Competitive advantage of India

Abstract

The objective of this study is to determine the nature of the Indian competitive advantage. Hence to find out which set of industries emerging/ located in India will be able to compete internationally and have a natural competitive advantage against international players. Further, certain industries such as Indian IT Services and Pharma industry have achieved significant international success. It would be interesting to ascertain whether the nature of competitive advantage that an Indian origin grants them and the sustainability of such an advantage. Further we also used Porter’s work on the genesis and evolution of industries to classify Indian industries to come up with some interesting observations. The methodology adopted was as follows: We used Porter’s Diamond model as a starting point for out analysis and used it to explore the influence of the various determinants of the Diamond and their influence on overall competitive advantage. At a subsequent stage, we drilled down into each of the individual components of the Diamond using existing research on factors such as clusters to determine the India specific drivers of advantage. Key Findings: • The huge local demand is one of the key factors that distorts the nature and focus of business in India leading to their international uncompetitive ness. • Industries that have attained global competitiveness predominantly owe their genesis to factor conditions. A key exception to the rule is the Auto components industry. • Individual clusters become un-competitive over a period of time and multiplicity of clusters leads to competitive advantage. • More important than the influence of macro economic environment(such as government policy) on improving the competitive ness of a nation is the micro economic factors(such as nature of rivalry) We conclude the report with a list of recommendations for Indian industries to be competitive globally.