City Spotlight: Bangalore
May 16 – You can easily observe India’s cultural diversity in Bangalore – the city is a melting pot of races and cultures. Located in the heart of southern India, Bangalore has a population of 8.4 million people, making it the third most populous city in India.
Bangalore is also known as the “Silicon Valley” of India thanks to the large number of software companies and the concentrated number of information technology (IT) professionals located within its territory. The state of Karnataka, of which Bangalore is the state capital, accounts for more than a third of India’s total software exports, most of which come from Bangalore-based firms. Bangalore’s booming high-tech sectors are supported by a well-educated and technically trained populace, particularly in the fields of engineering, management and various areas of science.
Bangalore, which ranked in the top 10 on India’s Liveability Index in 2012, is also called “The Garden City,” a moniker earned due to the large number of parks in the city, the city’s large horticulture industry and pleasant climate.
Economic and Investment Climate
Bangalore is home to a wide range of heavy and light industries, as well as high-tech and service industries including electronics, telecommunications, aerospace, pharmaceuticals, biotechnology, food processing, automobiles, banking and finance, mining, steel and cement production.
Given the city’s reputation as the country’s garment capital, textiles and local handicrafts are also prevalent in the city’s economy.
Bangalore 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 12 biotechnology finishing schools, which began accepting students in 2012, to nurture qualified, industry-ready graduates. Bangalore is home to the majority of these institutions, with 6 schools falling within the city’s boundaries.
Government support for Karnataka’s biotech sector was further strengthened with the passing of the Millennium Biotech Policy II in 2009, which includes financial support for patent and production registration, fee waivers for converting agricultural land to industrial use and assistance with costs related to obtaining standardization certificates. In addition to this, the state provides biotech companies with priority for sanctioning and servicing of dedicated power supplies that are unaffected by power cuts.
Bangalore is a favored destination for IT and other knowledge-based industries. Named by the United Nations Development Program as the fourth best technology hub in the world, it is no wonder that Bangalore is a preferred IT outsourcing destination for Fortune 500 companies.
The Karnataka state government’s Information Communication and Technology Policy 2011 further bolstered Bangalore’s engagement in the IT sector and strengthened it’s reputation as a global IT R&D hub. A critical element of the policy is a proposal for a research hub in Bangalore supported by a prototype testing laboratory funded with private and public capital (the state’s contributions are capped at 50 percent).
The Bangalore-BIAL Information Technology Investment Region is also under development near the region’s Bangaluru International Airport, with investments amounting to over US$20 billion. The region will include special economic zones, industrial parks, export oriented units, warehousing and free-trade zones. It is expected to be fully completed by 2030, and to generate a projected total of 4 million employment opportunities over the next 10 years.
Garments and Textiles
As a major producer of cotton and silk, Bangalore has become the country’s center for textiles and garments and is commonly cited as the “Garment Capital” of the country. The Indian Government has actively promoted the sector by setting up apparel parks across the country, offering modern facilities and convenient infrastructure. Among these parks are the Doddaballapur Integrated Textile Park and Apparel Parks Phase II and III, located in Bangalore’s rural district.
The industry was further bolstered this year with the 2013-14 Union Budget’s repeal of an excise duty tax that was previously placed on ready-made and branded garments, inciting much positivity from industry leaders.
“We expect [the] Indian garment industry to grow by 12-15 percent per annum due to abolition of [the] 12 percent excise duty,” commented Rahul Mehta, the President of the Clothing Manufacturers Association of India.
The state of Karnataka is also set to release its new Textile Policy in 2014, which will seek to increase textile investment in the region by providing economic incentives to garment and textile producers.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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