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India now-vol-1-issue-02-june-july-2010

  2. 2. EDITORIAL VOLUME 01 | ISSUE 02 | JUNE-JULY 2010 EDITORIAL Editor: Anuradha Das Mathur Consulting Editor: Hemant KumarWinds of Change Managing Editor: Mahesh Ravi Copy Editor: Rohini BanerjeeA determined new breed of DESIGN Sr. Creative Director: Jayan K Narayananentrepreneurs leads Art Director: Binesh Sreedharan Associate Art Director: Anil VKthe charge. Manager Design: Chander Shekhar Sr. Visualisers: PC Anoop, Santosh Kushwaha Sr. Designers: Prasanth TR, Anil T & Suresh KumarT he manufacturing numbers of any economy are among the clearest indicators of its health. Manufacturing in India is showing the robust-ness it has so painstakingly built over the years. Chief Photographer: Subhojit Paul Photographer: Jiten Gandhi SALES & MARKETING From a little-known producer of semi-finished items many decades ago, VP Sales & Marketing: Naveen Chand SinghIndia has emerged as a serious manufacturer of high quality and globally National Manager-Events & Special Projects: Mahantesh Godicompetitive products. Industrial heavyweights from all over the world are Regional Manager (South): Vinodh Kmoving into India, setting up manufacturing hubs here to not only service Regional Manager (North): Lalit Arunthe sizable domestic market, but also the entire world. Indian companies Regional Manager (West): Sachin Mhashilkarare aggressively modernising and advancing in research and development, PRODUCTION & LOGISTICSbagging the prestigious Deming Awards, year after year. Sr. GM. Operations: Shivshankar M Hiremath Fifty years ago, India’s burgeoning population was seen as its heaviest Production Executive: Vilas Mhatreburden. Today, it has come to be understood as its greatest asset, whether as Logistics: MP Singh, Mohd. Ansari, Shashi Shekhar Singha high-power, youthful resource, or an ocean of a market for products and INDIA BRAND EQUITY FOUNDATIONservices. People make the difference – educated, inspired and enterprising. CEO: Aparna Dutt SharmaIf the last decade has been one of prolific growth, then the next one prom- Project Manager: Priya Sahai Shiraliises to be even more rewarding. More importantly, the growth is moving in step with prudent, sustain-able eco-consciousness. Entrepreneurs are saying: each of us affects theenvironment a little; each of us, therefore, must help keep it clean. A youngentrepreneur from Bangalore nurtured a dream and scaled mountains ofstruggle to give the world the all-green, world-renowned, commerciallysuccessful REVA. Rag pickers climb smoking hills of discarded plastic atDelhi’s landfills, and out comes a brand new material for European fash- India Now—Business and Economy is a bi-monthly magazine published andion’s high street. That’s recycling at its sustainable best. printed by India Brand Equity Foundation (IBEF), Gurgaon. It is published at 249- F, Sector-18, Udyog Vihar, Phase- IV, Gurgaon – 122015, Haryana and Admittedly, these are just local trickles, but not far from becoming a glob- printed at Silverpoint Press Pvt Ltd, D-107, TTC Industrial Area, Nerul, Navi Mumbai – 400706. The magazine is edited by Anuradha Das Mathur, Nine Dotal stream – the clear, gurgling stream of collective consciousness – more Nine Mediaworx Pvt Ltd., B-118 Sector 2 Noida – 201301, Uttar Pradesh. India Now—Business and Economy is for private circulation only. Material in thispowerful than the strongest wave ever recorded. publication may not be reproduced in any form without the written permission of IBEF. Editorial opinions expressed in the magazine are not necessarily those of IBEF and IBEF does not take responsibility for the advertising content, content obtained from third parties and views expressed by any independent author/ contributor. (India Brand Equity Foundation, c/o Confederation of Indian Industry, 249-F, Sector 18, Udyog Vihar Phase IV, Gurgaon 122 015, Haryana, India; Tel: 91-124-4014060-67; Fax: 91-124-4013873/75; Opinions expressed herein are of the authors and do not necessarily reflect any opinion of Nine Dot Nine Mediaworx Pvt Ltd., B-118 Sector 2 Noida – 201301, Uttar Pradesh, India; Tel: 91-120-4010-999; Fax: 91-120-4010-911; Email: HEMANT KUMAR JUNE-JULY 2010 1
  3. 3. CONTENTS VOLUME 01 | ISSUE 02 J U N E - J U LY 2 0 1 0COV E R D E S I G N: SA M E E R K I S H O R 12 COVER STORY MNC WATCH 12 | Manufacturing A resurgent 10 | IN THE DRIVERS SEAT: HONDA INDIA Well-timed entry into the market economy, strong domestic demand with a bevy of world-class cars and greater investor confidence mean helps the Japanese auto giant move into cruise gear on India is poised to be one of the greatest Indian roads. manufacturing nations in the world. ARTS & CULTURE 42 | SCULPTURE: METALLIC SHEEN Delhi- based master sculptor Sumedh COPYRIGHT Published & printed by India Brand Equity Foundation (IBEF), 249- F, Sector-18, Udyog Vihar, Phase- IV, Gurgaon–122015, Haryana. India Rajendran transforms ordinary Please Recycle Now–Business and Economy is for private circulation only. Material in this scraps of metal, wood and tile This Magazine publication may not be reproduced in any form without the written permission And Remove Inserts Before of IBEF. into grand works of art. Recycling 2 JUNE-JULY 2010
  4. 4. 39 INDIA 21 39 | ELECTRIC GREEN A bright young Indian entrepreneurs electric car REVA is an idea whose time has come as Europeans take to it with zeal and commitment. INNOVATION CORNER 36 | THE NEW LIFE OF PI MIT alumnus Vishal Mehta of Ahmedabad develops an affordable new e-reader that rivals the best in the market. Now download and read e-books in a wide 12 20 range of Indian languages, from Assamese to Telugu.EMERGING ENTREPRENEURS REGULARS20 | Seeding Green 01 | EDITORIALInnovation is the buzzword for the new 04 | ATIONAL ROUND-UP NIndian entrepreneur—the driving force 38 | ICROFINANCE M 44 | OURISM UPDATE Tbehind the country’s march to greener 46 | OOKSHELF Bpastures. 48 | URAL UPDATE RSECTORAL UPDATE 48 48 4824 | IT: 27 | TELECOM: 31 | BANKING: 34 | AVIATION:UPLOADED The second STRONG SIGNAL Brand GOOD BOOKS Clear CLEAR SKIES Steadywave of success is coming, and new technologies like 3G and focus and astute financial growth and rising investmentthe sector is gearing up for the ever-rising demand bode well planning help keep the Indian make India one of the worldschallenges and opportunities. for the Indian telecom sector. banking sector in robust health. fastest growing aviation markets. JUNE-JULY 2010 3
  5. 5. VOICE OF A VISIONARY Unique number will be the foundation through which a citizenNational can claim her rightsROUND-UPA Smooth Takeoff. Some of India’s airports DATA BRIEFINGmake a big mark in the global aviation map asthe Airport Council International rates them.DELHIS INDIRA Gandhi International Airport has beenadjudged the “best improved airport” in the Asia-Pacif-ic region and has been rated the worlds fourth best the Baltimore airport in the US topped the list. Hyder- abad’s Rajiv Gandhi International Airport (RGIA) has been rated the worlds No 1 airport in the 1.5 10% GROWTH RATE PERairport in the 2.5 crore passengers (approx) category. crore passengers (approx) category. The Hyderabad Awards were announced recently by the Airport airport has also been voted as the fifth-best airport ANNUM WILLCouncil International, the apex body, which has 575 worldwide. RGIA is the second public-private partner- BE SEEN INmembers operating over 1,633 airports in 179 coun- ship venture among Indian airports, after the Cochin THE INDIANtries. The Council rated airports on 36 parameters International Airport. With one of the country’s lon- AVIATIONrelated to passenger amenities and infrastructure. gest runways (4,260 metres), the airport is designed to INDUSTRY INThe Indira Gandhi International Airport received the handle 1.2 crore passengers, more than 100,000 met- THE NEXT 20fourth-best airport award in the category of airports ric tonnes of cargo and 90,000 air traffic movementshandling 2.5 crore passenger traffic per annum while (ATM) per annum in the initial phase. YEARS.4 JUNE-JULY 2010
  6. 6. NAT I O NAL RO U N D - U P THEY DR. D. SAID IT SUBBARAO The Reserve Bank of India (RBI) Governor, D. Sub- barao, speaking at a recent conference held in Zurich, Switzerland, admitted that among components of capi- tal flows, India preferred long-term flows, to short-term ones, and non-debt flows to debt flows. “Our policy on equity flows has been quite liberal, and in sharp contrast to other EMEs (emerging market economies), which liberalised More power, roads. The country and then reversed the expects to add 20,359MW of power liberalisation when flows generation capacity in this fiscal. became volatile, our policy has THE PLANNING Commission has set targets to boost the countrys infrastructure been quite stable.” in this financial year, including adding 20,359 megawatt (MW) of power genera- —Dr. D. Subbarao, Governor, tion capacity and 2,500km of highways, deputy chairman Montek Singh Ahluwalia Reserve Bank of India was quoted as saying in the media. The Plan panel had set a 14,507MW target in 2009-10, while addition was 9,585MW. Similarly, the target for highways in the last fiscal was 3,165 km, while 2,008km was completed. India has an installed power capacity of about 160,000MW. The investment target for roads has been pegged at INR 35,680 crore (US$ 7.6 billion) in 2010-11, higher than INR 29,934 crore (US$ 6.4 billion) in the last fiscal, according to a report by the country’s premier news agency Press Trust of India. The actual investment that came into the sector in the last fiscal was INR 11,608 crore (US$ 2.5 billion). The country expects to increase its infrastructure spending in the next five-year plan (2012-17) to $500 billion. By 2007, it is supposed to be doubled again, to $1 trillion. Indias economy is expected to grow 8.5 per cent in the fiscal year that began April 1, after expanding 7.2 per cent in 2009 (provisional figure) making it the worlds second-fastest growing major economy, after China. UPDATE ON RESEARCH Greener Indian companies. India’s Tata Con- sultancy Services, Bharti Airtel and Suzlon En- ergy are among the global firms with high sus- tainable development standards, a report by Swiss lender Bank Sarasin showed. The study, conducted among 360 emerging market com-PHOTO: PHOTOS.COM panies, found that a third of these firms have a high rating in terms of sustainability. JUNE-JULY 2010 5
  7. 7. NAT I O NAL RO U N D - U P SOUND BITES Bench- mark- ing on a global scale is the only way to com- pete internationally. And to achieve this, Indian companies must have an export orientation.PHOTO: PHOTOS.COM -N.R. Narayana Murthy, Chief Men- tor, Infosys Technologies Limited ILFS plans ‘long’ bonds. The We have instrument will be similar to the US’ to be pre- Treasury Bond. pared for a three-digit increase. INFRASTRUCTURE Leasing raise long-term fund through vide enough liquidity and an Financial Services will launch an instrument on the line of the exit route to the investors. These Crude oil prices are “long bonds” with a maturity period of 25 years, a move that US long bond for those projects which have residual conces- market makers will give two- ways quote for the instrument well above the $70- will set a new trend in the sion period of 25 years, ILFS that will be listed on Indian mark… the petro- corporate bond market, said a chairman Ravi Parthasarthy was bourses. ILFS will also be one report in the Economic Times. quoted as saying in the report. of the market makers. chemical industry The instrument will be simi- Long-term securities, such as Since there is no corporate will have to keep lar to the US’ Treasury Bonds long bonds with 25-year maturi- bond market in the country, the or long bond ties, are often company is looking at introduc- reinventing itself. with a maturity tough to sell. ing such instruments under the -Mukesh Ambani, Chairman, from 20-25 years and coupon ILFS will Unlike the short- er-dated securi- prevailing guidelines, which will have enough liquidity so Reliance Industries Limited payment every raise INR ties, a bond with that investors even with short- six months like short duration 5 crore maturity period of 25 years or term funds can participate, the chairman was quoted as saying. Talent treasury bonds. through this more appeals to ILFS will raise around INR acquisi- The instrument, which will be route. It is a much smaller group of buyers 500 crores (US$ 107 billion) through this route. The com- tion, trans- rated by credit in talks with as it needs long- pany has already started discus- formation and rating agencies, will work on the investment term investors’ commitment, it sions with investment bankers, the report said. “The company management are model of the bankers. said. will appoint four investment critical anchors for erstwhile US-64 However, bankers including three foreign of the Unit Trust ILFS is plan- banks and one domestic for the the growth of an of India, said the report in the ning to appoint at least two or proposed issue,” another com- Economic Times. even three market makers for pany official involved in the dis- industry. The company is planning to the instruments, who will pro- cussion was quoted as saying. -Nandan Nilekani, Chairman, UIDAI 6 JUNE-JULY 2010
  8. 8. NAT I O NAL RO U N D - U P UPDATES IT SERVICESINDUSTRYUPDATE Paris-based IT services and consulting firm Capgemini plans to hireIndia, US reach agreement. New Delhi more than 4,000 peoplecan tax 17.5 per cent of the profits earned by for its India operations PHOTO: PHOTOS.COM in this quarter. Its IndiaIndian units of the US companies in 2004-05. headcount stood at 23,353 INDIA has settled a disagreement over organisation. TP rules check an MNC at the end of March,taxing profits of captive Information from shifting profits out of India. The making India one of itsTechnology services units and research report added that Article 27 of the tax largest centres; its India Its Raining Jobs: French firmarms of US firms, bolstering New treaty between India and the US provides headcount grew by over Capgemini will be on the that a firm, which has suffered from a lookout for 4000 new facesDelhi’s position as a preferred destina- 5 per cent in January- for its India operations.tion of such investments, said a report potential double taxation, can seek relief the Economic Times. through the competent authority under According to the report, the negotiated the mutual agreement procedure (MAP). The finance ministry planssettlement between the tax “Most multinationals to form a core group of tax 30%authorities of the two coun- view transfer pricing astries allows India to tax 17.5 a tug of war between tax officials for rolling outper cent of the profits earned authorities and a MAPby Indian subsidiaries of the OF PROFITS FROM resolution ensures that the GST by April next year.US companies in 2004-05. taxpayer does not sufferIndia had sought to tax 25 CAPTIVE IT SERVICE economic double taxation,”to 30 per cent of the profits. UNITS WOULD Vijay Iyer, partner at con- BOOK PREVIEW“This is a significant develop- sulting firm Ernst Young, BE CUT FROM USment,” the daily quoted an was quoted as saying by the AWAKENINGofficial with the income-tax SUBSIDIARIES newspaper. GIANTS: FEETdepartment as saying. The Several multinational OF CLAYgovernment could gain about INR 400- companies have set up their IT and500 crore (US$ 107 million) in revenues, research facilities in the country Pranab Bardhan’s book focus-the report said. Though the transfer pric- thanks to the availability of high- es on the economic develop-ing (TP) settlement is binding only for quality technical manpower and low ment of India and China in term institutional and politi-transactions in 2004-05, this would serve labour costs. American companies the past quarter century. It cal-economic issues in theseas a reference point in future disputes, such as GE, IBM, Dell, Accenture, JP investigates the two coun- fast-growing added. TP refers to the valuation of Morgan and American Express have tries’ economic reforms and India release not announced.contributions by way of assets, services, large establishments in India, said composition of growth. It also PRINCETON UNIVERSITYand funds changing hands within an the report. puts the spotlight on long- PRESSSHARE TRACKER years entails a total invest- tions have been accepted byRoad regulator expects ment of INR 8 lakh crore (US$174 billion), of which the Centre, has also given its nod to NHAIs plan to awardto be debt-free. The market borrowings will be projects of 37,000 km. Theauthority plans to mobilise INR INR 1.2 lakh crore (US$25 bil- plans will be executed in five-40 billion in the current fiscal. lion), the Business Standard reported. NHAI chairman ing: “The government has six years. It quoted Dash as say-THE NATIONAL H i g h w a y s infrastructure bonds, term Brijeshwar Singh said the already given in-principle ing that NHAI expected toAuthority of India is plan- loans, and loans from mul- estimated size of borrowing clearance to the investment be debt-free by 2030-31 andning to use multiple instru- tilateral agencies, banks and would be INR 100-200 bil- plan. However, NHAI will added the authority, raisedments to raise funds. Plans financial institutions, said a lion annually for the next 15 have to seek its approval on about INR 14 billion (US$ 300include capital gains tax report. The planned construc- years. Nihar Ranjan Dash, a case to case basis. Besides, million) in 2009-10 throughexemption bonds, external tion of another 37,000km chief general manager, was the BK Chaturvedi Commit- capital gains tax exemptioncommercial borrowings, of roads over the next four quoted by the daily as say- tee, whose recommenda- bonds. JUNE-JULY 2010 7
  9. 9. INDIA $ 14.2WATCH billion revenues from India’s 3G auction Area Population Male Female Population Density Urban Population 3,287,590 sq km 1.133 bn 600884425 523601762 359.14 340 millionKey performance ECONOMIC PROSPECTS FOR 2010indicators of the India’s Economic Outlook ProjectionIndian economy, with Fiscal Year 2007 2008 2009 2010patterns, trends and GDP Growth  CPI 9.40% 6.40% 7.30% 9.30% 5.40% 5.50% 7.20% 4.90%forecasts Source: Data taken on 7th May,2010 from RBI website Mean Probability Pattern of Real GDP Growth Forecasts45% For the year 2009-10, the40% forecast for agriculture has 2010-1135% been revised downwards from 3 per cent to 2.5 2009-1030% per cent. For the industry and services sectors,25% the forecasts have been20% revised upwards from 4.1 per cent to 4.8 per cent15% and from 7.5 per cent to 8.3 per cent, respectively Source: RBI10%5%0% Below 3 to 3.5 to 4 to 4.5 to 5 to 5.5 to 6 to 6.5 to 7 to 7.5 to 8 to 8.5 to 9 to 9.5 to 10 to 10.5 to 11% or 3% 3.4% 3.9% 4.4% 4.9% 5.4% 5.9% 6.4% 6.9% 7.4% 7.9% 8.4% 8.9% 9.4% 9.9% 10.4% 10.9% More Chart 1: Year-on-Year Growth IIP Chart 2: Year-on-Year Growth in Sectoral Indices20% 20%18%16% 15%14%12% 10%10% 8% 5% 6% Source: CSO Source: CSO 4% 2% 0% 0%-2% -5% 6 7 8 9 6 7 8 9 06 06 09 09 06 06 09 09 08 08 07 07 08 07 07 08 r-0 r-0 r-0 r-0 r-0 r-0 r-0 r-0 g- c- g- c- g- c- g- c- g- g- g- c- c- g- c- c- Ap Ap Ap Ap Ap Ap Ap Ap De De De De Au Au Au Au Au Au De De De De Au Au Mining Manufacturing Electricity8 JUNE-JULY 2010
  10. 10. I N D I A WATC HChart 3: Contribution to IIP Growth 4500 Chart 4: FDI FII Inflowsin March 2010 400014% 350012% 3000 Electricity Non-Durables, 0.6% 0.8% 250010% Durables, 2000 FII8% 2.5% 15006% Manufacturing Intermediate 1000 FDI 12.1% 3.1% 5004% Source: CSO Capital, Source: RBI 0 4.2%2% 9 9 9 9 9 0 09 9 10 500 9 09 00 00 00 00 00 01 00 Mining 00 Basic, -20 -20 -20 y-2 g-2 p-2 v-2 c-2 b-2 t-2 r-2 0.8% 2.9% Jun Jan Jul0% Oc Ap Ma No De Au Se Fe Cash Reserve Ratio RBI Policy Rates 6 65.8 55.6 Cash Reserve 4 Repo Rate5.4 Ratio 3 Reverse5.2 Repo Rate 5 24.8 14.6 0 Source: RBI Source: RBI May-2009 June-2009 July-2009 Aug-2009 Sept-2009 Oct-2009 Nov-2009 Dec-2009 Jan-2010 Feb-2010 Mar-2010 April-2010 7, May-2010 May 2009 June 2009 July 2009 Aug 2009 Sept 2009 Oct 2009 Nov 2009 Dec 2009 Jan 2010 Feb 2010 Mar 2010 April 2010 7,May 2010 20 Manufactured Products Fuel Power Light LubricantsMonthly trends in 15Wholesale Price Primary articlesIndex- monthly 10 All Commoditiesaverage (% change) 5 0 Source: RBI -5 Jan Feb Jan Feb 2008 - 09 2009 - 10STOCK MARKET CURRENCY EXCHANGE RATE Date BSE Sensex % Change SP CNX NIFTY %Change Date INR/USD INR/GBP INR/JPY INR/EUR 1.12.09 17198 11.6 5122 12.2 Sep 09 48.82 79.73 53.39 71.03 4.01.10 17558 2.1 5232 2.1 Nov 09 46.74 77.54 52.40 69.64 Jan 10 46.18 74.60 50.55 65.96 1.02.10 16356 -6.8 4900 -6.4 Source: RBI Source: RBI Mar 10 45.50 68.53 50.25 61.80 2.03.10 16772 2.5 5017 2.3 May 10 45.08 68.09 48.23 58.75 JUNE-JULY 2010 9
  11. 11. M N C WATC H HONDA SI E L CARS I ND IA LTD COMPANY DASHBOARD FIRST CAR IN INDIA: Honda City ESTABLISHED (IN INDIA): Dec 1995 EMPLOYEE STRENGTH: 3,394 associates SALES VOLUME: 61,185 (April 2009 to March 2010) MANUFACTURING UNITS: Greater Noida, UP, and Tapukara, RajasthanDRIVEN TOSUCCEEDThe journey so far has been smooth and Hondaknows that the road ahead is even better—consis-tent growth has led the company to invest more,and expand its service network. As the firm readiesto launch its first world-class concept car in India,its confidence shows. BY SHREYASI SINGH10 JUNE-JULY 2010
  12. 12. HONDA SI E L CARS I ND IA LTD M N C WATC HGG LOBAL AUTO giant Honda couldn’t have better of the Year. The model has won awards for its engine performance, timed its entry strategy to India. It’s an advantage they reliability and design.  have profitably leveraged, as the company is now the car Honda knows that the Indian car market will continue to grow. manufacturer of choice across several automobile seg- Right now, only eight in every 1,000 Indians own cars, as against 800ments. “The Indian automobile industry was at a growing stage when in every 1,000 Americans. While the numbers are good for compari-Honda entered India. We anticipated the growth prospects of the son, they also suggest that the American market is saturated, andindustry when there were not too many international brands available the potential for the growth of the Indian market is tremendous.for the Indian customer,” says Jnaneswar The cost competencies in India also makeSen, vice president (marketing), Honda Siel it a better investment option for companies.Cars India. “In fact, India has emerged as an automo- Honda Siel Cars India Limited (HSCI) tive hub and favourite investment destina-was incorporated in December 1995 as a tion for global automobile manufacturers,”joint venture between Honda Motor Com- says Sen. pany Limited, Japan, and Siel Limited, a The Indian market is also considered toSiddharth Shriram Group company, with be more stable than most parts of the world,a commitment to providing Honda’s latest showing profits, growth in figures and ris-passenger car models and technologies to ing sales even during the slowdown.Indian customers. Over the past decade- HSCI says this indicates that the funda-and-a-half, the company has made an mentals of their business are in shape here. investment of INR 2,4000 crore (US$527 Their journey has been a positive casemillion) in India. “Consistent growth has study for several companies who have simi-made us invest more, extend our product larly forayed into India.offering, and expand our service network Several European and American car man-here in India,” adds Sen.  ufacturers have followed Honda’s instinct HSCI set up its first unit at Greater Noida, INDIAN about the Indian market.UP, in 1997. Spread over 150 acres, the green-field AUTOMOBILE For them, Sen has some useful advice. “Indian customers are smart buyers andproject has a capacity of 100,000 cars. Itssecond plant at Tapukara, Rajasthan, went INDUSTRY WAS are aware of the new products and tech- nologies. We were able to capture theonline two years ago. Occupying 600 acre AT A GROWING mindset of evolving and discerning Indianof land, it has a capacity of 60,000 cars. Thecombined investment in the two projects STAGE WHEN customers and responded by offering our latest global products at regular intervalsexceeds INR 24,000 crore (US$5.2 billion).  Rising sales are driving the investment. HONDA to suit their requirements. We are com- mitted to introducing the latest technol-Last year, Honda sold nearly 62,000 cars, 18 ENTERED. WE ogy products for our Indian customers,per cent more than the previous year. Thecompany has a strong sales and distribu- ANTICIPATED and we take their feedback regularly to improve our customer-service levels.” tion network across 70 cities. From the newsmall car, Jazz, to the popular City, and THE GROWTH In fact, HSCI unveiled its new Small Concept Car at the Tenth Auto Expo in Newluxury sedans Civic and Accord, Honda has PROSPECTS OF Delhi, earlier this year. a car for every segment.    “We have introduced some of our best THE INDUSTRY Still being developed, the new car is the concept model of a small-sized vehicle,global products in the Indian market. Weentered the market with the Honda City, WHEN THERE especially for India and other emerg- ing nations. It is pegged to be a truewhich became the best-selling sedan,” says WERE NOT Honda—running on a futuristic designSen, adding that the sedan has definedthe company’s journey in India. Since its MANY CHOICES. with maximum cabin space. It is for the first time that Honda has chosen India forlaunch in 1998, the Honda City has main- —Jnaneswar Sen, the world premiere of a concept car, intained its bestseller position in the premi- Vice President, Marketing, what is a clear indication of its continuingum car segment. It was 2009’s Indian Car Honda Siel Cars Limited confidence in the Indian market. JUNE-JULY 2010 11
  13. 13. COVE R S TO RYThinkBigThinkSmart I Placing the ndia is one of the top 20 global powerhouses of manufacturing. It is easy to see why. customer first, Indian The right products and processes; an environment that promotes capital engineering; long history of manufacturing; a solid higher education sys- manufacturers are tem, and cheap and skilled manpower. Having grown at nearly seven per cent annually over the last decade,redefining processes, Indias manufacturing sector is now the 13th largest in the world, accord- harnessing their ing to a recent CII-BCG report. What’s more, the report predicts that India can jump to fourth place, if its assets grow, exports rise and the produc-workforce, and making tivity of labour increases in the next 15 years. By 2025, India’s assets would need to rise by almost INR 80 lakh crore (US$ 1.7 trillion) and exports, by India attractive for nearly 20 per cent, the report adds. It is easy to gauge why manufacturing is so integral to the Indian econo- global manufacturers my—half of all exports come from this sector that employs 12 per cent of the total workforce, and contributes 15 per cent to the nation’s GDP. and investors. The government has said that it will announce a national manufacturing BY DEBASIS SEN policy by August, this year. The right policy measures and the private sector’s credit growth can help the GDP rise by 9.5 per cent this year itself. This would mean producing many more manufacturing champions – increasing the number of companies and raising annual revenue. But the news is good so far. Indian manufacturers have been in an innova- tion mode—to raise operational efficiency, add new features and meet con- sumer needs. They have raised the quality bar for goods. Ravi Kant, Vice Chairman, Tata Motors, explains, “By lowering interest rates and improving the efficiency of capital markets, the government has turned JUNE-JULY 2010 13
  14. 14. COVE R S TO RYIndia into an attractive business destination.Then, there are young entrepreneurs witha global vision and a growing middle-classwith more money to spend.” A LARGE AND GROWING DOMESTIC MARKET O ver 300 million Indians (63 million households) are expected to have a householdFrom local to global income of over $6,000 by 2015. India is experiencing a rapid growth in consumerOnce considered its weakness, India’s spending. The economic reforms since the early nineties have unleashed a newburgeoning population is now transform- entrepreneurial spirit, creating a vibrant economy supported by rising per capita into one of its greatest strengths. As The average Indian can adapt to global trends, thanks to rapidly-growing disposablea result, investors are eyeing India for its incomes and easily available consumer finance. This has created one of the world’sdemographic dividend. It is estimated that largest markets for manufactured goods and services.its employable population will rise by 70 per Growth in key sectors like infrastructure, services and manufacturing continues atcent by 2030, the highest such rise in the about 10-12 per cent per More than 2.5 million graduates join The market for basic goods such as groceries and textiles is already large, driven byits workforce every year. By 2015, the num- the demands of an enormous population. Markets for other products are equally large,ber will touch 70 million, accelerating the and growing rapidly.transition from teeming millions to ready Over 225 million telephone subscribers, growing at more than 75 million per annum.resource. O ver 8 million TV sets and 4 million refrigerators are sold annually and expected to An Investment Commission of India grow at 20 per cent per talks about a set of industries that will T otal production of vehicles crossed 14 million (and more) in 2009-10, up from 2.3collectively boost growth and expand invest- million in 1998-99.ment opportunities by earning more than India has been ranked first by AT Kearney in a Global Retail Development Index180 billion dollars. The industries are: steel of 30 developing countries.and aluminium, textiles and garments, elec- —SOURCE: INVESTMENT COMMISSION OF INDIAtronic hardware, chemicals, automobiles,auto components, and gems and jewellery. Dilip Chenoy, CEO and MD, National pilgrimage to India is powered by the rise Today, it exports nearly 300,000 cars eachSkill Development Corporation, NSDC, of the Indian middle-class and the grow- year. Suzukis plant at Manesar, near Delhisays: “The time is ripe for us to become a ing economy. serves as its global hub for small cars. Nokiamanufacturing destination.” The stagnating auto markets of the US, uses its plant at Sriperumbudur in Tamil Global manufacturing giants like Nokia, Europe and Japan, have only accelerated the Nadu, to export mobile handsets to 50 coun-LG, Motorola, Samsung, Hyundai, Ford, pull. The preference is expected to continue, tries, though the MNC has nine factoriesSuzuki, GM, JCB and Caterpillar, ABB, Sch- as more companies taste success. Global located in Brazil and South Korea, too.neider, Honeywell and Siemens, have set up consultancy firm, Deloitte, says that by Recently, the chairperson and CEO of GE,shop here. Though they began with the idea 2020, at least one Indian company will be Jeffrey Immelt, announced the companysof servicing the local market, most found among the world’s top-six car makers. intention to enter the Indian market—bothfacilities strong enough to support and serve Hyundai Motors entered the India market for local consumption and export. “Notthe overseas markets. in 1996. It set up a plant near Chennai for surprising,” says NSDC’s Chenoy. “Indian In the automobile sector, the investors small cars. manufacturing will grow through a combi- nation of domestic demand and skill-driven A Credit Suisse export competitiveness,” he explains. If the trend continues, Americans may Group study predicts soon buy an SUV designed and built in India. Mahindra spent $120 million to that consumption design the Scorpio. The company now plans will continue to grow to launch a version of the four-cylinder, diesel-powered vehicle in the US, via a by 16 per cent for the partnership with Global Vehicles, USA. The company says that more than 300 dealers next two years, have already signed up to sell the vehicle. fuelled by the $1 The impetus will come from other quar- ters, too. Reliance Industries’ three-year trillion construction old Jamnagar complex combines a petro- leum refinery and petrochemical plants. It projects, nation-wide. manufactures a range of fuel from simple14 JUNE-JULY 2010