Kolkata – Concise Economic Profile

Kolkata – A Top Tier City

Kolkata (formerly Calcutta) is located in eastern India in the Ganges Delta. The city spreads along the banks of the Hooghly River. Kolkata is the state capital of West Bengal. Founded by the British, the city served as India's capital under the British Raj until 1911. Kolkata was the second city of the British empire. It was considered an oriental pearl, and was often referred to as the "City of Joy".

Today, the city is populated by 5 m people (estimate as of 2008). The metropolitan area has a population exceeding 15,2 m, making it the third largest metropolis in India, and one of the largest urban agglomerations on a global scale.

As measured by national standards Kolkata boasts excellent road communications to many domestic regions. Most important is the Grand Trunk road which connects with Amritsar. This national highway acts as the backbone of India's trade and surface transport.

Kolkata is well connected to other regions by an extensive railroad network. Two divisions of Indian railways (Eastern and South Eastern Railway) are headquartered in the city. The two main stations at Howrah and Sealdah. A third terminal has been inaugurated in north Kolkata.

The Netaji Subhash Chandra Bose International Airport at Dum Dum, 17 km northeast of downtown, provides both domestic and international flights. As the passenger volume has significantly increased over time it is planned to construct a second airport in the southern suburbs. Indian Airlines connects with Ahmedabad, Bengaluru, Delhi, Chennai, Hyderabad, Lucknow, Mumbai, Nagpur, Patna, Port Blair, Ranchi, Varanasi and other domestic destinations. International carriers connect with Bangkok, Dhaka, Dubai, Hong Kong, Kathmandu, London, Moscow, New York, Osaka, Rome, and Tokyo.

Local public transport is provided by the Kolkata suburban railway, the Kolkata Metro, trams and buses. The suburban network extends into distant suburbs. The Circular Rail encircles the entire city. The Kolkata Metro represents the oldest subway system in south Asia.

Kolkata's economic base deteriorated from the sixties until the late nineties. The secession of Bangladesh (formerly East Pakistan), the Bangladesh war, the collapse of the important jute industry, the breakdown of infrastructure and other factors combined to ever worsening conditions. In the 1980s, Kolkata was called the "dying city". However, things have changed. The city's economic recovery gathered momentum after economic reforms introduced by the central government in the 1990s came into effect. Since 2000, IT services have boosted Kolkata's economic resurgence. Furthermore, the growing manufacturing sector contributed to the city's revival.

Today, Kolkata is the dominant commercial and manufacturing center of northeast India. The city has attracted many large domestic corporations. Important branches are mechanical engineering, electronics, electrical engineering, cable manufacturing, steel processing, ship building, automotive industries, coach manufacturing, leather and textile industries, jewelry, pharmaceuticals, chemical and petrochemical industry, tobacco and food processing, paper and jute.

Some notable companies headquartered in Kolkata include ITC, Bata India, Coal India, Haldia Petrochemicals, Birla, Merlin Projects, Bengal Peerless, Orient Fans, Exide, Berger Paints, and National Insurance Company. The banking and financial sector is not yet represented adequately. Only two larger Indian banks (Uco Bank, United Bank of India) are based in the city. However, multinationals such as ABN AMRO and HSBC entered the stage. Noteworthy, Kolkata is home to India's second largest stock exchange.

The resurgence of the former "City of Palaces" is in full swing. Heavily promoted by the state government, Kolkata increasingly attracted foreign direct investments, mostly focused on software, IT and electronics. Due to ambitious infrastructure projects and state-of-the-art developments Kolkata is rapidly turning into a preferred IT and BPO location. Besides Kolkata based companies (Great Media Technologies, Polaris Networks, Sky Tech, Vision Comptech, WDC etc) top domestic and international players (IBM, Lexmark, Cognizant, TCS, Wipro etc) have chosen the city as their operational base. Around 2005 Kolkata's IT industry was growing at an annual rate of 70 % which was nearly twice the national average. In 2008, Kolkata's "official" GDP was 104 billion USD, with a global ranking of 61, and third among Indian cities. Like is the case with (next to) all cities in developing countries the informal sector is highly important in terms of its contribution to Kolkata's overall economic performance. It contributes more than 40 % to the metropolitan labor force.

Kolkata's growth is supported by two competitive advantages. For one thing, land is easily available at comparatively low costs as compared to metros such as Delhi and Mumbai. Secondly, Kolkata is a net exporter of electricity, which reduces the operating costs and limits losses in the manufacturing sector attributable to outages which are a severe problem across the country. Kolkata's attractiveness as an economic location is fostered by its reputation as being India's cultural capital.

The increasing number of corporates moving into the city has also triggered growth processes in the retail sector, the hotel and lodging industry, the construction industry, and the real estate market. This adds to the positive overall economic performance. This is reflected by the fact that in terms of economic growth the city and the state of West Bengal rank third among the country's regions. In contrast, living costs are lowest among major cities.

The office market consists of several distinct areas. The old CBD around Dalhousie Square (formerly BBD Bagh) is characterized by old buildings in European architecture, many of which are listed. The area is home to government secretariat, General Post Office, High Court, Lalbazar Police headquarters, several other government offices, domestic and international banks, and insurances. The new CBD comprises Park Street, Shakespeare Sarani, Camac Street, A.J.C Bose Road and Topsia Road.

An established non-central office location is to be found at the Eastern Metropolitan Bypass. Main suburban (or subsidiary) business districts are the technopolis in the Salt Lake Sector V and Rajarhat. The city is further spreading out to Garia-Narendrapur (southeast), Behala-Joka (southwest), Rajarhat i(northeast), BT Road (northwest), and Howrah (west).