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FASTEST GROWING FREE MARKET DEMOCRACY IN A GLOBAL ECONOMY
INDIA
Presentation by: Kamal Meattle, CEO, PBC-STIP, New Delhi, India [email protected]
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• THE INDIA STORY
• INDIAN SUCCESS STORIES
• INTERNATIONAL SUCCESS STORIES
• INDIA ADVANTAGE
• BUSINESS OPPORTUNITIES
• BUSINESS OPPORTUNITES FOR PHILIPPINES
• SME : ADDING VALUE
• WINNING ATTITUDE
• ACKNOWLEDGEMENT
CONTENTS
3
THE INDIA STORY
4
1947 : Year of Indian Independence
Today’s India is one of the fastest growing Democratic Market Economy, well on it’s way to be integrated with the world economy
The famous Goldman Sachs report ( Dreaming with BRICs: The Path to 2050 ) states that, among Brazil, Russia, India and China, India will grow the fastest over the next 30 to 50 years by leveraging its demographic advantages and through continued development
India’s GDP will exceed Italy’s in 2016, France’s in 2019, Germany’s in 2023 and Japan’s in 2032
INDIA TO BECOME THE 3RD LARGEST ECONOMY IN THE WORLD BY 2032
AND…THE STORY BEGAN IN 1947
5
• Planned Industrial Development
• Industry Licensing and Quotas
• Dominance of Public Sector
• Restriction on Private Investment
• Socialism
• Mixed Economy
India Pre - Liberalization
6
• Liberalization of Industrial Licensing
De-licensing
De-control
De-regulation
Broad banding
Abolition of registration
• FERA LiberalizationLiberalization of foreign investment
Liberalization of Technology Import
The New Industrial Policy for liberalization-1991
7
• MRTP LiberalizationAbolition of threshold assets limit
No MRTP clearance needed for expansions, mergers
• Curtailment of Public Sector
Several industries hitherto reserved for public sector opened up to private sector
Only eight core industries remain reserved for the public sector
Purview of Board for Industrial and Financial Reconstruction (BIFR) extended to Public sector
The New Industrial Policy for liberalization - 1991
8
• Government’s role changed to Regulator from Licensor
• All Licenses Rationalized
• Active participation of private sector
• FDI being Welcomed (100%) - Automatic Route
• Barriers Dismantled & Procedures Simplified
• Indian Industries Actively Investing Abroad
• Bureaucracy - Less Government is Good Governance
• Allowing Market Forces to Govern the Efficient Allocation of Resources with Minimum State Intervention
• Reducing and rationalising foreign trade barriers
India Liberalization Stage - Strategies Developed
9
• India - One of the fastest growing economies in the world
• Average GDP growth (1995 -2005) : 6.2 % per annum
• Average annual growth (1995 - 2005)
Agriculture & Allied : + 2.1 % per annum
Industry : + 6.6 % per annum
Services : + 7.8 % per annum
• Average Per Capita Income growth (1995 - 2005): 3.8 % per annum
• Inflation down to a single digit level continuously for the last ten years
• Foreign exchange reserves increased from US $ 2 b (March 1991) to US $ 145 b (September 2005)
• Merchandise Exports : +20 % average rate of growth in last three years
• Booming Services Exports from US $ 4.6 b in 1990-91 to US $ 51.3 b in 2004-05
Economic Scenario : Post Liberalisation
10
• Balance of Payments surplus (US $ 26 b in 2004 - 05)
• External Debt Service Ratio down from 26.2 % in 1995 to 6.2 % in 2005
• Foreign Direct Investment (FDI) : Average +US $ 5 b pa in the last five years.
• Foreign Portfolio Investment : US $ 11.4 b in 2003-04 and US $ 8.9 b in 2004-05
• Reforms continuing and have unleashed dynamic forces – putting the economy on a trajectory of unparalleled economic growth in the future
• The Indian Government is working in close co-operation with industry and trade to mitigate the remaining problems and constraints
• Broad consensus across the political spectrum on the need for and direction of the reforms. Some issues still need to be resolved
Economic Scenario : Post Liberalization
11
28.023.8 20.5
27.2
40.6 43.948.9 52.4
32.2 28.1 27.2 27.1
0
10
20
30
40
50
60
1990-91 1995-96 2000-01 2004-05
Agriculture Industry Services
Share Of Services Sector In GDP On The Rise (%)
12
India
• the world’s most irrigated land mass
• world’s 2nd largest exporter of rice & 5th largest exporter of wheat
Food production: India’s Ranking in the World
1st Tea, Milk
2nd Rice, wheat, sugar
Agriculture
13
• Rate of growth
2003-04 7 %
2004-05 9.2 %
• Diversified base of world class capabilities
• State-of-the-art technologies
• TQM,TPM, Six Sigma & Lean Manufacturing - part of
everyday practice
• Diversified industrial base with supporting ancillary industries
• Overseas acquisitions worth US$ 500 m
Manufacturing
14
• Consistent growth
2003-04 9.1 %
2004-05 8.9 %
• Sectors Driving Growth
- ITES
- Healthcare
- Financial Services
- Education
Source:Economic survey, 2004 - 05
Services
15
Average GDP Growth (1990-2001)
9.4
6.25.5
4.9 4.7
3.32.9 2.9
2.0
1.5
2.53.5
4.5
5.56.5
7.5
8.5
9.5
Chi
na
S.K
orea
Indi
a
Tha
iland
Indo
nesi
a
Mex
ico
Phi
lippi
n es
US
A
Bra
zil
Gro
wth
(%
)
Source: WDI, World Bank, 2003
Average GDP growth - India & the World
16
Share of external trade in GDP
18.123.1 25.5 26.9 30.3 28.9 31.6 32
0
10
20
30
40
1991-92 1994-95 1997-98 1999-2000
2000-01 2001-02 2002-03 2003-04
Rising share of India’s external trade in GDP
Target :To double share of exports from 0.7 % to 1.5 % of world trade
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• Land Area: 3.29 m sq. km.
• Population: 1.09 b
• GDP: US $ 630 b
• Real GDP Growth: 6.9 %
• Gross Domestic Savings: 28.1 % (2003 - 04)
• Gross Domestic Investment: 26.3% (2003 - 04)
• Per Capita Income: US $ 580
• Inflation Rate: 6.4 %
Macro Economic Indicators (2004 - 05)
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• Exchange Rate: US $ 1 = 43.75
• Merchandise Exports: US $ 80b
• Merchandise Imports: US $ 106b
• Services Exports: US $ 51b
• Foreign Direct Investment: US $ 5.5b
• Foreign Portfolio Investment: US $ 8.9b
• Direct Investment Abroad: US $ 1.5b
Macro Economic Indicators (2004-05)
19
INDIAN SUCCESS STORIES
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• Number of foreign firms acquired 120 by Indian companies during 2001 - 03
• Total worth US $ 1.6 b
• India - 8th largest investor in the UK
• No of investments 440
• No of Indian companies with 1,441 operations in Singapore
Indian MNCs - On a global buying spree
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• Hero Honda - Largest producer of motorbikes in the world
• Moser Baer - World’s 3rd largest producer of optical media
• Hero Cycles - World’s largest bicycle producer
• Bharat Forge - Amongst the world’s top 3 forgings manufacturers
• UB Group - World’s 2nd largest producer of alcoholic beverages
• Paharpur Cooling Towers - World’s 2nd largest manufacturer of
Cooling Towers
India – Leading The World
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India – Leading The World
• Apollo Hospitals - Single largest hospital chain in South Asia
• TISCO - world’s cheapest producer of steel
• Reliance Industries - World’s largest producer of PTA, a chemical
used in textile production
• Mahindra & Mahindra - Amongst top 3 tractor manufacturers in the
world
• Telco - Amongst top 3 truck manufacturers in the world
• Welspun - World’s largest producer of terry-towels
• Gujarat Ambuja - Amongst top 5 cement producers in the world
23
Some Indian Examples Benchmarked with the Best In The World
24
Success Story of RELIANCE
The Reliance Group founded in 1932, is India's largest business house with total revenues of over US $ 22.6 b and exports of US $ 3.6 b
It began as a an SME
The Group's activities span exploration and production of oil and gas, refining and marketing, petrochemicals, textiles, financial services, insurance, power, telecom and infocom initiatives
The Group exports its products to more than 100 countries the world over
Reliance Group revenue is equivalent to about 3.5 % of India's GDP
The Group contributes nearly 10 % of the country's indirect tax revenues and over 6% of India's exports
Today, the Reliance Group has one of the largest family of shareholders in the world
25
Success Story of WIPRO
Wipro was set up in the backdrop of the small town of Amalner in Maharashtra in 1945
An SME and primarily an oil factory, the chief products were Sunflower Vanaspati and 787 laundry soap
It was in the early eighties that Wipro made its foray into the Infotech arena
With this began the Wipro Infotech story
Today, Wipro stands at the firmament, as a trusted and experienced provider of a comprehensive range of IT services, solutions and products, worldwide
26
Success Story of BHARTI
Bharti Enterprises has successfully focused its strategy on telecom while straddling diverse fields of business
It all began as a Small Industry
Bharti Tele-Ventures is today acknowledged as one of India's finest companies, and its flagship brand 'Airtel', has over 12 million customers across India
Recently, Bharti has successfully launched an international venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri- products exclusively to markets in Europe and USA
27
Success Story of DR.REDDY’S
Dr.Reddy’s Laboratories was founded in 1984, with a capital of US $40,000 in cash and US $120,000 in bank loan
In fact, it is this spirit of entrepreneurship that has shaped the company to become what it is today
Today, the company with revenues of US $446 m, in fiscal year 2005, is India’s second largest pharmaceutical company and the youngest among its peer group
Dr. Reddy’s started its drug discovery programme in 1993 and within three years it achieved its first breakthrough by out licensing an anti-diabetes molecule to Novo Nordisk in March 1997
With this very small but significant step, the Indian industry went through a paradigm shift in its image from being known as just ‘copycats’ to ‘innovators’!
Through its success, Dr. Reddy’s pioneered drug discovery in India Today, the company manufactures and markets API (Bulk Actives), Finished Dosages and Biologics in over 100 countries worldwide, in addition to having a very promising Drug Discovery Pipeline
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Success Story of BIOCON
Biocon is India's leading biotechnology enterprise
Over the past 25 years, they have evolved from an small enzyme manufacturing company to a fully integrated biopharmaceutical enterprise, focused on healthcare
At Biocon, success has been their ability to develop innovative technologies and products and to rapidly leverage them to adjacent domains
This unique "integrated innovation" approach has yielded a host of patented products and technologies that have enabled multi-level relationships with their global clientele
As India's first and leading biotechnology company, Biocon extends its support to numerous community outreach and corporate citizenship initiatives with special concentration in the areas of healthcare, education and environment
The Biocon Foundation, set up in 2004 has recently launched Arogya Raksha Yojana, a unique health initiative for rural India
29
Success Story of Paharpur Cooling Towers
In its over four decades of existence, Paharpur has come to be acknowledged as the pioneer in the Indian cooling tower industry
It all began as a small industry with a capital of US $ 11,000
At today's selling prices, Paharpur has sold cooling towers valued at over US$ 1 b
If these cooling towers were all working together, they would be able to cool more than 265 million liters of water every minute or 382 b liters in 24 hours
The Paharpur team consists of highly qualified engineers & professionals with over 1,000 man years of experience in the field of cooling tower application engineering, designing, erection and trouble shooting
Paharpur has pioneered several improvements in cooling tower design and operation and has emerged as one of the largest cooling tower manufacturers in the world, with exports to more than 40 countries
30
Success Story of Standipack
A successful SSI unit set up in 1980, in NCR, Delhi
• It is the largest lube oil flexible packaging company in India producing packaging materials, machinery and systems and doing contract packaging
• Produces /contract packages over 300 m packages a year, for the oil majors in Delhi, Kolkata, Chennai and Mumbai
• Patents in most countries of the World
31
Success Story of Paharpur Business Centre & Software Technology Incubator Park
• Began operations in 1990 in New Delhi, with an equity capital of Less than US $ 15,000
• Current net worth of US $ 10 m
• Provides a suite of 28 services, employing 450 persons
• Has Fortune 500 companies, MNC's and corporate, as clients
• Has five international certifications, ISO 9001, ISO 14001, SA 8000, OHSAS 18001 and HACCP
• Commitment to UN Global Compact
32
• Publishes its annual Sustainability Report following the GRI system
• Reports its triple bottom line - relating to profit, environment and sustainability
• Now providing technical support to setting up of a 1.7 m ft2 Software Park near Delhi that has been given the SEZ status by the GOI – ‘The Haryana Technology Park’
• Company showcased by CII at the World Summit on Sustainable Development in Johannesburg in 2002 for its sustainability initiatives
• Its USP is the Clean Indoor Air in its Center in Delhi - Certified Mountain Quality Air using biotechnology developed by NASA, USA to clean air
Success Story of Paharpur Business Centre & Software Technology Incubator Park
33
INTERNATIONAL SUCCESS STORIES
34
1,858
1,1051,054
965
548393
263 17236 22 17 8 7
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1
Japan
India
South Korea
Singapore
Australia
China
Hong Kong
Taiwan
Malaysia
Sri Lanka
New Zealand
Philippines
Thailand
India attracts second highest privateequity investment in Asia
Total equity flow to India between 1999 and 2004 doubled
from US $ 5.12 b to US $ 11.50 b
Preferred Destination For Foreign Equity Investors
Source: NASSCOM
35
MNCs leveraging the India Advantage
36
*
FDI INFLOWS TO INDIA
4029
6125
50364674
5526
0
1000
2000
3000
4000
5000
6000
7000
2000-01 2001-02 2002-03 2003-04 2004-05
FDI Inflows ($ million)
37
• More than 100 global companies outsource R&D facilities from India
• GE John F Welch Technology Centre – Company’s largest research outfit outside the USA
• GE Medical Systems – India as sole sourcing base for its portable ultrasound scanner
• Monsanto – First non-US research facility
• Eli Lilly – largest research facility in Asia and 3rd largest in the world
• Texas Instruments – Digital Signal Processor developed in India – controls 50% of the world market
• AVL, Austria – India as base to do R&D for the company’s Japan centre
International Brands Utilizing The Indian Knowledge Base
38
Beiersdorf Problems at beginning:
• Existence of rival company (Nivea) in the market (personal hygiene market)
Reason for success:
• Relative name recognition • Adaptable Indian staff• Suppliers who are willing to cooperate• Immense support in form of technology and know-how transfer
from side of Germans• Great market potential
What is important for business-collaboration with India?
• Patience and endurance• Local manager who knows mother company• Collection of experience through business connections
Case Study of Selected German Companies in India
39
Daimler Benz
• Decentralized research was quite essential • Achievement of local representation to assess market
specified interests
Why India?
• Great resources of highly qualified scientists as staff• Availability of human capital with low labor costs• Internationality: English language and understanding of European culture
(due to British history, existence of numerous institutions, administrations, school etc)
• Economic Policy
Case Study of Selected German Companies in India
40
“Quite simply, I was blown away by what I
saw on my first trip to India”
Stephen Roach, Managing Director &
Global Chief Economist, Morgan
Stanley 2004
“India's highly educated workforce,
management talent, rule of law,
transparency, cultural affinity and regulator
environment are more favorable than
China's.”
A T Kearney, FDI Index 2004
"We want to bring to the world various facets
of this extraordinary country, its people and
progress"
Chris Cramer, International Managing
Director, CNN 2004
"India has the potential to deliver the fastest
growth over the next 50 years with an
average rate of more than 5 per cent a
year for the entire period”
Dominic Wilson, Senior Global
Economist and Vice President,
Goldman Sachs 2005
India – A Preferred Destination
41
INDIA ADVANTAGE
42
Trained manpower and knowledge base
Rich biodiversity
Extensive clinical trial opportunities
Excellent network of research laboratories
Well-developed base industries
Pro active policy framework
Proficiency in English
Low manpower costs
The India Advantage
43
Working
age
population
to rise
to 65%
Urban
population
to rise
to 40%
30-40 mnpeople joiningmiddle class every year
By 2020
Demographics: A strong demand driver
44
Source: IMD Competitiveness Yearbook 2003Source: UN, Morgan Stanley
ISO:9001:2000
Partnership Driver - Skilled Manpower
Global Growth in Working-AgePopulation (15~64) Over the Next
Six Years (Mln)
375
83
73
56
41
38
20
13
0.04
-3
Availability of SkilledManpower, 2003
7.4
7.3
7.2
7.1
7.1
7.0
6.6
5.7
5.3
4.3
Availability of QualifiedEngineers, 2003
10 = High
1 = Low
8.9
7.9
7.3
6.9
6.4
5.8
3.9
6.7
6.7
World
India
Africa
China
S E Asia
L America
W Asia
USA
W Europe
Japan
4,087
675
477
921
355
352
127
197
123
85
StockPosition 2004
Addl workingage population
by 2010
Singapore
USA
India
Germany
Hong Kong
Japan
Taiwan
Korea
Mexico
China
10 = High
1 = Low
India
Singapore
USA
Hong Kong
Germany
Taiwan
Mexico
Korea
China
Growing Knowledge Pool
45
2.4
5.88 6.4 6.5 7.2 7.2 88.9
25 28
6
0
5
10
15
20
25
30
Average wage / year (in thousand US dollars)
Source: NASSCOM
Costs for offshore work 30 - 50 % lower than in USA / Europe
The Cost Advantage
46
Total Compensation for Workers in Heavy Manufacturing (US$ per Hour)
20.32
8.35
2.270.75 0.43 0.35
0
5
10
15
20
25
USA Korea Mexico China India Indonesia
Source: IMD Competitiveness yearbook, 2003
Low Wages
47
Reduction in Peak Customs Duties on Manufactured items
150
110
5038.5 30 25 2042
0
20
40
60
80
100
120
140
160
1991 Mar-92 Mar-95 Mar-97 Mar-00 Mar-02 Mar-03 w.e.f March2004
in p
er c
ent
Import duty Reductions
48
10th largest economy in the world - 4th in terms of PPP
Will overtake Japan in PPP terms by 2010, to be 3rd largest in the world
Large entrepreneurial base and diversified manufacturing structure
Large reservoir of skilled labour at internationally competitive cost
Vast pool of scientifically and technically qualified manpower of 20m
A large domestic market - 300 m + strong middle class population having substantial purchasing power
Largest democratic set - up
A broad based and transparent legal framework including arbitration
India - Economic Enablers
49
Vast network of bank branches, financial institutions and well-organized
capital and money markets
A network of technical and management institutes of highest
international standards for development of human resources
India has a record of meeting its international financial obligations as
per schedule and has never been a defaulter
No communication barrier, as English is the most prevalent business language
Strong and vibrant small scale sector that is keen to establish strategic alliances with their foreign counterparts
India - Economic Enablers
50
Supportive infrastructure base
Strategic location for third country markets, particularly in the rapidly growing south and south-east Asian countries
The strategic location of India and its easy and efficient access to the Middle East, East European countries, CIS countries, Africa, South East Asia and Asia-Pacific countries places it in a unique position as a sourcing ground for entering into strategic alliances in export-oriented industries
Foreign companies can take advantage of India’s strategic location and tap the markets of these countries.
India is slowly but surely emerging as an attractive destination for foreign investment
Liberalized industrial and foreign investment policies
India - Economic Enablers
51
Recognising the need and the potential in certain areas, the Government has also come out with specialised packages of incentives for setting up projects in the fields of power, roads and highways, telecommunications, mining, drugs and pharmaceuticals,hydrocarbons, shipping and ports, tourism, electronics, food processing, etc
The Government is vigorously promoting and approving foreign direct investment keeping in view the objective of attracting at least US $ 10 b per annum
The Government is very keen to attract sizeable foreign investment into infrastructural projects like roads, power, ports, telecommunications, etc. as the demand for infrastructural services is expected to rise several times to match the projected economic growth of around 8 % per annum in the next ten years
India - Economic Enablers
52
Sector FDI Limits
• Defence up to 26 %
• Telecom up to 74 %
• Civil Aviation up to 49 %
• Real estate & construction sector up to 100 %
• Integrated township development up to 100 %
• Tea plantation up to 100 %
India - Economic Enablers
53
• Road length 2.5 m km
Second largest road network in the world
• Railway routes 63,000 km
• Cargo handled 298 m tonnes
• Electricity installed capacity 126,000 MW
Sixth in world electricity generation
• Telephone Connections 77 m lines
• Fixed lines (Dec, 2004) 44.76 m
8th largest telecom network in the world
Source: Department of Economics & Statistics, Tata Services Ltd
The India Advantage: Infrastructure
54
Indian Brains Abroad
• Though foreign multinational have dominated the research agenda in India
to date, a growing number of Indians who have worked abroad are
returning home with cash, contacts and confidence to set up companies
of their own
• These are people who have the experience and exposure to best practices
abroad
• For the first time, Indians who have been exposed to the world, realize they
can do something just as good and they can be world-class
• They have an attitude to meet challenges and succeed and also give back
something to their country
• 35 % of Doctors in USA• 36 % of NASA Scientists in USA• 35 % of Silicon Valley Start-Ups are by Indians• India emerging as outsourcing hub
55
BUSINESS OPPORTUNITIES
56
Opportunity in various Industry Sectors
• Software
• Biotechnology
• Outsourcing
• Retailing
• Real Estate
• Auto Components
• Telecommunication
• Media & Entertainment
57
• The Software industry in India is witnessing an explosive growth and expects to generate US $ 87 b including US $ 50 b from exports by 2008
• More than 150 global business giants have set up research and development facilities in India
Some of these firms are GE, Microsoft, TI, HP, IBM, Daimler Chrysler and Motorola
• Bangalore has over 150,000 software engineers and a concentration of hi-tech companies
• Delhi and NCR is the 3rd largest exporter of Software services from India
• More than 70,000 software professionals enter the Indian market each year
Opportunities in Software
58
Opportunities in Software – The China Connection
• China has a worker base equal to India's in terms of cost, quality and scale
• In future, the Indian software Industry will use China as a base to cater to the local markets including Japan
• Indian firms such as HCL, TCS, Infosys and Wipro have already opened centers in China to outsource technology talent
59
Size (2002 - 03) US $ 24 bGrowth rate 28 %
Share of IT and BPO 1.4 % of GDP2008 projection 7 %
Exports (2003 - 04) + US $ 12 bGrowing at + 30 % pa
CAGR (since 1999) 46 %
Employment Over 650,000Second largest employer in IT services sector
Growing IT Market
60
Opportunities in Biotechnology
• Biotechnology is a fast emerging sector in India
• The consumption of biotech products in India was US $ 1.8 b in 1999 and is expected to cross US $ 4.2 b by 2010
• It is estimated that 10 % of the researchers and 15% of the scientists in pharmaceuticals and biotech R&D in USA are of Indian origin • India is churning out 2 m graduates, 300,000 post graduates and 1,500 PhD's, every year
• Biocon, the first biotech company was launched in 1978 • Indian Firms such as Shantha Biotech, Bharat Biotech, Dr. Reddy's Lab and Biocon are all very successful firms
61
2002- 03
2010
25 % growth in investment
70 % growth in employment
74 % growth in R&D manpower
10 % of global industry
1 m skilled jobs
US $ 5 b annual revenues
Source: Confederation of Indian Industry (CII)
Size 2003 - 04 US $ 705 m
Biotech Market - A consistent Uptrend
62
Volume – wise 8 % of global market
4th largest in the world
CAGR (1995 - 2002) 16.6 %
Exports 23 %
CAGR(1995 - 2002)
Size (2002- 03) US$ 7 b
Share of formulations 80 %
Size 2010 (estimated) US$ 25 b
Pharma Market
63
• The Indian Outsourcing industry is moving up the value chain
• It is BPO today but the future is for Knowledge Process Outsourcing (KPO), Financial Process Outsourcing (FPO) and Legal Process Outsourcing (LPO)
• It is providing value through domain expertise rather than process expertise
• India, in the new knowledge economy, is all set to emerge as a global KPO,FPO and the LPO hub
• It is estimated to capture 71 % of the world market by 2010 against 56 % today giving it a market of US $12 b
• There are new opportunities, given that there is a serious shortage of
quality teachers, in the USA
Opportunities in Outsourcing
64
• The remote education market is expected to be US $ 15 b by 2008
• The current leaders are Engineering design – US $ 400 m, basic
data search, integration and management – US $300 m and Biotech and
Pharma – US $ 280 m
• The Compounded estimated annual growth of KPO for India is 50 %
whereas BPO will grow at about 30 %
• KPO is expected to engage 250,000 people by 2010
• It will be in areas such as biotechnology,animation and graphics,design
in aerospace & automotive, health care, pharma research, learning
solutions, data management, customer analytics and entertainment
• FPO will include insurance underwriting, risk assessment, equity
research and corporate market research
Opportunities in Outsourcing
65
Contribution of IT Enabled Services in total ITexports
1999-200020%
2000-200120%
2002-2003
33%
2001-200227%
- ITES exports projected to touch US$ 24 b by 2008
- India offers combination of cost-quality-scale advantage
ITES - BPO Sector
66
The ongoing buoyancy in India’s spending, arising from the changing demographics and the resultant rise in income levels, has resulted in a distinct consumer preference for value-added products across the retail spectrum, providing a platform for the rapid growth of the retailing sector which could emerge as one of the fastest growing sector in coming years
• Organized retailing industry to rise from US $ 4b to US $ 15b by 2010 The total retailing industry, estimated at US $ 200b is largely in the unorganized
sector with organized retailing accounting for less than 2 % (US $ 4b)
• The organized retailing segment to grow fourfold in 5 years
• According to NCAER, the Indian middle class (household income between US $ 4,500 – 23,000) currently at 92m, is expected to cross 153m by 2010
• Substantial mall construction: The number of malls is expected to rise from the current 40 to around 250 by
2010
• Close to 50m sq. ft. of retail space is expected to be developed over the next 5 years
Opportunities in Retail Sector
67
Opportunities in Real Estate
• The US $ 50 b Indian real estate market is booming and expected to grow at 25 per cent annually
• The boom owing to the consumption powered growth of the country's economy has seen investors planning nearly 250 new shopping malls
by 2008, as against just three that existed till 2002
• The central government adopted a regulation in 2005 allowing foreigners to bid for Indian construction projects with local partners and also reducing their minimum land - holding limit from 100 acres to 25 acres
• Enthused by the liberalized investment guidelines, a slew of foreign builders are rushing to launch projects in Asia's third largest economy
• Expected annual shortfall of 20 m housing units by 2011 Mumbai alone would need more than 180,000 housing units
• An opportunity – for developing large- scale commercial and residential townships in six cities – Kolkata, Bangalore, Mumbai, Chennai, Hyderabad and New Delhi
68
The Indian automotive industry has grown at a staggering pace over the last few years
The US$ 6.8 b industry has registered a CAGR of 17 % between 1998 - 2003 and is projected by ACMA to grow at a 15 % CAGR till fiscal 2012
The opening up of the sector over the last decade has caught the attention of global auto majors
In the 1990’s, economic liberalization allowed foreign automakers such as Hyundai, Ford, Toyota and GM set up base in India
They also persuaded their overseas components suppliers to set up local manufacturing bases in India
For example, Delphi followed General Motors and opened their plant in the state of Gujarat in 1995 and Visteon followed Ford in 1998
Opportunities in Auto Components
69
Opportunities in Auto Components
• Present Industry size US $ 6.8b
By 2012 US $ 17b
• Total Exports By 2010 US $ 5b
• Key Features
- Suitability as a low cost manufacturing base for MNCs
- Costs 20 - 30 % lower, compared to USA
- High product quality, superior design & engineering
capabilities
* Source: ACMA
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Opportunities in Telecommunication
• Until 1995, during the more than forty years of government monopoly, there
were 9.4 m telephone connections
• There are 46.2 m fixed line subscribers and 52.2 m mobile phones
• The mobile phone market is growing at 2 m per month
• Estimated rise in Cellular by 100 m subscribers by 2007
• Basic telephone connections 175 m by 2010
• 100 % FDI in telecom equipment manufacturing
• Almost 2 m wireless subscribers getting added every month
• Unlike many developed countries, the GSM and CDMA technologies co - exist
• The outsourcing boom would not have occurred without the private telecom sector
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• The Indian media and entertainment industry, with the prominent segments being films, television, and music has grown in recent times
• The entertainment industry is currently generating revenue of US $ 7.2b
• The average growth budget for films has been increasing by 15 % p.a
• Another high growth segment of the entertainment industry is television broadcasting
• The present size of this segment is estimated to be US $ 1b
• The penetration of cable TV, in the rural segment is expected to grow by 12 % pa
• The music industry in India is expected grow at 20 % pa
• FM radio broadcasting has been privatized
Opportunities in Media & Entertainment
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FOR PHILIPPINES
BUSINESS OPPORTUNITIES
73
Year Export Import Total Trade Balance of Trade
1997- 98 239.01 27.77 266.78 211.24
1998 - 99 118.71 37.25 155.96 81.46
1999 - 00 143.68 56.31 199.99 87.37
2000 - 01 201.63 62.97 264.60 138.66
2001- 02 248.63 95.17 343.80 153.46
2002 - 03 473.23 123.98 597.21 349.25
2003 - 04 321.54 122.11 443.65 199.43
2004 - 05 393.90 181.87 575.77 212.03
Bilateral Trade
Value in US $ m
Source: Ministry of Commerce, India
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• Meat & preparation
• Drugs, Pharmaceuticals & fine Chemicals • Rubber manufactured products except footwear
• Plastic & Linoleum Products
• Primary & semi finished iron steel
Major Indian Exports To Philippines
Major Indian Imports From Philippines
• Metal ores & scrap
• News print
• Non - ferrous metals
• Gold
• Electronic goods
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• IT & ITES
• Sharing information & technology for clean environment
• Gems and Jewelry
• Natural and Herbal Products
• Renewable Energy Sources
• Dairy
• Drugs and Pharmaceuticals
• Construction and Material and services
• Mining
• Oil and Gas
Potential for Business
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The major sources of air pollutants
Motor vehicles
Industrial plants
Burning and construction work
The continuing increase in motor vehicles and population, the inadequate mass transit system, worsening traffic conditions, the establishment of pollutive industries, the widespread practice of open burning, and inadequate enforcement, if not adequately addressed, are bound to contribute to increasing air pollution in the surrounding areas The most effective approach in improving air quality is to stop the generation of pollutants at their source
This involves replacing a highly pollutive technology or energy source with a non-polluting or a less polluting one, including shifting to cleaner fuels
Deteriorating Air Quality
77
The world’s best practices in preventing air pollution and maintaining ambient air
quality reflect the creative use of technology and fuel options, which range from
• Use of cleaner vehicle fuels - CNG, Gasohol, Biodiesel, Fuel cell, Electricity
• Solar energy
• Wind energy
• Mass transportation systems – Underground, Monorail
• Usage of Appropriate technologies for ‘Green Buildings’
• Innovative urban planning incorporating walkways and bike lanes
Air Quality Management
78
* American Society for Heating, Refrigeration, Air Conditioning Engineers 62-1999 (revised)** American Society for Heating , Refrigeration, Air Conditioning Engineers 62-2001 (revised)# Below Detectable Levelϒ Any presence of Benzene is carcinogenic ^ Data validated to August 2005
ASHRAE*
StandardASHRAE**
Standard(maximum) (maximum)
CO 21000 PPM 455 350 339 300-500 ppm 331 341 345
Carbon monoxide
0.055 ug / m3 BDL# BDL# BDL# 10 mg / m3 BDL# BDL# BDL#
O zone 100 ug / m3 BDL# BDL# BDL# 0.005 mg / m3 BDL# N.A. N.A.
Formaldehyde 0.4 mg / m3 0.278 BDL# BDL# 0.012 mg / m3 BDL# N.A. N.A.
Lead 1.5 mg / m3 2 0.003 BDL# 1.5 ug / m3 BDL# N.A. N.A.
Nitrogen dioxide
100 ug / m3 67 38 34 100 ug / m3 32 33 35
Sulphur dioxide
365 ug / m3 69 40 32 365 ug / m3 31 32 32
SPM 260 ug / m3 1047 593 390 260 ug / m3 389 399 404
RSP 75 ug / m3 672 502 355 - 349 356 354
Benzene 10 ug / m3 45 18.5 10 Carcinogenicϒ 10 N.A. N.A.
Parameter 1996 1999 2001 2002 2004 2005^
Improvement Of Ambient Air - Nehru Place Greens, New Delhi 1996 - 2005
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American Society for Heating, Refrigeration, Air Conditioning Engineers 62-1999 (revised) American Society for Heating , Refrigeration, Air Conditioning Engineers 62-2001 (revised) Below Detectable Levelϒ any presence of Benzene is carcinogenic
ASHRAE*
StandardASHRAE**
Standard(maximum) (maximum)
CO 21000 PPM
818 369 358700 ppmexcess ofambient
351 357 362
Carbon monoxide
0.055 ug / m3
BDL# BDL# BDL#10 mg / m3 BDL# 0.072 0.070
O zone 100 ug / m3
BDL# BDL# BDL#100 ug / m3 BDL# N.A. N.A.
Formaldehyde 0.4 mg / m3
0.156 0.013 BDL#0.5 mg / m3 BDL# N.A. N.A.
Lead 1.5 mg / m3 0.087 BDL# BDL# 1.5 ug / m3 BDL# N.A. N.A.
Nitrogen dioxide
100 ug / m3
30 22 22100 ug / m3 20 21 22
Sulphur dioxide
365 ug / m3
20 28 23365 ug / m3 23 19 19
SPM 260 ug / m3 606 118 94 260 ug / m3 92 90 82
RSP 75 ug / m3 218 55 47 - 46 39 37
Benzene 10 ug / m3
18.5 BDL# BDL#Carcinogenicϒ BDL# N.A. N.A.
2002 2004 2005^Parameter 1996 1999 2001
IAQ Results After IAQ Program At PBCTM - STIP 1996 - 2005
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Areca Palm(Living Room Plant)
Sansevieria Trifasciata(Bed Room Plant)
Using toxin removing plants to clean the air
Biotechnology originally developed by NASA, USA and research done by
PBC - STIP on plants suitable for the Delhi climate
Air Quality Management – Grow Fresh Air
81
SME: ADDING VALUE
82
SME’s IN EU
Category Max.# Employees Max. Turnover Euro m
Medium 249 50
Small 49 10
Smallest 9 2
Wef. January 2005
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The definition of small-scale industries (SSI), is given below
Norms for Definition of SSI in India Maximum Limit of Investment in plant and machinery in INR m
Year SSI Ancillary
1985 3.5 4.5
1991 6 7.5
1997 30 30
1999 10 10
Source: Ministry of SSI, Govt. of India
SME’s IN INDIA
INR 10 m = US $ 227,000
84
Country Share of total establishments
Share of output
Share of employment
Share of exports
India 95% 40% 45% 35%
Japan 99% 52% 72% 13%
Taiwan 97% 81% 79% 48%
Singapore 97% 32% 58% 16%
U.S.A 98% n.a. 53% n.a.
Korea 90% 33% 51% 40%
Malaysia 92% 13% 17% 15%
Indonesia 99% 36% 45% 11%
Contribution Of SME’s Across Diverse Economies
85
To say it in Sam Pitroda’s words
“ Technology is for problem solving at personal, community and national levels It is about doing things differently It is about change in mindset, processes, products and preferences Technology is about opportunities and experiences”
• This is where the SSI is creating a successful niche for itself.
• Technology is empowering people at all levels cutting across sectors
• This has helped India graduate from being a promising economy to one of the fastest growing economies
Technology & SSI
86
• Textiles, Knitwear, Garments, Woolen and Hosiery• Leather and Leather products including footwear and
garments• Food Processing• Drugs, Pharmaceuticals and Biotech• Auto parts and components• Chemicals, Dyes and intermediaries• Hand Tools• Electronic Industry particularly relating to design and
measuring
SSI Dominant Sectors In India
•Glass and Ceramic items including tiles•Information Technology and ITES•Rubber and Plastic Products, Parts & Components•Bicycle and Bicycle parts•Foundries – Ferrous and Cast Iron •Lubricant Manufacturing•Gems and Jewelry•Paper and Paper products, Corrugated Boxes
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• 350 SSI and 2,000 artisans clusters
• Panipat (Haryana) accounts for 75 % of the total blankets produced in India
• Tirupur (Tamilnadu) contributes 80 % of the country’s hosiery exports
• Agra (Uttar Pradesh) produces 150,000 shoes per day valued at US $ 1.3 m
• Ludhiana (Punjab) produces 95 % of the country’s woolen knitwear, 85 per cent of country’s sewing machines and 60 per cent of bicycle and bicycle parts
SSI Enablers - CLUSTERS
88
Dedicated Ministry and allied organisations offer
• Policy Support - Reservation, Priority Sector Lending, SEZ, Labor
• Institutional support - Through testing centres, tool rooms,
entrepreneurship development institutes, training, warehousing
• Partnership support - Sub-contracting, ancillarisation & vendor
development
• Marketing Support - Through Trading Houses, Subsidizing the
participation at international Trade Fairs, sales promotion and
business travel
SUPPORT FOR SSI
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• Credit Guarantee Fund Trust Scheme
• Collateral free loans of lenders to SSIs up to US $ 58,000
• Payment to SSI suppliers should be made within 120 days
• Reimbursement scheme in respect of ISO 9000 Quality Certification
• Instituting marketing development assistance scheme
Additional Government Initiatives
90
• Reservation of items for exclusive purchase from SSI
• 358 items reserved for preferential purchase from SSI
• Price preference up to 15 % on Government purchase
• Development of Industrial Estates In selected towns
• Technology : Adoption of new technology
• Technology up gradation of existing units
POLICY FRAMEWORK: Important Features
91
Networking of SSI for Globalization
• The promotion of inter-firm linkages
• Use of Internet: Web Portals like eBay have opened a new avenue, which the SSI are using as a tool, for marketing
• The increasing presence of Multinational corporations have opened new opportunities for subcontracting
92
SSI Sector Facilitating Institutions
SSI Sector
Technical Training SIDO, SISIs, EDIs, TCOs , PPDCs, DICss, CFTIs
Industrial Infrastructure SIDCs,
SSIDCs, HUDCO
Entrepreneurship Development SIDO, EDI, NIESBUD, SISIs
Specialized Institutions
Technology SupportNSIC, SIDO,
SISIs,RTCs,PPDCs, TBSE
Funding Institutions Banks, SIDBI, SFCs, SIDCs, NSIC
Marketing SIDO, NSIC,SSIDCs, EPCs
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An Engine of Growth
95% of Industrial Units
7% of GDP
35% of NationalExports
> 8,000 Products
Over 11 m Units
Over 27 m Employed
SSI
Contribution Of SSI In India
94
Year Total SSI Units (million)
Registered SSI Units (million)
Unregistered SSI Units(million)
Employment (million)
Employment per Unit
ExportsUS $ (billion)
1998- 99 9.3 1.2 8.1 22 2.4 11
2002- 03 11 1.5 9.5 26 2.4 20
2004- 05 (P)
12 2 10 28 2.3 24
Source: Ministry of SSI
Growing Competitiveness of SSI
The Average Export per unit is US $ 2,000
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Growing Productivity & Quality Controls
Year Average CapitalUS $
Employment Per Unit ProductionUS $
1993-94 2,100 6.3 17,000
1999-00 3,700 3.6 71,000
Source: Second Census & Sample Survey of 1999-2000 by DC(SSI)
50 % of the total number of ISO 9001 / 14001 certified units are from the SSI Sector
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WINNING ATTITUDE
97
• Differentiating themselves through the products and services they provide
• Standing out by creating special interfaces with their customers and building unique ways by which they can be held accountable by them
• Building a very strong quality story
• Benchmarking innovations against well set, globally accepted standards and aim for targets, creating an environment and culture of innovation within the organization
• Developing systems to nurture innovation making full use of the availability of information and by rightful dissemination of knowledge to foster goal driven innovation
• Building efficient processes to cut time - to- market
• Providing opportunities to their people to do roles that go beyond their existing work profiles
• Providing continuing education
It Is All About Attitude - Management
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• Need to hone their skills • More adaptive thinking
• Greater entrepreneurial drive to find new horizons of growth with a competitive spirit
• Foresight with a fierce unrelenting passion to execute and act today to improve the future
• Bring change more aggressively and lead the organization to implement sustainable changes
• Energizing their team and inspiring them for excellent team performance
• Delegating authority to allow people to perform
It Is All About Attitude – Business Person
99
• Ability to reach out to a wide international network for ideas and problem solving
• Understanding on how things get decided and done
• Using customized strategies to influence specific stakeholders
• Executive maturity and emotional wisdom to respond to others and embody the aspirations of ones organization
• Inner strength to do the right thing at the right time
• Courageous dedication to super ordinate goals, doing what is right and what will make India great
• To keep learning and be abreast of new technology
It Is All About Attitude – Business Person
100
Acknow ledgement
PHDCCI – PHD Chamber of Commerce and Industry
CII – Confederation of Indian Industry
FICCI – Federation of Indian Chamber of Commerce and Industry
Assocham – Associated Chamber of Commerce and Industry of India
IGCC – Indo German Chamber of Commerce
IACC – Indo American Chamber of Commerce
ICRIER – Indian Council for Research in International Economic Relations
NASSCOM – National Association of Software and Service Companies
USCAN – Uniting Services Consulting Advocacy and Networking
Paharpur Business Centre – The International Division
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THANK YOU