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Competitiveness : What works in India & what does not

Competitiveness : What works in India & what does not. 29 November 2010. You don't simply visit India, you experience India: Obama. Some facts about India. Internet users : 81 million Mobile phones : 670 million Middle class population : 368 Million Working population : 61%

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Competitiveness : What works in India & what does not

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  1. Competitiveness :What works in India &what does not 29 November 2010

  2. You don't simply visit India, you experience India: Obama

  3. Some facts about India • Internet users : 81 million • Mobile phones : 670 million • Middle class population : 368 Million • Working population : 61% • ICT exports : US$ 60 billion • Media : 180 TV channels; 65 news channels

  4. Top 10 Mobile phone users • China 747 million • India 670 million • United States 270 million • Russia 187 million • Brazil 173 million • Indonesia 140 million • Japan 110 million • Germany 105 million • Pakistan 91 million • Italy 88 million

  5. Top 10 Internet users • China 298 million • United States 231 million • India 107 million • Japan 90 million • Brazil 64 million • Germany 61 million • United Kingdom 48 million • Russia 45 million • France 42 million • South Korea 37 million

  6. India’s young population • Between 2010-2030 India will add 241 Million people • in working-age population • Brazil will add around 18 million • While China will add 10 million people during the • same time.

  7. 25 years in the making Even though the world hasjust discovered it, the Indiagrowth story is not new It has been going on for 25 years

  8. India is now the 4th largest economy It will overtake Japan between 2012 and 2014 to become the 3rd largest

  9. “By 2010 India will have world’s largest number of English speakers”“When 300 million Indians speak a word in a certain way, that will be the way to speak it.” Professor David CrystalCambridge Encyclopedia of the English Language Cambridge Encyclopedia of the English Language

  10. India’s growth is led by….. • ICT • Telecom • Pharma • Automobiles

  11. India’s Growth line Bihar – 11% growth M P – self sufficient in energy by 2013 Rajasthan – in 10 years, literacy rate has gone up by 23% U P – Agri production grew by 4% last year

  12. Reasons for success India’s success is market-led not state induced The entrepreneur is at thecentre of the Indian model

  13. Implications of Indian model GDP : Composition by sector Agriculture : 17.0% Industry : 28.1% Services : 64.9% Has India skipped the industrial revolution ?

  14. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment 125 Fortune 500 companies have R&D bases in India 290 Fortune 500 companies have outsourced software development to India 2% bad loans in Indian banks (v~20% in China) 80% credit goes to private sector (v~10% in China)

  15. What could stop the show for India ? Infrastructure : Improving via public-private partnerships Fiscal Deficit ? Governance ? None of these stopped the show in the past 25 years Nuclear War ???

  16. Introduction to Cluster Pulse Cluster Pulse is not for profit NGO that provides cutting-edge solutions to help firms and industries in emerging markets confront the challenge of developing successful business strategies through cluster approach. World Bank Group • New Economy • Solutions • Multilateral • Engagement • Change Process • Facilitation • Analysis • Creating solutions to help firms discover new export markets and become globally competitive • The OTF Group develops industry strategies based on concepts of “clusters” • Attempting to help donor institutions reshape their aid programs to build competitiveness at the microeconomic level • Fitting the preconditions for change together, through collaborative processes, to build working industry clusters • Describing the causes of underdevelopment • Discovering that simply providing the right insight is insufficient to create change

  17. c Intl Dev Agency Worked in 82 clusters in 14 countries Govt.’s Private Sector Public Sector MSME’s are our pride……

  18. India USA Canada ( Govt of Manitoba ) United Kingdom Brazil Italy South Africa Worked in

  19. Oman Brunei RAS Al Khaimah China Afghanistan Pakistan Worked in

  20. What is Competitiveness? • Competitiveness has emerged as the preeminent issue in every nation – for companies and governments • Upgrading a nation’s competitiveness requires a shared understanding of competitiveness within the nation • Competitiveness is not simply: • A favorable exchange rate • Positive balance of trade • Industrial subsidies • Low inflation rate • Rather, competitiveness is the productivity with which resources are deployed • Human resources • Capital • Physical assets • Since competitiveness relies on productive deployment of resources, industry sectors and their firms compete, not nations • Government has a partial but significant role in creating the platform from which firms compete • Clusters of related and supporting firms are the building blocks of a competitive economy

  21. Challenges to competitiveness5 Lessons learned 1. Lack of public – private sector dialogue resulting in low trust 2. Cluster selection process driven by traditional industries vs. small high growth sectors or cluster member enthusiasm 3. No quantitative targets for the cluster 4. Government and donor over-responsibility for results vs. a cluster driven approach 5. Misperceptions of the cluster development process and goals; especially the tension between short-term wins and building the foundations for long-term competitiveness.

  22. Challenges and solutions to competitiveness The approach uses a double loop process called the “Prosperity Generation Cycle” to ensure parallel growth in competitiveness and public – private dialog. Improving the CapitalConversion Cycle Economic Leadershipand Control Capacity to Export Complex Products to Demanding Customers Rational Policies to Balance Social and Economic Growth Improved Environment Economic Growth Shared Economic Leadership Productivity Innovation and Competition Public / Private Dialog Increased Wealth Economic Growth Private Sector Representation Private Sector Resp Social Equity Sustainability Investment in Higher Capital Compounding Activities Increased Taxes To Support Government Policies Early wins by the private sector is supported by productive communication among all parties.

  23. BDS Project Background The fostering of a skilled and entrepreneurial BDS sector will lead to a self-supporting loop of improved innovation and competitiveness in Alappuzha’s coir industry. BDS Providers Alappuzha Coir SMEs High Quality Product Offering Profits increases reinforces reinforces results in Competition in Service Delivery Growth and Innovation BDS Market leads to attracts leads to results in Good Income Opportunities Excellent Business Services

  24. Manufacturing Medium: 15 units Tuft-ing Weav-ing Manufacturing MSME: >9700 units Tuft-ing Weav-ing • Sheds & Elec. Connection • Fibre Consortia Ratt Marathon Marathon Machinery & equipment suppliers R&D Spinning, roping, etc. (Hhold. units, 45,000 indiv.) Lean Mfg. Coir fibre producers (60% total inputs) Fibre / yarn suppliers Transport -ers • FOREX • Loans • SIDBI Other input producers (40% total inputs) Dye suppliers Banks Looms up-gradation Machinery & equipment suppliers Anti-slip Packing materials Finishing Large 15 units Retailers (specialty and mixed) Wholesalers Transporters & export logistics Agents / ‘Bulkers’ Large retailers (domestic & international) Buying agents Finishing MSMEs 250 units Mktg/ branding Flame Retardant Mkt. Entry • World’s Longest Mat • SPARSH – Dom. Brand • Domestic Market Entry Competitive Needs improvement Under-developed B2C Portal • International Warehouse • Management Gyanam

  25. World’s Longest Doormat

  26. Like a sapling, BDS providers will require continued support from Govt., Academia & industry to guarantee its development into a mature tree

  27. SEVEN FORMS OF CAPITAL Representative Elements Representative Examples • Tangible Articulations • Norms • Mental Models • Respect for Nature, Architecture, Music, Language, • Range of Acceptable Behaviors • Trust, Wealth Creation Attitudes, Long-term Thinking Cultural • Health and Population • Education and Training • Attitudes and Motivation • Nutrition, Medical & Mental Health • Primary & Secondary, Technical • Self-responsibility, action-orientation Human Social • Qualitative, Quantitative Data • Frameworks and Concepts • Knowledge Generation • Statistics, Opinions, Records • Theories, Processes, Procedures • Universities, R&D, Market Learning Knowledge • “Good, Clean Governance” • Justice System • Connective Organizations • Transparency, No Hidden Costs, Accountability • Property Protection, Predictable Regulations • Chambers of Commerce, Unions Institutional • Financial Systems • Private Wealth • Public Wealth • Banks, Stock Markets • Bank Deposits • Bank Reserves, Taxes, Duties, Macroeconomic Stability Financial • Transportation, Communication • Power • Water and Sewerage • Roads, Ports, Telephone Systems • Electric Grids, Generation Capacity • Pipelines, Pumping Stations Man-Made Physical • Ecosystem Services • Raw Materials • Climate and Location • Clean Air, Water, Protected Ecosystems • Agricultural, Mineral, Petroleum • Proximity to Markets Natural Endowments Source: Based on Wolfensohn framework and Cluster Pulse experience.

  28. Implementation approach Deep diagnostic study Pain point identification SHG or consortia formation BDS intervention Use of ICT Domestic & Export market linkages Sustainable model

  29. Implementation principles Minimizing market distortion Partner with local Govt. Scale and replicability Variety and learning Gender mainstreaming Public-private partnership Institutional handover

  30. Competitiveness : What is good & works Strong Government support (policies / UID) Reasonable understanding by all stakeholders : 1994 ( 16 years ) Marketing approach to competitiveness Infrastructure investment in clusters – CFC Strong BDS network across the country

  31. Competitiveness : What needs improvement Too many agencies working in the same cluster Not many good implementation agencies Low budgetary allocation for soft interventions * Inclusiveness ( Artisanal & industrial clusters ) Passionate people

  32. Action @ speed of thought In our experience of 82 clusters, there is a close link between entrepreneurship quality, risk taking ability, speed of decision making, intention & passionof implementing agency & implementing staff in meeting goals.

  33. Indian as a Market for your clusters Technology hungry Consumer taste changing Exports : $ 164.3 billion ( 22 ) Imports : $ 268.4 billion ( 14 ) Forex reserves : $274.7 billion ( 6 ) Rural India Consumption economy Cluster to cluster market linkages

  34. Gujarat Land of Mahatma Gandhi Gujarati entrepreneurship 55 Million population 22% of India’s exports Mega projects : DMIC

  35. Gujarat holds many records in India for economic development : 80% of India's Diamond Production 54% of India's Crude Oil Production 50% of India's Natural Gas Production 47% of India's petrochemical Production 45% of India's pharmaceutical products 35% of India's Sponge Iron Production 24% of India's textile production 22% of India's exports 20% of India's Industrial Output 9% of India's Mineral Production

  36. More facts on Gujarat Over 35% of the stock market wealth of India is in Gujarat. Over 20% of the S&P CNX 500 conglomerates have corporate offices in Gujarat. Over 60% of Indian Population in North America is from Gujarat. Gujarat is the first state to interconnect 20 rivers It has the largest e-governance network in Asia Pacific Operation WHITE FLOOD (MILK) was initiated in Gujarat which took India in 1998 to become highest milk producer in the world - AMUL

  37. Elephant and not Tiger India got democracy before capitalism and this has made all the difference It is slower than China, but its path is surer India is more likely to preserve its way of life

  38. India : The Wise Elephant An elephant growing at 8% is a formidable beast Welcome to India…… ClusterPulse.org

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