india’s emergence as a global economic power and ... · • sunlife • teknion furniture ......

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Peter L. Nesbitt Chief Representative, India

Export Development Canadapnesbitt@edc.ca

INDIA’s EMERGENCE AS A GLOBAL ECONOMIC POWER

and implications for Canada

Tharoor on “Being Indian”“What does it mean to be an India? Our nation is such a conglomeration of languages, cultures, ethnicities that it is tempting to dismiss the question as unanswerable. How can one define a country that has 2,000 castes and sub-castes, 22,000 languages and dialects and 300 different ways of cooking the potato?”

Shashi TharoorApril 22, 2007, Times of India

Why India?

“Which One?”

“The New India”Mumbai’s Domestic Terminal

MERCHANDISE EXPORTS TO INDIA(2001-2007(E))

655740 811

15281650

1030

667.1

1,175

729

376611

267262220

0

200

400

600

800

1000

1200

1400

1600

1800

2001 2002 2003 2004 2005 2006 2007

(CAD$M)Cdn Exports vs. EDC’s Business Volumes

Canada's Exports to Asia Pacific (2004 – 2006)

2004 2005 2006 % Change (Ave. Ann)

Exports

Australia 1,463,931 1,471,535 1,659,831 6.7%

Bangladesh 105,830 97,973 158,516 24.9%

China 6,041,453 6,598,284 7,183,657 9.5%

Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0%

India 811,355 1,023,963 1,533,656 44.5%

Indonesia 646,223 678,416 779,467 10.3%

Japan 8,408,416 8,912,029 9,221,037 4.8%

Malaysia 393,077 345,705 461,932 8.8%

New Zealand 429,354 326,482 351,654 -9.0%

Pakistan 321,417 308,493 389,501 10.6%

Philippines 399,625 340,515 359,469 -5.0%

Singapore 538,091 496,729 581,959 4.1%

South Korea 2,213,699 2,727,287 3,188,049 22.0%

Sri Lanka 44,295 119,834 252,212 234.7%

Taiwan 1,175,126 1,266,699 1,308,592 5.7%

Thailand 456,856 426,172 491,039 3.7%

Vietnam 101,446 188,297 202,886 50.0%

Total 24,763,432 26,494,267 29,433,225 9.4%

Exports to Asia closing in on $30bln a year

Let’s Talk Exports

Canada's Exports to Asia Pacific (2004 – 2006)

2004 2005 2006 % Change (Ave. Ann)

Exports

Australia 1,463,931 1,471,535 1,659,831 6.7%

Bangladesh 105,830 97,973 158,516 24.9%

China 6,041,453 6,598,284 7,183,657 9.5%

Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0%

India 811,355 1,023,963 1,533,656 44.5%

Indonesia 646,223 678,416 779,467 10.3%

Japan 8,408,416 8,912,029 9,221,037 4.8%

Malaysia 393,077 345,705 461,932 8.8%

New Zealand 429,354 326,482 351,654 -9.0%

Pakistan 321,417 308,493 389,501 10.6%

Philippines 399,625 340,515 359,469 -5.0%

Singapore 538,091 496,729 581,959 4.1%

South Korea 2,213,699 2,727,287 3,188,049 22.0%

Sri Lanka 44,295 119,834 252,212 234.7%

Taiwan 1,175,126 1,266,699 1,308,592 5.7%

Thailand 456,856 426,172 491,039 3.7%

Vietnam 101,446 188,297 202,886 50.0%

Total 24,763,432 26,494,267 29,433,225 9.4%

Exports to Asia growing at just over 9% a year

Let’s Talk Exports

Canada's Exports to Asia Pacific (2004 – 2006)

2004 2005 2006 % Change (Ave. Ann)

Exports

Australia 1,463,931 1,471,535 1,659,831 6.7%

Bangladesh 105,830 97,973 158,516 24.9%

China 6,041,453 6,598,284 7,183,657 9.5%

Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0%

India 811,355 1,023,963 1,533,656 44.5%

Indonesia 646,223 678,416 779,467 10.3%

Japan 8,408,416 8,912,029 9,221,037 4.8%

Malaysia 393,077 345,705 461,932 8.8%

New Zealand 429,354 326,482 351,654 -9.0%

Pakistan 321,417 308,493 389,501 10.6%

Philippines 399,625 340,515 359,469 -5.0%

Singapore 538,091 496,729 581,959 4.1%

South Korea 2,213,699 2,727,287 3,188,049 22.0%

Sri Lanka 44,295 119,834 252,212 234.7%

Taiwan 1,175,126 1,266,699 1,308,592 5.7%

Thailand 456,856 426,172 491,039 3.7%

Vietnam 101,446 188,297 202,886 50.0%

Total 24,763,432 26,494,267 29,433,225 9.4%

India is Canada’s 5th largest Export market in Asia(* Was 7th in 2004)

Let’s Talk Exports

Percentage of overall Exportsto Asia

2004 2005 2006 % ChangeChina 24.4% 24.9% 24.4% 0.0%India 3.28% 3.86% 5.21% 29.5%

Percentage of Overall Exports to Asia

Exports to India (as a percentage of overall exports to Asia) have increased by 30% in 2 years

No change with exports to China

Let’s Talk Exports

Canada's Imports from Asia Pacific (2004 – 2006)

2004 2005 2006 % Ann

Australia 1,771,845 1,746,582 1,594,862 -5.0%Bangladesh 491,004 490,081 543,100 5.3%China 24,099,876 29,477,435 34,485,570 21.5%Hong Kong, SAR 719,286 559,995 513,307 -14.3%India 1,577,129 1,785,747 1,918,586 10.8%Indonesia 931,211 955,012 946,735 0.8%Japan 13,511,164 14,459,515 15,345,921 6.8%Malaysia 2,633,547 2,607,649 2,940,314 5.8%New Zealand 537,881 561,683 492,908 -4.2%Pakistan 244,980 247,552 276,977 6.5%Philippines 956,215 920,933 990,718 1.8%Singapore 1,189,810 971,819 982,293 -8.7%South Korea 5,825,699 5,356,434 5,763,425 -0.5%Sri Lanka 113,989 109,109 113,339 -0.3%Taiwan 3,930,635 3,894,043 3,877,603 -0.7%Thailand 2,014,539 1,980,485 2,251,359 5.9%Vietnam 449,913 558,311 652,792 22.5%Total 60,998,723 66,682,385 73,689,809 10.4%

Imports

Imports are 2.5x more than Exports – Trade Deficit with Asia is approx CDN $45bln

Let’s Talk Imports

Canada's Imports from Asia Pacific (2004 – 2006)

2004 2005 2006 % Ann

Australia 1,771,845 1,746,582 1,594,862 -5.0%Bangladesh 491,004 490,081 543,100 5.3%China 24,099,876 29,477,435 34,485,570 21.5%Hong Kong, SAR 719,286 559,995 513,307 -14.3%India 1,577,129 1,785,747 1,918,586 10.8%Indonesia 931,211 955,012 946,735 0.8%Japan 13,511,164 14,459,515 15,345,921 6.8%Malaysia 2,633,547 2,607,649 2,940,314 5.8%New Zealand 537,881 561,683 492,908 -4.2%Pakistan 244,980 247,552 276,977 6.5%Philippines 956,215 920,933 990,718 1.8%Singapore 1,189,810 971,819 982,293 -8.7%South Korea 5,825,699 5,356,434 5,763,425 -0.5%Sri Lanka 113,989 109,109 113,339 -0.3%Taiwan 3,930,635 3,894,043 3,877,603 -0.7%Thailand 2,014,539 1,980,485 2,251,359 5.9%Vietnam 449,913 558,311 652,792 22.5%Total 60,998,723 66,682,385 73,689,809 10.4%

Imports

Imports growing faster at 10.4% vs. Exports at 9.4%

Let’s Talk Imports

Canadian Companies in India• BC Instruments• Bell Helicopters• Bombardier• CAE• CGI• Fraco Mastclimbers• GL&V• Hatch Associates• Husky Injection Molding• Int’l Road Dynamics• Kryton Buildmart• Leggat and Pratt• Magic Woods• Magna• McCains Foods• Minaean Building Solutions• Newsco

• Niko Resources• Nortel Networks• Pratt & Whitney• Redknee• Royal Bank of Canda• RV Anderson• Samco-Gallium• Sandwell Engineering• Scotiabank• Senes Consulting• SNC Lavalin• SunLife• Teknion Furniture• Transworld Garnet• Tundra Semiconductors• Wesley Clover India (e.g. Mitel)• Woodbridge

STRONG ECONOMIC FUNDAMENTALS

Population of 1.1 billion (18% of world total)5th largest economy in the world (PPP basis)GDP Growth Rate: 9.4% (FY07) – ave. 8.6% over last 4yearsGDP = USD 923bn (FY07)Total Trade / GDP: 32%Moody's Investment Grade Baa1Surging capital flows (tripled between 2002 and 2006 to $23 billion), FDI inflows of $19bln in 2006Strong balance of payments position (over 10 months’import cover) Declining foreign debt burden (14% of GDP in 2006)

Growth is driven by domestic demand

INDIA AND THE US ECONOMY

Large foreign exchange reserves+

Low level of external debt+

Domestic consumption=

Limited vulnerability to an external shock

INDIA’s Middle Class… Fueling Growth

POLITCAL

• General elections in 2009

• United Progressive Alliance (UPA), a coalition headed by the Indian National Congress (INC) has been in power since 2004.

• Risks present, but generally not viewed as exceptionally high

“Complex Yet Manageable”

Prime Minister Man Mohan Singh

“The Father of India’s Economic Reforms”

Supporting Trade & Investment between Canada and India for more than 40 years

India’s Corporate Titans

•Confident

•Cash Rich

•Going GlobalVijay Malyaof Kingfisher

Kumar M. Birla of the Birla Group

Ratan Tata of the Tata Group

Anil and MukeshAmbani of the Reliance Groups

Sunil Mittal of the BhartiGrou

Naresh Goyalof Jet Airways

p

India’s Automotive Sector

OPPORTUN

ITY

● 2nd Largest two-wheeler (growing at 14.2%)

● 4th Largest manufacturer of commercial vehicles (growing at 33%)

● 10 mln vehicles manufactured in 2007

● Auto Parts - A $15billion industry growing at 15% per year

● Auto exports growing by more than 25% a year

India’s Automotive Sector

GOING GLOBAL

• Mahindra and Mahindra (M&M) in Brazil & Egypt

• TVS Motors in Indonesia

• Maruti Udyog in Indonesia

• Tata Motors in South Korea & South Africa

?

Opportunities in AUTOMOTIVE

$2500.00

Tata Nano

On building the Nano…

“Innovate, Innovate, Innovate. Redefine your processes and Drive down costs”

Joe RepovsChairman, Samco Machinery

Opportunities around INNOVATION

COST + PROFIT = PRICE

PRICE - PROFIT = COST

INNOVATION

Opportunity?“at the Bottom of the Pyramid”

Prof. C. K. Prahalad4 Billion People

“How strategy guru C.K. Prahalad is changing the way CEOs think”

Fortune at the Bottom of the Pyramid

“for companies with the resources and persistence to compete at the bottom of the world economic pyramid, the prospective rewards include growth, profits and incalculable contributions to humankind” Prof. C. K. Prahalad

Opportunities in TELECOM

Explosive Growth in Wireless

India = 233 million wireless subscribers as of 12/2007 (12.5% penetration)

Canada = 16.81 million wireless subscribers in Q3 2006 (52% penetration)Source: COFI, CWTA, Global Insight

050

100150200250300350400450500

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(Mill

ion) 12.5% penetration

40% penetration

Wireless Subscribers in India (Projected)

THE MAJORSNo. of Subscribers (mlns)

Bharti Airtel * 55mlnReliance Comm * 41mlnVodafone Essar * 39mlnBSNL (WLL) 31mlnIDEA Cellular 18mln

Opportunities: Application Solutions, 3G, WiMax, Multi-media offerings, network performance improvement solutions * EDC Customers

IT AND BPOa $64bln business

• Software and Service Exports - $40bln

• Challenges…talent, manpower and infrastructure issues

• 5% of GDP (as oppossed to 1.2% - 10 years ago)

Opportunities in Media & Entertainment

The Faces of Bollywood

INFRASTRUCTURE

INDIA needs new…• Airports • Roads• Sea Ports• Improved passenger and cargo rail

systems• Public transportation Systems (e.g.

MetroRail Systems)• Power • Water & Waste Water Solutions

FRACO MASTCLIMBERSSelling equipment to India’s

construction firms

Bombardier… Moving India

International Road Dynamics

Water & Waste Water Treatment

Canadian Playe

• GE Zenon• Eco-Tec Ltd

• RV Anderson

Opportunities in POWER GENERATION

INSTALLED CAPACITY

Energy Type MW PercentageTotal Thermal 86,975 64.5Coal 71,932 53.4Gas 13,841 10.2Oil 1,201 0.9Hydro 34,130 24.8Nuclear 4,120 3.1Renewable 10,175 7.6Total 135,401 100%

Opportunity in RETAILINGCountry of Consumers

EDC CLIENTS IN INDIA

How Can EDC Help Canadian Firms Face the Challenges

1.Accounts Receivable InsuranceProtection against the non-payment by international buyers due to commercial or political reasons

2.Bonding ServicesWide variety of instruments to support bid bonds, performance bonds and warranty bonds

3.FinancingBased on corporate risk, sovereign risk and project risk

Pre-export financing for exporters

4.Political Risk Insurance (PRI)Coverage against expropriation, inconvertibility and civil disturbance

Can be provided to equity investors and/or banks

At EDC our mandate to support and develop, directly

or indirectly, Canada’s export trade and Canadian

capacity, to engage in that trade, as well as to

respond to international business opportunities,

guides everything we do.

Corporate Mandate

Mandate Test

Q- What is the benefit to Canada in participating in this transaction?

The Question of“Work-Life Balance?”

K.V. Kamath, CEO of ICICI Bank Sunil Mittal, CEO of

Bharti Airtel

Our Team in India… THANK YOU

Rajesh Sharma Regional Manager Mumbai

rasharma@edc.ca

Leena Subramanian Admin Assistant New Delhi

lsubramanian@edc.ca

Peter Nesbitt Chief Representative India

pnesbitt@edc.ca