Bengaluru Poised To Leapfrog Rivals As Indias New Tech Hotspot

The Rise of Karnataka as a Hub for Technology Investment and Growth

Recent months have seen significant investments from major tech players like Microsoft, Google, and Amazon in building data centers in India. However, one region that has been noticeably absent from these expansion plans is Karnataka, a state known for its thriving technology sector and business-friendly policies.

Karnataka’s capital city, Bengaluru, is already home to many of the country’s top tech companies, earning it the nickname “Silicon Valley of India.” The city has become a hub for innovation, with numerous startups and IT firms setting up operations here. Despite this, Karnataka has struggled to attract significant investments from major tech players.

Microsoft, in particular, has announced a $17.5 billion investment to expand its cloud and AI infrastructure across India. While the company will establish new data centers in Pune, Chennai, Mumbai, and Hyderabad, it has surprisingly chosen not to set up any facilities in Karnataka. Similarly, Google has invested $15 billion in building an AI data center in Visakhapatnam, a city in Andhra Pradesh.

However, Karnataka is not giving up on its bid to attract major tech investments. The state government has announced several initiatives aimed at promoting innovation and entrepreneurship, including the Bengaluru Tech Summit 2025. This summit brought together industry leaders, policymakers, and entrepreneurs to discuss strategies for growth and development.

At the summit, the IT minister of Karnataka, Priyank Kharge, announced six new letters of intent (LoIs) and a series of skilling partnerships with various companies. These agreements include plans to establish new units in electronics manufacturing, EV systems, battery recycling, biotechnology, and a dedicated drone testing site.

The government has also launched the Local Economy Accelerator Programme (LEAP), which aims to support innovation clusters outside Bengaluru. The programme includes two new initiatives: Elevate Next, launching January 1, 2026, and Elevate Beyond Bengaluru, starting February 1, 2026. These programmes will provide grants ranging from ₹50 lakh to ₹1 crore for startups and entrepreneurs in various sectors.

One of the key components of LEAP is the creation of new clusters across Karnataka. The state has identified six regions that will serve as hubs for innovation, including Mysuru, Mangaluru, Hubballi-Dharwad, and Kalaburagi. These regions are expected to attract significant investments in IT, startups, semiconductors, and global capability centers.

Mysuru region is already taking the lead among these clusters, with a focus on developing a digital economy worth $10 billion by 2030. This will create 1.5 lakh digital jobs and position Mysuru as a major tech hub in Karnataka. The state government has set ambitious targets for growth, including increasing the Gross State Value Added Product (GSVAP) from 26% to 36%, boosting software exports to ₹11.5 lakh crore, and creating over 25,000 startups.

Karnataka’s efforts to attract major tech investments are backed by a range of policies aimed at supporting innovation and entrepreneurship. The state has announced an investment of ₹967 crore in incentives under the new IT Policy for 2025-2030, which includes initiatives to attract large-scale investments in AI, quantum computing, cybersecurity, and other emerging technologies.

The policy also aims to expand Karnataka’s startup ecosystem by establishing up to 25,000 startups over the next five years, including 10,000 in regions outside Bengaluru. This will include efforts to provide customized funding, grants for women-led and rural enterprises, and support for grassroots entrepreneurship.

Despite these efforts, Karnataka still faces significant challenges in attracting major tech investments. The state’s lack of infrastructure, particularly in terms of internet connectivity and data centers, is a major obstacle. Additionally, the competition from other states like Andhra Pradesh and Tamil Nadu has been intense, making it difficult for Karnataka to stand out as a destination for tech investment.

However, the state government remains optimistic about its chances of attracting significant investments. With its business-friendly policies, thriving startup ecosystem, and growing infrastructure, Karnataka is confident that it can become a major player in India’s tech industry.

As the global tech landscape continues to evolve, Karnataka will need to adapt and innovate if it hopes to remain competitive. The state’s efforts to promote innovation and entrepreneurship through initiatives like LEAP and the new IT Policy offer promising signs of progress. To achieve this goal, significant investment is still needed to build out the state’s infrastructure and attract major tech players.

Ultimately, Karnataka’s success will depend on its ability to balance growth with sustainability, ensuring that the benefits of technology development are shared equitably among all stakeholders. With its rich talent pool, business-friendly policies, and growing infrastructure, the state has a solid foundation for attracting significant investments in the years to come.