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Spotlight on India - How Does India Currently Compare to Other Emerging Markets?

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"We got government off the backs of the people of India, particularly off the backs of India's entrepreneurs. We introduced more competition, both internal competition and external competition. We simplified and rationalized the tax system. We made risk-taking much more attractive."
- Manmohan Singh, Statesman


It is a well-known fact China has become an economic super power in recent years. Interestingly, economic reports also suggest that India has the potential to surpass China in the race of the emerging markets. Although India currently has a massive trade deficit, which is ‘estimated at $175 billion’ over the next financial year according to The New York Times, the manufacturing industries still indicate potential growth; ‘India’s manufacturing grew at the fastest pace in six months’ at the end of 2011, according to Industry Leaders magazine. However, new tax plans proposed by the Indian government seem set to relax growth in all markets, especially in foreign investment.

Equally, one could argue that India’s modern economy stands on three fundamental pillars, which are its extensive labor pool, prevalent foreign investments, and its rapidly growing collection of middle class consumers. Moreover, the increase of the middle class consumer in most cities, more noticeably in Delhi and Mumbai, signifies not only a developing economy within India, but also an evolving business culture within the major cities. India’s professionals have never been so well-educated, had more disposable income, or been more influential in the global market. In the same way, the young professionals of India have never been as attractive to the executive world, with many having international educations and work placements, and speaking a multitude of languages. One could predict that this expanding collective will be at the head of most international companies within the coming years.

Conversely, if India’s economic tri-factor remains intact, we could very well see India’s economy expanding even further. However, with the new tax measures proposed, which indicate that all foreign appropriations will be taxed retroactively, we have already seen signs of growth decelerating. Furthermore, this also indicates that India will now need to rely on its internal strengths, its high volume workforce, and its executive middle classes, if it wants to continue to compete with its emerging market rival China, let alone surpass it in the future. However, with foreign investors losing confidence in Indian governmental policy, it seems unlikely that with one economic pillar theoretically collapsing, the second pillar will remain consistent for long, and we may start to see slowing in consumer spending, growing unrest in the workforce and commercial progression start to become regression.

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This article was written by Helen Langley of the Association of Executive Search Consultants (AESC).

 
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