India Market Growth

India is home to an economy, which is big, active and growing. The Indian market is made up of various important sectors and industries including pharmaceutical industry, IT/Software, Foreign Investment, Telecommunication, Stock Market, Manufacturing and Construction, Hospitality Industry, Bond Market, Loan Market, Pharmaceutical Sector, Real Estate, Aviation and Automobile Industry. The growth of all these industries has helped India become a major economy in the world.

India Market Growth: Growth Prospects of various industries in India

Retail

The retail industry in India has experienced commendable growth throughout the past 9 or 10 years. Organized retailing has forayed into the retail market of the country and the sector has adopted the new ideas of retailing. As a result, the traditional and unorganized family-run retail shops are facing stiff competition from the Indian and international retail chains.
According to A T Kearney, an international management consulting organization based in the US, India is rated as the fourth best country for investment in the retail sector among 30 up-and-coming markets. This was determined by the GRDI (Global Retail Development Index) 2011.
Given below are the names of the prominent retailers in India:

• Jubilant FoodWorks Ltd
• Reliance Retail by the Reliance Industries Ltd.
• Pantaloon Retail by Kishore Biyani
• The 'More' brand, run by Aditya Birla Retail
• Shopper's Stop Ltd.

As stated by 'Retail Sector in India', a study report by Research and Markets, the retail industry in India represents 22% of the GDP (gross domestic product) of India and makes a contribution of 8% of the overall number of jobs created in the country. In addition, the report also underlined that hypermarkets (at present representing 14% of the total mall area in the country) will experience huge growth in the Indian territory.

IT/Software

Over the last one or two years, the information technology and IT-enabled services industry in India has demonstrated a stable development curve. The Indian information technology industry has singularly played a key role in putting the country in the form of an important knowledge-oriented financial and outsourcing hub on the world map. The Business Process Outsourcing (BPO) Industry forms a major segment of the Indian information technology industry and it has reinvented itself with the changing requirements of the customers. Other important segments of the Indian IT industry include data analytics and legal process outsourcing (LPO).

As stated by the Department of Industrial Policy and Promotion (DIPP), the PC hardware and software industry of the country witnessed a whopping influx of snowballing FDI (foreign direct investment) amounting to US$ 10,787 million which took place in the middle of April 2000 and August 2011.

Foreign Investment

Foreign investment or Foreign Direct Investment (FDI) is a significant source of funds inflow in the Indian economy. Beginning from a baseline of under US $1 billion, a recent study conducted by UNCTAD (United Nations Conference on Trade and Development) depicted India as the second biggest FDI destination following China for international companies for the period of 2010 to 2012. As laid down by the statistics, the industries that are drawing foreign direct investment include the following:

• Telecommunications industry
• Services industry
• Computer software and hardware
• Construction and real estate industry

Between April 2000 and April 2011, the collective amount of FDI influx in India was US$ 197,935 million. In the year 2010, Foreign Direct Investment was $24.2 billion, which showed a considerable slump from both 2008 and 2009. In the month of August 2010, Foreign Direct Investment slid by approximately 60% to around US$ 34 billion and this is a record slump in 2010 fiscal, which is corroborated by the statistics published by the industry department of the Government of India. During the opening two months of 2010-11 fiscal, the influx of Foreign Direct Investment into the country was at its peak at $7.78 billion. This showed a hike of 77% from $4.4 billion for the same phase in the last year. FDI involves both short and long term capital which obviously includes equity capital.

Telecommunication

The Indian telecommunication network ranks as the second largest among the nascent economies in Asia and the third biggest in the world. The liberal policies have helped it become a pillar of the Indian economy. The Indian telecommunications industry is mostly dominated by the private companies. In February 2011, more than 20.2 million new connections were provided. In this way, the overall cellular phone subscription in India increased to 791.38 million.

In addition, the figures for February mention that the growth rate (2.82%) in the number of mobile phone users in rural areas exceeded those of the urban localities (2.52%) throughout the nation. In February 2011, the number of broadband users was 11.47 million and this was significantly higher than 11.21 million, which was recorded in January 2011. By 2013, the revenue from Telecom sector is expected to reach US$ 30 billion.

According to facts and figures, the overall number of cell phone users in India will increase to 900 million by the close of 2012. It is also anticipated that by 2015 this number will gradually climb to 1.25 billion.

Stock Market

The Indian stock market has experienced heady growth over the past decade with a number of foreign companies making entry into the Indian market. Deregulation, approval of foreign direct investment, and economic liberalization have prompted the growth of stock markets in India.

Manufacturing and construction

Reorganizing the Export Import (EXIM) policy has helped the manufacturing and construction sector of India to grow. According to a review, the manufacturing industry of India has grown aggressively in February 2011. This month was the 23rd successive month of growth in the manufacturing industry of India.

Fifty segments of the nation's economy rose by 39% throughout the phase of April – December 2010 and they were included in the "excellent growth" category. These sectors comprised natural gas, air conditioners, nitrogen fertilizers, tractors, cables and electrical wires, ball bearings, construction machinery, car parts, tire industry and electric fans. Another 22 sectors were grouped as the "high growth" category, and posted a growth of 17.3% throughout the first 9 months of the current fiscal.

Hospitality

The hospitality sector in India has witnessed impeccable growth and the factors contributing to this growth are the prospering middle class, higher expenditure by the international travelers, and coordinated management and sponsorship of the hotel and hospitality industry in India by the Government of India.

The hotel and hospitality industry is the most important service sector in India and contributes about 8.78% of the total number of jobs created in the nation and 6.23% of the countrywide Gross Domestic Product.

Bond Market

The bond market in India has undergone significant growth especially after the introduction of tax-saving bonds in the country. According to Morgan Stanley, the immense borrowing capacity of the Indian Government works as a catalyst for the growth of the bond market of the country.

Loan Market

The loan market in India comprises two segments – consumer debt and corporate debt. Both segments have experienced significant growth over the years. Reduced interest rates, limited paperwork, income tax benefits, quick processing, and flexible repayment options are the factors that have contributed to the growth of Indian loan market. Popular loan products in India include education loan, home loans, personal loan, automobile loan, consumer durable loan and gold loans.

Automobile

Since the economic globalization took place in India in 1991, the automobile industry of the country has experienced significant growth and over the last few years, Indian automotive industry has been able to sustain its growth. The automobile market of India is the second fastest developing market in the world. India is a favorite destination for car makers because of the following factors:

• Strong economic development
• Higher disposable income
• Favorable demographics

Within the next 8-10 years, India is all set to become the third largest car manufacturing nation in the world. The vertical and horizontal integration of the auto manufacturing industry of the country has helped it grow tremendously.

Pharmaceutical industry

The pharmaceutical industry of India has currently turned into a $17 billion (more than Rs. 68,000 crore) industry. According to "India Pharma 2020: Propelling access and acceptance realising true potential", a report by McKinsey & Company, by 2020 the Indian pharma market is estimated to grow to US$ 55 billion from US$ 12.6 billion in 2009. The sector also has the capacity to attain US$ 70 billion with a compound annual growth rate (CAGR) of 17%.

Real Estate

The real estate industry in India is on an expansion trajectory. Both commercial and residential real estate markets in India are developing at a fast pace. Urban Land Institute and PriceWaterhouseCoopers(PWC) have released a report which is named 'Emerging Trends in Real Estate in Asia Pacific 2011'. This report mentions about the growing demand of the real estate sector in India. In India, commercial and residential real estate and infrastructure development projects are taking place in Agra, Jodhpur, Uttar Pradesh, Punjab, Madhya Pradesh, Haryana, and Rajasthan.

Aviation Industry

The domestic aviation sector of India has been the most powerful sector throughout the world. The industry witnessed immaculate growth which is almost threefold over the last five years. This has been substantiated by the report of the International Air Transport Association or IATA.

At present, India is home to the ninth biggest aviation sector in the world. Taking into consideration the powerful market basics, prediction has been made that the domestic aviation sector will post a CAGR (compound annual growth rate) of over 16% during the period of 2010 to 2013.

Last Updated on 12/19/2011

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