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Indian consultant’s take on India

Wednesday 20 May, 2009

The Organization of Women in Trade (OWIT) sponsored this event BRIC OPPORTUNITIES AND CHALLENGES: A FOCUS ON INDIA.  Walter Viera is somewhat reknowned in India, so he has some valuable insights.  Here is his presentation Reflections on India BRICS 2009 & here are some of his observations:

India lost it’s economic might from 1700, when it controlled 24% of the world economy, to when it earned its independence, when it only accounted for 4.2% of world GDP.

India & China together comprise 1/3 of the world’s population.

While many assume China has 1 look & language, India is more complicated than what you see on the surface.  It is both a developing & mature market.  British discipline brought together 560 princely states.  Indians speak 30 languages with 300 dialects & worship 6 religions.  25% of their elected ministers face criminal charges, but  GDP growth is still ~7%.  Growth markets are

  • education-in consortia with Australia, New Zealand, & Singapore,
  • health care-there is no state insurance system,
  • tourism-medical tourism,
  • IT-yeah, duh, &
  • infrastructure-corruption is a problem & can be viewed as an indirect tax.

92% of all toys in India are made in China,  even festive elephants used during religious ceremonies.

The rural market is emerging quickly.  There are more millionaires in grade 3 towns than in top tier cities.  Items are simply sold in smaller lots (ex. 60% of all cigarettes are sold individually rather than in packs) to make them affordable to India’s poor.  Middle class households now outnumber low income households.

India is becoming the world’s R&D lab because it offers lots of cheap PhD’s.  GE employs 14,000 researchers there.

Indian companies are going on the offensive in M&A deals, for example Tata buying Jaguar.

There are still many risks in doing business in India:

  • $ loans have proven dangerous for Tata, Wockhardt, & Ranbaxy
  • the Satyam debacle indicated corporate governance is an issue, although the mess was resolved in speedy fashion
  • 380M Indians are still illiterate
  • clean water & sanitation are still problems
  • roads are still difficult to travel with highways only 2%  of all roads
  • since only 70% have access to care, health is an issue
  • the judiciary system is still far from expeditious.

Q&A offered:

  • the massive bureaucracies are breaking down by pro-industry ministers.  The RTI-Right to Information act has led to more transparency.
  • the FCPA-US Foreign Corrupt Practices Act leads Indians to no longer expect “facilitation” fees.  Wipro led the charge locally be refusing to play that game.
  • only the borders are affected by difficulties in Pakistan & Afghanistan, but it does divert $ from other pressing problems.
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