The Rise of India in World Trade

Chris Callen, Country Manager, DHL Express - Jan 28, 2004

Agenda
 India‘s International Trade Situation

 DHL Trade Confidence Index

 International Logistics

 Building “Brand India “

 Becoming World Class in India

India’s International Trade 2002/03
 Exports
– US $51.7 billion
– Growth 18%
• next only to that of China at 22%
• second highest among world’s 30 leading exporters in world
merchandise trade during the year 2002

 Imports
– Growth 17.03%

 Share of world trade

– 0.8%
Getting Ahead

“If the present trend continues, we may reach our

often stated goal of achieving 1% of world

merchandise trade ahead of the year 2007…”

Arun Jaitley
Union Minister of Commerce & Industry
31 March, 2003
 With the rupee rising against the
dollar and the global slowdown in
world trade over the past few
months, is there cause for concern?
GDP – Regional comparison
GD Pgrowth,
JP 4 ,1 4 6 1990-2001
CN 1 ,1 8 0 C hina 10.0
India 5.9
IN 485 S .K orea 5.7
KR 422 Indonesia 3.8
T hailand 3.8
AU 357
P akistan 3.7
TW 282 P hilippines 3.3
HK 162 M exico 3.1
B razil 2.8
ID 145
TH 115
MY 88
 India has recorded one of the
SG 86
PH 71
highest growth rates in the
1990s
- 200 400 600 800 1 ,0 0 0 1 ,2 0 0 1 ,4 0 0
 Among the largest economies
G D P ( in U S D B ill io n )
in the world, its GDP is close to
US$ 500 billion
 Only China has had GDP
growth higher than India
Merchandise Exports vs GDP
 Thailand, Malaysia, Indonesia all export more than India !

JP
10%
CN
IN 23%
KR 9%
AU 36%
TW 18%
HK
44%
ID
117%
TH
MY 39%
SG 57%
PH 101%
- 142%
200 400 600 800 1,000 1,200 1,400

45% (USD Billion)

GDP Exports
India Rising -- Challenges

 WTO, Asean Free Trade Agreement (AFTA), Bi-

lateral FTAs
 Ground Infrastructure
 Golden Quadrilateral Highway network
 New FTZs and enhanced transhipment facilities
 Liberalised air traffic rights
 Duty structures – among the world’s highest
 Air Express self-handling – elimination of
monopolies in statutory service providers
Agenda
 India‘s International Trade Situation

 DHL Trade Confidence Index

 International Logistics

 Building “Brand India “

 Becoming World Class in India

How do exporters view the situation?
DHL Trade Confidence Index
All India
 The DHL Trade Confidence Index (TCI) at an all-India level is 61 (Q2’-
Sep03), up from 58 (Q1- Jun03), driven by a very optimistic 72 points in
general demand conditions.
 Factors contributing to this movement include optimistic demand conditions,
better domestic conditions & optimism about the macro-economic state
 The factors where no significant change is seen include Attitude of US
Customers, Impact of WTO, Exim Policy & Order Expectations
100
90
 The Exporter view on General 80
70 72
Demand conditions, has become 60
50 53
more optimistic, with almost 72% 40 Q1
36
30
rating them as favourable as 20
11 21
Q2
compared to 53% in the last quarter 10
0
7

Fav ourable Neutral Less Fav ourable

…DHL Trade Confidence Index
Apparel Sector
 Confidence among Textile / Garment exporters is even higher: The DHL
Apparel Trade Confidence Index has moved up to 63 (Q2 - Sep03), from 58
(Q1-Jun03)
 Factors contributing to this upward movement include optimistic Demand
conditions, better Domestic conditions, optimism about macro-economic
state & Policy context
 Factors that seem to have moved
down on confidence include Attitude 100
90
of US Customers & Impact of NTMs 80 80
70
 Optimism in Exporter view of the 60 60
50
General Demand Conditions, shown 40
here, has moved up to 80% from 30 Q1 33

60% in the previous quarter 20 7

15
10
5 Q2
0
Fav ourable Neutral Les s Fav ourable
…DHL Trade Confidence Index
Analysis
 So, the DHL Trade Confidence Index moved up by 5% in Q2-Sep03, despite
the fact that month on month, export growth began to slacken. Dr Debroy’s
view of the possible reasons for this apparently paradoxical finding include:
- Time lag in perceptions reacting to objective reality
- Better domestic conditions biasing the results
- Exporters are unduly optimistic about seasonal demand conditions
 The upward movement in our Index can be ascribed more to better domestic
economic conditions & this has negated the impact of certain negative
developments internationally
 But there is no reason to despair… even if we get 8% growth in 2003-04 it
will be respectable… and the target of 1% share of global trade appears
fairly modest
Agenda
 India‘s International Trade Situation

 DHL Trade Confidence Index

 International Logistics

 Building “Brand India “

 Becoming World Class in India

Emerging Trends
 Growing cross-border trade
– More cross-border production to take advantage of lower
costs/new markets
– Greater liberalisation of trade policies & tariffs through WTO
– Major shift by global companies to source, produce and
distribute from emerging economies like India
 Greater need for dedicated air express freighters
– Less reliance on under- floor space of passenger aircraft &
dictated schedules
– Enhanced schedules to meet shortened transit times

Courier Air Express

…Emerging Trends

 Challenge of Breaking the Time Barrier Further

– Businesses demanding faster and more time-definite
deliveries
– Need shortest “Time- to- Market”
– Shorter Product life cycle
 JIT processes and express transport key to supply chain
logistics
– Lower inventory holdings
– Greater outsourcing of logistics services to integrators,
3PL/ 4PLs

Air Express Logistics Solutions

Agenda
 India‘s International Trade Situation

 DHL Trade Confidence Index

 International Logistics

 Building “Brand India “

 Becoming World Class in India

The Path Ahead
 Is India is at a point of inflection where it can take a significant
share and role in world trade?
 “There is no better time to be an Indian in this world”
 Two things critical for India to go forward strongly :
– Position India as a good place to do business in
– Position India as a place for manufacturing excellence
 These two are not easy-wins since the task is not one of
positioning alone – at least in many key sectors
 In marketing terms – India is not at the stage for aggressive
‘branding’ – but a stage for solid ‘product development’
 But brand is very important – not at the country level but at the
individual company level
Branding
 What came first : Sony or Japan, LG or Korea ?
 Building world-class brands is the responsibility of each and
every business – and the country has a smaller role in it
 The country responsibility is In making India an easy and
good place to do business with ! (whether it is for Indian
companies or MNCs)
 Infrastructure, labour reforms, primary education, borderless
states, debilitating levels of corruption – all of them need to
be managed with a far greater urgency.
 Individual companies will get enormous opportunities in the
world market – as trade barriers topple around the world.
Quotas in Apparel & textile Trade
 China’s growth has been spectacular in areas where quotas have
recently been removed by USA (Source : US Intl. Trade Commission)
 For example :
– Bras & foundation garments (Category 349/649) : 232 %
– Knit Fabrics (Category : 222) : 21,976 %
– Infant wear (Category : 239) : 826 %
– Robes and dressing gowns (Category : 350 /650) : 540 %

 Clearly, as trade regimes liberalise worldwide, new opportunities will

open up for businesses which have world class manufacturing excellence
with vertically integrated skills!
 Don’t bother too much about ‘Brand India’, focus on building world class
manufacturing excellence in our individual businesses – grow your own
brand!
Agenda
 India‘s International Trade Situation

 DHL Trade Confidence Index

 International Logistics

 Building “Brand India “

 Becoming World Class in India

Asia-Pacific Logistics Overview

Mature Unique Mid-Level Developing

Hong Kong China Malaysia Sub-Continent
Singapore Vietnam
Japan Thailand
Cambodia
Australia Indonesia
New Zealand Laos
Philippines
st ekr a M

Korea Myanmar
Taiwan India Etc

 Developed  Rapid  Developing  Poorer

Logistics Development sophistication infrastructure
 High Competition  Undeveloped  Increasing  Lower
 High Service domestic competition competition
levels  Increasing  Increasing  Customs
 Lead time service levels service levels  Ownership
pressure  High Growth  Varied Growth Issues
et car a h C

 Lower Growth  High Growth

Building a Strong Infrastructure
 Four Gateway Strategy – four state-of-the-art Express Handling Units
for seamless self-handling of Air Express shipments at major airports
– First 26,000 sq ft facility now operational in New Delhi; only
dedicated facility of its kind in India
– Similar facilities planned in Mumbai, Chennai and Bangalore
 12 Spare Parts Centres across major cities
 Modern, technologically superior Service Centres
 300-strong fleet of new vehicles, the largest of its kind in India, linked
in real time to our data network.
 Globally integrated sophisticated IT infrastructure for real time supply
chain management and tracking.
 24-hour country-wide toll-free customer service call centre.
Building a Strong Infrastructure
 Like you, many challenges we face are regulatory or
bureaucratic – some we have overcome, some we are still
battling, most of are unique to India:
– On-board-courier
– Gateways at Airports
– 24-hour Customs in-premise
– Indian Post Office (Amendment) Bill, 2002
 Our investments are significant and we hope to provide the
kind of logistics support which is truly world class. We’re
getting there.
 We are leading the way – we have 70% of the international air
express market in India, and over 20,000 exporters and
importers in our customer base here !
 Invest, excel, promote.
■THANK YOU