BUSINESS OPPORTUNITIES IN INDIA

Transcription

1 BUSINESS OPPORTUNITIES IN INDIA India is third largest economy (US$ 4.5 trillion GDP on PPP basis) in the world which is expected to grow at the CAGR of 6-9% for coming two decades. The thriving middle class and 1.2 billion population has created a huge domestic market which can withstand vagaries of global economic cycles. India has been able to grow at the rate of 5% during worst of global recessionary phase. Sixty percent of Indian population is in the working age. India boasts of largest number of technical graduates in the world. Almost all the sectors of Indian economy are faring well. The ever enlarging middle class means that there is great demand for Automobiles, Processed food, Fast Moving Consumer Goods, Entertainment, Tourism, Computers, Electronic equipments, Transportation, Airlines, Roads, Ports, Banks, Housing Projects, Schools and Hospitals. New manufacturing facilities are sprouting in remotest of areas thereby bringing development to hitherto backward places. The economy is booming on the back of increasing demand. There is need of large scale capacity building in every sector of economy and industry to meet the local demand. The overall positive ecosystem for business and commerce has given rise to large number of small and medium businesses all over India. India is home to about 48.8 million small and medium enterprises and is all set to become the largest SME nation globally, a study by market research firm Zinnov has said. It provides employment to around 81 million people. Today 1.5 million SMEs export their products or services outside India. Given below is brief details of important sectors of Indian economy. Indian Information Technology industry generates revenue of approximately US$ 108 billion and contributes 7.5% to the India s GDP. In the year , IT exports were estimated at $76 billion while domestic sales were $32 billion. Of the $32 billion, 12 percent were hardware and the remaining were software and services. Information Technology has evolved as a major contributor to India s GDP and plays a vital role in driving growth of the economy, in terms of employment, export promotion, revenue generation and standard of living. It is estimated that India based resources account for around 60% to 70% of the offshore delivery capacities available across the leading multinational IT players. The Government of India has recently approved the National Policy on Information Technology The policy aims to increase revenues of IT and ITeS industry from US$ 100 billion to US$ 300 billion by 2020 and expand exports from

2 US$ 76 billion to US$ 200 billion by Further, it will help to promote innovation and research and development (R&D) in cutting edge technologies and development of applications and solutions in areas like localization, location based services, mobile value added services, Cloud Computing, Social Media and Utility models. India has been leader in cotton and textiles for since the dawn of mankind. India's total textile and apparel industry size is estimated at $89 billion in 2011 and is projected to grow at a CAGR of 9.5 per cent to reach $223 billion by Indian Textile sector contributes about 14 per cent to industrial production, 4 per cent to the gross domestic product (GDP), and 17 per cent to the country's export earnings. It provides direct employment to over 35 million people. The textiles sector is the second largest provider of employment after agriculture. The textiles sector has witnessed a spurt in investment during the last five years. The industry attracted foreign direct investments (FDI) worth US$ 1.04 billion during April 2000 to November With retailers like Wal-Mart, JC Penney and GAP planning to substantially increase their outsourcing from India and FDI in single brand retailing making its way into the country, the opportunities for domestic apparel exporters are immense. India enjoys a significant lead in terms of labour cost per hour over developed countries like US and newly industrialized economies like Hong Kong, Taiwan, South Korea and China. India is rich in traditional workers adept at valueadding tasks, which could give Indian companies significant margin advantage. India is poised to become hub of automobile manufacturing. The Indian automobile industry is estimated to have a total turnover of US$74 billion for the year ending 31 March India is the world s largest three-wheeler, second-largest twowheeler and heavy commercial vehicle and the third-largest light commercial vehicle market. The country is rapidly being established as a small vehicle product development hub. There are as many as 12 multinational players in the original equipment manufacturer (OEM) segment in the Indian market, and a number of expansion or new projects have been announced during Exports of vehicles have grown at a CAGR of 25% over the period The Indian pharmaceutical market which was estimated at US$21.5b in 2011, is expected to grow at a CAGR of 14.3% to reach US$36.7b by India accounts for

3 nearly 8% of global pharmaceutical production which makes it the third- largest pharmaceutical manufacturer worldwide. Nearly 18 of the top 20 global pharmaceutical companies have set up their subsidiaries in India. India s total pharmaceutical exports were estimated at US$ 15.5 b in , growing at a 25% over previous year. The US is the largest market for India s pharmaceutical exports. India accounts for more than 45% of the world s requirement of bulk drugs. India exported gems and jewellery worth US $ billion in the year The two major segments of the sector in India are gold jewellery and diamonds. The country is the largest consumer of gold, accounting for more than 20% of the total world gold consumption. Gold jewellery forms around 80% of the Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond and gemstone studded jewellery. India is world's largest cutting and polishing centre for diamonds. At present, India exports 95% of the world s diamonds, according to statistics released by the Gems and Jewellery Export promotion Council (GJEPC). The government plans to establish diamond bourses in an endeavour to make India an international diamond trading hub. The Indian capital markets have made significant progress in the last decade, which spans several dimensions of development such as accessibility, regulatory framework, market infrastructure, transparency, liquidity and the types of instruments available. All these factors have culminated in the emergence of a much deeper and resilient primary as well as secondary capital markets in India which makes it most modern sector of Indian economy and almost at par with the best in the world The Securities and Exchange Board of India (SEBI) has proactively introduced measures to improve the integrity of the secondary as well as primary markets through better governance. Foreign Institutional Investors and Qualified Foreign Investors can invest in Indian capital markets. Saudi nationals can invest directly in Indian shares and equity market by Qualified Foreign Investor route. The engineering goods industry in India is one sector that has been growing steadily over the last decade. The shipment of engineering goods has also shown a remarkable eight-fold increase in the last decade. India engineering exports were worth

4 US$ 56 billion in The industry currently employs over 4 million people, both skilled and semi-skilled, through direct and indirect processes. The engineering goods industry has been receiving special attention from the Government of India due to the country s ongoing industrial expansion and infrastructural developments. Further, the government s FDI initiative has been fuelling demand of engineering goods. Some measures undertaken up by the government, such as eradicating tariff protection on capital goods, allowing 100 percent FDI and lowering custom duties, have contributed positively to the growth of the industry. In 2011, India was ranked first in the Engineering Research and Development and Design (ER&D) outsourcing industry, by virtue of a 22 percent share in global revenues. Largely because of cost effective labor and proactive government regulations, India has developed as an outsourcing hub for production, improvement and maintenance of machinery. Though India currently has the fifth largest electricity generation capacity in the world pegged at 1,92,792 MW, the growth of the economy is expected to boost electricity demand in coming years. India saw a total capacity addition of approximately 54,000 MW during the 11th Five Year plan ( ). According to Government of India estimates, the nation s per capita power consumption was pegged at 779 kwh in FY10, far below the world average of over 2,782 kwh. In India, power is primarily generated from thermal and nuclear fuels, hydro energy and renewable sources. Government of India has taken several initiatives, such as promoting the Renewable Purchase Obligation (RPO) scheme, allowing 100 per cent FDI through the automatic route, setting up of ultra mega power projects and encouraging joint ventures through the PPP route to step up private sector participation. The sector is expected to generate investments of approximately US$ billion for capacity addition of MW of electricity during the 12th Plan period ( ) to meet the increased power demand and grow at a CAGR of 7.5 per cent over This is ideal time to invest in India as there is ready market for goods and services within India and high scope for capacity building in future. The high growth rate in coming decades and huge domestic market will ensure ever increasing market and demand for products. India s proximity to the South East Asian, Middle East and African markets and well connected ports makes it an ideal location for establishing production

5 and commercial facilities. Government of India has introduced one of the most transparent and liberal FDI policy to attract foreign investment. All major international banks are operating in India.