India’s smaller cities among fastest-growing worldwide India’s smaller cities among fastest-growing worldwide

India’s smaller cities among fastest-growing worldwide
14 Jan 2019

India is home to some of the top 10 fastest-growing cities in the world, according to a research report from Oxford Economics

The study ranks cities from around the world that it expects to demonstrate the highest year-on-year growth in gross domestic product (GDP) over the next 20 years. But it reveals that the urban powerhouses of the next two decades will not just be today’s megacities in the shape of New York or Shanghai. Instead they will accompanied by India’s emerging tier II and tier III cities, which include Surat, Nagpur, Agra, and Vijaywada.

Due to the rapid growth of their technology and start-up environments, India’s three biggest cities – BangaloreChennai, and Hyderabad - also earned themselves a place on the top 10 list.

Quickest growing cities in India

Investing in India’s emerging cities

India’s economic boom has fast-tracked economic development across the country. As it continues to grow, rising disposable income and better infrastructure are also likely to lead to higher consumption and purchasing power in the country’s smaller cities, thereby generating faster growth. Industry reports predict that by 2025, tier II and III towns will account for 45% of India’s domestic consumption and 30% of its affluent households.

The unmet demand for goods and services in these cities offers immense opportunities for businesses keen to enter new markets and tap into one of the world’s highest earning populations. Other advantages that smaller cities offer over big ones include cheaper property and more affordable labour.

But moving to the provinces also presents its own set of challenges in terms of infrastructure and connectivity. As a result, employers looking to expand here must carefully consider their options. Here is an overview of India’s 10 fastest growing cities, which may help:

Surat

With an estimated average growth rate of 9.2%, Surat is set to become the fastest growing city in the world. Located in the state of Gujarat, it has a population of 4.46 million and is the eighth largest urban area in the country.

Surat is the largest international global diamond-processing hub and accounts for about 90% of the world’s diamond cutting and polishing exports. The city is also well known for its textile industry, which is mainly associated with yarn production, weaving, processing and embroidery.

Major domestic companies with operations there include ONGC, GAIL, Ambuja Cement, Ultratech Cement, and Reliance Industries.

Agra

Home to the world famous tourist attraction the Taj Mahal, Agra is one of the most popular cities in the state of Uttar Pradesh. The city is a growing hub for the hospitality industry, but also focuses on tourism, textiles, automobiles, and manufacturing. It likewise has a thriving, if small, industry based on leather goods and iron foundries.

Bengaluru

Bengaluru (or Bangalore) is the information technology capital of India and is often branded as the country’s Silicon Valley. A number of technology and services giants, such as Goldman Sachs, Cisco, HP as well as domestic success stories like Tata, Infosys, and Wipro, have their operations in the city. As a natural hub for tech start-ups, it has attracted the highest level of start-up investment, which has amounted to an annual average of US$4 billion over the last three years.

Due to the cluster of aerospace, defence, machine tools, biotech and electronics-related industries in the area, it has now also become India’s aerospace and bio-tech centre. Over the last few years, the city has likewise seen high growth in the healthcare, automotive, textiles/apparel, and construction industries. 

This all means that it boasts a buoyant retail sector and has become India’s primary destination for many global consumer brands.

Hyderabad

Like Bangalore, Hyderabad has positioned itself as a major technology and entrepreneurial hub. The city houses Hitec City, a major technology township, as well as India’s largest and fastest-growing start-up ecosystem, T-Hub, which started up in 2015. The city is also home to more than 1,500 information technology (IT) companies, including Apple, Microsoft, Google, Yahoo, Infosys, and Tata Consultancy Services (TCS).

But Hyderabad is likewise known as ‘City of Pearls’ due to its status as a trading centre for the gemstones. Other key industries include bio-pharmaceuticals, handicrafts, and property.

Nagpur

Nagpur is an emerging metropolis and important industrial city in Maharashtra state. It is home to more than 22,000 micro, small and medium enterprises and is set to be the next IT hub, with Infosys and TCS setting up campuses in the Multimodal International Hub Airport (MIHAN) area.

Agriculture, in particular, oranges and the processing of ayurvedic medicine, forms a large share of the city’s economy. Other important sectors include IT, manufacturing, transport systems, mining, power generation and banking - in fact, it hosts the regional office of the Reserve Bank of India.

Some of the companies that form an integral part of the city’s local economy include Hyundai, Unitech, and Videocon washing machine plants.  

Tiruppur

Tiruppur is the hub of India’s knitwear industry and accounts for about 46% of the country’s total cotton knitwear garment exports. Located in the Indian state of Tamil Nadu, Tiruppur’s local economy is predicted to grow by 8.36% per year between 2019 and 2035.

But local textile industrialists warn that such growth will only be possible if the government provides adequate infrastructure and support to the apparel industry. Tiruppur's multi-crore (10 million) textile industry is currently going through an existential crisis due to demonetisation and the recent implementation of the goods and service tax.

Rajkot

The fourth largest city in Gujarat after Ahmedabad, Surat, and Vadodara, Rajkot is the 35th largest urban area in India and the sixth fastest growing. The city hosts several small manufacturing industries, which include bearings, diesel engines, automotive parts, machine tools, foundries, and jewellery exports.

It is also known internationally for its metal casting and forging industries. The city has about 500 foundry units that handle the casting requirements of the local diesel engine industry. Most foundry units produce grey iron castings for the domestic market.

Rajkot is also known for its textile printing businesses and is starting to emerge as a centre for software and IT-enabled services, with several software companies having set up their operations and development centres in the area recently.

Trichy

Tiruchirappalli, or Trichy, is an industrial city in Tamil Nadu. A hub of technological, educational and agricultural activities, the city boasts the presence of high-tech manufacturing businesses, such as BHEL, which produces critical engineering products and components. The city is also known for its industrial, engineering equipment manufacturing, and software exports.

Chennai

Chennai, the capital city of Tamil Nadu, has the third-highest GDP per capita in India. The city is home to almost 40% of the country’s automobile industry and is often called ‘the Detroit of India’.

It is also a popular location for software, IT-enabled services and hardware manufacturing as well as the engineering and procurement industries. Other major sectors include petrochemicals, textiles, leather products, and financial services.

Chennai is the location of choice for a number of global corporations, including American Express, Citibank, and IT service companies such as Cognizant and TCS.

Vijayawada

Vijayawada is the second largest city in Andhra Pradesh. It is one of the state’s major business centres and is known for processing agricultural products, such as cotton and turmeric, as well as making automobile bodies, hardware, textiles and consumer goods.

This article was first published on India Briefing.

Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and ASEAN, we are your reliable partner for business expansion in this region and beyond. For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com.

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India is home to some of the top 10 fastest-growing cities in the world, according to a research report from Oxford Economics

The study ranks cities from around the world that it expects to demonstrate the highest year-on-year growth in gross domestic product (GDP) over the next 20 years. But it reveals that the urban powerhouses of the next two decades will not just be today’s megacities in the shape of New York or Shanghai. Instead they will accompanied by India’s emerging tier II and tier III cities, which include Surat, Nagpur, Agra, and Vijaywada.

Due to the rapid growth of their technology and start-up environments, India’s three biggest cities – BangaloreChennai, and Hyderabad - also earned themselves a place on the top 10 list.

Quickest growing cities in India

Investing in India’s emerging cities

India’s economic boom has fast-tracked economic development across the country. As it continues to grow, rising disposable income and better infrastructure are also likely to lead to higher consumption and purchasing power in the country’s smaller cities, thereby generating faster growth. Industry reports predict that by 2025, tier II and III towns will account for 45% of India’s domestic consumption and 30% of its affluent households.

The unmet demand for goods and services in these cities offers immense opportunities for businesses keen to enter new markets and tap into one of the world’s highest earning populations. Other advantages that smaller cities offer over big ones include cheaper property and more affordable labour.

But moving to the provinces also presents its own set of challenges in terms of infrastructure and connectivity. As a result, employers looking to expand here must carefully consider their options. Here is an overview of India’s 10 fastest growing cities, which may help:

Surat

With an estimated average growth rate of 9.2%, Surat is set to become the fastest growing city in the world. Located in the state of Gujarat, it has a population of 4.46 million and is the eighth largest urban area in the country.

Surat is the largest international global diamond-processing hub and accounts for about 90% of the world’s diamond cutting and polishing exports. The city is also well known for its textile industry, which is mainly associated with yarn production, weaving, processing and embroidery.

Major domestic companies with operations there include ONGC, GAIL, Ambuja Cement, Ultratech Cement, and Reliance Industries.

Agra

Home to the world famous tourist attraction the Taj Mahal, Agra is one of the most popular cities in the state of Uttar Pradesh. The city is a growing hub for the hospitality industry, but also focuses on tourism, textiles, automobiles, and manufacturing. It likewise has a thriving, if small, industry based on leather goods and iron foundries.

Bengaluru

Bengaluru (or Bangalore) is the information technology capital of India and is often branded as the country’s Silicon Valley. A number of technology and services giants, such as Goldman Sachs, Cisco, HP as well as domestic success stories like Tata, Infosys, and Wipro, have their operations in the city. As a natural hub for tech start-ups, it has attracted the highest level of start-up investment, which has amounted to an annual average of US$4 billion over the last three years.

Due to the cluster of aerospace, defence, machine tools, biotech and electronics-related industries in the area, it has now also become India’s aerospace and bio-tech centre. Over the last few years, the city has likewise seen high growth in the healthcare, automotive, textiles/apparel, and construction industries. 

This all means that it boasts a buoyant retail sector and has become India’s primary destination for many global consumer brands.

Hyderabad

Like Bangalore, Hyderabad has positioned itself as a major technology and entrepreneurial hub. The city houses Hitec City, a major technology township, as well as India’s largest and fastest-growing start-up ecosystem, T-Hub, which started up in 2015. The city is also home to more than 1,500 information technology (IT) companies, including Apple, Microsoft, Google, Yahoo, Infosys, and Tata Consultancy Services (TCS).

But Hyderabad is likewise known as ‘City of Pearls’ due to its status as a trading centre for the gemstones. Other key industries include bio-pharmaceuticals, handicrafts, and property.

Nagpur

Nagpur is an emerging metropolis and important industrial city in Maharashtra state. It is home to more than 22,000 micro, small and medium enterprises and is set to be the next IT hub, with Infosys and TCS setting up campuses in the Multimodal International Hub Airport (MIHAN) area.

Agriculture, in particular, oranges and the processing of ayurvedic medicine, forms a large share of the city’s economy. Other important sectors include IT, manufacturing, transport systems, mining, power generation and banking - in fact, it hosts the regional office of the Reserve Bank of India.

Some of the companies that form an integral part of the city’s local economy include Hyundai, Unitech, and Videocon washing machine plants.  

Tiruppur

Tiruppur is the hub of India’s knitwear industry and accounts for about 46% of the country’s total cotton knitwear garment exports. Located in the Indian state of Tamil Nadu, Tiruppur’s local economy is predicted to grow by 8.36% per year between 2019 and 2035.

But local textile industrialists warn that such growth will only be possible if the government provides adequate infrastructure and support to the apparel industry. Tiruppur's multi-crore (10 million) textile industry is currently going through an existential crisis due to demonetisation and the recent implementation of the goods and service tax.

Rajkot

The fourth largest city in Gujarat after Ahmedabad, Surat, and Vadodara, Rajkot is the 35th largest urban area in India and the sixth fastest growing. The city hosts several small manufacturing industries, which include bearings, diesel engines, automotive parts, machine tools, foundries, and jewellery exports.

It is also known internationally for its metal casting and forging industries. The city has about 500 foundry units that handle the casting requirements of the local diesel engine industry. Most foundry units produce grey iron castings for the domestic market.

Rajkot is also known for its textile printing businesses and is starting to emerge as a centre for software and IT-enabled services, with several software companies having set up their operations and development centres in the area recently.

Trichy

Tiruchirappalli, or Trichy, is an industrial city in Tamil Nadu. A hub of technological, educational and agricultural activities, the city boasts the presence of high-tech manufacturing businesses, such as BHEL, which produces critical engineering products and components. The city is also known for its industrial, engineering equipment manufacturing, and software exports.

Chennai

Chennai, the capital city of Tamil Nadu, has the third-highest GDP per capita in India. The city is home to almost 40% of the country’s automobile industry and is often called ‘the Detroit of India’.

It is also a popular location for software, IT-enabled services and hardware manufacturing as well as the engineering and procurement industries. Other major sectors include petrochemicals, textiles, leather products, and financial services.

Chennai is the location of choice for a number of global corporations, including American Express, Citibank, and IT service companies such as Cognizant and TCS.

Vijayawada

Vijayawada is the second largest city in Andhra Pradesh. It is one of the state’s major business centres and is known for processing agricultural products, such as cotton and turmeric, as well as making automobile bodies, hardware, textiles and consumer goods.

This article was first published on India Briefing.

Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and ASEAN, we are your reliable partner for business expansion in this region and beyond. For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com.

OTHER STORIES THAT MAY INTEREST YOU

Minding your manners in India - Part 1

Minding your manners in India - Part 2

A guide to supporting expats in India

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