Destination India
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Destination India Presentation Transcript

  • 1. Destination India Story of Success_____ January 23, 2006
  • 2. 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
  • 3.  
  • 4. 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$bn) India emerging as one of the top global economies
  • 5. Opportunity niches A Few Specific Sectors of Interest
  • 6. India is one of the fastest growing automotive markets in Asia Pacific… Sales of passenger cars by country - 2003-2008 Note: "Others" includes Malaysia, Indonesia, Philippines, Taiwan and Vietnam Source: EIU, "World automotive outlook", 2004 Extra 3 million units expected from China and India 4.5 4.7 4.6 4.5 4.6 4.6 2.0 2.3 2.6 2.9 3.4 4.1 0.9 1.0 1.1 1.2 1.5 1.6 1.3 1.1 1.2 1.3 1.3 1.4 0.4 0.6 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.4 10.1 10.8 11.3 11.9 13.0 14.1 0 2 4 6 8 10 12 14 16 2003 2004 2005 2006 2007 2008 Million units Japan China India South Korea Thailand Others
  • 7. …driven by growing economies and low vehicle penetration levels Vehicle penetration vis-à-vis GDP Source: Autodata Presentation from Mr. W. Vahland -Volkswagen do Brasil - 10/16/2000 0 5 10 15 20 25 30 35 40 0 100 200 300 400 500 600 700 800 China Thailand Mexico Argentina South Korea Taiwan Greece Portugal Spain New Zealand Italy Australia England Belgium’ Norway Denmark Germany Canada Japan Switzerland USA Per capita GDP (US$ 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
  • 8. 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
  • 9. 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
  • 10. Opportunity Areas for Engineering Firms Sector Opportunity Areas
    • Oil & Gas
    • Upstream
    • Refining
    • Petrochemicals & Fertilizers
    • Pipeline, Tankage, and Terminal
    • NELP – Investment in the range of $100-150 bn expected in next 10-15 years. Indian & foreign companies to particiapte
    • Industry research shows that additional refining capacity of around 110 mn tonnes will be required in India by 2010.
    • Indian companies like IFFCO planning to expand capacity in India
    • Crude, product and gas pipeline as well as tank farms are likely to attract large investments.
    • LNG terminals – huge potential in India
    Power Demand supply gap widening - Government plans “Power to all” within another decade Major capacity addition likely in the next 10 years – over 100,000 MW is planned to be added Thrust on Hydel – since very low potential has been tapped
  • 11. 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 Urban Infrastructure Another area where the demand far outstrips supply is the urban infrastructure amenities. The government is stressing on large capacity addition in various segments of the sector. Urban transportation, water supply and housing are some of the key areas. Other than a huge plan outlay, private participation is also considerable Special Economic Zone development is also an area to look out for Ports An increase in port capacity from 334 MT to 470 MT by the end of the Tenth Five Year Plan envisaged. Investments of around Rs 163 bn planned. Airports Privatization and upgradation of four metro airports planned. A number of airports, including international airports at Hyderabad and Bangalore, to be built. Investment of over Rs 164 bn proposed Roads Investments upwards of USD55 billion planned. Plans are on to build or widen 14,162 kms and 105,000 of roads by the central sector (NHAI) and state sector respectively. Opportunities in O&M of road projects also substantial
  • 12. 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 O pportunities IT & ITeS Sectors
  • 13. 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
    Rapid growth and large export potential Generic drug market growing High end research,, large pool of skilled manpower available O pportunities Pharma & Bio Tech Major cost advantage
  • 14.  
  • 15. Opportunity niches India – An enabling business environment
  • 16.  
  • 17. 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]
    • FDI not allowed in certain sensitive sectors e.g.:
      • Agriculture
      • Atomic energy
      • Railway Transport
      • Real Estate (except townships/ industrial parks, etc)
  • 18.  
  • 19. Overview of tax regime in India Slide | Indian tax regime Income tax Foreign Trade Policy Customs Duty Service tax R&D cess Cenvat (Excise) Duty Sales tax/ Value Added Tax (“VAT”) Indirect taxes
  • 20. 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 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
  • 21. Thank you!