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INDIA
FASTEST GROWING
FREE MARKET DEMOCRACY
IN A GLOBAL ECONOMY
Presentation by:
Kamal Meattle, CEO, PBC-STIP, New Delhi, India
[email protected]
www.pbcnet.com
1
CONTENTS
• THE INDIA STORY
• INDIAN SUCCESS STORIES
• INTERNATIONAL SUCCESS STORIES
• INDIA ADVANTAGE
• BUSINESS OPPORTUNITIES
• BUSINESS OPPORTUNITES FOR PHILIPPINES
• SME : ADDING VALUE
• WINNING ATTITUDE
• ACKNOWLEDGEMENT
2
THE INDIA STORY
3
1947 : Year of Indian Independence
Today’s India is one of the fastest growing Democratic Market Economy,
well on it’s way to be integrated with the world economy
The famous Goldman Sachs report ( Dreaming with BRICs: The Path to
2050 ) states that, among Brazil, Russia, India and China, India will grow
the fastest over the next 30 to 50 years by leveraging its demographic
advantages and through continued development
India’s GDP will exceed Italy’s in 2016, France’s in 2019, Germany’s in 2023
and Japan’s in 2032
INDIA TO BECOME THE 3RD LARGEST ECONOMY IN THE WORLD BY 2032
AND…
THE STORY BEGAN IN 1947
4
India Pre - Liberalization
• Planned Industrial Development
• Industry Licensing and Quotas
• Dominance of Public Sector
• Restriction on Private Investment
• Socialism
• Mixed Economy
5
The New Industrial Policy for liberalization-1991
De-licensing
De-control
• Liberalization of
Industrial Licensing
De-regulation
Broad banding
Abolition of registration
• FERA Liberalization
Liberalization of foreign investment
Liberalization of Technology Import
6
The New Industrial Policy for liberalization - 1991
Abolition of threshold assets limit
• MRTP Liberalization
No MRTP clearance needed for
expansions, mergers
Several industries hitherto reserved
for public sector opened up to private
sector
• Curtailment of Public
Sector
Only eight core industries remain
reserved for the public sector
Purview of Board for Industrial and
Financial Reconstruction (BIFR)
extended to Public sector
7
India Liberalization Stage - Strategies Developed
• Government’s role changed to Regulator from Licensor
• All Licenses Rationalized
• Active participation of private sector
• FDI being Welcomed (100%) - Automatic Route
• Barriers Dismantled & Procedures Simplified
• Indian Industries Actively Investing Abroad
• Bureaucracy - Less Government is Good Governance
• Allowing Market Forces to Govern the Efficient Allocation of
Resources with Minimum State Intervention
• Reducing and rationalising foreign trade barriers
8
Economic Scenario : Post Liberalisation
• India - One of the fastest growing economies in the world
• Average GDP growth (1995 -2005) : 6.2 % per annum
• Average annual growth (1995 - 2005)
Agriculture & Allied
:
+ 2.1 % per annum
Industry
:
+ 6.6 % per annum
Services
:
+ 7.8 % per annum
• Average Per Capita Income growth (1995 - 2005): 3.8 % per annum
• Inflation down to a single digit level continuously for the last ten years
• Foreign exchange reserves increased from US $ 2 b (March 1991)
to US $ 145 b (September 2005)
• Merchandise Exports : +20 % average rate of growth in last three years
• Booming Services Exports from US $ 4.6 b in 1990-91 to US $ 51.3 b in
2004-05
9
Economic Scenario : Post Liberalization
• Balance of Payments surplus (US $ 26 b in 2004 - 05)
• External Debt Service Ratio down from 26.2 % in 1995 to 6.2 % in 2005
• Foreign Direct Investment (FDI) : Average +US $ 5 b pa in the last
five years.
• Foreign Portfolio Investment : US $ 11.4 b in 2003-04 and
US $ 8.9 b in 2004-05
• Reforms continuing and have unleashed dynamic forces –
putting the economy on a trajectory of unparalleled economic
growth in the future
• The Indian Government is working in close co-operation with
industry and trade to mitigate the remaining problems and
constraints
• Broad consensus across the political spectrum on the need for
and direction of the reforms. Some issues still need to be resolved
10
Share Of Services Sector In GDP On The Rise (%)
60
50
40
30
20
10
0
32.2
40.6
27.2
1990-91
43.9
28.1
28.0
1995-96
Agriculture
52.4
48.9
27.2
23.8
2000-01
Industry
27.1
20.5
2004-05
Services
11
Agriculture
India
• the world’s most irrigated land mass
• world’s 2nd largest exporter of rice & 5th largest exporter of wheat
Food production: India’s Ranking in the World
1st
Tea, Milk
2nd
Rice, wheat, sugar
12
Manufacturing
• Rate of growth
2003-04
7%
2004-05
9.2 %
• Diversified base of world class capabilities
• State-of-the-art technologies
• TQM,TPM, Six Sigma & Lean Manufacturing - part of
everyday practice
• Diversified industrial base with supporting ancillary industries
• Overseas acquisitions worth US$ 500 m
13
Services
• Consistent growth
2003-04
9.1 %
2004-05
8.9 %
• Sectors Driving Growth
- ITES
- Healthcare
- Financial Services
- Education
Source:Economic survey, 2004 - 05
14
Average GDP growth - India & the World
Average GDP Growth (1990-2001)
9.5
8.5
7.5
6.5
5.5
4.5
3.5
2.5
1.5
6.2
5.5
4.9
4.7
3.3
2.9
2.9
Brazil
USA
Philippines
Mexico
Indonesia
Thailand
India
S.Korea
2.0
China
Growth (%)
9.4
Source: WDI, World Bank, 2003
15
Rising share of India’s external trade in GDP
Target :
To double share of exports from 0.7 % to 1.5 % of world trade
16
Macro Economic Indicators (2004 - 05)
• Land Area:
3.29 m sq. km.
• Population:
1.09 b
• GDP:
US $ 630 b
• Real GDP Growth:
6.9 %
• Gross Domestic Savings:
28.1 % (2003 - 04)
• Gross Domestic Investment:
26.3% (2003 - 04)
• Per Capita Income:
US $ 580
• Inflation Rate:
6.4 %
17
Macro Economic Indicators (2004-05)
• Exchange Rate:
US $ 1 = 43.75
• Merchandise Exports:
US $ 80b
• Merchandise Imports:
US $ 106b
• Services Exports:
US $ 51b
• Foreign Direct Investment:
US $ 5.5b
• Foreign Portfolio Investment:
US $ 8.9b
• Direct Investment Abroad:
US $ 1.5b
18
INDIAN SUCCESS STORIES
19
Indian MNCs - On a global buying spree
• Number of foreign firms acquired
by Indian companies during
2001 - 03
• Total worth
120
US $ 1.6 b
• India - 8th largest investor in the UK
• No of investments
440
• No of Indian companies with
operations in Singapore
1,441
20
India – Leading The World
• Hero Honda - Largest producer of motorbikes in the world
• Moser Baer - World’s 3rd largest producer of optical media
• Hero Cycles - World’s largest bicycle producer
• Bharat Forge - Amongst the world’s top 3 forgings manufacturers
• UB Group - World’s 2nd largest producer of alcoholic beverages
• Paharpur Cooling Towers - World’s 2nd largest manufacturer of
Cooling Towers
21
India – Leading The World
• Apollo Hospitals - Single largest hospital chain in South Asia
• TISCO - world’s cheapest producer of steel
• Reliance Industries - World’s largest producer of PTA, a chemical
used in textile production
• Mahindra & Mahindra - Amongst top 3 tractor manufacturers in the
world
• Telco - Amongst top 3 truck manufacturers in the world
• Welspun - World’s largest producer of terry-towels
• Gujarat Ambuja - Amongst top 5 cement producers in the world
22
Some Indian Examples Benchmarked with the
Best In The World
23
Success Story of RELIANCE
The Reliance Group founded in 1932, is India's largest business house with
total revenues of over US $ 22.6 b and exports of US $ 3.6 b
It began as a an SME
The Group's activities span exploration and production of oil and gas, refining
and marketing, petrochemicals, textiles, financial services, insurance, power,
telecom and infocom initiatives
The Group exports its products to more than 100 countries the world over
Reliance Group revenue is equivalent to about 3.5 % of India's GDP
The Group contributes nearly 10 % of the country's indirect tax revenues and
over 6% of India's exports
Today, the Reliance Group has one of the largest family of shareholders in the
world
24
Success Story of WIPRO
Wipro was set up in the backdrop of the small town of Amalner in
Maharashtra in 1945
An SME and primarily an oil factory, the chief products were
Sunflower Vanaspati and 787 laundry soap
It was in the early eighties that Wipro made its foray into the Infotech
arena
With this began the Wipro Infotech story
Today, Wipro stands at the firmament, as a trusted and experienced
provider of a comprehensive range of IT services, solutions and
products, worldwide
25
Success Story of BHARTI
Bharti Enterprises has successfully focused its strategy on telecom
while straddling diverse fields of business
It all began as a Small Industry
Bharti Tele-Ventures is today acknowledged as one of India's finest
companies, and its flagship brand 'Airtel', has over 12 million customers
across India
Recently, Bharti has successfully launched an international venture with
EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh
Agri- products exclusively to markets in Europe and USA
26
Success Story of DR.REDDY’S
Dr.Reddy’s Laboratories was founded in 1984, with a capital of US $40,000 in cash and
US $120,000 in bank loan
In fact, it is this spirit of entrepreneurship that has shaped the company to become
what it is today
Today, the company with revenues of US $446 m, in fiscal year 2005, is India’s second
largest pharmaceutical company and the youngest among its peer group
Dr. Reddy’s started its drug discovery programme in 1993 and within three years it
achieved its first breakthrough by out licensing an anti-diabetes molecule to Novo
Nordisk in March 1997
With this very small but significant step, the Indian industry went through a paradigm
shift in its image from being known as just ‘copycats’ to ‘innovators’!
Through its success, Dr. Reddy’s pioneered drug discovery in India
Today, the company manufactures and markets API (Bulk Actives), Finished Dosages
and Biologics in over 100 countries worldwide, in addition to having a very promising
Drug Discovery Pipeline
27
Success Story of BIOCON
Biocon is India's leading biotechnology enterprise
Over the past 25 years, they have evolved from an small enzyme manufacturing
company to a fully integrated biopharmaceutical enterprise, focused on healthcare
At Biocon, success has been their ability to develop innovative technologies and
products and to rapidly leverage them to adjacent domains
This unique "integrated innovation" approach has yielded a host of patented
products and technologies that have enabled multi-level relationships with their
global clientele
As India's first and leading biotechnology company, Biocon extends its support to
numerous community outreach and corporate citizenship initiatives with special
concentration in the areas of healthcare, education and environment
The Biocon Foundation, set up in 2004 has recently launched Arogya Raksha
Yojana, a unique health initiative for rural India
28
Success Story of Paharpur Cooling Towers
In its over four decades of existence, Paharpur has come to be acknowledged as the
pioneer in the Indian cooling tower industry
It all began as a small industry with a capital of US $ 11,000
At today's selling prices, Paharpur has sold cooling towers valued at over US$ 1 b
If these cooling towers were all working together, they would be able to cool more than 265
million liters of water every minute or 382 b liters in 24 hours
The Paharpur team consists of highly qualified engineers & professionals with over 1,000
man years of experience in the field of cooling tower application engineering, designing,
erection and trouble shooting
Paharpur has pioneered several improvements in cooling tower design and operation and
has emerged as one of the largest cooling tower manufacturers in the world, with exports
to more than 40 countries
29
Success Story of Standipack
A successful SSI unit set up in 1980, in NCR, Delhi
• It is the largest lube oil flexible packaging company in India producing
packaging materials, machinery and systems and doing contract packaging
• Produces /contract packages over 300 m packages a year, for the oil
majors in Delhi, Kolkata, Chennai and Mumbai
• Patents in most countries of the World
30
Success Story of Paharpur Business Centre &
Software Technology Incubator Park
• Began operations in 1990 in New Delhi, with an equity capital of Less than
US $ 15,000
• Current net worth of US $ 10 m
• Provides a suite of 28 services, employing 450 persons
• Has Fortune 500 companies, MNC's and corporate, as clients
• Has five international certifications, ISO 9001, ISO 14001, SA 8000, OHSAS
18001 and HACCP
• Commitment to UN Global Compact
31
Success Story of Paharpur Business Centre &
Software Technology Incubator Park
• Publishes its annual Sustainability Report following the GRI system
• Reports its triple bottom line - relating to profit, environment and
sustainability
• Now providing technical support to setting up of a 1.7 m ft2 Software Park
near Delhi that has been given the SEZ status by the GOI –
‘The Haryana Technology Park’
• Company showcased by CII at the World Summit on Sustainable
Development in Johannesburg in 2002 for its sustainability initiatives
• Its USP is the Clean Indoor Air in its Center in Delhi - Certified Mountain
Quality Air using biotechnology developed by NASA, USA to clean air
32
INTERNATIONAL SUCCESS STORIES
33
Preferred Destination For Foreign Equity Investors
2,000
Japan
1,858
India
1,800
South Korea
1,600
1,400
1,200
1,000
800
600
Singapore
1,105
1,054
Australia
China
965
Hong Kong
548
Taiwan
393
263
400
200
Malaysia
172
36 22 17
8
7
0
1
Sri Lanka
New Zealand
Philippines
Thailand
India attracts second highest private
equity investment in Asia
Total equity flow to India between 1999 and 2004 doubled
Source: NASSCOM
from US $ 5.12 b to US $ 11.50 b
34
MNCs leveraging the India Advantage
35
FDI INFLOWS TO INDIA
7000
6125
5526
6000
5000
5036
4674
4029
4000
3000
2000
1000
*
0
2000-01
2001-02
2002-03
2003-04
2004-05
FDI Inflows ($ million)
36
International Brands Utilizing The Indian
Knowledge Base
•
More than 100 global companies outsource R&D facilities from India
•
GE John F Welch Technology Centre – Company’s largest research outfit outside the USA
•
GE Medical Systems – India as sole sourcing base for its portable ultrasound scanner
•
Monsanto – First non-US research facility
•
Eli Lilly – largest research facility in Asia and 3rd largest in the world
•
Texas Instruments – Digital Signal Processor developed in India – controls 50% of the world
market
•
AVL, Austria – India as base to do R&D for the company’s Japan centre
37
Case Study of Selected German Companies
in India
Beiersdorf
Problems at beginning:
•
Existence of rival company (Nivea) in the market (personal
hygiene market)
Reason for success:
•
Relative name recognition
•
Adaptable Indian staff
•
Suppliers who are willing to cooperate
•
Immense support in form of technology and know-how transfer
from side of Germans
•
Great market potential
What is important for business-collaboration with India?
•
•
•
Patience and endurance
Local manager who knows mother company
Collection of experience through business connections
38
Case Study of Selected German Companies
in India
Daimler Benz
•
•
Decentralized research was quite essential
Achievement of local representation to assess market
specified interests
•
•
•
Great resources of highly qualified scientists as staff
Availability of human capital with low labor costs
Internationality:
English language and understanding of European culture
(due to British history, existence of numerous institutions,
administrations, school etc)
Economic Policy
Why India?
•
39
India – A Preferred Destination
"India has the potential to deliver the fastest
growth over the next 50 years with an
average rate of more than 5 per cent a
year for the entire period”
Dominic Wilson, Senior Global
Economist and Vice President,
Goldman Sachs 2005
"We want to bring to the world various
facets of this extraordinary country, its
people and progress"
Chris Cramer, International Managing
Director, CNN 2004
“India's highly educated workforce,
management talent, rule of law,
transparency, cultural affinity and regulator
environment are more favorable than
China's.”
A T Kearney, FDI Index 2004
“Quite simply, I was blown away by what I
saw on my first trip to India”
Stephen Roach, Managing Director &
Global Chief Economist, Morgan
Stanley 2004
40
INDIA ADVANTAGE
41
The India Advantage
Excellent network
of research laboratories
Well-developed
base industries
Pro active
policy framework
Proficiency in
English
Rich biodiversity
Low manpower
costs
Extensive clinical trial
opportunities
Trained manpower
and knowledge base
42
Demographics: A strong demand driver
By 2020
Working
age
population
to rise
to 65%
Urban
population
to rise
to 40%
30-40 mn
people
joining
middle
class
every
year
43
Growing Knowledge Pool
Source: UN, Morgan Stanley
Source: IMD Competitiveness Yearbook 2003
44
The Cost Advantage
Costs for offshore work
30 - 50 % lower than in USA / Europe
45
Low Wages
Total Compensation for Workers in Heavy
Manufacturing (US$ per Hour)
25
20.32
20
15
8.35
10
5
2.27
0.75
0.43
0.35
China
India
Indonesia
0
USA
Korea
Source: IMD Competitiveness yearbook, 2003
Mexico
46
Import duty Reductions
Reduction in Peak Customs Duties on Manufactured items
160
in per cent
140
120
150
100
110
80
60
40
50
20
42
38.5
Mar-97
Mar-00
30
25
20
Mar-02
Mar-03
w.e.f March
2004
0
1991
Mar-92
Mar-95
47
India - Economic Enablers
10th largest economy in the world - 4th in terms of PPP
Will overtake Japan in PPP terms by 2010, to be 3rd largest in the world
Large entrepreneurial base and diversified manufacturing structure
Large reservoir of skilled labour at internationally competitive cost
Vast pool of scientifically and technically qualified manpower of 20m
A large domestic market - 300 m + strong middle class population
having substantial purchasing power
Largest democratic set - up
A broad based and transparent legal framework including arbitration
48
India - Economic Enablers
Vast network of bank branches, financial institutions and well-organized
capital and money markets
A network of technical and management institutes of highest
international standards for development of human resources
India has a record of meeting its international financial obligations as
per schedule and has never been a defaulter
No communication barrier, as English is the most prevalent business
language
Strong and vibrant small scale sector that is keen to establish
strategic alliances with their foreign counterparts
49
India - Economic Enablers
Supportive infrastructure base
Strategic location for third country markets, particularly in the rapidly
growing south and south-east Asian countries
The strategic location of India and its easy and efficient access to the
Middle East, East European countries, CIS countries, Africa, South East Asia
and Asia-Pacific countries places it in a unique position as a sourcing ground
for entering into strategic alliances in export-oriented industries
Foreign companies can take advantage of India’s strategic location and tap
the markets of these countries.
India is slowly but surely emerging as an attractive destination for foreign
investment
Liberalized industrial and foreign investment policies
50
India - Economic Enablers
Recognising the need and the potential in certain areas, the Government
has also come out with specialised packages of incentives for setting up
projects in the fields of power, roads and highways, telecommunications,
mining, drugs and pharmaceuticals,hydrocarbons, shipping and ports,
tourism, electronics, food processing, etc
The Government is vigorously promoting and approving foreign direct
investment keeping in view the objective of attracting at least US $ 10 b
per annum
The Government is very keen to attract sizeable foreign investment into
infrastructural projects like roads, power, ports, telecommunications, etc.
as the demand for infrastructural services is expected to rise several
times to match the projected economic growth of around 8 % per annum
in the next ten years
51
India - Economic Enablers
Sector FDI Limits
• Defence
up to 26 %
• Telecom
up to 74 %
• Civil Aviation
up to 49 %
• Real estate & construction sector
up to 100 %
• Integrated township development
up to 100 %
• Tea plantation
up to 100 %
52
The India Advantage: Infrastructure
• Road length
2.5 m km
Second largest road network in the world
• Railway routes
63,000 km
• Cargo handled
298 m tonnes
• Electricity installed capacity
126,000 MW
Sixth in world electricity generation
• Telephone Connections
77 m lines
• Fixed lines (Dec, 2004)
44.76 m
8th largest telecom network in the world
Source: Department of Economics & Statistics, Tata Services Ltd
53
Indian Brains Abroad
• Though foreign multinational have dominated the research agenda in India
to date, a growing number of Indians who have worked abroad are
returning home with cash, contacts and confidence to set up companies
of their own
• These are people who have the experience and exposure to best practices
abroad
• For the first time, Indians who have been exposed to the world, realize they
can do something just as good and they can be world-class
• They have an attitude to meet challenges and succeed and also give back
something to their country
• 35 % of Doctors in USA
• 36 % of NASA Scientists in USA
• 35 % of Silicon Valley Start-Ups are by Indians
• India emerging as outsourcing hub
54
BUSINESS OPPORTUNITIES
55
Opportunity in various Industry Sectors
• Software
• Biotechnology
• Outsourcing
• Retailing
• Real Estate
• Auto Components
• Telecommunication
• Media & Entertainment
56
Opportunities in Software
• The Software industry in India is witnessing an explosive growth and expects
to generate US $ 87 b including US $ 50 b from exports by 2008
• More than 150 global business giants have set up research and development
facilities in India
Some of these firms are GE, Microsoft, TI, HP, IBM, Daimler Chrysler and
Motorola
• Bangalore has over 150,000 software engineers and a concentration of
hi-tech companies
• Delhi and NCR is the 3rd largest exporter of Software services from India
• More than 70,000 software professionals enter the Indian market each year
57
Opportunities in Software – The China
Connection
• China has a worker base equal to India's in terms of cost, quality
and scale
• In future, the Indian software Industry will use China as a base to
cater to the local markets including Japan
• Indian firms such as HCL, TCS, Infosys and Wipro have already
opened centers in China to outsource technology talent
58
Growing IT Market
Size (2002 - 03)
Growth rate
US $ 24 b
28 %
CAGR (since 1999)
46 %
Share of IT and BPO
2008 projection
1.4 % of GDP
7%
Exports (2003 - 04)
Growing at
+ US $ 12 b
+ 30 % pa
Employment
Over 650,000
Second largest employer in IT services sector
59
Opportunities in Biotechnology
• Biotechnology is a fast emerging sector in India
• The consumption of biotech products in India was US $ 1.8 b
in 1999 and is expected to cross US $ 4.2 b by 2010
• It is estimated that 10 % of the researchers and 15% of the
scientists in pharmaceuticals and biotech R&D in USA are of
Indian origin
• India is churning out 2 m graduates, 300,000 post
graduates and 1,500 PhD's, every year
• Biocon, the first biotech company was launched in 1978
• Indian Firms such as Shantha Biotech, Bharat Biotech,
Dr. Reddy's Lab and Biocon are all very successful firms
60
Biotech Market - A consistent Uptrend
25 % growth in investment
2002- 03
70 % growth in employment
74 % growth in R&D
manpower
Size 2003 - 04
US $ 705 m
US $ 5 b annual
revenues
2010
1 m skilled jobs
10 % of global industry
Source: Confederation of Indian Industry (CII)
61
Pharma Market
Size (2002- 03)
US$ 7 b
Size 2010 (estimated)
US$ 25 b
CAGR
16.6 %
(1995 - 2002)
Exports
23 %
CAGR(1995 - 2002)
Volume – wise
8 % of global market
4th largest in the world
Share of formulations
80 %
62
Opportunities in Outsourcing
• The Indian Outsourcing industry is moving up the value chain
• It is BPO today but the future is for Knowledge Process Outsourcing
(KPO), Financial Process Outsourcing (FPO) and Legal Process
Outsourcing (LPO)
• It is providing value through domain expertise rather than process
expertise
• India, in the new knowledge economy, is all set to emerge as a global
KPO,FPO and the LPO hub
• It is estimated to capture 71 % of the world market by 2010 against
56 % today giving it a market of US $12 b
• There are new opportunities, given that there is a serious shortage of
quality teachers, in the USA
63
Opportunities in Outsourcing
• The remote education market is expected to be US $ 15 b by 2008
• The current leaders are Engineering design – US $ 400 m, basic
data search, integration and management – US $300 m and Biotech and
Pharma – US $ 280 m
• The Compounded estimated annual growth of KPO for India is 50 %
whereas BPO will grow at about 30 %
• KPO is expected to engage 250,000 people by 2010
• It will be in areas such as biotechnology,animation and graphics,design
in aerospace & automotive, health care, pharma research, learning
solutions, data management, customer analytics and entertainment
• FPO will include insurance underwriting, risk assessment, equity
research and corporate market research
64
ITES - BPO Sector
Contribution of IT Enabled Services in total IT
exports
1999-2000
20%
2002-2003
33%
2000-2001
20%
2001-2002
27%
- ITES exports projected to touch US$ 24 b by 2008
- India offers combination of cost-quality-scale advantage
65
Opportunities in Retail Sector
The ongoing buoyancy in India’s spending, arising from the changing demographics
and the resultant rise in income levels, has resulted in a distinct consumer
preference for value-added products across the retail spectrum, providing a platform
for the rapid growth of the retailing sector which could emerge as one of the fastest
growing sector in coming years
•
Organized retailing industry to rise from US $ 4b to US $ 15b by 2010
The total retailing industry, estimated at US $ 200b is largely in the unorganized
sector with organized retailing accounting for less than 2 % (US $ 4b)
•
The organized retailing segment to grow fourfold in 5 years
•
According to NCAER, the Indian middle class (household income between
US $ 4,500 – 23,000) currently at 92m, is expected to cross 153m by 2010
•
Substantial mall construction:
The number of malls is expected to rise from the current 40 to around 250 by
2010
•
Close to 50m sq. ft. of retail space is expected to be developed over the next 5
years
66
Opportunities in Real Estate
• The US $ 50 b Indian real estate market is booming and expected to grow at
25 per cent annually
• The boom owing to the consumption powered growth of the country's
economy has seen investors planning nearly 250 new shopping malls
by 2008, as against just three that existed till 2002
• The central government adopted a regulation in 2005 allowing
foreigners to bid for Indian construction projects with local partners
and also reducing their minimum land - holding limit from 100 acres to
25 acres
• Enthused by the liberalized investment guidelines, a slew of foreign
builders are rushing to launch projects in Asia's third largest economy
• Expected annual shortfall of 20 m housing units by 2011
Mumbai alone would need more than 180,000 housing units
• An opportunity – for developing large- scale commercial and residential
townships in six cities – Kolkata, Bangalore, Mumbai, Chennai, Hyderabad
and New Delhi
67
Opportunities in Auto Components
The Indian automotive industry has grown at a staggering pace over the last few
years
The US$ 6.8 b industry has registered a CAGR of 17 % between 1998 - 2003 and
is projected by ACMA to grow at a 15 % CAGR till fiscal 2012
The opening up of the sector over the last decade has caught the attention of
global auto majors
In the 1990’s, economic liberalization allowed foreign automakers such as
Hyundai, Ford, Toyota and GM set up base in India
They also persuaded their overseas components suppliers to set up local
manufacturing bases in India
For example, Delphi followed General Motors and opened their plant in the state
of Gujarat in 1995 and Visteon followed Ford in 1998
68
Opportunities in Auto Components
• Present Industry size
By 2012
• Total Exports By 2010
US $ 6.8b
US $ 17b
US $ 5b
• Key Features
- Suitability as a low cost manufacturing base for MNCs
- Costs 20 - 30 % lower, compared to USA
- High product quality, superior design & engineering
capabilities
* Source: ACMA
69
Opportunities in Telecommunication
• Until 1995, during the more than forty years of government monopoly, there
were 9.4 m telephone connections
• There are 46.2 m fixed line subscribers and 52.2 m mobile phones
• The mobile phone market is growing at 2 m per month
• Estimated rise in Cellular by 100 m subscribers by 2007
• Basic telephone connections 175 m by 2010
• 100 % FDI in telecom equipment manufacturing
• Almost 2 m wireless subscribers getting added every month
• Unlike many developed countries, the GSM and CDMA technologies co - exist
• The outsourcing boom would not have occurred without the private telecom
sector
70
Opportunities in Media & Entertainment
• The Indian media and entertainment industry, with the prominent
segments being films, television, and music has grown in recent times
• The entertainment industry is currently generating revenue of US $ 7.2b
• The average growth budget for films has been increasing by 15 % p.a
• Another high growth segment of the entertainment industry is television
broadcasting
• The present size of this segment is estimated to be US $ 1b
• The penetration of cable TV, in the rural segment is expected to
grow by 12 % pa
• The music industry in India is expected grow at 20 % pa
• FM radio broadcasting has been privatized
71
BUSINESS OPPORTUNITIES
FOR PHILIPPINES
72
Bilateral Trade
Value in US $ m
Year
Export
Import
Total Trade
Balance of Trade
1997- 98
239.01
27.77
266.78
211.24
1998 - 99
118.71
37.25
155.96
81.46
1999 - 00
143.68
56.31
199.99
87.37
2000 - 01
201.63
62.97
264.60
138.66
2001- 02
248.63
95.17
343.80
153.46
2002 - 03
473.23
123.98
597.21
349.25
2003 - 04
321.54
122.11
443.65
199.43
2004 - 05
393.90
181.87
575.77
212.03
Source: Ministry of Commerce, India
73
Major Indian Exports To Philippines
• Meat & preparation
• Drugs, Pharmaceuticals & fine Chemicals
• Rubber manufactured products except footwear
• Plastic & Linoleum Products
• Primary & semi finished iron steel
Major Indian Imports From Philippines
• Metal ores & scrap
• News print
• Non - ferrous metals
• Gold
• Electronic goods
74
Potential for Business
• IT & ITES
• Sharing information & technology for clean environment
• Gems and Jewelry
• Natural and Herbal Products
• Renewable Energy Sources
• Dairy
• Drugs and Pharmaceuticals
• Construction and Material and services
• Mining
• Oil and Gas
75
Deteriorating Air Quality
The major sources of air pollutants
Motor vehicles
Industrial plants
Burning and construction work
The continuing increase in motor vehicles and population, the inadequate mass
transit system, worsening traffic conditions, the establishment of pollutive
industries, the widespread practice of open burning, and inadequate enforcement, if
not adequately addressed, are bound to contribute to increasing air pollution in the
surrounding areas
The most effective approach in improving air quality is to stop the generation of
pollutants at their source
This involves replacing a highly pollutive technology or energy source with a nonpolluting or a less polluting one, including shifting to cleaner fuels
76
Air Quality Management
The world’s best practices in preventing air pollution and maintaining ambient air
quality reflect the creative use of technology and fuel options, which range from
• Use of cleaner vehicle fuels - CNG, Gasohol, Biodiesel, Fuel cell, Electricity
• Solar energy
• Wind energy
• Mass transportation systems – Underground, Monorail
• Usage of Appropriate technologies for ‘Green Buildings’
• Innovative urban planning incorporating walkways and bike lanes
77
Improvement Of Ambient Air - Nehru Place Greens,
New Delhi 1996 - 2005
Parame te r
ASHRAE*
Standard
(m axim um )
CO 2
1000 PPM
C arbon
monoxide
O z one
0.055 ug / m
100 ug / m 3
Formalde hyde 0.4 mg / m
3
3
1996
1999
2001
455
350
339
#
#
ASHRAE**
Standard
(m axim um )
300-500 ppm
#
3
2002
2004
2005^
331
341
345
#
BDL
#
BDL
BDL#
BDL
BDL
BDL
10 mg / m
BDL#
BDL#
BDL#
0.005 mg / m 3
BDL#
N.A.
N.A.
0.278
#
BDL
#
BDL
0.012 mg / m
3
#
BDL
N.A.
N.A.
Le ad
1.5 mg / m 3
2
0.003
BDL#
1.5 ug / m 3
BDL#
N.A.
N.A.
Nitroge n
dioxide
Sulphur
dioxide
SPM
100 ug / m 3
67
38
34
100 ug / m 3
32
33
35
365 ug / m 3
69
40
32
365 ug / m 3
31
32
32
260 ug / m 3
1047
593
390
260 ug / m 3
389
399
404
75 ug / m
3
672
502
355
349
356
354
10 ug / m
3
45
18.5
10
10
N.A.
N.A.
RSP
Be nz e ne
*
C arcinoge nic
American Society for Heating, Refrigeration, Air Conditioning Engineers 62-1999 (revised)
American Society for Heating , Refrigeration, Air Conditioning Engineers 62-2001 (revised)
# Below Detectable Level
 Any presence of Benzene is carcinogenic
^ Data validated to August 2005
78
**
IAQ Results After IAQ Program At PBCTM - STIP
1996 - 2005
Parame te r
AS HRAE*
S tan dard
(m axim um )
CO 2
1000 PPM
C arbon
mon oxi de
O z on e
0.055 u g / m 3
1996
1999
2001
818
369
358
#
BDL
100 u g / m 3
#
BDL
#
BDL
#
BDL
#
Ni troge n
di oxi de
S u l ph u r
di oxi de
S PM
RS P
Be n z e n e
1.5 mg / m 3
100 u g / m
#
#
0.013
BDL
0.087
BDL#
BDL#
3
75 u g / m
3
10 u g / m
3
351
357
362
BDL#
0.072
0.070
100 u g / m 3
BDL#
N.A.
N.A.
0.5 mg / m 3
BDL#
N.A.
N.A.
1.5 u g / m 3
BDL#
N.A.
N.A.
3
20
21
22
365 u g / m 3
23
19
19
260 u g / m 3
92
90
82
39
37
N.A.
N.A.
22
365 u g / m 3
260 u g / m 3
20
28
23
606
118
94
218
55
47
18.5
BDL#
2005 ^
700
ppm
e xce ss
of
ambi
e n/ tm 3
10
mg
100 u g / m
22
2004
BDL
0.156
30
2002
BDL
Formal de h yde 0.4 mg / m 3
Le ad
AS HRAE**
S tan dard
(m axim um )
BDL#
C arci n oge n i c
46

#
BDL
American Society for Heating, Refrigeration, Air Conditioning Engineers 62-1999 (revised)
American Society for Heating , Refrigeration, Air Conditioning Engineers 62-2001 (revised)
Below Detectable Level
 any presence of Benzene is carcinogenic
79
Air Quality Management – Grow Fresh Air
Areca Palm
(Living Room Plant)
Sansevieria Trifasciata
(Bed Room Plant)
Using toxin removing plants to clean the air
Biotechnology originally developed by NASA, USA and research done by
PBC - STIP on plants suitable for the Delhi climate
80
SME: ADDING VALUE
81
SME’s IN EU
Category
Max.# Employees
Max. Turnover
m
Medium
249
50
Small
49
10
Smallest
9
2
Euro
Wef. January 2005
82
SME’s IN INDIA
The definition of small-scale industries (SSI), is given below
Norms for Definition of SSI in India
Maximum Limit of Investment in plant and machinery in INR m
Year
SSI
Ancillary
1985
3.5
4.5
1991
6
7.5
1997
30
30
1999
10
10
Source: Ministry of SSI, Govt. of India
INR 10 m =
US $ 227,000
83
Contribution Of SME’s Across Diverse Economies
Share of total
establishments
Share of
output
Share of
employment
Share of
exports
India
95%
40%
45%
35%
Japan
99%
52%
72%
13%
Taiwan
97%
81%
79%
48%
Singapore
97%
32%
58%
16%
U.S.A
98%
n.a.
53%
n.a.
Korea
90%
33%
51%
40%
Malaysia
Indonesia
92%
99%
13%
36%
17%
45%
15%
11%
Country
84
Technology & SSI
To say it in Sam Pitroda’s words
“ Technology is for problem solving at personal, community and national levels
It is about doing things differently
It is about change in mindset, processes, products and preferences
Technology is about opportunities and experiences”
• This is where the SSI is creating a successful niche for itself.
• Technology is empowering people at all levels cutting across sectors
• This has helped India graduate from being a promising economy to one of the
fastest growing economies
85
SSI Dominant Sectors In India
•
•
•
•
•
•
•
•
Textiles, Knitwear, Garments, Woolen and Hosiery
Leather and Leather products including footwear and
garments
Food Processing
Drugs, Pharmaceuticals and Biotech
Auto parts and components
Chemicals, Dyes and intermediaries
Hand Tools
Electronic Industry particularly relating to design and
measuring
•Glass and Ceramic items including tiles
•Information Technology and ITES
•Rubber and Plastic Products, Parts & Components
•Bicycle and Bicycle parts
•Foundries – Ferrous and Cast Iron
•Lubricant Manufacturing
•Gems and Jewelry
•Paper and Paper products, Corrugated Boxes
86
SSI Enablers - CLUSTERS
• 350 SSI and 2,000 artisans clusters
• Panipat (Haryana) accounts for 75 % of the total blankets
produced in India
• Tirupur (Tamilnadu) contributes 80 % of the country’s
hosiery exports
• Agra (Uttar Pradesh) produces 150,000 shoes per day
valued at US $ 1.3 m
• Ludhiana (Punjab) produces 95 % of the country’s woolen
knitwear, 85 per cent of country’s sewing machines and 60
per cent of bicycle and bicycle parts
87
SUPPORT FOR SSI
Dedicated Ministry and allied organisations offer
• Policy Support - Reservation, Priority Sector Lending, SEZ, Labor
• Institutional support - Through testing centres, tool rooms,
entrepreneurship development institutes, training, warehousing
• Partnership support - Sub-contracting, ancillarisation & vendor
development
• Marketing Support - Through Trading Houses, Subsidizing the
participation at international Trade Fairs, sales promotion and
business travel
88
Additional Government Initiatives
• Credit Guarantee Fund Trust Scheme
• Collateral free loans of lenders to SSIs up to US $ 58,000
• Payment to SSI suppliers should be made within 120 days
• Reimbursement scheme in respect of ISO 9000 Quality Certification
• Instituting marketing development assistance scheme
89
POLICY FRAMEWORK: Important Features
•
Reservation of items for exclusive purchase from SSI
•
358 items reserved for preferential purchase from SSI
•
Price preference up to 15 % on Government purchase
•
Development of Industrial Estates In selected towns
•
Technology : Adoption of new technology
•
Technology up gradation of existing units
90
Networking of SSI for Globalization
• The promotion of inter-firm linkages
• Use of Internet: Web Portals like eBay have opened a
new avenue, which the SSI are using as a tool, for marketing
• The increasing presence of Multinational corporations have
opened new opportunities for subcontracting
91
SSI Sector Facilitating Institutions
Technology Support
NSIC, SIDO,
SISIs,RTCs,PPDCs, TBSE
Funding Institutions
Banks, SIDBI, SFCs,
SIDCs, NSIC
Technical Training
SIDO, SISIs, EDIs, TCOs
, PPDCs, DICss, CFTIs
SSI Sector
Marketing SIDO,
NSIC,SSIDCs, EPCs
Industrial
Infrastructure
SIDCs, SSIDCs,
HUDCO
Entrepreneurship Development
SIDO, EDI, NIESBUD, SISIs
Specialized Institutions
92
Contribution Of SSI In India
> 8,000 Products
35% of National
Exports
95% of Industrial Units
SSI
An Engine of Growth
Over 27 m
Employed
Over 11 m
Units
7% of GDP
93
Growing Competitiveness of SSI
Year
Total
SSI Units
(million)
Registered
SSI Units
(million)
Unregistered Employment
SSI Units
(million)
(million)
Employment
per Unit
Exports
US $
(billion)
1998- 99 9.3
1.2
8.1
22
2.4
11
2002- 03 11
1.5
9.5
26
2.4
20
2004- 05 12
(P)
2
10
28
2.3
24
Source: Ministry of SSI
The Average Export per unit is US $ 2,000
94
Growing Productivity & Quality Controls
Year
Average Capital
US $
Employment Per Unit
Production
US $
1993-94
2,100
6.3
17,000
1999-00
3,700
3.6
71,000
Source: Second Census & Sample Survey of 1999-2000 by DC(SSI)
50 % of the total number of ISO 9001 / 14001 certified
units are from the SSI Sector
95
WINNING
ATTITUDE
96
It Is All About Attitude - Management
• Differentiating themselves through the products and services they provide
• Standing out by creating special interfaces with their customers and building
unique ways by which they can be held accountable by them
• Building a very strong quality story
• Benchmarking innovations against well set, globally accepted standards and
aim for targets, creating an environment and culture of innovation within the
organization
• Developing systems to nurture innovation making full use of the availability of
information and by rightful dissemination of knowledge to foster goal driven
innovation
• Building efficient processes to cut time - to- market
• Providing opportunities to their people to do roles that go beyond their
existing work profiles
• Providing continuing education
97
It Is All About Attitude – Business Person
• Need to hone their skills
• More adaptive thinking
• Greater entrepreneurial drive to find new horizons of growth with a competitive
spirit
• Foresight with a fierce unrelenting passion to execute and act today to improve the
future
• Bring change more aggressively and lead the organization to implement
sustainable changes
• Energizing their team and inspiring them for excellent team performance
• Delegating authority to allow people to perform
98
It Is All About Attitude – Business Person
• Ability to reach out to a wide international network for ideas and problem
solving
• Understanding on how things get decided and done
• Using customized strategies to influence specific stakeholders
• Executive maturity and emotional wisdom to respond to others and
embody the aspirations of ones organization
• Inner strength to do the right thing at the right time
• Courageous dedication to super ordinate goals, doing what is right and
what will make India great
• To keep learning and be abreast of new technology
99
Acknow ledgement
PHDCCI – PHD Chamber of Commerce and Industry
CII – Confederation of Indian Industry
FICCI – Federation of Indian Chamber of Commerce and Industry
Assocham – Associated Chamber of Commerce and Industry of India
IGCC – Indo German Chamber of Commerce
IACC – Indo American Chamber of Commerce
ICRIER – Indian Council for Research in International Economic Relations
NASSCOM – National Association of Software and Service Companies
USCAN – Uniting Services Consulting Advocacy and Networking
Paharpur Business Centre – The International Division
100
THANK YOU
101