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Published on November 14, 2007

Author: Misree


Destination India Story of Success_____ January 23, 2006 :  Destination India Story of Success_____ January 23, 2006 India today is fast changing – setting the pace for growth and stability… :  India today is fast changing – setting the pace for growth and stability… Slow rate of growth Bureaucratic Protected and slow Small consumer markets Underdeveloped infrastructure One of the fastest growing world economies Reasonably proactive Opening up of sectors for investment Promising consumer markets Significant investment in infrastructure creation for industry YESTERDAY TODAY … is reflected in strong fundamentals of the Indian economy…:  … is reflected in strong fundamentals of the Indian economy… Indian economy in a resilient mode in terms of GDP growth… Positioned as the fourth largest economy in terms of purchasing power parity... …and has the benefit of low inflation… …along with rising forex rate and reserves Consistently growing GDP (%) 1 Source: Declining Inflation levels 3 Among the top 5 economies (PPP) 2005 2 Strong Forex Reserves 4 Source: CMIE and Tata Statistical Outline of India Source: CMIE Year 2000 vs. Year 2020 predictions:  0 5,000 10,000 15,000 20,000 25,000 Russia India Mexico Brazil China Canada Italy France UK Germany Japan US GDP (US$bn) Year 2000 vs. Year 2020 predictions India emerging as one of the top global economies Slide5:  Opportunity niches A Few Specific Sectors of Interest India is one of the fastest growing automotive markets in Asia Pacific…:  India is one of the fastest growing automotive markets in Asia Pacific… Sales of passenger cars by country - 2003-2008 Note: "Others" includes Malaysia, Indonesia, Philippines, Taiwan and Vietnam Source: EIU, "World automotive outlook", 2004 Extra 3 million units expected from China and India …driven by growing economies and low vehicle penetration levels:  …driven by growing economies and low vehicle penetration levels Vehicle penetration vis-à-vis GDP Source: Autodata Presentation from Mr. W. Vahland -Volkswagen do Brasil - 10/16/2000 0 5 10 15 20 25 30 35 40 0 100 200 300 400 500 600 700 800 China Thailand Mexico Argentina South Korea Taiwan Greece Portugal Spain New Zealand Italy Australia England Belgium’ Norway Denmark Germany Canada Japan Switzerland USA Per capita GDP (US$ 1,000) Brazil France India Penetration levels in India are less than 10 per 1000 population Vehicle population expected to grow with GDP, leading to high demand potential in these countries In sum, India is emerging as a key growth area for the automotive industry in the Asia Pacific region:  In sum, India is emerging as a key growth area for the automotive industry in the Asia Pacific region Low penetration levels Growing economies High export potential Mature markets stagnating Shift in investment to Asia Pacific countries Demand side growth Supply side growth The Indian infrastructure industry is witnessing rapid growth:  The Indian infrastructure industry is witnessing rapid growth Prospects in the longer term remain Positive. Industry projected to further grow by 7-8% annually - faster than the country’s projected GDP growth Indian Engineering and Construction industry recorded a CAGR of 8.4% over the last two decades The industry is widely expected to continue its growth performance in the medium term …Thrust area for the Indian government …Witnessing Abundance of Opportunity Construction & Infrastructure Development viewed as a major growth engine of the Indian Economy Select top companies ruling High volume projects, entry of Several New and Small Players Entry of International players, alliances & JV’s …Growing and Gaining complexity Booming Indian Economy, Improved Living conditions, Policy & Taxation reforms, Rise in Gross Capital Formation Global Engineering & Construction spending growth ‘03-’04 ‘04-’07 Opportunity Areas for Engineering Firms:  Opportunity Areas for Engineering Firms Sector Opportunity Areas Opportunity Areas for Engineering Firms … cont’d:  Opportunity Areas for Engineering Firms … cont’d Infrastructure investment in the next 3 years estimated at around INR 4,000 bn of which Engineering & Construction is expected to be around INR 2,600 bn Sector Opportunity Areas IT & IT-enabled sectors:  IT & IT-enabled sectors IT industry is one of the fastest growing industries in India – grown at a CAGR of 29% over the last 5 years Industry like to maintain high growth and is expected to generate revenues of USD 62 bn by 2008 and USD 148 bn by 2012 (NASSCOM-KPMG estimates) In India the IT sector employs around 650,000 people currently, which is likely to increase to 2 million by 2010 Government backing for the sector Infrastructure support through setting up of technology parks and continuing strengthening of communication facilities 100% FDI allowed in the sector through the automatic route India exports IT products and IT enabled services to 133 countries 220 of the Fortune 500 companies outsource their software from india Huge export potential yet to be tapped Lower cost High end research, analytics and design, large pool of skilled technical personnel available India seen as an outsourcing hub Higher value added services planned and new markets aggressively targeted Pharmaceuticals & Biotechnology:  Pharmaceuticals & Biotechnology India is the world’s fourth largest pharmaceuticals producer – 8% of global production volume and 1.5% by value Major manufacturing base for generic drugs Indian pharmaceuticals manufacturers have a huge cost advantage over their developed country counterparts – almost one-twentieth of the cost Exports are a vital component of growth strategy of pharma companies Exports have grown by over 20% in the last five years – the US is the largest export market Biotechnology market also growing rapidly According to market analysts, the Indian biotech market, estimated at USD 0.5 billion in 2003 is expected to grow to around USD 5 billion by 2010 Government providing extensive policy and infrastructural support to both sectors Other key sectors :  Other key sectors Manufacturing Sector The government has recently set up a National Manufacturing Competitiveness Council Progressive reduction in taxes and tariffs, India emerging as a manufacturing hub Manufacturing exports from India likely to grow to USD 300 billion in 2015 from USD 48 billion in 2003 Food processing India is the world’s largest producer of tea, sugarcane and milk Processing industry is nascent but is growing rapidly FDI of 100% permitted except in special cases, capital goods can be imported freely All profits from exports are free of corporate tax and minimum alternate tax Textiles The second largest textile industry in the world Textiles account for 14% of India’s industrial production and 27% of export earnings National Textile Policy aims to take up the textile and apparel exports from USD 11 billion in 2004 to USD 50 billion in 2010 Other key growth sectors in India include: Telecom, Financial Sector, Insurance, Healthcare, Tourism, Entertainment, etc Slide15:  Opportunity niches India – An enabling business environment Foreign investment guidelines - An overview:  Foreign investment guidelines - An overview Financial collaboration Greenfield Joint Venture Acquisition of existing companies Technical collaboration Licensing of technology Licensing of brand names/ trade marks Technical services FDI – Financial collaboration:  FDI – Financial collaboration 100% FDI permitted in most sectors No prior approval necessary; Only post-facto filings FDI should be brought through normal banking channels Investment represented by fresh issue of shares Automatic Route Prior Approval Generally, applicable in following cases: Certain cases where FDI is regulated Investor has existing joint venture / collaboration in same field existing prior to 13 Jan 2005 Acquisition of existing shares in financial services sector Applications processed by Foreign Investment Promotion Board [FIPB] Negative List IT ITES Textiles Pharma Oil & Gas AMC NBFC Integrated township development Industrial parks Industrial model towns Hotels and tourism SEZ’s Atomic energy Railway transport Lottery business, gambling and betting FDI in select sectors FDI is permitted up to 100% under automatic route in Indian companies in the petrochemicals sector other than products requiring industrial approval [Hydrocyanic acid and its derivatives and Phosgene and its derivatives] Foreign investment guidelines – Technical Collaborations:  Foreign investment guidelines – Technical Collaborations In case payments are made in excess of the abovementioned limits, approval would be required Overview of tax regime in India:  Slide | 19 Overview of tax regime in India India in the eyes of MNCs - that have chosen India …:  India has not only established its leadership in the software sector, but also proved its pre-eminence in the fields of aeronautics and aerospace, thanks to a strong industrial and engineering base, built over the last four decades - Mr. Dominique Paris, Sr VP, Snecma (France) I'm amazed at the kind of engines and the number of engines that are made in India - Mr. David Friedman, Managing Director, Ford India India in the eyes of MNCs - that have chosen India … There is a high potential of very good technical people in India and the cost to the company is almost a fourth -Mr. Hans Juffermans, Technical Director (R&D operations), Akzo Nobel India The driving reason why GE has come to India is not the cost, but the talent pool - Mr. Guillermo Wille, Managing Director, John F. Welch Technology Centre, India Working with our Indian partners, we intend to increase our presence on the world market Mr. Philippe Camus, CEO, EADS Slide21:  Thank you!

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