Emerging Facts of India Economy
If companies can deliver services to different regions of the world from a single location! India's Geographical location offers this advantage leading to the very lower cost of operation, management & delivery, better to say everything. Services in Singapore and Hong Kong can be delivered by starting early in the morning, late evening shifts in evening to serve in UK & some European countries while the night working shifts perfectly match the timings of US to serve clients there.
India, which is becoming organized in trades and Investments:
The growth in number of companies listed on BSE is a significant indication of Indian industry becoming more organized. The companies in several places whether it is health care, real estate, manufacturing, service, IT, hospitality, or retail have shifted from unorganized to organized space. This transition is expected to become even fast paced.
The transparency levels across the investment horizons are also improving according to the JLL Transparency Index 2014 which is undergoing finalization. The transparency improvement in the preliminary findings of the index is better than even the Asia Pacific average.
The facts such as IBM which entered India in 2003 have grown its employ strength in India by 16 times from just 9000 in 2003 to 150000 in 2014. This is one third of total work strength of IBM across the globe. Accenture added more than double employees from about 32000 in 2007 to around 85000 in 2014, Ericsson India employee strength of about 19000 accounts for 16% of its global workforce. Some UK and Germany based financial institutions in India have also added significant number of employees in past few years for their back office and offshoring operations. Companies headquartered in USA today, occupy almost half of the office supply in India while Europe based corporates occupy 14%.
The Union Budget in 2014 announced on 10th July has also indicated that there are lots of new infrastructure projects and improvements are coming in India. The things such as available office space stock, office absorption and supply rate, improved transport infrastructure well placed hospitality industry, growth in foreign travelers, development of industrial corridors and improvement in physical & social infrastructure are the clear indication that India is a perfect investment destination for foreign corporates.
But the real roots of the problem go deeper, to a mismatch between India's growth targets and the ambitions of businessmen, and the ability of equity and debt markets to provide adequate capital to satisfy these things or people. Whenever any commodity is rationed, because supply is less than demand, black markets will raise up to service buyers for a premium.
India has ambitious targets for its own infrastructure, social services and manufacturing. The government is strapped for cash. So, the private sector has been included to bid for ambitious projects.
The trouble is that very few private players have pockets deep enough to afford the initial equity — typically one-fourth of the cost — of big projects. Thus starts a cycle of trickery where promoters "create" equity funding from bank borrowing, delay and raise up project costs and create multiple lines of credit in a pyramid that could collapse any time.
Bank chiefs and political backers are paid off. Regulatory and many administrative solutions are possible. But the exact real solution is the expansion of equity and debt markets. Companies should be able to raise equity, regulators must make sure that money raised for particular projects is deployed correctly, and not get directed elsewhere.