The new IT/BT policy in Karnataka pushes the main keyword “IT/BT policy Karnataka” and signals a strategic shift by the state to incentivise firms outside Bengaluru, offering major benefits for Tier-2 cities like Mysuru, Mangaluru, Hubballi-Dharwad and Belagavi.
Policy details and scope of incentives
The Karnataka government has approved a five-year IT/BT policy with an outlay of approximately ₹967 crore aimed at spreading technology growth beyond its capital region. The scheme includes multiple incentive components such as relocation reimbursement, rental assistance and recruitment aid for companies that set up operations outside Bengaluru. For example, firms recruiting over 100 employees in “Beyond Bengaluru” locations may receive support of up to ₹7 crore. There are also incentives for skilling costs, telecom infrastructure, event support and relocation of talent from other states or from Bengaluru. This policy realignment recognises that clustering solely in Bengaluru has created imbalances in cost, talent retention and regional development.
Why Tier-2/3 cities matter in this shift
Secondary cities in Karnataka such as Mysuru, Mangaluru, Hubballi-Dharwad and Belagavi are now being positioned as investment nodes in the IT/ITeS ecosystem. These Tier-2 hubs benefit from lower real estate and operational costs compared with Bengaluru, existing college and university campuses that supply talent, and improved connectivity via highways and rail. For firms, setting up in these cities can reduce attrition, leverage local talent and tap new markets. For the state, it helps decongest Bengaluru, balance urban growth and distribute economic gains more evenly across regions.
Implications for local workforces and talent pools
For young professionals and local graduates in Tier-2 cities, this policy means access to better-paid jobs closer to home. Tech companies expanding in these regions will hire for roles in operations, digital services, analytics, support functions and eventually R&D. For example, relocation reimbursement means that talent can be drawn from Bengaluru or other states into these newer hubs, but local talent also gets priority. This can reduce migration and strengthen local ecosystems. Educational institutes in these cities may witness more collaborations, training centres and campus placements aligned with tech firms.
Infrastructure and ecosystem challenges
Despite the strong incentive signal, smaller cities must still build the supporting ecosystem to fully capture benefits. Key requirements include high-speed internet, cloud connectivity, reliable power, quality office space and housing for talent. Local governments need to streamline approvals, manage land acquisition and upgrade civic infrastructure. Without these, firms may hesitate to commit long term. Another challenge is up-skilling local talent to meet global-capability standards; just hiring operations staff is not sufficient for growth into higher value functions.
Execution and regional competition ahead
Execution will be crucial. While the policy spells out attractive incentives, the pace at which firms relocate, recruit and scale in Tier-2 cities will determine success. Karnataka is competing not just internally among its districts but also with other states offering similar “beyond metro” incentives. Cities that move quickly to build infrastructure, offer talent pipelines and create clusters will attract early entrants and set the tone for others. Over the next 12-24 months we should monitor which Tier-2 cities actually secure global capability centres or sizeable IT/BT campuses as proof of intent.
Takeaways
• The IT/BT policy Karnataka now explicitly targets growth outside Bengaluru, making Tier-2 cities central to tech expansion.
• Incentives such as relocation funds, recruitment aid and rental support are designed to reduce cost and risk for firms setting up elsewhere.
• Local youth in Tier-2 locations will gain access to better jobs, training and placements, reducing migration pressure to metros.
• Infrastructure readiness and execution speed will decide which cities become real winners under this policy.
FAQs
What qualifies as a “Beyond Bengaluru” city under the policy?
Cities such as Mysuru, Mangaluru, Hubballi-Dharwad, Belagavi and other non-metro districts are designated as locations eligible for special incentives under the IT/BT policy.
What types of incentives are offered to firms?
Incentives include talent relocation reimbursement, rental assistance, recruitment support, skilling cost reimbursement, telecom infrastructure aid and event/ conference support for firms setting up outside Bengaluru.
How will the policy benefit local jobseekers in Tier-2 cities?
Local jobseekers gain by having tech and digital roles come to their cities, reduced need to migrate, better salary potential and opportunities for training and up-skilling aligned with industry demand.
What are the major risks or hurdles for this strategy?
Key risks include slower infrastructure build-out, insufficient local talent, competition between regions, and delays in policy implementation or disbursement of incentives which could deter firms.
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