Sources Used: Business World Hindu Business Line Economic Times Company Websites
Indian economy globalisation
INDIAN ECONOMY AND GLOBALISATION
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 MNCs, population migrations and more generally increased mobility of persons, goods, capital, data and ideas
Accountability of Global businesses? Increased gap between rich and poor fuels potential terrorist reaction Ethical responsibility of business? Efforts to remove trade barriers.
New trade pattern: developing countries ◦ dont 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
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. W-2, W-4, 1099 bonuses & stock statements Indian accountantUS 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.
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.
Growing Imports Source: Ministry of Commerce & IBEF
Increasing Forex Reserves Indias Forex Reserves: 2001-08 (Till 14 March 2008) 350 306 300 250 199USD Billion 200 141 152 150 112 100 75 54 50 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (Till 14 March 08) 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 Electronic equipment,India is ranked second in manufacturing and telecom AT Kearney’s FDI have witnessed significant confidence index (2007) 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 USD 12 billion in India by 2016 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 USD 1.7 billion four years Source: India Brand Equity Foundation (IBEF)
India Inc. Investing OverseasMain sectors: • Auto Components • IT • Beverages • Metals • Cosmetics • Mobile Communications • Energy • Pharmaceuticals • Financial Services • Software • Industrial GoodsMain Destinations: China, UAE, UK North America is emerging as a destination.
Additional economic indicators: • India has a consumer base 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.
India’s Trade with USAUSD Billion Exports to US 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
Buyer Acquisition Price Reliance Industries Flag Telecom, Bermuda US$ 212m Tata Motors Daewoo, Korea US$ 118m Infosys Technologies Expert Information Services, Australia US$ 3.1m"Toyota Motor has Bharat Forge Carl Dan Peddinghaus, Germany N/Achosen to source from Ranbaxy RPG (Aventis) Laboratories, France N/AIndia due to itscompetitive cost of Wockhardt CP Pharmaceuticals, UK US$ 18mmanufacture,availability of Cadila Health Alpharma SAS, France US$ 5.7mabundant engineering Hindalco Straits Ply, Australia US$ 56.4mtalent, and strongindigenous machine Wipro NerveWire Inc, USA US$ 18.5mtool." Aditya Birla Dashiqiao Chem, China US$ 8.5m United Phosphorus Oryzalin Herbicide, USA US$ 21.3m
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 and Korean 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
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.
Current Literacy rate is 64.84% Year Literacy Rate Male - Female Person Male Female Gap 1981 43.6 56.4 29.8 26.6 1991 52.2 64.1 39.3 24.8 2001 65.4 75.8 54.2 21.6
What are people talking about India? "India has a fantastic pool of software professionals. The This market (India) is critical world needs to benefit from to our plans for building a this.“ Ford Motor Co. for the 21st century Bill Gates, Microsoft Bill Ford, Chairman Chairman and CEO India on its way to becomingIT, manufacturing kingdom of The dynamism shown by India the world in the last 15 years is phenomenal Mr Yasukuni Enoki, Japanese Ambassador Paul Wolfowitz, to India 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).
Companies in India That Have Successfully MetCompetition by Multinationals & DomesticCompanies Had A Spirit Of Innovation Not OnlyIn Their Products And Services But Also WithReference To All Their Resources And EffectivelyRestructured Them In A Time And Cost FrameAnd Met Customer Needs And Improved TheirTop And Bottom Line.