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India’s top-ranking status in the field of basic research came in for mention at the India Eco Summit held recently, where the panelists discussed whether, and how, India could become an innovation hub in the near future, given India’s strengths in science and tech and research and development. The country made a significant stride in science and technology with Indian researchers succeeding in sequencing the entire genome of a human being. The genome sequencing was undertaken by the Institute of Genomics and Integrative Biology, part of the Council of Scientific and Industrial Research (CSIR). In another development that would have a bearing on innovative science and technology prospects for Indian companies—on the sidelines of the climate change conference at Copenhagen, India’s proposal for a global network of innovation centres for climate-friendly technologies received wide consensus.
Leading manufacturers of automobiles in India, posted record monthly sales for the month of November 2009, even as car makers and two-wheeler companies improved on their sales posted in earlier months. Two of the leading manufacturers of automobiles in India, Maruti Suzuki and Hyundai Motor India reported record monthly sales of 87,807 units and 55,265 units respectively for the month of November 2009. Major manufacturers of automobiles are seeing their India operations contribute significantly to the company’s global operations. For example, Hyundai’s India subsidiary contributes between 15 per cent and 20 per cent to the company’s global turnover.
India’s infrastructure segment has received a boost with representatives from the Power Grid Corporation, the India Infrastructure Finance Co Ltd (IIFCL), the World Bank and the Government of India, signing loan agreements for projects of a total value of US$ 4.2 billion in the month of October 2009. In another fillip to the country’s infrastructure that is certain to speed up infrastructure projects through the route of public-private partnership, the Asian Development Bank (ADB) has decided to provide close to US$ 700 million in loans as part of the second India infrastructure project financing facility.
According to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, India heads the top real estate investment markets for the year 2010. The report, which is based on the views of over 270 international real estate professionals, revealed that India, particularly the Indian cities of Mumbai and Delhi were viewed as good destinations with residential properties seen as more attractive sectors. ICICI Bank, a leading private bank, has stated that it was focussing on the home loans segment on the back of a recovery in the real estate segment. HDFC, a top lender of home loans, has said that it expects loan disbursals in the housing sector to remain strong in the current fiscal (FY 2010). HDFC Vice-Chairman and Managing Director, Keki Mistry, said, “Loan disbursals (in the housing sector) remain very strong. We expect credit growth in excess of 20 per cent.”HDFC Bank, has for its own part, made news in the banking system. HDFC Bank has been named the strongest bank in the Asia-Pacific region, in a survey conducted by Asian Banker, which provides information for the financial services industry. Other Indian banks that featured in the ranking include Punjab National Bank (PNB) and Union Bank of India.
The healthcare sector in India is projected to grow to US$ 77 billion mark by 2012, up 23 per cent from the current size, according to a recently released study. The growth in the healthcare sector in India would come on the back of growth in healthcare facilities in the public and private sector as well as growth in medical diagnostic and path labs, as well as growth in the medical insurance sector. The Indian life insurance industry is on a high growth trajectory, posting a double-digit growth figure of 35.7 per cent year-on-year in October 2009, on the back of high inflows in premiums of the first year.
Overall, these sectors reflect the socio-economic conditions in the country the most. With rural spending increasing both by the government and individuals, these sectors are likely to experience growth in the range of 10-18 per cent in the coming years and increase four times over in the next 10 years according to a recent industry research report.
Bullish rural growth plans of major fast moving consumer goods (FMCG) players are helping increase growth.
Amit Burman, Vice Chairman, Dabur India, agrees: "Rural India accounts for almost 40 per cent of the industry’s sales. The government’s decision to extend the loan waiver scheme in view of the delay in monsoons and offer subsidised loans (at 6 per cent) for farmers who have paid their dues in time would put more money in their pockets. This move would go a long way in giving the rural economy and consumerism a big boost."
Pinakiranjan Mishra, Partner & Industry Leader, Retail & Consumer Products Practice, Ernst & Young, concurs: "This means that a lot of the income in the hands of rural consumers and this will go towards buying consumer products."
According to M. S. Banga, president (Foods, HPC) of consumer products giant Unilever, the government's focus on stimulating rural demand and all the measures to put money in the hands of consumers will go a long way. "We are doing well as a nation and from here on, we can only look upwards. Consumption-led focus is a great way to get going. We must remember not many geographies are seeing the kind of growth which we are seeing," said Mr Banga.
Consumer electronic majors, such as LG, Samsung, Godrej and Philips, also expect their businesses to strengthen. These companies are working out strategies and products specifically addressing the market, apart from focussing on adding strength to their distribution network there. Samsung plans to expand its sales channel by 25-30 per cent in rural India. Meanwhile, LG has outlined plans to invest around US$ 40 million towards development of entry-level products targeted at rural markets.
Presently, the urban markets account for around 50 per cent of sales in the Rs 25,000-crore consumer electronics industry, tier-II and -III towns for 30 per cent from and rural India for the balance 20 per cent.
No wonder, the consumers are all out to buy and buy more, and enjoy spending for a change.
Current events and happenings in the country are leading us to believe that a recovery of sorts is occurring, boosting the economic morale in India.
Amongst the various Indian industries that have been successful in bucking the global contagion and are showing good numbers are the Indian telecom, banking and biotechnology sectors. The country added over 8 million subscribers during May 2009, taking the total GSM subscriber base to over 30 million, registering a growth of 2.78 per cent. The country’s largest telecom operator, Bharti Airtel that reached the 100 million subscriber mark (fixed line and wireless) achieved a 2.91 per cent growth in its wireless subscriber’s base taking its total wireless subscribers’ count to 99.5 million. Vodafone-Essar, the second largest GSM operator in the country registered a 3.55 per cent growth in its subscriber market share, adding further 2.5 million subscribers.
The banking sector especially public sector banks did well enough to garner ample credit and deposits on the back of increased economic and robust market activity. In 2008-09, total advances grew at 17.3 per cent while total deposits grew by 19.8 per cent. Spending on infrastructure and the new fiscal reforms are likely to propel further growth.
Mr. Philip Kendall, Senior Sector Manager (International Biotech and Pharma) with the United Kingdom Trade and Investment arm recently observed, “India has a relatively young biotech sector and all the ingredients for growth, such as quality services and businesses”. This is indicative of the milestones that the biotech industry has begun to achieve, what with US-based and European biotech companies wanting a pie in the sector to not only grow but to also buck globally difficult times.
The textile industry has in the meanwhile found a savior in form of the newly inducted textiles Minister, Mr. Dayanidhi Maran, who stated that “considering the current developments and technological advancement, it is crucial to evolve a National Fiber Policy. My priority is to get some relief for the industry in the short term. Once the industry picks up, the rest will fall in place.”
The perfume industry is witnessing an upheaval with the entry of Giorgio Armani, one of the top luxury apparel and accessories brands, which recently launched its first ever ‘super-luxury’ range of Prive perfumes in India in collaboration with L’Oreal International. It is scheduled to open 10 outlets offering perfumes in the luxury segment across Delhi, Mumbai and Bangalore out of which six will come up by May end. The company will be selling a wide range of eighty fragrances except for its super premium Prive range in Lifestyle and Shopper’s Stop stores.
Prime Minister Dr Manmohan Singh was back from the G-20 summit held at London recently with a smile. The outcome has been satisfactory, he said. President Obama, in his meeting with the PM, had credited Dr Singh with India’s growing financial stature in the world economy. Obama described the PM as a "wise and marvellous" man at an individual conference. President Obama even hailed India's "high stature" because it had "unleashed economic forces" and said a lot of it had to do with "the wisdom of Dr Singh".
Dr Singh’s efforts along with the other leaders at improving the economic climate seem to be paying off. According to Dr Singh, India too had provided a fiscal stimulus of about four percent of its GDP ie., approx. Rs 1,20,000 crore in 2008-09. This will help the country's growth rate to reach a little less than seven per cent, comparatively higher than most other economies. "We hope to be able to achieve a similar growth rate in 2009-10, with continuing reliance on monetary and fiscal policy. Active contra-cyclical policy must be a priority item on our agenda and global markets are looking to see if we are united on this issue," he said.
The agenda at the summit concluded with pumping of US$ 1.1 trillion into International Monetary Fund for providing stimulus for the revival of world business, removal of protectionist measures raids on tax havens and strengthening the global financial system through supervision.
Dr Singh reaffirmed India’s commitment to the said agenda and promised that more free trade agreements would be arrived at with countries. This would facilitate setting up of businesses in India and thereby improve the foreign direct investment flows. Recent industry research by IDC too reveals the growing optimism of Indian Chief Information Officers (CIOs) on bucking the economic slowdown and rejuvenating the economy earlier than anticipated.
After the announcement of the fiscal stimulus packages, the first of which was unveiled in December 2008, the Indian economy has started recovering. Changes in government policy with regard to foreign direct investment, among others, have changed the economic climate. Cabinet secretary K M Chandrashekhar said "I think we are seeing the first clear signs of a turnaround. The spending on flagship and infrastructure programmes and steady hikes in MSPs for wheat and rice seem to have kept the economy afloat, driving demand," he said.
Industry research reveals the following sector trends:
Cement: According to industry resources, the cement sector has grown 9.97 per cent in December 2008 as compared to November and the year on year increase is 11 per cent. Cement and steel are seen as key drivers and with the construction sector, and have a significant impact on the growth sentiment.
Automobiles: According to industry research, in January 2009, the passenger vehicles sector showed a 32 per cent rise over December 2008 whereas the increase for commercial vehicles is 23 per cent over a similar time frame. The sector has been attracting investments, especially foreign direct investment from companies such as Mercedes Benz.
FMCGs: The trends in this sector reveal that the sector has been recording growth. There is a record growth in year on year terms at 26.4 per cent for the quarter ended December 31, 2008, according to a top bureaucrat.
It’s official ! India is happening. With an economy growing at the rate of 9 per cent, business opportunities in India are increasing more than ever before. So much, so that Investors around the world are making a beeline for doing business in India. The FDI Confidence Index 2007 by A T Kearney shows India as second most attractive destinations for foreign direct investment.
Obviously, opening up of the market in the beginning of the nineties is paying dividends. Higher income generated at the bottom of the pyramid has fuelled the high octane growth of business opportunities in India across all sectors.
Lion’s share of the business opportunities in India exists in the knowledge intensive industries like, Information Technology. Its enormous talent pool available at a reasonably low cost helps India to edge out the competition. According to a NASSCOM-Deloitte study, this sector has contributed 5.2 per cent of India’s GDP in 2007.
Some other sectors that offer maximum business opportunities in India are:
Telecom: Five leading telecom companies in the world have already invested large amounts to cash in the business opportunities in India’s telecom market. The sheer population of India reflects the growth potential of the segment.
Oil and Gas: With a 25-50 per cent lower capital cost alongside the strategic location on the route of Middle East crude for East Asian and Pacific-rim markets India is fast emerging as the global hub for oil refining.
Infrastructure: Growing at a rate of 8.6 per cent (2006-7), this segment offers tremendous business opportunities in India.
Retail: India tops the AT Kearney's annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment.
Apart from the above, huge business opportunities in India lie the sectors like, financial services, healthcare and real estate.
In the post reforms period, setting up a business in India, is not a worry at all. The elimination of license raj has been able to cut off bureaucratic red tape to much extent. The liberal regime has shaped up an investor friendly economic climate over the years.
