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Making Business in India
2020-06-19
by Suniti Varma, Pacific Consultants, CSIL External Partner
Bangalore map of major furniture retail brand distribution

Rajajinagar emerges as the poshest area in the city. Richmond Town is another old neighbourhood, emerged as one of the most expensive areas. Mahatma Gandhi Road is one of the most popular and busiest commercial and shopping areas in Bangalore.


How will the international supply chains reorganize after the 2020 shock (that is not only Coronavirus, but also frictions United States/China and inside Europe, not to mention the oil crisis and the Brexit)?

Leading major manufacturers (both international and national brands) of electronic and electric and consumer products (home appliances, lighting and fixtures, glassware, consumer durables, furniture and accessories, furnishings and textiles etc.) are all present in India with established manufacturing bases.

Prompt availability of raw material of all related products, excellent transportation connectivity, high quality of components and competent labour makes India a wonderful production base.

Potential advantages for considering manufacturing and business prospects in India include a vast population (1.3 billion people, to become the youngest country with average age of 29 years by 2025), investment avenues and a supportive government.

'Make in India' Program

The focus of 'Make in India' Program is on 25 sectors. These include: automobiles, automobile components, aviation, biotechnology, chemicals, construction, defence manufacturing electrical machinery, electronic systems, food processing, IT & BPM, leather, media and entertainment, mining, oil and gas, pharmaceuticals, ports and shipping, railways, renewable energy, roads and highways, space, textile and garments, thermal power, tourism and hospitality and wellness. India has the 2nd largest Internet users base in the world with 462 million Internet users. Not to forget:

  • India has demonstrable capability to reach near 100% literacy level by 2025
  • Considerable upward mobility among all sections, more 150 million will be added to middle class by 2025 which will create huge consumer market base of $3.6 Tn by 2020 (BCG Report)
  • 3rd largest economy in the world with size of $8.6 Tn by purchasing power parity (PPP) and is expected to rise to $20 Tn in size by 2025
  • 2nd largest Railway Network in the world, used by 23 million travelers every day
  • 2nd largest Road Network in the world stretching 3.3 million km, 12 major ports, 200 notified minor and intermediate ports
  • The 'Make in India' Program also aims at improving India's rank on the Ease of Doing Business index by eliminating the unnecessary laws and regulations, making bureaucratic processes easier, making the government more transparent, responsive and accountable.

Pacific Consultants and CSIL have already cooperated in India in sectors such as Italian food, built-in appliances and kitchens, lighting fixtures. They can offer Single Window Clearance of the project proposal, finding a compatible Joint Venture partner, financing the project (including preparing project report).

 

FACTS ABOUT INDIAN ECONOMY. Last updated: March, 2020

-Real GDP in 2019-20 is estimated to grow at 5.0% (second advance estimates), lower than 6.1% in 2018­19 (first revised estimates).

-Foreign direct investment (FDI) equity inflows stood at US$ 456 billion) between April 2000 to December 2019 and US$ 27.58 billion for FY20 (till December 2019).

-India's foreign exchange reserves were US$ 476.09 billion as on February 14, 2020.

-Total value of Private Equity (PE)/Venture Capital (VC) investments grew 44% over past three years in value terms to reach US$ 48 billion in 2019.

-Major Sectors Attracting Highest FDI Equity Inflows: Services Sector (18%), Telecommunications (8%), Computer Software and Hardware (10%), Construction Development (6%), Automobile (5%), Trading (6%), Drugs and Pharmaceuticals (4%), Chemicals (4%), Power (3%), Construction Activities (4%) (as in April 2000 to December 2019).

 
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