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India---- the Competitive Advantage

India---- the Competitive Advantage. November 2006. Structure. Perception Perception------ Realities Value Proposition. Perception. Confidence Indices…. AT Kearney …… Trend of Secular Increase for both domestic and foreign investors. Moving up the League tables….

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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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