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Impact of Indian Government on International Trade


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New Indian Government , Make in India , Startup India.

Published in: Government & Nonprofit
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Impact of Indian Government on International Trade

  2. 2. Zinnov | 2 The primary reason behind the economic struggle has been a weak government in the past 5 years Governance Related Factors Global Economic downturn affected India’s exports and services business Global Slowdown No strong figurehead emerged from the coalition governmentLeadership Crisis Slowdown of economic reforms made India an unsuitable destination to run business Policy Paralysis Improper action plan and poor allocation of funds resulted in delayed projects that led to overruns of 15 BN Implementation Bottlenecks Government accused of multiple scams such as $5bn Telecom Spectrum scam, $29bn Coal mine scam, etc. Corruption
  3. 3. Zinnov | 3 Difference between single party government and coalition government SINGLE PARTY COALITION Electorate’s mandate for a Stable Government Empowered Government
  4. 4. Zinnov | 4 The “Growth Levers” present a massive potential opportunity for the Technology MNCs Total Opportunity Size for Technology Companies Digitization $7 B Infrastructural Improvements $11 B Push for Manufacturing $7.3 B Technology in Healthcare & Agriculture $0.7 B Year 2014-15 Government Investments in technology (Year 2014-15) Opportunity by Technology Areas $26 Billion Communication Technology $4 BN Computing & Storage $2.6 BN Software $4.2 BN Engineering & Machinery $6.6 BN IT Services $5.9 BN IoT $2.7 BN
  5. 5. Zinnov | 5 Modi has focused on re-energizing bilateral relations through an emphasis on forging investment partnerships Japanese government’s promise of investing $35 billion (3.5 trillion yen) into infrastructure projects in India Areas of partnership include rejuvenation of Ganga, smart cities, transport systems, skill development and next generation infrastructure Target to double Japan’s FDI and the number of Japanese companies in India within five years Beijing committed investment of about $20 billion in India over the next five years Setting up of two Chinese industrial parks in Maharashtra and Gujarat China will play a role in development of high speed railways in India and the first project will focus on upgrading some of the existing railway lines and stations in India JapanChina USA Five-year Trade and Economic Development Plan’ that seeks to reduce the bilateral trade imbalance and strengthen investment cooperation USIBC (US-India Business Council) has identified investments worth $ 41 billion by its members into India in the next 3 years
  6. 6. Zinnov | 6 The first 100 days of the government has already demonstrated positive impact Let us script a glorious future… IT+IT=IT; Indian talent + Information technology = India Tomorrow Don't compromise in manufacturing; Stress on Zero defect, Zero effect A son of a poor man is standing in front of you today. This is the strength of a democracy.
  7. 7. 5.7% GDP Growth Apr-Jun - highest in nine quarters Aim to lower fiscal deficit to 4.1% of GDP by Mar 2015 13% Rise in NCAER’s1 quarterly Business Confidence Index in June 2014 INR 7,060 crores allocated to build Smart Cities 1.5 crore bank accounts opened in 1 day2 49% FDI limit in Defense and Insurance 14 # of IITs, IIMs and AIIMs to be setup MODI’S 100 DAYS GOVERNMENT
  8. 8. Zinnov | 8 India is already home to the most prestigious manufacturing companies globally Source: World Bank – Doing Business report series, BJP manifesto 5Revive Manufacturing World’s 3rd largest Motorcycle manufacturer One of the largest Aluminium Rolling companies Biggest producer of Primary Aluminium in Asia World’s largest producer of polyester yarn and fibre World’s 5th largest Wind Turbine manufacturer World’s largest Motorcycle manufacturer Largest Oracle Siebel CRM Implementation in India World’s 2nd largest producer of Viscose Rayon Fibre
  9. 9. Zinnov | 9 5Revive Manufacturing With Modi’s impetus on “Zero Defect” manufacturing, India will soon be the global hub for MFG (1/2) Source: World Bank data, BJP manifesto 152 191 185 203 246 249 892 1141 1460 1477 1813 2342 2007 2008 2009 2010 2011 2012 Manufacturing, Value Added (USD billion) India China 2014 2020 14% 20% Execution Plan FDI in Defence Sector Labor Intensive Industries Investment along the Dedicated Freight & Industrial Corridors NIMZs* outside DMIC Region Clear Tax Policy Manufacturing, Value Added ( as % of GDP) *NIMZ : National Investment and Manufacturing Zones | DMIC : Delhi-Mumbai Industrial Corridor Modi aims at cranking up the share of manufacturing in India’s Gross Domestic Product
  10. 10. Introduction : FDI  Since 2001, India has allowed foreign direct investment (FDI) up to 26 per cent in its defence industry. The policy has, however, not been successful in bringing about any meaningful financial or technological inflows, primarily because of the lack of incentives in the policy for foreign investors.  Keeping in view India’s underdeveloped R&D and production base, and various defence industry-related policies and provisions whose success is contingent upon a liberal inflow of FDI, an increase in the foreign investment cap up to 100 percent would be logical, instead of a fixed cap-based method, which may be a constraint to desirable inflows.
  11. 11. Defence Budget: 28.34 29.74 32.88 33.7 40.73 0 5 10 15 20 25 30 35 40 45 2009 - 10 2010 - 11 2011 - 12 2012 - 13 2013 - 14
  12. 12. ALLOCATION OF DEFENCE BUDGET SERVICE WISE Army Air Force Navy DRDO Other 17.48 5.21 Army Air Force Navy DRDO OFB Other 5 1 2012 - 13 2013 - 14 24 19 1 50 27.91 0.47 48.93
  13. 13. Select Sector-wise FDI inflow, April 2000 to May 2010 Source: Rank Sector Amount of FDI inflows (US $ million) 1 Service Sector 24,227.48 2 Computer Software & Hardware 10,168.37 3 Telecommunications 9821.17 4 Housing &Real Estate 8519.25 5 Construction & Activities 8190.85 6 Soaps & Cosmetics 173.19 7 Timber products 37.07 8 Defence Industries 0.15 Grand Total 120,155.25
  14. 14. Year Development 2001  Defence Sector opened to Private Industry  26% FDI 2002  Defence Acquistion Council(DAC) created  Buy Category introduced 2003  Buy and Make category wit ToT introduced 2004  Kelkar committee constituted for revision of Defence Procurement Policy and participation of private sector 2005-2009  Defence Offset Policy formulated (2005) and Defence Offset facilitation Agency (DOFA) created  Make & Buy and Make Indian categories (2006 & 2008)introduced 2011  Offset scope enhanced to include aerospace and Internal Security July 17th  FDI increased to 49% (waiting for parliament approval)
  15. 15. FDI IN DEFENCE : IMPACT ON TRADE  Greater FDI inflow in defence sector provides substantive economic advantages.  Transfer of advanced sensitive technology.  Making India as a home market (major domestic sales market and global manufacturing hub)  Benefit to private defence manufacturers in funding as well as technology.
  16. 16. THINK BUSINESS THINK INDIA • The salient features of the SEZ Policy are: • SImplified procedure for deveent , operations and maintenance of SEZs and for setting up units and conducting business in SEZs; • Single-window clearance for setting up of SEZ; • Single-window clearance for setting up units in SEZ; • Single-window clearance on matters relating to Central as well as State
  17. 17. MAKE IN INDIA : BACKGROUND • The aim is to take the share of manufacturing in the country’s GDP • from a stagnant 16% currently to 25% by 2022, as stated in the National Manufacturing Policy, and to create 100 million jobs by 2022. • India had fallen to a lowly 134th rank out of 189 countries this year (three down from 2013) in the World Bank’s Ease of Doing Business rankings. • Currently, it takes 12 procedures and 27 days to start business, 35 procedures and 168 days to get construction permits and 1420 days to enforce contracts in India.
  18. 18. • Make In India: Origin • This initiative has its origin in the Prime Minister's Independence Day speech where he gave a clarion call to 'Make In India' and 'Zero Defect; Zero Effect' policy. • Make In India: Aim • To convert India into a global manufacturing hub, to help create jobs and boost economic growth. • To urge both local and foreign companies to invest in India.