India's representative tech city, Bengaluru, has hit the shadows of rapid growth. While over 20 years of global IT investment and a booming service industry have made the city 'India's Silicon Valley,' core infrastructures like transportation, water, and environment cannot keep up. The crisis that Bengaluru faces is not merely a local issue but has emerged as a symbolic case testing the sustainability of economic growth across India.
According to the Financial Times on the 26th (local time), Bengaluru, located in the southern Indian state of Karnataka, is a city where global IT corporations, including Google and Microsoft, and major Wall Street firms have campuses. While the offices are filled with advanced facilities like those in Silicon Valley, it takes four hours to travel 9 miles (about 14 km) during rush hour. The reality of one million employees relying on water tanker trucks due to a shortage of water is also in stark contrast to Silicon Valley. The transformation of Bengaluru from a once peaceful city, dubbed 'paradise for pensioners,' into a concrete jungle vividly illustrates India's urbanization challenges.
Manas Das, chairman of the association representing over 500 global corporations based in the outer ring road commercial district, noted, 'The city did not anticipate this level of growth at all.' In fact, corporations are filling the gaps created by the absence of public infrastructure to the extent of having to source their own water and lobby for subway extensions. IT and the service industry are currently a $300 billion growth engine for the Indian economy, but there are warnings that they are reaching their limits due to labor shortages and inadequate infrastructure.
According to Goldman Sachs, India's service exports jumped sixfold from $53 billion in 2005 to $338 billion in 2023. However, the report stated, 'We cannot take resilient growth for granted,' pointing out Bengaluru's water crisis. In fact, just in the first half of this year, office transactions amounting to half the size of Central Park piled up, with the city expanding without a breather. Repeated floods every year and worsening climate conditions have laid bare the urban planning that has lagged behind development.
Criticism has emerged from various quarters. Billionaire Kiran Mazumdar-Shaw from the pharmaceutical industry publicly condemned, 'The state allows violations of regulations as if it were robbing the goose that lays the golden eggs.' A representative of a real estate company raised his voice, stating, 'Now we need to prohibit new office leases altogether.' Professor Ramachandra from the Indian Institute of Science criticized, 'Why allow growth when you cannot supply water?' pointing out that the city has lost its status as a 'livable space.'
The rapid transformation of Bengaluru began when IT giants like Infosys and Wipro relocated their headquarters in the 1990s. At that time, low rental prices and vast sites were its strengths, but now 88% of the city is covered by concrete structures. The population has surged from 1 million 60 years ago to 14 million now. However, industry consensus is that roads, transportation, and water and sewage systems are at least 15 years behind.
There are cities that are invading this niche. Hyderabad, 350 miles to the north, is rapidly emerging as an alternative to Bengaluru. Companies like Google, Microsoft, and JPMorgan already have large offices there, leveraging low labor costs, low turnover rates, and better infrastructure. The IT exports from Telangana have tripled over the past decade, and startup investments have increased by 160% in the last two years. However, it still has a long way to go to catch up with Bengaluru's 50 or so unicorn corporations' 'economies of scale.'
Prime Minister Narendra Modi recently visited Bengaluru to inaugurate a subway line and promised a $2.6 billion transportation investment. He emphasized the need for urban planning, stating, 'Bengaluru symbolizes a new India.' However, local industry voices indicate that 'with just a few basic measures, we could solve 40% of the problem, but the speed of growth is too fast, requiring fundamental solutions.'
One expert warned, 'If unplanned expansion like this continues, Bengaluru's success myth could turn into a weakness for the Indian economy.'