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Question
Analyze the factors responsible for the growth of the sunrise industry in India. Substantiate your answer with relevant examples.
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Solution
SUNRISE INDUSTRY
Sunrise industry is a colloquial term for a burgeoning sector or business that is just in its infancy but shows promise of a rapid boom. A sunrise industry is typically characterized by high growth rates, numerous startups and an abundance of venture capital funding.
A sunrise industry is often characterized by a high degree of innovation, and its rapid emergence may threaten to push into obsolescence a competing industry sector that is already in decline. Because of its dim long-term prospects, such an industry is referred to as a sunset industry.
Examples of sunrise industries include alternative energy in the period from 2003 to 2007, as well as social media and cloud computing in 2011 and 2012.
Key factors for the growth in sunrise industry in India
ROBUST DEMAND: Per capita GDP of India is expected to reach US $ 3,273.85 in 2023 from US $ 1,983 in 2012. The maximum consumer spending is likely to occur in food, housing, consumer durables, and transport and communication sectors. Also higher penetration and a rapidly growing young population coupled with increased usage of 3G, 4G and portable devices is driving demand. For example: India's online gaming industry is expected to grow at a CAGR of 22 per cent between FY18-23 to reach Rs 11,900 crore (US $ 1.68 billion) in FY23.
Location: India has a location advantage – it is geographically close to key export destinations like middle east, south-east Asia, Africa etc. Example: In the food processing industry Strategic geographic location and continuous increase in raw material production help India to supply cheaper products to other countries. USA is the top destination for processed products from India followed by Vietnam, Saudi Arabia, Iran, and UAE etc.
Policy Support: In the beginning of july 1991, economy started shifted to Mixed Economy with equal control and opportunities for private enterprises as New Economic Policy introduced Liberalization, Privatization and Globalization as major economic reforms. This process of government support is still on as we can see from the current ‘ease of Doing Business’ rankings. There is a continuous attempt to provide enough support to help new enterprises grow. Example: Government launched Start Up India Programme to support new enterprises.
Availability of Labour: Any industry needs labour. India with its huge population provides enough labour for enterprises. Not only labour is available but also it is cheap.
Infrastructure: From the past two decades major thrust has been given to infrastructure development like highways, research and development centres, state of art technologies etc.
Example: In the food processing industry, Government of India inaugurated the first of its kind Rs 136 crore (US$ 20 million) mega international food park at Dabwala Kalan, Punjab.
Changing lifestyle: With the growth in the net disposable income in India, people have started giving more priority to leisure, comfort and pleasure. New and innovative business models have flourished because of this. A lot of app has been developed which cater to the specific demand of the consumers in the field of health and entertainment like Amazon Prime, netflix etc.
Challenges: - Deficiencies in the regulatory environment: Lack of integration & clarity: Numerous laws, under the jurisdiction of different ministries and departments, govern different aspects. The multiplicity of legislation leads to contradictions in specifications, conflicting approach, lack of coordination and administrative delays.
- Lack of Holistic Approach: Despite conferring numerous incentives for establishing new enterprises, proportionate results have not been achieved. This can be credited to the absence of vital peripheral infrastructural linkages and legislation and cumbersome procedures to avail grants. Also, unlike for small scale industries, fewer schemes have been designed to promote scale by incentivizing large scale investors.
- Besides these, inherent anomalies such as mounting cost of finance, lack of skilled and trained manpower, inadequate quality control and high taxes and duties, thwart development of the sunrise industry.
- Growth is expected in the sunrise industry, on the back of factors such as several players entering the food and beverages segment, ecommerce gaining more popularity in the country, and domestic companies testing out the waters. The rural region is also a potentially profitable target.
Sunrise industry is a colloquial term for a burgeoning sector or business that is just in its infancy but shows promise of a rapid boom. A sunrise industry is typically characterized by high growth rates, numerous startups and an abundance of venture capital funding.
A sunrise industry is often characterized by a high degree of innovation, and its rapid emergence may threaten to push into obsolescence a competing industry sector that is already in decline. Because of its dim long-term prospects, such an industry is referred to as a sunset industry.
Examples of sunrise industries include alternative energy in the period from 2003 to 2007, as well as social media and cloud computing in 2011 and 2012.
Key factors for the growth in sunrise industry in India
ROBUST DEMAND: Per capita GDP of India is expected to reach US $ 3,273.85 in 2023 from US $ 1,983 in 2012. The maximum consumer spending is likely to occur in food, housing, consumer durables, and transport and communication sectors. Also higher penetration and a rapidly growing young population coupled with increased usage of 3G, 4G and portable devices is driving demand. For example: India's online gaming industry is expected to grow at a CAGR of 22 per cent between FY18-23 to reach Rs 11,900 crore (US $ 1.68 billion) in FY23.
Location: India has a location advantage – it is geographically close to key export destinations like middle east, south-east Asia, Africa etc. Example: In the food processing industry Strategic geographic location and continuous increase in raw material production help India to supply cheaper products to other countries. USA is the top destination for processed products from India followed by Vietnam, Saudi Arabia, Iran, and UAE etc.
Policy Support: In the beginning of july 1991, economy started shifted to Mixed Economy with equal control and opportunities for private enterprises as New Economic Policy introduced Liberalization, Privatization and Globalization as major economic reforms. This process of government support is still on as we can see from the current ‘ease of Doing Business’ rankings. There is a continuous attempt to provide enough support to help new enterprises grow. Example: Government launched Start Up India Programme to support new enterprises.
Availability of Labour: Any industry needs labour. India with its huge population provides enough labour for enterprises. Not only labour is available but also it is cheap.
Infrastructure: From the past two decades major thrust has been given to infrastructure development like highways, research and development centres, state of art technologies etc.
Example: In the food processing industry, Government of India inaugurated the first of its kind Rs 136 crore (US$ 20 million) mega international food park at Dabwala Kalan, Punjab.
Changing lifestyle: With the growth in the net disposable income in India, people have started giving more priority to leisure, comfort and pleasure. New and innovative business models have flourished because of this. A lot of app has been developed which cater to the specific demand of the consumers in the field of health and entertainment like Amazon Prime, netflix etc.
Challenges:
- Deficiencies in the regulatory environment: Lack of integration & clarity: Numerous laws, under the jurisdiction of different ministries and departments, govern different aspects. The multiplicity of legislation leads to contradictions in specifications, conflicting approach, lack of coordination and administrative delays.
- Lack of Holistic Approach: Despite conferring numerous incentives for establishing new enterprises, proportionate results have not been achieved. This can be credited to the absence of vital peripheral infrastructural linkages and legislation and cumbersome procedures to avail grants. Also, unlike for small scale industries, fewer schemes have been designed to promote scale by incentivizing large scale investors.
- Besides these, inherent anomalies such as mounting cost of finance, lack of skilled and trained manpower, inadequate quality control and high taxes and duties, thwart development of the sunrise industry.
- Growth is expected in the sunrise industry, on the back of factors such as several players entering the food and beverages segment, ecommerce gaining more popularity in the country, and domestic companies testing out the waters. The rural region is also a potentially profitable target.
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