India Inc still swears by Hyderabad

HYDERABAD: It takes a lot more than a couple of bombs to blast a city’s brand value. That clearly was the signal from India Inc even as it condemned Saturday’s twin blasts. “The incident is most unfortunate. But it will not disturb the excellent reputation that Hyderabad enjoys as a business and employment destination. Although we do not see any business implication in the near future due to this event, we sincerely hope that it does not recur,” said Dr Reddy’s Laboratories COO Satish Reddy.

For a city that has been rocked more than once in recent times, Hyderabad has obviously shown enough resilience to command the confidence that corporates appear to repose in it. “Although this is the second consecutive incident in the city after the Mecca Masjid blast near Charminar on May 18, we look at this as a one-off incident,” said Nasscom president Kiran Karnik.

However, he also cautioned that the government should take proactive measures to avoid such terror attacks. If such incidents become a regular feature, they might affect the growth of the IT industry in the state. “This could trigger MNCs to take a relook at their decision to set up operations here,” he said.

India Inc’s faith in Brand Hyderabad may well be music to chief minister YS Rajashekara Reddy’s ears. He, too, was quick to add that the incident will not impact the flow of investments into Andhra Pradesh. “There is no question of investments being affected in Andhra and Hyderabad in particular. We will be the number one state for investments in the medium term,” he told ET.

Hyderabad is home to biggies such as Satyam and Dr Reddy’s, besides several mid- and small-sized companies. Total investments in the state topped Rs 10,571 crore between 2004 and 2007, against Rs 4,524 crore during 2001-04.

Only last month finance minister P Chidambaram had said that AP was all set for an investment boom with over Rs 40,000 crore of investments in the pipeline. IT exports, which topped Rs 25,000 crore in 2006-07, are expected to cross Rs 50,000 crore in 2007-08.

Nonetheless, “this is a tragedy of colossal proportion. Our hearts reach out to those who have suffered,” said a statement from Satyam Computer. “We do not expect our business to be impacted in any way. We are closely monitoring the situation and have further enhanced security in all our offices,” it added.

A cross section of industry that ET spoke to said that the inherent strength of Hyderabad will help it tide over the current crisis. According to Hyderabad Software Exporters Association (Hysea) president Anil Jampala, the city has strong fundamentals including good infrastructure, talent availability and low cost of living. These are some of the factors that lure IT companies to set up operations. “The blast has certainly raised concerns among the industry. On its part, industry would need to beef up their internal security measures,” he said.

But as Nasscom pointed out, though the economic progress made by southern states could make them soft targets for terror attacks, it could happen in other cities as well. “Even Delhi is constantly facing such threats. The government should ensure that there is no secondary impact due to these incidents. The city’s ability to get back to normalcy will determine its attractiveness as an investment destination,” Mr Karnik said.

Indian Semiconductor Association (ISA) president Poornima Shenoy said no city in the world could be considered a safe destination. “Israel is the best example. Despite attacks and an ongoing war, business in that country is flourishing. Even London and New York faced such attacks but they did not stop their progress in anyway,” she pointed out.

CII (AP-chapter) chairman Pradip Dhobale said factors like a stable government and quality talent pool make Hyderabad an attractive destination. The latest attack will no way impact the city’s brand image as an investment destination, he said.