Bengaluru: Can Communal Tensions Hurt Image of India's 'Silicon Valley'?

Karnataka's capital city is known as the "Silicon Valley of India" or the information technology hub of the country. More than 60 percent of the state’s revenue is generated from the IT sector. The city is home to about 100 unicorns - unlisted companies with a valuation of more than $1 billion.

The Indian state of Karnataka has witnessed a number of controversies over the past 15 months, ranging from a ban on wearing hijabs in classrooms, calls from Hindu activists to not buy goods from Muslim traders, a drive to evict Muslim vendors from temple premises, and many others.

With skirmishes being reported on a daily basis, the country's richest woman, Kiran Majumdar Shaw, who heads Biocon, a leading biotechnology firm, has urged the BJP-led government to "resolve the growing religious divide" in the southern state.

Shaw, in a tweet, urged Karnataka's state chief to resolve the growing religious divide, saying that if incidents of communal violence continue to increase in the city, it would destroy India's global leadership.

India's Tech Hub

Since 2016, Bengaluru has emerged as the world's fastest-growing tech hub, followed by London.

According to the data released by Dealroom.co, an international data analytics company, investment in the city has grown from $1.2 billion to $7.2 billion from 2016 to 2020.

"Karnataka remains the favourite destination for investors", Karnataka's Large and Medium Industries Minister Murugesh Nirani says, brushing away Kiran Majumdar Shaw's concerns about growing communal tensions.

He was echoed by Amit Chaturvedi, a senior business columnist, who says there's no "threat to Karnataka's brand image", adding, however, that the government has to be "cautious".

"Bengaluru is a magnet for tech companies and startups", he stresses.

Is BJP Responsible for Communal Tensions?

However, many analysts believe that these communal issues will be raked up by next year.

"Karnataka happens to be the only state, of the five southern states, where BJP is ruling. In the other states, it is not even in opposition", believes Shekhar Aiyar, a Karnataka-based political analyst.

The BJP first came to power in Karnataka state in 2008 under the leadership of B.S. Yeddyurappa, Aiyar notes.

"The people in the state never voted for the party. But now in his [Yeddyurappa's] absence, the BJP is trying to play its card of religion, caste, etc.", he highlights.

Yeddyurappa resigned last July from the state chief position after politicians rebelled against him.

According to Congress state President D.K. Shivkumar, "If you see the performance of the BJP in the last four years, it's underwhelming."

"The ruling government has been accused of corruption. They failed to handle the COVID crisis. Adding to it, there are bribery allegations against the ministers. Now, they're raking up issues of Hindu nationalism to win an election", he stated.

Is Karnataka Losing Competition to Neighbouring States?

So far, two states -- Telangana and Tamil Nadu -- have openly urged the companies to shift their base from Karnataka if they're not comfortable with the ongoing turmoil in the state.

Seeing an opportunity in the crisis, Tamil Nadu's Finance Minister Palanivel Thiagarajanhis said he would welcome companies who want to leave Karnataka due to the rising communal tensions there.

"IT companies were showing great interest in his state, and many wanted to set up shop in Tamil Nadu", Thiagarajanhis told reporters in May.

Meanwhile, Telangana IT Minister K.T. Ramarao on Twitter has also been seen inviting startups, urging them to go to Hyderabad, saying that Telangana has no social disparity and has better infrastructure.