Karnataka Plans New IT City Near Bengaluru as Global Interest Rises

Karnataka is preparing to establish a new IT city outside Bengaluru, with Bidadi emerging as the proposed location.

Deputy Chief Minister DK Shivakumar confirmed that global investors have shown renewed interest in the state’s technology sector, ahead of the Bengaluru Tech Summit 2025. 

The move aligns with the government’s broader strategy to expand growth beyond the capital.

Government Confirms Plans for a New IT Hub

Deputy Chief Minister DK Shivakumar announced that the state is working on setting up a new IT city in Bidadi to accommodate growing interest from international investors. He noted that delegates from around 60 countries will attend the upcoming Bengaluru Tech Summit, reflecting global engagement with Karnataka’s technology landscape.

The government aims to address space constraints in Bengaluru while supporting expansion proposals from technology companies.

Increasing Global Engagement in Karnataka’s Tech Sector

Shivakumar highlighted that overseas leaders frequently express interest in investing in the state, crediting Karnataka’s skilled workforce, innovation capacity, and active start-up ecosystem. He emphasised that encouraging young entrepreneurs and supporting new ventures could help guide the state towards broader technological progress.

He reiterated the administration’s commitment to backing investors seeking to build or expand operations in Karnataka.

Push to Strengthen Tier II and Tier III Tech Ecosystems

The announcement comes amid new discussions in the industry about Karnataka’s 2025–2030 IT Policy, which encourages companies to establish tech operations beyond Bengaluru. 

A recent post by investment banker Sarthak Ahuja highlighted the various financial incentives designed to attract start-ups to cities such as Mysuru, Mangaluru, Belagavi, and Hubballi-Dharwad.

Under the policy, the government offers benefits such as rent reimbursements, tax concessions, reduced energy charges, and R&D support.

Key Incentives Under the IT Policy 2025–2030

To decentralise technology growth and ease pressure on Bengaluru, the state is offering:

• 50% rent reimbursement, capped at ₹2 crore
• 30% property tax reimbursement for three years
• 100% electricity duty waiver for five years
• 25% waiver on internet and telephone bills up to ₹12 lakh
• 40% R&D reimbursement up to ₹50 crore, including incentives for work in AI, blockchain, quantum computing, and related fields

The government has allocated around ₹960 crore for this initiative over five years. Applications are expected to open by early or mid-December once rules are finalised. Each incentive category will be limited to 100 beneficiaries, increasing the significance of timely applications.

Eligible companies must operate in designated tier II and III cities as part of the “Beyond Bengaluru” programme, which aims to decentralise economic activity across the state.

Read More: Government Unveils ₹210 Crore Research Initiative for Critical Minerals.

Conclusion

Karnataka’s plan for a new IT city, coupled with incentives encouraging expansion beyond Bengaluru, signals a broader strategy to strengthen the state’s technology footprint.

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