Karnataka Govt constitutes task force to woo MNCs looking to relocate from China

The Karnataka Government on Monday constituted a Special Investment Promotion Task Force to woo disenchanted multinational companies looking to shift their manufacturing bases from China.

Commerce and Industries Department's Principal Secretary Gaurav Gupta said following the COVID-19 pandemic, there is a pushback against China by several countries.

"Rising labour costs, shortages of workforce, a trade war with the United States, the rise of manufacturing hubs in South-East Asia and now a pandemic that originated on its mainland...China may not be able to retain its position as the world's largest factory in the post-COVID global economic order," he said.

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This is an opportunity for India to attract them here, bringing with their investments both jobs as well as a transfer of technologies.

India stands a good chance to emerge as a reliable substitute, given its congenial landscape for manufacturing as well as its vast consumer market, a Karnataka Government Order said.

For attracting investments and looking to woo disenchanted multinational companies considering shifting manufacturing bases away from China in the backdrop of the coronavirus outbreak, there is a need to constitute a Special Investment Promotion Task Force under the Chief Secretary's chairmanship to attract investments into the state, it said.

The panel would also have nominees or representatives from trade promotion organisations of Japan, Korea, Taiwan, as also US, French, Singapore and German companies, among others.

The task force would identify sectors in which Karnataka can attract investment due to relocation from other countries post-COVID, formulate special incentive package and "facilitations" which need to be provided to attract these investments.

It would also identify key infrastructure projects, including dedicated industrial township that needs to be undertaken or expedited to attract investments, measures to fast-track clearances to promote these investments, and recommend outreach activities and brand building to position Karnataka as an attractive investment destination.

In recent days, Large and Medium Scale Industries Minister Jagadish Shettar held consultations with industrialists such as co-founder and non-executive Chairman of Infosys Ltd, executive Chairperson of Biocon Ltd, Kiran Mazumdar-Shaw and Chairman of early-stage startup accelerator and venture fund Axilor Ventures Senapathy (Kris) Gopalakrishnan to fine-tune the State's outreach push.

Shettar also held interactions with industry bodies, including Confederation of Indian Industry, the Federation of Karnataka Chambers of Commerce and Industry, Bangalore Chamber of Industry and Commerce and Karnataka Small Scale Industries Association.

The Minister told PTI that industrialists who took part in the deliberations suggested to the Government to focus on ease of doing business and improving the single window clearance system for approvals.

To boost the industry sentiment in the state, they also stressed the need for easing land acquisition regulations, and leveraging the knowledge base of Bengaluru to promote technology-based manufacturing, according to an Industry Department official.

"Given the interest shown by some companies in moving their manufacturing bases out of China, the industry leaders recommended that State Government identify a target list of 100 firms to reach out to for attracting to the State, and work out a strategy to bring them to Karnataka", the official said.

The industry leaders assured cooperation from the private sector in reaching out to and facilitating interactions with CEOs of these companies.

Shettar said restrictions on acquisition of agriculture land for starting industries have now been relaxed with the passage of an amendment to the land reforms act in the recent Legislature session.

This would facilitate immediate land allotment to industries, he added.

Secretary-General of industry body ASSOCHAM, Deepak Sood, told PTI recently that there is a broader consensus that the global manufacturing supply chain would be more spread than concentrated in major economies like China.

"If India comes out of the present crisis with minimum of impact, we can be the destination of choice for the global manufacturing giants in different sectors like electronics, computer hardware, pharmaceuticals, including medical devices, automobile, including components and other engineering products," Sood had said.

Gopalakrishnan, also co-founder of Infosys and former CII President, said India has to target companies which have operations in China, reach out to them, understand what their needs are and hold discussions with them.

"We have to make sure that their requirements are addressed, be it with regard to land, office space, faster approvals, and some concessions on local taxes. It depends on the businesses that the companies are in, and if we are able to respond to those requests, I think we will be able to attract them", he told PTI.

All states will compete for this business (foreign investment), Gopalakrishnan added.