Impact of India on Global Business

8/8/2018
Impact of India on Global Business

IMPACT OF INDIA ON GLOBAL BUSINESS
1
Table of Contents
Introduction................................................................................................................................2
Overview of Automobile Industry.........................................................................................2
Manufacturing Industry..........................................................................................................2
Innovation sector....................................................................................................................3
Service Sector.........................................................................................................................3
Agriculture Sector of India.....................................................................................................4
Impact of India on Global business........................................................................................5
Automobile Sector.............................................................................................................5
Manufacturing Sector.........................................................................................................7
Innovation Sector.............................................................................................................15
Service Sector...................................................................................................................18
Agriculture Sector............................................................................................................24
Comparison analysis between India and China...................................................................27
Differences.......................................................................................................................27
Similarities.......................................................................................................................28
Pestle Analysis of India and China..................................................................................29
Suggestion............................................................................................................................32
Dumping...........................................................................................................................32
Conclusion................................................................................................................................33
References................................................................................................................................35

IMPACT OF INDIA ON GLOBAL BUSINESS
2
Introduction
This thesis is being prepared in order to provide a brief of the impact of India on global
business in the Automobile and Manufacturing Sector. India is a country in South Asia and
also known as the Republic of India. India is said to be the world’s seventh largest country in
terms of area and most populated democracy. From the southwest, it is covered by the
Arabian Sea, from the southeast by the Bay of Bengal, and from the south by the Indian
Ocean. The country shares border with Bhutan, Nepal, and China to the northeast, Pakistan to
the west, and Bangladesh and Myanmar to the east. (Know India, 2018)
The Indian economy is an emerging mixed economy. It is said to be the third-largest
economy in the world by PPP (purchasing power parity) and sixth-largest by nominal GDP.
As per the per capita GDP (nominal) it is on the 141 rank with $2,134 and according to per
capita GDP (PPP), it is on the 123rd position with $7,783 of 2018 (Nation facts, 2018).
Overview of Automobile Industry
The whole automobile industry includes a broad range of organizations and companies
involved in the manufacturing, design, selling, development, and marketing of Motor
Vehicles, few of them are known as automakers. It is said to be the most vital sector of the
economy by revenue across the world. This industry of automotive does not involve
industries that are devoted towards the automobile maintenance performing delivery to the
customer, like fuel filling stations of motor, and repair shops of the automobile (Euler
Hermes, 2018).
Manufacturing Industry
Manufacturing industry means those industries that are incorporated in the processing and
manufacturing of objects or goods and involved in either making of new products or in value

IMPACT OF INDIA ON GLOBAL BUSINESS
3
addition. This industry is responsible for a major share of the industrial sector in developed
countries. The final good can be provided as a finished good for selling to the customers or
can be used as an intermediary product in the process of production (Chartered Institute of
Management Accountants, 2018).
Innovation sector
Innovation has always been the driver of change in the whole world overriding to offer
available and reasonable solutions to fulfil the shifting needs of the consumer. Examples from
all around the world evidently portray the character performed by innovative solutions in the
cumulative growth of national economic and enhancing standards of living.
There is a strong association between revenue growth and innovation at the level of the
enterprise. According to a global research directed by PwC clearly states this relationship. In
2013, PwC considered around 1,700 businesses of 25 countries and 30 sectors and divided
these according to their potential of innovation depending on a series of parameters
comprising expenses on innovation, launching of the new product, co-development work
carried out with partners, etc. Examining the financial performance of these companies
carried out a strong difference between the top and low performers, along with the top 20%
companies developing 16% quicker as compared to the least innovative. This was equivalent
to all of the best companies making 0.25 billion USD of extra revenue over 2010-2013, as
associated with the least innovative (PWC, 2015).
Service Sector
The service sector creates a huge part of the economy of India in terms of its contribution to
the national income and employment potential. This sector involves a broad range of actions
from the most refined in the arena of Communication and Information Technology to make
simpler services followed by the workers of the informal sector, for instance, rickshaw,

IMPACT OF INDIA ON GLOBAL BUSINESS
4
vegetable sellers, pullers, hawkers, etc. The following wide pool of activities can be focused
to make the part of the Services Sector:
 Transport comprising tourist support activities along with tour operators and travel
agencies activities
 Ownership of residences and real estate
 Defense and Public administration
 Hotels and restaurants
 Insurance and Banking
 Trade
 Personal facilities and activities of extra-territorial companies and bodies
 Business services comprising software development, management and business
consultancy, accounting, data processing services, advertisement, architectural,
engineering and other business and technical consultancy or services
 Storage and communication
 Other various services comprising medical and health, community services, recreation
services, education, religious, legal services, and entertainment services (Das & Raut,
2014)
Agriculture Sector of India
Agriculture is one of the most essential sectors of the Indian Economy. The agriculture sector
of India comprises 18% of the GDP of India and offers the job to around 50% of the
workforce of the country (Madhusudhan, 2015). India is known for producing a huge stock of
rice, spice products, pulses, spices, and wheat. The country possesses various regions to be
selected for the business like meat, fisheries, food grains, dairy, and poultry, etc. India has
appeared as the second biggest manufacturer of vegetables and fruits in the whole world.

IMPACT OF INDIA ON GLOBAL BUSINESS
5
As per the report issues by (DES) the Department of Economics and Statics, the food grain
production for the 2013-2014 year is 264 million tons which is more than the production of
2012-2013 i.e. 257 million tons. It reflects that the agriculture industry of India is growing
and developing with time.
Impact of India on Global business
Automobile Sector
The worldwide industry of automobile is considered as the main sector of the economy for
world’s each main country. Nowadays, the Indian industry of automobile reflects a cluster of
diversities and models meeting all conceivable anticipations and internationally recognized
industry standards. Several leading names resounding in the Indian industry of automobile
comprise Tata Motors, Hero Honda, Maruti Suzuki, Mahindra and Mahindra, Hindustan
Motors, and Hyundai Motors. In the course of initial stages of its growth, the industry of
automobile intensely rests on foreign technologies. Though, in some years, the Indian
manufacturers have on track of utilizing their own technology developed in the home
country. The successful market placed in the country has appealed various manufacturers of
an automobile comprising few of the famous worldwide leaders to place their base in the
country to improve their profile and visions to new altitudes (Shodhganga, 2018).
Being highly Capital concentrated the industry has resulted in the negative impact on the
small players. These players are not able to enter the market due to the presence of big
players in the market. Even the current worldwide auto majors themselves are readjusting
their manufacture sources and coming in the Asia-Pacific region, majorly in Thailand, India,
and China. Besides this, the continuous force for reduction of cost on OEMs is convincing
them to outsource more mechanisms from the countries with low cost. The fluctuating
scenario has unlocked the opportunities for the Indian industry of automobile. India, with the

IMPACT OF INDIA ON GLOBAL BUSINESS
6
vast local market, quickly rising purchasing power, and market-related exchange rate and
well recognized financial market and unchanging corporate governance outline is developing
as an attractive place for fresh investments in the automobile sector.
According to Shodhganga, the fast enhancement in the infrastructure comprising power, port,
road, and world-class amenities for analysis, certification and homologation joined with
obtainability of workforce and enabling government rules to endorse fair rivalry and make
Indian industry of automotive more competitive in the world besides creating the country a
constructive place for investment by the worldwide key leader in the auto industry.
According to Gupta, R., the Indian industry of automotive has its origin in the 40’s; it has
experienced a significant development in last two decades mostly because of economic
liberalization comprising 100% FDI in the sector. Worldwide component and auto
manufacturing companies are encouraged to start R&D and manufacturing amenities in the
country because of accessibility of big group of experienced employees, low cost of
production, quicker design and growth procedure and developing market status. Currently,
there are around 30 OEMs offering more than 75 choices in all classes of vehicles.
Automotive industry of India is the sixth largest manufacturer of automobiles in the world in
regards to value and volume and has developed 14.4% in the last decade. The industry adds
7% to the GDP of India, 7-8% of the overall population who are employed, 4% exports, and
39% of inflows of FDI and contributes 17% to the overall collected indirect taxes. Total local
sales are directed by two-wheelers vehicles, (in 2012-13 77.4% of overall sales) trailed by
passenger vehicles i.e. 15.1% and commercial vehicles i.e. 4.45%.
Since last five years, in the automobile production, there has been the total growth of 20.63
million vehicles in 2012-13 from 10.85 million vehicles in 2007-8. According to Gupta, P., in
2012-13, it has been identified that it has almost stagnant sales, whereas there is 10% increase

IMPACT OF INDIA ON GLOBAL BUSINESS
7
in the exports in the same time period. But, in worldwide terms, According to Maheshwari,
P., the 4 billion USD of export earnings (comprising 1.8 billion USD as auto component
sector exports), the sector of automobile add only 2.37% in the overall production of the
world and is positioned at 26th rank in the market of auto export of the world with a 0.53% of
share. The mission of Indian industry of automotive in struggling for worldwide
competitiveness is obvious from the fact that key manufacturers of the automobile are the
second-largest receivers after Japan for the quality of the Deming award. Considerably, India
possesses the best-in-class fuel rates of the economy along with the reasonable entire cost of
ownership. The above situation designates that the Indian industry of automotive has a high
potential for considerable growth (Gupta, Gupta & Maheshwari, 2015).
India is a worldwide center of automobile industry having:
16 Manufacturers of 2/3 wheelers, 9 Manufacturers of commercial vehicles and 15
Manufacturers of passenger cars, and 5 Manufacturers of the engine, 14 Manufacturers
tractors
Manufacturing Sector
According to A.T. Kearney (2015), in terms of GDP of approx. $2.3 trillion, India is the
ninth-largest economy of the world and in terms of purchasing power parity; it is the third
largest country with $8 trillion. However, manufacturing accounts only 16% of the GDP of
the country and 52% of the service sector. India signifies only 2% of the manufacturing
output of the world, and its 10% is contributed by China. Obviously, India is pressing its
efforts in manufacturing (A.T. Kearney, 2015).
India has various strengths that can support it in becoming a powerhouse of manufacturing: a
young workforce, a large group of engineers, major local consumption of manufactured
goods, and wages that are half of China's. These aspects become especially significant as