India City Competitiveness Report 2009

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Contents
Intioduction
Uibanisation and Metiopolitan Giowth
Methodology
Competitiveness Rankings
Levels of Measuiement
A A Note on Clusteis
e Way Foiwaid: A Woid foi the Policy Makeis
Foimulating the Right Coipoiate Stiategy
In Conclusion
Institute for Competitiveness, India
IInstitute foi Competitiveness, India is the Indian knot in the global netwoik of the Institute foi Stiategy and
Competitiveness at Haivaid Business School. Institute foi Competitiveness, India is an inteinational initiative
centied in India, dedicated to enlaiging and puiposeful disseminating of the body of ieseaich and knowledge on
competition and stiategy, as pioneeied ovei the last 23 yeais by Piofessoi Michael Poitei of the Institute foi
Stiategy and Competitiveness at Haivaid Business School. Institute foi Competitiveness, India conducts and
suppoits indigenous ieseaich, oeis academic and executive couises, and piovides advisoiy seivices to the
Co Coipoiate and the Goveinments. e institute studies competition and its implications foi company stiategy; the
competitiveness of nations, iegions & cities and thus geneiate guidelines foi businesses and those in goveinance;
and suggests and piovides solutions foi socio-economic pioblems.
Further Information
Foi fuithei infoimation on oui publications, ieseaich, advisoiy, ieseaich sponsoiship and executive piogiams,
contact Neeia Vohia at neeia.vohia(competitiveness.in oi visit oui website at www.competitiveness.in.
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Institute foi Competitiveness - India City Competitiveness Repoit 2009
Introduction
Cities aie economic miciocosms. ese fundamental
units piovide bieeding giound foi economic activities
acioss industiies and seivices foi a blend of people
fiom all walks of life. An inevitable competition ensues
when the multitude of visible and latent agents of the
numeious foices play inteiactively; thus exciting
dimensions of successful and unsuccessful coping with
su such competition.
Oui states and nations aie nothing but a summation of
oui cities; thus it is not inoidinate to asseit that the
state of oui cities ieects the state of oui nations.

As Dr. Chrsan Keels of Harvard Busness School,
n an exclusve pece for hs repor, pons ou ha
ces need o have a clear compeveness agenda.
And whou ces ha push for compeveness,
s hard o see how a naon lke Inda can make any
susaned progress n s overall ques for hgher
compeveness.
e Indian City Competitiveness Repoit 2009 is an
endeavoui that evaluates the peifoimance of cities on
competitiveness. In conclusion it foicefully advocates
foi them appiopiiately tiaveising specic paths
towaids economic and business success. In the piocess,
it delves into nuances of the city peifoimance; and
decipheis the stiengths and weaknesses that pull oi
pu push a city in the intended oi unintended diiections.
e iepoit seives twofold gioups i.e., the coipoiate and
the goveinment. We imly believe that it will aid
policy makeis in impioving city pioductivity and hence
attiacting moie business and that it will be a boon to
the coipoiate sectoi, pioviding them invaluable
infoimation as they decide the futuie couise of action
foi theii businesses' giowth path.
suimise that soon enough we will have 43-30 cities
with a million plus inhabitation. ese cities have
become epicenties of the Indian economic boom, have
cieated clusteis of uiban agglomeiations aiound them
and have aided the giowth of one oi moie satellite
towns as well. Case in point is the iise of Guigaon,
NOIDA, aiound Delhi; and Mumbai having subuibs
su such as ane. In fact, a detailed analysis of ve laige
metios, namely Mumbai, Delhi, Chennai, Hydeiabad,
and Bengaluiu ieveals that peiipheial giowth plays a
signicant iole in the giowth of a city thiough uiban
spiawl. One can obseive with inteiest that inevitably,
these uiban agglomeiations become thiiving
full-edged business centies.
Howevei, sustainability of these business epicenties is a
huge undeitaking and iesponsibility. Histoiically, woild
ovei booming business has tiaditionally biought
unmanaged population giowth, biinging innumeiable
stiesses on planning, iesouices and seivices. A
concomitant boom is in vehicle numbeis as well. us
fai, oui cities have not been able to piovide sustainable
so solution to any of these stiesses. Sanjeev Sanyal,
Pounder and Presden of Susanable Plane Insue
conends n hs repor ha walkng-he ulmae form
of publc ranspor needs o be nfused no our cy
DNA. Gong forward, buldng a publc ransporaon
grd conducve o walkng s hus mperave.
Purhermore, he need for susanably and nururng
an envronmenal conscence s also hghlghed by Raj
Lberhan, Drecor, Inda Haba Cenre, n hs arcle
n hs repor. He pus forh he alarmng ye
hush-hushed naure of our anhropogenc use of
naural resources and how has lead o a lopsded
nvesmen of me and money and consequenal
un unsasfacory oucomes. Agan, a new paradgm n
our cy plans needs o be mplemened. Issues across
he specrum-waer polluon, energy, wase
managemen ec-have o be suded n andem f our
ces are o survve and hrve n he fuure.
ough India is no stiangei to uibanization, its
boldfaced piesence has been acutely felt in the past
couple of decades oi so. Accoiding to the 2001 census
caiiied by goveinment machineiy, theie aie 33 cities
with a million plus population in India. Fuithei noted
that, 11 cities weie added to the list between 1981 and
1991, and 12 between 1991 and 2001. One could safely
We used Poitei's Diamond Model foi oui analysis; this
Diamond Model is the benchmaik model used by
leading academic institutions aiound the woild. Based
on Piofessoi Michael Poitei's seminal woik on stiategy
and competitiveness and taking o on the model used
by Woild Economic Foium foi its Global
Competitiveness, we evolved a iobust model to
me measuie competitiveness of Indian cities. Aei much
debate and discouise, ovei 300 indicatois weie used to
aiiive at the nal index foi competitiveness, wheiein
extensive ieseaich was employed to collect the data.
Unlike the Woild Economic Foium appioach, we did
not input any subjective opinions; only haid data has
been piocessed.
Urbanisation and
Metropolitan Growth
Methodology
Institute foi Competitiveness - India City Competitiveness Repoit 2009
e study uses haid data collected fiom ieliable souices
to eliminate the possibility of peisonal bias. To uphold
ieliability and validity, the data was collected fiom
public oiganization and institutes engaged in collection
of statistics, infoimation, and summations, Gaps in
data aie natuial, the bieaks in data aie howevei, lled
with similai size oi extiapolated data to pievent the
an any undue bias. us we evaded unfavouiable oi
negatively coiielated data being intioduced in the
piocessing. A myiiad of paiameteis weie developed
into compiehensive indices. Caie has been taken to
pievent multi-collineaiity with the use of Piincipal
Component Analysis to dene the weights placed on
each indicatoi and sub index.
Competitiveness is measuiable when vaiious
micioeconomic factois aie suitably aggiegated to give
the nal measuie. Heie, the measuie foi
competitiveness is founded on foui pillais of
dimensions that assess the competitive potential of a
city: factoi conditions, demand conditions, suppoiting
conditions, and stiategic context. Each indicatoi is
gi giouped into these foui pillais and fuithei into the
sub-pillais to obtain a composite index foi
competitiveness thiough many sub-indices. eieby,
eveiy indicatoi has been pivotal in deteimining the
nal index foi competitiveness. Howevei, eveiy
indicatoi does not play an equitable iole in the
pioductive potential of the city. Calibiated Weights
hhave been assigned to each indicatoi thiough Piincipal
Component Analysis; this eliminates oveilapping
coiielation. Competitiveness hence becomes a balanced
composite of vaiious factois.
e top ten, as you can see aie the familiai
cities-cities one would intuitively expect in the top
ten. What is iathei inteiesting is theii ielative places
Microeconomic Competitiveness. The Diamond
nderstand|ng Bus|ness Env|ronment}
Source: Porter, 1990
Conex for
Sraegy o Rvalry
Pacor
Condons
Sophistication of local custom-
eis and needs i.e., stiict qual-
ity, safety, and enviionment
standaids
Local rules and incentives that encouiage
investment and pioductivity e.g. salaiies,
incentives foi capital investments, intellectual
piopeity piotection
Vigoious local competition i.e., openness to
foieign and local competition; sophistication of
company opeiations
Access to high quality business
inputs i.e., natuial endowments,
human iesouices, capital
availability, physical
infiastiuctuie, administiative
infiastiuctuie, infoimation
infiastiuctuie, scientic and
te technological infiastiuctuie
Availability of suppliers and
supporting industries
Piesence of clusters instead of
isolated ims
Relaed and
Supporng
Indusres
Demand
Condons
within the top ten and theii peifoimance in
sub-categoiies. Mumbai emeiges as the victoi closely
followed by Delhi, which is followed by Bengaluiu,
Chennai and Kolkata. Chennai, which is the only city
to make it into top 10 in eveiy categoiy, pioves to be
the jack of all tiades in the gioup. Foi compaiison's
sake, accoiding to the nal scoies, we can divide the
ci cities into 4 'tieis'. e ist gioup of cities at the top
that aie veiy closely competitive include Mumbai,
Delhi, Bengaluiu, and Chennai. Next we have Kolkata,
Hydeiabad, Ahmadabad, and Pune neck-to-neck with
each othei. e thiid tiei is a laigei gioup of cities
Jaipui, ianked 9th to NOIDA, ianked 19th. e fouith
and nal tiei contains the iemaining cities
di dieientiated by whiskeis of maigins.
City Ranking
Mumbai 1
Delhi 2
Bengaluru 3
Chennai 4
Kolkata 3
HHyderabad 6
Ahmadabad 7
Pune 8
Jaipur 9
Surat 10
Chandigarh 11
Gurgaon 12
NNagpur 13
Coimbatore 14
Kochi 13
Goa 16
Indore 17
Shimla 18
NOIDA 19
City Ranking
Kanpur 20
Ludhiana 21
Lucknow 22
Trivandrum 23
Bhopal 24
VVadodara 23
Kozhikode 26
Guwahati 27
Bhubaneswar 28
Mysore 29
Nasik 30
Faridabad 31
JJammu 32
Dehradun 33
Srinagar 34
Visakhapatnam 33
Patna 36
Jamshedpur 37
Competitiveness Rankings
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Institute foi Competitiveness - India City Competitiveness Repoit 2009
Levels of Measurement
e Competitiveness Index is deiived fiom foui pillai
indices: Factoi Conditions Index that has 6 sub-indices;
Context foi Stiategy and Rivaliy Index that has 2
sub-indices; Suppoiting and Related Industiy Index
that has 2 sub indices and Demand Conditions Index
compiised in tuin with 2 sub-indices.
e iepoit spews a plethoia of insights at sub-categoiy
levels. Foi instance, a look at ianking in the
Institutional Suppoit categoiy, that falls undei
Suppoiting and Related Industiy Index, oeis some
inteiesting insights. Numeious cities in the top 10 do
not do well in this categoiy: Mumbai ianks 34th,
Kolkata 37th, and Suiat, Chandigaih, and Guigaon
ia iank in the 30's as well. On the administiative side, not
suipiisingly, Patna featuies close to the bottom of oui
iankings; Ahmadabad actually come out on top in this
categoiy. Kolkata ianked numbei 3 oveiall ianks a
dismal 37th in this categoiy. Kolkata also featuies at
the bottom of the chaits foi Institutional Suppoit. e
high competitiveness of Kolkata despite such low
admin administiative and Institutional Suppoit Systems is
since its peifoimance in othei aieas osets. e top
league of cities Mumbai, Delhi, Bangaloie, and Chennai
geneially peifoim well. In fact, in ceitain aieas,
Mumbai and Delhi standout as absolute
outpeifoimeis-positive and fai ahead-in ielation to
the iest of the cities; Mumbai does so foi
CCommunication and Suppliei Sophistication wheieas
Delhi, diiven by the sheei numeiical piesence of
companies, does so foi Regional Competition Intensity.
us, it is ieally satisfying to see data chuining excites
tiacks foi discussion and shaping an evolved and
textuied undeistanding of wheie competitiveness of
oui cities stands today, and suggests focus aieas foi the
iiefoim initiatives.
Factoi
Conditions
Demand
Conditions
Context foi
Stiategy & Rivaliy
Suppoiting &
Related Industiy
Competitiveness
Ranking
Dr. Am Kapoor, Professor a Managemen
Developmen Insue and Charman of Insue
for Compeveness, Inda says ha "e Indan
geography s wang o be mapped and he Indan
ces wang o be branded. A cluser
approach-based on he economc concep of
specalzaon-could do wonders n hs suaon.
On Once, a regon becomes known for a reason, s
prospery grows exponenally due o economes of
scale. A cluser based regme would open doors for
compeve advanage and unlock umpeen
avenues for saes o head owards prospery and
opulence".
cases bettei iegulation and taxation as well. It is
absolutely not a coincidence that these aie the piecise
elements that inciease the pioductivity of a iegion
accoiding to e Poitei's Diamond. e model also
piofesses clusteis as a catalyst foi economic boom; this
is validated iesoundingly by oui iesults.
CClusteis can expand oppoitunities foi the locals and
cieate a syneigistic enviionment foi businesses to
piospei. Considei this: the NCR tii-cities (i.e. National
Capital Region cities: Delhi, Guigaon and NOIDA),
Mumbai, Chennai, Ahmadabad, and Suiat all peifoim
well in oui model. A closei look ieveals the piesence of
clusteis in each of these iegions. e leathei clustei in
Ch Chennai, the diamond clustei in Suiat, the petioleum
clustei in Mumbai, the cotton yain in Ahmadabad and
the colossal piesence of MNCs in the NCR iegion
indicate the catalytic eect of clusteis.
e development of clusteis acioss the countiy is
anothei highlight of the iepoit. e competition foi a
laigei piece of the economic pie has led to
impiovements in physical and nancial infiastiuctuie,
human capital, consumei paying capacity, and in some
e ist and foiemost impeiative foi the policy makeis
is to take a holistic appioach towaids pioductivity,
which is the key denei of competitiveness. e
decision makeis need to woik on developing all iound
competitiveness by impioving on factois acioss the
boaid, cieating the coiiect mix of conditions that can
aptly suppoit the taiget futuie industiies oi the ones
al alieady piesent in the iegion. In addition to the geneiic
holistic impiovement, we want to highlight ceitain
specics that we think aie going to be ciucial factois
foi a city's pioductivity in the futuie.
Enviionmental and tianspoitation sustainability is a
key aiea wheie most cities in India need to impiove
upon. As cities giow, the alieady congestion and
pollution maiied Indian cities will stiuggle to iemain
attiactive foi businesses. Sustainable public
tianspoitation systems will be the key in the futuie.
A Note on Clusters
e Way Forward:
A Word for the Policy Makers
Institute foi Competitiveness - India City Competitiveness Repoit 2009
In fac, Susan Zelnsk, Managng Drecor of SMART
(Susanable Mobly and Accessbly Research and
Transformaon) a Unversy of Mchgan, assers
ha he problem of rac congeson n larger ces s
no small a all, and he subsequen consequences
canno be gnored.
BBuilding upon the clusteis aigument, we believe the
city developeis need to give a seiious thought to eithei
bianding the city, developing a clustei aiound it oi
enhance the existing clusteis. Since clusteis play such a
vital iole in the pioductivity of a iegion, caieful
policies need to be implemented to moie eciently
oiganize and delivei seivices, enhance netwoiking,
im impiove the suppoit systems foi clusteis, i.e. human
capital, institutional and suppliei eciency. is also
facilitates the bianding of oui cities. As Madhav
Raman, Parner, Anagram Archecs and Anupam
Yog, Managng Drecor, Mrabls Advsory pon ou,
a sngle exhausve denon (sll) eludes a cys
"urban experence".
e policy makeis also need to think about continually
'upgiading the diamond'. City goveinance needs
facelis in most of oui cities. We need to cieate
ecient and less buieauciatic pioceduies to attiact the
businesses. Investment in communication and
tianspoitation infiastiuctuie should obviously be high
on the piioiity list. Lastly, impioving the conditions of
th the uiban pooi should be on the agenda as well. Most
oen, the lattei condition is le to iesolve itself. But it
is one of the foui pillais of the diamond model-the
demand conditions-and the pioductivity of a iegion
cannot be incieased with thiee stiong and a fouith
weak pillai.
We hope that the policy makeis will be able to come up
with a piioiity list of things needing theii attention
upon a caieful peiusal of oui compiehensive analysis,
and act accoidingly.
As Sandeep Mann elucdaes he compellng
urgency all ces should sense and ac upon,
owards projecng hemselves as Branded
Desnaons for Poregn Drec Invesmen.
Inense soul-searchng and mappng of compeve
posonng alone shall enable every cy o carve
ou s unque appeal as an nvesmen
de desnaon, raher han a faceless generc
monolhc we-are-open-o-all-knds of
nvesmens pch. Apng he leadng ces by he
laggards shall be surely a fule and
couner-producve exercse.
Ces wh good governance have a greaer poenal
o creae and suppor good lvng condons. ese
ces have a beer chance o oer her nhabans a
more equable share n economc growh, access o
nfrasrucure and servces, and parcpaon n
polcal decson makng. Accompanyng hese
opporunes, however, are growng demands on he
ca capaces of muncpal nsuons. As naonal-level
publc fundng dwndles for ces, publc resources
mus be sreched o mee he needs of he growng
numbers of urban dwellers. s s one of he cenral
challenges of our mes.
Whethei one is looking to stait a business oi to expand
an existing one in India, the detailed analysis in this
iepoit indicates cogently wheie one ought to go. e
beauty of the time-tested diamond model is its
compiehensive exhaustiveness. Each pillai caiefully
coveis all the dieient facets of pioductivity. No mattei
what a im's evolution timeline is, the iepoit piovides
po pointeis foi ims in the piocess of expansion oi in a
nascent stage.
e location decision can be made depending on the
pioductivity potential and the micioeconomic
conditions a city has. e cities can be gauged foi theii
potential foi each industiy and coipoiations can deiive
theii stiategies accoidingly. Illustiatively, good
infiastiuctuie and suppoiting conditions point to a
high piobability of success foi a pioducts /
ma manufactuiing oiiented im, wheieas the quality of
institutional suppoit, business incentives, and
competition intensity in a iegion could be of inteiest to
a edgling business.
e facts and analyses included can be applied to all
ims iiiespective of theii industiy and futuie couise of
action. We hope that the iepoit will be of use to boaid
level stiategists and consultants to successfully extiact
and cioss-map the infoimation they need, and come up
with winning decisions foi theii ims.
On Governance: Gordon Peller
Formulating the
Right Corporate Strategy
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In Conc|usion
AAs a concluding woid on competitiveness, let it be said that the moie conducive the enviionment foi businesses,
the moie the competitiveness. e pioductivity of the city oi location would be no doubt beneted by the
investments, expoits and technological and innovation impoits. Fuithei, a healthy and open competition among
the cities is benecial foi competitiveness and piospeiity to giow. A piocess of discoveiy should be initiated by
each city, wheiein in line with Piofessoi Poitei's thesis, sustainable competitive advantages based on factoi
conditions aie cieated, not inheiited. e India City Competitiveness Repoit 2009 captuies the essence of
pi pioductivity by studying indicatois that aie diiectly ielated to the development of the iegions oi the cities. Foi the
coipoiate looking at a city foi investments, maiket entiy et al would focus on dieient pillais of competitiveness to
deteimine its entiy into the city and ceitainly stiategise foi success.
About the Authors
Dr. Amit Kapoor
Amit Kapooi is Honoiaiy Chaiiman of Institute foi Competitiveness, India and Piofessoi of Stiategy and
Industiial Economics at Management Development Institute, Guigaon, India. He is an aliate faculty foi the
Micioeconomics of Competitiveness couise of Institute of Stiategy and Competitiveness, Haivaid Business School.
He focuses on ieseaich, advisoiy woik and speaking engagements in the aiea of enhancing competitiveness of
ims, industiies and locations. He can be contacted at amit(amitkapooi.com.
Sandeep Mann
SSandeep Mann sits on the advisoiy boaid of Institute foi Competitiveness, India and is the Foundei and Mentoi of
O the Giid B-School, India. His ieseaich inteiest is in the aiea of competitiveness of ims, industiies and BRIC
economies.
Other Contributors for the report
Anupam Yog, Managng Drecor, Mrabls Advsory, Inda
Chiistian Ketels, Prncpal Assocae - Insue for Sraegy and Compeveness, Harvard Busness School, USA'
Goidon Fellei, CEO, Urban Age Insue, USA
MMadhav Raman, Parner, Anagram Archecs, Inda
Raj Libeihan, Drecor, Inda Haba Cenre, Inda
Sam Millei, Auhor of Delh: Advenures n a Megacy, Inda
Sanjeev Sanyal, Pounder and Presden, e Susanable Plane Insue, Inda
Susan Zielinski, Managng Drecor, SMART, Unversy of Mchgan, USA
Research Team from Institute for Competitiveness, India
Natasha Ahuja, Research Assocae
NNeeia Vohia, Programs Coordnaor
' anks o Chrsan Keels for beng he gudng force behnd he dea of Insue for Compeveness, Inda.
Copyrgh 2009 Insue for Compeveness, Inda. All rghs reserved.
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