India’s Packaged Food Sector is growing rapidly; this could be your perfect time to invest

The Indian food industry is increasing its contribution to world food trade by every passing year, and thereby, is set for a huge evolution. The food sector has emerged as a high-growth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry.

India’s farms are surely observing a silent revolution. Horticulture produce has been outpacing grain output and global food companies are beginning to evaluate the potential of the Indian market entry strategy. The local markets are also leveraging to beat the stringent import quality norms set by West Asian and European countries.

What opportunities lie in store for you?

  • Food packaging plays a vital role in preserving food throughout the distribution chain
  • The increase in consumption of convenience foods is driving the food packaging market
  • India witnesses a current turnover of USD 24.6 billion and a growth rate of 13%-15% annually
  • The Indian packaging industry is expected to reach USD 32 billion by 2020
  • The Indian Packaging Industry is presently ranked 11th in the world
  • Within the packaging industry, packaged processed food holds the maximum share of 48%, followed by personal care packaging (27%) and pharma packaging (6%)
  • Visual appeal and convenience are the two main growth drivers of the food packaging market
  • Further, the development of food processing has created the demand for the innovation of food packaging technology

Government Initiatives:

  • The government has sanctioned 42 Mega Food Parks (MFPs) to be set up in the country under the Mega Food Park Scheme, of which, 12 Mega Food Parks have already become functional
  • 100% FDI is permitted under the automatic route in Food processing industries
  • 100% FDI is allowed through government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India
  • By 2030, management consulting firms in India have predicted the Indian annual household consumption to treble, making India 5th largest consumer

Scope and Opportunities:

  • It will take more working women and smaller families to drive consumption of packaged food in India
  • The immediate push is coming from improving cold storage due to better power supply, affordability and investments
  • As per a report by Credit Suisse, the market is expected to grow five fold to $200 billion over the next decade
  • The most profitable opportunities lie in baby food, chocolates, biscuits, baked products and juices
  • There is increased focus on healthier snacks, and beverages which are largely driven by consumption amid rising temperatures
  • Enhanced power supply has improved refrigeration at retail stores, while modern retail outlets can now be found in smaller cities and towns
  • Mergers and acquisitions consulting firms in India have cited affordability as a key factor with lower GST rates, lesser wastage in the packaging cycle and larger manufacturing efficiencies keep costs under check
  • Representatives are putting in efforts to grow their categories, in order to attract greater investments

India has witnessed some major investments in this sector in the recent past:

  • Global e-commerce giant, Amazon is planning to enter the Indian food retailing sector by investing US$ 515 million in the next five years
  • After a thumping success of the original Mango Frooti, Parle Agro Pvt Ltd launched Frooti Fizz which will be retailed across 1.2 million outlets in the country as it targets increasing its annual revenue from Rs. 2800 crore (US$ 0.42 billion) to Rs. 5000 crore (US$ 0.75 billion)
  • US-based food company Cargill Inc, aims to double its branded consumer business in India by 2020, by doubling its retail reach to about 800,000 outlets
  • Danone SA plans to focus on nutrition business in India, its fastest growing market in South Asia, with an aim to double its revenue in India by 2020

Uber Technologies Inc plans to launch Uber Eats, its food delivery service to India, with investments made across multiple cities and regions. The brand has recently launched it’s first commercial campaign by positioning Uber Eats beyond delivering food from the restaurant, driving a transactional exchange of a strong memorable relationship

Ref Links-  

https://www.thehindu.com/business/Industry/casting-a-hopeful-eye-to-the-future/article17452574.ece 

http://www.capitalmarketplus.com/cabnas/Cabstory.asp?SNo=130892&opt 

http://www.autocarpro.in/news-national/association-of-indian-forging-industry-foresees-healthy-growth-for-the-forging-industry-40668 

http://industrialproductspurchase.com/admin/articles_pdf/1320406704-Casting%20and%20Forging.pdf 

http://www.engineeringnews.co.za/article/forging-market-for-automotive-application-to-be-valued-at-56-billion-by-2022-2017-03-10/rep_id:4136 

India’s textile and apparel exports stood at Rs 1.30 trillion (US$ 18.56 billion) in FY2019    

The Textile Industry occupies a vital place in the Indian economy and contributes substantially to its exports earnings. Textiles represent nearly 30% of the country’s total exports. Providing direct employment to over 15 million persons in the mill, powerloom and handloom sectors make India the world’s second largest producer of textiles after China. It is also the world’s third largest producer of cotton after China and the USA. 

India’s total exports of textiles and apparel are expected to grow at a CAGR of 12.03% to reach $82 billion by 2021. The total textile and clothing exports, during April-September 2018, stood at Rs. 1.30 trillion ($18.56 billion). As per reports released by various management consulting firms in India: 

  • Ready-made garments exports were Rs. 52,810.51 crore ($7.53 billion) 
  • Fiber exports stood at Rs. 8,429.05 crore ($1,201.06 million) 
  • Total value of yarn, fabrics and made-ups exports of the country was $14.33 billion 
  • The exports stood at Rs. 54,422.11 crore ($7.75 billion) 

The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 250 billion by 2019. The Confederation of Indian Textile Industry (CITI) recently cited that India’s apparel and textile sector is on its way towards a turnaround, as the apparel exports are expected to grow 7% in the current year. A glorious period for the sector indeed! 

India’s textile and apparel sector is fragmented, with few large companies and a dominant share of small, independent and unorganised players. The sector, which supplies fabrics and garments to leading global brands, is driven by India’s strengthening middle class whose taste for Western clothing has recently eclipsed the sales performance of traditional dress. 

To further propel the textile industry, the government of India has brought into force a number of steps: 

  • Allowed a 100% FDI via the automatic path 
  • De-reserved knitwear and readymade garments from the banner of small-scale industries 
  • Initiated TUFS (Technology Upgradation Fund Scheme) to upgrade and modernize the existing textile industry, which offers investment potential 
  • Textile parks are being set up under SITP (Scheme for Integrated Textile Parks), which is stated to attract foreign investment to the extent of US$ 4.3 billion 
  • Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunities and attract investments worth Rs. 800.00 billion (US$ 11.93 billion) during 2018-2020 
  • As of August 2018, it generated additional investments worth Rs. 253.45 billion (US$ 3.78 billion) and exports worth Rs. 57.28 billion (US$ 854.42 million)

The domestic textile market in India too is witnessing strong growth owing to an increase in disposable income of the young elite, and a rapid growth in organized retail. International brands in India are highly aspirational and the companies with strong branding and high margins are already profitable. There is increased collaboration between Indian and foreign companies such as Armani, Benetton, Esprit, Levi Strauss, Hugo Boss, Liz Clairborne and many more. You may engage a business consultant who can guide you step by step, virtually concluding a seamless transaction for you in the country. 

Opportunities for International Brands 

The Indian textile industry has its important place in the economy of the country. With a strong population base and the largest Gen Y population in the world, the ballooning middle class is also boosting Indian consumption patterns. The number of households with an annual income of more than $14,000 has increased at a CAGR of 11% since 2005 and is only expected to increase at the same rate for the next 10 years from now.  

Further India enjoys several advantages when it comes to textile and apparel manufacturing compared to competing nations like China, Vietnam, Bangladesh, Ethiopia, Myanmar, Kenya and others. 

Road Ahead 

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, rise in aspiration class and with the assistance of global business consulting firms, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next and others into the Indian market. 

 

References: 

https://www.ibef.org/industry/textiles.aspx ‘

http://www.fashionatingworld.com/new1-2/india-s-textiles-and-apparel-exports-to-touch-82-billion-by-2021  

http://www.investinindia.com/industry/textile/textile-industry 

https://www.mapsofindia.com/my-india/business/textile-industry-in-india-an-overview  

http://www.indiantextilemagazine.in/industry-news/investment-opportunities-in-indian-textile-industry/ 

 

India is dominating worldwide offering vast opportunities for global pharma companies

The Indian pharmaceutical sector is the largest provider of generic drugs globally supplying over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK. 

India dominates an important position in the global segment with a large pool of scientists and engineers who have the potential to steer the industry ahead. The domestic pharmaceuticals market is the second largest in terms of volume and thirteenth largest in terms of value, having large raw material base advantage. 

The growth story has developed by leaps and bounds in the last three decades and is only cultivating further. As reported by top strategy consulting firms, the industry has posted double-digit growth over the last few years, rising from US $20 billion in 2015 to US $36.7 Billion in 2017 and projected to grow to US $55 Billion by 2020.  

Initiatives taken by the GOI in past five years have been reassuring: 

  • The National Health Protection Scheme (2018-19) is largest government funded healthcare programme in the world, expected to benefit 100 million poor families in the country by providing a cover of up to Rs. 5 lakh (US$ 7,723.2) per family per annum 
  • In October 2018, the Uttar Pradesh Government announced setting up six pharma parks and has received investment commitments of more than Rs. 6,000 crore (US$ 712-855 million) for the same 
  • The GOI is also planning to set up an electronic platform to regulate online pharmacies under a new policy 
  • ‘Pharma Vision 2020’ is aimed at making India a global market leader in end-to-end drug manufacture.  

As per market research companies, the Indian pharmaceutical Industry (IPI) has grown at nearly 12 to 15 per cent in the past few years, which is a tremendous pace of growth if we compare it to that of the US or European markets. The industry growth is expected to continue in double digits, making India rank amongst top five global pharma markets by 2030.  

Big international houses are becoming more active in India as they have both money and resources to flourish. Tecnova  has successfully executed nearly 300 projects in the pharmaceuticals and healthcare domain with well-known brands such as GlaxoSmithKline, Baxter, Helvoet Pharma, Sanofi-Synthelabo and many more.  

India’s strong position as a pharma supplier rests on: 

Cost 

  • The cost of manufacturing formulations in India remains 30‐40 percent lower than other comparative manufacturing hubs such as China and Eastern Europe 

Domestic Requirement 

  • One need to keep in mind that India has been implored by its own people and quite a few developed countries to bring healthcare to the top of its development agenda 

Some International Pharma Companies that have been successfully operating in India 

PFIZER 

Pfizer Inc., the parent company of Pfizer Limited, was founded in New York in 1849. Today, it is the world’s premiere biopharmaceutical corporation producing medicines, vaccines and other consumer healthcare products across 175 markets. Pfizer Limited is the 3rd largest Multinational Pharmaceutical Company in India with a portfolio of 142 products across 15 therapeutic areas.  

NOVARTIS 

Novartis India Limited is part of a Swiss multinational pharmaceutical company (Novartis International AG) founded as part of a merger between Ciba-Geigy and Sandoz in 1996. In India, Novartis is primarily engaged in the trading of drugs and pharmaceuticals via the followingPharmaceuticals, Eye Care and Generic Medicines. As on July 2018, the company’s core operating profit rose 7% to $3.541 billion and Sales climbed 5% to $13.158 billion as per Reuters poll.  

ROCHE  

In November 1957, F. Hoffmann-La Roche Ltd. (FHLR), Basle, finalised negotiations with the GOI for the local manufacture of synthetic Vitamin A and pharmaceutical specialties. After launch of two innovative cancer drugs, the company feels that, under its ‘Vision 2030’, the “right collaboration and right focus” along with sustainable and innovative solutions will accelerate healthcare.  

Pharmaceutical consultingcompanies often mention Piramal Enterprises Limited (PEL) growth trajectory as a classic example of opportunism meeting expertise. From Rs. 15,000 crore it received from Abbott, Rs. 6,000 crore was invested in the pharma segment. The business has now grown to earn revenues of Rs. 4,000 crore. 

 

 

India is 4th largest medical devices market in Asia after Japan, China, and South Korea

Life Sciences are a category encompassing the wide range of industries related to biological sciences. By and large this industry is related to human healthcare, including pharmaceuticals, diagnosis, healthcare facilities, medical devices and policy making.

THE PHARMA STORY IN INDIA

The Indian pharmaceutical industry’s year-on-year revenue growth is back on track, as per top healthcare consulting firms in India. While the global pharmaceutical market stood at $934.8 billion in 2017 and will reach $1.17 trillion in 2021, the domestic industry was estimated at $33 billion in the same year.

India is the largest provider of generic drugs globally and caters to over 50% of global demand for various vaccines, 40% of generic demand in the U.S., and 25% of all medicines in the U.K.

OVERVIEW OF THE MEDICAL DEVICES INDUSTRY IN INDIA

The Medical Devices industry in India is presently valued at USD 5.2 billion and contributes 4-5% to the USD 96.7 billion Indian health care industry. Consulting firms in India have cited the following statistics that put India high up on the global map.

  • The industry has steadily grown and witnessed a surge from USD 2.02 billion in 2009 to USD 3.9 billion in 2015 at a CAGR of 15.8%
  • As per industry estimates, the Indian medical devices market will grow to USD 50 billion by 2025
  • Currently, India is counted among the top 20 global medical devices market
  • India is the 4th largest medical devices market in Asia after Japan, China and South Korea
  • The estimated market size of the consumer and durable segment is USD 1404 million

HEALTHCARE IN INDIA

Ayushman Bharat is the largest government funded healthcare program in the world. Technology is playing a key role of equaliser in taking preventive healthcare to second and third wave of demography across geography and class.

Road Ahead for Healthcare

  • By 2020, the healthcare information technology market is expected to grow 1.5 times from current $1 bn
  • By 2022, the diagnostics market is expected to grow at a CAGR of 20.4% to reach $ 32 bn from $ 5 bn in 2012
  • 100% FDI is allowed under the automatic route of greenfield projects
  • For investments in brownfield projects upto 100% FDI is permitted under the government route

FOREGIN COMPANIES COULD LOOK TO INVEST IN THESE SEGMENTS IN INDIA

Hospitals

There is tremendous demand for tertiary care hospitals and specialty hospitals in India. Most healthcare players have been setting up additional facilities to cater to critical care or super-speciality healthcare and some leading hospital players are aggressively raising funds for their. Recently, Fortis Healthcare Ltd. accepted the proposal from Malaysia’s IHH Healthcare Berhad to invest INR 4,000 crores in the Indian Hospital Chain. 

MEDICAL DEVICES AND EQUIPMENTS

Investment in the medical equipment-manufacturing sector is one of the most attractive areas for foreign companies. This sector has seen a significant flow of foreign investments over the past few years. Business consultancy services in India have given a thumbs up to the medical equipment manufacturing industry which is expected to grow in tandem with the hospital sector, touching nearly USD 60 billion

DIAGNOSTICS

Diagnostic centres are proving to be a lucrative business/investment opportunity for foreign companies. These centres have expanded their service to include all kinds of diagnostic services including cardiology and neurology.

TECHNOLOGY DRIVEN SERVICES

Tele-medicine and e-Healthcare and Tele-radiology have emerged very fast with an increasing number of foreign hospitals active in this space. Many hospitals have adopted the foreign partnership route to render these services.

HEALTH INSURANCE

The domestic health insurance business at INR 12,606 crore (USD 2.03 billion), accounts for about a quarter of the total non-life insurance business in the country. New products that also cover certain ailments not covered earlier are seeing more buyers of such insurance policies.

SOME SUCCESSFUL MNC INVESTMENTS IN INDIA

ABBOTT

US-based global healthcare and research company Abbott Laboratories has a strong presence in therapeutic, Gastroenterology, Diabetes and women’s health category in India.

GLAXOSMITHKLINE

 GlaxoSmithKline is one of the world’s top research-based health management and pharmaceutical companies in India. It’s market capitalisation stood at Rs. 27,522.55 crore on June 2015.

ADVANTAGE INDIA

  • 100% FDI in health
  • Large domestic market
  • Rising affordability
  • Availability of skilled and qualified Human Resources
  • Enabling environment – growing GDP and FDI

 

The Indian Automobile Industry- Demand, Exports and Growth Opportunities

Landing at Rank 77 in the Ease of Doing Business report released by the World Bank, India has observed certain remarkable improvements in terms of economic growth and creating opportunities for industry giants in the country with the help of business development consultant in terms of setting up business in India.

The country’s automotive sector became the world’s 4th largest in the world with its sales increasing 9.5 percent year-on-year to 4.02 million units in the year 2017. Last year, India became the world’s 7th largest manufacturer of commercial vehicles. The country’s demand for the automobile sector is broadly based across multiple sectors; however, major demand is from the rural part of the country. Over the years, Indian consulting companies state that India has emerged as a prime destination for automotive manufacturer for both small and heavy vehicles.

The continuously growing population and the expanding middle-class section of the society are expected to remain the key drivers of the demand for automotive components in the country. The industry accounts for 2.3 percent of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. The presence of a stable government framework, increasing purchasing power, larger domestic market, and continuous development in the infrastructure have made India a favorable destination for investment, creating opportunities for major companies for establishing a business in India.

As far as the Indian automotive sector is concerned, the country is the world’s sixth largest auto producer by volume, owning less than 1 percent of the global export markets. As per July 2018, the exports in the Passenger Vehicle (PV) segment comprised of cars, utility vehicles, and vans have grown around 41 percent in the first quarter of the ongoing fiscal in comparison with the previous one. The growth in shipment of automobile products to foreign shores from India has maintained its pace with hike in the domestic sales in most of the segments in the first quarter of the financial year 2018-19. The overall demand for automobiles grew by 18 percent in the domestic market whereas the demand for exports went up by 26 percent. According to the latest society of Indian Automobile Manufacturers (SIAM) data, the segment witnessed total exports of 167, 161 units in the quarter as against 118,420 units in April-June period of FY 2017-18.

As of May 2018, India’s annual production stood at 29.08 million vehicles, inclusive of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycles in FY18 as against 25.33 million in FY17, witnessing a growth of 14.8% as compared to a growth of 5.5% during the same period last year. Being a prominent auto exporter, India’s auto exports stood at about 14% of the automobiles produced annually. Declined by about 4.5% in FY17, the exports witnessed a sharp growth of over 16% in FY18. The gross turnover of the Automobile manufacturers in India for the year 2016-17 stood at US$ 67,724 million.

Going forward in FY19, the Indian auto industry is expected to continue witnessing a healthy growth with regard to the disruptions caused by various policy implementations such as demonetization, ban on BS-III vehicles, GST, rate revisions have been moderated. Moreover, the demand is expected to improve the back of various initiatives taken by the government in the Union Budget 2019 for the agriculture and infrastructure sectors. Additionally, as observed by the consulting companies, auto exports from India are expected to show strong growth as many companies like Volkswagen, Ford Motors, General Motor are focusing on exports and expansions in newer markets such as South America, North America, and Asia, resulting in an increase in the growth. Export demand from the African and Latin countries is expected to pick up on the back of stabilization of exchange rates and commodity prices in the country. Tecnova, the India management consultant helps global organizations enter and establish/set-up their business in India.

Ref Links-  

https://www.ibef.org/industry/autocomponents-india.aspx 

https://auto.economictimes.indiatimes.com/news/industry/complete-automobile-analysis-q1-fy-19/64949063 

https://www.business-standard.com/article/news-cm/auto-exports-from-india-is-expected-to-show-strong-growth-care-ratings-118052200235_1.html 

The Indian Casting and Forging Industry Witnessing a Robust Growth in Demand

Fourth largest sector in the country, the Indian Automotive Industry is on the upswing and all big producers are relocating their manufacturing in this region to be near the upcoming biggest consumer markets. Currently, India is the world’s third-largest Casting producer. This will further open more opportunities for castings and forging industries both for domestic production and for exports.

The manufacturing processes of Casting and Forging are known to give intricate shape to industrial components. The major difference between the both is that Forging is extensively obtained with the usage of iron and steel metal. No industrial product can be considered complete without the processes of Casting and Forging. Both the processes have been into existence since the beginning of the industrial revolution. However, Forgings are preferred over Casting because of better directional strength, high impact toughness, fatigue properties, and structural integrity.

Casting and forging are one of the key engineering segments supplying various components to end-user industries such as Railways, Automobile, Defense, Aerospace, Material handling, Construction equipment, and Mines. The Indian casting and forging sector has equipped itself to retain its prowess to accelerate revenue from the auto sector. Heavy expansion by way of organic and inorganic growth has been playing an important role in this industry. Forging players are taking initiatives to acquire technology, knowledge, experience, and expertise in the industry. The Indian Casting and Forging industry has gone through upgradation to be in sync with the international practices. Given the enormous potential, frontline domestic players have started building up world-scale capabilities by either putting up Greenfield projects or acquiring sick global facilities and turning them around as business solutions for setting up foreign business in India.

The Indian automobile sector is currently moving towards the growth lane in the new fiscal year with robust sales growth across all vehicle categories. The Association of Indian Forging Industry (AIFI) stated that in comparison to the usual trend of low production during the months of April-May in a fiscal year, the year 2018-19 let the industry witness a continuous higher demand during the first quarter.

The ‘Make in India’ program aims to raise the contribution of the manufacturing sector to 25% of the Gross Domestic Product by 2025. The Indian Automotive industry commands 22% of India manufacturing GDP and 7% of India’s overall GDP. The Chinese influence in the India automotive industry is only to going to decrease in the future as the world’s biggest car market, standing at about 28 million a year finally begins to report slowing growth. Zion, the Market Research Company published a report highlighting that the global steel forging market for automotive applications was valued at $41.77 Billion in the year 2016 and is expected to reach $56 Billion by the year 2022, growing at a Compound Annual Growth Rate (CAGR) of 5.1% between the years 2017 and 2022.

The Automotive industry depends significantly on steel-forged metal components. Forged steel is used for demanding applications such as crankshafts, transmission gears, and bearings, and is essential in handling the torque and stress placed on these components. Intense competition among the key players is majorly driving the demand for more attractive and lightweight vehicles in the country. Tecnova, the India management consultant presumes that in almost no time, the Indian Casting and Forging industry is going to lie at par with China. The industry is looking at double growth rates spurred by imminent demand from emerging sectors, resulting in an increase in the set-up of foreign business in India.

Ref Links-  

https://www.thehindu.com/business/Industry/casting-a-hopeful-eye-to-the-future/article17452574.ece 

http://www.capitalmarketplus.com/cabnas/Cabstory.asp?SNo=130892&opt 

http://www.autocarpro.in/news-national/association-of-indian-forging-industry-foresees-healthy-growth-for-the-forging-industry-40668 

http://industrialproductspurchase.com/admin/articles_pdf/1320406704-Casting%20and%20Forging.pdf 

http://www.engineeringnews.co.za/article/forging-market-for-automotive-application-to-be-valued-at-56-billion-by-2022-2017-03-10/rep_id:4136 

Performance of Foreign Companies in the Rapidly Growing Indian Market

The Foreign Direct Investments made by the multinational companies involve a lot more than just the transfer of capital as it brings along the technologies of production, managerial services, and other business practices. For the underdeveloped and the developing countries, MNCs help in creating employment opportunities that solve one of the major concerns of unemployment. Inviting and making ways for multinational companies to operate in India will enhance the economic development of the country. The government’s initiatives for ‘Make in India’ and ‘Skill India’ campaigns and efforts to simplify the FDI regulations and easy India market entry strategy are certainly making ways for global companies to invest in India.

The integration of the domestic economy through the twin channels of trade and capital inflows has accelerated in the past, thereby leading to India’s GDP reaching at US$2.30 trillion in 2017-18. To be precise, India’s trade and external sector significantly had an impact on the GDP growth as well as expansion in the per capita income. Multinationals have been operating in India even prior to the Independence. Till date, there have been innumerable changes and additional benefits to the rules and regulations by the government of the country to make way for the multinationals. At present, established MNCs in India can-

  • Increase foreign equity up to 51 percent
  • Borrow money or accept deposits without the permission of Reserve Bank of India
  • Transfer the shares from one resident to another non-resident
  • Disinvesting equity on stock exchanges at market rates
  • Deal in immovable properties in the country
  • Carry activities in trading, commercial or industrial areas

The foreign companies that are based out of India benefit from having a globally recognized brand and access to the technology. Not only is India one of the fastest growing countries in the world, but it is also going through a period of unprecedented economic liberation, whilst granting overseas investors more access to its vast and varied market.

India is a massive country with vast economic potential. However, traversing the diverse and complicated corporate landscape can be an intimidating task without the right assistance from a renowned management consultant on their side. No matter how successful foreign companies get in the Indian market, MNCs face a number of issues such as being at par with the current and future opportunities of growth in the market, government regulations, competition, entry barriers, sales and distribution channels, business culture, etc. while establishing their business in India.

India is a cultural hotbed, and the business is more about building relations than presenting figures and sums. The Indian culture can be difficult to adopt for MNCs and due diligence is important for companies before taking up the decision of setting up a business in India. Tecnova, the Indian market entry, and management consultant helps global organizations understand the Indian market, focusing on developing the right India market entry strategy based on research and supporting the clients through the entire implementation phase to be able to penetrate the Indian market effectively and efficiently. Management consultants such as Tecnova assist foreign businesses in driving change through on-going competitive and market analysis. One of the major issues that the foreign organizations face while entering the Indian market is with the recruitment of the right talent to lead and grow their business. Another major task that is considered a hurdle by foreign businesses is that of acquiring new clients through road shows, lead generation and techno-commercial seminars. Tecnova has tailored its services for direct and indirect market entry strategies. Pricing and competitive challenges in the Indian market make a huge impact on international business. Tecnova steps in to help major giants overcome the hurdles that they face while setting up their business in India whilst assisting its clients in their process of setting up and/or establishing their business in India in localizing, manufacturing and trading across global markets. Tecnova helps its clients with the research and recommendation of the growth and demand for their products and services in the Indian market, along with the collection and validation of data, past experience of companies and their capabilities, and hence, successful implementation of the planned procedure. Tecnova helps global organizations overcome the basic barriers in the Indian market whilst setting up their business in the Indian market.

Ref Links-  

http://www.yourarticlelibrary.com/company/multinational-corporations-of-india-characteristics-growth-and-criticisms/23462 

https://www.ibef.org/economy/trade-and-external-sector 

https://www.tmf-group.com/en/news-insights/business-culture/top-challenges-india/ 

Biggest M&A Deals Witnessed by the Indian Economy in 2018- Same Picture to be Expected in 2019

Landing at Rank 77 in the Ease of Doing Business Report issued by the World Bank, the year had been a blockbuster for the Indian economy. Mergers and Acquisitions in India cross the $100 Billion mark, led by corporate acquisitions as well as private equity-led buyouts.

The first half of the year showed robust growth. The investors continue to view the Indian market positively. The investment bankers in India have witnessed the biggest mergers & acquisitions boom in Indian history. Transactions worth $104.5 Billion in the year 2018, crushing the previous annual record. $16 Billion dollar worth of acquisition of e-commerce giant, Flipkart Online Services Pvt. Ltd. by Walmart Inc. was the biggest-ever takeover by a foreign organization in India.

Raj Balakrishnan, the head of India Investment Banking, Bank of America Merrill Lynch (BofAML) stated that the year 2018 had been a good one for the country. “We were part of some of the largest M&A and fund-raising transactions in India. We recently announced Unilever’s acquisition of GSK’s health food drinks business- the largest deal in India’s consumer sector, in which we advised Unilever. We also advised Schneider Electric on the acquisition of L&T’s electrical and automation business and worked for Actis Llp on its sale of Ostro Energy to Renew Power- both deals being the largest transactions in the respective sectors in India. We also closed the Vodafone-Idea merger, in which we were one of the advisors to Vodafone. We also helped Generali increase its stake in Future Generali India Insurance Co.”, stated Raj Balakrishnan.

Major giants like Amazon.com Inc., Alibaba Group Holding Ltd., and Tencent Holdings Ltd. have been acquiring stakes in local companies to increase their presence in the Indian market. Additionally, Berkshire Hathaway Inc. by Warren Buffet agreed to invest in the company behind Paytm, the leader in the Indian digital payments market. Vodafone India and Idea Cellular completed a merger resulting in the creation of the largest telecom company in India. The two largest wireless carriers merged their operations in an attempt to topple Reliance Jio’s grip over the market, with the deal finalized at $23 Billion.

Balakrishnan claimed that the strategy for the year 2019 would be to continue working with their key clients on marquee transactions, both in India across the globe. Calling this a “responsible growth strategy”, the organization plans to focus on key clients and have a large share of the big ticket transactions with them. Balakrishnan presumed that the Buyout funds would continue to be very active as they have a lot of capital to deploy. The deal sizes in India have recorded an enormous growth.

Management Consulting firms in India work towards the promotion and enhancement of joint ventures in India, while creating a sustained deal-making boom look close to the Indian economy. The year, 2018 witnessed few of the biggest mergers and acquisitions in India and the same trend is expected to be followed in the year 2019. The upcoming year is estimated to cross the mark of $100 Billion once again, as stated by Sanjeev Krishnan, a Gurgaon-based partner at PwC India.

Ref Links-  

https://www.livemint.com/Companies/uQvESeSftU0zz8pkIQHlJN/Wont-be-surprised-by-big-MA-deals-in-India-in-2019-BofAML.html 

https://www.arabianbusiness.com/equities/404034-india-set-for-100bn-plus-ma-deals-in-2018 

https://qrius.com/india-rakes-in-the-deals-as-2018-witnesses-a-boom-in-mergers-and-acquisitions/ 

Indian Government to Boost the Production of Medical Devices by Setting up a Panel in the Country

The Indian healthcare sector has become one of the largest sectors in the country, both in terms of revenue and employment. The market size is expected to increase three-fold to Rs. 8.6 Trillion by the year 2022. The Government’s expenditure on health sector has grown from 1.2 percent in FY14 to 1.4 percent n FY18.

With the country experiencing 22-25 percent growth in medical tourism, there is significant scope for enhancing healthcare services in the country. The Indian government is currently set to form a Medical Devices Development Council with the aim to reduce the country’s dependence on imported medical devices by promoting the manufacture of medical devices in the country. Likely to be notified by the Department of Industrial Policy and Promotion, the council will soon spearhead policy initiatives to boost local manufacturing of medical devices, whilst ensuring that these products are of good quality and are capable of attracting investments in innovation through sops.

The Department of Industrial Policy and Promotion will announce the formation of the council during the World Health Organization’s upcoming global conference on medical devices in Vishakhapatnam from December 13 to 15. “The government is now seriously considering to promote ‘Make in India’ for medical devices. This is evident from the fact that India has chosen to host the UN agency’s fourth global forum on medical devices”, an official said.

The government said that it would set up National Medical Devices Promotion Council (NMDPC) in order to boost manufacturing, attract investments and promote exports of the fast-growing sector. “As Indian manufacturing companies and startups move towards creating innovative products, the settling up of the council will spur domestic manufacturing in this sector,” the Commerce and Industry Ministry said in a statement. It also stated that the medical devices industry, pharmaceutical market research and top healthcare consulting firms in the country play a critical role in the healthcare ecosystem and is indispensable to achieve the goal of health for all citizens.

The market for medical devices in India is currently valued at around $10 Billion, growing annually at 10-12%. However, the imports constitute a majority of the medical device market in the country by catering to around 80% of the requirements. Even though the local medical industry in the country has been growing steadily in the last few years, the market for critical care products like stents, and orthopedic implants is still dominated by multinational players. The local players comment that though the recent price regulation by the government has helped, they still require support from in terms of other policy parameters and incentives to arrive at a level playing field.

The Indian government has made a number of achievements in recent years. As of September 23, 2018, Ayushman Bharat, the world’s largest government-funded healthcare scheme was launched. India is a land full of opportunities for the medical devices industry. Indian healthcare, the fastest growing sector is expected to reach $280 Billion by the year 2020. The country has become one of the leading destinations for high-end diagnostic services and pharmaceutical consulting with tremendous capital investment, thereby catering to a greater proportion of the population.

Ref Links-  

https://economictimes.indiatimes.com/articleshow/67020470.cms?utm_source=ETMyNews&utm_medium=HPMN&utm_campaign=AL1&utm_content=20&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst 

https://www.medicalbuyer.co.in/government-to-set-up-national-medical-devices-promotion-council/ 

https://www.ibef.org/industry/healthcare-india.aspx 

Top Sectors Driving India’s Economic Growth

The boosting economic growth of the country is projecting India to be the world’s fastest growing economy for the rest of the decade. The combined growth in the population and the economy will soon make India the fifth largest economy in the world, overall. Out of only two developing countries to attain a position in the top 10 in A.T. Kearney’s Foreign Direct Investment Confidence Index, India became one and the only country with a per capita GDP of less than $5000 to be ranked at all. According to Kearney, India is perceived as ‘competitive’. 

Various sector and industries have put in their contribution to drop India at a position where international market entry is considered feasible for the industrial giants. The Indian economy is boomed by the long-awaited recovery in consumption that has helped cut down slack in the economy and underpinned sales in all the sectors. 

Have a detailed look at which sectors contribute how much and in what ways in the growth of the country’s economy. 

  • The Automobile sector- The Indian Automobile industry became the 4th largest in the world with its sales increasing 9.5 percent year-on-year to 4.02 million units in the year 2017. In the year 2017, India became the 7th largest manufacturer of commercial vehicles. The country is known to have emerged as an auto export hub for both small and heavy vehicles, along with establishing itself as a prime destination for automotive manufacture. While the demand for automobiles is broadly based across various markets, the major concentration of the demand is from the rural part of the country. Indian rural areas deliver a high demand for two-wheelers and tractors, which is strongly affecting the sales of companies like Maruti Suzuki and Ashok Leyland in a positive direction. Between FY13-18, the domestic automobile production in India increased at 7.08 per cent CAGR. The domestic automobile sales increased at 7.01 per cent between FY13-18 with 24.97 million vehicles getting sold in FY18. The Indian Automobile industry has attracted Foreign Direct Investment worth US$19.29 Billion during April 2000 to June 2018. 

 

  • The Oil and Gas sector- India is experiencing a ferocious demand to power the growing fleet of trucks, cars, and motorbikes. With the expanding middle-class needs, the country’s appetite for energy is surging. The government is continuously encouraging the use of cooking gas for cleaner air. This, as a result, is driving refiners and attracting global major to enter the Indian market, setting up their business in India. The Indian energy demand is known to be growing at the fastest rate among all the major economies, making it the third largest consumer of oil in the world in 2017, with consumption of 4.69 mbpd of oil in 2017 as compared to 4.56 mbpd in 2016. India’s energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from 5.8 per cent in 2017. According to Department of Industrial Policy and Promotion, the Indian petroleum and natural gas sector attracted FDI worth US$ 7 Billion between April 2000 and June 2018. 

 

  • The FMCG sector- Think-tank India Brand Equity Foundation has ranked India as the fourth- largest in the economy for its rapid growth in the fast moving consumer goods sector, with Household and Personal Care accounting for 50 per cent of FMCG sales in the country. India is known as the world’s largest producer of generic medicines accounting for 20% of the global volume. The widespread availability of raw materials and the presence of highly skilled workforce have both catapulted India to the top, establishing it as the research and manufacturing hub for pharmaceuticals. The Indian Food Processing, bringing together the country’s agriculture and industry is vital to the country’s development. The Revenue of the FMCG sector reached 3.4 lakh crore (US$ 52.75 Billion) in FY18 and is estimated to reach US$103.7 Billion in the year 2020. The Indian FMCG sector witnessed FDI inflows of US$ 13.63 Billion during April 2000 to June 2018.  

 

  • The Steel and Cement Sector- The Steel industry contributes to almost 2% of the GDP is witnessing increasing local demand and higher prices. According to the data from the Steel Ministry, Tata Steel Ltd.’s sales climbed 8 percent during April through June 2018, driven by automotive and special products’ demand. On the parallel, JSW Steel Ltd. recorded a growth of 11 percent in the group sales. These figures were considered the highest in five years in the year ended March, as per the data from the Steel Ministry. India’s finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18 to reach 90.68 MT. According to DIPP, the Indian metallurgical industries attracted Foreign Direct Investments (FDI) of US$ 10.84 Billion during April 2000 to June 2018. 

 

  • The Aviation sector- The Indian Aviation sector has continuously observed double-digit traffic and capacity growth, as more people take to flying. The country’s RPK (Revenue Passenger Kilometre) rose to 16.6% in the month of May 2018. The passenger demand has continued to grow at a remarkable rate over the years, further resulting in an increased number of airport connections. The country’s Aviation sector is estimated to witness investments of around $15 Billion in between the financial years of 2016-17 to 2019-20. Out of this figure, $10 Billion is expected to come only from the private sector. 

The overall growth in the country’s economy enables global giants to look up for mergers and acquisition firms in India and reap the benefits of the rapidly growing Indian market.  

 

 

Ref Links-  

https://theprint.in/economy/here-are-the-industries-that-made-india-the-worlds-fastest-growing-economy/96222/ 

http://www.makeinindia.com/six-superstar-sectors-boosting-make-in-india 

https://www.ibef.org/industry/india-automobiles.aspx 

https://www.ibef.org/industry/oil-gas-india.aspx 

https://www.ibef.org/industry/fmcg.aspx 

https://www.ibef.org/industry/steel.aspx