The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has submitted its pre-state budget memorandum for 2025-26, calling for investment revival, industrial infrastructure development, and a dedicated MSME policy. The recommendations emphasize the distinct challenges faced by micro enterprises, the need for land reservation, and regulatory reforms to ease the compliance burden on businesses.
Call for a Separate MSME Policy
FKCCI has strongly advocated for a state-specific MSME policy, highlighting that micro enterprises, which constitute nearly 99% of MSMEs, operate at a much smaller scale than medium enterprises. While micro enterprises have an annual turnover of less than ₹5 crore, medium enterprises can have revenues up to ₹250 crore, making their challenges vastly different. FKCCI has urged the Karnataka government to create distinct policy frameworks to ensure micro businesses receive targeted support rather than being grouped with larger enterprises.
Additionally, the body has proposed a state-specific procurement policy that mandates Karnataka government departments to source products and services from local MSMEs, mirroring the Central Government’s policy to boost small-scale industries.
Addressing Land and Infrastructure Challenges
FKCCI has sought reforms in land allotment policies under the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka State Small Industries Development Corporation (KSSIDC). The organization pointed out that high land costs in KIADB industrial areas make it inaccessible for small entrepreneurs, and banks are often reluctant to approve loans for such acquisitions.
To support MSMEs, FKCCI has proposed that KIADB reserve 30% of its land allotment for micro and small industries while allocating 80% of industrial area land to large-scale enterprises. The organization has also emphasized the importance of plastic parks with integrated recycling units, a proposal that KIADB had previously accepted, but requires accelerated implementation.
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Tax Relief, Interest Subsidies, and Compliance Reforms
The memorandum also includes financial relief measures for MSMEs, such as:
- Exempting industrial consumers, particularly MSMEs, from the 9% electricity tax
- Further lowering the Agricultural Produce Market Committee (APMC) cess from 0.6% to enhance business competitiveness
- Modernizing APMC yards by improving storage and logistics infrastructure
FKCCI has also highlighted the excessive compliance burden on industrialists, stating that many existing regulations are outdated and redundant. The industry body has urged the Karnataka government to simplify compliance norms, ensuring they align with current business realities and reduce bureaucratic hurdles for MSMEs.
A Roadmap for MSME Growth in Karnataka
With MSMEs being a crucial driver of Karnataka’s industrial and economic growth, FKCCI’s recommendations aim to make business operations more viable, reduce costs, and enhance access to infrastructure. As Karnataka prepares for its 2025-26 budget, the MSME sector is looking for policy support, regulatory simplifications, and financial incentives to drive sustainable growth and job creation.