Karnataka Amends Industries (Facilitation) Act For Small, Medium and Large-scale Industries

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  • Under the amended Act, an industry would not need any statutory permissions for the first three years to set up operations in the state
  • These permissions include approvals from under multiple state laws, including trade licence and building-plan approval

The Karnataka government has amended the long pending industrial reform ‘The Karnataka Industries (Facilitation) Act, 2002’. This move, as per the government was done to facilitate and attract investment in the state. The decision was taken by the state cabinet meeting chaired by the Chief Minister of Karnataka BS Yediyurappa.

“This is an historic decision taken for the benefit of the industrial sector. This decision has been undertaken as the government wants to promote Ease of Doing Business and facilitate investors to invest in the state,” pointed out Jagdish Shettar, minister for Large & Media Scale Industries, Karnataka.

Currently, only Gujarat and Rajasthan are the two states in the country that have amended this Act for small scale industries only. In Karnataka the amended act includes small, medium and large scale industries.

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According to IoT Startup Directory 2017, out of 971 Internet of Things (IoT) startups in India, 536 were registered in Bengaluru. As per an IBEF report, exports of electronics and computer software from the state reached US$ 62.66 billion 2016-17. Exports of IT & electronic products accounted for around 38.99 per cent share in India’s electronics and computer software exports & 76.36 per cent share in Karnataka’s overall exports.

No statutory permissions for the first three years

Under the amended act, an industry would not need any statutory permissions for the first three years, or whichever is earlier to set up operations in the state. These permissions include approvals from under multiple state laws, including trade licence and building-plan approval, measures that would save lot of time and cost for industries.

“The objective of the amended Act is to simplify regulations and reduce procedural requirements and create a conducive investment environment,” read an official press note.

It continued, “Economies worldwide are seeing a slow transition and will require a longer period to restore the pre-COVID normalcy levels. In midst of these sobering business environment, the Karnataka State Cabinet cleared the (Facilitation) Act, 2002. This Act has been a long pending demand by the investors and will usher in investments to the state in coming days.”

In the past, numerous procedures and clearances, as per the State government, have resulted in delay of setting up industries and escalated the project cost for the investors, thus resulting in a huge economic toll and delayed investment to the state. Keeping that in mind, the newly amended Act shall ensure the investors are insulated by the delays.

“This decision was taken today in the cabinet under the leadership of Chief Minister BS Yediyurappa and I thank all my cabinet colleagues for this progressive move,” added Shettar.

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