India’s Emerging Role in your Asia-Pacific 2020 Portfolio

Last month, I had the opportunity to meet 28 Heads of Asia-Pacific in our Senior Executive Round Table and discuss the key themes that will help multinational corporations decide on the right role India will play in their Asia-Pacific portfolios.

With India’s base-case growth for the next decade to be around 7.7 percent (70 percent likelihood), it will be the fastest growing major emerging market in the world. For any multinational this is the right time to re-assess if you still need to wait and watch the reform execution, or if you need to increase the allocation for the country now to capitalize on the new opportunities and gain first-mover advantage.

The results were even more interesting in terms of checking on how India’s role will evolve within portfolios.


Some themes that emerged during our session were as follows:

  1. India being a part of the Middle East portfolio: This is predominantly the reason why we witnessed a rise to 9 percent of companies that think India won’t be a part of an Asia-Pacific portfolio. An increasing number of companies have started considering if India should be embedded within the Middle East cluster because the leadership skills and consumer behavior in the regions are similar.
  1. Opportunities for B2B companies: Most of the B2B companies are considering whether to increase their allocation to India given the “Make in India” campaign which will have direct/indirect benefits to all multinationals. Whether you consider manufacturing in India for India or for the rest of the world, it’s an important aspect to consider if you want to expand your product portfolio and the segments you plan to serve.
  1. Make in India vs China: A deeper analysis across the board is on the rise since China’s land/labor cost is increasing and managing profitability is becoming an issue. We believe that China will continue to lead the way in high-end manufacturing. India will become a competing country only in the low-end manufacturing in the short term. The real success for the Make in India campaign is a function of the pace of new reforms to be executed.
  1. Adopting a cluster-based approach: Understanding where the pockets of wealth exist in India is more crucial than in other countries. While only 30 percent of the population lives in urban areas, they account for more than 60 percent of the GDP, and the number is expected to rise to more than 70 percent by 2030. In addition, leveraging the right center/state-level incentives to build your appropriate manufacturing base is critical.

FSG’s proprietary analysis suggests that all multinationals need to consider the seven mega clusters, nine emerging clusters and 24 frontier clusters. The fundamental question remains where multinationals need to “go wide,” or “go deep,” or both. All FSG clients can access the report through the FrontierView platform.

The most important action that a lot of regional multinationals and country GMs need to take is to initiate making a case for India to their corporate teams. Providing a clear and deeper analysis on the true opportunity is a must since, historically, lack of profitability, infrastructure bottlenecks and bureaucracy have been big hindrances, and many executives don’t have the appropriate patience to wait for scaling the right business in India.

This update is the first of a series of insights on how and what you need to plan for success in India. In my next blog, I’ll be sharing the top actions all multinationals need to plan for as they scale up operations in India.

FSG clients can access our latest India research via the client portal. Not a client? Contact us to learn more.

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