Top Lines

In September, FT reported that India was the top greenfield FDI destination in terms of estimated capital expenditure (at $31 billion) in the first half of 2015, more than doubling its total by this time last year, and outstripping China and the US.
  • Brokerage Emkay Global cautions observers against linking India’s FDI success with the performance of Make in India. "data suggests that FDI flows have centered on exploiting domestic consumption, rather than stimulating domestic manufacturing,” it notes. E-commerce, automobiles, and cash-and-carry businesses are the key drivers of FDI growth. (NDTV)

Times of India: October 22
A Grant Thornton survey showed that 86% of Indian businesspeople feel that their companies will see a revenue increase, amid the RBI interest rate cut and positive indications on domestic demand. Conversely, only 52% feel that employment will grow, and there are concerns about the IT infrastructure, R&D, and export activity.

Reuters: October 15
"Imports fell 25.42 percent in September from a year earlier to $32.32 billion. Exports stood at $21.84 billion, according to data released by the Ministry of Commerce and Industry on Thursday…India’s exports to Europe fell 10.9 percent to $21.2 billion in first five months of the current fiscal year. Exports to the United States fell 3.8 percent to $17.5 billion, mainly because of a decline in the value of oil products and textile exports."
  • "Experts contend that in the absence of a significant pick-up in global demand and commodity prices, exports are unlikely to go up in the near term. This could be a drag on growth as merchandise exports account for around 18 per cent of GDP.” (Business Standard)
  • "India needs to take measures to be a part of the mega regionals which are going to shape the future of global trade architecture such as the Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) agreement. Being a part of these mega regionals will go a long way in boosting Indian exports. One way to be part of the global value chain is to attract export-oriented FDI, but the success depends on improving ease of doing business,” write Geethanjali Nataraj and Mridul Mohan in The Hindu BusinessLine.

Business Standard: October 19
Indrajit Gupta
Geoskope friend Indrajit Gupta, co-founder and director of FoundingFuel, a resource for entrepreneurs, reflects on the need for the right sort of research to develop and market business ventures. Not only are many following creatives who look down upon the idea of research, but many also obsess over a limited idea of resaerch. In any society, it is important to build a genuine bridge to the consumer, and particularly in India, Gupta highlights how.

The Business Landscape

Economic Times: October 18
With exports to China in jeopardy due to the slowdown in recent months, California walnut growers have turned to India, where there is a vibrant walnut-consumer market. "We know that the Indian consumer wants walnuts from California…We will promote the California brand, along with our reputation for food safety and reliability…We are excited about the Indian market and feel it holds great potential for our industry…What is most encouraging is that India has a tradition of walnut consumption,” various officials from the California Walnut Commission have said.

Eater: October 21
Scotch is a notoriously popular drink in South Asia, and Johnnie Walker is king in India strongly by nature and by nurture. Indians have a natural taste for hard liquor and particularly the strong taste of whisky, and Johnnie Walker’s imperial origins, aggressive marketing that has it feature prominently in Bollywood, and structural placement as a luxury brand that is not out of reach for the middle class has led it to be embedded in the culture. This has given Johnnie Walker 56% share of a market that consumes 1.5 billion liters in a year.

The helicopters that transport the President along with Marine One will have Indian-made cabins. Lockheed Martin is responsible for the helicopters, based on the Sikorsky S-92, which also has an Indian-made cabin, as well as other parts. Sikorsky’s South Asia MD noted that United Technologies Corporation (UTC) had moved part of the supply chain from Japan to India with an eye on the future of the U.S.-India strategic relationship. (Business Insider)

Forbes: October 23
Industry observer Rob Cain feels that amid the hype around India’s growth, particularly its middle class, it becomes increasingly clear that Bollywood is undercapitalized. He cites low screen counts, low theater quality, segmentation of the industry by region, low ticket prices, high taxes, and piracy among contributing factors. Given the relevance of the film industry to popular culture and the vibrancy of the country, the upsides to taking care of the industry are obvious.

Special Focus: Logistics, The Backbone of Indian Growth

Logistics are by any account a weakness of the Indian market, and services are increasingly in demand as the country grows, so naturally the sector is a major business opportunity. Accordingly, hyperlocal logistics startups have been attracting a great deal of funding of late. Opinio, based out of Bengaluru, raised $7 million in Series A funding. Other startups that deliver from stores in a particular area or provide emergency logistical services to small businesses include Shadowfax, Zopper, and Pickingo. (TechCrunch)
  • Startup funding is a dip of the toes into the problem, but the logistics sector that will back the full weight of India’s growth will require an immense amount of manpower—well, 28.4 million by 2022. "Dilip Chenoy, MD and CEO, [National Skill Development Corporation] said: ‘The biggest challenge for the sector is to attract talent. The sector clearly sees poor working conditions and low pay scales in comparison to other career options because of poor or non-existent manpower policies. The industry is expected to give a push to Indian economy with emergence of e-commerce, organised retail & Quick Service Restaurants (QSR).’” (Business Insider)
  • With more pressure on delivery, companies will need to systematically understand what it takes to meet their delivery needs. 40% of Indian food retailers do not have the appropriate visibility of logistics operations, according to an early 2015 survey by DHL. Strikingly, a third of retailers who responded to the survey do not track their supply chain operations rigorously, but 86% of retailers say that they understand their supply chain costs. (Business Standard)

Special Focus: Digital Entertainment Boom

Reuters: October 13
India’s $675 million animation industry is set to double in size over the next five years, as Hollywood demand grows for animators at a lower cost who are familiar with Western culture and the English language. The Indian animation industry dates back to 1956, and has been involved with popular products such as, “Game of Thrones,” “Maleficent,” and “How To Train Your Dragon.” On the industry side, Mumbai-based Prime Focus effects studio bought London-based Double Negative, and Prana Studios has received funding from giants Mahindra and Reliance.

Billboard: October 15
The CEO of streaming service Rdio, which runs an Indian streaming service, says that the country is, "the fastest-growing Internet market in the world, with one of the most vibrant cultures for music.” Popular streaming service Gaana has tied up with Micromax to allow its music streaming service (ala Spotify and the paid Apple Music) to be pre-installed in each of its smartphones. Gaana will have a premium trial and a free, ad-supported tier, similar to its competitors, and benefits from local knowledge of tastes. Apple Music is making a play for India as well, relying on local curators such as MTV India, but as it is a premium-only offering, it remains to be seen how its user base will grow. Micromax sells 2 million phones each month, implying a target of 100 million users can be reached in short order.

The mobile game market in India is growing quickly, correlated to the rapid growth in internet and smartphone usage and increased broadband speeds throughout the country. While game-makers are struggling at the moment to garner revenue from in-app purchases, as companies and consumers become more comfortable with the mobile platform in general, it is likely that cultural barriers to success in the mobile space, such as consumers’ preference for cash over credit card and the lack of alternative payment mechanisms from service providers, will melt away. (VentureBeat)