Is Bengaluru in danger of losing its firstcomer infotech advantage?

Anil Budur Lulla
15th Sep 2016
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Bengaluru seems to have frittered away its unique advantage as the Silicon Valley of India and is in real danger of ceding that ground to competition from other Indian cities.

Four bandhs in succession and weeks of lost man-hours in a city that works hard with new ideas and combines it with technology together with the violent attacks following the Supreme Court’s adverse order to release Cauvery river water to neighbouring Tamil Nadu has put fear in investors and raised uncomfortable questions.


While it is true that Bengaluru, among the world’s top 15 startup enablers, has so far raised close to a billion dollars in investment only by startups, the investments will stop once those with the ideas flee to better climes. And, there are many cities staking claim despite their own inherent contradictions and problems.

Chennai, once an aspirant to be among the top three Indian cities that welcomed infotech companies, is staring at a similar problem as fringe linguistic elements have made life difficult for outsiders who have contributed to its economy. The two Dravidian parties are also culpable on this count as they have been competing fiercely with each other to fatten the large constituency of its once hard-working citizens with electoral sops that make them prefer the confines of home over stepping out to work.

Pune too is in danger of a slide as the city’s sudden growth as an ITeS centre has left it battling a rapidly growing neo-Marathi problem. Fancied Gurgaon, part of NCR, lost its sheen after last month’s heavy deluge which led to its collapse. An unplanned city that sprung up on farmland, investors are now thinking of retreating back to Delhi, which has at least solved its transportation woes by building a world-class metro.

That leaves Hyderabad, which has been assiduously cultivating multinational businesses and investors for over 15 years now. What started with then united Andhra Pradesh CM Chandrababu Naidu, has now been extended by Telangana CM K. Chandrasekhar Rao. An experienced political hand, Rao, the architect of Telangana, has made it clear to investors that the name of the state may have changed, but Hyderabad’s place on the global IT map will only get better. In fact, as a reassurance, his son KT Rama Rao has been given the responsibility of ensuring Hyderabad remains Cyberabad, a moniker that stuck after Naidu named the area that houses these cyber-related companies Cyberabad.

Shreedhar P. Reddy, CMD of CtrlS said:

Hyderabad has been good for entrepreneurs for the last decade or so. The new governments of both the states (Telangana and Andhra Pradesh) have allowed a lot of technology companies to invest with a host of tax sops.

With Prime Minister Narendra Modi making efforts to ease business rules for investment in India, those coming in will look at various factors and in this race to become India’s top global city, Hyderabad may well emerge as the dark horse.

Sridhar Vembu, Founder, Zoho Corp believes:

Governments are there to make policy, ease business, and ensure security. At our company, we focus on improving lives and making people employable. We are focused on youngsters who care about their families and want to give back to society.

But is the Karnataka government listening?

As the city limps back to normalcy, the government is happy that there is a long queue of prospective investors that includes Apple’s plans to set up a startup accelerator here by 2017 and a dozen other top-notch MNCs waiting in the wings.

After Monday’s violence in which 100 vehicles and business establishments of a linguistic minority were targeted following the Supreme Court’s orders, the very good investment climate that is being spoken about has suddenly become an uncertain climate. Bengaluru’s climate, the real winner, one that actually settles the issue in favour of the southern city vis-à-vis a Gurgaon or Hyderabad, is no longer attractive enough given the ground realities where the state cannot guarantee its citizens’ security.

Acknowledging that Karnataka’s reputation as a safe place has taken a hit, Chief Minister Siddaramaiah sought to contain it by stating that troublemakers of all hues would be rounded up and would have to take responsibility for the damage caused.

Tamil Nadu has already pegged the loss to businesses that were targeted in Bengaluru on Monday at Rs 175 crore and wants the Karnataka government to compensate them.

While the city may lose its claim to fame (and when the US government advisory to its citizens to be careful while in Bengaluru), state’s Industries Minister R.V. Deshpande issued a press statement passing the buck to the Prime Minister who he says must intervene in the Cauvery river waters sharing matter and solve the issue. “In a federal system, it is the responsibility of the Hon’ble Prime Minister to solve such issues,’’ he said.

The law and order is the responsibility of the state, which the Supreme Court also reminded it while disposing off the application to reduce the quantum of water release.

Deshpande, who has been serving as the state’s industrial minister almost continuously for nearly 20 years despite regime changes — he was first elected from the Janata Dal and now represents the Congress party — only succeeded in adding political colour to the issue.

This is emblematic of the state trying to escape its primary responsibilities.

S.D. Shibulal, Co-founder and ex-CEO of Infosys put it best when he said,

India is a contradiction. It has a huge middle class and a larger class of people who cannot access resources. Cities alone cannot change lives. Education, infrastructure, and other knowledge-based resources must reach all parts of the country.

For that to happen, governments of the day have to take everyone along.

(With inputs from Vishal Krishna)

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