Political and business officials claim that Karnataka, which was previously a leader in drawing industrial units, is losing ground to nearby states like Tamil Nadu and Maharashtra. This change is credited to their competitors’ aggressive marketing strategies and alluring offers.
The opposition and the state administration are blaming each other for the recent decision made by Bengaluru-based electric vehicle (EV) startup Ather Energy to locate its new manufacturing factory in Aurangabad, Maharashtra, rather than Karnataka. This episode has turned into a focal point for the wider trend of manufacturers bypassing Karnataka in favour of other states.
Why are Manufacturers Choosing Elsewhere?
Several factors seem to be contributing to Karnataka’s decline in manufacturing appeal:
- Proactive Approach by Other States: Industry executives point towards the contrasting approaches of the states involved. Tamil Nadu, for example, has been lauded for its aggressive strategy. Through bodies like the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), the state proactively identifies and prepares land with necessary infrastructure like electricity and roads, even before receiving official commitments from manufacturers. This reduces setup time and makes Tamil Nadu a more attractive option.
- Focus on Specific Markets: The choice of location can also be driven by proximity to target markets. Ather Energy’s decision to set up in Maharashtra aligns with their focus on the western and northern regions, which are the biggest family scooter markets in India. Locating in Maharashtra allows for easier and cheaper shipment to these key areas.
Current Landscape
Bengaluru is still thought to be a desirable site for corporate headquarters, especially in the computer industry, even though Karnataka may be losing position in the manufacturing sector. On the other hand, the pattern points to a growing concentration of manufacturing facilities in Tamil Nadu and Maharashtra.
Major manufacturers including Ashok Leyland, BMW, Hyundai, and Royal Enfield have found success in Tamil Nadu. Nonetheless, well-known producers like Honda, TVS, Scania, and Tata Motors are still present in Karnataka.
Karnataka will have to take a cue from its rivals if it hopes to recapture its manufacturing prowess. Reversing the current trend may require taking a more proactive stance when it comes to infrastructure development, land acquisition, and providing alluring incentives.
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