India's Growing Sports Industry

 
 

The global sports sector is estimated to be worth between $480-620 billion. However, in India, sport is yet to be recognized as an economic sector, mainly due to the fact there has been little or no comprehensive study done on the industry’s size, potential, and on the available opportunities that are on offer.

The sports industry sector may include several different segments such as sports tourism, sporting goods (in manufacturing and retail), sporting garments, and the available opportunities in sporting management and sponsorship. It is seen across the globe that sports as a full-fledged industry can and may contribute about 1 to 5 percent of the country’s GDP.

However, a lack of sporting culture has held back the growth of a similar industry in India in the past, despite the growing awareness and interest in various different sports besides cricket. Hence, due to a lack of industry status along with a lack of sporting culture, corporate investments in India’s sports have traditionally been limited to only non-profit corporate social responsibility activities and initiatives, while the scope for exploring profit-related activities under the sports industry have not been explored in vast depth.

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Sport is regarded as one of the largest industries worldwide in terms of generating employment and revenue. Sports is a multi-billion dollar global industry propelled by enormous consumer demand. According to Vinit Karnik, national director for sports and live events at GroupM ESP, in the past, sports was seen as loss-making affair. However, with the formation of newer leagues and successful franchises, “the sports industry has grown by up to 10 percent by the year 2014,” Karnik says.

New initiatives such as the establishment of Indian Premier League (Cricket), Hockey India League, Indian Badminton League, Pro Kabaddi League, and Indian Super League (Football) are indeed changing the face and the identity of Indian sports. The sports industry has indeed grown extensively — from Rs. 43.7 billion in 2013 to Rs. 48 billion ($713 million) in 2015 — mainly due to the emergence of new sporting leagues according to CVL Srinivas, CEO of GroupM South Asia. Srinivas further went on to state that India has moved forward from a single sport nation to a multi-sport country, and is witnessing a boom that will benefit the sports business in the years to come.

The establishment of a sports industry in India can reap rich dividends in different segments. Employment and the massive market opportunities which will open up within this industry will be enormous in the years to come. However, new sports initiatives require professional human capital to speed up growth, and the harsh reality is that there are very few quality professional sports managers available in the country. Government initiatives to make India a sporting superpower will not be realized without professional sports managers. Indian sports industry has an impressive growth prospect even though its fundamentals are not solid. This is where professional sports managers can bring a solid foundation to India’s sports industry.

Sports in India have a tremendous potential for expansion in the existing huge market. With a high growth economy and an ever-growing middle class with disposable income and leisure time, together with rapid growth in TV-owning households and a strong passion for sports, there is high potential for growth. These conditions have fostered a rapid rise in advertising, as local and international companies target this lucrative underdeveloped market through sports. Moreover, buying TV and marketing rights for the large sporting events that now regularly take place in India provides ample business opportunities and huge revenue for many companies. Besides cricket, recent years have clearly made it evident that other sports such as Formula One racing and the Hockey India League have some serious business propositions that can be explored. Moreover, with the coming of the Indian Super League, football is starting to achieve real traction with TV audiences, which are tuning in in ever greater numbers for international leagues and competitions.

The sporting goods and apparel industry in India has been in existence for more than a century and has managed to flourish due to a skilled workforce. For example, the towels produced every year for the prestigious Wimbledon Grand Slam tennis tournament are produced in a factory in Gujarat, while footballs used in many of the international football tournaments across the globe are manufactured in the city of Jalandhar.  Being labor-intensive in nature, the industry provides employment to more than 500,000 people. The nucleus of this industry in India is in and around the states of Punjab and Uttar Pradesh; however there is tremendous potential for developing a sporting goods industry just waiting to be explored in other cities like Mumbai, Kolkata, and Chennai.

The sectors of sports tourism and sports medicine also have massive business potential in India. Mega sporting events in the past, such as the Hockey World Cup and the 19th Commonwealth Games (both held in New Delhi in 2010), along with the ICC Cricket World Cup held in 2011, brought a number of tourists and sports enthusiasts. Simultaneously, there has also been a marked rise in the number of tour operators and agents specializing in servicing the requirements of this particular tourist segment. Even mainstream tour operators have set up separate divisions to tap the potential of sports tourism. An alien concept in India about a decade ago, sports tourism has evolved rapidly over the past five years, though it remains a niche segment.  Sports tourism is a well-organized sector and major revenue churner in several nations around the world like the U.K., Germany, Singapore, South Africa, and Malaysia, while in India it is slowly picking up speed. According to industry experts, the segment is expected to have a growth rate of 10-20 percent in the coming years.

In recent times, a lot of sporting activity – in the form professional hockey, kabaddi, badminton, tennis, football, and cricket leagues – has come up in India, which requires a proper medical support system. There is also the question of whether Indian sports medicine is prepared to handle such on and off the field incidents. Although the sports medicine segment in India remains in its infancy stage, it took a step forward with the recent development of the Sports Injury Center at Safdarjung Hospital, which not only boasts world-class facilities and doctors, it can even provide treatment to international athletes at a very competitive rate. This in turn is likely to increase and enhance the sports tourism sector of India.

All in all, the sports industry in India has tremendous business potential, especially in the fields of marketing, management/sponsorship, exporting of goods or apparel, and sports medicine and tourism. Therefore, the time is ripe to facilitate investment mobility so that corporate houses that are already engaging in sports can upgrade to for-profit sporting ventures, while business houses that are not involved in sports so far may consider this sector as an ideal avenue for CSR activities. It’s time to find out whether the sports industry can in fact be the next big thing for India’s economy.

Sooraj Aurora is an Executive Officer associated with the International Affairs Division at PHD Chamber of Commerce and Industry. He has pursued his Masters in Development Studies and is also pursuing his P.hD from the Natural Resources and Sustainable Development Department at Amity University.

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