Final Report

CHANGING PATTERNS OF INVESTMENT IN KARNATAKA
EXECUTIVE SUMMARY
Investment is the employment of funds with the aim of getting return on it. It is the
commitment of funds which have been saved from current consumption with the hope that
some benefits will accrue in future. Thus, it is a reward for waiting for money. So the first
step to investment is savings. In common usage, saving generally means putting money aside,
for example, by putting money in the bank or investing in a pension plan. In a broader sense,
saving is typically used to refer to economizing, cutting costs, or to rescuing someone or
something. In terms of personal finance, saving refers to preserving money for future use -
typically by putting it on deposit this is distinct from investment where there is an element
of risk. The main elements of Investments are Return, Risk and Time.
This research aims to study and understand the behavioral pattern of investment among the
salaried people working in private sector and the difference in perception of an individual
related to various investment alternatives. It also aims to provide an insight into factors
considered for an appropriate investment. Gives a wider scope to understand various issues
related to investment by salaried people.
Investment is one of the major issues of the middle class families as their small savings of
today are to meet the expenses of tomorrow. This study examines the investment pattern and
awareness of the Investors about different investment instruments such as bank deposits, real
estate, small savings, life insurance schemes, bullions, commercial deposits, corporate
security- bonds, mutual funds, and equity and preference shares. This research finds the
impact of age, education, occupation and income level of the individual on investment.
The researcher aims to study the awareness and preferences of investor for different
investment option available to them and to analyze the factors influencing their perception
and preferences. More especially, an attempt has been in this article to measure the level of
awareness of investor about several pre-identified investment products; to rank the
investment products in terms of awareness; to analyze the relation between awareness and
socio-economic factors relating to the investors; to study the preferences of investors for
different investment products; and finally to identify the factors influencing investor
awareness and preferences.
CMR UNIVERSITY Page 1

INTRODUCTION
For most of the investors throughout their life, they will be earning and spending money. Rarely,
investors current money income exactly balances with their consumption desires. Sometimes,
investors may have more money than they want to spend; at other times, they may want to purchase
more than they can afford. These imbalances will lead investors either to borrow or to save to
maximize the long-run benefits from their income. When current income exceeds current
consumption desires, people tend to save the excess. They can do any of several things with these
savings. One possibility is to put the money under a mattress or bury it in the backyard until some
future time when consumption desires exceed current income. When they retrieve their savings
from the mattress or backyard, they have the same amount they saved.
Another possibility is that they can give up the immediate possession of these savings for a future
larger amount of money that will be available for future consumption. This tradeoff of present
consumption for a higher level of future consumption is the reason for saving. What investor does
with the savings to make them increase over time is investment. In contrast, when current income is
less than current consumption desires, people borrow to make up the difference. Those who give up
immediate possession of savings (that is, defer consumption) expect to receive in the future a
greater amount than they gave up. Conversely, those who consume more than their current income
(that is, borrowed) must be willing to pay back in the future more than they borrowed.
The rate of exchange between future consumption (future rupee) and current consumption (current
rupee) is the pure rate of interest. Both peoples willingness to pay this difference for borrowed
funds and their desire to receive a surplus on their savings give rise to an interest rate referred to as
the pure time value of money. This interest rate is established in the capital market by a comparison
of the supply of excess income available (savings) to be invested and the demand for excess
consumption (borrowing) at a given time. An investment is the current commitment of rupee for a
period of time in order to derive future payments that will compensate the investor for (1) The time
the funds are committed, (2) The expected rate of inflation, and (3) The uncertainty of the future
payments. The Investor can be an individual, a government, a pension fund, or a corporation.
Similarly, this definition includes all types of investments, including investments by corporations in
plant and equipment and investments by individuals in stocks, bonds, commodities, or real estate.
This study emphasizes investments by individual investors. In all cases, the investor is trading a
known rupee amount today for some expected future stream of payments that will be greater than
the current outlay.

An individual who purchases small amounts of securities for themselves, as opposed to an

institutional investor, also called as Retail Investor or Small Investor. At this point, researcher has
answered the questions about why people invest and what they want from their investments. They
invest to earn a return from savings due to their deferred consumption. They want a rate of return
that compensates them for the time, the expected rate of inflation, and the uncertainty of the return.
In todays world everybody is running for money and it is considered as a root of happiness. For
secure life and for bright future people start investing. Every time investors are confused with
investment avenues and their risk return profile. So, even if Researcher focuses on past, present or
future, investment is such a topic that needs constant upgradation as economy changes. The research
study will be helpful for the investors to choose proper investment avenue and to create profitable
investment portfolio.
Investment is the employment of funds with the aim of getting return on it. In general terms,
investment means the use of money in the hope of making more money. In finance, investment
means the purchase of a financial product or other item of value with an expectation of favorable
future returns. Investment of hard earned money is a crucial activity of every human being.
Investment is the commitment of funds which have been saved from current consumption with the
hope that some benefits will be received in future. Thus, it is a reward for waiting for money.
Savings of the people are invested in assets depending on their risk and return demands. Investment
refers to the concept of deferred consumption, which involves purchasing an asset, giving a loan or
keeping funds in a bank account with the aim of generating future returns. Various investment
options are available, offering differing risk-reward tradeoffs. An understanding of the core concepts
and a thorough analysis of the options can help an investor create a portfolio that maximizes returns
while minimizing risk exposure.
There are two concepts of Investment:
1) Economic Investment: The concept of economic investment means addition to the

capital stock of the society. The capital stock of the society is the goods which are used in the
production of other goods. The term investment implies the formation of new and productive capital
in the form of new construction and producers durable instrument such as plant and machinery.
Inventories and human capital are also included in this concept. Thus, an investment, in economic
terms, means an increase in building, equipment, and inventory.

2) Financial Investment: This is an allocation of monetary resources to assets that are

expected to yield some gain or return over a given period of time. It means an exchange of financial
claims such as shares and bonds, real estate, etc. Financial investment involves contrasts written on
pieces of paper such as shares and debentures. People invest their funds in shares, debentures, fixed
deposits, national saving certificates, life insurance policies, provident fund etc. in their view
investment is a commitment of funds to derive future income in the form of interest, dividends, rent,
premiums, pension benefits and the appreciation of the value of their principal capital. In primitive
economies most investments are of the real variety whereas in a modern economy much investment
is of the financial variety. The economic and financial concepts of investment are related to each
other because investment is a part of the savings of individuals which flow into the capital market
either directly or through institutions. Thus, investment decisions and financial decisions interact
with each other. Financial decisions are primarily concerned with the sources of money where as
investment decisions are traditionally concerned with uses or budgeting of money.
(a) Investment: Karnatakas investor friendly and responsive administration which is

highly proactive in attracting private Investment from time to time has introduced many reforms and
initiatives to make Karnataka a competitive and attractive destination for global investments.
Important initiatives include: easing administrative procedures, creating world class infrastructure,
creating sector specific industrial zones and SEZs, announcing incentives and concessions, giving
special focus on skill development to enhance the availability of technical staff, accelerate excellent
telecommunication network, and implementing related policy measures for faster and smoother
industrial growth in the state. The concerted efforts by the State have resulted in a large-scale inflow
of investments during the past few years. A successful investors meet Invest Karnataka was held
between 3 and 5 February 2016.
The Government has attracted over Rs. 3 lakh crore investments, of which 1080 projects
with investments of Rs. 1.77 lakh corere have been approved. This has the potential to create
employment for 4.82 lakh persons. Further, 122 Memoranda of Understanding/Expressions of
Interest were signed across sectors with a potential of Rs. 1.27 lakh crore of investment an
employment creation for 1.7 lakh persons The State Level Single Window Clearance Committee
(SLSWCC) has approved 72 projects with the proposed investment of Rs.1996.33 crore which
intends to create employment for 24248 in 2014-15. Further in 2015-16 (up to February 2016), the
committee has approved 262 projects with the proposed investment of Rs.15246 crore which
intends to create employment for 115827 persons.

The State High Level Clearance Committee (SHLCC) has approved 36projects with the
proposed investment of Rs.52148.05 crore which intends to create employment for 31819 in 2014-
15. Further in 2015-16 (up to February 2016), the committee has approved 29 projects with the
proposed investment of Rs.90831 crore which intends to create employment for 172074.
(b) Foreign Direct Investment: Karnataka is one of the five hot destinations for FDI in
India. Hence Karnataka accounts for a significant share in the total FDI that flows into India.
Karnataka has attracted US $ 3444 million in 2014-15 which is 11.13% share in the total FDI inflow
into India. Further in 2015-16 (up to September 2015), Karnataka attracted US $ 2199 million
which is 13.22% of total FDI inflow into India. Karnataka attracted FDI of US$18319 million
during the period of April 2000 to September 2015, constituting 6.91% of FDI inflow into India.
(c) Information Technology: Karnataka is the pioneer of the IT Revolution in India.

Karnataka, today is home to over 3500 IT companies, contributing a sum of Rs. 2.20 lakh crore of
exports. The industry contributes to over 25% of the States GSDP. The share of Karnataka in IT
exports is nearly38% of the countrys exports. The IT Industry in the State has emerged as one of
the largest job providing sector. The Industry provides direct employment to over a million persons.
Bengaluru, is the 4th Best Technology Hub in the world, after Silicon Valley, Boston and London
(as per UNDP Report), has become a global brand in the IT space.
Almost all the Fortune 500 companies have one or the other of their operations
outsourced in Bengaluru. Bengaluru is Ranked 2nd in the Global Startup Ecosystem growth index
by Compass. Many global brands such as GE, Texas Instruments, Intel, AMD, SAP, CISCO,
Microsoft, Motorola, Nokia Mercedes Benz, Huawei etc., have their R & D activity based in
Bengaluru. Indian Institute of Information Technology (IIIT) is being established in Dharwad. The
new IIIT will be set up on PPP mode, with Government of India funding 50% of the project cost.
State Government has committed to provide 35% of the project cost besides land in Dharwad.
Balance of 15% of the project cost would come from industry partners. Government land of 61
acres has been identified in Dharwad for this project. Meanwhile, the Institute has started
functioning this year in a temporary campus in Hubballi IT Park. Karnataka is the first state to roll
out a Multisectoral Start-Up Policy 2015-2020 in the country aiming towards a globally competitive
start up eco system. The objective is to set-up 20,000 technology start ups by 2020. Bengaluru is
now also known as the Startup Capital of India and it is reported that nearly 30% of the startups are
from Bengaluru.

(d) Bio Technology: Karnataka is a leader in the Biotechnology sector as well,

contributing more than 30% of the Indian biotech revenues of $4 billion in 2014-15. Of this,
50 % comes from exports. There are over 300 Biotech Companies in the State. Karnataka has
put in place a strong policy framework to provide all requisite resources for enhancing this
industrys research and development capabilities. Biotechnology industry, the State has built
up considerable resources and talent pool that are well suited for the needs of the industry.
Karnataka was one of first Indian States to frame an industry-oriented biotechnology policy
in 2001. The Policy was revised in 2009. Version 3.0 of the policy is now being worked up
for release to integrate adoption of new technologies as well as innovation to meet challenges
that continue to persist in the society. Bengaluru Bio Innovation Center has been launched in
February 2015 in Bengaluru Helix Park, Electronics City. The Center will house over 20
SMEs with access to high tech instrumentation facility to provide impetus for innovation.
Karnataka is highest in R&D expenditure in South India.
Investment in Karnataka
Karnataka is a pioneer in introducing many reform initiatives adopted in India and has
been highly proactive in attracting private investment. Lucrative policies incentivizing private
domestic and foreign investments are framed from time to time. These policies along with an
investment friendly climate in the State have helped the State attract largescale private
investment, especially in information and communication technology (ICT) and
biotechnology sectors. Karnataka Udyog Mitra, established under the Department of
Industries and Commerce, by the Government of Karnataka, is specially meant for the
promotion and facilitation of investments in the State.
Policy Framework for Attracting Private Investments

Foreign investment is a subject in the Central List of the Indian Constitution. All
powers for the design of policies for promotion and regulation (including approvals) of
foreign investment rest with the Government of India. State Governments complement the
National policy efforts by initiating special measures for speedy clearances and smooth
facilitation of inflow of investments. The National policy framework is aimed at maximising
the inflow of private foreign investment into India. However, investors have the ultimate
locational choice of their investment anywhere in India.

In this context, policies and programs of Government of Karnataka for attracting

private foreign investment by making Karnataka a competitive and attractive destination for
global investments assume special and utmost significance.
Karnataka is one of the industrially developed States in the Country. The State has
been laying special emphasis on promotion of industries, trade and service sectors. In order to
make the State more attractive and investor friendly, investment promotion policies and
programs framed on a periodical basis have offered attractive incentives and concessions and
made attempts to strengthen the required infrastructure. The industrial promotion policies
also aim at achieving inclusive development, given the wide regional industrial development
disparities prevailing in the State. The State has been making concerted efforts to announce
suitable incentives in attracting investment into the backward regions. The current industrial
policy 2014-19 of the Government of Karnataka is a reflection of these broad objectives for
promotion of industrial investment and development in the State.
The fiscal and financial incentives, announced by the State government include
capital investment subsidy, exemption of electricity duty on captive power generation,
exemption of stamp duty & reduction of registration charges, waiver of conversion fee (on
lands converted for industrial use), acquisition and allotment of land through Karnataka
Industrial Areas Development Board (KIADB), subsidy for setting up of Effluent Treatment
Plants (ETPs), entry tax & special entry tax concessions, technology up gradation and,
industrial infrastructure development/common infrastructure/ facilities in notified industrial
clusters. Agricultural produce processing industries are exempted from payment of APMC
cess. Incentives such as interest free loan on VAT for large and mega projects, anchor unit
subsidy, special incentives for enterprises coming up in low human development index (HDI)
districts (only for large and mega projects), interest subsidy for micro manufacturing
enterprises, exemption from electricity duty for micro and small manufacturing enterprises
and refund of cost incurred for preparation project reports for micro and small manufacturing
enterprises are also provided.
Karnataka Udyog Mitra (KUM) is a single contact point for all investors who are
looking at setting up enterprises/business in Karnataka. As the nodal agency, its role is to
facilitate investments and execute initiatives to enable a smooth transition from the stage of
receiving investment proposals to the eventual implementation of the project. It acts as a
secretariat for State High Level Clearance Committee (SHLCC) chaired by Honble Chief
Minister for projects above Rs.500 crore and State Level Single Window Clearance

Committee (SLSWCC) chaired by Honble Minister for Large and Medium Industries and
Tourism, for projects between Rs.15 crore to Rs.500 crore.
Karnatakas Investment Climate

Karnatakas vast and diversified resource base has emerged as a reputed investment
destination for investors worldwide. The State was the first to enact the Industrial Facilitation
Act to help investors. Karnataka has a single window which acts as a onestop- shop for
investments in the State. The specific advantages for Karnataka include
i) Good law and order situation prevailing in Karnataka which is conductive to
foreign direct investments
ii) Abundant availability of highly skilled manpower
iii) Karnataka ranks among the top 5 industrially developed States in India
iv) The State provides excellent logistic support and connectivity to the investors and
v) The State provides one of the biggest and fast expanding markets in the
Country.
Karnatakas investor-friendly and responsive administration has worked towards easing

administrative procedures and implementing policy measures for faster and smoother
industrial growth. Some of the significant measures are as follows:
(a) An investor-friendly responsive Administration
(b) The State-level single window clearance committee and the State high level
clearance committee facilitate clearance of proposals in a speedy manner.
(c) Sector-specific industrial zones and SEZs that match the natural resources and
capabilities of a region with the industry requirements.
(d) Creation of World-class, ready-to-use infrastructure through investments in power,
roads, water, warehouse and logistic facilities, connectivity through
rails and ports etc.
(e) The State Governments packages of incentives and concessions for new industrial
investments announced from time to time
(f) Special focus on skill development to enhance generation of technical manpower
(g) Excellent telecommunication network and optical fibre connectivity throughout
the State
(h) Exemption from State taxes for all purchases from domestic tariff area
Karnatakas Electronics Systems Design and Manufacturing Policy 2013:

Electronic Systems Design and Manufacturing (ESDM) is the fastest growing

segment of the Information and Communications Technology (ICT) sector. As per the
National Electronics Policy 2012 (NEP-2012), ESDM is expected to grow to USD $400
Billion by the year 2020 and will generate a total employment of over 28 million. The
objective of the Karnataka ESDM Policy is to facilitate, promote and develop the ESDM
sector in the State of Karnataka and make Karnataka preferred destination for investment in
Telecommunications, Defense, Medical, Industrial, Automotive, Consumer Products,
applications and components, parts, and accessories required for the aforesaid products and
applications. apart from Bengaluru to help the development of IT industry. The setting up of
IT industries under this policy is with an objective of earning valuable foreign exchange
through software exports. The Government has brought out new IT Policy i.e., Karnataka I4
Policy (IT, ITeS, Innovation Incentives Policy) where in several incentives are being offered
to new IT / ITES and other knowledge based sectors to set up their facility in Tier 2/3 Cities
across Karnataka. The Dept. of IT, BT and S&T acts as Single Window Agency for clearance
of IT / ITES /Start-ups / other Knowledge based industries.
Apart from Bengaluru to help the development of IT industry. The setting up of IT
industries under this policy is with an objective of earning valuable foreign exchange through
software exports. The Government has brought out new IT Policy i.e., Karnataka I4 Policy
(IT, ITeS, Innovation Incentives Policy) where in several incentives are being offered to new
IT / ITES and other knowledge based sectors to set up their facility in Tier 2/3 Cities across
Karnataka. The Dept. of IT, BT and S&T acts as Single Window Agency for clearance of IT /
ITES /Start-ups / other Knowledge based industries.
Department of Electronics and IT, Government of India has approved setting up of
Brownfield ESDM Clusters-one in Electronics City, Bangalore and another in Mysore. The
ESDM Clusters will be set up on PPP mode, stake holders being Government of India, State
Government and Industry bodies.
Penetration of ITBT into regions other than Bengaluru:

The thrust of the ICT Policy and ESDM Policy is on development of IT and ESDM
Companies in the Tier 2 / 3 Cities of Hubballi Dharwad, Mysuru, Mangaluru, Kalaburgi
and Belagavi. While IT Parks have been developed in Hubballi-Dharwad, Shivamogga and
Kalaburgi, the Department would conduct feasibility study for IT Parks in Mysuru,
Mangaluru, Belagavi and Bagalkote. Skill Development programs have been started in Tier
2 and Tier3 cities, especially for the Karnataka ESDM companies. The Department of IT,

BT and S & T, Government of Karnataka has approved two ESDM common facility centers
in collaboration with the Department of Electronics & Information Technology, Government
of India. One greenfield ESDM cluster is proposed to be setup in Vasanthanarasapura,
Tumkur dist.
The State Government pursued and obtained approval of G.O.I. for establishment of
Indian Institute of Information Technology (IIIT) in Dharwad. The new IIIT will be set up on
PPP mode, with Government of India funding 50% of the project cost. State Government has
committed to provide 35% of the project cost and 50-100 acres of land in Dharwad, free of
cost. Balance of 15% of the project cost would come from Industry Partners. Government
land of 61 acres has been identified in Dharwad for this project and work will start soon after
the land is handed over to the Revenue Department. Meanwhile, the Institute has started
functioning in a temporary campus in Hubballi IT Park and begun the academic session from
the year 2015-2016.
Karnataka Start up policy 2015-2020.

1. Karnataka is the first state to roll out multi sector start up policy in the country aiming
towards a globally competitive start up eco system.
2. The objective is to set-up 20,000 techonology Start-ups by 2020.
3. Department of IT, BT and S & T, in partnership with NASSCOM set up the first start up
warehouse in the country, in10,000 sq.ft. of space.
4. New Age Incubation Network (NAIN) academic institution will be assisted to establish an
incubation facility and for funding of entrepreneurship Projects in colleges.
5. Start up Cell will facilitate handholding of new ventures started by young people.
6. Release of funds for early stage startup ventures
Government of Karnataka in partnership with NASSCOM has set up the first start up
warehouse at Diamond District, Old Airport Road, Bengaluru. This is one of the
recommendations of the KIG 2020 Report. The first startup warehouse has been running
successfully and it has incubated 64 Start-ups. All the start ups incubated in the warehouse
are reported to be in Bengaluru only and are expected to grow their operations locally.
Bengaluru is now also known as the Startup Capital of India and it is reported that nearly
30% of the startups are from Bengaluru. Encouraged by the success of the first warehouse,
Government of Karnataka has set-up a second start up ware house in the city in 36,000 sq.ft.
which is expected to accommodate around 500 work stations along with other infrastructure.

ICT Skills Development Society

As per the i4 Policy of the Government ICT Skills Development Society (ICTSDS)
has been registered in March 2014 with the mandate to take up Skill Development activities
in consultation with the Industry for training un-employed and underemployed youth in basic
ICT domains of subsectors like BPO, Telecom, ESDM, Manufacturing , Services, Health,
Automation etc. The ICT Skills Development Society has been selected to roll out a skilling
program in ESDM Sector by the Department of Electronics and Information Technology,
Government of India. Karnataka has been selected as one among six states in the country to
implement this Govt. of India Scheme which is to the tune of Rs. 14.3 Crore per state and a
provision to provide skilling in ESDM sector to 15,000 youth per state.
Investment in Biotechnology
Karnataka State is a leader in Biotechnology sector also. Karnataka contributed more
than 30% of the Indian biotech revenues of $4 billion in 2014-15. Of this, 50 % comes from
exports. There are over 300 Biotech Companies in the State.
Karnataka has put in place a strong policy framework to provide all requisite
resources for enhancing this industrys research and development capabilities. Being the
pioneer of the biotechnology industry, the State has built up considerable resources and talent
pool that are well suited for the needs of the industry. Karnataka was one of first Indian States
to frame an industry-oriented biotechnology policy.
The millennium biotech policy was formulated by Karnataka Government in 2001 to
give a thrust to the biotechnology industry in the State. Keeping in tune with rapid changes in
the industry, the policy was revised in 2009 which is being further revised to release version
3.0 of the policy to integrate adoption of new technologies as well as innovation to meet
challenges that continue to persist in the society. Karnataka is highest in R&D expenditure in
South India. To give Biotechnology a further boost, an annual event, namely, Bangalore India
Bio is organized every year.

RELEVANT STUDIES
OBJECTIVES
To study the behavioral pattern of investments among salaried people working in
private sector.
To study the difference in perception of an individual related to various investment
alternatives.
To provide an insight into factors considered for an appropriate investment.
HYPOTHESIS
There are no differences in the consumption and saving pattern of the sample test.
LIMITATIONS
The study shall be limited to salaried people who are employed in private sector.
The study is limited to Bangalore city only.
METHODOLOGY
It is an exploratory research.
Primary and secondary data will be collected.
Purposive sampling will be used to collect primary data.
Sample size shall be total 50 salaried employees.
SAMPLE
The study sample comprised of 50 salaried people in private sector. Using stratified random
sampling method the salaried people were classified into two categories on the criterion of
sex. 25 were male and 25 were female. Both the respondents male as well as female were
salaried employees employed in various Companies in manufacturing, trading and service
providing sectors.
TOOLS
A questionnaire was framed consisting of 20 closed end questions and open end questions
covering the personal and demographic profile, the awareness related to methods, modes,
reasons of saving and investment and other related data were collected.

DATA
Using the survey method primary data was obtained from the respondents by
administering the questionnaire and evaluating the feedback. Personal interviews was
also conducted with few respondents who provided valuable information inputs.
Secondary data included information collected from various Internet download,
Books, publications and various journals.
SAVING
Saving differs from savings in that the first refers to the act of putting aside money for future
use, whereas the second refers to the money itself once saved. For example: you may decide
to start saving 10% of your income; because you aim for your savings to grow into an amount
sufficient to buy an automobile. In common usage, saving generally means putting money
aside, for example, by putting money in the bank or investing in a pension plan. In a broader
sense, saving is typically used to refer to economizing, cutting costs, or to rescuing someone
or something. In terms of personal finance, saving refers to preserving money for future use -
typically by putting it on deposit - this is distinct from investment where there is an element
of risk. Saving is closely related to investment. By not using income to buy consumer goods
and services, it is possible for resources to instead be invested by being used to produce fixed
capital, such as factories and machinery. Saving can therefore be vital to increase the amount
of fixed capital available, which contributes to economic growth.
SAVING IN PERSONAL FINANCE

Within personal finance, the act of saving corresponds to nominal preservation of money for
future use. A deposit account paying interest is typically used to hold money for future needs,
i.e. an emergency fund, to make a capital purchase (car, house, vacation, etc.) or to give to
someone else (children, tax bill etc.).
Within personal finance, money used to purchase shares, put in a collective investment
scheme or used to buy any asset where there is an element of capital risk is deemed an
investment. This distinction is important as the investment risk can cause a capital loss when
an investment is realized, unlike cash saving(s). Cash savings accounts are considered to have
minimal risk. In the United States, all banks are required to have deposit insurance, typically

issued by the Federal Deposit Insurance Corporation or FDIC. In extreme cases, a bank
failure can cause deposits to be lost as it happened at the start of the Great Depression.
However, since the FDIC was created, no deposits in the United States have been lost due to
a bank failure. In many instances the terms saving and investment are used interchangeably.
For example many deposit accounts are labeled as investment accounts by banks for
marketing purposes. To help establish whether an asset is saving(s) or an investment you
should ask yourself, "Where is my money invested?" If the answer is cash then it is savings,
if it is a type of asset which can fluctuate in nominal value then it is investment.
ELEMENTS OF INVESTMENTS
A. RETURN: Investors buy or sell financial instruments in order to earn return on them. The
return includes both current income (current yield) and capital gain (capital appreciation).
B. RISK: Risk is the chance of loss due to variability of returns on an investment. In case of
every investment, there is a chance of loss. It may be loss of investment; however risks and
returns are inseparable.
C. TIME: Time is an important factor in investment. Time period depends on the attitude of
investors who follow a buy & hold policy. A serious minded investor will have to
consider the following important categories of investment opportunities:-
Protective investments.
Tax oriented investment.
Fixed income investment.
Speculative investment.
Emotional investment.
Growth investment.
INVESTOR PROFILE
An investor profile or style defines an individual's preferences in investment decisions, for
example:
Short term trading (active management) or long term holding (buy and hold)
Risk averse or risk tolerant / seeker
All classes of assets or just one (stocks for example)

Value stock, growth stocks, quality stocks, defensive or cyclical stocks...

Big cap or small cap stocks,
Use or not of derivatives
Home turf or international diversification
Hands on, or via investment funds
Investment in Karnataka
Karnataka is a pioneer in introducing many reform initiatives adopted in India and has been
highly proactive in attracting private investment. Lucrative policies incentivizing private
domestic and foreign investments are framed from time to time. These policies along with an
investment friendly climate in the State have helped the State attract large-scale private
investment, especially in information and communication technology (ICT) and
biotechnology sectors. The State held global investor meet twice during the last four years i.e.
in June 2010 and in June 2012. These events aimed at attracting National and Global
investments by highlighting the investment opportunities in 12 key sectors namely, minerals,
tourism, information, biotechnology, power, health, education, food processing and textiles.
Karnataka Udyog Mitra established under the Department of Industries and Commerce, by
the Government of Karnataka, is specially meant for the promotion and facilitation of
investments in the State.
Policy Framework for Attracting Private Investments
Foreign investment is a subject in the Central List of the Indian Constitution. All powers for
the design of policies for promotion and regulation (including approvals) of foreign
investment rest with the Government of India. State Governments complement the National
policy efforts by initiating special measures for speedy clearances and smooth facilitation of
inflow of investments. The National policy framework is aimed at maximising the inflow of
private foreign investment into India. However, investors have the ultimate locational choice
of their investment anywhere in India. In this context, policies and programmes of
Government of Karnataka for attracting private foreign investment by making Karnataka a
competitive and attractive destination for global investments assume special and utmost
significance.
Karnataka is one of the industrially developed States in the Country. The State has been
laying special emphasis on promotion of industries, trade and service sectors. In order to

make the State more attractive and investor friendly, investment promotion policies and
programmes framed on a periodical basis have offered attractive incentives and concessions
and made attempts to strengthen the required infrastructure.
The industrial promotion policies also aim at achieving inclusive development, given the
wide regional industrial development disparities prevailing in the State.
The State has been making concerted efforts to announce suitable incentives in attracting
investment into the backward regions. The current industrial policy 2009-14 of the
Government of Karnataka is a reflection of these broad objectives for promotion of industrial
investment and development in the State.
The fiscal and financial incentives, announced by the State government include capital
investment subsidy, exemption of electricity duty on captive power generation, exemption of
stamp duty & reduction of registration charges, waiver of conversion fee (on lands converted
for industrial use), acquisition and allotment of land through Karnataka Industrial Areas
Development Board (KIADB), subsidy for setting up of Effluent Treatment Plants (ETPs),
entry tax & special entry tax concessions, technology up gradation and, industrial
infrastructure development/common infrastructure/facilities in notified industrial clusters.
Agricultural produce processing industries are exempted from payment of APMC cess.
Incentives such as interest free loan on VAT for large and mega projects, anchor unit subsidy,
special incentives for enterprises coming up in low human development index (HDI) districts
(only for large and mega projects), interest subsidy for micromanufacturing enterprises,
exemption from electricity duty for micro and small manufacturing enterprises and refund of
cost incurred for preparation project reports for micro and small manufacturing enterprises
are also provided.
Karnataka Udyog Mitra (KUM) is a single contact point for all investors who are looking at
setting up enterprises/business in Karnataka. As the nodal agency, its role is to facilitate
investments and execute initiatives to enable a smooth transition from the stage of receiving
investment proposals to the eventual implementation of the project. It acts as a secretariat for
State High Level Clearance Committee (SHLCC) for projects above Rs.50.00 crores and
State Level Single Window Clearance Committee (SLSWCC) for projects between Rs.3.00
crore to Rs.50.00 crore.

Karnataka's Investment Climate
Karnataka' vast and diversified resource base has emerged as a reputed investment destination
for investors worldwide. The World Bank's 'investment climate' survey across 16 states in
India has assessed the conduciveness of the Indian States to private investment by using a
number of indicators. The survey's results place Karnataka in the top rank in terms of the
conducive investment climate. The State was the first to enact the Industrial Facilitation Act
to help investors Karnataka has a single window which acts as a one-stop-shop for
investments in the State. The specific advantages for Karnataka include i) Good law and
order situation prevailing in Karnataka which is conductive to foreign direct investments ii)
Abundant availability of highly skilled manpower iii) Karnataka ranks among the top 5
industrially developed States in India iv) The State provides excellent logistic support and
connectivity to the investors and v) The State provides one of the biggest and fast expanding
markets in the Country.
Karnataka's investor-friendly and responsive administration has worked towards easing

administrative procedures and implementing policy measures for faster and smoother
industrial growth. Some of the significant measures are as follows:
(a) An investor-friendly responsive administration

(b) The State-level single window clearance committee and the State high level clearance
committee facilitate clearance of proposals in a speedy manner.
(c) Sector-specific industrial zones and SEZs that match the natural resources and
capabilities of a region with the industry requirements.
(d) Creation of World-class, ready-to-use infrastructure through investments in power,
roads, water, warehouse and logistic facilities, connectivity through rails and ports etc.
(e) The State Government's packages of incentives and concession for new industrial
investments announced from time to time
(f) Special focus on skill development to enhance generation of technical manpower
(g) Excellent telecommunication network and optical fibre connectivity throughout the
State
(h) Exemption from State taxes for all purchases from domestic tariff area.

Investment flows into Karnataka
Details of projects approved by the State Level Single Window Clearance Committee
(SLSWCC) are provided in Table 4.1. The State had attracted maximum investment during
the year 2006-07 with an investment of Rs 11511.44 crore. In terms of approved number of
units and employment too, 2006-07 had the largest during the time period under study. Good
flow of investment continued in 2007- 08.The global recessionary trends have not spared
Karnataka as one can observe a reduced size of investment, however, one can observe that the
number of approved projects and investment have been much higher than any of the years
between 2000-01 and 2004-05. For the current year, up to September 2013, the SLSWCC has
approved 158 projects with an investment of Rs.2485.44 crore with employment generation
potential of 0.33 lakh.
Projects approved by State Level Single Window Clearance Committee
During the time period 2000-01 to 2013-14 (till December) the State Level Single Window
Clearance Committee has approved 5123 projects with an investment of Rs 82743.50 crore.
Projects with an investment of Rs.50 crore and above are cleared by the State High Level
Clearance Committee (SHLCC). The number of projects cleared by SHLCC during 2000-01

till 2013-14 is 934 with a whopping investment of Rs.1156770.96 crore creating employment
of 6429302 people (Table 4.2). Performance has been remarkable since 2005-06. Karnataka
accounts for a significant share in the total FDI that flows into India. The statistics provided
in Table 4.3 reveal that the State had 7.41% share in the total FDI taking place in India in
2008-09, the highest for the time period reported in the table up to last year. During the
current year, the State's share in total FDI taking place in India is likely to be highest year at
8.72%. Karnataka attracted FDI of US $11523 million during the period of April 2000 to
August 2013, constituting 5.71%of the all-India FDI. During th the 11 Five Year Plan period,
the State attracted 5.70% of FDI in the country.
Foreign Direct Investment Inflow to Karnataka (US $ Million)
Investment in Information Technology
The information technology (IT) sector in Karnataka has become one of the main growth
drivers of Karnataka's economy. IT activity in Karnataka is largely concentrated in
Bangalore. Lately, other parts of Karnataka have also seen a growth in IT-related activities.
Bangalore was the first city in India to set up a satellite earth station for high speed
communication services to facilitate software exports in 1992. The State made a giant leap in
the ITsector by establishing the Country's first extended facility of the International gateway
and network operations centre at the Software Technology Park of India (STPI) in the
Electronic city. Karnataka is home to over 3500 IT companies, contributing to over 26 billion

US dollars (Rs.1.60 lakh Crore) of exports, giving direct employment to over 9 lakh
professionals and creating over 27 lakhs indirect jobs.
The industry contributes to over 25% of the State's GDP. The industry will continue to grow
over 15% annually and expected to cross 20% by end of 2014.
Information Technology Policy in Karnataka
The State Government has been encouraging IT units to set up their operations in the State.
Under the State's IT policy, several infrastructure facilities are proposed in Mysore, Hubli,
Manipal & Mangalore apart from Bangalore to help the development of IT industry. The
setting up of IT industries under this policy is with an objective of earning valuable foreign
exchange through software exports.
Karnataka's Information, Communication and Technology (ICT) Policy 2011

Karnataka
Government has announced two new policies-the Information and Communications

Technology Policy and the Karnataka Electronics Systems Design and Manufacturing
(ESDM) Policy aimed at further growth of the Industry. The aim of the ICTpolicy is to
position Bangalore as the ITR&D and product hub, to maintain Karnataka's leadership in
outsourced IT services and to enable it to be the most preferred destination for MSME.Salient
Features of Karnataka's Information and Communication and Technology (ICT) Policy
2011are

Karnataka's Electronics Systems Design and Manufacturing Policy 2013-
The following targets are set for Karnataka ESDM Policy

Karnataka's I 4 Policy IT, ITES, Innovation Policy - Karnataka's new IT policy looks
beyond Bangalore
In a bid to decongest India's grid-locked tech hub, Karnataka's new IT policy, focuses on
attracting investments in the knowledge sector in cities & towns across the state & not only
the state capital. The objective is to attract prospective investors & entrepreneurs to look
beyond Bangalore & replicate its IT success in cities & towns across the state to ensure
Karnataka retains its numero uno status. The new policy, offers incentives and exemptions to
facilitate existing & new firms to set up software or hardware development centres in tier-2 &
tier-3 cities in the state, with a potential to create a million jobs over the next seven years.
Besides a single-window agency for expeditious approvals, the policy provides stamp duty
exemption, concession in power tariff & extends exemption from the state labour laws under
the Industrial Employment Act for another five years.
The extension will enable hundreds of IT and back office services firms in the state from
complying with outdated labour laws that were made essentially for the manufacturing sector.
As the country's preferred IT destination, the policy aims to achieve a whopping Rs.4 lakh
crore (Rs.4 trillion) software exports from the state by 2020 from Rs.1.65 trillion (Rs.1.65
lakh crore) in 2012-13, accounting for over 40% of the country's total exports. The stamp
duty exemption will be 100% for investments & concession on power tariff will be Rs.2 per
unit for units that will be set up in tier-two and tier-three cities such as Belgaum, Gulbarga,
Hubli, Mangalore and Mysore. The single-window agency is headed by the IT minister &
will meet every month to monitor the status of the clearances and address grievances of
investors for speedy implementation of their projects. Projects up to Rs.100 crore will be
cleared by the agency while the state high-level committee, headed by the Hon'ble Chief
Minister will evaluate investments above Rs.100 crore for approval.

Investment in Biotechnology
Karnataka has played a key role in India's emergence as a significant player in the global
biotechnology industry. Karnataka is home for 60% of the country's biotech units. There are
365 biotech units in the country and in Karnataka their number has increased to 206 in 2012-
13 with total revenue of Rs.3600 crore, registering a 10 fold increase from 2001. This number
continues to grow with most of the wellknown companies choosing Karnataka for their
operations. Karnataka has put in place a strong policy framework to provide all requisite
resources for enhancing this industry's research and development capabilities. Being the
pioneer of the biotechnology industry, the State has built up considerable resources and talent
pool that are well suited for the needs of the industry. Karnataka was one of first Indian States
to frame an industry-oriented biotechnology policy. The millennium biotech policy was
formulated by Karnataka Government in 2001 to give a thrust to the biotechnology industry
in the State. Keeping in tune with rapid changes in the industry, the policy was revised in
2009.
Expected investments
Global Investors Meets

Global Investors Meet 2010 - The State Government organized the Global Investors
Meet on 3 & 4 June 2010. During the Global Investors Meet, 2010, the State
Government entered into MOU with 389 companies with an investment of Rs.3.92
lakh crore which would create employment opportunities to more than 7 lakh people.
61 projects with an investment of Rs.32178 crore are already implemented & 216
projects with an investment of Rs.2.36 lakh crore are under various stages of
implementation.
Global Investors Meet 2012 The State Government had organized Global Investors
Meet in the month of June 2012. The event was held at Bangalore International
Exhibition Centre, Tumkur Road, Bangalore. The event witnessed the participation of
10,000 delegates. It attracted an investment of Rs.6.78 lakh crore from 751 companies
who have signed Memorandum of Understanding/Expression of Interest/Registration
of Interest with Government. Further, as a part of Global Investors Meet, MOUs in
MSME and other sectors involving investment of Rs.42364 crore have been entered
into. This event provided investors an excellent opportunity to explore the potential of
the State & network with global investors. Several sectoral sessions were held and

eminent speakers participated. An exhibition was also held as a part of the event.As a
result of constant follow up and review, 38 projects were implemented with an
investment of Rs.9561 crore. 245 projects are in the various stages of implementation
which will generate an employment to more than 5 lakh people in next 3-4 years.
Agriculture Global Investment Meet 2011-The State Government has organized the
Global Agri business Investors' Meet during December 2011; the event, held at the
Bangalore International st nd Exhibition Centre on 1 and 2 December 2011, was the
first exclusive Global Investors Meet for Agriculture sector in the entire country. The
Meet was participated by1900 delegates, including farmers; 300 organisations from
across 20 Indian States. Delegates from Netherlands, Australia, Israel and France also
took part. The Meet resulted in the signing of 66 MOUs covering an investment of
Rs.60969 crore. Sofar 28 Projects covering an investment of Rs.10774 crore have
been approved by Karnataka Udyog Mitra, the Single Window Agency in the State
and these projects are at various stages of implementation. In addition, during the
Global Investors Meet 2012, 62 MOUs related to Agriculture sector have been signed
involving an investment of Rs.15017 crore. Implementation of these projects is also
being coordinated by Karnataka State Agricultural Produce Processing & Export
Corporation Limited (KAPPEC) by regular interaction with investors and concerned
departments in order to ensure their timely implementation.
TRADE STATISTICS
DATA ANALYSIS
The survey conducted to investigate The Investment perspective of the salaried
people in the Private Sector which discloses the reasons, methods, types and modes
of investment followed by these people.
The sample size of 50 respondents was surveyed out of which 25 were male and 25
were female. The graph below depicts the same.
I PERSONAL PROFILE
1) SAMPLE SIZE

It is evident from the chart that the number of male and female respondents were equal in
number.
2) MARITAL STATUS

It is evident from the chart above that most of the respondents, male as well as female are all
married.
3) AGE GROUP
It is evident from the chart above that majority of the respondents fall in the age group of 41
to 50 years and minimum in below 30.
4) EDUCATION

It is observed that maximum of the respondents are graduates, followed by post graduate and
professionals whereas the minimum are undergraduates.
5) DESIGNATION

It is observed that the majority of the respondents both male and female are employed as
Executive whereas minimum are on the post of Director.
6) FILING OF INCOME TAX RETURN
It is observed that the majority of the male respondents file their Income Tax Returns while
majority of female respondents do not file their Income Tax Returns.
7) ANNUAL INCOME

It is observed that majority of the Male respondents have annual Income in range of 2-5 Lac
while majority of Female respondents have annual income in range of 1-2 Lac.
8) ANNUAL SAVINGS
It is observed that majority of the Male respondents have annual Savings in range of 1-2 Lac

while majority of Female respondents have annual savings below 1 Lac.
9) ANNUAL INVESTMENT
(CONSIDERING THE TOTAL OF ALL THE AVENUES)
It is observed that majority of the Male respondents have annual Investment in range of 1-2
Lac while majority of Female respondents have annual Investment below 1 Lac.
10) AVENUES OF INVESTMENT

It is observed that majority of Investment of Male respondents is in the Stock market

followed by Mutual Fund , Real Estate and Govenrment Securities while the minimum is in
Gold. Whereas the majority of Investment of Female respondents is in the Government
Securities followed by Gold, Mutual Fund and Stock Market while the minimum is in Real
Estate the as the first.
11) RETURN ON INVESTMENT

It is observed that the majority of Male respondents invest in those Avenues of Investment
where the Return on Investment is more than the Prevailing Market Return. Whereas the
majority of Female respondents invest in those Avenues of Investment where the Return on
Investment is Less than or Equal to the Prevailing Market Return.
12) PROPORTION OF SAVINGS TO INCOME

It is observed that majority of the Male respondents have proportion of investment to income
in range of 10-20% while majority of Female respondents have proportion of investment to
income in range of Below 10%.
13) PROPORTION OF INVESTMENT TO INCOME
It is observed that majority of the Male respondents have proportion of investment to income
in range of 10-20% while majority of Female respondents have proportion of investment to
income in range of Below 10%.

14) PROPORTION OF INVESTMENT TO SAVINGS
It is observed that majority of the Male respondents have proportion of investment to savings
in range of 50- 60 % while majority of Female respondents have proportion of investment to
savings in the range of 40-50% .
15) REASON FOR INVESTMENT

It is observed that the majority of Male respondents invest for getting higher returns on their
funds/savings where as majority of female respondents invest for safety of their
funds/savings.
16) PREFERENCE OF INVESTMENT
It is observed that the male respondents prefer Higher Returns with High Risk while the
female respondents prefer Lower Returns with Lower Risk.

17) SATISFACTION FROM INVESTMENT
It is observed that the Male respondents are satisfied with their savings and investments while
the female respondents are not clear on the matter.

KEY CONCENTRATION AREAS

Micro, Small & Medium Enterprises
Micro, Small & Medium Enterprises (MSMEs) form an important and growing segment of
Karnataka's industrial sector. As per the MSME Act 2006, MSME units have been
categorized broadly into those engaged in manufacturing and those providing /rendering
services. Under the Act, Micro, Small and Medium Enterprises (MSMEs) are classified as
under.
Micro, Small and Medium Enterprises occupies a place of prominence in the Karnataka
economy in view of its massive potential for employment, growth and exports.
MSME sector is a vibrant and vital sector of the State economy in terms of employment
generation and share of production. There are nearly 4.81 lakh registered MSMEs in
Karnataka as on 31.03.2014 providing employment to over 28 lakh persons with a total
investment of around ` 18,635 crore
In the current year 2014-15, 28743, MSME units have been registered in the State with an
investment of Rs.279292.24 lakhs by providing employment to 175473 persons. When
compared to the same period of previous year 2013-14 there is 10.69% increase in No. of
Units registered, and 4.86% increase in the no. of persons employed.
Under this, 26005 Micro units, 2661 Small and 77 Medium industries have been registered
with an investment of Rs.87609 lakhs, Rs.138515.60 lakhs and Rs.53167.64 lakhs
respectively by providing employment to121599, 47311 and 6563 persons respectively.
During 2013-14, 25966 MSME Units have been registered in the State with an investment of
Rs. 285056 lakh by providing employment to 167347 persons. Details of the MSMEs
registered in Karnataka are provided in below Table

As compared to 2012-13, there is a 7.27% increase in the number of units registered, 31.45 %
increase in investment and 7.58 % increase in number of persons employed during 2013-14.
During the first Nine months of the current year (April to Dec.2014), 19721 units have been
registered with an investment of Rs. 191905 lakh by providing employment to 122286
persons.
When compared to previous year for the same period (April to Dec.2013), there is an increase
of 12.30 % in the number of units registered under MSME with 4.50% increase in investment
and 6.69 % increase in the employment generated.. The number of units registered every year
in Karnataka has been increasing since 2007-08.
Trends in Industrial Production Trends in industrial production can be analyzed by

considering the changes in the index of industrial production (IIP). Towards calculating the
index, the weights of different sectors and sub-sectors are assigned based on their
contribution to Gross Value Added (GVA) of industry in the base year. The manufacturing
sector has the highest weight of about 81.1% followed by electricity sector (11.8%) and the
mining sector (6.9%).
The general index of industrial production (IIP) of Karnataka covering mining,

manufacturing and electricity sectors for 2013-14 stood at 175.59. The sector wise indices for
the period from 2011-12 to 2013-14 with base year as 2004-05 are presented in below
mentioned table.
The overall organized industrial sector of Karnataka has registered 3.66% growth in 2013-14
as compared to 2012-13. Within the organized industrial sector, Electricity sector has boosted
up with highest growth of 11.49% followed by the manufacturing sector (2.92%) and mining
sector registered negative growth of (-20.48%).Contraction in mining activities and
deceleration in manufacturing output moderate growth was observed in industrial sector.

The average annual growth rates for the overall organized industry mainly for mining,
manufacturing and electricity sectors for the period from 2005-06 to 2013-14with base year
as 2004-05 are presented in the table given below.
The compounded average growth rate (CAGR) for this period for the entire organized
industry was about 6.5% whereas it was 7.0% for manufacturing and 8.1% for electricity. A
decline of 12.9% was seen in the output of the State's mining sector. Index of Industrial
Production of Karnataka: 2011-12 to 2013-14 is given in the below table.
Food Parks
Food Parks with the Ministry of Food Processing Industries, Govt of India, under the 10th
five year plan, the Ministry of Food Processing Industries, Govt. of India had approved the
establishment of food parks in Malur in Kolar District, Hiriyur in Chitradurga District,
Bagalkot in Bagalkot District and Jewargi in Gulbarga District.
Potential Areas for Investment

Agro & Food Processing, Readymade garments, Chemical industry, Pharmaceutical,
Engineering (Automobile, Aerospace & Precision tools) Electronics Electricals Gems &
Jewellery Leather Products Handicrafts Marine products

MSE-Clusters in Karnataka
The Cluster Development Programme (CDP) is to contribute to the overall performance and
collective efficiency of the Small and Medium Enterprise clusters for sustainable
development by assisting selected local communities of firms and associated institutions in
the clusters.
This entails the implementation of cluster support initiative in selected pilot clusters as well
as assistance to central and local institutions in their programmes of cluster modernisation
and restructuring.
Micro and Small Enterprises Cluster Development Programme has been launched by the
Ministry of Micro, Small and Medium Enterprises.
The Karnataka Council for Technology Up gradation [KCTU] will be a monitoring agency
on behalf of the State Government.
The following are the District wise identified clusters in Karnataka are

Addl. Secretary and Development Commissioners(MSME) New Delhi has approved 65

clusters which are functioning at various stages. The following are the list of 65 Clusters
approved by Government of India .
1. Electronic System Design [CLIK], Bangalore Urban Dist.

2. Electronic Cluster (ELCIA), Bangalore.
3. Jewellary Cluster, Guledagudda, Bagalkote Dist.
4. Jaggery Cluster, Hipparagi, Bagalkote District.
5. Leather Processing Cluster, Mudhol, Bagalkote District.
6. Wooden Furniture Cluster, Angol, Belgaum Dist.
7. Kudchi Jaggery Cluster, Belgaum District
8. Foot Diamond Leather Cluster, Madhabavi, Belgaum Dist.
9. Machine Tool and Engineering Cluster, Udyambag, Belgaum District.
10. Readymade Garments Cluster, Ramdurga, Belgaum District
11. Birds Power loom Cluster, Ramdurga, Belgaum District.
12. Jaggery processing Cluster, Chikkodi, Belgaum Dist.
13. Bricks Processing Cluster, Khanapura, Belgaum District.
14. Athani Raisins processing cluster, Athani, Belgaum dist
15. Rice Mill Cluster, Siraguppa, Bellary District
16. Artificial Jewellary Cluster, BasavaKalyana, Bidar Dist.
17. Bidar Auto Cluster, Bidar
18. Pharmaceuticals Cluster, Kolhar Indl. Area, Bidar Dist.
19. Embroidery Garmenting & Zari Cluster, Mylor, Bidar Dist.
20. Bidri Art & Craft works Cluster, Bidar Dist.
21. Raisin Cluster, Bijapur District
22. Embroidery and Readymade Garment Cluster, Doddamudahalli, Chamarajanagara

District.
23. Food Products Cluster, Sakrayapatna, Chickmagalur District.
24. Wooden Furniture Cluster, Gavanahalli, Chikkamagalore Dist.
25. Automobile Repair & Servicing, Kadur, Chikkamagalore Dist.
26. Handloom Cluster, Konnampalli, Chinthamani Tq, Chikkaballapur Dist.
27. Silk Reeling & Twisting Cluster, Chikkadasarahalli, Chikkaballapur
28. Handloom Weavers Cluster, Thimmasandra, Chinthamani Tq, Chikkaballapur
29. Wool Cluster, Challakere, Chitradurga Dist.
30. Wool Cluster, Hosadurga, Chitradurga Dist.
31. Puffed Rice Cluster, Holalkere Road, Chitradurga District
32. Printing Cluster, Hubli, Dharwad Dist.
33. Woolen Knitted Garments Cluster, Hubli, Dharwad Dist.
34. Heat Treatment & Engineering Cluster, Hubli, Dharwad District.
35. Auto Components Cluster, Hubli, Dharwad District.
36. Readymade Garment Cluster, Hubli, Dharwad District.
37. Wooden Furniture Cluster, Betageri, Gadag District.
38. Spices Manufacturing Cluster, Betageri, Gadag Dist.
39. Handloom Cluster, Betageri , Gadag Dist.
40. Stone Carving Cluster, Belagatti, Gadag District.
41. Readymade Garments, Shigli, Gadag District.
42. Broom Cluster, Betageri, Gadag Dist.
43. Printing Cluster, Betageri , Gadag Dist
44. Wooden Furniture Cluster, Mundargi, Gadag
45. Food Processing Cluster, Narasapura, Gadag.
46. Nava jyothi Readymade Garments Cluster, Betageri , Gadag Dist
47. Navodaya Powerloom Cluster, Shigli halli, Shiratti Tq, Gadag Dist.
48. Readymade Garment, Narasapura, Gadag.
49. Food Cluster, Gulbarga District
50. Rice Mill Cluster, Mandya Dist.
51. Kaveri Packaging Cluster, Mandya District.
52. Agricultural Implements Cluster, K.M.Doddi, Mandya District.
53. Printing Cluster, Mysore Dist.
54. Engineering Cluster, Mysore Dist.
55. Auto Cluster, Mysore Dist.

56. Silk Textile Cluster, Kudur, Magadi Tq.

57. Jewellary Cluster, Shimoga
58. Desiccated Coconut Cluster, Tiptur, Tumkur Dist.
59. Printing Cluster, Tumkur District
60. Printing cluster Udupi.
61. Cashew Processing Cluster, Murur, Kumta Tq, Uttarakannada District.
62. Food Cluster, Yogamandira, Sirsi, Uttarakannada District.
63. Readymade Garments Cluster, Rangampet, Yadgir Dist.
64. Wooden Furniture Cluster, Hunasagi, Yadgir Dist.
65. Automobile Servicing Cluster, Hunasagi, Yadgir Dist.
INCENTIVES
New Industrial Policy 2014-19 has been brought out by commerce and industries
department after consulting with all the stake holders. The New Industrial Policy 2014-19
aims at achieving an industrial growth rate of 12% per annum by attracting investments of
about five lakh crore & generate employment to about fifteen lakh persons during the
Policy period. The Policy aims at holistic development of the State and looks beyond
Bangalore with equitable distribution of industries all over Karnataka. Incentives and
Concessions offered in the policy are as follows:
1. Interest Free Loan to Large, Mega, Ultra Mega and Super Mega enterprises on Net
VAT and CST Incentive is interest free loan of 40 % to 100% of NET VAT+CST with max
limit of 100 % of value of fixed assets for a period of 7 yrs to 14 yrs depending on
investments and zone
2. Anchor Industries: Anchor Units (Manufacturing enterprises in a taluk providing a

minimum direct employment of 150 persons with a minimum investment of Rs. 250 crore)
are given special importance by providing special investment promotion subsidies and
enhanced tax related incentives for taking the industries to taluks where industrial activity
needs to be encouraged.
3. Investment Promotion Subsidy ranging from minimum of Rs. 9 Lakhs to a maximum

of Rs. 65 Lakhs based on investment and location of project (Details of Zones)

4. Stamp Duty Exemption & Concessional Registration Charges
5. Reimbursement of Land Conversion Fee from 75% to 100% based on investment and
location of project (Details of Zones)
6. Exemption from Entry Tax: 100 % on Plant and Machinery for period of 3 to 5 years
and 100% on Raw Material for period of 5 to 8 Years based on the investment and location
of project (Details of Zones)
7. Subsidy for Setting up Effluent Treatment Plant (ETP) from 50% of cost of ETP
subject to a maximum of Rs.50 Lakhs to 75% of cost of ETP subject to a maximum of
Rs.100 Lakhs based on the investment and location of project (Details of Zones)
8. Interest subsidy (Micro enterprises only) of 5% for period from 4 years to 7 years based
on the investment and location of project (Details of Zones)
9. 100% Exemption from Tax on Electricity Tariff (for MSMEs) for period from 4 years
to 8 years
10. Incentives for Technology Upgradation, Quality Certification for MSMEs (Interest
subsidy 5%, ISO series Certification 75% or maximum of Rs. 1 lakh, BIS Certification
75% to 100% subject to maximum of Rs.1 lakh, Technology Adoption 25% to 50%
subject to maximum of Rs.1 lakh, Technology Business Incubation Centre - 25% to 50%
subject to maximum of Rs. 75 lakh, Recycling of electronic waste and plastic waste - 5% or
subject to maximum of Rs.15 lakh) based on the investment and location of project.
(Details of Zones)
11. Incentives for Water Harvesting / Conservation Measures (Manufacturing SMEs

Only) (Rainwater harvesting - 50% to 75% subject to maximum of Rs.1.5 lakh, Waste water
recycling - 50% to 75% subject to maximum of Rs. 7.5 lakh, Zero discharge process - 50%
to 75% subject to maximum of Rs.7.5 lakh) based on the investment and location of project.
(Details of Zones)
12. Energy Conservation: Manufacturing MSMEs (Energy conservation measures - 10%

to 15% subject to maximum of Rs.7.5 lakh, Non conventional energy sources - 10% to 15%
subject to maximum of Rs.7.5 lakh, Captive power generation subsidy - Rs.0.5 to Rs.0.75
per unit through Solar and Wind energy) based on the investment and location of project.

(Details of Zones)
13. Focus on MSME: Special attention has been given to this sector by reserving 20% of
the allotable land in each industrial area. Further, an attractive package of incentives and
concessions provided in the policy coupled with suitable measures for marketing and
financial support for MSMEs are proposed.
14. Inclusive Growth: The Policy not only aims at spreading industries all over Karnataka,
it also aims at inclusive growth covering all sections of the society like Women, SC/ST,
Backward Classes & Minorities, special package of incentives and concessions have been
given to them.
For SC/ST Entrepreneurs:
1. KIADB/KSSIDC to reserve 22.50% of allotable area
2. KIADB/KSSIDC to allot land at subsidised rates at 30% to 40 % subject to maximum of

`35 lakhs based on the investment and location of project. (Details of Zones)
For Women entrepreneurs.
1. KIADB/KSSIDC to reserve 5% of allotable area
2. Special package of incentives
For Minorities, Backward Classes, Physically challenged persons, Ex-Servicemen

entrepreneurs
1. KIADB/KSSIDC to reserve 5% of allotable area
2. Special package of incentives
15. Encouragement to Non Resident Kannadigas (NRKs)
16. Additional Package of incentives and Concessions to focused Manufacturing sector

i.e., Automotive & Machine Tools (Excluding Steel and Cement) Ultra and Super Mega
projects.
17. Special Incentives special package of incentives and concessions and relaxation in
the conditions mentioned in the policy will be considered for deserving cases.

In case of investment relating to debentures also declined from 26.51 percent in 1993-94, to
17.40 per cent by the year 2008-09. Similarly investment in government treasury bills also
declined marginally.
Investments in 2004-05: During this year the total number of mutual fund schemes
available for investment is 450.
The Income and Equity funds together account for almost 76% of the total number of
schemes, but they account for only 25% of the total investment. The remaining six
schemes account for 25% of the total number of schemes but they account for a little
over 75% of the investment.
Investments in 2008-09: During this year the total number of mutual fund schemes
available for investment is 832. The Income and Equity funds together account for
almost 75% of the total number of schemes, but they account for only 25% of the total
investment.
The remaining six schemes account for 25% of the total number of schemes but they
account for a little over 75% of the investment. The most striking aspect is that the
Liquid/Money Market Funds account for only 7% of the total number of schemes but
they account for almost 75% of the total investment.
UNIT HOLDING PATTERN : As on March 31, 2012 there are a total number of 3.08 crore
investors accounts (it is likely that there may be more than one folio of an investor which
might have been counted more than once and actual number of investors would be less)
holding units of Rs.100594 crore. As on March 31, 2009 there are a total number of 4.76
crore investors accounts (it is likely that there may be more than one folio of an investor
which might have been counted more than once and actual number of investors would be
less) holding units of Rs. 419,321.66 crore.
Out of this total number of investors accounts, 4.61 crore are individual investors accounts,
accounting for 96.75% of the total number of investors accounts and contribute Rs.
1,55,283.21crore which is 37.03% of the total net assets.
Scheme-wise Analysis of Investors Composition
Liquid/Money Market Funds: It shows that the Corporates are the major investors
(73.65%) followed by Banks/FIs (16.15%) and High Networth Individuals (7.86%). It

has been observed that these funds are not appealing to Foreign Institutional Investors
(FIIs) and Retail investors.
Gilt Funds (Funds investing in Government securities): The data focuses that the
corporates are the major investors (62.19%) followed by HNIs (32.12%). Gilt funds
are not appealing to other investor groups including FIIs who have no investment in
these funds.
Debt oriented Funds: Data indicates that the corporates are the major investors
(64.75%) followed by HNIs (28.57%) and Retail investors (4.09%).
Equity oriented Funds: The data reveals that the retail investors are the major
investors (64.14%) followed by HNIs (20.63%) and Corporates (12.07%).
Balanced Funds: The data shows that the retail investors are the major investors
(68.21%) followed by HNIs (22.23%) and Corporates (9.09%).
Gold Exchange Traded Funds: The data reveals that the corporates are the major
investors (49.14%) followed by HNIs (24.44%) and Retail investors (23.43%).
Exchange Traded Funds (other than Gold): It was observed that the HNIs
(31.89%) and Corporates (31.22%) are the major investors followed by FIIs
(27.25%).
Fund of Funds (Investing Overseas): HNIs (46.38%) and Retail investors (33.12%)
are the major investors followed by Corporates (19.07%).
The scope for micro, small and medium enterprises in a particular area is decided upon the
availability of human and material resources. Human resources particularly skilled labour is
essential.
Entrepreneurial talent among the local people to harness the resources is also considered to be
the important factor. Material resources such as agriculture, horticulture, livestock, minerals
etc. should also be taken into consideration and abundance available of material resources,
which is required for harnessing Micro, Small and Medium Enterprises for purposes.
Karnataka. is endowed with agriculture, horticulture resources, mineral, forest resources etc.,
for industrial exploitation. Karnataka is driving domestic growth, crafting careers and
creating wealth through a potent mix of resource based, skill based, technology based and
knowledge based products and services.
The State has a living tradition of employing technology to trace a steady growth curve
across various sectors of the economy, earning in the process, the enviable tag of being the
most technology savvy State in India.

The States entrepreneurial spirit in innovations and R&D has given recognition world over.
The state is known as Silicon Valley of India. Our rich natural resources, proactive
Government policies, talented work force and a strong economy have propelled the State to
become a preferred investment destination Karnatakas biggest story is the growth of
Information Technology (IT) / Information Technology Enable Services (ITES) led sector
which accounts for more than 40% of the Indias Software export. This growth has primarily
occurred in Bangalore city and its environs though the industry has now begun moving
towards other centers such as Mysore, Mangalore and Hubli-Dharwad.
Karnataka also has the largest number of Medical Institutes & Industrial Training Institutes
(ITI) in the country. It is the preferred investment destination in the Country and truly
represents One State, Many Opportunities.
Karnatakas economic growth across sectors, namely: Information Technology, Bio

Technology, Aerospace, Machine Tools, Animation and Gaming, Telecommunication, Agri
Business and others has been rapid and on a steady ascent. It offers plethora of opportunities
for investors across sectors. Each of our 30 districts is unique in its own right, offering
investment potentials like no other state in the country. Supported by rich natural resources
and progressive policies, the state presents to its investors the right blend of strengths and
opportunities.
The Government is focused on building critical infrastructure required for the industry. The
Governments priority is also to speed up the implementation of the projects approved in the
state.
An ever growing Karnataka offers opportunity across sectors notably infrastructure,

pharma, automobiles, education, aerospace and many more in an investor-friendly
environment State has been ranked 1st for a healthy business climate and attracting
investments by World Bank's Investment Climate Index and Bangalore Best India City to
Live in - 'Quality of Living Survey - Worldwide Rankings, 2011' Mercer.
The Governments priority is also to speed up the implementation of the projects approved in
the state. Some of the prominent cities in the state are Bengaluru, Mysore, Mangalore,
Belgaum, Gulbarga, Hubli-Dharwad, Shimoga, Kolar, Tumkur and Karwar. The state has
witnessed rapid and unparalleled growth across various sectors.

Karnataka - The Knowledge Hub of Asia Karnataka accounts for around 5% of Indias
national income and the State has been ranked No. 1 by the World Bank for its investment
climate in a study that analysed 16 States using 46investment parameters. The fact that one
new MNC invests in the State every week is testimony for the fact that Karnataka is the
leading investment destination in the country.
One of the fastest-growing states in the country and has a strong industrial base and vibrant
tertiary sector. Its services sector, has in fact been, the engine of growth. Karnataka
continues to be the most preferred destination for all global IT & BT giants due to numerous
favorable factors such as:
1. Pro-active Government
2. Industry friendly Labour Laws
3. Salubrious Climate
4. Excellent Law & Order situation
5. Absence of Natural Calamities
6. Talent pool of highly trained professionals
7. Cosmopolitan social life in the cities particularly at Bengaluru
8. Investor friendly opportunities
9. Excellent infrastructure
10. Readily available land
11. Highly skilled technical manpower base
12. Large number of technical and research institutes
13. Technology savvy work force with proficiency in English
14. Cultural diversity and cosmopolitan urban centres
15. Advanced healthcare facilities
16. Connectivity through air, rail, sea and road network integrated with the rest of the world
17. Liberalised economy with single window clearance for investors

18. Excellent logistics support
19. Abundant primary resources
In order to introduce efficient and effective follow up process of investment in the state and
to ensure best possible investment environment for the investors in the State. Government has
introduced an online portal called e-Udyami w.e.f. 1.04.2013. The objective of portal is to
facilitate the investors and to file applications irrespective of their location and monitor of the
status of the application filed.
CONCLUSION
This paper has described the trends and patterns of private investment at the aggregate,
sectoral and sub-sectoral levels in India. This analysis has revealed the following. It was
found that, the share of private investment had increased during the economic reforms period
while that of public investment had declined. Further, the rate of capital formation in the
public sector was higher than in the private sector in the pre-reforms periods, but during
economic reforms period it was reversed. However, there was a disparity across the sectors
and sub-sectors in terms of private investment.

The industrial sector dominated over the service and agricultural sectors in terms of rate of
capital formation in the short and long term. There was a big change in the rate of capital
formation with the introduction of economic reforms in India. Further, within the industrial
sectors, the sub-sectors, such as electricity, gas and water supply, and manufacturing, were
the dominating sectors during economic reform period. The analysis shows that, the annual
average growth of private investment in electricity, gas and water supply was very higher that
that of manufacturing sector.
Within the service sector, transport by other means and real estate, ownership of dwelling and
business services dominated in terms of rate of capital formation. Specifically, economic
reforms lead to the sudden growth of capital formation in real estate, ownership of dwellings
and business services in India. The weighted rate of capital formation indicated that real
estate, ownership of dwellings were the most important sub-sectors, followed by transport by
other means, in the rate of capital formation within the service sector. However, this suggests
that manufacturing and real estate, ownership of dwellings and business services were the
major contributors to the increase in the rate of capital formation in the private sector as a
whole during the economic reforms period.
The analysis has shown that there was a declining trend in the share of the agriculture sector
in the growth of private investment. The industrial sector showed a positive trend in the share
of private investment during the study period. The growth in the share of private investment
was significant in the 1980s or the second period. It could have been due to the introduction
of economic reforms in the 1980s. Further, the same trend was maintained during the 1990s
with the association of the broad measures of economic reforms. The important observation
was that the industrial sector had developed at the expense of agricultural sector since the
1980s.
Regarding the service sector, in the 1970s its share was equal to that of the industrial sector,
but in the 1980s it fell. The economic reforms stimulated the service sector to recover in the
1990s. Further, three major sub-sectors - manufacturing, real estate, ownership dwellings and
business services, and transport by other means had played a prominent role in the growth
of investment in private sector since the 1990s.
The analysis has shown that the industrial sector was the major contributor to the growth of
private investment in India. There was a steady increase in the contribution of the industrial
sector to the growth of private investment. The role of the sub-sectors of manufacturing, real

estate, ownership of dwellings and business services, and transport by other means were
significant in the growth of private investment in India.
The growth of rate of capital formation was very significant in real estate, ownership of
dwellings and business services sub-sector. This sector, which includes Information,
Communication and Technology (ICT), was very important in attracting private investment
during the economic reforms period in India. This sub-sector comes under the group of
producer services in the services sector.
The analysis has shown that the contribution of this sector was the highest in terms of share
in private investment within the producer services sector as well as the service sector as a
whole. This sub-sector was also the major contributor to the growth of private investment
within the producer services group and the whole of the service sector.
The analysis of the structural transformation in terms of the allocation of private investment
showed that structural transformation had taken during this period.
BIBLIOGRAPHY
I. BOOKS
a) Kothari C. R., Research Methodology Methods & Techniques-, New Delhi, Wishwa
Prakakashan,(2002).
b) Suja Nair, Consumer Behavior in Indian Perspective 6th Edition- Himalaya
Publications, New Delhi. (1999).
c) Preeti Singh, Investment Management , Himalaya Publications, New Delhi.

d) Income Tax and Investment Journal (AY-2008-09)by A.N. Agarwal (Income tax
expert), Rajesh Agrwal (CA), Sanjay Kulkari (CA), and Dr. Gajanan Patil. - ABC
Publication- Nagpur..
e) V.A.Avdhani, Investment Management-, Himalaya Publications, New Delhi.
II. WEBSITES
1. www.wikepedia.com
2. www.icai.org
3. www.thehindubusinessline

Final Report

Uploaded by

Copyright:

Available Formats

Final Report

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final Report

Uploaded by

Copyright:

Available Formats

CHANGING PATTERNS OF INVESTMENT IN KARNATAKA

CMR UNIVERSITY Page 1

CMR UNIVERSITY Page 2

An individual who purchases small amounts of securities for themselves, as opposed to an

There are two concepts of Investment:

1) Economic Investment: The concept of economic investment means addition to the

CMR UNIVERSITY Page 3

2) Financial Investment: This is an allocation of monetary resources to assets that are

(a) Investment: Karnatakas investor friendly and responsive administration which is

CMR UNIVERSITY Page 4

(c) Information Technology: Karnataka is the pioneer of the IT Revolution in India.

CMR UNIVERSITY Page 5

(d) Bio Technology: Karnataka is a leader in the Biotechnology sector as well,

Policy Framework for Attracting Private Investments

CMR UNIVERSITY Page 6

In this context, policies and programs of Government of Karnataka for attracting

CMR UNIVERSITY Page 7

Karnatakas Investment Climate

Karnatakas investor-friendly and responsive administration has worked towards easing

CMR UNIVERSITY Page 8

Electronic Systems Design and Manufacturing (ESDM) is the fastest growing

Penetration of ITBT into regions other than Bengaluru:

CMR UNIVERSITY Page 9

Karnataka Start up policy 2015-2020.

CMR UNIVERSITY Page 10

ICT Skills Development Society

CMR UNIVERSITY Page 11

CMR UNIVERSITY Page 12

SAVING IN PERSONAL FINANCE

CMR UNIVERSITY Page 13

CMR UNIVERSITY Page 14

Value stock, growth stocks, quality stocks, defensive or cyclical stocks...

Policy Framework for Attracting Private Investments

CMR UNIVERSITY Page 15

CMR UNIVERSITY Page 16

Karnataka's Investment Climate

Karnataka's investor-friendly and responsive administration has worked towards easing

(a) An investor-friendly responsive administration

CMR UNIVERSITY Page 17

Investment flows into Karnataka

Projects approved by State Level Single Window Clearance Committee

CMR UNIVERSITY Page 18

Foreign Direct Investment Inflow to Karnataka (US $ Million)

Investment in Information Technology

CMR UNIVERSITY Page 19

Information Technology Policy in Karnataka

Karnataka's Information, Communication and Technology (ICT) Policy 2011

Government has announced two new policies-the Information and Communications

CMR UNIVERSITY Page 20

Karnataka's Electronics Systems Design and Manufacturing Policy 2013-

The following targets are set for Karnataka ESDM Policy

CMR UNIVERSITY Page 21

CMR UNIVERSITY Page 22

Global Investors Meets

CMR UNIVERSITY Page 23

CMR UNIVERSITY Page 24

CMR UNIVERSITY Page 25

CMR UNIVERSITY Page 26

CMR UNIVERSITY Page 27