Karnataka Offers Rent, Property Tax, and Power Duty Reimbursement to Attract IT Firms Outside Bengaluru

Karnataka, Nov 14 : Karnataka has unveiled a draft IT Policy 2025-30 with a comprehensive set of cost reduction incentives aimed at encouraging IT and IT-enabled services firms to establish operations outside Bengaluru. The policy offers reimbursements on rent, property tax, electricity duty, and telecom expenses for companies setting up in Tier II and Tier III cities such as Mysuru, Mangaluru, Hubballi-Dharwad, Kalaburagi, Belagavi, Shivamogga, and Davanagere.

Key Incentives Under the Draft Policy

Rent reimbursement: 50% up to ₹2 crore

Property tax: 30% reimbursement for three years

Electricity duty: 100% waiver for five years

Telecom & internet charges: 25% reimbursement up to ₹12 lakh

The policy outlay totals ₹445 crore over five years, with ₹345 crore earmarked for fiscal incentives and ₹100 crore for supporting interventions. Each reimbursement category is capped at 100 applicants, indicating a targeted strategy to seed early anchor units in these regions.

Strategic Shift Beyond Bengaluru

Previously, Karnataka’s IT policies were heavily Bengaluru centric, but the new framework shifts focus to decentralized growth, aiming to alleviate pressure on the city’s infrastructure and tap a wider talent base. The draft extends nearly all fiscal incentives—hiring support, internships, R&D, and talent relocation subsidies to Beyond Bengaluru units.

By reducing capital and operating costs during the first three to five years, the state aims to accelerate the formation of new tech clusters, creating multiple alternative IT hubs across the state.

Industry Push and Labour Readiness

The incentives come amid strong industry demand for alternative centres to ease Bengaluru’s congestion and infrastructure strain. The policy also proposes labour relaxations, single-window clearances, and a unified digital platform to support IT operations statewide.

The draft policy is now set to be placed before the state cabinet for approval, paving the way for Karnataka’s next phase of IT-led growth beyond its capital.