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Karnataka govt unveils new IT-enabled Services Policy

The Cabinet has also decided to draft a new cyber security policy to adopt necessary data protection safeguards

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Karnataka, IT-enabled Services Policy, Bengaluru, R&D, Cyber security policy, Quality certification

The Karnataka government has unveiled its new IT and IT-enabled Services (ITeS) Policy, giving small technology products and services firms a slew of incentives to set up firms away from Bengaluru.

The policy focuses on strengthening digital infrastructure in Tier-II and -III cities. Bengaluru is the fourth largest technology cluster in the world and four-fifths of global IT companies have their India operations and research and development (R&D) centres based-out of Karnataka.

The state government aims to add around 60 lakh direct and indirect jobs by encouraging technology investments in Tier-II and -III cities. The policy seeks to promote a culture of innovation in these regions.

The new policy provides a cash support of up to Rs two crore for developers of co-working spaces with a minimum built-up area of 15,000 sq ft.

Apart from this, for firms setting up tech companies at the plug-and-play facilities will get a lease and rental reimbursement of Rs 10 per sq ft or up to Rs three lakh for a year.

The state is aligning its goals with that of the Centre to create USD one trillion digital economy out of India. The state government has targeted USD 300 billion digital economy over the next five years.

During the previous five-year policy period beginning 2014, Karnataka received Rs 6,728 crore in investments, adding about 1,73,000 new jobs.

The Cabinet has also decided to draft a new cyber security policy to adopt necessary data protection safeguards. The investments under the IT policy will get stamp duty exemption of between 75 percent and 100 percent depending on where the project is proposed, and investors will also get to pay concessional power tariffs.

The government will provide a support of up to Rs one crore for research and development initiatives and reimburse costs for quality certification and patents.

The Cabinet also cleared a special incentive scheme for the electronics system design and manufacturing (ESDM) sector.

The investments away from Bengaluru urban and rural districts will get a capital investment subsidy of 25 percent on land and 20 percent on plant and machinery. They will also receive a 100 percent cash-back on stamp duty and registration charges and land conversion fee.

Moreover, investors will also get one percent of annual turnover as a production-linked incentive for five years, including for investments that will go into expanding the existing units.

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