Industrial advance

Print edition : December 17, 2010

Inside the Mahindra Navistar plant at Chakan in Pune.-SHASHI ASHWAL

Pune is the preferred destination for a number of vital industrial sectors.

OVER the last decade, Pune has been advancing steadily towards becoming the most preferred commercial destination for a number of vital industrial sectors. It is the sixth largest metropolitan economy in the country, with a per capita income that is second only to Chandigarh's. Pune got its first big corporation in 1945 when the engineering firm Kirloskar set up Kirloskar Oil Engines Ltd, India's largest diesel engine company. The group went on to set up more enterprises in the city. In 1950, Hindustan Antibiotics Ltd, the first public sector pharmaceutical company, was established in the city. It was soon joined by the National Chemical Laboratory and BAIF Development Research Foundation.

These industries laid the foundation for the entry of the automobile and auto engineering industries and, more recently, the information technology (IT), biotechnology and health-care sectors.

When the Maharashtra Industrial Development Corporation (MIDC) created and developed two industrial estates on the outskirts of the city, there was a welcome response from numerous multinational companies and major Indian corporations. Foreign direct investment came to Pune through companies such as Afa Laval, Sandvik, Atlas Copco, Keihin FIE, Panasonic, Sharp, Enkei, Tata Toyo, Tata Yazaki, Tata Yutaka, Lumax, Mercedes-Benz, Whirlpool, LG and others. Indian companies such as Bajaj Auto Ltd, TELCO, Weikfield India, Serum Institute of India Ltd, Duroshox, Kinetic Engineering Ltd, Philips India, Kalyani Sharp and others have also contributed to the changing economy of Pune over the last 50 years.

Auto industry

The newly created Chakan corridor near Pune is a major vehicle production hub. There are at least 53 large auto companies, including Mahindra and Mahindra, General Motors, Volkswagen and Skoda, in Pune and surrounding areas, with an annual turnover of about $1,500 million and exports worth approximately $230 million. In addition, there are close to 7,000 auto ancillary units in and around Pune; this has led to the region being called the Detroit of the East. Pune district has nearly 9,500 industrial manufacturing units. In 2009, these units generated a turnover of nearly Rs.52,000 crore.

An employment trends survey conducted by Ma Foi Management Consultants Ltd in March revealed that at least 68,000 new jobs would be created all over India in the manufacturing industry, which currently has a job base of 55,30,000. The implication is that Pune will see more hiring of personnel in 2010-11. The survey said: Movement from Mumbai to Pune has strengthened due to better infrastructure. IT and manufacturing are strongly up as the economy looks up. Construction is hiring again.

IT sector

Pune aims to become India's Silicon Valley, competing with Bangalore. The IT and biotechnology sectors are credited with driving its per capita income up to Rs.35,000 per annum.

The IT park at Hinjewadi village (officially named the Rajiv Gandhi IT Park) was set up by the MIDC on about 2,800 acres (1 acre = 0.4 hectare). The investment in the project was around Rs.600 million. The government offered attractive incentives in its IT and IT Enabled Services (ITES) Policy, 2003, and major software companies, such as Infosys, Symantec, Wipro, Accenture, Persistent Systems, Mahindra British Telecom, Cognizant and Fujitsu had gravitated towards Pune. Microsoft also proposes to set up a Rs.700-crore project at Hinjewadi. The sector now employs more than 70,000 people in Pune.

The assembly line for Pulsar motorcycles at Bajaj Auto Ltd.-KUNI TAKAHASHI/BLOOMBERG

In what can be seen as supporting news to this estimate, Pune's Infosys centre at Hinjewadi will recruit 2,000 employees by the end of this year. The Hinjewadi campus, which is larger than its campuses in Bangalore and Chennai, currently has 23,000 employees. Apart from this there are other IT parks such as the MIDC Software Technology Park at Talawade, the Magarpatta Cybercity, and the Marisoft IT Park at Kalyani Nagar.

The statistics for 2009 from Pune Municipal Corporation show that the IT and biotechnology sectors have grown from Rs.250 crore to over Rs.6,500 crore in the past eight years. The 114-odd small, medium and large companies in the sector are expected to generate about 38,000 new jobs over the coming five years.

Corporate enthusiasm over Pune has generated activity in another sector. Land prices have soared in the city and its surrounding areas over the last decade. Both housing and retail commercial space are in great demand, and a report by Cushman and Weikfield, the world's largest privately-held commercial real estate services firm, says this trend will continue. Pune city will see a 51 per cent compounded growth over the next five years, the report says. This is the highest projected for any Indian city. The total expected demand in the city for retail space is estimated at approximately 1.76 million square feet and for office space it is estimated at 21.7 million square feet. The projected demand for residential units is four lakh-plus units and for hotel rooms it is 30,000 rooms.

Proximity to Mumbai

One of the reasons for Pune's fast-paced growth is its proximity to Mumbai. With the construction of the Mumbai-Pune expressway eight years ago, travelling time between the cities has reduced to the extent that they are now practically suburbs of each other.

While Pune does continue to expand there have been concerns about infrastructure being able to keep pace. While roads and rail connections have, to a great extent, done so, electricity and water supply continue to be in short supply. This is the next challenge for Pune to overcome.

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