Union govt should not dictate to semiconductor companies on where to invest: Karnataka minister MB Patil  

Karnataka minister for Large and Medium Industries and Infrastructure MB Patil was speaking at the CNBC TV18 - Moneycontrol Global AI Conclave in Bengaluru

Taking a swipe at the BJP-led Union Government, Karnataka Minister for Large and Medium Industries and Infrastructure, M B Patil, said that semiconductor companies express interest in Karnataka, visit Delhi, and then never return.

He was speaking at the CNBC TV18 - Moneycontrol Global AI Conclave moderated by Network18 group Consulting Editor Bodhisatva Ganguli and Moneycontrol Deputy Executive Editor Chandra R Srikanth,  in Bengaluru on November 22.

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Patil also accused the Union Government of diverting semiconductor investments that were initially inclined to set up operations in Karnataka. "Semiconductor investments in India are being steered by the Union Government. Many companies approached us—they came here, met with us, and then went to Delhi. However, they did not return," he said.

Patil said, "In the case of the US-based microchip manufacturer Micron Technology, 50 percent of the project cost is from the Union Government and 20 percent from the Gujarat Government. We might as well call it a PSU (Public Sector Undertaking). I have also discussed this matter with Union Minister for Heavy Industries and Steel HD Kumaraswamy".

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He said: "If the Government of India wants to develop the semiconductor industry, they cannot dictate where these companies should go when they visit Delhi. This should not happen. Ultimately, it’s about the country’s overall development. States must promote themselves based on merit and their ability to attract investments".

Gunjan Krishna, Commissioner, Karnataka's Department of Industries and Commerce, said the state is also attracting investments in the semiconductor sector. "In ATMP (Assembly, Testing, Marking, and Packaging), the Tatas have completed their first proof of concept (POC) here in Karnataka. Similarly, companies like Applied Materials, Lam Research and AMD, active in the semiconductor sector, have made significant investments in Karnataka."

Bengaluru competes globally: minister

Patil said that Karnataka and Bengaluru compete on a global scale. "The ecosystem and talent here are on a completely different level. While there is competition in manufacturing, particularly from Tamil Nadu and parts of Maharashtra like Pune in the automotive sector, Karnataka leads in IT, biotechnology, aerospace, and defence. About 60 percent of the national share in these sectors comes from Karnataka. We also excel in machine tools, which places us in a league where we compete with the world," he said.

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Asked about Karnataka losing manufacturing industries to neighbouring states, Patil said, "In this competitive environment, there’s a lot of cut-throat competition among states. Recently, one company approached us with demands that were excessive. Bengaluru is not desperate to offer such concessions. We have other EV companies like River and Ultraviolette Automotive Pvt Ltd., which have set up their manufacturing facilities here. While we have attracted many players, it’s true that we’ve lost some opportunities."

Karnataka is the AI capital of India

Krishna added,  "We are already the AI capital of India. In fact, around 1.2 million people are employed in this sector in Karnataka, working in areas such as AI, machine learning, robotics, and quantum computing."

"We are the second-largest hub for AI talent in the world. This is why any company looking to do something innovative chooses Karnataka and Bengaluru for their product development." she said.

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"AI is integral to every sector," said Krishna. "For instance, in aerospace and defence, it plays a crucial role. In the machine tool industry, it’s equally vital. While we may not have a specific AI policy, it is part of the Global Capability Center (GCC) policy. Most of the R&D happening here—since Texas Instruments first came in 1985—has transformed Bengaluru from a back-office hub to a front-office leader, now driving cutting-edge innovation."

"Most companies, whether in semiconductors, telecom, healthcare, or drug discovery, are leveraging AI to enhance their research, tapping into the talent pool available in Karnataka," she said.

Policy changes required for China+1 strategy

Patil also called for policy changes to help India benefit from the China+1 strategy. "If the Indian government implements certain policy changes, the country could see significant benefits as companies adopt a China+1 strategy. Right now, we are not fully capitalising on this opportunity, as countries like Vietnam and Indonesia are benefiting more." he said.

Global companies are adopting the China+1 strategy to diversify their production and reduce reliance on China.

Krishna said that many companies from Japan and Korea are now showing interest in India. "Japanese companies, in fact, are looking at our Japanese industrial park in Tumakuru, which is now full. We also have a Taiwan-specific park here in Karnataka, near Bengaluru airport, which is already getting fully booked. This shows the influx of companies coming in, and we are seeing a very positive response."

Krishna said that countries like Germany and France are also increasingly involved in sectors like aerospace, defense, electronics, and EV battery manufacturing. "China+1 is a reality, and India is definitely going to benefit. Nowhere else will companies find the kind of consumer base that we have—330 million middle-class people. When companies look to invest, they assess the consumption potential and export opportunities, and India is excelling in both areas."

She added, "What we need now is more ease of doing business, plug-and-play facilities, and a more welcoming environment for these industries. We are seeing a very positive response everywhere."

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