Indian Economy - Emerging Markets

Programme: (173 - 19310) BA/BA (Hons) Marketing Management (HONG KONG) F/T

(MKT10901) Emerging Markets

3 rd Semester, 2017-18

Assessment 1

Topic: India

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Student Name: Ho Shu Ting, Sue    

Napier Student Number: 40338766

CityU Student Number: 55253184

Submission Date: 10 July 2018

Table of Contents

1. Introduction …………………………………………………………. 3

2. Overview of India – PESTEL

2.1 Political factors …………………………………………………….. 4

2.2 Economic factors……………………………………….................... 5

2.3 Social factors ………………………………………………………. 6

2.4 Technological factors ………………………………………………. 7

2.5 Environmental factors ……………………………………………… 8

2.6 Legal factors ………………………………………………….......... 9

3. Challenges and Opportunities in India ………………………… 10 - 12

4. Recommendation and Conclusion ………………………………… 12

5. References ………………………………………………………….. 13

1. Introduction

The fast internationalization of research and development (R&D) by many multinational enterprises (MNEs) into emerging markets because larger volumes of technological knowledge are generated in the home country's strongest technological fields and in the home countries of MNEs (Suma, Asli & Vandana, 2013). This can competitive benefits in a globalized world and into new sources of technological knowledge (Cantwell, 1995). There is very large reward for the effective management of competence creating extra in geographically dispersed locations. The India is the one of huge opportunities emerging markets in a globalized world and good to trade, investment and migration markets. This report will use PESTEL analysis overview of India market environment, challenges and opportunities.

India is the third largest economy in Asia and is a stable democracy. India has well English speaking educated. India have diverse economy, services a is count for almost two or thirds of India’s output but use less than one-third of its labor power (The Heritage Foundation, 2018).

In 2017, GDP of India service account for 59%. India’s wholesale price level stable with inflation and less than 2%. However, India’s retail market size around US$600 billion, is outlook to growth rate of 12% and reach US$1000 billion by 2020 (Hong Kong Trade Development Council, 2017). India population is 1.3 billion that is the second largest population in the world's. Forasmuch, big consumer base is the benefits in India. This can be improving shopping costs and expansion opportunities in retail labor (Hong Kong Trade Development Council, 2017).

2. Overview of India – PESTEL

2.1 Political factors

India is develop become an open market economy. In early 1990s India began growth, including deregulation industrial, privatization and less controls on foreign trade and investment. The government change their opaquer and to make the rights to use state owned resources more transparent.  However, poor financial, underdeveloped infrastructure, corruption, poor environment will continue to weaken overall development (The Heritage Foundation, 2018).

Since 2016, India government doing some further reforms. India key policy action has been to improve India's business environment on FDI, in order to promote the country to foreign investors. The Department of Industrial Policy and Promotion and Federation of Indian Chambers of Commerce and Industry has set up a joint venture and different state governments to promote inward FDI. This can promote overseas investments to India. According to India's investment policy, have two lines are available for foreign investors - Automatic Route and Government Route (HKTDC, 2018).

India has good developed tax construction with three tier federal structure. The main taxes/duties that the Union Government is empowered to levy are Income Tax income, Customs duties, Central Excise and Sales Tax and Service Tax. The main taxes is by the governments Sales, Stamp Duty, State Excise, Land Revenue, and Tax (Suman, 2017). Moreover, India have deregulation, the International trade regulations can freely do business in India. India also is government and International stability, no anyway will make uncertainty in market (Suman, 2017).

2.2 Economic factors

India income tax rate is 30.9% The overall tax burden is 7.2% of total domestic income.  Government spending has amounted to 27.3% of total output and budget debt is about 6.9% of GDP. Public debt is 69.5% of GDP (The Heritage Foundation, 2018).

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Figure 1. Open market (The Heritage Foundation, 2018)

India economic freedom is 54.5 that is 130th freest in 2018. This has increase 1.9%, with improve the business freedom, judicial effectiveness, government integrity and health. India exports and imports value equals 40% of GDP, so trade is very important to India economy. India about tariff rate is 6.3%. India government is open the market to foreign investment is 40%, Financial Freedom 40%. However, India trade freedom was 72.4% that is around high and upward trend (The Heritage Foundation, 2018). India open market is in the middle level.

2.3 Social factors

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Figure 2. India Population (1950 – 2018) (Worldometers, 2018)

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Figure 3. India Yearly Population Growth Rate (1950 – 2018) (Worldometers, 2018)

India have huge population is number 2 ranks population in the world's. There are continued upward trend. The median age in India is 27 years old but the aging problem is happened (Worldometers, 2018). The Figure 3 can see the yearly population growth rate is 1.13% by 2017 but population number is increased that mean India aging problem. It is offing in every country. The problem is employees working and living longer that is add the company costs because they committed the pension payments to employees (Suman, 2017).