Mumbai is sometimes known as the ‘Maximum City’, a dynamic metropolis that is always growing. The city alone contributes to around 5% of India’s total GDP, in part because of its perceived position as the financial capital of India. Whilst Banking, Finance, Insurance and Professional Services are the major sectors of growth, the Shipping, Manufacturing, Pharmaceuticals, Media and Entertainment sectors are also prominent contributors to the city’s success. Looking ahead, what are the factors which will drive growth over the next seven years. Given these drivers, Mumbai will generate further employment within prominent growth sectors, such as Pharmaceuticals, Research and Development, Retail, Media and Entertainment.
The greatest hope is for Mumbai to become like Shanghai in terms of having excellent infrastructure attracting multinational companies. The reality is, this won’t be achieved within the 2020 time frame, although through investment and implementation, we could now see this dream become a reality in the not-too-distant future. The worry for Mumbai is that it may be surpassed by other Asian cities in an increasingly competitive market. Cities such as Delhi and Chennai are increasingly competing with Mumbai. Infrastructure investment and other upgrade programs have resulted in some operations moving away from Mumbai. Delhi puts in place a 10-year plan and is clearly making progress whilst Bangalore is coming up strongly too. Mumbai is losing Shipping and back-end Financial jobs to Chennai, and even the townships around Mumbai are benefiting from the migration from the City centre. How will this tip the scales?
Fortunately, the city’s gravitational pull will remain strong over the next seven years, although the city will be increasingly challenged and it will become imperative to proactively fulfill the needs of its citizens. Mumbai will remain the gateway to India, and with India representing such an influential slice of the Asia Pacific (APAC) pie, it will undoubtedly remain as a mainstay of the APAC region.
India is more self-sustaining than any of the other BRIC economies. It’s driven by its own consumption, not exports nor foreign investment, and therefore, resilient to externalities. Mumbai is a key entry point to this massive market. India’s demographics are astonishing. It has been calculated that by 2050, India’s workforce will be virtually as big as America’s and China’s combined. Before then, perhaps as early as 2030, India will be the world’s third biggest economy. These are irresistible facts. International occupiers and investors will have to position themselves to take advantage of India’s huge internal market; they have no choice. The question is when?
The government has clearly stepped up the reforms. Passing the new Land Acquisition Bill and Real Estate Authority Bill has indeed been helpful in India’s march towards absolute transparency and has been one step closer to achieving a robust real estate market. The hope is that foreign direct investment (FDI) will arrive again sooner, rather than later. And, the linked hope is that deregulation will accelerate this timetable. Deregulation in finance and retail could already do so much to signal where the government wants to take the country.
The Hope vs. Frustration dilemma really is in the balance, so much so that occupiers and investors are preferring not to make any big decisions for now. What is certain is that by 2020, there will be increased clarity. The competitive threat of oriental and Indian cities will be more evident. The government’s liberalising agenda will be better understood in one direction or the other. The economic and education story will show whether India is on the path to dragging millions out of poverty or not. Occupiers and investors will play ‘wait and watch’, but one fact is evident-whilst there can be varied perceptions about country – level risks, Mumbai remains the first port of call, and it does remain as the most favoured Indian city for the rest of the world.
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Source: Jones Lang LaSalle India
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