India's strong growth creates more and more marketing possibilities for companies and also opportunities for greater cost efficiency. At the same time, India's high growth results in increased competition.
To be able to do business in India, companies must continue to be world leaders. Companies already established in India are optimistic about the opportunity of good business opportunities. "Innovate or Abdicate" are the key ingredients for global competitiveness!
In India, we are not talking about "innovation", but "Indovation" - innovations in product areas which are also directed to a financially weak part of the population. A book that is highly mentioned is the Michigan economist C.K. Prahalad´s book "The fortune at the bottom of the pyramid. Eradicting poverty through profits.”
Technology and innovation will generate new opportunities for India's population of 1.2 billion where the GDP per capita does not exceed 1 000 U.S. dollars per year.
The price of Tatas Nano-car is only 2,450 dollars, which is an opportunity for the growing number of Indians. Today there are 17,500 Nano-cars on the Indian roads, but according to the Financial Times (2010-01-20), the number at the end of the year will have risen to 100,000 cars. Good marketing possibilities for small cars now attract international car manufacturers to increase their presence on the Indian market.
India's young population gives rise to dynamism and entrepreneurship which will inspire the outside world. Underlying conditions is democracy, including freedom of media, creating innovation and creativity also at the grassroots level. According to Rai and Simon (2007), in 2020, about half of the world’s population under the age of 25 will be in India!
Globalization and liberalization are consent among Indian politicians, but with some caution. One example is the difficulty for foreign retailers to enter the Indian market since the protection of the small Indian shop owners has high priority.
The EU is India's largest trading partner (with about one quarter of imports and exports). There are important exchanges within technology and consumer products. India is in lead within IT and outsourcing. In addition, India increases its market shares within manufacturing with high value added.
Manufacturing zones contribute to strengthening the manufacturing sector. Not least, car production is growing rapidly to meet the domestic demand - and eventually export markets demand as well.
The risk is that the poor education and poor infrastructure are holding back the development. In relation to China, India attracts far less foreign capital for investment.
Cecilia Hermansson
Chief Economist
Swedbank