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India, one of the world’s largest economies, has become one of the most critical markets for global Diversified Industrial companies.

 Fast Facts

• India is the world’s largest democracy and the 12th largest economy in the world.

• Among BRIC (Brazil, Russia, India and China), countries, India is expected to deliver the highest growth rates over the next 50 years.

• A rise in discretionary income and a growing appetite for global brands means the market is poised to become an important consumption hub as well.

• An over reliance on domestic demand could curb growth. Exports comprise only 20 percent of India’s manufacturing output, compared to 50 percent for China.

 • To address these issues, the Indian government has become increasingly engaged, pushing a series of inward investments and backing policies designed to stimulate manufacturing growth.

 Strength:

With India’s economy continuing its rapid growth, the Diversified Industrials (DI) sector is well-poised to reap the benefits. The country remains a favoured outsourcing hub for many multinationals as well, not just for lower-cost manufacturing, but increasingly as a source of higher value innovation in engineering, materials and design.

 Weakness:

India still faces severe infrastructure issues, with roads, rail systems and airports in need of significant upgrades in order to keep pace with the needs of global businesses. Much depends as well on government commitments to advance policies and make good on its investment promises to support the manufacturing sector.

A history of rapid growth

 Growth accelerated after a series of market reforms opened India’s markets to foreign competition. Today, among the BRIC group of countries (Brazil, Russia, India and China), India alone is considered to have the potential to show the highest growth (over 5 percent) over the next 50 years.

 The Government of India, taxation policies

 The Government is proposing several changes to its tax laws as well in an effort to boost exports and encourage inward investment. These include a simplified tax code that the Government hopes will reduce indirect taxes and lower the overall tax burden. These programs are also expected to ease restrictions on the size of foreign equity investments and trim the number of licenses and other permits formerly required of companies headquartered outside of India.

 Read the complete Article “The India Opportunity” KPMG

Discussion questions:

  1. Do you think that China and India will be the next superpowers?
  2. Does India have the human resources to compete ona world scale?
  3. What do you think will happen to the USA and Canada when the BRIC countries are fully developed economic powers?

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