ECONOMIC ANALYSIS OF INDIA

• India’s economic freedom score is 54.6, making its economy the

124th freest in the 2011 Index. Its score is 0.8 point better than last
year, with improved scores in four of the 10 economic freedoms,
including a large gain in labor freedom. India is ranked 25th out of 41
countries in the Asia–Pacific region, and its overall score is below the
world average.
• Despite the challenging global economic environment, the Indian
economy has recorded average annual growth of around 8 percent
over the past five years, propelled by domestic demand and
continuing strength in services and manufacturing.
• However, growth is not deeply rooted in policies that support
economic freedom. Progress with market-oriented reforms has been
uneven. The state maintains an extensive presence in many areas,
playing a major role through many public-sector enterprises. India’s
restrictive and burdensome regulatory environment discourages
broader private-sector growth and hampers realization of the
economy’s full potential. Corruption remains significant, and the
judicial system remains inefficient. Increasing inflationary pressure
poses a major risk to overall macroeconomic stability.
• Background
• India is the world’s most populous democracy. Though over 80
percent of the population is Hindu, the country also has one of the
world’s largest Muslim populations. The Congress Party government
was re-elected to another five-year term in 2009 on a populist
platform that included promises of guaranteed employment for rural
households. India resumed bilateral talks with archrival Pakistan in
2010 after having suspended dialogue following attacks in Mumbai in
November 2008 by a Pakistan-based terrorist group that killed nearly
170. Improvement in relations between the U.S. and India is
evidenced by the launching of a Strategic Dialogue aimed at fostering
cooperation in defense, energy, trade, education, and counterterrorism.
Since its 1991 “big bang” liberalization, the economy has grown
rapidly, first in services and more recently in manufacturing.

Business Freedom36.9 +0.6

Potential entrepreneurs face severe challenges.
The regulatory framework is burdensome, and the legal
framework is weak.
It can take almost 200 days to obtain a construction permit.

Trade Freedom
India’s weighted average tariff rate was 7.9 percent in 2009.
Significant differences between bound and applied tariff rates,
import and export restrictions, services market access restrictions,
complex and non-transparent regulation, onerous standards and
certifications, discriminatory sanitary and phytosanitary
measures, restrictive import licensing, domestic bias in
government procurement, problematic enforcement of intellectual
property rights, export subsidies, inadequate infrastructure, anti-
dumping restrictions, and complex and non-transparent customs
add to the cost of trade. Twenty points were deducted from India’s
trade freedom score to account for non-tariff barriers

Fiscal Freedom75.4 +2.0

India’s tax rates are relatively high. The top income tax is now
30.9 percent (30 percent plus an educational assessment of up to 3
percent). The top corporate tax rate is 33.99 percent (30 percent
plus a 10 percent surcharge and a 3 percent education tax on that
total). Other taxes include a dividend distribution tax, a tax on
interest, and a value-added tax (VAT). A general sales tax (GST)
was recently approved to replace the VAT. In the most recent year,
overall tax revenue as a percentage of GDP was 18.6 percent
Government Spending77.8 +1.7
The government still plays a central role in the economy. In the
most recent year, total government expenditures, including
consumption and transfer payments, fell slightly to 27.2 percent of
GDP. Public debt is 78 percent of GDP.
Monetary Freedom65.1 -2.4
Inflation has been relatively high, averaging 9.9 percent between
2007 and 2009, and was running above 11 percent in 2010. The
government subsidizes agricultural, gas, and kerosene production;
applies factory, wholesale, and retail price controls on “essential”
commodities, 25 crops, services, electricity, water, some petroleum
products, and certain types of coal; and controls the prices of 74
bulk drugs that cover 40 percent of the market.

QUICK FACTS ABOUT INDIA:-

Population:
1.2 billion
GDP (PPP):
$3.5 trillion
5.7% growth
8.0% 5-year compound annual growth
$2,941 per capita
Unemployment:
10.7%
Inflation (CPI):
10.9%
FDI Inflow:
$34.6 billion

SINGAPORE ECONOMIC ANALYSIS

Singapore’s economic freedom score is 87.2, making its economy
the 2nd freest in the 2011 Index. Its score is 1.1 points higher than
last year, reflecting gains in fiscal freedom, monetary freedom,
and financial freedom. Singapore is ranked 2nd out of 41
countries in the Asia–Pacific region, and its overall score remains
significantly higher than the world average.
Despite the challenging global economic environment, the
Singaporean economy has shown a considerable degree of
resilience that stems from strong fundamentals. With an educated
and highly motivated workforce in place, the economy’s
competitive tax regime, strong respect for property rights, and
efficient regulations sustain an innovative and vibrant economy.
Emerging from the sharp contraction in 2009, the economy has
rebounded well and has regained its entrepreneurial dynamism.
The government’s fiscal stimulus was timely, well-planned, and
executed with discipline.
Singapore is one of the world’s leading business centers and a
major destination for foreign investment. Monetary stability is
good, and the legal and regulatory framework for the financial
sector is transparent and efficient; government influence in the
sector is gradually being reduced. Anti-corruption laws are strong
and well enforced. Foreign and domestic investors are treated
equally, and openness to global commerce fosters competitiveness.
With prudent and sound banking practices, the financial sector has
weathered the global financial turbulence relatively well.
Background
Singapore is a nominally democratic state that has been ruled by
the People’s Action Party (PAP) since 1965, when the country
became independent. Certain rights, such as freedom of assembly
and freedom of speech, remain restricted, but the PAP has also
embraced economic liberalization and international trade.
Singapore is one of the world’s most prosperous nations. Its
economy is dominated by services, but the country is also a major
manufacturer of electronics and chemicals .

Investment Freedom35.0 no change

Foreign investors generally receive national treatment. Licensing
procedures do not discriminate against foreign companies,
although export obligations and local content requirements are
imposed in some industries. Foreign investment is prohibited in
some industries and capped in others. Foreign investment in real
estate is limited to company property used to do business and the
development of some types of new commercial and residential
properties. Bureaucracy is non-transparent and burdensome, and
contract enforcement can be difficult. Foreign exchange, capital
transactions, and some credit operations are subject to approvals,
restrictions, and additional requirements
Financial Freedom40.0 no change
Despite some liberalization and modernization, state-owned
institutions dominate the banking sector and capital markets; 28
state-owned banks control about 70 percent of commercial
banking assets. Access to financial services varies sharply around
the country. High credit costs and scarce access to financing
impede private-sector development. Foreign banks account for
less than 10 percent of total assets and may not retain more than a
5 percent equity stake in a domestic private bank. Insurance is
partially liberalized. Capital markets remain illiquid, with foreign
participation limited. The government has introduced new
financial instruments including derivatives
Property Rights50.0 no change
Transfers of land are restricted, and there is no reliable system for
recording secured interests in property. Courts take years to reach
decisions, and foreign corporations often resort to international
arbitration. Protection of intellectual property rights is
problematic. Proprietary test results and other data about
patented products submitted to the government by foreign
pharmaceutical companies have been used by domestic companies
without legal penalties. Amendments to the Copyright Act
submitted to Parliament in December 2009 implement WIPO
Internet treaties, extend copyright periods, and strengthen
enforcement of copyright protection in the digital environment
Freedom From Corruption34.0 no change
Corruption is perceived as significant, especially in government
procurement of telecommunications, power, and defense contracts.
India ranks 84th out of 180 countries in Transparency
International’s Corruption Perceptions Index for 2009.
Corruption is viewed as an obstacle to foreign direct investment
Business Freedom98.2 no change
The overall freedom to conduct a business is well protected under
Singapore’s regulatory environment. Starting a business takes
only three days, compared to the world average of 34 days.
Obtaining a business license takes much less than the world
average of 18 procedures and 209 days. Bankruptcy procedures
are straightforward
Trade Freedom90.0 no change
Singapore’s weighted average tariff rate was 0 percent in 2009.
Import and export restrictions, services market barriers, import
taxes, import and export licensing, burdensome sanitary and
phytosanitary rules, problematic enforcement of intellectual
property rights, and export incentive programs add to the cost of
trade. The Private Education Bill enacted on September 14, 2009,
may make it more difficult for foreign universities to offer classes
in Singapore. Ten points were deducted from Singapore’s trade
freedom score to account for non-tariff barriers
Fiscal Freedom91.1 +0.4
Singapore has relatively low tax rates. The top income tax rate is
20 percent, and the top corporate tax rate has been reduced to 17
percent from 18 percent. Other taxes include a value-added tax
(VAT) and a property tax. In the most recent year, overall tax
revenue as a percentage of GDP was 14.2 percent
Government Spending91.3 -4.0
Government spending is relatively low. In the most recent year,
total government expenditures, including consumptionand transfer
payments, increased to 17 percent of GDP. The state remains
involved in the economy throughSingapore’s many government-
linked companies. Plans to open state-owned energy and
telecommunications enterprises to private investment have stalled.
Monetary Freedom86.2 +5.3
Inflation has been very low, averaging 1.9 percent between 2007
and 2009. The government influences prices through regulation
and state-supported enterprises and can impose controls as it
deems necessary. Five points were deducted from Singapore’s
monetary freedom score to account for measures that distort
domestic prices
Property Rights90.0 no change
The court system is efficient and protects private property. There
is no expropriation, and contracts are secure. Singapore has one
of Asia’s strongest intellectual property rights regimes, though
enforcement could be improved
Freedom From Corruption92.0 no change
Corruption is perceived as almost nonexistent. Singapore ranks
3rd out of 180 countries in Transparency International’s
Corruption Perceptions Index for 2009. The government enforces
strong anti-corruption laws. It is a crime for a citizen to bribe a
foreign official or any other person, either within or outside of
Singapore
Financial Freedom60.0 +10.0
Singapore’s modern financial sector remains competitive and
sophisticated. Bank consolidations have left three dominant
banking groups. The largest is the government-controlled
Development Bank of Singapore, which is publicly listed. The
other two also have significant government-held minority shares.
All three have remained relatively profitable throughout the global
financial crisis. Overall, barriers to foreign banks have gradually
been lowered, although a majority of bank board members must be
Singapore citizens and residents. Foreign firms compete
aggressively in insurance, fund management, and venture capital.
As of 2010, there were 120 commercial banks, of which 113 are
foreign banks. Singapore’s capital markets are well developed,
and banks are increasingly using complex derivatives for risk
management and hedging
Labor Freedom98.0 -0.9
Singapore’s labor market is highly flexible. The non-salary cost of
employing a worker is low, and dismissing an employee is not
burdensome. Regulations related to work hours are very
flexible..Facts about SINGAPORE:-
Population:
4.8 million
GDP (PPP):
$240.0 billion
-2.0% growth
4.0% 5-year compound annual growth
$50,523 per capita
Unemployment:
3.0%
Inflation (CPI):
0.2%
FDI Inflow:
$16.8 billion
ECONOMIC ANALYSIS OF THAILAND
• Thailand’s economic freedom score is 64.7, making its
economy the 62nd freest in the 2011 Index. Its score is 0.6
point better than last year due to gains in four of the 10
economic freedoms, including monetary freedom and labor
freedom. Thailand is ranked 10th out of 41 countries in the
Asia–Pacific region, and its overall score is higher The
Thailand economy has rebounded quickly from the recent
economic slowdown with strong export performance and
steady growth. An initial stimulus package focused on tax
measures, but a second wave provided income transfers,
subsidies for utilities and transport, and public investment,
increasing the deficit. Economic fundamentals remain
relatively solid, and the main challenges are to strengthen
investor confidence and move forward.

• Undermining the country’s investment climate and economic

potential, lingering political instability remains themajor
source of setbacks. Corruption remains significant, both in
the private and public sectors, and is oftenencountered in
connection with government procurement, customs, and
other business transactions.
• Background:-
• Thailand is a constitutional monarchy with a turbulent
political history. Since 1932, it has experienced 18 military
coups d’état—the latest in 2006. The government returned to
democratic civilian control in December 2007 and after a
year of political turmoil experienced a peaceful transfer of
power to the political opposition. That government was
toppled by military-supported street protests, and a pro-
monarchy, pro-elite government headed by Abhisit Vejjajiva
was installed. Demonstrations and protests have continued,
and political instability is undoubtedly having a negative
impact on economic growth. Mr. Abhisit’s government
 violently cracked down on street protesters in May 2010.
About 40 percent of the population is engaged in agriculture,
but a thriving manufacturing sector, including the
manufacture of such high-technology products as integrated
circuits, contributes significantly to export-led growth .
• Business Freedom69.9 -0.8
• The pace of regulatory reform has been sluggish in recent
years. Starting a business takes an average of 32 days,
compared to the world average of 34 days. Obtaining a
business license takes less than the world average of 18
procedures and 209 days. Bankruptcy proceedings are fairly
easy and straightforward.
• Trade Freedom75.9 no change
• Thailand’s weighted average tariff rate was 4.6 percent in
2006. Prohibitive tariffs, some import bans and restrictions,
services market access barriers, burdensome standards and
import licensing requirements, restrictive sanitary and
phytosanitary rules, preferential treatment for domestic firms
in government procurement bids, non-transparent customs
valuation, and weak enforcement of intellectual property
rights add to the cost of trade.
• Fiscal Freedom74.8 +0.1
• Thailand has a relatively high income tax and a moderate
corporate tax. The top income tax rate is 37 percent, and the
top corporate tax rate is 30 percent. Some small enterprises
are subject to a different rate on the lowest income band.
Other taxes include a value-added tax (VAT) and a property
tax..
• Government Spending 90.6 +0.8.
• In the most recent year, total government expenditures,
including consumption and transfer payments, held relatively
steady at 17.7 percent of GDP. Government intervention
persists, and privatization has suffered several setbacks. The
deficit is set to widen to 4.5 percent of GDP, though public
debt will remain sustainable
• Monetary Freedom70.8 +4.4
• Inflation has been low, averaging 1 percent between 2007
and 2009. The government controls the prices of more than
200 products; can set price ceilings for basic goods and
services; and influences prices through regulation, subsidies,
and state-owned utilities. Twenty points were deducted from
Thailand’s monetary freedom score to account for measures
that distort domestic prices.
• Investment Freedom40.0 no change
• The government prohibits majority foreign ownership in
many sectors and reserves certain professions for Thai
nationals. Investment regulations are complex, investment
laws are enforced inconsistently, and bureaucracy is non-
transparent. Residents and non-residents may hold foreign
exchange accounts, subject to some controls. Some foreign
exchange transactions, repatriations, outward direct
investments, and transactions involving capital market
securities, bonds, debt securities, money market instruments,
and short-term securities are regulated and face restrictions.
Foreign ownership of land is strictly controlled.

• Financial Freedom70.0 no change

• Thailand’s financial system has undergone restructuring in
recent years. The regulatory framework has been
strengthened. Under the 2008 Financial Institutions
Businesses Act, the Bank of Thailand (BOT) and the Finance
Ministry have eased restrictions on foreign ownership and
control of commercial banks. Foreign shareholders are now
permitted to retain a 49 percent stake in financial institutions.
Prior approval is still required for foreign ownership between
25 percent and 49 percent. The law also gives the BOT the
authority to allow foreign ownership above the 49 percent
limit if such action is necessary to support financial stability.
Credit is generally allocated on market terms. As of 2009,
there were 14 commercial banks, two of which are
 government-owned. Capital markets are relatively well
developed. The stock exchange is active and open to foreign
investors.
• Property Rights45.0 no change
• Private property is generally protected, but the legal process
is slow, and judgments can be affected through extralegal
means. Despite a Central Intellectual Property and
International Trade Court, piracy (especially of optical
media) continues. The government can disclose trade secrets
to protect any “public interest,” and there are concerns that
approval-related data might not be protected against unfair
commercial use.
• Freedom From Corruption34.0 -1.0
• Corruption is perceived as significant. Thailand ranks 84th
out of 180 countries in Transparency International’s
Corruption Perceptions Index for 2009. The Thai press
features frequent allegations of irregularities in public
contracts, most notably over the use of public lands,
procurement favoritism, and police complicity in a variety of
illegal activities. In December 2009, the Minister of Public
Health and Deputy Minister of Public Health resigned over
allegations of corruption in a medical supplies procurement
deal.
• Labor Freedom76.3 +2.7
• Thailand’s labor regulations are relatively flexible. The non-
salary cost of employing a worker is low, and dismissing an
employee is not burdensome. Regulations on work hours
have become less rigid.
FACTS ABOUT THAILAND:-
Population:
67.0 million
GDP (PPP):
$539.9 billion
-2.3% growth
2.5% 5-year compound annual growth
$8,060 per capita
Unemployment:
1.5%
Inflation (CPI):
-0.8%
FDI Inflow:
$5.9 billion
INDUSTRY ANALYSIS OF
CONSUMER DURABLE INDUSTRY
India Consumer Durables industry analysis
• Consumer Durables industry analysis, industry research
reports and Consumer Durables industry forecasts reports are
available in the list below. Browse and view Consumer
Durables industry analysis reports. We provide a range of
industry analysis reports covering the Consumer Durables
industry. The reports will help you understand the size of the
industry and the forecasted growth of the market. It will also
contain a competitor analysis of companies that operate in the
Consumer Durables industry. Please click the table of
contents to review the content that is in the report to ensure
that you are happy with the report prior to purchase

India Experiences Robust Growth in Consumer Durables

• Jul 05, 2010 The consumer durable industry in India is
witnessing healthy growth rate this summer on account of
high demand for refrigerators and air conditioners. The
Indian consumer durable industry is recording strong growth
due to substantial increase in the summer sales. The summer
has registered the highest rise in sales of air conditioners and
refrigerators, as reported by Business Standard. The industry
has posted 30% growth in Q1 2010 against the corresponding
period in 2009 (Q1 2009). The sales of display category
items such as Conventional Flat Panel Displays (LCDs, PDPs
and Flat screen TVs) also rose phenomenally in Q1 2010.
The sales of FPD registered growth of around 70% and AC
posted sales increase of nearly 50%. Besides, the sales of
home appliances surged by a healthy growth rate of
 40%. The main reason for uptrend in the sales of consumer
durables is strong consumer sentiments in the backdrop of
higher disposable income and the good performance of
domestic economy. Moreover, the consumer preference has
shifted towards products and devices that come with smart
technology, innovative design and sleek look. The demand
for technologically advanced devices has risen owing to the
benefits of making life easier and consume less
time. However, these has been an increase in prices of AC
and appliances due to high commodity prices such as copper,
steal, etc and hike in VAT by few state governments.
• Despite the prices increase, almost all the categories recorded
handsome growth. The Indian consumer durable industry has
experienced substantial changes for the last few years on
account of several factors. Among these factors, greater
affordability and changing lifestyle boom in housing and real
estate and commercial advertising have been the major
factors that bring revolution in the Indian consumer behavior
pattern. According to a research report “Global Consumer
Electronics Market Forecast to 2013”, by RNCOS, the Indian
consumer electronic industry represents immense growth
potential for years to come. The industry is expected to grow
at a CAGR of nearly 19% during 2010-2013 to US$ 9.5
Billion. A Senior Research Analyst at RNCOS said, “India
represents huge potential for the consumer durable industry
as the penetration level of many appliances is very low. For
example - the usage of refrigerator stands at around 18%,
washing machine (6%), microwave oven (about 1%) and air
conditioner (less than 2%). The low penetration of these
products shows a lucrative untapped market.”
• Description
• Indian consumer durables market used to be dominated by a
few domestic players like Godrej, Allwyn, Kelvinator, and
Voltas. But post-liberalization many foreign companies have
entered into India, dethroning the Indian players and
dominating the market. The major categories in the market
are CTVs, refrigerators, air-conditioners and washing
machines.

India being the second fastest growing economy with a huge

consumer class has resulted in consumer durables as one of
the fastest growing industries in India. LG and Samsung, the
two Korean companies have been maintaining the lead in the
industry with LG being the leader in almost all the categories.

The rural market is growing faster than the urban markets,

although the penetration level in rural area is much lower.
The CTV segment is expected to the largest contributing
segment to the overall growth of the industry. The rising
income levels, double-income families and increasing
consumer awareness are the main growth drivers of this
industry.

This report highlights the significance this industry has for

the Indian economy, throwing light on the pre and post
liberalization scenario. It discusses the important segments of
this industry and the growth patterns, trends and the demand
drivers. The report also profiles the key players of this
industry, with a discussion of their business strategies
 GROWTH
• The first of the 3 part dissertation series on “Growth
Strategies of LG Electronics India” presents a picture of the
consumer durables industry in India. The consumer Durables
industry consists of durable goods and appliances for
domestic use such as televisions, refrigerators, air
conditioners and washing machines. The consumer durables
industry can be broadly classified into two segments:
Consumer Electronics and Consumer Appliances. Consumer
Appliances can be further categorised into Brown Goods and
White Goods. The study plays a significant role in
understanding the reasons for LG’s entry into India, its
marketing strategies, growth strategies and finally, reasons
why it is the No 1brand in India in the consumer durables
industry.

The report speaks extensively on the spurt in consumer demand in

the last 5 years due to a large middle class population, rapid
growth in disposable income, changing socio-economic conditions
& favourable economic conditions
• Several key trends are driving growth in the sector

Income growth and availability of financing

• Disposable income levels are rising and consumer financing
has become easier
Increased affordability of products
• Advanced technology and increasing competition are
narrowing the price gap and the once expensive appliances
are becoming cheaper
Increasing share of organised retail
 • Urban and rural markets are growing at the annual rates of
7%–10% and 25%, respectively, with organized retail
expected to garner a 10% share by 2010 from a mere 3%
share at present
Entry of heavyweight retail players is increasing competition
• Competitive evolution of organised retail due to the entry of
heavyweight players like Croma, E Zone.

Investment oppurtunities
• Advantage India
India is a major hub for all businesses and consumer goods is
the most emerging sectors in India. As a business hub India
provides a better advantage of setting up business due to both
federal policies and consumer markets. With increase in
mobile factors of production the availability of labour is
creating opportunities for Multi nationals. Another
advantage in India as a business destination the currency. The
rise in currencies lead to higher productivity resulting in
increased purchasing power.Another factor influencing the
business atmosphere is the India's federal system of
Government with clear line of powers within the state and the
Central Governments.

Apart from these India provides a liberal, attractive, and

investor friendly investment climate. India has the most
liberal and transparent policies on foreign direct investment
(FDI) among major economies of the world. India is among
the top 10 FDI destinations.In addition to all this Government
of India accords high priority to development of
infrastructure in highways, ports, railways, airports, power,
telecom..

Advantage India at a Glance

• General
• A stable Government with second stage reforms in place
• Well established corporate ethics
• Major tax reforms including implementation of VAT
• Strengths : Indian FMCG Sector
• Well-established distribution network extending to rural
areas
• Strong brands in the FMCG sector
• Low cost operations
• Opportunities
• Large domestic market
• Export potential
• Increasing income levels will result in faster revenue growth
• Returns and Investments
• $130 billion-plus investment in infrastructure by year 2010
• $ 10 billion FDI in infrastructure development and capital
market by year 2008
• Stock market rose by nearly 40 per cent in 2005; foreign
investors are flooding
• Market
• India has the largest young population with over 890 million
people below 45 years of age
• 600 million-plus consumers by year 2010
• 550 million-plus people under the age of 20 by year 2015
• 70 million-plus people earn over Rs.8,00,000 ($18,000) a
year - number to rise to 140 million by year 2011
• Consumer Spending Pattern
• In India the Total Consumer Spend was Rs.20,00,000 crore
($445 billion) in the year 2005
• Size of Retail market Rs.10,50,000 crore ($233 billion);
• Organised Retail sector is worth Rs.35,000 crore ($8 billion)
• Leading retailers' sales growth (2005): 50-100%
• India is the fourth largest economy in terms of purchasing
power
• A consumer market of 1.02 billion
• A growing middle class of over 400 million with increasing
purchasing power
• FDI and Global Retailers
• 51% FDI allowed in single brand retailing
• FDI laws relatively liberal in wholesale trade
• Metro AG and Shoprite already operational
• More foreign retailers eyeing possibilities in wholesale
• Tesco, Carrefour and Wal-Mart expected to operate soon
• Woolworths (Dick Smith Electronics - durable retail arm)
entering through a JV with the Tata conglomerate
• Foreign Exchange Controls
• Rupee is freely convertible on current account
• Rupee is almost fully convertible on capital account for non-
residents
• For FDI- Profits earned, dividends and proceeds out of the
sale of investments are fully repatriable
• There are some restrictions for resident Indians on capital
account on incomes earned in India

CONCLUSION
• Consumer durables goods rose by 23 percent and even
non-durables grew by seven percent, indicating the
strength in the GDP growth numbers. The higher credit
cost due increase in rates has not dampened factory
output and production of consumer goods.

Credit growth too has also been above the central bank's
target. The Economic Survey has projected a nine percent
economic growth in 2012 as compared to 8.6 percent
estimated growth in 2010-11. The RBI expects India's
GDP growth rate to remain in the range of around 8.6
percent in this financial year.
Improved government response on supply side issues can
further limit downside risks to growth. Despite all
positive indications from the GDP numbers, the RBI
recognises the increasing risks to GDP growth, going
forward. Hence, based on the current and evolving
growth and inflation scenarios, will continue with
thecurrent anti-inflation stance .
 Logistics industry in India

• Logistics industry in India is an industry that has not

achieved its much deserved attention or recognition. It is an
area that is ripe with potential and yet the resources are far
from complete utilizations. There is however a huge demand
for logistic services in India especially with the growth of the
Indian economy along with the influx of new companies in
sectors that was otherwise unknown. Estimated at a value of
$14 billion US dollars this industry is slated for another 9%
to 10% growth in the years to come.

Purpose of Logistics Industry

The purpose of logistics industry is to enable an effective

transportation or timely movement of goods from one place
to another. This could be for the purpose of industrial
transportation or even private purposes.

• Purpose of Logistics Industry

The purpose of logistics industry is to enable an effective

transportation or timely movement of goods from one place
to another. This could be for the purpose of industrial
transportation or even private purposes.

Different mediums of Logistics services in India

•

There are three mediums of logistics services in India. These

can be categorized in the following way:
• Air freight – this is a modern and the safest mode to ensure a
fast delivery of goods. A chosen one by many because of the
swiftness of the system there are many companies that are
now even providing super fats deliveries by airways even on
the same day.
• Land transport – this is a means of logistics support that has
withstood the test of time through the extensive network of
roads in India. It has been the popularly used method and
used especially in the shipments of heavy articles like
machinery and vehicles. This is also a chosen method in case
of household packers and movers.
• Railways – this is also an age old method of shipments and
transport. Though most used in case of domestic services this
is very effective in the availability of cost effective logistics
support in India.
• Waterways – an essential part of this industry this is also one
of the oldest methods. Shipments and transportation of goods
is done on an international basis through this way. It is apt in
case of shipments of oil, highly sensitive or volatile articles
like Uranium.
• Key players of the Logistics industry in India
•
Among the key players of the Indian logistics industry there
are certain international names along with national
companies that are not only world leaders in the field but are
also part of the Indian industry for a long time now.
• DHL – a very commonly known name in the Indian logistics
industry, DHL has been part of the industry for a long time
now. Established in San Francisco in the 1969 DHL has
grown across 220 countries with over 300,000 employees. It
has built a reputation over the years as a responsible logistics
support air, ocean, express freight and overland transport,
contract logistic solutions.
• TNT – this is an international brand that has been a part of
the Indian market also. Established at Netherlands, TNT is a
 reliable name in the arena of international transportation and
distribution business. Spread across 200 countries it has an
estimated revenue turnover of $ 3,500 billion US dollars.
• AFL – this is one of well known international players in the
logistics industry of India. The main areas of service by the
company are in the area of logistics and warehousing along
with Courier Company and custom consultant.
• BLUE DART – this is one of the premier companies in the
field of logistics. The company has a huge network linked
with the most advanced communication systems. Blue Dart
handles large and oversized packages and stands for an
overnight delivery of such goods.
• GATI – one of the pioneering companies in the field of
logistics. This is one the companies that have taken several
initiatives to implement modernization in the area of
logistics. With a turnover of Rs. 576 crores this company
believes in setting new standards of customer service.
• DTDC – this company spreads over 3700 locations within
India and 240 international places. The company is a leading
name in low cost shipments along with timely delivery

• ASHOK LEYLAND – this is an established name in the

manufacture of trailer trucks and heavy vehicles in India. It
has come up with a new venture in Ashley Transport
Services Ltd. in the area of information exchanges and the
business of freight contractors along with integrated logistics
services.
• FIRST FLIGHT – this is an Indian company that has
domestic, international and many other programs of multi
tracking technologies.
• AGARWAL PACKERS AND MOVERS – this is a
popular name in the field of logistics companies of India.
Services like shifting, transport of cars, and all other forms of
quality packing and transportation this is a name that has
 over the years become synonymous with quality and
assurance.
Future of Logistics - The Indian Scenario
• India’s logistics sector attracted investments worth Rs.
23,200 crore in first half of 2008,
• according to a study by Assocham. It outclassed some of the
major sectors including aviation (Rs 20,890 cr), metals and
mining (Rs 8500 cr) and consumer durables (Rs 6000 cr)
among others.
• Among the factors cited by analysts for the rapid growth of
Indian logistics include the growth of organized retail
industry, commodity markets, growth in manufacturing and
development of Special Economic Zones. (SEZ).
• According to a report by Cushman and Wakefield, real estate
consultants, Indian logistics industry is expected to grow
annually at the rate of 15 to 20%, reaching revenues of
approximately $385 bn by 2015. Market share of organized
logistics players is also expected to double to approximately
12% during the same period.
• The report said about 110 logistics parks spread over
approximately 3,500 acres at an estimated cost of $1 bn are
expected to be operational and an estimated 45 mn sq ft of
warehousing space with an investment of $500 mn is
expected to be developed by various logistics companies by
2012.
• A large number of upcoming SEZs have necessitated the
development of logistics for the
• domestic market as well as for global trade.
• Mumbai, Kolkata, Chennai and Hyderabad have become
preferred locations for logistics parks. These locations are
characterized by excellent port, rail, and road connectivity
and are witnessing significant investment in infrastructure.
 Eight logistics parks with an approximate investment of $200
mn is 600 acres of land around Mumbai.
• According to industry analysts, almost all logistics players
are in the process of setting up warehouses, container freight
stations, inland container depots, logistics parks, distribution
centres and other facilities to tap the trade opportunities
fuelled by revolution in the retail, ports etc.
• Demand for warehouses and logistics services are expected
to accelerate further due to increase in foreign trade and the
upcoming Maha Mumbai Special Economic Zone.
Warehouse rentals in Panvel are expected to increase by 15
to 20% over the next two years.
• Proximity to textile and auto-component industry clusters and
other manufacturing units has made Kolkata a major
economic centre. Ten Special Economic Zones (SEZs) in the
proximity of Kolkata have received in-principal approvals.
This will result in major demand for logistics in this region.
• There are plans for 4 logistics parks spread across
approximately 400 acres. Centers like Haldia, Falta, Pargana,
Dankuni, Kharagpur, Bantala and Durgapur are expected to
witness substantial logistics activities in the near future.
• Five logistics parks are being set up in Hyderabad, spread
across 220 acres and approximately
• 10 mn sq ft of warehouse space coming up by 2012. It scores
high as a logistics destination as it provides excellent
connectivity to large markets in southern and western India
and has established clusters of textile and engineering firms,
as well as an important centre for the pharmaceutical
industry.
ESTIMATE OF BUSINESS SPACE IN
LOGISTICS SECTOR
• Type of Infrastructure Estimated nos./demand
Investment Needed
•
• 1 ICD/ FTWZ 50 nos. 7500

• 2 Air Cargo Centers 1.50 lac sq.m. 300

•
• 3 Agro Warehouse 35 mn. 600

• 4 Integrated Transport Centers15 nos.

4875
• Total Investment needed (approx.) 13275

CONCLUSION
• Another important factor is the opportunity for big ticket
investments into the logistics infrastructure. While India has
been lagging behind in terms of transportation links, the
Government is now betting big on public-private partnership
projects (PPPs) for the development of highways, port
connectivity, dedicated freight corridors and establishment of
free trade warehousing zones (FTWZ). The state-run
profitable Indian Railways plans to set up multi-modal
logistics parks and is inviting private players to join hands.
DHL has just announced an investment of USD 10 million to
set up a warehousing facility in the upcoming FTWZ in
Chennai. Many such areas are opening up, that offer huge
investment potential.
• While the issues of weak infrastructure, poor connectivity
and complex tax regimes have bogged down the shippers and
3PLs alike in the past, the long term outlook is strongly
positive for this industry. As a testimony to the market's
potential, a recent study by UK-based Transport Intelligence
found that India tops the emerging markets as an attractive
destination for foreign investment, which has been attributed
to its size and growth prospects. In short, the time is now ripe
for Logistics 2.0 to take off in India.
• As Indian corporate houses are increasingly realising the
importance of logistics in moving their products across the
country, new business opportunities are emerging for
providers of e-Logistics services, or vehicle tracking systems.
• Currently, the number of vehicles equipped with such
tracking devices is very few. The number of companies that
provide such solutions are also very few in numbers. But,
industry experts feel, the scene is set to change soon, as more
companies would jump on to the bandwagon and new
tracking devices fill the logistics market.