In the first of our series profiling dynamic markets around the globe, we travel to northern India where the National Capital Region (NCR) – the world’s largest urban agglomeration – is posting some of the best growth figures in the world
When does a city become a megacity? Perhaps when its population reaches 23 million and it spreads over nearly 13,000 square miles, which is the current size of India’s National Capital Region – an area comprising Delhi and its satellite cities.
Video profile: NCR business leaders on doing business in India
In our video, three business figures from the NCR give an overview of India’s history and culture, its economic transformation, how their businesses work, their ambitions moving forward, and why business in their area is set to keep rising.
Hear from Rahul Sharma, co-founder, Micromax Mobile (one of the largest handset manufacturers in the world); Ashish Gupta, COO of research provider Evalueserve; and Vishesh Chandiok, national managing partner, Grant Thornton India.
Or read on for an in-depth profile of India’s NCR.
India’s megacity in stats
Making up 1.06% of India’s total size, the NCR has had a breathtaking level of economic development. More than a fifth of the jobs created in India in 2012 were in the NCR and it’s hardly surprising that it has become the largest residential market in the country. Prices have been on an upward trend since mid-2009. It has been estimated that more than a million new houses and 25 million square feet of office space will be needed for 2013. Anuj Puri (chairman of Jones Lang LaSalle India) estimates the NCR will, along with Bangalore, “continue to be of highest interest to big-ticket investors focused on real estate in 2013”.
Retail growth has been strong and the scale of shopping mall development in the NCR has been extraordinary. Gucci recently opened its third store in the NCR, its fifth and largest in India. India Times reported that: “With an increasing number of global brands foraying into the food and beverage space in India, the NCR is now becoming a preferred destination to enter this market over Bangalore and Mumbai.”
Alongside Dunkin’ Donuts’ much-publicised flagship opening (in Delhi’s mighty Connaught Place) in 2012, with nine others over the financial year, there were also the arrivals of Starbucks, YogurBerry from Korea, Berrylite outlets from Singapore and Red Mango from the US.
Gurgaon – ‘the new Singapore’
One of the stars of the area is the city of Gurgaon. A close satellite city to Delhi, it has seen the biggest capital appreciation for investors and end users and has become known as ‘the new Singapore’.
“If Gurgaon had not happened, the rest of India’s development would not have happened, either,” says Kushal Pal Singh, Chairman of real estate firm DLF. “Gurgaon has become a pacesetter.”
Barely existing two decades ago, Gurgaon has seen a growth rate equal to anything in China. It has the highest per capita income in north India and is the only city in India to have all its homes cabled to electricity, albeit with distribution problems.
With at least 62 shopping malls, retail industries are strong in Gurgaon.
The city has also rapidly become a major hub for the automobile industries – it is home to Hero MotoCorp and Maruti Suzuki (the world’s largest motorcycle maker and India’s largest auto maker respectively).
It is one of the most prominent offshoring and outsourcing hubs in the world and is home to multinational companies including McKinsey, Nestlé, Genpact and SAP AG.
Growth story – Evalueserve
Local outsourcing player Evalueserve started its knowledge process outsourcing services in India in 2000 and now has offices in China, Chile, Romania and the UK. During its first eight years, the company grew at a phenomenal rate of 75% a year.
“When you are growing that fast the main concern is managing the business flow and our type of product is very complex so we have developed a strategy that allows us to have fewer clients and provide a higher-value service,” says Co-founder and Global COO Ashish Gupta (pictured).
“But that can only be possible if we really go up the knowledge curve ourselves. We need to have more knowledge about clients’ industries along with specific technology platforms that we can imbed into our client organisations.”
That requires fact finding and analysis but Gupta says it’s important to balance that out with instinct and experience.
“I think experience is sometimes underrated in any business,” he observes. “You would have had small, singular problems in the past that you can recall to help you instinctively know what might be the solution for more difficult problems.”
That instinct and experience will be crucial as Gupta and his team move to Evalueserve’s next stage of growth. “I think we are at a cusp,” he says. “The next two years will be about dramatic positive change. Really I think it’s all about how big we can think.”
Local leader – Micromax
Gurgaon is also a major hub for IT and telecoms companies, with HQs here including those of IBM, Dell, Mitsubishi Electric, Schneider, General Electric, Fuji Electric, Nippon and British Telecom.
One local telecoms leader is Gurgaon-based Micromax, whose low-cost phones have dominated the Indian market, largely because they address the needs of local consumers.
“When we launched the 30-day battery phone it cost around $25 and there was nothing like it,” says Rahul Sharma (pictured), Micromax Co-founder. “We had consumers coming from Africa because they had the same problem with charging phones in rural areas.
“That’s when we realised that this humungous market was being supplied by international manufacturers who didn’t understand what the people here need in their daily life.”
Sharma and his team work by instinct, only making products that they feel are right for the market. Micromax’s dual-sim phone, which features two sims on a single band, came from the observation that people in the middle market had a work and a home phone.
The product has been a huge success, becoming a category in itself and creating a vertical market. “In fact,” says Sharma, “we’ve created so many vertical markets that the established manufacturers are now following the roadmap that we are making.
“In 2013 there will be 240 million mobile handsets sold in India. With smartphones coming, this year is going to be important for us and we are looking to double our rate of growth. We are already in nine countries; if we play it right there is a big chance that we will be a global player worldwide.”
Faridabad – ‘the industrial capital’
Faridabad is an even larger NCR city than Gurgaon, situated to the east and across the southern tip of Delhi. Along with Gurgaon, it generates half of the income tax collected in the whole state of Haryana.
Situated on National Highway 2 out of Delhi, and on the broad gauge of the Delhi-Mumbai rail line, Faridabad is considered to be the industrial capital of India, with more than 25,000 small-scale companies – mainly mechanical and engineering – and hundreds that are large scale, including Dee Development Engineers, ABB Group, Goodyear, Yamaha, JC Bamford, Havells, Whirlpool Corp, JBM Group and Indian Oil Corp.
Meerut – ‘significant education hub’
To the east of Delhi, a part of the state of Uttar Pradesh provides roughly 32% of the size of NCR and includes, for starters, the NCR’s second largest city, Meerut (43 miles from Delhi).
A recent report by Morgan Stanley, A Guide To India’s Urbanization, placed Meerut at fifth place on its ‘vibrancy index’ – ahead of both Delhi itself and Mumbai – not least due to the scale of its rapid infrastructure development.
Four national highways pass through the city, it is a significant education hub and is home to large distillery, chemical, engineering, sugar, paper, publishing, tyre and textile companies, more than 8,000 cottage industries and roughly 50,000 industrial units.
About 50,000 skilled craftsmen work in the city’s gold market and there are more than 40 Hallmark BIS showrooms.
Noida – ‘model city with economic zone status’
Closer to the state of Uttar Pradesh’s border with Delhi are Noida and Greater Noida. Noida, known as ‘a model city’, with economic zone status, is managed by – and an acronym of – the New Okhla Industrial Development Authority. It has a high level of infrastructure, is home to Noida Film City, and has fast become a hub for large software companies and automobile ancillaries.
It also has corporate offices of major manufacturers and a wealth of multinationals outsource IT services to it, including IBM, Dell, Samsung, Patni, Adobe, Fujitsu, SDG, Dex, Wipro, Avis e-Solutions, Accenture, CSC, Tech Mahindra, EXL Service and Tata Consultancy Services.
All the above areas – along with other vibrant cities and towns such as Rohtak and Jhajjar (to the west of Delhi) and Palwal (to the south) are part of India’s general growth.
NCR – the business advantage
India as a whole achieved 1% annualised GDP growth rate in the three decades after its independence, but in the mid-80s slowly began economic liberalisation. In 1991, when the Gulf region ‘dried up’ – with Iraq’s invasion of Kuwait – Indian GDP fell to 1.3% and the country suffered near-insolvency. When asked for loans, the World Bank demanded increased liberalisation of the Indian market. India’s Government gave up its idea of self-sufficiency and encouraged foreign investment.
NCR alone now has 54 Special Economic Zones (SEZs), not least with duty exemptions and a 10-year tax ‘holiday’.
Unlike most international instances where zones are primarily developed by governments, the Indian SEZ policy encourages government, joint or private development and 100% FDI is permitted. (NCR’s private initiatives have almost invariably had better vibrancy and power supplies.)
Since the Asian Economic Crisis of 1997, NCR has done well in squeezing costs, revamping management, keeping labour costs low, focusing on designing new products and adopting new technologies – partly aided by a fortuitous fire sale of fibre-optic cables being auctioned off at a tenth of their value.
NCR has a large working population, which has migrated from many parts of India, is younger than its Chinese counterparts and has a high proficiency in English.
NCR has a large pool of skilled professionals, especially in the services sector. Meerut alone has four universities, 150 academic colleges, 50 engineering colleges, 23 management colleges, seven pharmacy colleges and even four colleges offering hotel management training; while in the Greater Noida district alone there are 24 engineering colleges and 21 management schools.
With all this development there is a demand for business expertise, which NCR can supply with an astounding 32,000 business students graduating every year.
Photography/video: Rama Knight; video editing: Edward Chamberlin; audio: Dear Music