DPU Working Paper - No. 89

Authors: Srinivas, S.

Publication Date: 1998

Bangalore is often referred to as the ‘Silicon Valley of India’ as it is home to the largest number of Information Technology (IT) firms in India. This paper aims to understand the reasons for Bangalore’s success in attracting both foreign and domestic IT industries and investigates the extent to which the city can continue to be the preferred location for IT industry in the country. The analysis is conducted at the national level (which examines the global competitiveness of the IT industry in India), and at the city level, which provides a comparative analysis of the industry in Bangalore visàvis other major metropolitan areas in India. On the conceptual ground, the paper endeavours to put forward a case of urban competitiveness of Bangalore.

The theme of urban competitiveness is relatively new to the field of urban and regional economics, and is primarily found in the context of North American and European cities. Using a set of parameters which interalia include telecommunications infrastructure, government policies, availability of industrial/office space, skilled labour and specialised services, an appreciation of Bangalore’s competitiveness is provided. The study found a strong link between the IT industry and the research institutes in Bangalore. Such links were especially strong in the R & D activities.

Many of the interviewed firms felt that Bangalore would continue to be the preferred location for the IT industry in the country. However, they do not rule out the possibility that an impending infrastructure crisis in the city will undermine its competitiveness. The paper is based on my PhD dissertation completed at the end of 1997 at the Development Planning Unit, University College London, entitled The Information Technology (It) Industry in Bangalore: A Case of Urban Competitiveness in India? 

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