Transcript Why India - India Brand Equity Foundation

Indian Economy
Opportunities Unlimited
India: Fastest Growing Free Market Democracy
2
GDP Growth
Forex
FII Flow ‘93
FDI
Per Capita
Inflation
1990
4.9 percent
< USD 1 billion
USD 1 million
USD 97 million
USD 390
9 percent
2007
9.4 percent
USD 246 billion
USD 15 billion
USD 16 Billion
USD 720
3.4 percent
Source: Times of India
India: Among the Top-15 Countries in terms of GDP at constant prices
The Indian economy has witnessed unprecedented growth…. Booming services and industry sectors
are providing the required impetus to economic growth
India's GDP at Current Prices: 2002-07
USD Billion
India’s GDP has
witnessed high
growth, and was the
second fastest
growing GDP after
China in 2006-07
Indian economy is
expected to be 3rd
largest in terms of
PPP – USD 4.5
trillion by the end of
2007
900
800
700
600
500
400
300
200
100
0
Fastest GDP growth of 9.4
percent in 2006-07, since last 18
years (at constant prices)
469
556
638
830
737
237
2002-03 2003-04 2004-05 2005-06 2006-07
2007-08
(Q1)
Growth in sectors at Current
Prices (2006-07):
Industry: 16.2%
Services: 16.3%
Agriculture: 10.2%
Contribution of
Services increased from
48 percent to
55 percent
900
800
700
USD Billion
The sound
performance of each
industry segment is
leading to the
overall robust
performance of the
Indian economy
3
453
600
398
500
400
300
200
100
191
237
103
125
105
105
204
231
135
145
Estimated growth rate in various GDP
sectors for Q1 (2007-08) is: Industry – 15.9
percent, Agriculture – 11.4 percent and
Services – 15.7 percent
0
1999-00
2002-03
2005-06
Agriculture
Industry
Services
2006-07
Source: MOSPI Statistics
India: Robust Economic Platform
India's Forex Reserves: 2001-07 (Till 28 September 2007)
300
248
250
199
150
100
141
152
2005-06
200
2004-05
USD Billion
India’s strong
economic
performance has
been the major
contributor towards
increased Forex
reserves
4
…at present level of Forex
reserves, the country has
adequate cover for 12 months of
imports
112
54
75
50
Steadily increasing
Forex reserves offer
adequate security
against any possible
currency crisis or
monetary instability
2007-08
(Till 28
September)
2006-07
2003-04
2002-03
2001-02
0
External Debt-to-GDP Ratio
22
Forex reserves
witnessed an
increase of 200
percent for the
period 1990-2007
Falling Dollar inflates
the India’s external debt
20.4
19
Ratio
Increased
confidence of
investors in Indian
companies has led
to a surge in cross
border borrowing by
corporate houses
21.1
17.8
India’s Forex
reserves are in
excess of
external debt…
17.3
15.8
16
16.4
…the decreasing external debt to
GDP ratio indicates that India has
a sound economic platform
13
10
2001-02
2002-03
Source: RBI Statistics
2003-04
2004-05
2005-06
2006-07
India: Surging Exports
India's Exports: 2002-08
USD Billion
Services sector has
been a major
contributor to
increased exports
from India
Acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies
Product imports by
India mainly include
petroleum products
and minerals
140
120
100
80
60
40
20
0
126.33
103.42
83.81
52.81
2002-03
63.95
46.80
2003-04
2004-05
2005-06
2006-07
Quality and cost advantage are the two
important parameters leveraged by the
Indian producers to increasingly
market products and services
2007-08
(AprilJuly)*
* - 2007-08 provisional data for period of April to July only
India's Imports: 2002-08
250
USD Billion
Indian companies
have chalked out
extensive plans to
increase their
presence abroad
5
190.50
200
149.65
150
100
111.89
61.52
78.28
72.40
50
Petroleum products are the major
contributors towards India’s growing
imports
0
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
(AprilJuly)*
* - 2007-08 provisional data for period of April to July only
Source: Ministry of Finance (August Report)
India: Attractive Investment Destination
6
With improved performance on PE ratio and ROE, Indian markets have attracted
large investments
India is ranked
FDI Inflow - India: 2001-07
18,000
second in AT
Kearney’s FDI
14,000
USD Million
confidence index
15,730
16,000
180 percent
Increase
12,000
10,000
8,000
6,000
4,000
5,546
4,222
3,134
2,634
Electronic equipment,
manufacturing and telecom
have witnessed significant
FDI inflow
4,909
3,755
2,000
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Net FII into India: 2001-07
FDI inflow for the
of 180 percent over
the same period last
Large FII activity in India has
led to an upsurge in the
Sensex
year
USD Billion
period 2006-07
witnessed a growth
2007-08
(till June)
18
16
14
12
10
8
6
4
2
0
16.60
10.00
9.40
6.71
1.80
2001-02
Source: DIPP (June Report), SEBI
10.20
0.60
2002-03
2003-04
2004-05
2005-06 2006-07
2007-08
(till 12
October)
India: Vibrant Capital Market
India is among the
major destinations
across the globe for
inflow of US Dollar
i.e. FIIs
7
Sensex – The Bombay Stock Exchange index has risen 18 times from 1990s to
reach 18,000 mark in October 2007.
10/9/2007
Crossed
18,000
mark
Sensex has risen
18 times in the
period 1990-2007
09 July 2007
Crossed 15,000 mark
20000
18000
07 February 2006
Crossed 10,000 mark
16000
14000
12000
30 December 1999
Crossed 5,000 mark
10000
Emergence of
industry and
confidence of local
investors along with
the FIIs has led to
increased movement
of the Sensex
8000
6000
4000
2000
0
12-Oct-97
12-Oct-98
12-Oct-99
FIIs have infused
large investments
into the Indian
stock market
12-Oct-00
12-Oct-01
12-Oct-02 12-Oct-03
Encouraging
industry
performance
12-Oct-04
12-Oct-05
12-Oct-06
Increased local
investors’
confidence
12-Oct-07
India: Vibrant Economy Driving M&A Activities
Trends:
 Ratio of the 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 deals
 Private Equity (PE)
houses have
funded projects as
well as made a few
acquisitions in
India
28.2
30
782
25
18.3
20
15
10
12.3
467
306
5
0
900
800
700
600
500
400
300
200
100
0
2004
2005
2006
Deal Value
No. of Deals
Number of deals
Number of Deals and Value
USD Billion
Growth Drivers:
 Globalisation and
increased
competition
 Concentration of
companies to
achieve
economies of
scale
 Lower interest
rates and vibrant
global markets
 Cash Reserves
with corporates
8
SECTOR
USD
(Mn)
SECTOR
USD
(Mn)
Automotive
518
Manufacturing
933
Banking and Financial
1,375
Media
630
Chemicals and
Plastics
1,133
Oil & Gas
384
Electrical and
Electronics
896
Pharma &
Biotech
2,520
Energy
1,484
Telecom
2,198
FMCG, Food and
Beverages
1,327
Others
4,006
IT and ITES
2,903
Total
20,305
In 2006, there were a
total of 480 M&A deals
and 302 private equity
deals…
… Average deal size close to
USD 36 million…
Indian companies have clocked M&A
deals approximately worth USD 31
billion during the first eight months in
2007
Source: Dealtracker Grant Thornton, Economic Times
…Average private equity
investment deal size
increased to USD 26.02
million in 2006 from USD
16.4 million in 2005
Major M&A Deals Undertaken Abroad by India Inc.
9
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
Suzlon Energy Ltd. acquires REpower
USD 1.6 billion
United Spirits Ltd. acquired Whyte &
Mackay
USD 1.1 billion
Major M&A and Investments Announcements in India
10
Vodafone buys Hutch
USD 11 billion
Plans to spend on its development operations
in India over the next four years
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 acquiring 48.14-percent stake
USD 0.98 billion
Renault, Nissan and Mahindra & Mahindra
have initiated a Greenfield automobile plant
project in Chennai.
USD 0.905 billion
Mylan Laboratories acquired a majority stake
in Matrix Laboratories
USD 0.74 billion
India: Pacing Ahead to Emerge as a Major Economy in the World
2007 Global Retail Development Index (GRDI)
India
80
AT Kearney has
placed India as the
most preferable
destination for
Services sector…
India is expected to
outperform its rivals
in the BRIC, in terms
of GDP growth rate,
from 2015
onwards…
60
2.9
Malaysia
2.8
Brazil
Indonesia
0
India Russia Vietnam Ukraine China
Chile
3.2
China
Thailand
40
20
2.3
2.3
1.3
3.2
2.6
1.6
1.8
3.3
1.4
2
1.2
1.5
1.5
Financial structure
Business environment
Latvia
1.4
1.1
People and skill availablity
Projected GDP Growth Rates for Select Upcoming Economies
8
GDP Growth Rate (%)
… India is the top
destination in the AT
Kearney Global
Retail Development
Index (2007)
2007 Global Services Location Index
100
GRDI Score
… the retail market
along with the
services sector has
been attracting
interest of major
global players
11
6
4
2
0
2005-10
2010-15
2015-20
Brazil
Source: AT Kearney, BRIC Report
2020-25
2025-30
China
2030-35
India
2035-40
Russia
2040-45
2045-50
India: Astounding Demographics
12
DEMOGRAPHIC TRANSFORMATION OF INDIA
Annual Household Income
(in USD)
Population (million)
Growth in the higher
income categories
of India’s population
is creating an
affluent section with
high purchasing
power
2
9
20
Rich (Above 115,000)
9
17
33
High Income (57,000 – 115,000)
48
74
120
Consuming class (23,000 – 57,000)
221
285
404
Working class (10,200 – 23,000)
726
710
613
Needy (Below 10,200)
2005-06
2001-02
2009-10(E)
* In PPP terms
519
Increasing per capita income
coupled with an emerging middle
class has provided the necessary
impetus to consumerism in India
461
500
400
651
583
600
USD
Increasing per capita
income and a
growing middle
class is driving a
high level of
consumerism in
India
Per Capita Income
700
393
300
200
100
0
2002-03
2003-04
2004-05
2005-06
2006-07
Source: RBI Statistics
India: Increasing Working Population
13
Growth in Global Working Age Population (15-64)
Addition to Working Age Population by 2010
Stock Position 2005
World
4,168
India
691
Africa
500
China
934
South East Asia
362
Latin America
359
Southern Asia
132
USA
200
Europe
497
Japan
314
71
64
44
33
31
17
10
0
85 -3
-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.
Source: Its Hendersons
Growth Expected in India
14
To sustain the GDP growth of more than 8 percent, India requires an investment of USD 1.5 trillion
in the next five years
2010
 GDP (at constant prices) – USD
900 billion
2008
2006
 GDP (at constant prices) – USD
590 billion
 GDP growth rate – 9 %
 Services contribution – 54 %
 FDI limit less than 100 per cent in
major industry sectors such as
Telecom, Semiconductors,
Automobiles, etc.
 Balance of Trade – USD (-)46.2
billion
 Investment target – USD 250
billion
 GDP (at constant prices) – USD
750 billion
 GDP growth rate – 9.5%
 Services contribution – 60 %
 FDI limit is expected to be close to
100 percent in major industry
sectors such as Telecom,
Semiconductors, Automobiles, etc.
 Balance of Trade – To improve
with surging exports
 Investment target – USD 305
billion
 GDP growth rate – 9%
 Services contribution – 60-65 %
 Investment target – USD 370
billion
Why India? – Quote Unquote
15
“India has evolved into
one of the world's
leading technology
centers“.
“India is now truly a
land of opportunity”.
“I have never seen
India so dynamic,
vibrant and full of
business
opportunities”.
Craig Barrett
Intel Corporation
John Redwood
Economic Competitiveness
Policy Group, UK
By 2032, India will be
among the three
largest economies in
the world.
“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
BRIC Report,
Goldman Sachs
“India is a
developed country
as far as intellectual
capital is
concerned”.
Jack Welch
General Electric
Peter Loescher
President and Chief
Executive
Siemens
“The Indian market has two
core advantages - an
increasing presence of
multinationals and an upswing
in the IT exports”.
“India is a very exciting
market and the luxury
car segment is growing
exponentially here”.
Mr Paul de Voijs
Managing Director
Volvo Car India
Travyn Rhall,
ACNielsen
16
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