Transcript Path to India Market - HKTDC World SME Expo

Path to India Market
1
Path to India Market
Agenda







Why India
Economic and Trade Issues
Important Statistics
Market Trends
Opportunities & Challenges
Channels and Strategies
How TDC can help
2
Path to India Market
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
3
Path to India Market
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.
4
Path to India Market
ECONOMIC AND TRADE ISSUES

“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
5
Path to India Market
STATISTICS
% Change
forecast
7.3
7.3
8.1
7.8
6.5
5.9
5.1
4.8
6.1
6
5.8
4.4
4
2003/04
2000/01
1997/98
1994/95
1.3
1991/92
9
8
7
6
5
4
3
2
1
0
India’s GDP Growth, 1991-2004
6
Path to India Market
Sustainable growth led by services
US$ billion
India’s Exports of Services, 1997-2003
+20% each year
30
27.6
25
25
18.9
20
20.7
15.7
13.2
15
10
IT &
Software
12.2
9.4
6.3
7.6
9.6
5
0
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
7
Path to India Market
Rise of middle & high income classes
51.2 Million Household Living in Urban India
% of urban
7.7 Million of High-income Household
household
80
70
60
50
40
30
20
10
0
1989/90
1994/95
1999/2000
69.1
59.160
37.133.6
15.9
15
3.8 6
Low income
Middle
income
High income
8
Path to India Market
Impressive results….. Trade
Export
Import
77
61.4
49.7 50.5 51.4
41.5 42.4
39.1
36.7
20
03
20
01
19
99
19
97
23.3
19.4 21.9
28.7
19
95
19
91
90
80
70
60
50
40
30
20
10
0
From 2002
19
93
US$ billion
Trade between India and the World, 1991-2003
+25% in 2003
Double in 10 years
9
Path to India Market
Hong Kong’s Exports to India, 1994-2003
Double in 5 years
US$ billion
+32% in 2003
from 2002
3500
1901
3000
Gems and Diamonds
2500
Others
1099
2000
796
1500
1000
762
1441
1294
685
1202
679
517
500
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
0
10
Path to India Market
FDI inflows to India, 1991-2002
Accelerating since 1997
US$ billion
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
4.3
3.4
3.6
3.4
2.6
2.2
2.3
1999
2000
1.1
199196
1997
1998
2001
2002
2003
11
Path to India Market
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
12
 total chargeable duties 40%.
Path to India Market
MARKET TRENDS

Opening up domestic market to foreign companies


Expanding two-way trade between HK and India.


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.
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.
13
Path to India Market
OPPORTUNITIES & CHALLENGES
Opportunities 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 semimanufactures 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.
14
Path to India Market
OPPORTUNITIES & CHALLENGES
Opportunities for Services Sector


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.
15
Path to India Market
OPPORTUNITIES & CHALLENGES
Opportunities for Services Sector


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
16
Path to India Market
OPPORTUNITIES & CHALLENGES
Challenges

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.
17
Path to India Market
OPPORTUNITIES & CHALLENGES
Challenges

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.
18
Path to India Market
CHANNELS & STRATEGIES

Finding Indian buyers proactively

Aggressive pricing

Branding and design

Supplying semi-manufactures and capital goods

Focusing on affluent households and major cities

Seasonal sales
19
Path to India Market
Opportunities and Challenges
Watch

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. 20
Path to India Market
HOW TDC CAN HELP

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
21
Path to India Market
Loretta Wan
Regional Director, Southeast Asia and India
Telephone : (65) 6538 7376
Mobile : (65) 9018 1033
22
Path to India Market
Thank You
23