India, the second largest developing economy in the world is on a trajectory of becoming the world's 3rd largest economy by the year 2020. Real estate will continue to be among the key ingredients that will contribute to the rising Indian economy. However there are certain concerns like trade deficit, currency depreciation, high inflation, slowing GDP growth end external debt, lack of transparency in investment policies and corporate governance that are somehow preventing international investors to enter India.
Despite of these hurdles, the 65% of working age population out of a total of 1.3 billion and talent are two key elements which contribute to India's huge offering to the international corporations. Manufacturing and service sector in India have achieved a growth rate of 7.7% and 9.6% respectively in past 10 years when economy was healthy. A 5 and 1/2 times increase in the stock market index has also indicated the potential growth opportunities that India has to offer.
2nd highest population, 65% working age category, increasing PCI, low wages, low penetration of organized retail, improving lifestyles are already weighing much more and ignoring the rupee depreciation, low GDP growth, increasing deficit and high inflation. With the new NDA government led by Prime Minister Shri Narendra Modi with focus on corporate governance, FDI, infrastructure & startups, India hopes to improve the policy level clarity, foreign money flow and foreign participation in coming years.
Top 5 things in India that have attracted foreign corporate in past
The new emerging India
With the second largest population, the new generation of India has immense potential to give birth to new startups and growth to the foreign corporate in the consumer market. The increasing incomes, change in lifestyle, increasing focus on spending, luxury attractions, and most importantly the growth in urbanization are the key elements that offer sizable market and huge growth potential for a range of foreign consumer industries to grow and increase revenue in India.
Easy and affordable talent acquisition
For India itself, it is a big challenge to give employment to the new generation coming out of the institutions. The high competition and higher level of unemployment are to major things that contribute to the easy and affordable availability of talent in India. The diversified academic & social exposure makes Indians carry out each and every job whether it is a tough physical work in difficult conditions or making business strategies while sitting in office.
The low wages, particularly in the manufacturing industry and increase in labour mobility provide a lot of flexibility to the employers.
Low cost of real estate
If you ask about real estate prices in India to any Indian who do not have any knowledge about the international real estate prices, his answer will contain the words/phrases "huge, almost impossible to afford, skyrocketed, 10 times, not for common man, blah blah... ". However the prices have gone up considerably in past decade but it is still cheaper than most other developed countries. To be specific, office space in Banglore, India's fastest growing office market, is available at about 85% less cost than Tokyo. In the list of world's costliest cities for office rental, Banglore stood at 21st place while Delhi and Mumbai feature at number 10 and 11 respectively.
The almost central time zone
Isn't it convenient if companies can deliver services to different regions of the world from a single location? India's Geographical location offers this advantage leading to the lower cost of operation, management & delivery, better to say everything. Services in Singapore and Hong Kong can be delivered by starting early, late evening shifts to serve in UK & some European countries while the night working shifts perfectly match the timings of US to serve clients there.
India becoming organized
The increase in number of companies listed on BSE (Bombay Stock Exchange) is a significant indication of Indian industry becoming more organized. The companies in several verticals whether it is health care, real estate, manufacturing, service, IT, hospitality, or retail have shifted from unorganized to organized space. And, in the coming 10 years, this transition is expected to become even fast paced.
Transparency levels across the investment domains are also improving according to the JLL Transparency Index 2014 which is undergoing finalization. The transparency improvement in the preliminary findings of the index is better than even the Asia Pacific average.
And the more convincing are the facts such as IBM which entered India in 2003 has grown its employ strength in India by 16 times from just 9000 in 2003 to 150000 in 2014. This is 33% of total work strength of IBM across the globe. On the similar lines, Accenture added more than double employees from 35000 in 2007 to 80000 in 2014, Ericsson India employee strength of about 18000 accounts for 16% of its global workforce. Some UK and Germany based financial institutions in India have also added significant number of employees in past few years for their back office and offshoring operations. By today, companies headquartered in USA occupy almost half of the office supply in India while Europe based corporates occupy 14%.
The Union Budget 2014 announced on 10th July has also indicated that there are lots of new infrastructure projects and improvements are coming in India. The things such as available office space stock, office absorption and supply rate, improved transport infrastructure (national highways, expressways, flyovers, metro train, etc), well placed hospitality industry, growth in foreign travelers, development of industrial corridors and improvement in physical & social infrastructure are the clear indication that India is a perfect investment destination for foreign corporates.