Indian hi-tech states hot rivals for big investments

Sufia Tippu
Tuesday, 13 June 2006 14:48

IT Industry - Market

Two of India’s top three software firms, Infosys Technologies and Wipro Technologies will have an unexpected visitor on June 15.

For the first time the chief minister of the south Indian state of  Tamil Nadu, will visit  Bangalore in the state of Karnataka state. The Minister wants to see for himself how this city has moved from a “sleepy pensioners” town to being the Silicon Capital of India and accounting for 30% of India’s total software exports of $24 billion in 2005-06.

The Union Minister of IT and Communications, Dayanidhi Maran, will be accompanying the chief minister of Tamil Nadu, M. Karunanidhi. The 39-year old IT minister also happens to be the great-nephew of the 80-year-old chief minister.

This is a significant event because both the states, considered to be arch rivals when it came to attracting investments from  IT multinationals have not seen either of their chief ministers visiting their counterpart in the other state.

The three cities of south India – Bangalore (Karnataka state), Chennai (Tamil Nadu state) and Hyderabad (Andhra Pradesh state) are always in a white-knuckled, nail-biting race to attract investment from large IT multinationals as well smaller startups with niche technologies.

Recently, Bangalore lost out to both Chennai and Hyderabad for large manufacturing projects.

In January this year, Nokia as well as Motorola (which announced its plan just recently) have set up manufacturing plants in Chennai. Nokia had the plant up and running in just six months and is now manufacturing over a million phones a month.

The $3 billion semiconductor fabrication plant, the first of its kind to be set up in India by a consortium of non resident Indians and the Union government participation, was yet another closely fought race where the location finally went in favor of Hyderabad.

The success of high technology firms in Bangalore has led to the growth of India's IT industry, making it the Silicon Valley of India. But, trying to cope with such an unprecedented growth, Bangalore continues to struggle with major infrastructure problems. Nevertheless it still remains an attractive destination for high-end R&D projects, if not manufacturing, with two new companies setting up operations each week.
 
Hyderabad city is also known for its IT and IT Enabled Services (call centers), pharmaceuticals and entertainment  industries while Chennai is the automobile capital of India, with around 40%  of the automobile industry having a base there.  After being called as the Detroit of South Asia, it is fast emerging as the hardware manufacturing hub of India.