IBI Investor - January 2011


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A newsletter for economic development agencies from IBI Consulting.

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IBI Investor - January 2011

  1. 1. IBI InvestorNewsletter for economic development agenciesIssue 1 | January 2011 India Inc.’s outward investment increasing Welcome to the inaugural issue of  Overseas investment ‘Investor’ from IBI Consulting! by Indian companies to increase driven by the need to explore If one were to ask what David Cameroon, Barack Obama, Nicholas new markets Sarkozy, Wen Jia Bao and Dmitry Medvedev had in common in the year 2010, it is this – all of them made a visit to the Indian subcontinent last year. The Heads of the state of 5 most powerful nations in the world were  India is the 21st largest outward in India one after the other. This in itself is a testimony to India’s influence investor as a nation in the world economic arena. While many countries are still struggling to come out of the  Indian firms have economic recession, India has withstood the onslaught of recessionary invested over $75 pressures and is again on a steady growth path. India is estimated to grow billion overseas in the past decade at an 8.7% in 2011 according to forecasts by the Asian Development Bank. The boon of a huge working population (from 2010-30 India will add 241 million people into the working age population) and the minimal impact the  Sectoral and regional global recession has had on the country continues to instill and inspire distribution of outward confidence in the minds of the Indian corporate world. Indian FDI is increasing Hence it is no surprise that India has witnessed an exodus in outward investments in the recent past. The country maintained its  Singapore is the position as the second highest foreign employer in the UK, after the US largest host to Indian (2009 UK inward foreign direct investments official data). Indian outward FDI companies are increasingly exploring newer geographies and scouting for opportunities to satisfy its appetite for growth. Apart from the ICT sector,  Favourable regulatory manufacturing, life Sciences and the Services sectors are looking at developments have capitalizing on the investment opportunities outside the country. supported India’s emergence as an As an Economic Development Agency there could not be a better outward investor time to consider the Indian market as a strategic destination, not only to attract investments from but for companies in your region to explore  Though there was a 25 opportunities in India. We welcome you to be part of the growth story as per cent drop in 2009, they say of ‘Incredible India!’ Indian firms are once again increasing their In this issue we have highlighted the Aerospace sector in India overseas investment, including through which is the next big sector that is taking off in the country. Please read on M&As to see why. Source: Vale Columbia Also wishing all of you from IBI Consulting, the best 2011 has to Center on Sustainable offer. International InvestmentFor comments/queries: Shankar Ramachandran at shankar@ibimail.net or +91 99999 48732Copyright © 2011 IBI Consultingwww.consultibi.com
  2. 2. India’s Expanding Aerospace Industry The Indian aerospace industry is one of the fastest growing in the world largely driven by the increase in defense spending and the growing commercial aviation market. A recent example of the growing commercial aviation market is the Karnataka – India’s $16 billion order for 180 airplanes from Airbus by IndiGo Airlines, India’s Aerospace Hub third largest domestic carrier. Many Indian carriers are growing their fleets as demand booms in India, where the economy is growing at nearly 9  According to report percent. IndiGosrival SpiceJet, agreed to buy 30 Nextgen turboprop aircraft published by the from Canadas Bombardier Inc. for $915 million in November 2010. Confederation of Indian Industry and India is also emerging as a Maintenance Repair Overhaul (MRO) PwC, Karnataka has destination. According to a report by the Confederation of Indian Industry, emerged as the critical India’s MRO segment is estimated to grow at 10 percent and reach $2.6 destination in the billion by 2020. aerospace value chain. Defense aviation is another strong driver of growth with India  Both manufacturing expected to spend over $100 billion in the next decade for the purchase of and service companies defense equipment. In January 2011 India’s defense ministry awarded have a presence in the initial operating clearance to the air force’s indigenous light combat aircraft state. A large number called Tejas. Given that indigenous material comprises only about 30 of public sector percent of military equipment, there is immense potential for foreign aerospace institutions such as Hindustan players in this area. Aeronautics Limited and National Pursuing the goals of self-reliance in the defense sector, the Aeronautics government introduced offsets or binding arrangements written into Laboratory are based commercial defense contracts that oblige the foreign vendor to invest a in Bangalore. certain portion of their contract back into the home country. The Defense Procurement Policy 2011 of the Ministry of Defense has enlarged the scope  To add to existing of offsets and reformed the procurement process by including homeland facilities and exploit security and civil aerospace products under the ambit of offsets. opportunities in the international market, The Indian government recognizes the need for technological tie- the state government ups with foreign manufacturers to successfully develop commercial and has planned an defense aircraft in the domestic market. Reforms in sourcing and the aerospace special regulatory environment along with the changing market dynamics offer economic zone at various opportunities for foreign companies in the aerospace industry. Devanahalli close to the new Bangalore IBI Consulting works closely with regions across the world exploring International Airport. opportunities in partnerships or joint-ventures with Indian companies in the aerospace and defense sector. IBI helps facilitate meetings and all other support services for delegations. For a detailed presentation on IBI services, please write to shankar@ibimail.net. The Investment & Trade Promotion practice (ITP) at IBI Consulting helps Economic Development Agencies (EDA) and trade offices attract inward investment into their respective regions from Asia as well as help trade offices of foreign economies find distributors and trading partners in Asian markets. Our portfolio of services includes:  Market Access Consultancy  Market Representation & Outreach  Investor Seminars, Events & Road Shows  Trade Missions Support Services  Lead Generation & NurturingFor comments/queries: Shankar Ramachandran at shankar@ibimail.net or +91 99999 48732Copyright © 2011 IBI Consultingwww.consultibi.com
  3. 3. IBI State Watch Gujarat: Gujarat is called the ‘petro capital of India’. Strategically located on western coast of India, the state has the longest coastline in the country of about 1600 Kilometers. The state contributes 34 per cent to petrochemicals and 27 per cent to India’s chemicals & pharmaceutical business. And with 41 Gujarat ports, the state handles 25 percent of the countries sea cargo.Capital: Gandhinagar The people of Gujarat have been traditionally entrepreneurs and are known to be enterprising with high levels of business acumen. The state also holdsPopulation: 50 million the unique distinction of having been the hot bed of white revolution. With one of the largest milk cooperative of the country operating from theLanguage: Gujarati region, Dairy sector is big in the state.Gujarat is - Gujarat was recently in the news for having held the ‘Vibrant Gujarat’  World’s largest Summit which was intended to bring together various stake holders who producer of included business leaders, policy makers, investors and thought leaders processed under one roof to showcase the state as a leading investment destination. diamonds & wall The two day summit saw the signing of 7936 MOUs worth $450 billion with clocks promises of creating over 5 million jobs.  The world’s largest producer of Castor Power, Manufacturing, Urban Development & Infrastructure were the main & Cumin sectors which saw the investment commitments flowing in. Japan and  The world’s third Canada were partner countries at the conclave. largest producer of denim The Key sectors in the state include:  World’s largest greenfield  Chemicals & Petro-chemicals  Engineering & Auto petroleum refinery  Pharma & Life Sciences  India’s largest  Environmental Technologies producer of  Food & Agro pharmaceuticals,  Gems & Jewellery chemicals and  Textiles & Apparel petrochemicalsUpcoming Events:NASSCOM India Leadership Forum Mumbai, 8 to 10 February, 2011 For more information: http://indialeadershipforum.nasscom.in/Aero India 2011 Asia’s premier airshow will be held in Bangalore from February 9 to 13, 2011. The show will have exhibitors from over 25 countries showcasing new technologies and products. For more information: www.aeroindia.inFor comments/queries: Shankar Ramachandran at shankar@ibimail.net or +91 99999 48732Copyright © 2011 IBI Consultingwww.consultibi.com