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India

presentation for international business
by

scott tobin

on 24 April 2011

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Transcript of India

New Delhi The capital of India, and the central city for its government The Indian economy has weathered the financial crisis reasonably well, the government expects its GDP growth to return to around 9% when the crisis ends. Transparency International’s Corruption Perceptions Index rates India as 84th of 180 countries for Business corruption, the U.S. ranks 19th. Government has a strong presence in most industries. Business freedom is low. Government regulations are so burdensome that it can take 200 days to obtain a construction permit. In 2009, the average tariff was 7.9% India began reforming the economy in 1991 which dropped the import tariff rates from 350% to an average of 10% in the last 15 years. There is not an official publication of the tariff rates. Courts do not enforce intellectual property protection. Bangalore The Government of India (GOI) provides a 10-year tax holiday for knowledge-based start-ups. Home to a number of major colleges and fortune 500 businesses. [6] Kandla Labor force: 478.3 million. More than 7 million unionized workers which represent less than 1/7th of the workers in the state-owned sector and less than 2% of the total work force. The payment of wages is governed by the Payment of Wages Act 1936, and the Minimum Wages Act, 1948. Industrial wages range from about $3.50 per day for unskilled workers, to over $150 per month for skilled production workers. A prominent port city [6] India is the worlds 12th largest economy. Average growth of the economy is more than 7%
Foreign portfolio and direct investment inflows have risen significantly in
recent years. They contributed to 283.5 billion in foreign exchange reserves
by December 2009. Economic growth is hindered by inadequate infrastructure,
cumbersome bureaucracy, corruption, labor market rigidities, regulatory and
foreign investment controls, and the "reservation"
of key products for small-scale industries. Exports from the United States to India consist of diagnostic or lab reagents, aircraft and parts, advanced machinery, cotton, fertilizers, ferrous waste/scrap metal, and computer hardware. Imports from India to the United States usually consist of textiles and ready-made garments, Internet-enabled services, agricultural and related products, gems and jewelry, leather products, and chemicals. A foreign company invests in India either through automatic approval by the Reserve Bank of India (RBI) or through the Foreign Investment Promotion Board (FIPB). The Indian government usually welcomes foreign investment in power generation, telecommunications, ports, roads, petroleum exploration/processing, and mining industries. Currently one United States dollar is worth around 45 Indian rupees. Languages: Hindi 41% Population: 1.2 billion
Population below poverty line: 25%
Population growth rate: 1.41% It is seen as polite to ask about dietary information because
of the many different religions and different diets that come with them. Friendly conversation is common in India. This could be the way that a business meeting is started up. It is not uncommon to talk about people's family, it is seen as friendliness and is a way to earn trust. Indians seldom express disagreement directly. Open disagreement is seen as hostile and aggressive. Unless it is important is advised not to show open disagreement. Culture Literacy (age 15 and over can read and write): India 61% vs. US 99% India's sense of time is much different than American's. While doing work with Indians one must have a flexible work schedule. There are many different languages in India (over 30 types) with many different dialects. Under the constitution, India has Hindu and English as its official languages. U.S. firms have identified corruption as the number one obstacle to foreign investment--India businessman agree. Revenues-$170.7 billion Expenditures-$257.4 billion
External Debt: $237.1 billion
GDP (PPP): $3.5 trillion
Inflation Rate: 10.9%
Prime Lending Rate: 6.5% Stock of Foreign Direct
Investment: $89.04 billion [1] Foreign Direct Investment
Inflow: $34.6 billion [9]
-1 of top 5 most attractive locations for
foreign direct investment
-Automatic approval, no need for licenses,
simply notify Reserve Bank of India in most sectors
-Limits on equity contributions and voting rights,
mandatory government approvals, and capital controls Labor force by occupation: agriculture= 52%, industry: 14%; services= 34% Unemployment rate: 10.8% Education expenditures: 3.2% of GDP vs. US at 5.5% Ethnicity: Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3% Religion: Hindu-80.5%, Muslim 13.4%,
Christian 2.3%, Sikh 1.9%, other 1.8%,
and unspecified 0.1% Location: Southern Asia, bordering the Arabian Sea and the bay of Bengal, between Burma and Pakistan.[7] India In 1500 B.C. Aryan tribes came to northwestern part of Indian subcontinent

Aryans and Dravidian inhabitants created the Indian culture

British outpost in 1619 controlled most of India

Late 1800s on the road to a self-government---Commonwealth by 1947

Separation of British India into India and Pakistan

Became a republic on January 26, 1950 History [7] GDP per capita at PPP: $2,941
Savings Rate: 3.5% Current Issues [4,11,12,13] India and Pakistan relations are in poor shape Graft is a huge problem Now Comes the Global Revolution in Services
Business Freedom- India 36.9 vs. US 91.0 Freedom From Corruption- India 34.0 vs. US 75.0 The top tier of income tax is 30.9% and corporate tax is 33.99% (US is 35%). Tax revenue as a percent of GDP is 18.6%. The Industrial Disputes Act requires prior government permission to lay off workers or close businesses employing 100 or more workers. Permission is not easily obtained. There is no specific free trade agreement between the US and India. Demographic & Socioeconomic [6,7,9] Financial Environment [1,9,10] Investment Climate [6] Legal and Administrative Environment [1,5,6,7,9] Managerial and Labor Climate [1,2,6,7] Cultural Practices [3,6] Economic Freedom Score: 54.6 Economic Climate [6,7,8] Ministry of Commerce projected that 60% of trade would be by FTAs. Member of: WTO, IMF, G-20, etc. India's Tata Finds Home Hostile http://www.resodynmixers.com/markets/pharmacueticals/ http://www.oscarbudde.com/testimonials.html http://www.hometips.com/real_estate_finance.html http://www.zopat.com/rupee-symbol/ http://www.solarnavigator.net/geography/india.htm http://www.unodc.org/southeasterneurope/en/Corruption.html India Tori Harms
Carissa Keyes
Amanda Sherry
Scott Tobin Works Cited
1.Central Intelligence Agency’s Office of Public Affairs. (2011, February 4). India. Retrieved April 11, 2011, from The World Factbook: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
2.Central Intelligence Agency’s Office of Public Affairs. (2011, February 4). United States. Retrieved April 11, 2011, from The World Factbook: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
3.Michigan State University. (2001-2011). United States. Retrieved April 11, 2011, from global EDGE: http://globaledge.msu.edu/countries/united-states/
4.Sternberg, J. (2011, February 10). Now Comes the Global Revolution in Services. Wall Street Journal, p. A17.
5.The Heritage Foundation. (2011). United States. Retrieved April 11, 2011, from 2011 Index of Economic Freedom: http://www.heritage.org/Index/country/Unitedstates
6.US Commercial Service. (2010). India. Retrieved April 11, 2011, from BUYUSA.GOV: http://www.buyusa.gov/india/en/ccg.html
7.Michigan State University. (2001-2011). India. Retrieved April 11, 2011, from global EDGE: http://globaledge.msu.edu/countries/india/
8.Oanda Coporation. (1996-2011). Retrieved April 11, 2011, from OANDA: http://www.oanda.com/
9.The Heritage Foundation. (2011). India. Retrieved April 11, 2011, from 2011 Index of Economic Freedom: http://www.heritage.org/Index/Country/India
10. Sircar, S., & K. Vasant. (2011, January 26). Indian Inflation Prompts Rate Rise. Wall Street Journal, p. A15.
11.Sharma, A. (2011, April 13). India’s Tata Finds Home Hostile: Chair of Nation’s Best-Known Company Says Bureaucracy Slows Domestic Growth. Wall Street Journal, p. B1.
12.(2011, February 19). In hope, not expectation. The Economist, 398(8721), 44.
13.(2011, March 12). A rotten state. The Economist, 398(8724), 18.
Small Medical Research Group Medium-sized Construction Manufacturer Large Financial Services Firm Illicit drugs/Trafficking in persons Disadvantages
•Courts do not enforce intellectual property rights
•Poor infrastructure
•Limits on capital and equity contributions

Advantages
•Automatic approval for FDI up to 100% of drug manufacturing
•Low wages, skilled workforce
•Indian pharmaceutical industry is the world's second largest after China
•GOI gives a 10 year tax holiday for knowledge start-ups










Recommendation: Yes, wholly-owned subsidiary Disadvantages
•Poor infrastructure
•Limits on capital and equity contributions

Advantages
•Automatic approval for FDI up to 100% of machinery and equipment
•Low wages, skilled workforce
•High growth of economy

Recommendation: Yes, joint-venture at the local level
Disadvantages
•Poor infrastructure
•28 state-owned banks control 70% of assets
•Limits on capital and equity contributions

Advantages
•Automatic approval for FDI up to 100% for non-banking financial companies
•Low wages, skilled workforce
•High growth of economy
•Lower corporate tax rate than US

Recommendation: Yes, joint-venture at the local level
Full transcript