Methodology
We selected cities based on multiple criteria: sustained startup and investment growth; presence of new tech/industrial parks or special economic zones; robust transport linkages (air, rail, ports/highways); and strong local talent (universities, professional colleges). For each city we examined latest industry and news reports, government and think-tank data to gauge factors such as ecosystem size, funding trends, and infrastructure projects. For example, analyses by industry groups and media note that many tier-2 hubs are adding GCCs and tech jobs at 25–35% growth rates. Our report draws on these sources to ensure an evidence-based selection (citations throughout) and avoids focusing on any single industry or policy.
City Profiles
Indore (Madhya Pradesh)
Overview & Demographics: Indore is Madhya Pradesh’s largest city (urban pop. ~2.4 million) and central India’s commercial capital. It has the state’s highest GDP (≈$14 billion) and a literacy rate around 80.9%. Indore’s economy is highly diversified – textiles, steel, chemicals, pharmaceuticals and food-processing are major sectors.
Business Ecosystem & Startups: Indore hosts India’s only campus housing both an IIT and an IIM, underscoring its talent base. The city has cultivated a startup scene (116 “high-tech” startups as of 2025) and numerous incubators. Local entrepreneurs often come from its engineering colleges, and sectors include fintech, AI and enterprise software (e.g. companies like YatriKart and Onetab in Tracxn’s list). Venture funding is rising: Indore firms are securing seed and Series A rounds as investors seek lower-cost alternatives to metros.
Infrastructure & Connectivity: Indore benefits from robust infrastructure projects. It has a modern airport (national and some international flights), major rail links (on the Delhi-Chennai trunk route) and good road links (NH52, NH52G). Key initiatives include the Super Corridor (a large mixed-use development) and the Pithampur Special Economic Zone. The city even operates India’s first bus rapid transit (BRT) line (12 km). Indore’s relatively compact size means 15–20% lower living costs than metros, making commutes short and quality of life high.
Talent & Education: Indore’s educational institutions are a major draw. Alongside IIT/IIM, the city has RGPV (state tech university), IIITM, and numerous engineering/management colleges. As one report notes, Indore’s strong education indices and moderate costs have “ensured availability of senior professionals and skilled workforce”.
Key Growth Drivers: Indore’s growth is driven by its clean-city reputation, cost advantage and connectivity. Companies cite lower rents and wages than Delhi/Mumbai, while still accessing a vast hinterland market. It has attracted manufacturing investments (automotive testing NATRIP facility nearby) as well as IT services in the new IT Park. Entrepreneurially, Indore is noted for frugal innovation and local startups, in line with forecasts that a new unicorn could emerge here.
Jaipur (Rajasthan)
Overview & Demographics: Jaipur is Rajasthan’s capital and gateway to western India, with a 2011 city population of ~3.1 million (metro ~6–7 million today). Its district GDP is about ₹1.93 lakh crore (US$23 b). Jaipur’s economy mixes tourism, gems/jewelry, manufacturing, and a growing IT/BPO sector.
Business Ecosystem & Startups: Rajasthan has aggressively promoted startups: over 7,100 startups are registered statewide, many centered in Jaipur. Jaipur’s ecosystem is now noted for SaaS, fintech and AI startups. For example, AI firm Celebal Technologies raised $15M Series B in 2025, and other tech firms (HabileLabs, GirnarSoft, etc.) are active. The city’s iStart program and global capability center policy (2025) aim to further boost innovation. Taggd reports Jaipur’s IT sector is expanding ~25% per year, reflecting rapidly rising hiring in software, tourism tech, banking/finance services and healthcare platforms.
Infrastructure & Connectivity: Jaipur has an international airport (operating since 2010) with direct connections to Middle Eastern and Southeast Asian hubs. Major highways (e.g. NH48 to Delhi and Mumbai) and a new metro line (Phase I operational since 2015, expanded further) have improved connectivity. Rail links and the planned Delhi–Jaipur bullet train (Vande Bharat) will cut travel times. The Rajasthan urban development plan and Smart City projects are upgrading roads, utilities and business districts. High-quality airports and highways make Jaipur a transit hub between northern and western India.
Talent & Education: Jaipur’s strong talent pool stems from institutions like MNIT Jaipur (top NIT), BITS Pilani (nearby), and dozens of engineering/management colleges. Many local graduates now choose to build careers at home rather than migrate. This retention of engineers and managers – combined with English proficiency – fuels Jaipur’s companies.
Key Growth Drivers: Jaipur’s rise owes to state support and its mix of heritage and innovation. It is a “mature” Tier-2 ecosystem with incubators (e.g. RIICO iStart hubs), international trade (country’s top wholesale electronics market) and a thriving creative economy (tourism/gems). Lower office and living costs than metros let startups run lean. Quality-of-life and family networks (culture-rich city) also attract talent. Global companies and GCCs are eyeing Jaipur for cost efficiency, as Bangalore strains under traffic. The Indus Entrepreneurs (TiE) network has identified Jaipur as a key upcoming hub.
Kochi (Kerala)
Overview & Demographics: Kochi (Cochin) is Kerala’s largest commercial city, population ~600,000 (2021) on the Arabian Sea coast. It anchors the Kochi metro region (pop ~2M), the main port of Kerala and a naval base. Historically a trade center, Kochi has one of India’s busiest ports and an international airport (Kerala’s first, fully solar-powered). GDP of Greater Kochi is about ₹1 lakh crore (2023), supported by shipping, refining, tourism and IT services.
Business Ecosystem & Startups: Kerala has built a highly inclusive startup ecosystem (6,500+ registered startups statewide). Kochi, in particular, has become a fintech and IT/ITES hub. The presence of Infopark (IT/ITES SEZ opened 2004) and SmartCity Kochi (promoted by UAE investors) provides office space for hundreds of tech firms. These campuses host many GCCs and tech startups working on AI, analytics, health-tech and fintech. Kerala’s startup funding is rising rapidly (first 9 months of 2025 saw $14.7M, up ~147% YoY). Major firms like Infosys, UST Global, Accenture, BankBazaar and others have set up large operations here.
Infrastructure & Connectivity: Kochi’s port handles container and bulk cargo, with ongoing expansion projects (new terminals, cruise terminals). The city has an international airport with flights to Gulf countries and domestic hubs. National Highway NH66 connects Kochi to Mumbai and Chennai; NH544 links to Coimbatore/Karnataka. A suburban rail network and ambitious water-metro (intra-city waterways) are under development. However, industry leaders note gaps: limited long-haul flights (e.g. to US/EU) and city road congestion remain challenges. Still, Kochi’s infrastructure is generally strong compared to many Tier-2s.
Talent & Education: Kerala’s 100% literacy ensures a skilled workforce. Kochi has several universities (Cochin University of Science & Technology, Rajagiri, etc.) and top colleges (NIT Calicut in nearby Kozhikode). The state government’s campus innovation programs (IEDCs) mean even rural talent feeds into Kochi’s economy. Tech workers come from across Kerala (and neighboring Karnataka/Tamil Nadu) to Kochi for jobs in IT parks, lured by a pleasant climate and good schools.
Key Growth Drivers: Kochi’s growth stems from its IT/port hybrid economy. Infopark’s success created a self-reinforcing tech cluster: global firms can do software R&D here at 20–30% cost savings, yet still serve Middle East/Indian markets via the port and airport. Kerala’s supportive policies (e.g. Kerala Startup Mission, favorable trade zones) underpin this ecosystem. Compared to Bangalore/Mumbai, Kochi offers much lower real estate and labor costs while maintaining high living standards. Altogether, Kochi exemplifies how a smaller city with global connectivity (port+airport) and state backing can become a leading business hub.
Chandigarh–Mohali–Panchkula (Punjab/Haryana)
Overview & Demographics: The Tricity region – Chandigarh (a union territory) plus Mohali and Panchkula – is a key northern hub. Chandigarh itself had ~1.06 million population in 2011 (metro ~1.5M today) and ranks among India’s highest per-capita income regions. Chandigarh is known as an “academic and institutional” city, serving as the capital of both Punjab and Haryana. The area’s economy is led by government services, IT, pharmaceuticals and education.
Business Ecosystem & Startups: This region is rapidly growing its tech base. Government data show Chandigarh’s DPIIT-recognized startups jumped from <10 in 2016 to 633 by Oct 2025, generating over 6,000 jobs. Many of these startups are in AI/SaaS/enterprise services. Major players like Infosys, Tech Mahindra, Teleperformance and eClerx already have large GCCs or delivery centers here. The tri-city’s educated population (Panjab University, NITTTR, PEC engineering college) provides strong engineering talent. Incubators and agencies (e.g. STPI Chandigarh) actively promote new ventures.
Infrastructure & Connectivity: Chandigarh has an international airport (opened 2015) with flights to Middle East and Southeast Asia. Its road network is excellent (wide planned boulevards, low congestion relative to metros). NH5 and NH205 link Chandigarh to Delhi and northern India, while the Chandigarh Junction station connects it by rail. The city is known for urban planning – green sectors and grid roads – which translate to faster commutes (metro city employees spend under 45 minutes on average vs ~1.5h in Bangalore). A planned Chandigarh Metro (phase I) will further boost intra-city connectivity.
Talent & Education: Chandigarh’s “education indices are strong”. Panjab University, PGIMER, IIT Ropar (nearby), and premier schools supply a continuous pool of graduates. Its literacy rate (~86.8%) is well above national average. The union territory’s high standard of living and cultural amenities help retain engineers and managers who might otherwise leave for Delhi/Chennai.
Key Growth Drivers: Chandigarh’s appeal lies in its quality of life and central location. It consistently tops ease-of-living rankings. As [17] notes, **“High quality of life, strong education indices…have made [Chandigarh] a growing base for AI services, SaaS, and enterprise tech startups.”**. With lower rent and rapid real estate development, it’s easier for startups to scale. Its Tri-city status also provides a large combined market and talent belt (including Mohali’s biotech park and Panchkula’s industries). Overall, Chandigarh shows how a compact, well-planned city can leverage its strengths as a Tier-2 tech hub.
Coimbatore (Tamil Nadu)
Overview & Demographics: Coimbatore is Tamil Nadu’s second-largest city (metro ~2 million) and an industrial powerhouse in south India. Known as the “Manchester of South India,” it has a long history in textiles, manufacturing (pump sets, auto components) and engineering goods. Coimbatore’s economy (city GDP ~US$10 billion) is underpinned by hundreds of textile mills and engineering firms, plus emerging IT/ITES.
Business Ecosystem & Startups: In recent years Coimbatore has been repositioning as an IT/GCC hub. A 2025 Zinnov report highlights that Coimbatore saw a 21% CAGR in new GCC setups over five years, and now hosts 50+ centers employing 11,000+ tech professionals (mostly in engineering R&D). Major global/Indian firms (e.g. Accenture, Deloitte, Tech Mahindra, Zoho) have opened delivery centers here. Export data confirm this rise: Coimbatore’s software exports jumped from ₹10,433 crore in 2023-24 to ₹11,986 crore in 2024-25, making it Tamil Nadu’s second-largest IT export city after Chennai. Local startups (fintech, health tech, manufacturing tech) also benefit from this ecosystem.
Infrastructure & Connectivity: Coimbatore is well-connected by road and rail. It lies on NH544 (toward Kochi/Kochi/Kerala) and NH81 (toward Salem/Chennai). Its airport (Coimbatore Intl) has regular domestic flights and some international services (Middle East, Southeast Asia). The city’s infrastructure lags metros, however – local leaders urge a metro rail and improved airport linkages. Several planned projects aim to address this (e.g. Outer Ring Road, Coimbatore Smart City initiatives). The city also has a port (Coimbatore Port Trust in nearby Mettupalayam) and strong civic amenities.
Talent & Education: Coimbatore boasts an unusually strong engineering education base for its size. It has nearly 10 NIRF-ranked engineering colleges (e.g. PSG College of Technology, Coimbatore Institute of Technology, Amrita University). This means a large supply of software/IT graduates. Tech professionals from neighboring districts and Kerala also prefer Coimbatore’s climate and job opportunities. In short, the city’s talent pool rivals larger metros relative to its cost base.
Key Growth Drivers: Coimbatore’s growth is anchored in its cost-effective skilled talent and mature manufacturing ecosystem. Unlike Chennai or Bangalore, Coimbatore offers 365-day work continuity (no monsoon floods) and about 20–30% lower cost of living and office space. Industry leaders credit Coimbatore’s semi-urban environment and year-round comfort for attracting IT firms. The local industry lobby and state have pushed GCC and SEZ investment. For entrepreneurs, Coimbatore represents a balance: proven industrial base + rising IT sector, backed by a receptive community. (Wadhwani Foundation even notes Coimbatore alongside Indore as a likely source of the next Indian unicorn.)
Visakhapatnam (Andhra Pradesh)
Overview & Demographics: Visakhapatnam (Vizag) is Andhra Pradesh’s largest city (2011 pop ~1.7 million, metro ~2.5M now) and its leading port on the Bay of Bengal. It hosts heavy industries (steel plant, oil refinery, shipbuilding) and the Eastern Naval Command, making it a strategic industrial hub. Vizag’s port is among India’s busiest and a key LNG terminal. The city’s GDP (metro) is several times that of other AP cities, fueled by industry, logistics and a growing services sector.
Business Ecosystem & Startups: Vizag’s startup scene is smaller but growing due to state initiatives. Notably, global firms are eyeing Vizag for new capability centers: in 2025 pharmaceutical firm Eisai announced a new GCC there, and ANSR signed an MoU to build a GCC innovation campus in the Madhurawada IT cluster – together expected to create 10,000 high-skill jobs over 5 years. The city has a budding IT park (Rushikonda/Visakhapatnam IT Special Economic Zone) attracting tech SMEs. The state’s Andhra Pradesh Reboot initiatives (like T-Hub) also pull resources to Vizag.
Infrastructure & Connectivity: Visakhapatnam has excellent transport links. The port provides direct maritime access to global markets. Visakhapatnam Airport (international terminal opened 2017) connects to domestic hubs and Middle East. Rail and road: NH16 (part of Golden Quadrilateral) links Vizag to Kolkata and Chennai, and a new expressway to Hyderabad is planned. Within the city, ongoing metro rail construction will further improve commuting. The combination of port+airport+highway/rail makes Vizag highly connected for a Tier-2 city.
Talent & Education: Vizag draws students from across AP. It has top institutions like Andhra University, GITAM University and regional engineering colleges. The local language (Telugu) is common, but many institutes teach in English. The city’s population is young and literate, and universities provide IT/tech graduates. The Naval and DRDO research presence also attracts skilled researchers, adding to the talent pool.
Key Growth Drivers: Visakhapatnam’s growth is led by its port and defense industries, but now increasingly by IT/tech. The dramatic improvements (port modernization, airport expansion) have set the stage for economic diversification. As trade and logistics expand, services follow; IT and healthcare are emerging sectors. The tradebrains report sums it up: “supportive policies and expanding infrastructure are enhancing Visakhapatnam’s appeal as a seaside business and technology hub”. For entrepreneurs, Vizag offers gateway access (port/airport) with relatively low land costs. In effect, Vizag is transforming from an industrial town into a well-connected tech hub – a classic Tier-2 growth story.
Comparative Insights
All six cities share a shift from traditional bases to diversified, innovation-driven economies. They have attracted significant investment in IT, manufacturing and services, and each reports strong talent-driven growth. For example, Jaipur and Indore leveraged their manufacturing legacies and government support to spark IT clusters, while Kochi and Coimbatore combined existing industries with new GCCs. Chandigarh’s advantage is its high literacy and organized infrastructure.
In terms of scale and costs, Indore and Jaipur are larger (2–3 million each) and serve big internal markets, whereas Kochi and Vizag are smaller geographically but crucial trade centers. Coimbatore and Chandigarh fall in between. Importantly, all have lower operating costs and faster commutes than major metros. For instance, housing is 40–60% cheaper in many tier-2 cities. Connectivity varies: Chandigarh and Kochi have international airports (while Coimbatore’s is domestic-only), and Vizag’s port confers unique logistics strength. Educationally, each city boasts key institutions (IIT/IIM in Indore, MNIT in Jaipur, premier colleges in Coimbatore, etc.) that anchor its talent pool.
Despite differences, a common theme is rapid job creation: hiring activity in tier-2 cities is rising ~25–35% per year. All six are now on par with or outpacing many larger cities in tech and services growth. As one industry analyst observes, “Kochi, Jaipur, Chandigarh and Indore [are] emerging as key growth hubs” for startups beyond the big three metros.
Conclusion
By 2026, India’s fastest-growing Tier-2 cities are no longer on the periphery but at the forefront of economic expansion. Indore, Jaipur, Kochi, Chandigarh (Tricity), Coimbatore and Visakhapatnam exemplify this trend. Each combines improving infrastructure and connectivity with ample local talent – often enhanced by engineering/management institutes – and diversified industries. As a result, they offer lower costs and rising market opportunities for new ventures. For entrepreneurs and businesses, these cities represent fertile ground: not just because of cost or space, but due to dynamic ecosystems. Indeed, as one commentary puts it, “the next big unicorn could just as easily come from Indore, Coimbatore, or [another Tier-2 city] as from Bengaluru”.
In summary, the shift to Tier-2 hubs opens up new avenues for growth. These cities’ trajectories suggest that success will come to those who tap into regional strengths – be it a specialized industry base, quality of life advantages, or proximity to underserved markets. For investors and startups alike, the implication is clear: India’s emerging entrepreneurial wave runs as strongly through its tier-2 heartland as through its traditional metros.
Sources: Industry and government data were used throughout, including analytics and startup reports, local news and district profiles, and expert analyses (see citations).
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