Startups Get Karnataka Budget Push

SUMMARY

The announcement was made by chief minister Siddaramaiah during his state budget speech today (March 7)

The investments are part of the government’s broader Local Economy Accelerator Programme (LEAP), launched with a grant of INR 1,000 Cr

The state is also planning to set up Centre for Applied AI for Tech Solutions (CATS) with an investment of INR 50 Cr over the next five years

In an effort to bolster the startup ecosystem and boost entrepreneurship, the Karnataka government has announced an INR 300 Cr fund of funds and INR 100 Cr corpus to support the deeptech startups in the state.

The announcement was made by chief minister Siddaramaiah during his state budget speech today (March 7).

These investments are part of the government’s broader Local Economy Accelerator Programme (LEAP), launched with a grant of INR 1,000 Cr to create jobs in Tier II & III cities.

“It is a matter of pride that Karnataka is leading in global and national indices related to entrepreneurship, information technology and innovation,” said Siddaramaiah during his budget speech.

The programme is expected to generate 5 Lakh jobs across the state, along with a major focus on developing the startup ecosystem in Mysuru, Mangaluru, Hubballi-Dharwad and Kalburgi. It will follow a lifecycle approach to build incubators, accelerators, centres of excellence (CoE) and global technology centres (GTCs).

Additionally, the state is also planning to set up Centre for Applied AI for Tech Solutions (CATS) with an investment of INR 50 Cr over the next five years.

The state also plans to set up the second phase of the Quantum Research Park in collaboration with the Indian Institute of Science, Bengaluru. The government aims to deploy INR 48 Cr over the next three years for this initiative.

Karnataka will also come up with an IT policy this year, with a focus on cloud computing and emerging technologies.

The Karnataka budget also focussed on boosting other sectors in the startup ecosystem, including adoption and manufacturing of electric vehicle (EV) mobility and the agritech sector.

The state plans to establish a Digital Agricultural Service Centre which would leverage AI and geospatial technology to find solutions to the challenges faced by the farmers in the state. Besides, an agritech accelerator will be established in Kalaburagi for successful integration of technology in the agriculture sector.

To give push to EV manufacturing and adoption in the region, the state government has also unveiled the Karnataka Clean Mobility Policy 2025-30 which aims to attract INR 50,000 Cr investment from the clean mobility value chain. The state also plans to build a testing track and state-of-the-art EV cluster with common infrastructure to boost EV manufacturing in the Bengaluru zone with an investment of INR 25 Cr.

The development comes at a time when a number of steps have been taken at the national level as well to boost the world’s third largest startup ecosystem, and the deeptech sector in particular.

In her budget speech 2025-26, finance minister Nirmala Sitharaman said that the government would explore setting up a new fund of funds for startups.

To further push the electric vehicle manufacturing industry in the country, the Centre also announced exemption of Basic Customs Duty (BCD) on the imports of cobalt powder, scrap of lithium-ion batteries, zinc, and 12 other critical minerals critical for EV production.