The Karnataka Cabinet has approved the Karnataka Aerospace Policy 2026-2031, targeting investments of Rs 60,000 crore and the creation of 60,000 jobs over the next five years. Announced following a cabinet meeting on Wednesday, the policy aims to expand the state's aerospace, defence, aviation, and space manufacturing ecosystem beyond Bengaluru into regional districts.
Deputy Chief Minister Dr G Parameshwara briefed reporters on the sweeping industrial and welfare decisions, noting that the administration has structured differentiated capital subsidies to encourage private sector participation across distinct regional zones. The state also cleared a parallel textile policy, agricultural mechanisation initiatives, and digital infrastructure funding across multiple government departments.
Aerospace and Defence Investment Framework
The newly approved aerospace framework establishes a tiered capital subsidy model designed to drive industrial decentralisation away from the capital. Subsidies have been fixed at 30% in zone one and 25% in zone three, marking a sharp increase from previous policy thresholds that ranged between 1.75% and 2.25% in non-focus areas. The framework specifically targets aerospace and defence manufacturing, aviation, space technologies, drones, and avionics.
To support the broader high-technology manufacturing sector, the cabinet approved a drone testing facility at Jedarahalli in Chintamani taluk of Chikkaballapur district at an estimated cost of Rs 42.83 crore. Additionally, an artificial intelligence hub was cleared for IIIT-Bengaluru with an allocation of Rs 35 crore to train students through internships and practical projects, alongside a Rs 25 crore public procurement initiative under the ELEVATE program.
Regional Employment and Worker Housing Initiatives
To address economic disparities across regional districts, the cabinet sanctioned the Udyoga Nidhi scheme based on recommendations from the Prof M Govinda Rao Committee. Targeted at ten backward districts in north Karnataka, the program provides an incentive of Rs 2,500 per worker per month for two years to industries creating formal jobs and meeting EPF obligations, backed by an initial budgetary provision of Rs 300 crore.
The government also introduced the Shramika Nivasa initiative to encourage industrial employers, including IT and biotechnology firms, to construct worker accommodation close to manufacturing units. The administration plans to offer tax concessions and establish standardized guidelines for housing development in phases, supplementing broader industrial land policies across focus taluks.
Agricultural Mechanisation and Textile Sector Push
In the agricultural sector, the cabinet instituted the Chief Minister Negila Yogi scheme with an outlay of Rs 152.28 crore to combat rising agrarian fallow land. Operating initially as a pilot project across 31 taluks, the initiative will procure approximately 500 tractors to provide free ploughing services to farmers owning up to three acres, drawing on successful models observed in Gauribidanur.
Simultaneously, the New Textile and Readymade Garments Policy 2026-2031 received formal approval, targeting Rs 20,000 crore in investments and establishing apparel parks across 33 identified focus taluks. The textile framework incorporates silk industries for the first time and will provide credit-linked capital and power subsidies, backed by an estimated Rs 4,000 crore in government investment support.
Democratic Revival and Public Infrastructure Programs
Beyond industrial policies, the cabinet approved the revival of student union elections in state colleges and universities starting from the 2026-27 academic year. Formulated after recommendations by a ministerial committee led by Dr Sharana Prakash Patil, the proposed student bodies will mandate reserved positions for women while barring official affiliation with political parties, though students retain individual political freedoms.
Infrastructure and administrative upgrades formed a major component of the meeting, including the approval of the Shakti Smart Card project for KSRTC at Rs 237 crore and Rs 10.78 crore for tele-ICU hardware across 185 health institutions. The cabinet also pegged state drought losses at Rs 18,000 crore across 101 declared taluks, confirming plans to submit a memorandum seeking federal assistance under National Disaster Response Fund guidelines.
State officials will finalize pending drought assessments for remaining taluks while administering upcoming land distribution and urban ring road master plans to support the state's rising urbanisation rate.
