By Srividya Kannan, Founder and CEO, Avaali Solutions
The Karnataka GCC Policy 2024-2029 reflects the state government’s strategic vision to maintain and expand its leadership as India’s information technology capital. The three key tenets the policy aims to achieve in the next five years are as follows. First, it seeks to attract the establishment of 500 new GCCs in Karnataka, with the goal of reaching a total of 1,000 GCCs. Second, the policy aims to support the creation of 350,000 new jobs in Karnataka by 2029. Finally, it targets generating an economic output of US $50 billion in Karnataka through the establishment of these centers.
With Bengaluru already hosting a significant share of Global Capability Centres (GCCs) and being a global tech hub, the policy aims to address future growth by decentralising the GCC ecosystem via ‘Beyond Bengaluru’ initiative. This is a welcome move towards balanced growth and development, making sure up and coming areas also come into the fold. The cities identified Mysuru, Mangaluru, Hubballi-Dharwad-Belagavi, Kalaburagi, Tumakuru, and Shivamogga are in close proximity to the capital city and boast seamless availability of connectivity, Infrastructure as well as potential untapped talent. This expansion will ensure equitable socio-economic outcomes for the residents.
By shifting focus to these emerging clusters, the policy creates opportunities for balanced economic growth across the state via GCCs. It incentivises companies to establish smaller Nano GCCs and larger operations in these regions through attractive benefits like tax exemptions, rental reimbursements, and subsidies. This will not only declutter Bengaluru but also unlock the potential of other cities, creating new technology hubs and generating employment, thereby driving inclusive growth.
Adding to this, the policy introduces the creation of Global Innovation Districts. These three new technology parks—one in Bengaluru and two Beyond Bengaluru—will be strategically located and offer state-of-the-art infrastructure, including high-speed internet and reliable power supply, all while adhering to global sustainability standards.
The Global Innovation Districts are intended to foster collaboration between various stakeholders; academia, startups and the tech industry. Which in turn would harness the skilled talent pool of the state.
To make it lucrative for investors the government intends to provide continued end to end support and would incentivise them to focus on R&D initiatives. A dedicated coordination office of the Global Innovation District would offer streamlined support for existing as well as up and coming GCCs.
The timing is crucial, leveraging first-mover advantage, as the GCC market in India is projected to reach $99-105 billion by 2030. These aren’t just numbers; they represent a transformation of our economy, workforce, and global standing. Each new GCC is a potential hub of innovation and global connectivity.
AI Innovation Fund: Building Tomorrow’s Tech
The INR 100 crore Innovation Fund outlined in the policy is aimed towards building a robust AI ecosystem. This fund, intended to support joint research between GCCs and academia, is integral to advancing the development and application of artificial intelligence (AI) in the state. The policy includes establishing a Centre of Excellence (CoE) for AI in Bengaluru on a triple helix model, which will work with academic institutions across the state to build AI infrastructure, curate datasets, and promote ethical AI practices. Additionally, the formation of an AI Skilling Council is a key step in driving AI-related curriculum development, aimed at aligning the local workforce with the industry’s needs
With the rapidly evolving AI landscape, along with the establishment of AI Centres of Excellence and the need for continuous research, suggests that scaling this fund over time will be necessary. The costs associated with building advanced compute infrastructure, developing ethical AI frameworks, and creating training programs will grow as the state deepens its AI footprint. Additionally, the fund needs to be integrated with other financial resources from public-private partnerships, Corporate Social Responsibility (CSR) funds, and central government schemes to ensure the sustained growth of Karnataka’s AI ecosystem.
Enhancing the Policy’s Impact
The draft policy is commendable for its forward-looking approach, yet there are opportunities to enhance its impact further such as establishing a clear path for Nano GCCs to scale through phased growth incentives and a structured expansion framework, enabling smaller centers to grow steadily. Additionally, promoting cross-cluster collaboration in areas beyond Bengaluru through innovation networks and joint R&D initiatives would foster a connected ecosystem across the state.
To align with sustainability goals, the introduction of incentives for circular economy practices and detailed guidelines for green infrastructure could attract environmentally conscious businesses. Similarly, offering a comprehensive relocation support package, including subsidised housing and schooling for employees, would ease transitions and encourage movement to emerging business hubs.
Enhancing digital infrastructure, such as reliable high-speed internet and robust cybersecurity, alongside investments in physical infrastructure like efficient transport networks, will further solidify Karnataka’s position as a global digital economy leader.
Furthermore, streamlining regulatory processes by simplifying business setup and operations will enhance the ease of doing business.
Lastly, global collaboration for talent development, through international exchange programs and partnerships with leading institutions, could build a highly skilled workforce in emerging technologies.
Driving Policy Effectiveness
While the draft policy has just been announced and I am sure it will undergo refinements, it would be good to see more detailed incentives for companies that invest in Research and Development. This could include tax breaks or grants for businesses that develop innovative technologies or services in Karnataka.
Additionally, the policy might lack clarity or adequacy in providing tax incentives or exemptions that could attract more GCCs to the region. With respect to intellectual property rights, strengthening the legal framework around intellectual property could be necessary to protect innovations developed by GCCs. Also, a more thorough focus on diversity and inclusion could attract a more diverse talent pool, leading to higher innovation and productivity.
With the rapid pace of technological advancements and global changes, it’s crucial to ensure that policies remain relevant and effective in addressing current challenges and opportunities. Hence, the government must ensure to regularly review and keep the policy updated.