Stories from second-tier cities | Wilnesh News

This report comes from this week’s CNBC “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse and the big players behind its meteoric rise. Like what you see? You can subscribe here.

India’s economic map is being redrawn.

While the country’s megacities, or metropolises, such as Bengaluru, Hyderabad, Chennai, New Delhi and Mumbai continue to grow, a subtle but noticeable wave of opportunity is sweeping across tier-2 and tier-3 cities.

These cities – including Chandigarh, Coimbatore, Kochi and Jaipur – offer various advantages, including lower operating costs, a more laid-back lifestyle, decent educational opportunities and untapped skilled and semi-skilled Skilled employee pool.

Some companies are taking advantage of these opportunities.

Give an example Tridentis a textile company that manufactures linens, carpets, bedspreads and yarns for consumers in India and India.india and abroad. The company is headquartered in the industrial city of Ludhiana, about 100 kilometers from Chandigarh, the capital of Punjab.

Multinational companies looking to do business in India have also been jockeying for space outside major metros. For example, carmaker Kia India has set up a manufacturing plant in Ananathapur district, about 215 kilometers from Bengaluru.

Tier II and III cities in India are also becoming hotspots for setting up Global Competence Centers (GCCs), which look after a range of business functions of the parent company.

The Asian powerhouse has about 1,800 such centers and accounts for more than 50% of the global market, according to employment and talent platform findit. Data shows that in the first half of 2023, one-fifth of the GCC has established a base in second-tier cities to open up new talent markets.

Pune is a city in the state of Maharashtra and the center of the GCC that specializes in IT, automotive and manufacturing. Meanwhile, the city of Ahmedabad in Gujarat has emerged as a major destination for banks and financial services companies due to its proximity to the Gujarat International Fintech City.

Other cities on the GCC radar include Chandigarh, Bhubaneswar, Jaipur, Lucknow and Visakhapatnam, thanks to improved air connectivity, establishment of new-age private universities and cost reduction.

Shumita Deveshwar, chief India economist at TS Lombard, told CNBC’s Inside India: “As populations grow and space becomes limited, these cities have been growing organically. develop.

Nearly 60% of India’s GDP comes from urban pockets, Data from government agency NITI Aayog shows. The agency said that as more people move to cities, 73% of the country’s population growth is expected to be concentrated in urban areas by 2036, while wages for workers in rural areas will be 122% higher.

Better job prospects?

Population size aside, urbanization in India’s smaller cities is in line with the country’s vision of cultivating a geographically balanced economy, providing fertile ground for talent-seeking employers and employees looking to fulfill their careers.

“We do see cities outside of the top metros doing better in terms of job growth,” findit CEO Sekhar Garisa said.

“We believe these cities are showing higher growth because of a lower base. But over the past 18 months, we have found that the base effect has not slowed down as policies, organizational incentives and candidates’ willingness to work outside the home have changed Changing subways in second-tier cities.

Garissa says this is because employees don’t feel their career advancement is compromised simply by working outside metropolitan cities, with at least three in 10 now willing to work in second-tier cities, compared with none a decade ago.

However, there is a problem. Garisa said wages in second-tier cities are usually about 30 to 40 percent lower than in big cities. Garissa noted that the net salary difference in second-tier cities could be about 20% to 30% after accounting for differences in cost of living.

The difference is shrinking, he said, as people outside metropolitan areas demand the same compensation because they understand market prices.

The more pressing issue now is job creation across industries and cities as educated millennials face employment challenges.

“India has always been a services-led economy but has not performed well in creating the required employment opportunities for its young population,” TS Lombard’s Deveshwar said.

Her suggestion is that urbanization of cities includes creating jobs and allowing people to retain their comfortable lifestyles and environments.

infrastructure needs

India’s urbanization story is fraught with concerns, starting with whether the makeup of cities will allow for the expected influx of people.

Millions of urban Indians will soon be joined by many more. However The Ministry of Housing and Urban-Rural Development allocated only 1.7% The latest national budget was announced on July 23.

“India’s cities are really overcrowded. Infrastructure development has not kept pace with population growth,” Deveshwar said.

Besides investing in its own growth, the bitter but perhaps more effective pill India needs is foreign investment, either through more multinationals setting up factories in smaller cities or investing in local projects.

Deveshwar said the push comes as foreign investment in India has been slowing – a “not a good sign” given that India is one of the fastest growing countries in the world.

Malcolm Dorson of Global .

Mirae Asset, the parent company of Global X, is one of the largest foreign asset managers in India.

“I think that will translate into foreign direct investment and drive GDP growth,” Dotson added.

Apple hopes to grab a bigger share of India’s streaming and music market after striking a deal with Airtel. tech giants Apple has teamed up with India’s Bharti Airtel to offer free music and video streaming services to its premium customers. It comes as India’s $28 billion media and entertainment industry faces fierce competition from Netflix, Amazon Prime Video, Disney+ Hotstar and billionaire Mukesh Ambani’s JioCinema.

Indian stocks rose this week, broadly outperforming global equities. this nifty 50 The index has gained nearly 1.4% over the past five trading days. The index has gained 15.7% so far this year.