Bengaluru: After a high-profile global investor meet it held in February, the Karnataka government claimed to have secured investment commitments of ₹ 1.33 trillion. Seven months on, how much of the promised money has come through?
Data shows out of the 122 memoranda of understanding (MoU) which were signed at the summit, only a few have made progress. This, despite the government appointing a nodal officer and setting a deadline of 15 May to realise these projects.
According to government data, 97 out of the 122 MoUs accounted for the larger commitments. Out of them, 57 big investments (above ₹ 5 crore) must be filed at the industries department. Investments of ₹ 15-500 crore are cleared by the State Level Single Window Clearance Committee (SLSWCC) while investments above ₹ 500 crore are cleared by the State High-Level Clearance Committee (SHLCC).
However, only 12 out of these 57 have been filed and approved by either SLSWCC or SHLCC. Industries department data shows 16 others were filed but are yet to be approved, meaning most committed investments are yet to take off.
Besides, the 12 approvals are only the beginning. They still need to be vetted for land, water and electricity.
Industries minister R.V. Deshpande, however, claimed the meet was a success: “You please understand, we have cleared more investment than any other investor meet... not just in Karnataka, in any part of the country... That means Karnataka has become a favourite investment destination," he said.
On the sidelines of a press meet recently, Gaurav Gupta, Karnataka’s commissioner for industries and commerce department, also refused to accept the meet was not a success.
To be fair, investor meets have a poor history of attracting investments. The success rate of the first investor meet held in 2010 by the then BJP government, was only 28%, Mint reported in December 2015. Only 108 out of 389 projects committed at that meet have taken off so far, while investors dropped 118 committed projects (30%). Out of the 751 projects committed at the BJP-government’s second Global Investors Meet in 2012, only 68 projects, or 9%, have been realised on the ground. While investors dropped 58%, or 439 projects they committed at the 2012 meet, the remaining 244 are still under implementation. Indeed, replying to a question in the state assembly on 26 November last year, Deshpande himself has said that less than 15% projects cleared by the state in the last seven years saw the light of day.
Also read: Will projects under Karnataka’s next investor meet really take off?
The decline in investor sentiment is not new. It has been echoed in almost every business summit in Bengaluru, where industry leaders would complain about civic woes.
“Solving infrastructure woes such as deploying a cutting-edge traffic management system could be done in even 48 hours. But the solutions that should have been running at 100km/hour is running at 1km/hour, and sometimes in the opposite direction," Ashwin Mahesh, chief executive of social technology firm Mapunity Information Systems and a member of Bangalore’s city planning task force, had said in an earlier interview.
Karnataka also suffers from institutional bottlenecks such as delays in getting land and approvals, or competition from neighbouring states. While two-wheeler maker Hero Motocorp. Ltd chose neighbouring Andhra Pradesh for a ₹ 2,200 crore factory in 2014, Korean steelmaker Posco scrapped plans to build a $5.3 billion steel plant in the state in 2013. The Indian unit of e-commerce firm Amazon set up its warehouse in Telangana after it was unable to resolve tax disputes with the Karnataka government.
An urban expert associated with various government panels related to boost investments to Bengaluru said on condition of anonymity that the state is struggling with investments, despite the government trying to keep a brave face. “The government needs to apply a strategic approach to chasing investments. Perhaps they should separate the commitments into three baskets; the projects that are sure, the ones which have a 50-50 chance, the ones which are really hard to get," he said.