The topic was delivered by Shri B.S. Mubarak IFS, Director (South) – Ministry of External Affairs, Government of India, Delhi | Former Consul General of India in Saudi Arabia.

1. Knowledge Partner
Fhyzics Business Consultants Pvt.Ltd.
Shri B.S. Mubarak IFS
[Director (South) – Ministry of
External Affairs, Government of
India, Delhi] Former Consul General
of India in Saudi Arabia
India’s Quest for Aligning Business
and Strategic Goals

2. Book Now
www.pdma-india.in

3. India’s Quest to Align
Business and Strategic Goals
Shri B.S. Mubarak IFS

4. Context
• Swami Vivekananda said ‘Each work has to pass through three stages – ridicule,
opposition, and then acceptance’. The same is true for New Product
Development.
• Engagement with the outside world is a priority for Indian’s economic
development.
• Economic engagement with outside world ushers growth, brings in foreign
exchange and contributes to employment generation.
• In diplomacy, the clout and leverage that a nation wields in maneuvering its way
in world affairs can depend on various factors. In today’s world, strength in
economic engagement is an important one.
• Greater economic inter linkages and commerce with lands near and far,
contribute to strengthening partnerships and generating greater understanding.
• Economic engagement can bestow a certain brand value and reputation as we
have seen in the case of Germany or Japan.

5. Economy
• $2.45 trillion economy.
• Economic Growth: 7.9% (2015-16); 7.1% in (2016-17)
• Sectoral contribution to GDP
 Agriculture ~ 17.5%
 Industry ~ 29.6% (Manufacturing ~ 16.6%)
 Services ~ 53%
• Moderate inflation @ 4~5%.
• Population @ 1.25 billion
 Unemployment Rate – 4.9%
 Labour Participation Rate ~ 52.5%
 Trade (2016-17): Exports ~ $275 Billion; Imports ~ $380
Billion
 Large Trading Partners: China, U.S., UAE, Hong Kong,
Switzerland
 Central Bank Interest Rate ~ 6.5%
 Bank Lending Rate ~ 9.1-9.6%
 Yield on 10-yr Govt. Securities: 6.53% (June 2017)
 Credit Rating:
➢ Moody’s : Baa3 (Positive)
➢ S&P : BBB- (Stable)
 World Bank Growth Estimates: 7.6% (2018), 7.8% (2019)
 India’s share in global GDP (2016): 2.99% (Nominal GDP)
and 7.32% (GDP in PPP).
 India’s share in global exports – 2% (2016).
 FDI ~ $60 Billion (2016-17)…+8%
 FOREX reserves ~ $393 Billion (5 Aug 2017)
 Current account deficit ~ 0.7% of GDP (2016); Expected 1.3%
in 2017
 Govt. Debt to GDP @ 67%
 Household Debt to GDP ~ 10.1%
6.9
6.7
6.5
6
7.6
6.6
7.2
7.7
5
10
2015 2016 2017 2018
China India
IMF Forecast till 2018

6. Young Demography
• World’s youngest country by 2020, with an average age
of 29 years…A surplus workforce of 47 million against a deficit of
10 million in China and 17 million in the U.S.
• By 2030: India’s workforce will have an average age of 32 years. In
comparison, during the same period, the average age is expected to be
43 years in China and 39 years in the U.S
• Young Demography: A window of opportunity ~
✓ To improve labour productivity,
✓ To increase domestic production,
✓ To enhance revenue from services,
✓ To increase savings; and
✓ To reduce the burden of old residents on the working population.
• Empowered with unique demographic advantages and guided efforts,
India is poised to position itself among developed
economies within the next 10–15 years.

7. Ease of doing business
 India’s ranking in the World Bank’s Ease of Doing Business Report,
jumped from 142 to 100, in three years.
 20 Services of Central Government have been integrated with the
E-Biz single window IT Platform. Several States are working on
this direction.
 Cooperative and Competitive Federalism
 42% share for states in the divisible pool of taxes.
 States assessed on 8 broad parameters of Ease of Doing
Business.
 Goods and Services Tax implemented on 1st July 2017.
 New Bankruptcy Law Passed.
 New IPR policy announced.
 Investor Facilitation Cell – INVEST INDIA, established to guide,
assist and handhold investors during the entire life cycle of a
business.
 Road-map to reduce corporate tax from 30% to 25% laid down.
 Time taken for obtaining PAN and TAN on E-Biz portal has been
brought down to T+1 days
Highlights of Budget 2017-18:
 Foreign Investment Promotion Board (FIPB)
abolished… 92% of FDI allowed through automatic
route.
 Legislative reforms initiated to simplify,
rationalize & amalgamate existing labor
laws into 4 Codes on Wages, Industrial Relations,
Social Security & Welfare and Safety & Working
Conditions.
 Minimum Alternate Tax (MAT) credit allowed to
be carried forward up to a period of 15 years.
 Corporate tax for smaller companies with annual
turnover of up to 50 crore ($7.5 Mn) reduced to
25%.
 Concessional tax rate of 5% withholding tax
being charged on interest earned by foreign entities in
ECBs /Government securities extended till 30.6.2020
and also extended to Masala bonds.

8. Make in India
▪ As part of the Ease of Doing Business, the Make-in-India (MII) program
was launched on 25 Sept 2014.
▪ MII focuses on:
 Attracting investment into manufacturing by introducing a
business friendly regulatory environment, fostering innovation,
enhancing skill development, protect IPR, and build best-in-class
manufacturing infrastructure.
 Increase manufacturing share in GDP from 16% to 25%
by 2022.
 Create 100 Million jobs by 2022.
 Completely overhaul the FDI regime.
 25 Sectors identified: Automobile, Auto Components, Aviation,
Biotechnology, Chemicals, Construction, Defence, Electrical
Machinery, Electronic Systems, Food Processing, IT & BPM,
Leather, Media & Entertainment, Mining, Oil & Gas, Pharma, Ports
& Shipping, Railways, Renewable Energy, Roads, Space,Textiles &
Garments,Thermal Power, Tourism & Hospitality, and Wellness.
A pentagon of corridors is being envisaged to
facilitate manufacturing and to project India as a
global manufacturing destination.
1. Amritsar Kolkata Industrial Corridor
2. Bengaluru Mumbai Economic Corrido
3. Chennai Bengaluru Industrial Corridor
4. Delhi Mumbai Industrial Corridor
5. Vizag Chennai Industrial Corridor

9. FDI
 No. 1 FDI Destination in the World.
 Most open economy in the world for investment.
 FDI flows in 2016-17: US$ 60 Billion (+8%)
 National Investment and Infrastructure Fund (NIIF) created
with a corpus of USD 6.2 billion.
• 1st Rank on the Baseline Profitability Index (BPI)
BPI Ranking
India : 1
U.S. : 50
China : 65
Brazil : 99
Russia : 108
Factors on which success
of FDI depends on:
• Growth of Asset Value
• Preservation of Value while
the asset is owned
• Ease of repatriating profits
MEA-ED 2017
46.84
36.86 36.39
44.87
55.59
60.08
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
40
50
60
70
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
FDI figures in US$ billion
100% FDI allowed in 92% of sectors, including:
▪ Industrial Parks, Construction Development, Railways,Telecom, Defence and Petroleum & Natural Gas – Exploration.
▪ Airports – Greenfield & Brownfield; Ground Handling Services; MRO facilities; Flying & technical institutes.
▪ Credit Information Companies, Non-banking Finance Companies, and Asset Reconstruction Companies
▪ Pharmaceutical, Bio-tech, Medical Devices – Greenfield & Brownfield
▪ Mining – coal & lignite, metal & non-metal ores
▪ Trading – Wholesale & B2B E-commerce, Food Products Retail Trading, and Duty Free Shops.

10. E&RD
▪ India accounted for $12.3 billion, or 40%, of the total of
$31 billion of globalized Engineering and R&D (E&RD) in
2016.
▪ The Indian E&RD market is expected to reach US$ 38 Bn
by 2020.
▪ Services offered by Indian E&RD Firms include:
▪ Supporting clients on innovation
▪ Enabling access to new markets (SBMs)
▪ Designing products for emerging markets (frugal
engineering)
▪ Innovating on existing designs to suit market needs
and client requirements
▪ Driving end-to-end product development
• There are over 400 service providers and captives
offering ER&D services from India
• Over 200,000 engineers have been employed by service
providers and captives in India
• Indian service providers invest around 3.5% in R&D
• India-based ER&D centres resulted in cost savings of USD
20 billion for global organisations

11. Government Initiatives to promote innovation
and new product development.
• Start-Up India programme is a comprehensive action plan to foster entrepreneurship
and promote innovation. It aims to provide support to startups. Global
Entrepreneurship Summit-Hyderabad Nov 2017 and Global Technology Summit-
Bangalore Nov 2017.
• The MUDRA scheme provides easy finance of upto one 10 Lakh rupees to
entrepreneurs. Since its launch in 2015, over 9 crore loans worth 1 lakh crores
rupees have been sanctioned. This scheme is promoting NPD and innovation at the
lower end of the pyramid in areas of food processing, retailing, garment industry and
others.
• The "Atal Innovation Mission” has enabled opening Tinkering Labs in more than 900
schools to promote a culture of innovation and entrepreneurship among children.
The "Mentor India” initiative engages leaders to guide and mentor students through
these tinkering labs. 19 incubation centers have been created in various universities
and research institutions. These will nurture innovative start-up businesses to
become scalable and sustainable.

12. Government Initiatives to promote innovation
and new product development.
• Under India’s clean energy programme, in just 3 years, renewables capacity have
been doubled from 30 thousand Megawatts to about 60 thousand Megawatts. Solar
energy generation has increased over 80 percent in the last year.
• Swachh Bharat Mission; infrastructure and connectivity programmes like Sagarmala
and Bharatmala, digital India, skill India, clean energy programme, Defence
procurements, Rail, Road and Ports and civil aviation offer entrepreneurs many
business opportunities for New Product Development, innovation and investment.
• World Food India initiative engaged with entrepreneurs in the food processing
industry and agricultural waste sectors. This is again promoting innovation and NPD
in areas of Food Processing and agro products.

15. Aligning Business and Strategy
• To understand India’s endeavour to align business and strategic goals, we need to
look into the changing nature of global power centres.
• End of the Cold War and the economic rise of Asia.
• 2008 crisis that brought out the redistribution of power in the global order.
• More impactful are the daily consequences of New Product Development,
Innovation and multiple technology revolutions.
• To a country like India, they offer enormous leap-frogging possibilities.
• The number of smartphone users in India is reaching 500 million. This offers immense
potential for the growth of any venture, in terms of outreach and job creation. JAM
• It is not just the power hierarchy that is changing. Interplay of nation states is
clearly circumscribed by interdependence.
• The global strategic landscape is akin to business environment.
• Its key concepts are risk assessments, convergence, competition, leveraging and hedging.
• Countries which can comprehend this changing paradigm will grow ; others
would be trapped in old debates.

16. Business of Indian diplomacy is increasingly
Business
• In the course of human history business has played a major role in driving
national strategies.
• Business is becoming central to the formulation of strategy.
• During the present century strengths of nations are primarily derived from
economic growth. Thus business becomes the ballast for many of our important
international relationships. ASEAN, the Gulf and China.
• It is the primary driver in some, perhaps a little less salient in others, but never
entirely absent.
• In contentious situations, business can even serve as a mitigating factor.
• Where strategic imperatives are less pronounced – like in Latin America and parts
of Africa – business is actually our main connect.

17. Conclusion
• As we now look beyond narrower economic reform towards a much broader modernisation effort, its relevance to our
engagement with the world is only stronger.
• India’s approach in aligning business and strategic goals bears some similarity to the experiences of East Asian and South East
Asian polities as they traversed their path of national development.
• India’s foreign policy is today dominated by the quest for capital, resources, technology, capabilities and best practices and all this
is very much relevant to the NPD and innovation in India.
• They have become the benchmarks to judge the success or otherwise of policies and interactions.
• Contribution of partner countries from across the globe is solicited in development programmes like Digital India, Skill India and
Smart Cities.
• When a Prime Minister goes to Hannover to showcase "Make in India” or to San Francisco to unveil "Start Up India”, or co-host the
Global Entrepreneurship Summit in Hyderabad with the US it is clear that India’s external linkages are aiding Innovation andNPD
in India.
• Today, every Indian Embassy has a designated commercial officer. We are the first port of call not just for Indian business going
out, but increasingly for foreign business coming in.
• The Economic Diplomacy Division in MEA is tasked to hand-hold foreign investors. Creating a better enabling environment for
business is our daily mantra.
• Addressing the political and regulatory impediments is very much at the heart of our diplomatic agenda.

18. Thank you