Indian economy is growing through a transient phase with GST introduction. Average employees cost has increased from 8% of revenues in 2012 to 11.5% of revenues in 2017. One development in auto industry is Mahindra & Mahindra is investing in electrical vehicles. Successful businesses have high repeat orders/customers even up to 85% (Source: Outlook Business, January 19, 2018). Only 2% of MSMEs in India are tech-savvy or they are using some means of digitization.
Auto Industry: As on 2017, India is 2.75 million units car market (annually). Whereas, China is 20 million units car market in 2017. Both India and China have similar geographies. This indicates the future potential for growth in Indian auto industry (See Figure 1) (Source: Outlook Business, January, 2018). Only 1% of passenger cars sold in India are luxury cars (BMW, Mercedes-Benz, Audi, etc). Luxury car market is expected to grow by 42% in 2018 and 21% in 2019 in India. Chinese are trying to enter into Indian electrical car segment by disturbing dreams of Tata and Mahindra. Let’s watch!!!
Figure 1: Auto Industry 2017- India vs. China
Auto Ancillaries Industry: This industry contributes 2.3% to Indian GDP. In FY2017, auto ancillaries industry in India is worth $10.9 billion; it is poised to grow to $70 billion by 2026. By 2025, Indian auto components industry would be the 3rd largest in the world. Major contributors to this industry include Motherson Sumi Systems, Minda Industries and Exide Batteries.
Chemical Industry: In FY2017, Indian Chemical industry is worth $150 billion; by 2025, it is expected to grow to $300 billion. The opportunity for Indian chemical industry is per capita chemical consumption in India is much less than western countries; This gives immense scope for this industry. Only one company in Indian Chemical industry has more than Rs 100,000 crore market capitalization; that is, Asian Paints. For 1HY2018, none of the company in this industry has revenues of more than Rs 10,000 crore. Particularly chemical industry is staggered industry; revenues are spread across multiple companies. In case of fertilizers, Indian and Chinese markets are the foremost drivers of demand for fertilizers.
Non-Banking Financial Sector: it is becoming major pillar of Indian economy penetrating into rural markets rapidly. In FY2017, mutual fund investments in India have crossed Rs 1.69 lakh crore. Almost 90% of the organizations operating in this sector have got operational profits in FY2017.
Other Sectors: By 2020, Indian retail and e-commerce sectors combined are expected to reach USD $1 trillion revenues. In FY2017, Indian education sector is worth around $100 billion; By 2047, it is expected to grow by five times. IN FY2017, engineering exports from Indian were worth $65 billion; By 2020, Indian engineering services market is projected to reach USD $1.1 trillion. Particularly, Indian electrical & electronics segment is expected to reach $400 billion by 2020; however there is stiff competition among players in this industry. 50% of the Indian population is under 25; indicating the first time buyers to the sectors like consumer durables, mobile and smart devices.