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India
Your Next Investment and Business
Destination
(A Macroeconomic Perspective)
Agenda
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Motives of Global expansion
The Indian Dimension
India- Past & Present
India- Land of opportunities
Market overview and approach
India competitiveness
India’s Macro economic indicators
Indo-US collaboration
The India advantage
Top growing sectors
Other leading sectors
Key challenges
Tecnova
Motives of Global Expansion
“Business transformation through services globalization is one of the most
important levers that global companies can no longer afford to ignore”
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Growth Imperative
Better Profit Realization
Efficiency Imperative
Spreading Risk
Accessing Technology
To be Present in the Lead
Market
Learning & Innovation
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Preempting Competition Strategic Positioning
Defending the Home Market
(Cross Parry)
Following the Competitor
Following the Customers
Bandwagon Effect
The Indian Dimension
Area
: 3.29 million sq. km
Population : 1.09 billion
Urban:300 million
Rural : 700 million
Capital
: New Delhi
States
: 28
Languages : Multilingual society with 14
principal languages.
National language is Hindi
Major Cities: Delhi, Mumbai, Chennai,
Calcutta, Bangalore,
Hyderabad, Pune
India- Past & Present
The 70’s, 80’s and early 90’s
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Dominance of Public Sector
across industry
Sellers market with limited
competition.
Closed Economy with negligible
presence of multinationals.
GDP growth below 4% (Hindu
rate of growth) primarily
agriculture based.
India post 1995 and counting
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100% FDI in most sectors has seen
Pepsi, Coke, Shell, Ford, GM,
Suzuki., Toyota, Amex, Citibank, GE,
Microsoft, Pfizer, Novartis, GSK,
Merck operation in India (availability
of world class products)
A new India is transiting from a third
world country status to a league of
developed nations
• India has transformed from a land of snake charmers, elephants and an inward looking
society to a progressive and forward looking nation of 1 Billion has the second largest
community of science and technology professionals
• The world’s third-largest repository for foreign direct investment (FDI), after China and
America.
• India is one of the three countries that makes supercomputers, one of the six countries
that builds and launches satellites.
India – Land of Opportunities
Largest democracy
– political stability &
consensus on
reforms
Fourth largest
Economy (PPP) - A
safe place
to do business
Second Largest
Emerging Market
Largest reservoir of
skilled/semi-skilled
manpower
Long-term sustainable
Competitive advantage
- High growth rate
economy
Liberal &
transparent
investment policies
Highest returns on
investment; India
19.33%, China
14.25%, Thailand
13.3%
“Developing an International presence is the key strategy for business growth”
Market overview and Approach
Market Overview
 Population of 1.09 Billion
 12th largest economy in the world in 2005 by GDP and 4th largest by PPP
 170-200 million people with growing purchasing power
 7-8% GDP growth rate
 Over 45% of the Indian population is under the age of 20
Key factors for success
 Reliable local partners
 Good planning
 Due diligence and follow-up
 Patience and commitment
 Indian consumers are price-conscious
 Adapt products for local conditions
 Have an efficient distribution network
 Consider a local/regional approach
 Don’t underestimate local competition
India Competitiveness
India is emerging as the preferred global destination due to a
number of significant advantages over other countries
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Location Attractiveness
Infrastructure
 Communications
 International connectivity
 Ever improving highways and
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ports infrastructure
 Communications
Low Country Risks/ FDI Incentives
 Stable political environment
 Independent judiciary
 Low entry barriers
 Attractive Incentives
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Immense labour pool
 High on qualification/capabilities
 Low on cost
 Language skills
 Work ethics
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WTO accession & commitments
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Mature financial market
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IP Protection Laws
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Favourable labour laws
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Capitalist work ethic
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Mature management talent
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Breadth and scalability of services
India’s Robust Macro Economic
Indicators talk …
GDP – US$ 850 Bn (growing at 8%); India is all set to surpass Italy, France & Germany in
US$GDP by 2020 and Japan by 2030
Sustained economic growth – over 7% in next 50 years (Goldman Sachs)
FDI (US$ Mn)
Forex Reserves (USD Billion)
200
167
160
20000
15872 16500
15000
119.3
120
80
40
75
38
42.3
10000
54.1
5381
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8152
5635
5000
0
1999-00 2000-01 2001-02 2002-03 2003-04
6783
July
2006-07
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
You are setting your eyes on the fourth largest economy in the world (in terms of purchasing
power parity)
Indo US Collaboration
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U.S.- India political and economic relations are
strong and growing
Shift in U.S. –India relationship: from sanctions to
civil nuclear cooperation
Indian market has many opportunities for the right
products and services
Total bilateral trade in 2005: $26.8 billion
US merchandise exports to India in 2005: $7.9 billion
– a 30% increase over previous year
The India Advantage
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Potential of huge domestic market provided by the country's 1bn-plus
population
Manufacturing Industry in India is growing by 9.4%
Cost of employing engineers – essential to manufacturing services – is
one-third to one-fifth lower in India than in industrialized nations such as
the UK and the US
India has an edge in the service aspects of manufacturing, these areas
including design, development, links with suppliers and the ability to
customize output to meet changes in demand patterns
High level of technology combined with Service that ensures India is in a
good position to develop a new source of products that mix innovation with
low costs
Better control of intellectual property unlike China
Foreign companies can broaden access to a supply of technical people
beyond that which is available in their home country
Fastest growing sectors
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Automotive
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The Indian automobile sector currently generates revenues of $34 billion a year; Auto
sector could grow to $145 billion by 2016
India has gradually become a sourcing hub for auto companies worldwide. Among the
companies outsourcing from India are General Motors, Ford, Daimler Chrysler, Hyundai,
Fiat, Toyota, Delphi, Navistar, Visteon, Cummins and Caterpillar.
The size of the auto component industry has grown from US$ 2.4 billion in 1997 to US$
12 billion in 2005-2006
India has emerged as a significant exporter of auto parts. From US$ 578 million in 200102, overseas sales of Indian companies have jumped to US$ 2.2 billion in 2005-06
Drivers for growth
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The Indian automobile industry is likely to attract an investment of US$ 6.7 billion by 2007
India produces 8.46 Mn vehicles annually with exports of 0.62 Mn units
Production has been growing at 12% CAGR
Mercedes, BMW, Porsche, Audi, Bentley and Rolls Royce are already in India. Now, the
Italian marquee Lamborghini is also planning to enter the country
Apart from Ford and Hyundai, other international players like BMW, Toyota, Daimler
Chrysler are set to open up their manufacturing units in India
Continued…
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Healthcare & Pharma
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India’s Pharma market ranks 4th in the world in volume and 13th in domestic
consumption value
India has the highest number of USFDA certified manufacturing facilities outside the
United States
Indian pharma market estimated at US$ 3.8 billion ranks 12th in value terms and
accounts for around 1% of the global market
Expected to grow at 12-14% p.a., as against the global average of 6-8%
At the current pace of growth, medical tourism, currently pegged at US$ 350 million, has
the potential to grow into a US$ 2 billion industry by 2012.
With the expected increase in the pharmaceutical market, the total healthcare market
could rise from US$ 22.2 billion currently (5.2 per cent of GDP) to US$ 50 billion - US$ 69
billion (6.2-8.5 per cent of GDP) by 2012
Drivers for growth
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Highly fragmented market with over 20,000 companies with top 250 companies
controlling around 70% of the market.
Sourcing of active pharmaceutical ingredients (APIs) and contract manufacturing
Conducting early-stage research and development (R&D).
Highly skilled human capital and technology expertise.
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Leverage India’s low cost structure
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Continued…
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Construction
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The Indian construction industry grew by 5.5 % to reach a value of $35 billion in 2006
The sector will continue to grow at a CAGR of 6.5% to reach $38 billion by 2009
representing an increase of 35.4 % since 2004
India accounts for 4.7% of the Asia-Pacific construction and engineering market
The Indian construction and engineering industry is expected to grow in the region of
75% between 2000 and 2009, behind only China in the Asia-Pacific region
Drivers for growth
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The country's commercial and residential real estate market is valued at
about $50 billion now, and is expected to grow 25% annually
A report on real estate trends by Merrill Lynch said that the number of
malls in major metropolitan cities across India is expected to grow to about
250 by 2010 as against 40 now. In terms of total area, there was 12.40
million square feet (mn sq ft) of mall space available in these cities
Gurgaon (National Capital Region, New Delhi) is set to get the biggest mall
of the world — a large US$ 89.78 sq ft sprawling property that is being
developed by DLF Universal. It will be known as Mall of India
Continued...
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Retail
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Indian retail industry ranked second most attractive retail destination by AT
Kearney
The total domestic retail market is currently estimated to be over US$ 330
billion and is growing at a rate of 4-6 % in real terms
Organized sector accounts for just 2 % of the market (i.e. US$ 4 billion)expected to grow four-fold to US$ 15 billion by 2010
There are 12 million retail outlets in India out of which 9 lakh are in the
organized sector. Retail will grow by 40% by 2008
Drivers for growth
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Retail sales in India's consumer goods market are expected to grow to $400
billion by 2010, making it one of the world's five biggest
India's emerging middle class is driving this rapid growth, and companies must
target that segment if they aspire to make the country a key market
By 2007 there would be as many as 350 malls built in India with a mall area of
over 87.7 million square feet
Major construction of malls taking place both in the Tier- I and Tier- II cities of
India
Continued…
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Telecommunication
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One of the fastest growing sectors in the country
The telecom sector has witnessed the presence of many leading foreign
companies including US companies: AT&T, Motorola, Nynex, US West,
Hughes, Harris, Qualcomm, Sprint, Telstra, NTT, Singapore Telecom, Philippine
Telecom, Bezeq, Siemens, Ericsson, Nokia, Fujitsu, Alcatel, and Bell Canada
among others
2 million Cellular phones added every month - Among the lowest mobile tariff
in the world
Drivers for growth
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India offers an unprecedented opportunity for telecom service operators,
infrastructure vendors, manufacturers and associated services companies
Nortel, North America's biggest telecommunications equipment provider, has
signed a five-year deal to provide call centre services for Bharti, which has a
more than 22 per cent market share of the mobile phone market in India
Investment Opportunities
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Setting up manufacturing facilities
Supply of hand sets and equipments
Telecom & Value added service
Other leading sectors for US exports and
Investment in India
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Airport and Ground Handling
Computers and Peripherals
Electric Power Generation, Distribution, and Transmission Equipment
Food Processing & Cold Storage Equipment
Machine Tools
Medical Equipment
Mining and Mineral Processing Equipment
Pollution Control Equipment
Safety and Security Equipment
Oil & Gas/ Energy
Textile Machinery
Water
Key Challenges
The key challenges that companies under-estimate while
contemplating doing business in India and where Tecnova
can play a role are
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Estimation of business risks
 Correct estimation of market and business potential
Market differences from the West
Under-estimating local competition
Government regulations
Intellectual property right and infringements
Partnerships and Acquisitions
 Proper due diligence
Cultural issues
TECNOVA
Your virtual business partner in India
About Tecnova
“22 years of operation, over 200 clients (from 18 countries) with 130 Fortune 1000 companies”
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TECNOVA- a Consulting firm specializing in providing workable strategy solutions and
implementation assistance to foreign companies for leveraging the “India advantage”
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Help foreign companies investigate opportunities, understand markets, start-up business,
compete more effectively, and expand in India
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Advised more than 200 companies and have implemented the start up operations for 125 of
them to leverage India advantage
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70 people based in New Delhi; Over1 million man-hours of consulting work across entire
spectrum of Indian business
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Assist foreign organizations in developing customized solutions based on in-depth
understanding of their corporate goals and global strategy
Our Mission is to make our clients successful in the Indian market place
Tecnova’s value adds
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Minimize the knowledge gap to make our clients succeed in India
(including research on market & competition and regulatory)
Identify key success factors
Develop Strategy to leverage India advantage to capture market shares
Recommend a modular and flexible India structure and strategy
Minimize business & cultural gaps
Minimize risk of start up failures
Advise on strategic alliances
Prepare business plan including detailed location analysis
Help in selection of start up leadership team (executive search)
Work as virtual partners for India Strategy implementation and
incubation till profits are made in India
Service Offerings
PHASE-I
Market
Research
India Visit
Outline Business
Plan
Strategy
PHASE-II
Location
Analysis
Cost benchmark
Detailed Business
Plan
Implementation
(Indian Entity)
PHASE-III
Sales Ramp up
services
Risk Mitigation
Regulatory
Compliance
Assistance to leverage
India advantage
Partial list of clients- Sector wise
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Danaher Group, USA
Valmont Industries, USA
Mondi Group,USA
(Frantaschach Packaging)
Johns Manville USA
(Warren Buffet Company)
Presstek, USA
Novus, USA
Goss International, USA
MSA, USA
International Paper, USA
Roquette, France
SICK, Germany
ISS, Denmark
Chr.Hansen,Denmark
Healthcare/ Pharma
Consumer Durables
B2B
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Gillette, USA
Haworth, USA
Kohler, USA
Sunbeam (Jarden Consumer Group),
USA
Mary Kay, USA
Elkay Manufacturing, USA
L’Oreal, France
Arc International, France
Sennheiser, Germany
Miele, Germany
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Perfetti, Italy
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Teuco, Italy
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Barr Labs, USA
Nektar Therapeutic, USA
Genezyme, USA
Patheon, USA
Cephlon, USA
Cytyc, USA
BioMerieux, France
SCA Hygiene,Sweden
Auto
Findlay Industries, USA
Michelin, France
Jost Werke, Germany
Surtec, Germany
Caran Design, Sweden
Alteams, Finland
Thank You