On Bengaluru's doorstep: Hosur's meteoric rise

Rapid industrialisation has transformed this Tamil Nadu town into a manufacturing hub, however, basic infrastructure remains far behind

Credit: DH Creative

In the early 1970s, Hosur was just a one-minute stop for buses from Bengaluru to different parts of Tamil Nadu and vice-versa. Five decades later, there is a proposal to have an exclusive airport in this evolving industrial city.

The availability of a skilled workforce, cheaper land prices and the presence of over 3,000 diverse micro, small & medium enterprises (MSMEs) have transformed Hosur into a sought-after destination for investors. The city's proximity to Bengaluru has also come to its advantage.

In 1974, Hosur was chosen as an industrial site by the Tamil Nadu government to infuse growth in the Krishnagiri district. The establishment of an industrial estate by the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) attracted industrialists from across the state to set up their manufacturing units.

While firms like Ashok Leyland and Titan chose SIPCOT’s industrial estate, two-wheeler major TVS established factories on its own land. The city now caters to a wide range of industries in the manufacturing sector.

On the flip side of the remarkable growth of the town into a city is the fast depletion of groundwater, infrastructure that has not kept pace with the fast-growing population, conversion of fertile agricultural lands for other uses and degradation of the environment owing to pollution and granite mining.

Hosur continues to garner more investments

The second busiest highway connecting Chennai with Bengaluru and other parts of the country runs right into the city making even crossing the road difficult. Improper town planning has led to chaotic congestion near Hosur, which is projected as the 13th fastest growing city in the world in terms of population. From flyovers to residential complexes, the city lacks planned growth to match its industrial development.

Still, Hosur has been drawing a major chunk of investments that come into Tamil Nadu. Investments have increased in the past few years, with traditional sectors like automobiles (now electric vehicles) and electronics topping the list.

Since 2017, Hosur has garnered investments worth Rs 21,424 crore with a major chunk being invested in electronics (Rs 9,050 crore), and automobiles (Rs 5,539 crore). Forty-three projects for which MoUs have been signed since 2017 will generate employment for over 70,000 people.

'Hosur offers an irresistible environment to investors'

The reason, K Velmurugan, President, Hosur Small and Tiny Industries Association (HOSTIA) said, is due to the “matured environment and availability of skilled labour”, cool climate, excellent road connectivity and proximity to Bengaluru.

“These are irresistible to an investor. There is nothing that MSMEs in Hosur cannot do. We have expertise in automobiles, electronics, tooling, rubber, plastic, machining fabrication, and machine tool spares. The SMEs can make a dummy of any spare parts that make things easy for big players. Such an environment is not possible anywhere except Hosur,” he said.

B Senthil Nathan, chief finance officer of a clothing enterprise, added, “Three things that made Hosur what it is today are the spinoffs from Bengaluru, skilled workforce, and cheap land prices.”

Hosur is next only to Chennai in garnering investments in a majority of sectors – the inherent advantage is its proximity to Bengaluru which has excellent air and train connectivity making things easy for businesses in moving their goods. To further improve air connectivity, businessmen in Hosur cheer the Tamil Nadu Government’s move to set up an airport in the city as they feel it has the potential both in passenger and freight traffic.

Tata, Delta, Ola Mobility, Ather, and Simple Energy are some of the big names in the electronics and electric vehicle (EV) sectors that have made Hosur and Krishnagiri their home in the past few years. TVS has also decided to invest Rs 1,100 crore for its EV facility in Hosur.

Easy accessibility has made three firms based out of Bengaluru to invest in EVs in Hosur. After reaching its limit of expansion, Hosur is now fuelling growth in Krishnagiri and Dharmapuri.

Hosur-Krishnagiri-Dharmapuri (HKD) belt is now being pitched as a hub for the EV ecosystem. The government has already brought in a few battery manufacturers to the region and is in talks with other major players.

Suhas Rajkumar, CEO of Simple Energy, which is building a massive EV facility with battery manufacturing and testing track in backward Dharmapuri district at a cost of Rs 1,100 crore apart from another unit in Hosur, said it was the government policies that support the manufacturing units and OEMS prompted him to choose Tamil Nadu.

“The government has been welcoming all types of automobile companies in the area thus making it an automobile hub. The welcome move has also helped in achieving scale by reducing the costs wherever possible. Though this area is already an automobile hub, the EV evolution will happen considering all the industry players setting up their units in TN, thus creating more employment,” Rajkumar told DH.

Fall of floriculture

However, traditional sectors of the region -- floriculture and horticulture – the soil has a unique quality that allows all kinds of vegetables and flowers to grow – are witnessing a downfall due to the rapid industrialization of areas close to Hosur and adjoining areas. Roses grown in Hosur are preferred by many countries during Valentine’s Day celebrations every February.

A farmer who grows cut flowers including roses told DH that there has been a downturn in sales in the past few years. “The cost of maintaining a flower farm is huge. And the Covid-19 pandemic led to huge losses. Many feel it is better to sell lands and convert them into mini-warehouses,” he added.

Senthil Nathan believes that the promotion of other industries should not be at the cost of two important sources of livelihood, horticulture and floriculture.

“We should take steps to protect the livelihood of the people and prevent diversion of cultivable land for industry. Balanced development takes precedence over everything else. Else there will be rural distress and land sale,” he said.

Hosur has reached its saturation point

L K M Adhi, who came to Hosur from Erode in western Tamil Nadu in the 1970s to set up his business, agrees with Velmurugan on the unparalleled rise of Hosur as an industrial hub from the scratch. However, he believes that the city has “reached its saturation point” and welcomes the government’s move to take industries to nearby Krishnagiri and Dharmapuri.

“If you ask me did we expect such a growth? The frank answer is No. Hosur’s transformation has belied all our expectations. In my opinion, the city has overgrown. The major fallout of this unplanned growth is the quality of life taking a nosedive. We have no water, and the groundwater has gone 1,200 feet below,” Adhi, former president of Hosur Industries Association (HIA), told DH.

Electronics, aerospace and much more

Besides electronics, EVs, and automobiles, the Tamil Nadu government is also positioning the region as an aerospace hub — Salem-based Aerospace Engineers Private Limited is setting up a factory in Hosur to supply critical aviation components and parts to Boeing, while Air Works has set up an MRO unit.

The city’s proximity to Bengaluru, traditionally strong in the sector with the presence of state-owned HAL and others, will help garner more investments.

“There is no one single factor that motivates investors to go to a place. Besides incentives and government support, industries expect a strong ecosystem, skilled labour, and a conducive atmosphere. Hosur is a combination of all these factors, especially the ecosystem developed in four decades by large investors like TVS, TITAN, Ashok Leyland, and MSMEs. That is the reason we see investors flocking,” Pooja Kulkarni, Managing Director and CEO, Guidance Tamil Nadu, told DH.

The investment climate is so good that Kulkarni said, companies like Delta Electronics and Ola have already taken allotment of land for their vendors too.

“Be it Ola, Tata, or Delta – everyone wants their vendors to be stationed close by. And Hosur has a few natural advantages, it is best suited for sunrise sectors like EVs and electronics,” Kulkarni added.

These industries will fuel growth, says Velmurugan who exudes confidence that new firms will absorb the MSMEs at least at the second or third layer. “Already, we hear MSMEs are supplying tools to companies like Tata Electronics, and we hope this will only increase. MSMEs form the core of the ecosystem along with skilled labour,” he added.

The government’s aggressive push has brought many investors to the city – while the erstwhile AIADMK government signed an MoU with Ola for its Future Factory at Pochampalli, 80 km from Hosur, the incoming DMK dispensation has extracted an assurance for expansion from Ola and other firms, officials said.

While appreciating successive government's industrial policies, S Sundariya, Chairman, Infrastructure Committee, HIA, flagged the need for at least six flyovers in the city to clear bottlenecks.

“The city’s economy is worth Rs 3.5 lakh crore. We need better infrastructure and better planning,” Sundariya said, mentioning the push for extension of Bengaluru Metro to Hosur.

Kulkarni is also appreciative about how the state government does not discriminate between SIPCOT, the state agency which develops industrial estates, and private players.

“When we take an investor to Hosur, we provide them with a bouquet of options. We show them SIPCOT parks and private ones. We allow the investor to make an informed choice. Whether SIPCOT or a private park, the investment is made in TN. That’s about it,” she added.

Cost of living in Hosur

The low cost of living, including affordable rent, calm environment in many localities and abundant parking facilities as compared to its rich neighbour Bengaluru, now plays a major role in Hosur’s growth in terms of population. Thousands of people, especially those who work in Electronic City, have made Hosur their home.

From less than 10,000 in the 1970s, the city’s population increased rapidly to 2.5 lakh (2011 census) and conservative estimates put the current population to be around 5 to 6 lakh. The new Hosur Urban Development Authority (HUDA) covers 734 square kilometres against a mere 94 sq km in 1984.

As a result of Bengaluru’s influence, Hosur is also truly cosmopolitan. In the town, the many languages of India like Kannada, Tamil, Malayalam, Telugu, Hindi, and English are audible. Hosur has good schools and colleges, both in the public and private sectors. The government is now building a medical college in Krishnagiri.

“I came to Hosur 18 years back. The employment opportunities are abundant, and we see a huge influx from across Tamil Nadu and other states. Unfortunately, the roads and other infrastructure remain the same. We need better living conditions and better quality of life,” Madhumitha, a software professional, said.

‘Water problem will be taken care of’

Since the 1970s, successive governments in Tamil Nadu have explored different ways to garner investments. However, industrialists had a complaint — urban infrastructure was not given the “due focus” leading to “haphazard growth.”

Senthil Nathan said while the government provides enough support to the industries, it should ensure necessary facilities for urban agglomerations that come up around these industries.

“We have quality roads in SIPCOT Phase-II but the moment you get out of the estate, things are completely different,” he said, pushing for an organisation with the “thought process” of a private developer to build quality townships.

Acknowledging water scarcity in the city, Hosur Corporation Commissioner K Balasubramaniyam said implementation of the second phase of the Hogenakkal Water Supply & Fluorosis Mitigation Project in Krishnagiri will take care of the water needs of the city.

“The water availability is 10 million litre per day (MLD) and 27 MLD is the demand. We are maintaining the supply using local sources. We have 400 borewells. In the phase-II of Hogenakkal water scheme, the quota for Hosur will be 46 MLD and it will be sufficient,” he told DH.