Consumption.IN – a series

In this series we will touch upon the facts and figures related to (energy) consumption in India. We will also discuss about the scopes for resources that can help in meeting the ever increasing (energy) demands in the country.

Current Power Struggle (article 1 of consumption.IN)
The daily energy consumptions in India are quite different than that in Europe. Let’s see how. Say you wake up in the morning, get under a hot shower, enjoy your breakfast with tea, and drive to work. Until this point in India, you might not have used electricity from a standard power outlet. The water for the shower is heated by solar-panels, the breakfast is cooked with gas, and you might travel on an auto-rickshaw that is fuelled with natural gas. That’s right, only the alternative energy sources would have been used so far.

However, India is hungry for energy. The electricity consumption in India is currently around 600TWh annually, and it is all set to double over the next decade. It means that it would have surpassed the Russian energy consumption levels by then. The growing demands for energy do not just come from the urban areas, where car bookings and demand for other consumables are always on the rise. There are millions of people in India who do not even have access to electricity as yet. 404 million people in India live in rural areas, and 94% of them do not get electricity.

In order to meet the growing demands for power, India will have to adopt a mix of sustainable energy resources. Currently India is importing oil, coal, and gas at alarming rates.
• Oil Imports: 76% of the oil for consumption is imported, out of which 60% comes from the Middle East countries.
• Coal Imports: 20% of India’s coal consumption is imported mainly from Indonesia.
• Gas Imports: 19% of the gas consumption is imported mainly from Africa.

I asked a few questions with Mr. Debasish Choudhury from SEMI® is the global industry association serving the manufacturing supply chain for micro and nano electronics industries, including Photovoltaic. For your understanding, 1000MW = 1GW. As an example, the high-speed railway lines from Beijing to Shanghai consume 20 MW. This route stretches up to 1318 kms, with the capacity of carrying up to 1.050 people.

NexusNovus: Do you see opportunities in India for European SMEs of the renewable energy industry, or is it rather a game for only the big international players?
DPC: The Ministry of New and Renewable Energy (MNRE) is implementing a UNDP assisted Project for enhancing the ‘Access to Clean Energy’, which is primarily aimed at providing opportunities to European SMEs to participate in India’s rural renewable energy projects. The aim of the ‘Access to Clean Energy’ project is to accelerate the access to energy services, particularly for enhancing the livelihoods of the poor and marginalized people in the seven UNDAF states (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh). To know more about the project, please visit www.ebtc.eu/energy.

NexusNovus: Which mix of energy sources is most likely to be realized to meet India’s energy demand in the near future (~ until 2050)?
DPC: The reforms initiated in India since the beginning of the nineties have led to rapid economic progress. Today, India is the fastest growing developing country, and its GDP is likely to experience an average growth rate of 8% over this decade. According to a Goldman Sachs study, India has the potential to show the fastest growth over the next 30 to 50 years. Growth rate could be higher than 5 percent over the next 30 years, and close to 5 percent as late as 2050, if the development progresses successfully.
Energy is the engine for growth. It supplements human labour and increases productivity in agriculture, industry, as well as in services. To sustain the growth rate in economy, the energy supply has to grow in tandem. For a large country like India with over one billion population and rapid economic growth rate, no single energy resource can provide solutions to all issues related to availability of fuel supplies and environmental impacts, particularly the climate change and health affecting factors. Therefore, it is necessary that all non-carbon emitting resources become an integral part of an energy mix. They should be as diversified as possible to ensure energy security to a country like India. Currently available sources are fossil fuels, renewable resources, and nuclear energy. However, all these sources will require increased levels of research, development, demonstration, and deployment.

NexusNovus: Do you see actual efforts being made by the Indian Government as a significant accelerator in terms of renewable energy usage?
DPC: India has a vast supply of renewable energy resources, and it has one of the largest programs in the world for deploying renewable energy products and systems. Indeed, it is the only country in the world to have an exclusive ministry for renewable energy development, the Ministry of Non-Conventional Energy Sources (MNES). Since its formation, the Ministry has launched one of the world’s largest and most ambitious programs on renewable energy. In October 2006, MNES was renamed the Ministry of New and Renewable Energy (MNRE).
Once again, the government of India has taken a pioneering step for the welfare of humanity, and they have announced National Action Plan for Climate Change (NAPCC). The ambitious solar mission is called as Jawaharlal Nehru National Solar Mission (JNNSM), and it is one of the eight missions under NAPCC. It proposes to generate 20 GW of solar power by 2022, and it is aimed at reducing the effects of climate change, and enhancing the country’s energy security.
The government’s efforts over the last 3 decades have created a noticeable difference. Today India has an installed renewable energy capacity of about 20 GW, which is around 11 percent of the country’s total installed power capacity, and it amounts for 4 percent of the electricity mix. The government aims to push it to over 20 percent in the next decade, with the RE capacity of over 70 GW.

NexusNovus: Private habits in India: Do you see signs of increased sensitivity in the Indian population towards the environmental or energy issues?
DPC: A good environmental sense has been one of the fundamental features of India’s ancient philosophy. However, during the last few decades global circumstances have forced our country into a situation where it is becoming increasingly difficult to practice lifestyles that do not push this planet towards disaster. During the last ten years, there has been a remarkable resurgence of this good environmental sense in this country. The growing environmental consciousness in this country is seen in both people and establishments.

NexusNovus: What would be the key motivators for an average Indian to become (more of) a supporter of environmental energy solutions?
DPC: It is imperative that the environmental consciousness preoccupies the minds of our people, as no amount of government intervention can reverse the ecological collapse. I see clear signs of that happening in India as well. Against this backdrop, we now have a system for environmental checks and balances in place. There is sufficient institutional, legislative and political strength, supported by responsive people to produce a practicable environmental culture. Even in the constitutional terms, the efforts towards protection of ecology look quite promising.

NexusNovus: What conditions would make a long term investment such as a solar energy solution become more attractive in India?
DPC: India’s solar energy program was started as early as the late seventies, but it has got a massive boost with the launch of the JN-NSM in January 2010. The ambitious target of installing 20 GW of solar power capacity (both solar PV and thermal) has provided a great momentum to the growth of the solar sector in India. Several new companies from India and abroad have begun their operations in India, and the existing companies are committed towards expanding their capacities. Some states like Gujarat and Rajasthan have also announced their own solar policies, thereby providing further impetus to the solar industry. Off-grid applications which are highly relevant to rural India are also receiving the due attention that they need. All these developments will help in providing huge opportunities for the growth in solar energy sectors.
At the end of 2011, installed solar PV generation capacity in India (including off grid, grid-connected, roof top etc.) have reached about 200 MW. The grid connected market which is driven by Solar RPOs, the REC mechanism, and government policy incentives will only grow further in the years ahead.
Talking about solar energy as long term investment, solar power’s unit price is competitive with the effective price of diesel based unit power, and it is being used in many telecom tower operations across the country. Also, solar power is a viable/effective solution for decentralised or local-grid applications in rural/semi-urban areas, where grid power is either not available at all, or is facing severe shortage. The availability of land for solar panel installations is not a constraint.
Let’s look at the outcome of the Batch-2, Phase-I allocation of grid connected PV power projects under Jawaharlal Nehru National Solar Mission (JNNSM). The cost of solar power quoted by French project developer SolaireDirect is Rs.7.49 / kWh, which is almost equivalent to the power generated from imported coal by the thermal power plants in India. The price discovery mechanism through reverse bids has accelerated the journey towards grid parity even faster. Furthermore, the aggressive bidding for project allotment under Phase-II of JNNSM (2013-2017) would narrow the gap further, leading to grid parity even before the close of the JNNSM Phase-II.

NexusNovus: What role does the Bangalore city play in terms of renewable energies in India?
DPC: Bangalore has the largest deployment of rooftop solar water heaters in the country. These heaters are estimated to generate an energy equivalent of approximately 250 – 300 MW every day. Bangalore is also the first city in the country to offer an incentive program for residents using roof-top solar thermal systems, by providing a rebate on monthly electricity bills. These systems are now mandatory for all new structures.
Also, Bangalore houses many leading solar cell & module manufacturers namely TATA BP Solar, Emmvee Solar, Kotak Urja, BEL, HHV Solar, just to name a few. Additionally, the city now hosts a large number of global players from the solar eco-system sector, and their numbers will only continue to grow.

NexusNovus: Thanks Mr. Choudhury.

The Evolution of the Indian Economy

The Indian economy has been under global scrutiny lately making headlines in most news and publications. A large part of it has been portrayed in negative light owing to two major trends that have been noticed in the economy’s evolution;. The issue of inflation which is almost at 9% and the reduced economic growth this year which has dropped to 7%.

The question that investors and the international business community is frantically looking for answers to is -“Should they be worried about their investments and businesses in India?”  Well, as far as I see it, the answer is ‘of course not’.

Before making any hasty decisions based on circumstantial news, take a step back and evaluate the situation; .or- India has opened her economy to the world only since 1991. She is a relatively young economy finding her foothold in the landscape of world economy. There is fast growth seen for a market that is actually just getting started. The exponentially expanding middle-class population of India will prove to be her biggest strength. At the moment, like any other BRIC country, there is a huge demand for resources like gold, oil, food, land and more. The result? Hike in prices for such goods, especially for oil.

It can be argued that the inflation which is a result of the rise in middle-class can prove to be a hindrance for outsourcing related businesses; but on the flipside it is a positive emerging trend for those who are looking at India as a potential market. The relatively large gap that existed between Indian goods and imported goods due to high import duties are now slowly closing in, making it the right time for international exporters and manufacturers to gain a competitive edge and cash in on the opportunities at hand.

To put it in a nutshell, this is the time to map your blue plans or prints for your Indian business and strategize your growth for the next decade. The growth of the Indian market is inevitable. What you need to decide is how big a slice of this profit making economy you are looking for.

For more information on trade, consultancy and doing business in India, visit NexusNovus website

Golden Rules on ‘How to Enter the Booming Indian R...

With the announcement that FDI is soon to be allowed in all the major cities of India, the retail market is seeing a steep boom. Taking in the fact that the retail market in India accounts for 35% of the GDP (as compared to just 20% in the US) and that the market sees almost 47% growth every year, the inevitable dominance of the retail market becomes a sharper reality every day.

We hear continuous stories of the enormous potential of this market in the news, in the papers, in strategic market discussions and even in US President Obama’s speeches. The facts and figures are readily available to everyone who is interested. But the question of the hour isn’t about the potential or the figures. The question being asked by manufacturers, suppliers, export managers and trading agents is on how to successfully enter this viable market. How can they get their products in? What are the risks and benefits? What are the Do’s and Dont’s?

There is a lot of literature out there focused on this subject. But I’m going to list out a few ‘golden rules’ that are practical and often overlooked. In the blur of strategizing and planning, one often forgets to see the realities of the market they are about to enter. And in India, it is all about these realities if you are looking for a slice of your retail heaven.

Realistic Expectations: Yes, it is a country of 1.2 billion people. No, they aren’t all going to buy your products. The middle and the upper middle-class population is currently estimated at 80 million people and is expected to grow to 500 million people by 2025 according to McKinsey.  But the reality is that this whole segment isn’t going to be a part of your clientele from day one. The crucial step you need to take is to enter right away. Get in and allow yourself to be molded into the Indian market, grow gradually but steadily in market share, but most of all, keep this target group and their economic expansion in focus.

Dress your Product: The higher price factor; your product is an imported one and with the high import duties and high margins in the re-sellers/retail network, the consumer price of your brand will set it apart from local brands and you will not be competing with local ‘favorites’. The higher quality perspective; People are often under the impression that imported products are akin to quality, uniqueness, status and durability. But you need to dress your product and bring out the unique selling points in order to pull in the buyers who have the income and are willing to invest in your brand. Eye-catching packaging, homeland quality marks and unique product features; these are your tools at hand that will help you sell your products at high prices.

A Shift in Attitude: Every exporter who has brought products into the Indian market will have a ready story of unexpected problems that suddenly sprouted in between the whole process. The big mistake that is often made here is doing things ‘the way they always do’. The Indian market cannot be classified as any known norm. You might have had experience with a multitude of countries and even other Asian countries, but you need to have an individual approach for India, if you want to make your mark in this market. It isn’t an act that is impossible, but it is an act that requires you to step out of your comfort zone and learn the tricks of the trade the Indian way. Indianize your strategy and make sure that it fits the market and the people you will deal with.

The Right Partner: Business in India requires careful scrutiny when it comes to choosing your local business partner. Don’t go for the braggart who promises you the sky from day one. Choose a person you share trust and compatibility with. One you can discuss long term strategies and business goals with. A person who understands the local market and the rules that govern it. This person should have the ability to start things in a small, controlled and focused pace and work towards making it big. This is what your products need.

The Right Space: Choosing where to place your product is another big responsibility that needs careful study. Keeping in mind that 95% of the retail in India is unorganized, you need to ensure that your products aren’t swallowed up by the obscure market of little tuck shops. Place them in organized retail spaces where pricing, promotions and sales data evaluation can be studied and controlled. With organized retail growing at almost 50% per year, the growth plan for your range of products is also big. Once you have more control over organized retail sector you can always tap into the unorganized sector, but then on your own terms and conditions.

The Right Promotion: The final golden rule would be to make sure that you promote your products. With an array of existing and new products to compete against, hypermarkets selling hundreds of established and many new-coming brands in outlets that cover over 10,000 sq.ft of selling area, you need to ensure that your products stand out and demand the buyer’s attention. Use traditional marketing like in-store promotions, sampling, POS and more, but also tap into the effective social media platforms, magazines, associations and trade fairs related to your segment to promote your products. This will help you gain a strong hold of your market and expand your brand’s reach.

If you do this right, India can become one of your main export countries in the near future!

For more queries and discussions visit us at www.nexusnovus.com.

Dealing with Complexity

We all find ourselves occasionally muttering the saying that “Life is not a bed of roses”. Complexities and hurdles to cross are a part and parcel of life at all times. Move to another country and this becomes even more pronounced. Now take a country like India into consideration. If you are one of those who is adventurous at heart, India is your ticket to an absolutely thrilling ride. But for the weak hearted and those fixed in their way of thinking and living, you are in for a rude awakening; but one that is quite necessary.

If I were to analyze the reason behind why some people find it so hard to find themselves absorbed by the Indian way of living and thinking, the only answer I can think of is that these people incessantly keep drawing comparison between India and their own native country. This holds true for most people living in a new environment, be it India or some other place. And it never ends up helping them live a better life. Comparing a new environment to yours just hinders acceptance of the new as you keep yearning for the familiar. Not only does it make you feel unhappy and alienated, but it also stops you from exploring and discovering aspects of India that you might actually like.  But the moment you allow yourself to let go and mentally integrate with the new surrounding the complexities of this new place will suddenly seem to shrink and become easier to accept and deal with.

Take the infamous Indian traffic for example. To any Western European traffic in India will seem akin to catastrophic destruct at first sight (except for Rome of course). But like how the Romans say “When in Rome be a Roman”, I would say “When in India be an Indian.” Undoubtedly it is true that the Indian traffic seems hectic, chaotic, unorganized and dangerous. But if you actually stop comparing it to what is familiar to you, you will slowly realize that the Indians follow their own beat when it comes to traffic rules which at the end work out perfectly for them. Honking is just a way of saying “I’m here” instead of the rude “Get out of my way” as it would mean in Europe. Opening up your mind will help you live and move around the country with much more ease and calm. It will help you feel in control and to break down and understand the complexities that you experience around you.

Equate this way of living to doing business in India and you will find your path being paved much easier. To do business in India, any outsider must understand her ethos and her people. Close your mind and be assured of not progressing at all. But open up your mind and be surprised at how far an emerging market like India can take you to. After all, there is a reason she is called Incredible India.

Indo-German Trade

An Overview:

Let’s face it; to say that German businesses are booming in India is an understatement. The fact is that no other industrialized nation, taking into account the strength of its economic power, can claim to have as many top companies as Germany. A recent study by the IGCC (Indo-German Chamber of Commerce) showed that 86% of the top companies of Germany companies are engaged in active business in India. Most of these businesses are hand-held by subsidiaries under the legal form of a Limited or a Private Limited. But the way of functioning of these subsidiaries vary according to the strategic plan of growth and business conduct of the companies with some functioning under just one subsidiary or joint-venture and others like Siemens, Bosch, Bayer, Freudenberg, Voith, Adolf Würth etc managing a horde of them. It has also been an evident pattern of establishment for German companies to mostly have their business location in India focused at 3 locations; Maharashtra, Delhi/Gurgaon and Karnataka.

Facts:

-          Indo-German trade grew notably and boasted of a growth of nearly 18% in 2010; the highest in the last three years.

-          Trade between the two countries reached a staggering volume of € 15.4 billion which indicates and addition of at least 2.3 billion in 2010 over the previous year`s figures.

-          Indian exports show a 21.3% figure of growth which has allowed it to reach € 6.2 billion. Imports from Germany grew up to 15.7% in 2010 amounting to € 9.2 billion.

-          According to latest figures from the Federal Statistical Office in Wiesbaden, Indo-German trade during the first two months of 2011 shows a remarkable growth of 30% in comparison to the same period in 2010.

-          Machinery, Electro-Technology and Metal Products remain the top 3 items of Indian imports: with 35%, Machinery takes up the lion`s share of India´s imports from Germany. The sector growth shot up by 20.4% from the previous year (total of € 3.2 billion); Electro-Technology grew by 14.1% (total of € 1.1 billion, with 12% share of all imports); Metal and Metal Products grew by 13% (total of € over one billion); Chemicals also grew significantly to touch € 813 million posting a growth of nearly 31% and increasing its share in the import basket to 8.8% in 2010 from 7.8% in 2009.

-          Imports of Automobiles and Ancillaries registered the highest growth of an astounding 105% after having shown a decline of 18% in 2009.

-          The other figures of growth are; Textiles & Garments (+54%); Plastics (+47.5%); Pharmaceuticals (+45%), Rubber (+61.8%) and Glass & Ceramic products (+54%).

Imports of Consumer Goods, even though at a lower level in comparison, grew a phenomenal 101.6%.