Transcript Why India - India Brand Equity Foundation

Indian Economy – Opportunities Unlimited
Fastest Growing Free Market Democracy
India: Ranks Among the Top-15 Countries in terms of GDP at
constant prices
Indian economy has
witnessed an
unprecedented
growth….
Sound performance of each
industry segment is leading to
the overall robust performance
of Indian economy
India's GDP: 2002-06 (Till Q2)
700
8.40%
8.50%
600
9.05%
7.50%
500
USD Billion
Indian economy is
the 4th largest in
terms of PPP – USD
3.9 trillion in 2006
400
300
4%
484.4
590
534
423.73
200
286
100
0
Registered highest
second quarter
growth since 200102 i.e. 9.2 percent
2002-03
2003-04
2004-05
2005-06
2006-07 (Till
Q2)
GDP at Constant Prices
700
600
154.7
Booming Indian
markets providing
impetus to the
economic growth
USD Billion
500
400
104.4
109.4
103.1
90.9
204.90
223.40
1999-00
2002-03
116.05
300
200
319.30
100
0
Services
Agriculture
2005-06
Manufacturing
Indian GDP has registered one
of the fastest growth rates
across the globe
India: Robust Economic Platform
India's Forex Reserves: 2001-07 (Till February 2007)
200
153.3
160
India’s enhanced economic
performance has been major
contributor towards increased
Forex reserves
External debt-toGDP ratio has
shown remarkable
improvement…..
138.2
140
120
106.8
100
74.8
80
60
55.5
40
20
0
2001-02
India’s Forex
reserves are in
excess of external
debt……
2002-03
2003-04
2004-05
2005-06
2006-07 (Till 16
Feb 07)
External Debt-to-GDP Ratio
22
21.1
20.4
17.8
Ratio
19
…..at present level
of Forex reserves,
the country has
adequate cover for
12 months of
imports
182.8
180
USD Billion
Ever rising Forex
reserves providing
adequate cushion
against any
possibility of
currency crisis or
monetary instability
17.3
15.8
16
13
10
2001-02
2002-03
2003-04
2004-05
2005-06
The decreasing external debt to
GDP ratio indicates that India has
a sound economic platform
India: Attractive Investment Destination
India is ranked
second in AT
Kearney FDI
confidence index
With the better performance on PE ratio and ROE, Indian markets have attracted
large investments
FDI Inflow - India: 2001-07
18,000
16,000
16,000
MARKET
India
FDI inflow for the
period April –
December 2006
witnessed a growth
of 151 percent over
the same last year
Mauritius has been
the largest
contributor towards
FDI into India…..
PE
Ratio
16.1
P/B Ratio
RoE (%)
200 percent
Increase
12,000
10,000
8,000
5,546
6,000
4.53
4,222
22
4,000
2,000
China
10.62
2.06
17
Indonesia
10.26
3.09
NA
Korea
9.85
1.84
16
Malaysia
13.21
1.82
16
Taiwan
12.17
2
11
Thailand
9.84
2.32
23
3,134
3,755
2,634
0
2001-02
2002-03
2003-04
2004-05
10.00
11.19
2.12
15
Latin America
9.35
2.46
18
EM Europe
10.9
2.39
15
2006-07
10.20
10
EM Asia
2005-06
Net FII into India: 2001-07 (Till February 2007)
12
USD Billion
Telecom and
Electronics topped
the list of inward FDI
Return on the Investments in India (2006 Q1)
USD Million
14,000
9.40
8
6.80
6
4
2
1.80
0.60
0
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07 (Till 16
Feb 07)
India: Surging Exports
Services sector has
been a major
contributor to
increased exports
from India.
India's Exports: 2001-06
140
124.65
120
103.42
100
The acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies.
USD Billion
83.81
80
63.95
60
52.81
The quality and cost advantage
are the two important parameters
leveraged by the Indian
producers to increasingly market
their products and services
40
20
0
2002-03
2003-04
2004-05
2005-06
2006-07
Exports
The Indian
companies have
chalked out
extensive plans to
increase their
presence abroad
India's Import: 2001-06
200
181.37
180
160
149.65
140
111.89
120
USD Billion
Imports of products
by India mainly
includes petroleum
products and
minerals
Petroleum products are the
contributor towards the growing
imports by India
100
78.28
80
61.52
60
40
20
0
2002-03
2003-04
2004-05
Imports
2005-06
2006-07
India: Pacing Ahead to Emerge as the Major Economy in the
Globe
India has been
ranked superior to
other major
countries by many
prominent surveys…
100
2005 Global Services Location Index
2006 Global Retail Development Index
(GRDI)
India
AT Kearney placed
India among the top
three in its FDI
confidence index…
GRDI Score
80
3.47
China
60
Malaysia
40
Philippines
3.21
1.17
2.95
1.06
1.62
Thailand
2.14
1.76
2
3.56
Singapore
20
1.26
2.67
3.27
1.12
1.16
1.44
1.51
0.94
0
Chile
Latvia
Financial structure
Business environment
Projected GDP Growth Rates for Select Upcoming
Economies
8
6
Brazil
China
India
4
2
Russia
-5
0
20
45
-4
5
40
-4
0
20
20
35
-3
5
30
-3
0
20
20
25
-2
5
20
-2
0
20
20
15
-1
5
20
10
-1
0
0
05
GDP Growth Rate (%)
India is expected to
outperform its rivals
in the BRIC, in terms
of GDP growth rates
from 2015
onwards…
India Russia Vietnam Ukraine China
20
… retail market
along with services
sector has been
attracting lot of
interest from the
major players
People and skill availablity
India: Vibrant Economy Driving M&A Activities
Number of deals and values
782
25
800
700
18.3
20
15
10
600
500
467
12.3
400
306
SECTOR
900
300
Number of deals
28.2
30
USD Billion
Growth Drivers:

Globalization of
competition

Concentration of
companies to
achieve
economies of
scale

Lower interest
rates and vibrant
global markets

Cash Reserves
with Corporate
Trends:

Ratio of Size of
acquisition to
the size of
acquirer has
grown from 10
percent in 2004
to 25 percent in
2006.

Cross-border
deals are
growing faster
than domestic

Private Equity
houses have
funded projects
as well as done
some
acquisitions in
India.
USD
(Mn)
SECTOR
USD
(Mn)
Automotive
518
Manufacturing
933
Banking and
Financial
1375
Media
630
Chemicals &
Plastics
1133
Oil & Gas
384
Electrical &
Electronics
896
Pharma &
biotech
2520
Energy
1484
Telecom
2198
FMCG, Food and
Beverages
1327
Others
4006
IT & ITES
2903
Total
20305
200
5
100
0
0
2004
2005
Deal Values
2006
No. of Deals
In 2006, there were a total of
480 M&A deals and 302
private equity ones…
… Average deal size close to
USD 36 million…
…Contribution of private equity
deals to total number of
deals have increased from
nearly 9 percent in 2004 to
28 percent in 2006
Major M&A Deals Undertaken Abroad by India Inc.
Tata Steel buys Corus Plc.
USD 12.1 billion
Hindalco acquired Novelis Inc.
USD 6 billion
Essar Steel acquired Algoma Steel
USD 1.58 billion
Videocon Industries acquired Daewoo Electronics
Corporation Limited
Tata Tea has acquired 30-percent stake in the US
based Energy Brands Inc.
USD 730 million
USD 677 million
Major M&A and Investments Announcements in India
Vodafone buys Hutch
Plans to spend on its development operations
in India over the next four years
USD 11 billion
USD 1.7 billion
Plans investment in private equity, real estate,
and private wealth management
USD 1 billion
Aditya Birla Group increased its stake in Idea
Cellular by buying 48.14-percent stake
USD 0.98 billion
Renault, Nissan and Mahindra & Mahindra to set
up Greenfield automobile plant in Chennai.
USD 0.905 billion
Mylan Laboratories acquired a majority stake in
Matrix Laboratories
USD 0.74 billion
India: Astounding Demographics
Growth in the
higher income
DEMOGRAPHIC TRANSFORMATION OF INDIA
categories of
Annual Household Income
India’s
lead to a
burgeoning
affluent section
of society, which
(Million Population)
population, has
(in USD)
has significant
level of
2
9
20
Rich (Above 115000)
9
17
33
High Income (57000 - 115000)
48
74
120
Consuming class (23000 - 57000)
221
285
404
Working class (10200 - 23000)
726
710
613
Needy (Below 10200)
2005-06
2001-02
purchasing
2009-10(E)
* In PPP terms
power
Per Capita Income
By 2009, India will
have 1.1 million
700
600
individuals with a
500
wealth of USD
400
100,000
393
461
519
583
638
300
200
100
0
2002-03
2003-04
2004-05
2005-06
2006-07 E
Increasing per-capita
income coupled with
emerging middle class has
provided necessary
impetus to the
consumerism in India
India: Increasing Working Population
Growth in Global Working Age Population (15-64)
Stock Position
2005
World
4,168
India
691
Africa
500
China
934
South East Asia
362
Latin America
359
Addition to working age population by 2010
314
71
64
44
33
31
Southern Asia
132
USA
200
Europe
Japan
17
10
0
497 -3
85
-5
45
95
145
195
245
295
345
In Million
Countries worldwide are anticipating a shortage of working population
in the future. India is expected to emerge as a clear winner and by 2050
it will have the largest working age population.
Growth Expected in India
To sustain the GDP growth of more than 8 percent
India requires an investments of USD 1.5 trillion in
the next five years
2010
2008
2006
• GDP – USD 900 billion
• GDP – USD 750 billion
• GDP growth rate – 9%
• GDP growth rate – 9.5%
• Services Contribution – 60-65 %
• GDP – USD 590 billion
• Services Contribution – 60 %
• GDP growth rate – 9 %
• FDI limit is expected to be close
to 100 percent in major industry
sectors such as Telecom,
Semiconductors, Automobiles,
etc.
• FDI limit is expected to be 100
percent in major industry sectors
such as Telecom, Semiconductors,
Automobiles, etc.
• Services Contribution – 54 %
• FDI limit not 100 percent in major
industry sectors such as Telecom,
Semiconductors, Automobiles,
etc.
• Balance of Trade – USD (46.2)
billion
• Investment goal – USD 250 billion
• Balance of Trade – Should
increase with surging exports as
compared with imports
• Investment goal – USD 305 billion
• Balance of Trade – Should be
positive with increased level of
exports as compared with imports
• Investment goal – USD 370 billion
India’s Sunrise Sectors
1
Infrastructure
2
Automobile
3
Telecom
4
Semiconductor
5
Aviation
6
Defense
India to Gain in terms of Economic Prosperity due to Continued
Government Initiatives in Infrastructure Sector
Railways has
initiated process to
develop dedicated
freight corridor…
Increase in traffic is
expected to amount
to 12-15 percent for
passenger traffic
and 15-18 percent
for cargo traffic…
… Government of
India spends
approximately USD
4 billion annually on
road development
There is increasing
competition between
full services carriers
and low cost
carriers…..
‘Golden Quadrilateral’, ‘North-South’ and
‘East-West’ corridors are the major road
infrastructure being undertaken by the
government. 96 percent work of Golden
Quadrilateral has been completed
• Project ‘Sethusamundram’, which
involves dredging of the Palk Strait to
facilitate maritime trade through it
• Project ‘Sagarmala’ – a USD 22 billion
project for the modernisation of major and
minor ports
•The government has initiated the
process of up-gradation and
modernisation of national airports
worth USD 9 billion by 2010.
•It has also initiated process of
modernisation of other non-metro
airports (more than 40 cities)
• Private sector can set up coal, gas or
liquid based thermal projects, hydel
projects and wind or solar projects of any
size. Mega power projects permitted in
India.
• Foreign equity participation upto 100
percent is allowed in the power sector
through automatic route.
Government has identified infrastructure as a priority sector to sustain the momentum of the
GDP growth rate. The investment goal for infrastructure sector are:
• Power – USD 140 billion by 2010
• Roads – USD 25 to 30 billion by 2010
• Ports – USD 8 to 10 billion by 2010
• Civil Aviation – USD 15 to 17 billion by 2010
• Telecom – USD 22 billion by 2010
India’s Sunrise Sector: Automobile
The Indian automobile sector generates a revenue of USD 34 billion per year. Its
contribution to GDP is around 3-4 percent.
Largest two
wheeler
manufacturer….
Total Commercial Vehicles
CAGR for production : 24.5%
CAGR for sales : 24.3%
Domestic
production of auto
components has
increased to USD
10 billion in 200506, a jump of 17
percent…
Exports have
grown by 30
percent to USD 1.8
billion
Production and domestic sales
figures for commercial vehicles
are growing at a rate of
approximately 24 percent.
350
250
150
50
2001-02
2002-03
2003-04
2004-05
2005-06
Total Two Wheelers
CAGR for production : 15.1%
CAGR for sales : 13.8%
8,500
Production and domestic sales of
two wheelers are growing at a
rate of approximately 15 and 14
percent respectively.
Units (thousands)
……Fifth largest
CV manufacturer in
the world
Units (thousands)
450
6,500
4,500
2,500
500
2001-02
Production
2002-03
2003-04
Domestic Sales
2004-05
2005-06
India’s Sunrise Sector: Telecom
190
200
160
140
120
98
76
80
44
53
17
13
12
9
7
8
5
4
4
40
0
0
2001-02
2002-03
10
2003-04
2004-05
2005-06
2006-07
(Q3)
2001-02
2002-03
2003-04
2004-05
2005-06
Internet Subscribers
9
8
Subscribers (in Mn)
India has 40.3
million wireline
subscribers and
149.6 million
wireless (mobile
and WLL-F)
subscribers.
Tele-Density
16
Tele-Density (%)
Tele-density has
more than doubled
in the last 3 years.
20
Telecom Subscribers (Wireline & Wireless)
Subscribers (in Mn)
India ranks among
the top 10 countries
of the world with
regards to its
telecom network.
The Indian mobile market is witnessing strong growth and is slated to become the
third largest in the world behind US and China in the next two to three years
Mobile communication and
internet penetration are
adding to the momentum of
telecommunication sector
7
6
6
5
4
3
4
2001-02
2002-03
2
0
2003-04
2004-05
2005-06
2006-07
(Q3)
2006-07
(Q3)
India’s Sunrise Sector: Semiconductor
Semiconductor Design Market: 2004-06
10
8
USD Billion
India has developed
strong competence
in design side of
semiconductor
industry….
6
4.6
4
Captive
semiconductor
units in India
contribute 62
percent to the total
revenues being
generated by the
industry….
India has
approximately 125
companies
operating in the
semiconductor
domain
3.2
2.4
2
Many international players such
as Intel, AMD, etc have
established their R&D centres in
India, which assists them to
develop novel products at fast
pace
0
2004
2005
2006
Semiconductor Design Market and its Components: 2005
Indian companies have chalked
out plans to establish fabrication
units thus catering to the overall
demand from designing to
manufacturing phase
18%
78%
4%
VLSI Design
Hardware Design
Embedded Software
Investment Opportunities in Indian Aviation Industry
Activities in the Indian Aviation Industry





Global aviation major Boeing plans to invest approximately USD 280
million to establish airplane maintenance facility and a pilot training
centre. The company estimates that Indian market will require 470
airplanes worth USD 35 billion by 2025.
Carrier
Proposed Requirement
GMR has undertaken project for modernisation of Delhi airport. The
project worth is USD 1.94 billion.
Air India
50 Aircrafts
Indian Airlines
43 Aircrafts
Airbus plans to invest USD 1 billion over a period of 10 years to
establish training centres, maintenance, repair and overhauling
(MRO) centre, and engineering and design centre in India.
Jet Airways
30 Aircrafts
Air Deccan
60 Aircrafts
Kingfisher
48 Aircrafts
Spicejet
20 Aircrafts
Indigo
100 Aircrafts
GoAir
15 Aircrafts
Paramount
5 Aircrafts
Magic Air
10 Aircrafts
EADS plans to invest USD 2.57 billion over a period of next 15 years
to establish technology centre in India.
Indian carriers have placed orders for approximately 480 aircrafts to
be delivered by 2012. State operated carriers – Indian airlines and Air
India have placed orders worth USD 8 billion for approximately 100
aircrafts to modernise its fleet.

The demand for corporate jets has increased and it is estimated that
number of corporate jets in India will be 300 in next 18 months.

Canadian avionic firm – CAE plans to expand its operations in India.
It plans to aggressively market its simulation and modelling
technologies to civil and military aviation customers.
Why India? – Quote Unquote
India has among the
highest returns on
foreign investment
India is among the
three most attractive
FDI destinations in
the world
US Department of
Commerce
A T Kearney
FDI Confidence Index 2005
By 2032, India will be
among the three largest
economies in the world
BRIC Report
Goldman Sachs, October 2003
“We came to India for the
costs, stayed for the
quality and are now
investing for innovation.”
- Dan Scheinman, Cisco System
Inc. as told to Business Week,
August 2005
“India is a developed
country as far as
intellectual capital is
concerned.”
Jack Welch
General Electric
For detailed information on India, visit the IBEF website: www.ibef.org
Contact IBEF at [email protected]
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