Multi-faceted Mumbai drives India’s economy

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Mumbai has long been the engine of the Indian economy, and this 16-million-strong city shows no sign of slowing down.

Statistics illustrate the economic clout of the capital of Maharashtra state: Mumbai accounts for one tenth of all industrial jobs in India, six per cent of GDP and 40 per cent of exports.

Mumbai’s strength lies in the diversity of its business sector. While the textile industry has traditionally been its backbone, the automotive and pharmaceutical industries are also among its mainstays. In recent years the array of companies operating here has broadened in the services realm as well as areas demanding advanced know-how, including IT.

The entertainment industry is also a major employer. Formerly known as Bombay, Mumbai turns out some 200 Bollywood feature films annually.

Mumbai is also the favourite investment target for foreign firms in India. The flipside of the area’s rapid growth is a rise in manufacturing costs, which has pushed production based on cheap labour into other areas. Besides Delhi, Mumbai is indisputably the most expensive area in India.

Full speed ahead

In recent years, the Indian economy has sprouted by 8–9 per cent annually. The business community in Mumbai and its surrounding growth centres have been responsible for a major slice of that growth.
So far, the international financial crisis has had less impact on the Indian economy than was feared. Economic think-tanks and banks have, however, slightly downgraded their forecasts for Indian growth. Next year the economy is expected to expand by ‘only’ about 7.5 per cent.

Trouble in the world economy has reduced demand on export markets, but these fluctuations are counterbalanced by the extensive home market in the Mumbai region and the rest of India. Demand is being spearheaded by the quickly-growing and increasingly affluent middle class, whose purchasing power has also attracted foreign companies. More and more Indians can afford cars and consumer electronics, for instance.

India’s immunity to this recession has been boosted by its own stable financial sector. The South Asian giant’s economy has not produced any bubbles to be burst by the global economic crisis.

Rapidly-growing air cargo

Mumbai’s port is an important hub for western India’s foreign trade. The city’s Chhatrapati Shivaji International Airport is the country’s busiest. The growth in passenger and cargo volumes has been so rapid that aviation authorities have been kept busy trying to keep up with developments.

“Mumbai has been facing challenges in upgrading its infrastructure both at the airport and sea ports, due to settlements and various regulatory issues which have been limiting the commercial advance of the region,” says Kuldip Kharayat, Finnair Cargo’s Area Director for India. “A new green-field airport in Mumbai area is already under government consideration.”

Kharayat is confident that Mumbai will remain western India’s air cargo centre, even though other growth centres are investing in new airports and infrastructure.

“The key driver of air cargo is Mumbai’s diversified product portfolio,” he says. “It has adjoining growing industrial areas in Gujarat, Pune, Nasik and Goa with diversified products such as pharmaceuticals, auto parts, chemicals, engineering products and garments. A large proportion of air exports out of Mumbai are perishable products, including cut flowers, meat products and fruit.”

Text by Matti Remes
Photo by iStockphoto
 

Published October 28, 2011

Category: Local features, Market updates

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