Archive for the ‘Doing Business in India’ Category

The hospitality industry in India is growing

March 30, 2011

According to industry reports, the hospitality industry in India is growing at a rate of 15 per cent annually. More and more companies in India are investing in the sector to fill in the gap between supplies (61,000 rooms) and demand (100,000 rooms).

The year 2010 saw the demand in Hospitality Industry pick up after a slow growth in 2009. A company in India such as Reliance Industries (RIL) is entering the hospitality industry through a JV with Mumbai-based real estate company Maker Builders. RIL plans to build two hotels in Mumbai Bandra Kurla Complex.

International hotel chains such as Hyatt, Radisson, Meridian and Marriot are expanding their chains in the country by tying up with companies in India. World hotels will be signing a deal for a resort at Aamby Valley in Maharashtra as well as opening business hotels in New Delhi and Chennai to enter the hospitality industry. InterContinental Hotels Group (IHG) has tied up with Holiday Inn Express, a mid-market hotel brand, and its first property is expected to open in Noida in 2012. Lebua Hotels & Resorts, a Thailand-headquartered luxury hospitality chain is planning to enter India as well. Lebua has hotels in Bangkok and New Zealand.

According to the World Travel and Tourism Council (WTTC) 2011 report, India is expected to attract 6,179,000 international tourist (overnight visitor) arrivals in 2011, generating US$ 15.05 billion (INR678.6bn) in visitor exports (foreign visitor spending, including spending on transportation). The direct contribution of Travel & Tourism to GDP is expected to be US$ 34.8 billion (INR1,570.5bn) in 2011 which is about 1.9 per cent of the country’s GDP. This reflects that the hospitality industry in India will have to gear up to cater to such high demand. Companies in India are investing their capital and industry reports predict that the capital investment in India, in the travel and tourism sector will grow at the rate of 8.8 per cent between 2010 and 2020.

Taking the cue, online travel companies too are making their entry in India to cash in the booming travel and hospitality industry., an international online hotel booking portal, has plans to spend about Rs 25 crores on promotional activities. ERevMax, an online channel management technology provider, has developed an innovative product for the hotel industry. The product allows fully automated inventory management and rate calculation across over 700 connected websites based on channel performance.

Mandarin Oriental Group, which owns one of the world’s most luxurious hotels, resorts and residences, will be adding 16 new properties in India in the next five years. Other Companies in India such as Small Luxury Hotels of the World (SLH), a marketing firm of luxury hotels, is expecting to expand their foothold in India. Currently, SLH has 13 hotels in India and hopes to add 10 more hotels by the end of 2011. The company also has a website for travel agents through which agents can book rooms for their clients.

India’s growth story

March 14, 2011

The Indian economy is boosting with growth and is attracting the foreign players to come, invest and be part of the aspiring Indian investment climate. One of the leading sectors harnessing the limelight potential is the Indian Fast Moving Consumer Goods sector, with a market size of US$ 25 billion (2007–08 retail sales). Food products being the largest consumption category in India, so much so that the sector constitutes nearly 2.15 per cent of India’s gross domestic product (GDP). India is recognised as a cost-effective quality manufacturing base in the world market. Food products accounts for nearly 21 per cent of the country’s GDP. India is the largest producer of several fruits, such as banana, mango and papaya, and the second-largest producer of vegetables such as brinjal, cabbage and onion. The food processing industry is one of the largest industries in India, and is ranked fifth in terms of production, consumption, export and expected growth.

Tracking the size of the food processing industry in India, it has increased from US$ 57 billion (INR 2,736 billion) in 2004 to US$ 75 billion (INR 3,600) in 2007. Moreover, the sector attracts foreign direct investment (FDI) worth Rs 576 crore (US$ 127.50 million) in the first eight months of 2010-11, according to Mr Harish Rawat, Minister of State for Agriculture and Food Processing Industries.

CG Foods, a noodles and snacks firm set up by Singapore-based Cinnovation Group, is all set to invest Rs 40 crore (US$ 8.82 million) for establishing a manufacturing plant in Gujarat.

The FMCG forms a concrete part of every individual’s life. With the facilitation from the Indian government and the relatively aloof economy during the recession, the companies are foraying into the Indian market with their products in order to tap the vast middle class base of India.

The industry intends to provide additional option to the consumer. Keeping the lead, companies are also looking forward to spend upon research and technology (R&D), with Nestle, another FMCG major plans to invest Rs 230 crore to set up its first R&D centre in India at Manesar in adjoining Gurgaon district.

The invariably growing Indian economy is witnessing its golden age, with the Indian talent in research being recognised globally. The companies foraying into India harness the potential and reap the benefits of the low infrastructure, production and labour costs. In addition, the companies in India like the Pune-based Thermax, has initiated a solar project at a village in Chakan near Pune, in association with the Department of Science and Technology at a cost of US$ 2.84 million to electrify the village. It is these developments, which form the backbone of the growth story of India. It is technology sector, which forever provides inputs to the innovation and research and ignite the investment climate in India.

Significantly, research in science and technology sector includes various sectors include nano technology, renewable energy, space sector besides other related sectors. The investment climate in India being conducive and open to be harnessed is all ready for companies in India and that from abroad. In all the presence of good, sophisticated and latest technological infrastructure attract the foreign firms to have their respective development centres in India, besides reaping the benefits of the lucrative investment climate in India.

The growing consumer market in India

February 10, 2011

The invariably growing Indian economy is witnessing its golden age, with the fast moving consumer goods (FMCG) global companies foraying into India to harness the potential and reap the benefits of the rampantly growing economy. The FMCG in India form a significant part of the business world in India, as the heightened access to information has made the consumer more aware. It assists the consumer in comparing and asking for better products.

The growing consumer markets have reeled in a new era of retailing. No wonder the international fast moving consumer goods (FMCG) companies like Carrefour and the Wal Mart are pressurizing the Indian government to open the India’s multi-brand retail sector. Carrefour, the world’s second-largest retailer, opened its first cash-and-carry store in India in New Delhi on December 31, 2010 to tap the Indian Consumer Market. The store, Carrefour Wholesale Cash&Carry, is located in the Seelampur area, east of New Delhi in the Shahadara neighborhood.

Moreover, Chennai-based FMCG India space reported CavinKare’s plan to invest around US$ 109.50 million over the next two years in various expansion plans. In addition, Nestle, the fast moving consumer goods (FMCG) major, plans to invest US$ 50.49 million to set up its first research and development (R&D) centre in India at Manesar in adjoining Gurgaon district. The facility will be made operational by July 2012.
Similarly, the direct selling Fast Moving Consumer Goods (FMCG) company, Amway India Enterprises is aiming at a 25 per cent growth to clock US$ 545.7 million by 2012.

Additionally, the Swiss fast moving consumer goods (FMCG) player, Nestle plans to make further inroads into the rural consumer markets. The company has asked its sales team to deliver “6,000 new sales points every month in rural areas” to expand presence in Indian villages, according to Antonio Helio Waszyk, Chairman and Managing Director, Nestle India. India’s FMCG sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion by 2018.

Furthermore, according to data from market researcher Nielsen, the fast moving consumer goods industry posted a 14 per cent sales growth year-on-year in April 2010, the highest in eight months. US-based Harley Davidson, the iconic heavyweight motorcycle maker is targeting the urban consumers markets in India. Harley Davidson opened its first outlet in Hyderabad recently and plans to open more across the country.

Indian consumer market had access to private label products in food and beverage, apparel, footwear and fast moving consumer goods products.

On another note, the number of foreign tourist arrivals in India has increased as India continues to be a favored tourist destination for leisure, as well as business travel. Banking on the government’s initiative of upgrading and expanding the country’s infrastructure like airports, national highways etc, the Tourism and Hospitality industry is bound to get a bounce in its growth. Significantly, the Indian hospitality industry is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism and hospitality market in the world. Initiatives like massive investment in hotel infrastructure and open-sky policies made by the government are all aimed at propelling growth in the hospitality sector. The Indian hospitality sector is certainly the most apt replication of the belief ‘Atithi devo bhava’- touch of tenderness, a helping hand and a welcoming visage.

The flamboyant economy of India

December 17, 2010

The boosting economy of India is offering great potentials for doing business in India for the overseas investors to make investment in India and is encouraging them to consider India as one of the best place for their business development. The most in focus sector being the real estate. Inflation rate is coming down and increased market demand for goods and services are good signs which attract foreigners to do business in India.

There are various factors like quality, availability and reliability of infrastructure services, state or central government’s efforts, good power supply, transportation facilities connecting important nodal points, relaxed tax regulations, efficient banking systems and relatively cheaper availability of labour and raw material, export and import options etc. Doing Business in India is the most attractive destinations for the investments. Even the World Bank analysis has indicated that the infrastructural development and institutions remain the main factors in the development of India’s private sector. The real estate sector is one of the most booming sections in India.

The economy of India is one of the fastest growing economies of the world with good population base. The growth rate of gross domestic product (GDP) is reviewed around 8.75 per cent plus against 7.4 per cent in the previous year. The International Monetary Fund (IMF) indication of India’s GDP is much higher at a growth rate of as high as 9.7 per cent. The economy of India is one of the most favorable economies in the world as of now. This higher growth trends are creating good opportunities to do business in India.

The Banking system of India has survived well to the global economic crisis. In India, nationalized banks play an important role in banking sector (50.5 per cent of the aggregate deposits and hold the highest share of 50.5 per cent in the total bank credit. Banking facilities both through the foreign banks and regional rural banks had a share of 5.5 per cent and 2.5 per cent respectively in the total bank credit.

The economy of India is one of the most robustly growing economies in the world with a huge population base. The recent trends show that the growth rate of Economy of India will grow at around 8.75 per cent for current year. The Indian economy is performing well as the purchasing power parity has increased in the last six months.

Economy of India is ranked the fifth largest economy in the world and third largest GDP in the entire continent of Asia. The world’s popular brands have started seeing the economy of India as the potential market for their business expansion.

Conclusively, it is no surprise for India being chosen as one of the most favoured foreign direct investments (FDI) destinations as the economy of India grows in leaps and bounds. The strong banking system proved a blessing during the financial meltdown, even opening the opportunities for doing business in India. Besides, the real estate and infrastructure management turned out to top the private equity (PE) investment sector at 23 per cent of the total with US$ 99.36 million, according to Deal tracker October 2010, Grant Thornton.