GLOBAL COMPETITIVENESS- MACROECONOMIC AND BUSINESS

STRATEGY PERSPECTIVE

According to The World Economic Forum

COMPETITIVENESS is defined as that collection of factors, policies and institutions which determine the level of productivity of a country and that, therefore, determine the level of prosperity that can be attained by an economy. Thus, a more competitive economy is one that is likely to grow faster over the medium to long term.

Motives of Global Expansion

Business transformation through services globalization is one of the most important levers that global companies can no longer afford to ignore”

Growth Imperative Better Profit Realization Efficiency Imperative Spreading Risk Accessing Technology To be Present in the Lead Market Learning & Innovation Preempting Competition - Strategic Positioning Defending the Home Market (Cross Parry) Following the Competitor Following the Customers

India- Past & PresentIndia- Past & Present The 70’s, 80’s and early 90’s

Dominance of Public Sector across industry Sellers market with limited competition.

Closed Economy with negligible presence of multinationals. GDP growth below 4% (Hindu rate of growth) primarily agriculture based.

India post 1995 and counting 100% FDI in most sectors has seen Pepsi, Coke, Shell, Ford, GM, Suzuki.,

Toyota, Amex, Citibank, GE, Microsoft, Pfizer, Novartis, GSK, Merck operation in India (availability of world class products)

A new India is transiting from a third world country status to a league of developed nations.

India has transformed from a land of snake charmers, elephants and an inward looking society to a progressive and forward looking nation of 1 Billion has the second largest community of science and technology professionals

The world’s third-largest repository for foreign direct investment (FDI), after China and America.

India is one of the three countries that makes supercomputers, one of the six countries that builds and launches satellites.

India – Land of Opportunities:  India – Land of Opportunities Fourth largest

Economy (PPP) - A safe place to do business Largest democracy – political stability & consensus on reforms Largest reservoir of skilled/semi-skilled manpower Long-term sustainable Competitive advantage - High growth rate economy Highest returns on investment; India 19.33%, China 14.25%, Thailand 13.3% Liberal & transparent investment policies “Developing an International presence is the key strategy for business growth”

Market overview and Approach

Population of 1.09 Billion 12th largest economy in the world in 2005 by GDP 4th largest by PPP 170-200 million people with growing purchasing power 7-8% GDP growth rate Over 45% of the Indian population is under the age of 20 Key factors for success Reliable local partners Good planning Due diligence and follow-up Patience and commitment Indian consumers are price-conscious Adapt products for local conditions Have an efficient distribution network Consider a local/regional approach

India Competitiveness

Immense labour pool High on qualification/capabilities Low on cost Language skills Work ethics & commitments Mature financial market IP Protection Laws Favourable labour laws Capitalist work ethic Mature management talent Breadth and scalability of services

India is emerging as the preferred global destination due to a number of significant advantages over other countries Location Attractiveness Infrastructure Communications International connectivity Ever improving highways and ports infrastructure Communications Low Country Risks/ FDI Incentives Stable political environment Independent judiciary Low entry barriers Attractive Incentives

India’s Robust Macro Economic Indicators talk …:

GDP – US$ 850 Bn (growing at 8%); India is all set to surpass Italy, France & Germany in US$GDP by 2020 and Japan by 2030 Sustained economic growth – over 7% in next 50 years (Goldman Sachs)

Indo US Collaboration

India political and economic relations are strong and growing

Shift in U.S. –India relationship: from sanctions to civil nuclear cooperation Indian market has many opportunities for the right products and services Total bilateral trade in 2005: $26.8 billion US merchandise exports to India in 2005: $7.9 billion – a 30% increase over previous year

The India Advantage

Potential of huge domestic market provided by the country's 1bn-plus population Manufacturing Industry in India is growing by 9.4% Cost of employing engineers – essential to manufacturing services – is one-third to one-fifth lower in India than in industrialized nations such as the UK and the USIndia has an edge in the service aspects of manufacturing, these areas including design, development, links with suppliers and the ability to customize output to meet changes in demand patternsHigh level of technology combined with Service that ensures India is in a good position to develop a new source of products that mix innovation with low costs Better control of intellectual property unlike China Foreign companies can broaden access to a supply of technical people beyond that which is available in their home country

Fastest growing sectors