New Delhi & Mumbai Comparison

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A comparitive overview of India’s most vibrant cities

Oct. 29 – The capital of the world’s largest free-market democracy, Delhi, is a spicy fusion of the ancient and the modern, a harmonious blend of culture, cuisine, arts and architecture. Meanwhile, Mumbai, formerly known as Bombay, is the gateway to modern India – a vibrant, fast and pulsating city giving it a unique position among the multiethnic cities of the world.

For much of its history, Delhi was the political and financial center for various Muslim dynasties. In 1911, the British moved their capital to Delhi from Calcutta, and pulled down part of the old city to create New Delhi, an administrative quarter designed to house government offices. It continued to be the political capital of India after independence.

Mumbai, on the other hand, is an island city. The British decided to develop the natural harbor into a city, which has now grown by a series of land reclamations that link the original islands into a singular mass. With an estimated metropolitan area population of 20.5 million, Mumbai is now the largest city in India by population and fourth most populated city in the world. Maharashtra, the state in which Mumbai is situated, has a population of 96.8 million, thus making it the second largest state in India by population.

Economy, Industry and Investment Opportunities Compared

Delhi and the NCR (National Capital Region – comprising the satellite cities of Faridabad, Gurgaon, Noida and Ghaziabad), have been transformed over the past 15 years. Delhi is now a hot-bed for the IT and BPO (business process outsourcing) industries with most Indian call centers located in and around there.

Delhi is an important commercial center in South Asia and third largest metropolitan area in India after Mumbai and Kolkata. It has the highest per-capita income in the country, at around 2.5 times the national average, and the second highest GDP in terms of purchasing power parity. During October of this year, the Delhi government raised the minimum wage for unskilled labor to Rs 8,086, semi-skilled labor to Rs 8,918 and skilled labor to Rs 9,802.

The state has witnessed a phenomenal rise in its service sectors due to its skilled English-speaking workforce, availability of adequate infrastructure, number of Internet and telecom service providers and satellite communication facilities.

As of May 2013, the services sector contributed 82 percent of the city’s GDP. The largest sectors include hotels and restaurants (18.24 percent) and the financial services, insurance, and real estate sector (40.23 percent).

Delhi’s manufacturing industry has grown considerably as many companies have established manufacturing units and headquarters in the area, making it the largest center for small-scale industries. The Delhi State Industrial Development Corporation (DSIDC) has developed four major industrial areas giving special emphasis to small-scale industries.

Furthermore, during 2012-2013 manufacturing made up 17.69 percent of the city’s GDP. It is the Delhi government’s goal that by 2021 the region’s economy will switch from low-skilled and low-tech industries to high-skilled and high-tech industries. Thus, the area will become “a hub of clean, high-technology and skilled economic activities.”

Delhi is the biggest consumption center in India for a variety of goods and has the highest concentration of “rich” households (24 percent). This makes the city an ideal destination for the retail investor trying to enter India. New Delhi’s Connaught Place is currently ranked as the fifth most expensive office market in 2013.

Out of a total FDI of US$185.7 billion, Delhi (and the NCR) received US$35.4 billion (19 percent) from April 2000-October 2012. The reasons for this investment are the “substantial improvements in the infrastructure and pro-active approach of the… government.”

Furthermore, Delhi is home to over half of the 3,000+ foreign businesses that are operating within India. The World Bank ranks New Delhi sixth out of seventeen Indian cities for “ease of doing business” with infrastructural constraints being amongst the lowest in India. The city ranks the highest for “starting a business.”

Mumbai, the entertainment, fashion and financial capital of India, is an economic powerhouse. It is synonymous with Indian entertainment – Bollywood – and the country’s media industries. Mumbai currently has the highest GDP in the country in terms of purchasing power parity.

Mumbai is a center of business activity for Maharashtra and greater India. Many multinational corporations and Fortune Global 500 companies have their headquarters in the city. In addition, the National Stock Exchange and the Bombay Stock Exchange (BSE) are located there. With over 5000 members, the BSE is the largest exchange in the world in terms of listed members and the third largest for Index options trading. As of January 2013, the companies listed on the bourse had a total market capitalization of US$1.32 trillion.

Mumbai accounts for 6.16 percent of India’s GDP, 40 percent of foreign trade, and 25 percent of industrial production. In total, the city accounts for US$10 billion in corporate taxes and its per-capita income is higher than the national average.

The Maharashtra Industrial Development Corporation (MIDC) is the primary agency that has been responsible for making the region the most industrialized and urbanized state in India. The MIDC has built more than 225 industrial complexes, including specialized parks for such business areas as IT, gems and jewelry, textiles, chemicals, and electronics.

Endowed with a large coastline, Maharashtra has several natural ports. The two principal ports, the Jawaharlal Nehru Port (the largest container port in the country) and the Mumbai Port (primarily for bulk cargo) are located in Mumbai and together handle the largest proportion of the country’s foreign trade.

Mumbai occupies the leading position in institutional finance with a multitude of commercial and cooperative banks, and non-bank financial institutions (NBFCs). It also has the headquarters of the Reserve Bank of India.

Mumbai has a highly productive workforce operating within excellent educational facilities, quality infrastructure, and thriving partnerships with enterprising entrepreneurs. This is backed by continuity and consistency in government investment policies that have made the state the “First Choice Destination” of domestic and foreign investors. From April 2000-October 2012, Maharashtra attracted 33 percent of India’s total FDI.

Special Economic Zones and Business Parks: Delhi vs. Mumbai

Foreign investors wishing to take advantage of development zones for export-related manufacturing and assembly, and obtaining tax incentives when doing so, may consider establishing a presence in one of India’s special economic zones (SEZs).

In Delhi and the NCR area there are around 17 SEZs in various stages of operation and development. The capital’s first IT Park was set up by the Delhi Metro Rail Corporation (DMRC) and equipped with state-of-the-art technology. The Delhi Development Authority also participates in the development of IT parks

World-class science and technology parks have been set up to focus on the IT, nanotechnology and biotechnology sectors to position Delhi as a destination for advanced research.

Encouraged by the Delhi state government, the Noida SEZ has been constructed near Delhi international airport. The aim of the SEZ is to attract jewelry manufacturers, thus creating a zone with facilities such as jewelry centers, exhibition halls, hotels, and commercial and residential complexes.

Mumbai has high quality infrastructure and over 250 industrial parks. Maharashtra has announced a SEZ policy with attractive incentives (other than those from central legislation) such as: 100 percent exemption from stamp duty and registration fees, permission for captive power generation, “public utility service” with labor law relaxation for all 100 percent export oriented units (EOUs).

The SEZ scheme seeks to create a simple and transparent procedural system for enhancing productivity and improve the ease of doing business. The state currently has 201 special economic zones that focus on multi-product and product specific sectors like automotive, textiles, biotechnology, and IT.

The Santacruz Electronic Export Processing Zone (SEEPZ) is located in Mumbai and is home to 40 percent of India’s total jewelry exports. Currently, one of the largest SEZs in India is being established in New Mumbai.

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