India
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Transcript of India
Agenda
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
Growth Imperative Better Profit Realization Efficiency Imperative Spreading Risk Accessing Technology To be Present in the Lead
Market Learning & Innovation
Preempting Competition - Strategic Positioning
Defending the Home Market (Cross Parry)
Following the Competitor Following the Customers Bandwagon Effect
“Business transformation through services globalization is one of the most important levers that global companies can no longer afford to ignore”
The Indian Dimension
Area : 3.29 million sq. kmPopulation : 1.09 billion
Urban:300 millionRural : 700 million
Capital : New DelhiStates : 28Languages : 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 India post 1995 and counting
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.
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
Second Largest Emerging Market
Fourth largest Economy (PPP) - A
safe place to do business
Largest democracy – political stability &
consensus on reforms
Largest reservoir of skilled/semi-skilled
manpower
Long-term sustainableCompetitive advantage
- High growth rate economy
Highest returns on investment; India
19.33%, China 14.25%, Thailand
13.3%
Liberal & transparent
investment policies
“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
Immense labour pool High on qualification/capabilities Low on cost Language skills Work ethics
WTO accession & commitments
Mature financial market
IP Protection Laws
Favourable labour laws
Capitalist work ethic
Mature management talent
Breadth and scalability of services
India is emerging as the preferred global destination due to a number of significant advantages over other countries
Location Attractiveness Infrastructure
Communications International connectivity Ever improving highways and ports infrastructure Communications
Low Country Risks/ FDI Incentives Stable political environment Independent judiciary Low entry barriers Attractive Incentives
India’s Robust Macro Economic Indicators talk …
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Forex Reserves (USD Billion)
GDP – US$ 850 Bn (growing at 8%); India is all set to surpass Italy, France & Germany in US$GDP by 2020 and Japan by 2030
Sustained economic growth – over 7% in next 50 years (Goldman Sachs)
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FDI (US$ Mn)
You are setting your eyes on the fourth largest economy in the world (in terms of purchasing power parity)
Indo US Collaboration
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
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
Automotive 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 2001-02, overseas sales of Indian companies have jumped to US$ 2.2 billion in 2005-06
Drivers for growth 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…
Healthcare & Pharma 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 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. Leverage India’s low cost structure
Continued…
Construction 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 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...
Retail 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 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… Telecommunication
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 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 Setting up manufacturing facilities Supply of hand sets and equipments Telecom & Value added service
Other leading sectors for US exports and Investment in India
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-
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
About Tecnova “22 years of operation, over 200 clients (from 18 countries) with 130 Fortune 1000 companies”
TECNOVA- a Consulting firm specializing in providing workable strategy solutions and implementation assistance to foreign companies for leveraging the “India advantage”
Help foreign companies investigate opportunities, understand markets, start-up business, compete more effectively, and expand in India
Advised more than 200 companies and have implemented the start up operations for 125 of
them to leverage India advantage
70 people based in New Delhi; Over1 million man-hours of consulting work across entire
spectrum of Indian business 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
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 OfferingsPHASE-I
Market Research India Visit Strategy
Location Analysis
Cost benchmarkDetailed Business
PlanImplementation
PHASE-II
Sales Ramp up services
Risk MitigationRegulatory Compliance
Assistance to leverage India advantage
PHASE-III
(Indian Entity)
Outline Business Plan
Partial list of clients- Sector wise
1. Danaher Group, USA2. Valmont Industries, USA3. Mondi Group,USA
(Frantaschach Packaging)4. Johns Manville USA
(Warren Buffet Company)5. Presstek, USA6. Novus, USA7. Goss International, USA8. MSA, USA9. International Paper, USA10. Roquette, France11. SICK, Germany12. ISS, Denmark13. Chr.Hansen,Denmark
1. Findlay Industries, USA2. Michelin, France3. Jost Werke, Germany4. Surtec, Germany5. Caran Design, Sweden6. Alteams, Finland
B2B Consumer Durables Healthcare/ Pharma
1. Gillette, USA
2. Haworth, USA
3. Kohler, USA
4. Sunbeam (Jarden Consumer Group), USA
5. Mary Kay, USA
6. Elkay Manufacturing, USA
7. L’Oreal, France
8. Arc International, France
9. Sennheiser, Germany
10. Miele, Germany
11. Perfetti, Italy
12. Teuco, Italy
Auto
1. Barr Labs, USA2. Nektar Therapeutic, USA3. Genezyme, USA4. Patheon, USA 5. Cephlon, USA6. Cytyc, USA
7. BioMerieux, France
8. SCA Hygiene,Sweden