India as an Emerging Economy

India as an Emerging Economy

Manufacturing Sector of India

The major growth for the Indian economy has been influenced greatly by the industrial manufacturing sector with diverse growth of companies including those that manufacture metal and electrical products, equipment and machinery, construction and building material, cement, plastic and rubber products, and automation technology products. Both the private and public industrial sector in India contributes to about 30 percent of total expenditures. The government has greatly encouraged industrial sector participation in the past years and this has resulted in a small increase in private funding of R&D, although a lot has to be done to meet the larger S&T objectives. The industrial sector in India is composed of 400 national laboratories, R&D institutions in the government sector total to 400 (Gubbi et. al 2010, p. 401). The prime minister of India launched the program of Made in India which aims at placing India’s manufacturing hub on the world map and give global recognition to the Indian economy. The president applied the trade theory of location implications which states that a firm should distribute the various manufacturing products to the countries where they can be performed efficiently. India is strategizing in manufacturing products that are suitable to markets which efficient in their markets.

Science, Technology and Innovation Activities in India

India has prioritized in achieving the set goals of becoming a developed nation through science and technology use. The country has not published long term plans for science and technology but in turn, has strategized in five-year plans which contains an important section in Science and Technology. Although this plan offers flexibility, they do not provide specific guidance on long term goals of science and technology. This leaves the countries’ Science and Technology more vulnerable to dilution or interruption as a result of administration changes. The S&T infrastructure includes S&T organizations under the state government, central government, and private, public and non-government organizations. Indian science is considered to be one of the strongest instruments of development and growth, especially in the emerging scenario of the competitive economy (Pao &Tsai 2011, p. 690). India is trying to invent new techniques of science and technology for them to capture the first-mover implications in international trade to take advantage of the global trade and dominate in science and technology.

International Trade Developments in India

Domestic Policy

The economic growth levels of India have remained sustained according to the International Monetary fund. This growth is attributed to favorable global trade conditions and structural domestic reforms. India has strategized in the implementation of measures that attract direct foreign investment. Additionally, India has made efforts to facilitate foreign trade ease. This has been done by introducing changes to intellectual policies, domestic competition, and laws. India has also has been aggressive in the use of trade remedy measures. For instance, the steel industry has been a beneficiary in imposing minimum import prices, safeguard duties and anti-dumping duties simultaneously.

The Nature of Foreign Direct Investment Activities in The Economy in India

Historically FDI in India is traced back to the East India company establishment. Japanese companies invested in India after the second world war and these facilitated enhancements of their trade with India, but the most dominant investor in India in the UK. There have been perceptions of the role which the Foreign Direct Investment plays in the development process of India. The main factor that drives foreign investment inflows in India is the policy regime (Gubbi et. al 2010, p. 405). The FDI inflows have increased substantially in comparison with the earlier regimes where there was restriction of the FDI scope.

Data of India Economy

GDP

There has been an expansion of Gross Domestic Product in India 2019 by 4.5 percent following a 5 percent growth in the previous quarter. The data available from June 2005 to Sep 2019 has shown that the real GDP growth rate is 7.6 percent. In March 2010, there was the highest record of 13.3 percent and it was 0.2 percent less in march 2009. The latest reports indicate that India’s nominal GDP is 704.9 USD in September 2019.

Balance of Payment

BoP records of India consist of records of all transactions of the economy between its residents and the rest of the world. The BoP account includes the Capital account, the current account, and the financial account. Since 1948, the Reserve Bank of India has compiled and published Bop for India since 1948. The data provided in the table above has been retrieved from the latest IMF’s BPM6 classification standard.

Imports and Exports

In 2019 the India exports decline by 1.1 percent and this was caused by lower petroleum products shipments, linoleum, and plastic products, RMG of all textiles and cotton yarn. The average of India exports is 5715.36 million Dollars between 1957 and 2019 hitting the highest target of 32550 million US dollars in march 2019 and in June 1958 it was 59.01 million US dollars.

FDI

The data provided by the Reserve Bank of India shows that the outward Foreign Direct Investment of India in guaranteed issue, loan and equity stood at 12.59 billion dollars between 2018 and 2019 and 2.841 million US dollars between April-June 2019. The cumulative stock of oversees OFDI in India stood at 155 billion US dollars in 2017. There was an expansion of abroad direct investment in India by 3.0 billion Us Dollars in June 2019. The investment in foreign portfolios increased by 5.2 billion US dollars in June 2019. The nominal GDP of the country was reported at 704.9 billion US dollars in Sep 2019 (Agrawal & Khan 2011, p.71).

Inflation

The retail price of India’s inflation rate rose to4.62 percent in 2019 and this recording was highest over a year. The medium-term target of the reserve bank of India was 4 percent and the inflation was higher than this target for the first time since July 2018. In 2012, the average inflation rate in India was 5.98 percent in 2019 (Agrawal & Khan 2011, p.71). The highest being in November 2013 recording a rate of 12.17 percent and it was lower by 1.54 percent in June 2017.

Employment

The rate of unemployment in India recorded an increment of 8.5 percent in October from 7.2 percent in 2019 September. Between 1983 and 2019 the average rate of unemployment in India is 5.16 percent. It was highest in October 2019 averaging at 8.5 percent and it was lowest in December 2011 with a record of 3.53 percent.

Conclusion

From the data above, India can be termed as an emerging economy. This is due to the growth in the number of exports in recent years. For instance, agriculture and industry markets have recorded a growth worldwide and important imports and exports, the nation has been considered to be growing fast in terms of world economies. The data above show that the reason for the growth of its economy is because of its large nominal GDP and in terms of purchasing power parity, it is large. If the records persist in the next 30 years, India could overtake the USA in terms of GDP before 2050 and this could turn India into the strongest economy worldwide (Pao &Tsai 2011, p. 691). India’s young and rapidly growing population which can work is one of the key pillars of its growth. The exports of India also play a big role in getting benefits from the exports of petroleum products, textile goods, jewelry, software, engineering goods, and chemicals.

Apple Incorporated is one of the primary consumer electronics corporations in India (Vascellaro, 2012). The company launched its product, Apple iPhone in the lucrative premium mobile segment in India. The mode of entry of Apple iPhone in the country was through a joint venture with two main Indian telecommunications service providers, namely, Vodafone and Bharti Airtel. This launch was welcomed by several market analysts as one of the advanced marketing strategies that the Apple Company adapted (Vascellaro, 2012).

The marketing strategy challenged the other existing handsets in the mobile market of India. The competitors felt that Apple Incorporation had some marketing challenges to overcome to recognize its set goal of attracting a large number of the Indian mobile phone customers, bearing in mind that the existing market had various dynamic competitors who had some decades of experience. For the last three quarters, smartphone shipments in India have hovered around 30 million units mark. The iPhone 6 is the most popular iPhone in India in the year 2018 by a wide margin.

However, iPhone products are costly in India than other countries due to customs duty, the central government Taxes, States Government Taxes, and depreciation of Indian Rupee. Apart from central taxes, Apple has to pay 12.5 percent Value Added Tax (VAT) to various states on the total price of the phone (Vascellaro, 2012). Even though Apple Incorporation is at the top in the tablets marketing worldwide, the Company has not yet managed to compete successfully with other competitors such as Samsung in the current Indian market. The fact remains, the marketing strategy of Apple in the country does not put into consideration that India is one of the competitive markets for Apple products. Nevertheless, India remains one of the emerging markets for various mobile products that the company can exploit on and endure with its achievement through sales.

Coca-Cola is one of the multinational corporations in the emerging market of Indian (Karnani, 2014). In the year 1950, Coca-Cola made its entry in the India market through a joint venture, with the first opening of the bottling plant by the Pure Drinks Ltd, in New Delhi. Further, the corporation withdrew from India in 1977, following the implementation of the Foreign Exchange Act in India (Karnani, 2014). Nevertheless, in the last quarter of the year 1992, the firm returned to the country after the introduction of foreign investments in the Indian economy in 1991. Moreover, towards the end of, 1993, The Company legitimately initiated its operations in the country by first opening a production facility outside Agra.

Besides, in the year 1999, the Coca-Cola India firm launched Sprite in India together with Schweppes (Karnani, 2014). After its launch is 1999, Sprite has been established as one of the brands which effectively enjoys ‘cut-thru’ perspective with a straightforward, authentic, edgy, and urban style and also attained the status of an acknowledged youth ‘Badge’ brand. Currently, Sprite is one of the fastest-growing and most preferred soft drinks in India (Karnani, 2014). This Coca-Cola brand has also turn out to be one of the leading highly marketable brands in India together with the Thums Up brand that was acquired by the Company in 1993 (Karnani, 2014).

Adidas is one of the multinational corporations in India market that entered India in the year 1996, as a joint venture with Magnum Trading, with Adidas holding about 80% stake (Kapur & Ramamurti, 2011). Since December 1995 it has been a 100 percent. Adidas trades with three brands in this country such as Taylormade, Adidas, and Maxfli (Kapur & Ramamurti, 2011). The corporation sources from the 16 manufacturing factories which have employed about 3,800 workers in India. Adidas also retails accessories including water bottles and footballs as well as apparel and footwear (Kapur & Ramamurti, 2011). Further, Adidas has a share of 25-30 percent of the superior footwear market in India. In addition, this market is projected to grow at 15-20 percent annually.

The six metros account for about 40 percent of Adidas’ sales, and the small towns are playing a critical role and demonstrating healthy growth (Kapur & Ramamurti, 2011). The corporation entered the India market as part of the global strategy, in efforts to acquire direct control of Asia markets. However, the local demand was low during the time the company entered India operations. In the initial nine 9 years, the Adidas’ India market was the least sub-division in the Asia market, in terms of the total revenue (Kapur & Ramamurti, 2011). However, Company believed that the India market was possible to become a large market with the consideration of a large young population in the country and the varying demographics. At present, out of the thirteen subsidiaries in the Asia market, the India market is ranked number seven and the Adidas management believes there is a possibility to climb over to number three.

IBM also entered into Indian Market with a joint venture with the Tata Group in 1992. IBM is the only company in the world that offers end-to-end solutions to customers from hardware to software services and consulting (Kshetri, 2012). In the lower-end server segment, IBM emerged the leader with a market share of 38.2 percent.

Since the inception of IBM Corporation in India, the company has extended the operations significantly and at present operates through fourteen offices network, with the regional headquarters at New Delhi, Bangalore, Mumbai, Chennai, and Kolkata. The Company is interested in marketing and sales of PCs, servers, and software services and products (Kshetri, 2012). The businesses of IBM in India comprise of the IBM Global Services, IBM Software Group, IBM Global Financing, IBM Consulting Services, Linux Solution Centre (one amongst seven worldwide), IBM Solution Partnership Centre (one amongst ten worldwide), Linux Software Development Centers, Pondicherry manufacturing facility, and Global E-Business Centre (Kshetri, 2012).

Moreover, IBM documented total returns of about US$ 606 million in FY 04 and is lucrative in India. The corporation has about 23,300 workforces including individuals at working at its BPO Centre (Kshetri, 2012). Furthermore, 34 percent of its total returns come from products’ exports. According to the internal sources, IBM Corporation has capitalized about US$ 10 million in the Indian market, particularly in the year 2000 for the labs, without including its Daksh investment.

The American software company, Microsoft Corporation, has also extended its markets into the emerging Indian market, with a subsidiary known as Microsoft India Private Limited, which is headquartered in the town of Hyderabad in India (Taneja, Girdhar & Gupta, 2012). Microsoft Corporation first entered the Indian market in the year 1990 and has since operated closely with the Indian IT industry, academia, and Indian government as well as the indigenous developer community, in ushering in a few of the primary accomplishments in the existing IT market (Taneja, Girdhar & Gupta, 2012).

Microsoft corporation has established nine offices in Bangalore, Hyderabad, Ahmedabad, the NCR (Gurgaon and New Delhi) Kolkata, Mumbai, Chennai, Kochi, and Pune (Taneja, Girdhar & Gupta, 2012). Increasingly, the company has become a key IT partner of the Indian government and industry, supporting and fueling the growth of the local IT industry through its partner enablement programs (Taneja, Girdhar & Gupta, 2012). Since the entry of this company in India, it has focused on some key objectives such as becoming a main IT partner of the local IT industry an Indian government, supporting and fueling development of Indian local IT industry through partnership empowering programs, and to utilize Microsoft Unlimited Potential program to improve education, opportunities, and jobs as well as fostering innovation through affordable, relevant, and access to technology (Taneja, Girdhar & Gupta, 2012). Further, Indian Microsoft employs close to 6,500 employees and owns six business entities demonstrating the comprehensive Microsoft product portfolio.

References

Agrawal, G. and Khan, M.A., 2011. Impact of FDI on GDP: A comparative study of China and India. International Journal of Business and Management, 6(10), p.71.

Gubbi, S.R., Aulakh, P.S., Ray, S., Sarkar, M.B. and Chittoor, R., 2010. Do international acquisitions by emerging-economy firms create shareholder value? The case of Indian firms. Journal of International Business Studies, 41(3), pp.397-418.

Kapur, D. and Ramamurti, R., 2011. India’s emerging competitive advantage in     services. Academy of Management Perspectives, 15(2), pp.20-32.

Karnani, A., 2014. Corporate social responsibility does not avert the tragedy of the commons.      Case study: Coca-Cola India. Economics, Management, and Financial Markets, 9(3),             pp.11-23.

Kshetri, N., 2012. Cloud computing in India. IT professional, 14(5), pp.5-8.

Pao, H.T. and Tsai, C.M., 2011. Multivariate Granger causality between CO2 emissions, energy   consumption, FDI (foreign direct investment) and GDP (gross domestic product):       evidence from a panel of BRIC (Brazil, Russian Federation, India, and China)             countries. Energy, 36(1), pp.685-693.

Taneja, G., Girdhar, R. and Gupta, N., 2012. Marketing of Global Brands in Indian           Markets. International Refereed Research Journal, 3(3), p.78.

Vascellaro, J.E., 2012. Audit faults Apple supplier. Wall Street Journal, 30.