K’taka may get more 'Silicon Valleys' as govt opts to revise IT policy

Bengaluru may no more be India’s sole Silicon Valley for smaller cities from the state may soon join the fold. In a bid to stretch the IT industry beyond Bengaluru, the Karnataka government plans to revise the Information Technology Policy and boost IT investment in Tier II and Tier III cities like Mysuru, Mangaluru, Shivamogga and Huballi among others.

But developing smaller cities into a hub like Bengaluru depends on the state government’s ability to create better infrastructure and provide support initiatives, besides offering land at relatively cheaper rates.

Though BPO companies started operations in small size in places like Shivamogga, Hubli, Haveri and other cities a decade ago, no big companies have set up shops in these cities yet. However, industry sources say that major companies are willing to shift to Tier II and Tier III cities to attract talent and cut operational expenses.

Announcing the move, Gaurav Gupta, principal secretary of department of IT, BT and Science and Technology, in the Karnataka government, said the objective behind the new IT policy was to adopt strategies that will promote an inclusive digital growth across the state.

“The revised policy will help us make Karnataka a global ‘first choice’ for IT. We will lay special focus on cities such as Mysuru, Mangaluru and Hubballi to attract more investments and jobs in these places,” Gupta said.

This apart, the Karnataka Cabinet decided to amend the Karnataka Startup Policy 2015-2020 in line with the national policy.

The disruptive changes in the technology landscape with artificial intelligence (AI), machine learning, IoT, Blockchain and data analytics, since the last policy was written in 2013, forced the government to relook and revise the policy.

Karnataka recorded cumulative FDI inflows from April 2000 to December 2017 were recorded at US $ 28.82 billion, the third highest in India after Maharashtra and Delhi, according to Indian Brand Equity Foundation.

Industry bodies are however sceptical about the development as similar promises by various governments in the past haven’t materialised.

“The government’s words are only on paper. Nothing has improved in the past twenty years, irrespective of which government came to power. They need to give beyond giving free or cheaper land to companies,” said former Infosys CFO and multi-sector investor T V Mohandas Pai.

“To think beyond Bengaluru, the government needs to create better schooling and higher education institutions, so that the talent pool gets created,” he added.

Citing the example of Infosys, Pai said, though the company set up its unit in Mangalore in mid 2000s, there was no electricity for many years. And in the Mysore campus where it invested ₹2,600 crore, there was no housing, road infrastructure built around the campus.

“The governments have failed to market some of the places even though the talent pool was available. When the economy doesn’t support the system, why would people move to smaller towns,” he asks.

K Ravi, former president of Federation of Karnataka Chambers of Commerce and Industry echoed similar views and cautioned government in their slow approach.

“Companies can get as much as 60 per cent cost advantage by moving to smaller cities. All they look at is return on investment. But for that, the government needs to create support infrastructure and not just give free lands,” Ravi added.

For cities to be a miniature of Bengaluru, they need to create townships will amenities so that people feel encouraged to move to these smaller cities, he adds.