Emerging Economy

Situationer: INDIA
INDIA
• India is the world's fourth-largest economy. It produced $9.4
trillion in goods and services in 2017. But it has a long way to go
to beat the top three: China, European Union and the Unites
States
• India had rapid growth despite the Great Recession. It grew 6.8%
in 2018, 7.2% in 2017, and 8.2% in 2016.2 From 2008 through
2014, it grew between 3% and 8.5%. That phenomenal growth
rate reduced poverty by nearly 10% in the 2010s.
• On May 23, 2019, Prime Minister Nahrendra Modi won reelection.
Mr. Modi, a successful businessman, promised to reduce
bureaucracy and regulation, greenlight infrastructure projects,
and simplify the tax code.
INDIA
• The United States is one of India’s biggest military allies, and
China is one of its biggest economic partners.
• India wants to be treated like the official five nuclear powers:
United States, Russia, Britain, France and China.
• India and the United States have continued to deepen their
partnership, with an emphasis on military cooperation, including
joint defense exercises and counterterrorism efforts.
• Its Prime Minister promoted closer ties between China and
India, two of the world’s largest and fastest growing
economies. China and India have complementary economies.
India has raw materials while China has manufacturing.
THE
ECONOMY
OF INDIA
WHAT IS THE ECONOMY OF INDIA
 Mixed economy has three of the following
• India has a MIXED
characteristics
ECONOMY. of a market economy:

1. First, it protects private property.

2. Second, it allows the free market and the laws
of supply and demand to determine prices.
3. Third, it is driven by the motivation of the self-
interest of individuals.
WHAT IS THE ECONOMY OF INDIA
• India has a MIXED ECONOMY.
• Half of India's workers rely on agriculture, the signature of
a traditional economy.
WHAT IS THE ECONOMY OF INDIA
• India has a MIXED ECONOMY.
• Half of India's workers rely on agriculture, the signature of
a traditional economy.
• One-third of its workers are employed by the services industry, which
contributes two-thirds of India's output.
WHAT IS THE ECONOMY OF INDIA
• India has a MIXED ECONOMY.
• Half of India's workers rely on agriculture, the signature of
a traditional economy.
• One-third of its workers are employed by the services industry, which
contributes two-thirds of India's output.
• Since the 1990s, India has deregulated several industries. It's
privatized many state-owned enterprises, and opened doors
to foreign direct investment.
WHAT IS THE ECONOMY OF INDIA
INDIA’S STRENGTH:
• The cost of living is lower than in the United States. This is an advantage because
Indian workers don't need as much income since everything costs less.
• India has many well-educated technology workers.
• English is one of India’s official subsidiary languages. Many Indians speak it. This,
combined with the high level of education and the wage differential, attracts U.S.
technology and call centers to India.
• India’s 1.3 billion people come from a wide range of economic and cultural
backgrounds.
• The profitable Indian film industry is called "Bollywood”. Bollywood makes more than
twice the number of movies Hollywood makes due to less revenue and less cost of
production.
ECONOMY
OF INDIA:
PROS AND
CONS
DOING BUSINESS IN INDIA: THE PROS

• STABLE ECONOMY:

- Buoyed by a robust democracy, key

structural reforms, private
consumption, and a rise in government
investment, India has achieved a high
macroeconomic stability ranking (with
a score of 90 out of 100 and ranked 41
out of 141 economies) in the World
Economic Forum’s (WEF) Global
Competitiveness Index.
DOING BUSINESS IN INDIA: THE PROS

• BUSINESS REFORMS:

- In a bid to attract foreign

investment, the Indian
government has eased foreign
direct investment (FDI)
restrictions, such as raising foreign
equity caps for insurance and
defense, leading to significant
progress in terms of improving its
overall business environment.
DOING BUSINESS
IN INDIA: THE PROS
• MASSIVE CONSUMER MARKET:

- India has a large and healthy middle

class, making it an attractive consumer
market.
- India is the world’s largest market for
manufactured goods and services, and
ranks number 3 out of 141 economies for
market size according to the WEF’s
Global Competitiveness Index.
DOING BUSINESS IN
INDIA: THE CONS
• EASE OF DOING BUSINESS:
- Though progress has been made, India still lags
behind many larger nations in critical metrics
such as starting a business, enforcing contracts
and registering property.
- It can take 68 days to register a business at a
cost of 7.4% of the property’s value, much
longer and costlier than other OECD high-
income economies.
- Commercial dispute arise, it can take a
staggering 1,445 days for the issue to be
resolved through a local court — three times
higher than other countries.
DOING BUSINESS IN INDIA: THE CONS

• EASE OF DOING BUSINESS

- In the city of Mumbai, 10 steps are
required — twice the number than
the typical five-step average in
high-income OECD nations.
- It also takes longer to complete the
process, roughly double the OECD
average (18 days in Mumbai versus
9.2 days for OECD countries).
DOING BUSINESS IN
INDIA: THE CONS
• HIGH TARIFFS AND PROTECTIONIST POLICIES:
- The country’s average applied tariff is the highest
of any G20 country and among the highest
bound tariff rates in the World Trade
Organization (WTO). Those barriers to trade have
not improved in recent years as the Indian
government moves to protect domestic
producers.
- The country has also extricated itself from the
world’s biggest regional trade deal, refuses to
join the Regional Comprehensive Economic
Partnership (RCEP), and the government plans to
take measures to ban the import of any products
that may be detrimental to domestic industries.
DOING BUSINESS IN
INDIA: THE CONS

• HIGH TARIFFS AND

PROTECTIONIST POLICIES:
- Finally, India has placed limits
on foreign ownership of
businesses and has stringent
local presence requirements
for would-be investors.
DOING BUSINESS IN INDIA: THE
CONS
• A VAST AND FRAGMENTED MARKET:
- Indian states are often compared to individual nations,
given their size and diversity in language, culture, talent
and infrastructure. This creates a considerable variance in
business landscapes.
- South India is wealthier and older, for example, while
the northern part of the country is younger and poorer.
North Indians prefer communicating in Hindi, while
southern Indians use English or their respective state
language for business transactions.
DOING BUSINESS IN INDIA: THE CONS

• INFRASTRUCTURE:
- India’s infrastructure of roads, railroads,
airports, seaports, power grids, and
telecommunications infrastructure
present challenges to its growing
economic status and ability to deliver
public services.
- Massive population growth, growing
urbanization, and rising incomes put
pressure on the government to improve
the country’s infrastructure. As such, the
government is allocating significant
portions of its budget to infrastructure
projects.
DOING BUSINESS IN
INDIA: THE CONS
• SAFEGUARDING INTELLECTUAL
PROPERTY:
• Although local laws are thorough and
generally compatible with EU and U.S. IP
laws, there is some concern about
enforcement of these laws.
• Bureaucratic delays (IP enforcement
cases can take years to wind through the
courts) and a general lack of
transparency are both areas of concern
in terms of protecting sensitive
intellectual assets.
CONCLUSION
• India is the fastest-growing trillion-dollar economy in the world and ranks as
the fifth overall and offers many advantages for companies seeking expansion
opportunities.
• A stable economy, business reforms designed to drive foreign investment,
digital competitiveness, and a massive consumer market make India a lucrative
business target for the fintech, services telecom, and capital markets sector.
• Although India is introducing reforms to improve its overall business
environment, the country has recently implemented protectionist policies to
bolster domestic industry. India also has the high tariffs and prohibitive policies
that can make starting and forming a business costly and time-consuming.
SOURCES:
• “India's Economy, Its Challenges, Opportunities, and Impact” taken
from https://www.thebalance.com/india-s-economy-3306348
• “Doing business in India” taken from
https://www.wolterskluwer.com/en/expert-insights/doing-business-
in-india
END