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Karnataka i4 policy- what is it all about?

I4 policy stands for IT, ITES, Innovation Incentives Policy. India’s IT capital Bangalore today stands as the second largest IT hub in the world next only to Silicon Valley with over almost 11 lakh direct and over 27 lakh indirect employment. According to industry sources, by the year 2020 the city will take over Silicon Valley as the largest IT hub in the world.


  • To put Karnataka and more so Bangalore as the preferred Global Investment Destination for IT/ITES/BPO/KPO sectors.
  • To give more focus to startups, web and mobile based industry like animation, graphics, Electronic Systems Design and Manufacturing(ESDM)
  • To strengthen Karnataka’s position as an IT cluster to create many e-governance projects all through the state to improve people’s lives out there in the state.

Main highlights:

Employment Linked Incentivization  of Land Allotment (E-LILA) outside Bangalore Urban and Rural Districts’ Limits-

  • Land should be allotted to IT/ITES/other animation based enterprises at a concessional price and it should lead to employment generation for investments outside the limits of Bangalore Urban and Rural District to promote Tier 2/3cities which are considered emerging IT cities by KIG 2020 Report of the Government of Karnataka.
  • This incentive is applicable only to direct end users and not real estate developers.
  • Existing companies of a district cannot apply for benefits from another district.
  • To avail the benefits, an enterprise should employ at least 1000 people or above with a salary of minimum Rs 10,000 per month for a minimum period of 2 years.
  • Subsidy is directly related to job creation with 1 acre land will be allotted to any enterprise over 1000 jobs created.
  • The maximum subsidy limit for one time is of INR 60,000 for each such employment is created.
  • No extra cost would be paid by the government except INR 60,000.


  • Any startup is eligible to space along with free internet at a minimal rate of Rs 5-15 per sq. ft.
  • A startup although has to vacate the space once it reaches milestones in revenue or employment.


  • When it reaches a revenue of Rs 25 crore in Bangalore
  • A revenue of 15 crore in Mysore-Mangalore
  • 10 crore in other locations


  • When it employs 50 technically experienced people in Bangalore
  • 35 technically qualified people in Mysore-Mangalore
  • And, 25 technically qualified people in other areas.

 Single Window Clearance Agency: Karnataka government has authorized the departments of IT, BT and S&T to act as a Single Window Clearance Agency for IT/ITES/other enterprises including startups.


  • Government of Karnataka has exempted IT/ITES/other enterprises from applying of Karnataka Industrial Employment Rules, 1946 for a period of 5 years up to 2018. Al though appropriate working environment for women and stricter actions for sexual harassment should be taken into serious accounts.
  • Instead of Commercial Power Tariff, Industrial Power Tariff would be applicable to the enterprises under this policy.
  • The state government will reimburse Provident Funds or Employees’ State Insurance (ESI) of Rs 2000/- per employee per month for a period of 2 years to all the new employment that has been created in Tier 2/3 cities.
  • All the IT/ITES/BPO/KPO/Telecom/other animation based enterprises would get 75% of stamp exemption from the government.
  • Brand Bangalore 3.0 Society and a “Bangalore First” Fund would be created to promote Bangalore along the lines of India Brand Equity Fund set up by GoI. This fund would be utilized to launch Karnataka as ‘the’ place for technology investments and IT industries.

The main agenda is to make Karnataka as a place for startups and SMEs to promote entrepreneurship among people from all walks of life.

For more information, read Govt of Karnataka i4-policy



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