Has one of the most ancient civilizations, with a history of scientific enquiry.
Has never invaded another country ,yet the 3rd largest armed country, and even a nuclear weapon power.
Is world’s 4th largest economy
Has 29 states; 325 languages; 1652 dialects and many civilisations.
Has 2nd largest pool of technical manpower in the world.
Produces 50,000 doctors, 350,000 engineers and 800,000 MBAs every year.
India…a unique, very complex story In India, an Italian lady born a Catholic (Sonia Gandhi) stepped aside so a Sikh (Manmohan Singh) could be sworn in as Prime Minister by a Muslim President (Abdul Kalam) to lead a nation that’s 82% Hindu Can you cite another country with such diversity and tolerance??
Even though the world hasjust discovered it, the Indiagrowth story is not new It has been going on for 25 years
What is the India story?
28 years of high growth Average annual GDP growth (%) (%) 10 8.9 8 6.0 6 3.5 4 1.0 2 0 1900-1950 1950-1980 1980-2002 2002-2007
Literacy is rising (%) 100 80 80 65 52 60 40 17 20 0 1950 1990 2000 2010 P Source: Census of India (2001)
(m) 0 The rise of a strong middle class makes it a consumption driven economy 32% 22% 8% 400 368 300 200 220 100 65 2010 1980 2000 Source: The Consuming Class, National Council of Applied Economic Research, 2002
India is now the 4th largest economy It will overtake Japan between 2012 and 2014 to become the 3rd largest
The India model is unique
Drivers of growth India Domestic Services Consumption High tech, capital intensive industry East and S.E. Asia Exports Manufacturing Investment Low tech, labour intensive industry
Implications of India model ‘Domestically led’ means: Insulation from global downturns Less volatility Coming out of the global crisis faster
33% 59% 42% 64% India India China China 41% U.S. Europe 58% 45% Brazil Implication of India model – Consumption led People Friendly:Consumption as % of GDP People Friendly, Less inequality: Gini Index Will India become the next big consuming economy after the U.S.?
India’s success is market-led whereas China’s is state induced The entrepreneur is at thecentre of the Indian model
India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment 125 Fortune 500 companies have R&D bases in India 390 Fortune 500 companies have outsourced software development to India 2% bad loans in Indian banks (v~20% in China) 80% credit goes to private sector (v~10% in China)
Understanding India’s economic success Mental revolution among the young “I want to be Bilgay” “Banianisation” of society 300+ TV channels; 65 news channels The rise of Hinglish
“By 2010 India will have world’s largest number of English speakers”“When 300 million Indians speak a word in a certain way, that will be the way to speak it.” Professor David CrystalCambridge Encyclopedia of the English Language
Key government reforms Opened economy to trade and investment Dismantled controls Lowered tariffs Dropped tax rates Broke public sector monopolies
Where the government infrastructure fails….. ….. Innovation kicks in
Business in 21st century India Yet Another Point Of View
First …the bad news
ports and airports
Labour productivity issues
Some archaic laws -eg. Land ,labour
Socialist hangovers –or posturings
Intermittent fundamentalism issues
…..and some good news
Secular tolerance-2nd largest Muslim population
Stable and sharp economic growth
Well established banking and a judicial system
Very young population-that means hands ,and demand
Developing into a consumption economy
Declining trade unionism
Federal and unitary amalgam
Why was it this way….
The Hindu DNA-acceptance and karma
A few hundred years of subjugation
And then by politicos
Erosion of self esteem
Complex governance issues
And what has changed……..
Intellect-the main Indian export
Abundance of knowledge resources- and creation of the arbitrage opportunity
Global acceptance of the Indian mind
Some visible successes overseas-software , steel , automobiles
Indian acquisition of overseas companies
A WORLD OF OPPORTUNITY OPENS UP
1991 and onwards
Liberalized Trade Regime – opening up of India
Huge Investment inflows
Merging with the world economy
Liberal Capitalist Regime- but at gunpoint
Technology exposed-and absorbing fast
Demographics-A very young nation- and getting younger
What does all this mean for us Implications on Global Managers Implications on Companies to do business in India – or from India
India gets richer
Goes beyond the big cities
The creamy layer gets richer and thicker
Serious structural shifts happening in the Indian consumer market
Shift away from a supply-constrained economy to a demand-driven one
The Indian consumer's mindset is dramatically changing
Austerity is no longer considered a virtue --and debt no longer taboo
“Yehdil mange more” ---the Pepsi generation is here
Consumer India #1
Consumer India: The Good News Mn HH Mn HH 4 15 High UM 5 13 M 10 15 LM 16 14 L 12 2 NCAER From a pyramid to a cylinder - The Richer are getting richer and the poor are getting richer. Finally - the ability will match aspiration.
The rise of rural demand
Rural India accounts for 74 per cent of India's population and 58 per cent of its disposable income
Breaking into this market requires innovative thinking and a new strategy
THE BIG QUESTION …. “HOW TO DRILL THIS ROCK” Consumer India #2
Mn HH Mn HH 3 8 High UM 4 8 M 11 25 38 64 LM L 63 34 Growth in rural income NCAER
The Rural - Urban Divide
Is it a strength or a weakness
Opportunity certainly exists
Creation of many market/product Life-cycles
Similar aspirations (C & W penetration/telecom explosion)……BUT
Very dissimilar purchasing power
An opportunity………………… in disguise Consumer India #3
The changing low income consumer From
Settle for less
Intimidated by technology
Reacting and avoiding
Stretch for more
Curious about technology
Not overawed by power
India –THE NEW OPPORTUNITY?
Burgeoning middle class – as large as the entire population of the US
Market deprived of international goods and services
“Pundits” said that it was a market ready for all the global brands
Consumer India # 4 But was it? … Will it be??
Not one Market-very heterogenous
Tyranny of averages
Market within markets
Speciality local markets
Very demanding consumer emerging
An amalgam culture happening emerging -new languages and metaphors
DELIGHT OF MARKETING PROFESSORS…..AND MARKET SEGMENTERS ….And the bane of marketers “Whatever you say about India, the opposite is also true” Consumer India #5
So what’s happening in India now?Some case stories
Suzuki Motor / Maruti
Glocalisation Is All Very Well But these are the true road warriors Some Success Stories
Made for India Strategy And “Made in India’ Multi-pronged strategy to tackle diversity of customer base Leverage world R&D capability for “Value right” products Provided solutions for a highly aspiring low income market Manage the logistics to address market spread Success in India …what made it happen?
…….. and the list goes on. “Failures”
Replicating Global Strategy Unified global Strategy replicated in India Tastes for India – Not kept in mind Indian Values and Attitudes ‘Non- value right’ products Failures in India… why ?
An amazing opportunity to Fail….. Or Succeed
Long haul market, ‘hang in there’
Not for the faint-hearted
Under-investing as bad as over-investing
Demands strategy complexity –folks and strokes
What India means today-Rx
What India means today-Rx
Build costs in tandem with revenues
Needs international fundamental questions-not solutions
Exist on Earth and Mars concurrently in terms of market and technology practices
An amazing opportunity to Fail….. Or Succeed
INCOME ASPIRATION IDEOLOGY Fertile Ground for Market Development THE INDIA SOLUTION
Not just a market – also a supplier Software professionals-but that’s current history BPO extended
Food , yes food
Cars, yes cars
and the list goes on….. 7th largest in the world
Home to 40 million passenger vehicles
Almost 4 million vehicles produced in 2010
India at 64 As a nation, India has never followed the plot. Just when the world is ready to buy into myth of modernity, it finds itself harking back to medievalism. It is a narrative that defies even the most ardent storyteller, an idea that can never be encapsulated by mere numbers. Specially in India, torture numbers and they’ll confess anything. It is a country in the throes of change, its greatness sometimes diminished by figures, at other times enhanced by them. But as the nation turns 64 a midnight’s child ready for a new beginning, the facts and figures also show us where we stand in the community of nations – a country not afraid to confront, and surmount, its worst truths. …ANON..