New Satellite Cities: The Answer to India’s Urban Congestion?

Featured & Cover New Satellite Cities The Answer to India’s Urban Congestion

The Union government recently provided six concept notes to state governments, aimed at tackling unemployment and underemployment in rural regions and resolving obstacles that hinder job creation in non-metro cities. The states’ feedback on these proposals will be discussed in the upcoming National Conference of Chief Secretaries, chaired by the prime minister in November. One of the key issues likely to be addressed is the emergence of satellite cities, a growing trend in India that is expected to reshape the country’s urban landscape.

These satellite cities include Sri City in Andhra Pradesh, Hosur in Tamil Nadu, Dahej and Dholera in Gujarat, Manesar in Haryana, Greater Noida in Uttar Pradesh, and Shendra-Bidkin and Navi Mumbai in Maharashtra. They are becoming major industrial and population centers, offering relief to overcrowded megacities like New Delhi, Mumbai, Bengaluru, Chennai, and Ahmedabad. Urban development experts believe these new cities, which absorb the overflow from larger cities, may hold the solution to India’s urban challenges.

A Unique Private Township

Sri City, located in Andhra Pradesh but with close ties to Chennai, brings a distinctive corporate-driven model to the satellite city concept. This 40 square kilometer township, just 55 kilometers from Chennai, is privately owned. With 220 companies, mostly multinational corporations, operating there, it’s home to well-known brands like Kellogg’s, Alstom, Colgate-Palmolive, and PepsiCo.

Launched during the Special Economic Zone (SEZ) boom in 2008, Sri City has become a hub for global industries, housing Asia’s largest chocolate factory. Mondelez, the maker of Cadbury chocolates, set up a plant worth Rs 1,250 crore in 2016, further establishing Sri City’s industrial significance. Its proximity to four seaports and two airports, Tirupati and Chennai, has made it an attractive destination for investors.

Ravindra Sannareddy, founder and managing director of Sri City Pvt Ltd, highlights their future plans: “We are expanding residential options to create a ‘walk-to-work’ environment.” He adds that the workforce, which currently numbers 62,000, is expected to reach nearly 100,000, with another 200,000 indirect jobs being created. Sri City also hosts Krea University, which aspires to international recognition, with a governing council that includes prominent figures like former RBI governor Raghuram Rajan and Nobel laureate Esther Duflo.

The Silent Rise of Satellite Cities

Amitabh Kant, India’s G20 Sherpa, notes that Shendra-Bidkin in Maharashtra and Dholera in Gujarat have the potential to become major hubs similar to Sri City. Shendra-Bidkin, near Aurangabad, is being developed for export-oriented businesses, while Dholera is envisioned as a smart industrial city. Tata Electronics has already established a semiconductor fabrication unit in Dholera, signaling its importance in India’s industrial future.

Dholera, located around 100 kilometers from Ahmedabad, and Dahej, known for its chemical industries, have capitalized on their proximity to the coast to attract businesses. Manesar, on the other hand, has benefited from its close connection to Delhi, driving growth in both industrial sectors and real estate. Kant, who was CEO of the Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC), emphasizes the importance of these new cities: “The Noida-Greater Noida region continues to thrive as a technology and manufacturing hub,” he says, citing the area’s strategic location near Delhi and strong infrastructure.

Kant also points out the development of Navi Mumbai, which is set to benefit from an upcoming international airport. These satellite cities, he believes, are crucial not only for reducing the pressure on larger cities but also for promoting balanced regional development.

The Impact of GST and Urban Growth

The introduction of the Goods and Services Tax (GST) in 2017 has made interstate trade more efficient, benefiting places like Hosur, a city in Tamil Nadu that has seen rapid development due to its proximity to Bengaluru. Cities like these occupy only 3% of India’s landmass but generate around 60% of the country’s GDP. According to UN data, India’s urban population increased from 109 million in 1970 to 460 million in 2018, with projections showing another 416 million people moving to urban areas by 2050.

OP Agarwal, a former urban transport specialist at the World Bank, explains that satellite cities can be situated close to a major city or up to 100 miles away, as long as there’s strong transport connectivity. “What defines a satellite city is its strong connection to the main city, thanks to a robust transport network,” he says, giving the example of Gurgaon, which draws from Delhi’s infrastructure and resources.

Agarwal believes the focus of policymakers should shift towards developing satellite cities and city clusters, as much of India’s goal of reaching a $30 trillion GDP by 2047 will come from urban areas, particularly tier-2 and -3 cities. “To attract investments, especially from manufacturing firms, satellite cities need to ensure essentials like power, water, and road connectivity are in place,” he adds.

Challenges and Opportunities

Economist Rumki Majumdar of Deloitte India stresses the importance of smart urban planning and investment in connectivity for these satellite cities to thrive. “India will need smart urban planning and investment in connectivity so that satellite cities can become key engines for industrial expansion, innovation, and job creation,” she says. Decongesting major urban centers will allow for a more equitable distribution of economic opportunities, lower living costs, and improved infrastructure, she adds.

Urban planners and policymakers face increasing pressure to develop vertical cities with high-rise apartment buildings. Vinayak Chatterjee, an infrastructure expert, notes that public transit systems like metro rails depend on population density, which in turn relies on vertical growth. “For vertical growth to be sustainable, it must be matched with essential civic amenities like water and sewerage systems,” he says.

Cities like Meerut, which is 80 kilometers from Delhi, have already benefited from improved transport links, leading to a real estate boom. The planned Mumbai-Ahmedabad bullet train, expected to be completed by 2028, is also set to boost cities along its route, such as Bharuch.

Planning for the Future

India’s rapid urbanization has created challenges, especially in the management of areas between major cities and their satellite cities. According to former housing secretary M Ramachandran, many growing areas lack cohesive policies to integrate them into broader urban strategies. “We still lack a cohesive policy to address areas adjacent to larger cities,” he says, noting that the National Capital Region is an exception.

Ramachandran warns that the rapid, unplanned construction of new cities may lead to future problems. Despite Gurgaon’s economic success, for instance, property prices there remain 60% lower than in Delhi. The success of satellite cities like Greater Noida, Navi Mumbai, and Sohna over the past two decades offers hope, but careful planning is crucial.

According to real estate expert Anuj Puri, the new satellite cities are seeing substantial real estate growth and price appreciation. However, urban planners must ensure that these cities offer better quality of life and smarter designs than older metros to truly succeed.

As the National Conference of Chief Secretaries approaches, the future of India’s satellite cities will likely be a major topic of discussion. These cities hold the potential to address India’s growing urban challenges—if developed with careful planning and vision.

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