Sustaining India's growth through people and technology

By Mr Peter Gartenberg, Managing Director, SAP India

“Brand India” today is about young talent, new-age innovation, and entrepreneurship.
Today, India produces more than 50,000 skilled computer professionals and 360,000 engineering and management graduates. India
is blessed with a young and growing workforce. Its dependency ratio – the proportion of children and old people to working-age
adults – is one of the best in the world and will remain so for a generation.
India is also fast becoming the new source of innovation to reach the bottom of the pyramid, a vast market for new demand. One
look at the spread on innovation in India and you realize the significant impact it has on its beneficiaries as well as on “Brand India.”
From the Tata Nano to ITC’s eChoupal to Narayana Hridayalaya to Amul – they all have invented a new way of creating scale, and
the world is keenly watching.
Finally, Indian capitalism is driven by millions of entrepreneurs running legions of thriving small businesses as well as a large number of world-class
businesses that compete with the best in the world.
To ensure this continues, strong economic growth, fuelled by domestic consumption and international demand, effective public-private partnerships in
welfare projects, and continued leadership in IT are the critical drivers of “Brand India.”
In recent years, the government and the private sector have come together to play a significant role in making healthcare, education, and information
infrastructure easily accessible and available to its citizens. The private sector has the motivation to be efficient, while the public sector can provide the
infrastructure and support base. These initiatives have far-reaching effects on “Brand India” in the long run. A case in point is the UID (unique
identification) project – while a government initiative, it has the best minds from the private sector contributing and partnering with the government to
bring widespread changes in the delivery of social welfare programmes, enabling more inclusion of the underprivileged and plugging leaks in welfare
schemes.
India’s business contribution in IT outsourcing, now a US$60 billion-plus business annually , is well documented. Indian IT companies have helped
lower costs and raise efficiencies at hundreds of corporations worldwide. As the global economy becomes more knowledge-intensive, India’s
advantage will only grow in the coming years.
Over the past several years, MNCs have steadily increased their presence in India to participate in the opportunities offered by this vibrant economy.
While India was always seen as a talent hub, the strong domestic consumption led economic growth made India a strategic market for a large number
of global companies. These MNCs, through partnerships, joint ventures, and by directly providing products and services, brought advanced technology,
process know-how, and best practices from across the world to businesses and consumers in India.
For MNCs as well as for Indian companies, one of the significant opportunities in the coming years will be in the area of sustainability.
In an age when climate change has become a major political and social issue, governments, as well as Indian corporations are increasingly adopting
“green” strategies – efforts to make their processes more environmentally friendly and reduce their carbon footprints.
Here too, India’s leadership in IT will be an important differentiator. IT is a key enabler of sustainability initiatives, and companies are now leveraging IT
capabilities to facilitate sustainability initiatives across the enterprise in various areas. The rewards of such efforts can be significant, measured in lower
fuel and energy costs, a more productive workforce, and, of course, a reduction in emissions of polluting and greenhouse gases, thus impacting the
“triple bottom line” of profit, people (human capital), and planet (natural resources).

Ensure we use this opportunity to drive positive change

By Mr Shiv Nadar, Founder - HCL, and Chairman & Chief Strategy Officer - HCL Technologies

Brand India is built on the foundation of the three key values of its economic resilience, democratic culture and scientific and
technical knowledge pool, which are driving the Indian growth story.
I believe that Brand India stands for a diverse and enabling ecosystem, which is now making a mark on the rest of the world. This
ecosystem is characterised by the following:

1. Powerful democracy – India represents the world’s largest democracy supported by an emotionally, socially and
intellectually strong and diverse population. The Public Private Partnership (PPP) model is turning out to be one of the
prime drivers of India’s goal to become a developed nation.
2. Buoyant economy – India is run by an intelligent set of economists who have managed to protect India from the recession that affected the
rest of the world. Each industry in India is seeing massive growth as the disposable income of the middle class is on an upward trend.
3. Deep intellectual talent – India is blessed with a favourable demographic set up with more than 50% of its population below the age of 25
and more than 65% below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29 years. India’s strong
demography is a salient contributor to its stellar growth numbers. We also have the advantage of a predominantly English speaking
population.

Therefore India has become the hub of outsourcing for companies located across the globe.
Furthermore, our economy is in a unique situation. Logically, 70% of our leaders should come from rural India. However, the real statistics aren’t close
to this number. We have the world’s best engineers, doctors and management professionals on one hand and 456 million illiterates on the other.
India’s GDP is $1.24 trillion in totality, 70% of which comes from the urban segment of the country which comprises only 30% of the population. This
essentially means that a significant portion of our people do not make or receive major contributions to the National Income.
Despite having one of the youngest populations in the world, India is yet to benefit from this inherent advantage. As we see India growing at an
unprecedented pace in the world, we can no longer be oblivious to a reality which can potentially handicap this growth. The percentage of India's
population in the productive cohort would rise to 64% by 2028 - the largest in the world. But what would be the quality of that pool?
 The important drivers for Brand India will be ensuring that we encourage leadership from all parts of India. I can’t begin to stress more on the criticality
of the opportunity which has the potential of turning into a disaster. What we need today are transformational programs that can alter the lives of our
children with relevant education and rid us of the obstacles which prevent a large part of our population from entering the mainstream. We need to
make a far reaching attempt to enable and empower aspiring students from all walks of life with quality education to continue this growth and take it to
new levels.
We need to establish an educational system that trains our youth for the jobs of tomorrow and promote clean technologies that protect our environment
and acts as incentives to develop new innovations. Sectors such as information technology have flourished because of entrepreneurship, and this has
encouraged youngsters in India to set up their own businesses. I believe this drive for entrepreneurship will assume greater proportions in the future,
helping develop a stronger India.
As technology is becoming more pervasive, innovation has become the solution for the new entrepreneur. As we see new entrants realising the
omnipresence of technology in our lives, we will see India’s globally recognised talent continue to reinvent technology. Technology and service
industries will continue to rise as India sees its population growing to become one of the biggest users/consumers of IT.

Rural Market

Last Updated: February 2011

The empowerment spree of rural India is on its high from the last couple of years due to which the economy pertaining to this section is showing
impressive growth. The propellers for this progress include government initiatives and schemes, infrastructure development, industry projects across
the country and the emphasis on local-employability.

Rural Indians are developing desire for packaged foods, personal care products, consumer durables and IT products, two- and four-wheelers, and
fashion accessories. Over the last five years, some consumer product companies have recognised the potential of rural markets and invested time and
resources to tap into this opportunity - understanding and segmenting the consumer, based on their spends and lifestyles.

Some companies have even re-engineered products, pricing and packaging to customise features and value relevant for these markets. For instance,
Godrej has introduced chotukool refrigerator; Vortex has launched low cost ATMs and Nokia has developed Life tools - a mobile application that
provides access to agricultural, educational and entertainment content. These innovative features and products have facilitated a better lifestyle for the
people residing in hinterlands. Some players have developed new communication and distribution channels within the rural agents (HUL's Project
Shakti; Tata Tea's 'Gaon Chalo') and some have created completely new products.

The Union Budget for 2010-11 has hiked the allocation under the National Rural Employment Guarantee Act (NREGA) to US$ 8.71 billion in 2010-11,
giving a boost to the rural economy.

FMCG

According to a study by research firm The Nielson Company, the fast moving consumer goods market (FMCG) in rural India is tipped to touch US$ 100
billion by 2025 on the back of "unrelenting" demand driven by rising income levels. According to the study, rural India now accounts for more than half
of sales in some of the largest FMCG categories.

The study found that:

 Rural purchasing power has grown faster than urban in the last six quarters
 Faster growth in rural is not limited to penetration; today the rural consumer’s frequency of consumption is growing faster as well,
demonstrating their entrenchment in these categories
 Instant noodle sales are growing nearly twice as fast in rural India compared to urban in both penetration and frequency
 Seemingly ‘urbane’ brands in categories like deodorant and fabric softener are growing much faster in rural India than urban

Several FMCG firms, including ITC and DCM, have been registering faster and higher growth 1`in the sales of their goods in the rural markets as
compared to the urban markets.

Some of the FMCG companies such as Godrej Consumer Products, Dabur, Marico and Hindustan Unilever (HUL) have increased their hiring in rural
India and small towns in order to establish a local connect and increase visibility.

Swiss FMCG giant, Nestle plans to make further inroads into the rural markets. The company has asked its sales team to deliver "6,000 new sales
points every month in rural areas" to expand its presence in Indian villages, according to Antonio Helio Waszyk, Chairman and Managing Director,
Nestle India.

At present, rural consumers spend about US$ 9 billion per annum on FMCG items and product categories such as instant noodles, deodorant and
fabricConsumer Durables

India’s rural consumer durable market will witness an annual growth of 45 per cent in the next fiscal 2011-12, as against the current growth rate of 30
per cent owing to the change in lifestyle and higher disposable income of rural India which has fascinated the consumer durable market according to a
study “Rise of Consumer Durables in Rural India” by an industry body.

Retail

The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study
paper, 'The Rise of Rural India', by an industry body.

Hindustan Unilever (HUL) is planning to significantly increase its rural reach. According to Harish Manwani, Chairman, HUL, the quality and quantity of
rural coverage will go up to the extent that "what we have done in the last 25 years we want to do it in the next two years." Currently HUL products
reach approximately 250,000 rural retail outlets and the company intends to scale it up to nearly 750,000 outlets in two years time.

Direct selling firm Tupperware India, known for its storage containers plans to foray into the rural markets in the next two-three years. "We have solid
plans for the rural market. We are working on bringing products for rural people as well," said Asha Gupta, Managing Director, Tupperware India.

Castrol India is pushing its rural sales by building up a distribution infrastructure to reach out to all villages. According to Ravi Kirpalani, Chief Operating
Officer, Castrol India, "Our distribution now reaches 5,000-7,000 towns and villages, but we are planning to take our products to six lakh villages with a
population of less of 5,000."

Automobiles

Car sales in rural India have been on the increase in the last three years since the government announced various schemes such as farm loan waiver
etc, for the rural population.

Maruti Suzuki's share of rural sales has increased from 3.5 per cent to 17 per cent in the last three years. Mahindra & Mahindra (M&M) is now selling
more Scorpios in rural and semi-urban markets. Scorpio sales have increased from 35 per cent to 50 per cent in the last two years.

Toyota Kirloskar Motor (TKM), in which Japan's Toyota Motor Corp holds an 89 per cent controlling stake, is planning to sell 40 per cent of its cars in
rural markets in India. According to Hiroshi Nakagawa, Managing Director, TKM, "We are aggressively expanding our dealership footprint in India and
quite a significant portion of this will be in country's heartland.

Yamaha plans to double the number of its sales outlets in India in the next five years to tap the growing demand in villages as economic growth boosts
incomes. India Yamaha Motor Pvt. may increase showrooms to 2,000, mostly in small towns and rural hubs, according to Koji Arai, director and chief
sales officer. The company is refurbishing some of the existing outlets in small towns and rural hubs and adding new ones called Yamaha Bike
Corners, organising free motorcycle service camps and test rides.

Tata Motors is also making efforts to sell its pick up truck Ace in rural markets. It has already opened 600 small outlets for the Ace in rural and semi-
urban markets. It has also tied up with 117 public sector, gramin (rural) and co-operative banks to help small entrepreneurs buy the vehicle.

Internet

The number of internet users in rural India is estimated to have risen by 30 per cent to 5.4 million in 2010, according to a joint study conducted by the
Internet & Mobile Association of India (IAMAI) and market research firm IMRB.

Services

With the focus on enterprise development activities and to make the rural masses self-sustainable, the Commonwealth Secretariat, London, has
partnered with public sector banks Corporation Bank and Central Bank of India to provide credit to young people, women and differently-abled youth
living in rural areas of India.

As part of the financial inclusion plan, UPA Chairperson Sonia Gandhi has launched the campaign—Swabhimaan- that aims at opening 50000,000
crore no-frill accounts by March 2012, spanning 73,000 villages.

According to a study by Indian Direct Selling Association (IDSA), conducted in association with Ernst & Young (E&Y), the smaller towns have emerged
as key markets for the direct selling industry contributing 38 per cent of overall industry value, an increase from 14 per cent in 2009. The study
attributed the growth to increased rural focus and advertising.

Grape farmers in Nasik, Maharashtra, are planning their harvest and managing inventory and production using an enterprise resource planning (ERP)
software reflecting a growing shift in the way sophisticated software applications can be used by the masses. over 100 farmers across Maharashtra,
Karnataka and Gujarat are showing that such sophisticated applications can be put to simple use.

, with the pace of consumption growing much faster than urban areas, as per the findings.
Quick Facts

Last Updated: January 2011

India's gross domestic product (GDP) is expected to expand by 8.6 per cent in 2010-11 and is likely to sustain an annual average of 8.4 per cent
over 2010-11 to 2015-16, according to the leading credit rating agency, CRISIL Research

The Indian economy will register the second fastest growth between now and 2050 and emerge as the second biggest economy in the world by the
middle of this century, according to a forecast released on January 7, 2011 by the consultancy group, PriceWaterhouseCoopers (PwC)

On a cumulative basis, the FDI equity inflows received by India stood at US$ 12.40 billion during April-October 2010, according to the data
released by the Department of Industrial Policy and Promotion (DIPP)

India ranks second in terms of manufacturing competence as per the 2010 Global Manufacturing Competitiveness Index; a result of the
collaboration between Deloitte Touche Tohmatsu and the US Council on Competitiveness

India has emerged as one of the world's top ten countries in industrial production as per UNIDO's new report titled 'Yearbook of Industrial Statistics
2010'

Organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14 - 18 per cent of the total retail market and reach
US$ 450 billion by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail Comes of Age in India'

India, along with China, will become the world leaders in manufacturing competitiveness by 2015, according to a recently published 2010 Global
Manufacturing Competitiveness Index, a collaboration between Deloitte and the US Council on Competitiveness

The business expectation index (BEI), which acts as a barometer of the overall health of the manufacturing sector, has gone up to 126.5 for the
assessment quarter, its highest reading since the April-June 2007 quarter

The total consumption in India is likely to quadruple making India the fifth largest consumer market by 2025, according to a McKinsey Global
Institute (MGI) study titled 'Bird of Gold: The Rise of India's Consumer Market’

The Indian pharmaceuticals market is expected to reach US$ 55 billion in 2020 from US$ 12.6 billion in 2009, according to a report ‘India Pharma
2020: Propelling access and acceptance, realising true potential’ by McKinsey & Company

Orissa

Last Updated: February 2011

Orissa has emerged as a key state with regards mineral-and metal-based industry. The state leads in iron, steel, ferroalloy and aluminium production. It
also has a strong base for coal-based power generation. The state offers a wide range of fiscal and policy incentives for businesses under the
Industrial Policy Resolution, 2007. Additionally, the state has sector-specific policies for IT, and the micro, small and medium enterprises (MSME).

Orissa is targeting 9 per cent annual economic growth during the Eleventh Five-Year Plan period (2007-2012). Much of this growth is expected to come
from the secondary sector (manufacturing), which is anticipated to grow at a rate of 6 to 10 per cent.

At current prices, the total Gross State Domestic Product (GSDP) of Orissa was about US$ 31.8 billion in 2009-2010. The average GSDP growth rate
between 1999-2000 and 2009-2010 was about 13.2 per cent.

Orissa‟s total exports were US$ 3.0 billion in 2008-09. Exports increased at a CAGR of 29.2 per cent between 2001-02 and 2008-09. Orissa has been
a major exporter of mineral and metallurgical products, accounting for 52.4 per cent and 32.9 per cent of the state‟s total exports, respectively. The
State Government has identified some sectors for export promotion and facilitation. These are agriculture and processed food products, readymade
garments, electronics, IT, engineering goods, arts and crafts, and minerals and mineral-based products.
From April 2000 to May 2010, the state received FDI inflows of US$ 246 million. Two memorandums of understanding (MoU) have been signed for
setting up (two) alumina refineries at an expected investment of US$ 5.4 billion. The major investors in the metals sector are Tata Steel, Pohang Iron
and Steel Company, Arcelor-Mittal, the Bhushan Group, the Jindal Group, Essar Steel, Hindalco, Vedanta, Aditya Aluminium, L&T-Dubal, Sterlite Iron
and Steel, Welspun Power & Steel and Uttam Galva Steels.