India & China

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India & China

  1. 1. INDIA & CHINA <ul><li>China and India are the largest, agrarian economies in the world, accounting for a substantial share of the world poorest people. </li></ul>
  2. 2. INTRODUCTION <ul><li>The rate at which China and India have been growing since the early 1990’s has been a major topic of discussion around the world. Both countries are home to nearly a billion people and they experience tremendous GDP growth each year. </li></ul><ul><li>One of the main factors that make India and China an interesting comparison is the fact that although they are similar in many ways, their differences have led each of the take different paths towards economic development. </li></ul>
  3. 3. INDIA AND CHINA COMPARISON OF KEY INDICATORS <ul><li>India’s growth has been spurred by the service sector as opposed to its </li></ul><ul><li>manufacturing sector. India’s service sector comprises approximately 52% of </li></ul><ul><li>its GDP while China’s is significantly lower, at 41%. </li></ul>Indicators India China Size of Population 1.1 Billion 1.3 Billion Type of Government Democracy Communist State GDP Growth (2007) 9.3% 11.4% Manufacturing as a % of GDP 16% 53.3% 1 Services as a % of GDP 51.5% 41.2% FDI Inflows (2006 – 2007) $67.72 Billion (predicted) $699.5 Billion
  4. 4. INDIA OPENS ITS ECONOMY <ul><li>India is viewed as a rising economic superpower today, but as recently as 1991, it was in dire financial straits. Economic liberalization opened India’s doors to foreign investors. </li></ul><ul><li>  </li></ul><ul><li>Before India began welcoming foreign trade and investors, its economic growth rate hovered around 3%. Three years after the 1991 reforms, the rate of growth jumped to 7% and since then, the country has experienced an overall 6 - 7% growth rate. </li></ul><ul><li>  </li></ul><ul><li>India had only $1 billion in foreign currency at the time of the reforms; today, it has an astounding $239.4 billion. (31 December 2007 est.). </li></ul><ul><li>   </li></ul><ul><li>India is playing an increasingly important role in information technology innovation. Motorola, Hewlett-Packard, Cisco Systems,Microsoft and other technology giants rely on their Indian employees to design software platforms and futuristic multimedia features for next-generation devices. </li></ul>
  5. 5. CHINA OPENS ITS ECONOMY <ul><li>“ To get rich is glorious,” declared China’s leader in 1977, signifying the opening of the world’s most populous country to international trade. In China today, there is no question that communist ideology takes a backseat to capitalism for economic growth. </li></ul><ul><li>  </li></ul><ul><li>For the past two decades, China’s average annual economic growth has been an incredible rate of 9.5%. If this rate continues, China’s economy could be 75% bigger than the U.S. economy by 2050. </li></ul><ul><li>China is the world’s largest manufacturer of consumer electronics. China impacts our lives in some fashion every day, as consumers, sellers, employees, employers, manufacturers, etc. China leads the world in the number of clothes made and toys assembled. China makes more than 40% of all the furniture sold in the United States. </li></ul>
  6. 6. COMPARISON OF INDIA & CHINA ON THE BASIS OF <ul><li>Education </li></ul><ul><li>Manufacturing Industry </li></ul><ul><li>Service Industry </li></ul><ul><li>Infrastructure With Focus On The </li></ul><ul><li>Power Sector </li></ul><ul><li>Petroleum </li></ul>
  7. 7. EDUCATION <ul><li>I NDIA & C HINA </li></ul>
  8. 8. EDUCATION <ul><li>China and India are churning out large numbers of well-educated students armed with the skills that are necessary to compete in and drive an economy based on information and technology. In 2007 China produced 3.3 million college graduates; India, 3.1 million. In engineering, China graduated 600,000 students & India 350,000. </li></ul><ul><li>  </li></ul><ul><li>China does not attempt to provide education opportunities to all, and economically, it does not need to. China’s huge population supplies ample numbers of educated professionals to fill its needs. India is trying to make education available to all its citizens, and enrolment of Indian children ages 6 to 14 increased to 90% in 2006, up from 75% in 2003. However, about 75% of those students drop out by 8th grade and 85% by 12th grade. </li></ul><ul><li>  </li></ul><ul><li>The Indian government enhanced the program by increasing education spending from 3% of gross domestic product (GDP) in 2004 to 4% in 2005. And now in 2007 it is 6% of GDP. </li></ul>
  9. 9. MANUFACTURING INDUSTRY <ul><li>C HINA </li></ul>
  10. 10. OVERVIEW OF MANUFACTURING <ul><li>China has experienced spectacular economic growth, quadrupling its GDP to become the second largest economy in the world based on its purchasing power parity (CIA Fact book, 2005). Much of this growth is driven by manufacturing. </li></ul><ul><li>China has become the manufacturing centre of the world. Exports of manufactured goods have risen at a rate of 15 percent per year to about $730 billion. </li></ul><ul><li>  </li></ul><ul><li>China now makes 50 percent of the world's telephones, 17 percent of refrigerators, 41 percent of video monitors, 23 percent of washing machines, 30 percent of air conditioners, and 30 percent of colour TVs. </li></ul>
  11. 11. KEY MANUFACTURING SECTORS: ELECTRONICS AND AUTOMOTIVE COMPONENTS <ul><li>The Chinese electronics industry has become the leading export industry in China, and has a significant presence globally across a wide spectrum of electronics products, from household electrical appliances to semiconductors. Today China makes $60 billion worth of consumer electronics goods a year. </li></ul><ul><li>China is also fast becoming an important source of automotive electronics for the global market. According to figures by Chinese supplier Asimco Technologies, in 2005, China exported $1.49 billion worth of automotive electronics and electrical instruments. </li></ul><ul><li>  </li></ul><ul><li>The combination of preferential government policies, foreign direct investment, great infrastructure, and human capital has contributed to the success in Chinese electronics and automotive component manufacturing. </li></ul>
  12. 12. FACTORS LEADING TO SUCCESS IN MANUFACTURING <ul><li>Preferential Government Policy </li></ul><ul><li>The Chinese government has led investment in the manufacturing sector by giving preferential loans to targeted industries. In recent years, the government has promoted growth in the value added manufacturing industries such as electronics and automotive components. </li></ul><ul><li>Compared to other countries in the Asia-Pacific, the cost and time to start up and close a business are lower in China (IFC Doing Business). Moreover, the costs and procedures involved in importing and exporting a standardized shipment of goods in China are less than countries in the region. </li></ul>
  13. 13. <ul><li>Foreign Investments </li></ul><ul><li>By welcoming foreign investment, China’s open-door policy has added power to the economic transformation. In 2005, China received $153 billion in foreign direct investment (US China Business Council). Through this strategy, multinationals have brought large sums of capital and senior talent to China, helping China develop its manufacturing arm without relying on local institutions. </li></ul><ul><li>  </li></ul><ul><li>Joint venture firms have also been a huge boon for the Chinese manufacturing sector. By employing local managers and workers, foreign-invested companies teach management, production, and marketing skills to local employees. </li></ul><ul><li>  </li></ul><ul><li>  High-tech companies are also establishing in western China: Intel Corp. announced a $375 million chip testing and packaging facility in Chengdu, Sichuan ((US China Business Council). </li></ul>
  14. 14. <ul><li>Infrastructure Investment </li></ul><ul><li>One of the most important success factors is China’s superior infrastructure. China invests heavily in maintaining its transport system. It makes enormous efforts to lower congestion levels on main railways. Additionally, China has built 25,000 km of four to six-lane, access-controlled expressways in the past 10 years. </li></ul><ul><li>Human Capital </li></ul><ul><li>Cheap labour is one of the main draws for firms relocating in China. Firms come in search of human resources. </li></ul><ul><li>  </li></ul><ul><li>Many hi-tech firms choose to locate in Xian because the surrounding universities provide an abundant supply of educated labourers. Similarly, one of the reasons global electronics and car manufacturers are relocating its headquarters to Beijing and Shanghai is to access the readily available supply of cheap, skilled human capital. China currently has 1,731 universities and continues to build more universities and trade schools </li></ul>
  15. 15. MANUFACTURING INDUSTRY <ul><li>I NDIA </li></ul>
  16. 16. OVERVIEW OF MANUFACTURING <ul><li>India’s manufacturing sector has lagged behind those of China, Thailand, Malaysia, and Mexico. The main reasons multinational companies have not invested in India results from the lack of infrastructure including electricity, roads, and sea and air ports as well as government regulation and corruption. </li></ul><ul><li>  </li></ul><ul><li>Despite these obstacles to growth, electrical and electronic components manufacturers ABB, Honeywell, and Siemens and automotive manufacturers DaimlerChrysler and Toyota Motor have started operations in India.  </li></ul><ul><li>  </li></ul><ul><li>India needs to continue to take steps to improve its infrastructure and government regulation in order to increase FDI flows. A further examination of the electronic components and automotive manufacturing sectors will provide insight on what factors are spurring growth in these sectors and what government regulations need to be leveraged to increase growth. </li></ul>
  17. 17. KEY MANUFACTURING SECTORS: ELECTRONICS AND AUTOMOTIVE COMPONENTS Source: India Brand Equity Foundation. 2006 Key Sub-Sectors • Commercial vehicles • Passenger vehicles • Two wheelers • Three wheelers • Consumer electronics • Industrial electronics • Computers • Strategic electronics • Communication & broadcasting equipment • Electronic components Market Size (2004 -05) Total vehicle production – 8.4 million Total size – US$11 billion Domestic Growth Rate CAGR – 14.2% last 4 years Export Growth Rate CAGR – 39% last 4 years 16% between 2003 and 2004 Key Companies Ford, General Motors, Hyundai, Hero Honda, Toyota, Daimler Chrysler, Tata Motors, Mahindra & Mahindra, Ashok Leyland, Hindustan Motors, Bajaj Auto, Maruti Suzuki etc . Samsung, LG, Philips, Mirc Electronics, Flextronics, Solectron, Jabil Circuits, HCL ,Info systems Ltd, Videocon International Ltd.
  18. 18. FACTORS LEADING TO GROWTH IN MANUFACTURING <ul><li>Preferential Government Policy </li></ul><ul><li>Government has implemented reductions in import and customs duties. In the electronics sector the government has removed customs duty on raw materials and inputs for the manufacture of electronic components. In the automotive sector the government has reduced customs duties on raw materials and inputs for manufacture of automotive components from 20 – 15 percent. </li></ul><ul><li>  </li></ul><ul><li>India has also developed Special Economic Zones (SEZ) that allowed for government, private, or joint sector initiatives to develop business. The SEZs provide high quality infrastructure facilities and support services. </li></ul>
  19. 19. <ul><li>Human Capital </li></ul><ul><li>India has an abundance of skilled engineers and technical experts. The U.S. and Singapore are the only countries the outrank India in the availability of skilled-workforce. </li></ul><ul><li>  </li></ul><ul><li>India’s employable skilled workforce is predicted to grow for the next 20 years, but China’s skilled workforce will begin to decline in 2010. </li></ul><ul><li>  </li></ul><ul><li>In 2005, India also had the lowest hourly labour costs among its major competitors at US$0.74. India’s competitors followed at the following rates: China US$0.90, Thailand US$1.20 and Mexico US$1.68 </li></ul><ul><li>  </li></ul><ul><li>India has a well-developed technical and tertiary education infrastructure that produces over 500 PhDs, 200,000 engineers, 300,000 non-engineering postgraduates and 2,100,000 other graduates each year </li></ul>
  20. 20. <ul><li>Large Domestic Markets </li></ul><ul><li>India’s rising incomes and growing consumerism are the main factors aside from lower costs that make India appealing to foreign investment. </li></ul><ul><li>  </li></ul><ul><li>Between 2006 and 2007 domestic consumption was forecasted to increase by 8.7% </li></ul><ul><li>Quality and Trade Standards </li></ul><ul><li>India manufacturing companies have quality management programs in place including ISO 14001, TS 16949 and TQM that make them export ready. </li></ul><ul><li>  </li></ul><ul><li>Approximately 80 percent of automotive component manufacturers in India meet ISO 9000 quality standards. In addition they are WTO compliant for Trade Related Intellectual Property (TRIPS). </li></ul>
  21. 21. FACTORS SLOWING INDIA’S GROWTH IN MANUFACTURING <ul><li>Lower Levels of Foreign Investment than China </li></ul><ul><li>Since the beginning of the 1990’s,. India has improved its manufacturing environment exports grew 30% higher than the world export market, but during this time China’s exports grew at a rate of 57% higher than the world market. </li></ul><ul><li>  </li></ul><ul><li>One main factor that contributed to China’s higher rates of growth was that during that time China averaged US$40 billion in foreign investment annually while India averaged foreign investment was only US$3 during the same period of time. </li></ul><ul><li>  </li></ul><ul><li>According to the World Bank 2004 , it is harder to do business in India than China. One supporting example of this fact is that in 2005 it took 89 days to start a business in India, but it only took 41 days to start a business in China. India also has stricter labour laws, which makes it much harder to hire and especially fire workers. </li></ul><ul><li>  </li></ul><ul><li>Senior management at Indian firms also spends more time addressing regulatory issues than management of Chinese firms (11.9% in India vs. 7.8% in China) (World Bank 2005) </li></ul>
  22. 22. <ul><li>Lack of Infrastructure </li></ul><ul><li>Infrastructure is often cited as the biggest impediment to growth of the manufacturing sector in India. Gains made through low labour costs are often lost through bottlenecks in power supply, telecommunication, and transportation. </li></ul>Objective Indicators of Bottlenecks in India and China Source: World Bank. India: Investment Climate and Manufacturing Industry . In terms of transportation, India has the second largest railways system in the world, but the high duties on transporting goods makes it an expensive way to move goods around the country. Telecommunication Power Supply Transportation Number if Days to get a new phone connection Number of Days to get connected to a public grid Average Inventory Days of Average Inputs India China India China India China 29.8 9.3 47.8 25 32.5 24.2
  23. 23. RECOMMENDATIONS FOR INDIA’S MANUFACTURING SECTOR GIVEN CHINA’S SUCCESS <ul><li>Recommendation 1: Increase FDI Inflows </li></ul><ul><li>  </li></ul><ul><li>FDI inflows is one of the main factors that will enable India to improve its manufacturing sector. Higher FDI will allow India to further develop its infrastructure, which will lead to business development. </li></ul><ul><li>  </li></ul><ul><li>To increase FDI, India needs to further liberalize FDI regulation. </li></ul><ul><li>  </li></ul><ul><li>Recommendation 2: Improve Infrastructure </li></ul><ul><li>  </li></ul><ul><li>While the Indian government is taking some steps towards developing infrastructure through the Special Economic Zones, in order to truly be competitive they need to allow for better access to power supply and transportation. </li></ul><ul><li>  </li></ul><ul><li>Note : - Until these factors are addressed foreign companies will continue to choose other destinations for their investment like China, Brazil, or Malaysia. </li></ul>
  24. 24. SERVICE INDUSTRY <ul><li>I NDIA </li></ul>
  25. 25. OVERVIEW OF SERVICES <ul><li>The Indian information technology (IT) industry has been the source of much discussion on the successful growth of a knowledge industry in a largely poor, developing country. </li></ul><ul><li>IT in India is spread across four key sectors- IT services; IT enabled services (ITES), software, and e-business. These sectors combine for a 2008 annual revenue forecast of $87B, (NASSCOM) with numerous analysts suggesting higher revenue. </li></ul><ul><li>  </li></ul><ul><li>The rapid growth of IT in India, software was a small $150MM industry in 1991, but grew to $5.7B in 2000.An annual growth rate of 50% . (NASSCOM). </li></ul>
  26. 26. FACTORS LEADING TO GROWTH IN SERVICES <ul><li>Passive Role of Government </li></ul><ul><li>India’s IT industry has flourished with minimal intervention or support from the central government . </li></ul><ul><li>  </li></ul><ul><li>The Indian IT industry did not face a rigorous process for starting new companies. IT also faced limited labour restrictions on hours and overtime, while having the opportunity early in its development to receive foreign direct investment </li></ul><ul><li>English </li></ul><ul><li>  </li></ul><ul><li>At least 70MM individuals (Torreblanca) speak English at a professional level in India. </li></ul><ul><li>  </li></ul><ul><li>India’s IT industry has matured from software to business process off shoring (BPO), English has again been a comparative advantage as the sheer number of employable English speakers has made India a key FDI destination. </li></ul>
  27. 27. <ul><li>Education </li></ul><ul><li>I ndia has only 4% engineers, while Germany and China have 20% and 33% respectively. </li></ul><ul><li>IT required large numbers of technical graduates, especially relatively inexpensive, English speaking ones, which has been a major advantage for India, despite overall shortcomings in the education system. </li></ul><ul><li>Entrepreneurship </li></ul><ul><li>While the heavily regulated post-Independence economy in India was not conducive to entrepreneurship, IT beginning in 1980s was an exception. </li></ul><ul><li>  </li></ul><ul><li>Starting a software company was comparatively easy to manufacturing or other capital intensive industries. As multinationals began using India for IT services </li></ul><ul><li>  </li></ul><ul><li>Clusters of high tech areas formed in cities like Bangalore and Hyderabad, essentially creating natural high tech zones that pulled in greater amounts of investment . </li></ul>
  28. 28. OVERVIEW OF SERVICES <ul><li>One of China’s fastest growing service industries is the software industry. The Chinese software industry is inherently different than India’s and will likely take different paths. The majority of Chinese software services producers are domestic companies with domestic consumers. </li></ul><ul><li>  </li></ul><ul><li>Chinese firms comprise about a third of the domestic software market, with the government pushing for a 60% domination by 2010. China is also experiencing growth in other knowledge based service sectors. </li></ul><ul><li>  </li></ul><ul><li>China is racing India in the IT enabled services/ Back Office Operations industry. </li></ul>
  29. 29. FACTORS LEADING TO GROWTH IN SERVICES <ul><li>English </li></ul><ul><li>The recent emergence of English education in China is likely attributed to the growth of the service sector. Because the government understands the importance of English-language knowledge to success in the Knowledge based service sector. </li></ul><ul><li>Education </li></ul><ul><li>To take advantage of the large technically educated labour pool, many American educated and trained Chinese entrepreneurs are moving back to China to develop ITES/BPO companies. </li></ul><ul><li>  </li></ul><ul><li>Salaries amongst IT professionals in China are less than a sixth of those in the United States. China, spent 2.3% of GDP on education, compared to 5.1 % by the United States in the same year. </li></ul>
  30. 30. OBSTACLES TO GROWTH IN SERVICES IN CHINA <ul><li>IPR violations </li></ul><ul><li>Despite the efforts in education and infrastructure that China has started, one of the largest drawbacks is the constant threat of intellectual property rights violations in China. </li></ul>
  31. 31. RECOMMENDATIONS FOR CHINA’S SOFTWARE INDUSTRY/ITES GIVEN INDIA’S SUCCESSES <ul><li>Recommendation 1: Become More Export Oriented </li></ul><ul><li>  </li></ul><ul><li>The first recommendation that China should adopt to improve its software sector is to develop a more export oriented growth strategy. Being domestically focused could leave the industry susceptible to internal shocks. </li></ul><ul><li>  </li></ul><ul><li>The high tech development zones should provide technical assistance on exporting guidelines and globalization to help companies export abroad. </li></ul><ul><li>  </li></ul><ul><li>Recommendation 2: C reate A Better IPR Regulatory Environment </li></ul><ul><li>  </li></ul><ul><li>China needs to focus on improving its protection of IPR and target pirating. A first step towards this goal is through the creation of an IT/Off shoring Trade Association similar to India’s NASSCOM. </li></ul><ul><li>  </li></ul><ul><li>The creation of this type of organization would allow companies to share best practices to increase efficiency and, apply more pressure to increase compliance with international IPR standards </li></ul>
  32. 32. INFRASTRUCTURE WITH FOCUS ON THE POWER SECTOR <ul><li>I NDIA & C HINA </li></ul>
  33. 33. INTRODUCTION <ul><li>The East Asian region including China and India is projected to experience stronger growth in electricity consumption than any other region of the world. Total electricity consumption is projected to grow by more than 3 trillion-kilowatt hours between 1995 and 2015, a growth rate above 5 percent per year, with China alone accounting for more than half the growth. </li></ul><ul><li>China and India are more heavily dependent on coal for electricity generation than are the other developing Asian nations. The relative shares for oil and nuclear power are expected to decline </li></ul>
  34. 34. INTRODUCTION <ul><li>At the time of India’s independence, India and China were at par with respect to overall infrastructure development. Now China’s per capita consumption of steel is five times that of India and that of energy if three times. </li></ul><ul><li>The success of reforms in the power sector in China paves the way for India in understanding the formulation and implementation issues relating to the same. China is a very relevant case study for India because of various similarities viz. population, size, demographics. </li></ul>
  35. 35. THE CHINESE POWER SECTOR China has the world's fastest growing electric power. Per capita consumption in China is currently only 6% that of the United States.
  36. 36. THE DEMAND – SUPPLY SITUATION <ul><li>Strong projected growth in electricity demand in China results from two factors. </li></ul><ul><li>Increased need for rural electrification. Although nearly 90 percent of the rural households in China had access to electric power at the end of 1993, some 120 million people were still without electric power. The Chinese government plans to increase electrification to 95 percent by 2000. </li></ul><ul><li>The Chinese government is working to keep electric power growth in line with economic growth. China's annual average ratio accounted for only 1.24 percent of GDP from 1980 to 1999. Hence, China is heavily investing in power projects. Growth in electricity generation averaged 8% per annum during the last 15 years. </li></ul>
  37. 37. ENERGY SUPPLY PTIONS <ul><li>China’s installed power generating capacity was 250 GW in 1997 of which 77% was thermal and 23% was hydro. Nuclear capacity occupied only a fractional share of the total power generated. </li></ul><ul><li>1.) Thermal Power, </li></ul><ul><li>2.) Hydroelectric Power, </li></ul><ul><li>3.) Nuclear Power. </li></ul>
  38. 38. THERMAL POWER <ul><li>Coal-fired power plants provide more than 90% of thermal generation, with oil based generation accounting for most of the balance. The share of natural gas-based power generation is negligible and is expected to remain so even if the country succeeds in implementing its challenging gas import projects. </li></ul><ul><li>The power sector’s use of coal amounted to 370 million tons, which is more than one-third of the total coal consumption in the country. </li></ul>
  39. 39. THERMAL POWER <ul><li>Although government policy emphasizes the addition of larger, more efficient units of 300 MW and 600 MW, over half of the existing capacity is still in units below 200 MW. Only 15% of installed capacity are in units of larger than 300 MW, compared to 60-80% in industrialized countries. </li></ul><ul><li>New plants being built by the local governments are in unit sizes of 50 MW or less. The main reason is that these small units are easier to finance. At the same time, these units consume 60% more coal per unit of electricity produced compared to units of 300 to 600 MW. </li></ul>
  40. 40. HYDROELECTRIC POWER <ul><li>Hydropower is the least-cost generation source in China. It serves, and will serve, a major role in meeting the base-load power generation needs of the country. The generation cost is about $0.03 / kWh. </li></ul><ul><li>The country has a hydroelectric potential of 670 GW, of which 380 GW is considered suitable for exploitation. This capacity may generate up to 1900TWh per year. By the end of 1996, 56 GW of installed hydro capacity were in operation, reflecting approximately 14.7 percent of the exploitable resource. The installed capacity is expected to increase to 100 GW by 2010. </li></ul><ul><li>The Three Gorges project on the Yangtze River involves construction of the world's largest dam, with its 26 hydropower generating units (700 megawatts each) slated to provide a total of 18 gig watts generating capacity by 2009. </li></ul>
  41. 41. NUCLEAR POWER <ul><li>Nuclear power represents a relatively minor, but growing, share of China‘s electric generating capacity, with two plants currently in operation: Qinshan at Hangzhou Bay in Zhejiang province (288 megawatts) and a plant at Daya Bay in Guangdong province (1812 megawatts). </li></ul><ul><li>China has plans for 9 additional units, totalling 8 gig watts. By 2015, output from nuclear plants is projected to increase 9-fold over 1996 levels, accounting for about 4.5 percent of China's electric power generation. Under construction are two 600-megawatt units at the Qinshan plant and two 1,000-megawatt units at a new plant, Lingao, near Hong Kong. </li></ul>
  42. 42. ENERGY CONSUMPTION PROJECTIONS FOR CHINA <ul><li>If electricity demand grows, as expected, at 8 to 9% per annum, China would need to add about 18-20 GW of capacity per year. </li></ul><ul><li>Even with a growth rate of 7% (low-case scenario), the growth in China’s power generating capacity will be about 16 GW per year. This still accounts for more than 20% of the world’s new capacity. </li></ul><ul><li>The projected huge increase in overall energy usage by 2020 (162 percent), a massive investment in energy infrastructure for natural gas, nuclear, hydroelectric (e.g., Three Gorges Dam project), and other renewable is a must. </li></ul><ul><li>The large annual increases in energy demand in Asia will most likely be met by rapid increases in coal and oil imports. In 1992, China was a net oil exporter, but it is expected that by 2010, China will become the second largest importer of oil in Asia. </li></ul>
  43. 43. THE INDIAN POWER SECTOR India’s power sector has grown many fold in size and capacity. India consumes two-thirds more energy per dollar of gross domestic product (GDP) as the world average. India consumes only about 18 percent of the energy per person as the world average.
  44. 44. THE DEMAND – SUPPLY SITUATION <ul><li>The power sector has been characterized by shortage in supply vis-à-vis demand. From 1998, there has been peaking shortage of 18% and energy shortage of 12%. </li></ul><ul><li>The transmission and distribution losses in India are among the highest in the world. Against the normal world average of 8-10%, the figures have been about 23%, which is alarmingly high. </li></ul>
  45. 45. ENERGY SUPPLY OPTIONS <ul><li>Coal currently accounts for 78% of fuel use at India’s electric power stations. As in China, India’s high coal use is a reflection of its ample coal reserves. Renewable energy (almost entirely hydropower) is the next largest source of electricity supply in India. </li></ul><ul><li>Renewable energy (almost entirely hydropower) is the next largest source of electricity supply in India. In1995, renewable accounted for 14% of India’s electricity generation. Natural gas (at about 5%), oil (at 2%), and nuclear energy (at just under 2%) provided the remaining fuels to India’s electricity industry. </li></ul><ul><li>A wind-energy rush began in 1994 as the government opened up the power grid to independent developers and offered tax incentives for renewable energy development. Indeed, India is now second only to Germany in the number of annual wind-power installations. </li></ul>
  46. 46. ENERGY CONSUMPTION PROJECTIONS FOR INDIA <ul><li>Electricity demand in India is projected to grow dramatically over the next 20 years. With about 6 percent of total world coal reserves, India, like China, relies on coal for much of its energy supply. Although coal's share of India's electricity generation is projected to drop slightly, from 77 percent in 1995 to 64 percent in 2015. </li></ul><ul><li>The contribution of natural gas in electricity generation is projected to rise from only 4 percent in 1995 to 12 percent by 2015. </li></ul>
  47. 47. WORLD ENERGY CONS. FOR ELECTRICITY GENERATION BY REGION AND FUEL
  48. 48. LEADING ELECTRIC POWER COMPANIES IN ASIA
  49. 50. PETROLEUM <ul><li>I NDIA & C HINA </li></ul>
  50. 51. PETROLEUM CONSUMPTION IN CHINA <ul><li>From 1993 China began to become a net importer of energy resources, with yearly petroleum import increasing around 10m tons and the amount tending to grow on an annual basis. </li></ul><ul><li>China will still be short of 8 percent energy by 2010 and about 24 percent by 2040, of which petroleum shortage may reach several hundred million tons. Dependence on imports had jumped from 6.6 percent in 1995 to 25 percent in 2000. The figure is expected to rise to 30 percent by 2010 and further to top 50 percent by 2020. </li></ul><ul><li>The country plans to increase its proven oil reserve by four billion tons and crude oil production by 10 million tons in the next five years, mainly by stepping up exploration and exploitation efforts in the western regions and its offshore areas </li></ul>
  51. 52. PETROLEUM CONSUMPTION INDIA <ul><li>India's oil import bill has swelled 52 per cent to $44.64 billion in 2005-06 on the back of high global oil prices. </li></ul><ul><li>India imported 99.4 million tones of crude oil for $38.77 billion and 11.67 million tones of petroleum products for $5.86 billion in 2005-06. </li></ul><ul><li>In 2006- 2007 the import bill of PETROLEUM, CRUDE & PRODUCTS was $52.11 billion according to latest Petroleum Ministry data. </li></ul><ul><li>LPG demand was up 0.6 per cent to 10.3 million tones and petrol consumption rose 4.8 per cent to 8.64 million tones </li></ul>
  52. 53. INDIA & CHINA <ul><li>Quick Facts In Figures </li></ul>
  53. 54. ECONOMY INDIA CHINA GDP (purchasing power parity): $2.965 trillion (2007 est.) $7.043 trillion (2007 est.) GDP (official exchange rate): $894.1 billion (2007 est.) $2.879 trillion (2007 est.) GDP - real growth rate: 8.5% (2007 est.) 11.4% (official data) (2007 est.) GDP - per capita (PPP): $2,700 (2007 est.) $5,300 (2007 est.) GDP - composition by sector: agriculture: 16.6% industry: 28.4% services: 55% (2007 est.) agriculture: 11% industry: 49.5% services: 39.5% note: industry includes construction (2007 est.) Labour force: 516.4 million (2007 est.) 803.3 million (2007 est.) Labour force - by occupation: agriculture: 60% industry: 12% services: 28% (2003) agriculture: 43% industry: 25% services: 32% (2006 est.) Unemployment rate: 7.2% (2007 est.) 6.1% unemployment in urban areas; substantial unemployment and underemployment in rural areas (2006 est.)
  54. 55. ECONOMY INDIA CHINA Population below poverty line: 25% (2002 est.) 8 % note: 21.5 million rural population live below the official &quot;absolute poverty&quot; line (approximately $90 per year); and an additional 35.5 million rural population above that but below the official &quot;low income&quot; line (approximately $125 per year) (2006 est.) Household income or consumption by percentage share: lowest 10%: 3.6% highest 10%: 31.1% (2004) lowest 10%: 1.6% highest 10%: 34.9% (2004) Distribution of family income - Gini index: 36.8 (2004) 46.9 (2004) Inflation rate (consumer prices): 5.9% (2007 est.) 4.7% (2007 est.) Investment (gross fixed): 31.8% of GDP (2007 est.) 42.2% of GDP (2007 est.)
  55. 56. ECONOMY INDIA CHINA Public debt: 58.8% of GDP (federal and state debt combined) (2007 est.) 18.9% of GDP (2007 est.) Agriculture - products: rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish Industries: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software mining and ore processing, iron, steel, aluminium, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites
  56. 57. ECONOMY INDIA CHINA Industrial production growth rate: 10% (2007 est.) 12.9% (2007 est.) Electricity - production: 661.6 billion kWh (2005) 2.866 trillion kWh (2006) Electricity - production by source: fossil fuel: 81.7% hydro: 14.5% nuclear: 3.4% other: 0.3% (2001) fossil fuel: 80.2% hydro: 18.5% nuclear: 1.2% other: 0.1% (2001) Electricity - consumption: 488.5 billion kWh (2005) 2.859 trillion kWh (2006) Electricity - exports: 67 million kWh (2005) 11.27 billion kWh (2006) Electricity - imports: 1.764 billion kWh (2005) 5.39 billion kWh (2006) Oil - production: 834,600 bbl/day (2005 est.) 3.71 million bbl/day (2006) Oil - consumption: 2.438 million bbl/day (2005 est.) 7 million bbl/day (2006) Oil - exports: 350,000 bbl/day (2005 est.) 375,800 bbl/day (2006) Oil - imports: 2.098 million bbl/day (2004 est.) 3.646 million bbl/day (2006) Oil - proved reserves: 5.848 billion bbl (1 January 2006 est.) 16.3 billion bbl (1 January 2006 est.)
  57. 58. ECONOMY INDIA CHINA Natural gas - production: 28.68 billion cu m (2005 est.) 58.6 billion cu m (2006 est.) Natural gas - consumption: 34.47 billion cu m (2005 est.) 55.6 billion cu m (2006 est.) Natural gas - exports: 0 cu m (2005 est.) 2.874 billion cu m (2006) Natural gas - imports: 5.793 billion cu m (2005) 976 million cu m (2006) Natural gas - proved reserves: 1.056 trillion cu m (1 January 2006 est.) 2.45 trillion cu m (2006 est.) Current account balance: -$18.53 billion (2007 est.) $363.3 billion (2007 est.) Exports: $140.8 billion f.o.b. (2007 est.) $1.221 trillion f.o.b. (2007 est.) Exports - commodities: petroleum products, textile goods, gems and jewellery, engineering goods, chemicals, leather manufactures machinery, electrical products, data processing equipment, apparel, textile, steel, mobile phones
  58. 59. ECONOMY INDIA CHINA Exports - partners: US 17%, UAE 8.3%, 7.8%, 4.3% (2006) US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2% (2006) Imports: $224.1 billion f.o.b. (2007 est.) $917.4 billion f.o.b. (2007 est.) Imports - commodities: crude oil, machinery, gems, fertilizer, chemicals machinery and equipment, oil and mineral fuels, plastics, LED screens, data processing equipment, optical and medical equipment, organic chemicals, steel, copper Imports - partners: China 8.7%, US 6%, Germany 4.6%, Singapore 4.6%, Australia 4% (2006) Japan 14.6%, South Korea 11.3%, Taiwan 10.9%, US 7.5%, Germany 4.8% (2006)
  59. 60. ECONOMY INDIA CHINA Economic aid - recipient: $1.724 billion (2005) $1.757 billion (2005) Reserves of foreign exchange and gold: $239.4 billion (31 December 2007 est.) $1.493 trillion (31 December 2007 est.) Debt - external: $165.4 billion (30 June 2007) $363 billion (31 December 2007 est.) Stock of direct foreign investment - at home: $67.72 billion (2006 est.) $699.5 billion (2006 est.) Stock of direct foreign investment - abroad: $21.11 billion (2006 est.) $75 billion (2006 est.) Market value of publicly traded shares: $818.9 billion (2006) $2.426 trillion (2006) Currency (code): Indian rupee (INR) Renminbi (RMB); note - also referred to by the unit yuan (CNY) Currency code: INR CNY Exchange rates: Indian rupees per US dollar - 41.487 (2007), 45.3 (2006), 44.101 (2005), 45.317 (2004), 46.583 (2003) yuan per US dollar - 7.61 (2007), 7.97 (2006), 8.1943 (2005), 8.2768 (2004), 8.277 (2003) Fiscal year: 1 April - 31 March calendar year
  60. 61. THANK YOU

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