Since 2004, all over the world has been focusing on continuous high economic growth and rising international status of India. Along with international trend, Korea is also keeping up studies regarding India and its changes. But as most of studies are tried to cover the whole India, there has been limitations to understand Indian regional market more practically and specifically. Actually, India has too various languages, religions, and tribes to consider as one country. In order to provide more practical information for Korean companies and government that are interested in Indian market, it is necessary to collect and analyze region-wise and state-wise information.
The purpose of this study is to provide assessments on investment environments as well as basic information of Indian regional market. For the first step, we divided India into four parts East, West, South, and North. And then, advanced market research for major states and basic market research for minor states was conducted according to four parts.
The study is comprised of Basic Investment Environments, Manufacturing & Market Environments, and Political & Economical Openness for each state. And analysis on risk factors and assignments of four parts were conducted based on above market research, and assessments and implications of the study are provided on the last part of each report. For this study, first of all, we collected and classified region-wise and state-wise information. Second, field researches for manufacturing environments and market environments were conducted for major 13 states. Last, in order to understand political environments and risk factors, we gathered opinions from Indian experts and Korean companies in India through interviews and meetings.
This report is a study on Southern Part which includes Tamil Nadu, Karnataka, Kerala, Andhra Pradesh. Southern states are relatively familiar with us, since it covers Chennai in Tamil Nadu and Bangalore in Karnataka which are famous investment regions of Korean companies. Especially, Tamil Nadu is the most attractive destination of Korean company and already a lot of Korean companies are operating in this region.
In economic terms, Karnataka and Tamil Nadu play leading role in southern Indian economy. Each of two states takes 8% of Indian GDP and have higher economic growth rate than Indian average. And the amounts of FDI inflow into both states are also similarly higher than Indian average. Kerala is little bit behind in economic development, but it has high potential with excellent human resource.
In terms of manufacturing environments, Tamil Nadu is the most industrialized state in the southern India and manufacturing industry of Tamil Nadu takes 9% of total output from whole Indian Manufacturing industry. In Karnataka, the tertiary industry with IT industry in Bangalore became one of the main pillars of Indian economy. Kerala government takes effort to differentiate the state with media and entertainment industry, furthermore developing video entertainment industrial complexes.
In market environments, southern states show relatively high consumption propensity than other region. Especially, the monthly per capita consumer expenditure of Kerala urban as well as rural people is the highest level in India.
Southern states have relatively favorable investment environments with abundant labor resource and evenly developed industries than other regions. And state governments are active to attract investments. However, risk factors to enter into southern Indian market still exist. Generally, southern India is politically unstable; especially Tamil Nadu shows regional political behavior and conflicts with central government. Andhra Pradesh has abundant natural resource, but it is the main activity area of Naxalite.