India Inc, 2010-20

AS THE COUNTRY GROWS AND GLOBALISES, INDUSTRY MUST GEAR UP TO FACE RISING COMPETITION FROM DOMESTIC AND FOREIGN COMPANIES, SAYS ROOPA KUDVA

THE INDIAN ECONOMY IS FIRMLY SET on a high-growth path for the next decade. A young population, growing middle class, rising income levels and higher discretionary spends will ensure that demand for a wide range of goods and services remains high for several years to come. This offers the country’s corporate sector an opportunity for tremendous growth. In the process, there will be several major forces that will define the way domestic companies operate and evolve. What are the key forces that will evolve?

One of the most important trends will be an increase in competition. There are several reasons for this, some of which are already beginning to play out. To begin with, the country’s leading companies will seek to enter new businesses to benefit from the opportunities that the economy is throwing up. We can also expect to see large global corporations looking to step up their India presence, as the country’s increasing integration with the global economy provides easier access to its markets for producers based outside the country. Moreover, if capital flows continue as expected, we could see the rupee appreciating further, making imports more competitive.
Crisil estimates that the Indian economy, led by growing consumption and increasing investment needs, can grow to $4.6 trillion by 2020 — in nominal terms, assuming constant exchange rates — indicating an addition of around $3.2 trillion to GDP over the next decade. Clearly, established domestic companies will be keen to benefit from this growth. Several companies will expand into new sectors — such as housing, retail, power generation, infrastructure, financial services, travel and tourism, education, healthcare, etc — as opportunities present themselves. Many leading Indian companies and groups have already initiated steps to implement this strategy. They are likely to emerge as strong competitors in the market place, backed by their superior financial flexibility.
The same factors will make the country an even more attractive market for multinational companies (MNCs). In the years to come, many MNCs will focus even more on India. Many MNCs today are struggling with weak demand growth in the developed economies; India will be among the few large economies that offers considerable growth potential. Thus, the importance of Indian market for MNCs already present in the country will grow further; MNCs that do not operate here can no longer afford to ignore not being present here. As a result, the leading global players will commit significant amounts of capital, and invest considerable senior managerial resources, to try and achieve a more meaningful presence.