Karnataka's angst: AP may bag its project, use its logistics, labour as well

Karnataka's decision to withdraw the acquisition of 1,777 acres of fertile farmland in Channarayapatna and surrounding villages near Devanahalli for industrial and aerospace development has come as a relief for farmers, but seems to have put the Siddaramaiah governement in a quandary.

The state that lost significant investment due to the decision may also end up providing logistical support, including access to Bengaluru airport and labour, to Andhra Pradesh.

The Chandrababu Naidu government in Andhra Pradesh is trying to woo the aerospace companies that couldn’t set up shop in Karnataka, by strategically offering them available land close to Karnataka's Chikkaballapur and Tumakuru districts.

Tough call

The Congress-led government in Karnataka, on Tuesday (July 15), announced that land near Kempegowda International Airport will not be acquired forcibly for an aerospace park. “Only land from consenting farmers will be considered, and we aim to protect the soil and still create jobs,” Chief Minister Siddaramaiah said.

Also read: Karnataka halts land acquisition for aerospace projects, AP govt seizes opportunity

However, with the Devanahalli project now shelved, the spotlight has shifted to what happens to the aerospace industries that were preparing to set up there.

According to officials, Karnataka was expecting investments to the tune of Rs 50,000 to Rs 60,000 crore through the now-scrapped project. This would have not only created thousands of jobs but also generated significant tax and non-tax revenue for the state.

With the land acquisition cancelled, the question is: Where will these companies go now?

Andhra’s strategic move

Almost immediately after Karnataka withdrew the notification, Andhra Pradesh sprang into action. State IT Minister Nara Lokesh, who is also Naidu son, issued an open invitation to aerospace companies to shift to the state, offering 8,000 acres of ready-to-use land, attractive incentives, and fast approvals.

But Andhra’s strategy goes deeper than just land availability. Lokesh is targeting Penukonda and Madakasira — both towns in Andhra Pradesh’s Sri Sathya Sai district that border Karnataka’s Chikkaballapur and Tumakuru districts, respectively.

Crucially, both are just about 80 km away from the Kempegowda International Airport in Bengaluru. The proximity would allow companies to operate out of Andhra Pradesh while fully relying on Bengaluru’s airport, roads, and workforce.

Karnataka’s conundrum

“It’s not the availability of 1,000 acres that’s the problem — we can arrange that elsewhere in Karnataka,” a senior official from the Karnataka Industries Department told The Federal. “But the free land offer from Andhra, along with access to Bengaluru’s infrastructure, is the real challenge.”

Also read: Devanahalli land acquisition: Karnataka drops plan after 1,200-day farmer protest

"KIA Motors built its plant in Penukonda after securing land at a lower price following negotiations with Karnataka. Now, a similar situation is unfolding again," he added.

Karnataka’s Industries Minister MB Patil said the state is still committed to supporting aerospace industries. Companies will be offered land in other regions such as Mysuru, Tumakuru, Bagalkote (Hattaragi), Chamarajanagar, and others, he added.

Patil dismissive of AP offer

Patil emphasised that value-added industrial parks and infrastructure are already in place, and that Rs 3,600 crore has been allocated for water supply and utility support to industrial zones.

Patil dismissed Andhra’s offer as superficial. “Just because land is offered doesn’t mean companies will shift. Ecosystem and business environment matter more,” he said.

He also pointed out that Karnataka accounts for 65 per cent of India’s aerospace exports, and is globally ranked as the third-best aerospace ecosystem. “We are not just talking about aerospace — we have land for AI, deep-tech, and IT industries too,” he added.

Watch | Farmers near Bengaluru airport stand firm against govt

Why Andhra’s offer is tempting

Siddaramaiah and senior bureaucrats have also tried to downplay the impact of the decision, saying Karnataka’s long-term industrial strength remains intact. They believe most companies would prefer to stay in the state, even if they have to wait a little longer for alternate land parcels.

Still, industry insiders are concerned. While Karnataka's long-term advantages — skilled human resources, infrastructure, and a robust supply chain — remain intact, the lack of immediately available land near Bengaluru has made Andhra Pradesh’s offer more tempting for new investors.

Andhra is offering speed, cost savings, and hassle-free clearances, while still letting companies tap into Bengaluru’s ecosystem — without paying Bengaluru prices.

Also read: Karnataka farmers oppose land acquisition, burn survey team’s drone, laptops

BJP slams Siddaramaiah govt

Meanwhile, a political controversy has erupted in Karnataka over the issue. State BJP president BY Vijayendra accused the government of sending the wrong signal to investors and “chasing industries out of Karnataka.”

Patil hit back, saying the Opposition is being opportunistic and that it would have opposed land acquisition had it moved forward.

As of now, no company has officially withdrawn from Karnataka or confirmed a move to Andhra Pradesh. Government sources say efforts are underway to convince companies and offer suitable alternatives.

Still, the threat is real. If even a few companies cross the border to Andhra’s Madakasira or Penukonda, Karnataka risks losing industrial investment while continuing to serve as the logistical and infrastructural base.