competitiveness : what works in india & what does not 29 november 2010
TRANSCRIPT
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%
• ICT exports : US$ 60 billion
• Media : 180 TV channels; 65 news
channels
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
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
• 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.
India’s young population
Even though the world has
just discovered it, the India
growth story is not new
It has been going on for 25 years
25 years in the making
India is now the 4th
largest economy
It will overtake Japan
between 2012 and 2014
to become the 3rd largest
“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 Crystal
Cambridge Encyclopedia of the English Language
Cambridge Encyclopedia of the English Language
India’s growth is led by…..
• ICT
• Telecom
• Pharma
• Automobiles
India’s Growth lineBihar – 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
Reasons for success
India’s success is market-led
not state induced
The entrepreneur is at the
centre of the Indian model
Implications of Indian model
GDP : Composition by sector
Agriculture : 17.0%
Industry : 28.1%
Services : 64.9%
Has India skipped the
industrial revolution ?
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)
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 ???
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.
LeadershipLeadership
MoralPurpose
InsightReceptivityReceptivity
TensionTension
AnalysisAnalysis AnalysisAnalysis
Change Change
ProcessProcess FacilitationFacilitation
Change Change
ProcessProcess FacilitationFacilitation
Multilateral Multilateral EngagementEngagement
Multilateral Multilateral EngagementEngagement
New EconomyNew Economy SolutionsSolutions
New EconomyNew Economy SolutionsSolutions
Describing the
causes of
underdevelopme
nt
Discovering that
simply providing
the right insight
is insufficient to
create change
Fitting the
preconditions
for change
together,
through
collaborative
processes, to
build working
industry
clusters
Attempting to
help donor
institutions
reshape their
aid programs
to build competitivene
ss at the
microeconomi
c level
Creating
solutions to help
firms discover
new export
markets and
become globally
competitive
The OTF Group
develops industry
strategies based on
concepts of “clusters”
World Bank Group
Introduction to Cluster Pulse
Worked in 82 clusters in 14 countries
IntlDev Agency
c
Govt.’s
Private Sector
Public Sector
MSME’s are our pride……
Worked inIndia
USA
Canada ( Govt of Manitoba )
United Kingdom
Brazil
Italy
South Africa
Worked in
Oman
Brunei
RAS Al Khaimah
China
Afghanistan
Pakistan
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
Challenges to competitiveness
5 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.
Challenges and solutions to
competitivenessThe approach uses a double loop process called the “Prosperity Generation Cycle”
to ensure parallel growth in competitiveness and public – private dialog.
Early wins by the private sector is supported by productive
communication among all parties.
Economic Growth
Social EquitySustainability
Productivity
Innovation and Competition
Capacity to Export
Complex Products to
Demanding Customers
Investment in Higher
Capital Compounding Activities
Improved Environment
Shared Economic Leadership
Private Sector Resp
Private Sector Representation
Public / Private Dialog
Rational Policies to
Balance Social and
Economic Growth
Increased Taxes To
Support Government
Policies
Economic Leadership
and ControlImproving the Capital
Conversion Cycle
IncreasedWealth
EconomicGrowth
results in
attractsleads to
reinforces
Competition in
Service Delivery
High Quality Product Offering
Good Income Opportunities
Growth and Innovation
Profits
Excellent Business
Services
Alappuzha Coir SMEs BDS Providers
BDS Market
leads to results in
reinforces increases
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 Project Background
Coir fibre producers (60% total inputs)
Other input producers (40% total inputs)
Spinning, roping, etc. (Hhold. units, 45,000 indiv.)
Finishing Large 15 units
Finishing MSMEs 250 units
Dye suppliers
Machinery & equipment suppliers
R&D
Transport -ers
Fibre / yarn suppliers
Packing materials
Transporters & export logistics
Buying agents
WholesalersRetailers (specialty and mixed)
Large retailers (domestic & international)
Agents / ‘Bulkers’
Machinery & equipment suppliers
Mktg/ branding
Manufacturing Medium: 15 units
Weav-ing
Tuft-ing
Manufacturing MSME: >9700 units
Weav-ing
Tuft-ing
Competitive Needs improvement Under-developed
Banks
•Sheds & Elec. Connection•Fibre Consortia
•World’s Longest Mat•SPARSH – Dom. Brand• Domestic Market Entry
Ratt
•FOREX• Loans SIDBI
Looms up-gradation
Marathon
• International Warehouse• Management Gyanam
Marathon
Lean Mfg.
Anti-slip
Flame Retardant
B2C Portal
Mkt. Entry
World’s Longest Doormat
Like a sapling, BDS providers will
require continued support from Govt.,
Academia & industry to guarantee its
development into a mature tree
CulturalCulturalCulturalCultural
HumanHumanHumanHuman
KnowledgeKnowledgeKnowledgeKnowledge
InstitutionalInstitutionalInstitutionalInstitutional
FinancialFinancialFinancialFinancial
Man-MadeMan-MadeMan-MadeMan-Made
Natural Natural EndowmentsEndowmentsNatural Natural EndowmentsEndowments
Soci
al
Tangible Articulations Norms Mental Models
Phys
ical
Ecosystem Services Raw Materials Climate and Location
Transportation, Communication Power Water and Sewerage
Financial Systems Private Wealth Public Wealth
“Good, Clean Governance” Justice System Connective Organizations
Qualitative, Quantitative Data Frameworks and Concepts Knowledge Generation
Health and Population Education and Training Attitudes and Motivation
Respect for Nature, Architecture, Music, Language, Range of Acceptable Behaviors Trust, Wealth Creation Attitudes, Long-term Thinking
Clean Air, Water, Protected Ecosystems Agricultural, Mineral, Petroleum Proximity to Markets
Roads, Ports, Telephone Systems Electric Grids, Generation Capacity Pipelines, Pumping Stations
Banks, Stock Markets Bank Deposits Bank Reserves, Taxes, Duties, Macroeconomic Stability
Transparency, No Hidden Costs, Accountability Property Protection, Predictable Regulations Chambers of Commerce, Unions
Statistics, Opinions, Records Theories, Processes, Procedures Universities, R&D, Market Learning
Nutrition, Medical & Mental Health Primary & Secondary, Technical Self-responsibility, action-orientation
Representative Elements Representative Examples
Source: Based on Wolfensohn framework and Cluster Pulse experience.
SEVEN FORMS OF CAPITAL
Implementation approach
• Deep diagnostic study
• Pain point identification
• SHG or consortia formation
• BDS intervention
• Use of ICT
• Domestic & Export market linkages
• Sustainable model
Implementation principles
• Minimizing market distortion
• Partner with local Govt.
• Scale and replicability
• Variety and learning
• Gender mainstreaming
• Public-private partnership
• Institutional handover
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
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
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 &
passion of implementing agency &
implementing staff in meeting goals.
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
Gujarat
• Land of Mahatma Gandhi
• Gujarati entrepreneurship
• 55 Million population
• 22% of India’s exports
• Mega projects : DMIC
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
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
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
India : The Wise
Elephant
Welcome to India……
ClusterPulse.org
An elephant
growing at 8% is a
formidable beast