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 

 

Tesla, the Electric Car Manufacturer Reaps the Growth Benefits of the Indian Electric Automobile Sector

The continuous rise in middle-class income and the increasing young population in the country is resulting in strong growth, thereby increasing the demand.  India is expected to become a leader in shared mobility by the year 2030, providing innumerable opportunities for electric and autonomous vehicles in the country. The Indian automobile sector is witnessing a shift in focus towards electric cars, providing increasing opportunities for international market entry.

Reaping the benefits of the increasing demand in the country, Tesla, the American electric cars manufacturer has revealed its plans to expand its overall market beyond North America, Europe, and China. The company intends to establish a ‘partial presence’ in India, Africa, and South America by the end of 2019, and expand further in 2020. Tesla is entering the Indian automobile market competing against Indian players like TATA, Hero MotoCorp.etc, along with global players that are running way ahead in the game.

The Indian electric vehicle space is observed to be dominated by electric two-wheelers, as suggested by the reports. The country has a target of bringing 30% electric mobility to India by the year 2030. A TechSci Research report issued in December 2017 estimated the electric vehicle to grow at a CAGR of over 37%, during the years 2018-23, and the Indian electric two-wheeler market is forecasted to grow at a CAGR of more than 23%, during these years.

Several Indian states are also doing the groundwork to introduce electric vehicles and provide the required bandwidth for its expansion and use. Indian states like Kerala, Uttarakhand, and Telangana have introduced their own electric vehicle policies bringing in more opportunities for electric vehicle manufacturers.

With response to the rising investment in the country, the FDI inflow in the automobile sector stood at 19.29 Billion between April 2000 and June 2018. Domestic automobile production increased at 7.08% CAGR between FY13-18 with 29.07 million vehicles manufactured in the country in the financial year 2018. The overall domestic automobile sales, on the other hand, increased by 7.01% CAGR between FY13-18 with 24.97 million vehicles being sold in FY18. The auto sales in July 2018 witnessed a year-on-year growth rate of 7.9 percent across segments. Mahindra & Mahindra, the Indian multinational car manufacturer expects the electric vehicle segment to stabilize in India over the next five years.

Reports have shown that the India electric vehicles market is expected to expand at a CAGR of 77% in terms of value during the forecast period. The market players are focusing on developing and expanding their business in India where the electric vehicles industry is growing at a rapid rate. Key players in the industry are planning to enter the Indian market, focusing on partner search in order to create a noticeable presence in India.

Significant incentives for electric vehicles under FAME India and NEMMP 2020, low maintenance and operation costs of electric vehicles, increasing crude oil prices anticipated to augment the adoption of electric vehicles, etc. are considered some of the key drivers of the growth and increasing demand in the Indian automobile sector. To conclude, India, one of the fastest growing economies in the world is also one of the fastest growing automobile sectors and stores a huge market for global industry giants in the electric automobile sector.

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

[ii] https://timesofindia.indiatimes.com/business/international-business/tesla-plans-partial-india-presence-in-2019-musk/articleshow/66504283.cms

[iii] https://inc42.com/buzz/elon-musk-hints-at-partial-presence-in-india-by-next-year/

[iv] https://economictimes.indiatimes.com/industry/auto/auto-news/electric-vehicle-segment-to-stabilise-in-india-over-next-5-years-mahindra-mahindra/articleshow/65706913.cms

[v] https://www.marketwatch.com/press-release/india-electric-vehicles-market-passenger-cars-to-zoom-ahead-of-two-wheelers-commercial-vehicles-in-terms-of-revenue-share-2018-08-27

Major Countries Adding to FDI in the Fast Growing Indian Economy

Along with being a critical economic driver of economic growth, Foreign Direct Investment is a major source of non-debt financial resource for the economic development of the country. Foreign companies investing in India take advantage of relatively lower wages, special investment privileges such as tax exemptions, etc. The Indian government’s policy regime and robust business environment ensure the uninterrupted flow of capital into the country.
According to the Department of Industrial Policy and Promotion (DIPP), the total FDI investments in India in the months of April-June 2018 stood at USD 12.75 Billion. This proves that the government’s effort to improve the ease of doing business and relaxation in FDI is yielding results. As per a trade view released by The Commonwealth in 2018, India emerged as the top recipient of Greenfield FDI inflows from the Commonwealth.
Here is a list of the top countries that have invested in India and procured the benefits of the rapidly growing economy-

  • The United States of America– The U.S. is known to be India’s biggest believer, with around 1100 deals in the country. Lockheed Martin teamed up with Tata Advanced systems on its C-130 Hercules, considering opening a maintenance facility in the country. Coca-Cola announced its intention of investing $5 Billion over the next six years, two years ago. Following Indian Prime Minister, Narendra Modi’s speech, General Electric CEO, Jeffrey Immelt said that India was a great place to invest. Immelt said, “GE is a long-term investor in India. We look forward to more in the future.” The American multinational is investing $2 Billion in two new assembly plants in India. In the month of June, Cisco investments claimed that it is planning to invest $40 Million in the Indian start-ups. Ranging from FMCG to the Automobile sector, international business firms have acquired a major portion of the Indian economy.
  • Germany– German companies have 361 ongoing FDI deals in India. Volkswagen, the major German player in the automobile industry revealed its plans of investing upwards of $250 Million in India over the next five years. The ‘strategic partnership’ between India and Germany strengthened with the Intergovernmental Consultation (IGC) between the two governments that aim at increasing cooperation and identifying potential areas of investment. Indian exports from Germany increased from US$ 9.9 Billion in 2007-8 to US$ 11.5 Billion in 2016-17, accounting for 30.35 percent of India’s total imports from EU countries. The major investments in India from Germany are noticed in the sectors of transportation, electrical equipment, metallurgical industries, service sectors, chemicals, construction activity, trading, and automobiles.
  • United Kingdom– India had 380 FDI deals originating from the UK over the last year. One of the largest investment of the UK was made by Diageo at $1.9 Billion in order to take control of the United Breweries.
  • Italy– Italy has made 57 investments in India recently. Fiat Chrysler Automobiles, the world’s eighth largest automaker said that as part of a billion dollar investment in India, it plans to manufacture a premium sports utility vehicle under the Jeep brand and then export it to the U.K., Australia, and South Africa within the next two years.
  • Switzerland– Investments made by Switzerland in India reached 103 the last year, the majority of them being from the financial sector. Partners Group, the private investment firm in Switzerland having over $30 Billion under management worldwide, opened its first office in Mumbai in the month of May. Switzerland has accounted for a total of $2.4 Billion, which is 1% of the total FDI flow into India.
  • France– France has made 138 new Foreign Direct Investments in India. GDF Suez, the French multinational electric utility company continues to invest in power plants as a majority stakeholder.

The established giants have already drenched the Indian market, considering the continuously growing scopes and spaces for them to grow. India is a huge depository of skilled yet cheap labor. This makes it easy for foreign companies to optimize their production in India, thereby attracting the global firms to establish and/or expand their business in India.

[i] https://www.ibef.org/economy/foreign-direct-investment.aspx

[ii] https://www.forbes.com/pictures/hkgl45gk/no-7-switzerland/#3e3421173357

[iii] http://www.makeinindia.com/five-countries-that-are-making-big-in-india

[iv] https://ciiblog.in/india-germany-trade-and-investment-relations/

Indian Aviation Industry Moving Up the Value Chain, Welcoming FDI

Posting the fastest full-year growth rate for three consecutive years, India is known as the world’s fastest-growing aviation market. In May 2018, India recorded a double-digit passenger growth for 45 continuous months.

According to the International Air Transport Association, the country’s Revenue Passenger Kilometre (RPK) rose to 16.6% in the month of May 2018. “Passenger demand has continued to be supported by strong growth in the number of airport connections within the country too; 22 percent more airport-pairs are scheduled to operate in 2018 compared to last year,” IATA said. 2018 is expected by IATA to be another year of above-trend passenger growth.

The new Aviation policies articulated by the Indian Government work towards grabbing the current opportunities in the Indian Aviation market and turning them into realities. Effective improvement in the infrastructure, regional connectivity, flexible flying norms for new entrants are all factors that attempt to capitalize on the growth prospects of the Indian Aviation market. While the growth in individual sector affects the overall growth of the country’s economy, the growth of the aviation market highly impacts the growth of the country’s MRO (Maintenance, Repair, and Overhaul) sector. Boeing Shanghai Aviation Services claimed that the global commercial aviation service sector is anticipated to witness a remarkable growth to $8.5 Trillion in the next 20 years.

Over the years, India’s Aviation defense requirements have observed a steady growth leading to a corresponding growth in the Defence Aviation MRO. Creating a bonanza of opportunities for the industry players, the combined MRO opportunities of the Defence and Civil Aviation market in India is expected to touch USD2.5 Billion by the year 2025. Due to this, industrial giants are looking to expand their international business in India. Established vendors to international manufacturers express their interest in setting up their plants to India where the global supply chain is in the making for multi-billion dollar domestic and export-oriented industries.

In addition to this, India holds a huge scope of growth in the design and engineering services related to components and assemblies to be given as services to original equipment manufacturers.

India is being talked about across the globe for catching the attention of major aerospace defense manufacturers with its low production cost and government’s focus on building the manufacturing sector under the country’s ‘Make in India’ initiative. Andrew Martin, the Director of business development and market at Martin-Baker Aircraft Company Ltd. said, “India has the attention of all the big aerospace defense manufacturers and ourselves as well.” “India is our second largest market for (pilot) ejection seats after the US,” added Martin whose family-owned company was rated as the 99th largest aerospace and defense supplier.

Currently, there are more than 80 international airlines that operate in India, building a network between the country and the rest of the world. The country is expected to be the third largest Aviation market in the world by the year 2020 and the largest one by 2030. 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 domestic passenger traffic in the country crossed the 100 million mark in the year 2017 and is expected to reach 106 million between January 2018 and November 2018. The management consulting firms in India are doing their in-depth market research in assisting the global aviation giants enter one of the fastest growing aviation markets, which is expected to cater to 478 million passengers by 2036.

[i] https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/india-records-double-digit-air-passenger-growth-for-45th-consecutive-month-in-may-iata/articleshow/64871421.cms
[ii] https://www.aviationpros.com/press_release/12359043/indian-aerospace-defence-mro-poised-for-a-vertical-take-off
[iii] http://www.mmindia.co.in/article/93/indian-aerospace-industry-on-a-high-growth-trajectory

Ease of Doing Business- India Lands at Rank 77 in 2018 from Rank 130 in 2017

The year, 2018 witnessed a remarkable improvement in the Ease of Doing Business report, with India jumping by 23 notches in one take. India noticed a hike in its rank in six out of the ten indicators and has managed to jump 23 notches landing at rank 77 in the World Bank’s ‘Ease of Doing Business’ report. The first rank was given to New Zealand followed by Singapore, Denmark, and Hong Kong. The USA was placed on eighth rank and China on 46th.

In comparison with BRICS peers such as Brazil, ranking at 109, South Africa at rank 82, and other West Asian economies such as Qatar, landing at rank 83 and Saudi Arabia ranking at 92, the World Bank now deems India as an easier place to do business in. Landing at rank 77, India has now become the top-ranked country in South Asia for the first time and third among BRICS. Moreover, the Department of Industrial Policy and Promotion stated that India now ranks 25 globally on the indicators of getting electricity, getting credit and protecting minority investors. Due to the given achievements, the World Bank recognized the country as one of the top “improvers” of the year. India has now become one of the only nine countries around the world and only one in BRICS to feature in the report’s list of top 10 Improvers for the second year in a row. This has opened the doors for companies looking forward to international expansion in the country.

Launched in 2003, the World Bank’s ‘Ease of Doing Business’ report made an independent objective assessment of business regulation across 190 economies that covers the lifecycle of a business from end to end in the following 10 indicators-

  • Starting a business
  • Construction permits
  • Getting electricity
  • Registering property
  • Getting credit
  • Protecting minority investors
  • Paying taxes
  • Trading across borders
  • Enforcing contracts
  • Resolving insolvency

India noticed the most remarkable improvements in the indicators related to ‘Construction Permits’ and ‘Trading Across Borders’. India climbed 129 ranks to the 52nd place in the ‘Construction Permit’ on the back of targeted government effort to remove hurdles, making it the biggest gain. In ‘Trading across Borders’, India’s rank improved from 146 in 2017 to 80 in 2017, taking a jump of 66 positions. Commenting on the ‘Construction Permits’, Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion (DIPP) said, “Online single window in Delhi and Mumbai has streamlined the processes. The procedures have reduced from 37 to 20 in Mumbai and 24 to 16 in Delhi. The time has reduced from 128 to 99 days in Mumbai and from 157 to 91 days in Delhi. The cost has reduced from 23.3 percent to 5.3 percent (percent of the cost of construction).”

The World Bank’s Doing Business Report, which is an assessment of Business regulation across 190 economies, shared the details. The report ranks countries based on the score that shows the gap of an economy to the global best practice, referred to as Distance to Frontier (DTF). India refined its DTF score from 60.76 last year to 67.23 this year. India’s growth in the industry is significant considering the improvement in Ease of Doing Business Ranking by 23 positions this year, 30 places last year, 53 positions in the last two years and 65 places in the last four years. The country registered the best performance in dealing with Construction Permits by taking a massive jump of 129 places to come to the 52nd easiest place to construct a business unit. The remarkable improvement in the country’s ranking has increased business opportunities in India, giving large organizations an option of setting up a business in the country. “We implemented an online single window system, integrating internal and external departments and removing the requirement of visiting them individually. The time taken to process all approvals during the construction lifecycle has been reduced from 185.9 to 94.8 days,” he added. In regards to trading across borders, he further said, “Robust Risk Management System (RMS) has reduced inspections. e-Sanchit now allows traders to file all documents electronically. Electronic sealing of containers has enabled faster movement of goods.”


[i] https://economictimes.indiatimes.com/articleshow/66445814.cms?utm_source=linkedin_web&utm_medium=social&utm_campaign=socialsharebuttons&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst


[ii] https://www.business-standard.com/article/news-ani/india-jumps-23-notches-ranked-77th-in-ease-of-doing-business-118103101587_1.html


[iii] https://thelogicalindian.com/news/ease-of-doing-business-index-india/


[iv] https://www.deccanherald.com/business/india-one-world-banks-top-700919.html


[v] https://www.thehindu.com/business/Economy/behind-indias-leap-in-ease-of-doing-business/article25469900.ece

Indian Economy Builds a Stabilized Landscape for Mergers and Acquisitions

Given the demand and growth opportunities for various products and services, with regard to the changes in lifestyle and awareness among the people; all the major business giants are seeking to scale up their businesses overseas. A profusion of growth drivers including the advancements in technology and globalization, digital transformation, innovation, mergers and acquisitions, high cash flows, customer-centricity, agility and scalability of operations that enable the expansion of business are creating multiple growth opportunities in the country. While each of these collectively work out to bring a change in the comprehensive success of an organization, Mergers, and Acquisitions specifically carry higher advantages.

The Indian economy experienced a turbulence in the last few years, serving to the introduction of Goods and Services Tax (GST) and Demonetization. This made the foreign companies think twice before getting into Mergers and Acquisitions; most of which switched to organic growth as an alternative to this. This further resulted in an evident downshift in the number of such transactions. The Mergers and Acquisition firms in India noticed a downfall of 10% in the number of deals in the year 2017, as per the reports extracted by KPMG in India’s CEO Outlook 2018 survey. Overall, only 11% of the M&As were considered a priority by the Indian CEOs. This phase was considered ‘optic but not yet upbeat’, while the firms were still cautious on variables like oil prices and interest rates.

Despite this, the year, 2018 had been looked at as the year when the M&A deals observe a hike. The global inclination for M&A deals is projected to rise by 5%; according to the information gathered from KPMG’s M&A Predictor Report. The quarter ended March 2018 showed that due to the increasing business opportunities in India, both the Indian and global economy are on a comeback. Industries such as financial services, steel, automobile, cement, and real estate are all moving in a positive direction. The past four to five months have observed a stabilized economic landscape, thereby building confidence and interest in the country’s CEOs. Irrespective of the valuations being high, the organizations are not ecstatic about big spends. However, a renewed optimism has been observed in the steel and cement industry, in regard to the stressed assets.

A report extracted by EY states that there were 1,011 deals, taking place in the Indian M&A sector for USD 40,961 million in the year, 2017. The Flipkart-Walmart deal has given a massive boost to the Indian M&A sector. The reports suggest that Indian economy is going to observe a hike in the number of deals in the next few years. The Indian government is also playing its role in the increasing number of deals in the country. Almost all relevant laws and regulations had been revamped in the last few years. The largest M&A deals to be consummated included Russia’s Rosneft PJSC agreeing to acquire Essar Oil Ltd., Flipkart acquiring the Indian arm of eBay, Axis bank taking over FreeCharge, the mobile payment application, Ola acquiring Foodpanda, and the SBI Associates merging into SBI, thereby enhancing the muscle power of the public sector. Business leaders in India use Globalization from the time of trade wars and tariff barriers as another reason to be open to M&As; thereby using it as a strategic step to head to newer markets with the help of available business consultancy services in India.


[i] https://www.livemint.com/Companies/akzGrtIAxkMbwWU9M23bLM/A-stabilizing-Indian-economy-driving-MA-deals-in-India.html

[ii] http://www.forbesindia.com/blog/legalese/mergers-and-acquisitions-outlook-in-india-for-2018/ https://www.entrepreneur.com/article/315658

Growing Demand for Medical Devices and Equipment in the Indian Healthcare sector

Thanks to the recent technological advancements, the Indian medical industry has observed a hike by leaps and bounds. To become an industry leader and gain an edge over the competitors, the manufacturers in the healthcare sector need to enter the markets strategically, while juggling with the factors of location and targeted audience.

The Indian Healthcare is the 4th largest sector, with Hospital and medical devices accounting for 91% of total market. The Indian medical industry consists of large multinationals that have extensive service networks and small to medium enterprises. India’s medical technology can be identified as a sunrise sector with major government focus on its development. The sector is expected to touch USD 9.6 billion in the year 2022.

The Indian medical device market is projected to be valued at 50Bn USD by the year 2025. Anticipated to grow at a CAGR of 9.6% and 8.8% respectively, the Orthopedics & Prosthetics and patient aids segments will be the two fastest-growing verticals by the year 2020. The Indian market for surgical robots is presumed to grow at a CAGR of 20%.

The Indian medical device industry is continuously changing its trends. Even the digital companies like Google, Amazon, IBM-Watson are investing a huge amount in the R&D of the medical devices usage trends in the future. Artificial Intelligence and Big Data analysis are being used in the new manufacturing devices to enhance better decision-making and improvement in the treatment outcomes. Big data and cloud computing companies are majorly used to design focused and better treatment solutions for its customers.

The usage of medical devices in India is not just limited to the commercial sector but extends beyond that. Even the Indian households have portable devices like Diabetes or BP apparatus or wearable steps counter. The changes in lifestyle and the differences in preferences have resulted in a growth in working-class population from 34% in 2011 to an assumed 40% in 2026; while the elderly population in the country is expected to double by the year 2026. The Medical Tourism industry is anticipated to reach 7.3Bn EUR by the year 2020, at a growth rate of 22%. Medical insurance penetration is assumed to grow from 18.7% in 2015 to 22% in the year 2020.

The Tier II and Tier III cities are under focus because of the growing population. 96% of the Indian population lives in non-metro regions, out of which 70% lives in rural areas. Due to the evident increasing demand of medical services in these areas, regional and national hospital chains are expanding their distribution network in under-penetrated Indian cities like Durgapur, Guwahati, Trichy, Nasik, Bhubaneshwar, Madurai, etc.

The Indian healthcare industry is growing at a high pace owing to strengthening coverage and services, increasing expenditure by public and private players, changes in regulations, etc. The number of hospitals in the country is expected to grow at a CAGR of 13% by the year 2020. The major growth in the sector is fueled by the growth in private hospitals and the northern zone of India.

Increasing awareness of healthcare paired with the growing per capita income has resulted in a demand for better quality of health care services in the country. The diseases caused due to the adopted lifestyle in the country and the growth in the elderly population have resulted in an increased demand for healthcare equipment and devices. The medical tourism has grown at a remarkable rate with the increasing presence of well-educated, English-speaking medical staff in the state-of-the-art private hospitals in the country. The medical tourism market in India was valued at US$ 3.0Bn in size in 2017 and is expected to double this year. The evident data is influencing major healthcare giants to invest in the Indian medical device and equipment sector with the help of entry consulting from top healthcare consulting firms in the country.

Catering to the demand for medical equipment and devices in the country, the Indian government has allowed 100% FDI via automatic route in the hospital and medical devices sector. The global private equity players and leading healthcare providers are looking forward to enter the Indian market through Indian business consulting firms in order to grow sustainably in the Indian market, considering that these factors drive growth for the services in the country. The Indian healthcare industry is expected to grow by a CAGR of 18% until the year 2020. Hospitals in the country acquiring the largest segment with a 64% share in the overall healthcare market.

India Management Consultants like Tecnova help major healthcare giants set up or expand their businesses and manufacturing units in the market that has a flooding demand and growth for medical equipment and devices.


[i] https://www.investindia.gov.in/sector/medical-devices

[ii] https://pharmastate.blog/2018/06/28/medical-devices-industry-india-a-paradigm-shift-to-be-noticed/

[iii] http://www.makeinindiamittelstand.de/wp-content/uploads/2015/09/Opportunities-in-the-Medical-Equipment-Market-India.pdf

[iv] https://www.ibef.org/download/Healthcare-February-2018.pdf

Why Air Purifier Manufacturers love Indian Winters?

The rising demand for Air purifiers in India can be directly proportionated to the rising population in the country. The experts from various market research companies have noticed that the indoor air in the Indian homes is more polluted than the outdoor air. A point of major concern, this problem needs to be addressed. Hence, there is a rising demand for Air purifiers in the country.

The Air purifiers are known to clean the indoor air by removing impurities such as tiny dust particles, pollen, and smoke that cause damage to human health. One of the largest growing electronics markets in the world, India is expected to grow at 41 percent CAGR between 2017 and 2020 to reach US$400 Billion.

The global giants view India as one of the major markets from where their future growth is likely to emerge. The favorable population composition and increasing disposable incomes would be primarily driving the growth in the Indian consumer market. The market for Air purifiers has become highly competitive over the course of time; welcoming the fight for innovation and advancement in technology. The Air purifier segment is growing at a CAGR of 45 percent and is considered a niche category in the Indian market. All the leading brands have entered into the category with technically advanced products that offer promising results.

Clearly, India has seen rapid development in the past two decades, along with the growth in pollution in Tier I and Tier II cities like Mumbai, Bangalore, Delhi, Pune, etc. However, this state of the country has taken a different turn for various Air Purifying giants across the globe. These metropolitan cities have resulted in a remarkable demand and awareness among the consumers for Air purifiers. The opened gateways for global Air purifying giants like Panasonic, Air Phillips, Sharp have benefitted the country in multiple ways, specifically in the cities that generate demand for Air purifiers at their roots. This has eventually opened innumerable opportunities and challenges for global organizations in the market. As a result, the weak distribution channels have strengthened, thereby creating awareness, intensifying marketing and increasing penetration into tier I and tier II markets.

Air Purifier manufacturing giants like Panasonic are planning a shift from only importing their Air purifiers to India to setting up local manufacturing units in the country. Manish Sharma, the Panasonic India, and South Asia President and Chief Executive Officer said, “We are still importing Air purifiers, but I am seriously considering (manufacturing) because this market is growing quite rapidly. So, we are considering to look at manufacturing them also in India, possibly from next year”. The Japanese firm sold 5,000 units of Air purifiers in the last fiscal and is expecting to raise the number to 20,000 units this fiscal.

Air purifier manufacturers are witnessing a definite rise in the sales, as Air purifiers have become a necessity more than a luxury for Indian homes, offices, and institutions. The increase in demand and sales of the Air purifiers is a result of both commercial and domestic needs of the country. Moreover, rising disposable incomes maximized electrification of rural areas and wide usability of online sales aid the growth in demand. This has influenced industry leaders like Sharp, that owns 52% market share in the Air purifier business, launched its extensive range of HEPA Air purifiers in the country.

The advancements in the technology and its cost-effectiveness function is the major growth driver in the industry. The market is expected to increase at a 9 percent CAGR to reach US$ 48.37 Billion upto 2022. Jayati Singh Chakraborti, Business Head- Air Phillips, India, while highlighting the advancement of its newly introduced Air purifiers said, “As a health and well-being company, we offer solutions that let you control the air you breathe and ensure your family breathes fresh air. The Phillips Air purifiers come with patented Vitashield IPS technology with multi-level filtration that can remove up to 0.02 microns pollutants keeping the air 99.97 percent allergen free”.

Beholding the immense scope for growth in the Indian Air purifying industry, many international consumer electronics brands are now getting looking at the Indian market for seeking feasible expansion opportunities in the country.

[i] https://economictimes.indiatimes.com/industry/cons-products/electronics/panasonic-plans-local-mfg-of-air-purifiers-from-next-year/articleshow/55921876.cms

[ii] https://www.ibef.org/industry/indian-consumer-market.aspx

Volkswagen’s 1Bn Euros Investment in the Rapidly Growing Indian Automobile Sector

The Indian Automotive sector is on a drive to changing the automobile industry landscape. Being the fourth largest country in the Automobile sector, India is expected to be valued between $251.4 Billion and $282.2 Billion by the year 2026. With the growing dominance of the use of automobiles in the country, the interest of foreign companies in investing in the country for the sector is increasing in parallel.

According to data, the automobile production in India increased by 16.69% year-on-year to reach 10.88 Million vehicle units, during the months of April-July 2018. The Compound Annual Growth Rate (CAGR) in the country, between FY13-18, increased by 7.01% with 24.97 million vehicles being sold in FY18. BMW and Mercedes-Benz, the leading luxury car manufacturers recorded their best-ever half-yearly sales in India during January-June 2018.

The Indian government has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centers as well as the National Automotive Board to act as a facilitator between the government and the industry. Since the year 2015, five testing and research centers have been established in the country under NATRiP. The Government aims to develop India as a global manufacturing and Research & Development hub. These initiatives by the Government and the major Automobile players in the market are expected to make India a leader in the two-wheeler and four-wheeler market by the year 2020.

With the increasing global concern in the country, the Government has shifted its focus on electric cars in order to meet the Emission Reduction targets. To achieve the ambitious target of having only electric vehicles sold in the country, the Indian auto industry is expected to see 8-12% increase in its hiring during FY19. In the fillip to India’s mission of only Electric vehicles by 2030, the Ministry of Heavy Industries, under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme shortlisted 11 cities namely Delhi, Mumbai, Ahmedabad, Bengaluru, Jaipur, Lucknow, Hyderabad, Indore, Kolkata, Jammu and Guwahati for the introduction of these vehicles.

In order to cope up with the growing demand of the Indian automobile market, various international car manufacturing companies such as BMW, Audi, Toyota, Skoda, Volkswagen, and Mercedes Benz are willing to join hands with India entry consulting firms as their strategic partners in order to expand their horizon in the Automobile manufacturing sector. These companies have started providing finance to their customers in India through Non-Banking Financial Companies (NBFCs). India offers a comparative cost advantage of roughly 10-25 percent in comparison to that in Europe and Latin America; which acts as the major attraction force for foreign automobile companies to invest in the rapidly growing sector. The presence of large automotive clusters in the country: Delhi-Gurgaon-Faridabad in the north, Mumbai-Pune-Nashik-Aurangabad in the west, Chennai- Bengaluru-Hosur in the south and Jamshedpur-Kolkata in the east also prove the need of the hour.

Considering the growth rate in the Indian market, Global car manufacturers have been escalating their investments in the country, with the plan to leverage India’s competitive advantage in setting up export-oriented production hubs. With the help of Indian business consulting firms, a growth of 26.56% had been observed in the Indian automobile exports during April-July 2018. The growth is further expected to reach a CAGR of 3.05% during 2016-2026. The Indian Automobile industry received Foreign Direct Investments (FDI) worth $19.29 Billion between the months of April 2000 and June 2018.

The German Automobile Manufacturing company has declared its investment worth 1 Billion Euros in the Indian Automobile industry between the years 2019 and 2021. This has been done as a part of its latest strategy, led by the Skoda group in order to enhance its presence in the country and avail business opportunities in India. An Engineering Design and Development will be set up in Pune besides its enhancing capabilities at the group’s two plants at Aurangabad and Pune. One of the world’s largest automobile companies is pointing at a significant 5% share in the Indian passenger market through its sister brand, Skoda Auto. With the motive of giving the best customer support services at competitive prices, Volkswagen has entered the Indian Automobile industry planning to launch one new product every year, from the year 2021 to 2025.


[i] https://www.ibef.org/industry/healthcare-presentation

[ii] https://timesofindia.indiatimes.com/business/india-business/volkswagen-group-to-invest-1-billion-euro-in-india-by-2021/articleshow/64828231.cms

9 Undeniable Reasons That Spearhead Organized Retail Growth in India

Organized retailing is a latest and ongoing advancement. It refers to the trading activities of licensed retailers who are registered for income tax, sales tax etc. These include retail chains and hypermarkets backed by corporates and privately owned retail businesses. With socio­economic factors playing out a crucial role in the buildup to organized retailing, India is currently standing on the threshold of a retail revolution.

The Retail Industry is one of the rapidly evolving industries that is replete with vibrancy and dynamism. It has significantly reinforced the economic growth and development of our country in a very short span of time.

Varying demographic patterns, improving economic prosperity, increasing disposable incomes, proliferating Indian manufacturing firms and changing consumer likes and preferences are key to driving success in the domain of Indian organized retail sector.

Here are 9 top factors at the helm of the rise of organized retailing.

1. Ascent of consumerism

With the stupendous rise in consumerism, the retailer is challenged with a more intelligent and demanding consumer. As a business exists with the prime objective to placate consumer needs and preferences, the amplifying consumer expectation has compelled the retail companies to change the business model of their retail trade. Consumer demand, comfort, convenience, time and location are the critical decision makers for the evolution and expansion of organized retailing in India.

2. Rise in the number of middle-class consumers

The recent years have observed a rapid growth in the number of middle-class consumers. The burgeoning demands, better disposable income among the consumers and improvements in infrastructure have offered the retail industry an elbow room to develop and flourish.

The consumers expect the finest quality products at affordable prices. Offering a broad variety of goods and value-added services to the consumers is what modern retailers strategize on.

The development of consumerism that has predominantly enlarged the consumer markets and accelerated the confluence of consumer tastes would be a vital success driver for Indian organized retail.

3. Increase in the number of working women

The modern Indian women are literate, knowledgeable and qualified. They keep up an excellent balance between their home and work. The buying propensity of working women is out-and-out different from the homemakers. Because of their time constraint for leisure and relaxation, they insist on engaging in a seamless one-stop shopping experience to satiate their needs and the whole shebang under one roof which the ultra-modern retail outlets offer.

4. More value for money

Numerous dealers and distributors in India from the organized retail sector are able to appreciate the economies of production and distribution in large scale. They lean on eliminating intermediaries in their distribution channel. In addition, organized retailers provide decent quality products at acceptable prices. The tempting open door for ample profit is increasingly attracting entrepreneurs to enter into this breeding sector by setting up retail companies in India.

5. Emergence of the rural market

In the present times, the rural market in India is confronting fierce competition in the retail sector as well. The rural consumers have also become extremely quality conscious. To capitalize on this development organized retailers are creating new strategies to fulfill and deliver the needs of the rural customers. After agriculture, it’s the retail industry that is growing a deep penetration into rural India and proving to be the country’s next big source of employment.

6. Entry of the corporate sector

Eminent business moguls like Tata, Birla, Reliance etc. have entered and taken the retail sector by storm. They provide products and entertainment with quality par excellence. Other prominent corporates like ITC, Piramal, RPG Enterprises and retail heavyweights like Shopper’s Stop, Pantaloons and Crosswords have completely revolutionized the Indian retail landscape.

7. Ingress of foreign retailers

The Indian retail sector has caught the attention of even foreign retailers like never before. Because of considerable liberalization, many well-known multinationals are poised to make successful inroads through moneymaking joint ventures and franchising thereby majorly boosting organized retailing.

Case in point is the world-renowned furniture retail giant Ikea that has recently opened its colossal 400000-square-foot retail store in Hyderabad. Ikea is “get up and go” to fulfill its ambitions in expanding their footfall in other metros like Delhi, Mumbai, and Bangalore in the next couple of years. The company has plans to set up around 25 stores by 2025.

8. Technological impact

Technological innovation is a dynamic aspect that has propelled organized retailing to greater heights. With the influx of digital information system, internet, explosion in electronic and social media, satellite television, digital marketing and popular unique technologies like big data, artificial intelligence, bar coding, Blockchain etc. have not only increased consumer awareness about products and services but also enabled retailers to sell online products in a transparent and profitable manner.

9. Upsurge in average income

The rise in literacy level has come about in an increase in the average income of the general populace. This growth is observed not just in cities, but in towns and rural areas as well. Increase in income levels, heightened spending habits and enhanced literacy rate among consumers have led to the genesis of a new retail structure to meet the ever-growing demands for improved quality goods and services.