OPPORTUNITIES IN GLOBALIZATION FOR INDIAN COMPANIES

By,

KrishnaKumar

SIMSR Mumbai

Globalization

What is Globalization? Globalization, as a concept, refers both to

the "shrinking" of the world and the increased consciousness of the world as a whole.

Globalization has increased due to the fast progress that has been made in the field of technology.

India before globalization

A stringent regime of “Autarky” and “Command and Control” economy, from 1956 to 1975.

Bitter experiences from East India Companies & British rule made Indian little bit cautious for adventures of globalization.

The proportion of population below poverty line was 55% in 1973. By 2000, it stood at 26%.

Foreign trade accounted for only about 5% of the national income.

The overall growth rate during 1950-80, was only 3.5%.

Why Globalization?

Liberalization. Emphasis on cost cutting. Increasing importance given by

consumers for high quality goods and superior services.

Creation of various trade organizations and trade blocks.

Access to new technology.

Favourable factors - India

Entrepreneurial skills . Large domestic consumption and

domestic market. Large pool of skilled and cheap work

force . Huge English speaking population.

Effects of Globalization on the various Indian industries

Textile industry

Predominantly an unorganized industry before Globalization.

India earns around 27% of the foreign exchange from exports.

Contribution of the Indian textile Industry towards the gross domestic product (GDP) of India is around 3%.

Eg: Welspun acquired UK based Christy.

Steel Industry

India steel industry is experiencing a slow but steady growth.

Caters to many other industrial sectors.

Plans for 3 pig iron manufacturing units(6 lakhs ton) and steel manufacturing unit(1 million tons) in WB.

Indian steel industry plans a reversal of the production of steel industry. Optimum utilization of the plant capacity Nullification of any form of drawbacks Tackle the possible threats

IT and ITeS sector

New hub of economic activity in the post globalisation scenario.

IT & ITES has created around 10 million jobs.

India is now world’s one of the most favoured destinations for IT outsourcing, It has become the world’s IT workshop.

HCL and Infosys fought ferociously to acquire Axon, a UK based SAP consulting firm. Finally HCL made it.

Pharmaceutical Industry

Advantages Number of jobs Advanced technology Quality of medicines Acquisition and in turn growth

Disadvantages Reduced profit levels of the Indian companies People losing their jobs.

Macro scenario after Globalization Higher Rate of GDP Growth. Income and Savings. Households using electricity (34 %to 54

%), Cooking Gas (2 %to 11.71 %). Fiscal deficit :

9%(1991)7.2%(1992)3.3%(2006). Foreign Exchange : Due to growing

strength of BOP country has strong positions in FDI & FII.

Indian Companies that benefited

IT companies like Tata Consultancy Services, Infosys technologies, Cognizant Technology Solutions etc have grown at a great pace after globalization.

Companies like Tata Motors, Hero Honda, Maruti Suzuki etc. now have customers all over the globe

Airtel

This is India’s biggest telecom service provider.

After its growth started slowing down in India, Bharti Airtel is now increasing its global presence. It acquired Zain Telecom in Africa recently.

After sensing global opportunities, Bharti Airtel recently repositioned itself to cater to its global customers alike!

Aditya Birla Group

It is the world’s 4th largest Carbon Black maker with an annual capacity of 9,00,000 tonnes.

It recently acquired Georgia based Columbian Chemical Company (CCC) which is a 100 year old company.

According to Mr. Kumar Mangalam Birla, the world has become smaller because of globalization. We need to constantly reinvent ourselves, he says.

Dabur

Dabur is India’s 4th largest FMCG player with a strong foothold in the Healthcare and Personal care areas.

Dabur is targeting markets that are similar to India.

It has acquired firms like US based “Namaste Group” and Turkey based “Hobi Kozmetik”.

Evolution of the Opportunities for Indian companies

Step 1•1991- 2000 -> Decade of Body Shopping.

Step 2• 2000-2007 -> Off-

shoring or Outsourcing.

Step 3

• 2007-2010 -> Business Transformation period where clients seek solutions. For example an insurer asks an Indian firm what kind of customers should it sell new policies to?

So what about 2010-2020?

Support function Collaborative Partner There would be a transformation in the

Global perception about Indian companies from labour arbitrage destination to intellectual arbitrage destination. For e.g. An insurer asks the Indian firm to take charge of its actuarial services. Offshore companies may manage the complete business.

Tip of the iceberg?

February 7, Economic times “ In one of the largest aerospace

outsourcing contracts awarded to a mid-tier Indian firm, Bangalore-based Maini Group has bagged a multi-million dollar contract from German engine maker MTU Aero-Engines to make components for Eurofighter Typhoon and the next generation A380 and A320 Airbus planes”

The Future?

Globalization has enabled the free flow of technology, goods and people across the globe.

Indian companies are facing cut throat competition from global giants. Also Indian companies are giving some foreign countries a run for their money in their home country. This is expected to continue.

Indian companies are being affected by protectionism even in the globalized world. Hence they need to be innovative for the rest of the world to be dependent on India.

Globalization has created a level playing field, hence it is the survival of the fittest.

India needs to improve the quality of its workforce to stay competitive.

Conclusion

Due to globalization, the search for more cost-effective locations of production can make India a huge global manufacturing and supply base. But we need to compete with countries like China, South Korea etc.

Government and industry should have to build a strong partnership and create conditions for Indian companies to become global MNCs.

Conclusion Contd..

International businesses are being developed by Indian companies in order to gain economies of scale and de-risk their dependencies on limited domestic geographies and markets vis-à-vis their global competitors.

Due to the world becoming a ‘global village’ there are huge opportunities for companies that perform business activities better and innovative than competitors .

When they ruled us, we barely had something!

When they left us, we almost had nothing!But today,

They understand that we have arrived!

Here comes INDIA…….. -Proud Indian(s)