Tap business opportunities in india 2015 &

By Ramesh Kumar Nanjundaiya
1All Rights Reserved - RKN

RAMESH KUMAR NANJUNDAIYA – MS (Belgium), MBA (US)
 Head - Business Strategy - M/s.Triniti Solutions, Bangalore, India
 Visiting Guest Faculty in “International Marketing” and “Corporate Finance” at a
couple of known MBA institutions in Bangalore, India.
Professional overview
 A widely traveled and accomplished professional with over 33 years’ of career in
international banking, Marketing and the financial sector.
 Ex- Senior banker with working experience gained in well known international
banks as BNP, SCB, Citibank, EBIL, Barclays Bank, Banque Saudi Fransi in
such diverse countries as the Middle East (GCC) region, West Europe and
India.
 Currently - Trainer in Corporate Banking and Credit, International Trade and
Marketing and Business Consultation.
All Rights Reserved - RKN 2

 To give an overview of India as it stands today and
a snap shot of the areas of business potential that
exists. Not here to promote “Brand India”.
 As a Case Study material - India would be a good
example now for global MBA students in
International Marketing.
 Venture Capitalists or the Crowd funding people
can use this as initial information on the present
day India.

 India is Democratic country with a Parliamentary Form of
government, governed under the Constitution of India.
 India is a federal union of states comprising twenty-nine states
and seven union territories.
 All states have their own local language and are culturally quite
diverse. Hindi is National Language & English is Business
Language.
 India has 22 official languages. According to Census of India, the
total number of mother tongues spoken in India is 1652.
However, only around 150 languages have a sizable speaking
population.

 Indian economy – USD 2 trillion (2014 – per IMF)
 Tenth largest economy by exchange rates (per World Bank)
 Third largest economy by PPP – USD 7.3 trillion
 One of the world’s fastest growing economies
◦ Average GDP growth rate - 5.8% over the past two decades
◦ GDP reached 6.1% during 2011–12
◦ GDP touched an all time high of 11.4% in Q1 2010
◦ GDP was at a record low of -5.2% in Q4 1979
◦ GDP touched 7.5% in Q4 2014 over same period in 2013

 The World Bank has predicted a GDP growth
rate of 8 per cent for India by 2017.
 They further state that a strong expansion in
the country, coupled with favorable oil prices,
would accelerate the economic growth not
only in India but also in South Asia generally.

 7th largest country in the world
 It is very much a fast developing country
 Population: 1.25 billion (July 2013 est.)
 Capital is New Delhi and Financial Center is Mumbai
 Largest English speaking nation in the world – high number of
engineers.
 Density: 389 persons per square km as compared to 31 persons per
square km in USA
 USP - Anything under the Sun can be sold in India – so much demand
 Bangalore is considered the Silicon capital of India
 The Middle Class in India (350 million) is driving consumerism today
and this is what attracts foreign investors/business
 I always believe that new technology transfer/sale to a developing
country brings Economic growth.

 The newly elected Narendra Modi’s BJP
government is very keen to project India globally
and invite overseas investments and allow foreign
companies to tap the growing Market in India with
a population of 1.25 billion people.
 The Indian Prime Ministers’ buzz work is “Make in
India”.
 To bring in economic growth and employment, the
new BJP government feels that the country should
run potential growth areas of the economy as a
Corporation. Not a bad idea.

 Make in India is the latest initiative of the Government of India, to
encourage companies (including overseas companies) to manufacture
their products in India. It was launched by Prime Minister, Narendra
Modi on 25 September 2014.
 The major objective behind the initiative is to focus on 25 sectors of the
economy for job creation and skill enhancement.
 Some of these sectors are: automobiles, chemicals, IT,
pharmaceuticals, textiles, ports, aviation, leather, tourism and
hospitality, wellness, railways, auto components, design manufacturing,
renewable energy, mining, bio-technology, and electronics.
 The initiative hopes to increase GDP growth and tax revenue. The
initiative also aims at high quality standards and minimizing the impact
on the environment.

 The Indian market today presents lucrative and
diverse opportunities for USA Companies with the
right products, services, and commitment.
 India has potential for a sustained growth of 8% +
for the next couple of years.
 Now is the time for U.S. companies to enter the
growing Indian market.

 is the world's second largest small car market (Nano Car costs US$ 2500/-)
 is one of only three countries that makes its own supercomputers
 is the fourth largest economy in the world (measured in terms of purchasing power
parity)
 is one of six countries that launches its own satellites
 100 of the Fortune 500 have R & D facilities in India
 has the second largest group of software developers after the U.S.
 lists 6,600 companies on the Bombay Stock Exchange; only the NYSE has more
 is the world's largest producer of milk, and second largest producer of food, including
fruits and vegetables
 sends more students to the U.S. colleges than any other country in the world. In
2012, over 120,000 Indian students enrolled in the U.S.A. (highest after China).
 Indian pharmaceutical industry is the world's second largest after China
 Every year 1 million engineers (bachelors’ degree holders) graduate and enter the
employment market. A high percentage of these are proficient English speakers as
well.

 Quote
 India's Economic Strength and Business Environment Are of Strategic
Importance to the U.S.
 We are not starting from scratch. Since 2000, trade between our
countries has increased nearly fivefold to more than $96 billion. Indian
investment in the US has grown from just over $300 million to $9 billion,
and US investment in India has risen from $2.4 billion to $28 billion.
 Half of all Indians see the US as their country's "most dependable
future ally“.
 We (the US) want to build on this strong foundation. We will focus on
specific areas that are aligned with the priorities of India's new
government.

 2012 : U.S. goods and private services trade with India = $93 billion in 2012
(latest data available).
 US Exports = $34.00 billion;
 US Imports = $59.00 billion.
 The U.S. goods and services trade deficit with India was $25 billion in 2012.
 2013: India is currently USA’s 11th largest goods trading partner with $63.7
billion in total (two ways) goods trade during 2013.
 US Exports = $21.90 billion;
 US Imports = $41.80 billion.
 The U.S. goods trade deficit with India was $20.0 billion in 2013.
 The total wealth of India has tripled in a decade to $3.5 trillion and is expected
to double again in the next 5 years (source: Credit Suisse).
 India is expected to invest $1.2 trillion on its infrastructure over next 2 decades
(Source: McKinsey)

 Bengaluru (Bangalore) is known as the "Silicon Valley of
India" because of its role as the nation's leading information
technology (IT) center, developer and exporter.
 Indian technological organizations ISRO, Infosys and
Wipro are headquartered in the city. A demographically
diverse city, Bengaluru is the second-fastest growing major
metropolis in India.
 For a long time, India has been seen as a low-cost back
office for big corporate houses. When Target, the Fortune
50 retailer, launched its accelerator programme in India last
year, it was an endorsement of the fact that the giants had
started looking at India, especially Bengaluru, as a source
of innovative technologies.

 The Union Budget 2015-16 had some good news for Indian entrepreneurs—especially
ecommerce startups. With the technology and startup sectors receiving allocations of Rs
1000 crore, promotion of cashless transactions via RUPay debit cards backed by major
reduction in corporate tax from 30 per cent to 25 per cent over next four years.
 The government is establishing a mechanism to be known as SETU (Self-Employment and
Talent Utilization) which will support all aspects of startup businesses, and other self-
employment activities, particularly in technology-driven areas.
 Over the years, entrepreneurship has proven to be critical to India’s growth and
development, given its increasing significance and visible impact in wealth-creation and
employment-generation.
 Several other corporates have seen the trend, understood it, and wanted to build
innovation capabilities in India. Technology giants like Microsoft, Cisco, IBM and the likes
are all involved in the ecosystem of accelerators, directly working with startups, or, as in
the case of Yahoo!, acquiring talent from the ecosystem by scrupulously hiring.

 Does your company have an India strategy?
 Does your company have a plan about how to do business in
India?
 Does your company knows what is the best way to enter India?
 Does your company know what corporate structure is best suited
for your requirements in India?
 Does your company know what corporate entities are available
for doing business in India?
 Does your company know what approvals are required before
investing in India?
 Does your company know what kind of joint venture partner is
good for your company?
 Does your company know what are legal requirements of doing
business in India?

 Driven by a growth rate of over 8% in 2010 and a 350
million strong middle-class with increasing purchasing
power, the Indian market today is reshaping the
world’s economy.
 India’s GDP crossed the trillion dollar mark in 2007
and is currently in 4th position (PPP) after US, China
and Japan. Investment in almost every sector
(Education, Food, Energy, Health Care and Retail) of
the Indian economy has a promise of high returns that
has caught the attention of investors and businesses
across the world.

 A very lucrative market exists for US companies
with products or technologies in the following
areas:
 Food & Beverages: food processing, food
packaging, food warehouse and transport, health
drinks, etc.
 Home based: home décor products, kitchenware
essentials, bed and bath, etc.
 Healthcare: diagnostics and testing, medical
equipment, health supplements, clean air and
water products, etc.

 Education: medical/nursing, ‘train the teacher’ programs,
automotive mechanics, medical technicians, advanced courses
in the upcoming fields of genetics and nanotechnologies. For
human resource and skill requirements in the healthcare services
industry, your can download a full report by National Skill
Development Corporation of India at
entryindia.com/files/Healthcare/healthcare.pdf
 Consultancy Services: engineering, business development,
product development, security analysis, etc.
 Infrastructure: waste management, solar and wind technologies,
temperature controlled warehouses, air and noise pollution
control technologies, towing trucks, and automated parking lot
equipment.
 Similar business prospects abound in other sectors such as
home land security, media & entertainment, hotel/motel, financial
investment services, etc.

 One of the business formats that is rapidly gaining acceptance is
"Franchising" which is growing at a rate of 30% annually. While legal
infrastructure and ecosystem are in place in India, one must do a
thorough research, and due diligence of the potential Franchisee and
create binding agreements covering all important aspects of the
Franchising before making any investments.
 One must also understand business norms of India and seek
professional help in navigating the paper trail, IP protection, and Tax
implications etc. before undertaking partnership agreements with the
Franchisee.
 Top sectors with franchising opportunities are Education and
Healthcare due to a huge mismatch between supply and demand now
and in the coming years. You may want to take advantage of the fact
that US Commercial Service (Dept. of Commerce) regularly takes
Trade Missions of US Franchisors to India.

 President Obama’s National Export Initiative has set a target of
doubling US exports to $2 trillion by 2015. To meet this objective, the
US Administration has initiated huge incentives to support US exports.
 Commerce Dept.'s International Trade Administration (ITA) budget is
raised by 20 percent to $534 million and 300 international trade
specialists are added to help US companies export US goods and
services.
 Indians have a very favorable view (76%) of the US according to a
Global Attitudes Survey. Indian Government officials make regular visits
to the US to meet with the industry experts and to promote business
and trade opportunities.
 The government of India offers multiple incentives to US companies
doing business in India. Government incentives include duty free import
of capital goods and raw materials, reimbursements of Central Sales
Tax, Tax holiday for specified period, 100 per cent repatriation of profits
for subcontracting facilities and more.

 The top business opportunities in India for the
year 2015 and beyond. The list has not been
arranged in any specific order and is based on
various factors such as historic growth rate,
profitability, outlook, etc., of the sector:

 Telecommunications: The global and Indian
telecommunication industry will present numerous
business opportunities in the year 2015.
 India’s metros are set to transition from 3G
networks to 4G network, while many of the 2nd
and 3rd tier cities in India will transition from 2G to
3G networks.

 Mobile technology is growing exponentially each
year as more and more things are being done on
the move. Mobile access of internet is now
nearing the same levels as that of desktop access.
 Further, affordable smart phones from local
companies combined with the penetration of 3G
mobile internet services in 2nd and 3rd tier cities
will unleash massive demand for mobile
accessible content and mobile apps.

 E-commerce companies have enjoyed tremendous growth rate over the past
few years and will continue to grow rapidly during the year 2015 and beyond.
 M-Commerce - commercial transactions conducted electronically by mobile
phone.
 E- Commerce - commercial transactions conducted electronically on the
Internet
 N- Commerce - commercial transactions in the neighborhood
 It is expected that 2015 will witness the growth of many small to medium sized
local or regional e-retailing businesses that provide groceries and/or FMCG
products to a smaller customer base. In recent years, e-commerce has taken
the world by storm, changing the way we shopped, forever. Its newer avatar, m-
commerce, has further accelerated the pace of growth in this segment,
considering Smartphone penetration itself is at an all time high.

 The situation is no different in India where out of a total
population of roughly 1.2 billion, 900 million already have a
mobile subscription. However, only 110-120 million of them
own a Smartphone. But herein lies the potential of m-commerce
because Smartphone penetration in India has witnessed
exponential growth in the last couple of years and the trend is
only getting better with time. This should give rise to commercial
transaction in the immediate neighborhood.
 Hyper-local (neighborhood) seems to be the new buzzword in
the fledgling e-commerce industry. Since the beginning of 2015,
about half a dozen hyper-local start-ups such as Pepper Tap,
ZopNow, Jiffstore, Grofers, Woolpr and Zopper have raised big
money. These start-ups enable customers to buy anything from
grocery and apparel to medical supplies and consumer durables
from their neighborhood stores. Though they compete with large
companies such as BigBasket and Flipkart, their USP is delivery
within 2-3 hours.

 Health and personal care services will continue to
grow steadily in the year 2015. Healthcare or
healthy related service providers leveraging
technology will enjoy tremendous growth.
 Increase in affluence and urbanization will
continue to drive the demand for health related
services like gyms, salons, weight loss clinics,
etc.,creating business opportunities in the health
or personal care sector.

 Many online learning platform providing instructor led
live online courses for IT professionals recorded an
astounding annual growth rate of 3000% during the
year 2014.
 There is tremendous demand for learning in the
internet especially for upcoming technologies like
Hadoop, Cassandra, Android and cloud computing.
 Therefore, companies that can deliver strong content
in the above areas in an online format can enjoy
similar business opportunities.

 Growth Area - Audience are seen as gradually
shifting to social media, streaming video, blogs
and other forms of online content. This has led to
more and more businesses advertising online.
 Large businesses are having to supplement their
offline advertising channels with online presence,
while smaller businesses are also advertising
online due to the affordability.

 As of now, India accounts only 2% of US imports
and meager 1% of exports; while they do $560
billion business with China every year, only $100
billion worth of goods and services are exchanges
with India yearly.
 Obama said, “We are moving in the right direction
… That said, we also know that the U.S.- India
relationship is defined by so much untapped
potential. Everyone here will agree, we’ve got to
do better.”

 $1 Billion Assistance for Indian SMEs:
US Government’s business development and finance
arm: U.S. Overseas Private Investment Corporation
(OPIC) will give an assistance of $1 billion for Micro-
SMEs and SMEs from rural and urban India. This
decision was made to encourage entrepreneurship
and business, along with technological assistance.
Soon after this announcement, Yes Bank said that
they have signed a MoU worth $220 million with OPIC
for lending credit to SMEs from India. Wells Fargo
bank would be the official project coordinator for this
scheme.

 $1 Billion Assistance for Make In India exports:
U.S. Export-Import Bank will provide an
assistance of $1 billion for “Make in India”
campaign launched by PM Modi, which will help
made in India products to be exported to US and
increasing trade relations in this sector. Special
focus would be provided in infrastructure
development.

 One of the most important decisions taken after Obama’s
visit to India in 2015 was breaking the deadlock on Civil
Nuclear deals, which was stuck since last decade. India
agreed to amend few of it’s clauses related with Insurance,
and in return US pledged to make it go live.
 India has created an Insurance pool worth Rs 750 crore led
by General Insurance, and contributed another Rs 750
crore to make the insurance regulations stronger. (US$1 =
IRs. 62)
 In the coming days, we can observe some major
breakthrough in this direction, which can help solve several
problems such as energy needs, industrialization progress
among others.

 $2 Billion for Energy Investments In India:
US Trade & Development Agency will pitch in with $2
billion investments in the renewable energy sector in
India, which includes Solar Power and Wind Energy to
help India solve its energy crisis, and to bring down
costs related with power production using traditional
means.
In addition, US Government also assured India that
they will help us to achieve the target of producing 100
GW via solar energy with an investment of $100
billion.

 The takeaways - Growing market potential, growing
consumerism, growing buying power
 Introduction of a “single portal” for all overseas
businesses/investment to get the necessary timely
clearances for setting up shop in the country.
 New initiatives as ‘Make in India’ and ‘Digital India’.
 The world is suddenly looking up and taking notice of
India as next investment opportunity and destination.
 THANK YOU

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