IBE _ Project Report _ India in Global Settings_Group1_v2 (1)

7/24/2019 IBE _ Project Report _ India in Global Settings_Group1_v2 (1)

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Indian Institute of ManagementLucknow (Noida Campus)

India in Global Context

A Case Report

ubmitted !"# $M% (Group &)

(2014-17, Term 5th)

This Report is submitted on 29thof August 2015 at 1700 Hours to facilitate the project

requirement of the course International Business Environment.


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Submitted to: Prof. K.L Chawla

'eclaration

Group %articipants#

Abhinav Ramaria ( WMP100! "

Abhi#he$ %ain ( WMP100& "


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An#hul 'erma(WMP100"

A#huto#h Mathur ( WMP100)* "

+iv,a ( WMP100)) "

S,ed -uail /a#an ( WMP100&! "

able of Contents

Contents

eclaration!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!2

Table of "ontents!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #

"ontents!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! #

$ntroduction!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! %

&lobal 'conom( ) An Anal(sis!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5

*rospects for the +orld econom( in 2015)201, - &lobal gro+th prospects!!!!!!!!!!!!5

.ajor "hallenges /aced b( orld 'conom(!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

h( &o &lobal!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 9

The need to capture ne+ marets!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 9

The need to e3pand capabilities and assets!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10

The need to e3pand product or ser4ice portfolio!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11

The pressures of domestic competition!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11

$ndias +a( for+ard!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12


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6ooing for+ard to+ards 2050!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12

An $ntegrated approach!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1%

References!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!19

Introduction

Every man lives by e!han"in"*

+,, Adam mit-

'4er since the e4olution of manind man is e3changing the goods and ser4ices in some form or

another! The economic histor( of the +orld is a record of the economic acti4ities 8i!e! the

production distribution and consumption of goods and ser4ices: of all humans spanning both

recorded histor( and e4idenced prehistor(! The conte3t of the trade re4olution +as increasing

+ith the changing times and the human ci4ili;ation +as leading to the path of global e3changes!


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orld trade re4olution started +ith the passage of time in the earl( modern era +hen man(

4o(agers lie "hristopher "olumbus opened up ne+ opportunities for trade +ith the ne+ +orld!

The economic gro+th in the modern sense


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Co let us e3amine the current maret situation the problems and challenges faced b( the +orld

economies in general!

Global .conom" / An Anal"sis

%rospects for t-e world econom" in 01&2/01&3 4 Global growt- prospects

The global econom( continued to e3pand during 201% at a moderate and une4en pace as

the prolonged reco4er( process from the global


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The other trac leads bac to+ards recession! *roblems that ha4e been stored up since 200F-09

can be contained no longer! A


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lea4ing man( resource dependent countries scratching around to pa( their bills and ser4ice

mountainous foreign currenc( debts! $n Gapan +hose econom( lie "hinas is similarl(

dependent on in4estment and e3ports Jionomics is also struggling to counter the e@ects of the

"hinese slo+do+n! &reece ma( ha4e achie4ed a sta( of e3ecution but 'urope as a +hole

remains engulfed b( a political and economic crisis of almost biblical proportions +ith no sign of

the shift in political attitudes necessar( to sol4e it! The main Anglo Ca3on economies are at least

gro+ing but in both Jritain and the EC these are manufactured reco4eries still hea4il(

dependent on rising consumption and record lo+ interest rates! Jritains near ,pc current

account de


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Global %o9ert" - *o4ert( reduction is a major goal and issue for man( international

organi;ations such as the Enited =ations and the orld Jan! The orld Jan estimated 1!29

billion people +ere li4ing in absolute po4ert( in 200F! Df these about %00 million people in

absolute po4ert( li4ed in $ndia and 17# million people in "hina! $n terms of percentage of

regional population sub-Caharan Africa at %7L had the highest incidence rate of absolute

po4ert( in 200F! Jet+een 1990 and 2010 about ,,# million people mo4ed abo4e the absolute

po4ert( le4el! =e4ertheless gi4en the current economic model built on &* it +ould tae 100

(ears to bring the +orldIs poorest up to the standard po4ert( line of M1!25 a da(! $t has been

argued b( some academics that the neoliberal policies promoted b( global


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and saturated it often pro4es diBcult for $ndian companies to gain maret share +ithout

acquisitions! $n line +ith this trend the more de4eloped economies of Cingapore Hong Kong and

Couth Korea together account for %0 percent of the cross-border acquisitions conducted b( $ndia

+ithin Asia in the


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resources +ill pro4e a major challenge for $ndia +hich cannot begin to match its neighbors

state-le4eraged


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unrecogni;able from that of a decade ago some companies still loo outside $ndia to a4oid

domestic obstacles! $ndian pharmaceutical companies for e3ample often prefer to carr( out

certain stages of clinical trials in de4eloped marets because of the lag times that are inherent

in $ndias bureaucratic processes despite the other cost ad4antages of eeping them in $ndia!

India;s wa" forward

Looking forward towards 0121

.ost gro+th scenarios for the future are based on an e3trapolation of gro+th from the past! $n

attempting such projections most e3ercises assume that gro+th rates in "hina and $ndia as also in the

industriali;ed countries +ould remain at le4els obser4ed in the recent past! Df course it is Russia rather

than Couth Africa that is an integral part of projections for and scenarios in 2050! And e4en if Couth

Africa has some potential it is not (et on a trajector( of rapid economic gro+th!

The construction of future scenarios began +ith the &oldman Cachs stud( +hich attempted to project

le4els of &* and &* per capita for Jra;il Russia $ndia and "hina 8JR$"s: in 2050! The e3ercise is

based on a simple model of capital accumulation and producti4it( gro+th combined +ith demographic

projections! The broad conclusions of the stud( are as follo+s - $n 2000 the &* of these four economies

+as less than 15 per cent of the &* of the &-, EC Gapan &erman( EK

/rance and $tal(! J( 2025 in terms of &* the JR$"s +ould be more than 50 percent of the &-,! And in

20%0 the JR$"s economies together +ould ha4e a larger &* than the &-,! $n terms of &* each of the

JR$"s economies +ould o4ertae each of these &-, economies e3cept the EC b( 20%0! And b( 2050 of

the &-, onl( the EC and Gapan +ould remain among the si3 largest economies in the +orld! $t is


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estimated that about t+o-thirds of the increase in &* of the JR$"s measured in EC dollars +ould come

from real gro+th +hile the remaining one-third +ould be attributable to currenc( appreciation! The catch-

up of JR$"s is e3pected to be most dramatic until 20#0!

Thereafter gro+th in JR$"s +ould also slo+ do+n and onl( $ndia might ha4e gro+th rates higher than #

per cent per annum in 2050! The catch-up +ould be less in terms of &* per capita! Dn a4erage +ith

the e3ception of Russia citi;ens in the JR$"s are liel( to be poorer than citi;ens in the &-,! $t needs to

be stressed that the projected gro+th path for the JR$"s e4en in the &oldman Cachs stud( depends on

critical assumptions about policies and institutions as also the capacities of these countries to resol4e

their problems so that outcomes are neither predictable nor certain! $n a more sophisticated e3ercise for

$ndia that uses simple con4ergence equations Robert Ro+thorn 8200,: projects that in 2050 at

purchasing po+er parit( per capita income in $ndia +ould be %5 per cent of per capita income in the

Enited Ctates! $t is also projected that $ndia should comfortabl( o4ertae the Enited Ctates in &*

measured at purchasing po+er parit(! This catch-up is not con


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$n principle "hina and $ndia ma( be able to sustain high rates of economic gro+th for some time to come

for the follo+ing reasons! Jra;il ma( also be able to attain high rates of gro+th for similar reasons

although their relati4e importance ma( be di@erent! /irst their population si;e is large and income le4els

are lo+! Cecond their demographic characteristics in particular the high proportion of (oung people in

the population +hich +ould mean an increase in the +or force for some time to come are conduci4e to

gro+th! Third in "hina and $ndia more than in Jra;il +ages are signi


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$n order to further bring do+n the current account de


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ser4ices major participation is in business ser4ices mainl( dri4en b( the use of $ndian intermediaries in

the e3ports of other countries! *olicies are no+ being undertaen to encourage $ndian producers to

capture higher 4alue from &O"s so that the( mo4e up the 4alue chain b( performing 4alue added

acti4ities!

The gain from &O"s depends upon the 4alue a countr( creates in &O"s! $ndia speci


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$n $ndia agricultural-producti4it(-led gro+th occurred in one major historical period the &reen

Re4olution dating from 19,5-,, to the earl( 19F0s! The &reen Re4olution +as centered on short-

stemmed high-(ield +heat and to a lesser e3tent padd( rice +ith both crops depending on irrigation

and intensi4e application of fertili;er! $n short not onl( is a second &reen Re4olution needed but it is

needed in the hugel( populated states of Ettar *radesh Jihar .adh(a *radesh and Drissa! ith the

right polic( frame+or and incenti4es in place +e belie4e indi4idual states can tae the lead and set an

e3ample b( using the right mi3 of modern agricultural techniques along +ith eBcient +ater resource

management and region speci


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Growt- and rade ($orld and $


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+as noti


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autonomous regime of $ndia20 suggesting that +hile commitments on ser4ices go be(ond its &ATC

commitments $ndiaIs applied regime remains more liberal!

TD +as formed on 1 Gan 1995! $t too o4er &ATT 8&eneral agreement on tari@ N trade:! $n Fth round

of &ATT popularl( no+n as Erugua( Round member nations of &ATT decided to set up a ne+

organi;ation Iorld Trade Drgani;ationI in place of &ATT! A /orum +here member countries met from time

to time to discuss N sol4e +orld trade problems! $t 'njo(s identical legal status pri4ileges $mmunities

that the +orld ban N $./ get!


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.


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Trade *olic(-.aing!

Cettling trade related disputes among member nations +ith the help of its ispute Cettlement

Re4ie+ing trade related economic policies of member countries +ith help of its Trade

*olic( Re4ie+ Jod( 8T*RJ:!

*ro4iding technical assistance N guidance related to management of foreign trade N


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sectors the( are +illing to open to foreign competition and ho+ open those marets are!

RI%

The TDIs intellectual propert( agreement amounts to rules for trade and in4estment in ideas

and creat i4it(! The rules state ho+ cop(rights patents trademars geographical names used

to identif( products industrial designs integrated circuit la(out-designs and undisclosed

information such as trade secrets intellectual propert( should be protected +hen trade

is in4ol4ed! $n =utshell the TR$*s Agreement co4ers 7 categories of intellectual propert( !

'I%8. .L.M.N ?.M

The TDIs procedure for resol4ing trade quarrels under the ispute Cett lement Enderstanding

is 4ital for enforcing the rules and therefore for ensuring that trade o+s smoothl(! "ountries

bring disputes to the TD if the( thin their rights under the agreements are being infringed!

Gudgments b( speciall(- appointed independent e3perts are based on interpretations of the

agreements and indi4idual countriesI commitments!

$< AN' IN'IA

Introduction

After o4er 7 (ears of negotiations the Erugua( Round multilateral trade negotiations +ere

concluded on ecember

199# and +ere formall( rati


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The TD Agreement on Agriculture contains pro4isions in # broad areas of agriculture!

1! .aret access!

2! omestic support!

#! '3port subsidies!

MAR@. ACC.

This includes tariBcation tari@ reduction and access opportunities! TariBcation means that

all non- tari@ barriers such as

1! Puotas!

2! Oariable le4ies!

#! .inimum import prices!

%! iscretionar( licensing!

5! Ctate trading measures!

'


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B'I *#TI+* T'E B#* !raBil Russia India C-ina out- AfricaJR$"C is international political organi;ation of leading emerging economies its /i4e members are

all de4eloping and ne+l( industriali;ed countries!


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/all in the number of people li4ing belo+ the po4ert( line "onsumer maret of o4er 1%0 million people

,FL of people comes under middle income group Highl( educated +orforce Third largest e3porter of steel and aluminium

India

1!2 billion *eople 2nd largest labour force Holds second place follo+ed b( "hina in JR$"C emocratic countr( Jroad no+ledge econom(!

C-ina

1F

Th

fastest gro+ing econom(

Third largest countr( in land si;e

Jiggest of all JR$" nations &* +ise

1#L of people comes under middle income group

Holds more than M# trillion fore3 reser4es!

6argest e3porterQ importer for #2 and #% countries respecti4el(!

"heap labour +or force

out- Africa

The Couth African econom( is no+ the 2#rd largest in the +orld

$nation is belo+ ,!,L and falling!

25L of goods produced in Couth Africa are for e3port

Richest in terms of its mineral reser4es!

#


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rade between !raBil Russia D Rest of !RIC

%


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rade between India C-ina D Rest of !RIC

!RIC / 'e9elopments

Russia

5


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Treasur( bonds ) no+n as D/Ss

6arge sporting e4ents!

"hina

Recent reforms b( the "hina securities and regulator( "ommission 8"CR": ha4e sough

to bolster in4estor con


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7


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F


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Growt- rate of new business formation

&ap bet+een the &7 nations and JR$"C economies narro+ed in 201# according to research! JR$"C had a rate of o4er se4en times greater than the &7 countries from 2007-2011 postin

a 5!F percent "ombined Annual &ro+th Rate 8"A&R: 4ersus a 0!F percent increase b( the &7 $n 2012 the JR$"C rate +as %!9 percent generating 1!2 million ne+ businesses N &7s +a

1!9 percent adding 5#1000 companies! "hina gre+ at 9!1 L! Jra;il gre+ b( #!% L! /rance e3hibited the fastest rate of 1,!7 L! $tal( declined b( 0!# L and "anada dropped b( 1#!, L!

The report indicates that +ell targeted go4ernment inter4entions can boost the sur4i4al rateof startup companies that require time and capital to translate their competiti4e assets int

sustainable gro+th!

6uture %rospects

Custainable solution for inclusi4e gro+th

Jroadening multi-dimensional co-operation

9


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.utual Trade and $n4estment

=e+ e4elopment Jan 8JR$"C Jan:

6ending for $nfrastructure projects Aid to other small economies

"ontingent Reser4e Arrangement

'3port "redit N &uarantee Agencies

Cigni


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Rising Middle Class

Infrastructure In9estments

11


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!RIC / C-allenges

'e9elopment of !RIC bank Reducing t-e ruralEurban income gap

Maintaining macroeconomic stabilit"

Inade7uate 6inancial reforms

Managing uppl" C-ain

12


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Conclusion

Conclusion $t is possible that "hina could become as big as the EC b( 2027

$ndia and Russia +ill indi4iduall( be larger than Cpain "anada or $tal( b( 2020 J( 2025 JR$"C +ill be o4er half the si;e of the &7 6ong-term projections JR$"s could account for almost 50L of global equit( marets b( 2050 Df the current &7 onl( the EC and Gapan ma( be among the se4en largest economies in E

dollar terms in 2050

J( 2050 the largest economies in the +orld 8b( &*: ma( no longer be the richest 8bincome per capita:

1#


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References#

1: $nternational Jusiness 'n4ironment and Dperations ) 12th'dition ) Gohn! ! aniels

6ee H! Radebaugh U aniel *! Culli4an U *rashant Cal+an2: httpQQ+++!un!orgQenQde4elopmentQdesaQpolic(Q+espQ+espVarchi4eQ2015+espVchap1!pdf#: httpsQQen!+iipedia!orgQ+iiQ'conomicVhistor(VofVtheV+orld%: httpQQner!sagepub!comQcontentQ225Q1Q/2!abstract5: httpsQQ+++!imf!orgQe3ternalQnpQspeechesQ201%Q10021%!htm,: iscussion *aper =o! 200FQ05 "hina $ndia Jra;il and Couth Africa in the or

'conom(! 'ngines of &ro+th eepa =a((ar Gune 200F7: The &lobal 'conomic Cituation and $ndias '3ternal CectorF: $=$AC '"A' D/ 'O'6D*.'=T 6DDK$=& JA"K AT TH' 6ACT 10 W'ARC A=

6DDK$=& /DRAR TD TH' ='XT 20 =irupam Jajpai and Ge@re( ! Cachs "&" U C

oring *aper =o! # Gul( 2011 DRK$=& *A*'RC C'R$'C "olumbia &lobal "ente

U Couth Asia "olumbia Eni4ersit( '3press To+ers 11th /loor =ariman *oint .umb

%00021 globalcenters!columbia!eduQsouthasiaQ

1%
http://www.un.org/en/development/desa/policy/wesp/wesp_archive/2015wesp_chap1.pdfhttps://en.wikipedia.org/wiki/Economic_history_of_the_worldhttp://ner.sagepub.com/content/225/1/F2.abstracthttps://www.imf.org/external/np/speeches/2014/100214.htmhttp://www.un.org/en/development/desa/policy/wesp/wesp_archive/2015wesp_chap1.pdfhttps://en.wikipedia.org/wiki/Economic_history_of_the_worldhttp://ner.sagepub.com/content/225/1/F2.abstracthttps://www.imf.org/external/np/speeches/2014/100214.htm


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IBE _ Project Report _ India in Global Settings_Group1_v2 (1)

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