Karnataka’s thriving startup ecosystem and talent pool have caught the attention of global corporations in the US, luring them to establish or expand their presence in Bengaluru.
During the 10-day US roadshow across three major cities—Boston, New York, and San Francisco—the Government of Karnataka secured a total investment of approximately ₹7,100 crores from electronic systems design and manufacturing (ESDM) companies and global capacity centres (GCCs).
Interestingly, Karnataka’s IT minister, Priyank Kharge, faced issues obtaining travel clearance from the Ministry of External Affairs despite applying for permission on May 15 to travel to the US. He received approval only five days after his intended departure date.
In an exclusive interview with the AIM, the minister discusses the impact it had on Karnataka’s deal closings.
In his absence, Sharath Bache Gowda, chairman of Karnataka State Electronics Development Corporation (Keonics), led the delegation. “We managed to attract about Rs 5,500 crore in the ESDM sector and around Rs 1,600 crore in the GCC space,” said Kharge.
The state is also tentatively expecting around ₹5,500 crores of investment in talent hiring, infrastructure spending, R&D investments and collaborative initiatives.
The investment attracted from multinational companies and academic institutions could generate employment opportunities for more than 7200 people, the delegation said in a press briefing on July 9.
Citing his travel clearance issues, Kharge asserted that Karnataka’s business faced a slowdown due to the central government. He stated that the state could have attracted more investments during the recent US roadshow if he had been allowed to lead the delegation.
The IT Minister chose not to disclose specific company names due to confidentiality and protocol, but emphasised the commitment to enhancing employment and attracting investment in both Karnataka and India.
In the meantime, Gowda mentioned that the 10-day roadshow in the US demonstrated Karnataka’s innovation and startup landscape, sparking significant global interest.
The delegation, spearheaded by IT-BT secretary Ekroop Caur and Gowda, conducted over 120 meetings, finalised MoUs and LoIs, and took part in key events such as BIO US and the Design Automation Conference.
The roadshow showcased potential in fields like biotech, semiconductors, and GCCs, while also exploring academic partnerships at MIT and Stanford. Gowda stated that companies no longer view Bengaluru as a location for back-end setups; many major companies now see the city as a key hub for tech innovations.
The delegation met with leaders from StartX, a deep-tech incubator associated with Stanford University and supported by global venture capital. Karnataka is now looking into opportunities for high-level collaboration with StartX. This collaboration may include tailored support packages that feature subsidised infrastructure, access to flagship programs such as Elevate, LEAP, and Beyond Bengaluru, as well as regulatory assistance for global startups.
Gowda promoted that Bengaluru’s ecosystem, especially, “Startups are not only for India, but for the world.”
“Companies don’t have a choice but to choose Bengaluru” for business and investments, Gowda said. The world views the city as one of the top hubs for a skilled talent pool and business innovation, and startups, he added.
At the sidelines of the press meet, Gowda told AIM, “No one setting up operations in Bengaluru is doing so with the expectation of cutting their project costs by 20%. They are not simply outsourcing backend accounting; they are investing in cutting-edge research and development that could cost them $400 million in the US. The question is how to achieve that value more efficiently, and India is a key part of that strategy.”
He added that Bengaluru is no longer seen merely as a cost-saving destination. Companies are not coming to Bengaluru solely to reduce expenses; instead, they are drawn to the advanced technology and talent that the city has to offer. There is confidence in Bengaluru’s ability to attract and retain skilled professionals.
“We are seeing a lower risk of brain drain here because we are not just focusing on basic service work; we are engaged in product development and the creation of intellectual property, including patents.”
Even when there is a need to reskill the workforce, the programs are designed to equip individuals for meaningful employment, rather than merely issuing certificates or generating revenue for training initiatives, Gowda highlighted.
Bengaluru saw around 50,000 job losses in the IT sector in 2024, primarily due to AI and automation replacing certain roles such as junior programmers and software testers. While some of these job losses are still attributed to the post-pandemic market, the pace of AI-induced job displacement has raised several concerns in India’s tech capital.
These layoffs, in turn, have impacted the tech industry as well as Bengaluru’s real estate market. The demand for affordable private housing and rental accommodations near the tech parks, particularly in the Outer Ring Road areas, has decreased significantly. Subsequently, homeowners have seen lower occupancy rates and declining property prices in these areas.
From a wage perspective, Bengaluru’s tech salaries remain significantly lower compared to those of global peers. The average tech worker earns around $12,000 annually, while counterparts in Silicon Valley make over $125,000. There is also concern that AI could further widen this gap, making routine tech roles less viable in India over time.
When discussing job losses among US companies due to AI, Gowda said that “about 90% of people believe AI will create jobs and serve as a beneficial tool. Tasks that once took three to six months could be completed in two to three months, potentially doubling productivity. However, this doesn’t imply that the workforce will also double.”
While some fear significant job losses driven by AI advancements, such as the evolution of ChatGPT from levels comparable to a parrot’s intelligence to that of a freshman, most agree that AI will enhance efficiency without causing widespread unemployment. An action plan on this will be announced at the end of the month, he added.
While the recent roadshow indicates that many MNCs, GCCs, and startups are interested in establishing themselves in Bengaluru, it raises concerns about the city’s rather frustrating infrastructure.
Karnataka’s GCC Policy for 2024–2029 aims to establish three Global Innovation Districts: one in Bengaluru, near the airport, and two in the surrounding region. These innovation districts are designed for easy walking access to workplaces and reliable utility services, with efficient regulatory processes in place. By grouping GCCs in these areas, the state aims to address urban challenges, reduce traffic and power supply issues, and alleviate commuting pressures within purpose-built hubs.
Startups like Bounce and Yulu are helping the city invest in micro-mobility initiatives and technology-based traffic decongestion tools, such as AI for signal timing and route planning.
While these solutions are beneficial for tech capital investments and businesses, addressing the underlying issues must also take precedence.
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