The Indian Market Opportunity
Rating agency Standard & Poor’s recently downgraded India’s long-term investment rating from stable to negative. Despite the downgrade, India remains a highly desirable marketplace and one where ModusLink will continue to invest. India’s economy is projected to grow 5.3% next year. Even though this marks a slowdown of India’s record growth over the past decade, an economy forecasted to grow 5.3% is the envy of most countries.
India will continue to show strong growth driven by a large and fast-growing domestic market, significant foreign investment and an improving regulatory environment. The government has adopted a style similar to China with Special Economic Zones (SEZ) which are treated as foreign territories for the purpose of trade operations, duties and tariffs.
Based on IBEF (India Brand Equity Foundation) updates of May 2012, more than 70% of India’s population resides in rural areas. Capturing these markets is one of the most lucrative options for all sectors. Key drivers behind this growth include government initiatives and schemes, infrastructure development, industry projects and emphasis on local employability. Other reasons to continue investments in India:
- India is the second most populated country with 1/6th of the global population. Countries worldwide are anticipating a future shortage in the working population due to aging and rising dependence ratios, but India has a young and rapidly growing population. (source: The Economic Times of 01-09-2011)
- 60% of India’s population has seen income levels steadily rise over the last decade mainly contributed by the industry and service sectors. Growth in the higher income categories of India’s population has created an affluent society which has significant level of purchasing power.
- With new found wealth, India is rapidly adopting Western ideas of consumption. Increased per capita income, coupled with an emerging middle class, has provided the necessary impetus to consumerism.
- A $30 billion consumer electronics market. India remains a major importer of electronic components and finished products, mainly from China. The Indian electronics industry is just under 1% of the global electronics industry, but is growing at over 25% CAGR and is expected to be worth $158 billion by 2015. According to Indian-industries/electronics newsletter of January 2011, the electronics industry is one of the fastest growing in the country and is driven by growth in key sectors such as IT, Consumer Electronics and Telecoms.
What are your views about venturing into the Indian market? Do you see the same big opportunity? Leave a comment and share with us your thoughts or experiences.