There has been a recent interest in expanding the focus of deindustrialisation studies to the cities of the Global South. Bangalore, with its long legacy of state sponsored industrialisation, as well as a substantial shift in its economy following economic liberalisation in 1991, presents itself as a suitable case to examine the impacts of industrial transformation. We study the decline of the engineering economy in one of Bangalore’s earliest planned industrial suburbs, Rajajinagar, to understand how industrial restructuring at the city and national scale has affected and reconfigured local economies. Using this case study, we make two main theoretical contributions: one, we bring out shifts at a neighbourhood scale that go beyond the existing literature on neoliberal transformations in Bangalore as well as other Indian cities. Two, the case also allows us to assess the limitations of deindustrialisation as a framework to analyse these changes, and we suggest a modified framework, that of ‘industrial destabilisation’.