Summary of this article
Tier-II cities emerge as India’s new growth hubs.
Policy incentives and infrastructure fuel decentralised investments.
Smaller cities now rival metros in economic potential.
The Indian commercial segment has been dominated by Tier-I giants: Delhi, Mumbai, Bengaluru, and Hyderabad, ever since companies scaled in number, space, and branches. However, the situation is changing now.
However, Tier-II cities, which were once considered peripheral and secondary, have now stepped into their own as economically dynamic and independent centres of progress.
According to the CBRE India's Tier-II Cities: Coming of Age report, Tier-II cities like Chandigarh, Jaipur, Lucknow, Indore, among others, are now gaining traction and preferences as investment destinations. These cities have emerged as self-sustaining hubs, creating jobs as well as business opportunities.
Comparatively low rentals, developing infrastructure, access to a skilled talent pool, and being home to manufacturing hubs are some of the factors behind their growth as commercial hubs, according to the report.
Ahmedabad and Indore have become the hubs of manufacturing and tech-led industries. Cities like Jaipur and Lucknow have leveraged their state investments and supported infrastructure.
As of 2025, India's investment surge in Tier-II cities is backed by the state governments, by providing incentives in taxes, rates, and policies, which are driving businesses and investors for the long run. The Union Budget and several state frameworks now encourage companies to expand into these cities through targeted reliefs, such as Goods and Services Tax (GST) reimbursements and lower compliance costs.
Industrial policies in states like Gujarat, Madhya Pradesh, and Rajasthan continue to provide stamp duty waivers, land rebates, and interest subsidies to reinforce manufacturing and start-up diasporas outside of Tier-I cities.
The combined effort of the state and Union government has not just promoted the commercial sale in these cities, but also solidified their position as India's next motor for economic expansion, the report says.
According to the report, the coming decade will likely consolidate this shift.
With the Indian government’s continued push for industrial corridors, smart cities, and state-level startup incentives, Tier-II cities are positioned not as alternatives but as equals in the country’s economic hierarchy, the report added.
“Moving ahead, the coming decade will support this shift with the Indian government's continued push for an industrial ecosystem, smart cities, and start-up incentives. The cities are predicted to drive India's next growth chapter, from 2022 to 2025, and there has been significant growth,” the report further said.
