Group members

Sr.
no.
Name
Roll
No.
1. ---
2. ---
3. ---
4. ---
5. ---
2
Acknowledgemen
t
Any accomplishment requires the effort of
many people and this work is no different.
We would like to thank
Prof. ---- for giving us an opportunity for
doing the project together and for helping
and guiding us in completion of the
project.
We would also like to thank our parents
and friends who have supported and
helped us in the project and constantly
motivated us in doing the project.
egardless of the source! we wish to
e"press our gratitude to those who have
contributed to this work even though
anonymously.
3
#nde"
1. Introduction..05
2. Foreign Direct Investment (FDI)..09
3. Shining Indin !u"tintion"11
4. Im#ct o$ !%&s on Indin Industri" Sectors..13
'utomo(i"e
Industr).14
!nu$cturing
Sector...1*
+e"ecom
Industr)..1,
-eserch .
Deve"o#ment.21
I+
Industr).23
Food . /everges
Industr)..25
5. &se-Stud)10 Im#ct o$ 1"2o-Smith3"ine !erger.24
*. 56 mr7s Indin 8m#"o)ment !i"estone29
4. &se-Stud)20 6e#si &o.31
4
,. Indi v9s &hin.34
9. &onc"usion3*
5
#ntroduction
+i"" 1991: Indi ;s more or "ess c"osed 8conom). +he rte o$ gro;th o$
the econom) ;s "imited. +he contri(ution o$ the "oc" industries to the
countr)<s 1D6 ;s "imited tht ;ere the min cuse o$ shortge o$ $unds $or
vrious deve"o#ment #ro=ects initited () the government.
In n e$$ort to revive the industries nd to (ring the countr) (c7 on the right
trc7: the government (egn to o#en vrious sectors such s In$rstructure:
'utomo(i"e: +ourism: In$ormtion +echno"og): Food nd /everges: etc to
the !u"tintion" &or#ortions. +he !%&s s"o;") (ut re"uctnt") (egn to
#our c#it" investment: techno"og) nd other v"u("e resources in the
countr) cusing surge in 1D6 nd u#"i$tment o$ the econom) s ho"e.
+his ;s the #ost 1991 er ;here the government (egn to invite nd
;e"come gint !%&s into the countr).
Opportunities for Developing Economies
+he o##ortunities $or deve"o#ing economies re signi$icnt s ;e"". +hrough
the ##"iction o$ c#it": techno"og): nd rnge o$ s7i""s: mu"tintion"
com#nies> overses investments hve creted #ositive economic v"ue in
host countries: cross di$$erent industries nd ;ithin di$$erent #o"ic)
regimes.
+he sing"e (iggest e$$ect evidenced ;s the im#rovement in the stndrds o$
"iving o$ the countr)>s #o#u"tion: s consumers hve direct") (ene$ited $rom
"o;er #rices: higher ?u"it) goods: nd (roder se"ection. Im#roved
#roductivit) nd out#ut in the sector nd its su##"iers indirect") contri(uted
to incresing ntion" income. 'nd des#ite o$ten-cited ;orries: the im#ct
on em#"o)ment ;s either neutr" or #ositive in t;o-thirds o$ the cses.
Foreign direct investment is "red) hving drmtic im#ct on the ;)
com#nies do (usiness nd deve"o#ing economies integrte ;ith the g"o("
econom). &om#red to its #otenti": ho;ever: it>s =ust dro# in the (uc7et.
Impact On Developing Economies & Policy Implications:
Investments () mu"tintion" com#nies (!%&) ""o; deve"o#ing
economies to shre in the consider("e (ene$its o$ the g"o(" econom).
@$$ici" incentives: trde (rriers: nd other regu"tor) #o"icies: though: cn
resu"t in ine$$icienc) nd ;ste.
*
&se studies reve" tht in virtu"") "" cses: !%& investment hd
#ositive to ver) #ositive im#ct on the host countr). -ther thn "eding to
the e2#"oittion o$ "o;er-;ge ;or7ers: s some critics hve chrged: the
investments $ostered innovtion: #roductivit): nd n im#roved "iving
stndrd. +here$ore: government see7ing those dvntges ;ou"d (e dvised
to $vor #o"icies o$ o#enness: rther thn regu"tion: ;hen it comes to
$oreign direct investment.
The orl!"s service provi!er
+he services sector: ;hich hs (een gro;ing consistent") t rte o$ 4
#ercent #er nnum: ccounts $or "most h"$ o$ the countr)>s 1D6.
82#ort revenues $rom the sector re e2#ected to gro; $rom A, (i""ion
in 2003 to A4* (i""ion in 2004.
1"o(" investment (n7s: (ro7erges nd ccounting $irms hve set u#
"rge reserch est("ishments in Indi. ' gro;ing num(er o$ BS
com#nies re hiring Indin mthemtics e2#erts to devise mode"s $or
ris7 n")sis: consumer (ehviour nd industri" #rocesses.
In!ian E#ports Overvie $in Rs. %rore&
'E(R E)PORTS *RO+T, R(TE
-../0.- 12334 -5.5
-..-0.2 66/62 13.1
-..20.1 31744 2-..
-..10.6 7.53- 2...
-..60.3 42756 -4.3
-..30.7 -/7131 24.7
-..70.5 --44-5 --.5
-..50.4 -1/-/- ..3
-..40.. -1.531 5.6
-...02/// -3.37- -6.2
2///0/- 2/135- 25.7
2//-0/2 2/./-4 2.74
2//20/1 233-15 22./7
2//10/6 2.1175 -6..4
2//10/6 $(pril08an& 222471../ 0
2//60/3$P& $(pril08an& 2561-1.15 21./.
4
1ross Domestic 6roduct (1D6)
'ear +ot" 1D6
19,5-,* 15*5**
1990-91 212253
1991-92 2139,3
1992-93 2252*,
1993-94 23,,*4
1994-95C ,*10*4
1995-9* 92*412
199*-94 99,94,
1994-9, 1049191
199,-99 111220*
Total GDP
0
200000
400000
600000
800000
1000000
1200000
1985-
86
1990-
91
1991-
92
1992-
93
1993-
94
1994-
95*
1995-
96
1996-
97
1997-
98
1998-
99
years
(
I
n

R
s
.

C
r
o
r
e
s
)
,
+he ;or"d>s service #rovider
+he services sector: ;hich hs (een gro;ing consistent") t rte o$ 4
#ercent #er nnum: ccounts $or "most h"$ o$ the countr)>s 1D6.
82#ort revenues $rom the sector re e2#ected to gro; $rom A, (i""ion
in 2003 to A4* (i""ion in 2004.
1"o(" investment (n7s: (ro7erges nd ccounting $irms hve set u#
"rge reserch est("ishments in Indi. ' gro;ing num(er o$ BS
mu"tintion" com#nies re hiring Indin mthemtics e2#erts to
devise mode"s $or ris7 n")sis: consumer (ehviour nd industri"
#rocesses.
+he (ric7 nd mortr com#nies
Indi is not mere") #rovider o$ services. /esides (eing n outsourcing hu(:
it hs gro;n into g"o(" mnu$cturing hu(. Dor"d cor#ortions re no;
"everging its #roven s7i""s in #roduct design: recon$igurtion nd
customistion ;ith cretivit): ssured ?u"it) nd v"ue ddition. '(out 20
#ercent o$ Indin utomotive #roduction in 2004 is e2#orted to deve"o#ed
countries.
In!ia: ( Services an! 9anufacturing Supplier to the +orl!
Sector %ompany Outsourcing %lient
I+ Services In$os)s
+t &onsu"tnc)
Di#ro
1o"dmn Schs: 'etn: %orth;estern
!utu": 'rm 82: D5E: FeriGon
18: 5ond: B/S: 5S/&
+rnsco: 56-&om#?: %orte": 1ener"
!otors: &IS&@: Son)
I+8S !#hsis /FE
S#ectrmind
&iti grou#: 'ccenture: 'utoHone: &#it"
@ne
De"": 'mericn 82#ress: &#it" one
6hrmceutic"s &i#"
Shshun &hemic"s
Eu#in E(ortories
Ive2: Dtson 6hrm: 8on E(s
8"i Ei""): 1S3 6hrm
'#ote2: '66: Dtson: 6hrm
!nu$cturing /hrt Forge
+t !otors
!oser /er
8sse" 6ro#c7
!eritor: &ter#i""r: +o)ot: Ford:
F'D(&hin)
-over
Imtion: /'SF
6.1: Bni"ever: &o"gte
9
$oreign %irect #nvestment
FDI or Foreign Direct Investment re$ers to the investment o$ $oreign
currenc) nd other v"u("e resources () !u"tintion"s into the host
countr).
FDI ""o;s the host countr) to ern v"u("e $oreign e2chnge tht cn (e
used $or $uture im#orts or to #) o$$ e2isting "ons o$ the countr). +he
1overnment o$ the host countr) contro"s the FDI "eve"s in vrious segments
o$ the econom) such s +e"ecom: -eti": +ourism: In$rstructure: -eserch
nd Deve"o#ment: 'utomo(i"e nd so on.
6erh#s the (iggest dvntge o$ !%&s is the in$"u2 o$ v"u("e Foreign
82chnge. FDI is re?uired () deve"o#ing econom) such s ours to t#
une2#"ored resources nd #ut them to more #roductive use.
A series of ambitious economic reforms aimed at stimulating foreign
investment has moved India into the front ranks of the rapidly growing Asia
Pacific region.
+he Finnce !inister c"ered 4* #ro#os"s o$ $oreign direct
investment (FDI) mounting to -s 40,.22 crore (BSA 93.4 mi""ion) in
Iu") 2004.
Dith h"$-(i""ion strong midd"e c"ss: consumer demnd in Indi
;i"" gro; s7) high. 'ccording to some estimtes: 4,4 mi""ion midd"e-
c"ss Indins ;i"" s#end n ddition" A420 (i""ion during the ne2t
$our )ers.
It is evident. The investment scenario in India has changed. And the figures
say that it is for the better.
+here hs (een shr# rise in the num(er o$ FDIs ##roved in 2004.
During the $irst seven months o$ 2004: (et;een Inur) nd Iu"): -s
5:220 crore ;orth o$ FDI ;s ##roved.
+his $igure: ;hich ccounts $or on") seven months o$ 2004: mounts
to 9* #er cent o$ the tot" FDI ##roved during the $u"" )er o$ 2003.
+he ctu" FDI in$"o; too is e2#ected to sur#ss "st )er>s $igure --
during the $irst seven months o$ 2004 ctu" FDI in$"o; t -s 9.503
crore ;s more thn ,0 #er cent o$ ;ht the countr) received in 2003.
10
In a bid to stimulate the sector further, the government is working on a
series of ambitious economic reforms.
+he &entre hs divested some o$ its o;n #o;ers o$ ##roving $oreign
investments tht it e2ercised through the Foreign Investment
6romotion /ord (FI6/) nd hs hnded them over to the gener"
#ermission route under the -/I.
+he FDI c# $or vition hs (een hi7ed $rom 40 to 49 #er cent
through the utomtic route.
+he government hs scr##ed 6ress %ote 1,: ;hich ;s cting s
deterrent to $oreign investors.
It hs set u# n Investment &ommission tht ;i"" grner investments
in the in$rstructure sector mong others: nd #"ns to increse the
"imit $or investment in the in$rstructure sector.
India's foreign exchange reserves rose !"" million to a record high of
#$".!% billion in &uly $""'.
&om#rison (et;een Indi nd &hin ;ith res#ect to FDI
In!ia vs. %hina :DI :los
&hinese re$orm #rocess
1944
Indin re$orm #rocess
1991
5 )ers since 19,2
&hin
BSD 450, m
5 )ers since 1991 Indi
BSD 44,, m
10 )ers since 19,2
&hin
BSD 13491 m
10 )ers since 1991
Indi
BSD 154,3 m
11
&hining #ndian 'ultinationals
Indi Inc. is $")ing high. %ot on") over the Indin s7). !n) Indin $irms
hve s"o;") nd sure") em(r7ed on the g"o(" #th nd "ed to the
emergence o$ the Indin mu"tintion" com#nies.
Dith ech #ssing d): Indin (usinesses re c?uiring com#nies (rod:
(ecoming ;or"d-#o#u"r su##"iers nd re recruiting st$$ cutting cross
ntion"ities. Dhi"e n 'sin 6ints is #inting the ;or"d red: +t is ro""ing
out Indics $rom /irminghm nd Sundrm Fsteners ni"s home the $ct
tht the Indin com#n) is n entit) to (e rec7oned ;ith.
Some instances:
Tata 9otors se""s its #ssenger-cr Indic in the B3 through
mr7eting ""ince ;ith -over nd hs c?uired De;oo
&ommerci" Fehic"es unit giving it ccess to mr7ets in 3ore nd
&hin.
Ran;a#y is the ninth "rgest generics com#n) in the ;or"d. 'n
im#ressive 4* #ercent o$ its revenues come $rom overses.
Dr Re!!y"s <a;oratories (ecme the $irst 'si 6ci$ic
#hrmceutic" com#n) outside I#n to "ist on the %e; Jor7 Stoc7
82chnge in 2001.
(sian Paints is mong the 10 "rgest decortive #ints m7ers in the
;or"d nd hs mnu$cturing $ci"ities cross 24 countries.
Sm"" uto com#onents com#n) =harat :orge is no; the ;or"d>s
second "rgest $orgings m7er. It (ecme the ;or"d>s second "rgest
$orgings mnu$cturer $ter c?uiring &r" Dn 6eddinghus
1ermn $orgings com#n) "st )er. Its ;or7$orce inc"udes I#nese:
1ermn: 'mericn nd &hinese #eo#"e. It hs 31 customers cross the
;or"d nd on") 31 #ercent o$ its turnover comes $rom Indi.
Essel Propac> is the ;or"d>s "rgest mnu$cturers o$ "mitu(es -
tu(es used to #c7ge tooth#ste. It hs 14 #"nts s#red cross 11
countries nd turnover o$ -s *09.2 crore $or the )er ended
Decem(er 2003. +he com#n) commnds stggering 30 #ercent o$
the 12., (i""ion-units g"o(" tu(es mr7et.
'(out ,0 #ercent o$ revenues $or Tata %onsultancy Services comes
$rom outside Indi. +his month: it rised -s 54.2 (i""ion (A1.14
(i""ion) in 'si>s second-(iggest tech I6@ this )er nd Indi>s "rgest
I6@ ever.
12
Infosys hs 25:*34 em#"o)ees inc"uding *00 $rom 33 ntion"ities
other thn Indin. It hs 30 mr7eting o$$ices cross the ;or"d nd 2*
g"o(" so$t;re deve"o#ment centres in the BS: &nd: 'ustr"i: the
B3 nd I#n.
Sun!ram :asteners is not mere") nuts nd (o"ts com#n). It
(e"ieves in thin7ing out o$ the (o2. 6ro((") tht is ;h) it decided to
c?uire #"nt in &hin. +he #"nt in Ii2in cit) in the 5i)n
economic Gone hs ensured one $ct0 tht its customers ;ho ;ere
er"ier (u)ing Sundrm #roducts in 8uro#e nd the BS: did not hve
to go $r $rom home to ccess the #roduct.
13
#mpact of '()s on #ndian
#ndustrial &ectors
So $r: ;e hve n")Ged the Indin 8conom) nd the ;) in ;hich
mu"tintion" hve dded more v"ue nd incresed the e2#orts: 1D6 nd
#roductivit): resu"ting in "" round deve"o#ment.
Further more: ;e hve the ctu" n")sis o$ the e$$ect o$ !%&s on vrious
Indin Industri" Sectors. &ertin im#ortnt sectors re considered nd the
ctu" e$$ect o$ !%&s i.e. the #rctic" ;) in ;hich the) re $$ected re
studied viG.
1. &ement
2. 'vition
3. 'utomo(i"es
4. 'uto &om#onents
5. /iotechno"og)
*. Finnci" Services
4. Food Industr)
,. 1ems nd Ie;e""er)
9. 5e"thcre
10. In$ormtion +echno"og)
11. I+ en("ed Services
12. !edi . 8ntertinment
13. @i" . 1s
14. 6hrmceutic"s
15. -e" 8stte
1*. -eti"
14. -eserch . Deve"o#ment
1,. Science . +echno"og)
19. Stee"
20. +e2ti"es
21. +e"ecommunictions
22. +ourism . 5os#it"it)
23. +rining . 8duction
14
#mpact *f '()s on Automobile
industry
+he #resent scenrio is high") trns$ormed one. !u"tintion" gints re
v)ing ;ith one other to "unch their mode"s. /ig nmes o$ the vehic"e
industr) "i7e the 3oren gint: 5)undi: 1ener" !otors: !itsu(ishi etc.
hve "red) o#ened their ccount. In other vehic"e segments too: Fo"vo:
!ercedes /enG: 'udi etc. hve crved out their niche. In the t;o-;hee"er
segment (esides the other m=or !%& (rnds mde vi"("e to the Indin
consumers.
's resu"t conducting (usiness in the 'utomotive Industr) hs (ecome
more com#etitive nd so#histicted: ;hich increses the demnd $or mu"ti
s7i""ed #ersonne". 8m#"o)ment o##ortunities re emerging ;ith
!nu$cturers: De"ershi# @#ertions inc"uding 6rts: S"es: Service:
Eesing . Finncing: s ;e"" s in the $st deve"o#ing 'utomotive
'$termr7et sector.
@n the other hnd: !nu$cturing in Indi hs "so come o$ ge. +he #ost
"i(ertion economic" scenrio hs resu"ted in "" the (ig nmes such s
1ener" !otors: Ford: +o)ot: 5ond: SuGu7i: !itsu(ishi: !ercedes-/enG:
Fit to come u# ;ith #"nts in Indi. +he Indin utomotive gints "i7e
+e"co: !hindr: 'sho7 Ee)"nd: /== re revm#ing their #roduction
strtegies nd "unching ne; mode"s designed nd deve"o#ed indigenous").
+his hs o#ened u# numerous o##ortunities or em#"o)ment in this sector $or
trined nd s7i""ed #ro$ession"s ;ho re ;e"" versed in the "test
mnu$cturing #rocess.
+he gro;th curve o$ Indi 'uto Inc. hs (een on n u#s;ing $or the #st
$e; )ers. +he high gro;th o(served since 2001-02 in utomo(i"e
#roduction continued in the $irst three ?urters o$ the 2004-05. 'nnu"
gro;th ;s 1*.0 #er cent in '#ri"-Decem(er: 2004K the gro;th rte in 2003-
04 ;s 15.1 #ercent. &onse?uent to "i(er"istion: the rriv" o$ ne; nd
contem#orr) mode"s: es) vi"(i"it) o$ $innce t re"tive") "o; rte o$
interest nd #rice discounts o$$ered () the de"ers nd mnu$cturers ##er
to hve stimu"ted the demnd $or vehic"es nd strong gro;th o$ the
industr).
15
+he utomotive industr) is the (rometer o$ n) m=or econom) nd the
sme ho"ds true $or Indi s ;e"". +here hs (een #henomen" gro;th in
the utomotive mnu$cturing sector in our econom).
Indi hs (ecome "unch #d
-ising s"es nd strong gro;th #ros#ects heightened the #o#u"rit) o$ uto
stoc7s in Iu") 2004 s $oreign institution" investors (FIIs) incresed their
st7es in 7e) utomo(i"e com#nies "i7e !hindr . !hindr: 'sho7
Ee)"nd: !ruti Bd)og: +FS !otors nd 5ero 5ond.
1"o(" nmes such s Dim"er &hr)s"er nd 6orsche hve (egun introducing
their ne; o$$erings in Indi. Dim"er&hr)s"er #"ns to "unch the ne;
!ercedes SE3 rodster: ;hich hs =ust hit 8uro#en rods: in Indi ()
@cto(er-%ovem(er 2004. 6orsche is (ringing in the &)enne nd +o)ot is
#"nning simu"tneous re"ese o$ its I!F.
%ote: these mode"s re the "test crs Gi##ing on interntion" rods nd not
the dted versions tht ;ere #ssed on er"ier.
1*
#mpact on the #ndian
'anufacturing sector
+he resurgence o$ Indi>s mnu$cturing sector hs (een ?uite mgic". %ot
on") re #ro$its soring: the sector is $st s#reding its tentc"es (rod s
mn) Indin mnu$cturing $irms inch c"ose to (ecoming true ("ue
mu"tintion"s.
+he Indin econom) gre; () 4.4 #ercent in the '#ri"-to-Iune ?urter:
FJ2005: (uo)ed () gro;th in mnu$cturing nd services. !nu$cturing
gre; , #ercent in the ?urter: com#red ;ith 4.* #ercent in the #revious
?urter. +he #icture is (out to (righten $urther.
'ccording to &II-!c3inse) re#ort: mnu$cturing e2#orts $rom
Indi re "i7e") to gro; to A300 (i""ion in 2015 $rom A4, (i""ion in
2003. +he countr) ;ou"d then hve 3.5 #er cent shre o$ the ;or"d
mnu$cturing trde.
+o rech the A300 (i""ion trget: the industr) hs to c"oc7 gro;th o$
14 #er cent ever) )er s ginst the 11 #er cent rte t ;hich it is
gro;ing t #resent.
!nu$cturing e2#orts $rom Indi gre; 20 #er cent in 2003 over the
#revious )er.
@$ the tot" A300 (i""ion: A40- A90 (i""ion is e2#ected to come $rom
=ust $our sectors - ##re": uto com#onents: s#eci"it) chemic"s nd
e"ectric"s nd e"ectronic #roducts. Indi>s e2#orts in these sectors
;ere A10 (i""ion in 2002.
9anufacturing firms on e#pansion ;inge
!nu$cturing com#nies re #"nning to invest s much s -s 200:000
crore over the ne2t t;o )ers.
@$ -s 200:000 cr: -s 100:000 cr ;i"" come $rom intern" genertion
5"$ o$ this de(t m) come through the 8&/ route
!ost cor#ortes re going $or (ro;n$ie"d e2#nsion
-ising interest rtes ;on>t im#ct Indi Inc>s investments
14
Dith nnu" out$"o;s verging t A1 (i""ion: the countr)>s rn7ing in
B%&+'D>s out;rd FDI #er$ormnce inde2 hs "red) shot u# $rom the
104th #osition in 1999 to the *1st s#ot in 2003.
+he t;o most im#ortnt destintions $or Indin FDI "st )er ;ere the BS
nd the -ussin Federtion: ccounting $or round 34 #er cent o$ the tot"
Indin overses investments during "st )er: ;hi"e 8uro#e ccounted $or 40
#er cent o$ the tot" out$"o;.
Some large In!ian investments
@%1&>s 25 #er cent st7e (u)-out in Sudn oi" $irm $rom +"ismn
8nerg) o$ &nd $or A420 mi""ion (round -s 3:312 crore)
+he 5indu=>s #urchse o$ contro""ing interest in &3: c"" centre in
the 6hi"i##ines
!source>s S#nish "nguge centre in +i=unn: !e2ico
9anufacturing Outsourcing
Indi is $st deve"o#ing into mnu$cturing hu( $or ;or"d cor#ortions
;nting to "everge the sector>s #roven s7i""s in #roduct design:
recon$igurtion nd customistion ;ith cretivit): ssured ?u"it) nd v"ue
ddition. '(out 20 #ercent o$ Indin utomotive #roduction in 2004 is
e2#orted to deve"o#ed countries.
Dhi"e some !%&s enter into @8! de"s to source com#onents: others hve
Indin rms to su##") to g"o(" mr7ets.
18 hs entered into n @8! de" ;ith +herm2 Indi to su##")
chi""ers $or the "tter>s #o;er s)stems.
South 3oren t;o-;hee"er m=or 5)osung is m7ing Indi the
mnu$cturing hu( $or its 250cc cruiser (i7e: '?ui" through
technic" tie-u# ;ith 6une-(sed 3inetic 8ngineering.
Ford !otor &om#n) is iming to source BSA 120-1*0 mi""ion ;orth
o$ uto com#onents $rom Indin mnu$cturers over the ne2t t;o
)ers under its Indi Sourcing 6rogrm.
1,
1"o(" consumer e"ectronics gint !tsushit o$ I#n hs decided to
source 6nsonic co"our te"evision sets $rom Indi $or its interntion"
mr7et.
&o"gte is setting u# (rnd ne; tooth#ste $ci"it) in ;estern Indi
;hich ;i"" (e one o$ 15 such $ci"ities cross the ;or"d.
#mpact on +elecom #ndustry
@ne o$ the $stest gro;ing sectors in the countr): te"ecommunictions hs
(een gro;ing t $everish #ce in the #st $e; )ers. +he s#eed o$ gro;th
cn (e guged () the $ct tht in 2004: ten )ers $ter #rivte te"e#hon) ;s
introduced in Indi: the mo(i"e su(scri(er (se hd crossed the num(er o$
$i2ed "ine connections.
Dhi"e $i2ed "ines touched 44 mi""ion t the end o$ 2004: the ce""u"r
user (se registered *, #er cent gro;th to touch the 4,-mi""ion
mr7. !ore thn third o$ these su(scri(ers ;ere dded during 2004.
+he tot" te"ecom su(scri(er (se: consisting o$ $i2ed s ;e"" s
mo(i"e users: registered gro;th o$ 31.42 #er cent to touch 92.4*
mi""ion t the end o$ 2004. +he gross te"ecom user (se stood t 40.5,
mi""ion t the end o$ 2003. ('ccording to the +e"ecom -egu"tor)
'uthorit) o$ Indi (+-'I): the gro;th in the mo(i"e su(scri(er
segment #ic7ed u# in Decem(er 2004 $ter remining t round 1.5
mi""ion #er month $or the #revious t;o months.)
+he )er 2004 ended ;ith the te"e-densit) reching n ""-time high o$
,.*2: s com#red to *.*5 t the end o$ 2003: n increse o$ over 30
#er cent.
In the mo(i"e segment: dditions consisted o$ 1.42 mi""ion 1S!
su(scri(ers nd 0.53 mi""ion &D!' su(scri(ers. +he tot" o$ 19.51
mi""ion mo(i"e users in 2004 mr7s n increse o$ 11.5 #er cent over
the 14.49 mi""ion dditions mde in 2003.
8ven in $i2ed "ine: 2.*4 mi""ion su(scri(ers ;ere dded s com#red
to 2.15 mi""ion ne; users during 2003: registering n increse o$ 24
#er cent.
+he non-voice mr7et (messge nd dt services) $or mo(i"e o#ertors hs
"so registered tremendous gro;th in 2004. 'ccording to stud) () ID&: it
hd gro;th o$ 139 #er cent )er on )er in 2004.
19
't #resent non-voice revenue contri(utes round 4.4 #er cent to the tot"
mo(i"e services revenue: ;hich is round -s. 14:5*0 crore (BSA 3.3 (i""ion).
'n")sts (e"ieve tht i$ the current rte o$ gro;th is mintined: it cou"d dd
u# to mGing $igures in the ne2t $e; )ers. ' stud) re"esed () 8rnst nd
Joung s)s revenues $rom the sector cou"d touch BSA 25 (i""ion () 2004.
Telecom statistics
8anuary" /3 :e;ruary"/3 9arch"/3
+ot" su(scri(ers 94.92mn 94.03mn 9,.0,mn
+e"e-densit) ,.,0 9.0 9.0,
Fi2ed "ine 45.15mn 45.54mn 45.90mn
'dditions during the
month
0.39mn 0.39mn 0.3*mn
!o(i"e 49.44mn 51.49mn 52.14mn
+ot" dditions
during the month
1.44mn 1.*4mn 0.43mn
1S! dditions 1.24mn 1.13mn 1.24mn
&D!' dditions 0.5mn 0.54mn 0.52 mn
Source: TRAI
:oreign interest
+he gro;th sttistics com(ined ;ith the government>s decision to increse
the $oreign direct investment c# in the sector to 44 #er cent is generting
interest mong g"o(" investors. Dhi"e the government e2#ects over BSA
,00 mi""ion investment $rom $oreign te"ecom com#nies in the coming )er:
num(er o$ them re "red) here.
I#nese cong"omerte 3)ocer: ;hich hs c?uired the mo(i"e
e?ui#ment division o$ &D!' techno"og) #ioneer Lu"comm: is
setting u# mo(i"e #hone mnu$cturing #"nt in Indi: nd e2#ects to
shi# #hones to '$ric () the end o$ the )er. It #"ns to strt shi##ing
to countries in South 8st 'si: 'ustr"i nd %e; He"nd ne2t )er.
'"cte" ;nts to m7e 1S! mo(i"e #hones in Indi. +he French
m=or is #"nning ce"" #hone mnu$cturing $ci"it) in Indi ;ith n
nnu" c#cit) o$ 2.5-5m units to cter to the 'si-6ci$ic mr7ets.
20
E1 recent") strted ssem("ing #hones in Indi nd %o7i #"ns to set
u# mnu$cturing #"nt ;ith n investment o$ BSA 100-150 mi""ion.
1"o(" hndset m=or Siemens Indi Etd is #"nning to invest over
BSA 500 mi""ion in Indi in the ne2t three to $our )ers $or setting u#
ne; $ctories nd e2#nding its e2isting c#cities.
In!ian companies going glo;al
Indi o$$ers n un#recedented o##ortunit) $or te"ecom service o#ertors:
in$rstructure vendors: mnu$cturers nd ssocited services com#nies. 's
the sector hs (een #er$orming ;e"": the (u"ging (ottom "ines o$ Indin
te"ecom com#nies re m7ing them invest in ssets.
+he +t grou#>s Fidesh Snchr %igm Etd. (FS%E) struc7 A130-
mi""ion de" to #ic7 u# +)co 1"o(" %et;or7>s (+1%) 34:20,-mi"e
(*0:000 7i"ometre) su(mrine $i(re o#tic net;or7 tht connects
northern 'si: 'meric nd 8uro#e. 's #rt o$ the +1% de": FS%E
"so received dr7 (uncommissioned) $i(re tht "in7s I#n to
Sing#ore nd 200 em#"o)ees o$ +1%. +he +)co c("e hs the "rgest
c#cit) g"o(""). It is o$ the order o$ 4 ter(its on the 6ci$ic route.
Dithin d)s o$ (gging +1%: FS%E inugurted its o;n 3:145-
7i"ometre: 5.12-ter(it &henni-Sing#ore su(mrine "in7. +)co hs
su##"ied the o#tic $i(re $or the &henni-Sing#ore "in7.
FS%E>s ;s the second su(mrine c("e de" struc7 () n Indin
com#n) in 2004. -e"ince In$ocomm hd "so #ic7ed u# FE'1
+e"ecom $or A210 mi""ion $e; months (e$ore FS%E (ought +1%.
+he +t 1rou# hs "so ;on (id to c?uire 2* #er cent st7e in
South '$ric>s second net;or7 o#ertor (S%@) tht gives the com#n)
mndte to deve"o# nd o#erte (oth ntion" "ong distnce (%ED)
nd $i2ed-"ine net;or7s in the countr). +he deve"o#ment he"#ed +t
gin $ootho"d in the South '$ricn mr7et.
Technology a!vancements
'mong other tidings in the te"ecom sector re the techno"og) u#grdtions
(eing e$$ected in De"hi nd !um(i. Indi ;i"" soon =oin the e"ite c"u( o$
countries tht hve 31 mo(i"e services. +he !hngr +e"e#hone %igm
Eimited (!+%E): the stte-run te"ecom services #rovider: is setting u#
Indi>s $irst 31 net;or7 in De"hi nd !um(i. +he net;or7: ;hich ;i"" hve
21
c#cit) o$ 4m "ines: ;i"" re?uire tot" investment o$ -s 4:000 crore (BSA
914.9 mi""ion).
#mpact on esearch ,
%evelopment
Indi hs emerged s the hottest destintion $or mu"tintion" com#nies
(!%&s) strting or re"octing their reserch . deve"o#ment (-.D) centres
over the #st t;o )ers. &hin comes ne2t: though it continues to (e the
"eding destintion $or !%&s re"octing their mnu$cturing o#ertions.
+hese re some o$ the under")ing trends tht emerge $rom the 8rnst .
Joung +rns$er 6ricing 2005 g"o(" surve) tht #o""ed 34, mu"tintion"
#rent com#nies nd 12, su(sidir) cor#ortions in 22 countries.
'round 10M o$ the res#ondents re#orted either ne; or re"octed -.D
o#ertions in the #st t;o )ers. @$ this: 24M identi$ied Indi s the "eding
re"oction destintion $or -.D: $o""o;ed () &hin ;ith 14M.
+he (est-7no;n Indin -.D com#nies re in #hrmceutic"s nd (iotech
sectors. &om#nies such s -n(2): Dr -edd)>s E(ortories: Sun 6hrm
nd /iocon nd Shnt /iotech re ttrcting interest $rom com#nies in the
BS nd 8uro#e: ;hich re see7ing strong #"t$orm $or deve"o#ment s7i""s.
Fo""o;ing in the $ootste#s o$ the in$ormtion techno"og) en("ed services
(I+eS) industr): ;hich #ut Indi on the ;or"d m#: )et nother sector --
-eserch nd Deve"o#ment (-.D) -- is ;itnessing incresing vit"it) nd
gro;th. !ore thn 125 Fortune 500 com#nies hve o#ted to hve their
-.D (se in Indi. +he resons $or this re o(vious. Indi>s ;e"th o$
scienti$ic t"ent is unmtched in the ;or"d.
Indi conducted its inugur" test $"ight $or Srs: the countr)>s $irst
indigenous civi"in "ight-trns#ort ircr$t: in 'ugust 2004.
'(out 1*5 institutions in the countr) re engged in genetic
engineering reserch: com#rising 55 in trnsgenic ;or7: 25 in
22
ther#eutics nd ,5 in (sic reserch: ccording to the De#rtment o$
/iotechno"og).
+he countr) hs "red) strted commerci" cu"tivtion o$ genetic"")
modi$ied cotton in 1u=rt nd some southern sttes: ;ith sever"
other cro#s in vrious stges o$ getting ##rov"s $or commerci"
#"nttion.
Indi is the on") deve"o#ing countr) nd si2th ;or"d;ide to
mnu$cture nd "unch its o;n ste""ites in geo-sttionr) or(it nd
even #"ns moon mission in 200,. It hs "so "unched ste""ites $or
$oreign customers such s 1ermn) nd 3ore.
5ving #roved its scienti$ic mett"e: Indi hs (egun to ##er on the
outsourcing rdr ;ith monotonous regu"rit). 1one re the d)s ;hen
interntion" com#nies retined -.D =o(s t home nd sent (rod ;or7
tht ;ere c"eric" nd o$ re#etitive nture. %o;: even innovtion nd
design ;or7 hve (egun to move o$$shore: es#eci"") to Indi. !ore thn
100 Fortune 500 com#nies N inc"uding De"#hi: 8"i Ei""): 1ener" 8"ectric:
5e;"ett 6c7rd: Dim"er&hr)s"er nd others N hve #ut u# -.D $ci"ities
in Indi over the #st $e; )ers.
18>s Iohn F. De"ch +echno"og) &enter in /ng"ore is the com#n)>s
"rgest such $ci"it) outside the BS. Dith n investment o$ BSA*0
mi""ion: it em#"o)s 1:*00 reserchers nd #"ns to rise the num(er o$
st$$ to 2:400.
+he Dim"er&hr)s"er -eserch &entre in /ng"ore is invo"ved ;ith
$undment" nd ##"ied reserch in vionics: simu"tion nd so$t;re
deve"o#ment.
/oeing is ;or7ing ;ith 5&E +echno"ogies to co-deve"o# so$t;re $or
ever)thing $rom nvigtion s)stems nd "nding ger to the coc7#it
contro"s $or its u#coming 484 Drem"iner =et.
()* products developed by +,- centres in India
%ompanies Pro!ucts
Sun !icros)stems<
Indi
6ort" server: De( server: Identit) server nd
8ngineering &entre met director).
23
+e2s Instruments<
-.D &entre
Fu"") deve"o#ed t "est 20 #roducts: inc"uding the 'n7ur Digit" Sign"
6rocessorK Sngm: (ridge router $or the DSEK nd Heno: ;hich runs
mu"timedi ##"ictions.
S'6 E(s +he "( hs #roduced some o$ S'6<s #roducts ment $or the g"o("
mr7et: inc"uding the &hnne" !ngement So"ution: ;hich he"#s chi#
mnu$cturers negotite #rices ;ith their de"ers on"ineK De"er 6ort"
$or the utomotive industr)K mo(i"e "#to# so"utions nd oi" nd gs
u#strem so"utions. +he "( is "so ;or7ing on so"ution $or F"ue
'dded +2 (F'+).
i2 +echno"ogies< -.D
&entre
+he centre hs $u"") deve"o#ed strtegic sourcing so"ution $or i2:
(esides de"ivering ner") eight mnu$cturer-industr) tem#"tes nd
reti" so"utions $rom Indi.
6hi"i#s Innovtion It deve"o#s most o$ the so$t;re re?uired $or 6hi"i#s #roducts. '"most
#mpact on #+ &ector
In$ormtion +echno"og) en("ed Services (I+8S) () !%&s hs #ro((")
generted the m2imum num(er o$ sunshine stories in the Indin industr) in
the "st $e; )ers. 'ccording to %sscom: the so$t;re industr) hs
overt7en the gems nd =e;e""er) s ;e"" s te2ti"es industries: to (ecome
the num(er one e2#orter in the countr). &urrent") Indi is the 6o;er 5ouse:
+he ;or"d so$t;re 'ren.
I+ is no; n industr): ;hich is gro;ing
() "e#s nd (ounds (oth through
#rtici#tion () c#tive units o$
mu"tintion"s nd third #rt) #roviders
o$ Indin origin. Some o$ them re the
(ig home-gro;n I+ Services com#nies
"i7e Infosys? +ipro nd Tata
%onsultancy Services (+&S).
The Top :ive
+he to# $ive Indin I+ com#nies (sed on FJ04 revenues-+&S: Di#ro:
In$os)s: St)m nd 5&E +echno"ogies-re the #rime contenders in the rce
to the Fortune 500. Dhi"e the $irst three hve mde it to the (i""ion-do""r
c"u(: the remining t;o re "red) h"$ ;) through to tht mr7.
'ccording to 3rni7: the ;) things re sh#ing u# the com#nies tht re
most "i7e") to m7e it re going to (e the ones $rom the current to# 10
(ecuse the di#-o$$s in siGe re shr# (e)ond the to# 10. 82#erts $ee" tht
even ;ithin the to# 10 the di#-o$$s strt getting shr#er $ter the to# three to
24
$ive com#nies. 's resu"t: the "i7e"ihood is restricted to on") the to# $ive
nd: more s#eci$ic""): to the to# three.
+he to# com#nies re indeed r#id") e2#nding their g"o(" out"oo7 nd
rech: setting u# centers cross the ;or"d nd com#eting ;ith the to# tier
g"o(" I+ com#nies. +&S is "octed cross over 30 countries nd serves
c"ients in round *0. +he g"o(" "octions $or In$os)s: Di#ro nd 5&E
+echno"ogies rnge (et;een 10-20 countries. +hese com#nies serve some
o$ the to# c"ients g"o("") inc"uding the "i7es o$ 18: 'mericn 82#ress:
8ricsson: Ford: +rnsco: 6rudenti": Deutsche /n7: nd the Stndrd
&hrtered /n7. In the "st t;o to three )ers: these com#nies hve "so
(een o#en to $oreign c?uisitions nd IFs: to e2#nd their g"o(" $oot#rint.
'nd the c?uisition "ist is ver) "ong0 +&S c?uired 6hoeni2 1"o(" Services
(techno"og) so"ution #rovider)K Di#ro c?uired %erve;ire: BS-(sed
$innci" services consu"tnt nd uti"ities> #rctice o$ consu"tnc) '!SK
In$os)s c?uired 82#ert In$ormtion Services o$ 'ustr"i nd BS-(sed
+rde IL #roduct division o$ IL Finnci" S)stems: Deutsche /n7-o;ned
out$itK 5&E +ech hs c?uired m=orit) st7e in '")nce: (usiness
integrtion $irm ;ith o$$ices in Sn Iose: BS.
<ea!ing the %harge 2//6
S Rama!orai (@im PremAi Nan!an Nile>ani
+&S Di#ro In$os)s +echno"ogies
Ran>ing: 1 Ran>ing: 2 Ran>ing: 3
Revenue: A1.* (n Revenue: A1.3 (n Revenue: A1.1 (n
,ea! %ount: 43:000 ,ea! %ount: 39:000O*300 ,ea! %ount: 35:000O
9ar>et %apB: A21 (n 9ar>et %ap: A14.4 (n 9ar>et %ap: A19.,4 (n
Some IT 9N%s in 2//6 *lo;al :ortune 3//
Name Revenues $C ;n& 9ar>et %ap $C ;n&
I/! 9*.23 149
56 49.9 *3
8DS 20.* 10.4
'ccenture 15.1 23
&S& 14.4 ,.*
25
Rules of the game
/ut: ;i"" this (e enough $or our to# three to =oin the rn7s o$ the "i7es o$
D"-!rt Stores: /6: She"" 1rou#: &itigrou#: 1ener" !otors: /!D: I/!:
56: etc. Dhi"e +&S: Di#ro nd In$os)s m) hve crossed the #s)cho"ogic"
(i""ion-do""r (rrier: chieving the ne2t $e; (i""ion do""rs is going to (e
tough ts7: ;rrnting much more r#id gro;th. 3rni7 #oints out tht
"ong ;ith orgnic gro;th these com#nies ;i"" hve to go in $or
c?uisitions to (e ("e to chieve the re?uired r#id gro;th. P+he orgnic
gro;th ;i"" continue to h##en (ut tht is not going to (e good enough $or
r#id gro;th. 'c?uisitions ;i"" he"# these com#nies to dd e2#ertise in
terms o$ (oth ne; mr7ets nd techno"ogies:P he dds.
2*
#mpact *n $ood and -everages
&ector
%e; De"hi0 Indi>s (ooming tourism sector nd its r#id") gro;ing Destern-
st)"e $st $ood =oints o$$er un"imited o##ortunities $or $oreign $ood nd
(everge e2#orters: s Indin $ood im#orts re "i7e") to gro; *-4 #er cent
over the ne2t $e; )ers: s)s stud).
8)eing the over 250 mi""ion-strong midd"e c"ss: BS de#rtment stud)
s)s the #ros#ects $or investment in Indin mr7ets cou"d (e guged $rom
the $ct tht tot" 5ote": -esturnt nd Institution" (5-I) service sector
s"es o$ F nd / mounted to A , (i""ion during 2003-04.
'n u#s;ing in the Indin hote" industr) since 2003 $o""o;ing turnround o$
the g"o(" tourism industr): #ositive im#ct o$ >Incredi("e Indi> tourism
#romotion cm#ign nd the ;or"d>s incresing interest in Indi>s r#id")
gro;ing econom) re some o$ the min resons cited $or gro;th.
+hough Indin consumers: on n verge: s#end on") 2.5 #er cent o$ their
$ood e2#enditure in hote"s nd resturnts: the 5-I service sector is
e2#ected to gro; () *-4 #er cent over the ne2t $e; )ers.
P+hough ne;: unorgnised nd unt##ed so $r: the 5-I service sector in
Indi hs vst #otenti" $or gro;th s there re ##ro2imte") 55:000
registered resturnts in the orgnised sector nd in the rnge o$ 1:00:000 to
5:00:000 in the unorgnised sector: com#rising innumer("e rodside
eteries nd te9snc7 sho#s:P the stud) noted.
+he institution" $ood service sector consists o$ $ood service $ci"ities $or
-i";)s: government nd cor#orte o$$ices: eduction institutions:
hos#it"s: #risons: rmed services: nd ir"ines.
+he Indin midd"e-c"ss: ;hich some estimte is 250 mi""ion-strong nd
gro;ing t 30-40 mi""ion )er: is the min drivers o$ the econom): the
stud) #ointed out.
+he econom) o$ the countr) is ;ide") ntici#ted to dou("e () 2010 (!erri""
E)nch 2004) to (ecome the ;or"d>s third "rgest () 2050 (1o"dmn Schs).
24
'ccording to the stud): hote"s mnged to get miniscu"e $ive #er cent o$
tot" s"es o$ Indin $ood service sector ;hi"e resturnts nd institution"
cterers together cornered 52 nd 43 #er cent res#ective").
In recent )ers: the Indin hos#it"it) industr) hs (ene$itted $rom stedi")
gro;ing econom) nd (ooming tourism sector. Foreign tourist rriv"s
into the countr) in 2004 crossed 3.3* mi""ion: gro;th o$ 24 #er cent over
the #revious )er.
+his gro;th is e2#ected to remin strong over the ne2t $e; )ers: the stud)
sid: dding tht the Indin hote" industr) ;s gering u# to cter to the $ood
needs o$ the interntion" visitors.
' r#id") gro;ing Indin econom) (* #er cent nnu"") over the "st decde)
hs incresed incomes o$ the consuming c"ss. /) 2004: ##ro2imte") 22
#er cent o$ househo"ds (44 mi""ion) re e2#ected to hve n verge nnu"
income o$ A3:150 (BSD 14:300 on #urchsing #o;er #rit) (sis) com#red
to "ess thn seven #er cent in 1995: the stud) #ointed out.
'n e2#nding )oung #o#u"tion: more ;omen in the ;or7$orce nd
incresing ur(nistion su##ort 5-I $ood s"es: the stud) sid: noting tht
c"ose to 30 #er cent o$ the #o#u"tion "ive in ur(n res. +his shre ;s
"i7e") to gro; to 40 #er cent () 2025.
Si2t)-$ive mi""ion #eo#"e re e2#ected to enter the 20-34 )er ge grou#
$rom 2001 to 2010 in Indi nd the num(er o$ du" income househo"ds hs
(een e2#nding r#id") in ur(n res: the stud) o(served.
+he eting-out cu"ture is evo"ving $st in Indi: s more consumers see7
vriet) in their $ood choices. Br(n Indins re ;re o$ interntion"
cuisines nd n incresing num(er re ;i""ing to tr) ne; $oods.
'(out 4.5 #er cent o$ ur(n consumers et outside their home t "est once
;ee7: nd (out 12 #er cent et out once month: it sid ?uoting surve).
+here hs (een dou("e-digit gro;th in the Destern-st)"e $st-$ood out"ets
nd co$$ee sho#s: (oth mu"tintion" chins (!cDon"d: 6iGG 5ut: Dominos
etc) nd Indin chins (%iru">s: 6iGG &orner: /rist: &$e &o$$ee D)).
It is (e"ieved tht the mu"tintion" nd domestic mu"ti-unit resturnt
segment ;i"" drive the $uture e2#nsion o$ the Indin resturnt industr).
2,
!ost Indins sti"" #re$er Indin $ood: s region" cuisines o$$er mn)
choices: it sid: dding PvegetrinismP ;s sti"" ;ide") #o#u"r cu"inr)
trdition in Indi. 5o;ever: the )ounger ur(n #o#u"tion is incresing")
shi$ting to Destern-st)"e $st $ood items: the stud) o(served.
#mpact of Gla"o! &mith.line
merger on #ndia /conomy
+he merger o$ 1"2o Indi nd Smith3"ine /eechm 6hrm ;i"" crete the
second "rgest #hrmceutic" com#n) in Indi: (sed on the resu"ts $or the
)er ended 31 Decem(er 199,: $ter -n(2) E(ortories: ;ith its s"es o$
-s 1:3,2.0* crore. +he ne; entit) ;i"" hve com(ined net s"es o$ -s
1:24,.2* crore (not counting the s"es o$ Smith3"ine /eechm &onsumer
5e"thcre).
1"2o De""come ho"ds 51 #er cent in 1"2o Indi nd /urroughs De""come
Indi: ;hi"e Smith3"ine /eechm is 40 #er cent $$i"ite o$ the B3-(sed
#rent.
Nutritional pro!ucts ill stay out
Smith3"ine /eechm &onsumer 5e"thcre: or S/&5: is un"i7e") to (e
#rt o$ the merger in Indi. +his is (ecuse the #rent com#nies hve
decided to se"" their ;or"d;ide nutrition" (usiness s #rt o$ their merger
#"n. S/&5 Indi is 40 #er cent su(sidir) o$ Smith3"ine /eechm #"c.
1"2o Indi hs "red) so"d its consumer (usiness to 5einG Indi: ;hich
com#rised #o#u"r (rnds such s &om#"n nd 1"ucon-D.
Smith3"ine>s consumer (usiness in Indi com#rises o$ nutrition drin7s
(5or"ic7s: nd /oost: ;hich together ccount $or *3 #er cent shre o$ this
mr7et)K or" cre #roducts '?u Fresh tooth#ste nd tooth (rushesK nd
over-the-counter #roducts &rocin nd 8no.
<arge mar>et share
In terms o$ reti" drug s"es: the merger o$ 1"2o: /urroughs De""come nd
Smith3"ine 6hrm ;ou"d $urther ;iden the g# (et;een the num(er one
com#n) nd the rest o$ the to# $ive drug com#nies in Indi. 'ccording to
the I!S 1999 udit (Dec 9, to %ov 99): the merged entit) ;i"" hve
29
com(ined nnu" s"es o$ -s 1:0,4.,4 crore nd 4.92 #er cent shre o$ the
Indin #hrmceutic"s mr7et.
!r7et "eder 1"2o>s I!S udited s"es ;ere -s ,49.3* crore: ;hi"e
Smith3"ine recorded reti" turnover o$ -s 205.51 crore. Smith3"ine
/eechm 6hrm is rn7ed 20 in terms o$ reti" s"es.
+he emerging entit) ;i"" hve com(ined nnu" #rescri#tion (se o$ 23.5
mi""ion (I!S medic" udit Dec 9, to %ov 99). 1"2o: "ong ;ith its
$$i"ite com#nies /urroughs De""come nd /idd"e S;)er hve
#rescri#tion (se o$ 19 mi""ion: ;hi"e Smith3"ine #roducts generte 4.5
mi""ion #rescri#tions #er )er.
+he t;o com#nies com#"ement ech other ver) ;e"" in terms o$ ther#eutic
c"sses. 1"2o is the mr7et "eder in ther#eutic ctegories such s
ce#h"os#orins: #"in corticosteroids: nti-u"cernts nd to#ic"
corticosteroids. Smith3"ine is the mr7et "eder in #ure vccines nd hs
siGe("e #resence in (rod s#ectrum #enici""ins: nti-in$ective
ntidirrhoe"s nd iron #re#rtions.
Pro;lems to ;e overcome
+he m"gmtion o$ the t;o entities is "i7e") to #ose some #ro("ems $or
1"2o: ;hich is in the midst o$ m=or restructuring e2cercise. 1"2o hs
s#"it the #roduct #ort$o"io o$ 1"2o: /urroughs De""come nd /idd"e
S;)er into seven (usiness units: (sed on ther#eutic ctegories.
P+he e2isting im(rog"io (et;een the /urroughs De""come union nd the
1"2o mngement is )et to (e reso"ved (e$ore /urroughs De""come cn (e
integrted ;ith 1"2o. +his m) cuse some de")s:P s)s Devinder 6":
chie$ e2ecutive o$ !um(i-(sed &t")st 6hrm consu"ting. 1"2o
s#o7es#erson dec"ined to comment on the merger: (ut com#n) source
s)s tht (ord meeting ;s he"d tod) $or #re"iminr) discussions.
'nother im#ortnt s#ect o$ the merger is Smith3"ine /eechm>s 100 #er
cent su(sidir) in Indi Q Smith3"ine /eechm 'si. Dhi"e Smith3"ine
6hrm hs "red) nnounced its intentions to "unch reserch #roducts
through this su(sidir): 1"2o #roducts too m) use this su(sidir) to
"unch certin ne; #roducts: n")sts $ee". 1"2o is "so not verse to setting
u# nother 100 #er cent rm in Indi. Its chirmn Sir -ichrd S)7es hs
"red) conve)ed this during his recent visit to the su(continent.
30
0P marks #ndian employment
milestone
,elett0Pac>ar! has ;ecome the largest multinational IT employer in In!ia
/eting more ;e""-7no;n contenders such s I/!: Inte" nd !icroso$t:
5e;"ett-6c7rd hs recent") (ecome Indi>s "rgest mu"tintion" I+
em#"o)er: ;ith more thn 10:000 em#"o)ees.
!esuring the siGe o$ mu"tintion" cor#ortions (!%&s) in Indi is
di$$icu"t: s most do not disc"ose countr)-s#eci$ic revenue $igures.
5edcount #rovides one re"i("e stndrd: re#orted the .conomic Times: n
Indin di").
56 is in the #rocess o$ c?uiring the #u("ic st7e o$ Indin so$t;re services
e2#orter: Digit" 1"o("So$t (D1S): turning its current 51 #ercent st7e into
n c?uisition. Inc"uding the D1S em#"o)ees: I/!>s hedcount goes over
10:000 st$$.
D1S hd hedcount o$ 4:400 () the end o$ Se#tem(er this )er: ;ith
nother 2:*00 em#"o)ees in so$t;re o#ertions nd 3:000 in 56>s 1"o(" e-
/usiness: the (c7 o$$ice division. Dith nother ,00 $rom s"es nd su##ort
tems: 56>s tot" rises to round 10:,00 st$$: re#orted the di").
+his #uts 56 $r hed o$ its min riv": I/!: ;hich hs n Indin
hedcount o$ *:000. 5o;ever: I/! is gro;ing ?uic7") in Indi: nd rise to
,:000-#"us is e2#ected.
/ig /"ue "so hs re"tive") ;e7er #resence in Indi com#red to 56. @$
the estimted 320:000 g"o(" em#"o)ees: *:000 is =ust under 2 #ercent: ;hi"e
56 hs sm""er over"" hedcount o$ round 140:000: ;hich m7es its
Indi o#ertions ccount $or ;e"" over 4 #ercent o$ hedcount.
31
@ther "rge $oreign com#nies in Indi re "so e2#nding. 'ccenture: the I+
consu"ting nd services cor#ortion: ;nts to rise $rom its current 3:000 to
riv" 56 ;ith more thn 10:000 em#"o)ees ;ithin the ne2t t;o )ers.
Dhi"e !icroso$t o$$ici"") s)s it on") hs 400 st$$ in Indi no;: humn
resource recruiters in /ng"ore to"d the .conomic Times tht !icroso$t ;s
ggressive") recruiting $or (c7-o$$ice o#ertions: nd tht the) e2#ected it
to hire 3:000 #eo#"e () the end o$ 2004. &isco hs 3:000 no; nd @rc"e
;i"" e2#nd to 4:000 () the end o$ this )er: nd Inte" #"ns to hit 3:000 in
Indi in 2005.
5o;ever: (eting 56 nd the rest o$ the !%&s in Indi $or I+ em#"o)ment
() (rod mrgin is BS-(sed 1ener" 8"ectric (18). +he cong"omerte hs
22:000 em#"o)ees in Indi: most o$ them ;or7ing $or 18>s (usiness-#rocess
outsourcing nd c""-centre o#ertions.
Dith Indin outsourcing hot to#ic in the BS nd other source mr7ets: the
.conomic Times sid none o$ the I+ !%& e2ecutives it contcted ;ere
;i""ing to comment on their hiring #"ns. @utsourcing is seen s thret to
BS I+ =o(s.
32
Pepsi )o. )ase &tudy
6e#sico hs (een n er") strter in engging $rmers in Indi. Dith n
e"(orte contrct-$rming #rogrmme under;) $or the "st 15 )ers: there
hve (een "ernings "ong the ;) $or the co" nd $oods m=or. 6e#sico<s
Dor"d;ide 6resident nd &F@: Indr %oo)i shres some o$ them ;ith
&hit"i &h7rvrt) . /hnu 6nde. 'n e2cer#t.
,as PepsiDs contract farming mo!el change! in In!iaE
It hsn<t chnged (ut evo"ved over time. In 19,9: ;hen 6e#si cme into
Indi: ;e set u# #otto #rocessing #"nt $or our snc7s (usiness nd
tomto #rocessing #"nt in 6un=( $or e2#orts. +he "tter ;s #rimri") set
u# to meet our e2#ort o("igtions. 6e#si<s entr) into contrct $rming ;s
triggered () the need to m7e vi"("e su$$icient ?untities o$ tomtoes .
#ottoes o$ the right ?u"it) $or our domestic #"nt. +o strt ;ith: there ;s
no ("ue#rint vi"("e either in Indi or interntion"") o$ n ##ro#rite
mode" ;hich cou"d (e emu"ted to structure our contrct $rming inititive.
In tht scenrio: strting $rom the (sics o$ ##"iction reserch: ;e creted
mode" ;hich hs evo"ved to its current $orm. 5o;ever: ;hen )ou t7e u#
contrct $rming $or di$$erent cro#s in di$$erent res: suit("e modi$ictions
nd d=ustments hve to (e mde to ensure it<s re"evnt to "oc" conditions.
,ave the o;Aectives change!E
+he o(=ective o$ contrct $rming is to (c7;rd integrte the su##") chin
to ensure time") vi"(i"it) o$ right ?u"it) nd ?untit) o$ mteri"s. +his
(sic o(=ective hs not undergone n) chnge.
%ontract farming mo!els rarely generate profits. +hy then shoul! an
9N% e#pen! so much time an! energy on themE +hat are the
collateral ;enefits of entering the rural economyE
33
&ontrct $rming in itse"$ is not (usiness. It is n integr" #rt o$ (usiness
mode" ;hich ensures tht r; mteri" is vi"("e t the right time
con$orming to the ?u"it) stndrds in re?uired ?untit) t com#etitive
#rices. '"" this to ensure the #ro$it(i"it) o$ the (usiness. @ur snc7s
(usiness re?uires "o; sugr #ottoes to #roduce the right ?u"it) o$ #otto
chi#s s such vrieties ;eren<t gro;n in Indi. So ;e hd to introduce the
suit("e vrieties vi contrct $rming. @ur e$$orts ;ere "so mde to
increse #roductivit) to ensure higher income $or the $rmer nd to reduce
our #rocurement costs. In order to succeed ;e hd to undert7e e2tensive
tri"s o$ vrious vrieties nd evo"ve gronomic #rctices suited to "oc"
res. De then #ut in #"ce n e2tension tem to trns$er these "erning<s to
the $rmers. 8$$orts to increse gricu"tur" #roductivit) "so go "ong ;)
in im#roving $rm incomes: there() (ringing our e$$orts in s)nc ;ith the
ntion" #riorities.
+hy has Pepsi not ;een a;le to scale up contract farming of various
cropsE The latest seaee! proAect starte! out ith a !ifferent o;Aective.
=ut it suffere! !elays an! is no ;eing toute! as a liFui! fertiliser
proAect. DoesnDt this sho the lac> of clarity ith hich 9N%s enter
contract farming in In!iaE
+he contrct $rming #rogrmme gets sc"ed u# in "ine ;ith (usiness needs.
@ur #otto #rogrmme strting $rom 6un=( hs $oot#rint cross the
countr) to su##ort mnu$cturing c#cities est("ished in !hrshtr nd
Dest /eng". +od): the num(er o$ $rmers ;ho #rtici#te in our contrct
$rming #rogrmme is higher thn ;ht ;e strted ;ith: nd mn) o$ the
#ioneers re sti"" ;ith us. &"ose to 50M o$ the #ottoes #rocessed () us come
$rom our contrct $rming #rogrmmes.
Do 9N%s face any special hur!le entering the rural areas in contract
farmingE
+he se;eed contrct $rming #ro=ect is #th (re7ing inititive s
cu"tivtion o$ se;eed in the o#en se hd never (een undert7en (e$ore in
Indi. Initi""): e$$ectiveness o$ the techno"og) to de"iver vi("e nd
sustin("e income mode" $or the gro;ers hd to (e est("ished. Its e$$icc)
hd to (e demonstrted to the $unding nd #rtnering institutions: ;ho
;ou"d mnge the Se"$ 5e"# 1rou#s undert7ing this ctivit). Est: (eing
ne; ctivit): regu"tor) c"ernces ;ere re?uired: ;hich cou"d (e grnted
on") $ter due ev"ution nd o(servtion o$ the tri"s. @n") "st month: due
to the e$$orts o$ the &! o$ +mi" %du nd her tem: Se"$ 5e"# 1rou#s hve
34
(een given the go hed to t7e u# this ctivit). Fer) soon it ;i"" ;or7 on
commerci" sc"e. &S!&-I: ;hich #rovided the techno"og) $or this ;hi"e
;or7ing on the #rocess o#timistion discovered n ddition" ##"iction o$
the ;eed. +he) discovered tht it cou"d "so de"iver () #roduct N "i?uid
#"nt gro;th nutrient. It mde sense $or us to c?uire this techno"og) $or
;hich &S!&-I hd t7en g"o(" #tent. De ho#e to no; m7e vi"("e
this orgnic nd cost e$$ective gro;th nutrient to the Indin $rmers nd ;e
(e"ieve this ;i"" hve signi$icnt im#ct on the )ie"ds nd their incomes.
+hat >in! of challenges? if at all? !o you see in partnering ith farm
or>ersE
'n) success$u" inititive re?uires c"er understnding o$ the ground re"ities
o$ the terrin nd the needs o$ its #eo#"eK their resource (se nd their
constrints.
'n) cor#orte: Indin or mu"tintion" entering this $ie"d hs to m7e the
e$$ort nd s#end time nd mone) to "ern in order to (ui"d success$u"
#rtnershi# ;ith the $rmers. Indin $rmers hve no (is ginst the
mu"tintion"s nd our 10 )ers o$ success$u" #rtnershi# ;ith the 6un=(
$rmers is testimon) o$ the sme.
35
$or investors! #ndia is less risky
than )hina
%8D D8E5I 0 Indi continues to (e "ess ris7) thn &hin s (usiness
destintion: ccording to cor#orte stud). Indi hs (een rn7ed 10th
mong 29 emerging mr7ets in the "test countr) ris7 n")sis () 8conomic
Inte""igence Bnit (8IB): n in$ormtion service rm o$ the 8conomist grou#.
Dith score o$ 39 out o$ 100 in the ris7 sc"e: Indi hs got >/> ris7 rting
nd hs outrn7ed &hin (41): Sudi 'r(i (41): South '$ric (45): !e2ico
(45): /rGi" (4,) nd 8g)#t (49): ;ho hve got >&> rting.
5o;ever: Sing#ore (11: ' rting): 5ong 3ong (21) continue to (e the
s$est #"ce $or $oreign investment: $o""o;ed () +i;n (25): Isre":
5ungr) nd 6o"nd (34): ;ho hve ?u"i$ied $or >/> rting. %ot sur#rising"):
Ir? is the most dngerous countr) to do (usiness: ;ith score o$ 91 out o$
100: $o""o;ed () 'rgentin (4*).
' "o; ris7 rting is n im#ortnt indictor o$ countr)>s g"o(" credit rting
nd the ;i""ingness o$ $oreign investors to invest in countr). Industr)
re#resenttives sid Indi hs n o##ortunit) to gin $rom &hin >s
s"o;do;n.
82#erts sid countr) ris7 re#ort comes in hnd) s decision m7ing too"
$or !%&s to enter or e2#nd in ne; mr7ets.
8IB countr) ris7 rn7ings com(ine mesures o$ #o"itic" ris7 ("i7e thret o$
;r) nd economic ris7 ("i7e siGe o$ $isc" de$icits). +he) "so inc"ude
mesures tht $$ect countr)>s "i?uidit) nd so"venc) (de(t structure nd
$ore2 reserves). Some o$ the o#ertion" $ctors tht re considered in
determining countr) ris7 inc"ude securit): #o"itic" st(i"it): government
3*
e$$ectiveness: "eg" . regu"tor) $rme;or7: mcroeconomic conditions:
$innci" . t2 #o"ic): "(our mr7et nd in$rstructure. 8IB revie;s the
ris7 rtings o$ over 100 emerging mr7ets on month") (sis.
-#id gro;th: high") s7i""ed "(our nd o##ortunities in outsourcing (oosted
Indi >s rtings. Dhi"e chnge in government (rings no dec"ine in ris7 $or
Indi : 8IB s)s tht !nmohn Singh-"ed co"ition must su##ort re$orms to
sustin current rn7ing.
P Indi is ;tched c"ose") () overses investors on ;hether re$orms ;i""
continue in the Ee$t su##orted government. +here is "itt"e ;reness (out
economic #o"icies do#ted () Ee$t in Dest /eng" :P s)s 'mit !itr:
secretr) gener": Ficci. 5e sid FDI investment ;i"" gther momentum. P
Indi is s s$e s ;ht it ;s nd chnge in government hs not chnged the
sitution:P s)s % Srinivsn : D1-designte: &II. PIndin industr) is u#(et
nd $u"" o$ se"$-(e"ie$.P
Former -/I governor /im" I"n is con$ident tht the countr) cn hnd"e
n) economic crisis. &om#red to &hin : Indi hs (ecome mrgin"") s$er
in 2004. +his #erce#tion cou"d (e #rt") ttri(uted to the strong e2tern"
sector #er$ormnce nd reduced (order-tension tht Indi e2#erienced )er
(c7.
8IB s)s tht Indi is #oised to gro; t ,.3M in 2003-04 ('#ri"-!rch) nd
;i"" gro; t 4.3M in 2004-05 N o;ing to Psm""er hrvest nd hence "ess
ro(ust gro;th in #erson" incomesP. It "so #redicted s"o;do;n in &hin .
P &hin >s 1D6 is "i7e") to gro; () 9.4M this )er nd () ,.1M in 2005:
;ith the s"o;do;n (eing "ed () n esing o$ investment gro;th:P #ro=ects
8IB. Indi hs n edge over other g"o(" com#etitors in outsourcing
o##ortunities: -.D. &hin hs scored over ever) countr) in che# "(our.
Des#ite s"o;do;n: &hin ;i"" continue to (e mong to# emerging mr7ets
$or FDI: (ut Indi is "so (ecoming ver) ttrctive to g"o(" investors. 8IB
hs #ro=ected FDI $"o;s to Indi to touch A13 (i""ion in 200, $rom A5 (i""ion
in 2003. 5o;ever: &hin is $orecst to receive A5, (i""ion in FDI this )er. P
Indi >s #er$ormnce s one o$ the most ttrctive destintions $or FDI is
(sed on sever" criteri: considering Indin uthorities> commitment to
ttrct more FDI is )et to (e $u"") mtched () more investment-$riend")
#o"icies:P s)s 8IB.
34
&II s)s e$$ective communiction is 7e) to reduce Indi >s ris7 $urther:
s)ing: P+he (iggest ch""enge is s#reding the right messge to the g"o("
investing communit).P I"n #ointed out the need to reduce $isc" de$icit.
Conclusion
!u"tintion" com#nies re "i7e dou("e-edged s;ord. +he s;ord cn hrm
i$ not hnd"ed #ro#er"). Simi"r") the !u"tintion" com#nies hve their
o;n #ros nd cons.
+he e2tent o$ techno"og) nd mngement o$ 7no;-ho; trns$er () the
!%&s de#end to "rge e2tent on their cor#orte strteg)K $or e2m#"e:
$irms desiring to hve "onger-term re"tionshi# ;ith the su##"iers (rther
thn those sim#") using the host countr) s mr7eting9e2#ort (se) ;i"" (e
more inc"ined to e$$ect trns$er techno"og).
's #ointed out in the Dor"d Investment -e#ort: 2000: !%&s m) restrict
the ccess o$ #rticu"r $$i"ites to techno"og) in order to minimise inter-
$$i"ite com#etition. It is noted tht !%&s re more "i7e") to "icence o"der
techno"ogies $rom ;hich the) hve "red) derived signi$icnt rents thn
ne;er techno"ogies on ;hich there re sti"" re")ing $or mr7et "edershi#.
Further: the) m) ho"d (c7 the u#grding o$ the $$i"ite techno"og) or
invest insu$$icient") in host-countr) trining nd -.D in ccordnce ;ith
their g"o(" cor#orte strtegies. +here$ore: rguing tht FDI in$"o;s nd
economic "i(er"iGtion utomtic"") $ci"ittes techno"og) trns$er is (eing
e2treme") nRve.
3,
Webliography
;;;.i(e$.org
;;;.goog"e.com
;;;.cii.com
;;;.$icci.com
;;;.indoin$o"ine.com
-ibliography
Interntion" !r7eting !ngement
- !.F. 3u"7rni
Interntion" !r7eting
- Frncis &heruni"m
39