Costs in Bangalore are 20% higher

Costs in Bangalore are 20% higher

Government claims single window clearance, but industry disagrees

Financial Express




BANGALORE: The Bangalore-Mysore infrastructure corridor, the only infrastructure project to have obtained financial closure and commenced construction out of 45 mega projects worth over Rs 1,000 crore signed during 1992-95, has seen: 4 chief ministers, 5 ministers of PWD, 8 chief secretaries, 8 secretaries of public works department, 6 secretaries of urban development, 10 secretaries of infrastructure department and over 350 IAS officers, more than 100 Cabinet meetings and nearly 10,500 signatures from government officials at various levels.


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This sums up the ground reality of doing business in Karnataka. The government claims it has introduced single window clearance to assist and approve projects in the state. If any company provides the required documents, it just takes few days to approve and sanction the project, say government officials. However, industry doesn’t buy that claim. ‘‘The government does not consider the importance of a project. It is very difficult to obtain all permissions within a few days. Some times it takes years,’’ says Ashok Kheny, managing director, Nandi Infrastructure Corridor Enterprises.

Medium to large sized projects require a minimum of three to six months to get all clearances from the Karnataka government and not a few days as claimed by the government, says another CEO who has recently set up a project in Bangalore.

The cost of doing business in Karnataka, especially in Bangalore, is 20% higher than any other major cities in South India and is almost on par with Mumbai. With most of the industries located in and around Bangalore, increased urbanisation has impacted the availability of land in the city and its outskirts thus pushing up the cost. Land near the electronic city in Bangalore, which was quoting around Rs 20 lakh per acre four years back, is quoting around Rs 1 crore at present. Speaking to FE, Satish BN, associate director of Debenham Tie Leung (DTZ), an International property advisory firm, points out that cost of 1 sq ft area in the central business district of Bangalore will cost around Rs 5,500. ‘‘Compared to Chennai, this is expensive by over 1,200 rupees’’ he said.

‘‘Taxes in Karnataka are much higher compared to other states,’’ points Anant R Koppar, president, Bangalore chamber of Industries and Commerce (BCIC). Besides, costs arise from red tapism and corruption. Says one industrialist, “around 35% of the officials seek bribe, when it comes to clearing a project, and companies may have to add another 20% to their project cost to factor in corruption.”