Download India,s silicon valley is on a high growth path enormousely aided by

TRADE AND PROSPERITY: A CASE STUDY OF BANGALORE, SILICON
VALLEY OF INDIA
By DR.S.SHAJAHAN, ICFAI BUSINESS SCHOOL, BANGALORE
E-mail: [email protected], contact: +919886415268
INTRODUCTION
“India is rapidly emerging as a country of global importance and we are seeing its foot
print across the world new in new and exciting ways “
PAUL WOLFOWITZ, PRESIDENT WORLD BANK **
Indian fever is spearheading in the world’s investment community but IMF’s trade
restrictiveness index for India is 8 out of 10. India’s foreign trade at US$235 billion in
2004 increased by an impressive 8% over 2003. As a share of GDP foreign trade has
grown to 34% in 2004 from 16% in 1995. Services accounted for one-third of India’s
exports and IT services at US$17 billion were the largest export earner. India jumps 5
notches in services exports ranking of WTO to 16 th position up from 21 and exports
stood $39.6 billion and improved market share to1.9 per cent in 2004.
As we know, the post-war era had already witnessed economic miracles in Japan and
South Korea. But neither was populous enough to power worldwide growth or change the
game in a complete spectrum of industries. China and India, by contrast, possess the
weight and dynamism to transform the 21st-century global economy. The closest parallel
to their emergence is the saga of 19th-century America, a huge continental economy with
a young, driven workforce that grabbed the lead in agriculture, apparel, and the high
technologies of the era, such as steam engines, the telegraph, and electric lights.
Further, China and India are among the fastest growing in terms of the number of patents
won from the United States Patent and Trademark Office (USPTO). Chinese mainland
recorded the highest growth of 41.4% in patents won in 2004, compared with the 1999
figures while India showed a 210% growth over the same period. Singapore recorded
the second best growth rate of 230%.China and India are the fastest growing economies
in the world, according to the GDP growth rate figures released by UNCTAD in 2005
and there is another bit of evidence supporting that story.
----------------------------------------------------------------------------------------------------------** Source: Economic Times, October 15, 2005 and The McKinsey Quarterly, Indian
economy updates, October 2005
The present import led growth poised many problems for the Indian policy makers.
Indian manufacturing industry contributed only 15 % of GDP since 1990s but their
export growth is exceeding 20% on a year to year basis since 2000. Further CAGR of
manufacturing is only 5.5 during 1990-2003 and it employed 12% of work force. The sun
rise industry for India, service sector employed 21% of the work force and registered
CAGR of 6.9% during the same period. Agriculture sector employed 67% of the work
force grew marginally and recorded CAGR of 2.9% during 1990-2003.Contribution of
service in India’s GDP has grew from 43% in 1990 to 57% in 2004.FDI is linking the
country’s growth in service sector in a big way. In 2004 India attracted US $ 5.4 billion
as against US$ 4.2 billion in 2003 and net capital inflow recorded US$32,500 million in
2004 up from US$ 26,500 million in 2003.
1.0 FDI AS ENGINE FOR GROWTH
We recognize the globalization offers us enormous opportunities in the race to leapfrog
in developmental process
DR.MANMOHAN SINGH, PRIME MINISTER OF INDIA **
One of the key factors influencing economic development of a country like India is
investment. Larger the investment, higher can be the rate of economic growth. Most of
the developing countries like India have investment requirement greater than the
domestic savings. This gap can be filled by foreign capital inflow. Therefore, foreign
capital can increase the investment capability of a country In the world increasingly
characterised by liberalization and globalization, firms are looking for places to invest
that offer specific advantages or “created assets”, including communications
infrastructure marketing networks, and intangibles such as attitudes to wealth creation
and business culture, innovative capacity, the stock of information trademarks, and
goodwill. These factors have become critical for firms’ competitiveness and can make
countries without more traditional advantage attractive locations for FDI. .
According to world investment report 2005, a more liberal investment regime led to a
25% in India’s FDI inflow during 2004 interestingly outward FDI flow from India is
higher at US$ 2.22 billion compared to US$1.80 billion by Chinese companies in 2004
Foreign investment - both direct and portfolio - rose to an all-time high during 2003-04,
amounting to 2.7 per cent of GDP and 24.8 per cent of merchandise exports. However
due to slow down in the reform process the corresponding figures m during 2004-05 as
estimated by RBI is 2.1 and 17.9.
The Foreign Investment Promotion Board (FIPB) is the nodal, single window agency for
all matters relating to FDI as well as promoting investment into India. The Secretarial for
Industrial Assistance (SIA) is gateway to industrial investment in India. It was set up by
the Government of India to provide a Single Window for Entrepreneurial Assistance,
investor facilitation, processing all applications which require government approval.
----------------------------------------------------------------------------------------------------------** Source: Economic Times, August 16, 2005 and The McKinsey Quarterly, Indian
economy updates, September 2005
SIA functions through its specialized divisions such as Foreign Investment Promotion
Board (FIPB), Foreign Investment Promotion council (FIPC) and Foreign Investment
Implementation Authority (FIIA).Table.1 shows some of the major initiatives to attract
FDI during 2002-03
TABLE- 1 FDI APPROVALS MADE IN THE RECENT PAST
Actual inflow of FDI
1995 1996 1997
Government's
Approval
38.7 57.6
RBI Automatic
Approval
5.3
6.2
NRI Schemes
19.7 20.6
Total
63.7 84.4
Source: RBI Annual Report, 2004
1998 1999 2000 2001
2002
(April)
101.3 82.4
61.9
63.4
96.4
32.9
8.7
6.1
10.4 3.6
120.4 92.1
7.6
3.5
73
17
3.5
83.9
32.4 12.6
2.3
0.1
131.1 45.6
Foreign Direct Investment (FDI) has a direct impact on output growth in India as it
augments the available investable capital. FDI serves to increase competition in markets,
bring new technology into India and faster skill acquisition among domestic labour.FDI
flows remained subdued during 2003-04 in line with the slowing down of FDI flows to
the developing countries in general (Table.2)
TABLE- 2 FOREIGN INVESTMENT FLOWS TO INDIA
(US $ million)
2004-05(P) 2003-04
2002-03
A. Direct Investment in India 5536
4673
5035
(I+II+III)
I. Equity
3363
2,387
2,764
II. Re-invested earnings# 1816
1,798
1833
III. Other capital *
357
488
438
B. Portfolio Investment
(a+b+c)
8,909
11,377
979
a) GDRs / ADRs
613
459
600
b) FIIs+
8280
10,918
377
c) Off-shore funds and
16
-2
others
C. Total (A+B)
14,445
16,050
6,014
P-Provisional figure, - -negligible
# Relates to acquisition of shares of Indian companies b non resident Indians under
section 6 of FEMA, 1999
* Data related to inter company debt transactions of FDI entities
+ Net inflow of funds by FIIs
Source: RBI Annual Report, 2005
Foreign Institutional Investors (FIIs), the lynchpin of Indian stock markets, have emerged
as the second biggest block of investors in leading domestic companies with a share
much higher than that of the local financial institutions. FII investments in Indian equities
have crossed $8 billion in 2004 which is $1400 million more in 2003. Data on share
holding pattern collated till the end of June, 2004 shows that FIIs hold about 13.9% of the
market capitalization of 394 BSE 500 companies worth $222 billion. Promoters of these
companies owned about 53.8% while the public holds about 14.9%. The ownership
patterns are significant as it shows that FIIs are now the 2nd largest owners of Indian
companies behind promoters. About 7 leading Indian companies have foreign ownership
worth more than $ 1 billion. Infosys Technologies leads the pack with about $ 3.8 billion
followed by Reliance Industries at $ 3.7 billion, ICICI Bank at about $ 2.7 billion and
HDFC at $ 1.7 billion.
A strong performance by the domestic corporate sector in India has clearly emerged as
one of the significant driving forces of FII investment in the domestic capital market. A
turnaround in the fortunes of several cyclical industries such as auto, steel, aluminium,
shipping and hospitality has seen strong performances coming in from the companies of
these sectors. With the developed economies like US, Europe and Japan grappling with
lower than expected growth and also with dollar losing its hold, emerging markets like
India and China are being seen as attractive destinations for FIIs’ money
Important factors like slow nominal GDP growth, deflation, the US current account
deficit and continued historically high stock valuations in developed markets as key
concerns to global investors. In comparison, emerging markets are currently trading at a
significant discount to developed markets and their currencies are now very competitive
withy many having gone through painful devaluations. According to US based Emerging
Portfolio Fund Research, on the basis of net purchases by foreign funds, India ranks fifth
after Taiwan, China, Korea and South Africa
2.0 RISING EXPORTS
Perhaps the most critical feature of fast growing economies has been the rapid rise of
manufacturing /service exports. This has been supported by trade policies that have
allowed manufacturing/service exporters to operative at (nearly) world prices, both for
inputs of capital and intermediate goods/services, and for the sale on world markets. All
fast growing economies, for example, avoid trade policies that undermine the capacity of
manufacturing/service exporters to obtain necessary inputs at world prices, or that penalize
exporters through heavy taxation.
India successfully crossed 95.240 billion USD in 2000-01, then to 185.5 billion USD in
2004-04 in foreign trade transactions. India has achieved 4.74 times growth in foreign
trade transaction during 14 years of its trade liberalization. .The Indian success Story, in
terms of rising exports of services and engineering, auto, auto components and generic
pharmaceuticals are on track .Mid term appraisal of Indian economy in October 2005
by RBI shows a positive growth of 6.5%, BSE Sensex touched the highest score of 8,600
and FIIs investment in India registered a record high of $ 8 billion.
2.1 Liberalization holds the key
The experience of rapidly growing developing countries demonstrates that protectionism
only perpetuates inefficiencies and stagnation. Recent World Bank studies show that
developing countries that have embraced open market strategies in the past decade have
grown much faster than those that have not.
A country like India where forex reserve in 1991 was only 7% of external doubt (US$
120 billion) and globalization brought US $145 billion forex to the country’s reserve with
in 14 years which changed the country’s position from a debtor to donor in IMF. In
October 2005, India’s forex reserve, according to reserve bank of India (RBI), exceeded
its foreign debt by US$ 16.2 billion despite a sharp expansion of external commercial
borrowing of US$27 billion. Further India’s export is growing at 20% for three
consecutive years Investment averaged 26% of GDP in the early 2000s crossing 30% of
GDP and also crossing savings rate in 2005. It is estimated the current account deficit of
US$ 47 billion (nearly 6% of GDP) in 2005 as against a surplus of US$10,561 in 200304 In general, Asian economies are registering well above 6% in 2005-06.
The Bombay Stock Exchange Sensex rose from 7000 to 8000 level in 55 days flat since
July 20, 2005. In comparison it took more than 500 days for the Sensex to rise by the
same distance from the 6000 marks that it crosses in January 2004. Worse still, it took
nearly 5 long years to climb back to 6000 level after it first breached that barrier in
February 2000.
2.2 India moving towards service economy
Economic development is, characterised by an increase of the share of the services in the
GDP and total employment. This trend tends to increase the international trade in services.
Many of the fastest growing sectors are services (Telecommunications, Health care,
Finance and Software developments).The share of services in world trade and investment
has been increasing. Following global trend India also witnessed a boom in service exports
in the recent years.
An upward shift in the trend growth of services exports from 7.9 per cent in the first half
of the 1990s to 15.3 per cent in the period from 2000-01 to 2003-04 reflected a distinct
strengthening along with greater stability. The coefficient of variation of services exports,
which increased from 12.0 per cent in the first half of the 1990s to 34.7 per cent in the
second half of 1990s(Table-3)
TABLE-3 PROFILE OF INDIA’S SERVICES EXPORTS
(Per cent of total services exports)
Year
Travel Transportation Insurance G.N.I.E. Software Miscellaneous*
1990-91 32.0
21.6
2.4
0.3
0.0
43.7
1995-96 36.9
27.4
2.4
0.2
10.2
22.9
2000-01 16.8
10.1
1.4
3.5
33.6
34.6
2001-02 14.1
9.5
1.3
2.3
36.6
36.3
2002-03 12.1
10.1
1.5
1.2
38.5
36.6
2003-04 14.3
11.6
1.5
0.9
44.2
27.5
*: Miscellaneous services excluding software.
Note: G.N.I.E: Government Not Included Elsewhere.
Source: RBI Annual Report 2005
In terms of outsourcing of IT services, proficiency in the English language provides
comparative advantage to India's exports vis-à-vis those of competitors such as China
and Mexico Ireland, which was the biggest hub of ITES, was surpassed by India mainly
on account of a relatively larger supply of IT professionals. In the recent period, some
downside risks have emerged due to restrictions on outsourcing of software services in
certain parts of the world. It is estimated, however, that outsourcing has been resulting in
cost saving in the range of 40-60 per cent for the trans-national corporations
India has great potential in a variety of services. The large number of scientists,
professional and skilled and semi-skilled personnel working abroad is indicative of India's
potential in several fields. The socio-economic and political implications of certain
services, generally, subject to various types of national restrictions. Protective measures
include visa requirements, investment regulations, restrictions on repatriation, marketing
regulations, restrictions on the employment of foreigners, compulsion to use local facilities
etc. International trade in many services including software development and maintenance
involve international factor mobility. There are a number of international transactions
involving temporary-factor-relocation services such as those requiring temporary residence
by foreign labor to execute service transactions. In general, International trade in services
involves intricate issues like right to establish the factor mobility
India is a leading destination for outsourcing of Information Technology Enabled
Services (ITES) and other related Business Process Outsourcing (BPO) activities.
Currently, India renders more than two-thirds of all offshored ITES worldwide. The BPO
activities encompass not only ITES but also a wide range of areas comprising services
relating to manufacturing, banking, insurance, sales, marketing, utilities and human
resources.
India’s comparative advantage in the outsourcing business is on account of availability of
well developed telecommunication network and advanced technological infrastructure,
skilled yet low cost labor force, widespread use of English language, and India’s location
in a different time zone from the United States (US) enabling a 24-hour service. The BPO
activities have benefited India by generating substantial job opportunities in the country
and augmenting export earnings. India is expected to maintain its lead as the best
offshore outsourcing destination, particularly for the US and European companies
The offshoring of software development and, later, back-office and call centre services,
has driven India’s rapidly expanding service exports. During the past decade, the value of
exports of software and other services jumped from less than a $0.5 billion to $12 billion
in 2003-2004, according to the National Association of Software and Service Companies
(NASSCOM). In parallel, the export intensity of the Indian software and service industry
rose from 58% to 78%, and the share of these services in total exports from India
increased from 3% to 21% between 1996 and 2003. Table -4 shows the service lines and
employment generation capabilities of ITES.
TABLE -4
SERVICE LINES IN IT-ENABLED SERVICES IN INDIA
(Number of employees and millions of dollar)
Source: World Investment Report, 2004
According to a NASSCOM-McKinsey report, annual revenue projections for India’s IT
industry in 2008 are US $ 87 billion and market openings are emerging across four broad
sectors, IT services, software products, IT enabled services, and e-businesses thus
creating a number of opportunities for Indian companies (Table5). In addition to the
export market, all of these segments have a domestic market component as well. Other
key findings of this report are: Software & Services will contribute over 7.5 % of the
overall GDP growth of India .IT Exports will account for 35% of the total exports from
India .Potential for 2.2 million jobs in IT by 2008 .IT industry will attract Foreign Direct
Investment (FDI) of U.S. $ 4-5 billion .Market capitalization of IT shares will be around
U.S. $ 225 billion and Exports of $50 billion in 2008 (Table-5)
TABLE -5
PROJECTED REVENUE OF I.T BASED SERVICES – 2008
($ US billion)
India India
Sub
total
Domestic Total
1998
Based Centric (International)
23
7
30
8.5
38.5
2.1
IT Services
Software
8
2
10
Products
IT-enabled
15
2
17
Service
1
5
E-business 4
50
12
62
Total
Source: NASSCOM McKINSEY Report, 2004
9.5
19.5
0.6
2
19
0.4
5
25
10
87
0.2
3.3
According to Confederation of Indian Industry, India is set to become the most preferred
destination for knowledge process outsourcing as it grows 46 per cent to touch the $17
billion mark by 2010. In its recent study--India in the new knowledge economy--the CII
said the services sector would grow at a more than eight per cent and its contribution to
GDP would be above 51 per cent. This, the study said, affirmed that India's transition
from being a business process outsourcing destination to a KPO destination was
imminent.
Areas with significant potential for KPO include pharmaceuticals, biotechnology,
technology, legal services, intellectual property, research and design, and development of
automotive and aerospace industries. India could emerge as a global KPO hub as the
business requires specialized knowledge in respective verticals and the country's
engineering and technical institutes are geared to address the manpower demand.
The health care sector is projected to account for 7-8 per cent of GDP and provide
employment to around nine million people. India's spending on the sector is to the tune of
$22.7 billion. India has the opportunity to provide the best of western and eastern heath
care systems, adding that more than 70 per cent Americans preferred a natural approach
to health and spend around $25 billion on non-traditional medical therapies and products,
thus making India one of the most preferred destinations because of ayurveda and yoga.
The CII research estimate around $31 billion of investment would be required in the
health care sector in the next 10 years. In the pharmaceuticals sector, Indian companies
were offering custom synthesis services at a competitive price, lower by as much as 50
per cent than global costs, and clinical trials for as low as $25 million compared with
$300-350 million elsewhere.
3.0 PARADOXICAL SITUATION
It is estimated that four Southern States and Maharashtra contributed 40% of India’s
GDP .About 67% of the people are engaged in agriculture which recorded a marginal
growth of 1.5% since 2003. Real GDP of wealthiest state who participated in the
globalisation improved from US$ 386 in 1990 to 720 in 2003. Further CAGR grew from
3.8% during 1980 - 1990 to 4.7% during 1990 to 2001. This prosperity has extended to
531 million people who spread across 1.5 million sq.km .On the other side, the States that
were considered conservative to liberalisation were little benefited out of the new trade
regime. Their Real GDP grew marginally from US$ 264 in 1990 to US$ 328 in 2003 but
CAGR slipped from 3.4% during 1980 -90 to 1.7% during 1990-2001. Still 536 million
people spread across 1.7 million sq.km are looking for new break through.
However, according to Govt.of India’s estimate, the people below the poverty line have
declined from 55% during 1973-74 to 26% during 1999-2000. But when apply World
Bank norms of earning a dollar per day, people below the poverty in India has declined
from 42% in 1992 to 35% in 2000. This prosperity has also reflected on the
Government’s spending on education and health care which shows that India is really
benefiting out of the new economic vigor. The spending on education has gone up from
3.3% of GDP in 1995 to 4.1% in 2002 and in health sector it grew from 4.7% to 5.2%
during the same period
4.0 BANGALORE, THE SILICON VALLEY OF INDIA
Bangalore, India’s Silicon Valley is on a high growth path enormously aided by the
reform measures and a vibrant economy. Today top notch companies in integrated chip
design, communication software, and system software and world renowned R&D centers
have made Bangalore the fourth largest technology cluster in the world. It capital of
India has in its fold 612 MNCs,66 global fortune 500 companies, and 1566 IT companies
50 per cent of India’s SEOI CMM level 5 companies. The number of It companies
registered with STPI is 1566 and they exported software and services of worth US$ 6.27
billion during 2004-05. They grew by 52 per cent over 2003-04. While ITES /BPO grew
from 28 during 2001-02 to 138 during 2004-05 and exports from hardware sector touched
US$ 405 million during 2004-05. Investment in IT sector has been consistently showing
an upward trend from US$ 122 million in 1999 to US$ 640 million during 2004-05.
With 2.85 lakh IT professional and 20,000 bio-tech professionals steering the course of
development, Bangalore’s IT boom has pushed real estate development to a new high in
2005-06. A salubrious climate, cosmopolitan outlook, availability of skilled man power
with 40,000 engineers graduated every year, and investor friendly attitude have propelled
Bangalore to the forefront of technological capital of India. During 2004-05 out of 305
companies registered, 129 are foreign companies with an investment of US$370 million.
IT boom has helped real estate, retailing, automobile, entertainment and transport sector
to come up very well. It companies on average pay out Rs. 10,700 crores annually and it
is est6imated that Rs. 5350 is channeled to varied investments. The average age of an IT
employee is less than 25 and earning potential nudges investment from lower needs to
higher order needs. It is estimated that 750 new vehicles are adding every day to the
existing stock of 27 lakh vehicles on road.
The city’s 70-80 per cent of office/market transactions in Bangalore is related to IT/ITES
sectors. Besides commercial property, the IT growth has led to an unprecedented demand
for residential property and other sectors like hospitality, healthcare and service
apartments during 2005-06. Further US techies voted Bangalore as their alternate home
in India during a recent survey conducted in California and New York in September
2005. IT industry is expected to generate additional 5.25 lakh new jobs by the year
2010.The liberalisation of FDI norms convinced 20 foreign companies like Tiechman,
balckstone, JP Morgan Stanley and so on to invest in township projects along with local
player HDFC and ICICI banks. On an average, every second day a new company entered
in Bangalore and set up premises. The city demands 7 million square feet with in next 12
months as the top 15 IT companies would employ 1lkh people at the current recruitment
level. Further IBM entered the city with just 1lakh sq.ft five years ago and today it is
occupying 8 lakh sq.ft
Even more exhilarating is the pace of innovation, as tech hubs like Bangalore spawn
companies producing their own chip designs, software, and pharmaceuticals. "I find
Bangalore to be one of the most exciting places in the world," says Dan Scheinman,
Cisco Systems Inc.'s senior vice-president for corporate development. "It is Silicon
Valley in 1999." Beyond Bangalore, Indian companies are showing a flair for producing
high-quality goods and services at ridiculously low prices, from $50 air flights and
crystal-clear 2 cents-a-minute cell-phone service to $2,200 cars and cardiac operations by
top surgeons at a fraction of U.S. costs. Some analysts see the beginnings of
hypercompetitive multinationals. "Once they learn to sell at Indian prices with world
quality, they can compete anywhere," predicts University of Michigan management guru
C.K. Prahalad.
However the race plays out, Corporate America has little choice but to be engaged -heavily. Motorola illustrates the value of leveraging both nations to lower costs and speed
up development. Most of its hardware is assembled and partly designed in China. Its
R&D center in Bangalore devises about 40% of the software in its new phones. The
Bangalore team developed the multimedia software and user interfaces in the hot Razr
cell phone. Now, they are working on phones that display and send live video, stream
movies from the Web, or route incoming calls to voicemail when you are shifting gears in
a car. "This is a very, very critical, state-of-the-art resource for Motorola," says Motorola
South Asia President Amit Sharma.
As perceived by Mr.Stephen S. Roach, MD and Chief Economist, Morgan Stanley ,USA
in October 28, 2005 India’s economy is more balanced than China’s and the country can
sustain over 7 per cent growth over a long period as the private consumption is driving
the country’s growth. Domestic private consumption in India accounts for 65 per cent of
India’s GDP, while it’s only 42 per cent in India.
Look at the India’s biggest telecom deal and largest single foreign investment announced
in 28th October, 2005. Vodofone would pick up a 10 per cent stake in Bharti Tele
Ventures for US$ 1.5 billion. The venture capitalist Warburg Pincus finally made US$1.6
billion from his investment of US$300 million in 1999 from Bharti Tele Ventures. And in
India where bandwidth cost is hardly $3 per month, the mobile service comes at an
average of around $10 per month, local companies like Bharti Tele Ventures recorded
growth rate of 35% on a year to year sales in 2005.
Ford India has received $75 million fresh equity infusion from its parent in 2005 Cisco
also pumped $1.1 billion to its Bangalore R&D division in 2005 in addition to the earlier
allotment of $750 million in the same year. The paradox of the Indian market is seeing
techies in India creating solutions for the developed world while MNCs are innovating
their products for the market here. For example, Microsoft will be launching an operating
system in January 2006 which is very specific to Indian market (adding 9 Indian
languages along with English). Bill Gates is scheduled to visit Bangalore in December
2005 in connection with Microsoft’s 30 year anniversary celebration and hold talks with
Indian companies.
Indians are playing invaluable roles in the global innovation chain. Motorola, HewlettPackard, Cisco Systems, and other tech giants now rely on their Indian teams to devise
software platforms and dazzling multimedia features for next-generation devices. Google
principal scientist Krishna Bharat is setting up a Bangalore lab complete with colorful
furniture, exercise balls, and a Yamaha organ -- like Google's Mountain View (Calif.)
headquarters -- to work on core search-engine technology. Indian engineering houses use
3-D computer simulations to tweak designs of everything from car engines and forklifts
to aircraft wings for such clients as General Motors Corp. and Boeing Co. Financial and
market-research experts at outfits like B2K, Office Tiger, and Iris crunch the latest
disclosures of blue-chip companies for Wall Street. By 2010 such outsourcing work is
expected to quadruple, to $56 billion a year. Nokia Corp. is building a major campus to
make cell phones in Madras, and South Korea's Pohang Iron & Steel Co. plans a $12
billion complex by 2016 in Orissa state. But it will take India many years to build the
highways, power plants, and airports needed to rival China in mass manufacturing
CONCLSION
to summarize, liberalization of services provide the glue that holds the economy together
and low-cost and efficient services improve the workings and productivity of both the
national and global economy as a whole. The widely shared perception that information
and communications technology is a general purpose technology that improves
productivity and technological progress in the economy as a whole motivated the
Information Technology Agreement. A similar case for well-conceived service
liberalization could be made for basic infrastructural services all over the world
American business isn't just shifting research work because Indian and Chinese brains are
young, cheap, and plentiful. In many cases, these engineers combine skills -- mastery of
the latest software tools, a knack for complex mathematical algorithms, and fluency in
new multimedia technologies -- that often surpass those of their American counterparts.
As Cisco's Scheinman puts it: "We came to India for the costs, we stayed for the quality,
and we're now investing for the innovation."
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PROFILE OF THE AUTHOR
Dr.S.Shajahan BFSc, MBA, Ph.D., is a faculty member, ICFAI Business School,
Bangalore. He authored 8 textbooks including International Business (Macmillan India
Ltd, New Delhi) and 30 articles in management. At present Dr.S.Shajahan is a founder
co-ordinator of CRM TODAY Inc. USA-Indian chapter linking ERP technologies from
USA to Indian Corporates contact: [email protected]
Popular books authored
His latest book is Relationship marketing-Text &cases is published internationally by
McGraw-Hill and forwarded by Prof.Jagadish N.Sheth , Charles H.Kellstadt Professor
of marketing ,Goizueta Business school of Emory University ,Atlanta 30322-2710
http://highered.mcgraw-hill.com/sites/0070583374 WIDELY FOLLWED IN INDIA
- INCLUDING ALL IIMs. At present he is working as the founder co-ordinator of
CRM TODAY Inc USA, India chapter