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India Shining

India Shining. Presented by: Chitra Srivastava October 25, 2007. Are all Indians Hindu?. Don’t Indians marry someone they have never seen before?. Do you really have 300 million Gods?. Isn’t India full of snake-charmers and fakirs and Yogis?. Myths about India.

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India Shining

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  1. India Shining Presented by: Chitra Srivastava October 25, 2007

  2. Are all Indians Hindu? • Don’t Indians marry someone they have never seen before? • Do you really have 300 million Gods? • Isn’t India full of snake-charmers and fakirs • and Yogis? Myths about India

  3. Where on the globe is India?

  4. Overview • Population: 1,129,866,154 (July 2007 est.) • Largest Democracy in the world. • Maintains the third largest military force in the world, • Hindi (national language) and 21 other official languages. • Capital: New Delhi • Major Cities: Mumbai (Bombay), Chennai (Madras), Kolkata (Calcutta), Hyderabad, Bangalore

  5. Economy • Twelfth largest economy in the world • GDP in terms of USD exchange-rate is US$1.103 trillion, • Fourth Largest GDP in terms of PPP- US$4.156 trillion • Fastest growing economy GDP growth rate of 9.4% in 2006-07 • GDP Composition: 22% Agriculture; 52% Services, 15% Manufacturing and 11% other industries. • Major exporter of software as well as financial, research, and technological services. • Inflation – 5.66% (US-2.3%) • Gini coefficient- .37 to .42 • 25% of population is below poverty line.

  6. Business Climate • Growing Consumer goods Market • One of the top 10 markets in the world. • Expected to reach $400 Bn by 2010 • Since 1990’s , Economic growth at an average of 5.7% • Per capita income doubled in real terms $543 (2004) • High disposable incomes giving way to business growth. Since 1996 • No. of airlines passenger has increased six folds (47 M in 2005) • Motorcycle and Car sales has doubled • Mobile phone subscription increased by 80%/year.(55 M in 2005) • Largest young population in the world – over 890 million people below 45 years of age • Life Expectancy at birth 65 years (2005) as compared to 57 years (1990)

  7. Business Challenges • Inadequate Infrastructure • Inefficient Bureaucracy • Corruption http://video.google.com/videoplay?docid=6179728353953099409&q=corruption+in+india&total=276&start=0&num=10&so=0&type=search&plindex=1 • Restrictive labor regulations • Tax rates • Tax Regulations • Policy Instability • Poor Work ethics • Lack of access to financing • Inadequate educated work force **Source: A survey of managers by McKinsey 2005

  8. Indian Consumer • Nuclear families; High personal disposable incomes; Growing consumerism. • Affordability growth • Falling interest rate, Easier consumer credit, Greater variety and quality at all price points • The youngest population profile • 70% of the population below 36; more than 35% below 18 years • Global India- 1.2 Million households • Buy branded products, vacation abroad, own a number of cars, televisions, behave like their counter parts in developed markets. • Burgeoning Middle Class- 40 Million households. • ‘Aspiring India’- owns an apartment, bank account, TV, refrigerator, a small car • Growing at 10% and expected to be 65M by 2010

  9. Retailing In India • Tops A T Kearney’s list of emerging markets for global retailers. • Contributes to 10% of GDP • Employs 7% of the work force (21 million)

  10. Retailing Structure • Highly fragmented: mostly ‘Mom and Pop’ outlets. • Over 12 million unorganized retail outlets • Average outlet size < 500 sq.ft. • Organized Retail’ constitutes only 3% of total retail sales - about $8 billion p.a. • Growing at 30% annually

  11. Unorganized Retail KiranaStore Fresh Vegetable Market Fresh Fruit Market Fresh Fish Market

  12. Gray Market

  13. Organized Retail MKB Mall Oberoi Mall, Mumbai

  14. Organized Retail- Domestic Players

  15. Organized Retail- Domestic Players Shoppers Stop Pantaloons Westside BIG BAZAAR

  16. ‘FDI Policy in Retail • FDI not permitted in retail trade sector, except in: • Private labels • Hi-Tech items / items requiring specialized after sales service • Medical and diagnostic items • Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) • For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required) • 100% Foreign Direct Investment (FDI) is allowed in Cash and Carry Wholesale formats. • Franchisee arrangements are also permitted in retail trade. • FDI up to 51% is permissible in the retail trade of single brand products.

  17. Permitted Retail Formats

  18. International Retailers in India: Licensed and Franchised Outlets

  19. International Retailers in India: Wholesalers and Licensed outlets METRO AG opens “Cash & Carry” stores in Bangalore. Foodland has now been taken over by Dutch retailer Spar Shoprite in Mumbai Walmart and Bharti Telecom’s Joint Venture

  20. Implications for FDI • A major roadblock- India's infrastructure bottleneck. • A cookie cutter concept will not be effective: The Indian Consumer is difficult to comprehend. • India is likely to see emergence of several “innovative” India specific Retail business models and Retail formats.

  21. Tailor Made for India Make that “No Beef” in my burger…

  22. Tailor Made for India Organized retailers mimic unorganized retailing methods: Rice section at Big Bazaar for the picky Indian consumer

  23. Sources: • FDI in Indian retailing- Presentation by ICICI. • The A. T. Kearney 2007 Global Retail Development Index. • McKinsey Quarterly: Fulfilling India’s Promise • Presentation on India for RET-465 • KSA India study • http://www.valuenotes.com/one-time/one-time_IndianRetailSector_11oct06-8.gif • www.indiastats.com • Watch for the fun ahead……………….

  24. Glimpse of Bollywood • Dholi Taro http://www.youtube.com/watch?v=iaZPexT_ffo • Dola re Dola http://www.youtube.com/watch?v=IiIL-w_jD8o

  25. Thank You!!

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