Presentation on theme: "India Jaideep S Kalra 8 Sept 2011. - Strong GDP growth amid recession - Back office of the developed world - Land of Nano - $2k passenger car and Indian."— Presentation transcript:
India Jaideep S Kalra 8 Sept 2011
- Strong GDP growth amid recession - Back office of the developed world - Land of Nano - $2k passenger car and Indian Premier League (IPL) - Bureaucracy & corruption scandals - Most expensive residence in the world (Ambani’s - $2 bn) & Asia’s largest slum in vicinity - 1.2 Bn people, 26 states and over 100 languages - Anna Hazare peaceful protests – the modern day Gandhi OR A unique set of Opportunities and Challenges for any Business We do seem to know this……
Macro-economic marvel or one time wonder Economics GDP: $1.5 tn (UK is 1.5x India GDP) 10 th globally & 4 th on a PPP basis Per capita: $1.3k (UK 28x & China 3.4x) Inflation: 8.5 pct Public debt 72 pct of GDP (UK 76 pct, US 93 pct & Greece 143 pct) Budget deficit of 5.1 pct of GDP (UK 10 pct, US 10 pct & Greece 10.5 pct) Bank base rate 7 pct (UK 0.5 pct) Demographics Labour force of 470 mio and growing middle class at 250 mio Young population – unlike China Differentiating factors could to be effectiveness of fiscal and monetary policy to manage growth momentum. Growing middle class and young population driving demand. Inflation a concern and a priority for the Government but recent comments on the potential impact of crisis in Europe and US indicate steps could taken to ensure 7.5 pct to 8 pct is maintained.
Moody’s release 6Sept11 “India's medium- to long-term economic potential continues to be buoyed by its demographic profile, robust savings and investment rates and rising international competitiveness of its corporations”
Growth POTENTIAL Consumer demand potential: Telecom sector - 2nd largest globally. Fastest growing Automobile & Biotech sector. Indian Pharmaceuticals Industry ranks 3rd in terms of volume. Private healthcare boom – Medical tourism to Basic healthcare. $1 Tn investment in Infrastructure (2012-17) of which 25 pct in roads, rail and port projects. $13 Bn of farm produce is wasted due to Insufficient cold chain infrastructure. Opening up of FDI in Multi Brand Retail on the cards Over 50 pct of the Indian education sector is Private and British education is highly regarded. Preferred destination for High tech IT and R&D English is the most widely spoken business language
Opportunities & Challenges Vast geographical spread. Need to understand the major commercial centres and Tier 2/3 cities for your business. Entrepreneurial Mid Market enterprises for JVs with access to Capital. Need to do background checks and understand Long term interest of the partner. British brands and institutions held in high esteem. Need to leverage the product and design expertise Strong management talent with prior work experience in MNCs. Need to manage attrition and nurture talent.
Opportunities & Challenges Culture & Climate are incredibly different. Need to be prepared and this can make or break an opportunity. Corruption and lengthy litigation an issue. Need to have realistic expectation in terms of time to market and enhanced due diligence to avoid litigation. Complicated tax laws and lack of asset backed financing. Opportunity to leverage DTA treaties with MAR/ SGH and optimum capital structure. Financial risk due to high Interest rates & Volatility in exchange rates. Best to explore Offshore Debt financing (External Commercial Borrowing) and natural hedge on exports/imports.
Recent best practices First sales invoice before incorporation Product life cycle analysis. e.g Safety clothing & footwear Cost structure and innovation are key. Benefit from lower cost of capital in UK and labour cost in India and not vice versa. Leverage local talent Need to have India in your long term plans. Opportunity could present itself as in “God We Trust”
Thank You Jaideep Karla - firstname.lastname@example.org@hsbc.com