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August 14, 1998


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Greenbacks for greenhorns: Karnataka bets Rs 150 m on first-time entrepreneurs in the software business. The Karnataka government proposes to introduce a venture capital fund next week to exclusively promote first generation entrepreneurs who would like to set up software development centres.

Email this story to a friend. The first of its kind to be launched by any state agency in the country, the fund would have a corpus of Rs 150 million. This would be later expanded to Rs 300 million.

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Karnataka Minister for Large and Medium Industries H Shivappa and Principal Secretary, Industry, N Vishwanathan reveal that the Karnataka Industrial Area Development Board has acquired 40,000 acres of land near Bangalore for IT businesses.

The state has already received 20 applications for seed money to commence software development business under the venture capital scheme.

The Karnataka industry minister is leading an official team to hold a road show for the state in New Delhi to pitch for investments. This is perhaps a conscious effort to respond to rising competition from neighbouring states.

The state proposes to hold more road shows in Bombay and Madras soon before taking the campaign right up to Europe Japan and US.

According Vishwanathan, Karnataka continues to lead software exports in the country with volumes climbing up to Rs 20 billion in 1997-98, a 102 per cent jump over Rs 9800 million earned in 1996-97.

During the current fiscal, the state is targeting Rs 35 billion.

Bangalore's share of the national software exports is about 57 per cent. During fiscal 1997-98, the state attracted 45 new software companies to set up their operations.

Contrary to claims made by other states, the IT boom continued unabated in Bangalore, he said. For instance, during the first quarter of the current fiscal, Bangalore had attracted 23 software technology investments including eight multinationals such as Gizmo Technology, Forbes, Sanyo Electric, Hughes Software Systems and Guardian Insurance.

This compares well against 10 by Hyderabad and 6 by Madras. The total number of IT units in Bangalore has reached 230 against 70 in Madras and 110 in Hyderabad. Software exports from Madras was about Rs 2.92 billion in 1997-98, an 80.2 per cent jump over the previous year, while Hyderabad boasted of exports to the tune of Rs 2.72 billion, an increase of 107.63 per cent.

Besides, leading overseas IT majors such as Sharp Labs, Cisco Systems, Sun Microsystems, Bay Networks and Metlife Insurance (all from the US) had written to the Karnataka government about their plans to invest afresh in the state or expand their existing base, the officials said.

Since infrastructure in Bangalore is getting stretched and consequential problems are surfacing rapidly, the Karnataka industry cell is pushing for development of secondary IT cities such as Mysore, Mangalore, Hubli and Manipal.

High-speed datacom facilities would be set up in Mysore and Manipal by September 15. A cyber park is also coming up at the Software Technology Park in Bangalore itself, they said.

- Compiled from the Indian media

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