Investing in Hyderabad: India’s Hub for IT, Pharmaceutical Manufacturing

India Briefing profiles the city of Hyderabad, capital of the southern Indian state of Telangana and a leading destination for service exports, pharmaceutical manufacturing, and aerospace tech R&D.

Telangana’s capital, Hyderabad, is well-known for having robust IT, pharmaceutical, life sciences, and real estate industries. Known as “Cyberabad,” the area has the potential to become the most significant IT hub in India over the next decade.

The city is known for its rich historical and cultural landscape, largely shaped by pre-independence rulers like the Qutub Shahis, Mughals, and Nizams. According to India’s Ministry of Tourism, in December 2023, Hyderabad accounted for 6.2 percent of India’s foreign tourist arrivals (FTAs). Hyderabad is home to renowned historical sites such as Chowmahalla Palace (a UNESCO Asia Pacific Heritage site) and the Salar Jung Museum. The Indian Railway Catering and Tourism Corporation (IRCTC) attracted 200,000 tourists in Hyderabad in FY 2022-2023 with an estimated revenue of INR 260 million (US$3.11 million).

Economic activity

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Telangana’s agriculture, forestry, and fisheries sectors altogether contribute 17.4 percent of the state’s GDP. Manufacturing, construction, pharmaceuticals, and other industrial activity contribute approximately 21.5 percent. Key sectors driving growth are IT, tourism, and education, which account for 61.1 percent.

The Telangana state government has also undertaken massive infrastructure development projects in an effort to compete internationally and draw investment. During the April-December 2023 period, the state attracted US$2.40 billion in foreign direct investment (FDI), of which a significant portion is expected to have been directed towards Hyderabad.

Pharmaceutical industry

Hyderabad is a key player in the pharmaceutical business, ranking first in bulk drug manufacturing in India. The city accounts for about 40 percent of the country’s bulk medicine production, earning the title of ‘Bulk Medicine Capital of India’. With over half of all vaccines produced worldwide expected to be produced in Hyderabad by 2024, the region is also regarded as the ‘Vaccine Hub of India’ and is home to prominent vaccine manufacturers such as Bharat Biotech.

Life sciences sector

Hyderabad has become a premier life sciences hub in Asia, with over 200 companies and 20,000 sectoral professionals. As of 2024, the sector has attracted approximately 900 greenfield investment projects, totaling around US$2 billion.

Genome Valley: India’s top life sciences hub, Genome Valley is a 2,000-acre high-tech business district. The location features leading infrastructure for research, development, and manufacturing. Hosting major vaccine manufacturers and European giants like Novartis and GSK, it offers over 2.5 million sq. ft. of lab space, with ongoing expansion. Ranked #1 in India among organized clusters for life sciences R&D activities, the location makes it an attractive destination for global life sciences ventures.

Medical Device Park: In 2017, the state government established India’s largest Medical Device Park , spanning across 302 acres. It has attracted over 50 companies that have committed an investment of INR 14.24 billion (US$170 million) and created around 7,000 direct jobs. 

Hyderabad Pharma City (HPC): It is the world’s largest pharmaceutical cluster, dedicated to research and manufacturing. Recognized as a National Investment and Manufacturing Zone (NIMZ) by the central government, it is located 25 kilometers from Shamshabad airport. Covering 19,000 acres, HPC employs over 560,000 professionals and offers a streamlined infrastructure, reducing setup times and costs. Expected to attract US$ 9.7 billion in investments, the cluster accelerates growth for life sciences companies and enhances Hyderabad’s global pharmaceutical prominence.

IT sector

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Hyderabad is recognized as the ‘software training capital of India’, playing a pivotal role in training software professionals. The state of Telangana stands out with 31 percent of software exports, mainly centered in Hyderabad. As of 2023, Hyderabad has over 9,05,715 people working in the IT/ITES sector across 1500 companies. In the FY 2022-23, Hyderabad’s IT exports reached INR 2.41 trillion (US$32 billion), making it the second-largest IT exporter in India. This has led to the establishment of prominent IT parks like HITEC City and Mindspace Cyberabad. The city hosts various types of IT companies, including IT, ITES, and computer hardware manufacturers, with major players, such as Google, IBM, Microsoft, Infosys, and TCS.

To further bolster the IT sector’s expansion, the state government has enacted various initiatives and policies. It has set up entities like the Telangana State Industrial Infrastructure Corporation (TSIIC) and the Telangana State Information Technology and Communications Department (T-IT&C) to encourage investments, provide infrastructural support, and streamline administrative procedures, contributing to the industry’s growth and success.

Transport infrastructure

Hyderabad’s transport infrastructure features a well-connected road network and efficient public transportation options. The city’s roads, comprising national and state highways along with the Outer Ring Road (ORR), ensure seamless connectivity to major destinations. Under the Strategic Road Development Program (SRDP), the government focuses on enhancing road infrastructure to ease congestion, employing measures like road widening and constructing flyovers.

The Hyderabad Metro Rail, launched in 2017, stands as the largest public-private partnership (PPP) project in the metro rail sector worldwide. It serves as a crucial mode of transportation, with three operational lines spanning approximately 69 kilometers.

In terms of air connectivity, the Rajiv Gandhi International Airport (RGIA) serves as the city’s primary gateway, located about 24 kilometers from the center. Around 61,058 MT of freight passed through Hyderabad airport in FY ’23, according to data from the Airports Authority of India.

Rail connectivity is also robust, with Secunderabad Railway Station and Hyderabad Deccan Railway Station (Nampally Railway Station) serving as major hubs. These stations connect Hyderabad to various cities and towns across India, facilitating both passenger and freight services.

Overall, the Greater Hyderabad Municipal Corporation (GHMC) and the Hyderabad Metropolitan Development Authority (HMDA) oversee the infrastructure of the city.

Real estate

According to a 2022 Knight Frank’s Wealth report, 467 ultra-high-net-worth persons reside in Hyderabad. With a 21 percent share and an absorption of 4.03 million square feet, the city also placed second in terms of net office absorption in 2023. More than 8.2 million square feet of new office space have been added to the site as of 2023; this is 34 percent of all new office space created in India’s seven major marketplaces.

FDI opportunities in Hyderabad

Hyderabad has emerged as a leading investment destination, attracting a cumulative US$21 billion in FDI since 2014. In 2022 alone, the state of Telangana secured 160 greenfield FDI projects, with Hyderabad accounting for 91.8 percent of the total FDI received.

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Amazon Web Services (Asia Pacific Region-Hyderabad) made an announcement in 2023 committing to boost its investment from INR 200.96 billion (US$2.4 billion) in 2020 to INR 363 billion (US$4.34 billion) by 2030, making it one of the largest FDI sources in Telangana. 

Proactive investment promotion tactics employed by the city have resulted in significant investments, particularly in critical industries, such as biotechnology, medical devices, and pharmaceuticals. Earlier in 2024, it was reported that the state of Telangana had secured over INR 365 billion (US$4.37 billion) in investments from both domestic and foreign parties at the World Economic Forum (WEF) in Davos. Businesses including Iron Mountain and Web Werks signed a memorandum of understanding to invest INR 52 billion (US$622 million) in building data centers, with INR 12 billion (US$ 143 million) going toward a 10MW data center project in Hyderabad with extensive networking.

Hyderabad has received substantial funding from major corporations, further strengthening its position as an investment hotspot. For instance, Microsoft announced a staggering US$1.93 billion investment over the next 15 years to build the India’s largest data center. Similarly, US-based manufacturer Biliti Electric pledged US$150 million to establish the world’s largest electric three-wheeler plant in Hyderabad, a move expected to create 3,000 new jobs. Additionally, the large Swiss pharmaceutical company Ferring Pharmaceuticals invested approximately US$31.3 million to open a state-of-the-art production plant in Hyderabad’s Genome Valley.

Hyderabad is well-positioned to maintain its standing as a major participant in the global economy, drawing more interest from foreign investors and enhancing its reputation as a top location for corporate expansion and growth.

Ease of doing business

In the latest edition of the country’s Ease of Doing Business rankings (2020), the state of Telangana was included in the Top Achievers category. Moreover, in the Export Preparedness Index 2021, Telangana scored a perfect 100 in the Business Environment indicator.

Hyderabad is the city with the highest ranking for ease of doing business, according to the Chief Executive Officer of the industry group Retailers Association of India (RAI), Kumar Rajagopalan, in 2022. Growing per capita income is positive for the retail industry.

Conclusion

Hyderabad has emerged as a key player in the global pharmaceutical sector, with ongoing investments and infrastructure developments positioning it as a potential global hub. The city’s IT sector is similarly robust, contributing significantly to India’s software exports, aided by infrastructure projects like HITEC City and Mindspace Cyberabad, which attract leading technology companies and MNCs. Strong transport infrastructure, including road networks, the Hyderabad Metro Rail, and an international airport, ensures seamless connectivity with the rest of the country and global markets. Proactive investment promotion strategies, a conducive business environment, and growing affluent population make Hyderabad a top investment destination in India.

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