Karnataka Startup Policy 2025–2030 Targets 25,000 Startups Beyond Bengaluru

Karnataka has announced the Startup Policy 2025–2030, with an outlay of ₹518.27 crore to boost 25,000 new startups over the next five years — including 10,000 outside Bengaluru. The state is doubling down on deep tech, regional incubation, women-led businesses, and industry collaborations to spread innovation to cities such as Mysuru, Mangaluru, Hubballi-Dharwad, and Kalaburagi.

Karnataka has rewritten its startup playbook with a policy designed to drive innovation beyond Bengaluru and into regional centres. The Startup Policy 2025–2030, recently approved by the state cabinet, will support the establishment of 25,000 startups in five years, with 10,000 of them located outside Bengaluru.

The policy represents a strategic shift: instead of concentrating resources in one urban cluster, the state aims to develop a distributed startup ecosystem, aligning capital, mentorship, and infrastructure with the strengths of local industries. Priyank Kharge, Minister for IT and Biotechnology, described the approach as “participatory and market-aware”, adding that the government intends to act as “the first customer” for startups where procurement is viable.

Regional Focus: Centres, Grants, and Jobs

A key design element of the policy is regional clustering. Cities such as Mysuru, Mangaluru, Hubballi-Dharwad, and Kalaburagi are listed as priority nodes where the state will establish incubators, Centres of Excellence, and R&D hubs.

As a short-term measure to stimulate local ecosystems, the plan includes one-time capital grants of up to ₹50 lakh for private incubation centres and PF/ESI reimbursements of ₹3,000 per employee per month (up to ₹12 lakh per firm) during the first two years.

These measures are aimed at reducing the fixed costs of startups and encouraging founders and talent to build locally. For regions that have long exported founders to Bengaluru, these incentives aim to tilt the odds in their favour—motivating entrepreneurs to build companies where they originate rather than relocate.

Deeptech and Commercialisation: The New Priorities

Unlike previous iterations, the 2025–2030 policy foregrounds deeptech domains—including artificial intelligence, blockchain, quantum computing, and semiconductor design—and links incentives directly to research commercialisation. The state plans to subsidise cloud storage and R&D while supporting Centres of Excellence that translate lab research into products and intellectual property.

Karnataka’s approach recognises a persistent challenge: patent filings and lab research alone do not guarantee market success. Hence, the policy ties financial incentives to measurable outcomes such as productisation, industry partnerships, mentorship, and performance-linked support—nudging projects toward viable business models.

Women-Led and Inclusive Entrepreneurship

The policy includes targeted measures to foster inclusive growth. It reserves investments and support initiatives for women-owned businesses, rural entrepreneurs, and social-impact models. Individually customised training programmes, state-subsidised industry certifications, and mentorship-based financial assistance are designed to broaden participation in the state’s innovation economy.

For a state that already hosts over 18,000 startups and a significant share of India’s recognised ventures, this shift toward diversity and inclusion represents an intentional effort to make the ecosystem more equitable and resilient.

A notable aspect of the policy is the government’s willingness to act as a buyer. Kharge’s statement that the government will serve as “the first customer” underscores a procurement-led scaling model, where the state creates initial demand signals that help startups overcome the “first-customer” barrier. This model could be particularly effective in healthtech, agritech, and smart cities, where public deployments validate solutions and open commercial pathways.

Risks and Execution Challenges

While the targets are ambitious and the incentives attractive, success will depend on execution—especially the speed of fund disbursements, clarity in performance metrics, and the ability to attract mentors and industry partners to regional hubs.

Beyond funding, ecosystem enablers such as talent availability, quality co-working spaces, local angel networks, and consistent regulatory practices will be essential to sustain startups in smaller cities.

A recurring challenge will be balancing breadth and depth. Spreading funds across 10,000 non-Bengaluru startups risks diluting impact if resources are thinly distributed. While the policy’s performance-based incentives aim to counter this, strict monitoring and responsive governance will be crucial to ensure meaningful outcomes.

Karnataka’s new startup policy reframes state-level industrial strategy for the deeptech era—combining procurement, capital, and regional hubs to create multiple innovation nodes instead of a single megacluster.

For founders, investors, and corporations, it opens fresh opportunities beyond Bengaluru—from local product pilots to regional talent engagement.

If executed effectively, the policy could accelerate India’s deeptech ambitions while democratising startup benefits across the state. As India enters its deeptech decade, Karnataka’s experiment will serve as both a model and a test of whether public policy can truly broaden and deepen national innovation capacity.