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 HD Kumaraswamy said.
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 Rs 5 billion 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.