Second tier cities, first class business opportunities

Many people are talking about India’s ‘Second Tier’ cities.  The phrase doesn’t strike me as the kindest, with the hint that they haven’t quite made the grade.  But it is commonly used, to differentiate the large number of growing two million plus cities from the huge metropolises like Mumbai, Delhi and Chennai.

I visited briefly two of these second tier cities, Ahmedabad and Vadodara (or Baroda), in the State of Gujarat last week.  In Ahmedabad the Confederation of Indian Industries (CII) invited me to speak to their quarterly State Council.  The group of about 40 business people representing some large companies in IT, construction, energy and other sectors, have some impressive business.  A number are looking to expand in Europe, and we agreed we would work together to arrange a business delegation to the UK later this year. There should be some useful openings for British companies to explore with them.

Other major Indian companies with interests in Gujarat include Tata, who have just completed their new production facility for their low cost ( about $3000) Nano car there, and Essar, whose chairman Shashi Ruia  told me this week that they are on track to finalise a major steel plant next month, in addition to their oil refinery. The Reliance Group also boasts one of the world’s largest oil refineries on the west coast of Gujarat. The scale of some of these Indian conglomerates is colossal, and it is not surprising that Mr Ruia said that he is hoping Essar’s Energy offshoot, which recently floated in London, will make the LSE’s Top Fifty this month.

In Ahmedabad, a city of over 6M, we have had a two-person Trade & Investment office for several years, which is there to support UK business and encourage Indian investment.  The Canadians have recently opened an office, and I have heard that the French and the Australians may shortly follow suit:  they say that imitation is the best form of flattery!

From Ahmedabad I drove 100 kilometres on one of India’s impressive new highways to Baroda, another teeming city of 2M.  There are also developments of interest there to the UK.  One of our, and the world’s, largest chemical manufacturers, INEOS, has a major plant. The company’s international adviser, and former owner of the factory, has set up with his own funding a wonderful ‘retreat’ for Indian and international artists on the banks of the nearby river, and his son would be keen to see more UK artists in residence.  Separately, under the energetic leadership of one India’s leading architects, Karan Grover, the city’s flourishing Institute of Designers has invited the UK to take part in Baroda’s annual design festival with our 300 companies.

If that isn’t enough to follow up, an impressive Indian NGO, Bhasha, showed me at the weekend their work in support of tribal communities just outside Baroda.  Their director Dr Ganesh Devy told me that 30 percent of their funding comes from a UK NGO, Reach to Teach, who I am seeing in Mumbai next week. There could be ways we can give a little extra support to their superb work.

Ahmedabad and Baroda may count as second tier cities, but there are big and challenging opportunities to grow the UK links with them.