Professional Documents
Culture Documents
Unlocking Opportunities
Contents
Foreword
Executive summary
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23
39
53
67
Foreword
Sanjay Jain
Managing Director,
Accenture Management
Consulting
Executive summary
The multi-technology
future
Technology is central to economic
progress and the improvement of living
standards in India. New technologies
have the potential to mobilize
communities, enable innovation and
increase productivity. Next-generation
technologies like mobility solutions,
cloud computing and analytics will
create new sources of demand in
10
11
180
+ 8.7% p.a.
160
Rs154 trn
Rs11 trn
140
Alternative
trajectory
increment
120
100
80
Rs67 trn
+ 8.0% p.a.
60
Rs144 trn
Current
trajectory
40
20
0
2010
2020
12
160
150
140
620
610
600
590
580
130
570
120
560
110
550
100
540
530
90
Employment (million)
520
80
510
70
500
60
490
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2019
2020
13
9,300,000
28,200,000
14
15
Million
800
Aged 50-59
Aged 16-49
600
400
200
0
2000
2004
2008
2012
2016
2020
Skilling at scale
Nearly one-fifth of the worlds
population lives in India, and one-third
of India's population is younger than
15 years of age. The UN forecasts that
Indias working-age population will grow
by around 240 million people between
2010 and 2030more so than in any
other emerging economy. In 2020, the
average age in India will be only 29
years, compared with 37 in China and
the United States, 45 in Western Europe
and 48 in Japan.7 The number of people
classified as being of retirement age in
India (above the age of 60) is estimated
to increase from 7% at present to
nearly 10% by 2020 (Figure 1.4).
16
62,517
61,356
60,467
2006
60,170
2007
2008
2009
2010
Financial inclusion
17
1.5
3000
1.4
1.3
% of GDP
2000
1.2
1500
1.1
1.0
Rupee
1000
% of GDP
Rs billion
2500
0.9
500
0.8
0
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
18
19
20
16
14
12
10
8
6
4
2
0
2005
2008
2011
2014
2017
2020
Employment
1.6
GDP
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
2010
2011
2012
2013
2014
2015
2016
2017
2016
2017
2020
2017
2020
Healthcare
0.9
Pensions
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
2010
2011
2012
2013
2014
2015
2016
2017
2016
22
23
Chapter summary
Areas to watch
Service exports
Low-cost business models
Infrastructure
The emerging-market middle class
Medical tourism
Organizational imperatives
The
emergingmarkets
surge
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25
26
Figure 2.1: Share of global GDP (US$ trillion at 2005 prices and PPP)
160
140
Emerging economies
Developed economies
120
65%
100
80
57%
60
48%
40
20
38%
37%
62%
52%
2000
2010
63%
1990
43%
2020f
35%
2030f
50
65
48
Imports
Imports
60
46
55
44
42
50
40
38
45
36
40
34
35
Exports
32
30
1995
1997
1999
2001
2003
2005
2007
2009
2011
30
Exports
1995
1997
1999
2001
2003
2005
2007
2009
2004
2007
2010
China
5.2%
9.4%
10.8%
10.9%
uae
2.6%
4.7%
6.8%
6.6%
6.5%
Saudi Arabia
0.9%
7.2%
5.9%
5.1%
3.7%
4.4%
USA
6.4%
6.3%
5.9%
Singapore
3.3%
4.8%
4.2%
Switzerland
4.2%
4.9%
5.0%
Netherlands
2.0%
2.1%
3.6%
Australia
3.4%
3.8%
4.3%
uk
4.7%
4.4%
3.5%
Iran
0.3%
4.1%
4.0%
Germany
4.0%
3.1%
3.0%
Germany
3.7%
4.1%
3.6%
Saudi Arabia
1.8%
2.0%
2.2%
Indonesia
2.7%
2.3%
3.0%
France
2.0%
1.7%
2.1%
3.6%
2.6%
3.0%
2004
2007
2010
uae
8.0%
9.5%
13.4%
usa
18.0%
14.9%
china
4.6%
Hong Kong
Source: CMIE
2011
Source: CMIE
27
Areas to watch
Spurred by the rising middle class
and rapid urbanization, Indian
companies are making inroads in
emerging markets by replicating tested
homegrown business models across
sectors such as services, consumer
goods and infrastructure.
Service exports
India has proved its mettle in the
services industry, with the sector
contributing about 55.2 percent
to the countrys GDP. India is a
highly attractive business process
outsourcing (BPO) services destination;
more than 250 Fortune 500 companies
have their BPO units in India. After
gaining a foothold in the domestic
market, Indian information technology
(IT) companies are extending their
reach in Africa, Latin America
and Asia Pacific. For instance,
Tech Mahindra recently started
BPO operations in the Philippines
28
Infrastructure
With increasing urbanization across
emerging markets, governments in
some of these countries are investing
to develop infrastructure assets
such as mobile communications and
transportation, as well as to support
industries that supply materials for
constructing infrastructure. Some Indian
infrastructure companies are seizing
advantage of this opportunityscaling
up their operations, acquiring design
skills and building strong balance sheets
to support projects in other emerging
markets. For instance, GMR Group
became the first Indian company to
operate an airport abroad, with the
opening of the new terminal at Istanbul
Sabia Gokcen International Airport.32
GMR recently also won the bid to
construct the US$360-million airport in
Male, defeating the Aeroport De Paris
(which operates airports in the Paris
region, including Charles de Gaulle).33
29
The emerging-markets
middle class
The middle class is growing in
emerging-market economies, as people
emerge from poverty thanks to their
nations rapid economic growth. The
expansion of this middle class provides
competition for labor and other
resources. It also creates enormous
potential for global consumer markets.
The World Bank estimates that the
global middle class will grow from
430 million in 2000 to 1.15 billion
in 2030, driven primarily by the
surge in emerging economies. The
geographic distribution is striking.
In 2000, developing countries were
home to 56 percent of the global
middle class, but by 2030 that figure
is expected to reach 93 percent.34
Indian consumer goods companies
seek a share in these fast-growing
consumer markets. Most such
companies and retailers are focusing
on markets that have many nonresident Indians, such as Middle
East Asia and Southeast Asia, places
30
Medical tourism
India is gaining popularity as a global
destination for medical tourism.
The reason: treatment costs can be
substantially lower than in neighboring
medical-tourism destinations such
as Singapore and Thailand. Currently,
India receives more than 100,000
foreign patients a year.37
Most medical tourists treated by
private hospitals in India come from
South Asian Association for Regional
Cooperation (SAARC) countries, and
from Middle East and Africa. These
hospitals often have facilitation
centers in emerging markets, which
educate local residents about the
medical facilities available in India.
An ecosystem that includes several
hospitals, chemists and freelance agents
educates, facilitates and ferries medical
tourists to India from across the world.
In 2010, about 600,000 such patients
travelled to India and spent US$997
million on treatments. The medical
tourism business is estimated to be
growing by 40 percent year-on-year.38
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Employment (million)
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520
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510
70
500
490
60
2010
2011
2012
2013
2014
2015
2016
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2018
2019
2019
2020
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32
34
Drive efficiencies In
manufacturing
India aims to double its exports
over the next three years to reach
an export level of US$450 billion by
2013-2014.42 To achieve this ambitious
target, India will need to build up its
economys manufacturing strength.
Indias manufacturing sector has grown
in size and ranks among the top 10 in
the world. However, in terms of the
value of its manufactured output, the
countrys level of industrialization,
expressed as manufacturing value
added (MVA) per capita, is the lowest
among fast-growing emerging markets.
The promise of the worlds largest
working-age population is undermined
by one of the lowest labor-productivity
rates among fast-growing emerging
markets. India may have some worldclass clusters of excellence (such as
automotives and pharmaceuticals), but
more than 40 percent of its industrial
output is produced by small and
medium enterprises. Around 84 percent
Organizational imperatives
Use India as a learning
laboratory
A number of Indian companies
are using their knowledge of how
to operate in India to strengthen
their operations in other emerging
countries. For example, Bajaj Auto
trained roadside mechanics in Angola
to fix their bikes, because many parts
of Angola could not support a proper
dealer and service-centre network.44
Be authentically local
To create and develop products for
other emerging economies, Indian
companies must understand local
consumers and customize product
design, pricing, value engineering
and marketing strategies to local
preferences and priorities. Savvy
companies embed their innovation
activities into the local R&D and
consumer environment, working
in tandem with industry peers and
policymakers.
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37
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Chapter summary
Areas to watch
Organizational imperatives
The multitechnology
future
40
41
700
12,000
600
10,000
500
400
thousands
millions
8,000
300
4,000
200
100
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
42
6,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Areas to watch
As technologies mature and are brought
to market, they offer a springboard for
a major leap forward in almost every
area of business operations. The core
technologies themselves will develop
their own markets as they are adopted,
as well as foster ancillary markets for
related technologies and services.
Sometimes growth stems from the
convergence of one technology with
another. Finally, new technologies can
enable new ways of doing business with
existing products.
Core technologies
New technologies will open up
significant opportunities for rapid
growth. The market for cloud
computing in India is expected to
be worth US$360 million by 2014,
43
44
Ancillary technologies
Tech-savvy enterprises can now base
key management decisions on large
quantities of informationdriving
development of new services centered
on analytics. Business intelligence and
analytics will be critical for companies
in sectors such as retail, healthcare,
telecom and financial services, which
rely on data-driven decision making.
India has a billion-plus consumers,
and very little is known about the
consumption patterns of most of
them. Companies that previously based
decisions on managers past experience
and business instincts will gradually
move toward fact-based decision
making. Banks are already analyzing
customer profiles to cross-sell other
products, while telecom companies are
examining usage patterns to market
new plans and services to subscribers.
Forecasts suggest that the Indian
business-intelligence technology market
will generate revenues of US$65.4
million in 2011, up almost 16 percent
over 2010.64
Indias government is seeking to build
its competency in business intelligence
and analytics. The UID programme
will make available huge volumes of
consumer data that the government
plans to analyze to improve efficiencies
in collecting taxes, combating fraud
and maximizing public services.
But with the availability of so much
data, security and privacy will become
growing concerns. Businesses are
already facing increased enterprise
security risks coming from social
networking sites, mobile devices
and cloud platforms. Security is an
Convergent technologies
The convergence of two or more
different technology fields generates
innovative solutions across industries.
For example, biotechnology combined
with pharmacology, information
technology and even agriculture
has created vital opportunities. The
Indian biopharmaceuticals sector
has been a particularly successful
segment, boasting revenues of
US$1.9 billion and growing at 12
percent.66 Indian biotechnology
major Biocons biopharmaceuticals
and chemical formulations business
has been the main force behind its
high profit and revenue growth.
Biocon is also making a US$160
million investment in Malaysia for
development of high-end biosimilars
(officially approved new versions
of innovator biopharmaceutical
products, following patent expiry).67
The bio-agriculture market segment
in India, estimated at US$420 million,
is the fastest growing segment in the
biotechnology sector.68 Bio-agriculture
can help tackle Indias food-shortage
problems. Private companies and
government research agencies are
genetically improving the quality of
crops to create high-yielding hybrid
Technology-enabled business
models
Indian businesses want to use
technology to bridge the gap to the
countrys massive rural markets, which
have stood outside companies reach
because of poor infrastructure and
lack of connectivity. Technology will
play a critical role in the inclusion of
these people in Indias growth story.
For instance, the National Bank for
Agriculture and Rural Development
(NABARD) has entered into a
partnership for a one-year programme
with international news agency
Thomson Reuters' Indian subsidiary,
Reuters Market Light. The goal is to
provide farmers in Tamil Nadu with
real-time market information for a
duration of one year for free. The
service will deliver spot crop prices,
commodity news and other relevant
information to farmers through SMS
in local vernacular languages. Armed
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Employment (million)
150
520
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510
70
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60
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2019
2020
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48
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Open innovationwhereby
companies involve stakeholders
such as suppliers, vendors and
customers in their innovation
processis attracting interest in
India. Automobile companies in India
provide exceptional examples. They
have nurtured capabilities in local
auto-parts companies and OEMs, and
in return, have benefited from these
stakeholders ideasstrengthening
technological capabilities across the
industrys value chain.
Organizational
imperatives
Embrace the cloud
Purchasing IT solutions as a service
enables companies to enter new
markets rapidly, minimize sunk
costs and benefit from cuttingedge software. Offering all these
advantages, cloud computing will
help Indian entrepreneurs and SMEs
compete with larger organizations.
As more of Indias low-income
consumers demand pay-per-use
services, companies will have little
choice but to shift to clouds.
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The resource
economy
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Chapter summary
Areas to watch
Intelligent energy
Alternative energy
Green infrastructure
Food processing and agribusiness
Water, waste and land management
Alternative fuels
Hybrid and electric vehicles
Organizational imperatives
Shift to next-generation fuels and
renewable energy sources
Diversify supply sources
Develop energy-conserving products
and services
Turn scarcity into abundance
Shape pro-growth regulation
54
The
resource
economy
Impact on growth and jobs
INR458 billion (US$10 billion) added to
GDP by 2020
0.3 percent above the current trajectory
by 2020
821,000 additional jobs by 2020
55
Quadrillion btu
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2000
2005
2008
2015
2020
2025
2030
2035
Areas to watch
Which sectors stand to benefit
most from this resource-efficiency
revolution? Our research shows that
managing the scarcity of resources is
opening up growth opportunities for a
wide range of old and new industries
including agriculture, energy,
consumer products, infrastructure
and automotive sector.
Intelligent energy
Intelligent-energy solutions will
promote Indias low-carbon agenda
while also addressing its inefficient
power supply. At present, energy losses
during transmission and distribution
in India exceed 30 percent, one of the
highest in the world.
Smart grids intelligently gather
and analyze consumption patterns
to control distribution and reduce
theft. Rural/agricultural areas
suffering acute power shortages can
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Alternate energy
India wants to reduce its dependence
on non-renewable energy sources.
The Ministry of New and Renewable
Energy in India has set a target of
renewable energy sources contributing
10 percent to new power-generation
capacity installed up to 2012.
Alternative energy sources such
as wind power, hydro-power, bioenergy (biomass gasifiers) and
next-generation solar power can
create new markets and export
opportunities as well as provide a
much-needed impetus to Indias
domestic manufacturing sector. Wind
energy is one of the fastest-growing
alternative-energy sectors in India.
Nuclear power is the fourth-largest
source of electricity in India, with India
ranking ninth in the world in terms
of number of operational reactors. As
of 2010, India had 20 nuclear-power
plants generating 4,780 megawatts
1984
1988
1992
1996
2000
2004
2008
Green infrastructure
Indias drive toward renewable energy
is fuelling its green-infrastructure
sector and breeding demand for a
host of green capital goods as well as
construction and building materials.
Recent research by The Climate Group
estimates that Indias wind-energy
sector could create as many as 250,000
additional jobs by 2020. The solarenergy sector could create another
235,000 jobs during the same period.91
Indias production capacity for solar
photo voltaic (PV) systems has grown
multifold, from less than 60 MW in
2005 to more than 1 gigawatt (GW) in
2009, and is expected to reach 2.5 GW
by 2015. India is also set to become
a major manufacturing hub for the
global solar PV market, exporting close
to 75 percent of its total production to
markets in the EU.92
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Alternate fuels
As fuel prices continue to rise, vehicle
manufacturers in India are developing
models that can function on alternative
fuels as efficiently as they do on
conventional fuels such as petrol and
diesel. Shale gas may be one such
alternative fuel. Indias Oil & Natural Gas
Corporation (ONGC) recently discovered
the first shale gas deposit in the country
in the state of West Bengal. This is
the first significant shale gas reserve
found outside the US and Canada.
Initial estimates from US mining major
Schlumberger has pegged the gas
reserves at this site at 300 trillion cubic
feet.105 If successful, this initiative could
turn Indias current energy picture from
deficit to surplus.
Coal-to-liquid technology, which uses
domestic coal reserves, offers another
sign of hope because it may help reduce
Indias reliance on oil imports. The
government recently awarded two coal
blocks in the state of Orissa to Jindal
Steel and Power (JSPL) and Strategic
Energy Technology Systems (SETL) for
60
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Employment (million)
150
520
80
510
70
500
490
60
2010
2011
2012
2013
2014
2015
2016
2017
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2019
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2020
The Oxford Economics modeling shows that, buttressed with an appropriate blend of regulation, skills development, investment incentives
Source:
Oxfordspillovers,
Economics
and technology
the green sector could boost Indias GDP by INR458 billion (US$10 billion), 0.3 percent above the current
trajectory by 2020. This translates to lifting employment levels by 821,000 by 2020.
61
Investing in next-generation
technologies
Investing in next-generation
technologies can help India catch up
with developed-economy competitors
in the resource arena. Idea incubation
will be vital for generating innovative
solutions to old problems based on
high-technology platforms. To support
technology development, companies
will need to rapidly develop large-scale
green-infrastructure capabilities.
Signs look promising. For instance,
NTPC, Indias biggest power producer,
is in talks with Toshiba, the Japanese
power-equipment maker, to build
a pilot project in India aimed at
62
Organizational imperatives
Shift to next-generation fuels
and renewable-energy sources
Indian companies must plan for a
future where pollution-causing fossil
fuels will be prohibitively expensive
and regulated. They have an advantage
in not having to deal with legacy
systems and can base their growth on
clean technologies that will help them
tackle future resource scarcity.
Develop energy-conserving
products and services
Be it the semiconductor industry
that supports the solar PV systems
market, or green-building construction
companies, the market for green
technologies is expanding. SELCO
Solar, a not-for-profit organization
established in India in 1995, provides
solar-energy solutions to underserved
households and businesses, and has
serviced and financed more than
115,000 solar systems since its
inception. Its services span the value
chainfrom creating awareness
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References
1 NDTV Profit, Monetary tightening to pull
down India's GDP to 8.2%: IMF, April 2011.
2 Asian Development Bank, Asia 2050 Realizing the Asian Century, April 2011.
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Acknowledgments
Authors
Mamta Kapur, Aarohi Sen,
Smriti Mathur, Ryan Coffey
Senior Review Team
Sanjay Jain, Raghav Narsalay,
Matthew Robinson, David Light,
Mark Purdy, Armen Ovanessoff,
Ladan Davarzani
71
11-1185
About Accenture
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