California, the American state that houses Silicon Valley – the cradle of technology companies, is witnessing a massive exodus of large companies in the last few months. Amid the pandemic, many technical companies have adopted work from home (WFH) as their business continuity plan for the future. Therefore, the physical location office matters less and even lesser from a productivity point of view. But, since the state levies personal income tax on employees and tax on corporates based on the location, it matters a lot for their expenditure.
Therefore, companies like Oracle Corporation and Tesla are moving their headquarters to Texas, which has zero income tax and a minimal cost of living compared to California. The same could happen in India if Uddhav Thackeray remains CM of Maharashtra for another four years.
The Delhi National Capital Region, which includes cities like Noida and Gurgaon, have emerged as more favourable locations for corporates to set up offices in the last few years. Many technical companies, including Microsoft and Samsung, have either announced setting up their new offices in Noida or expanding the existing capacity of their offices. The NCR has a better infrastructure than Mumbai, and the business sentiment around the region, too, has improved in the last few years.
Both Uttar Pradesh and Haryana have business-friendly governments, offering various types of incentives like tax rebates, hassle-free land acquisition, and single-window clearance for the offices. Moreover, the labour cost, cost of living, and public infrastructure in these cities are much lower compared to Mumbai as well.
Maharashtra too seems to be all set to witness the same fate as California if the Uddhav Thackeray led tri-party government, which has complete apathy towards the business, remains in power. The entrepreneurs and businessmen are being hounded by the Maharashtra government for political reasons.
Arnab Goswami, the celebrity journalist who decided to set up an office in Mumbai instead of Noida- where most of the media houses have a head office- is being hounded by the Mumbai police for taking on the Uddhav government on Sushant Singh Rajput’s case and Palghar Sadhu lynching case.
In May 2017, when Arnab Goswami opened a new media house a few months after he quit the Times Group, he decided to set up its office in Mumbai because he wanted to maintain arm’s length distance from the political-bureaucratic establishment of Delhi-NCR.
Mumbai, the financial capital of the country, is known for its libertarian culture. Though there is rampant corruption in the Maharashtra government as well as in BMC for decades, generally politicians do not interfere with the functioning of businesses out of political vendetta. And this is the reason behind the fact that any foreign company looking forward to doing business in India sets up its head office in Mumbai. Even domestic business houses move their head-office to Mumbai when they become big.
But, the hounding of Republic TV officials- the arrest of its CEO and previously of Arnab Goswami- changes all that and does massive damage to Mumbai and the financial future of the Mumbaikars. The city is already losing its edge due to lack of public investment and the decisions taken by the Uddhav Thackeray government in the last one year adds to its misery.
The Yogi government is already luring the Bollywood actors and producers to move to Noida, where the UP government is establishing a huge film city. Mumbai has offices of financial companies, Media and Entertainment companies, and, many technical companies. The technical companies already prefer Noida, and financial companies prefer Gurgaon. The media and entertainment companies will also soon move to Gurgaon if the Uddhav government continues its vendetta against entrepreneurs and businesspeople.
Gurgaon will soon replace Mumbai as the financial hub of the country given the fact it has attracted many Business and Financial Services (BFS) companies in the last decade.
If the Uddhav government remains in power in Maharashtra for four more years, it will do irreversible damage to the position of Mumbai as a pre-eminent business city and Delhi-National Capital Region will surely replace it.