The Karnataka government has announced a major push to decentralise the state’s technology ecosystem by introducing a one-time relocation incentive of up to ₹50,000 per employee for companies shifting talent from Bengaluru to Tier-2 cities. The incentive also applies to firms bringing employees from outside Karnataka into these identified regions, signalling a strong effort to distribute economic activity more evenly across the state.
The announcement was made on Tuesday at the 28th edition of the Bengaluru Tech Summit (BTS) 2025, where Chief Minister Siddaramaiah and IT Minister Priyank Kharge unveiled the Karnataka IT Policy 2025-30 aimed at strengthening deep-tech innovation and expanding growth beyond the capital.
New IT policy aims to drive investments across Tier-2 cities
The new policy offers companies a financial incentive to expand or shift operations to Mysuru, Mangaluru, Hubballi-Dharwad, Kalaburagi and Shivamogga. These cities have been identified as emerging technology clusters with strong academic presence, improving infrastructure and growing startup activity.
Under the approved policy blueprint, companies relocating employees will receive up to ₹50,000 per hired worker, providing them with financial cushioning during the transition phase. The government has allocated ₹445 crore for fiscal incentives and sector-specific interventions during the policy period.
IT Minister Priyank Kharge emphasised the need to invert traditional growth patterns.
“We need policies where talent doesn’t chase investment; instead, investment should be drawn to where the talent is,” he said, highlighting the state’s intent to reduce the burden on Bengaluru and encourage more balanced regional development.
Karnataka positions itself as India’s deep-tech innovation hub
The Karnataka IT Policy 2025-30 positions the state as the country’s leading destination for deep-tech research, product innovation and emerging technologies. Karnataka continues to lead India’s digital economy, contributing 42% of the country’s IT exports, valued at ₹3.2 lakh crore, and growing at a rapid 27% year-on-year.
The Chief Minister noted that Karnataka remains India’s largest R&D and product development hub, with more than 550 Global Capability Centres (GCCs) — nearly one-third of the country’s total. Over 400 Fortune 500 companies operate out of Bengaluru, cementing the city’s status as one of the world’s premier tech capitals.
However, the new policy signals the government’s intention to distribute this success across the state.
SpaceTech Policy 2025–2030 aims to capture half of India’s space market
During the summit, CM Siddaramaiah also launched the SpaceTech Policy 2025–2030, targeting ambitious growth in the state’s rapidly expanding aerospace and satellite ecosystem. The policy aims to ensure Karnataka captures 50% of India’s space technology market and 5% of the global space market by 2034.
A state-level Space Technology Cell will be established under the Karnataka Innovation and Technology Society (KITS) to coordinate infrastructure development, research initiatives and partnerships with private companies.
Startup Policy 2025 to enable 25,000 new startups
The government also announced that the Startup Policy 2025 will be launched on Thursday. It seeks to enable the creation of 25,000 startups over the next five years through interventions in funding, market access, infrastructure, talent development and social inclusion.
The government reiterated Karnataka’s role as the startup capital of India, home to over 16,000 startups and attracting nearly 47% of the country’s total startup funding.
Government invests ₹1 lakh crore in Bengaluru’s infrastructure
Deputy Chief Minister D.K. Shivakumar highlighted the government’s heavy investments in the state’s infrastructure, particularly in Bengaluru.
He said Karnataka is investing over ₹1 lakh crore to improve mobility and civic infrastructure in the state capital. Calling Karnataka’s growth “neither an accident nor a coincidence,” he said the synergy between the government and private sector has played a pivotal role in shaping the state’s IT leadership.
Shivakumar also reiterated that Karnataka was the first state to launch an IT policy in 1997, setting the foundation for its long-standing leadership in technology.
Conclusion
The combination of the IT Policy 2025-30, SpaceTech Policy 2025-2030, and Startup Policy 2025 marks a decisive shift in Karnataka’s development strategy. By promoting decentralisation, incentivising talent redistribution and doubling down on deep-tech and space innovation, the state aims to secure its leadership in India’s digital and research landscape for the next decade