Three-Part Series: Top 3 Emerging Cities in India; 2
When ventures start looking for areas to expand internationally, they tend to focus on the largest markets. However, in some countries, that may not be your best market entry bet. In India, its largest Tier 1 cities come with their fair share of challenges, such as overpopulation, inadequate infrastructure, pollution, poor public transportation, and long commutes. If you’re looking to expand to a large market with less challenges seen by the congested and trendy areas, it would be worth your time to explore India’s top Tier 2 and 3 cities first.
Tier 2 and 3 cities are worth the consideration, especially as connectivity increases between each city and their economic activity continues to grow. These places come with great benefit, such as less expensive labour, affordable real estate, less resistance to change, and assistance from the Government of India’s Smart Cities Program. Currently, a number of the Tier 2/3 cities are situated in business-friendly states that already have, or will have, the proper infrastructure required for large-scale economic activity.
Note: Government of India’s Smart Cities Program is geared toward developing new city infrastructure and implementing smart technologies to improve the performance and quality of current urban services.
In this series (link to first instalment) we will go over three emerging cities that have been thriving in recent years and may correlate with your future business expansion. See below for our last instalment and see our previous city highlights here (link to second instalment).
This Month’s Emerging City
Coimbatore, a city in the Southern state of Tamil Nadu, is the second-largest with a population of roughly 1.5 million. The city is often recognized as the ‘Manchester of Southern India’, thanks to the textile industry and is the best Indian emerging city in the annual survey (India Today; 2014), and the safest city for women, according to the National Crime Records Bureau (2015). The majority in Coimbatore speak Tamil, but typically have an understanding of English as well — making it easier for primarily English-speaking businesses to find roots.
The city is well connected by air, road, and rails, due to the work of the Coimbatore Urban Development Authority. This makes commuting and sourcing talent easier. Coimbatore’s thriving sectors are in engineering, textiles, tourism, and more recently IT.
The 4 Core Sectors of Coimbatore
The first textile business in Coimbatore was established in the 19th century and now, the city holds the majority of textile activities in India. These include, knitwear, weaving, spinning, and more with approximately 40% of Tamil Nadu’s spinning units located in the city. Coimbatore is mainly responsible for exporting home furnishings, knitwear, and woven apparel to different countries in bulk.
With the involvement of technology and the government on the manufacturing front, the textile sector is flourishing. There are approximately 600 cotton mills and 15 fabric production mills. Some of the most notable of these mills being KG Denim and Lakshmi Mills. Most of them are now associated with the South India Textile Research Association (SITRA), which helps them in with their research and development departments.
Coimbatore is often referred to as the ‘pump city of India,’ due to housing the majority of renowned motor pump brands — supplying nearly 40% of India’s requirements.
The engineering units in Coimbatore are greatly diversified, despite the nomenclature. It is the most reliable auto parts destination for outsourcing; manufacturing units for Larsen & Turbo, Titan, and ACC Limited. Companies like Craftsman Automation, and Hirotec reside in Coimbatore. Further, due to being ideal for suppliers and hosts an emerging IT hub, Robert Bosch GmbH has also based its technical centre there.
Emerging IT hub
Coimbatore is the second leading city for producing software in Tamil Nadu. With the launch of technical parks like TIDEL and KCT, Coimbatore is now hosting the IT and BPO operations for companies like Amazon, Ericsson, and Cognizant.
IT start-ups are not far behind these large companies. In 2019, AppView X Inc. received funding of 30 million from Brighton Park Capital, a US-based investment firm, for expansion. With an evolving technology focus, more tech companies are beginning to explore expansion into Coimbatore’s emerging IT hub.
Coimbatore is close to many hill stations, like Ooty, and serves as a point of access for its neighbouring state Kerala, popular for its scenic beauty. Along with this, Coimbatore has a lot of local touristic points like Aliyar Dam, Monkey Falls, Botanic Garden, Indira Gandhi Wildlife Sanctuary, and National Park which make the city a tourist hotspot.
Though tourism is not a primary economic driver for Coimbatore, and most particularly now given Covid-19, it serves as a potential opportunity for future businesses in this sector.
For a company that is looking at international expansion, whether in India or elsewhere, it’s wise to conduct thorough research beforehand. This is where many businesses fail; research and planning are the largest contributing factor for success in a new market. This may allow you to discover other market entry avenues outside of the obvious, such as Coimbatore.
Most of the Tier 1 cities in India already have strong global businesses which could be your direct competitors. Selecting a less competitive market, with great resources, increases the chances of exponential growth. Not to mention how much time, money, and potential headaches can be saved from addressing problems associated with traffic and leasing in the more metropolitan cities.
Fellow leaders, what is keeping your business back from international expansion? Let us know in the comments.