Two-Minute Tour: Bengaluru, India

Growth fueled by IT and industrial investments in the city
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Posted March 19, 2019

The Numbers

Bengaluru (the city formerly known as Bangalore) is India’s third largest, after Mumbai and Delhi, with a population of roughly 12 million people.

The location of the city, 3000 feet above sea level, produces a four-season climate that is cooler and less humid than the rest of India, resulting in a more casual lifestyle and a green environment. In 1927, King Krisharaja Wodeyar IV celebrated his 25-year reign by creating parks and tree-lined avenues – that earns Bengaluru its nickname, “The Garden City of India.”

The Pulse

Bengaluru’s growth – spurred by a population increase of 45 percent since the 2011 census – has been fueled by large investments in industrial and information technology development, giving the city an alternative nickname, “the Silicon Valley of India.”

In an overwhelmingly Hindu country, Bengaluru’s 78 percent Hindi population is below the national average. The rest of the city’s makeup includes 14 percent Muslim, 5 percent Christian and 5 percent Jain (an ancient Indian religious faith), a diversity that accounts for much of Bengaluru’s culinary and cultural distinctiveness.

The primary language is Kannada, which is spoken mainly in the Southern state of Karnataka, though the city’s youth speak a vernacular dialect called “Bangalore Kannada,” and the growing professional and business class speaks principally English.

The Hot Spots

“Bengaluru is a great mix of modern and traditional retail in high streets and malls,” says Bengaluru-based Surender Gnanaolivu, who operates a retail experience consultancy. “There are about 214 malls and shopping centers in Bengaluru.”

Gnanaolivu says the most popular shopping high streets are Brigade Road, Commercial Street and 100 Feet Road in the hipster Indiranagar neighborhood, home to fashion stores and quirky boutiques where flagships of most national and international brands are present.

A newer growing area of retail activity, says Gnanaolivu, “is Whitefield, a major hub for the IT industry since the setting up of The International Tech Park, more commonly known as ITPL, one of the country's first such centers.” He says many international brands entering Bengaluru prefer to launch in popular Whitefield malls like Phoenix Market City and VR Mall.

Obstacles and Opportunities

The challenge for international retailers doing business in India has always been the country’s protective FDI (Foreign Direct Investment) policies, which limit access to non-Indian retailers and consumer brands.

Effective January 2018, the government began allowing for 100 percent FDI for SBRTs (Single Brand Retail Trading). However, explains Gnanaolivu, “if the investment is more than 51 percent, there is a mandatory requirement that 30 percent of the merchandise is sourced locally.

“To enter India,” he says, “many international brands have either employed the franchise model or kept their FDIs at no more than 51 percent, and found a local partner for the remainder, to avert the 30 percent rule.”

In the case of Multi-Brand Retail Trading (MBRTs), the 51 percent and 30 percent rules also apply, but the total investment is limited to U.S. $100 million, and 50 percent of that has to be invested in “back-end infrastructure” within three years. Plus, notes Gnanaolivu, “MBRTs are not allowed to trade by means of e-commerce.”