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Market of the Month – India
The world’s business is coming to India, are YOU?
Why India?
The Indian market, with more than one billion people, presents lucrative and diverse opportunities for U.S. exporters with the products, services, and commitment that can meet the country’s needs. India’s requirements for equipment and services for major sectors such as energy, environmental, healthcare, high-tech, infrastructure, transportation, and defense will exceed tens of billions of dollars in the medium-term as the Indian economy further globalizes and expands.
To meet growing domestic and export demands, Indian companies are increasingly manufacturing finished products and sourcing sophisticated, efficient products and equipment from the United States. There is also a growing trend in utilizing U.S. expertise in the fields of education, energy, environmental, engineering consulting, management consulting, retail and telecommunication.
India’s sustained and forecasted GDP growth makes it one of the fastest growing economies in the world, and the second fastest in Asia. While its size and growth make it attractive as a market, the most compelling reason for investors to be in India is the high return on investment. India is a free-market democracy with a legal and regulatory framework that rewards free enterprise, entrepreneurship and risk taking. Now is the time for U.S. companies to enter the rising Indian market.
India’s Economic Outlook
India is a fast-growing economy with a dynamic and robust financial system. The highly diversified Indian economy has shown rapid growth and remarkable resilience since 1991, when economic reforms were initiated with the progressive opening of the economy to international trade and investment. The result was an average annual GDP growth of over 6.5% in the past decade, with 8% per annum expected in the long term.
Best Prospects in India
Civil Nuclear Energy is perhaps the biggest market opportunity in terms of potential export value to U.S. companies, valued at more than $150 billion over the next 30 years. The recent opening of the civil nuclear sector provides a huge market opportunity (reactors, raw materials, supplies) for U.S. companies.
Renewable Energy (RE) market is estimated at $500 million and growing at an annual rate of 15%. Solar energy, wind energy, small hydro projects, waste-to-energy, biomass and alternative fuel are the major investment areas. Only about 3500 of the estimated potential of 100,000 RE megawatts (MW) are currently used. In addition, the government’s new RE policy of generating 10,000 MW through renewable and a non-conventional source by 2012 is expected to further boost the participation of U.S. energy companies.
Aerospace and Defense sector ranks among the world’s most dynamic, with airlines in India in the process of buying over 300 aircraft between 2007 and 2012. India is also a large and growing market for air defense equipment, especially for U.S. suppliers seeking joint-venture opportunities.
Mining and Coal sector has shown healthy growth over the past few years and will likely continue, given the emphasis on coal production to overcome a projected shortfall. An estimated $21 billion investment in opencast mining and $5 billion in underground mining will be required to attain the target production level by 2025. Although Indian firms manufacture mining equipment, U.S. firms are competitive for providing high-end, higher-size equipment and advanced technologies. India will also require a coal washing capacity of 810 million tons by 2025, an eight-fold increase from the current installed capacity, indicating a $3 billion investment.
Safety and Security industry has been growing at 20-25% during the last 5-7 years. Following the recent terror attacks in Mumbai, users are looking to procure hi-tech surveillance, detection, access control, perimeter security, fire fighting and specialized security equipment and services for rail, air, urban infrastructure, industry, schools, malls, hotels, and other strategic establishments to counter terrorism and other security threats. According to industry contacts, the security industry is estimated to grow from the current $2 billion to over $5 billion in the next 3-5 years.
Healthcare - the growing demand for quality healthcare and the absence of delivery mechanisms pose a great opportunity, and challenge, for U.S. industry. Currently valued at $35 billion, the Indian healthcare industry is expected to reach over $75 billion by 2012. With 14.5% growth in the medical infrastructure market, the demand for medical equipment could nearly double to $5 billion by 2012. Imports account for over 65 % of the entire medical equipment market, most of which come from the U.S., Germany and Japan.
Retail: Beauty and Personal Care market is currently estimated at $1.5 billion and growing rapidly. Increasingly, Indian shops and boutiques are stocking cosmetics from around the world. Many U.S. companies have immense export potential since U.S. products are considered to be of very high quality and are in high demand.
Franchising is the second fastest-growing industry, with the nascent $2.7 billion sector booming at an impressive 25%. Ten percent of the 700 franchise systems are run by international companies. Franchising is expected to grow to half of the overall organized retail trade. Though the current economic downturn could slow the growth temporarily, the avid interest in franchises in India will continue to increase, especially in smaller and medium-sized cities. The best prospects for U.S. firms include education and training, food and beverage, health and fitness, beauty salons and supplies, real estate and professional services, and clothing.
- India is emerging as the world’s fastest growing passenger car market, with the second largest two-wheeler and fifth largest commercial vehicle manufacturing centers in the world. The auto parts sector holds enormous potential for U.S. auto parts suppliers as it is expected to grow from $18 to $45 billion by the year 2015. Currently, imports account for nearly $5 billion of that amount. According to the government’s Automotive Mission Plan (AMP), 2006-2016, the projected automotive sales revenue is estimated to grow from $34 billion to $122-159 billion by 2016.
Doing Business in India
Finding partners and agents: New businesses must address issues of sales channels, distribution and marketing practices, pricing and labeling, and protection of intellectual property. Relationships and personal meetings with potential agents are extremely important. Due diligence is strongly recommended.
Geographic diversity: U.S. companies, particularly small and medium-sized enterprises, should consider approaching India’s market on a local level. Good localized information is a key to success in such a large and diverse country. U.S. Commercial Service posts in India provide indispensable local information and advice and are well plugged in with local business and economic leaders. Often multiple agents are required to serve each geographic market in the country.
Market entry options: include a subsidiary relationship, a joint venture with an Indian partner, or using a liaison, project, or branch office.
Customs duty: The levy and rate of customs duty in India are governed by the Customs Act 1962 and the Customs Tariff Act 1975. Imported goods receive a basic customs duty, additional customs duty and education cess. The rates of the basic customs duty are specified under the Tariff Act, with the peak rate reduced to 12.5% for industrial goods. The additional customs duty is equivalent to the excise duty payable on similar goods manufactured in India. Education cess at 2% is leviable on the aggregate of customs duty on imported goods. Customs duty is calculated on the transaction value of the goods. Customs duties in India are administrated by Central Board of Excise and Customs under Ministry of Finance.
India at a Glance
Population: 1.16 billion (May 2009)
Languages: Hindi (national language and primary tongue of 30% of population); English enjoys associate status, but is the most important language for national, political, and commercial communications
Currency: Indian Rupee (Rs)
Capital City: New Delhi
Financial Center: Mumbai (formerly known as Bombay)
GDP: $1.16 trillion
Per Capita (PPP): $4,139 (2007-08)
U.S. Exports to India (2008): $32.44 billion, a 85% increase from the previous year
U.S. Imports from India (2008): $39.89 billion, a 65% increase from the previous year
Major imports: machine tools, food processing equipment, textile machinery, medical equipment, high voltage electrical equipment, premium building materials, healthcare, telecommunication equipment, machinery for oil & gas, HVAC products and electronic and computer hardware.
Fred Norfleet
FBN ITPro World Business Network
msn: fbnorfleet@live.com
yahoo: fbnorfleet@ymail.com
skype: frednorfleet
web-1: http://www.fbnitpro.com
web-2: http://www.fbnitprowbn.com
business/social network: http://fbnitprowbn.ning.com
Why India?
The Indian market, with more than one billion people, presents lucrative and diverse opportunities for U.S. exporters with the products, services, and commitment that can meet the country’s needs. India’s requirements for equipment and services for major sectors such as energy, environmental, healthcare, high-tech, infrastructure, transportation, and defense will exceed tens of billions of dollars in the medium-term as the Indian economy further globalizes and expands.
To meet growing domestic and export demands, Indian companies are increasingly manufacturing finished products and sourcing sophisticated, efficient products and equipment from the United States. There is also a growing trend in utilizing U.S. expertise in the fields of education, energy, environmental, engineering consulting, management consulting, retail and telecommunication.
India’s sustained and forecasted GDP growth makes it one of the fastest growing economies in the world, and the second fastest in Asia. While its size and growth make it attractive as a market, the most compelling reason for investors to be in India is the high return on investment. India is a free-market democracy with a legal and regulatory framework that rewards free enterprise, entrepreneurship and risk taking. Now is the time for U.S. companies to enter the rising Indian market.
India’s Economic Outlook
India is a fast-growing economy with a dynamic and robust financial system. The highly diversified Indian economy has shown rapid growth and remarkable resilience since 1991, when economic reforms were initiated with the progressive opening of the economy to international trade and investment. The result was an average annual GDP growth of over 6.5% in the past decade, with 8% per annum expected in the long term.
Best Prospects in India
Civil Nuclear Energy is perhaps the biggest market opportunity in terms of potential export value to U.S. companies, valued at more than $150 billion over the next 30 years. The recent opening of the civil nuclear sector provides a huge market opportunity (reactors, raw materials, supplies) for U.S. companies.
Renewable Energy (RE) market is estimated at $500 million and growing at an annual rate of 15%. Solar energy, wind energy, small hydro projects, waste-to-energy, biomass and alternative fuel are the major investment areas. Only about 3500 of the estimated potential of 100,000 RE megawatts (MW) are currently used. In addition, the government’s new RE policy of generating 10,000 MW through renewable and a non-conventional source by 2012 is expected to further boost the participation of U.S. energy companies.
Aerospace and Defense sector ranks among the world’s most dynamic, with airlines in India in the process of buying over 300 aircraft between 2007 and 2012. India is also a large and growing market for air defense equipment, especially for U.S. suppliers seeking joint-venture opportunities.
Mining and Coal sector has shown healthy growth over the past few years and will likely continue, given the emphasis on coal production to overcome a projected shortfall. An estimated $21 billion investment in opencast mining and $5 billion in underground mining will be required to attain the target production level by 2025. Although Indian firms manufacture mining equipment, U.S. firms are competitive for providing high-end, higher-size equipment and advanced technologies. India will also require a coal washing capacity of 810 million tons by 2025, an eight-fold increase from the current installed capacity, indicating a $3 billion investment.
Safety and Security industry has been growing at 20-25% during the last 5-7 years. Following the recent terror attacks in Mumbai, users are looking to procure hi-tech surveillance, detection, access control, perimeter security, fire fighting and specialized security equipment and services for rail, air, urban infrastructure, industry, schools, malls, hotels, and other strategic establishments to counter terrorism and other security threats. According to industry contacts, the security industry is estimated to grow from the current $2 billion to over $5 billion in the next 3-5 years.
Healthcare - the growing demand for quality healthcare and the absence of delivery mechanisms pose a great opportunity, and challenge, for U.S. industry. Currently valued at $35 billion, the Indian healthcare industry is expected to reach over $75 billion by 2012. With 14.5% growth in the medical infrastructure market, the demand for medical equipment could nearly double to $5 billion by 2012. Imports account for over 65 % of the entire medical equipment market, most of which come from the U.S., Germany and Japan.
Retail: Beauty and Personal Care market is currently estimated at $1.5 billion and growing rapidly. Increasingly, Indian shops and boutiques are stocking cosmetics from around the world. Many U.S. companies have immense export potential since U.S. products are considered to be of very high quality and are in high demand.
Franchising is the second fastest-growing industry, with the nascent $2.7 billion sector booming at an impressive 25%. Ten percent of the 700 franchise systems are run by international companies. Franchising is expected to grow to half of the overall organized retail trade. Though the current economic downturn could slow the growth temporarily, the avid interest in franchises in India will continue to increase, especially in smaller and medium-sized cities. The best prospects for U.S. firms include education and training, food and beverage, health and fitness, beauty salons and supplies, real estate and professional services, and clothing.
- India is emerging as the world’s fastest growing passenger car market, with the second largest two-wheeler and fifth largest commercial vehicle manufacturing centers in the world. The auto parts sector holds enormous potential for U.S. auto parts suppliers as it is expected to grow from $18 to $45 billion by the year 2015. Currently, imports account for nearly $5 billion of that amount. According to the government’s Automotive Mission Plan (AMP), 2006-2016, the projected automotive sales revenue is estimated to grow from $34 billion to $122-159 billion by 2016.
Doing Business in India
Finding partners and agents: New businesses must address issues of sales channels, distribution and marketing practices, pricing and labeling, and protection of intellectual property. Relationships and personal meetings with potential agents are extremely important. Due diligence is strongly recommended.
Geographic diversity: U.S. companies, particularly small and medium-sized enterprises, should consider approaching India’s market on a local level. Good localized information is a key to success in such a large and diverse country. U.S. Commercial Service posts in India provide indispensable local information and advice and are well plugged in with local business and economic leaders. Often multiple agents are required to serve each geographic market in the country.
Market entry options: include a subsidiary relationship, a joint venture with an Indian partner, or using a liaison, project, or branch office.
Customs duty: The levy and rate of customs duty in India are governed by the Customs Act 1962 and the Customs Tariff Act 1975. Imported goods receive a basic customs duty, additional customs duty and education cess. The rates of the basic customs duty are specified under the Tariff Act, with the peak rate reduced to 12.5% for industrial goods. The additional customs duty is equivalent to the excise duty payable on similar goods manufactured in India. Education cess at 2% is leviable on the aggregate of customs duty on imported goods. Customs duty is calculated on the transaction value of the goods. Customs duties in India are administrated by Central Board of Excise and Customs under Ministry of Finance.
India at a Glance
Population: 1.16 billion (May 2009)
Languages: Hindi (national language and primary tongue of 30% of population); English enjoys associate status, but is the most important language for national, political, and commercial communications
Currency: Indian Rupee (Rs)
Capital City: New Delhi
Financial Center: Mumbai (formerly known as Bombay)
GDP: $1.16 trillion
Per Capita (PPP): $4,139 (2007-08)
U.S. Exports to India (2008): $32.44 billion, a 85% increase from the previous year
U.S. Imports from India (2008): $39.89 billion, a 65% increase from the previous year
Major imports: machine tools, food processing equipment, textile machinery, medical equipment, high voltage electrical equipment, premium building materials, healthcare, telecommunication equipment, machinery for oil & gas, HVAC products and electronic and computer hardware.
Fred Norfleet
FBN ITPro World Business Network
msn: fbnorfleet@live.com
yahoo: fbnorfleet@ymail.com
skype: frednorfleet
web-1: http://www.fbnitpro.com
web-2: http://www.fbnitprowbn.com
business/social network: http://fbnitprowbn.ning.com
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