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The top 5 cities to do business in India

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By Michael Moignard and Stephen Manallack, Directors, EastWest Academy Pty Ltd, India engagement advisor.

While New Delhi, Mumbai and Chennai might be the first thought for business locations in India, finding the right niche that plays to your strengths requires more research – there are some 53 cities in India with over one million people.

So, here are the “big three” plus some cities which have not been necessarily been on Australian radar – these are our personal ratings – what is your view? But even with the “big three” we suggest a different view as they embrace nearby cities.

 

5. Nagpur

Nagpur’s claim to fame is its location – right in the centre of India. Apart from New Delhi, it is the only city with rail connection to all state capitals. This makes it an ideal place for logistics within the central regions of the sub continent. It is located in the state of Maharashtra, but a few kilometres from Madhya Pradesh in the north. It houses the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) project. There is an opportunity to build a logistics base here. Companies including Mahindra Satyam, DLF, Sahara and Raheja all have bought land to create townships and there is a plan for Health City as a centre for healthcare. IT giants such as TCS and Infosys are building major centres here. It has also a tourism opportunity with tiger parks within striking distance.

4. Indore

If you are looking for a prize position on the Mumbai–New Delhi growth corridor (1,500 kms, over 6 states, transport, “smart cities” and Japanese money), and access to the transport infrastructure which links Mumbai and New Delhi, this would have to be on your list. Indore is a commerce and industrial city in Madhya Pradesh, strong now in IT (Infosys and TCS locating there) as well as a major healthcare and education centre. It is commercial capital of the state.

3. Gurgaon-Noida-New Delhi

Again, a different view – thinking of New Delhi, also think of satellite cities: Gurgaon (especially) and Greater Noida. Gurgaon is a diverse financial and industrial city and the Indian corporate headquarters of IBM, American Express, Microsoft, Bank of America and many more – 250 of the Fortune 500 companies are there. It was also one of the first offshoring locations thanks to GE. Good access to the political and decision making heart of New Delhi – which is also impacted by major population pressure. Retail is huge in Gurgaon with 26 shopping malls.

2. Mysore-Bengaluru

We suggest Mysore could be seen as your gateway to Bengaluru and the state of Karnataka – not as crowded and lower costs. Another benefit is the ranking as India’s second cleanest city. This ancient town is steadily being brought into the orbit of Bengaluru (just 145 kilometres away) with an upgrade of the road and communications links. Tourism, IT software development and education are mainstays of the economy here, plus the city is surrounded by four industrial zones, so it would be a good place to consider as an entry point to these sectors.

1. Pune-Mumbai

We take a different view on Mumbai and urge you to think Mumbai-Pune, fast becoming a conurbation of massive size. Mumbai is fast, expensive, has massive population pressure, proudly 24/7 and you have to be fully ready to go before having a conversation. Pune is a more affordable centre of education, manufacturing – with research/innovation of growing importance, and can be your more manageable and more liveable (along with Hyderabad highest ranking on Mercer 2015 Quality of Living rankings) gateway to Mumbai. Pune has just been ranked number two among India’s proposed “smart cities”.

Honourable Mentions

Chennai

Cultural capital of South India, seemingly slow and conservative but has attracted the third largest expat population after Delhi and Mumbai, so lots of westerners are doing good business there. Use it as a gateway to the substantial South Indian marketplace. But keep in mind, Tamil Nadu is experiencing a slowdown and Chennai was recently deposed as the third busiest airport, losing out to Bengaluru.

Hyderabad

This city is entering a new economic phase, acting in the short term as capital of two states, Telangana and Andhra Pradesh (whose new capital is to be Amaravati). This means the city is the access point to these two states, and to the opportunities for building the infrastructure required for the development of them. Hyderabad is a major IT and Pharmaceutical/Biotechnology centre. Some 90% of the people work in the services sector and Hyderabad is the fifth largest city contributor to Indian GDP. So, it is a big city that might be on your list. Along with Pune it was highest ranking on Mercer 2015 Quality of Living rankings. Telangana has manufacturing and mining opportunities.

Visakhapatnam

Known as Vizag this port city on the Bay of Bengal is part of the state of Andhra Pradesh, and is its largest city, acting as financial capital of AP. It is host to many industries, including steel, mining, and has a large naval facility.  The city has good to very good port, air, road and rail connectivity, and as a result is growing fast – with four new towns on its edges and “Smart City” status on the way. The next Confederation of Indian Industry (CII) Partnership summit will be held in Vizag in January 2017, a good opportunity to explore this city and its opportunities.

Kolkata

Not your first port of call in India, but worth investigation. This is one of India’s oldest business cities and it should not be overlooked if your interest is in mining, or IT. It is home to many Indian mining companies, especially Coal India. Its Salt Lake area is well known for IT and software development. Kolkata has a thriving arts community. You will be well hosted there, but business is at a more relaxed pace and locals will not be desperate to do a deal with you.

Ahmedabad

Again, an alternative view – why not consider Vadadora (140 kms from Ahmedabad) which is big in petrochemicals (Reliance Industries), engineering, pharmaceuticals, plastics and IT – thanks to the vision and influence of the Confederation of Indian Industries which pushed for and got a Knowledge City there – recently attracting Mastercard technology hub. Expansion of highways linking it to Ahmedabad and Mumbai make it attractive. For the long term, the corridor between Mumbai and Ahmedabad is worth attention – with India’s first bullet train scheduled to open their in 2024 – long term! Ahmedabad is the main business centre of Gujarat. Apart from its business opportunities in agriculture, construction, and energy, it is also a good base to consider opportunities in other centres between it and Mumbai. It has a thriving chemicals and pharmaceuticals sector and is home to two of India’s largest pharma companies. Real estate prices are quite steep.

There are many other cites which may be right for you. The list could easily include Jaipur, Trivandrum, Mangalore, Coimbatore, Nashik, Lucknow, Chandigarh, Bhopal, Surat, Kochi, Belgaum, Kanpur, Patna, Ludhiana and Kozhikode (Calicut).

You should consider India as a ‘market of markets’. Your market entry strategy should examine where your value proposition best matches market opportunity. That opportunity may not always be in one of the six mega cities of India. You need to be nimble and flexible in India. Let’s have a lively discussion – what is your experience and view?