Why ISB shifted from Mumbai to Hyderabad: Bal Thackeray sought quota, Naidu offered merit

The Indian School of Business (ISB), the country's top institution for business studies, could have been in Mumbai. But Bal Thackeray's quota demand for Maharashtrians, and an offer from Andhra Pradesh CM Chandrababu Naidu, changed its address.

Before Hyderabad became synonymous with the Indian School of Business (ISB), Mumbai was supposed to get it. The financial capital of India had what appeared to be an almost natural advantage. The people building the country's top business school were largely from Mumbai. Its founding board included some of India's biggest industrialists. Land had been identified in Navi Mumbai. Negotiations with the Maharashtra government were underway.

Then came an issue involving Shiv Sena founder, Bal Thackeray.

According to Pramath Raj Sinha, the founding Dean of the ISB, a demand for reservations for Maharashtrian students and employees by Thackeray became a turning point in the school's search for a campus. The tensions surrounding the choice of location finally eased after N Chandrababu Naidu, then chief minister of undivided Andhra Pradesh, made an offer that was "simply difficult to reject". In 2001, the ISB established its first campus in Hyderabad.

In 2022, during the ISB's 20th anniversary, Naidu, who is currently the chief minister of Andhra Pradesh — a state that no longer has Hyderabad on its map — recalled how the ISB was shaped in Hyderabad over a cup of tea. "I sent letters to each of the board members. I garlanded them. And then, I served them breakfast," he said, illustrating how he worked to convince those who initially opposed the idea.

The story is back in the spotlight as clips from Sinha's 2023 podcast, in which he spoke about the episode, have resurfaced online, at a time when the country is witnessing renewed debate over the reservation system following the death by suicide of Sahil Wakode, a second-year BTech student at IIT Bombay.

The founding dean of ISB has recounted the episode on multiple occasions, including in a 2009 interview with Knowledge at Wharton, the business journal of the Wharton School of the University of Pennsylvania, and in a 2023 YouTube podcast.

What began as an attempt to resolve a land-related dispute with the City and Industrial Development Corporation of Maharashtra (CIDCO) eventually sent the ISB board looking beyond Maharashtra, and the destination turned out to be Hyderabad in 2001.

The ISB story is a telling example of how a proposed condition — a quota for admissions and employment — influenced the location of a major institution that could otherwise have been established in Mumbai.

MUMBAI WAS THE FIRST CHOICE FOR ISB

The ISB was conceived in the late 1990s as a new kind of Indian business school, backed by leading Indian business figures and academic partnerships with institutions such as the Wharton School of the University of Pennsylvania and Northwestern University's Kellogg School of Management.

Sinha, who became its first Dean, recalled that Mumbai appeared to be the obvious home.

In an interview with Knowledge at Wharton in 2009, Sinha said most of the school's board members were from Bombay (now Mumbai). "The bias was 'Bombay does not have an IIM. It is the commercial capital. A business school should logically be in Bombay,'" Sinha was quoted as saying by Knowledge at Wharton.

The board included industrialists such as Ratan Tata, Mukesh Ambani, the Bajajs, Mahindras and others. That made the search for land in and around Mumbai relatively straightforward.

The board eventually identified a site in Navi Mumbai. CIDCO, the Maharashtra government agency responsible for planning and development in the region, was to make the land available.

But the negotiations hit a roadblock.

Sinha said the land itself was being offered at an attractive price, but CIDCO added what the ISB side considered exorbitant charges for water, electricity and other infrastructure.

"We said, 'Listen, this is unacceptable,'" Sinha recalled in the interview with Knowledge at Wharton.

At the time, Maharashtra was governed by a Shiv Sena-BJP coalition, with Bal Thackeray, the Shiv Sena founder, wielding a huge political influence. Members of the ISB board believed the problem could be resolved by speaking directly to Thackeray.

That meeting changed the course of the project.

THE MEETING WITH BAL THACKERAY THAT WENT OFF THE RAILS

Sinha recalled that the board members went to meet Thackeray when a large gathering was taking place at his residence, Matoshree. The press was present. According to Sinha, Thackeray spoke publicly about the proposed business school and announced that there would be reservations for Maharashtrians as well as a quota for employees.

In the Knowledge at Wharton interview, Sinha said Thackeray announced "10% reservations for Maharashtrian students" and "50% for employees".

The announcement was reported by mid-day newspaper the following day, and quickly became public.

For the ISB team, this was not a minor administrative condition. The school had been conceived as a merit-based institution with a global orientation. Sinha said its position had always been that admissions would be based on merit, while financial support could be provided to candidates who needed it.

"This was clearly unacceptable to us," he said.

But the board did not immediately abandon Mumbai. The founding dean of ISB said it was still in touch with people close to Thackeray, who suggested that a solution could be found. The ISB team also considered another option — to create a competition. The idea was to show Maharashtra that other states were interested in hosting the institution.

THE SEARCH FOR ISB'S OTHER HOME BEGAN

The school wrote to chief ministers and chief secretaries of several states, asking whether they could provide around 100 acres of land for the proposed business school.

Among the places approached were Gujarat, Kerala, Karnataka, Tamil Nadu, Andhra Pradesh and Haryana, besides Delhi and the National Capital Region (NCR). The exercise was initially intended to put pressure on Mumbai rather than necessarily move the project elsewhere.

But Hyderabad moved quickly. Sinha recalled that the ISB team flew from Bombay to Hyderabad, Bangalore (now Bengaluru) and Chennai on a single trip. Hyderabad was the first stop.

Hyderabad, which was then part of undivided Andhra Pradesh, was led by N Chandrababu Naidu, who was serving his first extended term as chief minister and aggressively pitching the city as an emerging technology, investment and knowledge hub.

Sinha said the board was "completely floored" by the hospitality it received from Naidu.

The CM offered 250 acres for the institution and, according to Sinha, promised to better any competing offer.

"We just knew that this was the right place and the right thing to do," Sinha said.

The decision was subsequently approved by the board.

A 1998 Business Standard report on the selection of a site for ISB said Hyderabad had edged out Navi Mumbai, Bangalore and Chennai after a competitive process. The Andhra Pradesh government and ISB signed an agreement for a 250-acre campus in Gachibowli.

That land, which at the time was largely undeveloped, would eventually become home to one of India's premier business schools.

CHANDRABABU NAIDU'S HYDERABAD PITCH

The ISB decision fitted neatly into Naidu's larger economic vision for Hyderabad.

In the late 1990s, he was trying to position the city as an alternative technology and investment destination. The development of HITEC City and the expansion of the western part of Hyderabad were part of that strategy.

ISB became an important component of the knowledge-economy ecosystem Naidu was trying to build.

Years later, Naidu recalled that he had deliberately pitched Hyderabad as a future knowledge hub to the ISB board. He said he had invited the board members for breakfast and presented his vision for the city.

The institution eventually opened its Hyderabad campus in 2001.

Its second campus came much later, in Mohali, Punjab. Today, ISB operates as one school across two campuses, in Hyderabad and Mohali.

The Hyderabad campus itself has grown alongside the city. The 250-acre site in Gachibowli is now surrounded by the urban landscape of a city that has transformed dramatically since the late 1990s.

It is difficult to separate the ISB story from Naidu's larger effort to use land, infrastructure and institutions to accelerate Hyderabad's economic development, just as it is difficult to separate the Mumbai episode from Maharashtra's longstanding politics around local opportunities and reservation.

WHAT MUMBAI MISSED

The irony is that Mumbai eventually did get an institution carrying the IIM name.

In 2023, the National Institute of Industrial Engineering, or NITIE, in the Powai suburb, was converted into the Indian Institute of Management Mumbai through an amendment to the IIM Act.

That gave Mumbai an IIM, decades after the city had been considered the natural location for one of India's first major private business schools.

Sinha's anecdote has acquired a different resonance today because questions of reservation and regional identity remain politically charged in Maharashtra.

This month, Maratha reservation activist Manoj Jarange-Patil ended a 20-day hunger strike after the Maharashtra government assured him that his demands would be addressed within three months. His agitation has centred on demands including Kunbi certificates and access to OBC reservation benefits for eligible Marathas.

At the same time, Maharashtra has seen a separate political debate over the use of Marathi, including a controversy over making Marathi knowledge compulsory for autorickshaw drivers. Maharashtra Navnirman Sena (MNS) leader Amit Thackeray has also issued warnings against non-Marathi-speaking autorickshaw drivers.

Amid all this, the death by suicide of Sahil Wakode inside an IIT Bombay hostel has intensified the debate over the reservation system.

These are not the same questions as the reservation issue described by Sinha in the ISB episode.

But at a broader level, they sit within the same recurring question in Maharashtra, that how should claims of representation, local opportunity and merit be balanced when institutions are being built or expanded.

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