With Bangalore's infrastructure continuing to crumble and real estate prices sky-rocketing, Infosys and Wipro, two companies synonymous with India's capital, are leading the flight of it firms to cheaper tier-II locations across the country. While Infosys already has a 300-acre campus in Mysore (including its much-vaunted leadership institute), it has also acquired 300 acres in the coastal town of Mangalore, 350 km west of Bangalore, while cross-town rival Wipro is also among the pack of around 20 companies heading to these two emerging locations. "There is no space for us to expand in Bangalore," quips T.V. Mohandas Pai, Director (HR), Infosys Technologies.
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Following in Bangalore's footsteps: Infosys' leadership institute in Mysore |
Since the 90s, breakneck growth in metros such as Mumbai, Delhi, Bangalore, Kolkata, and Chennai has left the cities overcrowded, while their infrastructure hasn't kept pace at all. With the result, mega cities have long expanded into suburbs. Delhi, for example, has clawed into Gurgaon and Noida.
What's happening now is that businesses are looking beyond the suburbs and farther into smaller cities such as Agra or Meerut, or, if you are in Mumbai, then Nashik and Nagpur. There's frenetic development taking place from Siliguri to Mangalore and from Ludhiana to Durgapur. It's not just offices that are coming up, but residential complexes, malls and entertainment centres. By all accounts, India's story over the next decade will be about these cities and how they morph into tier-I cities themselves.
Why we need alternative cities
The reasons are many and predictable.
Housing Crunch: Proper housing has become increasingly expensive and, therefore, scarce for a large number of city dwellers. Smaller cities tend to offer better housing at lower costs.
Better Infrastructure: It's easier to build bigger and better roads in small and less populated cities than in bigger cities, where unplanned expansion may offer little scope for urban changes.
Better Urban Planning: Zoning, which doesn't seem to exist in any Indian metro, can be better introduced and followed in smaller cities, and thereby, offer better standard of living to the people.
Better Civic Life: Municipalities tend to be inefficient and corrupt in the larger cities. In smaller cities, where the municipalities tend to be smaller and less sclerotic, there is opportunity to ensure better delivery of civic services.
Lower Cost of Living: For both employers and employees, the lower cost of living in smaller cities is a big attraction. Their coming, in turn, multiplies wealth in the local economy.
The IT Effect
One industry that has done more than others to turn around fortunes of smaller cities is IT and ITEs, especially in South India. Take Mangalore, for example. This coastal city is a big attraction for the BPO industry. MphasiS (now part of EDs) is looking to hire 3,000 people for its facility here, and there are other players as well looking to get a toehold in the city. Madurai is another city that's benefiting from the IT boom.
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There's wine too: M&M plant in Nashik |
Mysore
What the City Offers:
Nashik
What the City Offers:
Bhopal
What the City Offers:
Within Tamil Nadu, Coimbatore is another city that is angling for a ride on the IT bandwagon. For years, it has been home to industries like textiles and auto parts, apart from educational institutions that include a host of colleges. Although a latecomer to the IT party, it has managed to excite it majors like Cognizant Technology Solutions. More such players may troop in, if the city's plans of upgrading its infrastructure bear fruit. Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Coimbatore will get Rs 3,000 crore to modernise its infrastructure. It plans to invest that money in six-laning its major roads and improving sewerage and civic services.
Even cities in north and central India that have traditionally depended on manufacturing industries, are trying to woo it companies. Bhopal, for example, plans to set up a software and hardware technology park that is expected to host companies like Genpact, Fujitsu, and Taurus Microsystems (an American custom design engineering firm). The city has already seen growth in the market for technology products as is evident in the presence of a large number of hardware and software vendors at Maharana Pratap Nagar, a major commercial area. It's not hard to see why Bhopal wants it. Although investments by it companies tend to be small, the wealth they create per employee is vastly greater than what blue-collar industries do. Therefore, the economy that such jobs create is far more affluent.
Coimbatore
What the City Offers:
Durgapur
What the City Offers:
Siliguri
What the City Offers:
Ludhiana
What the City Offers:
Manufacturing: Mass Employer
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Already a prosperous city: Ludhiana has all the trappings of a metro |
That's not to say manufacturing is passé. It is still a key focus at cities like Nashik, Durgapur and Ludhiana. Nashik, for example, already has a significant auto industry thanks to Mahindra & Mahindra. That apart, it has a thriving wine industry that is getting noticed globally. Interestingly, Nashik is also the base for the National Treasury Printing Press apart from housing five industrial zones on its outskirts. "I have been watching Nashik for over a decade and it has changed from a one-horse town to one offering a multitude of shopping options and entertainment," says Rajeev Samant, MD, Sula Vineyards, which owns more than 300 acres in Nashik. The proximity to Mumbai has helped Nashik a great deal. According to Akshay Kumar, MD, Park Lane Property Advisors, beyond Mumbai and Pune, one cannot afford to ignore Nashik as far as Maharashtra goes. "It is cheap, has a population that is well educated and offers a good talent pool. The infrastructure, too, is reasonably good," says Kumar.
Speaking of manufacturing, West Bengal's Durgapur is another interesting story. It was in the late 50s that the place got its first major industry-a state-owned steel plant-that changed its fortunes. Following several periods of struggle, the city is now looking at new opportunities in the fields of metalwork, engineering, petrochemicals and telecommunications. "This vibrancy of Durgapur can be attributed to the revival of the iron and steel industry in the area," says Nirupam Sen, West Bengal's Commerce and Industries Minister.
Today, the Durgapur-Asansol belt has over 30 iron and steel units. The city of Durgapur, on its own, has a swanky Durgapur City Centre spread over an area of 3.7 lakh sq. ft, and a multiplex, to name a few things. If that's not enough, there is a Ginger hotel (of Roots Corporation) that has just come up in the city. Says Roots' CEO, Prabhat Pani: "Tier-ii and tier-iii cities are growing across the country. This belt is probably growing the fastest because this is backed by an extremely vibrant manufacturing and engineering industry."
Vizag
What the City Offers:
Mangalore
What the City Offers:
Madurai
What the City Offers:
Duragpur's peer in West Bengal, Siliguri, is catching up, too. Situated interestingly at a place where the borders of four countries-Bangladesh, Nepal, Bhutan and China-are in the vicinity, the region is often referred to as the Gateway to the North East. At one point, it was all about tea, timber, tobacco and tourism.
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Already a prosperous city: Ludhiana has all the trappings of a metro |
A bit of everything is what Visakhapatnam offers and that could well be its USP. It has a pharma city in the works, although drug companies like Divi's Labs has an SEZ in operation since last year and Dr Reddy's is planning one, too. It's also got it, thanks to HSBC, which has a group service centre here, and Satyam that has set up an 800-seat facility.
As Park Lane's Kumar puts it, "In the next 10 years, all the tier-ii and tier-iii cities will look completely different. The momentum of the Indian economy along with that of the local economy is what will work well for these cities." Let us hope he's right.
(With Rahul Sachitanand, E. Kumar Sharma, Ritwik Mukherjee,
Nitya Varadarajan and Kapil Bajaj)