Bangalore woos foreign capital for facelift

By Sumeet Chatterjee

BANGALORE - Authorities in the technology

hub of Bangalore are wooing foreign capital to crank up its creaking

infrastructure to help lure back Western firms who are turning to other cities

for outsourcing and IT services.

The government plans to build new elevated highways, widen existing roads,

develop satellite towns and set up a $1.4 billion mass transit system in the

city, home to more than 1,500 technology firms.

But IT industry officials said on Friday the government needs to speed up the

projects and plan many more initiatives to sustain growth in India's Silicon

Valley.

"We will encourage foreign investment in all areas of infrastructure

building in and around Bangalore. Immediate approvals will be granted to all

such investment proposals," Karnataka Chief Minister H.D. Kumaraswamy told

Reuters.

He said the state would issue a global tender next month to build five

satellite townships in a radius of 50 km of Bangalore.

But investors may be discouraged by an ongoing dispute between the state

government and a consortium that is building an expressway from Bangalore to

Mysore, 110 km away.

The state government has accused the consortium of buying more land than

necessary for the $600 million project to build the road, industrial hubs and

new townships.

Ashok Kheny, managing director of the Nandi Infrastructure Corridor

Enterprise consortium, denied the allegation saying such controversy would be a

setback for new private investment.

Bangalore boasts large facilities of global firms such as Microsoft

Corp., Intel

Corp. and IBM

but its rapid growth has led to traffic jams on potholed roads, overcrowded

public transport and irregular power supply.

"Bangalore, which is essentially a brand that has been created painfully

in the last so many years, is fast disappearing," said Rajendra Misra,

managing director of private equity firm Tenet Holdings Private Ltd.

Misra, a member of an official panel set up to improve the city, said

authorities had ignored infrastructure for too long. "They (the government)

are killing a golden goose."

Technology firms, which have helped transform a tranquil city into a buzzing

metropolis of 6.5 million people that makes up a third of India's $23 billion

software and back-office service industry, say Bangalore needs large

investments.

"The new infrastructure initiatives will certainly help but we need many

more projects like these," said Sunil Mehta, vice president of the National

Association of Software and Service Companies (NASSCOM).

Bangalore now competes with other cities such as Hyderabad in the

neighbouring state of Andhra Pradesh.

On Monday, the world's largest wealth manager, UBS AG, began back-office

operations in Hyderabad, where Franklin Templeton is setting up a unit and

Microsoft also has facilities.

Tata

Consultancy Services Ltd., India's top software services exporter, said

earlier this month it plans to invest 5 billion rupees in a new software

development centre in Pune.

Industry officials say they are keenly watching the progress of other

projects such as a new highway connecting the city to the Electronics City,

which houses 150 firms including India's second-largest software services firm, Infosys

Technologies Ltd. and its smaller rival Wipro

Ltd.

"We are getting good signals from the government. We need to have good

governance and good project management to see the faster implementation of all

these projects," said Anant Koppar, president of MphasiS BFL Ltd.'s

technologies division.