Karnataka ranks as number two top investment destination in the country after Gujarat with 1,528 projects worth Rs 9.1 lakh crore underway, according to industry body ASSOCHAM.

In Gujarat, 1,455 projects worth Rs 13.35 lakh crore are underway, ASSOCHAM officials said.

Nearly 44 per cent of the 1,528 projects in Karnataka are in manufacturing sector followed by 22.4 per cent in services, 15 per cent in power and about 14 per cent in real estate.

The projects are in different stages of implementation, said ASSOCHAM (The Associated Chambers of Commerce and Industry in India) in its study titled ‘Karnataka - Next Growth Leader in the Making’, unveiled in Bangalore on Thursday.

The study was jointly released by ASSOCHAM President Dilip Modi, Co-Chairman of ASSOCHAM Southern Regional Chapter, J Crasta and ASSOCHAM’s Secretary General, D S Rawat.

Investment flows into manufacturing sector marked a 107.8 per cent jump during 2010 compared to the previous year while those in services sector registered a healthy growth of 76.5 per cent.

Investments in real estate and irrigation sectors witnessed 30.2 per cent and 19.3 per cent, respectively.

“We appreciate the efforts made by current leadership to realise the growth potential”, Mr. Modi said. “ASSOCHAM believes that Karnataka needs to build further on its present strength”.

Since 2000-01, the services sector has clocked an average growth rate of nine per cent and accounts for nearly 56 per cent share of the state domestic product while industrial sector contributes 28.5 per cent (with 9.3 per cent growth) and primary sector 15.7 per cent (with negligible growth).

ASSOCHAM study said Karnataka must reduce unproductive subsidies.

It called for special focus on micro, small and medium enterprises (MSMEs) and capitalising on the existing sectoral capacities.

“The State should promote industrial estates in backward regions in public private partnership mode by announcing special incentives and further streamlining single window clearances system which are essential elements of successful industrial policies”, ASSOCHAM said.

It suggested revival of state level development finance institutes to help MSMEs.