Delhi Beats Mumbai As New Commercial Capital

A recent study by Mc Kinsey Global Institute’s `Urban World: Cities and the rise of consumer class’ suggests that in the coming decade, Delhi’s GDP will cross Mumbai’s and by 2025. The capital’s economy will also be about ten percent higher than Mumbai’s- thus, positioning Delhi as the new commercial capital of the country. In addition, Delhi has emerged as the most competitive city in the country for the third time straight, with Mumbai in second place, according to a report by an international think tank. The report titled `India City Competitiveness Report-2012’ compiled by the Institute for Competitiveness (IFC) indicates that Delhi is fast stealing the limelight from Mumbai.

The last few years have seen Delhi tide over Mumbai in terms of state-of-the-art infrastructure, real-estate development, retail expansion, availability of facilities, operating costs and revenue generation. Industry experts feel that Delhi has the fundamentals to be India’s commercial capital. According to Amit Kapoor, IFC Chair, “New Delhi has managed to demonstrate phenomenal growth time by balancing demand and development.” The city boasts of world-class infrastructure, a good governance model, large and growing consumer market and proximity to Haryana (Gurgaon) and UP (Noida), which have a large and diversified industrial base.

The superior aviation infrastructure has also worked in favour of India’s capital. “Delhi has a world-class airport with scalable infrastructure, whereas the Mumbai airport has huge capacity constraints. The new airport in Navi Mumbai is not likely to be ready before 2017 and the city will have no airport capacity for the next four-five years. This will cripple Mumbai and have a massive economic impact on Maharashtra,” says Kapil Kaul, Chief Executive Officer-Indian Subcontinent & Middle East, CAPA India- Centre for Aviation.

Meanwhile, Delhi Airport has the highest percentage of foreign nationals (this includes persons of Indian origin) at 43 percent. According to the CAPA India Travel Retail Report 2012, Delhi Airport has the greatest prospects to establish itself as a hub airport, attracting large flows of transfer traffic, in which case it could even exceed the projected retail spends.

Then there’s the fact that Delhi seems to be at par with Mumbai in terms of real estate consumption, retail markets, education, lifestyle and entertainment. According to Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India, “ In terms of GDP growth, infrastructure, MNC saturation and overall image, Delhi is shoulder-to-shoulder with Mumbai. In many aspects, it is superior.”

A professional services firm, specialising in real estate, in its Monthy Real Estate Monitor- July 12, reported that both Delhi and Mumbai remained at par in terms of office and retail space demand. Delhi, however, witnessed better growth with respect to residential sales.

Apart from being home to corporates like Bharti Airtel, HCL, Ranbaxy and DLF, Delhi is also an automotive hub and is seeing a sizable concentration of e-commerce start-ups, which are instrumental in supporting secondary and tertiary economic activities. “As India moves from a manufacturing based economy to a knowledge based economy, one can spot potential in the political centre due to a number of reasons such as availability of large, open spaces and thereby, lower cost of land and rentals and better infrastructure,” said a Technopak advisor.

The organisation that closely monitors and predicts consumer trends in retail and consumer products, fashion, healthcare and education, highlights that many large universities and institutions such as Amity University, Sharda University, G.D. Goenka World School and many more have set up their campuses in Delhi NCR due to the availability of large spaces at affordable prices and government support.

“Any company that has scalability and growth in mind, would prefer Delhi over Mumbai. Forty percent of the overall retail space in India is constituted by Delhi, against Mumbai’s 30 percent. India’s capital has also become a desitnation for luxury consumption,” said the Technopak advisor.

Once known for its culture and undying party spirit, Mumbai is now losing out to Delhi in that area too. With a slew of clampdowns, raids on restaurants, and pubs and acts of moral policing at art shows, Delhi is definitely being favoured. Bose Krishnamachari, artist and curator who has resided in Mumbai for 27 years, said, “In Delhi, artists can afford a large studio. In Mumbai, barely three or four artists can do so. Moreover, the Delhi art scene is more vibrant. Both cities are equal in terms of exhibition space but in Delhi, there’s a lot of support, especially at the diplomatic level since there are many consulates and embassies that organise and promote get-togethers for artistic and creative people.”

AD Singh, Restaurateur and Managing Director of one of Mumbai’s most popular restaurants, Olive Bar & Kitchen, admits that the events of the past few months have had an impact on how Mumbaikars entertain and party. Srila Chatterjee, one of the founding partners of Blue Frog, a live music performance club, has also come to prefer Delhi over Mumbai, where it opened last year.

However, many feel that it’s too early to say if Delhi will emerge as the new commercial capital of India. According to Technopak advisors, Mumbai still enjoys an edge in terms of providing access to securities and capital market, regular power supply, lower crime rate and being a port city that has led to the establishments of manufacturing and industrial clusters.

According to Anuj, the fact that Mumbai is a port city makes a difference. “Most international corporations still look at Mumbai as their primary choice when it comes to establishing headquarters. That said, ‘commercial capital’ is not an official designation and more of a concept, and can therefore be interpreted in a number of ways and on the basis of many different parameters,” says Anuj.

While both Mumbai and Delhi present a convincing case in point to put India on the global map as a country bustling with large city –economies, it is only together that both the cities can add to the story we know as India Shining.

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