The India Opportunity & Business Environment 2012:
What it is? What are the Challenges? How to Get Involved
Rana Sarkar
President & CEO
Canada-India Business Council
Board of Trade of Metropolitan Montreal
October 25, 2012
Overview
• Who We Are
• The India Opportunity in Box
• Market Challenges and Solutions
• Common Mistakes to Avoid
• Steps to Winning in India
• New Reforms
Founded in 1982 the Canada-India Business Council serves over 100
members in Canada and India. The C-IBC is Headquartered in Toronto
with operations in Vancouver, New Delhi & Montreal.
We’re the National Trade Promotion Organization Dedicated Exclusively to
Building the Canada-India Trade Corridor
Mission
•
•
Accelerate Bilateral Trade,
Investment and Deal Flow
•
Institution-to-Institution Relationship &
•
Proprietary
•
Effective Advocacy
Network Building
•
•
•
How We Do It
Raise the “Mindshare” of India in
Corporate Canada and Canada in India
Create Option
Value for our members
Generate unexpected outcomes
in future industries
Convening Key Players Across
Borders
Research
& Policy
Development
•
Network
•
Building Connectivity
•
Building Mindshare
•
Trade Facilitation & Innovation
Thickening
India Opportunity
Drivers
• Global Economic Re-alignment
Makes India Inevitable for
Canada
• Demographics
• Relationships between BRICS
that will be transformative Triangles
• 3rd Largest Economy by 2050
• Market Access
• Bottom Billion Innovation
• Rich before Old
• Urbanization
• 250M moving to cities
• Globalization & Googlization
• Domestic Consumption
• Entry of Bottom Billion
“Asia is returning to its natural “half share” of the world economy”
Dominic Barton , Global Managing Partner, McKinsey
Global Wealth 2015
Global GDP 1990 to 2015
India will grow rich before it grows old….
Indian aspiring middle classes are growth
drivers
Deprived: Less
than $2,250 in
annual income
Aspirers: $2,250 to
$5,000
Seekers (Middle
Class): $5,000 to
$12,500
Strivers (Middle
Class): $12,500 to
$25,000
Globals: > $25,000
Urbanization & new cities of scale are also
driving growth
A quarter billon people are moving into cities
in the next 18 years
Anatomy of the Growth Story
•
Indian Reforms Started Almost 30 Years ago - Hour of
Necessity
•
Accelerated in 1991 Liberalization of the License Raj
and Re-opening to the world (on Indian Terms)
•
Gains were Consolidated and Sent over the Tipping
Point in 2000 - Y2K Dividend - IT leads the way
•
Cross Party Consensus - Question is Pace Now
Economic Crisis is Forcing Reform: Sept 2012
•
Relaxation of Restriction on Single Brand
Retail (IKEA & WalMart)
•
Permit foreign investment of up to 49% in
power trading exchanges.
•
Reducing Fuel Subsidies: It also announced a
14% rise in the price of diesel, which is heavily
subsidised in India, and reduced the subsidy on
cooking gas cylinders.
•
Disinvestment (or privatization) of India’s
government corporations has moved into a
new progressive phase with a target of over
$5 billion.
•
Civil Aviation: foreign carriers allowed to buy
a 49% stake in Indian private airlines –
opportunity to be part of India's remarkable
growth in passenger traffic.
•
India's government has approved the
Insurance Amendment Bill, which proposes
raising the level of Foreign Investment allowed
in the Insurance Sector to 49% (up from current
26%)
•
FDI in all broadcast-carriage services has been
raised to 74% from 49% previously – could help
fund India's digitization plan.
•
The cabinet also cleared up to 49% Foreign
Investment in Pension Companies – a sector
previously closed to foreign investment.
= new partnerships
Indian Farmers Fertiliser Cooperative (IFFCO) and La Coop fédérée
announced a $1.2 Billion investment to establish a urea production
nitrogen fertiliser plant in Bécancour. (octobre 2012)
Growth Drivers
• Attracted over 100B in FI
• Domestic Driven Growth
(Consumption is 64% of GDP vs 42%
in China)
• P/E Deals of over 10B in 221
Transactions (ave. deal size up 19m44m)
• “Bottom Billion” Opportunities Bringing 500m into the Consumptive
Economy in 10 Years
• Stable Banking System
• 25% Savings Rate
• Services and Capital Intensive
Industries Lead Growth
• Bad Loans are 2% (vs 20% in China)
• 300M English Speakers by 2015
• US$ 311 B in Reserves
• Exports are only 13% of GDP (vs 40130% in other Asia)
• Only 20% of Exports are to the US
Challenges to Growth - What
Can Stop the Train?
1.
2.
3.
4.
5.
6.
7.
Governance
Education
Poverty Amidst Urbanization
Infrastructure Gap
Adapting to Climate Change
Regional Instability
Black Swans
Why it’s Likely to Stay on the
Rails
1.
Tipping Point in Growth
2.
Demographic Dividend
3.
China Example
4.
Attitude of New India
5.
Democratic Dividend
6.
“Syncretic Gradualism” / Diversity
7.
Management Talent
What are the Government’s Key
Challenges in India?
Steps to Overcoming Them
Brand Canada Confusion - Lack of Visibility
Brand Canada Strategy - New Public
Diplomacy – New Strategic Plan
Limited Focus / Little Knowledge / Limited
Travel
Senior Government / CEO Travel and Forums
Overcoming our Federal System
Start Where We are Globally Excellent
Differences in Cultural Styles
Focus on Education
Harnessing the Diaspora Dividend and our
Weapons of Mass Attraction - Gen 1, 1.5 and
beyond
Capturing the Symbolic focus - Tactics
Towards Mindshare - Using Events and
Popular Culture
Common Mistakes to Avoid for Business – more to come from
subsequent presentations
1. Don’t Get Distracted by the 100,000 foot view
2. Not Doing Your Homework
1. Wrong Plan, People, Partners and (No) Patience
2. Not Getting Over There: Out of Sight / Out of Mind
3. Not Knowing Your Strengths
3. Unrealistic Time Horizons
4. Getting Overwhelmed
Which Sectors Should We Focus On? Focus on Need & Expertise
Energy & Resources
Clean Tech
Infrastructure
Global Excellence Capability
Agriculture
Financial Services
Automotive
Life Sciences
Mining
What to Do:
1.
Know Your Strengths
2.
Pinpoint Your Targets
3.
4 Ps
1.
Plan
2.
Partners
3.
People
4.
Patience
4.
Focus on the Needs of the Bottom Billion
5.
Use the Networks - DFAIT, EDC, C-IBC, BT Metro Mtl., STEP etc.
6.
Go there – Episodic to the Strategic
Persistence is Key: But Smart Engagement Will Be Rewarded
Innovation is the Real Reason We Should Be in India