Bengaluru: During SM Krishna's regime between 1999 and 2004, most top leaders of the world used to visit New Delhi via Bengaluru (then called Bangalore). The Chinese leader Deng Xiao Ping, Japanese Prime Minister Mori, British Prime Minister Tony Blair and a dozen other leaders from the highly industrialised nations first landed in Bengaluru, met Krishna, discussed big investment plans and then headed to New Delhi to discuss dry politics.
It is a fact that Karnataka emerged as a major investment destination on the world map during that period. In 2004, Krishna lost power and the state faced political uncertainty of nine years under five chief ministers.
When the Congress returned to power in the 2013 Assembly elections, people had high hopes that it would improve the economy and boost investor confidence. However, exactly the opposite has happened after Congress chose a rank outsider Siddaramaiah as the new Chief Minister. Siddaramaiah who is allergic to the corporate world and planned growth, started focussing only on populist schemes like free rice, free milk, etc., totally ignoring the concerns of the industry leaders who have contributed a lot for the economic development of the state. Worse is that the state does not even have a full time industries minister and he holds the Industries ministry as an additional portfolio.
In the last two years after Siddaramaiah came to power, there has been no visible improvement of infrastructure. State government is taking a lot of time to clear approvals for the industries. There is no proper communication between the corporate world and the state government.
Two recent incidents have jolted the state to a big extent. World's online shopping leader Amazon has moved its central warehouse from Bengaluru to neighbouring Hyderabad and blamed state government's lethargic attitude for its decision. Indian online shopping major Flipkart is also facing 'harrassment' over commercial taxes.
The latest industry major to slam the Karnataka government is iconic German multinational company Bosch. Bosch has been in Karnataka for over 60 years and it is also one of the oldest foreign investors in India. According to a report in Karnataka's leading English daily ‘Deccan Herald', the India unit head of €49-billion German auto component giant Bosch Steffen Berns, tore into the Karnataka government for its culture of red tape and threatened to shift the company's expansion plans elsewhere.
Delivering a lecture on the "Multinational Perspective on Make in India" at the 38th Annual General Meeting (AGM) of the Bangalore Chamber of Industry and Commerce (BCIC) on Saturday, Berns thundered, "Bosch is thinking of diverting its expansion plans to other states because of delays in approvals. We have got lots of support from the Karnataka government here, which we really appreciate, on many issues, but looking at the construction progress, getting electricity, it took us 29 touch points and 19 months to get approvals for two of our office buildings.
"To tell you, it was not for land acquisitions, just for electricity connections. It took us seven months to get approval for simple logistics."
He added, "We have completed phase-I construction activities of the new plant at Bidadi, which also took a lot of time. We are still waiting for approval of electricity connections. These are the points which I cannot explain to my headquarters in Germany. It is not a question of whether we have to wait six months longer. But, it is a question of whether we can continue investments in Karnataka, or look to invest in other parts of India or Asia."
Loud complaints by multinationals against the state government have acquired a familiar ring of late. A few months ago, American eCommerce giant Amazon had announced it was putting on hold all future investment plans in Karnataka after a long-running dispute over payment of value added taxes (VAT) boiled over. There at least, the state commercial taxes department could argue about the merits of its contentions. But the grievances of Bosch are sure to touch a chord. The German marquee name has been one of the earliest multinationals to make in India, with its first plant coming up in Adugodi in the city in 1953.
Berns referred to that heritage in his speech. "As a multinational company, we are present in Karnataka for over 60 years and we are still facing issues. We have to think twice to continue to make further investments and we don't see enough improvement yet."
According to him, labour laws with unclear terminology, multiple contradictions, and complex problem resolution mechanisms are among the major hurdles to making more investments in India.
Contrary to popular beliefs that Bengaluru is just an IT city, the city is home to a several top manufacturing majors and garment industries. They also generate a huge income.
According to a top Cabinet minister in the Siddaramaiah government, the Chief Minister is disinterested in promoting industries. He spends all his time on his favourite populist schemes which are actually leading the state economic ruin. He adds that Siddaramaiah lacks basic etiquette and manners. He does not even know how to meet and greet world's industry leaders. Even during very important meetings with them, he dozes off offending the corporate leaders.
Talking to IBNLive on the condition of anonymity he said, "the chief minister has no development agenda. He has no vision, no plans, no seriousness. He treats investors badly. They don't even get appointments. Even if they get, they get no attention. If the same situation continues, no new industry will come to Karnataka. Even the existing one may leave one by one".
Karnataka is also facing a huge competition from two neighbouring states Andhra Pradesh and Telangana. Their governments are working overtime to woo investors from Karnataka. They keep visiting Bengaluru looking for a disappointed investor who is ready to move out.
"The Congress high command is also not bothered about the exodus of industries from Karnataka. Instead, it is backing Siddaramaiah's populist schemes," said another minister.
However the government claims that projects worth around Rs 97,000 crore have been approved during Siddaramaiah regime, generating 2.27 lakh employment.
Bangalore's booming real estate sector has taken a big hit due to no new investments.
Another minister in the government said, "if the same situation continues for the remaining three years of our government, if we don't take some drastic steps to change the perception and the atmosphere, Karnataka will be doomed. Siddaramaiah will take the state backwards by 20 years."
Future looks bleak and scary for a development oriented state like Karnataka.
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