Fortune India Startup Summit: States fiercely competitive for FDI, says Karnataka Minister Priyank Kharge

Indian states are becoming increasingly aggressive in attracting foreign direct investment (FDI), with competition now sharper than ever, Priyank Kharge, Karnataka’s Minister for Electronics, IT/BT, Rural Development and Panchayat Raj, said at the Fortune India Startup Summit 2026. 

Speaking during a fireside chat with Fortune India’s Rukmini Rao, Kharge said states are “fiercely competitive” in pitching themselves as investment destinations. However, Karnataka’s strategy goes beyond merely seeking investments. 

“We do not pitch Karnataka as an investment destination. I pitch it as a destination for skills, knowledge, collaboration and co-creation. That is what makes the difference,” Kharge said. 

He noted that Karnataka has built a strong innovation ecosystem comprising skilling centres, incubators, centres of excellence and accelerators, backed by supportive policies and budgetary allocations. “This entire pyramid has been built through collaboration. The policies we make are by the industry, of the industry and for the industry,” he added. 

On the relationship between the government and the private sector, Kharge said attracting investments remains challenging, but Karnataka has stayed ahead through proactive policymaking. 

“It is very difficult to attract investment, there is no doubt about that. But Karnataka has been doing this for a long time, and our policies speak for themselves. We were the first to introduce IT policy, BT policy, cybersecurity policy, GCC policy and more,” he said. 

Kharge said the state’s close engagement with industry leaders has helped it remain responsive to emerging trends. “Karnataka is on a better plane. Data speaks for itself,” he added. 

Role of private capital in startups

Addressing the role of private capital in startups, Kharge said governments need to step in where private investors are reluctant to take early-stage funding risks. 

“The private sector is not always ready to take the greater risks of seed capital. That is where the government can step in,” he said, citing Karnataka’s Elevate programme. 

He said the initiative has funded more than 1,300 startups, helping them secure follow-on investments and access mentoring from corporates. “No other state in India has funded seed capital for so many startups,” he claimed. 

On Bengaluru’s evolving identity, Kharge said the city is moving beyond its traditional image as India’s IT capital to become a global innovation hub. 

Bengaluru: The most restless idea of India right now

“Bengaluru is probably the most restless idea of India right now. It is one of the most disruptive cities in the world. We have moved up the value chain,” he said. 

Kharge added that the state is encouraging startups to think beyond conventional models and innovate boldly. 

Responding to concerns over Karnataka’s proposed social media policy, Kharge rejected claims that the state intends to ban social media platforms. 

“There is a false narrative that Karnataka wants to ban social media. We do not want to ban social media. We just want to regulate it,” he said. 

He cited concerns around child safety online, saying over 1.8 crore people in the state are below the age of 17, with more than 70% using at least one social media platform. Of these, over 60% are exposed to inappropriate content, while around 40% face cyberbullying or cyber fraud. 

“It is the responsibility of the government, social media platforms, educational institutions and parents. It has to be a shared responsibility. We will come up with a policy for sure,” Kharge said.