Karnataka State Profile

1. Brief Demographic, Economic and Infrastructure Overview of the State

Geographic and Demographic Overview:
Karnataka, a state in southern India, is the 8th largest state in terms of area and 9th largest in

terms of population. It comprises of 30 districts. The states capital city is Bengaluru. The
table below illustrates key demographic indicators of the state.
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Indicators
Geographical Area
Population
Decadal Growth Rate
Density of Population
Urban to Total Population
Sex Ratio
Literacy Rate (LR)
Birth Rate
Death Rate

Year
2011
2011
2011
2011
2011
2011
2011
2011
2011

Unit
Lakh Sq. Km
Crore
Percentage
Population/Sq. Km.
Percentage
Females/1000 Males
Percentage
Per 1000 Mid-year Pop.
Per 1000 Mid-year Pop.

Karnataka
1.91
6.11
15.67
319
38.57
968
75.60
18.8
7.1

India
32.87
121.02
17.64
382
31.16
940
74.04
21.80
7.1

Economic Overview:

The share of primary, secondary and tertiary sectors in the states economy stood at 17.20
percent, 26.50 percent and 56.30 percent respectively in 2011-12. The average NSDP growth
rate between 2004-05 and 2011-12 was 14.7 percent. The table below shows key economic
indicators of the states economy.
Particular
Gross State Domestic Product (GSDP)
Constant (2004-05) Prices
Current Prices
Economic Growth Rate as per GSDP
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Unit
Rs. Crore

2010-11
271,485
406,470

Percent

2011-12 Q.E 2012-13 A.E

286,410
463,243

303,444
527,492

Constant Prices
Current Prices
Per Capita Income
Constant Prices
Current Prices

Rs.

9.7
20.4

5.5
14.0

5.9
13.9

68,695
45,882

77,491
47,911

87,359
50,254

(Q.E- Quick Estimates, A.E Advance Estimates)

Infrastructure Overview:

Roads: Total road network in the state stands at 231,997 km (2012-13)

Railways: As of March 2011, the state had railway network of 3,073 km
Airports: The state has five domestic airports. These are located in Bengaluru, Mangalore, Hubli,
Mysore and Belgaum. International flights operate from the airports at Bengaluru and Mangalore
Ports: There are 11 ports in Karnataka, of which new Mangalore is a major port.
Power: As of January 2013, the state had a power generation installed capacity of 13,596.28 MW
which consisted of 7279.56 MW of state share, 4720.63 MW of private share and 1596.09 MW of
central share.

2. Production Base/Resource Mapping

Agriculture: Total production of food grains (cereals and pulses) in the state during 2012-13 is being
estimated at 125 lakh MT. Table below gives production figures of agri-crops:
Crop/Group

Unit

Cereals
Pulses
Total Food grains

Lakh MT
Lakh MT
Lakh MT

2012-13 A.E
111.64
13.36
125

2011-12
108.22
10.61
118.83

Commercial crops such as oilseeds, cotton, sugarcane and tobacco roughly are prominent cash crops
grown in the state. Table below indicates the production of these crops over the last two years.
Crop/Group
Oilseeds
Cotton
Sugarcane
Tobacco

Unit
Lakh MT
Lakh bales
Lakh MT
Lakh MT

2012-13 A.E
9.50
10.91
303.20
0.94

2011-12
9.24
12.79
400.33
1.06

Horticulture: During 2010-11, production of horticulture crops stood at 152.13 lakh MT. The state is
the largest producer of coffee and cocoa in the country, 2nd largest producer of flowers and grapes, 3rd
largest in plantation crops production, 4th largest in spices production and 5th largest in fruits
production.
Fruits: According to the advance estimates by National Horticulture Board for 2012-13, fruit
production in the state is estimated at 67.38 lakh MT. Production of major fruits during the past five
years is indicated in the table below.

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Crop

Production (in lakh M.T.)

2009-10
2010-11 2011-12
21.32
22.82
23.52

Banana

2007-08
17.93

2008-09
19.19

Mango

12.23

12.84

16.94

17.79

18.68

Papaya

3.90

4.09

4.19

4.39

4.40

Citrus

2.96

3.10

3.13

3.25

4.01

Grapes

2.59

2.69

2.88

3.18

3.30

Vegetables: Advance Estimates for the year 2012-13 indicate vegetable production in the state to be
79.56 lakh MT. Production of major vegetables in Karnataka over a period of five years is provided in
the table below.
Crop

2007-08
28.87
14.99
5.72
3.62

Brinjal
Onion
Potato
Tomato

2008-09
30.32
15.74
6.06
3.73

Production (in lakh M.T.)

2009-10
2010-11 2011-12
22.66
25.92
24.51
15.80
17.57
19.87
4.01
4.83
4.60
3.73
3.55
4.38

Spices and Medicinal Plants: Total production of spices during 2011-12 was 4.6 lakh MT. Production
of medicinal plants during 2010-11 was 0.22 lakh MT.
Dairy and Livestock: Karnataka has livestock population of 3.29 crore and poultry population of 4.24
crore as per the 18th Livestock Census, 2007. Major livestock products are milk, eggs and meat. The
production statistics for major livestock products is given below:
Product
Milk
Eggs
Meat
Inland Fish
Marine Fish

Unit

2008-09

2009-10

2010-11

000 MT
No in Crore
MT
MT
MT

4538
237
114520
143717
218137

4821
291
119247
159324
248728

5113
307
123910
186008
340571

2011-12
5448
347
139553
199053
347383

2012-13
(up to Sep 2012)

3242
221
94858
85640
160028

3. Agri Marketing Infrastructure in the State

The APMC Act is functional in the state and has been amended from time to time. The key
features include provisions for setting up private mandis, direct procurement/sale from
farmers fields, contract farming, setting up and promoting agricultural marketing extension
units etc.
Market Yards/APMCs: There are 155 notified market areas/APMCs in the state. There are 353
sub market yards and 742 other kinds of market yards (seasonal).
Status of Logistics and Warehousing Facilities in the State: As of February 2012, the
Karnataka State Warehousing Corporation (KSWC) was operating 121 warehouses across the
state with a capacity of 10.04 lakh MT. The capacity utilization of these warehouses and
storage spaces stood at 74 percent. Central Warehousing Corporation (CWC) has a current
storage capacity of approximately 4.39 lakh MT in the state and operates 33 centres. Food
Corporation of India is operating 52 storage centres with a capacity of 13.13 lakh MT.
Cold Storages: The state has around 180 cold storages with a capacity of 4.87 lakh MT.
Abattoirs/Slaughter Houses: There are seven licensed slaughter houses in the state. There are
no APEDA supported abattoirs in the state as on date.

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4. Status of Karnataka Food Processing Industry

Food Processing Units: There were approximately 1550 food products and beverage
manufacturing units registered in the state till end of 2011-12. Total investment in these units
was estimated at Rs. 23,405 lakh and employment generated from these units was in excess of
15000.
Agri Export Zones: Various agri-export zones have been earmarked in the state for products
like gherkin, Rose onion, flowers and vanilla. To be precise, eight zones have been earmarked
for gherkin, three for rose onion, six for flowers and six for vanilla.
Mega Food Parks: Ministry of Food Processing Industries (MoFPI) has sanctioned one Mega
Food Park project under its Mega Food Parks Scheme in Karnataka. The project is located in
Tumkur and is currently under implementation.
Apart from MoFPIs Mega Food Parks Scheme, the state Govt. also has a Food Parks Scheme
under which food parks are being established in 6 districts including Bangalore (Rural),
Tumkur, Shimoga, Davangere, Bijapur and Belgaum. The state government is also planning
to set up a spice park at Byadagi in Haveri district.
Cold Chain Projects: MoFPI has so far sanctioned three cold chain projects in the state under
its Scheme for Cold Chain, Value Addition and Preservation Infrastructure.

5. Taxation Policy- State Govt.

Major State Government taxes levied by Commercial Taxes Department, Govt of Karnataka are
VAT and Entry Tax.

KVAT: The levy and collection of VAT is governed by the Karnataka VAT Act, 2003. Subject
to the provision of this act, every dealer whose taxable turnover exceeds or who reasonably
expects his total turnover two lakh per annum or rupees fifteen thousand per month is liable to
pay VAT. This is not applicable to the dealers who are purchasing goods from outside the state
and those who are executing works contract. VAT in Karnataka has four schedules where the
tax rates are 0%, 1%, 4% and 20%.
Entry Tax: The state government had enacted the Karnataka Special Tax of Entry of Certain
Goods in 2004. Under this Act, the state government is empowered to levy tax on entry of any
notified goods from any place outside the state into any local area for the purpose of either
consumption or use or sale.
Other than these, there are other taxes including entertainment tax and luxury tax levied by the
state government.

6. Policy Framework Governing the Sector

The Government of Karnataka has formulated an Integrated Agribusiness Development Policy
covering agriculture and allied sectors (like horticulture, fisheries, animal husbandry, sericulture
and food processing) both in infrastructure and industrial segments. Below are the major incentives
and subsidies under the Policy for agro based/food processing industries

Exemption from Stamp Duty for MSME, large, mega food processing industries
Concessional registration charges for MSME, large and mega food processing industries
(@Rs. 1 per Rs.1000)
100% Exemption from Entry Tax on P&M and Capital Goods for MSME, large and mega
food processing industries for an initial period of 3 years.

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Exemption of APMC Cess/fees in respect of procurement of agricultural produce

One time capital subsidy up to 50 percent of the cost of the ETPs subject to a max of Rs. 100
lakh and Rs. 500 lakh for common ETP depending on project scale
Interest free loan on VAT for large and mega units
Special incentives in selected zones
o Anchor Unit subsidy of Rs.100 lakh for first two units with minimum investment of
Rs. 50 Crore and minimum employment of 100 members
o Special incentives for projects in low HDI districts. 75 percent of the expenditure
towards EPF and ESI shall be reimbursed
o Interest subsidy up to 5 percent for micro enterprises for a period of 5 years
Technology up-gradation, quality certification and patent registration for micro & small
manufacturing agro based industries
o Interest subsidy up to 5 percent on TU loans
o BIS Certification: 50 percent of the fees payable to BIS (max of Rs. 20,000) and 25
percent of the cost (max Rs. 50,000) for purchase of testing equipments as approved
by BIS
o Financial assistance of up to 50 percent, subject to a ceiling of 5 lakh to micro, tiny
and small units for implementation of HACCP and other international standards
o Patent Registration: 75 percent of the cost of fee payable to patent office (max 1.25
lakh) and 50 percent of the cost (max Rs. 75,000) towards attorney fee, patent search
etc
o Technology adoption : 25 percent of the cost (max Rs. 50,000) for adopting
technology from recognized nationalized laboratories
o Technology Business Incubation Centre: 25 percent of the project cost (Max. Rs. 50
Lakh)
Other Incentives
o

Reimburse 50 percent cost of preparation of DPR for setting up new agro based
industrial units with a ceiling of Rs. 5 Lakh
o Encourage R&D for sponsored research work undertaken by reputed research
institutions, up to 50 percent of the cost with a ceiling of Rs. 20 Lakh
In addition to the above, the Government of Karnataka has come up with various sub-sector
specific policies as mentioned belowo
o
o
o
o
o

Karnataka Industrial Policy 2009-14

Karnataka State Infrastructure Policy, 2007
Karnataka State Policy on Organic Farming, 2004
Karnataka Grape Processing and Wine Policy, 2007
Karnataka Livestock Development Policy, 2010
Karnataka Agriculture Produce Marketing Committee Act

7. Sector Specific State Bodies/Agencies

Key state government bodies specific to the food processing and agri-business sector are

Directorate of Industries and Commerce: to carry out industrial development in the state and
implement policies and schemes of both central and state governments.

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Karnataka Udyog Mitra (KUM: First contact point for all the investors in Karnataka and nodal
agency to facilitate investments. KUM executes initiatives to enable smooth transition from
investment proposal stage to implementation stage

Food Karnataka Limited: Government of Karnataka has established Food Karnataka Limited
(FKL), a Special Purpose Vehicle as the nodal agency for development of infrastructure to
establish food processing industries in the State.

Karnataka State Agricultural Produce Processing and Export Corporation Limited: To

promote production, processing and export of agriculture, horticulture and floriculture
products

Karnataka State Industrial & Infrastructure Development Corporation Limited (KSIIDC)

oversees overall implementation of industrial projects in the state. It has also extended
financial assistance in the form of debt to core sector industries.

8. Potential Areas of Investment

According to the Advantage Karnataka campaign of the state government, following are the key
investment opportunities identified in agriculture and food processing sectors:

Cereals and pulse based processing activities

Agri Ecology
Organic agriculture
Aseptic packing of fruit pulps concentrate, Ready to Serve (RTS), Ready to Eat (RTE),
Herbal Extracts, Herbal Medicine nutraceuticals, Herbal medicine extraction
Livestock and fisheries production related activities
Dairy related processing activities

9. Key Links and Sources

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http://planning.kar.nic.in (for economy related information)

http://censusindia.gov.in/ (Census of India- for all the demographic and geographic
information)
http://www.agricoop.nic.in (for all the agriculture production related information)
http://www.nhb.gov.in ( for all the horticulture production related information)
http://www.advantagekarnataka.com (for all the infrastructure and industry related
information)
http://www.agriexchange.apeda.gov.in
http://karnatakaindustry.gov.in
http://www.kswc.in and http://www.cewacor.nic.in for all the warehousing related
information
http://cosamb.org/state_info/karnataka.pdf (for all agriculture marketing related
information)
Economic Survey of Karnataka 2012-13