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India – Snapshot

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DIFFERENT SECTORS - SNAPSHOT

DIFFERENT SECTORS - SNAPSHOT

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  • 1. FW/09-11/ISBE/PGP 1 INDIA – SNAPSHOT ~ SANDESH GHOSAL
  • 2. ADVANTAGES – INDIA 2  Fastest growing Economy: Fifth largest economy - GDP (PPP). Second fastest growing economy in the world after China  Favorable Demographics: About 64.3 percent of the population falls under the working 3 age group and 30 % comprises of children . Highly skilled, English speaking and technical manpower - lower costs  Thriving Services Sector: Chief source of economic growth in recent years, contributing to over 1/2 of the country’s GDP, while employing only 1/3rd of labor force  World’s Largest Democracy: stable democracy, independent judiciary and free press make India better off than it’s counterparts  Principal Exports: Petroleum products, textile goods, gems and jewelry, engineering goods, machinery and instruments, pharma and fine chemicals, metals, transport equipment, iron ore, primary and semi- finished iron and steel  Principal Imports: Petroleum crude & products, electronic goods, transport equipment, gold, iron and steel, precious and semi-precious stones, organic chemicals, coke, coal and briquettes, etc . FW/09-11/ISBE/PGP
  • 3. INDIA’S GDP GROWTH 3 Series 1 12 10 9.5 9.7 9 8 6.7 % Growth 6 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10E Source: Economic Survey, Ministry of External Affairs, Government of India FW/09-11/ISBE/PGP
  • 4. FDI INFLOWS 4 30 25 20 CAGR – 65% 15 10 5 0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Source: Department of Industrial Policy & Promotion FW/09-11/ISBE/PGP
  • 5. GDP COMPOSITION 5 17% Service Sector 20% Industry 63% Agriculture Source: IBEF FW/09-11/ISBE/PGP
  • 6. …more facts 6 According to a UNIDO analysis based on 2007 figures mentioned in the International YEARBOOK OF INDUSTRIAL STATISTICS 2009  India ranks among the top 12 producers of manufacturing value added (MVA)  Textiles, the country is ranked 4th after China, US and Italy  electrical machinery and apparatus, it is ranked 5th  holds 6th position in the basic metals category  Ranked 7th in chemicals and chemical products  Ranked 10th in leather, leather products, refined petroleum products and nuclear fuel  Ranked 12th in machinery and equipment FW/09-11/ISBE/PGP
  • 7. AGRICULTURE & FOOD PROCESSING 7 PARAMETERS STATISTICS Overall Indian Food Market Size USD 182 billion (2008) Food Processing Industry Size - 2008 USD 67 billion Growth in 2007-08 13.1% CAGR (2008-2015) 20% FDI Inflows (2000-2009) USD 750 million Exports of Processed food (2006-07) USD 20.5 billion Foreign Players in India Unilever, Cadbury Schweppes, PepsiCo, Nestle, FW/09-11/ISBE/PGP Source: India Food Report, 2008; Ministry of Food Processing Industries, Indian MSM Ecosystem, DGCIS
  • 8. …contd 8 Region Package & Consumption Northern Region 28% Western Region 30% South India 25% Eastern Region 17% Source: Euromonitors, Packaged Food India – May 2009 FW/09-11/ISBE/PGP
  • 9. ANALYSIS – Agriculture & Food Processing 9  Inclusion of FDI in agriculture sector  Infrastructure of cold storage, warehouse should be improved at larger scale.  Improve on quality control and testing should be done i.e. more number of testing centers should be there.  Supply chain & involvement of middlemen should be increased.  Growing demand in organic food market and immense export.  Rising demand in branded packaging food. “Atleast if consider the above points, India should start looking to European Union countries as markets are already established.” FW/09-11/ISBE/PGP
  • 10. Hillary Clinton 10 U.S. Secretary of State FW/09-11/ISBE/PGP
  • 11. EDUCATION 11 PARAMETERS STATISTICS Industry Size – 2009 USD 50 billion (2008) Pvt. Spend on Education USD 80 billion (2012) Education Spend (% of GDP) 3.7% (10th FYP – Five Year Plan) 6% proposed in 11th five year plan Target Population (5-24 years)** 445 million (2008) 486 million (2025E*) School & Institutions 1.3 million schools; 20,000 higher education & 350 universities Key Private Players Educomp, Everonn, NIIT, Career Launcher, Core Projects FW/09-11/ISBE/PGP
  • 12. Key Industry Trends 12  Government - encouraging Public - Private–Partnership  Demand for skilled workers - vocational training institutes  E-learning market comprising of:  Digital content in private schools,  Information, Communication and Technology (ICT) program for Government schools and  online education market is gaining importance  Foreign universities - offering online courses to Indian students FW/09-11/ISBE/PGP
  • 13. Advantage - India 13  Government – importance of education - achieving rapid and inclusive growth  Average household spending: estimated to increase 5.4% over 2005-25  Increase expenditure on education to 6 % of GDP  Tax Benefits:  Under the provisions of certain tax treaties between India and foreign countries, income earned by foreign professors/ teachers who visit India for the purpose of teaching at a university or other approved institution, is exempt from tax in India  Government - likely to allow the IITs and IIMs to open campuses in foreign countries Source: 11th Five Year Plan document; ICICI Securities, Education Services, February 2008 FW/09-11/ISBE/PGP
  • 14. Analysis - Education 14  Large untapped market in India  About 1.5 lakh students from India go abroad for higher education and this number is rising by 35 % annually  During 2007-08, about 1,700 students went to France, while 4,500 students opted for Germany as their educational destination  At present, only 2% of Indian schools are equipped with computers offering room for growth  Opportunities  Language constraints especially in Italy, France , Spain and Germany  Cost of studying in western countries are very higher  Challenges - Indian Education Sector is highly regulated FW/09-11/ISBE/PGP
  • 15. 15 Kapil Sibal – Human Resource Development Minister TOI, FDI in Education top priority , 25th June 2009 FW/09-11/ISBE/PGP
  • 16. LUXURY BRANDS 16 PARAMETERS STATISTICS Industry Size – 2007 USD 0.8 billion Expected growth for the next 5 years 25% Share of Global Market 0.4% # of luxury brands (2008) 25 (8 in 2005) Foreign Players in India Hugo Boss, Versache, Chanel, Zara, Gucci, Chritian Dior, etc. FW/09-11/ISBE/PGP
  • 17. Key India Markets 17 • Political Capital • Luxury Consumers – politicians, bureaucrats, DELHI businessmen & Senior Executives • Commercial Capital & home to Bollywood • Luxury Consumers – film stars, CEO, MUMBAI executives & socialists • IT Capital of India, elite group of CEO & Top level executives BANGALORE • Luxury Consumers still to make an impact • Untapped Market • Luxury Consumers – film stars, politicians & CHENNAI businessmen FW/09-11/ISBE/PGP
  • 18. Key Industry Trends 18  Market driven by niche segment  Industry driven by Bollywood  Changing life style – unbranded to branded  Ability to manufacture @ low cost  Well developed media industry for advertising & marketing  Major cities – many malls FW/09-11/ISBE/PGP
  • 19. Analysis – Luxury Brands 19  Number of brands increasing – so FDI limit should be increased.  Indian fashion accepted worldwide.  Indian designers – labeled in cities London, etc.  Common methods to enter – JV, Franchising  60% of European brands are not present in India.  Design Process – Indian designers are gaining recognition globally FW/09-11/ISBE/PGP
  • 20. FINANCIAL SERVICES 20 PARAMETERS BANKING INSURANCE MUTUAL FUND Industry Size (2008) USD 1081 billion USD Life = 48.6 USD 98.7 billion billion Non life – USD 8.7 billion Expected Industry USD 2130 billion Life = USD 80-100 USD 192.8 billion Growth (2012) billion (2013) Non-Life = USD 18.3 billion (2013) Major Foreign BNP Paribas, Aviva, Standard ING, HSBC Players in India Barclays Life, Bajaj Allianz Major Indian SBI, BOB, ICICI NA NA Players Globally Source: AMFI, IRDA, RBI, BMI FW/09-11/ISBE/PGP
  • 21. Key Industry Trends 21  Rise in entry of foreign players in financial service sector  Indian banks venturing into new opportunities like insurance and mutual fund  Low penetration of financial services  Rising income levels  Leading financial service centre  Favourable tax and regulatory environment  Advanced technology  Low dependence on exports and high reliance on  domestic market  Low exposure to sub-prime loans  High savings rate FW/09-11/ISBE/PGP
  • 22. Analysis – Financial Services 22  India – needs more improvement in terms of awareness  More reach & distribution required  MNCs – enter through acquisitions, joint ventures & wholly owned subsidiaries.  Offshoring of banking and financial services to India.  Enter – by setting private equity funds. FW/09-11/ISBE/PGP
  • 23. 23 MR FIDELIS M GOETZ, HEAD OF PRIVATE BANKING - BANK SARASIN FW/09-11/ISBE/PGP
  • 24. PHARMA, BIOTECH & HEALTHCARE 24 PARAMETERS STATISTICS Size of industry - Pharma USD 16.6 billion Healthcare delivery USD 36.6 billion Biotechnology USD 2.5 billion Expected Industry Size (2013) USD 37.1 billion Healthcare Delivery (2012) USD 64.2 billion Biotechnology (2013) USD 13-16 billion Pharma Exports USD 8.9 billion Foreign Players Presence in India GlaxoSmithKline, AstraZeneca, Sanofi Aventis, Novartis, Solvay Source: Crisil Research Pharmaceuticals Annual Review December 2008, Crisil Research Hospitals Annual Review May 2008, FW/09-11/ISBE/PGP
  • 25. SPLIT of INDIAN PHARMACEUTICAL MARKET 25 22% Domestic MNC 78% Source: IBEF FW/09-11/ISBE/PGP
  • 26. Key Pharma Clusters 26 Baddi (Himachal Pradesh) Agra Lucknow Ahmedabad Gandhinagar Baroda Vapi/Valsad FW/09-11/ISBE/PGP
  • 27. Key Industry Trends 27  Increasing potential of domestic drug consumption market  Indian pharma companies penetrating regulated and semi-regulated markets  Emerging as an attractive outsourcing destination in areas of Contract  Indian biotechnology industry is a sunrise sector  Ranked among the top 12 biotech destinations globally and is third biggest in Asia, Pacific by number of biotech companies  Healthcare delivery market - rapidly transforming.  Focus of Indian companies shifting from USA to JAPAN – JAPAN world’s 2nd largest pharma market. FW/09-11/ISBE/PGP
  • 28. Advantages & Opportunities 28  Highest number of US FDA approved plants  Low cost destination for drug development and manufacturing  Five-year tax holiday for hospitals set up in Tier II and III cities between April 2008 and March 2013  Government policies on FDI and tax promote foreign players foray into the country  A tax deduction to the tune of 150 % on R&D spent  Exemption of clinical trials from service tax  65% of population in Rural Area – no access to medicines & health care facilities FW/09-11/ISBE/PGP Source: KPMG Report
  • 29. RETAIL 29 PARAMETERS STATISTICS Industry Size – 2007-08 USD 345 billion Share of organized retail in the total retail USD 20 billion market (2007-08) Expected growth rate (2008 - 2013) 12.5 % Expected growth rate of organized 18.9% retailing (2008 - 2013) Foreign Player Presence Wal mart, Tesco, Metro AG, Gap, Marks & Regulatory Spencer, Mc Donalds, Guess, Home Depot, staples, Benetton, Body Shop Source: Crisil Research FW/09-11/ISBE/PGP
  • 30. Key Markets 30 Kolkata Pune Hyderabad Ahmedabad Bangalore KEY Mumbai Chennai MARKET Source: Euro Monitor, Retailing in India, 2009 FW/09-11/ISBE/PGP
  • 31. Emerging Industry Trends - Analysis 31  Rising health, fitness and wellness retailing  Increasing popularity of home décor and furnishing stores  Cash and carry – 100% FDI is permitted only through this format.  Direct retailing and internet retailing are emerging as attractive non-store based retail formats  Rising urbanization and internationalization  Increase in income leading to rise in purchasing power  Young population willing to experiment with new trends  Low cost destination  Large & Untapped rural market  Octroi – abolished to boost retail in many states FW/09-11/ISBE/PGP
  • 32. REVENUE & SHARES OF VERTICALS (source: IBEF) 32 Food & Clothing Consumer Jewelry & Home Beauty Books & Foot ware beverages & textile Durable Watch Décor Products Music 3,268 & 231,951 & 29,024 & 15,171 & 13,390 & 9,463 & 6,854 & 2,610 & 1.05% 74.41% 9.31% 4.87% 4.30% 3.04% 2.20% 0.84% ALL IN USD & MILLION FW/09-11/ISBE/PGP
  • 33. 33 FW/09-11/ISBE/PGP
  • 34. 34 FW/09-11/ISBE/PGP