India poised to become Third-Largest Consumer Market

India is poised to become the third-largest consumer market behind only the US and China. The consumer spending in India is expected to grow from USD 1.5 trillion at present to nearly USD 6 trillion by 2030, a report of World Economic Forum said.

As per the WEP, with an annual Gross Domestic Product (GDP) growth rate of 7.5 per cent, India is currently the world's sixth-largest economy. Domestic private consumption, which accounts for 60 per cent of the country's GDP, is expected to develop into a USD 6-trillion growth opportunity by 2030.

The report further added, "If realised, this would make India's consumer market the third-largest in the world, behind the US and China."

Zara Ingilizian, Head of Consumer Industries and Member of Executive Committee, WEF, said "as India continues its path as one of the world's most dynamic consumption environments, private and public-sector leaders will have to take shared accountability to ensure such consumption is inclusive and responsible. Notwithstanding the significant growth in consumption, critical societal challenges will need to be addressed, including skills development and employment of the future workforce, socio-economic inclusion of rural India, and creating a healthy and sustainable future for its citizens.”

The report 'Future of Consumption in Fast-Growth Consumer Market India' mentioned that growth of the middle class will lift nearly 25 million households out of poverty.

According to the report, growth in income will transform India from a "bottom of the pyramid economy" to a middle class-led one.

As expected the future consumption growth will mainly come from rich and densely populated cities and the thousands of developed rural towns.

WEF said that, "India's top 40 cities will form a USD 1.5 trillion opportunity by 2030, many thousands of small urban towns will also drive an equally large spend in aggregate. In parallel, there will be an opportunity to unlock nearly USD 1.2 trillion of spends in developed rural areas by improving infrastructure and providing access to organised and online retail."

The report was produced in collaboration with Bain & Company builds on consumer surveys conducted across 5,100 households in 30 cities and towns in India, and draws from more than 40 interviews with private and public-sector leaders.

Nikhil Prasad Ojha, Partner and Leader of the Strategy practice at Bain India said, "It's an exciting future for firms that wish to unlock the consumption opportunity in India."

The report identified three critical societal challenges that need to be addressed to unlock the potential of these opportunities and to ensure equitable growth - skills development and employment for the future workforce, socio-economic inclusion of rural India and healthy and sustainable future.

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Purchasing Managers’ Index signals a Sparkling Continuous Expansion

Purchasing Managers’ Index is an indicator of business activity both in the manufacturing and services sectors. PMI in October 2018 stood at 53.1 as against 50.3 in October 2017. October 2018 is the 15th consecutive month of PMI>50, indicating growth in the manufacturing sector.

The Start-up India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of start-up businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower start-ups to grow through innovation and design.

DIPP recognized start-ups number touched 14,545 in November 18 as compared to 4610 on October 2017 generating total employment for 130,424 persons.

Number of programmes have been undertaken since the launch of the initiative on 16th of January 2016 by Prime Minister, to transform India into a country of job creators instead of job seekers.

 The 19-Point Start-up India Action Plan envisages several incubation centres, easier patent filing, tax exemptions, ease of setting-up of business, a Rs. 10,000 crore corpus fund and a faster exit mechanism.

The achievements of the Start-up India action plan can be stated as: simplification and hand holding for compliance regime based on self-certification, rolling out of mobile app and portal, setting up of Start-up India hub, legal support and fast-tracking patent examination at lower costs, relaxed norms of public procurement for start-ups and faster exit for start-ups,  providing funding support through fund of funds with a corpus of Rs. 10,000 crore, tax exemption on capital gains, tax exemption to start-ups for 3 years, removal of angel tax, promoting industry-academia partnership and incubation through launch of Atal Innovation Mission, harnessing private sector expertise for incubator setup, building 11 Technology Business Incubators, setting up of 7 new research parks modelled on the research park setup at IIT Madras, promoting start-ups in the biotechnology sectors and launching of innovation focused programmes for students.

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India Improves Ranking in Ease of Doing Business

India jumped 23 ranks in the World Bank’s Ease of Doing Business Ranking this year to be ranked at 77. Upward move of 53 ranks in the last two years is the highest improvement in 2 years by any large country since 2011. India now ranks number one in Ease of Doing Business Report among South Asian countries compared to 6th in 2014.

So far, India has improved its rank in 6 out of 10 indicators and has moved closer to international best practices (Distance to Frontier score) on 7 out of the 10 indicators. The most dramatic improvements have been registered in the indicators related to construction permits and trading across borders. India's rank improved from 181 in 2017 to 52 in 2018, in grant of construction permits, an improvement of 129 ranks in a single year. When comes to trading across borders, India's rank has improved by 66 positions, moving from 146 in 2017 to 80 in 2018.

The Department of Industrial Policy and Promotion ,Ministry of Commerce and Industry, in collaboration with the World Bank conducts an annual reform exercise for all States and Union Territories under the Business Reform Action Plan (BRAP) to improve delivery of various Central Government regulatory functions and services in an efficient, effective and transparent manner. States and UTs have conducted reforms to ease their regulations and systems in areas like labour, environmental clearances, construction permits, contract enforcement, registering property and inspections. The States have also enacted Public Service Delivery Guarantee Acts to enforce the timelines on registrations and approvals.

Ease of Doing Business ranking improved, and it has been possible because of the transformative measures taken by the Government of India which includes legislative and regulatory reforms. To support start-ups and lower tax rates for MSMEs quicker environmental clearances from 600 days to 140 days has been implemented, abolition of inter-state check post after implementation of GST has been done, enhanced input tax credit and electronic GST network has been put in place and the creation of commercial courts to fast track enforcement of contracts and faster security clearances has lent support to the start-ups in the country.

Among BRICS countries, India has improved its rank from 5th in 2010 to 3rd in 2018. Various measures were undertaken to ensure this improved ranking is issuance of construction permits where India’s rank is 52, in getting electricity connection India’s rank is 24 and in Trading Across Borders India now ranks at 84. In paying taxes India’s ranking is 121 and in resolving insolvency India’s ranking stands at 108.

For ease of doing business for start-ups Twenty-One regulatory changes have been made. For optimization of resource utilisation and enhance the efficiency of the manufacturing sector, DIPP launched the Industrial Information System, a GIS-enabled database of industrial areas and clusters across the country in May 2017. This portal serves as a one-stop solution to the free and easy accessibility of all industrial information including availability of raw material – agriculture, horticulture, minerals, natural resources, distance from key logistic nodes, layers of terrain and urban infrastructure.

IPRS is proposed to be translated into an annual exercise covering all the parks across India. The coverage would be widened and updated to bring in deeper qualitative assessment feedback, bring in technological intervention and develop it as a tool that helps effectively for demand driven and need based interventions both by policy makers and investors.

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Latin Manharlal Group