back to news 2009-03-16| AT Consult Newsletter! India - The Golden Bird Ramit Gupta, Vice President of Avalon Consulting After September 2008, India remains one of the few large global economies with reasonable growth. The latest IMF growth projections in January 2009 projects India as one of the few large global economies having positive growth prospects in the next 2 years. IMF Growth Projections 2009 -2010 (BMP) The export oriented industries (especially IT and IT enabled services) are expected to suffer from the global recession but the domestic economy is expected to record robust growth. The sectors expected to have little or no impact are agriculture, food and beverages, FMCG (Fast Moving Consumer Goods) and agricultural equipment. What is fueling India’s Growth? 1. Investor Friendly Regulations Since 1991, FDI has been allowed in a large set of industries and controls have been increasingly withdrawn. India has one of the most transparent and liberal Foreign Direct Investment (FDI) regimes among emerging and developing economies. Many sectors (except the likes of Atomic Energy, Defence, Hazardous Chemicals, Insurance, etc) are completely de-regulated. 2. India is a large market India has grown as a market with GDP growth. Personal consumption as a share of GDP is one of the highest in India at 70%; this compares well with the US at 70%, UK at 65%, Germany at 55% and China at 40%. (Source: EIU) The personal disposable income (PDI) has grown at ~6% since 2000. Increase in PDI is reflected in a large and growing middle class driving consumption. Thus, many sectors in India are witnessing explosive growth. Chief among them are Auto, Electronics, Telecom, Food processing and Infrastructure. Today India’s consumer market ranks 12th. By 2025, India's market will be the fifth largest in the world, surpassing Germany. 3. Opportunity as a sourcing Hub The chief advantage of India as a sourcing hub is labour. India has a large, skilled and young workforce. India’s median workforce age is 26, compared with 33 for China, 37 for US and 43 for Germany. In addition, a population growth rate of 1.6% ensures that there would not be any ageing problem in the next 20-30 years. India’s English speaking population of more than 350 Million is equal to the combined English-speaking populations of Britain, the USA, Australia and New Zealand. India turns out more than 2.5 Million graduates each year, of which ~ 1 Million are engineering graduates. India produces over 500,000 engineers, 300,000 post-graduates and 2.5 million other graduates every year (the whole of EU produces 100,000 engineers). In addition, India produces 16 Million technical diploma holders each year. Thus India is a very attractive destination from a skilled manpower availability point of view. So despite the current crisis, India will continue to offer two opportunities to any Austrian company: – Access its large and growing market – Increase your competitiveness by sourcing from India It has become more important to be in India now than it was ever. If you are interested in the market India please contact us! |
