Inclusive industrialization
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Model & Responsibility A necessity in resource-based Industrialization
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Manufacturing Growth
Model for Integration
Responsibilities
Suhas Baxi; 27th Nov 2010
In India
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Suhas Baxi; 27th Nov 2010
World Business… in blocks
Brazil, Russia, India, China Growth, Investments, Returns, Wealth Creation
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Suhas Baxi; 27th Nov 2010
BRIChina: Reserves,Infrastructure, Manufacturing...
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Fastest growing sectors (next 5 years)
1. Electricity, gas & water (13,8%) 2. Paints, varnishes &c. (13,6%) 3. Telecommunication equipment
(12,6%) 4. Pharmaceuticals (11,6%) 5. Man-made fibres (11,5%) 6. Special purpose machinery (11,4%) 7. Electric components (11,4%)
China Sector Shares % of GDP
Services 31%
Agriculture 9%
Extraction 4%
Utilities 4%Construction 6%
Manf of non durable consumer goods 9%
Manf of durable consumer goods 3%
Manf of investment goods 16%
Manf of intermediate goods 18%
Sectoral GDP Split
Source: Oxford Economics 06/2009. 1) Sector Split: % of GDP 2008
Services 31% (General Service including: Insurance, Banking, Consulting etc.)
Suhas Baxi; 27th Nov 2010
BRIndiaC: Domestic Consumption & Infrastructure growth
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India Sector Shares % of GDP
Services 59%
Agriculture 16%
Extraction 2%
Utilities 2%
Construction 7%
Manf of non durable consumer goods 3%
Manf of durable consumer goods 0%
Manf of investment goods 2%
Manf of intermediate goods 9%
Fastest growing sectors (next 5 years)
1. Motor Vehicles (10,9%) 2. Other manufacturing (10,0%) 3. General purpose machinery
(9,9%) 4. Machine tools (9,2%) 5. Pharmaceuticals (9,2%) 6. Coke,petroleum & nuclear fuel
(8,7%) 7. Iron & steel (8,5%)
Source: Oxford Economics 06/2009. 1) Sector Split: % of GDP 2008
Sectoral GDP Split1)
%
Services 59 % (General Service including: Insurance, Banking, Consulting etc.)
Suhas Baxi; 27th Nov 2010
India’s Challenges to achieve 18% GROWTH in manufacturing sector
Sustaining Growth Create Growth
1. Automotive
2. Other manufacturing
3. General purpose machinery and
Machine tools
4. Pharmaceuticals
5. Coke, petroleum & nuclear fuel
6. Iron & steel
1. Electricity, gas & water
2. Hightech, Electronics
Mineral Resources, Fossil
Fuels, Wind & Solar Power will play a crucial role in
driving this growth
18% annual growth will need a wider growth base
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Suhas Baxi; 27th Nov 2010
Integrated Industry Structure with certain limitations
Iron/ Coal Mines
Iron & Steel & Mineral
Intermediates
Steel & Mineral Products Machinery
Ancillaries
Other Intermediate
Goods Automobile
White & Brown Goods
Consumables
• Utility & Commodity companies have been able to create fully integrated businesses around the world
• Food Industry in India has also been able to create a successful model for integrated businesses
• Conventional manufacturing companies need competencies in technology, markets and business model that may not allow them to create fully integrated models
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Suhas Baxi; 27th Nov 2010
Efficient Markets
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Suhas Baxi; 27th Nov 2010
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Integrating the industry thru efficient markets
Power & Gas Convergence: Price Discovery, Availability, Risk Mitigation
Production Company
Transport Company
Distribution Company
Retailer
Trader Energy Exchange
Consumer
Service Provider
Generation Company
Transmission Company
Distribution Company
Gas
Power ISO / RTO
Storage
Suhas Baxi; 27th Nov 2010
Posed by Resource based Industrialization
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Suhas Baxi; 27th Nov 2010
Environment & Traditional Livelihood
• Government Role ▫ Proactive ▫ Building Consensus
• People Aspect ▫ Displacement ▫ Education ▫ Future generations
• Environmental Impact ▫ Growth at what cost ▫ For whom ▫ Mining is a necessity for
growth; how do we minimize the negatives
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Suhas Baxi; 27th Nov 2010
A Socially Conscious & Innovative model for integration
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Suhas Baxi; 27th Nov 2010
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Today, ~400M people are employed, primarily in unorganized sectors
Note: *limited to employees who receive provident fund and social security benefits; ^consists of those in the working age group (15-59) actively seeking employment; Source: Registrar General of India; NSSO; Indiastat; Labour Bureau of India
0
250
500
750
1,000
1,250
Total pop.
~1,100
Population(age 15-59)
687
Employable^
450
Employed
402
Nonagricultural
CasualRegular
Self employed
201
Organised
32
Working population breakup (M), FY 2007
62%
66%
89% 50%
16%
Of the ~400M, • ~200M people employed in
agriculture • ~90M people self employed in
non-agricultural sectors • ~70M people employed in regular
sector • ~40M people employed in casual
sector
*
Suhas Baxi; 27th Nov 2010
Resource based Industrialization “Creating Organized sector jobs that benefit large sections of our population will be the best way to achieve resource based industrialization”
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Suhas Baxi; 27th Nov 2010