Indian Economy & Globalisation

INDIAN ECONOMY AND GLOBALISATION
IRVING FISHER GROUP

The term globalization means International Integration.
It is a process through which the diverse world is unified into a single society.
Opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas
WHAT IS GLOBALISATION ?

GLOBALISATION

Issues
Accountability of Global businesses?
Increased gap between rich and poor fuels potential terrorist reaction
Ethical responsibility of business?
Efforts to remove trade barriers.

Shape of the world’s economy is being changed by “globalization”
Marketing
Branding
Advertising
Nike
Dell
Cost down
Outsourcing

New trade pattern:developing countries
don't just have to trade their raw materials to the West and get finished products in return;
can become big-time producers as well.
New production pattern:global product network
companies can locate different parts of their production, research and marketing in different countries
Globalization – what’s really new? New Trade and Production Patterns

Growing global markets in services
people can now offer and trade services globally -- from medical advice to software writing to data processing -- that could never really be traded before.
Globalization – what’s really new? New markets
W-2, W-4, 1099 bonuses & stock statements
Indian accountant
US tax payers

Market economic policies spreading around the world, with greater privatization and liberalization than in earlier decades.
ex: BRIC
Widespread adoption of democracy as the choice of political regime.
Globalization – what’s really new? New rules and norms

Multilateral agreements in trade, taking on such new agendas as environmental and social conditions.
New multilateral agreements – for services, intellectual property , communications – more binding on national governments than any previous agreements.
Globalization – what’s really new? New rules and norms

Growth
Customer Survey

*
2010
GDP – USD 1.36 trillion
GDP growth rate – 9%
Services contribution – 60-65%
Balance of Trade – Negative balance should increase with surging imports versus exports
Investment goal – USD 370 billion
*
2008
GDP – USD 1.16 trillion
GDP growth rate – 9.5%
Services contribution – 60%
Balance of Trade – Negative balance should increase with surging imports versus exports
2006
GDP – USD 590 billion
GDP growth rate – 9%
Services contribution – 54%
Balance of Trade – USD (-)46.2 billion
Growing Indian Economy
*: ProjectedSource: Economic Times & India Brand Equity Foundation (IBEF)

Growing GDP
Contribution of Services -
increased from 48% to 62% and is estimated to contribute 60% by 2010
*: ProjectedSource: India Brand Equity Foundation (IBEF)

Growing Exports
*: Projected
Source: Ministry of Commerce & IBEF

Source: Ministry of Commerce & IBEF
Growing Imports

Increasing Forex Reserves
Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability
Source: Reserve Bank of India & India Brand Equity Foundation (IBEF)

Growing FDI Inflows
India is ranked second in AT Kearney’s FDI confidence index (2007)
Electronic equipment, manufacturing and telecom have witnessed significant FDI inflow
* Provisional
Source: Department of Commerce

Increasing Per Capita Income
Source: India Brand Equity Foundation (IBEF) & Economic Survey 2007-08

Major M&A and Investments Announcements in India
POSCO to invest in building steel manufacturing plants and facilities in India by 2016
USD 12 billion
Plans to establish three manufacturing plants to produce photo-voltaic units
USD 2 billion
Plans to spend on its development operations in India over the next four years
USD 1.7 billion
Source: India Brand Equity Foundation (IBEF)

India Inc. Investing Overseas
Main sectors:
Main Destinations: China, UAE, UKNorth America is emerging as a destination.

Additional economic indicators:
India has a consumerbase of 1.14 billion people
India is the 4th largest economy in the world when measured by PPP
India’s has a growing middle class of over 300 million people - 30% of India’s population – and larger than the population of the US
India is the 3rd largest global telecom market. The mobile subscriber base has grown from 0.3 Million in 1996 to over 250 million currently.
India is likely to add over 200 shopping malls by 2010 and 715 malls by 2015
The number of billionaires in the country were 3 in 1999; 23 in 2006; and are 48 currently.

Exports to US
India’s Trade with USA
USD Billion
Imports from US
Source: Department of Commerce, Govt of India

Major Items Exported to USA (2006)
Source: US Department of Commerce

Major Items Imported from USA (2006)
Source: US Department of Commerce

India co. going Global
"Toyota Motor has chosen to source from India due to its competitive cost of manufacture, availability of abundant engineering talent, and strong indigenous machine tool."

Automotive Sector - Overview
India is the world’s:
2nd largest two-wheeler market,
4th largest commercial vehicle market
11th largest passenger car market.
Expected to be the 7th largest automobile market by 2016
India has become an attractive destination for global American,European,Japanese andKorean OEMs.
Source: IBEF, Economic Times

1990 FDI $ 234 Million
1998-2003 FDI $ 2.5 Billion Per Year
Target FDI $ 10 Billion Per Year
Over 620 FIIs Compared to 500 in 2003 and Earlier
China FDI & FII
FDI $ 50 Billion Per Year
FII $ 20 Billion Per Year
GOI POLICY-FDI AND FII

Agriculture
Agriculture acquired 17% of India’s GDP in 2008.
60% of population still depends on agriculture for their livelihood.
Occupied 43% of India’s geographical areas.
All other sectors are growing at much faster.

SHARE IN GDP

Education
Current Literacy rate is 64.84%

What are people talking about India?
"India has a fantastic pool of software professionals. The world needs to benefit from this.“
This market (India) is critical to our plans for building a Ford Motor Co. for the 21st century
Bill Gates, Microsoft Chairman
Bill Ford, Chairman and CEO
India on its way to becoming IT, manufacturing kingdom of the world
The dynamism shown by India in the last 15 years is phenomenal
Mr Yasukuni Enoki, Japanese Ambassador to India
Paul Wolfowitz, President, World Bank

High growth but problem of unemployment.
Need to generate 10 million jobs per year.
Multi party rule, hence need to accommodate political ideology with economic reality (reservation, labour law reforms).
India’s Problems

Conclusion
Companies in India That Have Successfully Met Competition by Multinationals & Domestic Companies Had A Spirit Of Innovation Not Only In Their Products And Services But Also With Reference To All Their Resources And Effectively Restructured Them In A Time And Cost Frame And Met Customer Needs And Improved Their Top And Bottom Line.

Thank You

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Indian Economy & Globalisation

by Jamila Bano on Jul 28, 2009

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Indian Economy & Globalisation — Presentation Transcript