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1
Path to India Market
2
Path to India Market
Agenda
Why India Economic and Trade Issues Important Statistics Market Trends Opportunities & Challenges Channels and Strategies How TDC can help
Path to India Market
3
Path to India Market
WHY INDIA
Dynamic, fast-growing economy
Sustainable growth led by services
Huge population second to China
Rise of middle & high income classes
Trade liberation & commitment to reforms
Retail revolution
Path to India Market
4
Path to India Market
ECONOMIC AND TRADE ISSUES
Sustainable good economic growth.Avg. 6% GDP growth over past decade. Est. growth for this and next year is 6-7%. Strong national reserve.
Change of Ruling Party/Prime Minister.Manmohan Singh of Congress Party replacing Vajpayee of BJ Party as Prime Minister. Mr. Singh was former financial minister pioneering many of the reform policies.
Economic reforms and liberalisation policies
continued.Trade reforms and liberalization since 1991 proved to be successful. Political consensus regardless of change of leadership. Trend of globalisation and outsourcing.
Path to India Market
5
Path to India Market
“Look East” policy. Links with China, FTAs with ASEAN, Singapore, Thailand, etc. World’s second largest market.
Over 1 billion population, fast GDP growth, increasing incomes, increasing affluent households ready buyers of imported goods
Path to India Market
ECONOMIC AND TRADE ISSUES
6
Path to India Market
1.3
5.15.9
7.3 7.37.8
4.8
6.56.1
4.4
5.8
4
8.1
6
0123456789
19
91
/92
19
94
/95
19
97
/98
20
00
/01
20
03
/04
forecast
India’s GDP Growth, 1991-2004% Change
STATISTICS
7
Path to India Market
9.4
13.215.7
18.920.7
2527.6
6.37.6
9.612.2
0
5
10
15
20
25
30
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
India’s Exports of Services, 1997-2003+20% each year
US$ billion
IT & Software
Sustainable growth led by services
8
Path to India Market
37.1
59.1
3.8
33.6
60
6
15.9
69.1
15
0
10
20
30
40
50
60
70
80
Low income Middleincome
High income
1989/90
1994/95
1999/2000
% of urbanhousehold
Rise of middle & high income classes51.2 Million Household Living in Urban India
7.7 Million of High-income Household
9
Path to India Market
21.9 23.328.7
36.7 39.1 41.5 42.449.7 50.5 51.4
61.4
77
19.4
0102030405060708090 Export
Import
Impressive results….. TradeTrade between India and the World, 1991-2003
Double in 10 years +25% in 2003From 2002
US$ billion
10
Path to India Market
1901
14411202
12941099
679685762796
517
0
500
1000
1500
2000
2500
3000
3500
Gems and Diamonds
Others
Hong Kong’s Exports to India, 1994-2003Double in 5 years
US$ billion +32% in 2003from 2002
11
Path to India Market
4.33.4
3.4
2.32.22.6
3.6
1.1
00.5
11.5
22.5
33.5
44.5
5
1991-96
1997 1998 1999 2000 2001 2002 2003
FDI inflows to India, 1991-2002Accelerating since 1997
US$ billion
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Path to India Market
MARKET TRENDS Modernising retailing.
Emergence of chain stores, department stores, supermarkets, hypermarkets, shopping malls in tandem with rising living standards
Soaring demand in capital goods, machinery and parts.
Serious lack of high-tech machinery – textile, injection moulding, printing, food machines, etc.
Improving trade policies and foreign investment
prospects. Removal of quota system in 2001 and has since reduced import tariffs, lowered excise duty brackets to 16% and abolished additional customs duty (SAD) of 4% fr. Jan. 2004 total chargeable duties 40%.
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Path to India Market
MARKET TRENDS Opening up domestic market to foreign companies
for example, raising the ownership ceiling for foreign investors in the oil/ banking sectors from 74% to 100% and 49% to 74% respectively; establishing Special Economic Zones with tax exemptions to promote export-led businesses.
Expanding two-way trade between HK and India.
2002-2003, total trade grew by 12.7% and 28.9% respectively; while HK’s exports to India up 19.9% and 31.9% during the same periods.
Growing middle/high classes and young generation. Creating new demand of goods and services.
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Path to India Market
OPPORTUNITIES & CHALLENGESOpportunities for Product Sector
Consumer Goods- On the rise as local offerings fail to satisfy current demand much room for imports- Consumer electronics, timepieces and, to a lesser extent, toys, gifts,
house
Semi-manufactures, parts and components- Except a few sectors like jewelry, India’s light manufacturing industries
do not have high-tech machinery to do the processing work. badly need to procure sophisticated, high value-added semi-
manufactures from overseas (e.g. electronic parts)
Capital goods, machinery and parts- Imports of advanced machinery, parts and accessories from overseas
much needed to move up value chain.- textile, injection moulding, printing, food machines, etc.
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Path to India Market
Electronics & ICT – India gained competitive advantage in providing service exports, with IT sector as the star performer. Increasing no. of IT plus electronic companies wish to expand overseas
Film & TV – India is one of the world’s largest
producers of films and one of US’s outsourcing destination for animation work. Its Bollywood is gaining international attention and status.
OPPORTUNITIES & CHALLENGESOpportunities for Services Sector
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Path to India Market
Infrastructure and real estate
Fast economic development triggers huge demand in upgrading infrastructure and real estate requirement
Opportunities in roads, highways, parts/airports, commercial and residential building, township development, etc.
Design
Potential consumer products like toys & gifts craving for value-add design services due to increasing keen competition
OPPORTUNITIES & CHALLENGESOpportunities for Services Sector
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Path to India Market
A loose and highly unorganized market.
Consumers extremely price sensitive. Japanese brand Q&Q watches (@ USD2.5 ~ USD35)
Very hot weather in summer (~40 C)
Insufficient flights between HK and India.
Very high airfare in India eliminates businessmen’s travel interest.
OPPORTUNITIES & CHALLENGES Challenges
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Path to India Market
Foreign vs. Chinese goods. Foreign-made products are highly visible in India. Among them, the majority consumer goods in particular, are sourced from China.
Chinese goods Chinese prices. Chinese goods mostly consolidated and shipped to India via Dubai, off record or under invoiced to avoid tax/tariffs. Prices extremely low with bad quality.
Hong Kong brands/goods not visible. In the eyes of consumers, HK brands/goods are not visible; some even can’t differentiate it from China.
Reliance on local manufacturers, importers, import agents to source new products.
OPPORTUNITIES & CHALLENGES Challenges
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Path to India Market
Finding Indian buyers proactively
Aggressive pricing
Branding and design
Supplying semi-manufactures and capital goods
Focusing on affluent households and major cities
Seasonal sales
CHANNELS & STRATEGIES
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Path to India Market
Market size : 50 m (now) and 75 m (by 2007)
Brands : >100 with ~50 switzerland-dominant
Price range : 7 segments (US5, 20, 75, 150, 300, 1,500, >1,500)
Tax : CIF$10 $19 after tax $35-40 market
Distribution : direct (for low volume high value watches); indirect (through distributors to cover majority areas at its maximum); or a combination of both
Retailing : traditional watch outlets, non-traditional watch outlets (jewelers, inflight, gift/chain/super/electronics/ fashion/lifestyle/dept. stores), franchise and showrooms.
Opportunities and ChallengesWatch
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Path to India Market
tdctrade.com – market intelligence
Business matching – finding partners
Promotional activities in India in the up and coming years (missions, exhibitions and department store promotion being planned)
TDC regional office at Singapore – any queries about doing business business in India
HOW TDC CAN HELP
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Path to India Market
Loretta Wan
Regional Director, Southeast Asia and India
Telephone : (65) 6538 7376
Mobile : (65) 9018 1033
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Path to India Market
Thank You