Bengaluru, India: Foreign Investment Brief
It is poised to be the fastest growing city in Asia Pacific and expected to grow by more than six percent in 2023.
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Bengaluru is the largest city in Karnataka and is well connected to the rest of the state and country. The GDP of Karnataka is heavily skewed in favor of Bengaluru, due to its mature industrial ecosystem, talent pool, and infrastructure. Bengaluru’s GDP makes up over 87 percent of Karnataka’s total gross domestic product (GSDP).
Bengaluru boasts the largest technology workforce in India, with approximately two million individuals employed in this sector. The city is home to an impressive count of 25,000 IT companies, attracting a substantial annual foreign direct investment (FDI) influx of $5-6 billion. Several Fortune 500 companies have their base in this city or key back offices. It is also the top start-up hub in the country. The city has around 12-15 million sqft area of office space.
The climate of Bengaluru is moderate and pleasant throughout the year as it is at an elevation of 920m.
Due to these factors, the city has a diverse population hailing from various regions of India as well as a substantial expatriate community. It offers its residents and visitors the unique blend of urban living alongside easy access to nature, hiking trails, and serene lake promenades.
Bangalore’s urban infrastructure has not kept pace with its fast pace economic growth. To improve connectivity and congestion problems, the city has invested heavily in road and public transportation projects in the last 10 years.
A rapid transit system called Namma Metro runs across the city—making it easy to use public transport. The system has has two operational corridors (55 elevated stations, 8 underground stations, and 1 at-grade station), servicing 63 metro stations. Once complete, Namma metro will connect central locations in Bangalore to outer regions.
Bangalore has an extensive network of roads connecting it to other parts of Karnataka and India. The Bangalore Metropolitan Transport Corporation (BMTC) offers bus services with high frequency routes that form a grid around the twelve major roads that run through the city center.
The Government of India intends to develop the Bengaluru Mumbai Industrial Corridor (BMIC) between Bengaluru and Mumbai, which will have an influence area spread across the states of Karnataka and Maharashtra. The Chennai-Bangalore Industrial Corridor Project (CBIC) is a forthcoming mega infrastructure initiative by the Government of India. This corridor is poised to span across several key locations, including Chennai, Sriperumbudur, Ponnapanthangal, Ranipet, the suburbs of Vellore, Chittoor, Bangarupalem, Palamaner, Bangarpet, Hoskote, and Bangalore.
Bengaluru is part of the South Western Railway zone of the Indian Railways and is well connected to various parts of the country by rail network. It connects Bengaluru to most cities in Karnataka, as well as other metro cities like Mumbai, Chennai, Kolkata, and Delhi. The KSR Bengaluru City Railway Station is the main railway station serving the city.
The city’s Kempegowda International Airport, which opened in 2008, is one of the busiest airports in India. In the FY 2021-22, the airport handled around 16.2 million passengers and 411,550 tonnes (453,660 short tons) of cargo. The airport offers connecting flights to all six inhabited continents, and direct flights to five of them. The terminal is located 40 kilometers from the center of Bangalore, with an airport shuttle service operated by BMTC connecting the two.
Major industries in Bengaluru
Bengaluru is one of the world’s fastest-growing major metropolises and is among India’s most productive metropolitan regions. The city serves as a pivotal hub for the high-technology-based heavy manufacturing industry, attracting numerous large multinational technology corporations that choose to establish their headquarters there. The city boasts a wealth of top-tier engineering and research institutions, earning it the nickname “Silicon Valley of India.” It not only leads the nation in software exports but is also home to a wide range of heavy and light manufacturing industries as well as service industries, including electronics, telecommunications, aerospace, pharmaceuticals, biotechnology, food processing, automobiles, banking and finance, mining, steel, and cement production. Further, given the city’s reputation as India’s garment capital, it has a thriving network of textile and local handicraft businesses.
Bengaluru is the leader in India’s biotechnology industry. It is host to leading biotechnology companies and start-ups, in addition to research and development (R&D) facilities, such as the Indian Institute of Science, the National Center for Biological Sciences, the Jawaharlal Nehru Center for Advanced Scientific Research, and the University of Agricultural Sciences.
The Karnataka state government has established 18 biotechnology finishing schools, which first began accepting students in 2012, to nurture qualified, industry-ready graduates. Bengaluru is home to the majority of these institutions.
Government support for Karnataka’s biotech sector include providing biotech companies with financial incentives and concessions under the Karnataka Industrial Policy, offering active single window clearance process for biotech projects handled by the Karnataka Biotechnology and Information Technology Services (KBITS), establishing biotech parks across various parts of the state, and encouraging the development of bioinformatics, among other initiatives.
Information technology and services
Bengaluru is the IT capital of India. The city houses several big players in technology and services, such as Goldman Sachs, Bosch, Hitachi, IBM, Cisco, HP as well as India-based giants like Tata, Infosys, and Wipro. It is also a key base for global capability centers (GCCs).
The Bengaluru IT hub contributes the most (34-40 percent) of the total IT exports from India. Consequently, the city is among the most favored destination for IT and other knowledge-based industries.
Some of the major IT parks in Bangalore are Integrated Hitech Software Park, International Tech Park Ltd., Prestige Tech Park, Safina Software Technology Park, Salarpuria Infinity, Brigade Tech Park, Manyata Tech Park, and Bagmane Tech Park.
The presence of a large number of software companies and IT professionals has given rise to a unique culture of mentorship and networking in the city—making it the biggest technology start-up hubs in India. With US$10.8 billion, Bengaluru was the top city in India in terms of start-up funding in 2022.
Garments and textiles
Karnataka is a major producer of cotton and silk and is the country’s center for textile and garment manufacturing. The state contributes to 20 percent of the garment production, valued at close to US$1 billion, and is the second largest textile employer in India.
The government has actively promoted the sector by setting up apparel parks across the state, offering modern facilities and convenient infrastructure. Among these are the Doddaballapur Integrated Textile Park and Apparel Parks Phase II and III, located in Bangalore’s rural district. There are around 401 garment units in Bengaluru according to the state’ Department of Handlooms & Textiles.
The state of Karnataka has a mature mechanical, manufacturing, and technology base in its capital Bengaluru, which has fostered the growth of the machine tool industry. Per a 2020 state investment promotion paper, Karnataka is among the top five capital goods producers to prioritize the production of special purpose machinery (SPM) over general-purpose machinery (GPM) in terms of value. Moreover, Bengaluru Urban has 95 percent of total Karnataka’s investment in the SPM industry and benefited from 62 percent of the total investment in the GPM industry (2007-08 to 2017-18).
Bengaluru’s machine tool industry caters to the automobile, aerospace, and CNC machine industries. Product clusters in the industry include CNC and SPM, heat treatment, accessories, and components. Machine tool suppliers cater to the OEM requirements of ISRO, HAL, BEML, MICO, BHEL, Kirloskar Electric, Bayforge Ltd, etc. The distribution of the machine tools industry in the region is concentrated largely in the Peenya Industrial Estate, followed by Abbigere Industrial Estate and Bommasandra Industrial Estate.
In 2021, the Tumakuru Machine Tool Park (TMTP)—India’s first integrated machine tool park—became operational. It is located 90km from Bengaluru, as part of state efforts to spread industrial and manufacturing investments beyond the capital city. The TMTP is 105km from Bengaluru International Airport, 350km from Mangalore seaport, and 4km from the national highway connecting Bengaluru with Pune, Maharashtra.
Key resources / sector
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