INDIA IN INTERNATIONAL BUSINESS By, ALIMITA BINTY AIMAN
International Business in India
I.B in India looks really lucrative and every passing day, it is coming up with only more possibilities.
The growth in the international business sector in India is more than 7% annually. There is scope for more improvement if only the relations with the neighboring countries are stabilized. The mind-blowing performance of the stock market in India has gathered all the more attention.
India definitely stands as an opportune place to explore business possibilities, with its high-skilled manpower and budding middle class segment.
With the diverse cultural setup, it is advisable not to formulate a uniform business strategy in India. Different parts of the country are well-known for its different traits.
The eastern part of India is known as the 'Land of the intellectuals', whereas the southern part is known for its 'technology acumen'. On the other hand, the western part is known as the 'commercial-capital of the country', with the northern part being the ‘hub of political power'.
With such diversities in all the four segments of the country, IB opportunity in India is surely huge
Sectors having potential for International business in India :
Information Technology and Electronics Hardware.
Pharmaceuticals and Biotechnology.
Banking, Financial Institutions and Insurance & Pensions.
Chemicals and Hydrocarbons.
Agriculture and Food Processing.
To foster the international business scenario in India, bodies like CII, FICCI and the various Chambers of Commerce, have a host of services like :
These bodies work closely with the Government and the different business promotion organizations to infuse more business development in India.
They help to build strong relationships with the different international business organizations and the multinational corporations.
These bodies help to identify the bilateral business co-operation potential and thereafter make apt policy recommendations to the different overseas Governments.
With opportunities huge, the International Business trend in India is mind boggling. India International Business community along with the domestic business community is striving towards a steady path to be the Knowledge Capital of the world.
It was evident till a few years back that India had a marginal role in the international affairs. The image was not bright enough to be the cynosure among the shining stars. The credit rating agencies had radically brought down the country's ratings. But, as of now, after liberalization process and the concept of an open economy - international business in India grew manifold. Future definitely has more to offer to the entire world.
Emerging Market India:
Emerging market is used to evaluate the socio economic scenario of the country in terms of the growth of the market and industrial development. Based on data from 2010 there are 40 emerging markets of which India ranks in the second place.
The economies of China and India are considered to be the largest. Emerging market hedge fund capital reached a record new level in the first quarter of 2011 of $121 billion.
The ASEAN–China Free Trade Area, launched on January 1, 2010, is the largest regional emerging market in the world.
INDIA: India ranks among the well known emerging markets in the global economic scenario. Since the economic liberalization policies were undertaken in the 1990s, emerging market India has really prospered which has helped to boost the Indian economy to a great extent.
Factors behind the favorable emerging market in India :
The main factors behind this booming emerging market are the economic liberalization and the perfect competition market, the high standard of living and per capita income, the development of medical facilities and infrastructure, the increase in foreign investments and so on.
Over the few years, there has been a significant growth of the Indian market which has resulted in the high Gross Domestic Product (GDP). The average annual growth rate ranges between 6 to 7 %. The growth rate of GDP was around 6.7 % during the financial year 2008-09.
To boost the emerging market India, the government is also taking some positive steps. The main aim is to increase the growth rate to around 9 %. Due to the favorable emerging market, more and more industries are being set up and the customer base is also increasing. Currently, India is the 4th largest economic system in the world in terms of the purchasing power parity.
The recent economic development has also put a positive impact on the various sectors. There has been a significant development in the agricultural, service and industrial sector in the country. Today, to complement the rapid pace of economic growth, the service sector contributes around 54 % of the annual Gross Domestic Product.
INDIA’S IMPORT AND EXPORT !!!
INDIA’S CURRENT SCENARIO !!!
India’s economic growth has accelerated in recent years, and its share of world trade has expanded. These are welcome developments for the country and, given India’s large share of the world’s population, for the global economy.
Yet, despite these recent positive trends, India faces daunting challenges and policy decisions if it is to maintain high economic growth rates, employ its population, and raise incomes across the full range of households, skill levels, sectors, and regions. India remains the largest reservoir of poverty in the world.
Its recent high growth has been driven mainly by its modern services sector, which accounts for only a small proportion of overall employment and household incomes. Its agricultural sector is in a deep crisis, whether measured by slow growth rates, persistent rural poverty, or widespread farmer suicides.
Top 10 trading partners of India
USA, China, UAE, Saudi Arabia, Singapore and Germany have been the top trading partners of India for the past 3 years. USA was the top trading partner for the last 2 years until China came along.
For the fiscal year of 2008-09 China became the top trading partner of India beating the US. India-China trade stands at 1,63,202 crores.
China has managed to be India’ top trading partner in spite of the recent ban on various Chinese products (International Mobile Equipment Identity).
Overall, India is a net importer. It runs trade surpluses with some countries and huge trade deficits with few countries like China. For the months of April-June 2010 alone India’s trade deficit is at $15,504 million.
Top exports to China are Salt, Plastic, Cotton, Ores, Slag and Ash.
Top imports from China are Mineral Fuels (mineral Oils, mineral waxes etc), Organic Chemicals, Electrical machinery, Iron and Steel.
Top exports to the US are Pearls, articles of iron or steel, apparel and clothing.
Top imports from US are Fertilizers, Nuclear reactors, Electrical machinery and Mineral Fuels. Heavy industries is gearing up for the joint ventures with many American and European companies for the nuclear pie which is estimated at $100 bn. With the new nuclear targets set by India this trade will increase.
INDIA’S FOREIGN TRADE: August 2010.
Exports during August, 2010 were valued at $ 16,644 million (Rs.77,509 crore) which was 22.5 per cent higher in Dollar terms (18.0 per cent higher in Rupee terms) than during August, 2009.
Cumulative value of exports for the period April-August 2010 was $85,273 million (Rs 3,92,811 crore) registering a growth of 28.6 per cent in Dollar terms (21.8 per cent in Rupee terms) over the same period last year.
Imports during August, 2010 were valued at $ 29,679 million (Rs.1,38,211 crore) representing a growth of 32.2 per cent in Dollar terms (27.4 per cent in Rupee terms) than in August, 2009.
Cumulative value of imports for the period April-August, 2010 was $ 1,41,894 million (Rs. 6,53,828 crore) registering a growth of 33.1 per cent in Dollar terms (26.2 per cent in Rupee terms) over the same period last year.
INDIA AS AEMERGING GLOBAL POWER...
INDIA is in a recovery mode from the hugely impacted global financial meltdown surfaced in mid-September 2008. An advance estimate of the Central Statistical Organization indicates to 7.2 percent GDP growth during the current fiscal year (2009-10). The cumulative growth for the period April-December 2009-10 stands at 8.6 percent.
The growth in GDP during 2009-10 is estimated at 7.2 per cent as compared to the growth rate of 6.7 per cent in 2008-09.
The growth rate of 7.2 per cent in GDP during 2009-10 has been due to the growth rates of over 5 per cent in the sectors of ‘mining’, ‘manufacturing’, ‘electricity, gas and water supply’, ‘construction’, 'trade, hotels, transport and communication', 'financing, insurance, real estate and business services', and 'community, social and personal services.
On industry front, the Quick Estimates of Index of Industrial Production (IIP) stands at 331.7 during December 2009, which is 16.8 percent higher as compared to the level in the month of December 2008.
The cumulative growth for the period April-December 2009-10 stands at 8.6 percent over the corresponding period of the pervious year.
The IIP for 2010 :
Mining (206.0)-Growth of 9.5 %,
Manufacturing (360.7)-Growth of 18.5%
Electricity (235.2)-Growth of 5.4%.
India's exports during 2010 stood at $ 117.58 billion.
India’s exports during 2009 were valued at $14,606 million (Rs. 68,107 crore)
India’s exports during 2008 $13,368 million (Rs. 65,015 crore).
India’s imports during December, 2009 were valued at $ 24,753 million (Rs.1,15,420 crore)
India’s imports during December, 2008 $19,456 million( Rs. 94,625 crore).
Cumulative value of imports for the period April- December 2009 was $1,93,829 million (Rs. 9,27,969 crore) registering a negative growth of 23.6 per cent in Dollar terms and 17.6 per cent in Rupee terms over the same period last year.
The short-term objective of India's new five-year Foreign Trade Policy (2009-14) that was announced in August, 2009 is to arrest and reverse the declining trend of exports and to provide additional support especially to those sectors which have been hit badly by recession in the developed world.
The government intends to achieve an annual export growth of 15 percent with an annual export target of $ 200 billion by March 2012 and around 25 percent per annum for the remaining three years ending 2016.
The government's objective is to achieve an annual export growth of 15 percent by March 2012.
BALANCE OF PAYMENT & BALANCE OF TRADE
India Balance of Trade
India reported a trade deficit equivalent to 14,965 Millions USD in May of 2011.
India is poor in oil resources and is currently heavily dependent on coal and foreign oil imports for its energy needs. Other imported products are: machinery, gems, fertilizers and chemicals. Main trading partners are European Union, The United States, China and UAE .
Indian Rupee Exchange Rate Chart (USDINR)
The Indian Rupee exchange rate (USDINR) depreciated 4.96 percent during the last 12 months.
From 1973 until 2011 the USDINR exchange averaged 30.10 reaching an historical high of 51.97 in March of 2009 and a record low of 7.19 in March of 1973.
The Indian Rupee spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the INR. While the Indian Rupee spot exchange rate is quoted and exchanged in the same day, the Indian Rupee forward rate is quoted today but for delivery and payment on a specific future date.
India exports were worth 25,941 Millions USD in May of 2011. Exports amount to 22% of India’s GDP.
Gems and jewelry constitute the single largest export item, accounting for 16 percent of exports.
India is also leading exporter of textile goods, engineering goods, chemicals, leather manufactures and services. India’s main export partners are European Union, United States, United Arab Emirates and China .
India Gross Domestic Product (GDP)
India GDP is worth 1,296 billion dollars or 2.09% of the world economy, according to the World Bank. From 1960 until 2009, India's average GDP was 307.23 billion dollars reaching an historical high of 1296.09 billion dollars in December of 2009 and a record low of 36.61 billion dollars in December of 1960.
India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points.
India imports were worth 40,906 Millions USD in May of 2011.
India is poor in oil resources and is currently heavily dependent on coal and foreign oil imports for its energy needs.
Other imported products are: machinery, gems, fertilizers and chemicals. Main import partners are European Union, Saudi Arabia and United States.
India Inflation Rate
The inflation rate in India was last reported at 8.72 percent in May of 2011. From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976.
Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.
India GDP per capita (Purchasing Power Parity PPP)
India GDP Per Capita, when adjusted by purchasing power parity, stands at 2946 US dollars, according to the World Bank.
The GDP per capita is obtained by dividing the country’s gross domestic product, adjusted by purchasing power parity, by the total population.
From 1980 until 2008, India's GDP Per Capita adjusted by Purchasing Power Parity averaged 1254.03 dollars, reaching an historical high of 2946.00 dollars in December of 2008 and a record low of 415.00 dollars in December of 1980.