Delhi-NCR Generating growth opportunities for diverse segments of the economy

India’s National Capital Region (NCR) is emerging swiftly as a global economic hub, with its contribution to India’s GDP standing at around 8 per cent (2016-2017). With strong policy support from the Delhi government and the respective states that fall in the NCR, there are many attractive investment options for the electronics industry in the region.

By Shruti Mishra

To speed up industrial growth and to provide a strong impetus to the adjoining regions like Gurugram, Faridabad, Noida and Ghaziabad, the Delhi-NCR area has adopted the cluster approach to serve large, medium and small enterprises in the formal and informal sectors. There are vast differences in the economic structure and the nature of industries in each sub-region of the NCR, even in those close to each other. For instance, the National Capital Territory (NCT) of Delhi primarily comprises industries that belong to the tertiary or services sector, whereas the regions in Uttar Pradesh (UP) and Rajasthan are still dominated by the primary sector. The Haryana sub-region has a mixture of firms from the industrial and service sectors. Gurugram district, from this sub-region, has shown tremendous growth in per capita income, primarily due to the rapidly expanding software sector. On the other hand, Panipat in another Haryana sub-region is developing as a major trade centre. An electronics manufacturing cluster (EMC) is now being set up in the Bhiwadi district of Rajasthan, as an ambitious greenfield project.

The development of the Delhi-NCR zone is largely attributed to its strong transportation network. The growth story of Delhi-NCR is very dynamic and diverse, because of the involvement of many sub-regions from different states. In this article, we will discuss the current and upcoming projects in different verticals, and will look at how supportive the region actually is in promoting startups, especially with respect to the electronics industry.

Transport
Road development projects: The transportation system in the NCR is largely dependent on roads. Keeping this in mind, the state government in its 2018-19 budget has allocated ` 51.45 billion for improving the public transport system in the NCT. The road network of Delhi has increased from 32,131km in 2007-08 to 33,868 lane-km in 2015-16 and currently constitutes around 12 per cent of the capital’s total area. It is estimated that around 40,000 outstation vehicles enter the national capital daily, leading to congestion and pollution in the region. The convergence of five national highways (NH-1, NH-2, NH-8, NH-10 and NH-24) onto the ring roads of Delhi/NCR also causes severe congestion, due to heavy movement of goods and passengers. Therefore, the government has passed proposals to construct a few mega expressways, which will not only decongest and reduce pollution in the capital but also integrate the remote sub-regions of the NCR more effectively. Let’s have a look at some ambitious upcoming road projects that are expected to see the light of day very soon.

• Eastern Peripheral Expressway (EPE): This is scheduled to be inaugurated very soon. The EPE is a 135km six-lane access-controlled expressway which will connect Kundli to Palwal in Haryana via Ghaziabad in Uttar Pradesh, and has interchanges at various industrial areas like Bhaghpat, Meerut, etc. The project will cost around ₹ 110 billion, of which ₹ 44.2 billion will be invested within Delhi’s boundaries alone. Reports claim that once completed, it will be the country’s first solar powered expressway coupled with intelligent traffic management systems (ITMS). It is expected that the EPE will divert an estimated 20 million vehicles, including 52,000 trucks that are currently passing through Delhi every day, which will eventually bring down the vehicle pollution in the region by 27 to 28 per cent.
• Western Peripheral Expressway (WPE): Widely known as the Kundli-Manesar-Palwal Expressway, this will cover a distance of 136km along the periphery of western Delhi. Equipped with a four/six lane access-controlled configuration, this expressway will lead to the international airport in the capital and facilitate the development of a new economic corridor. The cost of the project is estimated to be around ₹ 19.15 billion. Like the EPE, the WPE will also be equipped with ITMS and electrified by solar panels.  Almost 15 flyovers will be constructed at various places along the stretch to enable smooth commuting.
• Delhi-Mumbai Expressway: Nitin Gadkari, the minister for road transport and highways, has recently initiated work on this expressway, which will substantially reduce the travel time between the two metros. The construction work will be carried out in four phases and is expected to be completed by 2021. The minister claims that once completed, the expressway will enable travellers to complete the journey of 14,000km between the two metros in 12 hours. The cost of the project is estimated to be around ₹ 1 trillion. Along with this, the Chambal expressway that will connect Madhya Pradesh and Rajasthan to this new expressway, is also being planned.

Railways: Being the national capital, Delhi and its adjoining regions are well connected via rail networks to other parts of the country. The New Delhi Railway Station, which is the headquarters of the Northern Railways, is one of the busiest stations in the country and supports a significant amount of trade. Under the project ‘Mission Raftaar’, the Indian Railways is planning an investment of around US$ 1.5 billion to increase the speed of trains to up to 160km per hour on the Delhi-Howrah and Delhi-Mumbai routes. To boost the rail network in the NCR, the Board of the National Capital Region Transport Corporation has invested US$ 3.34 billion in the 92km Rapid Rail Transit Corridor (RRTC) which will serve Delhi, Ghaziabad and Meerut.

To reduce the carbon footprint, the Centre is planning to run four major railway stations in Delhi on solar power. As per plans, Hazrat Nizamuddin station will have a solar power plant of 0.6MW capacity, the Old Delhi station will have a 2.2MW solar plant, the New Delhi Railway station will have a 1.1MW solar plant, and the Anand Vihar terminal a solar capacity of 1.1MW. The country’s first solar-powered train was launched last year from the Safdarjung railway station in the NCR.

The development story of Delhi-NCR is incomplete without the mention of the Delhi Metro, which has become the lifeline of the region. The Delhi Metro Rail Corporation (DMRC) is responsible for serving Delhi and its satellite cities like Faridabad, Gurugram, Noida and Ghaziabad, with efficient connectivity. In the 2017-18 budget, the state government has proposed to invest US$ 179.4 million on the DMRC.

Phase-III of the DMRC project is in the final stages of completion and will increase the Delhi Metro daily passenger count from 2.7 million to 4.1 million. DMRC is also doing its bit to reduce pollution in the region and so, along with the Madhya Pradesh Power Management Company, has entered into a power purchase agreement with Rewa Ultra Mega Solar Ltd to set up a 750MW solar park. The power generated from this park will fulfil 90 per cent of the daytime requirements of the metro. The DMRC is now in discussions with the state government about executing 104km of Phase IV.

Airports: The Indira Gandhi International (IGI) airport is India’s largest and the world’s 16th most busy airport as per the Airports Council International (ACI). A recent techno-economic feasibility report (TEFR) by PwC (Price Waterhouse Cooper) states that the IGI and the upcoming second international airport in Jewar (to be operational by 2022) will cater to over 300 million passengers annually, by 2050. The report also points out that the IGI airport currently serves over 60 million passengers annually.

The Jewar international airport, which will be completed in four phases, over an area of 5,000 hectares in Uttar Pradesh, will have four runways.  In the first phase, the new airport will have two runways and will cater to about 80 million passengers, the report suggests.

Sectors with new business avenues
Over the last three decades, there has been visible growth in various industrial sectors within the NCR, specifically in the sub-regions of Haryana, UP and Rajasthan. Let’s have a look at the developments happening in some important sectors within the NCR.

ESDM sector: The ailing electronics hardware industry of India got a strong boost with the setting up of an electronics manufacturing cluster (EMC) in Bhiwadi, Rajasthan. Launched under the Electronics Manufacturing Cluster Scheme 2012 and backed by Electronic Industries Association of India (ELCINA), the Bhiwadi EMC is a greenfield project spread across 100 acres. As of now, 19 domestic component makers have invested in the cluster, having committed over US$ 150 for Phase I. The overall investment in this EMC is ₹ 2.19 billion, and it has the capacity to accommodate almost 50 companies.

Besides this, the growth of the ESDM sector in the NCR is expected to grow tremendously after the UP government announced its plans to promote the Noida, Greater Noida and Yamuna Expressway area as an electronics manufacturing zone. Because of their proximity to the national capital, Noida and Greater Noida have already turned into manufacturing hubs and enjoy the advantage of the large pool of skilled labour. According to media reports, the new plan envisages the setting up of country-specific industrial parks, which will virtually act as a home away from home for the foreign companies. This plan has the potential of turning the NCR into an ideal investment destination.

Telecom Regulatory Authority of India. * As of December 2017 (Source: IBEF (www.ibef.org)

Telecom sector: In February 2018, Vodafone offered telecom users in the NCR the Voice over LTE (VoLTE) service, which not only ensures seamless connectivity but also enables the customer to explore newer opportunities with smart devices. A subscriber base of over 10 million in the NCR means that this area has the potential of becoming one of the top revenue-generating regions in the telecom sector.

It is difficult to measure the teledensity of the entire Delhi-NCR zone due to its discrete nature. However, according to the Telecom Regulatory Authority of India (TRAI), NCT Delhi had a teledensity of 252.73 per cent, with nearly 53.58 million wireless subscribers and 3.22 million wireline subscribers, as of January 2018.

Solar sector: Almost the entire NCR has been battling with the problem of air pollution, a subject that makes the headlines every year. Therefore, solar energy has been suggested as an important step in combating pollution. Acting quickly in this direction, NCT Delhi has increased its solar power generation capacity to 78MW from the 56MW recorded last year. Gurugram, too, has reached a total installed capacity of 25MW of solar power, which is a 47 per cent increase over the corresponding period of 2017 — underlining the growing potential of renewable energy in the NCR. In addition, to increase adoption of rooftop solar products within the region, Delhi based company, Mysun, has announced a special scheme for Delhi/NCR customers. Under the terms of the scheme, the company has waived the installation fees for customers installing solar rooftop facilities, within a limited period.

Particularly in NCT Delhi, the state government has put forth a proposal to develop the New Delhi Municipal Council (NDMC) area as a Solar City by installing SPV panels on the rooftops of government buildings, metro stations, bus stops, etc. Besides this,  74MW of solar capacity is being created across Delhi, at various government departments, as well as in the domestic and social sectors.
(Source: Economic Survey of Delhi 2017-2018)

An attractive startup zone
As of August 2017, Delhi-NCR ranked second, behind Bengaluru, as the technology hub of India. Data released by Tracxn Technologies reveals that Delhi-NCR is home to more startups (8,772) than Bengaluru (6,818), but these include startups in the financial and consumer services fields. The report points out that Delhi-NCR also hosts the highest number of online retail startups – a total of 1,288. Major online startups like Ibibo, Lenskart, Paytm, Snapdeal, Shopclues and Policy Bazaar are based in this region.

Another report titled ‘India Angel Report 2017’ by venture debt firm InnoVen Capital, highlights that Delhi NCR received up to 33 per cent of angel investments, whereas Mumbai, Chennai and Bengaluru received only 14 per cent, 12 per cent and 10 per cent, respectively.
As to why startups prefer to set up shop in Delhi-NCR over Bengaluru, experts say that most of the startups thriving in Bengaluru are based on technology-oriented ideas, and have been started by technology professionals. So the ecosystem in Bengaluru is favourable for tech startups. On the other hand, in Delhi-NCR, professionals with a business or non-technical background can easily begin their startup journey. It is important to note that startups nowadays are not driven only by technology ideas but are widening their scope to financial services, consumer services as well as other verticals.

Another crucial reason for startups choosing Delhi-NCR above Bengaluru or any other metro is the presence of the strong network of business incubators in the region, which fuel their growth, giving them the thrust they need to take that giant leap into the entrepreneurial world.

Incubator facilities
From providing mentorship to entrepreneurs and sharing office space, to enabling networking opportunities and access to investors, a business incubator offers every type of assistance that a startup may require in the early stages. Let’s have a look at the incubators that are supporting startups in Delhi-NCR.

Amity Innovation Incubator: Established in 2008, the Amity Innovation Incubator (AII) centre is run by Amity University. This Noida based incubator is a registered ‘not for profit’ society backed by an advisory body consisting of industrialists, venture capitalists, technical specialists and managers. The motive of this incubator is to enable entrepreneurs to realise their dreams by providing a range of infrastructure, business advisory, mentoring and financial services.

Benefits offered: The AII mentors startups in the areas of e-learning, bio-fuels, software testing, mobile testing, clinical data management, media and e-commerce. The centre has incubated more than 100 companies and claims to have generated employment for around 3,500 people so far.

Electropreneur Park: Funded by the Ministry of Electronics and IT (MeitY), the Electropreneur Park was launched in 2015 with a target to incubate 50 ESDM startups over the first five-year period. Situated at the University of Delhi, South Campus, the centre was created to promote, develop and mentor breakthrough innovations in the ESDM sector.

Benefits offered: The platform offers a state-of-art electronics lab and prototyping machines to enable startups to build electronic products within a short turnaround time. The centre offers mentorship by industry veterans and academicians in the ESDM domain, apart from providing access to funding agencies to facilitate seed funding for promising ventures.

Indian Angel Network (IAN) Incubator: The IAN was started in April 2006, and comprises a network of angel investors interested in funding early-stage businesses that have the potential to create disproportionately high value. The centre helps startups scale up and create value quickly.

Benefits offered: Along with funding, the incubator offers constant access to high quality mentoring, a diverse network of resources as well as suggestions on strategy and operations.

Source: IBEF (www.ibef.org)

Technology Based Incubator (TBI): Located in the University of Delhi, South Campus, TBI was established in 2009 with the aim to help startups and early-stage businesses in the areas of industrial microbiology and biotechnology, with an emphasis on the fermentation-based production of different bioactive molecules. Along with the support of the Department of Science and Technology (DST), this incubator also has a close association with the National Research Development Corporation (NRDC), the Federation of Indian Chambers of Commerce and Industry (FICCI), the Association of Small and Medium Entrepreneurs (ASME), and others.

Benefits offered: The most crucial benefit offered by TBI is product development. In addition, it also provides a unique interface between academia and industry, where laboratory scale research can be converted into pilot manufacturing processes.

The road ahead—building the IT industry
It is true that the IT industry in Delhi-NCR has not yet surpassed the level reached by Bengaluru, India’s Silicon Valley, but the region is certainly developing into one of the country’s foremost IT destinations. The prime reason for the rapid growth in the IT industry is Delhi-NCR’s excellent connectivity with surrounding regions, and the availability of a diverse pool of skilled labour as well as access to the markets of the adjacent states. Both the Centre and the state governments are aggressively formulating policies that will spur investments in the region’s IT sector and also promote the overall growth of India’s IT industry. For instance, the ‘single window’ approval mechanism proposed by the Delhi government helps entrepreneurs to submit all their supporting documents at a single location or to a single authority, which streamlines the otherwise time-consuming process of approvals and clearances.

In a nutshell, Delhi-NCR is inching towards developing a highly-functional entrepreneurial ecosystem. This fact, coupled with expanded territory and excellent infrastructure, will attract foreign investors and pave the way for more job creation which will thereby make a direct contribution to India’s GDP. There are many enterprises in the region that are playing a significant role in enhancing the overall investment climate. In the next segment we will showcase some of the major contributors.