How well is the Indian economy picking up?

Till a while back, a lot of uncertainty surrounded the rebound of the Indian economy. The June quarter saw a growth of 8.8% due to increase in private demands and investment demands. This rate of growth in expected to last the coming months. The fact that real estate rates are picking up and the car market is regaining momentum reflect this growth rate.

There are two factors that support this assumption. First, that the employment market picking up. Recruitment firm Manpower conducted an Employment Outlook Survey recently according to which the next three months would see robust hiring in India. The public administration, education and services sectors are likely to see the highest rates of hiring. The second is the huge FII inflows that India has been witnessing recently. The Indian Sensex is likely to reach the 20000 mark thanks to the large chunks of cash expected to come in. Overseas investors are showing tremendous interest in India and they would be interested in picking up local stocks.

The flipside is that a number of analysts still believe that India is not there yet when it comes to economic growth. This is primarily because India gets a huge chunk of its business from the US, UK and Japan, which are still reeling under the economic downturn. Equity analysts in particular believe that stocks are overvalued and we must expect a correction sooner or later.

Where the US, UK and Japan are still struggling to bring down unemployment levels, the next three months are likely to see heavy hiring in India. The International Monetary Fund director Dominique Strauss -Kahn has said that for the economic crisis to end, unemployment has to go down.

The challenge will be to see if India is able to maintain this growth despite the recession that the rest of the world is yet to recover from. Countries such as China and Taiwan have witnessed growth along with India. They have an advantage compared to India because of the outsourcing services that Indian economy is heavily reliant upon. The good part is that the Indian economy is growing out of outsourcing. The number of entrepreneurs is picking up and the manufacturing sector has seen a double digit growth.

Certainly, India is going to witness an upturn. And it is going to last. How far it will take the growth story is what we’ll wait and see.

Marketing of SEZs

The Growth Catalysts

With recession fading away, there is a hope of markets in Europe and North America jumping back to business. This will mean increased business for Indian IT and ITeS and also BPO and KPO companies and need for centralised and better infrastructure. Considering SEZs play an important role in India’s export sector now is the need to plan a marketing strategy that will project them rightly.

What are SEZs?

SEZ or special economic zones are specifically delineated duty free enclaves. These zones are deemed to be foreign territory and are given special privilege for the purposes of trade operations, duties and tariffs. They were primarily promoted for facilitating exports in the country. SEZS also aim to attract export-oriented FDI, enable Indian entrepreneurs to operate under international conditions, implement of global industries and practices, create employment and attract international investment in India. For SEZs to grow, the first requirement is world class infrastructure. This is true for not just IT and ITeS SEZs, but also for manufacturing and industrial SEZs.

Marketing SEZs

While planning any marketing strategy in terms of SEZs, it should be remembered that these areas will be occupied by a mix of mid-sized Indian companies hoping to go global as well as some of the large players from India and outside. This calls for a focussed marketing strategy that should be directed at new domestic as well as international companies. The international companies should particularly be targeted as they will be looking for economically viable areas to set up their units at and will be also be aiming at expanding their operations after deployment.

It is important to send positive signals to potential tenants due to the negative impression that has been created of SEZs by policy flip-flops and land acquisition issues. The marketing strategy of SEZs should aim at showing tenants that inspite of STPI been granted a year’s extension in the last budget, they will be better off than existing STPI-based companies in the end. Those with space in IT and ITeS SEZs definitely stand to gain in the long run when STPI concessions will ultimately cease in future.

There is no denying that marketing activities for SEZs were rather slow till recent times. With companies becoming more aware of different benefits of leasing space in SEZs, the time is now ripe to execute these strategies with full vigour. From large players to start-ups and small entrepreneurs, everyone is waking up to the benefits of SEZs. We can further instil hope in these companies by making them aware of the through tax benefits that SEZs provide and will continue to provide in future.

Sun seems to be rising now for SEZs! Encouraging news of Bharat Forge (BFL) starting its marketing effort for the first phase of its 10,500 acre SEZ at Khed and the Tamil Nadu Industrial Development Corporation (TIDCO) starting marketing space at the multiproduct SEZ in Ennore from April-May are definitely promising a better future for SEZs in India.

India's Manufacturing exports to touch $ 300 b by 2015: study

Indian manufacturing export has the potential to touch $ 300 billion by 2015, growing at an annual rate of 17 per cent as against the historic growth of 11 per cent, states a study released by the Confederation of Indian Industry (CII) and McKinsey on manufacturing.

“The global trend to manufacture and source products in low-cost countries (LCCs) is likely to gather steam over the next 10 years, particularly in the skill-intensive industries, where India has a significant competitive advantage,” states the study.

The study asserts that if India could take advantage of this particular trend, it would lead to the creation of 25-30 million jobs in manufacturing by 2015 and two to three times this number in allied sectors like construction, education and entertainment due to the multiplier effect.

The aspiration, though ambitious, is attainable. The CII -McKinsey study states that India has several advantages in skill-intensive industries, such as auto components and pharmaceuticals, where the next set of offshoring opportunities will arise. Apart from low wages, these advantages include engineering skills (process, product and capital engineering), established raw material bases, a mature supply base and a growing domestic demand.

The study has also found that out of the $ 300 billion of total manufacturing exports, $ 70 billion to $ 90 billion could be captured from just four sectors — apparel, auto components, specialty chemicals and electrical and electronic products.

In apparel, global trade could grow from $ 200 billion in 2002-03 to over $ 300 billion by 2015. Of this, India could grow its exports from $ 6 billion to $ 25 to $ 30 billion by 2015. It could thus become the second largest LCC exporter with an 8 to 10 per cent share of world trade, adds the CII-McKinsey study.

The study also points out that in auto components, LCC offshoring is poised to take off and could reach $ 375 billion by 2015. “India should aspire to capture $ 20 to $ 25 billion of this by 2015 as compared to exports of just over $ 1 billion in 2003,” states the study.

In electrical and electronic products, world trade has already exceeded $ 1 trillion and countries such as China, Taiwan, Malaysia and Thailand all have a significant lead. Offshoring business from developing countries is expected to increase from $ 345 billion to at least $ 600 billion by 2015. “Of this, India should aspire to capture $ 15 to $ 18 billion, as compared to exports of $ 1.2 billion in 2002,” states the study.

India’s chemical, engineering and cost-innovation skills could also make the country one of the top two LCC exporters with a potential $ 12 to $ 15 billion in exports, the study finds.
The study, however, points out that achieving this acceleration in manufacturing exports would require that Indian players adopt a global mindset, carefully select product segments and rapidly develop India as one of the top three outsourcing hubs.

It adds that the government should also implement key reforms in taxation, infrastructure, clusters (SEZs), labour and skill development to help unlock India’s manufacturing potential.

Source - The Tribune