What is missing in India’s growth story?

There is no doubt that India is growing fast and consistently. We are able to register above average growth compared with most economies globally.


In the past decade, we have remained less affected by the financial issues of the global markets. India’s consumption story is very much intact and is improving with every passing month.

 

Although we have all these positive stories floating around the Indian economy, I sense that there is still something missing in our economy. If we have a look at some of the developed countries or the emerging markets more closely, we might be able to understand what is missing from India’s growth story.

 

 

A developed country such as the US has produced big companies such as Unilever and Microsoft. Further, new kids on the block such as social networking and software companies such as Google and Facebook belong to the US.

 

They invented or marketed big revolutions such as web business, software boom, and social networking through companies such as Microsoft, Yahoo, Google, Twitter, and Facebook.

 

All these companies have emerged into colossal brands and are an integral part of people globally. These are brands, which people know very well and some of them have become almost synonymous with the actual product category.

 

All these US companies have spread their businesses globally including India and are earning big money from across various continents, truly deserving to be called ‘World MNCs’.

 

This phenomenon is not just limited to the US. Other emerging economies such asKorea and China have produced true world MNCs such as Samsung, LG, Huawei, and Alibaba. All these companies have created a big retail brand name for themselves. Products from these companies are sold like a hot cake just with the help of their brand name itself.

 

China has produced companies such as Baidu and Alibaba, which are compared with the likes of Google and Amazon of the US. More recently,the Chinese web giant Alibaba announced that it is proposing to come out with a US IPO of more than$ 25 bn, which is likely to value the company around $ 170 bn almost Rs.10 Lakh Cr. This is double the size of market cap of India’s biggest company.

 

Compare with this, thus far, India has not been able to produce big world MNCs with popular world brands. Although Indian blue-chips such as Reliance, Wipro, and Infosys have large export business and enjoy a good global presence, we have not been able to create retail brands across the world, with brand names itself generating global product sales like in case of our immediate counterparts China.

 

Many Indian IT personnel have worked in the US to launch and manage innovative companies such as Google, Microsoft, and Yahoo. However, India is still not able to use the currently available talent pool to build big global companies in India such as the ones mentioned above.

 

India’s eCom story has just started to improve with companies such as Flipcart, Snapdeal, and Naukri enjoying consistent success. However, there seems to be a long way to go for us to compete with global brands.

 

US companies now world’s biggies

China

Korea

Google

Twitter

LinkedIn

Facebook

Yahoo

Microsoft

Unilever

Baidu (China’s Google)

Huawei

Alibaba (China’s Amazon, ebay)

 

Samsung

LG

 

 
Very Few Indian Co’s May be called MNCs but still not a big Retail Brand worldwide India’s eCom Co’s Still too small
L&T

M&M

Wipro

Infosys

Reliance

 

Rediff

Flipcart

Snapdeal

 

 

 

Investors can invest in many innovative concepts mentioned above through mutual funds such as Franklin US opportunities Fund and upcoming new business IPOs from India.

 

We are really missing on innovation and big world MNC brands in India. India needs to innovate and come out with new ideas and develop big brands, which would work globally to compete with the developed and other emerging world economies. With emerging companies such as Micromax, Flipcart, Snapdeal, Naukri, and Hike, things are looking promising.

 

 

 

Happy investing…

Manish Tawde

Product Research & Financial Planning

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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