Mumbai continues to be India’s financial capital. But it has a long way to go to become an attractive start-up destination. High real estate costs could be a major reason for that, said Shiv Sena MP Milind Deora.

Speaking on the sidelines of an event hosted by Mumbai-based startup Workverse, Deora said, “I will also be discussing this issue with the Maharashtra Chief Minister. It’s very important that we have lower real estate prices. This is very critical for attracting more start-ups to the Mumbai Metropolitan Region (MMR).”

Deora entered the Rajya Sabha in April this year, less than three months after switching over from the Congress, which he represented in Lok Sabha from 2004 to 2014. The two-time Mumbai South MP also served as the junior IT and Shipping minister between 2011 and 2014.

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The high cost of real estate in Mumbai has once again become a topic of discussion after reports stated that quick commerce startup Zepto will be moving to Bengaluru to save costs. A news report quoted a Zepto spokesperson saying that the move will help save ₹40-50 lakh each month.

A recent Knight Frank India report reiterated that Mumbai continues to have the most expensive real estate, with prices rising four percent in the first half of 2024. An Anarock report further showed that the average price of real estate in the MMR has risen from ₹10,610 per square foot to ₹15,650 per square since 2019.

Deora told CNBC-TV18 that the state government must think of providing real estate-related incentives to entrepreneurs to make Mumbai a more cost-effective start-up hub.

“Maybe if an entrepreneur is buying a property and is employing a certain number of people, the government could waive off stamp duty. This is an idea that the Maharashtra government can tinker with,” he said.

Lowering real estate prices will hold the key to the state government’s ambitious plan to expand Maharashtra’s startup portfolio from 8,300 to 50,000 in the future. Notably, the government has already recognised over 5,000 startups since 2023.

Mumbai, which along with rest of the state goes to Assembly polls in October-November, boasts of the third-largest ecosystem in India after Bengaluru and Delhi-NCR. Nevertheless, Mumbai faces the popular perception of being a city of ‘old money’ and big businesses. This has hampered its ability to develop a vibrant startup culture like Bengaluru.

“Cities like Bengaluru and Hyderabad have developed in the last few decades on the back of the IT-enabled boom. So, the governments there are far more responsive to start-ups than perhaps here in Mumbai,” Deora said,

Arguing that there is a need for a major cultural change in Mumbai and Maharashtra, the former minister batted for a dedicated ministry or department for the start-up community.

The rise of the GIFT City in Gujarat is also being seen a challenge for Mumbai’s pre-eminence as a finance and fintech hub. Founded in 2015, the GIFT City is India’s first International Financial Services Centre (IFSC) and offers several concessions, incentives, and legal relaxations to rival Dubai and Singapore.

But Deora seemed optimistic about Mumbai’s prospects, arguing that India’s vibrant economy is now large enough to have two IFSCs.  “The next obvious choice is Mumbai. I am working with the state & the Centre on this and I hope that Mumbai will get an international base,” he said.

Deora, a votary of projects like the Atal Setu and the Coastal Road, counted two major advantages that the city offers to startups: women’s safety and cosmopolitan culture.

“Mumbai is a safe city for women.  That’s something we need to build on. Moreover, the city has a vibrant entrepreneurial culture that sustains and encourages investments,” he said.

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