Three-Part Series: Top 3 Emerging Cities in India; 1
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 fewer 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 benefits, 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 and 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, 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 first instalment and come back later to see the next city we explore.
This Month’s Emerging City
Indore, in central India, is considered a Tier 2 city, located in Madhya Pradesh (MP). It’s often referred to as “Mini Mumbai” because of their similarities — both being the commercial and financial capitals of their respective states. With a population of over 4 million, the predominate languages are English and Hindi, making it a good place for market entry.
Indore has gained recognition by qualifying to become a smart city. An exclusive list of 100 shortlisted cities from the first round of the Smart Cities Mission. Public transportation in Indore is well-established, having air, rail, and road connectivity that allows business activities to be more efficient and less time-consuming. Furthermore, Indore is favoured among residents as being a safe environment with quality healthcare and education for all.
In a pre-Covid-19 world, they hosted a large entrepreneurial attraction, the Global Investors Summit. This Summit draws potential investors from countries from around the world, like Germany, the UK, Japan, Singapore, and the United States.
The 4 Core Sectors of Indore
A key industry for Indore is manufacturing; there is a mass production of automobiles and auto parts along the industrial belt surrounding the city.
This region is responsible for building commercial vehicles and creating a network of ancillary units to supply to the auto industry. Each ancillary unit has contributed to the annual production of approximately 200 different auto components. You will recognize many leading players in this area, such as Force Motors, MAN Truck & Bus, and John Deere Tractors, and Ford India These companies have seen successful market entry and have their auto components locally supplied.
Indore has a high concentration of pharmaceutical manufacturers, over 280, producing tablets, capsules, and formulations for all of India. In addition, these pharma-industrialists have several retail and wholesale channels across the country to aid with distribution.
The state has witnessed annual revenues up to 1.5 billion in this sector, attributing to higher populations. The top pioneering companies in pharmaceutical innovation residing in Indore focused on creating new vaccines, drugs, and formulas, are those like Cipla Limited, Zest Pharma, Schon Pharmaceuticals Ltd., and Zyg Pharma Pvt. Ltd.
Technology is an integral part of streamlining tedious tasks, improve customer/client services, communications, and the ability for teams to work from home. Just to name a few business-related benefits. This has led to numerous opportunities for the tech sector in Indore; more medium to large-sized IT companies have set up shop in this state.
Some of the top companies in India’s IT sector are Infosys, DXC, Tata Consultancy Services, InfoBeans, and Diaspark. The quality of services, knowledge base, close competition, and a high number of skilled workers are all huge advantages. Many countries within Europe and Africa have seen several Indian IT firms expanding there due to a surplus of demand for the services.
Indore is home to many colleges and universities, as it is considered to be one of the most prestigious cities for education in Madhya Pradesh. All schools are held to high standards when it comes to education quality and the dedication of the faculty to achieve excellence. As a result, Indore is rated as one of the major education hubs of India.
The most respected universities in Indore are Devi Ahilya University, Indian Institute of Management (IIM-Indore), and the Govindram Seksaria Institute of Technology and Science. Indore is also home to the Indian Institute of Technology (IIT-Indore), which makes it the only city in India that has both IIT-Indore and IIM-Indore. These factors together combine to establish Indore as one of the biggest educational hubs in the country. The overall focus is to properly prepare Indian students for the real world and to give them the tools and opportunities to succeed in a highly populated country.
For a company that is looking at global expansion, whether in India or elsewhere, it’s advisable to conduct thorough research beforehand. This may allow you to discover other market entry avenues outside of the obvious, such as Indore.
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.