1.India Team Country PresentationTeam Topaz

2. Outline 1 Introduction 2 Analysis of Business Environment 3 Future Business Potential 4 Tips for U.S. Citizens 3. Introduction 4. The Ten Largest Economies in 2050 India will likely be the 3rd largest economy in the world in 2050, measured in GDP nominal (millions of USD), according to Goldman Sachs. 5. Reasons for Indias Economic Growth Global Trade India opened its doors tothe global trading floor in 1991, and it leadto the increase in the international tradesector. Among the top trading partners ofthe country includes the United States, theEuropean Union and the UAE. Increase in Outsourcing Services thesector has helped employed around 3million jobs in both direct and indirectopportunities Farming and Agriculture - India isconsidered as the second largest in theglobal market when it comes to the farmoutput. Foreign Direct Investment - When itcomes to PPP or the purchasing powerparity, it is the fourth largest economy.Thus, it has made the country to be afavorite foreign direct investmentdestination for industries liketelecommunications, autocomponents, pharmaceuticals andinformation technology companies. Withthe reduction of licensing requirements andthe restrictions on the expansion, more FDIcompanies are moving towards thecountry. 6. Reasons for Indias Economic Growth(cont.) Industrial and Textile Industries -Factory manufacturing industries of India isconsidered as the 14th top producer in theworld, and this sector accounts for around17 percent of the entire employmentsectors of the country. The textileindustry, itself, employs around 20 millionpeople. Investment Boost - Investments havebeen trigged by the domestic consumptionissues, and this has led people to givefocus on the real propertyinvestments, which is noted to have anaverage increase of 17 percent per yearfor the last five years. Mining - A vital element to the overalleconomy, the sector is essential producingaround 79 different minerals that areexported all over the world. Banks and Financial Institutions - In1969, 14 banks were nationalized byIndira Gandhi, and this led to therequirement that 40 percent of the totalnet credit of the banks must be used forother industries and other sectors.Overall, this helped the countryovercome certain budget issues forevery sector. 7. Brief History of India From the 3rd millennia to the 16thcentury, various tribes, empires, anddynasties helped form the Indian culture In the 16th century, European explorersbegan establishing footholds in India. By the 19th century, Great Britain wasthe prominent political power in theregion. The British Indian Army played vitalroles in both World Wars. By 1947, Mohandas Gandhi andJawaharlal Nehru lead a successfulnonviolence resistance movement thatbrought India its independence in 1947. On Indias Independence Day, August15, 1947, the country was split into Indiaand Pakistan. The partition displaced1.27 million people and resulted in thedeath of several hundred thousand to amillion people. By 1998, India conducted successfulnuclear weapons testing. By 2005, India had the fourth largesteconomy in the world on the basis ofPurchasing Power Parity. 8. Map of States in India 9. Population Density Map 10. Iconic Images of IndiaNational Icon BengalNational FlagTiger 11. India by the NumbersLinear miles GDP GDP Area of of(PurchasingPer LandLabor Force Coastline. PowerCapitaSq. km(km)Parity)(PPP)India3,287,263 7,000 487,600,0004.5 trillion $3,700 World136,437,679 356,0003,492,503,026 95.8 trillion $16,154*World Ranking --- 7th 2nd 4th164 Percentage5.7%2.0% 14.0% 4.7%--- Although India is ranked 4 largest in the world regarding GDP, thetop three entities (European Union, United States, and China)comprise over 44% of the Worlds GDP*Note this is an average across the data 12. Most Populated Cities in India 13. India Government Structure: Republic ofIndia 27 states 7 territories Legal System Common law based on the English legal system Separate personal codes apply to individuals depending on religious orientation 14. Environmental Issues OverAir populationPollutionDeforestation WaterandPollutionOvergrazing 15. Society - LanguageTop Four Native LanguagesHindi (41.0%)Bengali (8.1%)41% Telugu (7.2%) Marathi (7.0%)8.1%7.0%7.2%Percent of Indias Population which speaks the language 16. Society- Religion and EthnicityReligion Ethnic GroupsThe above data is representative of the top religions or ethnic groups in India 17. Society EthnicDispersion Map 18. Economy Open-market economy withties to its past autarkicpolicies. In the early1990s, legislation such asindustrialderegulation, privatizationof state-ownedenterprises, and reducedcontrol of foreign trade andinvestment accelerated theeconomys growth. Labor force One-half is in agriculture One-third is in services, but is a major source of growth 19. Top Commodity Exports and Imports 20. Ports of Entry 21. Regulation of India Ports Laws: Indian Ports Act of 1908 This aided in delineating the responsibility of operational and procedural aspects of governing the ports for the central and state governments In essence, this granted the central government the majority of power when it comes to ports. Major Ports Trusts Act of 1963 Articulated the conceptual framework of comprehensive institutional design for port administration in respect of designated major ports. This lead to the unprecedented decentralization and rationalization of port administration. 22. Trading Alliances Trade agreements can be formed between two states or multiple states within thecountry. India views Regional Trading Arrangements (RTAs) as constructive blocks towards theoverall purpose of trade liberalization. Consequently, it is participating in a number ofRTAs. South Asia Free Trade Area Came into force in January 2006 Members include: Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka Objective: Endorse and augment mutual trade and economic cooperation among the Contracting States India-Mercosur Preferential Trade Agreement (PTA) Came into force on June 2003 Members: India and MERCOSURE Objective: Enlarge and reinforce relations between MEROCSUR and India and endorse the extension of trade by granting reciprocal fixed tariff preferences with the ultimate objective of creating a free trade area between the parties. MERCOSURE is a trading block in Latin America formed in 1991 which consists of Brazil, Argentina, Uruguay, and Paraguay. Asia-Pacific Trade Agreement (APTA) aka the Bangkok Agreement Signed: July 1975 Proposal of the United Nations Economic and Social Commission for Asia and the Pacific BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and EconomicCooperation Its membership involves India, Bangladesh, Bhutan, Nepal, Sri Lanka, Thailand, and Myanmar. This is the bridging link between to major regional groupings. Objective: Sub regional economic collaboration consortium 23. Politics Two major political parties Indian National Congress Bharatiya Janata Party (BJP) In the past decade, more smallerregional based political parties havesprouted. These parties are more aligned withthe state, thus the relationshipbetween each state and the centralgovernment can be volatile at times. The different religious and ethnicgroups have their own politicalparties at times and this leads to aone sided agenda. For instance, the Bharatiya Janata Party has an image of being pro Hindu Terrorism, Naxalism, religiousviolence, and caste-related violenceare important issues affecting politicsin India. The Washington Times in 2004 reported that nearly of the Indian Parliament legislatures had ongoing criminal cases against them. 24. Hofstede Dimensions Power Individualism Masculinity Uncertainty Long-Term DistanceAvoidance OrientationU.S. 4091634629India7748564061Delta-37 437 6 -32 Power Distance: Extent to which the less powerful member of organizationand institutions accept and expect that power is distributed unequally. Individualism: Refers to the extent individuals are more likely to adhere toindividual needs whereas the opposite, collectivism, is where people tend tostick together from birth on, often in extended families. Individualism: The American Dream Masculinity: Refers to the degree the roles between genders are distributed.The high masculine score reflects more assertive people, but a low scorereflects a more caring individual. Uncertainty Avoidance: Refers to the degree with which the country iswilling to incur uncomfortable or unstructured opinions. Long-Term Orientation: Emphasizes perseverance and saving for futurebetterment 25. Analysis of Business Environment 26. Population India has the second largestpopulation in the world behindChina In July 2012, the populationwas estimated at1,205,073,612 Indians now make up 17% ofthe worlds population. UttarPradesh remains its mostpopulous state, with 199million people. More people now live in Indiathan in the UnitedStates, Indonesia, Brazil, Pakistan and Bangladesh combined. India is on course to overtakeChina as the worlds mostpopulous nation by 2030 27. Age Distribution India will be one of the youngestnations by 2020 The proportion of the workingage population (15-59 years) islikely to rise from around 58% in2001 to over 64% by2021, according to the EconomicSurvey. The comparative figures for China and the U.S. are 37 years, while it is 45 for West Europe and 48 Japan. There will be around 63.5 millionnew entrants to the working agegroup between 2011 and 2016. These changes are likely tocontribute to a substantiallyincreased labor force. However, it will benefit India only if the population is healthy, educated, and appropriately skilled. 28. Growth in the Labor Force(population aged 15-59) 29. Education in India Education expenditures: 3.1% of GDP (2006) Literacy: Definition: age 15 and over can read and write Total population: 61% Male: 73.4% Female: 47.8% (2001 census) School life expectancy(primary to tertiaryeducation): Total: 10 years Male: 11 years Female: 10 years (2007) 30. Female Literacy in India 31. Standard of Living In 2012, more than 3 in 10 Indians ratetheir lives poorlyenough to be considered"suffering," up from 24% last year. 32. Income Levels Fourth largest economy inthe world due to a strongeconomic growth but stillhas a low per capita income Still the poorest among theG-20 In 2011, GDP per capita(PPP) was $3,700 In 2010, the populationbelow poverty level was29.8% GDP per capita risessteadily year after year 33. Growth of GDP 34. Annual Real GDP Growth Rate Annual Real GDP Growth Rate12.00% 10.62% 9.99%10.00% 9.53% 9.03%8.00%7.59%7.24% 6.85%6.86% 6.58% 6.19%6.00% 4.56%4.00%2.00%0.00% 20022003200420052006200720082009 201020112012 35. Shares of Global GDP 36. Internet & Communication Infrastructure In 2011, there were 894million mobile cell phones inuse; ranks 2nd in world inregards to number of cellphone users In 2009, there were61,338,000 internet users;India ranks 6th in world inregards to number ofinternet users In 2011, more than 100million homes had accessto cable and satellite TVoffering more than 700 TVchannels In 2011, there were 32.6million telephone main linesin use 37. Mobile Phone Subscriptions 38. Internet Users as Percentage ofPopulation 39. Foreign Direct Investment in India India is a favorite foreign directinvestment destination forindustries liketelecommunications, autocomponents, pharmaceuticalsand information technologycompanies. The overall number of FDIprojects increased by 25% to864 (valued at US$ 50,813million) in the 11 months toNovember, up from 691 projects(valued at US$ 44,874 million) in2010 The United States remains theleading investor in India, both interms of projects and jobsgenerated. 40. Foreign Direct Investment Rules The cabinet of the Congress party-led coalition in New Delhi agreedto allow foreign multi-brandretailers to own up to 51% of jointventures in India Foreign retailers can now open supermarkets with Indian partners. (Wal-Mart-Bharti wholesale store shown to right) Government changed the rules toallow single-brand retailers suchas Nike Inc. to own 100% of theirIndian businesses. Before, theywere permitted to own only 51% ofa partnership with an Indiancompany. Currently, retailing is dominated bymillions of mom-and-popstores, and it lacks much modernsupply-chainmanagement, including storage oftemperature-sensitive products. 41. Top Export and Import Partners of India 42. Indias Trade Balance 43. Clean Energy Investments Clean energy investments have risenfaster than any other country, growing52 percent to a total $10.3 billion in2011 Advanced its solar capacity from 18megawatts in 2010 to 277 megawattsin 2011 In 2011, there was $4.2 billion in funding for grid-connected solar power plants, a sevenfold increase from 2010 levels 44. Research and Development Spending Over 5 years, the Prime Minister hopes to double the R&D budget for science and technology from 1 percent of the GDP to at least 2 percent. India, China and Brazil are ahead of the US in terms of the rate of growth in R&D indicators A 2 percent of GDP figure for R&D would put India ahead of Chinas at 1.4 percent investment, but behind the US at 2.7 percent and Japan at 3.3 percent. Part of that funding increase would go toward increase supercomputing capacity and capability, which would be implemented by the Indian Institute of Science 45. Issues Regarding IntellectualProperty Protections Pirates consider the business of software piracy a much safer and easier way to earn illegal money than through other means In 2007, India experienced PC sales growth at 32%, while the nations piracy level is hovering at a dismal 72% percent Present levels of software piracy contradict the leading position India enjoys in IT and Software 46. Intellectual Property Enforcement Indian Copyright Act of1957, in its present form, isregarded as one of thetoughest and strictest in theworld Empowers the police to takeaction without a warrantagainst pirates/infringers Punishment for copyrightinfringement isimprisonment for up tothree years and a fine of upto 200,000 Rupees ($4,500) 47. Intellectual Property Enforcement(cont.) Delhi High Court passed the first judgment on damages in 2005 The Microsoft Corporation vKamal Wahl (Suit 817, 2004) wasthe highest award of damagesever granted in an intellectualproperty matter by an IndianCourt The court granted damages of2.3 million Rupees ($52,800) infavor of the plaintiffs A much needed amendment in the Copyright Law is the inclusion of statutory damages Various countries, such as theUS and Australia, haveincorporated statutory damagesinto their copyright laws andhave effectively controlledsoftware piracy in theirjurisdictions 48. Labor Laws - Issues As soon as a company hires morethan 100 employees, it isimpossible to fire anyone withoutgovernment permission. Legislators are fighting to push a law through Parliament to let a company expand its workforce without surrendering the power to lay off workers to bureaucrats. The bill faces fierce opposition from labor unions. Companies must keep 6attendance logs and 10 separateaccounts for overtime wages, andfile 5 types of annual returns. There are at least 11 definitions of "Is it possible that our bestthe word "wage. intentions for labor are not actually Other rules regulate the height ofmet by laws that sound progressivecommodes in workerson paper but end up hurting the verywashrooms, how often a buildingworkers they are meant to protect? must be lime-washed, and how- Prime Minister Manmohan Singh, Nov 2011 many sand-filled buckets must beon hand to put out fires. 49. Labor Laws - Waivers Some labor laws were waivedstarting in 2001 to encouragegrowth in the sector, Indiassecond-largest earner offoreign exchange, by placingmost of the workforce insidefenced-off zones. The waivers allowed ITcompanies and call centers tooperate 24 hours a day, recruitwomen to work late at nightwithout building single-genderfacilities, and add staff freelywithout submitting layoffdecisions to the authorities.Indias IT companies, such as Tata Consultancy Services andInfosys, employ as many as 2.7 million. 50. Trade Unions in India The Trade Unions Act, passed in 1926, allows workers to register unions with the Labor Department. These then have to be recognized by the company they work for. Most trade unions in India are aligned to parliamentary parties and of these, leftist parties have traditionally been at the forefront of voicing workers demands. Workers allege that privatization has encouraged collusion between labor departments and company managements, making the process of registration of unions difficult Strikes demanding the right to form workers unions have hit the automobile sector in northern India at frequent intervals. 51. Tax Revenue in India Under 3% of Indian citizens pay income taxes The remainder of the income taxrevenue for the government isderived from corporations. Tax Rates Annual Income of $4000 orbelow no tax Annual Income ranging from$4001 to $10,000- 10% Annual Income from $10,001 to$20,000- 20% Annual Income over $20,000 30% There are various levels of tax exemptions for individuals. For example, any income from agriculture (around 45% of employment in India) is exempt from income taxes. 52. Largest Banks in IndiaRank BankTotal AssetsNumber of Branches1State Bank of India (SBI) 369.56 billion US dollars 13,0002ICICI Bank119.69 billion US dollars 2,5003Punjab National Bank82.23 billion dollars 5,0004Bank of Baroda78.28 billion US dollars3,4005Canara Bank 72.3 billion US dollars 3,1006Bank of India 70 billion US dollars 3,4007HDFC Bank 65.48 billion US dollars1,9868Standard Chartered Bank9IDBI Bank 55.69 billion US dollars92310 Axis Bank $53.36 billion1,281 53. Size of IT-BPO Industry The size of the InformationTechnology & BusinessProcess Outsourcingindustry in Indiaexperienced exponentialgrowth: 150 million US Dollars in 1990-1991 5.7 billion in 1999-2000 50 billion US Dollars in 2007 100 billion in 2012-2013. 54. Indian Software Exports 55. Key Highlights of IT-BPO in 2012 Aggregate revenues cross theUSD 100 billion mark, exports atUSD 69 billion Within the global sourcingindustry, India was able to increaseits market share from 51% in2009, to 58% in 2011 Software and services revenues(excluding Hardware), comprisingnearly 87% of the total industryrevenues, expected to post USD87.6 billion in FY2012; estimatedgrowth of about 14.9% overFY2011 Within Software and servicesexports, IT services accounts for58%, BPO is nearly 23% and R&Dand Software Products account for19% 56. Key Highlights of IT-BPO in 2012 (Cont.) Expected to add 230,000 jobs inFY2012, thus providing directemployment to about 2.8million, and indirectly employing8.9 million people As a proportion of nationalGDP, the sector revenues havegrown from 1.2% in FY1998 to anestimated 7.5% in FY2012 The industrys share of total Indianexports (merchandise plusservices) increased from less than4% in FY1998 to about 25% inFY2012 Embracing emergingtechnologies, increased customer-centricity, deepening focus on newmarkets, adopting new businessmodels are some successfulgrowth strategies followed by theindustry 57. Top IT-BPO Companies in India 2011Number ofRankCompany 2011 RevenueRevenueEmployeesGrowth Tata Consultancy 1Rs 33,112 crore25%Over 198,500 ServicesInfosys 2Rs 25,997 crore22%133,560 Technologies 3 WiproRs 24,899 crore13%122,385Hewlett-Packard 4Rs 23,227 crore30% India Cognizant 5TechnologyRs 21,393 crore37% Solutions 6 IBM IndiaRs 14,132 crore 14% 7 HCL Technologies Rs 14,111 crore28% 8 HCL InfosystemsRs 12,137 crore 2% 9 Ingram Micro India Rs 9,766 crore 35% 10 Redington India Rs 9,274 crore 32% 58. Future Business Opportunities and Threats 59. Business Opportunities Manufacturing Untapped demand for low cost products that are affordable to millions of people Frugal Innovation: Take an established product like a laptop which to millions of Indians would be unaffordable. Look at that laptop, work out what people could afford, and design a bare bones laptop that functions like the original product, but costs a fraction of the price. This business concept is at the heart of Indias emerging economy, and has proved to be successful- from the Tata Nana car to the TVS scooter. 60. Business Opportunities (cont.)- Retail -Allow 51% FDI in multi-brandretail - Consumer Spending up by 75%- Retail industry expected to reach US$ 1.3 trillion by the year 2018- Will improve retail supply chain and benefit farmers and consumers- Insurance- Allow foreign ownership of localinsurance companies andpension-fund managers up to49%- Huge opportunity as only 4.7%of the countrys more than 1.2billion people currently haveinsurance of any kind- Insurance sectors need forcapital can be met only throughincreasing FDI Minister ofFinance 61. Business Opportunities (cont.)- Telecom- One of the largest telecommarkets in the world- The limit in broadcast servicesis to increase 74% across theboard- Worlds 2nd largest mobilephone industry with nearly 1billion subscribers- Supportive governmentpolicies, emerging newtechnologies and changingconsumer behavior fuel thegrowth- This is a lucrative market. Alarge number of multinationaltelecommunication leaders arealready pouring into the nation 62. Business Opportunities (cont.)- Energy- Unprecedented need for cleanenergy production, unable tomeet the burgeoning demandsof the growing population andbusinesses- Severe shortage of electricityin several states- FDI of up to 100% is permittedunder automatic route forprojects of electricitygeneration, transmission, distribution and power trading- Growing potential of solarpower generation 63. Business Threats- Lack of adequateinfrastructure facilities- High cost of real estate- Unstable political conditions- Shortage of trainedmanpower- Widespread corruption, slowprocessing in governmentoffices- Opposition to FDI fromsome political parties andlocal groups 64. Tips for U.S. Citizens 65. Gender Issues Shaking hands with women is avery sensitive point in Indianculture. The important rule is thatshaking a woman by the hand is atthe womans initiative. Only whenan Indian woman offers her hand,is it acceptable to shake it. In theabsence of a handshake, thecustom all over India is thegreeting of peace known as"Namaste". When making thisgreeting, hold the palms of bothhands together under the chin,smile, bow slightly and say"Namaste. In Indian culture, it is consideredimproper for a man and woman toembrace and kiss in public. 66. Business EtiquetteDo not arrange business meetings for national holidays.It is important to remember that apart from the national holidays there are many festivals that are specific to certain regions of India.Like many high context cultures, Indians are family oriented. They take time to know you before they delve into business. The exchange of personal information may be more important than the legality of the contract.Like most Asian countries, India sees itself as different from the rest of the region; not monolithic. Indians will, almost always, protect each other, their cultural values, and their philosophies. It is important for an American not to impose his or her values on them. Always follow their lead. 67. Business Etiquette (cont.) Stay out of political and historical controversial discussions as much as possible. Be aware of political tensions between India and Pakistan over Kashmir for example. Respect for religious beliefs in India is paramount. Hindu is predominant while Islam is distant second. Being aware of some basic predominant religious beliefs is essential to understanding any people. Hindus in India hold a cow in sacred esteem, Muslims dont eat swine, and Muslims observe certain holidays and pray so many times a day facing a certain direction. In some cases, Shariah Law is practiced, whose tenets are vastly at variance with Judeo- Christian values practiced in the west. 68. Presenting and Receiving Gifts When presenting gifts, take care that the gift-wrapping is neither black nor white as these are believed to bring bad luck. On the other hand, the colors that are thought to bring good luck are red, green and yellow. It is not customary in India to open a gift in the presence of its donor. If you receive a gift from your Indian colleague, open it only after your colleague has left the room. Acceptable gifts are flowers, chocolate, perfume and small electronic goods. You should refrain from giving gifts that have a picture of a dog (dogs are considered unclean animals). It is important to know that many Indians do not drink alcohol or eat beef.