STRATEGIC BUSINESS PLAN

Market Entry into South India

2012

NGM Team 1Shannon Rushe – James Dellinger –Patrick Greene – Stephanie McGreehan –

TABLE OF CONTENTS

Page

Executive Summary................................................................3

Section

1. Strategic Focus............................................................................ 42. Regional Analysis........................................................................63. Market Analysis.......................................................................... 84. Products.................................................................................... 165. Marketing.................................................................................. 206. Strategy................................................................................257. Recommended Strategy.............................................................278. Risk Factors and Regulatory Compliance..................................309. Plan Improvement.....................................................................33

Appendices..............................................................................34Bibliography............................................................................54

EXECUTIVE SUMMARY

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There is a great business opportunity for First Touch Technology (FTT) to extend its unique desk

designs into other regions. India has a large market, a growing middle class with substantial

purchasing power and a massive amount of existing and developing academic institutions. It has a

long established legal and accounting system, an independent judiciary, a free and vibrant press,

and a strong tradition of entrepreneurship. The use of English is widespread in business and

commerce. Indian engineers, scientists, technicians, managers and skilled personnel are widely

regarded as among the best in the world. Procedures are being simplified and streamlined to help

global companies like FTT to do business in India. Real Estate in India shows every sign of

emerging as one of the fastest growing sectors, second only to agriculture in terms of employment

generation.

This Market Entry Strategy outlines a marketing analysis based on regional and product

assessments. A number of strategies are considered and the marketing plan recommends entering

the market independently with assistance from Enterprise Ireland, who has an office in New Delhi.

The risk factors and regulatory compliance are also considered.

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SECTION ONE

STRATEGIC FOCUS

The Business

Joe Griffin is Head of First Touch Technology (FTT).

The company was registered in 2000, but the business name was not registered until 2005

(Companies Registration Office).

FTT currently is situated in two locations: Meath, Ireland and Lincoln, UK.

FTT were recently part of the BETT show in London 2012 with Hewlett Packard. They have

worked with clients across a range of industries including government and universities.

In 2008 they made enquiries to Enterprise Ireland about entering the India market but this was not

progressed further.

The Aim of this Plan

First Touch Technology wants to assess to attractiveness and potential of the market in South

India.

Our Mission

First Touch Technology is dedicated to transforming the office environment by providing solutions

driven by the application of our core values.

Clients range from large corporations, including government departments, and schools to the home

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office user; each is provided with a product tailored to their needs.

At the centre of out product range is the e-space space management system, the solution for

creating office spaces that are more productive, cost effective and healthier.

FTT provides solutions to enable cost saving, space saving, and a healthier working environment.

Core Organisational Competencies

Unique e-space desk designs, which are patent and design protected.

FTT personnel can allow you to re-use your existing furniture and retrofit e-space designs to fit

around your current space; refurbish your current workspace with new worktops or design an

entirely new office space for you.

Organisational Values

Core values: innovation through design, user focused and environmentally friendly.

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SECTION TWO

REGIONAL ANALYSIS

(See Appendix 2.0 for detailed analysis by region)

Geography

Kerala, Karnataka, Tamil Nadu and Andhra Pradesh are the four regions, which make up the whole

of Southern India. Some parts of all these regions make up the southern coastline. Each region is

made up a number of districts and all displaying a diverse geology, which includes vast plains,

desserts and numerous mountain views. The line created by the Narmada River and Mahanadi

River is the traditional boundary between northern and southern India (South India Tours.com).

The three major rivers within South India are the Kaveri, the Godavari and the Krishna, are located

along the Bay of Bengal. With these brings ports, which enable imports and exports through cargo

and thus distribution made easier.

Population

The approximated population of South India is 233million people. With a population as big as this

there are a vast amount of religious, cultural and ethic outlooks. The main religions followed are

Hinduism, Buddhism, Jainism and Sikhism. 60% of the population lives in permanent housing.

Life expectancy is from the age of 64-68 years of age. “India's high population growth results in

increasingly impoverished and sub-standard conditions for growing segments of the Indian

population.” (About.com/Geography)

Education

The education system throughout Southern India has reached new heights in recent times with

Government initiatives, public – private partnerships. (Digital Learning.in, 2009) As Karnataka is

one of the main regions for IT development the skills and expertise which students acquire benefits

the economy further. Teaming up with IBM for certain initiatives this is a real area of opportunity

for the population of South India and further contributing to the growing economy.

Infrastructure

Infrastructure within Southern India is adequate they have a selection of airports, which see

international airlines avail off, a rail system, which connects most major towns and cities

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throughout. There are also a number of ports, which again enable the ease of export and imports

through the use of cargo ships.

Political Structure

The regions are made up of different constituencies. They all adhere to rules and regulations of the

National Government. “India's independent judicial system began under the British, and its

concepts and procedures resemble those of Anglo-Saxon countries.” (Global Edge) Internationally

India is held with high stance, due to its size population and growth prospects, foreign direct

investment here has a lot of potential.

Economic Structure

Despite the global downturn India has had growth yet in recent times it has seen a slight reduction

in their economic growth rate. The expected annual growth is 9%. Although Southern India has

quite a ‘rich’ economy, the north of the Country is the poorest part with a high percentage living

off less than US$2 per day. This highlights the huge discrepancies within India and the reason why

social class is often the topic of some political agendas. Corruption, rising fuel and food cost, and

inequality can be witnessed within this economy, yet over all they are still quite productive.

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SECTION THREE

MARKET ANALYSIS

Market Size & Attractiveness

Cavusgil et al.’s (2004) assessment of the attractiveness and potential of markets ranked India 21st

out of 88 countries (Appendix 1.0), ahead of EU countries Portugal and Italy and other growing

developing markets such as Brazil and Russia, highlighting the increased appeal for foreign

investment there. Although India is ranked 42nd in terms of ‘Risk’, it is also favorably ranked in

terms of ‘Market Growth’ and is the highest ranking of the developing nations to be listed.

Furniture Market India

The Italian Trade Commission’s Report (2009) states that India’s furniture industry is growing

(currently 25-30% per annum and set to rise) due to the large and increasing middle class

(population 400m) whose purchasing power is growing also.

India’s ‘furniture sector makes a marginal contribution of 0.5% to India’s GDP’. It is worth

US$8bn and employs 30,000 people. Although it is a growing market, it is highly unorganized,

with just 15% classified as ‘organised’ (‘mainly imports and a few Indian manufacturers who are

mostly into the office furniture segment’).

‘The office furniture segment boasts of better companies from the point of view of better size as

well as technological innovations’.

Malaysia External Trade Development Corporation (Matrade) announced earlier this year that

Indian furniture market is highly promising for the Malaysian furniture segment ‘apart from the

expanding middle class, a boom in the construction industry and growing demand for office space

in major cities offer good market potential for Malaysian furniture industry players’.

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Internal Marketing Strategy Analysis

Value Chain

External Marketing Strategy Analysis

PESTEL Analysis

Political:

Transparency International ranked India at 95 out of 182 countries (with 1 being the least corrupt)

(www.guardian.co.uk, 2011). Doing business in India is still fraught with difficulties as it is such a

large country with governance coming from a central government and there are uniquely different

state and local governments and political power players in each state.

Economic:

A 2011 report from the Economist Intelligence Unit said that ‘India's real GDP grew by 7.7% year

on year in April-June, the slowest pace of expansion in six quarters, and down marginally from

growth of 7.8% in January-March’. Although growth has dropped slightly, it is still growing and

so, is still a highly attractive market.

Socio-Cultural:

India's population is estimated at more than 1.1 billion and is growing at 1.55% a year. It has the

world's 12th largest economy, ‘large numbers of well-educated people skilled in the English

language to become a major exporter of software services and software workers, but more than half

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of the population depends on agriculture for its livelihood’ (GlobalEdge Report).

Technological:

There are 39 million Internet users in India and this figure is growing in line with increased access

to broadband. ‘India is now ranked as the seventh-largest global market for social networking. The

total Indian social networking audience has grown by 43% in the past year, more than tripling the

rate of growth of the total Internet audience in India’ (Euromonitor Report, 2010).

Educational:

Southern India’s educational capacity is growing, with existing campuses expanding and new

universities being developed to cater for the growing number of students there (Lewin T., 2012).

With 150+ universities and growing, there is massive potential for FTT to maximise on the need

for modern desk design.

Legal:

A recent EconomyWatch (2010) analysis states that ‘legislation on various ways of setting up

business and on intellectual property rights exists as well as a lot of advantages for foreign

companies to establish business alone or with partners in India. Indian government is continuously

taking steps to minimize entry-exit barriers for foreign companies and government is facing

pressure to liberalise the duty structure’.

The e-space range of fittings is patent protected, but the regions that are covered by this patent are

not mentioned. FTT should ensure that products and logos are patent protected in India before

entering the market.

FTT have used the trademark symbol alongside their logo on their site but it is unclear whether

they have trademarked their logo or name, and they should also ensure these are protected in India

also.

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PORTER’S FIVE FORCES

Suppliers

First Touch Technologies are not heavily reliant on suppliers; the most valued asset is the design

capability of the team and the e-space designs that they have patented.

The materials needed to build can be sourced from any country, many different suppliers: timber,

glass, handles, locks.

Buyers

Educational: There are numerous universities and schools in South India.

Corporate/Office: There are numerous multinational companies with offices in South India.

Domestic: India’s rapidly growing middle class are yielding increasing buying power

New Entrants

L3p recently launched the D3sk ‘a casemod which hides away cables and ... computer parts into a

sleek, thin desk, attached to the wall’ (Fish, 2011). This high level of design would appeal to

domestic users, and is expensive, but shows the direction desk design is moving towards.

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Substitutes

In terms of smart design, there are many companies offering improved space management and

working environment. One such company is Dornob. Their corner standing computer stand would

be ideal for the classroom or office, and the 3D touch screen computer and desk design shows how

working at a desk is changing rapidly.

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Competition –

First Touch Technologies believe that they have competitive advantage over other current desk

designs in the market. They are dismissive of the benefits of other desks, however, and the

ergonomic benefits of other desks.

There are quite a few competitors for office furniture in Southern India, both domestic and foreign

companies such as Dubai-based Al Reyami (see Competition section below).

SWOT Analysis

Strengths:

1. Increasing demand in modern, clean, minimalist designs2. Educated and skilled workforce3. Good track record with clients in Ireland and England4. Innovative design – patented

Weaknesses:

1. Lack of experience in market2. Lack of awareness of our products

Opportunities:

1. Big potential market in growing education and corporate market segments2. Lower labour costs in outsourcing3. Premium office furniture segment growing4. Large market in southern India and potential to expand

Threats:

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1. Attractive market to other larger foreign organizations, such as the Al Reyami Group

2. Corruption common in Indian business and politics

Competition

FTT’s competition in Southern India is made up of existing Indian business and the many external

companies that have entered the market, or are planning to.

The massive international corporation, Tata - now designing and manufacturing office furniture -

(Agrwal 2009) and dedicated national office furniture manufacturers and retailers Durian, Godrej

& Boyce and Featherlite have the ability and experience to reach top-level decision-makers and get

top contracts and understand the unique obstacles to doing business in India.

Other key competitors in the premium office furniture market are outlined below.

Al Reyami Group

The Dubai-based Al Reyami Group announced in 2010 that they were going to set up three office

furniture facilities in Southern India (The Economic Times, 2010). They are now well-established.

Al Reyami Office Furnishings & General Trading (ROF) is the flagship company of the Al Reyami

Group, which consists of 27 companies with more than 5,000 employees, and offices in India and

China, employing over 800 people.

The Reyami team in India designs and installs quality office furnishings, operating from offices

and showrooms in Bangalore, Chennai, Hyderabad, Madurai, Coimbatore, Kochi and Mumbai;

planning to open in New Delhi soon also.

JMLifeStyle

Based in Cochin/Kochi, premium office and home interiors, South India.

Dedicated team of creative designers and experienced work force.

ERGOMAXX

Corporate furniture solutions provider based in Chennai, Tamil Nadu, South India. In business for

over two decades; manufactures furniture for open office systems, modular furniture, Aditoria,

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Classroom seating, Workstations, Chairs & tables, Complying with ISO standards. Ergomaxx has

rich experience in delivering sophisticated seating solutions for a variety of industries- Software,

BPO, Education, Retails, Public sector, Government, etc.

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SECTION FOUR

PRODUCTS

Current & Near Future Products

First Touch Technology’s current products are developed adhering to the core value of:

‘Innovation without Compromise’, which epitomises the versatile design and layout of FTT

products to date.

Their current products would enhance every scenario within where it deemed suitable; From

Classrooms to Conference calls, auditoriums to test centres.

The Conference Room Examination Centre

All of FTT’s products are highly versatile and adaptable to any position. This is a real unique

selling point for the product in any country; the product can be adapted to the person or much case

the country’s cultural behaviour patterns.

FTT offer a variety of layouts to choose from:

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They then offer multiple Desk option types

And finally a choice of positioning for the Monitor:

Monitor Setup

Espace space management systems is at the centre of FTT’s product range; the solution for creating

office spaces that are more productive, cost effective and healthier is a niche in the market that they

have acted upon effectively and now in order to go global they are looking at a market such as

South India to outsource its manual labour.

Competitive Advantage

Competive advantage is derived from FTT’s core values such as innovation through design, being

user focused and of course environmentally aware. The versatility of the products to multiple

enviroments is also appealing.

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Benefits & Value

New design: Neater, more productive work space. Ergonomically sound.

Health & Safety Benefits:

Natural Posture

Correct Viewing Angle

Correct Viewing Distance

Health & Safety standards compliant

Reduced dry-eye syndrome

Allows correct and comfortable desk height

Keyboard tray can be placed at correct height

User benefits:

Contemporary look and feel

Increased comfort

Reduced desktop clutter

Confidentiality and privacy

Touch-screen friendly

Fully adjustable

Can be mounted left-side, right-side or centrally

Video-conferencing available

Organizational Benefits:

Reduced PC maintenance

Multifunctional rooms and workstations

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Increased productivity

Standards Compliant

Higher security

Greater Occupancy Densities

Save costs by retrofitting to existing desks

Universal VESA compatible fitting

Cable management made easy

Environmental & Social considerations

By setting up a presence in South India the usual social impacts on the region would be rise in

employment, better standard of living. Social implications would include a healthier environment,

better standard of living, less “out with old, in with the new mentality” Superior savings by FTT.

They would be able to sell their products to region that is occupied by many world leaders in IT

and car manufacturing.

Regulations & Standards

FTT are ISO certified in Ireland.

The Indian Government sets Standard on Occupational Health & Safety (OH&S) management

systems. It is called as the IS 18001:2000.

At what stage is each product in its life cycle?

FTT’s range of products is currently at the growth stage of the product life cycle. They have

introduced their products to the market in Ireland and England and they have yet to get more

traction in those markets.

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SECTION FIVE

MARKETING

Targeting

Primary Target: Education

The rapid expansion of universities and educational facilities in southern India offer the greatest

opportunity. FTT already have a proven track record in providing smart desk design for

universities and should be able to use their contacts to establish meetings with relevant people to

try to sell their designs.

Secondary Target: Corporate

Southern India and its cities are also developing rapidly as commercial hubs, with a number of new

international airports now opened in cities such as Kannur, and recently opened airports such as

Thiruvananthapuram expanding. Office space is growing and FTT should be able to leverage their

contacts and experience in education to get corporate contracts.

Product benefits

FTT’s e-space designs can be implemented in any space; office, commercial space, boardroom,

lecture hall. They offer a comfortable, clean and modern design and as a result, a more productive

work environment.

Product distribution

FTT will need to utilise current staff to design and construct the desks. Local staff can be used to

manufacture the parts needed to spec, unless FTT decide to import the parts: wood, handles, glass

tops etc.

Product promotion

FTT already have established relationships with universities in Ireland and the UK and have a

proven track record. These universities will have contact in some educational facilities in India and

where possible, these relationships should be used. Meetings should be arranged to establish

interest and perhaps get advice. A promotional plan should then be designed, perhaps focusing on

advertising in educational and business magazines and trade magazines that specialize in furniture.

There are a lot of benefits with advertising, which allow the publicity of your product or service.

Benefits include, informing the consumer of your product and how it may be what they want to

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suit their values, lifestyle or within organisations. Advertising gives a better range of value and

choice to perspective customers (Value of Advertising.org, 2008). To ensure the business has a

good footing within Southern India it is important that the company becomes known. For this to

happen, various advertising channels must be explored to highlight FTT within the Market. The

following are options, which FTT could consider within their marketing plan; they include online

resources, Television, Newspapers and Radio. India is said to be one of the most creative countries

when developing marketing ideas (India One Stop.com, 2009-2010). With regard to

newspaper/magazine advertising there are a vast amount of options to chose from for example, The

Times of India Bangalore Business Standard, Economic Times, Business India and Business World

to name a few. The cost of this service can range from 1430- 3855 Indian Rupees across India yet

one of the costliest is The Times of India Bangalore, which is 2485/sq cm colour (Release My

Ad.com, 2010). The western channels influence a lot of the television within Southern India.

Indian channels which probably would be the most effective to avail off would be Zee and Sony

TV again the cost of these could be up on 350000 Indian Rupees for just a ten second slot. The

cost of this could be a deterrent for companies to advertise using this source yet the benefit for FTT

we believe would out weigh the cost as they need to become well known within the Southern

Indian Market, so reaching people in their homes, business’ educational organisations is crucial.

The final medium of advertising is social media. FTT already have a substantial website yet other

resources they could avail off when conducting online advertising are for example; Ozone Media

who deal with clients in diverse sectors, Komli/Pubmatic who are international publishers within

the Indian audience and AdMagnet who deal with various actions such as media, campaign

management, SEO and interactive marketing (Pluggd.in, 2008). All aspects of advertising should

be looked at by FTT to choose the best fit for their business.

Customer communication, interaction and feedback

Client testimonials are a central part of FTT’s offering. FTT will use the work that they have done

previously to inspire confidence in the product and offer expectations of what deliverables can be

achieved.

Product support for the life of the product

The e-space design can be updated and altered during the lifetime of the product. The clean design

allows for expansion at any time of existing models.

Product pricing and purchasing

We have no information on pricing and will adapt pricing plan to market and materi

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Market Entry Experience in India

Clearly, any entry into a new market requires a certain degree of tailoring to its specific needs and

conditions. But FTT must start to rethink their product range and test if it will offer daily

improvements to businesses in India, cost structures should also be looked at along with

distribution and management teams. Companies that successfully tap into the promising Indian

market often ignore conventional wisdom, including the need for joint ventures.

The reason why many multinationals have not experienced the success they have had in other

regions is because they just replicated their product offerings to the market in India, however the

products and price points that are competitive in India are often considerably different from those

that work well in other countries. Below is a list of recommendations that FTT should explore

when planning their market strategy in India.

Adaptations:

1. Reach into the middle and lower-end segments or they may end up as niche high-end

players, with insignificant revenues and profits.

2. Indian Consumers will pay a premium if the value of superior features and quality is seen

too far outweigh their cost.

3. Develop completely new products to compete at target price points.

4. Localize their product offerings to meet Indian consumer preferences.

5. Re-engineer its supply chain

Examples of Companies that adapted to the Indian Market successfully

Companies trying to break into the Indian market must understand the Indian consumer's

expectations and price sensitivities.

Electronics Industry: Appeal to the lower & middle class

LG Electronics, for example, reengineered its TV product specifications in order to develop three

offerings specifically for India, including a no-frills one to expand the market at the low end and a

premium 21-inch flat TV for the middle segment.   By keeping the price of the latter offering to

within 10 percent of the price of TVs with conventional screens, LG persuaded many consumers to

buy it. These innovations have led the company to a top-three position in the country's consumer

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durable-goods and electronics market in a little over three years, with revenues of nearly a billion

dollars in India.

Retail Industry: Develop new Products

Very often, however, companies need to develop completely new products to compete at target

price points set by local competitors, as Hindustan Lever Limited (HLL), a part of the

multinational Unilever, did with its low-priced detergent brand, Wheel. Responding to local

competition, HLL lowered the active detergent content of its existing product, decreased the oil-to-

water ratio, and then launched the new detergent at a 30 percent discount to the price points of the

company's more traditional detergents. Today, Wheel accounts for 45 percent of HLL's detergent

business in India and for 8 percent of total HLL sales.

Automobile Industry: Localise their products

In other cases, companies must significantly localize their product offerings to meet Indian

consumer preferences. Because Indian consumers attach significant importance to lifetime

ownership costs, Hyundai reduced the engine output of the to keep its fuel efficiency high, priced

its spare parts reasonably, and made more than a dozen changes to the product specifications to suit

Indian market conditions. In contrast, other global automakers entered the market with vehicles

that had low gas mileage and high repair rates and after-sales service costs.

We also recommend hiring an Indian CEO as part of local operations.

Supply Chain

Companies can bolster their profitability by reengineering their supply chain both Hyundai and

LGE have built global-scale manufacturing facilities to capture economies, making India a global

manufacturing hub that can serve other markets as the local market develops.

Support for Business

The following are resources that FTT or any other potential business could avail off when needing

information and assistant when entering the Southern Indian market.

India Business support.com

They offer open seminars, training packages, further information on culture manners and customs,

information on sourcing,

DUNYA Group

They are a support for business’ providing advice, training in intercultural management and

communications within the workplace.

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ucityindia.com

“Fruticious offers a variety of services to ensure your first steps into India are well guided and on

firm footing”

They set up office, company formation, human resources, sourcing, advertising etc. Help with

supply chain.

Enterprise Ireland

Enterprise Ireland have an office in New Delhi and offer services such as market research and can

assist in setting up meetings etc. Being an Irish agency, they will also understand any cultural

barriers that need to be overcome.

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SECTION SIX

STRATEGY

A number of the most attractive market entry options for FTT are discussed below:

Option 1: Strategic Alliance

Gonsalez (2001) states that strategic alliances are suitable for any business type or industry, and are

becoming more successful as the world becomes more networked; the principles are the same.

Strategic alliances can allow for faster growth as organic growth may not be sufficient, and speed

to market is crucial. Partnerships can also lessen the degree of risk, and allow for greater access to

new markets.

However, partnerships need a great deal of ongoing commitment and time in order to make them

work, and it is crucial hat the organizations are properly aligned to begin with.

FTT could try to establish a relationship with another company that possessed the same core

values: innovation, design, and adaptability. Perhaps a furniture manufacturer that wanted to

branch into or extend their reach of the office furniture segment.

Option 2: Joint Venture

A joint Venture is when “two or more businesses joining together under a contractual agreement to

conduct a specific business enterprise with both parties sharing profits and losses. The venture is

for one specific project only, rather than for a continuing business relationship as in a strategic

alliance (Small Business Notes.com).

Joint Ventures can be structured in many ways it depends on the parties involved. With this option

FTT would have to find a suitable company with which to enter a venture with. The agreement of

operations would include such this as, shares, management structure, competition issues and

warranties or indemnities. Relations between both parties, regarding legalities, divisions of power

exist. These issues must be addressed (Lavelle Coleman Solicitors, 2009).

For FTT if considering a joint venture then teaming up with a resident Indian manufacturing

company would be the best option. This would carry huge advantages as they have the design and

the manufacturer could then produce their designs. Availing of an indigenous company will bring

ease of doing business as they obviously are already exposed to the culture and would have a vast

amount of contacts.

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Option 3: Go it Alone

FTT are a small company with big potential. India is an unfamiliar market and it will be difficult to

get to meet the right people. However, the potential and need for FTT’s product is great, and there

is a lot of assistance available.

Enterprise Ireland has offices in New Delhi where is serves Irish companies in India, Sri Lanka and

Nepal. They can assist in research and in preparing a customised programme of meetings when in

India, the cost for setting up a full programme (along with other pre-mission market research on

opportunities for your product/service) can be calculated based on FTT’s individual requirements.

Should their move into India not be successful, FTT can choose when they want to leave

independently, without having any obligation to contracts with others.

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SECTION SEVEN

RECOMMENDED STRATEGY

FTT should strongly consider entering the Indian market. The potential far outweighs the risk and

we believe that FTT should go it alone, with a view to finding joint venture should a suitable

opportunity arise. The recommended strategy is outlined below:

Our financial office for the region subsidiary with be in Mauritius to take advantage of their

stronger rule of law and ability to enforce international contracts, and the investment treaty with

India that allows profits made in India to be treated at the Mauritian tax rate of 15% instead of the

much higher Indian rate. Some have argued, that Mauritius is a ‘tax haven’; however, given the

economic relationship between the Mauritian and Indian governments are very strong, this is not

the equivalent of Bermuda and or the Cayman Islands based firms investing in the United States,

but more like firms investing in Ireland to invest in greater Europe.

Our operations and implementation and legal offices will be based in Bangalore, but our logistics

office will be based in the port city of Chennai to handle any issues that may come about as our

materials arrive at the port and are transported to their final destination.

We plan to target South India because of the trends that have this particular region of India

growing faster and attracting the young and upwardly mobile members of the new service sector

economy. In order to support the dramatic growth in business process outsourcing (BPO) services

along with the countless new office parks the south of India has seen the majority of new

Universities being founded buy the national and state governments over the last 20 years. More are

likely on the way and now American and European universities are attempting to set up campuses

in Southern Indian states. As millions of new workers join the service sector and many are of a

BPO, high tech, or software nature, millions of new office desks and other furniture will be

needed.

This is where FTT comes in. A vigorous pursuit of a suitable local joint venture partner should be

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attempted. Obviously our above office locations may change, if a partner is found. However, if one

cannot be found, in an acceptable timeframe, FTT should go it alone in targeting this growing

market for office furnishings.

Primary target: Education

First we will target testing centers like for example those run by Pearson Vue India,

(http://www.pearsonvueindia.com, 2012) and other testing companies running higher education

and English language certification testing for those attempting graduate level education at home

and abroad and the Universities they often operate out of or in conjunction with. We think our

product is optimal for the testing environment and it shows its strengths over tradition desk for

these high-pressure situations where absolute confidence is desired in attesting to rigid academic

honesty codes of conduct.

Testing centers and companies are among the lowest hanging fruit. Next, we see our products

selling well in academic settings looking to boast similar confidences in academic honesty,

ergonomic, and quite modern. The number of Colleges and Universities in only Southern India to

Target include:

Andhra Pradesh - 42 Karnataka - 40 Tamil Nadu - 55 Kerala - 14 Pondicherry - 2

There are roughly 153 academic institutions of higher learning that we could persuade to possibly

purchase our desks, as their campuses grow and develop, with more Indians pursuing higher

education each year. We do not see this growth in new institutions of higher learning slowing, for

example Hyderabad only got an Indian Institute of Technology (IIT) in 2008. Not to mention, the

future new campuses are that coming from foreign Universities the likes of Georgia Tech and

Virginia Tech and others (New York Times, 2012) (USA Today 2010).

To round out of academic sector we would target private secondary schools, which numbers are

growing, albeit much slower that the tertiary education system in our targeted southern Indian

states.

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Next, we will be attacking the modern outsourcing campuses along with western multi-national

organization’s large new growing research and development campuses that spread from Bangalore

to Chennai and Hyderabad. Our modern, ergonomic office furniture design would go with the

image being projected by India’s growing corporate economic might at home and abroad (New

York Times, 2012).

We will begin by targeting new companies first arriving in Southern India via trade fairs for

Education and India-sourcing looking to set up new modern offices or expand into new

consolidated campuses. In other words persuading customers when the are freshly thinking of their

new office spaces corporate image projection instead of attempting to sell new office furniture to

full office spaces humming at full speed.

Secondary Target: Corporate

Finally, we will target large growing publically listed state companies, local and state Development

Corporations and local governments as the change and grow into new modernizing office buildings

and get more image conscious, about projecting their part of the new Modern ‘India Rising.’

30

SECTION 8

RISK FACTORS AND REGULATORY COMPLIANCE

The risk and regulatory compliance within India are those that some companies may find difficult

to consent to. The culture is far distinct from any other part of the continent (Amritt Inc), which

causes grave difficulty to foreign firms to adapt too. The political risks that arise also can be a

deterrent for foreign companies because the in recent times there have been claims of corruption

within the Indian Government (Telegraph UK, 2011). Other risks which could affect companies

are Currency depreciation, Systemic Risks, Liquidity Risks, and Sovereign Risks. These may not

be an issue at the moment but may arise in the future, keeping an eye on the current markets are

crucial. With regard to regulatory compliance the main issues arise when talking about the Tax

system in South India and also the requirements on entry to the Country by foreign firms.

First we will analyse the possible risks, which could become apparent for firms. As every country

is vastly different in many respects this will inevitably be a concern for foreign firms. The

differential cultural aspects of doing business in South India will have to be addressed by FTT.

Relationships are held in a higher context then the actual business dealings itself and is said to be

the most important part of the business cycle. Also within Indian Culture hierarchy within the

business is respected and the Boss is the ‘Boss’ (World Business Culture.com, 2012). Without

accurate research a company could be taking a huge risk in entering South India without knowing

the lay of the land.

The political make up within India is mainly on the discussion of the social make up of groups and

their major distinctions and interests. Since the difference in income inequality is at an all time

high within some groups and states, according to the World Bank 76% are living on less than US$2

per day. (Euromonitor.com) However, the southern Indian states we are targeting are among the

wealthier ones in the nation and even more so if you are using a purchasing power parity (PPP)

basis and not absolute earnings.

Also there have been alleged corruption scandals regarding the leading Political Party and has lead

to the soaring food and fuel prices (Telegraph UK, 2012). Another risk that is highlighted for

South India and the whole Country are the peace negotiations with Pakistan, this heightens India’s

vulnerability for a war. This would be a major discouragement for any possible firm.

31

Now to highlight the regulatory compliances which every foreign investment firm needs to know

when entering South India. Firstly the following are relevant entry implications for any non-

resident company.

Every potential company must receive the approval of the Reserve Bank of India, RBI. Once they

get the go ahead then the company is free to commencement commercial activity.

Liaison offices are required to be open by foreign corporations, this office will act as a

communication channel between them and foreign companies and Indian companies. It is in fact a

marketing tool for the company (Ernst & Young, Section D).

Branch office is also required if the company wishes to export or import goods, acquiring

consultancy services, carrying out research, tendering technical support. It is NOT allowed to

carry out retail trading or manufacturing. It is taxed at a rate of foreign companies. (Ernst &

Young, Section D)

Contracts in India are governed by a law which is called Indian Council of Arbitration or ICA,

companies should be aware of this resource if contractual relations occur to ensure all details are

known for both parties if a disagreement occurs.

Also Visas required on entry to India there are a few different types yet the following would apply

to those doing business and are non resident or native to India

- business and employment Visa (valid from 1-5years)

As every country has a tax system which differ, it is important to understand the tax brackets your

company will fall into and that are required to be paid. South India’s tax year is from 1st April to

31st March. All corporations are liable for tax on worldwide income arising from all sources if

resident. FTT are non resident within South India so they would be taxed on income that they

earned from a business connection in India or from other Indian sources. The effective tax rate for

FTT as a foreign corporation if taxed under Indian law would be 42.23%. Excise duty within India

is payable by the manufacturer the rate of this effective duty is 8.24% in some case credits may be

available which enables relief yet companies must check this for their own specific situation.

Within each state in South India there are certain entry taxes which have to be paid, it differs in all

areas yet in recent times in has come under some constraints. Stamp duty is also applicable on

32

purchase of land, lease mortgage – it is dependent from state to state. (Ernst & Young, Section L)

However, if we chose to entire the Indian market via a Mauritian subsidiary the effective tax rate

would be in the 15-18.5% range as Indian law allows Mauritian based firms to choose which tax

jurisdiction and rates it wishes to pay for income purposes (not import and export taxes tariffs and

fees.)

Legalities also need to be adhered to for ease of business within South India the following are a

few examples from a report by Ernst & Young, of Acts, which apply:

- The Designs Act 2000 encourages and protects those who produce a new idea

- Registered design

- Artistic copyright

- This act will enable FTT to ensure the security of their ideas.

The Indian Patent Act 1970 “provides for the grant, revocation, registration, license, assignment

and Infringement of Patents in India.”

International Labour Organisation- provides a good working environment for labour and protects

them.

– industrial disputes act 1947

– trade unions act 1926

– payment of bonus act 1965 (on basis of profits or level of production, considering there are

20 or more employed)

– payment of gratuity act 1972

– work mans compensation act 1923

– minimum wage act 1936

– factories act 1948 (governs health and safety of factory workers)

– maternity benefit act 1961

– contract labour (regulation and abolition) act 1970 (employed as contract labour when he is

hired in connection with the work of an establishment by or through a contractor)

33

Anti – trust regulations ensure the competitiveness in Indian markets.

The importation of technology through a foreign collaboration carries a 5% CESS (Tax)

There are some state level incentives to encourage investment;

- rebate on cost of land/cost of land

- employment subsidies

The above examples of Legal Acts within India

To conclude on this analysis of Risks and Compliance, firms should conduct in-depth research on

the particular Country. For FTT in South India’s case the above information should help with the

decision. Although some of the content may be off putting, a lot of benefits can be sought from

this growing economy.

34

Appendix 1.0

35

Appendix 2.0

2.1

Kerala

Population 33.4m

Area 38,863 km2

Capital City Thiruvananthapuram

Largest City Thiruvananthapuram

Language Malayalam

Geography

Kerala is situated at the lower southwest side of India and is bordered by the regions of Karnataka

to the north and northeast and Tamil Nadu to the east and south. Kerala climate is humid equatorial

tropic.

Situated between the Lakshadweep Sea and the Western Ghats, it also lies near to the centre of the

Indian Tectonic Plate and is subject to very little seismic and volcanic activity.

The state has a coast of length 590 km and the width of the state varies between 11 and 121 km.

Geographically, Kerala can be divided into three climatically distinct regions: the eastern highlands

(rugged and cool mountainous terrain), the central midlands (rolling hills), and the western

lowlands (coastal plains).

The state of Kerala is divided into fourteen districts, which are further divided into three regions

depending on their geographical, cultural and historical similarities.

These regions are classified as follows:

North Kerala:Kasaragod, Kannur, Wayanad, Kozhikkod, Malappuram

36

Central Kerala: Palakkad, Thrissur, Eranakulam, Idukki

South Kerala: Thiruvananthapuram, Kollam, Alappuzha, Pathanamthitta, Kottayam

Kerala has 44 rivers, all of which begin in the Western Ghats; 41 flow west and three rivers flow

east.

Population

The majority of Kerala’s 31.8m population are of Malayali descent, with the rest made up of

Jewish and Arab populations; a small minority indigenous tribe Adivasis consist of 1.1% of the

population.

Malayalam is Kerala’s official language; Konkani, Tamil, Kannada, Hindi and various Adivasi

(Tribal) languages are also spoken.

Kerala is home to just 3.5% of India’s total population but is one of the most densely populated

regions of India. Kerala’s decadel growth is less than half of the average for India, but with an

ageing population, even with very high morbidity rates, this could lead to problems. Females

comprise 51.42% of the population; males form the remaining 48.58% of the population.

Kerala's principal religions are Hinduism (56.2%), Islam (24.70%), and Christianity (19.00%). In

comparison with the rest of India, Kerala experiences relatively little sectarianism. (Wikipedia,

2012)

37

Kerala's human development indices (primary level education, health care and elimination of

poverty) are among the best in India. According to a 2005–2006 national survey, Kerala has one of

the highest literacy rates (95%) among Indian states and life expectancy (74 years) was among the

highest in India in 2011.

Education

At present there are seven universities in Kerala with many affiliated colleges. The government,

private trusts, or individuals run schools and colleges, and the government aids many of the schools

owned by private sector. The majority of the public schools are affiliated to the Kerala State Board.

Other educational boards are: Indian Certificate of Secondary Education (ICSE), the Central Board

for Secondary Education (CBSE), or the National Institute for Open Schooling (NIOS). English is

the language of instruction in most self-financing schools, while government and government aided

schools offer English or Malayalam

Infrastructure

Kerala has 145,704 km of roads (4.2% of India's total). This includes 1,524 km of National

highway (2.6% of nation's total), 4341.6 km of state highway and 18900 km of district roads.

Traffic in Kerala has been growing at a rate of 10–11% every year, resulting in high traffic and

pressure on the roads.

The Indian Railways’ Southern Railway line runs through the state, connecting most major towns

and cities except those in the highland districts of Idukki and Wayanad.

Kerala has three major international airports, at Thiruvananthapuram, Kochi and Kozhikode, with a

fourth under development at Kannur.

Kerala, with numerous backwaters, is one of the States in India, where waterways are successfully

used for commercial Inland Water Transport. The transportation is mainly done with country craft

and passenger vessels. There are 41 navigable rivers in Kerala. The total length of the Inland

Waterways in the State is 1687 km. The main constraints to the expansion of Inland Water

transport in the State are lack of depth in the waterway.

Political Structure

38

Kerala's Government is based on rules and regulations determined by the Government of India.

The Governor of Kerala is the constitutional head of state, and is appointed by the President of

India. Kerala’s last governor M.O.H. Farook passed away at the end of January 2012, and the

Governor of Karnataka is currently overseeing the region.

The Government of Kerala has a secretariat of its own. It is the highest echelon of state

administrative structure offering locus for the exercise of authority by state Government. The

secretariat refers to the complex of departments. So the government departments are classified

according to the functions defined: Secretariat departments and Field Departments.

Its political heads are ministers while the administrative heads are secretaries to the Government.

The entire administrative machinery of the state is divided into several departments. This section

profiles the various departments of the state.

Each district (North Kerala, Central Kerala and South Kerala) is headed by a Deputy

Commissioner who is over all in-charge of the administration in that particular district. He has to

perform triple functions as he holds three positions: at once he is the Deputy Commissioner, the

district Magistrate and the Collector. As a Deputy Commissioner he is the executive head of the

district with multifarious responsibilities. As the District Magistrate he is responsible for

maintaining the law and order situation in the district. As the Collector he is the Chief Revenue

Officer of the district, responsible for revenue collection and recovery. The Police administration

in the district is under the control of Superintendent of Police (SP).

Economic Structure

Kerala is managed as a democratic socialist welfare economy. The state treasury is suffering

massive losses due to regular hartals or strike actions, which restrict infrastructure and services.

The service sector (including tourism, public administration, banking and finance, transportation,

and communications—63.8% of GSDP in 2002–2003) and the agricultural and fishing industries

(together 17.2% of GSDP) dominate the economy.

39

2.2

Karnataka

Population 61.3m

Area 191,976 km²

Capital City Bangalore

Largest City Bangalore

Language Kannada

Geography

Karnataka is one of the regions in South India. It is situated along the Western coastline. It is

boarded by the Arabian Sea to the left, Goa to the northwest, Maharashtra to the north, Andhra

Pradesh to the east, Tamil Nadu to the southeast and Kerala to the southwest. Karnataka is divided

up into different natural regions; Karnataka Northern Region, Karnataka Coastal Region,

Karnataka Central Region and Karnataka Southern Region. There are 27 districts within

Karnataka. The region has a vast selection of mountains having the highest peak in all of India,

1500ft. There are several river systems, one of which flows into the Bay of Bengal. Karnataka

enjoys a tropical climate with some places experiencing temperatures of up to 28degrees Celsius all

year round.

Population

Karnataka is the eight largest states in India with regard to its population. The population density in

40

Bangalore has risen by 47%, the increase in industrialisation is said to be a factor in the high population

count. “The increased growth in population is a result of adding six new fringe areas to

Bangalore.” (T.N. Bhat, ISEC) Also there is a higher count of males than females. As regard the

religious composition of the population, 83% of the are Hindi, 12.2% are Muslim, 3.1%

are Christian, 0.8% are Jains, 0.7% are Buddhist, <0.1% are Sikhs, and remaining belong to other

religions.

Education

Within the region of Karnataka there are quite a lot of opportunities for educational development.

The literacy rate is 67%. The education system in Karnataka is made up of four sections;

- Primary and Secondary Education which has three kinds of schools within, Government,

Aided and Un-aided Private.

- Pre University Education consists of a two-year pre university course or a three year

diploma which enables you entrance into a degree course.

- Baccalaureate Education are institutions which are run by the Universities, There are 481

degree colleges

- Technical Education involves engineering and Bangalore was one of the first in the Country

to have such a college.

Infrastructure

Karnataka has quite a developed set of infrastructures in place. There are 7 airports with an

expanding air sector, 3000km rail network and 11 ports all, which are connected to Bangalore.

The two main airports Bangalore International Airport and Mangalore International Airport have

great connectivity internationally with such airlines as British Airways and Lufthansa flying there

regularly.

Political Structure

Politics in Karnataka is ruled by three parties; Indian National Congress, Janata Dal and the

Bharatiya Janata Party of which the Government is formed. Nationally there are 28 parliament

constituencies and from there 28 members are elected. The subject of politics here is often based

around language issues and caste. Karnataka has gained a position within the political field as it

has brought a lot of power, in the form of economic and resource to India as a whole. The National

political parties do not have a major role to play in Karnataka Politics. Regional parties have more

41

of an influence.

Economic Structure

Karnataka is a high growth region of South India with GDP of 8% in 2011, yet this rate has hit a

slump. Growth is not as rapid as it used to be. Reasons for this may due to the rising land prices,

labour shortages. Although there seems to be a decline Bangalore has been called the Silicon

Valley of India, this comparison yield benefits as the IT industry can remain to flourish in such an

area with the relevant resources. Like most economies Karnataka is divided into three sectors;

Primary – agriculture, which was quite prominent but not so much in the 21st Century.

Secondary – manufacturing, mining which still contribute to the economy

Tertiary – transport, education, Real Estate this sector it would argue gives the most to the

Karnataka economy at this point in time.

2.3

Andhra Pradesh

Population 76.2.m

Area 275,069 sq km

Capital City Hyderabad

Largest City Hyderabad

Language Telugu and Urdu

Geography

Andhra Pradesh is situated at the southeast side of India. The state has a coast of length 590 km

42

and the width of the state varies between 11 and 121 km. Andhra Pradesh is bound on the north by

Orrisa and Chhattisgarh states, on the west by the states of Maharashtra and Karnataka, on the

south by Tamil Nadu State and on the east by the Bay of Bengal with a coastline of around 974

km.

Hyderabad the capital city and largest city spanning 583 km squared (including its smaller twin

city) and has a population of 5,300,000 inhabitants. (Wikipedia, 2012) Visakhapatnam, Andhra

Pradesh's primary port, is the second largest city. Two major rivers flow through Andhra Pradesh,

the Godavari and the Krishna. The state of Andhra Pradesh is divided into twenty-three districts.

Population

Below are some examples of census data from some of the state’s districts and below that is a map

of the various districts that make up Andhra Pradesh. (indiafacts.in, 2011)

43

44

Education

A quality primary and secondary education is still a struggle in Andhra Pradesh; however, the

number of Universities is growing as well as interest in setting up satilite and research campuses

outside Hyderabad for some American and other international Univerisities. (New York Times,

2012) (USA Today, 2010)

Infrastructure

Good access for FTT staff and freight via the airport and ports there + the direct flights from

international business transit countries (UK, UAE, and USA0. Including in this category is the new

international airport in Hyderabad completed in 2008.

Political Structure

The political scene of Andhra Pradesh has a combination of the parties at the national level and

parties at the state level. The state has five prominent "National Parties" and two "State Parties,"

that have contributed towards the development of the state.

Here is a list of the National Parties of the state of Andhra Pradesh:

- Bhartiya Janta Party (center right)

- Bahujan Samaj Party

- Communist Party of India

- Communist Party of India (marxist)

- Indian National Congress (center left)

Here is a list of the primary State Parties of Andhra Pradesh:

Telugu Desam Party: (center right Telugu center right nationalist party)

Telangana Rashtra Samity: Both the state parties work towards the growth of the Telugu language,

culture and tradition. (Much more culturally conservative and independence orientated than the

Desam)

These parties do not compete in other state elections. The Telugu Desam Party has led the state

government for many years however at this it is currently being run by the Indian National

Congress party.

45

Economic Structure

The economy of Andhra Pradesh is primarily agriculture. The Godavari and Krishna rivers provide

irrigation. Rice, sugarcane, cotton, mango and tobacco are the usual mix of local crops. Recently,

crops used for cooking oil production such as sunflower and peanuts are being planted. Andhra

Pradesh was among the Indian states, which went with the Green Revolution in rice cultivation in

the 1970s

Andhra Pradesh, India is also a mineral rich state, ranking second in India in terms of mineral

wealth. It accounts for about 93 percent of India's total production of Barites. Other important

minerals in the state are copper ore, manganese, mica, coal and limestone (Wikipedia, 2012).

The state ranks first nationwide in hydro electricity generation with national market share of over

11%. The offshore gas Krishna-Godavari basin reserves of 60+ Trillion cubic foot.

Andhra Pradesh has a robustly growing information technology and biotechnology services sector.

In 2004–2005, Andhra Pradesh was at the Seventh position behind Maharastra, New Delhi,

Karnataka, Tamil Nadu, West Bengal, and Gujarat in the list of top IT exporting states of India.

The IT sector is expanding quickly every year. The service sector of the state already accounts for

43% of the GSDP and employs 20% of the work force as of the mid 2000s. (Wikipedia, 2012)

Andhra Pradesh's IT industry is advanced enough to have had the Satyam Computer Services

scandal in 2011 which has been referred to as India's Enron scandal. As it was to be confessed that

the company’s public accounts had been falsified (the books were cooked.) (Wikipedia, 2012)

However these setbacks have not stopped many from opening up technology R and D and

outsourcing offices in Hyderabad in and around HITEC city (the campuses of corporate

developments in Greater- Hyderabad.)

Facebook has even found a home for its India based operations and Google is among the many

multinational companies that have an office in or around Hyderabad (Facebook corporate page,

2012) (watblog, 2010)

Many others have as well, for example here are a few:

- Ananth Technologies (Ananth Info Park)

46

- Computer Maintenance Corporation (CMC) Campus

- Convergys Campus

- DELL Campus

- CyberCity I.T. Campus[12]

- E-Park I.T. Campus (Currently leased by TCS)

- Franklin Templeton campus

- Honeywell Campus

- Hindustan Petroleum Corporation Limited. IT Data Centre

- HSBC Campus

- Capgemini Campus

- iLabs Centre

- Infosys Campus

- Infotech Enterprises Campus

- Microsoft Campus

- Motorola Campus

- Oracle Campus

- Polaris Campus

- Satyam Cyber Space Campus

- Satyam Infocity Campus

- Satyam GateWay Campus [My Home Hub - Bldg 1 & 2]

- Sierra Atlantic Campus

- Soft Sol Campus

- Tata Consultancy Services (TCS) Campus (Deccan Park)

- UBS (now Cognizant)

- ValueLabs Campus

- VSNL campus

- WIPRO Campus

- Zensar technologies Lt

2.4

47

Population 72,138,958

Area 130,058 km2

Capital

City

Chennai

Largest

City

Chennai

Language Tamil & English

Geography:

Forests take up more than 17% of the states geographical area with numerous wildlife parks and

bird sanctuaries. 54% of the state’s population lives in an urbanised area. Capitol City is Chennai,

which is the largest urbanised city in India. Since it is the most southern state in India with a long

coastline, it is the meeting point of the Arabian Sea, Bay of Bengal and the Indian Ocean. The

coastline itself is 910 km long but it is only the 3rd largest coastline in India.

West and North of Tamil Nadu have lofty hills while the east and south have coastal plains. Kerala,

Karnataka and Andhra Pradesh to the north. To the east are the Bay of Bengal, Arabian Sea and the

Indian Ocean all meet at Kanyakumari the southernmost tip of India. Tamil Nadu's coastline bore

the brunt of the 2004 Indian Ocean Tsunami when it hit India, which caused 7,793 direct deaths in

the state. (thinkquest.org, 2004). Tamil Nadu falls mostly in a region of low seismic hazard with

the exception of the western border areas that lie in a low to moderate hazard zone. Tamil Nadu is

48

entirely dependent on rain for recharging its water resources so if monsoon season is not plentiful

there is a risk of water shortage and drought. (unsystem.org)

Education:

Tamil Nadu has 37 universities, 455 engineering colleges, and 566 arts and science colleges,

34,335 elementary schools, 5167 high schools, 5054 higher secondary schools and 5000 hospitals.

(India Today, 2007)

Population:

7th largest by population with 555 persons per sqkm . The life expectancy is 65.2 years for a male

and 67.6 years for female.

Legislation

India is a fast growing economy and attracting foreign firms despite certain uncertainties. Entering

Indian market is a task that can be taken up through various ways. The ways have been listed

below. Setting up a base in India requires some steps that make the Indian Entry process a bit easy.

Tamil Nadu is one of the states where law and order has been maintained largely successfully.

The Tamil Nadu Police Force is over 140 years old. It is the fifth largest state police force in India.

Government Sanctions 

Well before setting up operations; several central and state governmental approvals are sought by

The Reserve Bank of India (RBI) and Foreign Investment Promotion Board (FIPB). The project

has to be registered with the Registrar of Companies (ROC). 

At the time of creating a joint venture or subsidiary, the company is supposed to be incorporated

and get hold of a certificate to start business. To set an office, registration ought to be done with

the concerning regional ROC. 

Other Approvals 

As soon as the entry plan get nod from the Central Government and registered appropriately,

several State clearances like building planning, land use, environmental clearance, power

clearance, etc. have to be kept before finally starting the business. 

Languages

49

The language Tamil is over 200 years old and it is spoken by 89.9% of the population however

English joins it as the official language of the region. Tamil is one of the remaining few classical

languages left in India and the language forms a strong bond amongst the population.

Cuisine:

The Tamil cuisine is perhaps the oldest representative of the continuous vegetarian cultures of the

world. The delicious dishes from the state are relished all over the country and abroad. There is a

wide range of rice and vegetable preparations. The Tamil food is of great value and good quality.

The meals are traditionally served on banana leaves.

Tamil Nadu is known for having a rich tradition of rich literature, song and dance. In fact music

and dance are the essence of Tamil Nadu; National festivals like Independence Day, Republic day,

Gandhiji's birthday etc. are celebrated throughout the state.

Muslim festivals like Eid-ul-Fitr, Eid-ul-Adha, Muharrum, Birthday of Prophet Mohamed and

Christian festivals like Christmas, Easter, and Good Friday etc. are celebrated harmoniously as in

other regions of the country. Including the Karagram dance where the performer wears a pot on

their head. Carnactic music is the classical form used in South India.

Trade

Industrially the state has made rapid strides: Agriculture is the dominant source in the economy.

Foods such as rive, Jowar, Ragi, Sugar, Coconut, Coffee and Tea play a vital role in the economy.

Hides and skins are very popular exports aswell as other leather products. Tamil Nadu has the most

reserves in India with almost 90% of Indias Lignite reserves, 45% of Magnesium and over 40% of

Granite is found there.

Political Structure

Tamil Nadu State has at present 32 Districts.  District Collector is the head of the District

Administration.

Districts are divided into Taluks for the purpose of Revenue Administration.  Tahsildar is the head

of taluk level administration.  Taluks consist of a group of Revenue Villages.

Development administration in a district is coordinated by the Panchayat Unions (also called as

Blocks) for the rural areas.  Panchayat Unions consist of a group of Panchayat Villages.

50

In the case of urban areas, the development administration is taken care by the urban local bodies. 

The urban local bodies are called as Municipal Corporations, Municipalities and Town

Panchayatsdepending on the size of the town. 

Economic Structure

Tamil Nadu's gross state domestic product for 2011 is estimated at US$ 97.970 Billion in current

prices (rediff.com, 2011). The state experienced a GDP growth rate of 12.1% for 2007-08.

(indiaedunews.net) It was the third largest economy among all states in India ]and also the most

industrialised state in India. It ranks third in foreign direct investment approvals next only to

Maharashtra and Delhi.

It is the fourth largest contributor to India’s GDP. It is home to many natural resources. It has hilly

rich fields with vegetation and in the east it has fertile plains.  Tamil Nadu is one of the leading

states in livestock, poultry and fisheries production. .

Tourism is a major industry as it has 8 UNESCO World Heritage Sites. It is well developed and is

the second most popular destination in the country with ancient temples and natural beauty hill

walks, not to mention the Tiger conservation nature parks.

Tamil Nadu has seen major investments in the automobile industry over many decades

manufacturing cars, railway coaches, battle-tanks, tractors, motorcycles, automobile spare parts

and accessories, tyres and heavy vehicles. Major global automobile companies

including BMW, Ford, Renault-Nissan, Caterpillar, Hyundai, Mitsubishi

Motors and Michelin. DaimlerChrysler AG Company established a new plant in Tamil Nadu.

Electronics manufacturing is a growing industry in Tamil Nadu, with many telecommunications

giants like Nokia, Flextronics, Motorola, Sony-Ericsson, Foxconn, Samsung, Cisco, Moser

Baer and Dell having chosen Chennai as their South Asian manufacturing hub.

Tamil Nadu is the second largest software exporter by value in India, second only to Karnataka.

Infrastructure

Tamil Nadu is connected to all parts of the state via its road networks. In total it has 28 highways

and 532 railways stations in the region. Added to that there is an international airport that has 169

direct flights per week. This is the third largest Airport in India. There are also three major

seaports.

51

Market Size and Attractiveness

Unlike China, the Indian legal system provides some protection of patents and while India is price

sensitive, they will pay for the right quality product. We would recommend using an integrator

with offices in India who will set all your offices up in India. Good access for FTT staff and freight

via the airport and ports there + the direct flights from leading countries. Naturally is there is a

demand in sales from Southern India we would set up there too.

Chennai is the capital and it is the major commercial, cultural, and educational centre in South

India. Chennai is divided into four broad regions: North, Central, South and West. North Chennai

is primarily an industrial area. Central Chennai is the commercial heart of the city and includes an

important business district,. South Chennai and West Chennai, previously mostly residential, are

fast becoming commercial, home to a growing number of information technology firms, financial

companies and call centers. The port of Chennai is the second largest in India. According to the

2011 Census there is 4.6 million people living in Chennai city and approx 8.9 million living in

suburbanised towns.

The majority of the population’s people in Chennai are Tamil. Tamil is the primary language

spoken in Chennai. English is spoken primarily and largely by white-collar workers and students.

Chennai's economy has a broad industrial base in the automobile, computer, technology, hardware

manufacturing and healthcare industries. The city is the centre of information technology and

business process outsourcing services. It is located on the south–eastern coast of India in the north–

eastern part of Tamil Nadu

52

Commercial and domestic broadband Internet services are provided by four service providers and a

majority of the mobile network providers. Chennai was the first Indian city to have the Wi-

Fi facility in a widespread manner.

Chennai serves as a major gateway to southern India, and the Chennai International Airport is the

third busiest airport in India with approximately 10.5 million passengers per year. The city is

connected to major hubs across Asia, Europe, and North America through more than 30 national

and international carriers

Sea

The city is served by two major ports, Chennai Port, one of the largest artificial ports, and Ennore

Port. The Chennai port is India's second busiest container hub handling automobiles, motorcycles

and general industrial cargo. The Ennore Port handles cargo such as coal, ore and other bulk and

rock mineral products.

Rail

Chennai is the headquarters of the Southern Railway. The city has two main railway

terminals. Chennai Central station, the city's largest, provides access to other major cities as well as

many other smaller towns across India

Road

53

 Chennai's transportation infrastructure provides coverage and connectivity, but growing use has

caused traffic congestion and pollution. The government has tried to address.

Other Issues such as Cultural factors

As I write this report there is a threat of a global trade war over a European Union scheme, which

wants to control airlines’ carbon Indian airplanes, emit by imposing carbon emission charges. But

the Indian Government will not give them the figures on how much pollution their airplanes emit.

India could hit back via any of the following forms of retaliation halting talks with European

airlines on new routes, retaliatory levies on EU airlines and even fees for overflying countries.

However the European Parliament could hit back at India by blocking a Free Trade Agreement

with the country.

High drop-out and low completion of secondary schools continue to hinder the quality of training

in the population. Other problems include class, gender, inter-district and urban-rural divide- it has

a high level of poverty especially in the rural areas.

The Oxford Poverty & Human Development Initiative ranks Tamil Nadu to have a

Multidimensional Poverty Index of 0.141, which is in the level of Ghana among the developing

countries (oneworld.net, 2012). Corruption is a major problem in the state with Transparency

International ranking it the second most corrupt among the states of India (rediff.com, 2011).

Tamil Nadu is now allowing other industries that they previously didn’t want in the region enter.

This will facilitate companies such as Walmart and Tesco to set up in the region.

54

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