Bengaluru's Peenya industrial region is now a hotbed for manufacturing startups

A drone’s-eye view of Peenya, one of Asia’s largest and oldest industrial areas in Bengaluru, will throw up a sprawling, semi-lush area filled with big concrete buildings, covered in colourful tin roofs, constant people movement, and off-boarding and onboarding from the metro station.

The region is home to many large and small manufacturing companies in industries like precision goods, engineering and electrical goods, fabrication products, EV motors, generators, and textile and rubber moulding.

Now, it is also home to many startups. At least 10-20 startups in the manufacturing space, such as Ati Motors, Ethereal Machines, Optimized ElectroTech operate out of Peenya.

Typically, most startups in the city are concentrated in pockets such as Koramangala, Indira Nagar, HSR Layout, Bellandur and Whitefield. However, Peenya's vintage as a manufacturing hub makes it attractive to startups which want to grow in this space.

“For many years, it was a norm that factories should be in the outskirts and head office in the main city areas but Peenya is now creating a holistic ecosystem where there is no need to set up a factory and head office in different places…Talent across junior and senior levels want to work here,” said Saurabh Chandra, cofounder and chief executive officer, Ati Motors.

Chandra’s Ati Motors, founded in 2017, is spread across an acre of land and manufactures autonomous industrial robots that are used by companies in the warehousing, logistics and manufacturing space.

U Sathyanarayana, honorary secretary of Peenya Industries Association (PIA), said: "Micro, Small, and Medium Enterprises (MSMEs) which are less than two years old are startups for us. Peenya has thousands of MSMEs specialising in manufacturing machine tools, aerospace components, and metal 3D printing. Even parts required for a hyperloop prototype were manufactured from Peenya a few years ago" he said.

PIA supports startups and new-age companies in setting up units, guiding them through the registration process, sourcing materials, connecting with financial firms, facilitating land acquisition and more.

Peenya Industrial Association

Attracting startups to Peenya

Sanjeev Gupta, CEO of Karnataka Digital Economy Mission, said "We are now applying some of the key learnings from the Peenya industrial areas model for the creation of technology-focused clusters in Mysuru, Mangaluru, Hubballi to catalyst the growth of the digital economy in Karnataka"

Startup founders Moneycontrol spoke to say that there is a holistic ecosystem in the region, including the growth of ancillary industries around the area. It is the place to find small vendors that help in making certain specific parts for startups and other large manufacturers.

“While we create the machine designs ourselves, there are some machine parts that will be sourced from vendors. That ecosystem for product development and hardware fully exists in Peenya. The talent that does it is so accustomed to this area,” said Kaushik Mudda, cofounder of Ethereal Machines.

Founded in 2014 by Mudda and Navin Jain, Ethereal Machines produces computer numerical control (CNC) machines. These machines are used in milling works, enabling engineers to create prototypes and commercial products.

“We focus on import substitution. So we try to source most of the parts we need from firms in and around our factory. Our vendors and sub-vendors are also increasing their manufacturing capacity because of us, which is great,” Mudda said.

Wise, cost-wise

Startups are seeing a visible cost difference in terms of savings on rentals, electricity and movement of goods.

“We are closing a big Series A round in the coming weeks. One of the main aspects that investors look at today is cost and Peenya has a huge advantage for us. We save at least 10-12 percent of electricity cost by being in an industrial area,” said a founder of a startup, making engineering and electrical goods, on the condition of anonymity.

Peenya helps startups to build frugally, said Ethereal’s Mudda.  “Electricity in an industrial area is at least Rs 1.5 per unit lesser than, let’s say, in a commercial property. Even rentals will come down significantly,” Mudda said.

PIA’s Sathyanarayana also said that land prices are cheaper in the region.

"In fact, the Greater Peenya Industrial Area covers areas in the outskirts like Nelamangala, Dobbaspet, and Tumakuru. While land prices in Peenya range from Rs 5,000-Rs 6,000 per sq ft, nearby smaller towns offer more affordable rates at Rs 1,000 per sq ft for setting up industries,” he said.

Attracting talent to Peenya

The blue-collar workforce is abundant in and around Peenya, and they form at least 50-60 percent of the total workforce requirement of a manufacturing facility.

"Peenya is one of the oldest manufacturing hubs in Asia. The easy access to smaller towns helps to source labour, with workers commuting from places like Tumakuru, Magadi, Nelamangala, Tavarekere, Yelahanka, and Kamakshipalya '' said PIA’s Sathyanarayana.

Now, even the white-collar workforce is travelling to Peenya every day for work.

“People’s imagination of startups is all about fancy offices, glass buildings and cubicles, but when you are working in a company that combines hardware with software, that’s not the place one should be in…Engineers will need a space where they can see what’s happening,” said Ati Motors’ Chandra.

Peenya Industry Metro Station

Chandra also said that, in the last two years, there has been a shift in the mindset of senior as well as younger talent to travel to Peenya to work from offices due to the proximity of the metro station and road connectivity.

“This is not just a blue-collar area now. The Peenya region has expanded. It now hosts R&D workers, software engineers, and senior management employees. This is key to innovation in growing manufacturing startups. You have a better road, Tumakuru Flyover, the Metro is so nearby… These kinds of changes have helped the region grow,” Chandra said.

Employees are travelling from Whitefield and other areas around Whitefield to Peenya for work.

Shop Floor, Ethereal Machines

“Senior talent also doesn’t shy away from coming and working here every day…Most of them live in central Bengaluru. So they don’t shy away from coming to office in Peenya. Some of my very senior team members actually take the metro to come from Whitefield,” said Ethereal’s Mudda.

The Peenya Industrial Area’s popularity is also due to the Bengaluru Metro connectivity (Nagasandra - Silk Institute), proximity to the Bengaluru-Tumakuru Road, Yeswantpur railway station, and the Nandi Infrastructure Corridor Enterprises (NICE Road), which connects Electronics City and Tumakuru Road, etc. Namma Metro's Green line (Nagasandra - Silk Institute) stations like Yeswantpur, Goraguntepalya, Peenya and Peenya Industry on Tumakuru Road have been operational since March 2014.

Peenya is also luring younger employees as the region is seeing development and growth of restaurants and entertainment spots. In fact, Yeshwantpur, which is closer to Peenya, has Orion Mall, where employees often unwind during the weekends.

“The metro is nearby, there are malls and everything that’s needed. I know it is not as hep as a Koramangala or Indira Nagar but things are changing here and it is not like how it was a few years back,” Chandra added.

Sathyanarayana also told Moneycontrol that they have asked the state government to expedite the 25 km Byappanahalli-Yeshwantpur- Chikkabanavara (Mallige) suburban rail corridor.

"We are also demanding an extension of this suburban rail corridor from Chikkabanavara to Tumakuru to help more people to work and commute at an affordable cost," he said.

In close loop with govt, research institutions

Among the other factors that make Peenya attractive are the proximity to niche educational institutions and exhibition centres, avenues for research and knowledge-sharing.

The Ramaiah Technology Business Incubator (RTBI) in Peenya, established in 2018, offers incubation services to novel and select technology startups in various sectors, including IoT, ESDM, Robotics, and Intelligent Systems.

Set up by the Ramaiah University of Applied Sciences, RTBI aims to promote a culture of entrepreneurship among students, faculty members, and interested citizens.

BIEC, or Bengaluru International Exhibition Centre, which was set up in 2007, gives a fillip to startups to showcase as well as to be close to witnessing the latest innovation within their industries.

BIEC is, in fact, a preferred destination for international business exhibitions, trade fairs, congresses, international conferences, seminars and training programmes in India.

“Manufacturing exhibitions in BIEC is an amazing add-on. BIEC is like 30 minutes from my office, which is great, and this kind of cluster ecosystem growth is amazing,” Chandra said.

Also, 3 km into the Nagasandra - BIEC metro section on Tumakuru Road, which is likely to be operational by November 2023, will also benefit the workers in and around Peenya.

Thanks to the Startup India Scheme, there are a lot of arrangements for self-certification near Peenya.

“We are able to stay close to the government. The PIA has been very helpful, we communicated about changes in the regulatory process. There were also a lot of redundant laws that were taken away. It is easier for startups to set up and build in an industrial area,” said the founder of a startup making engineering and electrical goods from Peenya.

The region is also home to CMTI or Central Manufacturing Technology Institute, Industrial Sales Corporation, and several testing labs.

“CMTI is very helpful. We stay very close to the institute and even work with them in a lot of research activities,” Chandra said.

Room for development

Business-to-business manufacturing is slowly becoming the favourite sector for many venture capital firms to invest in. In fact, from just $7.7 million in 2021, pure-play manufacturing startup investments have gone up to $14.7 million in 2023, excluding deals closed by Ethereal in the recent past, showed data sourced from Tracxn

Bengaluru alone hosts about 160-200 manufacturing startups, as per Tracxn's data and around 10-20 are based in Peenya, industry sources told Moneycontrol.

Sources also told Moneycontrol that more startups are mulling to shift to Peenya for its many advantages. However, there is room for development, too.

A startup founder highlighted that there have been some minor disruptions in the area in the recent past, due to power cuts.

“An industrial area should have power 24X7. This is vital to run factories at full capacities. In the recent past, there have been several incidents of power cuts, and we have communicated this to the government as well,” he said.

Another startup founder mentioned that land deals take more time than in commercial areas.

“Being in an industrial area is a great advantage but to secure land here takes time compared to securing land in a commercial space. There are a lot of regulatory and legal processes. At least for R&D purposes, land deals should move faster in line,” he said.

While Tumakuru road has less bumper-to-bumper traffic, compared to Bengaluru's tech hubs like Outer Ring Road, Koramangala, and HSR Layout, Goraguntepalya junction is a major bottleneck in North West Bengaluru.

The MES road flyover, which crosses the busy Yeswantpur-Tumakuru railway line, also faces traffic gridlock. The Tumakuru Road flyover (Goraguntepalya - Parle toll plaza) remains closed for heavy motor vehicles due to ongoing flyover repair work (replacement of old cables and other related work), which is expected to be completed only next year.

Local residents and employees in the area are also concerned about the rising pollution levels, particularly around Peenya. Despite witnessing a real-estate boom after the commencement of Namma Metro, rising air and water pollution remains a concern.

While there is still room for development, several startup founders and industry experts said that Peenya is growing into an ecosystem that will help India bolster its position as a manufacturing superpower.

“For India to be a manufacturing superpower, it is critical that we crack the making of products like precision machines and that’s how we started off our journey…The resources to crack hardware have been established in the Peenya industrial region and it is significant,” said Ethereal’s Mudda.