Last Factory Siren

	Mumbai	New Delhi
Time to start a business	30	32
Cost to start a business	70.9	41.1
	Maharashtra	NCR
New firms founded	11,000	44,000
	Mumbai	New Delhi
Total Occupancy Cost (per sq ft)	$51.6	$39.8

t took Amar Sinh Pandey seven years to set up his interior decoration business in Mumbai. When he arrived in the city seven years back from a village near Agra, he dreamt of being able to make it big in this thriving metropolis. Last year, all that changed. The attacks on north Indians prompted most of his skilled labour and carpenters to panic and return to their villages in UP and Bihar. Pandey, now down to a skeleton staff, is unable to meet his clients’ deadlines. He is struggling to make ends meet. So much so that he’s even contemplating getting into mobile phone retailing, or maybe as a last resort even going back to his village. “It’s like having to start all over again after all the work I put in. It has all gone to waste.”

It’s not the first time that Mumbai has faced turmoil based on ethnicity. While politics is one part of the picture, it has had a visible impact on Mumbai’s future prospects. For a city built on trading and business, there is already a noticeable shift in investments being made in other parts of the country. Last year, Delhi and the NCR attracted four times more new companies than the entire state of Maharashtra. The cost of setting up a business in Mumbai is 70.9 per cent of per capita income when compared to Delhi’s 41.1 per cent.

To be fair, not all of it can be laid at the door of a political stance (or the lack of it). It also owes to other critical issues—like infrastructure and the costs of doing business. But the enormous risks associated with a vicious and volatile political atmosphere that seeks to segregate rather than integrate only adds to the mix. Last year, the municipal corporation of Mumbai made Marathi its official administrative language, adding a barrier for the city’s non-Marathi-speaking small-time businessmen to interact seamlessly with the administration.

For small business owners, like traders or salesmen, navigating the length and breadth of the city on any given day is akin to torture. The Western and Central railway systems are overburdened. For a city that claims to be India’s  financial capital, the lack of power and water are huge impediments, as are other critical issues like safety, social parameters and law and order. Despite the attack on Mumbai on 26/11 and the subsequent furore, there has been no concrete action on addressing these issues. In fact, the language of silence is now taking root: most of India Inc’s leaders declined to speak with Outlook on these issues.

Although Mumbai leads in terms of foreign direct investments compared to Delhi, the latter’s share of the total investment pie has been going up steadily. Given the prohibitive costs of real estate and cost of living, Mumbai has already lost out in sectors like IT and ITeS to cities like Bangalore and the NCR. Several companies—including the likes of Max New York Life Insurance, Aviva Life Insurance, LG, Samsung, Nokia—have chosen to base themselves in the NCR for a variety of reasons.

If companies are unable to justify the costs to run their businesses, they will eventually look at moving towards more cost-efficient locations. Mumbai has already seen the shift of corporates turning toward larger spaces and cost-effective solutions to alternate business districts like Andheri-Kurla, Goregaon and Bandra-Kurla Complex. It is evident that the lack of a cohesive policy and action oriented towards urbanisation, infrastructure and development is only likely to hamper Mumbai’s growth. And that would be a pity. There are inherent advantages of doing business in Mumbai, particularly the historically cosmopolitan nature of the city. It’s time to restore faith in that.

By Arti Sharma with Pragya Singh