High-opportunity sectors
High-opportunity sectors India
Introduction
The Indian market is a great opportunity for Dutch companies to invest in. India is one of the largest economies in the world and has become more open to foreign investors after it liberalised its market. From this moment on many multinationals have started outsourcing much of their business to India as it has a highly skilled labour force and a sound economic policy. For Dutch companies India is very attractive to invest in since the opportunities in this country seem to be endless.
Agriculture
With a production value of €108,38 billion in 2004-05, agriculture represents with 21% a large share of the gross domestic product (GDP). The agricultural sector supplies very diverse products such as milk, cheese, cereals, fruit, vegetables, cotton, tea, coffee and tobacco. Although India is one of the largest agriculture countries, it only accounts for 1,5% of the international agricultural trade. This means that there exists a large opportunity for foreign investors to stimulate agriculture exports.
Airports
Indian airports are essential because they provide 40% of the international trade and 95% of the passenger flights. India has 5 airports that take care of 44 million passengers per year. Expectations are that the number of passenger will rise to 90 million by 2010. To cope with this growth the amount of flights needs to increase as well. Because of these developments, most of the airports are in desperate need of getting modernised. The Indian government is progressing in liberalising the air traffic; the country has already arranged 'open skies' deals with the United States and China. The Netherlands made the same arrangement in May 2005, resulting in an enlarged frequency of flights.
Biotechnology
Biotechnology is an interesting Indian sector for Dutch companies because of low research- and production costs, well educated and English speaking Indian researchers, biodiversity, well developed ICT sector, active Indian government and a well organised pharmaceutical industry. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the sector expects an annual growth of 35 to 40% which will put India on top of the international biothechnology sector.
Construction
The economic growth of India has caused a stimulance for the construction of houses, offices and appartment buildings. Expectations are that for each year until 2011 6 million new houses will be build. Opportunities in this sector lie in the supply of building equipment, resources and in the construction itself.
Infrastructure
The infrastructure has made some impressive and important changes in the last couple of years. Especially the number of regional roads and highways has grown enormously. The government of India is supporting the improvement of the infrastructure with a project called the 'National Integrated Highway Development Project'. Phase one of this project is to connect the four most important cities Delhi, Mumbai, Kolkata and Chennai; also known as 'The Golden Quadrilateral'. Phase two is to connect the north and the south from Srinagar to Kanyakumari and to establish an east to west connection from Silchar to Portbander with a total length of 7,300 km. The project is planned to be finished in 2009.
ICT
The Indian ICT sector built up a worldwide reputation in the last decade and still the industry is growing at a rate of 30% in 2005. According to McKinsey & Company the Indian software industry will occupy approximately 8,8 million people in 2010. Many companies outsource their ICT related business to India because of its highly skilled, English speaking labour force and its corresponding low labour costs. Outsourcing can be done for administration, transcriptions and digitalising the data files. The fastest growing segment in the ICT is the ICT enabled services, including 'business process outsourcing'. For the coming years, this segment will grow only further and will have an important place in the Indian economy.
Medical Sector
India has over 15,000 hospitals, of which only 30% are owned by the government. Since hospitals must cope with a huge population, it is no wonder that there is a shortage on medical care. Because of this, more hospitals, equipment and human resources are necessary. Other opportunities for Dutch companies are health insurance and outsourcing of medical production.
Manufacturing
India has a broad-based industrial base, covering a large range of basic, intermediate and consumer goods. Tee industrial structure includes several large public sector undertakings (government/state promoted units), a large private sector:
- More than 200.000 factories,
- 2 million cottage ands small-scale enterprises,
- A work force of 14 million workers, and 4 million trained technical personnel.
Manufacturing represents about 24% of gross domestic product (at factor cost) and nearly 75% of India's exports. Chemicals, machinery and equipment, food processing, textiles and apparel, transportation goods, metals and plastic products are the most important groups by output value. Major export earners are gems/jewellery, textiles, metal products, leather goods, transport equipment and machinery.
Competitive advantage of Indian manufacturing:
- Availability of skilled labor
- Availability of raw materials
- Engineering and managerial capabilities
- Quality focus
- Large domestic market
- Large target consumer base and rising income levels
- Increasing consumerism
- Changing age profile of Indian population
- Changing lifestyles
- Location and infrastructure
The Indian government opened up the insurance sector to private companies in 1999. Because of the large number of inhabitants it is possible to spread the costs and to start being profitable at low contributions. The government is stimulating its people to start building a pension and is increasing its role in providing retirement income to the ageing population.
Telecommunication
Mobile phone communication has experienced a rapid growth since the liberalisation of the telecommunications market in the year 2000. Ever since the number of subscribers has increased tremendously to 20 million in 2005. This number keeps on growing and therefore a great market potential is present for foreign companies.
Water Transport
Water transport plays an important role in the transport of resources. India has several harbours and many rivers that connect the different parts of India. In reality only 2,000 km of the 14,500 km of waterways are used for transportation. Reasons behind this are technical problems; rivers are impossible to be used and the infrastructure is insufficient. Dredging companies, harbour development projects and delivery of specialised ship building materials could be a solution to this problem.