Transcript CLIENT NAME TITLE Description Date

PRESENTATION ON INDIAN ECONOMY
February 2010
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RESILIENT ECONOMY
TRENDS
OPPORTUNITY INDIA
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STRONG MACRO FUNDAMENTALS
US$ bn
1400
1200
1000
800
400
300
200
100
0
600
400
200
Per capita income
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
1998-99
1997-98
1996-97
0
1995-96
Per Capita Income in 2008-09:
- US$ 2,563 in PPP terms
- US$ 831 in nominal terms
US$
1994-95
–
GDP has increased rapidly
over the past 15 years from
$250 billion to over US$ 1
trillion currently.
900
800
700
600
500
1993-94
–
World’s fourth-largest
economy in terms of PPP* and
ranked 12th in US$ terms.
1992-93
–
GDP
* PPP : Purchasing Power Parity terms
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GROWING SAVINGS RATE
39.1
40
Savings and Investments
% of GDP
38
36
Gross Domestic Savings
34
Gross Domestic Investment
37.7
Savings Breakup: Households,
public and private sector (% GDP)
32
30
Household
savings
Public
sector
Private
corporate
sector
28
Year
26
2000-01
21.6
-1.8
3.9
24
2001-02
22.1
-2.0
3.4
22
2002-03
22.9
-0.6
4.0
2003-04
24.1
1.1
4.6
2004-05
22.8
2.2
6.7
2005-06
24.1
2.4
7.7
2006-07
24.1
3.3
8.3
2007-08
24.3
4.5
8.8
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
Recent increase in savings-to-GDP
ratio has been due to improved
savings of all three categories –
households, public and private sector
2007-08
India’s dependence on foreign savings for financing domestic investments is limited
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CONSISTENT GROWTH…
GDP growth (%)
12
10
8
6
4
2
0
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10 AE
8.5 per cent average GDP growth from 2004 to 2009
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…OUTPACING THE WORLD
India is set to grow faster than other regions (Annual Percentage change)
Economies
2008
2009
Projections
2010
2011
World
3.0
-0.8
3.9
4.3
Advanced Economies
0.5
-3.2
2.1
2.4
United States
0.4
-2.5
2.7
2.4
Euro Area
0.6
-3.9
1.0
1.6
Japan
-1.2
-5.3
1.7
2.2
Developing Asia
7.9
6.5
8.4
8.4
China
9.6
8.7
10.0
9.7
India
7.3
5.6
7.7
7.8
Brazil
5.1
-0.4
4.7
3.7
Source: IMF
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RISE OF SERVICES AND INDUSTRY
GDP Composition: 1990-91 and 2009-10
2009-10
1990-91
41%
32%
15%
57%
28%
27%
Agriculture
Industry
Services
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GLOBAL TRADE
Export-Import of Merchandise goods (US$ bn)
291.5
127% growth in Exports
251.6
185.7
182.6
163.0
149.2
126.4
117.6
103.1
2005-06
*Apr-Dec 2009
2006-07
193.9
2007-08
Imports
2008-09
from SEZs Apr-Dec 2009
to over US$ 32.14 bn y-o-y
2009-10*
Exports
Exports at three-month positive run
• Jan 2010 exports - $14.34 bn
vs $12.9bn in Jan’ 09
Export-Import of Services (US$ bn)
101.7
90.3
73.8
57.7
34.5
44.3
51.5
52.0
2006-07
2007-08
2008-09
• Nov 09 exports - $13.2 bn
• 15-month high in Dec 09 - exports
touched $14.61 bn.
2005-06
*Apr-Sep 2009
Imports
40.1
24.7
2009-10*
Exports
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CAPITAL INFLOWS ARE RISING
• Foreign Direct Investment (FDI) in Jan 2010
grew 13.2 per cent over the previous month,
to touch US$ 1.54 billion
• Private equity investments in India doubled
in Jan 2010, with deals of over US$ 386 mn
being announced.
• The recent recovery in capital inflows has
lead to a 5-6% recovery in the value of the
Rupee, which is currently trading at levels
of Rs 46-47 /US$.
FDI and Portfolio Inflows (US$ bn)
34.2
29.6
35.0
26.5
22.7
12.5
8.9
2005-06
23.7
7.1
2006-07
2007-08
2008-09
2009-10*
-14.0
Inward FDI
Portfolio
*Apr-Dec 2009
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RESILIENT ECONOMY
TRENDS
OPPORTUNITY INDIA
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DEMOGRAPHIC ADVANTAGE
India’s Biggest Advantage: One of the youngest populations in the world
China
2000
Korea
18.7
21.4
12.3
14.7
8.3
14.8
5
5.2
6.9
7.1
11.4
13.2
21.1
16.9
22.7
27.4
21.5
29.2
Percentage of population aged 65 and older
Thailand
2025 (Projected
India
Europe
North
America
2050 (Projected)
Source: United Nations, 2008
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GROWING MIDDLE CLASS
Number of Households (In million)
Year
The Poor
Middle Class
The Rich
Annual household
income (Rs.)
< 200,000
200,000 – 1,000,000
> 1,000,000
1995
160.1
4.6
0.3
2005
192.4
13.3
1.2
2015
180.1
60.6
3.3
2025
143.0
128.0
9.5
Source: National Council for Applied Economic Research/ McKinsey Global Institute
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BOOSTING INCREDIBLE ASPIRATIONS
• 50 per cent of the population under 25
STRONG
DEMOGRAPHI
C DIVIDEND
• Among top three of 30 nations in availability of skilled labour
• 7.7 mn new entrants to the workforce every year
• Dependency ratio expected to fall from current 60 per cent
to 48 per cent by 2025
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DYNAMIC AND GROWING MARKET
CONSISTENT GROWTH
• Home to 10 of the world’s fastest
growing urban areas
• 20 Indian cities account for:
• IT GLOBALPOWER
• SMALL CAR EXPORT HUB
 10% of India’s population
• GLOBAL RESEARCH HUB
 60% of total surplus income
• HUGE OPPORTUNITY IN
INFRASTRUCTURE
 21% of total spending
 And generate 31% of total
disposable income
• FASTEST GROWING
TELECOM MARKET
• BREAKTHROUGH
SPACE TECHNOLOGY
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EMERGENCE OF THE INDIAN MULTINATIONAL
• In 2009, 156 cross-border deals and 174
domestic deals were signed
 Cross-border deal value: US$ 5.26 bn
 Domestic deal value: US$ 6.70 bn
• 20 Indian companies in the 2009
BCG 100 New Global Challengers list
GROWTH DRIVERS
• Globalisation and increased
competition
• Focus on achieving
economies of scale
• Focus on emerging markets
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RELENTLESS ENTREPRENEURSHIP
Market capitalisation
US$ billion
160
140
120
100
80
60
40
Auto/ Auto
ancilliary
Trading
Mining
Drugs &
pharmaceuticals
Consumer
discretionary
Engineering
Telecom
Metals and
metal products
Construction
Energy
Banks and
Financial
services
Oil & gas & POL
products
0
IT /ITES
20
Emergent Indian enterprises across sectors ranging from engineering to
financial services.
Market capitalisation of top-500 companies in excess of $800 bn or about
70% of GDP
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INDIA INC. GOING GLOBAL
Bharti Airtel has acquired a 70 per cent stake in
Warid Telecom in 2010
Spice Group acquired 20 per cent stake in
MediaRing Ltd. in 2009
Planned
investment US$ 300 million
US$ 44.44
million
Shree Renuka Sugars Ltd. acquired Vale Do Ivai
S.A. Acucar E Alcool sugar and ethanol
company in Brazil in 2009
US$ 82 million
ONGC acquired Imperial Energy PLC in 2008
US$ 2.8 billion
Sources: 1. Tribune India
2. The First Reporter
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INDIA: GROWING MANUFACTURING HUB
Easy Access to Other Markets
India’s strategic geographical
location offers an opportunity to
access neighboring South Asian
markets
Huge Demand
Large population base and
surging middle class with high
disposable income
Gains in Productivity
India:
Manufacturing
Hub
India's productivity growth was
5.5 per cent in 2008, as compared
with 2.3 per cent globally
Abundant Natural Resources
Low-cost Skilled Talent
Fifth-largest bauxite reserves in
the world, fourth-largest coal
reserves, sixth-largest iron ore
deposits
India offers skilled and trained
human resource at low cost
Sources: The Conference Board; CIA
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INDIA: FAVOURED R&D HUB
Vast pool of manpower
According to the IMD World
Competitiveness Year Book,
India ranks among the top three
of 30 nations in terms of
availability of skilled labour
Tax benefits
Higher productivity
Companies engaged in
scientific R&D projects in India
are entitled to a 100 per cent tax
relief on profits for 10 years
Indian graduates, on an
average, work 2,350 hours a
year as compared with 1,900–
1,700 hours in the US
India: R&D Hub
Growing domestic market
Sources:: 1. Asia Times; 2. Business Standard
The growing demand for
technologically-advanced
products in the Indian market is
increasingly drawing MNCs to
set up R&D centres here
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RESILIENT ECONOMY
TRENDS
OPPORTUNITY INDIA
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AUTOMOTIVES
India is:
 The largest two-wheeler
manufacturer in the world
Automotive production (million units)
2008-09
2007-08
 The largest three-wheeler
market in the world
2006-07
 The second-largest twowheeler market in the
world.
2004-05
 The fourth-largest
commercial vehicle market
in the world
*Compound Annual Growth
Rate (CAGR)
11.18
10.85
11.09
2005-06
9.74
8.47
2003-04
CAGR
9.08%
7.24
0
3
6
9
12
Share of automotive segments (2008-09)
Two-wheelers
75.4%
5-year
CAGR*
8.8 %
Passenger vehicles
16.4%
16.7 %
Three-wheelers
Commercial
vehicles
4.5%
10.4 %
3.7%
12.6 %
Segment
Share in total
Source: Society of Indian Automobile Manufacturers (SIAM)/
IMACS Analysis
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AUTOMOTIVES – ADVANTAGE INDIA
Proximity to markets
Proven product developmental
capabilities
Proximity to other Asian
economies and emerging markets
such as Africa
More than 200 Fortune 500
Companies (including large auto
companies) have R&D centres in
India
Large & growing domestic demand
Demand growth of 14 per cent
CAGR makes India one of the
fastest growing markets
India:
Automotive
Hub
High quality standards
11 Indian component
manufacturers have won the
Deming award for quality
Export potential
Total value of exports by 2015
expected to reach US$ 8 billion to
US$ 10 billion for vehicles and US$
20 billion to US$ 25 billion for
components
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INFRASTRUCTURE OPPORTUNITY – THE PPP MODEL
Planned investment for NHDP - USD
49,301 mn, excluding port connectivity
and other NHAI projects, for 7 phases.
Public private partnership (PPP) approach
for highways development has been
successful in India.
Private sector investment needed for USD
25,371 mn through BOT/SPV mode, and
USD 17,273 mn through Cess and Market
Borrowings.
As on date, 102 projects have been awarded
to private sector covering 7188 kms
involving an investment of almost USD
12,167 million.
No of Concessions
Total Length
Total cost (Rs.
Crores)
Investment committed
(US$ million)
Awarded
76
5737
45930.99
9985
Awards under
process
29
1546
10356.19
2251
1451
10036.95
2182
638
3341.7
726
BOT Toll
BOT Annuity
Awarded
26
Awards under
process
10
Total Awarded
102
7188
55,968
12167
Total Awards
under process
39
2184
13,698
2978
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INFRASTRUCTURE OPPORTUNITY – THE PPP MODEL
AIR SERVICES
- Associated areas like maintenance,
repair and overhaul (MRO) and
training
offer high investment potential. A
report by Ernst & Young says the MRO
category in the aviation sector can
absorb up to US$ 120 billion worth of
investments by 2020.
- There are ample opportunities for cooperation in the field of civil aviation
infrastructure and upgrading the nonmetro airports, Air Traffic Control
system, general aviation, aerospace
and MRO in India.
Particulars
Airport
Indicative
Cost
Restructuring /
Modernisation for
world class
airports
Delhi &
Mumbai
Chennai &
Kolkata
15,000
5,000
Greenfield
airports
Bangalore,
Hyderabad,
Goa, Pune,
Navi
Mumbai,
Nagpur
(Hub) &
Greater
Noida
10,000
Upgradation
25 selected
airports
7,000
Modernisation/
Improvement
55 airports
3,000
Total investment
by 2010
40,000
Source: Financing Plan for Airports, CoI, Planning Commission
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BIOTECHNOLOGY
 India is among the top-12 biotech
markets globally.
Segment
2008-09
Revenue (in
US$ mn)
Contribution
(in per cent)
 India ranks third in the Asia-Pacific
region, after Japan and Korea.
Biopharma
1734.26
64.95
 Expected to touch US$ 5 billion by
2010 and US$ 25 billion by 2015.
Bioservices
453.64
16.99
Bioagri
328.68
12.31
Bioindustrial
105.16
3.94
Bioinformatics
48.4
1.81
*Source: Top 20 biotech companies, Biospectrum
industry survey, June 2009, p.14; Ernst & Young
analysis
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BIOTECHNOLOGY - ADVANTAGE INDIA
 Large pool of talented human
resources
 Low-cost operations
• Significantly lower R&D costs;
outsourcing to India can save up to US$
200 million.
• Large talent pool of science students
pursuing higher education.
• Cost of clinical trials 50 percent lower in
phase I and 60 percent lower in phase II
compared to global markets.
• 5000 PhDs and 1000 post-doctorals in
biosciences-related fields.
• Clinical trials take significantly lesser time.
• Top-notch life science education and
research institutes.
 Favourable IP climate
Adherence to the TRIPS agreement with regard
to the Patent Protection Act implemented in
2005 has increased the confidence of innovator
companies in India.
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PHARMACEUTICALS

Among the fastest growing
pharmaceutical markets in the
world; worth US$ 16.6 billion in
2007–08

Domestic retail market
expected to cross US$ 10
billion mark in 2010 and reach
an estimated US$ 12 billion to
US$ 13 billion by 2012.

Outsourcing opportunity set to
grow to US$ 53 billion in 2010
from US$ 26 billion in 2006.
Key Multinational Companies in India
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PHARMACEUTICALS - ADVANTAGE INDIA
The basic production cost in
India is almost 50 per cent
lower than costs in the US.
30 per cent to 50 per cent
lower depreciation
85 per cent to 90 per cent
manpower cost savings
India: Growing
pharma market
40 per cent to 50 per cent
savings in raw materials
Around 1,000 biotech and
biochemistry postgraduates
pass out every year
Around 10,000 chemistry
postgraduate students
graduate every year
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IT & ITeS
Revenues by segment – Indian IT industry
India topped the A.T. Kearney Global Services Location Index 2009,
beating 49 other countries of the world, emerging to be the destination of
choice as an offshoring location of global IT/ITeS powerhouses
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IT & ITeS - ADVANTAGE INDIA
•
India’s share in the global market has
increased to four per cent in the IT
segment and close to 12 per cent in
ITeS in 2008-09.
Financial attractiveness of top 5
global services locations
Country
•
•
India has maintained its position as
the preferred outsourcing destination;
Indian IT/ITeS companies are now
offering a global delivery model, at par
with leading global standards.
India offers low costs, technical and
language skills, abundant skilled pool,
mature industry players and
supportive government policies.
Sources: ITeS: Industry profile, April 2009, CRIS INFAC
Index on a scale of 4
India
3.13
China
2.59
Malaysia
2.76
Thailand
3.05
Indonesia
3.23
Source: A T Kearney Global Service Location index 2009
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FOOD PROCESSING
80
15%
70
60
US$ billion
 In the 2004-2007 period:
– Value of food processing
grew from US$57 bn to US$75 bn
– Number of registered operating
units increased from 24,000 to
25,725.
Growth in output of processed food (US$ billion)
50
43
40
53
46
30
16%
14%
12%
8%
7%
68
62
57
75
9%
10% 10%
10%
8%
6%
20
4%
10
2%
0
Y-o-y growth
 The processed food market in India
is at an early stage with low
penetration and offers huge
opportunities.
0%
2001
2002
2003
2004
Output of processed food
2005
2006
2007
y-o-y growth
Source: Flavors of incredible India,
Ernst & Young, 2009
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FOOD PROCESSING – HUGE POTENTIAL
India’s tropical climate favours the cultivation of
exotic and seasonal food and flower crops. India’s
peninsular coastline augments the growth of the
marine industry
603
The establishment of
fully equipped Agriculture
Export Zones (AEZs), in
addition to food parks acts
as an incentive for
attracting foreign
investment
Infrastructure
development –
AEZs and food
parks
Favourable
agro-climatic
conditions and
strategic
location
High
production
volumes
India is the largest
producer of several
fruits such as banana,
mango and papaya
and the second-largest
producer of vegetables
Advantage
India
Middle East and SouthEast Asia are the major
export destinations for
Indian agricultural
commodities and milk
Proximity to
importing
countries
Large livestock
base
Availability of
workforce
India has the largest
livestock population,
leading globally with
98.7 million buffaloes
and 176 million cows2
Approximately employed 13 million directly and
35 million employed indirectly1. The presence of
several agriculture research institutes
provides a sound skill and innovation base
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DISCOVER
TALENT
GROWTH
MARKET
OPPORTUNITY
EXPERIENCE INDIA
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FOR INFORMATION ON INDIAN BUSINESS AND
ECONOMY, PLEASE VISIT
www.ibef.org
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