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| India Goes Global |
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A land of kaleidoscopic cultures, with a rich heritage and a bright future, India is making its mark. The world’s largest democracy and, already, one of the most important economies globally, India stands on the threshold of a new era in which the second most populous nation in the world is widely expected to rapidly become a key global player.
Following economic reform in the 1990s, India opened its markets to international competition and investment, triggering rapid economic growth. Today, the country is an emerging economic power with enormous human and natural resources, and an impressive knowledge base. Thanks to its well-educated workforce and a growing middle class that wields ever-greater buying power, India is one of the fastest growing markets in the world, averaging 7% annual GDP growth since 1997. Based on current trends, economists predict that, by 2020, the country will be among the leading economies of the world.
India’s boom is being fuelled both by domestic demand from its growing consumer base and by increasing appetite for its export prowess. The result is thriving markets for telecom (second largest in the world), automotive (fourth largest) and pharmaceuticals (fourth largest by volume and world leader in generics), not to mention consumer electronics, retail, and fashion. The country is also becoming an important manufacturing base for local and multinational exporters targeting markets around the world, putting India squarely on the global economic map. This trend is expected to continue apace, making India, together with China, one of the most dynamic and desirable markets for international business in the years to come.
According to R.S. Subramanian, Head of DHL Express in India, “The Indian market is in an exciting position and will be the place to be for global business in the next few years.”
Christoph Remund, Head of DHL Global Forwarding in India, agrees: “India is going global and looking for new, innovative ways to bring goods to customers, reduce costs, and make doing business simpler.”
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India Facts & Figures
- Area: 3,287,263 sq km
- Population:
1,156,897,766 (July 2009 est.)
- GDP (purchasing power parity):
$3.548 trillion (2009 est.)
- GDP real growth rate:
6.1% (2009 est.)
- Monetary unit: Indian rupees (INR); 48.766/$1 (2009)
- Inflation rate: 9.8% (2009 est.)
- Unemployment rate: 9.5% (2009 est.)
- Exports: $155 billion (2009 est.)
- Export partners:
US 12.3%, UAE 9.4%, China 9.3% (2008)
- Imports: $232.3 billion (2009 est.)
- Import partners:
China 11.1%, Saudi Arabia 7.5%, US 6.6%, UAE 5.1%, Iran 4.2%, Singapore 4.2%, Germany 4.2% (2008)
* Source: CIA World Factbook
(January 2010)
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In the scramble to modernize its economy, India has slashed import duties over the last five years, from some 350% down to an average of 15%, thereby opening up its market to the world. Internal barriers to the free movement of goods and services between the 28 states of India are now also being abolished, with the introduction of the General Sales Tax (GST) at the end of 2010 – a unified sales tax for all of India, replacing the myriad levies of the individual states. This will mean a significant change in how companies do business in India going forward, with a shake-up in the way logistics and transport are managed, including a big move to consolidate warehousing.
An equally important factor in unfettering India’s potential is a concerted push to improve infrastructure. Huge investments are planned or underway to improve the flow of goods, including new highways linking the largest cities, and new airports to link India to the rest of the world. Moreover, the government has realized that it cannot close the infrastructure gap on its own, which is why private investors and foreign direct investment are now welcome. As a result, modern airports in Bangalore, Delhi and Mumbai are among major infrastructure projects being financed with foreign investment.
As the business climate in India matures, consumer expectations are getting more sophisticated as well, increasing the demand for superior logistics services, in tandem. In order to satisfy their customers’ needs, companies are starting to demand higher quality, while also looking at the overall supply chain, to find ways to streamline business and achieve faster time to market. Meanwhile, they are looking to outsource more and more non-core business activities, like inventory management, on-site warehousing, and service parts logistics.
“Customers are looking for extended reach in India, with simplified, customized, and integrated solutions under one roof – and they prefer one partner who can handle it all,” says Anil Khanna, Head of DHL’s domestic express subsidiary in India, Blue Dart.
“Companies are also increasingly looking at quality and bringing this up to the level of more mature markets, which is where we have a distinct competitive advantage,” adds Oskar De Bok, Head of DHL Supply Chain in India.
DHL’s history in India goes back 30 years, with a concerted push in the last decade through the consolidation of the logistics business of the local joint-venture partner Lemuir Group and the acquisition of Blue Dart, the largest domestic express service provider. All four of DHL’s business units in India – DHL Express, DHL Global Forwarding, DHL Supply Chain, and Blue Dart – are working jointly with customers to provide seamless, end-to-end supply chain solutions.
Things are now moving so fast in the logistics market in India – the relevant segment of the market is estimated to be growing from $30 billion in 2008 to $90b by 2012-13 – that DHL is finding it necessary to invest its own resources in local infrastructure to be able to provide its customers with the world-class solutions they need.
In 2009, for example, the company announced it would build a center of excellence for the fashion and apparel industry – a sector that accounts for the largest volume of India’s exports.
DHL is also responding to customer demand in the life sciences sector for temperature-controlled logistics by putting in the necessary infrastructure across India. This includes recently-announced investments in facilities in Hyderabad and Mumbai, which will be the first such facilities in the country, enabling the best-practice handling of pharmaceuticals for export to the tightly-regulated European and U.S. markets.
Similar investments are being made in the oil and gas industry, and DHL is setting up free trade warehouse zones with partners on both the east and west coasts of India.
At the same time, in working closely with customers to prepare new distribution strategies once the GST is implemented, DHL is consolidating its own sites and building multi-user warehouses in Mumbai, Bangalore and Delhi, to be ready for customers in 2011.
In this new era of globalized business in India, its emerging global trading groups, like Tata, need a provider with a global network and the full spectrum of supply chain solutions, and this is where DHL’s offering is unmatched by the competition.
Other top global customers are also looking for agility and responsiveness in a partner who can move as fast as they are in India, which is why DHL is now running a number of warehouses for leading consumer electronics and white goods producers. Similarly, DHL has been working with a major player in the computer industry for the last decade in India, providing end-to-end supply chain services, including freight, warehousing, and distribution. In addition, DHL has comparable arrangements in place for key customers such as Nokia, among others.
On the fashion and apparel side, Levi Strauss India Pvt Ltd was looking for a supply chain partner who could handle its domestic warehousing and distribution needs in support of the company’s expansion plans in India. Based on DHL’s expertise in warehousing and related activities on the domestic front, and its handling of supply chain operations for Levi Strauss affiliates in Malaysia and Europe, Levi Strauss & Co awarded the logistics service operations of its Indian affiliate to DHL in 2009.
And, in the rapidly-developing automotive sector, DHL plays a major role in managing vendors and inventory for such global manufacturers as GM, which is sharply ramping up its production capacity to meet the booming demand for vehicles in India.
In fact, almost every one of DHL’s top global customers is present in India, harnessing the unique combination of the vast and deep reach of DHL’s domestic express and supply chain capabilities, along with its industry-leading worldwide transportation network.
India is fulfilling its promise with an enviable growth rate, an ever-improving business climate, and a dynamic entrepreneurial spirit. Global businesses are discovering the attractiveness of the country’s vast and growing domestic market, as well as its potential as a global manufacturing base. DHL, too, is poised to invest further in the country, ensuring its infrastructure and network in India continue to match the requirements of the world’s top global players, as they expand the scope of their activities in this new global economic powerhouse.
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DHL in India: Fast facts
With over 30 years of experience in India, DHL is No.1 for international express (DHL Express), domestic express (Blue Dart), ocean freight and airfreight (DHL Global Forwarding), and supply chain services (DHL Supply Chain)
DHL’s combined resources in India include:
- Over 9,900 employees
- Over 5,700 vehicles
- 8 freighters and 75 commercial airline options per week for airfreight from the five largest gateways
(Delhi, Bangalore, Chennai, Mumbai, Calcutta)
- Servicing over 21,000 locations with almost 300,000sqm of warehouse space
- Moving over 87 million shipments per year
- No.1 customs broker in India through in-house customs capabilities
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For more information on DHL in India, please contact your Customer Manager or gcscommunications@dhl.com
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