India Manufacturing Value Proposition Report Highlights Growth Sectors/TITLE

Manufacturing: The India Value Proposition October 2006

Contents Market Overview Government regulations & policy Business Opportunities and Advantage India

Manufacturing has contributed to India’s economic growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: GoI website, IMaCS analysis

Indian Manufacturing : A macro perspective Indian economy expected to grow at 8% to 10% over the next decade The quality of Indian work force is one of India’s key competitive advantages Indian manufacturing sector is expected to grow at 12% to 14 % over the next decade Indian manufacturing competitively positioned for a high growth rate era  India is a stable democracy with strong macro-economic fundamentals  The BPO migration to India is getting replicated in the manufacturing sector  FDI inflow into India has doubled from USD 3.4 bn in 2001 to USD 8 bn in 2005 India is ranked 43 in the latest GCI index (1) ahead of other BRIC (2) economies (1) Global Competitiveness Index (2) Brazil, Russia, India, China Source: National Manufacturing Competitiveness Council, IMaCS analysis

Key sectors in Indian manufacturing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],These sunrise sectors (1) of Indian manufacturing is enabling higher growth rates for the manufacturing sector (1) - list illustrative and not exhaustive Source: IMaCS analysis

[object Object],Export Competitiveness India's manufacturing output is USD 450 bn Domestic and Export competitiveness in manufacturing : Key drivers India’s liberalization, key policy interventions, competition and infrastructure build up have been key drivers India’s manpower advantage, indigenous technology advantage have played a leading role in achieving domestic competitiveness Many Indian sectors (e.g. Textiles, Glass, Automotive, Jewellery, Leather, Agro based, Pharmaceuticals, etc) have achieved export competitiveness Regional FTA’s, FDI in select sectors, stable currency, stable economic regime have been key drivers This interplay has enhanced India’s competitiveness Indian manufacturing exports have been growing at a CAGR of 14% for the last five years Source: IMaCS analysis

A handful of sectors contribute to 75% of India’s manufacturing exports Leather Jewellery Textiles Chemicals 75% of mfg exports Engg Goods Gems ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: National Manufacturing Competitiveness Council India is presently at the cusp of a “ Manufacturing take-off”

Where does the advantage arise from..... ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: IMaCS analysis A sustainable competitive advantage for India in Manufacturing

Regulatory Scenario for Indian manufacturers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Regulatory advantage Better project economics Central (Federal) Government State (Provincial) Government Source: GoI website, IMaCS analysis

Foreign Investment Policy relating to the manufacturing sector ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],(2) Except refining Source: FDI policy 2006, GoI (1) FIPB: Foreign Investment Promotion Board FDI inflow into India has doubled in the last five years

Infrastructure improvements are expected to facilitate manufacturing Investment in infrastructure is estimated to reach USD 125 bn between 2005 - 2010 Roads ,[object Object],[object Object],[object Object],Ports ,[object Object],[object Object],Airports ,[object Object],[object Object],[object Object],[object Object],Emphasis on infrastructure development would support Indian manufacturing to be competitive Source: IMaCS analysis

Attractiveness of India as a manufacturing destination ,[object Object],[object Object],[object Object],[object Object],[object Object],Investor’s expectations manufacturing locations India’s manufacturing competitiveness ,[object Object],[object Object],[object Object],[object Object],[object Object],India has compelling advantages

India is transforming from an “attractive labour pool” to a “preferred manufacturing destination” ,[object Object],[object Object],[object Object],Source: IMaCS analysis Over the next few decades India can overtake the economic growth rate of Brazil, Russia, China (the other fast growing economies) @ @ BRIC report by Goldman Sachs

A conglomerate of 96 operating companies in several sectors with revenues of USD 22 bn (2.8% of India GDP) in 2006. The Tata brand is a household name in India One of India’s largest private sector enterprise, with interests in downstream petrochemicals. Group revenues are about USD 20 bn. Reliance Industries Limited is a Fortune 500 company Pepsi is one of the biggest FMCG brands in the country. The company plans to invest around USD 500 Mn in India this year Ford is one of India’s popular brands in the car market. Ford manufactures around 100,000 cars per annum in India Key players in India Illustrative, not exhaustive

Coca Cola is one of the largest beverage player in the country. The company has invested more than USD 1 bn since its entry into India Wockhardt is one of India’s leading companies with interests in pharmaceuticals and healthcare with a market capitalization of USD 1.3 bn and an annual turnover of over USD 300 mn A US$ 8.3 bn conglomerate, with a market capitalisation of US$ 12 bn, it is anchored by 82,000 employees belonging to over 20 different nationalities Present in India for over 50 years. Leading player in the power sector. Employs over 4,000 people in India; has its global R&D centre in Bangalore Key players in India Illustrative, not exhaustive

The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. The Foundation’s primary objective is to build positive economic perceptions of India globally India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel +91 124 401 4087, 4060 - 67 Fax +91 124 401 3873 Email ajay.khanna@ciionline.org Web www.ibef.org

Disclaimer ,[object Object],[object Object],[object Object],[object Object],[object Object],ICRA Management Consulting Services Limited

India Manufacturing Value Proposition Report Highlights Growth Sectors/TITLE

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