Acts and Policies of Karnataka

Introduction

· Situated in the southern part of India, the state of Karnataka spreads over the Deccan Plateau.

· From a basically agricultural economy, Karnataka has evolved into an industrial one.

· It has today about 978 large and medium scale industrial units with a total investment exceeding INR 1,56,545 crores employing more than 4 lakh people .

The capital Bangalore today has become an industrial

1. Metropolis. As an electronic city, it has already spread over 300 acres and has become a nerve

2. Center of activity. Out of the 430 major software companies, 87 companies are based in Bangalore.

3. Products and food processing.

The key industrial activities in the state includes IT and ITeS, telecom equipments, electronics and electrical, engineering, aeronautics, minerals, machine tools, watch-making, ceramics, leather

As per the latest official data (quick estimates for 2004-05), state domestic product at constant prices

Purchase of Land :

The state of Karnataka is mainly governed by 2 key regulations namely,

o Karnataka Land Reforms Act, 1961

o Karnataka Town and Country Planning Act, 1961

Karnataka Land Reforms Act, 1961

1. The ownership and holding of land for agricultural purposes within the state of Karnataka is regulated by the KLRA.

2. The KLRA also contains detailed provisions governing tenancies on such land.

Under the provisions of KLRA, no person other than a person cultivating the land personally shall be entitled to hold agricultural land.

Further, holding of agricultural land by companies is allowable only if the same has been specifically approved under the provisions of KLRA.

Further under KLRA, a person having an assured annual income of INR 2,00,000 or more from sources other than agricultural land shall not be entitled to acquire further agricultural land.

Under KLRA, ceiling on land holdings are prescribed depending upon the classification of the land as irrigated, semi-irrigated, dry, etc.

The KLRA restricts the maximum extent of agricultural land that could be owned or possessed by any person to 54 acres. The extent of restriction of land holding reduces depending on the fertility of the land,

Eg, for grade-A irrigated lands, the ceiling would be 13 acres.

The KLRA exempts certain lands and certain persons from the applicability of some of the provisions of the Act. For eg, plantation lands are exempted from the applicability of inter-alia,provisions governing land ceilings, and consequently companies can own plantation lands in the state of Karnataka, without any ceiling .

In addition to the restrictions prescribed under the KLRA, certain specific regulations, such as the Jamma Tenure Land Holdings in the district of Coorg, are applicable to certain parts of the state,which places restrictions on the ability to buy or sell land in such parts

KarnatakaTown and Country PlanningAct, 1961 (“KTCPA”)

· The KTCPA regulates the planned growth of land use and provides for the development and execution of town planning schemes in the state.

· Under the KTCPA, the state government is empowered to notify an area as a local planning area and also appoint a planning authority for such an area .

For eg, the Bangalore Metropolitan Region Development Authority (“BMRDA”) is the planning authority for the Bangalore Metropolitan Region (“BMR”), comprising Bangalore urban district,Bangalore rural district and Malur taluk of Kolar district.

Similarly, the Bangalore International Airport Area Planning Authority (“BIAAPA”) is the planning authority for the area of the proposed new airport at Devanahalli, Bangalore and its environs. The planning authority for each area is required to prepare a Comprehensive Development Plan(“CDP”) or an Outline Development Plan (“ODP”) indicating the manner in which the development and improvement of the entire planning area is to be carried out and regulated .

The CDP/ ODP provide zoning of land use for residential, commercial, industrial, agricultural, recreational, educational and other purposes.

The CDP or ODP also provides for the reservation of certain type of land for the purposes of the central and state governments, planning authority or public utility undertakings and also for the designation of certain areas as areas of special control, which are subject to certain regulations on building line, height of the building, FAR, architectural features, etc .

Every land use, change in land use and development in the area covered by the CDP or ODP, would need to be in accordance with the provisions of the KTCPA and the CDP or ODP. These developments can be carried out only with a written permission of the planning authority, which is contained in a commencement certificate issued in the form prescribed under the KTCPA

Relevant Policies :

SEZ Policy:

In order to facilitate the development of SEZs in Karnataka, the state government has put in place a single window clearance mechanism. Projects with investments between INR 3 to 50 crores will be cleared by the State Level Single Window Clearance Committee (“SLSWCC”), chaired by the principal secretary, Department of Commerce and Industries, Government of Karnataka.

If the investment is above INR 50 crores, it will be cleared by the State High Level Clearance Committee (“SHLCC”), chaired by the Chief Minister, Government of Karnataka. The applications to both,SLSWCC and SHLCC are required to be submitted through the Karnataka Udyog Mitra.

Industrial Policy 2006-11 (“Industrial Policy”):

The newly introduced policy seeks to strengthen the manufacturing industry in the state, increase Karnataka’s share in the national exports, create additional employment and provide for a diversified industrial base with strength in both old economy and new economy fields.

Some of the key strategies adopted in the policy to promote the above objectives include:

· Encouragement of specialised industrial infrastructure for specific sectors and SEZs, through both the Karnataka Industrial Area Development Board (“KIADB”) as well as private sector promoters;

· The establishment of multi-product and product specific SEZs will be encouraged in all districts of the state except Bangalore Urban District (except if the proponent of SEZ comes forward to do so in his/ her own land or through a joint development agreement with land owners);

· Local amendments to the SEZ Act, 2005 and Rules, 2006 (Central Act) will be effected, providing for state level facilitation and incentives, labour law rationalisation, etc;

· Incentives and concessions for various categories of industries and locations

· Focused attention on sub-sectors/ areas where the state has core competency, ie aerospace,engineering, automobiles, pharmaceuticals, food processing, apparel and textiles, electronics,information technology, bio-technology etc

IT Policy:

· Karnataka was the first state to announce IT Policy in the year 1997. The state has recently introduced Mahithi, the Millennium IT Policy.

· Under this policy, various fiscal incentives are offered to IT industries. Zonal restrictions would not apply to IT companies that use power up to 5 KVA and hence, such companies can be established in residential, industrial or commercial areas.

· The procedure for seeking environment pollution clearances is simplified for software companies that use captive Diesel Generator (“DG”) sets.

· The government has relaxed the FAR for all IT projects set up outside the limits of the municipal corporations in the state.A rebate of 15% on cost of land will be applicable to those companies that get land from the state agencies like Karnataka State Small Industries Development Corporation (“KSSIDC”), Karnataka Industrial Areas Development Board (“KIADB”) and Karnataka State Electronics Development Corporation Limited (“KEONICS”).

· For other companies, rebate of 15% on stamp duty is applicable. This rebate on stamp duty is also applicable to the existing IT companies expanding or modernising as well as creating additional employment.

Karnataka Tourism Policy 2002-2007:

· The Government of Karnataka, in order to encourage private sector participation in the promotion of tourism and tourism-related activities, provides various concessions and incentives under the tourism policy.

· To obtain various incentives laid down in the policy, the projects have to beapproved by the Department of Tourism, Government of Karnataka, on or after June 1, 2002 and on or before May 31, 2007.

· Commercial establishments open to public in Karnataka, and providing facilities/ services to tourists, such as hotels, tourist resorts, wayside facilities, amusement parks, houseboats, adventure/recreation activity centre, heritage hotels, tourist village, dormitory etc, are eligible to seek approval for incentives from the Department of Tourism, Government of Karnataka.