Karnataka approves aerospace policy; Rs 2,500 per employee incentive for industries in backward districts,…

As per the latest business developments, Karnataka Cabinet on September 9 approved Aerospace Policy 2026-31, targeting Rs 60,000 crore in investments and 60,000 jobs over the next five years, Deputy CM G Parameshwara stated after Cabinet meeting.

The policy, which will be implemented from 2026 to 2031, aims to strengthen Karnataka's position as a hub for aerospace manufacturing and innovation. It provides varying marks of financial assistance based on the location and category of projects.

Projects in Zone 1 will receive a 30 percent capital subsidy, while other zones will have varying marks of backing. Projects in non-focus areas will be eligible for a 35 percent subsidy.

“The policy is anticipated to backing major aerospace projects already scheduled in Karnataka, including aircraft manufacturing by Tata and Hindustan Aeronautics Ltd's production of 97 Light Combat Aircraft,” Parameshwara stated.

Additionally, read: Karnataka to come up with state space policy: IT-BT minister Priyank Kharge

Rs 2,500 employment incentive in backward districts

The Cabinet additionally approved an Employment Fund Programme to encourage industries to create formal jobs in less-developed districts.

“Industries will receive Rs 2,500 per employee for two years, linked to the employer's provident fund contribution,” Parameshwara stated.

Additionally, read: Karnataka to offer Rs 2,500 monthly incentive for every new job created in 10 backward districts

The government has allocated Rs 300 crore for the programme, which will cover Yadgir, Bidar, Koppal, Raichur, Kalaburagi, Vijayapura, Belagavi, Vijayanagara, Haveri and Gadag.

Industries setting up in backward talukas will additionally receive investment-linked backing of up to 10 percent of investment, while projects in most-backward talukas will be eligible for assistance of up to 20 percent.

The government plans to promote aerospace, defence, automobiles, electric vehicles and semiconductor industries in these areas.

10,000 worker houses scheduled

The Cabinet cleared Shramika Nivasa, a worker-housing programme aimed at providing accommodation close to industrial workplaces.

Parameshwara stated large firms will be asked to construct 10,000 houses for workers in the first phase. The government will backing the scheme through subsidies and land provided through the Karnataka Industrial Areas Development Board (KIADB). The programme will cover industries across sectors.

AI hub, drone testing facility

An Artificial Intelligence Hub will initially be established at IIIT-B and later shifted to the proposed AI University. It will provide AI training, internships, mentorship, research backing, startup incubation and access to technical facilities.

Additionally, read: Karnataka to roll out AI courses before rolling out govt-backed AI university; full-fledged institution in 3 years

Karnataka will additionally establish a drone testing facility in Chikkaballapur, which the government described as the first such facility in India. It will provide testing airspace and structured flight-testing facilities to help take drone technologies from laboratories to commercial applications.

The Cabinet additionally approved a ‘Government First’ technology procurement framework, under which state departments will become early adopters of emerging technologies such as AI, satellite imagery, geospatial analytics, robotics, early-warning systems and last-mile connectivity.

Additionally, read: Karnataka to release rules for Rs 200-crore startup fund, launch Nipuna Edge AI skilling programme: IT Secretary

Textile policy, arbitration centre

A new Textile and Apparel Policy will include the silk industry, which was not covered under earlier textile policies, Parameshwara stated.

Thirty-three talukas have been identified for subsidies and other benefits to encourage textile industries outside Bengaluru.

The Cabinet additionally approved an International Arbitration Centre at Khanija Bhavan in Bengaluru, along with an International Mediation and Online Dispute Resolution Forum. Network grid, farmer scheme

A network grid plan covering 172 taluk-level local planning areas will seek to reduce congestion through ring roads around district and taluk headquarters. The government additionally plans impact zones with landscaping and greenery along these roads.

The Chief Minister's Negila Yogi Scheme, with an initial allocation of Rs 150 crore, will provide free cultivation services to farmers owning up to three acres.

The scheme will initially be piloted in 31 taluks, using tractors owned by farmers and additional government-purchased tractors where required.

Student elections, health and Shakti card

The Cabinet approved the return of student elections in colleges and universities, with posts including president, vice-president, general secretary and joint secretaries. The framework will include women representatives but no caste-based reservation.

Taluk hospitals will receive Rs 40.5 crore for technology upgrades, including digitised medical records, X-rays and ECGs. Hearing-detection and treatment facilities will additionally be established in 50 taluk hospitals.

The government will launch the Shakti Smart Card project at an estimated cost of Rs 232 crore through a public-private partnership. The system is anticipated to generate automated travel data on passenger numbers, routes, destinations and distances.

Additionally, read: Karnataka to spend Rs 250 crore to offering 1 crore Shakti smart cards for free travel to women: Transport Minister