Tap business opportunities in india 2015 &

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Time to tap Business Opportunities in India – 2015 &

beyond By Ramesh Kumar Nanjundaiya


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.

Presenter’s background


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.

Presentation objective


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.

The Government in India


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

Brief Background


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.

GDP Growth rate prediction for India 2015 ….


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.

India – some highlights


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.

India Today


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.

Make in India


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.

India – population 1.25 billion


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.

Some facts on India


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.

This is what John Kerry said..


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)

USA and India – basic facts


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.

Bengaluru (Bangalore)


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.

Start-ups in India – Entrepreneurships


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?

India – 8 questions


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.

The “Middle Class” in India


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.

Areas to look at


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.

Areas to look at for investing


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.

India and Franchising business


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.

President Obama’s views


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:

India – 2015 and beyond


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.

Telecommunication


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.

Mobile Technology


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.

E- Retailing (e m and n)


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.

E- retailing contd….


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.

Health and Personal Care


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.

Education


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.

Online Advertising


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.”

India –USA – bilateral trade


$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.

India and SME sector


$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.

Make in India


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.

Civil Nuclear Deal


$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.

Energy Investment in India


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

The India case study …..