INDIA

INDIA
Redefining progress

Did You know that India.......
Is the largest democracy in the world
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
Inadequate infrastructure
roads
ports and airports
power
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
Changing bureaucracy
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
Economic Scenario
Liberalized Trade Regime – opening up of India
Huge Investment inflows
Merging with the world economy
Political Scenario
Liberal Capitalist Regime- but at gunpoint
Psychographic profile
Literacy 50-85%
Technology exposed-and absorbing fast
Demographics-A very young nation- and getting younger
Cultural
Guiltless Consumers
Pragmatic

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
Feudal
Reacting and avoiding
Self denial
DESTINY DRIVEN
To
Stretch for more
Curious about technology
Not overawed by power
Experience seeking
Affordable indulgence
DESTINATION SEEKING

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

Long Haulers
Unilever (HLL)
BAT (ITC)
Suzuki Motor / Maruti
Later Starters
Hyundai Motor
LG
Samsung
GE
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?

General Motors
Ford
Kellogg
Pepsi
Coke
Enron
Electrolux
Whirlpool
Reebok/Nike/Adidas
…….. 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
Medicare
Biotech
Research
Automotive
Components
Two wheelers
Cars, yes cars
Components
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..

India …….a lesson in humility
Dhanyavaad

INDIA

by rohtashmal

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