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This Report has been published for
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Authors
Rajat Agarwal
Multinationals and India
outsourcing company. Combining
unparalleled experience, comprehensive
only and is not intended to serve as
advice of any nature whatsoever. The
Tim Cooper A plan for progress
capabilities across all industries and information contained and the Svenja Falk
business functions, and extensive references made in this Report is in
research on the world’s most successful good faith, neither Accenture nor any Mamta Kapur
companies, Accenture collaborates of its directors, agents or employees
with clients to help them become give any warranty of accuracy nor Raghav Narsalay
high-performance businesses and accepts any liability as a result of
governments. With approximately reliance upon the information, advice, Armen Ovanessoff
177,000 people serving clients in more statement or opinion contained in this
than 120 countries, the company Report. This Report also contains Dinu Poonacha
generated net revenues of US$21.58 certain information available in public
billion for the fiscal year ended domain, created and maintained by Mark Purdy
Aug.31, 2009. Its home page is private and public organizations.
Aarohi Sen
www.accenture.com Accenture does not control or
guarantee the accuracy, relevance,
timelines or completeness of such
information. This Report constitutes a
view as on the date of publication and
is subject to change. Accenture does
not warrant or solicit any kind of act or
omission based on this Report.
Foreword References
1 23
Based on the 9 years of FDI statistics International Energy Agency.
The world has changed significantly safeguarding intellectual property and
published by Department of Industrial 24
over the last couple of years. reducing bureaucracy, amongst others. 11th Five year plan of Ministry of
Policy & Promotion, Ministry of
Businesses in developed and emerging It also reveals some of the new growth New and Renewable Energy,
Commerce, Government of India.
economies have been shaken by the sector opportunities in India, such as Government of India.
2
global downturn. Governments, in turn, biotechnology, renewable energy and Economist Intelligence 25
have scrambled to steady their emerging technological sectors like Technopak Advisors, ‘India
Unit/Accenture survey, 2009.
economies and put them on a path cloud computing and digitization. Last, Healthcare Trends’ 2009.
3
towards recovery, using fiscal stimuli it highlights those key areas that can World Economic Forum Global 26
IBEF, August 2009.
and other policy instruments. Now, the contribute to enhancing the nation’s Competitiveness Report 2009-10,
27
light at the end of the tunnel is overall productivity and how India can www.weforum.org IBEF, July 2009.
4
beginning to emerge and we are seeing position itself at the heart of the global Accenture analysis. 28
LABORSTA database, International
pockets of recovery in different parts economy by promoting itself more 5 Labour Organization.
of the world. effectively. United Nations Conference on Trade
29
and Development (UNCTAD). UNESCO.
The Indian economy will face a As we look towards the future with the 6 30
changed global landscape as it enters same optimism that has driven India’s Ibid. NASSCOM Strategic Review 2009.
this recovery period. Emerging market growth to date, there is a fresh 7
McKinsey, ‘Building India: 31
World Bank, ‘Unleashing India’s
economies will acquire even greater opportunity for government and Accelerating Infrastructure Projects’, Innovation’, 2007.
significance as the global economy business in India to work together to 2009. 32
becomes increasingly multi-polar. India solve some of our common domestic Zinnov, ‘R&D Innovation Council’,
8
will have to compete more fiercely challenges and build a path towards India Brand Equity Foundation (IBEF), August 2008.
with its emerging-market peers, many sustainable growth and prosperity. But August 2009. 33
Evalueserve (2004).
of whom will be more competitive there are no guarantees or 9
Database of the Centre for 34
than before. In the political sphere, entitlements about the future, only Monitoring Indian Economy (CMIE), Migration Policy Institute database.
new governments have recently taken possibilities. Our vision is to help India August 2009. 35
Indian Ministry of Tourism, ‘Tourism
office in different parts of the engage with the global context around
10
Reserve Bank of India, op. cit. Statistics at a Glance’, 2008.
world—presenting new opportunities to us, positioning India as the preferred
address long-term challenges such as international destination of investment 11
Planning Commission, Government of
climate change and international and business activity. We hope this
India.
security threats. report will help outline the cooperative
12
steps that can be taken to make this CMIE, op. cit.
As this new landscape takes shape,
vision a reality. 13
India has the opportunity to position IBEF, September 2009.
itself as a leading international hub of 14
investment, human capital and Rabobank, ‘Indian agri-biotech
innovation—pushing ahead of rival sector: Emerging scenario, issues and
destinations in both developed and Harsh Manglik challenges’.
emerging economies. Multinational 15
CII/KPMG report, ‘India Pharma Inc. –
Companies (MNCs) are likely to feature An Emerging Global Pharma Hub’,
prominently in pursuing this ambition. 2008.
In the past, we’ve seen India’s ability to 16
attract foreign direct investment from IBEF, June 2009.
some of the largest companies in the 17
UNCTAD, ‘World Investment Report:
world. MNCs have now embedded Transnational Corporations,
themselves as a part of India’s Agricultural Production and
economic fabric. Looking forward, Development’, 2009, p. 141.
MNCs are looking to play a pivotal role 18
fostering the growth of small, medium CMIE, July 2009.
and large domestic enterprises across a 19
CMIE, August 2009.
range of industries and linking them
20
into global supply chains. CMIE, August 2009.
21
But more is possible, and more is Automotive Component
required. This report, which draws on Manufacturers Association of India,
interview-based research conducted ‘Global Competitiveness of Indian
jointly by Accenture and the Auto Component Industry & Its
Confederation of Indian Industry, Sustainability’, 2009.
reveals some of the ongoing challenges 22
Ernst and Young, ‘Renewable Energy
facing multinational businesses in
Country Attractiveness Indices’, Q4
India and underscores priority areas for
2007.
reform—such as rationalizing taxation,

02 31
Conclusions: Overcoming the Contents
challenges to growth Executive summary 04
With greater integration into the world For policymakers, the Achieving success in the next phase of Introduction 08
economy, the effectiveness of India’s growth story will require closer
policymakers in shaping and priorities must be cooperation between businesses and
implementing policies to increase policymakers than ever before. As the
Chapter one: Laying the foundations 10
! To take a lead in global forums in
flows of people, capital, products and order to embed India at the heart of world emerges from recession, this
services will, as we have seen, be new model of economic and social Chapter two: Combining old and new 14
the world economy
fundamental to securing India’s future governance will be replicated across
growth. To climb the competitiveness ! To simplify internal bureaucratic the globe. India has a number of Chapter three: Building capabilities for the future 20
ladder, it is crucial for India to focus processes, to rationalize taxation, and strengths that position it well to lead
on the following areas: to effectively police intellectual this new global order. Doing so will Chapter four: Projecting India 26
property rights require action on a number of fronts,
! Improve the overall business
from the local to the international,
environment by removing the barriers ! To encourage the free movement of
with a focus on scaling activity more
Conclusions 30
and hurdles that may hinder MNCs and talented labor, and to invest in
effectively and consistently. But with
domestic businesses as they seek to transport, technology and social
commitment from business and
achieve sustainable growth in India infrastructures
government alike, there are few limits
! Reduce dependence on, and increase ! To focus policy on encouraging to India’s potential.
the value of, traditional sectors of the higher-value in traditional sectors
economy (e.g. agriculture) as well as (agriculture, manufacturing) and to
developing new, higher-value-added invest in innovation
industry sectors such as healthcare,
renewable energy and new ! To align education more closely
technologies with employment opportunity, and to
involve business leaders in shaping
! Improve India’s productivity by human capital strategy
broadening its skills base beyond its
current centers of excellence and For MNCs the opportunities
fostering innovation on a national
scale for growth can be realized
! Place India at the heart of the multi-
by
polar world by increasing the impact it ! Working with local partner
achieves on the global stage through organizations and government to raise
linking SMEs to global supply chains, skill levels and invest in higher value-
tapping into the Indian diaspora and chain activities
making better use of India’s cultural
heritage ! Empowering rural populations to
open up untapped labor and consumer
MNCs must play a critical role in markets
achieving these objectives by nurturing
a globally integrated business ! Adopting imaginative responses to
ecosystem driven by knowledge, India’s diversity, using technology to
technology and talent. Several MNCs scale operations
have established globally significant ! Exploiting India’s advantages of
businesses in India by setting up language and demographics to test
manufacturing and R&D facilities, innovative business models
building and serving consumer markets
and establishing India as an export ! Co-operating with government to
base. They have complemented efforts make training and education better
of local governments, institutions and aligned with needs
businesses in imparting skills to local
workforces and by promoting a culture
of innovation. There is great scope for
more to be done.

30 03
Executive summary
The world has been shaken by the economic infrastructure, education and healthcare.
downturn. Developed and emerging However, in the political sphere there are
economies alike have felt the full force of new administrations in many countries and
its impact. India’s economy has seen a a re-elected Indian government unimpeded
slowdown after nearly a decade of by coalition politics. This presents a further
unprecedented growth, as its companies window of opportunity for businesses and
have been vulnerable to the varying policymakers to work together to develop
fortunes of their customers, partners and constructive and collaborative solutions
suppliers around the world. As we begin to that capitalize upon the country’s
emerge from this crisis, there is a new strengths, develop new opportunities and
sense of urgency amongst business leaders address the obstacles to achieving India’s
and policymakers to address long-term social and economic growth ambitions.
challenges and exploit fresh opportunities.
The Indian economy will enter the recovery
period facing changed global competitive
dynamics, particularly from other fast-
developing economies, as well as the
ongoing need to confront persistent
domestic challenges in areas such as

04 29
Finally, promoting the cross-fertilization emerging economies are catching up
of knowledge and capabilities can drive and starting to exploit their cultural
new, innovative business models and industries and diaspora population to
attract investment. For example, while great effect. Our analysis identifies the
India’s growth to date has been driven following levers to realizing growth in
in large part by the IT sector, there are this area:
opportunities for MNCs in adjacent ! Providing incentives for creative
industry sectors that can capitalize on
industries and talent to locate in India,
this e.g. advertising and digital media.
building on India’s burgeoning creative
In developing these industry sectors,
sectors to generate growth and
India will not only generate increased
strengthen India’s brand
economic growth but also enhance
even further its brand overseas. The ! Setting up a government initiative
India Brand Equity Foundation has to target and leverage the Indian
already undertaken extensive efforts to diaspora more effectively so that they
promote ‘brand India’ abroad: the can act as ‘ambassadors’ for
talent, markets, growth and investment opportunities, particularly
opportunity that exist in the country. in new technology sectors
To integrate itself further into the ! Using MNC supply chains to connect
global economy, India needs to build
local enterprise and global businesses
on this and promote India as the new
culture capital of the world and hub of
new digital industries.
Placing India at the heart of the global
economy means building on its
existing success in this area: in being
open, in being an attractive location
for investment and in promoting a
strong brand around the world. The key
for India is to realize that other

Figure 10: International tourist arrivals, 2008 The importance of Innovation: a 2007 study by the World of national competitiveness. For example,
Bank found that 300 MNCs had set up according to the World Economic
% of total international tourist arrivals
multinational companies R&D and technology centers in India, Forum, India ranks only 49th out of the
Multinational companies (MNCs) will accounting for 60 percent of the R&D world’s most competitive economies—
feature prominently in efforts to off-shoring industry. With these centers 23rd when compared only to other
France 8.6 comes increased economic growth and
3
emerging economies. And while a
overcome these challenges and drive
the next phase of sustainable spillover effects into the wider Indian comparable number of the world’s fifty
US 6.29
economic growth, not least by driving economy (e.g. through knowledge largest companies operate in China
Spain 6.21 inward investment, nurturing talent transfer and the flow of new skills). and India, their combined turnover in
and encouraging innovation. For China is three times their turnover in
In recent years, the relationship
China 5.75 example: India.4 This report attempts to
between India’s domestic businesses
understand and suggest ways to
Italy Investment: MNCs have invested over and multinationals has proved to be a
4.63 address this shortfall, to set out how
US$100 billion in India since 20001, unique competitive advantage for the
the Indian economy can be best
UK 3.28 with foreign direct investment (FDI) nation, generating a creative dynamics
aligned to encourage these investments,
inflows having increased at a rate of of knowledge transfer, investment and
2.76
and to show how MNCs can support
Ukraine
about 30 percent as compared to 14 innovation. As a result, India’s businesses
and amplify India’s next phase of growth.
percent for all emerging markets. are arguably the best adjusted to the
Turkey 2.71 global economy among emerging
Talent: MNCs have been at the heart economies, with a high proportion of
Major new research
Germany 2.7
of up-skilling the Indian workforce, higher-value and service-sector The report draws on a major research
2.45 making it one of the most competitive contributions as well as an inclusive project on MNCs operating in India
Mexico
talent pools in the world in a number and global mindset. conducted jointly by Accenture and the
India 0.58 of industries (especially information MNC Council of the Confederation of
technology). In a recent Accenture Further potential Indian Industry. Business leaders from
survey of business leaders around the more than a quarter of the MNCs in
world, India ranked second only to the More, however, is possible. Although
India were interviewed to gain first-
Source: Indian Ministry of Tourism; ‘Tourism Statistics at a Glance 2008’ United States in terms of the India’s recent growth has been
hand insight on some of the challenges
attractiveness of its top management impressive—second only to China since
they face and the broader role of
talent.
2 mid-2008—the country still does not
MNCs in India’s journey towards social
rank as high as it could on comparisons
and economic growth.

28 05
Key areas for growth enforcement of IP laws, as well as leading-practice knowledge, while But beyond this opportunity to reach investors. Indeed, this has already Doing so will require India to focus on
improving the efficiency in the driving advanced engineering skills new consumers, the diaspora happened in the context of the IT how it can build on its cultural
Based on Accenture’s interviews with administration of IP rights population represents a significant industry, where the government made heritage and creativity. For example,
! Invest in sunrise industries, such as
senior business leaders, supplemented source of potential talent, many of a conscious effort to communicate and other emerging markets have taken
! Reduce barriers to the free flow of renewable energy, healthcare and
by extensive research, this report sets whom have been educated in Western interact with the global Indian steps to leverage culture as a means of
people e.g. simplify immigration and pharmaceuticals, new technologies
out four key areas where action is economies and possess the skills that diaspora with hopes of encouraging making their living environment more
processes for obtaining visas for new (e.g. cloud computing) and cultural
needed to put India on a path to more MNCs looking to locate in India will investment in the country from those attractive to MNC employees. Abu Dhabi
entrants to India industries (e.g. design, food and
sustainable, inclusive growth: value highly. Indeed, many MNCs in who have emigrated and become has signed deals to develop offshoots
! Improve infrastructure e.g. upgrade tourism)
Reinforce the foundations of growth: India have sought to bring the Indian successful in other nations. A similar of both the Louvre Museum in Paris
railway stations and existing Improve current levels of productivity: diaspora back into leadership positions approach must be taken in respect to and the Guggenheim Museums in New
enhance the growth prospects of
technologies, including creating India’s make better use of India’s current where they can combine their India’s new growth industries, York and Bilbao; Singapore is planning
businesses operating in India by
first high-speed rail network between assets and capabilities to enhance its knowledge of Western business particularly those related to technology to have the Cirque du Soleil play a key
creating a more predictable and
major metropolitan cities competitiveness in key areas of the practices and working cultures with an where the existing reputation is strong. role in the new Sentosa cultural
enabling environment for business
economy, such as skills and innovation appreciation for local norms. This helps district. More active promotion of
! Simplify the bureaucratic experience Realize growth in new sectors: Exporting India’s culture:
! Promote skills development e.g. ensure that the Indian economy keeps India’s rich cultural heritage could also
capitalize on India’s potential in new
e.g. enhance coordination between the pace with the latest developments in Bollywood and beyond help develop its tourism industry.
industry sectors as well as improving MNCs should continue to work with
central, state and local governments Western business education as well as India’s share of international tourist
the value addtion in traditional sectors, local education establishments to India’s business environment is one of
on approval processes for foreign continuing to represent a highly arrivals globally and in the Asia Pacific
helping the economy move to a more shape curricula and ensure that skills the most attractive in the emerging
businesses both before and after set- attractive location for other MNCs region during 2008 was 0.58 percent
sustainable growth model are relevant to the workplace world, not least due to the high
up of operations looking to establish operations in India. and 2.92 percent respectively. Within
! Reduce dependence on, and increase ! Increase the proportion of the number of English speakers as well as emerging economies, these figures put
! Rationalize taxation e.g. improve The Indian diaspora can also act as the global mindset exhibited by many
the value of, agriculture e.g. increase population engaged in education and India well below China and Mexico
awareness and communication with ‘ambassadors’ for their home country Indians. However, other emerging
support for agricultural interventions productive employment. Policymakers (see Figure 10). In spite of the presence
business about the mechanisms that through promoting greater economies are catching up. Increased
(such as irrigation) and employers can bring more women of historical and cultural sites across
exist to reduce transaction costs in understanding of the opportunities investment in education in many
into the workforce by embracing the country, during 2008, only five of
taxation and bring in more ! Develop both basic and high-value within the Indian economy for emerging economies means that
flexible working options and putting in India’s 28 states accounted for around
predictability to the tax system manufacturing e.g. MNCs should play a investment and growth. By marketing India’s traditional advantage here is
place modernity provisions 67 percent of the total foreign tourist
! Safeguard Intellectual Property (IP) significant role in both shaping and actively investment opportunities to being eroded. India needs to capitalize visits into India.35
delivering the training needed to the diaspora, MNCs can tap into new on this advantage while it still can.
e.g. establish a common body or
supply basic manufacturing workers sources of growth as well as spreading
taskforce to centralize control over the
(see next chapter on education) with the word to a larger potential pool of

06 27
Chapter four:
Projecting India
India owes much of its recent Beyond this, there are three areas export their products. The ambition is ! Overcome constraints to innovation. ! Capitalize on India’s culture e.g. ! Build on the existing excellence and
economic growth to its open position where action can be taken in order to to increase production from 10,000 Improving the networks between provide incentives for creative reputation for IT to move into new
within the global economy, which has help realize the next phase of tonnes a year at present to 150,000 innovation stakeholders (such as industries and talent to locate in India, technological sectors e.g. cloud
seen significant levels of inward economic growth. MNCs can act as tonnes by 2020, which would constitute business, government and academia) building on India’s burgeoning creative computing and digitization
investment and MNCs choosing India facilitators in each of these areas. 3 percent of global cocoa production. and developing clusters can help scale sectors to generate growth and ! Make best use of India’s
as a location for a number of business innovation over a larger area strengthen India’s brand
Integrating local enterprise Tapping into the Indian demographic and educational
functions. India has been among the
Position India at the heart of the This report demonstrates how MNCs advantages to better utilize its
most attractive destinations for with global business diaspora global economy: ensure that India are already contributing to growth in workforce, particularly among the
investment worldwide, ranking second
India has a wealth of small- to India’s population is one of its greatest continues to act as a key political these areas, as well as how they can female population and in rural areas
only to China on the FDI Confidence
medium-sized enterprises (SMEs) that assets. While numerous steps are being player on the global stage and realizes continue to build on best practices and ! Increase the productivity of the
Index in 2007.
can collectively generate significant taken to improve the skills and the full benefit of international flows help generate growth in the future. The
workforce through enhanced education
However, if India is to maintain and levels of growth to the Indian education of the domestic population, of investment, talent and technology report also sets out recommendations
systems and more support for innovation
build on this position of strength, it economy. However, the key to realizing the potential afforded by the huge for policymakers that will help create
! Bridge the gap between local
needs to exploit further opportunities their potential is to connect them to Indian diaspora population should not the right regulatory and administrative ! Capitalize on India’s open position
enterprises and global supply chains environment for inclusive growth. in the global economy (in terms of
to adopt a more open position and global supply chains through MNCs. be underestimated. With 20 million e.g. ensure that rural infrastructure political, economic and cultural linkages)
integrate itself within the global Given India’s size and the number of people of Indian origin in 70 countries, and supply chains are of sufficient Conclusions in order to maximize flows of FDI
economy. At the political level, India small- to medium-sized enterprises India has a pan-continental presence.33 quality to facilitate the efficient
should utilize the opportunities arising (SMEs) that have developed (particularly Firstly, these populations represent a transport of goods In this new era of changed global These investments will pay dividends in
from its expanding global footprint of in rural areas), integrating these significant consumer market in their dynamics, what will be important for the future and set India on a path towards
interactions and relationships with the enterprises as part of a wider business own right, as well as a potential ! Tap into the Indian diaspora e.g. set
India as it tries to unleash the next sustainable economic growth. MNCs
rest of the world to encourage the ecosystem offers the potential to springboard to test products and enter up a government initiative to target
phase of economic growth? The will be crucial in all of this, not least in
exchange of knowledge and skills. increase growth at both local and new markets in developed economies. and leverage the Indian diaspora more
following imperatives should guide terms of technology transfer, sharing
Policymakers can take a lead by global level. For example, Dabur India Limited, effectively so that they can act as
India as it embarks on this journey: knowledge and skills, and growing new
ensuring that India is at the heart of which specializes in health and beauty ‘ambassadors’ for investment opportunities,
For example, Cadbury is supporting markets. By working with policymakers
international forums of decision-making products, sells to customers in the particularly in new technology ! Move existing traditional industry
Indian farmers with technical advice to and as a part of the fabric of Indian
(e.g. the G20, the Doha round of trade United Kingdom and United States, sectors up the value chain while
show them how to improve yields of society, businesses can help achieve a
talks and the Copenhagen Summit) as owing to the large Indian populations exploiting potential in new sectors
cocoa. Through this support, it is hoped collective vision of prosperity.
well as making sure that its businesses in these two countries (a combined
are fully integrated into global supply that Indian farmers can first achieve
total of more than 2 million in 2006).34
chains and investment flows. self-sufficiency before starting to

26 07
The role of MNCs in promoting application which allows a single computer
to run one or more virtual machines, each
innovation with its own operating system.
MNCs are involved in a number of projects Conducting world-leading research: Intel
and initiatives to improve the innovative uses India as a base for some of its most
capacity of the Indian economy, driving complex innovation. Recently, a pioneering
economic growth and generating wider microprocessor was developed by the India
spillover benefits in terms of increased R&D team.
knowledge and skills transfer. This is
occurring in a number of ways: Encouraging the entrepreneurial sprit: JCB
facilitates entrepreneurial activity in India
Undertaking low-cost innovation: through its efforts to create self-employment
Microsoft works to develop high-tech opportunities for over 5,000 people.
offerings which help bring IT to the largest Consumer goods company Amway’s
possible audience, including the poor. For approach encourages entrepreneurial
example, one localization program, activity in the broader environment by
‘Bhasha,’ has now made MS Windows and providing free and unlimited training to its
MS Office available in 12 Indian languages. distributors to help them grow their
Sharing hardware is a good way of keeping businesses. In 2007, over 29,000 training
costs down. To help people share PCs, the sessions were held reaching over 1.5 million
Microsoft India Development Centre (MIDC) Amway distributors.
Introduction has recently developed Virtual PC 2007, an

After a decade of unprecedented Figure 1: World Economic Forum (WEF) Global Competitiveness Report Improving India’s capacity to innovate ! Positioning India as a test ground
growth, India faces new challenges in 2009 –10 Rankings is critical to setting the country’s for innovative business models: India
the changing world economic order as trajectory of economic growth. possesses the raw materials – including
it emerges from the downturn. The rise Emerging economies All economies Innovation capabilities attract a proven track record, English language
of the multi-polar world—where investment, generate greater returns skills, an entrepreneurial spirit and
economic power is increasingly Singapore 1 4 and set a path for more sustainable large, distinct and varied consumer
diffused across the global Hong Kong SAR 2 11 growth. India possesses many of the groups—to market itself as the world’s
economy—presents both a major raw materials to unleash innovation- pre-eminent test-bed for innovative
opportunity and a challenge to the Taiwan, China 3 12 led growth and we have already seen business models. As with the IT
Indian economy. South Korea 4 19 great examples that place India in a services boom, MNCs would play a
strong position among emerging critical role in bringing tremendous
While India has been at the vanguard Qatar 5 22 economies. At the same time, there is technology, knowledge and capital
of the emerging markets that have
United Arab Emirates 6 23 no room for complacency. Concerted spillovers into the economy
redrawn the world’s economic
efforts are required by policymakers,
geography, comparisons with other Malaysia 7 24 educators and businesses across a
economies confirm that India still
China 8 29 number of areas. Important levers for
faces a number of challenges in
change include the following:
achieving greater competitiveness. For Chile 9 30
example, according to the World ! Nurturing an innovation
Economic Forum’s Global Czech Republic 10 31 ecosystem: clusters of innovation arise
Competitiveness Report 2009-10, India India 23 49 from partnerships between academia,
ranks at 49th position. Even when business and financiers, all incentivized
compared to emerging economies by government policy
alone, India still only ranks at 23rd
Source: World Economic Forum Global Competitiveness Report 2009 –10 ! Getting the scale right: technology
position (see Figure 1).
www.weforum.org can multiply the penetration and reach
of business solutions and best practice
ideas

08 25
Overcoming constraints to Figure 9: Percentage of patent applications registered by domestic companies
(latest figures percent)
innovative growth
Despite this progress and potential, 80 75% 74%
research activity by domestic Indian 70 62%
companies remains low (see Figure 9).
60
According to World Bank statistics, of
the top 50 applicants for patents in 50
India between 1995 and 2005, 44 were 40
foreign firms. Moreover, the
innovations and patents emanating 30
from these research centers have 20 18%
evolved almost in isolation from India’s
10
academic institutions. Further, as has
been discussed in chapter one, some 0
MNCs are reluctant to invest in R&D in South Korea Russia China India
India because of perceived weaknesses
in intellectual property administration Source: World Intellectual Property Organization
and enforcement.
With competitive pressures increasing
Scaling is also a critical issue. India has
from around the world, there is an
sometimes been labeled “a graveyard
urgent need for India to build a more
of good ideas” due to the large number
sustainable and healthy innovation
of innovative and successful initiatives
ecosystem for future growth. The
that are piloted or implemented
national government has recognized
without reaching enough scale to
some of this by tripling the R&D
make a significant national impact.
allocation in the Eleventh Five Year
Multinationals have played an
Plan (2007–2012) with the target of
important role in developing successful
bringing R&D investment to 2 percent
models that balance the benefits of
of GNP, closer in line with the average
global scale and knowledge with local
for developed countries of
insight and responsiveness. The best-
approximately 2.5 percent.
known examples include the successes
of consumer goods companies like P&G This investment requires buy-in from So while significant strides have been Figure 2: Percentage distribution of survey responses across sectors
and Hindustan Lever in developing all stakeholders, however, including made in recent years, there is still
innovative business models that bring government, business and academia. some way to go before India can truly
global products to the most isolated There are signs of progress, such as the 8% Banking and Insurance
take its place at the top table of globally 15%
Indian communities in a locally National Entrepreneurship Network competitive economies. Going forward, Chemicals and Petroleum
relevant way. (NEN), a non-profit initiative founded 15%
MNCs are crucial to the sustained 5% Communication and Entertainment
in 2002 to educate and support the economic growth of India, both in
Looking forward across broader Industrial Equipment and Systems
next generation of entrepreneurs in terms of driving inward investment
industry groups, methods of achieving Consumer Durables and Other
India. Co-founded by five of India’s and through the potential positive 10%
scale include the development of 8% Consumer Products
premier academic institutions and effects they have on education, skills
clusters of excellence around key Food Products and Beverages
collaborating with over 280 Indian and innovation. This report analyzes
themes, and the utilization of Automotive
graduate institutions, the NEN helps to the role of MNCs in the Indian
technology to multiply impact and
build entrepreneurship programs and economy, and the ways in which policy 15% 24% Business Services*
reach. Technology-based solutions are
create a pipeline of young innovators. initiatives can be aligned to increase
replicable, scalable, cost-efficient and
More recently, the Confederation of co-operation between governments, Source: Accenture/Confederation of Indian Industry Survey
consistent in quality. Moreover, the
Indian Industry set up a committee to MNCs and all other stakeholders.
application of technology seems *Business Services include consulting, software,
establish long-overdue formal real-estate and housing services
particularly well adapted to India’s The report is drawn from Accenture’s
communication between its members
need for solutions that reach across extensive research into the growth This research and the resulting analysis
and academia. Further efforts are
difficult terrain and long distances and opportunities facing India and the role outline opportunities for growth in
needed to include business in policy
that can easily be tweaked to respond of MNCs in realizing those four areas, and highlight the
discussions on education, training and
to a diversity of languages and opportunities. In addition, this report challenges faced in each. These
national innovation capacity.
cultures. Multinationals can play a key draws on in-depth interviews with key imperatives are set out in the chapters
Multinational companies can play an
role in developing and implementing executives from MNCs, officials from of this study, which look in turn at:
important role in these discussions,
the technology solutions that can the Government of India and other foundational factors for growth; the
bringing ideas and lessons learned
connect India’s disparate success crucial stakeholders, undertaken in co- possibility for growth in new sectors;
from other countries.
stories and unlock the country’s operation with the Confederation of the drive to improve current levels of
innovative potential. Indian Industry (CII). The MNCs productivity; and the ways in which
involved in the study account for a India can position itself at the heart of
significant portion of revenues of the new multi-polar global economy.
MNCs in India and represent a true
cross-section of sectors (see Figure 2).

24 09
The role of MNCs in education Addressing India’s human capital challenges
and maximizing the opportunities is both
Multinationals are undertaking initiatives complex and urgent. It requires leadership
in a variety of areas to help drive and commitment from government (at
increased productivity through education, national, state and local levels), business and
training and innovation promotion. Some civil society. It also requires innovative
of these are as follows: thinking to achieve results at speed and
scale. Beyond the mobilization of resources
Supporting basic, and high-value skill
and structuring of initiatives, it requires a
levels around the country: recognizing
cultural shift in India’s attitudes and
the need to improve basic IT skills across
approaches to learning, as well as its
the country, Microsoft set up Project
expectations from the workforce. Important
Shiksha (see previous section), which has
levers for change include the following:
given IT training to over 350,000 school
teachers. Intel has instituted programs to ! Identifying and measuring outcomes:
train India’s future software developers. improving productivity requires rigorous
The Intel Academic Community, which targets to be set at all levels of the education
works with universities in 72 countries, system, accompanied by transparent and
launched a Center of Excellence at the consistent performance measurement
Chapter one: MSRIT campus in Bangalore with the aim
of training 300 faculties from 155
! Aligning learning objectives: business
leaders, including from MNCs, must work
Laying the foundations institutes of the Visvesvaraya
Technological University (VTU) as well as with policymakers in shaping the nation’s
human capital strategy, to ensure an
influencing the undergraduate curriculum.
Just as MNCs have been at the heart of challenges may explain India’s together to address these key
alignment of needs and objectives
India’s growth story to date, so too comparative lagging behind the other challenges. The global economy is now Using technology to up-skill the
they will play an integral role in ! Promoting inclusiveness: the urgency for
BRIC (Brazil, Russia, India and China) inching towards recovery, and financial workforce: Hindustan Unilever is
creating the next chapter of economic economies when measuring the markets are beginning to stabilize.
constantly working to keep its workforce progress in education and skill levels must
growth. MNCs can be key facilitators volume of FDI inflows. In 2008, India Many MNC executives will now begin
of global economic integration and can attracted US$42 billion in FDI, to scan the horizon for the most equipped with the latest skills. In 2007, cut across geographies, social groups and
help link local and global supply compared to US$108 billion in China, attractive destinations for investment. Unilever introduced an ‘e-learning gender
chains. However, policies must be US$70 billion in Russia and US$45 India has the opportunity to be a part
aligned to allow MNCs to function billion in Brazil (see Figure 3).6 of this next chapter of global platform, which offers 3,000 self-learning ! Creating the innovation mindset: India
effectively. investment and growth but only by courses over the internet, allowing them
To propel the Indian economy towards
addressing the outstanding obstacles
needs an education system that requires
Over the past decade, India has a new phase of growth, policymakers
to business confidence. to be accessed by any Unilever employee, students to be critical in their thinking and
benefited from significant inflows of and business leaders will have to work
Foreign Direct Investment (FDI). MNCs anywhere, at any time. resourceful in driving their own learning
have invested over US$100 billion in Figure 3: FDI inflows into BRIC countries, 2005-08 (US$ billions)
India during the last eight years alone. Targeting under-employed segments of
Between 2000 and 2007, FDI inflows 120 India Russia Brazil China
108 the population: JCB, the UK-
into India grew at a compound annual
growth rate of 30 percent, compared 100 headquartered manufacturer of
to an average figure of 14 percent for 84 engineering vehicles and diesel engines,
other emerging markets.5 80 73
72 70 reaches out to create employment
However, the Indian economy still opportunities for under-employed part of
60 55
faces a number of challenges that
42 45 the workforce, such as retired army men.
continue to act as impediments to
40 35
investment and growth. Some of these 30
25
challenges include overly bureaucratic 20 19
approval processes for foreign MNCs 20 13 15
8
registering in India, as well as
difficulties in accessing talent pools 0
2005 2006 2007 2008
and critical infrastructure. These
Source: United Nations Conference on Trade and Development (UNCTAD)

10 23
maximize the reach and impact of Figure 8: Economically active women in India as a proportion of total Simplifying the Figure 4: Problems with India’s business environment identified by
their efforts. For example, Microsoft’s female population, 2007 (percent) MNCs and industry bodies
bureaucratic ‘experience’
‘Shiksha’ project provides IT education
to school teachers, having already 80 Our interview-based research suggests Multiple interpretations of 72%
made 350,000 teachers technology- that, while MNCs are experiencing an tax regulations
70 68%
literate, able to utilize these skills in increasing ease in doing business in
their profession and capable of passing 60 57% 55% India, more needs to be achieved in Unfavorable policies and regulations
50% 59%
them on to their students. 50 order to enhance the value of their net
contribution. In order to attract FDI,
Growing the workforce 40 34% Procedural delays 46%
central and state governments have
India’s productivity is further 30 been implementing a number of laws
hampered by the relatively small 20 and measures to remove regulatory Corruption
and procedural barriers to the 36%
proportion of the population that 10
graduates from the education system establishment of foreign enterprises.
0 According to the respondents to our IPR enforcement 28%
into the skilled workforce. The IT
industry, which represents as much as survey, while this has made entry by
China Brazil Russia South Korea India
5.9 percent of the country’s GDP, still MNCs into India easier, establishing
Other issues 28%
employs only 2.23 million of India’s Source: International Labor Organization and expanding within India is still a
750 million-strong working-age ‘challenging experience’ (see Figure 4).
population.30 Further, less than half of any time. However, according to the R&D centers account for over 60 A significant number of respondents Source: Accenture/Confederation of Indian Industry Survey
female higher-education graduates World Bank31, only 16 percent of Indian percent of the US$9.35 billion R&D said that the Department for Industrial
join the economically active population manufacturing firms provided in- off-shoring industry. This is projected the next phase of growth, and position However, many MNCs operating in
Policy and Promotion (DIPP) and the
(see Figure 8), and many of the highest service training to their employees, to grow to be a US$21.4 billion it ahead of the other BRIC economies, India still face a complex network of
State Single Window cells provide
achievers in India’s schools continue to compared to 92 percent in China. This industry by 2012.32 initial support for new entrants “but
further action is needed to enhance tax structures and mechanisms—an
seek work abroad, even if this trend shortfall, if not addressed, will inevitably the overall bureaucratic experience. area where India lags behind Brazil,
These centers of innovation have there is little support thereafter”. Our
has recently slowed. see India losing out in FDI and global Key actions would include: China and Russia. Business executives
generated the sharing and research also emphasized that time-
competitiveness in the longer term. operating in India told us that
multiplication of knowledge and skills sensitive government bureaucracy is a ! Enhancing coordination between the
Action needs to be taken on several navigating the Indian tax system
across India’s workforce through top factor in determining whether central, state and local governments
fronts. For example, policymakers and Innovation: technology transfer and through MNCs choose to invest and expand in about approval processes for foreign
remains a significant challenge.
employers can bring more women into Around 70 percent of MNCs surveyed
the workforce by embracing flexible the virtuous circle unplanned technology spillovers. For India. businesses
and interviewed are of the opinion that
working options and proper maternity example, Texas Instruments’ advanced Other key bureaucratic challenges in ! Improving lines of communication the reforms in the tax administration
Alongside the capacity to maximize
provisions. Training and education communication systems helped Indian India include the following: between governments and newcomer that have occurred to date, especially
human capital, innovation is a critical
must move beyond traditional systems companies emulate leading practices businesses regarding the overall with regards to implementation and
factor in sustaining productivity ! There are often approval hurdles
characterized by hierarchy to and move towards the development of approval processes, including interpretation of tax statutes at the
improvements. Typically, successful that emerge at state and local
emphasize critical thinking, personal offshore capabilities. Indian suppliers requirements at the central, state ground level, have been inadequate.
players in the Indian market use a government level
resourcefulness and teamwork. and partners of multinationals can and local levels Some of the key challenges in the area
high-volume, low-margin business
Training and education courses should learn from MNC best practice, ! MNC executives are often surprised of taxation include:
model, finding fresh and inexpensive ! Facilitating support from government
allow participants to test their own generating a virtuous circle of by a range of new approval requirements
ways to deliver existing technologies departments and agencies beyond the ! Laws are often interpreted in
ideas and define their own problems to innovation and wealth creation. that they did not know existed prior to
to more people and places: what some initial stage of setting up operations different ways by different tax
solve. MNCs can play an important role call low-cost innovation. An example Innovation is not restricted to products establishing operations. Moreover,
in bringing innovative learning authorities, as well as by different
would be Mango Technologies and marketing, however. In the same there is little support from government
techniques and policy in navigating these additional hurdles
Rationalizing taxation officials within the same tax authority
launching an Internet-enabled phone way that India has been able to attract
recommendations from their disparate designed to achieve maximum investment from around the world to A predictable business environment ! Tax authorities aggressively use their
! There are a number of government
experiences around the world. functionality out of a modest handset set up R&D centers, there is an includes a stable and easily powers to conduct investigative
departments and agencies that exist to
It is in the interests of companies with limited memory, lower processing opportunity to position the country as understandable tax system. Along with processes at early stages, and to
aid the overall approval process.
across industries continuously to capability, slower data download and an ideal test bed for a variety of the process of economic liberalization, pressure companies into paying taxes
However, little is known by business
improve the training of their workers, smaller screens. Multinationals in India innovative business models. India’s India’s complex tax system has been before a full audit is in place
leaders about these support systems
and to invest in the development of have been keen to leverage these kinds large and diverse populations, its undergoing significant change, bringing ! There are significant costs and
of innovations to bring them closer to proficiency in English and variations in Many of these challenges result in both a rationalization and reduction in
employees and service providers at business disruptions resulting from the
the country’s massive and growing infrastructure and distribution unexpected delays and higher costs for corporate tax rates. The Government of
every skill level. The case studies in this implementation of amendments to tax
consumer markets. channels allow a variety of business businesses—discouraging MNCs from India is now undertaking an effort at
report highlight some of the initiatives statutes with retrospective effect
models to be tested in the same setting up and expanding in India. significant tax reform through the
being carried out by multinationals in The evidence that India possesses the
location; covering mass low-income Addressing these inhibitors now could Draft Direct Taxes Code 2009. The ! Significant delays are often created
India. In more enlightened companies, raw materials for innovation can be
targets, high-end luxury consumers, not only spur investments, but also Code is ambitious and represents a by transfer pricing issues
innovative models are being utilized to seen in the number of multinational
and a variety of tastes, cultures and help differentiate India from its rival watershed in Indian tax policy, seeking
keep skills continually updated, such as companies that have been attracted to These challenges combine to create a
religions. economies. The central and state to promote tax compliance, introduce
24-hour online training courses and set up research and development ‘high-stress-low-trust’ tax
governments have already been a single Goods and Services Tax,
tie-ups with academic institutions. For (R&D) centers in the country. A 2007 environment. India must address these
implementing a range of laws and simplify tax language, and reduce the
example, in 2007, Unilever introduced survey by the World Bank found that challenges in order to attract the
measures to remove regulatory and scope for tax disputes.
an e-learning platform offering a range more than 300 multinationals had set capital and skills needed for the next
procedural barriers associated with the
of 3,000 courses accessible by up R&D and technology centers in establishment of MNCs in India.
employees anywhere in the world, at India in recent years. In fact, these However, in order to launch India into

22 11
phase of growth. Our analysis suggests ! Local enforcement authorities often economies, and has become a home to
that government could help achieve have limited understanding of IPRs, a large and growing pool of engineers,
this by: and central and state governments’ scientists and other professionals.
! Implementing a ‘grandfathering’ allocations of resources towards
Reducing barriers to the free flow of
building IPR-related capabilities and
period where amendments to the tax people is fundamental to maintaining
infrastructure are inadequate
code are made—i.e. a time allocated to a hub of talent excellence in India,
enable businesses to restructure their Poor enforcement of IPRs creates since it enables talent to come in from
transactions in line with new tax losses for both businesses and tax abroad and move about the country
requirements authorities. Intellectual property with relative ease. However, our
! Improving awareness and piracy has been rising in India, and is research uncovers a number of barriers
estimated to be worth several billion that continue to block the flow of
communication with businesses about
dollars annually. Some of the sectors talent both to and within India. Some
the mechanisms that exist to reduce
that traditionally suffer include of the challenges to the free flow of
transaction costs in taxation, as well as
business software, pharmaceuticals, talent in India include:
bringing in more predictability to the
and the movie and music industries. ! People moving to India from abroad
tax system (such as the Large Tax
But as technology, knowledge, and
Payers Unit and Advance Ruling) have difficulty acquiring and renewing
ideas become increasingly important
! Clarifying and improving transfer work and residence permits, a process
drivers of economic growth in India, so
riddled with delays
pricing legislation, specifically with too will IPR protection grow to become
regards to provisions for advance a pressing issue for businesses in many ! A relatively lower quality of social
pricing agreements other industries. amenities and infrastructure (e.g.
education, healthcare, living
India has already taken a number of
Safeguarding intellectual significant steps in building its IPR
conditions) discourages Indian diaspora
property talent as well as MNC employees from
protection capacity through WTO-
working in India or outside the key
compliant legal statutes. Additional
Ideas and knowledge are an metropolitan cities
policy initiatives, developed in
increasingly important part of business ! The quality and extent of
consultation with MNCs, would help
and international trade. Much of the
build a more stable and secure communication and power
value of medicines, software and new
operating environment. Some of the infrastructure is often not up to the
technologies lies in the invention,
actions the international business standard required to support virtual
research and innovation involved in
community would welcome include: and real-world flows of talent at an
their production. The protection of
! The establishment of a common affordable cost
intellectual property rights (IPR) is fundamental to managing change. Improving skills in Russia and 82 percent in the United
therefore a key factor for ensuring that body or taskforce to centralize control The financial crisis and recession Multinationals also play a critical role States.29 Moreover, Accenture analysis
any economy attracts investment from over the enforcement of IPR laws, as represent an opportunity to redefine in India both as drivers of productivity Driving improvements in basic shows that despite spending more on
MNCs specializing in high-tech, well as improving the efficiency of the India as a destination for talent from improvements and as channels for education, including literacy and each student in its higher education
knowledge-intensive products and IPR administration around the world. With rising investments and new assets that numeracy, is vital to ensure that the system than Brazil, China, Russia,
services. unemployment in many Western improved productivity will attract into groups currently excluded from the South Korea and Singapore, India
! The allocation of additional workforce are able to become productive.
economies, competition for the world’s the country. This chapter analyses the performs worse than these countries
There are currently a number of resources towards building IPR-related This is particularly urgent in rural areas.
best and brightest minds is increasing. challenges and opportunities that can when compared to specific measures
challenges relating to IPR protection capabilities and infrastructure Similarly, improvements in vocational
Returning professionals are a engender those advances, focusing on of delivery and innovation, access and
that businesses face in India, which ! Improved capabilities for judicial training are essential if India’s
particularly valuable asset to MNCs the two crucial areas in which step- inclusiveness and internationalization
combine to stifle investment and infrastructure constraints across the
authorities in the area of IPR protection, operating in India, as they bring global changes in productivity can be realized: of their higher education systems.
discourage business expansion. The country are to be addressed. Such projects
such as fast-track legal processes for experience and act as conduits for the human capital and innovation.
weak enforcement of IPRs has been the require commitment and engagement MNCs continue to play a critical role in
IPR infringement, and the adoption of exchange of new ideas. It is therefore
bane of businesses operating in many from a variety of stakeholders at both bringing new ideas and investments
emerging market economies, but this is
deterrent-level sentences of increased significance today that The wisest investment: into India’s education system. There is
policymakers and business leaders act national and state levels. A good
particularly so in the case of India. Our
Reducing barriers to the to address these barriers to talent
human capital example is the Prime Minister's an inherent self interest for MNCs to
research has revealed that some of the National Council on Skill Development, support and build the skills of their
free flow of people flows in India. Such actions might India has three distinct advantages in
ongoing challenges in the area of IPR which will launch a public-private future employees, suppliers, customers
include: its human capital: a young
protection include the following: initiative to train 150 million people and partners. By investing in the
With knowledge becoming an engine ! A simplification of immigration and demographic, English language skills
! Little focus on the enforcement of of growth across sectors, talent has across the country with the skills needed nation’s education levels, MNCs are
processes for obtaining work visas for and a culture that values learning and
IPR laws. As a result, penal provisions become a strategic developmental to work in manufacturing. improving the productivity and growth
new entrants to India is open to external influences. At the
fail to act as a deterrent to asset. India is becoming an potential of their business as well as
same time, it is clear that productivity India’s legacy of strong higher-
infringements increasingly knowledge-intensive ! Supporting foreign talent acquisition improving the expected returns on
and competitiveness are hampered by education institutions has served the
economy, producing millions of highly- by offering quality-of-life incentives their investments in India. MNCs in the
! The system of IPR enforcement and education and training infrastructures nation well in building the economic
educated graduates every year. The (e.g. healthcare benefits, pensions) to IT industry have been particularly active
regulation is highly fragmented, that are inadequate for the size of the progress of the last decade. But there
Indian diaspora is also beginning to foreigners and Indians living abroad, as in encouraging and investing in solutions
comprising several government population and the speed of is no room for complacency,
return to India in increasing numbers. the Chinese government is doing to address India’s education deficit,
departments and agencies in disparate improvement required for sustainable particularly as only 12 percent of the
India is thus well-positioned in terms often partnering with government
regions of the country growth. The deficits can be found at all country’s population enrolls in higher
of its talent base when compared to bodies or non-governmental
levels, including basic education, education, compared to 30 percent in
many other emerging market organizations and frequently utilizing
vocational training and higher education. Brazil, 23 percent in China, 75 percent technology-based solutions in order to

12 21
! Better enabling the virtual flow of ! Fulfilling the government’s
talent and ideas through upgrades to commitment to add power-generation
information technology and power capacity and expand electricity access
infrastructure in cities as well as rural in rural areas
areas ! Implementing upgrades to railway
stations and existing technologies,
Improving infrastructure including creating India’s first high-
The development of physical speed rail network between major
infrastructure has long been recognized metropolitan cities
as one of the most important factors ! Developing and implementing a
for attracting foreign investment, national IT infrastructure strategy,
increasing competitiveness and driving encompassing the expansion of
economic growth. Transportation, broadband access beyond the initial
energy and Information Technology targets set out in the Eleventh Plan
networks are all prime enablers of
productivity and improved economic
efficiency.
Our research confirms that MNC
growth has been held back in India for
want of a solid network of roads,
efficient railways and a uniform power
supply. The country is predicted to lose
close to US$200 billion of GDP by
2017 due to delays in infrastructure

Chapter three: Building development.7 As a result, businesses


still face a number of challenges in
conducting everyday activities in India.
Some of these challenges include the
capabilities for the future following:
! Electricity flows run short due to
capacity shortages, despite the fact
India has an abundance of talent and Figure 7: Labor Productivity, 2008 (as a percentage of US levels) that access to electricity is increasing
capital; the country’s potential is high, 100% ! Indian Railways face a range of
yet productivity levels are notoriously
problems, including outdated
low (see Figure 7). Large sections of
technologies, under-maintained
society are excluded from the productive
68% railway stations and gaps in
workforce, including much of the rural
connectivity to remote areas
population, the majority of whom are 57%
subsistence farmers, and there is a low ! India’s IT infrastructure remains
rate of female workforce participation. 36% comparatively underdeveloped,
32% particularly in the areas of broadband
India is home to 20 percent of the 23% and mobile phone connectivity
world’s people, a third of whom are
below the age of 15. This youthful 11% 8% MNCs and domestic companies
demographic will add about 250 universally welcome the Indian
million additional workers to the labor government’s current commitment to
US Singapore South South Russia Brazil China India
pool in the twenty years to 2025.28 Korea Africa
improving infrastructure in India. The
However, if the coming generations are Planning Commission has targeted an
not able to attain dramatically Note: Labor productivity measured as GDP at constant prices and PPP per person employed investment of US$20.38 billion in
improved levels of education, health Source: Economist Intelligence Unit infrastructure over the next two years
and productive employment, their ! Competitive pressures from fast-emerging ! Productivity improvements hold the through its Eleventh Plan, covering
contribution to India’s and to the economies around the world threaten to key to continued investment as well as areas such as railroads, electrification,
world’s economic and social welfare erode India’s position in important ensuring higher and more sustainable airports and telecommunications.8
will be severely threatened. Our higher-value sectors such as IT levels of growth and competitiveness With continued policy commitments in
analysis highlights that: the infrastructure space, India can
! The need to attract overseas investment Policymakers play a critical role in establish the foundation required for
! Beyond increasing participation in
into targeted growth industries of the defining success. They can reach out to future investment and growth. Some of
the productive workforce, India’s future is even more urgent as a wide range of stakeholders to ensure the actions that would be welcomed by
output can also be significantly multinationals are presented with that targets and outcomes are aligned businesses in India include:
enhanced through productivity increasing options from a disparate with the country’s aspirations for social
improvements across the existing range of economies eager to attract and economic growth. Identifying
economy capital and skills desired outcomes and setting targets is

20 13
Chapter two:
Combining old and new
The Indian economy has benefited next wave of information technology. Figure 5: Breakup of GDP in India, while cloud computing has become the primarily been witnessed through its design. Indian culture is already widely
immensely in recent years from Huge advances have been made in 2008-09 (% of GDP at constant prices) support structure of choice for the music, technology, film, food and appreciated across Asia, with high demand
developments in a number of higher- these areas, often by MNCs working in online community worldwide, it has television dramas. for films in particular. This appreciation
value-added industry sectors (such as close conjunction with government 17.0% taken some time to be widely used on for Indian culture can be used to
In similar fashion, India has a rich
IT and business process operations) as and local stakeholders, but the the subcontinent. Nevertheless, the strengthen ‘Brand India’, improving the
cultural heritage that can be better
well as specific islands of success (such opportunities have only begun to be increasing digitization of content attractiveness of Indian goods and
leveraged in order to realize higher
as automotive parts). These sectors exploited. (e.g. by libraries and government services overseas (see chapter four).
levels of economic growth. The impact
have driven the spectacular economic departments) also affords a huge
Our research demonstrates that the 64.5% of cultural phenomena such as the In order to realize growth in these new
growth in the decade leading up to the opportunity to position India as the
growth that has been set in motion in Bollywood film industry demonstrates sectors, a number of actions are needed:
current downturn. global center of digital industries.
IT and business process operations can the creativity that exists within Indian ! India is making concerted efforts
While these engines of growth have 18.5% society that, if combined with India’s
be mirrored more widely across the Developing cultural industries and progress in the area of renewable
become established in India, however, economy in three key areas: agriculture, strength in IT and digital media, can
Creative and cultural industries (e.g. energy. In these fields, businesses rely
the broader population has remained manufacturing and sunrise industries. also be harnessed to develop new industry
advertising, digital media and on clear regulatory direction from
dependent on traditional sectors, such Agriculture Industry Services sectors. Indeed, the link between high-
entertainment) have in recent years governments. Clear signals here- coupled
as agriculture. If the Indian economy is tech media and the high arts provide
become increasingly important direct with incentives for investment in low-
to sustain its growth it is vital that opportunities for collaboration and
Source: Annual report, Reserve Bank of India, 2008-09
sources of economic growth among carbon technologies - will ensure
traditional Indian sectors also begin to integration between sectors. So, for
emerging economies, as well as investment from MNCs and domestic
share the success story. There is example, Japan’s Sony has moved away
providing indirect benefits in terms of companies alike
tremendous potential in developing from being an electric goods company
traditional industries such as agriculture enhanced brand awareness. South to being a music production company ! To build on its history of IT excellence,
and manufacturing, particularly if Korea has established itself as a leader too. In India, the advertising industry is developments such as ‘cloud’ technologies
higher value-chain operations can be in South-East Asia in this field. The already becoming increasingly and digitization must be invested in and
established within them. citys of Seoul has made a concerted competitive. Combined with the latest quickly assimilated. The Indian government
effort to attract artists and creative developments in digital media, there is could conduct a feasibility study into
Alongside this investment in talent to locate there and has since the opportunity to create growth in establishing a South Asian cloud in India,
traditional industries, our research been at the epicenter of a cultural new cultural industry sectors. Further, reviewing infrastructure and server
shows that India is uniquely placed to wave that has seen Korean culture one of the best ways to improve the capacity. This would ideally be accompanied
be at the forefront of growth in new become increasingly popular around the margins in core consumer industries— by a review of data protection legislation
industry sectors, particularly in world, especially in Asia. This has including the automotive industry—is to ensure that digitization of records is
renewable energy, healthcare and the
to infuse products with cutting-edge feasible

14 19
across the health spectrum. The Indian Figure 6: Total primary energy production and consumption in India Agriculture: reducing presently growing at 13.5 percent per ! MNCs must continue to work with
domestic pharmaceutical market was (Quadrillion British Thermal Unit) annum against 6.5 percent in 2003–04, local partner organizations and
estimated to be worth US$10.76 dependence, enhancing and is certain to be an important driver governments to raise agricultural skill
18
billion in 2008 and is expected to grow value of the Indian economy.13 Also, the levels and tap into new labor pools
15 agricultural biotechnology sector,
at a rate of 9.9 percent till 2010 and ! Increased investment in higher value
thereafter at 9.5 percent until 2015. To India’s dependence on agriculture has which has been growing at an
12 chain activities (such as food
meet a growing international market in reduced in recent years. Agriculture extraordinary 30 percent for the last
9 accounted for about 23.9 percent of processing and biotechnology) should
the developing world, India’s global five years, is likely to sustain its
India’s GDP in 19989, but reduced over be facilitated to open up new
pharmaceutical sourcing industry is 6 growth.14 A recent report predicts that
the decade to 17 percent in 2008-09 consumer markets and empower rural
destined to become a US$2.5 billion the agricultural biotechnology sector
3
(see Figure 5).10 The share of agriculture development (see box on rural
opportunity by 2012, driven by R&D in India can become a major source of
0 in total employment also decreased development)
costs and a high-end talent pool in transgenic rice and several genetically
India.27 from 65 percent in 1983 to around 52 engineered vegetables by 2010.15 ! The government must maintain
percent by 2004-05, in part as a result support for agricultural interventions
New technologies of increased mechanization and more This revival in agriculture has been (such as irrigation) and work to
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 predictable irrigation.11 One driven in large part by the growth in incentivize investment in growth
Increased globalization and the growing consequence of these technological public sector investment in farming,
Total Production Total Consumption industries such as biotechnology
ubiquity and power of information and interventions is that, in value-added which has increased steadily from 1.8
communications technologies (ICT) are terms, agriculture has grown at 7.9 percent of sectoral GDP in 2000–01 to
Source: US Energy Information Administration
radically reshaping the environment percent in the decade to 2008 and 3.5 percent in 2006–07.16 If growth is
for business. Huge developments are recent value-added growth in to be maintained it is clear that
either already happening or are on the ! Digitization of content: more ! Superfast broadband: the increasing agriculture has been yet more significant public investment must
horizon: information is available online than availability of high-speed internet encouraging at 11 percent.12 continue, supplemented by an
! Cloud computing: the delivery of ever before with many traditional connections is driving increased increased commitment to higher
media (e.g. books, films and music) efficiency for businesses Our analysis suggests that the specific value-chain activities and a greater
technical capabilities—hardware, industry sectors undertaking higher
also making the transition concentration on increasing land yields
software and storage—through the India has the potential to be at the value-added activity that have grown through modern agricultural
Internet, across company firewalls and ! Mobile commerce: mobile devices forefront of many if not all of these significantly in recent years offer great techniques. Further actions to realize
national boundaries will augment and in many cases advances. For example, with its track future potential. For example, the food growth include the following:
supplant personal computers as the record of IT excellence, India can processing sector, which already
! Virtualization: the move away from
new e-business channel for employees position itself as the natural home of contributes 9 percent to India’s GDP, is
the physical provision of IT infrastructure the ‘South-East Asian cloud’. However,
and customers

18 15
the turnover of the auto-component
The role of MNCs in rural Technology Manufacturing: waking the
industry is forecast to reach US$40
Renewable energy and the low-
big sleeper carbon economy
billion—up from US$18 billion in
development Connecting communities, opening 2007-08.21 India currently suffers from a shortage
Manufacturing has long been
consumer markets: considered the ‘big sleeper’ of the of electricity generating capacity. This
As India’s dependence on agriculture At the same time, of course, basic
Indian economy. The share of means that consumption consistently
Nokia have developed local programs manufacturing will remain an
reduces, there is a need to provide manufacturing in India’s GDP has outstrips production of energy (see Figure 6),
important and a significant employer
and solutions tailored to the needs of remained almost static at around 15.5 leading to a high level of oil imports.
alternative means of employment and of lower-skilled workers, particularly
percent for the last decade, though those who have moved out of the However, India has also made significant
economic growth in rural areas. While rural customers in emerging markets. For the share of the manufacturing sector agricultural sector as a result of progress in developing renewable
improving basic manufacturing may example, Nokia Siemens Networks’ in terms of total employment has increased mechanization. MNCs can sources of energy supply. A recent
increased from 11.3 percent18 in 1983 play a significant role both in index of renewable energy technologies
provide many of these opportunities ‘Village Connection’ is an innovative to 12.9 percent in 2004-05, bringing employing these workers and in ranks India in third place behind the
(see next section), there is a key role solution that provides rural people with the number of people working in the equipping them with the skills United States and Germany.22 At a time
industry to nearly 50 million. A few necessary to make the transition (see when renewable energy sources comprise
for MNCs to play in developing rural access to information and segments of the industry represent the next chapter on education). The just 12.9 percent of total energy
communities and helping to promote communications technologies while also bulk of this revenue, in particular food challenge for India as a whole, production globally, in India renewables
products, chemical products, and the therefore, is to pursue a twin-track account for 40 percent of energy
small- to medium-sized enterprises encouraging entrepreneurship. The heavy machinery and equipment sub- approach: to develop basic production.23 The Indian government
(SMEs). Three key areas where MNCs system provides villages with local sector. manufacturing in order to absorb has pledged to invest US$21 billion in
access points, which include all the The most significant of these is the lower-skilled workers, but also to renewable-energy generation over a
are playing a key role in developing latter (which includes automotives), enhance higher-value-added five-year period ending in 2012, by
rural communities are highlighted technology needed to establish a village- that has averaged 13 percent growth manufacturing. Actions to achieve this which time it has also set an ambitious
level communications network. These from 2004 to 2008.19 Despite the include the following: target of adding 14.5 gigawatts of
below: changing economic climate, it is ! MNCs should continue to work in renewable power generation capacity.24
local networks are run by entrepreneurs forecast that the automotive sector partnership with local businesses both There are considerable opportunities
Micro-finance as franchises, reducing costs for network will grow by 10.9 percent year-on-year to drive efficiencies in manufacturing, for MNCs to drive growth and pioneer
in 2009-10, even as overall and to broaden the domestic sourcing
operators. manufacturing grows only by 4.5
sustainable energy sources. India’s
Creating local entrepreneurs: of vehicles and products climate, scale and geography provide
percent.20 MNCs have been—and will the natural resources of the future.
Hindustan Unilever Limited’s (HUL) Innovation continue to be—at the heart of this
! MNCs should play a significant role
Already MNC contributions in this
growth. For example, when the in both shaping and delivering the
Project Shakti covers 50,000 villages training needed by basic manufacturing sector have been significant. For
Moving agriculture up the value chain: Japanese carmaker Suzuki partnered example, BP has been an investor in
(each populated by fewer than 2,000 with India’s Maruti to become the first workers (see next chapter on education),
India’s alternative energy market for
local partnerships between local entities foreign entrant in India’s personal providing knowledge of leading
individuals) and creates profitable practices, as well as driving advanced over 15 years. The Tata BP Solar joint
and foreign MNCs have ensured the automobile market, it rapidly gained a venture is a leader in the Indian solar
micro-enterprise opportunities for rural 70 percent share of the total market. engineering skills
energy market and exports around 60
women. Armed with micro-credit, rural transfer of knowledge and expertise that One of the results of MNC success in ! The government should help target percent of its products to Europe and
is helping move agriculture into higher- automotive manufacturing has been a investment in local, job-specific the United States. It has also benefited
women become Shakti entrepreneurs: massive expansion in jobs, skills, training, which will reduce dependence several million people in rural parts of
direct-to-home distributors in rural value-added activity. For example, in the knowledge and a swathe of ancillary on agriculture and ensure a gradual India with increased access to low-
area of food processing, Pepsi Foods Ltd., industries, most notably the birth of transition into higher-value-added cost, sustainable energy.
markets. The products distributed are India’s globally competitive and activity
some of the country’s most trusted Nestle India Ltd., and Cadbury India Ltd., successful automotive-parts sector. Healthcare and
are engaged in product development Indeed, going forward the most New growth engines: pharmaceuticals
brands of consumer goods and include a investing in sunrise sector
with local research institutes to develop significant opportunities exist in high- Healthcare was a US$35 billion
range of mass-market products especially value-added activities in the industry in India in 2008 and is
hybrid crops and vegetables as well as automotive sector such as component Beyond the traditional sectors of
relevant to rural consumers. HUL trains agriculture and manufacturing, India is expected to reach over US$70 billion
new implements that will help improve parts. Manufacturers of luxury cars are by 2013 and US$285 billion by 2023.25
women entrepreneurs on how to run increasingly looking at making India a extremely well placed to play a crucial
The sector offers immense potential to
cropping patterns and raise productivity. sourcing hub for components, as well role in the ‘sunrise’ technologies of the
businesses. While the Shakti entrepreneur future. Already considerable MNCs and to national stakeholders as
Similarly, in biotechnology, MNCs have as building more components for India’s the country attempts to combat a
program is creating livelihoods among market. Seeing India’s success in this investment has gone into identifying
dramatic rise in the incidence of
established joint ventures with Indian sector, the Investment Commission has and pursuing these markets, with
under-privileged people across several MNCs working in partnership with lifestyle-related and other diseases.
companies, providing access to their set a target of attracting foreign
states in India, the related Shakti Vani investment worth US$5 billion for the government and local companies. To meet this growing demand, the
proprietary tools and technologies.17
next seven years to increase India's Some of the most obvious success country is estimated to need US$50
program focuses on improving the stories are to be found in the billion of investment annually for the
share in the global automotive-
quality of life through health and hygiene components market from the existing renewable energy industry, but great next 20 years.26 To take just one
0.9 percent to 2.5 percent by 2015. advances have also been made in the example, India needs to add 3.1 million
awareness initiatives in rural areas. health-related industries and in hospital beds by 2018 to the existing
MNCs are likely to be at the heart of
this increased investment. By 2015-16, advanced digital technologies. 1.1 million. These trends are reflected

16 17
the turnover of the auto-component
The role of MNCs in rural Technology Manufacturing: waking the
industry is forecast to reach US$40
Renewable energy and the low-
big sleeper carbon economy
billion—up from US$18 billion in
development Connecting communities, opening 2007-08.21 India currently suffers from a shortage
Manufacturing has long been
consumer markets: considered the ‘big sleeper’ of the of electricity generating capacity. This
As India’s dependence on agriculture At the same time, of course, basic
Indian economy. The share of means that consumption consistently
Nokia have developed local programs manufacturing will remain an
reduces, there is a need to provide manufacturing in India’s GDP has outstrips production of energy (see Figure 6),
important and a significant employer
and solutions tailored to the needs of remained almost static at around 15.5 leading to a high level of oil imports.
alternative means of employment and of lower-skilled workers, particularly
percent for the last decade, though those who have moved out of the However, India has also made significant
economic growth in rural areas. While rural customers in emerging markets. For the share of the manufacturing sector agricultural sector as a result of progress in developing renewable
improving basic manufacturing may example, Nokia Siemens Networks’ in terms of total employment has increased mechanization. MNCs can sources of energy supply. A recent
increased from 11.3 percent18 in 1983 play a significant role both in index of renewable energy technologies
provide many of these opportunities ‘Village Connection’ is an innovative to 12.9 percent in 2004-05, bringing employing these workers and in ranks India in third place behind the
(see next section), there is a key role solution that provides rural people with the number of people working in the equipping them with the skills United States and Germany.22 At a time
industry to nearly 50 million. A few necessary to make the transition (see when renewable energy sources comprise
for MNCs to play in developing rural access to information and segments of the industry represent the next chapter on education). The just 12.9 percent of total energy
communities and helping to promote communications technologies while also bulk of this revenue, in particular food challenge for India as a whole, production globally, in India renewables
products, chemical products, and the therefore, is to pursue a twin-track account for 40 percent of energy
small- to medium-sized enterprises encouraging entrepreneurship. The heavy machinery and equipment sub- approach: to develop basic production.23 The Indian government
(SMEs). Three key areas where MNCs system provides villages with local sector. manufacturing in order to absorb has pledged to invest US$21 billion in
access points, which include all the The most significant of these is the lower-skilled workers, but also to renewable-energy generation over a
are playing a key role in developing latter (which includes automotives), enhance higher-value-added five-year period ending in 2012, by
rural communities are highlighted technology needed to establish a village- that has averaged 13 percent growth manufacturing. Actions to achieve this which time it has also set an ambitious
level communications network. These from 2004 to 2008.19 Despite the include the following: target of adding 14.5 gigawatts of
below: changing economic climate, it is ! MNCs should continue to work in renewable power generation capacity.24
local networks are run by entrepreneurs forecast that the automotive sector partnership with local businesses both There are considerable opportunities
Micro-finance as franchises, reducing costs for network will grow by 10.9 percent year-on-year to drive efficiencies in manufacturing, for MNCs to drive growth and pioneer
in 2009-10, even as overall and to broaden the domestic sourcing
operators. manufacturing grows only by 4.5
sustainable energy sources. India’s
Creating local entrepreneurs: of vehicles and products climate, scale and geography provide
percent.20 MNCs have been—and will the natural resources of the future.
Hindustan Unilever Limited’s (HUL) Innovation continue to be—at the heart of this
! MNCs should play a significant role
Already MNC contributions in this
growth. For example, when the in both shaping and delivering the
Project Shakti covers 50,000 villages training needed by basic manufacturing sector have been significant. For
Moving agriculture up the value chain: Japanese carmaker Suzuki partnered example, BP has been an investor in
(each populated by fewer than 2,000 with India’s Maruti to become the first workers (see next chapter on education),
India’s alternative energy market for
local partnerships between local entities foreign entrant in India’s personal providing knowledge of leading
individuals) and creates profitable practices, as well as driving advanced over 15 years. The Tata BP Solar joint
and foreign MNCs have ensured the automobile market, it rapidly gained a venture is a leader in the Indian solar
micro-enterprise opportunities for rural 70 percent share of the total market. engineering skills
energy market and exports around 60
women. Armed with micro-credit, rural transfer of knowledge and expertise that One of the results of MNC success in ! The government should help target percent of its products to Europe and
is helping move agriculture into higher- automotive manufacturing has been a investment in local, job-specific the United States. It has also benefited
women become Shakti entrepreneurs: massive expansion in jobs, skills, training, which will reduce dependence several million people in rural parts of
direct-to-home distributors in rural value-added activity. For example, in the knowledge and a swathe of ancillary on agriculture and ensure a gradual India with increased access to low-
area of food processing, Pepsi Foods Ltd., industries, most notably the birth of transition into higher-value-added cost, sustainable energy.
markets. The products distributed are India’s globally competitive and activity
some of the country’s most trusted Nestle India Ltd., and Cadbury India Ltd., successful automotive-parts sector. Healthcare and
are engaged in product development Indeed, going forward the most New growth engines: pharmaceuticals
brands of consumer goods and include a investing in sunrise sector
with local research institutes to develop significant opportunities exist in high- Healthcare was a US$35 billion
range of mass-market products especially value-added activities in the industry in India in 2008 and is
hybrid crops and vegetables as well as automotive sector such as component Beyond the traditional sectors of
relevant to rural consumers. HUL trains agriculture and manufacturing, India is expected to reach over US$70 billion
new implements that will help improve parts. Manufacturers of luxury cars are by 2013 and US$285 billion by 2023.25
women entrepreneurs on how to run increasingly looking at making India a extremely well placed to play a crucial
The sector offers immense potential to
cropping patterns and raise productivity. sourcing hub for components, as well role in the ‘sunrise’ technologies of the
businesses. While the Shakti entrepreneur future. Already considerable MNCs and to national stakeholders as
Similarly, in biotechnology, MNCs have as building more components for India’s the country attempts to combat a
program is creating livelihoods among market. Seeing India’s success in this investment has gone into identifying
dramatic rise in the incidence of
established joint ventures with Indian sector, the Investment Commission has and pursuing these markets, with
under-privileged people across several MNCs working in partnership with lifestyle-related and other diseases.
companies, providing access to their set a target of attracting foreign
states in India, the related Shakti Vani investment worth US$5 billion for the government and local companies. To meet this growing demand, the
proprietary tools and technologies.17
next seven years to increase India's Some of the most obvious success country is estimated to need US$50
program focuses on improving the stories are to be found in the billion of investment annually for the
share in the global automotive-
quality of life through health and hygiene components market from the existing renewable energy industry, but great next 20 years.26 To take just one
0.9 percent to 2.5 percent by 2015. advances have also been made in the example, India needs to add 3.1 million
awareness initiatives in rural areas. health-related industries and in hospital beds by 2018 to the existing
MNCs are likely to be at the heart of
this increased investment. By 2015-16, advanced digital technologies. 1.1 million. These trends are reflected

16 17
across the health spectrum. The Indian Figure 6: Total primary energy production and consumption in India Agriculture: reducing presently growing at 13.5 percent per ! MNCs must continue to work with
domestic pharmaceutical market was (Quadrillion British Thermal Unit) annum against 6.5 percent in 2003–04, local partner organizations and
estimated to be worth US$10.76 dependence, enhancing and is certain to be an important driver governments to raise agricultural skill
18
billion in 2008 and is expected to grow value of the Indian economy.13 Also, the levels and tap into new labor pools
15 agricultural biotechnology sector,
at a rate of 9.9 percent till 2010 and ! Increased investment in higher value
thereafter at 9.5 percent until 2015. To India’s dependence on agriculture has which has been growing at an
12 chain activities (such as food
meet a growing international market in reduced in recent years. Agriculture extraordinary 30 percent for the last
9 accounted for about 23.9 percent of processing and biotechnology) should
the developing world, India’s global five years, is likely to sustain its
India’s GDP in 19989, but reduced over be facilitated to open up new
pharmaceutical sourcing industry is 6 growth.14 A recent report predicts that
the decade to 17 percent in 2008-09 consumer markets and empower rural
destined to become a US$2.5 billion the agricultural biotechnology sector
3
(see Figure 5).10 The share of agriculture development (see box on rural
opportunity by 2012, driven by R&D in India can become a major source of
0 in total employment also decreased development)
costs and a high-end talent pool in transgenic rice and several genetically
India.27 from 65 percent in 1983 to around 52 engineered vegetables by 2010.15 ! The government must maintain
percent by 2004-05, in part as a result support for agricultural interventions
New technologies of increased mechanization and more This revival in agriculture has been (such as irrigation) and work to
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 predictable irrigation.11 One driven in large part by the growth in incentivize investment in growth
Increased globalization and the growing consequence of these technological public sector investment in farming,
Total Production Total Consumption industries such as biotechnology
ubiquity and power of information and interventions is that, in value-added which has increased steadily from 1.8
communications technologies (ICT) are terms, agriculture has grown at 7.9 percent of sectoral GDP in 2000–01 to
Source: US Energy Information Administration
radically reshaping the environment percent in the decade to 2008 and 3.5 percent in 2006–07.16 If growth is
for business. Huge developments are recent value-added growth in to be maintained it is clear that
either already happening or are on the ! Digitization of content: more ! Superfast broadband: the increasing agriculture has been yet more significant public investment must
horizon: information is available online than availability of high-speed internet encouraging at 11 percent.12 continue, supplemented by an
! Cloud computing: the delivery of ever before with many traditional connections is driving increased increased commitment to higher
media (e.g. books, films and music) efficiency for businesses Our analysis suggests that the specific value-chain activities and a greater
technical capabilities—hardware, industry sectors undertaking higher
also making the transition concentration on increasing land yields
software and storage—through the India has the potential to be at the value-added activity that have grown through modern agricultural
Internet, across company firewalls and ! Mobile commerce: mobile devices forefront of many if not all of these significantly in recent years offer great techniques. Further actions to realize
national boundaries will augment and in many cases advances. For example, with its track future potential. For example, the food growth include the following:
supplant personal computers as the record of IT excellence, India can processing sector, which already
! Virtualization: the move away from
new e-business channel for employees position itself as the natural home of contributes 9 percent to India’s GDP, is
the physical provision of IT infrastructure the ‘South-East Asian cloud’. However,
and customers

18 15
Chapter two:
Combining old and new
The Indian economy has benefited next wave of information technology. Figure 5: Breakup of GDP in India, while cloud computing has become the primarily been witnessed through its design. Indian culture is already widely
immensely in recent years from Huge advances have been made in 2008-09 (% of GDP at constant prices) support structure of choice for the music, technology, film, food and appreciated across Asia, with high demand
developments in a number of higher- these areas, often by MNCs working in online community worldwide, it has television dramas. for films in particular. This appreciation
value-added industry sectors (such as close conjunction with government 17.0% taken some time to be widely used on for Indian culture can be used to
In similar fashion, India has a rich
IT and business process operations) as and local stakeholders, but the the subcontinent. Nevertheless, the strengthen ‘Brand India’, improving the
cultural heritage that can be better
well as specific islands of success (such opportunities have only begun to be increasing digitization of content attractiveness of Indian goods and
leveraged in order to realize higher
as automotive parts). These sectors exploited. (e.g. by libraries and government services overseas (see chapter four).
levels of economic growth. The impact
have driven the spectacular economic departments) also affords a huge
Our research demonstrates that the 64.5% of cultural phenomena such as the In order to realize growth in these new
growth in the decade leading up to the opportunity to position India as the
growth that has been set in motion in Bollywood film industry demonstrates sectors, a number of actions are needed:
current downturn. global center of digital industries.
IT and business process operations can the creativity that exists within Indian ! India is making concerted efforts
While these engines of growth have 18.5% society that, if combined with India’s
be mirrored more widely across the Developing cultural industries and progress in the area of renewable
become established in India, however, economy in three key areas: agriculture, strength in IT and digital media, can
Creative and cultural industries (e.g. energy. In these fields, businesses rely
the broader population has remained manufacturing and sunrise industries. also be harnessed to develop new industry
advertising, digital media and on clear regulatory direction from
dependent on traditional sectors, such Agriculture Industry Services sectors. Indeed, the link between high-
entertainment) have in recent years governments. Clear signals here- coupled
as agriculture. If the Indian economy is tech media and the high arts provide
become increasingly important direct with incentives for investment in low-
to sustain its growth it is vital that opportunities for collaboration and
Source: Annual report, Reserve Bank of India, 2008-09
sources of economic growth among carbon technologies - will ensure
traditional Indian sectors also begin to integration between sectors. So, for
emerging economies, as well as investment from MNCs and domestic
share the success story. There is example, Japan’s Sony has moved away
providing indirect benefits in terms of companies alike
tremendous potential in developing from being an electric goods company
traditional industries such as agriculture enhanced brand awareness. South to being a music production company ! To build on its history of IT excellence,
and manufacturing, particularly if Korea has established itself as a leader too. In India, the advertising industry is developments such as ‘cloud’ technologies
higher value-chain operations can be in South-East Asia in this field. The already becoming increasingly and digitization must be invested in and
established within them. citys of Seoul has made a concerted competitive. Combined with the latest quickly assimilated. The Indian government
effort to attract artists and creative developments in digital media, there is could conduct a feasibility study into
Alongside this investment in talent to locate there and has since the opportunity to create growth in establishing a South Asian cloud in India,
traditional industries, our research been at the epicenter of a cultural new cultural industry sectors. Further, reviewing infrastructure and server
shows that India is uniquely placed to wave that has seen Korean culture one of the best ways to improve the capacity. This would ideally be accompanied
be at the forefront of growth in new become increasingly popular around the margins in core consumer industries— by a review of data protection legislation
industry sectors, particularly in world, especially in Asia. This has including the automotive industry—is to ensure that digitization of records is
renewable energy, healthcare and the
to infuse products with cutting-edge feasible

14 19
! Better enabling the virtual flow of ! Fulfilling the government’s
talent and ideas through upgrades to commitment to add power-generation
information technology and power capacity and expand electricity access
infrastructure in cities as well as rural in rural areas
areas ! Implementing upgrades to railway
stations and existing technologies,
Improving infrastructure including creating India’s first high-
The development of physical speed rail network between major
infrastructure has long been recognized metropolitan cities
as one of the most important factors ! Developing and implementing a
for attracting foreign investment, national IT infrastructure strategy,
increasing competitiveness and driving encompassing the expansion of
economic growth. Transportation, broadband access beyond the initial
energy and Information Technology targets set out in the Eleventh Plan
networks are all prime enablers of
productivity and improved economic
efficiency.
Our research confirms that MNC
growth has been held back in India for
want of a solid network of roads,
efficient railways and a uniform power
supply. The country is predicted to lose
close to US$200 billion of GDP by
2017 due to delays in infrastructure

Chapter three: Building development.7 As a result, businesses


still face a number of challenges in
conducting everyday activities in India.
Some of these challenges include the
capabilities for the future following:
! Electricity flows run short due to
capacity shortages, despite the fact
India has an abundance of talent and Figure 7: Labor Productivity, 2008 (as a percentage of US levels) that access to electricity is increasing
capital; the country’s potential is high, 100% ! Indian Railways face a range of
yet productivity levels are notoriously
problems, including outdated
low (see Figure 7). Large sections of
technologies, under-maintained
society are excluded from the productive
68% railway stations and gaps in
workforce, including much of the rural
connectivity to remote areas
population, the majority of whom are 57%
subsistence farmers, and there is a low ! India’s IT infrastructure remains
rate of female workforce participation. 36% comparatively underdeveloped,
32% particularly in the areas of broadband
India is home to 20 percent of the 23% and mobile phone connectivity
world’s people, a third of whom are
below the age of 15. This youthful 11% 8% MNCs and domestic companies
demographic will add about 250 universally welcome the Indian
million additional workers to the labor government’s current commitment to
US Singapore South South Russia Brazil China India
pool in the twenty years to 2025.28 Korea Africa
improving infrastructure in India. The
However, if the coming generations are Planning Commission has targeted an
not able to attain dramatically Note: Labor productivity measured as GDP at constant prices and PPP per person employed investment of US$20.38 billion in
improved levels of education, health Source: Economist Intelligence Unit infrastructure over the next two years
and productive employment, their ! Competitive pressures from fast-emerging ! Productivity improvements hold the through its Eleventh Plan, covering
contribution to India’s and to the economies around the world threaten to key to continued investment as well as areas such as railroads, electrification,
world’s economic and social welfare erode India’s position in important ensuring higher and more sustainable airports and telecommunications.8
will be severely threatened. Our higher-value sectors such as IT levels of growth and competitiveness With continued policy commitments in
analysis highlights that: the infrastructure space, India can
! The need to attract overseas investment Policymakers play a critical role in establish the foundation required for
! Beyond increasing participation in
into targeted growth industries of the defining success. They can reach out to future investment and growth. Some of
the productive workforce, India’s future is even more urgent as a wide range of stakeholders to ensure the actions that would be welcomed by
output can also be significantly multinationals are presented with that targets and outcomes are aligned businesses in India include:
enhanced through productivity increasing options from a disparate with the country’s aspirations for social
improvements across the existing range of economies eager to attract and economic growth. Identifying
economy capital and skills desired outcomes and setting targets is

20 13
phase of growth. Our analysis suggests ! Local enforcement authorities often economies, and has become a home to
that government could help achieve have limited understanding of IPRs, a large and growing pool of engineers,
this by: and central and state governments’ scientists and other professionals.
! Implementing a ‘grandfathering’ allocations of resources towards
Reducing barriers to the free flow of
building IPR-related capabilities and
period where amendments to the tax people is fundamental to maintaining
infrastructure are inadequate
code are made—i.e. a time allocated to a hub of talent excellence in India,
enable businesses to restructure their Poor enforcement of IPRs creates since it enables talent to come in from
transactions in line with new tax losses for both businesses and tax abroad and move about the country
requirements authorities. Intellectual property with relative ease. However, our
! Improving awareness and piracy has been rising in India, and is research uncovers a number of barriers
estimated to be worth several billion that continue to block the flow of
communication with businesses about
dollars annually. Some of the sectors talent both to and within India. Some
the mechanisms that exist to reduce
that traditionally suffer include of the challenges to the free flow of
transaction costs in taxation, as well as
business software, pharmaceuticals, talent in India include:
bringing in more predictability to the
and the movie and music industries. ! People moving to India from abroad
tax system (such as the Large Tax
But as technology, knowledge, and
Payers Unit and Advance Ruling) have difficulty acquiring and renewing
ideas become increasingly important
! Clarifying and improving transfer work and residence permits, a process
drivers of economic growth in India, so
riddled with delays
pricing legislation, specifically with too will IPR protection grow to become
regards to provisions for advance a pressing issue for businesses in many ! A relatively lower quality of social
pricing agreements other industries. amenities and infrastructure (e.g.
education, healthcare, living
India has already taken a number of
Safeguarding intellectual significant steps in building its IPR
conditions) discourages Indian diaspora
property talent as well as MNC employees from
protection capacity through WTO-
working in India or outside the key
compliant legal statutes. Additional
Ideas and knowledge are an metropolitan cities
policy initiatives, developed in
increasingly important part of business ! The quality and extent of
consultation with MNCs, would help
and international trade. Much of the
build a more stable and secure communication and power
value of medicines, software and new
operating environment. Some of the infrastructure is often not up to the
technologies lies in the invention,
actions the international business standard required to support virtual
research and innovation involved in
community would welcome include: and real-world flows of talent at an
their production. The protection of
! The establishment of a common affordable cost
intellectual property rights (IPR) is fundamental to managing change. Improving skills in Russia and 82 percent in the United
therefore a key factor for ensuring that body or taskforce to centralize control The financial crisis and recession Multinationals also play a critical role States.29 Moreover, Accenture analysis
any economy attracts investment from over the enforcement of IPR laws, as represent an opportunity to redefine in India both as drivers of productivity Driving improvements in basic shows that despite spending more on
MNCs specializing in high-tech, well as improving the efficiency of the India as a destination for talent from improvements and as channels for education, including literacy and each student in its higher education
knowledge-intensive products and IPR administration around the world. With rising investments and new assets that numeracy, is vital to ensure that the system than Brazil, China, Russia,
services. unemployment in many Western improved productivity will attract into groups currently excluded from the South Korea and Singapore, India
! The allocation of additional workforce are able to become productive.
economies, competition for the world’s the country. This chapter analyses the performs worse than these countries
There are currently a number of resources towards building IPR-related This is particularly urgent in rural areas.
best and brightest minds is increasing. challenges and opportunities that can when compared to specific measures
challenges relating to IPR protection capabilities and infrastructure Similarly, improvements in vocational
Returning professionals are a engender those advances, focusing on of delivery and innovation, access and
that businesses face in India, which ! Improved capabilities for judicial training are essential if India’s
particularly valuable asset to MNCs the two crucial areas in which step- inclusiveness and internationalization
combine to stifle investment and infrastructure constraints across the
authorities in the area of IPR protection, operating in India, as they bring global changes in productivity can be realized: of their higher education systems.
discourage business expansion. The country are to be addressed. Such projects
such as fast-track legal processes for experience and act as conduits for the human capital and innovation.
weak enforcement of IPRs has been the require commitment and engagement MNCs continue to play a critical role in
IPR infringement, and the adoption of exchange of new ideas. It is therefore
bane of businesses operating in many from a variety of stakeholders at both bringing new ideas and investments
emerging market economies, but this is
deterrent-level sentences of increased significance today that The wisest investment: into India’s education system. There is
policymakers and business leaders act national and state levels. A good
particularly so in the case of India. Our
Reducing barriers to the to address these barriers to talent
human capital example is the Prime Minister's an inherent self interest for MNCs to
research has revealed that some of the National Council on Skill Development, support and build the skills of their
free flow of people flows in India. Such actions might India has three distinct advantages in
ongoing challenges in the area of IPR which will launch a public-private future employees, suppliers, customers
include: its human capital: a young
protection include the following: initiative to train 150 million people and partners. By investing in the
With knowledge becoming an engine ! A simplification of immigration and demographic, English language skills
! Little focus on the enforcement of of growth across sectors, talent has across the country with the skills needed nation’s education levels, MNCs are
processes for obtaining work visas for and a culture that values learning and
IPR laws. As a result, penal provisions become a strategic developmental to work in manufacturing. improving the productivity and growth
new entrants to India is open to external influences. At the
fail to act as a deterrent to asset. India is becoming an potential of their business as well as
same time, it is clear that productivity India’s legacy of strong higher-
infringements increasingly knowledge-intensive ! Supporting foreign talent acquisition improving the expected returns on
and competitiveness are hampered by education institutions has served the
economy, producing millions of highly- by offering quality-of-life incentives their investments in India. MNCs in the
! The system of IPR enforcement and education and training infrastructures nation well in building the economic
educated graduates every year. The (e.g. healthcare benefits, pensions) to IT industry have been particularly active
regulation is highly fragmented, that are inadequate for the size of the progress of the last decade. But there
Indian diaspora is also beginning to foreigners and Indians living abroad, as in encouraging and investing in solutions
comprising several government population and the speed of is no room for complacency,
return to India in increasing numbers. the Chinese government is doing to address India’s education deficit,
departments and agencies in disparate improvement required for sustainable particularly as only 12 percent of the
India is thus well-positioned in terms often partnering with government
regions of the country growth. The deficits can be found at all country’s population enrolls in higher
of its talent base when compared to bodies or non-governmental
levels, including basic education, education, compared to 30 percent in
many other emerging market organizations and frequently utilizing
vocational training and higher education. Brazil, 23 percent in China, 75 percent technology-based solutions in order to

12 21
maximize the reach and impact of Figure 8: Economically active women in India as a proportion of total Simplifying the Figure 4: Problems with India’s business environment identified by
their efforts. For example, Microsoft’s female population, 2007 (percent) MNCs and industry bodies
bureaucratic ‘experience’
‘Shiksha’ project provides IT education
to school teachers, having already 80 Our interview-based research suggests Multiple interpretations of 72%
made 350,000 teachers technology- that, while MNCs are experiencing an tax regulations
70 68%
literate, able to utilize these skills in increasing ease in doing business in
their profession and capable of passing 60 57% 55% India, more needs to be achieved in Unfavorable policies and regulations
50% 59%
them on to their students. 50 order to enhance the value of their net
contribution. In order to attract FDI,
Growing the workforce 40 34% Procedural delays 46%
central and state governments have
India’s productivity is further 30 been implementing a number of laws
hampered by the relatively small 20 and measures to remove regulatory Corruption
and procedural barriers to the 36%
proportion of the population that 10
graduates from the education system establishment of foreign enterprises.
0 According to the respondents to our IPR enforcement 28%
into the skilled workforce. The IT
industry, which represents as much as survey, while this has made entry by
China Brazil Russia South Korea India
5.9 percent of the country’s GDP, still MNCs into India easier, establishing
Other issues 28%
employs only 2.23 million of India’s Source: International Labor Organization and expanding within India is still a
750 million-strong working-age ‘challenging experience’ (see Figure 4).
population.30 Further, less than half of any time. However, according to the R&D centers account for over 60 A significant number of respondents Source: Accenture/Confederation of Indian Industry Survey
female higher-education graduates World Bank31, only 16 percent of Indian percent of the US$9.35 billion R&D said that the Department for Industrial
join the economically active population manufacturing firms provided in- off-shoring industry. This is projected the next phase of growth, and position However, many MNCs operating in
Policy and Promotion (DIPP) and the
(see Figure 8), and many of the highest service training to their employees, to grow to be a US$21.4 billion it ahead of the other BRIC economies, India still face a complex network of
State Single Window cells provide
achievers in India’s schools continue to compared to 92 percent in China. This industry by 2012.32 initial support for new entrants “but
further action is needed to enhance tax structures and mechanisms—an
seek work abroad, even if this trend shortfall, if not addressed, will inevitably the overall bureaucratic experience. area where India lags behind Brazil,
These centers of innovation have there is little support thereafter”. Our
has recently slowed. see India losing out in FDI and global Key actions would include: China and Russia. Business executives
generated the sharing and research also emphasized that time-
competitiveness in the longer term. operating in India told us that
multiplication of knowledge and skills sensitive government bureaucracy is a ! Enhancing coordination between the
Action needs to be taken on several navigating the Indian tax system
across India’s workforce through top factor in determining whether central, state and local governments
fronts. For example, policymakers and Innovation: technology transfer and through MNCs choose to invest and expand in about approval processes for foreign
remains a significant challenge.
employers can bring more women into Around 70 percent of MNCs surveyed
the workforce by embracing flexible the virtuous circle unplanned technology spillovers. For India. businesses
and interviewed are of the opinion that
working options and proper maternity example, Texas Instruments’ advanced Other key bureaucratic challenges in ! Improving lines of communication the reforms in the tax administration
Alongside the capacity to maximize
provisions. Training and education communication systems helped Indian India include the following: between governments and newcomer that have occurred to date, especially
human capital, innovation is a critical
must move beyond traditional systems companies emulate leading practices businesses regarding the overall with regards to implementation and
factor in sustaining productivity ! There are often approval hurdles
characterized by hierarchy to and move towards the development of approval processes, including interpretation of tax statutes at the
improvements. Typically, successful that emerge at state and local
emphasize critical thinking, personal offshore capabilities. Indian suppliers requirements at the central, state ground level, have been inadequate.
players in the Indian market use a government level
resourcefulness and teamwork. and partners of multinationals can and local levels Some of the key challenges in the area
high-volume, low-margin business
Training and education courses should learn from MNC best practice, ! MNC executives are often surprised of taxation include:
model, finding fresh and inexpensive ! Facilitating support from government
allow participants to test their own generating a virtuous circle of by a range of new approval requirements
ways to deliver existing technologies departments and agencies beyond the ! Laws are often interpreted in
ideas and define their own problems to innovation and wealth creation. that they did not know existed prior to
to more people and places: what some initial stage of setting up operations different ways by different tax
solve. MNCs can play an important role call low-cost innovation. An example Innovation is not restricted to products establishing operations. Moreover,
in bringing innovative learning authorities, as well as by different
would be Mango Technologies and marketing, however. In the same there is little support from government
techniques and policy in navigating these additional hurdles
Rationalizing taxation officials within the same tax authority
launching an Internet-enabled phone way that India has been able to attract
recommendations from their disparate designed to achieve maximum investment from around the world to A predictable business environment ! Tax authorities aggressively use their
! There are a number of government
experiences around the world. functionality out of a modest handset set up R&D centers, there is an includes a stable and easily powers to conduct investigative
departments and agencies that exist to
It is in the interests of companies with limited memory, lower processing opportunity to position the country as understandable tax system. Along with processes at early stages, and to
aid the overall approval process.
across industries continuously to capability, slower data download and an ideal test bed for a variety of the process of economic liberalization, pressure companies into paying taxes
However, little is known by business
improve the training of their workers, smaller screens. Multinationals in India innovative business models. India’s India’s complex tax system has been before a full audit is in place
leaders about these support systems
and to invest in the development of have been keen to leverage these kinds large and diverse populations, its undergoing significant change, bringing ! There are significant costs and
of innovations to bring them closer to proficiency in English and variations in Many of these challenges result in both a rationalization and reduction in
employees and service providers at business disruptions resulting from the
the country’s massive and growing infrastructure and distribution unexpected delays and higher costs for corporate tax rates. The Government of
every skill level. The case studies in this implementation of amendments to tax
consumer markets. channels allow a variety of business businesses—discouraging MNCs from India is now undertaking an effort at
report highlight some of the initiatives statutes with retrospective effect
models to be tested in the same setting up and expanding in India. significant tax reform through the
being carried out by multinationals in The evidence that India possesses the
location; covering mass low-income Addressing these inhibitors now could Draft Direct Taxes Code 2009. The ! Significant delays are often created
India. In more enlightened companies, raw materials for innovation can be
targets, high-end luxury consumers, not only spur investments, but also Code is ambitious and represents a by transfer pricing issues
innovative models are being utilized to seen in the number of multinational
and a variety of tastes, cultures and help differentiate India from its rival watershed in Indian tax policy, seeking
keep skills continually updated, such as companies that have been attracted to These challenges combine to create a
religions. economies. The central and state to promote tax compliance, introduce
24-hour online training courses and set up research and development ‘high-stress-low-trust’ tax
governments have already been a single Goods and Services Tax,
tie-ups with academic institutions. For (R&D) centers in the country. A 2007 environment. India must address these
implementing a range of laws and simplify tax language, and reduce the
example, in 2007, Unilever introduced survey by the World Bank found that challenges in order to attract the
measures to remove regulatory and scope for tax disputes.
an e-learning platform offering a range more than 300 multinationals had set capital and skills needed for the next
procedural barriers associated with the
of 3,000 courses accessible by up R&D and technology centers in establishment of MNCs in India.
employees anywhere in the world, at India in recent years. In fact, these However, in order to launch India into

22 11
The role of MNCs in education Addressing India’s human capital challenges
and maximizing the opportunities is both
Multinationals are undertaking initiatives complex and urgent. It requires leadership
in a variety of areas to help drive and commitment from government (at
increased productivity through education, national, state and local levels), business and
training and innovation promotion. Some civil society. It also requires innovative
of these are as follows: thinking to achieve results at speed and
scale. Beyond the mobilization of resources
Supporting basic, and high-value skill
and structuring of initiatives, it requires a
levels around the country: recognizing
cultural shift in India’s attitudes and
the need to improve basic IT skills across
approaches to learning, as well as its
the country, Microsoft set up Project
expectations from the workforce. Important
Shiksha (see previous section), which has
levers for change include the following:
given IT training to over 350,000 school
teachers. Intel has instituted programs to ! Identifying and measuring outcomes:
train India’s future software developers. improving productivity requires rigorous
The Intel Academic Community, which targets to be set at all levels of the education
works with universities in 72 countries, system, accompanied by transparent and
launched a Center of Excellence at the consistent performance measurement
Chapter one: MSRIT campus in Bangalore with the aim
of training 300 faculties from 155
! Aligning learning objectives: business
leaders, including from MNCs, must work
Laying the foundations institutes of the Visvesvaraya
Technological University (VTU) as well as with policymakers in shaping the nation’s
human capital strategy, to ensure an
influencing the undergraduate curriculum.
Just as MNCs have been at the heart of challenges may explain India’s together to address these key
alignment of needs and objectives
India’s growth story to date, so too comparative lagging behind the other challenges. The global economy is now Using technology to up-skill the
they will play an integral role in ! Promoting inclusiveness: the urgency for
BRIC (Brazil, Russia, India and China) inching towards recovery, and financial workforce: Hindustan Unilever is
creating the next chapter of economic economies when measuring the markets are beginning to stabilize.
constantly working to keep its workforce progress in education and skill levels must
growth. MNCs can be key facilitators volume of FDI inflows. In 2008, India Many MNC executives will now begin
of global economic integration and can attracted US$42 billion in FDI, to scan the horizon for the most equipped with the latest skills. In 2007, cut across geographies, social groups and
help link local and global supply compared to US$108 billion in China, attractive destinations for investment. Unilever introduced an ‘e-learning gender
chains. However, policies must be US$70 billion in Russia and US$45 India has the opportunity to be a part
aligned to allow MNCs to function billion in Brazil (see Figure 3).6 of this next chapter of global platform, which offers 3,000 self-learning ! Creating the innovation mindset: India
effectively. investment and growth but only by courses over the internet, allowing them
To propel the Indian economy towards
addressing the outstanding obstacles
needs an education system that requires
Over the past decade, India has a new phase of growth, policymakers
to business confidence. to be accessed by any Unilever employee, students to be critical in their thinking and
benefited from significant inflows of and business leaders will have to work
Foreign Direct Investment (FDI). MNCs anywhere, at any time. resourceful in driving their own learning
have invested over US$100 billion in Figure 3: FDI inflows into BRIC countries, 2005-08 (US$ billions)
India during the last eight years alone. Targeting under-employed segments of
Between 2000 and 2007, FDI inflows 120 India Russia Brazil China
108 the population: JCB, the UK-
into India grew at a compound annual
growth rate of 30 percent, compared 100 headquartered manufacturer of
to an average figure of 14 percent for 84 engineering vehicles and diesel engines,
other emerging markets.5 80 73
72 70 reaches out to create employment
However, the Indian economy still opportunities for under-employed part of
60 55
faces a number of challenges that
42 45 the workforce, such as retired army men.
continue to act as impediments to
40 35
investment and growth. Some of these 30
25
challenges include overly bureaucratic 20 19
approval processes for foreign MNCs 20 13 15
8
registering in India, as well as
difficulties in accessing talent pools 0
2005 2006 2007 2008
and critical infrastructure. These
Source: United Nations Conference on Trade and Development (UNCTAD)

10 23
Overcoming constraints to Figure 9: Percentage of patent applications registered by domestic companies
(latest figures percent)
innovative growth
Despite this progress and potential, 80 75% 74%
research activity by domestic Indian 70 62%
companies remains low (see Figure 9).
60
According to World Bank statistics, of
the top 50 applicants for patents in 50
India between 1995 and 2005, 44 were 40
foreign firms. Moreover, the
innovations and patents emanating 30
from these research centers have 20 18%
evolved almost in isolation from India’s
10
academic institutions. Further, as has
been discussed in chapter one, some 0
MNCs are reluctant to invest in R&D in South Korea Russia China India
India because of perceived weaknesses
in intellectual property administration Source: World Intellectual Property Organization
and enforcement.
With competitive pressures increasing
Scaling is also a critical issue. India has
from around the world, there is an
sometimes been labeled “a graveyard
urgent need for India to build a more
of good ideas” due to the large number
sustainable and healthy innovation
of innovative and successful initiatives
ecosystem for future growth. The
that are piloted or implemented
national government has recognized
without reaching enough scale to
some of this by tripling the R&D
make a significant national impact.
allocation in the Eleventh Five Year
Multinationals have played an
Plan (2007–2012) with the target of
important role in developing successful
bringing R&D investment to 2 percent
models that balance the benefits of
of GNP, closer in line with the average
global scale and knowledge with local
for developed countries of
insight and responsiveness. The best-
approximately 2.5 percent.
known examples include the successes
of consumer goods companies like P&G This investment requires buy-in from So while significant strides have been Figure 2: Percentage distribution of survey responses across sectors
and Hindustan Lever in developing all stakeholders, however, including made in recent years, there is still
innovative business models that bring government, business and academia. some way to go before India can truly
global products to the most isolated There are signs of progress, such as the 8% Banking and Insurance
take its place at the top table of globally 15%
Indian communities in a locally National Entrepreneurship Network competitive economies. Going forward, Chemicals and Petroleum
relevant way. (NEN), a non-profit initiative founded 15%
MNCs are crucial to the sustained 5% Communication and Entertainment
in 2002 to educate and support the economic growth of India, both in
Looking forward across broader Industrial Equipment and Systems
next generation of entrepreneurs in terms of driving inward investment
industry groups, methods of achieving Consumer Durables and Other
India. Co-founded by five of India’s and through the potential positive 10%
scale include the development of 8% Consumer Products
premier academic institutions and effects they have on education, skills
clusters of excellence around key Food Products and Beverages
collaborating with over 280 Indian and innovation. This report analyzes
themes, and the utilization of Automotive
graduate institutions, the NEN helps to the role of MNCs in the Indian
technology to multiply impact and
build entrepreneurship programs and economy, and the ways in which policy 15% 24% Business Services*
reach. Technology-based solutions are
create a pipeline of young innovators. initiatives can be aligned to increase
replicable, scalable, cost-efficient and
More recently, the Confederation of co-operation between governments, Source: Accenture/Confederation of Indian Industry Survey
consistent in quality. Moreover, the
Indian Industry set up a committee to MNCs and all other stakeholders.
application of technology seems *Business Services include consulting, software,
establish long-overdue formal real-estate and housing services
particularly well adapted to India’s The report is drawn from Accenture’s
communication between its members
need for solutions that reach across extensive research into the growth This research and the resulting analysis
and academia. Further efforts are
difficult terrain and long distances and opportunities facing India and the role outline opportunities for growth in
needed to include business in policy
that can easily be tweaked to respond of MNCs in realizing those four areas, and highlight the
discussions on education, training and
to a diversity of languages and opportunities. In addition, this report challenges faced in each. These
national innovation capacity.
cultures. Multinationals can play a key draws on in-depth interviews with key imperatives are set out in the chapters
Multinational companies can play an
role in developing and implementing executives from MNCs, officials from of this study, which look in turn at:
important role in these discussions,
the technology solutions that can the Government of India and other foundational factors for growth; the
bringing ideas and lessons learned
connect India’s disparate success crucial stakeholders, undertaken in co- possibility for growth in new sectors;
from other countries.
stories and unlock the country’s operation with the Confederation of the drive to improve current levels of
innovative potential. Indian Industry (CII). The MNCs productivity; and the ways in which
involved in the study account for a India can position itself at the heart of
significant portion of revenues of the new multi-polar global economy.
MNCs in India and represent a true
cross-section of sectors (see Figure 2).

24 09
The role of MNCs in promoting application which allows a single computer
to run one or more virtual machines, each
innovation with its own operating system.
MNCs are involved in a number of projects Conducting world-leading research: Intel
and initiatives to improve the innovative uses India as a base for some of its most
capacity of the Indian economy, driving complex innovation. Recently, a pioneering
economic growth and generating wider microprocessor was developed by the India
spillover benefits in terms of increased R&D team.
knowledge and skills transfer. This is
occurring in a number of ways: Encouraging the entrepreneurial sprit: JCB
facilitates entrepreneurial activity in India
Undertaking low-cost innovation: through its efforts to create self-employment
Microsoft works to develop high-tech opportunities for over 5,000 people.
offerings which help bring IT to the largest Consumer goods company Amway’s
possible audience, including the poor. For approach encourages entrepreneurial
example, one localization program, activity in the broader environment by
‘Bhasha,’ has now made MS Windows and providing free and unlimited training to its
MS Office available in 12 Indian languages. distributors to help them grow their
Sharing hardware is a good way of keeping businesses. In 2007, over 29,000 training
costs down. To help people share PCs, the sessions were held reaching over 1.5 million
Microsoft India Development Centre (MIDC) Amway distributors.
Introduction has recently developed Virtual PC 2007, an

After a decade of unprecedented Figure 1: World Economic Forum (WEF) Global Competitiveness Report Improving India’s capacity to innovate ! Positioning India as a test ground
growth, India faces new challenges in 2009 –10 Rankings is critical to setting the country’s for innovative business models: India
the changing world economic order as trajectory of economic growth. possesses the raw materials – including
it emerges from the downturn. The rise Emerging economies All economies Innovation capabilities attract a proven track record, English language
of the multi-polar world—where investment, generate greater returns skills, an entrepreneurial spirit and
economic power is increasingly Singapore 1 4 and set a path for more sustainable large, distinct and varied consumer
diffused across the global Hong Kong SAR 2 11 growth. India possesses many of the groups—to market itself as the world’s
economy—presents both a major raw materials to unleash innovation- pre-eminent test-bed for innovative
opportunity and a challenge to the Taiwan, China 3 12 led growth and we have already seen business models. As with the IT
Indian economy. South Korea 4 19 great examples that place India in a services boom, MNCs would play a
strong position among emerging critical role in bringing tremendous
While India has been at the vanguard Qatar 5 22 economies. At the same time, there is technology, knowledge and capital
of the emerging markets that have
United Arab Emirates 6 23 no room for complacency. Concerted spillovers into the economy
redrawn the world’s economic
efforts are required by policymakers,
geography, comparisons with other Malaysia 7 24 educators and businesses across a
economies confirm that India still
China 8 29 number of areas. Important levers for
faces a number of challenges in
change include the following:
achieving greater competitiveness. For Chile 9 30
example, according to the World ! Nurturing an innovation
Economic Forum’s Global Czech Republic 10 31 ecosystem: clusters of innovation arise
Competitiveness Report 2009-10, India India 23 49 from partnerships between academia,
ranks at 49th position. Even when business and financiers, all incentivized
compared to emerging economies by government policy
alone, India still only ranks at 23rd
Source: World Economic Forum Global Competitiveness Report 2009 –10 ! Getting the scale right: technology
position (see Figure 1).
www.weforum.org can multiply the penetration and reach
of business solutions and best practice
ideas

08 25
Chapter four:
Projecting India
India owes much of its recent Beyond this, there are three areas export their products. The ambition is ! Overcome constraints to innovation. ! Capitalize on India’s culture e.g. ! Build on the existing excellence and
economic growth to its open position where action can be taken in order to to increase production from 10,000 Improving the networks between provide incentives for creative reputation for IT to move into new
within the global economy, which has help realize the next phase of tonnes a year at present to 150,000 innovation stakeholders (such as industries and talent to locate in India, technological sectors e.g. cloud
seen significant levels of inward economic growth. MNCs can act as tonnes by 2020, which would constitute business, government and academia) building on India’s burgeoning creative computing and digitization
investment and MNCs choosing India facilitators in each of these areas. 3 percent of global cocoa production. and developing clusters can help scale sectors to generate growth and ! Make best use of India’s
as a location for a number of business innovation over a larger area strengthen India’s brand
Integrating local enterprise Tapping into the Indian demographic and educational
functions. India has been among the
Position India at the heart of the This report demonstrates how MNCs advantages to better utilize its
most attractive destinations for with global business diaspora global economy: ensure that India are already contributing to growth in workforce, particularly among the
investment worldwide, ranking second
India has a wealth of small- to India’s population is one of its greatest continues to act as a key political these areas, as well as how they can female population and in rural areas
only to China on the FDI Confidence
medium-sized enterprises (SMEs) that assets. While numerous steps are being player on the global stage and realizes continue to build on best practices and ! Increase the productivity of the
Index in 2007.
can collectively generate significant taken to improve the skills and the full benefit of international flows help generate growth in the future. The
workforce through enhanced education
However, if India is to maintain and levels of growth to the Indian education of the domestic population, of investment, talent and technology report also sets out recommendations
systems and more support for innovation
build on this position of strength, it economy. However, the key to realizing the potential afforded by the huge for policymakers that will help create
! Bridge the gap between local
needs to exploit further opportunities their potential is to connect them to Indian diaspora population should not the right regulatory and administrative ! Capitalize on India’s open position
enterprises and global supply chains environment for inclusive growth. in the global economy (in terms of
to adopt a more open position and global supply chains through MNCs. be underestimated. With 20 million e.g. ensure that rural infrastructure political, economic and cultural linkages)
integrate itself within the global Given India’s size and the number of people of Indian origin in 70 countries, and supply chains are of sufficient Conclusions in order to maximize flows of FDI
economy. At the political level, India small- to medium-sized enterprises India has a pan-continental presence.33 quality to facilitate the efficient
should utilize the opportunities arising (SMEs) that have developed (particularly Firstly, these populations represent a transport of goods In this new era of changed global These investments will pay dividends in
from its expanding global footprint of in rural areas), integrating these significant consumer market in their dynamics, what will be important for the future and set India on a path towards
interactions and relationships with the enterprises as part of a wider business own right, as well as a potential ! Tap into the Indian diaspora e.g. set
India as it tries to unleash the next sustainable economic growth. MNCs
rest of the world to encourage the ecosystem offers the potential to springboard to test products and enter up a government initiative to target
phase of economic growth? The will be crucial in all of this, not least in
exchange of knowledge and skills. increase growth at both local and new markets in developed economies. and leverage the Indian diaspora more
following imperatives should guide terms of technology transfer, sharing
Policymakers can take a lead by global level. For example, Dabur India Limited, effectively so that they can act as
India as it embarks on this journey: knowledge and skills, and growing new
ensuring that India is at the heart of which specializes in health and beauty ‘ambassadors’ for investment opportunities,
For example, Cadbury is supporting markets. By working with policymakers
international forums of decision-making products, sells to customers in the particularly in new technology ! Move existing traditional industry
Indian farmers with technical advice to and as a part of the fabric of Indian
(e.g. the G20, the Doha round of trade United Kingdom and United States, sectors up the value chain while
show them how to improve yields of society, businesses can help achieve a
talks and the Copenhagen Summit) as owing to the large Indian populations exploiting potential in new sectors
cocoa. Through this support, it is hoped collective vision of prosperity.
well as making sure that its businesses in these two countries (a combined
are fully integrated into global supply that Indian farmers can first achieve
total of more than 2 million in 2006).34
chains and investment flows. self-sufficiency before starting to

26 07
Key areas for growth enforcement of IP laws, as well as leading-practice knowledge, while But beyond this opportunity to reach investors. Indeed, this has already Doing so will require India to focus on
improving the efficiency in the driving advanced engineering skills new consumers, the diaspora happened in the context of the IT how it can build on its cultural
Based on Accenture’s interviews with administration of IP rights population represents a significant industry, where the government made heritage and creativity. For example,
! Invest in sunrise industries, such as
senior business leaders, supplemented source of potential talent, many of a conscious effort to communicate and other emerging markets have taken
! Reduce barriers to the free flow of renewable energy, healthcare and
by extensive research, this report sets whom have been educated in Western interact with the global Indian steps to leverage culture as a means of
people e.g. simplify immigration and pharmaceuticals, new technologies
out four key areas where action is economies and possess the skills that diaspora with hopes of encouraging making their living environment more
processes for obtaining visas for new (e.g. cloud computing) and cultural
needed to put India on a path to more MNCs looking to locate in India will investment in the country from those attractive to MNC employees. Abu Dhabi
entrants to India industries (e.g. design, food and
sustainable, inclusive growth: value highly. Indeed, many MNCs in who have emigrated and become has signed deals to develop offshoots
! Improve infrastructure e.g. upgrade tourism)
Reinforce the foundations of growth: India have sought to bring the Indian successful in other nations. A similar of both the Louvre Museum in Paris
railway stations and existing Improve current levels of productivity: diaspora back into leadership positions approach must be taken in respect to and the Guggenheim Museums in New
enhance the growth prospects of
technologies, including creating India’s make better use of India’s current where they can combine their India’s new growth industries, York and Bilbao; Singapore is planning
businesses operating in India by
first high-speed rail network between assets and capabilities to enhance its knowledge of Western business particularly those related to technology to have the Cirque du Soleil play a key
creating a more predictable and
major metropolitan cities competitiveness in key areas of the practices and working cultures with an where the existing reputation is strong. role in the new Sentosa cultural
enabling environment for business
economy, such as skills and innovation appreciation for local norms. This helps district. More active promotion of
! Simplify the bureaucratic experience Realize growth in new sectors: Exporting India’s culture:
! Promote skills development e.g. ensure that the Indian economy keeps India’s rich cultural heritage could also
capitalize on India’s potential in new
e.g. enhance coordination between the pace with the latest developments in Bollywood and beyond help develop its tourism industry.
industry sectors as well as improving MNCs should continue to work with
central, state and local governments Western business education as well as India’s share of international tourist
the value addtion in traditional sectors, local education establishments to India’s business environment is one of
on approval processes for foreign continuing to represent a highly arrivals globally and in the Asia Pacific
helping the economy move to a more shape curricula and ensure that skills the most attractive in the emerging
businesses both before and after set- attractive location for other MNCs region during 2008 was 0.58 percent
sustainable growth model are relevant to the workplace world, not least due to the high
up of operations looking to establish operations in India. and 2.92 percent respectively. Within
! Reduce dependence on, and increase ! Increase the proportion of the number of English speakers as well as emerging economies, these figures put
! Rationalize taxation e.g. improve The Indian diaspora can also act as the global mindset exhibited by many
the value of, agriculture e.g. increase population engaged in education and India well below China and Mexico
awareness and communication with ‘ambassadors’ for their home country Indians. However, other emerging
support for agricultural interventions productive employment. Policymakers (see Figure 10). In spite of the presence
business about the mechanisms that through promoting greater economies are catching up. Increased
(such as irrigation) and employers can bring more women of historical and cultural sites across
exist to reduce transaction costs in understanding of the opportunities investment in education in many
into the workforce by embracing the country, during 2008, only five of
taxation and bring in more ! Develop both basic and high-value within the Indian economy for emerging economies means that
flexible working options and putting in India’s 28 states accounted for around
predictability to the tax system manufacturing e.g. MNCs should play a investment and growth. By marketing India’s traditional advantage here is
place modernity provisions 67 percent of the total foreign tourist
! Safeguard Intellectual Property (IP) significant role in both shaping and actively investment opportunities to being eroded. India needs to capitalize visits into India.35
delivering the training needed to the diaspora, MNCs can tap into new on this advantage while it still can.
e.g. establish a common body or
supply basic manufacturing workers sources of growth as well as spreading
taskforce to centralize control over the
(see next chapter on education) with the word to a larger potential pool of

06 27
Finally, promoting the cross-fertilization emerging economies are catching up
of knowledge and capabilities can drive and starting to exploit their cultural
new, innovative business models and industries and diaspora population to
attract investment. For example, while great effect. Our analysis identifies the
India’s growth to date has been driven following levers to realizing growth in
in large part by the IT sector, there are this area:
opportunities for MNCs in adjacent ! Providing incentives for creative
industry sectors that can capitalize on
industries and talent to locate in India,
this e.g. advertising and digital media.
building on India’s burgeoning creative
In developing these industry sectors,
sectors to generate growth and
India will not only generate increased
strengthen India’s brand
economic growth but also enhance
even further its brand overseas. The ! Setting up a government initiative
India Brand Equity Foundation has to target and leverage the Indian
already undertaken extensive efforts to diaspora more effectively so that they
promote ‘brand India’ abroad: the can act as ‘ambassadors’ for
talent, markets, growth and investment opportunities, particularly
opportunity that exist in the country. in new technology sectors
To integrate itself further into the ! Using MNC supply chains to connect
global economy, India needs to build
local enterprise and global businesses
on this and promote India as the new
culture capital of the world and hub of
new digital industries.
Placing India at the heart of the global
economy means building on its
existing success in this area: in being
open, in being an attractive location
for investment and in promoting a
strong brand around the world. The key
for India is to realize that other

Figure 10: International tourist arrivals, 2008 The importance of Innovation: a 2007 study by the World of national competitiveness. For example,
Bank found that 300 MNCs had set up according to the World Economic
% of total international tourist arrivals
multinational companies R&D and technology centers in India, Forum, India ranks only 49th out of the
Multinational companies (MNCs) will accounting for 60 percent of the R&D world’s most competitive economies—
feature prominently in efforts to off-shoring industry. With these centers 23rd when compared only to other
France 8.6 comes increased economic growth and
3
emerging economies. And while a
overcome these challenges and drive
the next phase of sustainable spillover effects into the wider Indian comparable number of the world’s fifty
US 6.29
economic growth, not least by driving economy (e.g. through knowledge largest companies operate in China
Spain 6.21 inward investment, nurturing talent transfer and the flow of new skills). and India, their combined turnover in
and encouraging innovation. For China is three times their turnover in
In recent years, the relationship
China 5.75 example: India.4 This report attempts to
between India’s domestic businesses
understand and suggest ways to
Italy Investment: MNCs have invested over and multinationals has proved to be a
4.63 address this shortfall, to set out how
US$100 billion in India since 20001, unique competitive advantage for the
the Indian economy can be best
UK 3.28 with foreign direct investment (FDI) nation, generating a creative dynamics
aligned to encourage these investments,
inflows having increased at a rate of of knowledge transfer, investment and
2.76
and to show how MNCs can support
Ukraine
about 30 percent as compared to 14 innovation. As a result, India’s businesses
and amplify India’s next phase of growth.
percent for all emerging markets. are arguably the best adjusted to the
Turkey 2.71 global economy among emerging
Talent: MNCs have been at the heart economies, with a high proportion of
Major new research
Germany 2.7
of up-skilling the Indian workforce, higher-value and service-sector The report draws on a major research
2.45 making it one of the most competitive contributions as well as an inclusive project on MNCs operating in India
Mexico
talent pools in the world in a number and global mindset. conducted jointly by Accenture and the
India 0.58 of industries (especially information MNC Council of the Confederation of
technology). In a recent Accenture Further potential Indian Industry. Business leaders from
survey of business leaders around the more than a quarter of the MNCs in
world, India ranked second only to the More, however, is possible. Although
India were interviewed to gain first-
Source: Indian Ministry of Tourism; ‘Tourism Statistics at a Glance 2008’ United States in terms of the India’s recent growth has been
hand insight on some of the challenges
attractiveness of its top management impressive—second only to China since
they face and the broader role of
talent.
2 mid-2008—the country still does not
MNCs in India’s journey towards social
rank as high as it could on comparisons
and economic growth.

28 05
Executive summary
The world has been shaken by the economic infrastructure, education and healthcare.
downturn. Developed and emerging However, in the political sphere there are
economies alike have felt the full force of new administrations in many countries and
its impact. India’s economy has seen a a re-elected Indian government unimpeded
slowdown after nearly a decade of by coalition politics. This presents a further
unprecedented growth, as its companies window of opportunity for businesses and
have been vulnerable to the varying policymakers to work together to develop
fortunes of their customers, partners and constructive and collaborative solutions
suppliers around the world. As we begin to that capitalize upon the country’s
emerge from this crisis, there is a new strengths, develop new opportunities and
sense of urgency amongst business leaders address the obstacles to achieving India’s
and policymakers to address long-term social and economic growth ambitions.
challenges and exploit fresh opportunities.
The Indian economy will enter the recovery
period facing changed global competitive
dynamics, particularly from other fast-
developing economies, as well as the
ongoing need to confront persistent
domestic challenges in areas such as

04 29
Conclusions: Overcoming the Contents
challenges to growth Executive summary 04
With greater integration into the world For policymakers, the Achieving success in the next phase of Introduction 08
economy, the effectiveness of India’s growth story will require closer
policymakers in shaping and priorities must be cooperation between businesses and
implementing policies to increase policymakers than ever before. As the
Chapter one: Laying the foundations 10
! To take a lead in global forums in
flows of people, capital, products and order to embed India at the heart of world emerges from recession, this
services will, as we have seen, be new model of economic and social Chapter two: Combining old and new 14
the world economy
fundamental to securing India’s future governance will be replicated across
growth. To climb the competitiveness ! To simplify internal bureaucratic the globe. India has a number of Chapter three: Building capabilities for the future 20
ladder, it is crucial for India to focus processes, to rationalize taxation, and strengths that position it well to lead
on the following areas: to effectively police intellectual this new global order. Doing so will Chapter four: Projecting India 26
property rights require action on a number of fronts,
! Improve the overall business
from the local to the international,
environment by removing the barriers ! To encourage the free movement of
with a focus on scaling activity more
Conclusions 30
and hurdles that may hinder MNCs and talented labor, and to invest in
effectively and consistently. But with
domestic businesses as they seek to transport, technology and social
commitment from business and
achieve sustainable growth in India infrastructures
government alike, there are few limits
! Reduce dependence on, and increase ! To focus policy on encouraging to India’s potential.
the value of, traditional sectors of the higher-value in traditional sectors
economy (e.g. agriculture) as well as (agriculture, manufacturing) and to
developing new, higher-value-added invest in innovation
industry sectors such as healthcare,
renewable energy and new ! To align education more closely
technologies with employment opportunity, and to
involve business leaders in shaping
! Improve India’s productivity by human capital strategy
broadening its skills base beyond its
current centers of excellence and For MNCs the opportunities
fostering innovation on a national
scale for growth can be realized
! Place India at the heart of the multi-
by
polar world by increasing the impact it ! Working with local partner
achieves on the global stage through organizations and government to raise
linking SMEs to global supply chains, skill levels and invest in higher value-
tapping into the Indian diaspora and chain activities
making better use of India’s cultural
heritage ! Empowering rural populations to
open up untapped labor and consumer
MNCs must play a critical role in markets
achieving these objectives by nurturing
a globally integrated business ! Adopting imaginative responses to
ecosystem driven by knowledge, India’s diversity, using technology to
technology and talent. Several MNCs scale operations
have established globally significant ! Exploiting India’s advantages of
businesses in India by setting up language and demographics to test
manufacturing and R&D facilities, innovative business models
building and serving consumer markets
and establishing India as an export ! Co-operating with government to
base. They have complemented efforts make training and education better
of local governments, institutions and aligned with needs
businesses in imparting skills to local
workforces and by promoting a culture
of innovation. There is great scope for
more to be done.

30 03
Foreword References
1 23
Based on the 9 years of FDI statistics International Energy Agency.
The world has changed significantly safeguarding intellectual property and
published by Department of Industrial 24
over the last couple of years. reducing bureaucracy, amongst others. 11th Five year plan of Ministry of
Policy & Promotion, Ministry of
Businesses in developed and emerging It also reveals some of the new growth New and Renewable Energy,
Commerce, Government of India.
economies have been shaken by the sector opportunities in India, such as Government of India.
2
global downturn. Governments, in turn, biotechnology, renewable energy and Economist Intelligence 25
have scrambled to steady their emerging technological sectors like Technopak Advisors, ‘India
Unit/Accenture survey, 2009.
economies and put them on a path cloud computing and digitization. Last, Healthcare Trends’ 2009.
3
towards recovery, using fiscal stimuli it highlights those key areas that can World Economic Forum Global 26
IBEF, August 2009.
and other policy instruments. Now, the contribute to enhancing the nation’s Competitiveness Report 2009-10,
27
light at the end of the tunnel is overall productivity and how India can www.weforum.org IBEF, July 2009.
4
beginning to emerge and we are seeing position itself at the heart of the global Accenture analysis. 28
LABORSTA database, International
pockets of recovery in different parts economy by promoting itself more 5 Labour Organization.
of the world. effectively. United Nations Conference on Trade
29
and Development (UNCTAD). UNESCO.
The Indian economy will face a As we look towards the future with the 6 30
changed global landscape as it enters same optimism that has driven India’s Ibid. NASSCOM Strategic Review 2009.
this recovery period. Emerging market growth to date, there is a fresh 7
McKinsey, ‘Building India: 31
World Bank, ‘Unleashing India’s
economies will acquire even greater opportunity for government and Accelerating Infrastructure Projects’, Innovation’, 2007.
significance as the global economy business in India to work together to 2009. 32
becomes increasingly multi-polar. India solve some of our common domestic Zinnov, ‘R&D Innovation Council’,
8
will have to compete more fiercely challenges and build a path towards India Brand Equity Foundation (IBEF), August 2008.
with its emerging-market peers, many sustainable growth and prosperity. But August 2009. 33
Evalueserve (2004).
of whom will be more competitive there are no guarantees or 9
Database of the Centre for 34
than before. In the political sphere, entitlements about the future, only Monitoring Indian Economy (CMIE), Migration Policy Institute database.
new governments have recently taken possibilities. Our vision is to help India August 2009. 35
Indian Ministry of Tourism, ‘Tourism
office in different parts of the engage with the global context around
10
Reserve Bank of India, op. cit. Statistics at a Glance’, 2008.
world—presenting new opportunities to us, positioning India as the preferred
address long-term challenges such as international destination of investment 11
Planning Commission, Government of
climate change and international and business activity. We hope this
India.
security threats. report will help outline the cooperative
12
steps that can be taken to make this CMIE, op. cit.
As this new landscape takes shape,
vision a reality. 13
India has the opportunity to position IBEF, September 2009.
itself as a leading international hub of 14
investment, human capital and Rabobank, ‘Indian agri-biotech
innovation—pushing ahead of rival sector: Emerging scenario, issues and
destinations in both developed and Harsh Manglik challenges’.
emerging economies. Multinational 15
CII/KPMG report, ‘India Pharma Inc. –
Companies (MNCs) are likely to feature An Emerging Global Pharma Hub’,
prominently in pursuing this ambition. 2008.
In the past, we’ve seen India’s ability to 16
attract foreign direct investment from IBEF, June 2009.
some of the largest companies in the 17
UNCTAD, ‘World Investment Report:
world. MNCs have now embedded Transnational Corporations,
themselves as a part of India’s Agricultural Production and
economic fabric. Looking forward, Development’, 2009, p. 141.
MNCs are looking to play a pivotal role 18
fostering the growth of small, medium CMIE, July 2009.
and large domestic enterprises across a 19
CMIE, August 2009.
range of industries and linking them
20
into global supply chains. CMIE, August 2009.
21
But more is possible, and more is Automotive Component
required. This report, which draws on Manufacturers Association of India,
interview-based research conducted ‘Global Competitiveness of Indian
jointly by Accenture and the Auto Component Industry & Its
Confederation of Indian Industry, Sustainability’, 2009.
reveals some of the ongoing challenges 22
Ernst and Young, ‘Renewable Energy
facing multinational businesses in
Country Attractiveness Indices’, Q4
India and underscores priority areas for
2007.
reform—such as rationalizing taxation,

02 31
About Accenture
Accenture is a global management
consulting, technology services and
Disclaimer
This Report has been published for
information and illustrative purposes
Authors
Rajat Agarwal
Multinationals and India
outsourcing company. Combining
unparalleled experience, comprehensive
only and is not intended to serve as
advice of any nature whatsoever. The
Tim Cooper A plan for progress
capabilities across all industries and information contained and the Svenja Falk
business functions, and extensive references made in this Report is in
research on the world’s most successful good faith, neither Accenture nor any Mamta Kapur
companies, Accenture collaborates of its directors, agents or employees
with clients to help them become give any warranty of accuracy nor Raghav Narsalay
high-performance businesses and accepts any liability as a result of
governments. With approximately reliance upon the information, advice, Armen Ovanessoff
177,000 people serving clients in more statement or opinion contained in this
than 120 countries, the company Report. This Report also contains Dinu Poonacha
generated net revenues of US$21.58 certain information available in public
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Aug.31, 2009. Its home page is private and public organizations.
Aarohi Sen
www.accenture.com Accenture does not control or
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information. This Report constitutes a
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is subject to change. Accenture does
not warrant or solicit any kind of act or
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