Karnataka’s Big Push Beyond Bengaluru: Can Mysuru, Mangaluru or Hubballi Become the Next Startup Magnet?

Karnataka has introduced the IT-BT Policy (2025–2030) to decentralize its tech economy by encouraging startups to establish themselves outside of Bengaluru, aiming to develop cities like Mysuru, Mangaluru, and Hubballi into major tech hubs

The policy includes strong financial incentives, such as a 50% reimbursement on office rent, 30% property tax relief, and up to ₹50,000 per employee for talent relocation, to make these cities more attractive to startups

Additional benefits include full waiver on electricity duty for five years, 25% rebate on telephone and internet bills, and a substantial 40% reimbursement on R&D; expenses, particularly for deep tech sectors like AI and quantum computing

The government has allocated ₹960 crore to support this initiative over the next five years, with applications for incentives opening in December 2025

The policy announcement sparked significant online debate, with supporters praising its potential to relieve pressure on Bengaluru and spur growth in secondary cities, while critics warned against over-urbanization impacting local culture

Realists in the startup community see the incentives as too tempting to ignore, suggesting that the first-come-first-served nature could drive a rush to apply

Challenges remain, including whether Tier-2 and Tier-3 cities have the infrastructure to support rapid scaling and whether employees can be convinced to relocate from Bengaluru’s well-established tech ecosystem

Concerns about sustainable development highlight the need to balance growth with preserving the cultural and environmental identity of cities like Mysuru and Mangaluru

The policy represents a significant strategic move by Karnataka, aiming to reshape its startup landscape and reduce reliance on Bengaluru as the sole tech hub

The success of this policy in the coming years will determine if Karnataka can set a precedent for decentralized innovation or if it will struggle to gain real-world traction