India Country Report

INDIA COUNTRY REPORT 2017

FASM 420

AMELIA SANDA

CONTENTS

HISTORY LOCATION COUNTRY STABILITY STATE OF INDUSTRY TRANSPORTATION & PORTS

SHIPPERS & SUPPLIERS

INDIAN ETIQUETTE RISKS & BENEFITS

HISTORY 1858 1947

British rule comes to an end. The continent split into two nations: a hindu-majority India and a Muslim majority Pakistan. The two had widespread hostility for decades that resulted in war during 1948, 1964 & 1971.

1998

India conducts underground nuclear tests which leads to the U.S. imposing economic sanctions that remained until 2011.

2011

India takes the lead over China as the world’s largest importer of arms.

After an unsuccessful rebellion India comes under direct British rule.

1991

An attempt at opening the Indian economy to global trade occurs.

2006

With the goal of lifting around 60 million families out of poverty, India launches their largest rural job scheme.

2014 A monumental deal is announced between India and China that implies China will invest $20 billion in India over the next five years with the construction of two industrial parks.

CURRENT NEWS Steady relations with china despite differences on issues such as Bejing’s blocking of New Delhi’s efforts to get Jaish-e-Mohammed chief Masood Azhar proscribed the UN were agreed upon Tuesday February 21, 2017. Issues with India’s current in-use emission testing has recently become a topic of discussion. The current control program is said to be ineffective. India is also witnessing its highest voter turnout at 55% in 25 years concerning the Birhanmumbai Municipal Corporation. Officials from the UK and India have held discussions on extradition and mutual legal assistance. They have been having detailed talks about the deportation and extradition of “wanted” suspects from either country. India has requested to extradite 60 people and the UK has asked the same for 17 people.

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LOCATION Bordering the Arabian Sea and the Bay of Bengal, India is located in the southern most part of Asia, between Birman and Pakistan.

GOVERNMENT Type: Democracy Capital: New Delhi Head of State: Pranab Mukherjee Head of Government: Narendra Modi

IMPORTS

crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals, plastic

MONEY Currency: Indian Rupee GDP: 8.7 Trillion

GDP Growth Rate: 7.4% Inflation: 5.6%

EXPORTS petroleum products, precious stones, iron and steel, chemicals, vehicles, apparel, cereals and pharmaceutical products, cotton, silk, polyester

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COUNTRY STABILITY

SOCIAL Population: 1.26 billion Language: 41% Hindi Religion: 79.8% Hindu Ethnic Groups: 72% Indo-Aryan Median Age: 27.6

India is one of the top largest countries with a population of 1.26 billion. Located in Southern Asia, India consists mainly of IndoAryan’s, however the country also consists of Dravidian and Mongoloid decent as well as others. Hindu is the main religion practiced in this area at a steep 79.8% but there are other religions practices as well, including Muslim, Christian and Sikh. Along with a diverse group of ethnicities and religions they also have a vast array of languages spoken in the area. Hindi is the most common language you would encounter; however, you could also come across these languages as well, Bengali, Telugu, Marathi, Tamil, Urdu, Gurjarti, Kannada, Malayalam, Oriya, Punjabi, Assamese and Maithili.

In this country, we see an age breakdown of 27.7% of men and women are between the age of 0-14, 17.99% are between the age of 15-24, 40.91% are between the age of 25-54, 7.3% are between the age 55-64 and 6.09% are 65+ years old. The median age is totaled at 27.6 years old, for men it is 26.9 years old and for women it is 28.3 years old. The life expectancy for India is totaled at 68.5 years old, Men at 67.3 years old and women at 69.8 years old. The birth rate is 19.3 births/1,000 population and the death rate is 7.3 deaths/1,000 population.

The GDP of India is currently 8.7 Trillion, 3.8% of that is taken up by education expenditures. India’s literacy rate is at 71.2% with men at 81.3% and women at 60.6%. School life consists of primary-tertiary education with a total of 12 years as the median, male at 11 years and female at 12 years. Education is a top political issue in India and has been the cause of most social unrest recently with the Jat and Patel demand for reservations in education and government jobs. Other issues of social unrest include cyber insecurity and crime.

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TECHNOLOGY

Facebook: 33%

YouTube: 33%

WhatsApp: 28%

India is a leader in the field of science and technology in the world positioned as one of the top five nation sin the field of space exploration. It is considered the third most attractive investment destination for technology transactions. The analytics industry of India is projected to reach up to $16 billion by the year 2025 from the current $2 billion, as per the National Association of Software and Services Companies. India houses some of the youngest entrepreneurs in the technology industry throughout the world at an average age of 28 years olds

India is considered the second most connected nation in comparison to China. There was an estimated 169 minutes per day of smart-phone usage in 2015.

Internet users in the past year have been measured at 325.4 million, making up 26% of the population. Social media is a huge outlet used across India. The top three main platforms in use are YouTube at 33%, Facebook at 33% and WhatsApp at 28%.

India is assertively working towards becoming a leader in industrialization and technological development. It is likely that India will have significant developments in the nuclear energy sector.

The use of nanotechnology is projected to have a hand in transforming the Indian pharmaceutical industry. Agriculture will also be transforming due to the government considering more technology-driven Green Revolution. They aspire to be placed among the world’s top five scientific powers.

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ECONOMY GDP: 8.7 Trillion Budget Revenue: 200.01 billion Budget Deficit: 3.7% Inflation: 5.6%

Currency: Indian Rupee

India has quite a diverse economy that includes traditional farming, handicrafts, modern industries and services and modern agriculture. A little less than half of the workforce is works in agriculture. Services are India’s major source for economic growth with nearly two thirds of output but only one third of the labor force works in this area.

India is slowly turning into an open- market community, however some of its past selfsufficient polices remain.

India’s labor force is 513.7 million with 17.39% in agriculture, 30.01% in industry, 52.6% in services and 16.09% in manufacturing. Other common industries within India include, textiles, chemicals, food processing, steel, transportation, equipment, cement, mining, petroleum, machinery, software and pharmaceuticals. Unemployment rate stands at 8.4%, this number has dropped over the years due to the implementation of the Employment Guarantee Scheme that was put in place in 2006. Child labor is considered under the age of 15 and is currently at 12% in India.

India’s GDP is at 8.7 trillion and has a growth rate of 7.4%. The public debt sits at 52.3%. Their budget revenue is at $200.1 billion and the budget deficit is 3.7%. There is an inflation rate of 5.6% and a currency exchange rate of 66.3. India uses the Indian Rupee as their form of currency. One Indian Rupee is equal to 0.015 American dollars. Long term growth does have potential in India due to a young population, healthy savings and investment rates, and increasing integration into the global economy. However, they still face challenges in regards to availability of higher education, limited non-agricultural jobs, inefficient enforcement of IPP rights and discrimination against women.

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ENVIRONMENTAL North India: Cold and snowy South India: Hot with droughts South India: Monsoonal rain and sever thunderstorms

India is a little over one third of the size of the United states, much of the land, 60.5%, is used for agricultural purposes. The climate varies from area to area. In the south they have a tropical monsoon climate that is hot and in the north, a more temperate climate with snowfall in the mountains. In most of India the summers are very hot and begin in April and last through October. The plains in the north typically have a cold spell that lasts December through January. The terrain varies as well. In the south it is upland plain, flat to rolling along the Ganges, desert in the West and Himalayas in the North. In most of India the summers are very hot and begin in April and last through October.

India has the fourth largest reserves in the world for coal along with an abundance of other natural resources. These recourses include iron ore, manganese, mica, bauxite, titanium, chromite, natural gas, diamonds and limestone.

The country is faced with natural disasters throughout the year that have the potential to be devastating. Natural disasters include drought, flash floods, widespread destructive flooding from monsoonal rains, severe thunderstorms and earthquakes. India also faces a multitude of current issues such as deforestation, soil erosion, overgrazing, air pollution, water pollution, tap water not potable throughout the country and overstraining of natural resources due to the growing population.

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POLITICAL

India gained their independence from Great Britain on August 15, 1947. When the country broke into two separate states largescale violence broke out between the Indo Aryans and the Pakistani people. Three wars broke out due to the violence and the last one which ended in 1971 resulted in East Pakistan becoming what is now known as Bangladesh.

India’s government type is Democratic,, where the President, Pranab Mukherjee is the Head of State and the Prime Minister Narendra Modi is the Head of Government.

The other main powers include the Judicial branch and the Legislative branch which is broken down into the Lok Sabha and Rajya Sabha. The president can serve for 5 years while the people appointed by the president to the judicial branch can serve for life. The Lok Sabha members serve five years and the Rajya Sabha members serve six years.

India has a good relationship with the United States. Former President Obama called India one of the defining partnerships of the 21st century that will be vital to U.S. strategic interests in Asia-Pacific across the globe. India and the U.S. have a strong relationship due to common values such as the rule of law, respect for diversity and democratic government.

Consistent political visits have been crucial in keeping the momentum for bilateral support.

There are no free trade agreements between the two countries, however, they have a common interest in free flow of global trade and commerce. The U.S. is considered one of India’s largest trade and investment partners.

India and the U.S. are working together un bilateral and multilateral for a to aid mutual energy security, fight climate change and support development of low-carbon economies which will create opportunities and job growth in both countries.

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STATE OF INDUSTRY

OVERVIEW India has the second largest textile manufacturing capacity globally. They were also the leading cotton and jute producer in the world at the end of 2015. India accounts for 18% of the world’s spindles as well as 9% of the world’s rotor. They hold a 5% share in global textiles and apparel trade. The textile and apparel sector of India contributes to 14% industrial production, 4% of the GDP and constitutes 15% of the country’s export earnings. At the beginning of 2016 total exports for India were at $40 billion. Total fabric production in 2015-16 was at 66 billion square meters and is expected to grow up to 69 billion square meters by 2017-18.

LABOR & WAGES India’s houses the second largest textile and apparel sector for employment in the country. Overall at the end of 2015 India employed nearly 51 million people directly and 68 million people indirectly. There is no standard minimum wage across India but the wage averages at about $1.

TEXTILES & EXPORTS India was the leading cotton producer at the end of 2015 with 5,984 million kg in production and the second largest producer of man-made fiber and filament in the world with 2,511 million kg in production. At the end of 2014 India was the second largest producer of silk with 29 million kg in production and one of the major producers of wool with 48 million kg produced. One year earlier they had the largest production of jute at 1,710 million kg. The export volume of apparel from India to the United states last year was 3.2 billion which makes up 4% of their export total for the year. The key apparel and textiles that were exported to the United States were cotton woven knits, silk, poly knits and man-made fibers and filaments. The key categories were Men’s and Boy’s apparel and Girls and Infant dresses.

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TRADE AGREEMENTS

India does not have any trade agreements with the United States and has no future plans of implementing a trade agreement.

ORGANIZATIONS All-India Trade Union Congress All India Central Council of Trade Unions Bharativa Mazdoor Sabha Hind Mazdoor Sabha Labor Progressive Federation Self Employed women’s Association

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LEAD TIME

Drought Cyclones Monsoonal Rain and flooding

There are quite a few factors to consider when thinking about lead time in India. Weather is a main one. India experiences major drought as well as severe thunderstorms, monsoonal rain that leads to flooding, cyclones and earthquakes. National holidays are another factor such as Republic day on January 26th, Independence Day on August 25th, Christmas day on December 25th and Mahatma Gandhi Birthday on October 2nd. All of these factors could lead to delayed shipment times.

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TRANSPORTATION AND PORTS

TRANSPORTATION Rail India has a total of 68.5 km of railways and 7,137 stations. The broad gauge is 58.4 km with a 1.676-m gauge and a narrow gauge of 9.5 km and a 1.000m gauge as well as a 622km and a 0.762-m gauge. In country comparison, it was ranked as a five. The railways are owned by Indian Railways which is ran by the government. The railways carry about 1.1 billion tons in freight each year and 8.1 billion passengers each year. At the end of 2014 the railways had earned $17 billion in freight and $6.7 billion in passengers.

Road India has a road network that consist of 4.6 million km of roadways. Out of that 4.6, 96.2 thousand km consists of national highways and expressway and 147.8 thousand km are considered state highways. At the end of 2015 61.05% of the roads were paved and they are continuing to grow that percentage and improve their roadways. During that same time India, had completed and began using 24 thousand km of those roads and highways for connecting most of their manufacturing centers and well as their commercial and cultural centers.

Air India has twenty registered air carriers. The inventory of registered aircraft operated by carries is 485. They have approximately 1.8 million MT-km in freight traffic. India houses 346 airports which in country comparison was ranked at 21. They have 253 paved runways and are known for their big airline, India Air.

Sea India has six national inland waterways. The first known as NW1 is the longest national waterway in India and starts from Allahabad to Haldia running 1620 km. The NW2 is one of the major freight transportation waterways or Northeast India. The others are used for minimal trading and transporting of goods from city to city. India has a handful of major sea ports which include Chennai, Jawaharal Nehru Port, Kandla, Kolkata, Mumbai, Sikka and Vishakhaptnam. The two major container port’s for TEU’s are Chennai and Jawaharal Nehru Port.

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PORTS

K P E O Y R T S Jawaharal Nehru Port Jawaharal Port was commissioned in 1989 and is located on the west coast of India within the Mumbai harbor. It is considered the second youngest port in India and the most modern. Jawaharal is the country’s largest container port.

Chennai Chennai is considered India’s third largest port and is located on the East Coast of India. This port has been in business for 135 years servicing cargo. Due to weather conditions the first piers built in 1861 did not hold up and it was in 1881 that the operations could steadily be carried out with new piers. Chennai Port is one amongst the major ports that has railway operations inside the harbor. At the end of 2016 the port had handled 50.06 million tonnes of cargo volume.

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SHIPPERS & SUPPLIERS

SHIPPING COMPANIES APL Logistics India Pvt. Ltd.

Adithya Pvt. Ltd. 58C Ram Nagar 1st street , North Extension, Madipakkam, Chennai, Tamil Nadu 600091

Calavalas Aditya Whannels Road, Egmore 2nd Floor, New #8, Old #15 Chennai Tamil Nadu 600008

+91 44-42815956

(91) (124) 266 7700

Expeditors International Pvt. Ltd.

7th Floor Shyamala Towers 136 Arc Chennai Tn 600093 (91) (124) 4978500

Time & Cost Chennai, India - Los Angeles, California

Time: 16-41 Days Cost: $5,848

Chennai, India - Savannah, Georgia Time: 35-42 Days Cost: $3,073

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MAIN SUPPLIERS

CGS Apparel Pvt. Ltd.

Money Apparels

B-55/56, Hosiery Complex, Phase-II, Distt. Gautam Budh Nagar, Noida, Uttar Pradesh 201301 Customer: Men’s Warehouse Products: Cotton, Cotton Knit

613, Avanashi Main Road, Gandhi Nagar, Gandhi Nagar, Tiruppur, Tamil Nadu 641603

Alagendira Export 551, Periyakadu Thottam, Sirupuluvapatti Po, Gandhi Nagar, Gandhi Nagar, Tiruppur, Tamil Nadu 641603 Customer: Walmart, Sears, Target Products: Cotton, Poly Knit

Customer: Beniko Co., Urgent Gear Co. Products: Cotton, Poly Knit

Ajay Murty Modes A 4 17 Old Rajinder Nagar New Delhi 110060

Customer: Adrianna Papell Products: Silk, Polyester

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Indian Etiquette

Culture

Indian culture is something to be very aware of before visiting, it can make the difference in a business deal and the relationships you form. For starters, the day in India always starts late and ends late.

Many breakfast meetings are not held until 10-10:30 AM and dinner can be expected around 9 PM. It is considered rude if you are not 15-30 minutes late. In India people, do not use their left hand in day to day interactions. The left hand is views as dirty and is only used for the bathroom, cleaning your feet and taking off your shoes.

Indian’s speak in a more formal language, addressing others by using Sir, Ma’am or Mr., Ms., and Mrs. It is proper to shake men’s hands with your right hand or even both hands can be a sign of respect but you do not ever shake a women’s hand.

Women dress moderately, covering their legs and shoulders and can wear trousers if they are an appropriate length. Men are expected to always wear a shirt in public but do not have quite as strict rules as women. Nudity is not accepted in Indian. Indian’s do not kiss or embrace each other in public because this is a sex act. Men, however, do hold hands as a sign of friendship.

Eating Again, it is proper to show up to any meal 15-30 minutes late.

Invited guests can bring friends unannounced and their guests will be welcomed. In India, you mainly eat with your fingers which can take some getting used to. You are expected to only eat with your right hand because it would be considered rude to eat with your dirty left hand. Indian’s typically share food family style; however, it is not accepted to eat off another’s plate as well as drink with your lips pressed against a communal cup.

The proper way to drink from this style would be to pour it directly into your mouth.

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Business & Negotiations

When first meeting with a new client or group it is pertinent that you engage in small talk. If you do not form a relationship before getting down to business your Indian counterpart will consider that rude and hasty and you likely not close your deal. Refreshments are likely before the meeting or during. Bringing a small gift is accepted but not expected. Instead of speaking gratitude, it is common to show it through a smile or nod of the head.

You always want to address the more important member of the team. Indian’s respect hierarchy and they expect you to as well. Avoid folding your arms or placing your hands on your hips as this is aggressive.

Do not put your feet on any furniture and avoid pointing your feet at anyone. If eye contact is made with feet then an apology will always follow.

Business cards are big in India. If you receive a business card it is rude not to examine the card before stowing it away. Business cards are not only used for business; they also are given out as an introduction to someone new in any situation.

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Risks & Benefits

Risks Some risks you might encounter while manufacturing in India involve fluctuations and unpredictable regulations, as well as not briefing yourself on the business etiquette of the country. In the past few years’ corruption, bribery, and corrupt funds have been huge issues. Strikes, closures and unrest are also risks for manufacturing factories across India.

Benefits Factories in India are sticklers about testing and certifying the raw materials that they receive. There is an abundance of engineers and most are bilingual. They have quality Japanese machinery so that they will have all top of the line manufacturing. India also has a long history of manufacturing that most in the United States are unaware of. Many of the factories in India are family owned and passed down through generations so most likely the people you will be dealing with are very familiar with the industry and how their factory runs and operates.

Conclusion In conclusion, India still has areas in which they could improve to keep climbing to the top. However, they have made tremendous strides over the years and have remained in the top few best locations to manufacture overseas. India will most likely be the next country with the lowest manufacturing rate considering the talk of china raising theirs which will make it the go to country for must suppliers.

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COUNTRY REPORT 2017

FASM 420

AMELIA SANDA