Page 23 - DMGT401Business Environment

Business Environment

Notes Strong Presence of Indian National Congress at the National Level

In the Election of 2009 INC led Coalition has won the seats in the Pan India. They got significant
support from rural India and Middle Class. Congress won seats even in its weak fort that is Uttar
Pradesh. This election also saw the emergence new leader Mrs Sonia Gandhi and emerging
leader Mr. Rahul Gandhi. It was the Congress who initiated the Liberalization, Privatization
and Globalization. With the full majority in the house it is expected that Congress will follow
the same route.

Stable Government

Stability of the Government raises image, brand and ratings of the nation. Stable Govt. attracts
investment Foreign Direct Investments and Domestic Investments. All this generates Employment
and Demand. In totality a stable Govt. beget congenial environment for the business if it supports
the business and the present Government is stable and as well as it supports the business.

Unanimity among the Political Parties on Economic Issues

This is the biggest plus point of Indian Politics. INC, BJP and other political parties are unanimous
regarding economic policies. Even the Left Parties are inviting FDI and private investments in
their ruled states.
Economical Environment

The face of the Indian economy has changed drastically since 1991. Earlier, pricing in India was
governed by administered price mechanisms, but market forces today govern pricing. Supported
by wide ranging reforms over the past decade, India's economic growth has been robust. A
vibrant middle class with rising spending power has emerged, and a new generation of
industrialists and entrepreneurs has begun to compete globally. With Gross Domestic Product
(GDP) in nominal terms of US$692 billion in 2004, India is now the world's tenth largest economy.
The country's external position is also significantly stronger. Exports, specifically of services,
have grown substantially in 2004/5. Growth in services has largely been fueled by the information
technology boom in which India has emerged as a world leader. Some of the key factors of
India's new economy are as follows:

1. India is the fourth largest economy of the world in terms of PPP today.
2. It is an attractive destination for global FDI. Almost all the major MNCs of the world,
from GM and GE of USA to Sony and Samsung see their future in India.

3. India is emerging as a global manufacturing hub. More and more companies are
establishing their manufacturing unit in India. These include Nokia, Samsung, GM, Hyundai,
Posco, Ispat, Lafarge, Holcim, Toyota etc.

4. India is today a labelled as the back office of the world. As India is becoming the major
outsourcing theater of the world. India commands more than 30% of the world's outsourcing
business. Indian companies are working for almost all the major companies of the world
like GM, GE, Microsoft, Oracle, etc.
5. India is also regarded as the customised software factory of the world. Almost all the
major software companies of the world have their operations in India. The list includes
players like Microsoft, Oracle, HP, IBM, etc.
6. India is also emerging as the R&D hub of the world. Companies like GE have six R&D
centres outside the USA and the first of them was established in India under the name Jack

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