3. India: Ranks Among the Top-15 Countries in terms of GDP at
constant prices
204.90 223.40
319.30
103.1 90.9
116.05
104.4 109.4
154.7
0
100
200
300
400
500
600
700
1999-00 2002-03 2005-06
USD
Billion
Services Agriculture Manufacturing
Indian economy has
witnessed an
unprecedented
growth….
Sound performance of each
industry segment is leading to
the overall robust performance
of Indian economy
Indian economy is
the 4th largest in
terms of PPP – USD
3.9 trillion in 2006
Registered highest
second quarter
growth since 2001-
02 i.e. 9.2 percent
Booming Indian
markets providing
impetus to the
economic growth
India's GDP: 2002-06 (Till Q2)
423.73
484.4
534
590
286
0
100
200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07 (Till
Q2)
USD
Billion
GDP at Constant Prices
4%
8.50%
7.50%
8.40%
9.05%
Indian GDP has registered one
of the fastest growth rates
across the globe
4. India: Robust Economic Platform
India's Forex Reserves: 2001-07 (Till February 2007)
55.5
74.8
106.8
138.2
153.3
182.8
0
20
40
60
80
100
120
140
160
180
200
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 (Till 16
Feb 07)
USD
Billion
External Debt-to-GDP Ratio
21.1
20.4
17.8
17.3
15.8
10
13
16
19
22
2001-02 2002-03 2003-04 2004-05 2005-06
Ratio
India’s enhanced economic
performance has been major
contributor towards increased
Forex reserves
Ever rising Forex
reserves providing
adequate cushion
against any
possibility of
currency crisis or
monetary instability
External debt-to-
GDP ratio has
shown remarkable
improvement…..
India’s Forex
reserves are in
excess of external
debt……
…..at present level
of Forex reserves,
the country has
adequate cover for
12 months of
imports
The decreasing external debt to
GDP ratio indicates that India has
a sound economic platform
5. India: Attractive Investment Destination
Net FII into India: 2001-07 (Till February 2007)
1.80
0.60
10.00 10.20
9.40
6.80
0
2
4
6
8
10
12
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 (Till 16
Feb 07)
USD
Billion
FDI Inflow - India: 2001-07
4,222
3,134
2,634
3,755
5,546
16,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
USD
Million
India is ranked
second in AT
Kearney FDI
confidence index
Telecom and
Electronics topped
the list of inward FDI
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…..
Return on the Investments in India (2006 Q1)
MARKET PE
Ratio
P/B Ratio RoE (%)
India 16.1 4.53 22
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
EM Asia 11.19 2.12 15
Latin America 9.35 2.46 18
EM Europe 10.9 2.39 15
With the better performance on PE ratio and ROE, Indian markets have attracted
large investments
200 percent
Increase
6. India: Surging Exports
India's Import: 2001-06
61.52
78.28
111.89
149.65
181.37
0
20
40
60
80
100
120
140
160
180
200
2002-03 2003-04 2004-05 2005-06 2006-07
USD
Billion
Imports
India's Exports: 2001-06
52.81
63.95
83.81
103.42
124.65
0
20
40
60
80
100
120
140
2002-03 2003-04 2004-05 2005-06 2006-07
USD
Billion
Exports
Petroleum products are the
contributor towards the growing
imports by India
The quality and cost advantage
are the two important parameters
leveraged by the Indian
producers to increasingly market
their products and services
Services sector has
been a major
contributor to
increased exports
from India.
Imports of products
by India mainly
includes petroleum
products and
minerals
The Indian
companies have
chalked out
extensive plans to
increase their
presence abroad
The acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies.
7. India: Pacing Ahead to Emerge as the Major Economy in the
Globe
Projected GDP Growth Rates for Select Upcoming
Economies
0
2
4
6
8
2
0
0
5
-
1
0
2
0
1
0
-
1
5
2
0
1
5
-
2
0
2
0
2
0
-
2
5
2
0
2
5
-
3
0
2
0
3
0
-
3
5
2
0
3
5
-
4
0
2
0
4
0
-
4
5
2
0
4
5
-
5
0
GDP
Growth
Rate
(%)
Brazil
China
India
Russia
0
20
40
60
80
100
India Russia Vietnam Ukraine China Chile Latvia
GRDI
Score
2006 Global Retail Development Index
(GRDI)
2005 Global Services Location Index
3.27
1.62
3.56
2.95
3.21
3.47
1.51
2.67
1.06
2
1.17
1.26
0.94
1.44
1.16
1.12
1.76
2.14
Thailand
Singapore
Philippines
Malaysia
China
India
Financial structure Business environment People and skill availablity
India has been
ranked superior to
other major
countries by many
prominent surveys…
AT Kearney placed
India among the top
three in its FDI
confidence index…
… retail market
along with services
sector has been
attracting lot of
interest from the
major players
India is expected to
outperform its rivals
in the BRIC, in terms
of GDP growth rates
from 2015
onwards…
8. India: Vibrant Economy Driving M&A Activities
SECTOR 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
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.
Number of deals and values
12.3
18.3
28.2
306
467
782
0
5
10
15
20
25
30
2004 2005 2006
USD
Billion
0
100
200
300
400
500
600
700
800
900
Number
of
deals
Deal Values No. of Deals
…Contribution of private equity
deals to total number of
deals have increased from
nearly 9 percent in 2004 to
28 percent in 2006
In 2006, there were a total of
480 M&A deals and 302
private equity ones…
… Average deal size close to
USD 36 million…
9. USD 12.1 billion
Tata Steel buys Corus Plc.
Major M&A Deals Undertaken Abroad by India Inc.
Essar Steel acquired Algoma Steel
USD 1.58 billion
Tata Tea has acquired 30-percent stake in the US
based Energy Brands Inc. USD 677 million
Videocon Industries acquired Daewoo Electronics
Corporation Limited USD 730 million
Hindalco acquired Novelis Inc.
USD 6 billion
10. USD 11 billion
Vodafone buys Hutch
Major M&A and Investments Announcements in India
Mylan Laboratories acquired a majority stake in
Matrix Laboratories USD 0.74 billion
Aditya Birla Group increased its stake in Idea
Cellular by buying 48.14-percent stake USD 0.98 billion
USD 1.7 billion
USD 0.905 billion
USD 1 billion
Plans investment in private equity, real estate,
and private wealth management
Plans to spend on its development operations
in India over the next four years
Renault, Nissan and Mahindra & Mahindra to set
up Greenfield automobile plant in Chennai.
11. India: Astounding Demographics
Growth in the
higher income
categories of
India’s
population, has
lead to a
burgeoning
affluent section
of society, which
has significant
level of
purchasing
power
By 2009, India will
have 1.1 million
individuals with a
wealth of USD
100,000
Per Capita Income
393
461
519
583
638
0
100
200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07 E
2
9
48
221
726
9
17
74
285
710
20
33
120
404
613
2001-02 2005-06 2009-10(E)
Rich (Above 115000)
High Income (57000 - 115000)
Consuming class (23000 - 57000)
Working class (10200 - 23000)
Needy (Below 10200)
Annual Household Income
(in USD)
DEMOGRAPHIC TRANSFORMATION OF INDIA
* In PPP terms
(Million
Population)
Increasing per-capita
income coupled with
emerging middle class has
provided necessary
impetus to the
consumerism in India
12. India: Increasing Working Population
-3
0
10
17
31
33
44
64
71
314
-5 45 95 145 195 245 295 345
Stock Position
2005
South East Asia 362
Southern Asia 132
India 691
Africa 500
China 934
Latin America 359
USA 200
Europe 497
Japan 85
World 4,168
Growth in Global Working Age Population (15-64)
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.
Addition to working age population by 2010
13. 2006
2008
2010
• GDP – USD 590 billion
• GDP growth rate – 9 %
• 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
• GDP – 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 – Should
increase with surging exports as
compared with imports
• Investment goal – USD 305 billion
• GDP – USD 900 billion
• GDP growth rate – 9%
• Services Contribution – 60-65 %
• FDI limit is expected to be 100
percent in major industry sectors
such as Telecom, Semiconductors,
Automobiles, etc.
• Balance of Trade – Should be
positive with increased level of
exports as compared with imports
• Investment goal – USD 370 billion
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
15. 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 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…..
•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)
‘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
• 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.
16. Largest two
wheeler
manufacturer….
……Fifth largest
CV manufacturer in
the world
Domestic
production of auto
components has
increased to USD
10 billion in 2005-
06, a jump of 17
percent…
Exports have
grown by 30
percent to USD 1.8
billion
India’s Sunrise Sector: Automobile
Total Commercial Vehicles
CAGR for production : 24.5%
CAGR for sales : 24.3%
50
150
250
350
450
2001-02 2002-03 2003-04 2004-05 2005-06
Units
(thousands)
Domestic Sales
Production
Total Two Wheelers
CAGR for production : 15.1%
CAGR for sales : 13.8%
500
2,500
4,500
6,500
8,500
2001-02 2002-03 2003-04 2004-05 2005-06
Units
(thousands)
The Indian automobile sector generates a revenue of USD 34 billion per year. Its
contribution to GDP is around 3-4 percent.
Production and domestic sales
figures for commercial vehicles
are growing at a rate of
approximately 24 percent.
Production and domestic sales of
two wheelers are growing at a
rate of approximately 15 and 14
percent respectively.
17. Tele-Density
4
5
7
9
13
17
0
4
8
12
16
20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(Q3)
Tele-Density
(%)
Internet Subscribers
3 4
5
6
7
9
0
2
4
6
8
10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(Q3)
Subscribers
(in
Mn)
Telecom Subscribers (Wireline & Wireless)
44
53
76
98
140
190
0
40
80
120
160
200
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(Q3)
Subscribers
(in
Mn)
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
India’s Sunrise Sector: Telecom
India ranks among
the top 10 countries
of the world with
regards to its
telecom network.
India has 40.3
million wireline
subscribers and
149.6 million
wireless (mobile
and WLL-F)
subscribers.
Tele-density has
more than doubled
in the last 3 years.
Mobile communication and
internet penetration are
adding to the momentum of
telecommunication sector
18. Semiconductor Design Market and its Components: 2005
78%
18%
4%
VLSI Design Hardware Design Embedded Software
Semiconductor Design Market: 2004-06
2.4
3.2
4.6
0
2
4
6
8
10
2004 2005 2006
USD
Billion
India’s Sunrise Sector: Semiconductor
Indian companies have chalked
out plans to establish fabrication
units thus catering to the overall
demand from designing to
manufacturing phase
India has developed
strong competence
in design side of
semiconductor
industry….
India has
approximately 125
companies
operating in the
semiconductor
domain
Captive
semiconductor
units in India
contribute 62
percent to the total
revenues being
generated by the
industry….
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
19. Investment Opportunities in Indian Aviation Industry
Activities in the Indian Aviation Industry
Carrier Proposed Requirement
Air India 50 Aircrafts
Indian Airlines 43 Aircrafts
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
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.
GMR has undertaken project for modernisation of Delhi airport. The
project worth is USD 1.94 billion.
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.
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.
20. India has among the
highest returns on
foreign investment
- Dan Scheinman, Cisco System
Inc. as told to Business Week,
August 2005
“We came to India for the
costs, stayed for the
quality and are now
investing for innovation.”
A T Kearney
FDI Confidence Index 2005
India is among the
three most attractive
FDI destinations in
the world
Jack Welch
General Electric
“India is a developed
country as far as
intellectual capital is
concerned.”
US Department of
Commerce
By 2032, India will be
among the three largest
economies in the world
BRIC Report
Goldman Sachs, October 2003
Why India? – Quote Unquote
21. For detailed information on India, visit the IBEF website: www.ibef.org
Contact IBEF at j.bhuyan@ciionline.org
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This presentation is for information purposes only. While due care has been taken during the compilation of this
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