The Karnataka government is paying startups to leave Bengaluru, offering massive subsidies for tech companies that move to tier 2 cities, in a bold bid to decentralize India’s Silicon Valley under its new IT Policy 2025–2030.
Incentives include 50% reimbursement on rent (up to ₹2 crore), a 30% property tax rebate for three years, and a 100% waiver on electricity duty for five years. Companies can also claim 25% back on phone and internet bills, and up to 40% reimbursement on R&D expenses, capped at ₹50 crore, for work in areas like AI, blockchain, and quantum computing.
“The government is paying you to move out of Bangalore,” investment banker Sarthak Ahuja wrote in a LinkedIn post that’s gaining traction in the startup community.
“The Karnataka govt wants you to set up your tech startup in a tier 2 city like Mysore or Mangalore… and this is all part of the new IT policy.”
According to Ahuja, the state has allocated nearly ₹960 crore over five years to fund the program, and companies can expect to start applying by early to mid-December once detailed guidelines are released.
He warned that each incentive category is capped at 100 applicants, making it a first-come, first-served race.
To qualify, operations must be set up or expanded in designated tier II or III cities outside Bengaluru—specifically Mysuru, Mangaluru, Hubballi-Dharwad, Belagavi, Kalaburagi, Shivamogga, Davanagere, or Tumakuru.
The policy is a cornerstone of Karnataka’s “Beyond Bengaluru” strategy to ease pressure on its congested capital while spreading economic growth across the state.
In Ahuja’s view, it’s a golden window: “The state wants to supercharge its next wave of tech cities—this is their bet, and it’s backed by real cash.”
Final application procedures and terms are expected in the coming weeks, but the message is clear: if you’re a startup in Bengaluru, Karnataka will pay you to leave.
