After several quarters of anxiety, India?s GDP growth in FY 2010 is expected to be around 7%. In FY 2011, GDP growth is likely to cross 8% even as the Indian government exits its fiscal and monetary stimuli. Does this mean that India Inc is back in the halcyon days of 2007-08 when aggressive growth was the overriding mantra of CEOs? There are five major factors that have gained prominence in the last 12-18 months, which will profoundly influence the strategic choices of Indian firms.

First, economic volatility and risk. Economic growth is exhibiting divergent trends (and risks) across the world. Prior to 2008, the growing indebtedness of US consumers, balanced by excessive savings in China, was clearly unsustainable. As they restructure, both economies are likely to record slower growth than in past years. There could also be cases of sovereign debt crises (like Dubai) in the smaller European countries (like Greece) and possibly the UK.

In contrast, India?s economy is well-placed to maintain 8-9% GDP growth provided inflation (and the fiscal deficit) is kept in check. However, Indian firms will have to recognise the volatility and risks emanating from the world economy and be prepared for the after-effects on their businesses.

Next comes Infocomm. In 2009, the mobile subscriber base in

India reached a significant milestone?crossing 500m. Over the next 2-3 years, the base is likely to exceed 800m. Almost all households (barring the destitute or those in remote areas) will be connected in a vast network?which has global reach.

With 3G services likely to be launched by 2011, broadband capabilities will also be available on mobile devices. This will facilitate the next generation of Internet-based applications?including Web 2.0 and cloud computing. Such ubiquitous reach of Internet applications will create new options for firms?for their existing businesses as well as for new business models or entirely new businesses.

The third factor is climate change and related regulations and standards. At Copenhagen, India committed to a reduction in the carbon intensity of GDP growth. This is likely to be implemented through multiple mechanisms: these could include a nationwide carbon tax or a cap & trade mechanism, emissions norms for industries like automobiles, thermal power and cement, standards for devices, appliances or even buildings to conserve energy, subsidies to encourage alternative energy.

A rising price of carbon along with subsidies for renewable energy will create an economic case for substituting current energy sources. New opportunities will arise in alternative energy, energy-saving devices and next generation equipments or vehicles that meet new emission norms.

Domestic reforms constitute the fourth factor. After a lull of several years, a fresh wave of far-reaching reforms is likely in the next 2-3 years. These include the GST, FTAs, a land acquisition and rehabilitation policy, reforms in education and the legal system and financial sector reforms in pensions, insurance and the bond market. Clearly, all firms have to assess how these reforms affect their existing businesses or create new strategic options.

Lastly, inclusiveness and low-cost innovation. The political compulsions behind ?inclusiveness? are leading to poverty alleviation programmes (like NREG), affirmative action and the allocation of greater resources for health, welfare and education for the disadvantaged sections.

As a result, the income pyramid will develop a bulge in the middle?faster than earlier forecasts. By 2015, the largest number of households will fall in the middle-income slabs.

This is creating a huge mass market for goods and services at a price that?s affordable for this segment. Consequently, India is increasingly becoming a centre for low-cost innovation and new business models. Consider the Nano car at Rs 1 lakh, mobile voice services at less than Rs 1 per minute and SMS at Rs 0.5.

Global companies have set up R&D centres here for developed market needs, to design low-cost models for low-income countries. GE has launched a ?reverse innovation? initiative for this purpose. Clearly, there is a huge benefit in identifying such needs and configuring high-volume or low-price offerings to address them?before competitors do so.

Every firm in India will be affected by these five factors to varying degrees. Some factors may have a marginal impact requiring just a tactical response. Others may create new engines of growth or pose serious threats to the existing business model. These are likely to provide a rich menu of choices to define the strategic direction of the firm.

Given the likely volatility in global markets, it is critically important to identify risk factors and alternate scenarios. Having observed and experienced how improbable ?black swan? events can occur and what damage they can cause even in an insulated economy like India?s, firms should prepare contingency plans to counter or mitigate the effect of any such dislocations.

The year 2010 and the following few years promise to be interesting and eventful. Companies in India should draw appropriate lessons from the recent past and use the five factors described above to chart a course conforming to their risk appetite and ambition. Even as they take directional calls and implement strategic initiatives to reach their goals, they have to remain vigilant and expect the unexpected.

The author is chief executive, Tata Strategic Management Group