Karnataka Special Investment Region Bill 2022 Passed By The Karnataka Legislative Assembly

A bill was recently tabled in the Karnataka Legislative Assembly aiming to establish, operate, regulate, and manage large/ Mega/ Super Mega-size Investment Regions and Industrial Areas in Karnataka. On 27^th December 2022, the Legislative Assembly passed the Karnataka Special Investment Region Bill, 2022 (“KSIRB”).[1] The step aims to retain Karnataka’s position as a global manufacturing hub. The bill was formulated based on the Electronics City Industrial Township Authority’s (“ECITA”) successful model. 

Understanding the Bill 

KSIRB will supersede any other laws and regulations such as the Karnataka Town and Country Planning Act, 1961.  However, per Section 17, the Town and Country Planning Act will continue to apply to the development plans and town planning schemes under KSIRB mutatis mutandis. Furthermore, the State Government will declare an existing or proposed investment region to be a Special Investment Region (“SIR”) with decided geographical boundaries. This SIR would be beyond the jurisdiction of the local authorities.  

The Karnataka Industrial Areas Development Board 

The apex authority to regulate development, operation, frame norms, manage SIRs, and the development of infrastructure within the SIR, as under KSIRB, would be the KIADB. KIADB is required to monitor the development of SIR and is empowered to perform the following functions for the same: 

• Approve and sanction land use plans and development plans.  
• Grant permissions for economic activity.  
• Fix user charges as proposed by the Regional Development Authority (“RDA”). 
• Approve the agreements/contracts to be entered into by the RDA, with or without modification.  

Regional Development Authorities (RDAs) and their Powers 

Under the Bill, the State Government is required to constitute an RDA for a particular SIR. The State Government may also designate its own agency as an RDA and let it exercise such powers. The composition of such RDA consists of the chairman, the executive officer, the general manager, and two officials,appointed by the government, along with one officer nominated by the KIADB, among others. The powers of RDA, primarily under Section 15, are as follows: 

• To secure the planned development of the SIR. 
• To take steps for ensuring effective regulation and efficient management and planning of land resources and infrastructure. 
• To classify and earmark a SIR’s area for various purposes and prepare the development plans. 
• To acquire, hold, and manage the land, its sale, lease transfer, and disposal of any such land.  
• To carry out surveys in the SIR and enter into agreements and contracts with any entity or individual to perform such functions.  
• To provide disaster management and mitigation services in the SIR, collect fees and development charges, etc.  
• Additionally, there are certain other powers and responsibilities granted to RDAs as well: 
• Under Section 16, no person/ entity can erect or occupy any building or structure in the SIR against the RDA norms. RDA has the authority to grant such permission upon fulfilment of conditions specified in regulations. 
• The power to enter into agreements with a developer for carrying out projects or work in the SIR, under Section 22. 
• The authority to allocate and hand over premises and amenities in the SIR, under Section 24. 
• The authority to set up a grievance redressal committee for resolving any disputes of any stakeholder in the SIR under Section 26. 
• As per Section 29, SIR will be an industrial township and RDA is required to act as the authority for local administration too. 
• RDA has the authority to maintain its own funds under Section 30. 

To Sum Up 

The Karnataka Government has taken this step to retain the state’s position as a global manufacturing hub. The bill would particularly boost economic activity backed by the infrastructure of world-class quality, premium civic amenities, and centres of excellence, and also set in place a proactive regulatory framework along with the establishment of an organizational structure for this purpose. Since the Bill is based on ECITA’s successful model, it would effectively create and manage world-class investment zones, thereby attracting global investors. Furthermore, a large part of the property tax collected from the SIRs will be used to provide amenities in the region, including infrastructure. This would ensure development for industrialists and make the process of doing business easier without the need to engage with local bodies.  

[1]https://kla.kar.nic.in/assembly/bills/bill15140_32.pdf.