Investing in Karnataka: Incentives for Foreign Companies
Karnataka launched its Industrial Policy 2025-30 in February 2025, and it lets investors choose between production-linked incentives and capital subsidies.
What the policy offers
Karnataka's Industrial Policy 2025-30 lets investors choose between production-linked incentives and capital subsidies. It also offers specific support for warehousing, research and development, green projects and worker housing, so the value of the policy to you depends heavily on your project type.
- Warehousing: logistics and warehousing are granted industry status, with up to 20% capital subsidy on fixed capital investment, stamp duty reimbursement and a five-year electricity duty exemption.
- R&D and GCCs: an extra 10% incentive for companies that pair manufacturing with R&D centres or Global Capability Centres.
- Green projects: one-time capital subsidies for items such as zero liquid discharge, pollution control and energy efficiency.
Amounts for some items are not published in the summaries we checked, so confirm them with the state.
Zones and ease of doing business
The policy plans 12 new investment zones across 30,000 acres alongside more than 200 existing industrial areas, and it offers a single window covering over 150 services. Affidavit-based clearance lets construction begin on an affidavit before every departmental approval arrives.
Sector parks named in the policy include an advanced pharma park at Kolar, a drone park at Chitradurga and EV clusters at Chikkaballapur and Dharwad. A digital land system with mapping tools helps check land availability and zoning before you commit. Affidavit-based clearance reduces the wait to start building, but you remain responsible for obtaining the approvals afterwards, so build the approval timetable into your project plan and keep records of each application.Focus sectors
The policy targets electronics system design and manufacturing, advanced manufacturing, aerospace and defence, and future mobility, together with logistics and green manufacturing. Projects in these areas are the most likely to find the policy's features useful, and the state's sector parks and clusters are built around them.
If you are in electric vehicles or auto components, see our EV and auto components guide. If you are a manufacturer who also plans research and development in India, ask whether the extra incentive for pairing manufacturing with R&D or a capability centre applies to your plan. The policy's headline targets include 2 million jobs by 2029, which suggests the state will look closely at employment in any project it supports.What to check before relying on any incentive
Incentive amounts, caps and eligibility are fixed by the current policy and its implementing orders, and they change. Many benefits must be sanctioned before you buy land or begin construction, and payment is usually made in instalments after investment, production and jobs are verified.
Before choosing a location, ask the state agency for the current government order in writing, confirm which project size and district category you fall in, and check whether benefits can be combined with central schemes. Ask when the sanction must be obtained, how long payment takes in practice, and what happens if you miss an employment or production target. We help foreign companies with each step, from choosing the state and setting up the Indian entity to structuring the investment and filing for incentives. Contact a partner.This page is general information, not legal or tax advice. We summarise public descriptions of each policy; the official policy document is the authority.