As services sector started growing over manufacturing and agriculture, lack of employment opportunities, career growth and crumbling infrastructure in India’s smaller cities and towns drove country’s youth and labour to tier 1 cities. However, latest trends indicate economic revival and better growth opportunities as tier 2 and 3 cities in recent years making them next big markets for companies. In the 2010s, the overcrowding, pollution and high cost of living in tier 1 cities was compelling retiring people to move out to tier2 and 3 cities which offered better life. However, with increased public investment and better telecom services availability, these cities have become lucrative with higher captive consumption forcing more people to stay back and even return from tier 1 cities. People are investing in retirement properties in the tier 2 and 3 cities. Start-ups find these cities attractive as the initial costs are much lower, skilled personnel and their retention are affordable, and local authorities a lot friendlier than tier 1 cities. The co-working companies have expanded into smaller towns making it easier for start-ups to start functioning without heavy initial investment. Internet penetration in India helped in rising trend of smaller cities, improvement in connectivity has made these smaller cities more attractive. Growing consumerism also attracted retail and supermarket chains to open modern retail stores. Opening of malls and multiplexes, pubs and fast food restaurants made people never feel like missing on big city charms. Launching of delivery services by ecommerce players and cab hailing apps narrowed the service facilities enjoyed so far only by big city residents. The consumption boom led by these cities in all spheres make them next growth engines of India.

Keywords: Tier 2, Tier 3, E-Commerce, Internet Penetration, Consumerism.