PETSTEL analysis of India

In this research paper I am talking about India. What challenges they face and what they have been doing. I am using a PETSTEL analysis to give you an idea what you will be facing if you want to start an International business relationship with India. “PESTEL analysis: Examines the political, economic, socio-cultural, technological, (physical) environmental and legal forces within which businesses operate and which act on them.

Originally designed as a business environmental scan, the PEST or PESTLE analysis is an analysis of the external macro environment (big picture) in which a business operates. These are often factors which are beyond the control or influence of a business, however are important to be aware of when doing product development, business or strategy planning.”

“Those who wish to weaken our unity and hurt our nation should remember that India has always endured and emerged stronger. The force of history is on our side,”
(Prime Minister Dr. Manmohan Sing)

India’s biggest challenge, as always, is to uphold the constitution of India. The main challenge before India is to pursue these goals ruthlessly.India is currently in the middle of a global financial crisis, a time of IT downturn, job losses, loss of revenues for big companies and many other accompanied problems. In this situation, Indian government must make an extra effort to restore confidence among the people. I favor a little government intervention in free market economy particularly because India is a growing economic power and they must cover all the loopholes and must move cautiously. India’s growing middle class and also lower middle class people must also maintain seriousness in these difficult times. They must remember that this is a passing phase in the life of India.

Terror attacks have become almost a monthly occurrence. In the New Year, situation is not likely to change. However, better intelligence can reduce the number of terror attacks. Indian public must not fear. They should not let the terrorist win. A message must be sent out that Indian people will never change their way of life just because of terrorism.
New and improved measures to fight corruption and poverty must be undertaken. Fighting poverty should be our biggest priority.

Protection and upliftment of the weaker sections of society particularly the economically backward classes including the minorities must be one of our top priorities in 2009.
Democracy, secularism and an independent foreign policy must be the focus of India in 2009.

“In order to achieve this, we need to focus on achieving rapid economic growth and on ensuring social justice. It is only by walking on these two legs will we be able to ensure that the benefits of growth reach all sections of society.”
(Prime Minister Dr. Manmohan Sing)

Challenges before Indian economy:
• Population explosion: This monster is eating up into the success of India. According to 2001 census of India, population of India in 2001 was 1,028,610,328, growing at a rate of 2.11% approx. Such a vast population puts lots of stress on economic infrastructure of the nation. Thus India has to control its burgeoning population.
• Poverty: As per records of National Planning Commission, 36% of the Indian population was living Below Poverty Line in 1993-94. Though this figure has decreased in recent times but some major steps are needed to be taken to eliminate poverty from India.
• Unemployment: The increasing population is pressing hard on economic resources as well as job opportunities. Indian government has started various schemes such as Jawahar Rozgar Yojna and Self Employment Scheme for Educated Unemployed Youth (SEEUY). But these are proving to be a drop in an ocean.
• Rural urban divide: It is said that India lies in villages, even today when there is lots of talk going about migration to cities, 70% of the Indian population still lives in villages. There is a very stark difference in pace of rural and urban growth. Unless there isn’t a balanced development Indian economy cannot grow.

These challenges can be overcome by the sustained and planned economic reforms.

These include:
• Maintaining fiscal discipline
• Orientation of public expenditure towards sectors in which India is faring badly such as health and education.
• Introduction of reforms in labor laws to generate more employment opportunities for the growing population of India.
• Reorganization of agricultural sector, introduction of new technology, reducing agriculture’s dependence on monsoon by developing means of irrigation.
• Introduction of financial reforms including privatization of some public sector banks.

The socio-economic problem of India is well affecting the business climate of India at global forums too. It is worth mentioning in this regard that this year, India slipped to 48thposition in the World Economic Forum’s Global Competitiveness Index and to 31st position in Business Competitiveness Index.

Point to be noted here is that these rankings are largely affected by the socio-economic parameters such as sustainable national prosperity and the political and social context of the nation. Sustainable national prosperity is calculated by taking into account the per capita GDP.

In my opinion, intensive usage of technology, its generation and the incidence of technology transfer to India is worth appreciating but the penetration and implementation of the latest technologies are still quite low when you compare it with international standards.

No one will argue with the fact that this low penetration had led to low levels of per capita income, which eventually degrade India’s rank at the global forum. Apart from that, Indian government had failed drastically in minimizing the public sector deficit. By the way, public sector deficit of India is one of the highest in the world. In addition, there is corruption in infrastructural development.

According to experts, poor infrastructure, erratic power supply, inefficient bureaucracy, corruption, tax regulations and bad roads are major hurdles for upcoming entrepreneurs and also demotivate them in starting their business units. The pivotal factor here is that these rankings not only degrades India’s image at global business forums but also abstain new entrepreneurial start-ups.

All in all, one can safely say that development of India cannot fructify on discreet policies, but actually on a centralized policies covering both social and economical aspects. After all, without society can business thrive?

Information Technology in India accounts for a substantial part of the country’s GDP and export earnings while providing employment to a significant number of its tertiary sector workforce. Technically proficient immigrants from India sought jobs in the western world from the 1950s onwards as India’s education system produced more engineers than its industry could absorb. India’s growing stature in the information age enabled it to form close ties with both the United States of America and the European Union.

Out of 400,000 engineers produced per year in the country, 100,000 possessed both technical competency and language skills. India developed a number of outsourcing companies specializing in customer support via Internet or telephone connections. By 2008, India also has a total of 49,750,000 telephone lines in use, a total of 233,620,000 mobile phone connections, a total of 60,000,000 Internet users, comprising 6.0% of the country’s population, and 4,010,000 people in the country have access to broadband, making it the 18th largest country in the world in terms of broadband Internet users. Total fixed-line and wireless subscribers reached 325.78 million as of June, 2008.

With India’s exponential growth comes the exponential need for energy. Demand for electricity has far outstripped supply, and now, with the coming of the Electricity Act 2003, these demands are within reach. The government’s plan of “power for all” will require an additional capacity creation of nearly 100,000 MW by 2012. And, it seems, that India has made steps in this regard with two new successful bids for ultra-mega power projects (UMPPs) in Sasan and Mundra and the recent January 2006 nod to set up nine coal-based UMPPS of 4,000MW each.

The competitive bidding process has fomented effective reforms in the energy sector and the benefits are two-fold:
1. The Indian government shifts from closed-door negotiations of the past to more transparent operations.
2. India procures power at cost-effective rates.
However, the new policy to promote UMPP coal-fired power will have adverse effects on climate change and the environment. While the competitive bidding process is an important step forward, more needs to be done in terms of including environmental considerations in energy policies.

There is a single hierarchy of courts in India. Much of contemporary Indian law shows substantial European and American influence. Various acts and ordinances first introduced by the British are still in effect in modified form today. During the drafting of the Indian Constitution, laws from Ireland, the United States, Britain, and France were all synthesized to get a refined set of Indian laws as it currently stands. Indian laws also adhere to the United Nations guidelines on human rights law and environmental law. Certain international trade laws, such as those on intellectual property, are also enforced in India.

Each state drafts it own laws, however all the states have more or less the same laws. Laws directed by the central government and the Supreme Court of India via judicial precedent or general policy directives are binding on all citizens of each state. Each state has its own labor laws and taxation rates.

India’s judicial system is made up of the Supreme Court of India at the apex of the hierarchy for the entire country and twenty-one High Courts at the top of the hierarchy in each State. These courts have jurisdiction over a state, a union territory or a group of states and union territories. Below the High Courts are a hierarchy of subordinate courts such as the civil courts, family courts, criminal courts and various other district courts.

The High Courts are the principal civil courts of original jurisdiction in the state, and can try all offences including those punishable with death. However, the bulk of the work of most High Courts consists of Appeals from lowers courts and writ petitions in terms of Article 226 of the Constitution of India. The precise jurisdiction of each High Court varies.
Each state is divided into judicial districts presided over by a ‘District and Sessions Judge’. He is known as a District Judge when he presides over a civil case and a Sessions Judge when he presides over a criminal case. He is the highest judicial authority below a High Court judge. Below him, there are courts of civil jurisdiction, known by different names in different states.

This sites I mention below are the sites I visited during may:
CNN International News. URL:
The Economist Country Briefings. URL:
Human Rights Watch. URL:
Political Reference Almanac Online. URL:
United States Department of Energy, Country Analysis Briefs. URL:
Trade Policy Reviews by the World Trade Organization . URL:
Eldis Country Profiles. URL: