That changing mindset is also reshaping how developers and governments think about industrial infrastructure | Photo Credit: Getty Images

The debate over Karnataka’s proposed AI City in Bidadi extends far beyond a single 9,000-acre project. It raises a larger question about the future of industrial development in India: are traditional Special Economic Zones (SEZs) and industrial parks gradually giving way to integrated economic cities?

The answer, increasingly, appears to be yes.

Karnataka alone has unveiled three large integrated developments in recent months — a 9,000-acre AI City at Bidadi, the 5,800-acre KWIN City and the 1,000-acre SWIFT City — collectively spanning nearly 16,000 acres. Similar models have already emerged elsewhere, from Gujarat’s GIFT City and Dholera to integrated economic zones in China, Vietnam, the UAE and Saudi Arabia, where governments are packaging industry with housing, schools, hospitals and commercial districts instead of offering standalone industrial estates.

The shift reflects a fundamental change in what global investors and occupiers expect.

“The SEZ model delivered meaningfully on its original mandate of attracting foreign investment and boosting exports. That foundation is precisely what makes the next phase possible,” said Ram Chandnani, Managing Director, Leasing, CBRE India.

According to him, companies establishing Global Capability Centres (GCCs), advanced manufacturing facilities and research hubs are no longer evaluating locations solely on infrastructure or incentives. Talent attraction and employee experience have become equally important.

“Talent retention is now a board-level concern. The conversation has shifted from industrial efficiency to urban livability,” Chandnani said.

That changing mindset is also reshaping how developers and governments think about industrial infrastructure.

“Residential, social and commercial infrastructure are no longer value additions—they have become critical differentiators,” said Anuj Puri, Chairman, ANAROCK Group.

Integrated townships also offer a stronger investment proposition than conventional industrial parks. Mixed-use developments generate multiple revenue streams across offices, housing, retail and hospitality, while the surrounding ecosystem often drives sustained land value appreciation over time.

For occupiers, the appeal is equally compelling. Beyond office space, companies increasingly want campuses where employees have access to quality housing, healthcare, schools and retail within the same ecosystem. “The question global occupiers ask today isn’t just how much space costs. It’s whether they can attract and retain the right people there,” Chandnani said.

Yet Karnataka’s ambitious pipeline also raises questions about scale.

While AI City is positioned around deep technology, KWIN City as a knowledge cluster and SWIFT City around startups and fintech, Puri cautioned that Bengaluru’s existing infrastructure challenges—from traffic congestion and water shortages to weak last-mile connectivity—cannot be ignored.

However, Puri cautioned that while Bengaluru’s long-term growth story supports the state’s vision, occupier demand may initially be sufficient for only one or two large integrated economic townships, rather than the more than 15,000 acres of planned innovation, AI, startup and knowledge districts currently on the drawing board.

Elsewhere, experience offers useful lessons.

GIFT City has emerged as India’s most successful integrated economic zone by combining a clear regulatory framework with a focused financial services strategy and years of infrastructure creation before aggressively pursuing investments. Dholera, meanwhile, demonstrates how integrated manufacturing cities can leverage multimodal logistics, renewable energy and large-scale planning to attract industry.

Execution, however, remains the biggest differentiator.

The proposed Bidadi township has witnessed sustained farmer protests, political opposition and legal questions over land acquisition. Such uncertainty can weigh heavily on investor sentiment.

“Large integrated townships are built over 10 to 20 years. Investors need confidence that timelines, regulatory approvals and policy support will remain predictable across governments,” Puri said.

For Chandnani, the lesson is straightforward. Integrated cities require a clearly defined sectoral purpose, regulatory certainty, infrastructure built ahead of demand and political continuity. Without those foundations, ambitious announcements risk remaining little more than masterplans on paper.

If India’s first generation of SEZs helped establish the country’s manufacturing and IT credentials, integrated economic cities could shape the next phase of growth. But unlike industrial parks, their success will depend as much on creating thriving places to live as productive places to work.

Published on June 24, 2026