This is highly relevant for not only the MNCs but also the local players and entrepreneurs. When we decided to start a business catering to the wealthy in India, our first consideration was Mumbai—yet a thorough analysis of the country’s markets revealed that cities like Nagpur, Kochi, and Ahmedabad showed more promise than the megacities of Mumbai, Delhi, and Bangalore.

There is a whole new breed of players, powered with local knowledge, that is catering to companies’ buy-to-let growth requirements in these cities. Those companies that make a late decision to enter these markets are doomed to certain failure. Cheap labor, robust infrastructure, a better industrial climate, a cleaner environment, strong connections to larger markets, and the development of associated industries—what else could companies ask for?

A fascinating, stimulating, and incredibly exciting time awaits these emerging markets, not least of all from a retail perspective. Retailers and retail brands of all sizes need to embrace these new opportunities, establish roots early, and, where necessary, work with the local officials. Creating structured development plans, marketing and networking strategies, and understanding the uniqueness of each location will be key, though. Domestic retailers will clearly be particularly well positioned but may be constrained by finances, though progressive lenders will be well-rewarded in time.

I would like to bring to your kind attention about the omission of Mangalore, which is now one of the fastest growing cities in the southern part of India in all aspects—industrial, retail, and real estate development. Mangalore is the second largest job creator in India among all tier-three cities.

The whole city is undergoing or has undergone a sea change in its infrastructure development—the city has three IT Special Economic Zones (SEZs), a Suzlon SEZ, and a Mangalore Special Economic Zone (MSEZ) with an investment of 50 billion rupees.

I am a resident of Nagpur and was surprised to see it on this list. It was always a city to look for in India because of its central location but lagged behind due to political will. So why is Nagpur on the list? Location advantage is something that companies are now exploring. Also, cities such as Mumbai and Pune are getting congested. With a population of 2.5 million, a literacy rate of more than 90 percent, lots of engineering and medical colleges, pretty good infrastructure, and an educated populace, Nagpur can be among these future cities.

Alongside the growth of mid-size and small cities, there will also be a necessary decline in the growth of the big cities. This shift in importance will be capitalized by mid-size and small companies, rather than big companies: common sense will tell the former that it would be wiser to establish their headquarters in mid-size towns, as getting space is cheaper there. The bigger companies are usually snail-paced or timid in decision-making and they will stick to their hometowns, the big cities. Needless to say, it will be the agile, mid-sized ones who will win the race. The trend has already started in the South Indian city of Calicut, where several mid-size IT companies are about to establish their units. They all feel that they can reduce their running cost by a shift to Calicut.

This was an anticipated shift, the opportunites are immense. In countries like India, where a majority of the market is unexplored, the shift actually helps in slowly reaching out to the masses and all you know is that is where your future prospects lie. The BRIC (Brazil, Russia, India, and China) countries are the future, where most of the multinationals diverting their focus.

One of the key influences on this shift in urban primacy is the reduction of the demographic ‘reach’ of multinational organisations and the growth of domestic industries which has taken place more organically in line with national trends and demands, for example, the telecommunications industry in Central India. Nagpur is a prime example with excellent transport links, embedded financial services, and a resident educated populous fed by a young, economically active demographic.

A number of factors contribute to this shift:

- A growth of the service sector in the emerging markets where businesses no longer need to be close to raw materials or large labour pools

- Accessbility to high quality digital and communication services is more readily available and less costly.

- Environmental awareness deters families away from mega cities.

- The availability of highly skilled manpower in emerging markets.

- Midsize cities offer cleaner air, better transportation, less expensive office space and less expensive accommodation.

This is very interesting. But, serving these markets is not that easy. it needs a whole new strategy of localizing the global companies and mastering the art of socio-political challenges, not to mention the challenges of instability and social disruptions caused by political movements, activists, and local regulations. Global companies need a whole new strategy to enter and capture these growth opportunities.

Interesting, but you have measured all cities with the same parameters. For example, in Jaipur, growth will come from increasing tourism and in Rajkot from increased manufacturing. It would help if you can identify the sectors of growth in each emerging city.

I also think the emerging economies are facing new challenges like governance, lack of transparency, and increasing demands for more autonomy for states which make up a Federal system, like in India. Also, sudden changes can disrupt the growth rate. In Gujarat, the earthquake in Kutch led to an exemption in excise duties and we all know how much that contributed to the growth in that region. A Chief Minister like Nitish Kumar is taking Bihar rapidly into the 21 century, ergo, can a change of party in government derail existing policies and stunt growth? Too many variables to ponder over.

This is truly insightful material, very helpful for entrepreneurs who would like to start new businesses and also to the companies entering emerging markets. This stuff not only provides information on emerging markets but also helps to target market segments and position products.

It’s refreshing to see the developed world detailing the trends we are experiencing in emerging markets. I wonder where do you position a city like Johannesburg? It is the power house of Africa.