Very interesting article i took from the cover story of Business World.
With India hurtling down the growth superhighway, here’s what things could look like just three years from now.
Remember the BRICs report? The world sat up and took notice three years ago when Goldman Sachs turned out its path breaking ‘Dreaming With BRICs’ report. It audaciously predicted that India and three others —China, Russia and Brazil — would be giant economic forces in the coming century.
Well, we have got news for you. India is pelting along the superhighway to growth — at a speed that makes the BRICs report look almost conservative. The economy is racing along and GDP climbed to about $690 billion (Rs 31,20,200 crore) in 2005 up from about $600 billion in 2003. At the current speed and with 8 per cent growth becoming the norm, it is slated to touch $1 trillion slightly before 2010.
“The economy is moving much faster than the BRICs level of 6.5 per cent,” says Roopa Purushothaman, a co-author of the BRICs report. Purushothaman, an Indian-American born in the US, has left Goldman Sachs and is currently chief economist with the Mumbai-based Future Group.
Is this all a pie in the sky? Castles in the air that will come tumbling down at the first rough brush with reality? Not at all. Remember that 2010 is barely 39 months away, and from a corporate planner’s point of view, it is practically upon us. “There will be more of everything — special economic zones, new world-class buildings, more supermarkets, more shopping malls,” says Andrew Holland, managing director, Merrill Lynch, in Mumbai. Adds Purushothaman: “These are realistic trend numbers. Even with a correction, corporates can plan along these lines.”
For all you doubters, here’s a quiz on the fast-growth Indian economy: How many passenger cars will be produced this year and how much will that rise to in 2010? Answer: 1.1 million cars will be racing out of the factories this year. That will climb to over 2 million by 2010.
And what about the two-wheeler industry that keeps middle-class India on the roads? India’s two-wheeler industry is the world’s second largest and turned out 7 million gleaming vehicles this year. That is likely to rev up to about 12 million by the turn of the decade.
Or let us throw in a question about colour televisions, usually one of the first electronic purchases that every Indian household makes. India will make about 11 million television sets this year. Once again the picture looks good and that is likely to climb to about 20 million by 2010.
What about hi-tech outsourcing in which India is famously a world-beater? Outsourcing is climbing at a steady 30 per cent annually and exports are slated to hit $60 billion by 2010. By then, about 2.3 million employees will be at their workstations tackling assignments from around the world. The good news: hi-tech outsourcing is currently worth about $23 billion and is moving slightly ahead of schedule to hit its targets.
Wheels Of Growth
Take a look, for instance, at how Tata Motors is gearing up for the second decade of the new millennium. The trucks-to-buses-and-passenger car giant is urgently scouting for land in West Bengal so that it can roll out its small car by early 2008.
Simultaneously, it is driving out of Pune to Uttaranchal where it will build a Rs 2,500-crore plant for its super-hit small transporter, the Ace. Says Tata Motors managing director Ravi Kant: “Times have changed. I am setting up this unit just for one product.”
You could say that Tata Motors was pleasantly wrong about the Ace. It began rather modestly in mid-2005 with plans to produce 30,000 of these ‘last mile’ vehicles at its Pune factory. It ended up selling about 60,000 in the first year. The Uttaranchal factory is now being designed to turn out about 250,000 vehicles and will be ready in less than a year. Tata Motors is also making ambitious plans for the Korean unit it brought from Daewoo, and its bus-making firm in Spain, which has just picked up a giant order in Morocco.
Roopa Purushothaman,
co-author, Goldman Sachs’ BRICs report
Now with Future Group, she points out that India is moving much faster than the BRICs level of 6.5 per cent
Or, step into any mall across the country and check out if high-powered retailer Kishore Biyani has got there. If he has not, he probably will soon. Biyani, who has recently re-named his company Future Group, is shopping for space like a shopaholic who thinks there’s no tomorrow. He is pushing up store space in malls and plazas across India from 4 million sq. ft to about 8 million sq. ft this year. But he isn’t stopping there and aims to touch about 30 million sq. ft by 2010. “We are planning for the India of 2010,” says Biyani, who hopes that his group will grow from its current $1 billion turnover to anywhere between $6 billion and $7 billion by 2010.
Biyani will certainly be offering shoppers plenty of choice. He is moving in several directions simultaneously and is filling his supermarket cart before the other biggies, whether Indian or foreign, can even write out their shopping lists. By the year end, he aims to open 80 Big Bazaars, which are extremely popular with value shoppers. That’s up from only 33 at the beginning of the year.
Biyani is not neglecting the other top sectors of the shopper’s universe and is moving ahead with a range of chains like Pantaloons (clothing), Gini & Johny (children’s clothing), Shoe Factory (footwear), Brand Factory and Star Sitara.
In addition, he has tied up with foreign chains that are hoping to buy their way into India, like Marks & Spencer and the Next group. He is constantly on the move and last week opened the giant warehouse-like Hometown, which offers products for the home in a giant space of 150,000 sq. ft in Noida on the outskirts of Delhi. Says Biyani: “We want to capture the consumption space of the consumer.”
Biyani has amazingly grand plans for 2010. But he isn’t the only one by any stretch. Already the giants of Indian industry are limbering up to make their presence felt in the retailing sector, which has since time immemorial been dominated by tiny hole-in-the-wall style mom-and-pop or rather family stores. In fact, the Retailers Association of India (RAI) expects that organised retail will climb from about 18 million sq. ft currently to almost 60 million sq. ft by 2010.
So far, the biggies are still at the blueprint stage but their plans will quickly be turned into shop window reality. Reliance Industries’ Mukesh Ambani has been loudly threatening to spend about Rs 25,000 crore (that’s roughly $5 billion if that helps to bring all those zeroes into perspective) over the next five years and he’ll be out there in the malls quite soon.
Similarly, the Tatas have just announced their tie-up with Australia’s Woolworths and the Bharti Group is looking at ways to cement its ties with Tesco. Meanwhile, global giants like Carrefour are getting into a state of high excitement about the Indian market and may tie up with the Dubai-based Landmark Group. With all this about to happen, the shopping revolution is gaining pace at a remarkable speed. “It will be a quantum leap and most of retail will become modern,” says Gibson Vedamani, CEO, RAI.
But the truth is that the changes that are now happening aren’t taking place in one or two sectors in isolation. They are taking place in practically every industry that matters. Take a look at telecom, for instance, where India is finally catching up with those fast-talking Chinese. The government, which once tied the entire sector up in messy bureaucratic red tape, is now talking about having 500 million phones by 2010. Does that sound a mite too ambitious? Remember that we have become world-beaters in this field and now have about 170 million phones ringing, according to the Telecom Regulatory Authority of India. In September alone, we added a hot-to-talk 6.1 million mobile connections.
With India hurtling down the growth superhighway, here’s what things could look like just three years from now.
Remember the BRICs report? The world sat up and took notice three years ago when Goldman Sachs turned out its path breaking ‘Dreaming With BRICs’ report. It audaciously predicted that India and three others —China, Russia and Brazil — would be giant economic forces in the coming century.
Well, we have got news for you. India is pelting along the superhighway to growth — at a speed that makes the BRICs report look almost conservative. The economy is racing along and GDP climbed to about $690 billion (Rs 31,20,200 crore) in 2005 up from about $600 billion in 2003. At the current speed and with 8 per cent growth becoming the norm, it is slated to touch $1 trillion slightly before 2010.
“The economy is moving much faster than the BRICs level of 6.5 per cent,” says Roopa Purushothaman, a co-author of the BRICs report. Purushothaman, an Indian-American born in the US, has left Goldman Sachs and is currently chief economist with the Mumbai-based Future Group.
Is this all a pie in the sky? Castles in the air that will come tumbling down at the first rough brush with reality? Not at all. Remember that 2010 is barely 39 months away, and from a corporate planner’s point of view, it is practically upon us. “There will be more of everything — special economic zones, new world-class buildings, more supermarkets, more shopping malls,” says Andrew Holland, managing director, Merrill Lynch, in Mumbai. Adds Purushothaman: “These are realistic trend numbers. Even with a correction, corporates can plan along these lines.”
For all you doubters, here’s a quiz on the fast-growth Indian economy: How many passenger cars will be produced this year and how much will that rise to in 2010? Answer: 1.1 million cars will be racing out of the factories this year. That will climb to over 2 million by 2010.
And what about the two-wheeler industry that keeps middle-class India on the roads? India’s two-wheeler industry is the world’s second largest and turned out 7 million gleaming vehicles this year. That is likely to rev up to about 12 million by the turn of the decade.
Or let us throw in a question about colour televisions, usually one of the first electronic purchases that every Indian household makes. India will make about 11 million television sets this year. Once again the picture looks good and that is likely to climb to about 20 million by 2010.
What about hi-tech outsourcing in which India is famously a world-beater? Outsourcing is climbing at a steady 30 per cent annually and exports are slated to hit $60 billion by 2010. By then, about 2.3 million employees will be at their workstations tackling assignments from around the world. The good news: hi-tech outsourcing is currently worth about $23 billion and is moving slightly ahead of schedule to hit its targets.
Wheels Of Growth
Take a look, for instance, at how Tata Motors is gearing up for the second decade of the new millennium. The trucks-to-buses-and-passenger car giant is urgently scouting for land in West Bengal so that it can roll out its small car by early 2008.
Simultaneously, it is driving out of Pune to Uttaranchal where it will build a Rs 2,500-crore plant for its super-hit small transporter, the Ace. Says Tata Motors managing director Ravi Kant: “Times have changed. I am setting up this unit just for one product.”
You could say that Tata Motors was pleasantly wrong about the Ace. It began rather modestly in mid-2005 with plans to produce 30,000 of these ‘last mile’ vehicles at its Pune factory. It ended up selling about 60,000 in the first year. The Uttaranchal factory is now being designed to turn out about 250,000 vehicles and will be ready in less than a year. Tata Motors is also making ambitious plans for the Korean unit it brought from Daewoo, and its bus-making firm in Spain, which has just picked up a giant order in Morocco.
co-author, Goldman Sachs’ BRICs report
Now with Future Group, she points out that India is moving much faster than the BRICs level of 6.5 per cent
Or, step into any mall across the country and check out if high-powered retailer Kishore Biyani has got there. If he has not, he probably will soon. Biyani, who has recently re-named his company Future Group, is shopping for space like a shopaholic who thinks there’s no tomorrow. He is pushing up store space in malls and plazas across India from 4 million sq. ft to about 8 million sq. ft this year. But he isn’t stopping there and aims to touch about 30 million sq. ft by 2010. “We are planning for the India of 2010,” says Biyani, who hopes that his group will grow from its current $1 billion turnover to anywhere between $6 billion and $7 billion by 2010.
Biyani will certainly be offering shoppers plenty of choice. He is moving in several directions simultaneously and is filling his supermarket cart before the other biggies, whether Indian or foreign, can even write out their shopping lists. By the year end, he aims to open 80 Big Bazaars, which are extremely popular with value shoppers. That’s up from only 33 at the beginning of the year.
Biyani is not neglecting the other top sectors of the shopper’s universe and is moving ahead with a range of chains like Pantaloons (clothing), Gini & Johny (children’s clothing), Shoe Factory (footwear), Brand Factory and Star Sitara.
In addition, he has tied up with foreign chains that are hoping to buy their way into India, like Marks & Spencer and the Next group. He is constantly on the move and last week opened the giant warehouse-like Hometown, which offers products for the home in a giant space of 150,000 sq. ft in Noida on the outskirts of Delhi. Says Biyani: “We want to capture the consumption space of the consumer.”
Biyani has amazingly grand plans for 2010. But he isn’t the only one by any stretch. Already the giants of Indian industry are limbering up to make their presence felt in the retailing sector, which has since time immemorial been dominated by tiny hole-in-the-wall style mom-and-pop or rather family stores. In fact, the Retailers Association of India (RAI) expects that organised retail will climb from about 18 million sq. ft currently to almost 60 million sq. ft by 2010.
So far, the biggies are still at the blueprint stage but their plans will quickly be turned into shop window reality. Reliance Industries’ Mukesh Ambani has been loudly threatening to spend about Rs 25,000 crore (that’s roughly $5 billion if that helps to bring all those zeroes into perspective) over the next five years and he’ll be out there in the malls quite soon.
Similarly, the Tatas have just announced their tie-up with Australia’s Woolworths and the Bharti Group is looking at ways to cement its ties with Tesco. Meanwhile, global giants like Carrefour are getting into a state of high excitement about the Indian market and may tie up with the Dubai-based Landmark Group. With all this about to happen, the shopping revolution is gaining pace at a remarkable speed. “It will be a quantum leap and most of retail will become modern,” says Gibson Vedamani, CEO, RAI.
But the truth is that the changes that are now happening aren’t taking place in one or two sectors in isolation. They are taking place in practically every industry that matters. Take a look at telecom, for instance, where India is finally catching up with those fast-talking Chinese. The government, which once tied the entire sector up in messy bureaucratic red tape, is now talking about having 500 million phones by 2010. Does that sound a mite too ambitious? Remember that we have become world-beaters in this field and now have about 170 million phones ringing, according to the Telecom Regulatory Authority of India. In September alone, we added a hot-to-talk 6.1 million mobile connections.
