JAIN (NM COLLEGE) – 9820842680 SUBJECT: ECONOMICS
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One Delhi based headhunter described it, “the current job scene is filled with rampant optimism.” And then he adds that almost every company seems to be “buying people” these days. Our optimism headhunter hasn‟t really revealed sensitive information on shady defense deals, so what explains his hesitation to come on record? While he is still sure about the future, there is the apprehension that he might be forced to eat crow due to short term titanic events. “It was just take an Iraq war for the party to end,” says Rajeev Thakur, CEO, Grassik consultants, who quickly add that the Indian job market has expanded by 30-40 percent since last year. So what‟s really happening out there and what kind of jobs are up for grabs? Well the sunrise industries do speak it all for them. Yes the sunrise industry is the future industry and they will offer immense job opportunities for skilled as well as unskilled persons. The biggest sectors where there in expected sunrise are in biotechnology and the I.T enabled services. Apart from these the others are telecom, retail business, insurance, housing finance, tissue culture, flori culture, aqua culture and the like. Now let‟s see some of these in brief.
If Information technology marked India‟s debut into the global big league, biotechnology is being tipped to be the next big thing, which could help the country firmly establish itself on the global science and technology map. Going by the report of industry and research bodies, the sector holds immense potential for India‟s economy. GLOBAL BIOTECH DEVELOPMENT – INDIA‟S ROLE: Given India‟s share at only 2% in the global biotech market, her role in the field of biotechnology has till now been a supplementary one. The country has trained and supplied high quality human resources and scientists for U.S universities and biotech industry. “The Indian industry has played the role of being a provider of skilled professionals in the biotech industry, especially in collaborations with institutes abroad. Recent times have also seen many mergers and tie-ups between Indian industry and global corporations. This is just the beginning. The future will witness more such collaborations and alliances particularly between biotech companies to accelerate the process of commercialization and to cut down the costs. With the world recognizing the plethora of Indian intellect in the country and the international intellectual property rights coming into play after 2005, the stage is all set for the Indian biotech companies to take the genomic battle to the global war field and play a significant role in the development of the industry worldwide.
COMPARISION INDIA AND CHINA IN BIOTECHNOLOGY Low cost R&D capabilities, speed of innovation and the value of IPRs are going to be the key factors in determining success in biotechnology. It is inevitable that in this context, china and India will compete for leadership position in the region. India has the “English speaking” advantage while china has the “mindset advantage.” China already has an early mover
advantage in that it has taken proactive as well as pragmatic steps in biotechnology by being a key participant of the Human Genome Project, embracing GM crop technology and encouraging recombinant therapeutics in its healthcare programs. In contrast India is still grappling with ethical and moral issues relating to clinical research, safety issues surrounding GM crops and debating the merits. India has better capabilities in Pharma/biotech, while china has strong manufacturing capabilities and in sequencing as well as in doing genomics and proteonomics based research. India is perhaps better placed from the point of view of the setup of research institutes and the strength of computer proficiency than china. There are more than 400 universities, research institutes, and companies and a total of over 20,000 scientists and researchers involved in biotechnology in china. But this number is far higher in India. However in agricultural biotechnology, China is more advanced as compared to India in Agribiotechnology. China is developing more plant bio technology products than any country outside of North America. Both India and china are offering vast growth potential for biotechnology investments and currently have a huge untapped market. The biotechnology industry of china has generated a net revenue over 2 billion dollars in 2000 in contrast to the 25 billion dollars generated by the U.S. Nevertheless, at present, China and India are far behind the US and other Western countries in biotechnology. Both the countries can, however, potentially outpace Western countries in the development of biotechnology.
BIOTECH BUSINESS SEGMENTATION AND GROWTH FORECAST 2002-2010 FOR INDIA
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1. AGRI BIOTECH
India being a large agrarian economy, agriculture is an important source of foreign exchange for the country. Also, rapid growth of agricultural, by increasing productivity on the existing land becomes essential in order to ensure future security for the growing populace. In March 2002, Monsanto‟s seed partner in India received commercial approval for its insect protected hybrid cotton seed from the Indian Genetic Engineering Approval Committee (GEAC). This was a major step in Indian agricultural biotechnology sectors. In order to commercialize biotech products, both entrepreneurs and major business firms would have to get involved. On the investment front, as the Indian biotech industry is largely involved within the pharmaceuticals or agricultural industry, and because of the experience of major firms, biotech investment has been conservative and less risk prone unlike in the Western countries. Biotechnology and genetic engineering (with focus on technology department, research on gene and protein based drugs, molecular immunology, crop plant transgenic, food biotech products, veterinary biologics) could play a major role in growth of the Indian economy with opportunities for global export from India. Experts say in India, agricultural biotechnology advances are being desperately promoted in the name of eradicating hunger and poverty. Agricultural biotechnology has enormous potential. The use of this technology could increase in future. However,
speeds with which it will be adopted depend on the consumer‟s expectance of technology. In comparison china is a leading player in the area of agricultural biotechnology with a multitude of genetically improved crops, fast making it one of the leading players in the world market. India comparatively has been a slow starter in this field, even though our foray into biotech research started much early. In the years to come India, with interesting products in the pipeline and attractive projects will be a player to reckon with. “India has the potential to be the regional leader in agricultural biotechnology. South Asia represents close to 20% of the world‟s population. In order to dominate the South Asian market, Indian industry will need to focus on the R&D relative to the market. With the world focus on the agricultural biotechnology, Indian companies will need to trend carefully on how they approach these markets and ensure that there is no opportunity for negative public perception to arise.
BIOTECHNOLOGY IN HEALTH CARE DIAGNOSTICS: The market for diagnostics in India stood at about 100 million$ during 1997 and is estimated to reach 200 million $ by the end of the year 2003. There is an increased consumption of diagnostic devices and tests in public
hospitals. There are more that 11000 hospitals and 14000 diagnostic laboratories in India that consumes large volume of diagnostics. VACCINES: The domestic vaccine market in currently in the region of $100 million and this is growing at the rate of more than 20% per year. The potential for these products is immense with the possible market for all types of diarrhea vaccine alone being about $200 million. Vaccine against titanus, diphtheria pertusis and their combinations and measles are produced in the country. A manufacturing unit with an annual production capacity of $100 million doses of oral polio vaccine has been set up by the central government at Bulandsahar (UP). RECOMBINANT THERAPEUTIC PROTEINS: The Indian government has granted marketing licenses for about 25 recombinant therapeutic proteins. These include insulin, alpha inter feron hepatitis B surface antigen based vaccine, GM-CSF, G-CSF, blood clotting factor, erythropoietin, streptokinase, human growth hormone and follicle stimulating factor. Several causes including WORKHARDHT, PIRAMAL and DABUR are exploring the manufacture OF biogenerics. In addition DABUR INDIA is developing plant machines and is working in a natural substance based immunodulateor.
BIOTECHNOLOGY IN INDUSTRIAL MANUFACTURING Biotechnology in industry employs the techniques of modern molecular biology to reduce the environmental impact of manufacturing. Industrial biotechnology also works to make manufacturing processes more efficient for industries such as textiles, paper and pulp, and specialty chemicals. Some observers predict biotechnology will transform the industrial manufacturing sector in much the same way that it has changed the pharmaceutical, agricultural and food sectors. Industrial biotechnology will be a key to achieving industrial and environmental sustainability. What Is Industrial Sustainability?
According to the Organization for Economic Cooperation and Development (OECD), industrial sustainability is the continuous innovation, improvement and use of clean technology to reduce pollution levels and consumption of resources. Modern biotechnology provides a number of avenues for achieving these goals. In practical terms, industrial sustainability means employing technologies and know-how to lessen material and energy inputs, maximize renewable resources and biodegradable substances as inputs, minimize the generation of pollutants or harmful waste during product manufacture and use, and produce recyclable or biodegradable products.
SWOT ANALYSIS OF INDIAN BIOTECH SECTOR STRENGTHS WEAKNESS
STRENGTHS Trained manpower and knowledge base. Good network of research laboratories. Trained manpower and Missing link between research Knowledge base. and commercialization. Rich biodiversity. Well developed base industries. Access to intellectual Resources of NRI‟s research Good network of in this area. Lack of venture capital. laboratories. Extensive clinical trials and research- access to vast and diverse disease populations. Bio-diversity – Opportunity for genomic research. low R & D Rich biodiversity. Relatively expenditure by industry. WEAKNESS Well developed base Image of Indian industry Missing link between research and commercialization doubts industries. Lack of venture capital about ability of Indian Relatively low R&D expenditure by industry companies to develop original Access to intellectual products for international resources of NRI’s in this markets. area.
Image of Indian industry-doubts about ability of Indian companies to develop original products for international market. OPPORTUNITIES Large market Export potential Base for contract research for International companies due to Rising costs of R & D abroad Large number of patients covering wider range of diseases-clinical research/trials. THREATS Danger of anti-biotech Propaganda gaining ground IPR policies. EMERGING OPPURTUNITIES India‟s pre-eminent role as a global software provider creates the impetus realm of biotechnology (BT). A large reservoir of scientific human resource, centers of academic excellence in the biosciences, a vibrant pharmaceutical industry and fast developing clinical capabilities collectively point to a booming biotechnology sector in the future. The biotechnology sector, although nascent at the present time and accounting for a mere 2% of the global biotechnology market, is poised for exponential growth over the next five years with expected global market share of 10%. Indigenous biotech products and services presently account for approximately $150 million. The current segmentation is shared equally between the human therapeutics such as vaccines and biogenerics, contract research services including r-DNA technologies, genomics and bioinformatics and industrial products such as industrial enzymes, diagnostics and bioprocessing equipment and instrumentation. An emerging segment is agri-biotech, which is expected to realize rapid growth over the next five years and will account for at least 15 % of the total indigenous biotech market. The consumption of biotech products in India is estimated to increase tenfold to $1.5 billion by 2007 and to $4.5 billion by 2010.
HUMAN RESOURCE: India‟s rich human capital is believed to be the strongest asset for this knowledge-led industry. An English speaking skill base comprising three million graduates, 700,000 postgraduates and 1500 Ph.D.s qualify in biosciences and engineering each year. A large percentage opts for overseas opportunities. It is estimated that 10% of researchers and 15% of scientists engaged in pharma/biotech R&D in the US are of Indian origin. The software sector and the emerging biotech sector now provides large employment opportunities. A services model ensures large levels of gainful employment. Currently the IT sector employs in excess of 250,000 engineers and scientists. The nascent biotech sector in contract employs a fraction of this. The current employment statistics indicate approximately 10,000 scientists in the Indian biotech sector. However, the CRO opportunity alone has the potential of harnessing 50,000 professionals the next five years. EVOLUTION OF BIOTECH SECTOR IN INDIA: Indian BT has had an interesting evolution that has started with strand of activity on various academic and industry fronts which are now intertwined to provide a strong interface between industry and academia. The future of Indian BT will henceforth follow the format of academica generating intellectual capital for commercialization by industry. It is invisaged that these will scientists to pursue entrepreneurial aspirations. BIOENABLERS THE POLICY FRONT: The Indian government had the foresight to identify BT as a thrust sector for development of biotechnology as a nodal agency for policy making and development. Initially, the DBT focused on generating trained manpower and development and over the years it has extended its reach to other areas of focus such as genomics, proteomics, trangenics, stem cell research and product development. The budgetary allocation to biotechnology has increased from an amount of $150 million during the first phase: 1986-1988 to $300 million in the fiscal year 1997-1998 and $500million in the fiscal year 2002-2003. the ministry of science and technology also plans to introduce additional venture capital funds in line with its technology development fund with its
technology development fund to promote small and medium biotech enterprises. REGULATORY FRAMEWORK: A well conceived regulatory framework is in place to approve GM crops and r-DNA products for human health based on independent appraisal and approval bodies to ensure high levels of human and environment safety. A proactive government policy allows stem cell research in the country based on sound ethical guidelines. PATENT REGIME: The Indian government is committed to a product patent regime by 2005 in total compliance with the provisions of of WTO and TRIPS. While key aspects and relevant provisions of TRIPS, Paris convention and Doha declarations have been taken on board, available flexibilities have been incorporated to safeguard national security and protect varied interests of the nation including public health. BIO-CLUSTERS: Several states have been taken strong initiatives in developing bioclusters based on intrinsic academic and entrepreneurial strengths. Key features of these clusters are biotech-parks, fiscal incentives, centers of biotech excellence, incubators etc. PRESENT STATUS: A comprehensive survey conducted by the confederation of Indian industry, indicates that there are currently 160 registered BT companies in the country. Of these 60 are distinctly engaged in molecular and recombinant biotechnology. Around 50% of these companies are located in Banglore, and Hydrebad and 75% of these companies have been established in the last five years. The total revenues of this sector stand at $150 million in 2002 of which $60 million are revenues.
IT and IT-Enabled services contribute significantly to the growth of Indian economy through primarily the sale of skills in software area, by providing software services to other nations. Since the early 90s, software has been the driving engine of the Indian IT industry. The potential of its high capacity to generate wealth, foreign exchange and employment has caught the imagination of India's businessmen, citizens, economists, bureaucracy and politicians alike. Software driven IT industry is today at the top of India's national agenda as an instrument and a model for the modernization of the Indian Economy. ITES, which includes call centers, has already provided jobs to over a lakh people. By 2008, it could add another million jobs. The figure would be even higher, if one takes into account a recent study, which states that 70% of all global ITES work will be outsourced in India. Along ITES, the consultancy services, call centers and BPO are definitely sunrise industries for the upcoming future. Consider consultancy services:TATA consultancy services in India itself provide jobs for more than 5000 employees. They project to employees about 40000 employees at least by 2010. Also BPO (Business Process Outsourcing) is a booming sector. Example: Reshma Taranum, 25-year old team leader at I-Seva Systems, a Bangalore based call center, with a Rs.2.4 lakh annual packet (excluding perks), she chooses to work for graveyard shifts. Her logic: It allows her to crash out at 4.30 am, get up by 12.00 and still have the part of the day with her before reporting at 6.30 p.m. “I can still contribute more to household chores and do some personal work. Although my family feels I spend less time with them, it‟s O.K. since I‟m unmarried,” she explains. The call centers mostly recruit “agents”, the people who answer customers call (or call up potential customers), whose starting salary even in
a top notch company like GE, would range between Rs. 6000-10000 a month. IT enabled services are expected to grow 15 fold by 2008, providing vast opportunities for Indian players. Apart from IT enabled services, other promising businesses of the future seem to be web-based applications development like the data warehousing, data mining, embedded systems applications and Java applications.
FUNCTIONS: Customer Interaction Services Business Process Outsourcing/ Management; Back Office Operations Insurance Claims Processing Medical Transcription Legal Databases Digital Content Online Education o Data Digitization / GIS Payroll / HR Services o Web site Services Customer Interaction Services Business Process Outsourcing/ Management; CONCLUSION: Back Office Operations Insurance Claims Processing •IT is a fast-growing, export-oriented sector Medical Transcription Legal Databases •Also definite potential for contributing to broad-based growth – much more Digital Content than software exports Online Education •its successData Digitization / GIS areas where reform is needed exposes key bottlenecks and Payroll / HR Services Web site Services •Policy initiatives have to be general, not sector-specific, or narrowly targeted – IT as “the thin end of the wedge”
•IT can also contribute to broader economic development – governance, education, operational efficiency, market efficiency.
Apart from regular working hours for „telecos‟, there‟s the option of becoming a dealer. Reliance infocomm is believed to be recruiting agents and in-house executives “like mad”. In fact, its manpower requirement could be 36,000 people over the next years. Apart from agents the demand for salesperson will rise since there‟be new products and services to sell.
Example: Pramit Jaiswal, a 27-year old from Meerut who was selling home loans till recently is already thinking big after getting a Reliance Infocomm dealership. “I want to earn in lakhs”, he says, “And if this is successful, I‟ll try to become a franchisee for other reliance products. Maybe even own a Reliance petrol pump at some stage.” At the moment however he expects to earn Rs. 20,000-30,000 from the infocomm dealership. There is absolutely no doubt that mobile is going to be the key to the growth of the telecom industry in India, as it has been the trend globally. And hence the onus will be on the government to facilitate the expansion of the market. It is desired that the government took some lessons from the other nations of the world which have made rapid strides in this direction. Four words sum up today‟s telecommunication market: Private Competitive Mobile Global
So, the writing on the wall is clear: if India‟s telecom sector has to have a presence on the global map, it needs to promote mobile communication, even if it means at the cost of age-old fixed line communications. Thus, as long as the competition benefits customers, irrespective of whether happier customers would mean healthier carriers or not, and price cuts are driven by true competition and are not predatory in nature, let the subscriber be the king. Anyways, availability and affordability are going to be the challenges for the industry and the policy makers alike. Thus if India‟s telecom sector has to have a presence on the global map, it needs to promote mobile communication.
Housing finance is relatively safe and secured by mortgage of property, with very low delinquency rate, which is what a banker ideally looks for. Unlike the other modes of credit, which are of short term in nature, housing finance is long term oriented and gives a better average yield. The housing finance sector has been witnessing an exponential growth in the last few years. The trend is likely to continue in the future also. Considering the developing real estate market and growing importance given to housing loans by banks and financial institutions as a part of their portfolio, scenario is likely to remain very competitive. Things are moving certainly in favour of customers. Not only have home loans become cheaper, but they also come with a host of value-added services including property identification. The Indian property market has been resilent and has picked up slowly. The year 2002 witnessed a growth
after the slump in 2001. Today there are better competitive options available for the customer than before.
Today 18000 crore retail segment employs 35-40 million people directly or indirectly. The organized retailers, who account for only 2% of the market, could hire another 2 lakh people over the next 3 years. All large corporates like TATA are already in business. (Over 250 new malls are expected to come up in the next 2 years.) And if the government allows FDI in retail, global brands like Walmart will also be eyeing the lucrative Indian market. Retailers require shop floor supervisors whose income would be Rs.20, 000 or less for just part time. However a manager in a mall could earn up to Rs.50,000.
Insurance is tipped to become a $25 billion industry by 2010. It continues to throw opportunities, especially for agents. Several private insurers have been known to hire up to 2000 agents a month. Currently there is a poor of 8.5 lakh agents in the country which is expected to rise by 2 lakh per annum over the next few years. Ritu Nanda, LIC‟s most successful agent says that, “The job allows a person to be his or her own boss since one can work according to ones own wishes. Insurance agents may be better place since private firms are sounding them out with figures like Rs. 25000-50000 a month in the metros. There are 20 companies offering both life and general insurance products to Indian customers. One of the biggest challenges for HR in this sector in talentrecruitment is to identify sectors, which come close to the required competencies in insurance and recruit people with experience in this sector. The Indian Insurance opportunity has attracted the best of Indian companies and MNCs.
In this competitive scenario, organizations that are fast, productive and willing to adapt will succeed. People, who can work as teams, learn and deliver fast, think on their feet and accept ambiguity and diversity are likely to succeed.
CHARTERED FINANCIAL ANALYST
ECONOMICS – SAMUELSON
ECONOMIC TIMES FINANCIAL STANDARD
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