The National Capital Region of Delhi (Delhi NCR), one of the largest metropolitan areas in India, has experienced dramatic industrial development since the 1980s. In the initial stage, industrial estates were developed in some districts abutted on Delhi, especially in Gurgaon, Haryana and Gautam Buddha Nagar, Uttar Pradesh. In recent years, industrialization has occurred in remote areas situated around 100 km from Delhi.
This study picked Alwar District, Rajasthan as a research field for discussing the actual situation at the frontier of the expanding Delhi industrial agglomeration. While Rajasthan State consists of thirty-three districts, only Alwar is included in Delhi NCR. The northern part of the district can be reached in about two hours from Delhi through National Highway 8 (NH8), which has been renovated as a main artery linking Delhi to Mumbai. The industrial development corporation (RIICO) of Rajasthan State Government accelerated the development of industrial estates along with NH8 in the 2000s. Alwar is thought to have the following competitive advantages in terms of industrial location. First, land is much cheaper to acquire for industrial uses than in Haryana. Second, the cost of manpower is also lowest according to the minimum wages of four states constituting Delhi NCR. The author has checked these two points through his survey on companies that are located the Neemrana Industrial Estate developed by RIICO.
The Neemrana Industrial Estate consists of three parts, namely Phases I to III. Phase III is exclusively used by Japanese companies and its land cost has been 2,000 Rs. per square meter in 2011/12. All the surveyed companies cited this cheaper land cost as the most important factor in locating themselves at the industrial estate. On the other hand, they have paid salaries to their staff that are higher than those in Haryana. As Neemrana was a rural, agricultural area just until recently, the supply of both engineers and managers is quite poor. The companies in this industrial area have hired staff mostly from Haryana, paying salaries 10 to 20% higher than those in Haryana. Even the production workers the companies have taken on have been paid wages the same level as those in Haryana. Therefore, the author concluded that labor cost will not be a location factor that triggers the expansion of Delhi's industrial agglomeration.