《•》Entrepreneurship in tier 2 cities of India:- 👩🏻‍💼💻🏙🌆《•》

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mystartupyatra

9 min readJul 23, 2021

📍Nowadays, some businesses or startups basically look for Tier I, Tier II, or, Tier III cities as desirable destinations for increasing their business growth and increasing the sales of their company's products or services particularly in this time of economic growth.

Thus, those certain tier cities basically represent a particular opportunity for the company's growth as well as development by encouraging collaboration with those certain area companies and therefore, allowing the businesses to expand and provide employment to those people in the growing cities. Thus, the definite cost for operating in the prime Tier I real estate is basically much expensive, and so, many companies often see the underdeveloped areas as a perfect way for allowing expansion and invest in those areas for future growth and development. Any business platform would definitely like to operate and tend their focus more on those established markets in different Tier cities whenever the city’s economy is in full bad condition or distress, since, those areas don’t require much investment involved and risks associated with those undeveloped areas. In the case of different tiers, cities in India are classified under the HRA (House Rent Allowance) into Class X, Y, and Z more commonly you could say that Tier-I, Tier-II, and Tier-III respectively. Basically in India, there are approximately 8 Tier-I cities which are Bangalore, Chennai, Delhi, Mumbai, Hyderabad, Kolkata, and Pune. In the Tier-II cities, it has Agra, Lucknow, Jaipur, Chandigarh, Nagpur, and the other cities basically come under the Tier-III category.

Basically, the Tier-I cities basically stood the first class based on their better standards of living, exposure, and job opportunities in India. But slowly and gradually, the Tier-II and Tier-III cities of India are fastly emerging as some of the fastest-growing cities around the world. Not only those cities are coming up with better job opportunities but also, they are getting well connected with the time period and are offering much better education opportunities in those cities. Thus, the rapid income growth, urbanization, younger population, and availability of skilled labor are basically some of the factors which are responsible for the rapid development of the Tier-II and Tier-III cities and many of the research experts believe that their exponentially growing factors basically become the key business boosters in those cities. Thus, entrepreneurship in India has reached a maximum level in the last two decades and the smartphones and fast internet connectivity has allowed millions of business partnerships across the rural and urban areas and many hundreds of startup business such as Grofers, Zomato, Bigbasket, Hike and Byju’s have received huge success in a very short period. The Indian economy had already been steep rising in the number of startups based in the tier-II and tier-III cities. Apart from cities like Bengaluru, Mumbai, or Kolkata, Patna, Jaipur, Lucknow, and Bhopal had also emerged as the most desired cities among the startup ideas and flourished companies. In the last year, the NASSCOM and Zinnov basically published a research report which says that 20% of the total startup base in India is based in tier-II and tier-III cities, which is growing at a larger platform. Our Honorable Prime Minister of India, Mr. Narendra Modi has also said that a maximum of 44% of all new startups is basically found in tier-II and tier-III cities while discussing the achievements of the Startup India policy by the Government of India.

Categories of Real Estate Market Tiers:-

:: The Real estate market tiers are basically categorized as cities of Tier I, Tier II, or Tier III based on the stage of development of their real estate markets.

Tier- I cities are basically referred to as developed and established real estate markets. These cities basically need to become more highly developed, with desirable schools, facilities, and businesses, and these cities basically have the most expensive real estate. Development doesn’t stop at real estate options since Tier I cities also have a wide range of amenities and services, not to mention a robust local economy. Investors often shift their focus on Tier I cities whenever there’s an economic downturn as they are also likely to survive the ordeal.

Tier-II cities are basically referred to as the process of developing their real estate markets. These cities will be upcoming, and many companies have invested in these areas, but they haven’t yet reached their peak. Real estate is usually relatively inexpensive here; however, if growth continues, prices will rise. Development is a continuous process in these cities, and the potential is staggering. Although not as established as Tier I cities, markets under Tier II are magnets for businesses, real estate developers, investors, and young professionals. Basically, Tier-II cities are that real estate options that are relatively inexpensive here compared to Tier I cities. As these markets continue to grow and eventually mature, however, prices will surely increase.

Tier-III cities have basically undeveloped or nonexistent real estate markets. Real estate in these cities tends to be cheap, and there is an opportunity for growth if real estate companies decide to invest in developing the area. The markets depending on their locations can be full of potential and thus, real estate prices are the most affordable here, but the choices can be limited or nonexistent. Before becoming a Tier II or Tier I city, Tier III markets must build facilities and develop resources to attract and support more investments. Apart from the long process, developing a Tier III city is also costly and risky.

Thus, Entrepreneurship has boosted in tier-II and tier-III cities because of the availability of infrastructure support like fast internet connection, seamless 24x7 power supply, transport connectivity, and favorable working conditions in terms of legal support and company laws & regulations. The maximum expansion has provided the availability of tremendous talent in tier-II and tier-III cities. These talented minds get an opportunity to work in their home state rather than migrating to a metro city in search of employment. And in return, startups and established companies enjoy the leverage to access a talented workforce at lesser costs as compared to that of bigger cities. And at the end, both the employee and employer enjoy the benefit.

Factors allowing entrepreneurship growth in Tier 2 cities of India:-

a) Increasing in new startup platforms.

:: The paradigm shift in the Tier-2 cities of India is quite evident in the current economic scenario where an extensive number of startups are emerging with the motive of solving more localized problems, compared to startups in large metros, which are solving larger problems. These SEZs(Special economic zones) have allowed more catering to urban demography, consumer tech solutions, product discovery, online delivery, ride-sharing, and thereby, allowing more driving in the growth of startups in these cities leading to the exponential growth of entrepreneurship.

b) Allowing more co-working space for entrepreneurs.

:: In the contemporary industrial scenario, many business enterprising graduates from Tier-2 towns are no more interested in losing their patience at large fancy cities and preferring more to invest their knowledge initiating and building companies from their hometowns. As the cost factor plays an important role in the entrepreneurial ecosystem, the growth of the co-working spaces in these cities shows a healthy sign of a growing ecosystem. The co-working space allows like a perfect working environment for the ambitious in supporting the talent and ideas to network with like-minded people and share their own ideas and expertise.

c) E-Commerce.

:: The increase in e-commerce is huge in tier-2 cities of India which are basically considered as the virgin cities and thus, such cities are exactly the cause leading to the heavy traction for the urge of development in people’s minds. E-commerce is one such field helping dynamic entrepreneurs to put their ideas and labor to work and earn a massive turnover. The e-commerce ecosystem is booming in the towns where they are being effectively placed and monitored.

d) Lot of Government initiatives.

:: The entrepreneurial ecosystem in these cities has also marked its noticeable place on the government’s plan of attention because the productive rendezvous of government initiatives is quite apparent in the startup ecosystem. The DST (The Department of Science & Technology) department investing INR 500 Cr. to nourishing ideas and innovations in the startup ecosystem are some of the noteworthy initiatives by the government which intend to foster and revolutionize entrepreneurship growth in Tier-2 cities of India. The statement remains that India is a land of immense resources and a workforce. It can achieve great accolades in the entrepreneurial ecosystem if tapped at the right places with the right kind of infrastructure, and growth of the contention. However, Tier-2 cities have flourished some well-recognized business houses showcasing a plethora of modernization and expertise. These cities are ripe with possibilities and the future of success.

e) Rising traction of entrepreneurs.

:: While Mumbai, Bengaluru, and Delhi NCR usually take the limelight when it comes to the start-up ecosystem in India, Tier 2 cities are also rapidly emerging as a source of innovation. After being ignored, these cities are bustling with talent and resources and are overcoming the lack of less vigorous support infrastructure such as incubators and accelerators. With the government playing an active role, Tier 2 cities are gradually coming into the reckoning. From Madurai to Indore and Mohali; and from Jaipur to Udupi and Bhubaneswar, stories of successful start-ups are similar in tier 3 cities. The city of Chandigarh is abundant with innovative minds, startups, and the spirit of entrepreneurship. The most successful startups are those striding towards sustainable development and targeting mental health. Nagpur is fluttering with startups and young innovators. The startup ecosystem trend is similar in other fostering tier-2 cities like Indore (inclining towards e-learning), Kochi (focusing on aquaculture), and Ahmedabad (nurturing niche-based startups), to name a few. Evidently, the tier-II cities have cultivated a number of well-known startups and have also shown growth in innovations and skills of the entrepreneurs.

Few of the Indian entrepreneurs who marketed the people and created opportunities living in Tier 2 cities:-

a) Amit Nigam( The COO & Executive Director, BANKIT).

b) Shalabh Upadhyay (Founder & CEO of NEWJ i.e., New Emerging World of Journalism).

c) Sudha Anand(The Founder of Swaas).

d) Hemant Jalan(Managing Director of Indigo Paints).

e) MP Ahammed(The Chairperson of Malabar Gold).

:: In the upcoming future scenario, many real estate developments in the Tier II cities will become independent from the smart city missions of the central government which is already in its initial stage. The demand for such residential as well as commercial and warehouse spaces is expected to rise in the 100 smart cities after the cities are well developed and thus, many big companies are unlikely to reverse the trend for allowing them to reduce costs incurred on office spaces in the business platform.

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《•》Entrepreneurship in tier 2 cities of India:- 👩🏻‍💼💻🏙🌆《•》

Written by Dona Ghosh Dastidar