Synopsis: Indian Tier 2 and Tier 3 cities are emerging as new hotspots due to infrastructure upgrades, upcoming IT parks, manufacturing and logistics sector. India’s momentum is shifting beyond tier 1 metros, this article discusses the cities which are going to become the next future hotspots.
The Indian Tier 2 and Tier 3 cities are rapidly transforming into new centers for economic activity. Due to improved infrastructure, booming IT and industrial corridors, smart city initiatives, expanding airports and a young talent pool. Smaller cities like Coimbatore, Thiruvananthapuram, Visakhapatnam, Lucknow, Jaipur, and many more cities are now becoming powerful engines of growth.
Top Emerging Tier 2 and Tier 3 Cities in India Turning into Major Hotspots
1. Coimbatore (Tamil Nadu)
Key Reasons for growth:
- Coimbatore district recorded a 14.42% surge in revenue collections from property registrations.
- A large-scale township development of 714 acre project known as kovai hills project for estimated projection of Rs. 707 crores.
- AI CoE is an 18 acre project of 2 million sq. ft. which is being positioned as a startup hub.
- Coimbatore is positioned as an AI and tech startup hub, it has recorded the highest land deals in H1 2025.
2. Thiruvananthapuram (Kerala)
Key Reasons for growth:
- There is a strong residential real estate sector emerging in Thiruvananthapuram.
- Upcoming data center park of 38,207 sq. ft. also new technoparks are being developed.
- A Fintech startup in Thiruvananthapuram region launched an AI solution for detecting fake gold loan frauds.
- Industrial park of 7.48 acres at Thonnackal in Thiruvananthapuram was announced in May 2025.
3. Visakhapatnam (Andhra Pradesh)
Key Reasons for growth:
- Google and AdaniConneX announced plans to build a major AI data center campus of about $15 billion over 5 years.
- K Raheja Corporation got approval for a Rs. 2172.28 crore project on 27 acres in Madhurawada.
- NCL Industries Ltd commissioned a new cement grinding plant at Thallapalem near Anakapalle, it is of 660,000 tonnes per annum capacity on 40 acres and with projected investment of Rs. 250 crore.
- A major coastal erosion mitigation project of Rs. 222 crore was approved for a 30 km stretch.
4. Lucknow (Uttar Pradesh)
Key Reasons for growth:
- Lucknow saw a approx. 48% increase in housing sales value in Q1 2025 in the tier II city market.
- In May 2025 The Uttar Pradesh State Industrial Development Authority executed 13 mega plot allotments.
- Sify infrastructure to build a data center in Lucknow, the state has earmarked Rs. 10,732 crore to develop lucknow as India’s first AI CIty under the IndiaAI Mission.
5. Indore (Madhya Pradesh)
Key Reasons for growth:
- The Indore development Authority board approved selling 600 flats, 40 shops and 24 plots to raise revenue and also approved infrastructure works like bridges and elevated corridors.
- The RackBank, an AI infrastructure startup has secured a land in Indore for data center operations.
- The Madhya Pradesh Industrial Development Corporation announced an IT Park 4 a 70,000 sq. ft. office space to be offered on a 30 year lease.
Also read: Top 5 Indian States Offering Land Incentives for Semiconductor Projects in 2025
6. Nagpur (Maharashtra)
Key Reasons for growth:
- The Nagpur Metropolitan Region Development Authority is acquiring 1710 acres on the outskirts for an international business and finance center project which has surged the land rush, the land value is of Rs. 2 crore.
- The Maharashtra government has announced a data center park to be set up in Nagpur which will accelerate the digital infrastructure economy.
- Nagpur is emerging as India’s defense and aerospace manufacturing facility within the MIHAN SEZ.
7. Kochi (Kerala)
Key Reasons for growth:
- The state government announced phase III of Infopark on 300 acres around Kizhakkambalam / Kunnathunad with a land pooling model. Phase iv campus of 33.5 acres of land in Irumpanam with projected cost of Rs. 3000 crore.
- A tech township of Rs. 25,000 crore with direct employment of 2,00,000 jobs and indirect employment up to 4,00,000 jobs.
- Logistics and Industrial parks by Adani ports & SEZ Ltd at Kalamassery Kochi also by Panattoni in partnership with Edayar Zinc Ltd.
- IBM launched an ecosystem incubation centre in Kochi to support early stage ventures, mentorship, PoCs, hackathons, deep tech startups.
8. Bhubaneswar (Odisha)
Key Reasons for growth:
- The Odisha University of Technology and Research in Bhubaneswar is setting up 2 centers of excellence for design, AI and robotics to be operational by 2026 March.
- The central government announces a Rs. 7000 crore plan for developing Odisha as an IT hub.
- The central cabinet approved the 2 major semiconductor units in Odisha at info valley in Bhubaneshwar by SiCSem Pvt ltd and 3D Glass Solutions Inc.
Conclusion
These 10 cities have a powerful shift in India’s development model with emerging metros, airport and industrial corridor expansion which are thriving for business, innovation, real estate and employment ecosystem. These cities are potential for long term growth, destinations for investors, corporates, entrepreneurs and new age professionals.
Written by Soumya M