Karnataka bags Rs 12 lakh crore investments in 3 years: What’s fueling the state’s growth engine?

Karnataka has pulled in fresh investment proposals worth over Rs 12 lakh crore between FY22 and FY25, according to a study by the MSME Export Promotion Council (MSME EPC). The findings, as per the PTI report, note the state’s position as one of India’s most attractive destinations for investors, thanks to its policy environment, talent pool, and innovation-led ecosystem.

It shows that Karnataka is not just chasing investments but is also seeing strong project execution.

New projects announced: Rs 12,01,175 crore
Projects completed: Rs 1,40,476 crore
Pending projects revived: Rs 36,078 crore
Projects under implementation: Rs 9,49,370 crore

Sectoral Highlights

IT and Startups: Karnataka’s Global Edge

The state’s IT sector continues to be its strongest card. Karnataka accounts for 42 percent of India’s software exports and is home to more than 14,000 DPIIT-recognized startups. It also hosts 45 unicorns, representing a big chunk of India’s startup story.

Aerospace and Machine Tools: Silent Giants

Beyond IT, Karnataka leads in areas that rarely make headlines. It controls a 65 percent share in India’s aerospace exports and contributes half of the country’s machine tools output.

MSMEs: Driving Jobs and Local Economies

The MSME ecosystem in Karnataka is thriving, with over 8.5 lakh enterprises employing nearly 70 lakh people. These businesses span across electronics, garments, food processing, chemicals, and auto components.

Agriculture and Tourism: Untapped Potential

While tech and industry dominate headlines, the study highlights opportunities in agriculture and tourism.

Agriculture: Karnataka’s farm sector grew 4 percent in FY25, higher than the national average of 3.8 percent, led by horticulture and coffee. But low irrigation coverage and weak price support remain major hurdles.
Tourism: Despite its cultural and natural wealth, Karnataka has only scratched the surface. The study suggests tax breaks, subsidies, eco-lodges, boutique hotels, and community-run homestays as ways to scale up tourism.

Policy and Investment Climate

D S Rawat, Chairman of MSME EPC, as quoted by PTI, said Karnataka’s growth is being powered by its forward-looking policy framework, world-class infrastructure projects, and skilled workforce. The private sector alone accounted for over Rs 10.25 lakh crore in investments during this period.

The study cites NITI Aayog’s assessment that Karnataka leads India in innovation, reinforcing its reputation as the country’s go-to state for investors.

The Road Ahead

The real test for Karnataka will be sustaining this pace while ensuring inclusive growth. For that, the state will need to:

Expand irrigation and agri-infrastructure
Strengthen financing and support for small farmers
Push tourism with stronger branding and local empowerment
Scale up MSMEs with digital adoption and global linkages

(With inputs from PTI)