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How's business in India? Watch Bangalore

Bangalore, known as a magnet for India's technology jobs, is facing competition for investment from other cities, but business conditions are tough across India.

By Correspondent / August 22, 2012



Bangalore, India

Long known as India’s software hub and a magnet for information technology (IT) jobs, Bangalore is facing challenges as other Indian cities compete for IT investment and the nation’s economy struggles with slowdown and graft.

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Global consulting company Accenture recently announced a major expansion in India, with about 8,000 jobs going to Pune, a city with an emerging IT economy close to India’s financial hub Mumbai, according to the Economic Times.

It seems that Bangalore's branding as India's Silicon Valley – a misnomer given that the city sits on a plateau – could be threatened by other cities, such as Pune and Hyderabad, which has its own brand nickname: “Cyberabad.” 

Assessing the challenge to Bangalore posed by Hyderabad, Rakesh Kumar Srivastava of New Delhi-based National Council of Applied Economic Research says that the regional government in Andhra Pradesh, of which Hyderabad is the regional capital, has worked to grow the city as an IT destination.  

“Initiatives and strategies for infrastructural development, human resource development, and policy framework to support and attract investments have helped [Hyderabad] become an attractive investment destination for developers and occupiers as well,” he says.

Amid India’s lowest economic growth in almost a decade, the challenges faced by those doing business in India are compounded by political and legal risk, despite the efforts of officials to attract new business to Andhra Pradesh.

Citing challenges such as unclear laws and heavy-handed bureaucracy, Amit Midha, president of Asia Pacific and Japan for Dell told Reuters last week that India is a tough place to do business.

“New decision makers come and they don't honor the contract previously signed,” he said.

The often prickly relationship between officialdom and business in India affects not only big-name foreign investors such as Dell, but also Indian businesses based in Bangalore. Local authorities are trying to take over the running of Electronics City, a 440-acre IT industrial park about a 45-minute drive from downtown Bangalore, apparently to boost Bangalore's tax revenues, according to local press.

That move looks likely to be resisted by businesses based in the district, with the Electronics City CEO N.S. Rama reportedly expressing reservations to India's central government about the Bangalore local authorities' plans.

"We must not bring down Electronic City to the level of infrastructure that is in Bangalore," said Mohandas Pai of Manipal Global Education Services, based in Electronics City.

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