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India---- the Competitive Advantage

Explore the competitive advantages of India as an attractive FDI location, with a focus on its perception, realities, and value proposition. Discover the country's high profitability, financial performance, stock market gains, demographic dividends, large skill and intellectual capital base, and changing dynamics in consumer markets.

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India---- the Competitive Advantage

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  1. India---- the Competitive Advantage November 2006

  2. Structure • Perception • Perception------ Realities • Value Proposition

  3. Perception

  4. Confidence Indices….. • AT Kearney …… • Trend of Secular Increase for both domestic and foreign investors

  5. Moving up the League tables….. • India has progressively moved ahead in ranking and presently the 2nd most attractive FDI location in the world

  6. Attractive location across all broad sectors……. • Highly attractive location for Manufacturing

  7. Perception ------ Realities

  8. Operations in India……… Profits FICCI FDI Survey 2005 on the basis of response from 102 Companies having their operations in India. • 70% making profits in operation • 69% achieve profitability targets • 83% utilize 70% of capacities

  9. Indian subsidiaries outshine overseas parents • Better financial performance & accounting for a greater proportion of global revenues • Trends visible in many sectors – IT, auto, pharma, consumer durables & FMCG • Few examples • MNCs consolidating shareholding in their Indian subsidiaries

  10. Leading the Pack………. Source: JP Morgan • Indian Companies had a higher Return on Equity than other Countries in Asia

  11. Source: CRISIL Data Q1 2006-07 of 2,224 Indian corporate

  12. Slide no. 12 From PWC

  13. Returns in Stock Markets…….. • Amongst highest returns in one year period Source: The Economist

  14. Gains in World’s Stock Exchanges ……….. Per year average Gain in last 3 years (%)

  15. Price / Earning Ratio of Major Stock Indices ……..

  16. Value Proposition

  17. Demographic Dividend ……….. Dependency Ratio ( ratio of population aged 0 -14 and 65 + per thousand of population 15 -64 • Most East Asian Countries saw decline during 1970’s • India (and Indonesia) only saw decline after 19809 • After 2035 India has higher proportio0n than G 6 and all BRICS • After 2020 India has high proportion than Asian Economics • The Advantage is over next 4 – 5 decades • Declining DR -> savings ration rise -> boost investment GDP ratio -> labour productivity rise -> long term determinant of prosperity

  18. Large skill and intellectual capital base …… • 389 universities, 14,169 colleges • Total enrolment 9.3 million and • 1,500 research institutions, • Second largest pool of scientists and engineers in the world. • Over 2.5 million graduates are added to the workforce every year with large proportion English speaking including • 300,000 engineers and • 150,000 IT professionals up from 56,000 in 1991. Annual addition of Science and Engineering Graduates

  19. The Classes 1995 2000 2005 2010 Affluent (> US$ 10k) 0.6 0.8 2.4 7.9 Consuming (US$3k -10k) 11.8 17.2 47.3 115.5 Struggling (US$ 1k – 3k) 104.6 126.3 146.9 97.3 Improvised (<US$ 1) 50.6 44.1 9.7 negligible Total 167.6 188.3 206.3 220.7 Indian Consumer Markets…… Changing dynamics Annual household incomes in US $, Households in millions Source: - Economist Intelligence Unit, Accenture Analysis

  20. Natural Factor Endowment …………………

  21. Cost Advantage of India Source : BCG case experience

  22. Liberal Policy Framework ……………….

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