India is on track to become the world’s fourth-largest economy by 2025. It is also rapidly urbanising with one-third of its total population living in cities. In fact, India’s leading metros of Delhi and Mumbai have crossed populations of 34 million and 22 million respectively.
There is no surprise then that there are about 65 cities in India that hold a population of over 1 million people. This is a clear indicator that there is a vast amount of economic potential in cities beyond the 9 metros in the country. Based on the level of development and urbanisation, India’s cities are categorized into Tier I, II and III.
The economic boom, along with the growing middle class, has also driven household consumption to nearly double in the past decade to $2.1 trillion. Much of the consumer demand is met locally by India’s 64 million micro, small, and medium enterprises (MSMEs), which contribute to nearly 30% of its GDP.
There is no doubt that this sector will continue to rise to meet the growing consumption that is expected to cross $4 trillion by 2030. Making this increasingly viable is the ability for MSMEs to now thrive in Tier II and III cities and not be limited to fighting for the same resources in top metros. Why MSMEs thrive in Tier II cities With the tech transformation in the country being accelerated by multiple factors, Tier II cities have been quick on the uptake of digital financial services, driving extensive financial inclusion.
Internet penetration is widespr.