GLOBALIZATION & INDIAN CONTEXT By Abhishek Sisodia
GLOBALIZATION & INDIAN CONTEXT
By Abhishek Sisodia
The term globalization means International Integration.
It is a process through which the diverse world is unified into a single society.
Opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas
Accountability of Global businesses?
Increased gap between rich and poor fuels potential terrorist reaction
Ethical responsibility of business?
Efforts to remove trade barriers.
Nike
Dell
Marketing Branding Advertising
Cost down Outsourcing
India & China emerged as cheapest and best markets for outsourcing.
New trade pattern: developing countries ◦ don't just have to trade their raw materials to the West
and get finished products in return;
◦ can become big-time producers as well.
New production pattern: global product network
◦ companies can locate different parts of their
production, research and marketing in different
countries
Growing global markets in servicespeople can now offer and trade services globally -- from
medical advice to software writing to data processing --
that could never really be traded before.
W-2, W-4, 1099 bonuses & stock statements
Indian accountantUS tax payers
Market economic policies spreading around the
world, with greater privatization and liberalization
than in earlier decades.
ex: BRICS
(South Africa is the latest addition in this
group)
Widespread adoption of democracy as the choice
of political regime.
Multilateral agreements in trade, taking on such
new agendas as environmental and social
conditions.
New multilateral agreements – for
services, intellectual property , communications –
more binding on national governments than any
previous agreements.
GrowthCustomer Survey
GDP – USD 590 billion
GDP growth rate – 9%
Services contribution – 54%
Balance of Trade –
USD (-)46.2 billion
Investment goal –
USD 250 billion
2006
Growing Indian Economy
*: Projected
Source: Economic Times & India Brand Equity Foundation (IBEF)
GDP – USD 1.16 trillion
GDP growth rate – 9.5%
Services contribution – 60%
Balance of Trade – Negative
balance should increase with
surging imports versus exports
Investment goal –
USD 305 billion
2008 *
GDP – USD 1.36 trillion
GDP growth rate – 9%
Services contribution –
60-65%
Balance of Trade – Negative
balance should increase with
surging imports versus exports
Investment goal –
USD 370 billion
2010 *
105 105 135 145 167103 125
204 231287
682
191237
398453
0
200
400
600
800
1,000
1,200
1999-00 2002-03 2005-06 2006-07 2010*
US
D B
illio
n
Agriculture Industry Services
Contribution of Services -increased from 48% to 62% and
is estimated to contribute 60% by 2010
Growing GDP
*: ProjectedSource: India Brand Equity Foundation (IBEF)
*: Projected
Source: Ministry of Commerce & IBEF
83.5
103.1
126.3
155
200
50
90
130
170
210
US
D B
illio
n
2004-05 2005-06 2006-07 2007-08* 2008-09*
Growing Exports
Source: Ministry of Commerce & IBEF
Growing Imports
111.5
149.1
185.7
210.8
50
100
150
200
250
US
D B
illio
n
2004-05 2005-06 2006-07 2007-08 (Apr-
Feb)
India's Forex Reserves: 2001-08 (Till 14 March 2008)
5475
112141 152
199
306
0
50
100
150
200
250
300
350
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
(Till 14
March 08)
US
D B
illio
n
Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability
Increasing Forex Reserves
Source: Reserve Bank of India & India Brand Equity Foundation (IBEF)
Growing FDI Inflows
* Provisional
Source: Department of Commerce
8.9
22
30
4.36
0
5
10
15
20
25
30
35
2003-04 2004-05 2005-06 2006-07* 2007-08*
US
D B
illio
n
Electronic equipment, manufacturing and
telecom have witnessed significant FDI inflow
India is ranked second in AT Kearney’s FDI confidence index
(2007)
Increasing Per Capita Income
Source: India Brand Equity Foundation (IBEF) & Economic Survey 2007-08
460
7971021
2000
4000
0
500
1000
1500
2000
2500
3000
3500
4000U
SD
2000-01 2006-07 2007-08 2016-17 2025
Major M&A and Investments Announcements in India
USD 1.7 billion
Plans to spend on its development operations in India over the next four
years
USD 2 billion
Plans to establish three manufacturing plants to produce photo-voltaic units
USD 12 billion
POSCO to invest in building steel manufacturing plants and facilities in
India by 2016
Source: India Brand Equity Foundation (IBEF)
Main sectors:
Main Destinations:
China, UAE, UKNorth America is emerging as a destination.
India Inc. Investing Overseas
• Auto Components • IT
• Beverages • Metals
• Cosmetics • Mobile Communications
• Energy • Pharmaceuticals
• Financial Services • Software
• Industrial Goods
Additional economic indicators:• India has a consumer base of 1.21 billion people
• India is the 4th largest economy in the world when measured by PPP
•India’s has a growing middle class of over 300 million people - 30% of
India’s population – and larger than the population of the US
• India is the 3rd largest global telecom market. The mobile subscriber base
has grown from 0.3 Million in 1996 to over 250 million currently.
• India is likely to add over 200 shopping malls by 2010 and 715 malls by
2015
•The number of billionaires in the country were 3 in 1999; 23 in 2006; and
are 48 to 52 currently.
India’s Trade with USA
Imports from USExports to US
Source: Department of Commerce, Govt of India
11.4
5
13.7
7
17.3
9.4
18.8
11.7
0.0
5.0
10.0
15.0
20.0
2003 - 04 2004 - 05 2005 - 06 2006 - 07
USD
Billion
Major Items Exported to USA (2006)
Textiles
36%
Engineering
Goods &
Machinery
15%
Organic
Chemicals
6%
Iron & Steel
5%Cut and
polished
diamond &
jew ellery
38%
Source: US Department of Commerce
Major Items Imported from USA (2006)
Fertilizers
9%
Optical & Medical
Instruments
11%
Precious stones &
Metals
14%
Aircraft, Aviation
Machinery & parts
25%
Engineering
Goods &
Machinery
41%
Source: US Department of Commerce
Buyer Acquisition Price
Reliance Industries Flag Telecom, Bermuda US$ 212m
Tata Motors Daewoo, Korea US$ 118m
Infosys Technologies Expert Information Services, Australia US$ 3.1m
Bharat Forge Carl Dan Peddinghaus, Germany N/A
Ranbaxy RPG (Aventis) Laboratories, France N/A
Wockhardt CP Pharmaceuticals, UK US$ 18m
Cadila Health Alpharma SAS, France US$ 5.7m
Hindalco Straits Ply, Australia US$ 56.4m
Wipro NerveWire Inc, USA US$ 18.5m
Aditya Birla Dashiqiao Chem, China US$ 8.5m
Reliance British Petroleum $7.2 Billion
United Phosphorus Oryzalin Herbicide, USA US$ 21.3m
"Toyota Motor has chosen to source from India due to its competitive cost of manufacture, availability of abundant engineering talent, and strong indigenous machine tool."
Automotive Sector - Overview
India is the world’s:
• 2nd largest two-wheeler market,
• 4th largest commercial vehicle market
• 11th largest passenger car market.
Expected to be the 7th largest
automobile market by 2016
India has become an attractive
destination for global
American, European, Japanese and
Korean OEMs.
Source: IBEF, Economic Times
RISE OF MALL CULTURE IN CITIES
1990 FDI $ 234 Million
1998-2003 FDI $ 2.5 Billion Per Year
Target FDI $ 10 Billion Per Year
Over 620 FIIs Compared to 500 in 2003 and Earlier
China FDI & FII
FDI $ 50 Billion Per Year
FII $ 20 Billion Per Year
Agriculture acquired 16.4% of India’s GDP in 2010.
60% of population still depends on agriculture for their livelihood.
Occupied 43% of India’s geographical areas.
All other sectors are growing at much faster.
Year Industry(%) Service(%) Agriculture(%)
1991 25 31 44
2007 28 55 17
Current Literacy rate is 74.04%
Year Literacy Rate Male -
Female
Person Male Female Gap
1981 43.6 56.4 29.8 26.6
1991 52.2 64.1 39.3 24.8
2001 64.8 75.3 53.7 21.6
2011 74.04 82.14 65.46 16.68
"India has a fantastic pool of software professionals. The world needs to benefit from
this.“
Bill Gates, Microsoft
Chairman
This market (India) is critical to our plans for building a Ford Motor Co. for the 21st
century
Bill Ford, Chairma
n and CEO
India on its way to becoming IT, manufacturing kingdom of
the world
The dynamism shown by India in the last 15 years is
phenomenal
Mr Yasukuni Enoki, Japanese
Ambassador to India
Paul Wolfowitz, President,
World Bank
What are people talking about India?
High growth but problem of unemployment.
Need to generate 10 million jobs per year.
Multi party rule, hence need to accommodate political ideology with economic reality (reservation, labour law reforms).
DO ELECTIONS SLOW DOWN ECONOMIC GLOBALIZATION PROCESS IN INDIA?
IT’S POLITICS STUPID !
The motto behind slowing down the economic globalization process before elections is that it leads to polarization of voters and thus negatively affects the incumbent government.
PERIOD POLICIES OF G.O.I RESPONSES OF FOREIGN COMPANIES
Industrial Policy1947-1961
Industrial policy 1948,Industrial policy 1956
Nearly 60 US companies set up sales &marketing offices in India.Steady increase in FDI during the period:1948 to 1961.General Motors, Ford Motors, Pepsi ceasedoperations in India
1962-1976 Industrial Licensing Guidelines 1970,MRTP. Foreign Exchange RegulationAct, 1973.
Nearly 60 companies including IBM and Cokeceased operations in India
1977-1990 Industrial Licensing Policy, 1977.Industrial Licensing Policy, 1980
Limited FDI from the foreign companies.
1991-2004 Industrial Licensing Policy, 1991.Industrial Licensing Policy, 1999
Flooding of FDI in India, especially in theservices sector
Privatizing The Airwaves: The impact of globalization on broadcasting in India
An exponential growth in the number of television channels from one state-controlled channel in 1991 to nearly 70 in 1998 as India adapts its broadcasting industries to the deregulated and privatized media environment of the late 1990s.
The new economic policy encouraged privatization, dismantling state controls and liberalizing media regulation, paving the way for the entry of global media conglomerates into what used to be one of the most closed broadcasting systems in any democracy.
Live coverage of the 1990–1 Gulf crisis by the Cable News Network , Cricket match live broadcasting with efficient advertising & IPL FEVER, Exploiting the indianfemales with so called SAAS- BAHU serial revolution, YOUTH targeting by MTV & ‘V’, this list is endless with many more to come to please THE GREAT INDIAN MIDDLE CLASS.
DOORDARSHAN had a monopoly in past over broadcating scenario in this country with a huge poulation base.
In late 90’s ,with the advent of globalization cable networks risen drasticallly & thus resulted in drastic reduction of doordarshan’s base.
Also many new radio playyers came into competition with AIR , like MIRCHI ,RED ,BIG FM.
More consumer centric approach is followed nynew channels to gain their bases.
Advent of D2H technology in india.
Companies in India That Have Successfully Met Competition by Multinationals & Domestic Companies Had A Spirit Of Innovation Not Only In Their Products And Services But Also With Reference To All Their Resources And Effectively Restructured Them In A Time And Cost Frame And Met Customer Needs And Improved Their Top And Bottom Line.
Thank YouTHANK U !!