India’s employment geography looks oddly narrow for a nation of 1.4 billion people. Whether it’s tech in Bengaluru, automotive in Pune, finance in Mumbai, or consulting and startups in Delhi-NCR, just a handful of cities dominate the country’s high-value employment map. Together, these four metros attract most of India’s formal jobs, venture capital, and advanced industries, turning them into magnets for both opportunity and migration.
But this hyper-concentration raises a hard question: Can a nation of India’s scale — and with its vast demographic dividend — depend on a few cities to generate most of its formal employment?
The answer, increasingly, is no. Over half of India’s formal sector jobs are concentrated in fewer than ten cities, according to CMIE and NITI Aayog estimates. Bengaluru alone hosts nearly 38% of India’s tech workforce, while Mumbai anchors almost 70% of financial services employment. This imbalance has created urban ecosystems that are both overworked and overstressed. Bengaluru’s infrastructure, designed for six million residents, now serves more than thirteen million. Rents in Pune have surged by up to forty per cent since 2022, and Delhi’s commuting times continue to climb. Meanwhile, job seekers from the Hindi heartland migrate to these saturated metros, amplifying regional disparities rather than reducing them.
This is not merely an issue of congestion—it is a story of missed regional potential. Eastern and northeastern India contribute less than 5 percent of the nation’s startup formation or formal employment, despite having abundant human capital. The urban-rural and regional divide in job opportunities continues to widen. If left unchecked, this imbalance could undermine India’s long-term growth, restrict social mobility, and strain the very cities that drive its economy today.
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Other major economies have confronted similar challenges, but they made deliberate choices to decentralize opportunity. China, for instance, pursued a polycentric employment model in which different cities evolved distinct industrial identities—Shenzhen for tech and innovation, Guangzhou for manufacturing, Beijing for policy and research, and Chengdu-Chongqing for new-economy services. This distribution was not accidental; it was enabled by infrastructure-first industrial policy, including high-speed rail, logistics corridors, and special economic zones that connected smaller cities to global supply chains. Today, China has more than 285 cities with populations exceeding one million, most of which contribute meaningfully to the national GDP.
The United States followed a similar path. While New York remains synonymous with finance and San Francisco with tech, American employment strength rests on regional clusters: Austin for startups, Seattle for aerospace and digital innovation, Chicago for manufacturing, and Atlanta for logistics and fintech. Federal investment in universities, R&D, and transportation networks helped create self-sustaining job ecosystems that balanced national growth. The lesson for India is clear: economic dynamism strengthens when employment is spread across multiple centers rather than locked into a few urban cores.
At first glance, India’s latest Periodic Labour Force Survey (PLFS) 2023–24 seems to suggest that employment conditions are improving. The national unemployment rate, measured on the “current weekly status” basis, fell slightly from 5.4 % to 5.2 %, according to the Ministry of Statistics and Programme Implementation. However, a closer look reveals a more complex picture. The Labour Force Participation Rate (LFPR)—the share of working-age individuals either employed or actively seeking work—dropped from 56.2 % in 2024 to 55.1%, while the Worker Population Ratio (WPR) hovered around 52.2% from 53.5 % in 2024..
These figures indicate that while fewer people are being classified as “unemployed,” it may be because fewer people are actually participating in the job search. A stagnant LFPR often signals hidden unemployment, where discouraged workers stop looking for jobs altogether and therefore fall out of official statistics. The issue is even more acute for women: India’s urban female LFPR remains in the low 30 % range, far below that of other G20 economies. As The Times of India recently noted, India’s seemingly improving jobless rate “hides cracks beneath the surface”—including rural underemployment and urban participation fatigue.
If India’s labour market progress is to be more than statistical, it must be geographically and qualitatively broad-based. The country needs to expand its employment map beyond a few overburdened metros. Cities such as Hyderabad, Ahmedabad, Chandigarh, Coimbatore, Indore, and Bhubaneswar already show potential. Hyderabad’s strength in aerospace and IT, Coimbatore’s MSME-led manufacturing ecosystem, Indore’s reputation as India’s cleanest and fastest-growing startup city, and Ahmedabad’s textile and fintech expansion illustrate what’s possible when regional economies are empowered. EY India projects that these emerging hubs could collectively account for a quarter of new job creation over the next decade if policy support and infrastructure keep pace.
Several policy levers already exist to catalyze this shift. The Delhi–Mumbai Industrial Corridor, Chennai–Bengaluru Industrial Corridor, and PM Gati Shakti logistics framework can connect smaller cities to national and global value chains. The Digital India mission is improving connectivity and digital infrastructure, while state-level initiatives on skill development and startup funding are beginning to bear fruit. The challenge lies in coordinated execution—aligning infrastructure investment, skilling programs, and incentives so that mid-sized cities become sustainable job magnets rather than satellite suburbs.
A critical part of this transformation will be the empowerment of micro, small, and medium enterprises (MSMEs). India’s 63 million MSMEs—largely located outside the major metros—employ more than 110 million people and contribute nearly 30 % of GDP. Targeted credit expansion, digitalisation, and export facilitation can turn clusters like Tiruppur, Rajkot, and Ludhiana into regional job engines. In a country where formal employment remains heavily urban-centric, strengthening MSMEs is both an economic and social imperative.
The path ahead requires deliberate decentralization. Incentivising industries to locate beyond the top five cities, investing in university–industry linkages in smaller metros, and designing urban infrastructure that grows with—not behind—employment demand are essential steps. Equally important is improving women’s workforce participation and ensuring young people in smaller cities have access to meaningful skilling pathways.
India’s growth story will be incomplete if it remains confined to four cities. Distributed prosperity is not just equitable; it is strategic. As China and the United States have shown, when jobs spread, so does innovation, stability, and national resilience. For India, the next decade offers a singular opportunity to create a dozen vibrant employment hubs—each leveraging its local strengths, powered by modern infrastructure, and integrated into national value chains. Only then will the country’s demographic dividend begin to yield its full economic promise.
