Bangalore moves fast to satisfy needs of IT companies to avoid mass exodus - starts with a total privately held $300 million international airport 
Preetam Singh, Special Correspondent
December 15, 2004

Major IT companies have long been complaining about faltering infrastructure and inadequate facilities for hosting international companies. Ministers in Bangalore, India's software capital, yesterday said they would give final approval next week for a chronically delayed international airport in a move that will boost the city's flagging image among foreign investors.

According to Fianacila Times, the $300m (£156m, €226m) project, which is led by Siemens, the German company, and the Zurich Airport Authority, would be India's first "greenfield" airport to be majority-controlled by private companies. The development has stalled for more than five years, in spite of increasingly shrill complaints from the city's rapidly growing information technology companies.

State government leaders have approved the project "in principle" on several occasions. But yesterday Siddaramaiah, finance minister of the state of Karnataka, told the Financial Times that work on the 4,000-acre site would start next month and that it would get the final go-ahead "in practice" at a state cabinet meeting next week. The new state government of Karnataka, the southern state of which Bangalore is capital, came to office in May on what was widely seen as a strong plea by poorer rural and urban voters to improve their economic opportunities. 

"We are very keen on this airport as soon as possible," said Mr Siddaramaiah. "After coming to power earlier this year, we simply wanted to get some clarifications from the airport consortium about the terms and conditions of this project." But politicians and bureaucrats have cited any number of reasons since 2000, when the airport site was selected, to delay the project. Atal Behari Vajpayee, India's former prime minister, laid the "virtual" foundation stone of the airport, by computer, in January 2001. S.M. Krishna, the former chief minister of Karnataka, laid the actual foundation stone a year ago. Meanwhile, IT companies cite Bangalore's poor airport and snarled up traffic as reasons to look elsewhere in India for expansion. Senior officials from other state governments come to Bangalore almost daily to advertise their incentive packages to IT companies. Jerry Rao, chief executive of Mphasis, a large IT company, says air and ground travel costs have mounted sharply in Bangalore. This is in addition to a shortage of hotel rooms and road space. 

Average car journey times in Bangalore have doubled in the last two years. "We are in a business where you have to fly to the United States and Europe a lot, but there are only six international flights a week out of Bangalore," said Mr Rao. Software executives point to Shanghai in China, which they say should be Bangalore's competitive benchmark. Shanghai acquired a modern international airport several years ago and has dramatically upgraded the city's infrastructure. 

In contrast, Bangalore's state government has been relatively hostile to business since May. However, Nandan Nilekani, chief executive of Infosys, India's second-largest IT company, says Bangalore's infrastructure difficulties are unlikely to lead to a mass exodus from the city. "Bangalore is very attractive in many other respects," said Mr Nilekani. "Apart from the traffic and the airport, the quality of life here is probably higher than any other Indian city. The weather is perfect."