Foreign companies looking to enter Indian market must look at the Economic Survey India 2020-21. It gives an overall health of Indian market and backs your intentions to enter Indian market or not. In these unprecedented times of Covid pandemic, reflects the preparedness of Indian economy for a sharp recovery. India’s GDP is estimated to contract by 7.7 % in FY2020-21, composed of a sharp 15.7 % decline in first half and a modest 0.1 per cent fall in the second half. Monthly GST collections have crossed the Rs. 1 lakh crore mark and reached its high- est levels in December 2020 ever since the introduction of GST.
COVID pandemic affected both demand and supply.
India opted for a national lockdown to counter COVID pandemic and adopted the strategy of Nobel-Prize winning research by Hansen & Sargent (2001): a policy focused on minimising losses in a worst-case scenario when uncertainty is very high.
From a market point of view, we see a progress towards a future market, where BNI is a good parameter of measuring it, by constructing a Bare Necessities Index (BNI) at the rural, urban and all India level. BNI summarises 26 indicators on five dimensions viz.,Water, Sanitation, Housing, Micro-environment, Other facilities
Figure below shows improvement in Bare necessities in India (Urban + Rural) for the period of 2012-2018
Key findings is: Access to the ‘bare necessities’ has improved across all States in the country in 2018 as compared to 2012
It is highest in States such as Kerala, Punjab, Haryana and Gujarat while lowest in Odisha, Jharkhand, West Bengal and Tripura. An important development to notice is that the Inter-State disparities declined across rural and urban areas. The market is the biggest in the world in terms of per unit of buyers. We have to understand the changing dynamics in terms of buying behaviour that the demand for quality is consistently increasing, though India remains a price sensitive market, but we need be overly pessimist about the opportunities prevailing, if the market is approached in a right manner.
India’s forex reserves at an all-time high of US$ 586.1 billion as on January 08, 2021. India to end with an Annual Current Account Surplus after a period of 17 years. Parameters in April-December 2020 compared to same period last year. India’s merchandise trade deficit was lower at US$ 57.5 billion. Merchandise exports contracted by 15.7% from US$ 238.3 billion. Petroleum, Oil and Lubricants (POL) exports have contributed negatively to export performance. Non-POL exports turned positive.
Total merchandise imports declined by (-) 29.1% to US$ 258.3 billion. Net services receipts remained stable. Resilience of the services sector was primarily driven by software services, which accounted for 49% of total services exports
Trade balance with China and the US improved as imports slowed. Net private transfer receipts, mainly representing remittances by Indians employed overseas, declined by 6.7%. Improvement in debt vulnerability indicators like Ratio of forex reserves to total and short-term debt (original and residual) etc.
In terms of financial management, Systemic liquidity in FY2020-21 has remained in surplus so far. RBI undertook various conventional and unconventional measures like Open Market Operations, Long Term Repo Operations, Targeted Long Term Repo Operations. Gross Non-Performing Assets ratio of Scheduled Commercial Banks (SCBs) decreased from 8.21% at end-March, 2020 to 7.49% at end-September, 2020. NIFTY-50 and BSE SENSEX reached record high closing of 14,644.7 and 49,792.12 respectively on January 20, 2021. Recovery rate for SCBs through Insolvency Bankruptcy Code (since its inception) has been over 45%.
In terms of inflation, Headline CPI inflation: Averaged 6.6% during April-December, 2020 and stood at 4.6% in December, 2020, mainly driven by rise in food inflation. Rural-urban difference in CPI inflation saw a decline in 2020.
With union budget underway we can expect an expenditure budget which is again an impetus to foreign companies in India. We at the MCG facilitate Indian market development at a success fee business model, yes we stand by the sales and patient enough o grow together.