Karnataka's Industrial Expansion: New Parks Announced as Existing Estates Face Underutilization
In a recent budget announcement, the Karnataka state government has unveiled plans for new industrial parks, aiming to boost economic growth and attract investment. However, this move comes against a backdrop of significant underutilization in existing industrial areas managed by the Karnataka Industrial Areas Development Board (KIADB), sparking debates over the prioritization of infrastructure development.
Data Reveals Widespread Underutilization in Bengaluru's Industrial Zones
According to KIADB data as of January 13, 2026, out of approximately 2,050 developed plots across 13 industrial areas in and around Bengaluru, only 1,908 have been allotted. More critically, of these allotted plots, a mere 543 units are currently in production. The remaining units are either under construction, awaiting implementation, or lying idle, highlighting a gap between allocation and operationalization.
The contrast between older and newer industrial zones is stark. Established areas like Kumbalagodu Phases 1 and 2, set up in 1979 and 1982, and Doddaballapur, established in 1983, have fully allotted all 347 plots and have all units operational. In contrast, newer sectors earmarked for IT, aerospace, and hardware face significant challenges.
Sector-Specific Challenges: IT and Aerospace Sectors Bear the Brunt
The IT Sector Park, spanning 1,175 acres and established in 2009, illustrates these issues vividly. Despite having 250 developed units, only 36 are currently in production. Similarly, the aerospace sector reports 73 units allotted but not implemented, while the IT sector has 79 such units. The newest industrial area in Devanahalli, launched in 2022, has 115 allotted units but just one operational, underscoring the slow pace of implementation.
Interestingly, the aerospace parks, which have a high number of working industries, have received over 100 new land requests, including from international investors, indicating potential demand if infrastructure issues are addressed.
Official Optimism vs Ground Realities
KIADB Chief Executive Officer M Mahesh remains optimistic, citing strong interest in sectors like software, manufacturing, aerospace, defence, automobiles, solar, and semiconductors. He emphasized Karnataka's position as a top Foreign Direct Investment (FDI) destination, with Chief Minister Siddaramaiah noting in his budget speech that FDI equity inflows to the state stood at $9.4 billion in the first half of 2025-26, accounting for 26.7% of the nation's total.
However, stakeholders on the ground paint a less rosy picture. An aircraft manufacturer operating in Bommasandra for 15 years described conditions as "on the verge of collapse," citing pothole-ridden roads, years of neglect, and ineffective local associations. This has forced several large firms, some employing 2,000 to 3,000 workers, to relocate to states like Tamil Nadu or Gujarat, with the manufacturer himself considering a move to Ahmedabad.
Industry Bodies Call for Infrastructure Upgrades
Uma Reddy, President of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), acknowledged the state's strong industrial legacy but stressed that sustained growth requires better connectivity, upgraded infrastructure, and development beyond Bengaluru. The pattern is clear: new parks are announced while existing ones struggle with idle units and business departures.
Until these infrastructure gaps are addressed, fresh announcements risk being perceived as real estate exercises rather than effective industrial policy, potentially undermining Karnataka's economic ambitions.
Summary of KIADB Plot Status Across 13 Industrial Areas
- Plots developed: 2,036
- Plots allotted: 1,908
- Vacant plots: 128
- Units across plots: 1,632
- Possession certificate issued: 1,320
- Building plan approved: 794
- Under construction: 543
- Units allotted but not implemented: 270
Industrial areas include Kumbalagodu Phase 1, Kumbalagodu Phase 2, Doddaballapur General, Apparel Park Phase 1, Apparel Park Phase 2, Aerospace Sector, Aerospace Sector (SEZ), IT Sector, Hardware Sector, Obadenahalli, Adhinarayana Hosahalli, Hi-tech Defence & Aerospace Park, and Devanahalli General Industrial Area-1.
