Transcript ETIG Knowledge Forum PPT

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 $51.7 billion
– Growth 18%
• next only to that of China at 22%
• second highest among world’s 30 leading exporters in world
merchandise trade during the year 2002
 Imports
– Growth 17.03%
 Share of world trade
– 0.8%
Getting Ahead
“If the present trend continues, we may reach our
often stated goal of achieving 1% of world
merchandise trade ahead of the year 2007…”
Arun Jaitley
Union Minister of Commerce & Industry
31 March, 2003
With the rupee rising against the
dollar and the global slowdown in
world trade over the past few
months, is there cause for concern?
GDP – Regional comparison
JP
4,146
CN
China
India
S. Korea
Indonesia
Thailand
Pakistan
Philippines
Mexico
Brazil
1,180
IN
485
KR
422
AU
357
TW
282
HK
162
ID
145
TH
115
MY
88
SG
86
PH
71
-
200
400
600
800
1,000
GDP (in USD Billion)
1,200
1,400
GDP growth,
1990-2001
10.0
5.9
5.7
3.8
3.8
3.7
3.3
3.1
2.8
 India has recorded one of the
highest growth rates in the
1990s
 Among the largest economies
in the world, its GDP is close to
US$ 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
23%
IN
9%
KR
36%
AU
18%
TW
44%
HK
ID
117%
39%
TH
57%
MY
101%
142%
SG
PH
-
45%
200
400
600
800
(USD Billion)
1,000
1,200
1,400
GDP
Exports
India Rising -- Challenges
 WTO, Asean Free Trade Agreement (AFTA), Bilateral 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
 The Exporter view on General
Demand conditions, has become
more optimistic, with almost 72%
rating them as favourable as
compared to 53% in the last quarter
100
90
80
70
60
50
40
30
72
53
Q1
36
11
20
10
0
7
Favourable
Neutral
21
Q2
Less Favourable
…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
of US Customers & Impact of NTMs
Optimism in Exporter view of the
General Demand Conditions, shown
here, has moved up to 80% from 60%
in the previous quarter
100
90
80
70
60
80
60
50
40
30
20
Q1
7
10
0
5
Favourable
Neutral
33
15
Q2
Less Favourable
…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
Characteristics
Markets
Mature
Unique
Hong Kong
Singapore
Japan
Australia
New Zealand
Korea
Taiwan
China
 Developed
Logistics
 High Competition
 High Service
levels
 Lead time
pressure
 Lower Growth
 Rapid
Development
 Undeveloped
domestic
 Increasing
service levels
 High Growth
Mid-Level
Malaysia
Thailand
Indonesia
Philippines
India
 Developing
sophistication
 Increasing
competition
 Increasing
service levels
 Varied Growth
Developing
Sub-Continent
Vietnam
Cambodia
Laos
Myanmar
Etc
 Poorer
infrastructure
 Lower
competition
 Customs
 Ownership
Issues
 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