Karnataka is preparing for a transformative leap in its technology landscape. The state government recently announced an investment of ₹967 crore in incentives under the new IT Policy for 2025-2030.
Positioned at the intersection of rapid global tech shifts and India’s own deep tech boom, the new policy is designed to attract large-scale investments in AI, quantum computing, cybersecurity, and other emerging technologies, with an intentional tilt toward expanding innovation ‘beyond Bengaluru’.
“To retain leadership and position the state as a preferred global destination for innovation and investment,” the policy aims to increase the Gross State Value Added Product (GSVAP) from 26% to 36%, boosting software exports to ₹11.5 lakh crore, and creating more than nine million jobs by 2030.
Beyond Bengaluru
The updates in the policy are also a deliberate push to nurture emerging tech cities outside the capital. Hubs like Mysuru, Mangaluru, Belagavi, Hubballi, Tumakuru, Kalaburagi, and Shivamogga are positioned as nerve centres of Karnataka’s digital economy.
Speaking to AIM at the Bengaluru Skill Summit, Nirmal Bhardwaj, founder of The Bengaluru Angels, and managing director of Resurgent, insisted that the government look into emerging hubs such as Mysuru and Tumakuru, as connectivity from Bengaluru is relatively easier.
This simplifies the process for startups and established companies to establish headquarters in these regions, which can efficiently accommodate talent and infrastructure, he said.
Complementing this, on November 6, the state cabinet approved the new Startup Policy for 2025-2030, which aims to establish 25,000 startups within five years, including 10,000 outside Bengaluru.
With a budget of ₹518.27 crore, the startup policy focuses aggressively on deep technologies such as AI, blockchain, quantum computing, and semiconductor design, signalling a united policy framework across IT and startup domains.
To elevate Karnataka as a global hub for frontier technologies, the state is building foundational infrastructure for innovation, another big up for startups.
Among the flagship initiatives is Technoverse, a series of integrated tech campuses that will function as innovation ecosystems featuring R&D laboratories, digital testbeds, immersive demo zones, and plug-and-play facilities for startups.
A statewide Digital Hub Grid will support this physical infrastructure, connecting innovation clusters across Karnataka into a single digital fabric, ensuring equitable access to advanced resources regardless of geography.
A significant catalyst within this infrastructure framework is the establishment of the Centre for Applied AI for Tech Solutions (CATS), backed by a dedicated ₹50 crore investment. The centre is envisioned as a springboard for AI-driven product development, research translation, and industry collaboration.
Financial Support
Recognising the high operational burden that early-stage startups face, the IT Policy offers one of the most comprehensive incentive frameworks in the country.
The government addresses this directly by offering rental reimbursement, covering 50% of rent, up to ₹10 lakh for companies with up to 100 employees and up to ₹50 lakh for units with up to 500 employees. This move is expected to enable startups to establish themselves in prime or semi-urban locations without prohibitive overheads.
To propel innovation, the policy offers the Advanced Innovation and R&D Incentive, which allows companies to reclaim 40% of eligible R&D expenditure, capped at ₹5 crore, and claimable once per unit.
Intellectual Property incentives further encourage innovation, with reimbursement for both domestic and international patent filing fees. For startups targeting product maturity, such support reduces risk and accelerates time-to-market.
Strengthening the Talent Pipeline
The policy also recognises that a thriving startup ecosystem is built on a skilled, adaptable workforce. Its Internship Cost Reimbursement programme helps reduce the barrier between academic talent and industry needs.
Startups can reclaim up to half of the stipend paid to interns, up to ₹5,000 per month, for up to 100 interns, thereby creating a structured pipeline of future-ready talent.
The Skilling Cost Reimbursement initiative supports startups in deep tech domains by reimbursing 20% of skilling expenses, up to ₹36,000 per graduate, with an additional 20% available if the candidate is hired under the Nipuna scheme. This targeted support enables companies to cultivate talent affordably, aligning them with cutting-edge technologies.
Bhardwaj emphasised the importance of talent and skill development. His concern resonated with the policy’s goals: “We have [over 300] engineering colleges in Karnataka, and I hope… all the students across these colleges build their skills, which are marketable to the rest of the world.”
Additionally, talent relocating from Bengaluru or other states can qualify for a 50% reimbursement of relocation costs, up to ₹50,000 per employee. These measures not only help startups expand but also distribute talent more evenly across Karnataka.
Creating a Business-Friendly Environment
The state is enhancing business-friendliness in emerging cities by addressing utility and property costs. For IT and ITeS companies outside Bengaluru, the government will reimburse 100% of electricity duty for the first five years and 30% of property tax for three years, easing the burden on early-stage firms.
The policy promotes the creation of green IT and ITeS parks, offering 20% support for eligible capital expenditures, capped at ₹5 crore, to encourage sustainable infrastructure development.
Additionally, Karnataka Udyog Mitra will act as a single-window agency for approvals, simplifying the process. Self-certification for labour laws will minimise compliance burdens, enabling startups to focus more on innovation.
The policy also supports events on emerging technologies through cost reimbursements, helping industry associations and startups showcase advancements and attract investments.
The post Karnataka Eyes a Leap in Emerging Tech with New IT Policy appeared first on Analytics India Magazine.
