1 path to india market. 2 agenda why india economic and trade issues important statistics market...

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Path to India Market

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Agenda

Why India Economic and Trade Issues Important Statistics Market Trends Opportunities & Challenges Channels and Strategies How TDC can help


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WHY INDIA

Dynamic, fast-growing economy

Sustainable growth led by services

Huge population second to China

Rise of middle & high income classes

Trade liberation & commitment to reforms

Retail revolution


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ECONOMIC AND TRADE ISSUES

Sustainable good economic growth.Avg. 6% GDP growth over past decade. Est. growth for this and next year is 6-7%. Strong national reserve.

Change of Ruling Party/Prime Minister.Manmohan Singh of Congress Party replacing Vajpayee of BJ Party as Prime Minister. Mr. Singh was former financial minister pioneering many of the reform policies.

Economic reforms and liberalisation policies

continued.Trade reforms and liberalization since 1991 proved to be successful. Political consensus regardless of change of leadership. Trend of globalisation and outsourcing.


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“Look East” policy. Links with China, FTAs with ASEAN, Singapore, Thailand, etc. World’s second largest market.

Over 1 billion population, fast GDP growth, increasing incomes, increasing affluent households ready buyers of imported goods


ECONOMIC AND TRADE ISSUES

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1.3

5.15.9

7.3 7.37.8

4.8

6.56.1

4.4

5.8

4

8.1

6

0123456789

19

91

/92

19

94

/95

19

97

/98

20

00

/01

20

03

/04

forecast

India’s GDP Growth, 1991-2004% Change

STATISTICS

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9.4

13.215.7

18.920.7

2527.6

6.37.6

9.612.2

0

5

10

15

20

25

30

1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04

India’s Exports of Services, 1997-2003+20% each year

US$ billion

IT & Software

Sustainable growth led by services

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37.1

59.1

3.8

33.6

60

6

15.9

69.1

15

0

10

20

30

40

50

60

70

80

Low income Middleincome

High income

1989/90

1994/95

1999/2000

% of urbanhousehold

Rise of middle & high income classes51.2 Million Household Living in Urban India

7.7 Million of High-income Household

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21.9 23.328.7

36.7 39.1 41.5 42.449.7 50.5 51.4

61.4

77

19.4

0102030405060708090 Export

Import

Impressive results….. TradeTrade between India and the World, 1991-2003

Double in 10 years +25% in 2003From 2002

US$ billion

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1901

14411202

12941099

679685762796

517

0

500

1000

1500

2000

2500

3000

3500

Gems and Diamonds

Others

Hong Kong’s Exports to India, 1994-2003Double in 5 years

US$ billion +32% in 2003from 2002

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4.33.4

3.4

2.32.22.6

3.6

1.1

00.5

11.5

22.5

33.5

44.5

5

1991-96

1997 1998 1999 2000 2001 2002 2003

FDI inflows to India, 1991-2002Accelerating since 1997

US$ billion

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MARKET TRENDS Modernising retailing.

Emergence of chain stores, department stores, supermarkets, hypermarkets, shopping malls in tandem with rising living standards

Soaring demand in capital goods, machinery and parts.

Serious lack of high-tech machinery – textile, injection moulding, printing, food machines, etc.

Improving trade policies and foreign investment

prospects. Removal of quota system in 2001 and has since reduced import tariffs, lowered excise duty brackets to 16% and abolished additional customs duty (SAD) of 4% fr. Jan. 2004 total chargeable duties 40%.

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MARKET TRENDS Opening up domestic market to foreign companies

for example, raising the ownership ceiling for foreign investors in the oil/ banking sectors from 74% to 100% and 49% to 74% respectively; establishing Special Economic Zones with tax exemptions to promote export-led businesses.

Expanding two-way trade between HK and India.

2002-2003, total trade grew by 12.7% and 28.9% respectively; while HK’s exports to India up 19.9% and 31.9% during the same periods.

Growing middle/high classes and young generation. Creating new demand of goods and services.

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OPPORTUNITIES & CHALLENGESOpportunities for Product Sector

Consumer Goods- On the rise as local offerings fail to satisfy current demand much room for imports- Consumer electronics, timepieces and, to a lesser extent, toys, gifts,

house

Semi-manufactures, parts and components- Except a few sectors like jewelry, India’s light manufacturing industries

do not have high-tech machinery to do the processing work. badly need to procure sophisticated, high value-added semi-

manufactures from overseas (e.g. electronic parts)

Capital goods, machinery and parts- Imports of advanced machinery, parts and accessories from overseas

much needed to move up value chain.- textile, injection moulding, printing, food machines, etc.

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Electronics & ICT – India gained competitive advantage in providing service exports, with IT sector as the star performer. Increasing no. of IT plus electronic companies wish to expand overseas

Film & TV – India is one of the world’s largest

producers of films and one of US’s outsourcing destination for animation work. Its Bollywood is gaining international attention and status.

OPPORTUNITIES & CHALLENGESOpportunities for Services Sector

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Infrastructure and real estate

Fast economic development triggers huge demand in upgrading infrastructure and real estate requirement

Opportunities in roads, highways, parts/airports, commercial and residential building, township development, etc.

Design

Potential consumer products like toys & gifts craving for value-add design services due to increasing keen competition

OPPORTUNITIES & CHALLENGESOpportunities for Services Sector

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A loose and highly unorganized market.

Consumers extremely price sensitive. Japanese brand Q&Q watches (@ USD2.5 ~ USD35)

Very hot weather in summer (~40 C)

Insufficient flights between HK and India.

Very high airfare in India eliminates businessmen’s travel interest.

OPPORTUNITIES & CHALLENGES Challenges

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Foreign vs. Chinese goods. Foreign-made products are highly visible in India. Among them, the majority consumer goods in particular, are sourced from China.

Chinese goods Chinese prices. Chinese goods mostly consolidated and shipped to India via Dubai, off record or under invoiced to avoid tax/tariffs. Prices extremely low with bad quality.

Hong Kong brands/goods not visible. In the eyes of consumers, HK brands/goods are not visible; some even can’t differentiate it from China.

Reliance on local manufacturers, importers, import agents to source new products.

OPPORTUNITIES & CHALLENGES Challenges

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Finding Indian buyers proactively

Aggressive pricing

Branding and design

Supplying semi-manufactures and capital goods

Focusing on affluent households and major cities

Seasonal sales

CHANNELS & STRATEGIES

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Market size : 50 m (now) and 75 m (by 2007)

Brands : >100 with ~50 switzerland-dominant

Price range : 7 segments (US5, 20, 75, 150, 300, 1,500, >1,500)

Tax : CIF$10 $19 after tax $35-40 market

Distribution : direct (for low volume high value watches); indirect (through distributors to cover majority areas at its maximum); or a combination of both

Retailing : traditional watch outlets, non-traditional watch outlets (jewelers, inflight, gift/chain/super/electronics/ fashion/lifestyle/dept. stores), franchise and showrooms.

Opportunities and ChallengesWatch

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tdctrade.com – market intelligence

Business matching – finding partners

Promotional activities in India in the up and coming years (missions, exhibitions and department store promotion being planned)

TDC regional office at Singapore – any queries about doing business business in India

HOW TDC CAN HELP

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Loretta Wan

Regional Director, Southeast Asia and India

Telephone : (65) 6538 7376

Mobile : (65) 9018 1033

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Thank You

1 path to india market. 2 agenda why india economic and trade issues important statistics market...

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