Contents
Market Overview
www.imacs.in
One of the fastest growing economies in the world - growing at over 8 % p.a average for the last 3years
Manufacturing contributes to 79% of FDI investment 16% of India GDP 53% of Indian exports
World's second largest small car market One of only three countries that makes its own supercomputers y World's largest producer of milk, tea and pulses and the worlds largest livestock population y Second largest producer of food including fruits and vegetables y Worlds largest diamond cutting and polishing centre and the second largest jewellery market
y y
India is ranked 43 in the latest GCI index (1) ahead of other BRIC (2) economies
The quality of Indian work force is one of Indias key competitive advantages
(1) Global Competitiveness Index
www.imacs.in
FDI inflow into India has doubled from USD 3.4 bn in 2001 to USD 8 bn in 2005
Electronics:
These sunrise sectors(1) of Indian manufacturing is enabling higher growth rates for the manufacturing sector
Capital Goods
y
www.imacs.in
Intermediate Goods
y
www.imacs.in
Each of these industries have one major firm with a high market share
www.imacs.in
Domestic Competitiveness
Indias liberalization, key policy interventions, competition and infrastructure build up have been key drivers
Export Competitiveness
Regional FTAs, FDI in select sectors, stable currency, stable economic regime have been key drivers
This interplay has enhanced Indias competitiveness Indias manpower advantage, indigenous technology advantage have played a leading role in achieving domestic competitiveness Many Indian sectors (e.g. Textiles, Glass, Automotive, Jewellery, Leather, Agro based, Pharmaceuticals, etc) have achieved export competitiveness
Indian manufacturing exports have been growing at a CAGR of 14% for the last five years
www.imacs.in
Leather
www.imacs.in
a)
Savings to the extent of 80% vis--vis plants in developed markets (due to the low cost, high quality engineering talent in India)
b)
Savings to the extent of 30% to 60% vis--vis plants in developed markets (due to local fabrication and labour intensiveness)
c)
Many manufacturing units in India follow a 3 shift seven day week (unlike a 2 shift-5 day week in high cost locations)
Contents
Market Overview
www.imacs.in
State (Provincial) Government 1. Each state & Union Territory (UT) offers their unique industrial and sectoral policy and incentives 2. The policies offered relate to industrial estates, taxes, power tariff, capital investment subsidies 3. States and UT in India typically follow a Single Window Clearance (SWC) mechanism 4. Competition among the states and UT to attract investment has proven to be beneficial for investors 5. Customized packages designed for capital intensive projects
Power projects Firms engaged in exports New industries in notified states Units in Electronic hardware, software parks EOUs and Free Trade Zones
2) Tax deductions of 100% on export profits 3) Deduction of 30% on net income for 10 years for new industries 4) Deduction in respect of certain intercorporate dividends
Some of the sectors in which 100% FDI is allowed 1) 2) 3) 4) 5) 6) 7) 8) 9) Airports Coal Agro & allied Roads Ports Coffee Tea Telecom equipment Hazardous Chemicals 10) 11) 12) 13) 14) Mining SEZ / FTZ Rubber Construction Petroleum (2)
Contents
Market Overview
www.imacs.in
www.imacs.in
Over the next few decades India can overtake the economic growth rate of Brazil, Russia, China (the other fast growing economies)@
www.imacs.in
A conglomerate of 96 operating companies in several sectors with revenues of USD 72 bn (5% of India GDP) in 2010. The Tata brand is a household name in India
One of Indias largest private sector enterprise, with interests in downstream petrochemicals. Group revenues are about USD 44bn. Reliance Industries Limited is a Fortune 500 company
Pepsi is one of the biggest FMCG brands in the country. The company plans to invest around USD 1 billion in India this year
Ford is one of Indias popular brands in the car market. Ford manufactures around 100,000 cars per annum in India
www.imacs.in
Wockhardt is one of Indias leading companies with interests in pharmaceuticals and healthcare with a market capitalization of USD 1.3 bn and an annual turnover of over USD 300 mn
Present in India for over 50 years. Leading player in the power sector. Employs over 4,000 people in India; has its global R&D centre in Bangalore
A US$ 30bn conglomerate, with a market capitalisation of US$ 45 bn, it is anchored by 82,000 employees belonging to over 20 different nationalities
www.imacs.in
Introduction
y y
From 1914 till 1924, nascent stage Signs of growth during 1924-41, severe competition, depressing prices and profitability; and Associated Cement Company (ACC) Production and distribution under direct control in 1942
www.imacs.in
India is the Worlds second largest cement producing country Factories clustered in a few locations depending on raw material availability Regional in nature Southern region (largest market, insulated from competition) Eastern region (isolated, monopoly in serving north-eastern states) Western region (most open to competition) Emergence of a few big players through M&As
www.imacs.in
Introduction
Highly heterogeneous and fragmented industry, with widely differentiated products y Strong public sector presence y Complete abolition of price and distribution controls during early nineties
y
www.imacs.in
Competition Concerns
y
Differential Pricing
Downstream producers compete with integrated producers for the same end-product Allegations of differential pricing between the intermediate and the end product
Cartelisation?
Threat of imports, public perception, users of HRC constitute a large lobby Suspicions of concerted action by steel majors (PSUs operation) Cartelisation, when the market is strong, but not when it is weak
www.imacs.in