The Karnataka government has withdrawn the special investment region status granted to the Peenya Industrial Area, reversing a decision made just a year ago. The move deals a blow to plans for a separate governance model for one of Asia's largest industrial clusters.
Government Notification Details
In a notification issued on Tuesday, the urban development department stated that the proposal to notify Peenya as a special investment region and transfer its administration to the Karnataka Industrial Areas Development Board (KIADB) cannot be implemented. The government explained that the Peenya Industrial Area already falls within the jurisdiction of corporation limits, and therefore cannot be brought under KIADB or any other authority by removing it from the civic administration framework.
Impact on Industrial Township Plans
The rollback is seen as a setback to efforts aimed at creating a dedicated industrial township for the Peenya cluster, which continues to face major civic infrastructure issues, including poor roads, drainage, and waste management problems. The notification clarified that apart from Peenya, 17 other special investment regions announced by the industries department will continue to be governed under the Greater Bengaluru Governance Act-2024, the Karnataka Municipal Corporations Act-1976, and the Karnataka Municipalities Act-1964. Local bodies and municipal corporations will retain administrative powers, including property tax collection and other civic responsibilities.
Previous Status and Proposed Model
In June 2025, the government had issued a notification declaring Peenya's 1st, 2nd, 3rd, and 4th phase industrial areas, spread across 1,461.5 acres, as a special investment region. That notification had appointed KIADB as the nodal agency to administer the region and collect taxes. Under the proposed model, 70% of the revenue generated through taxes was to be used for improving civic infrastructure within the industrial area, while the remaining 30% was to be shared with the city corporation under whose jurisdiction Peenya falls.
Economic Significance
The Peenya Industrial Area houses more than 13,500 industrial units, provides employment to over 14 lakh people, and contributes over Rs 8,500 crore in taxes to the government annually.
Industry Reactions
Shiva Kumar R, former president of the Peenya Industries Association, said the government's decision to declare Peenya as a special investment region had brought no change on the ground for industries. He noted that the government had promised the formation of a 15-member committee, but industries were given representation only through two members, while the majority were government officials. Even that committee was never formed.
He alleged that although KIADB has been collecting taxes, there is no clarity on how the funds are being utilized or any concrete plan for infrastructure improvement. Kumar pointed out that property records remain a major issue, with khatas originally issued by the erstwhile BBMP. Over the years, original plot owners have sold portions of their properties, and multiple industrial units now function within a single plot. KIADB has failed to address issues related to property identification numbers and ownership records.
Infrastructure Concerns
Criticizing the poor condition of roads in the industrial hub, Kumar said infrastructure remains neglected despite its economic importance. He claimed that Peenya industries are located close to the national highway, but even village roads are in better condition than roads there. There was hope for an industrial township authority on the lines of the Electronics City Industrial Township Authority (ELCITA), but that model never materialized. On the latest proposal to bring Peenya under the Greater Bengaluru Authority framework, Kumar said industry representatives are yet to receive clarity from the government.
