Category — Economy

Ten Most Significant Changes in India in the Last Decade

Forbes documents the top ten most significant changes that India has witnessed from 2010 to 2017. Read a lightly edited summary of these below:

1) Emerging as one of the largest economies

The recent economic expansion noted in India has brought a record number of people out of poverty. A growing middle class fuels its impressive consumer growth. Today, India is the world’s third largest market for smart phones and the sixth largest for cars; its software industry employs more than four million people directly and more than ten million indirectly.

With almost fifty percent of India’s population under the age of twenty-six, the country faces the challenge of finding jobs for one million citizens who enter the employment market every month.

2) Gaining diplomatic clout

With economic prosperity, India gained strategic importance. India’s Civil Nuclear Treaty with the U.S. in 2008 ushered India into the global nuclear elite. For the last three years, India has given more aid than it has received, with neighbors Bhutan, Afghanistan and Nepal topping the list of recipients. All of this has added up to give India much more power in diplomatic negotiations.

The current Indian government is the first one to consistently conduct diplomacy in the language of international business. Prime Minister Narendra Modi has undertaken more than 70 foreign trips since taking office in May 2014. Given his focus on trade and investment, Modi is widely promoting the fact that India jumped 30 places on the World Bank’s Ease of Doing Business list for 2018 to the 100th place.

3) Evolving federalism

Cooperative federalism of India’s 29 states has now morphed into a competitive federalism in which states – many with the populations of large countries – vie with each other for investment. Foreign investors need to assess the political and regulatory scenarios at both the federal and state levels and pay attention to the state-wise ease of doing business rankings that are published every year.

In the middle of 2017, India replaced dozens of state and federal taxes with a national one, called the Goods and Services Tax or GST. The federal government created a more unified national market which is expected to lead to greater efficiencies and a more attractive business environment.

4) Fighting corruption and “black” money

Prime Minister Modi’s government was elected on an anti-corruption manifesto, and in November 2016, Modi announced the immediate withdrawal of two high-value currency notes. In one stunning move, 86% of the currency was sucked out of circulation, to be gradually replaced by new bills. The declared aim of the move was to fight black money and counterfeiting.

The Prevention of Money Laundering Act, has recently been bolstered by an expanded Enforcement Directorate, the federal agency tasked with fighting money laundering. Between April and August of 2017, the Enforcement Directorate and the Securities and Exchange Board of India, the stock market regulator, acted against at least 331 fake companies and 100 brokerages charged with facilitating money laundering. This government has implemented Aadhaar, the world’s largest biometric identification system, to root out duplication of identities and safeguard welfare plans from corruption-related leakages. Aadhaar was conceived during the previous government of Dr. Manmohan Singh but Modi’s team has fully embraced its power.

5) Forging a stricter compliance regime

The Reserve Bank of India, the country’s central bank, has been given more power in 2017 to act against loan defaulter. The Companies Act of 2013, despite many problems, also brought clearer accountability to corporate anti-corruption and anti-fraud measures.

6) Emergence of the modern Indian  and Indian led multinational

Indian business groups began to extend their international footprint in this decade – India’s Tata Group bought Britain’s Corus Steel for $13 billion in January 2007. The next month, the Aditya Birla Group, announced the acquisition of Canada’s Novelis for $6 billion. The year after that, Tata Motors bought the Jaguar Land Rover car businesses from Ford Motor for $2.3 billion. These acquisitions have helped change the culture of corporate India, embedding international best practices in some of India’s top companies. During the same period, executives of Indian origin were appointed to lead Pepsico, Google. Adobe, Microsoft, Deutsche Bank and Reckitt Benckiser.

7) Tilting to the political right

India’s growing right-wing nationalism concerns business leaders who feel that a sense of nationalism is in the way of business decisions and policies. As the most populous democracy in the world heads towards another national election in the first half of 2019, this position is unlikely to soften anytime soon (“according to Forbes”)

8) Growing wealth of “godmen”

The fastest growing consumer company in the country today is Patanjali, which was founded just a decade ago by Baba Ramdev, a yoga evangelist whose religious sermons on his own television channel are watched by tens of millions every day. His diet-biscuit-to-dish-washer company is now a $1.6 billion behemoth whose success has forced several multinational giants to rethink their market strategies.

9) Changing security challenges

In  the November 2008 terrorist attacks, when Pakistani terrorists attacked four locations across Mumbai, India resolved to fight terrorism in a more coordinated way.

10) Leaping into a digital future

The Modi government has launched Digital India, a campaign to improve the country’s digital infrastructure and offer more government services online. Many Indian companies are leveraging artificial intelligence, data analytics and machine learning to disrupt their markets and deliver a competitive edge.

Indian flag

December 5, 2017   No Comments

VC March Capital Partners Focuses on Startups in India

One of the largest global funds in Southern California, March Capital Partners founded by Jim Armstrong, Sumant Mandal, Gregory Milken, and Jamie Montgomery, is now focusing on startups in India in the areas of data science, machine learning, and artificial intelligence.

In an interview with the Economic Times, Mandal said, “There are very exciting opportunities coming out of India. India has very strong talent within these spaces. That’s going to be very important areas for us to look at.” A team in India will help the VC expand its portfolio, and Mandal explained, “As we develop our portfolio in the country, we will definitely look to have people on the ground.

A case of dollar bills

Many leading global late-stage VC firms such as Temasek Holdings, DST Global, Tybourne Capital, FTV Capital, Generic Atlantic and many more have invested in India. Along with Temasek Holdings, March Capital Partners had co-led a $145 million Series E funding round in online automobile trading startup CarTrade, last year reports Inc42.

November 28, 2017   No Comments

Barclays: India Is on the Rise

London-based 327-year-old Barclays PLC says: With a rapidly growing middle class, a young labor force, and a reform-minded government, India is on the rise.

With a GDP of nearly $2.5 trillion, —  and one of the highest GDP growth rates in the world — India ‘s GDP is outpacing emerging markets; the country now holds investment-grade borrower statusSeveral factors are combining to create a virtuous cycle that heralds sustainable growth

Anti-corruption Reforms — the ban on high value rupee notes in November 2016 was a bold anti-corruption measure. Another of its anti-corruption initiatives is the Aadhaar program where over a billion Indians have enrolled in the universal ID program – the largest biometric identification system in the world that among other benefits ensures wider financial inclusion of the country’s people.  

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Long Term Investment — In order to attract long-term investments, the Government of India has eased limits on foreign direct investment (FDI), simplified regulations, implemented the integrated goods and services tax, and has undertaken planned urbanization. India is a top prospective host economy for FDI for 2017-2019.

Growing Labor Force — More than 10 million people join India’s productive labor force every year. The average age of India’s productive workforce is 27 – a decade younger than China’s and America’s workforce – and most people are expected to continue working until 2050. India’s population is projected to remain one the youngest for the foreseeable future.

Strong Macro Fundamentals — India has been able to circumvent high inflation, high fiscal and current account deficits, and pressure on the currency and interest rates with careful monetary and fiscal policy — its current account gap, as a proportion of GDP, has narrowed rapidly over the last four years. Real GDP growth has averaged around 7.5% Year-on-Year since 2014, up from about 6% in previous years.

November 21, 2017   No Comments

Moody’s Upgrades India’s Rating

New York City-based  Moody’s Investors Service‘s upgrading India’s sovereign credit rating for the first time since 2004 to Baa2 from Baa3, and changing the outlook to ‘stable’ from ‘positive’, is a boost to the Modi government’s reform agenda.

Bloomberg says that the upgrade adds to a string of good news for Modi. The World Bank said it’s getting easier to do business in India, with Asia’s third-largest economy jumping 30 places to rank 100th in the latest ranking released last month. Earlier this week, Pew Research Center said Modi remained a popular leader and public confidence in the economy and the overall direction had improved.

A poster saying 'analysis'

  • India is the largest economy among all Baa2-rated sovereigns
  • The Philippines is the only other Baa2-rated country in Asia
  • India ahead of other BRICS — Russia-Ba1, South Africa-Baa3, Brazil-Ba2
  • Among BRICS, only India, China and South Africa are investment grade
  • On a PPP basis, India’s GDP per capita has outstripped the Baa-rated median (19 countries)
  • Between 2006 and 2016, this grew 108% vs. 74% for Baa-rated median
Moody’s forecasts GDP growth of 6.7 percent for the fiscal year through March 2018, with a pick up to 7.5 percent in the following year and “similarly robust” levels from 2019 onward — that’s in line with the median 6.8 percent and 7.4 percent estimates in a Bloomberg survey.

 

 

November 19, 2017   No Comments

CapGemini says India has Nearly Quarter Million Wealthy Persons

According to the Asia Pacific Wealth Report 2017, released by the Paris-headquartered  Capgemini, India is making a noteworthy entry to the world’s richest list by scoring the fourth spot in the APAC region

India’s tally of High Net Worth Individuals, (each one having more than $1 million in the form of investible assets excluding apartment and collectable assets) grew from 84,000 in 2008 to 219,000 in 2016. However, wealthy Indians have assets scattered over the world rather than in the nation itself, notes the report. The focus on entrepreneurship is helping Asian firms to get a spot in the report.

A representative picture of an entrepreneur

“We project that Asia-Pacific will surpass $40 trillion in High Net Worth Individuals wealth by 2025 if Emerging Asia [China, India, Indonesia, and Thailand] capitalizes on its tremendous potential to grow at 12.9 percent annually – exceeding the 10.2 percent rate of 2016 – and if Mature Asia [Japan, Australia, New Zealand, Singapore, Hong Kong, Taiwan, Malaysia, and South Korea] grows at 6.4 percent or higher, which it accomplished in 2016 at 6.9 percent,” says Anirban Bose, Head of Global Banking and Capital Markets at Capgemini.

Dazeinfo reports that the millionaires in APAC, excluding Japan, were able to churn out a 33% return on investment during 2016. The factors that cause the growth of the trend include:

  • Transparency
  • Efficiency
  • Innovation

What works for China is the increased focus on single child policy which has created a large number of eligible bachelors while the Indian diaspora struggles with its unemployment index.

 

November 14, 2017   No Comments