SECTOR PROFILE

WHY INDIA?01

CHAMPION SECTORS02

PROFILE03

INVESTMENT OPPORTUNITIES04

BUSINESS & REGULATORYENVIRONMENT IN INDIA

05

WHY INDIA?01

ADVANTAGE INDIA

World’s largest democracy with

1.3 billionpeople

Expertise acrossa spectrum of

services

Largecompetitively-priced skilled

talent pool

Large andgrowing domestic

consumermarket

Demonstratedcapability to deliver

high-quality,cost-effective

solutions

Integrated taxstructure

Enablingbusiness

environment

Focus oninfrastructuredevelopment

Access totechnology

INDIA – A FAVORED INVESTMENT DESTINATION

Fastestgrowing major economy in the world in 2018 and 2019

6th largest economy in the world by nominal GDP and 3rd largest economy globally by PPP

1st rankglobally in inward greenfield FDI inflows in 2016

India ranks 8thin global services exports accounting for 3.4% ofworld trade incommercialservices

Services,

57%

Automobile, 5%

Pharma, 4%

Power, 4%

Others,

26%

Chemicals, 4%

Agriculture17%

Industry22%

Services61%

6.1

60.1Mauritius, 34%

Singapore, 17%Japan, 8%

UK, 7%

USA, 6%

Netherlands, 6%

Others,22%

India’s GDP is likely to touch US$ 5 trillion by 2025

2.6

4.7

2017 2023

GDP in current prices (US$ Trillion) GVA share of sectors in FY18

43.2

163.1

27.8

95.7

2004-05 2016-17

Exports

Imports

Services Trade (US$ Billion)

14%

10%

1%

1%74%

Category-wise Services Export (2016-17, % share)

17%

15%

1%

1%

66% Travel

Transport

Insurance

G.n.i.e

Miscellaneous*

Category-wise Services Import(2016-17, % share)

Gross Foreign Inflows-FDI (US$ Billion) Top FDI source countries (% share in inflows- Apr’00 to Mar’17)

G.n.i.e- Government not included elsewhere; * includes software, business, financial and communication services

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

Sector-wise FDI inflows (% share in inflows-Apr ‘00 to Mar’17)

75

60

45

30

15

0

Source: IMF, FDi intelligence report 2017, RBI, WTO

GROWTH ENABLERS

Growing domestic consumer base Large, young human capital base

Rising disposable income and urbanization More than 800 million people under the age of 34 years

Urb

an p

op

ula

tio

n (%

of

tota

l)

Pe

r-c

ap

ita I

nc

om

e (

INR

)

18,523

61,855

27.8

31.270000

60000

50000

40000

30000

20000

10000

0

32.0

31.0

30.0

29.0

28.0

27.0

26.0

2001 2011

Urban Population and Per-capita Income

Per capita income Urban population

Per-capita Income data pertains to 2001-02 and 2011-12Source: Census 2011, MOSPI

Size of the workforce (millions)*

37

35

27

1400

1200

1000

800

600

400

200

0

Korea Thailand Japan US Europe China India

2015 2025 (Projected) 2050 (Projected)

49

47

36 77

71

55

213

217

235

492

466

405

1008

984

795 860

985

1145

* Population aged 15-64 yearsSource: United Nations population statistics

CHAMPIONSECTORS

02

Transport

& Logistics Healthcare Accounting

& Finance

Construction

& Related

Engineering

Services

Media &

Entertainment

Education

Services Financial

Services

Environmental

Services

Tourism

& Hospitality

IT & ITeS Legal

Services

Communication

Services

((( (((

TRANSPORT & LOGISTICS SECTOR: INVESTMENT ANNOUNCEMENTS

Ascendas-Singbridge

Ascendas-Singbridge to set up Rs 350 Crores in a joint venture with Firstspace Reality near Chennai

Flipkart

Flipkart logistics park near Bangalore to help create 20000 jobs in next two years

CONCOR

CONCOR ready to open MMLP in Naya Raipur (Chhatisgarh) and MIHAN (Nagpur, Maharashtra)

Dubai Ports World

Dubai Ports World to invest Rs 5000 Crores to establish Multi Modal Logistics Park through a joint venture with J&K Government

PROFILE: TRANSPORT & LOGISTICS SERVICES

03

SIGNIFICANT INFRASTRUCTURE INVESTMENTS IN THE ENTIRE LOGISTICS VALUE CHAIN

• Govt. to build > 80,000 Km of roads, highways, greenfield expressways, bridges with an investment of ~US$107 Bn.

• Will improve road connectivity & speed of road transport

• 1st phase involves construction of ~35,000 Km highways by 2022

Source: Press announcements, expert interviews

• DFC is India's largest infrastructure project worth US$12.6 Bn and spread across 3,317 km

• ~70% of freight is expected to shift to DFC, freeing up capacity on Indian Railways

• DFC would aid in decongestion of highways, as one freight train would be able to carry load equivalent to 1,300 trucks

• ~US$31 Bn investment planned by govt. to build 34 MMLPs

• Parks would lease space to private companies to run central operations & save on warehousing cost

• Will act as freight aggregation & distribution hubs & will enable long haul freight movement to reduce transport costs

• Sagarmala is a flagship programme to promote Port led development, harnessing India’s 7,500 KM coastline.

• 508 projects with estimated investment of more than 8 lakh Crore have been identified

• 111 inland waterway channels have been declared as National Waterways,

• Waterways can carry 4x amount of cargo on a liter of fuel & are ~50% cheaper compared to roads

Bharatmala Pariyojana

Dedicated Freight Corridors (DFC)

Multi modal logistics parks

Sagarmala and Inland waterways

RECENT POLICY & REGULATORY CHANGES TO SUPPORT GROWTH OF THE LOGISTICS SECTOR

• Will enable the logistics sector to access infra lending at easier terms

• Will allow for enhanced limits, larger funding as ECBs, longer tenor funds from insurance companies

• Making logistics sector eligible to borrow from IIFCL

Source: Expert discussions, press search

• India, Bangladesh, Bhutan, Nepal signed the MVA in 2015 for seamless movement of goods across borders

• Does away with trans-shipment of cargo, saving on time and cost

• Will provide faster connectivity to North East India

• Creation of an integrated action plan for development of the logistics sector

• Aims to bring down logistics cost from 14.4% to 10% of GDP by 2022

• Bringing logistics sector to global level in terms of cost & efficiency

• Lays down measures for infrastructure development

• Identify measures for overall enhancement of trade ecosystem

• "Trade Infrastructure for Exports Scheme" launched to assess gaps in logistics infra

Logistics given infra status

BBIN Motor Vehicle Agreement (MVA)

Creation of a LogisticsDivision at DoC

Foreign Trade Policy 2015-20

1 2 3 4

GLOBAL SCENARIO

Global transport and logistics sector (T&L) sector is expected to reach to

US$15.5 Trillion by 2024 at a CAGR of 7.5%

Asia-Pacific region

accounts for nearly

47% of the global

T&L industry, at an

estimated size of

US$3.8 Trillion in

2015.

Global transport and logistics sector (T&L) markets in terms of volume was valued at

54.7 Billion tons in 2015 and is expected to reach 92.10 Billion tons by 2024

8.2

15.5

2015 2024

Size (US$ Trillion)

Volume (Billion Tonnes)

54.7

92.1

2015 2024

CAGR:7.5%

CAGR:6.0%

Source: Transparency Market Research

INDIAN SCENARIO

India jumped 19 places to 35 in 2016 from 54 in 2014 in the ‘World Bank

Logistics Performance Index (LPI)’

39

4746

54

35

2007 2010 2012 2014 2016

LPI Rank: India

Source: World Bank Source: NITI Aayog, Economic Survey

2018 2020

160

215

Logistics Sector: Size(US$ Billion)

CAGR:16%

India’s logistics sector currently employs nearly 22 million people and is

expected to grow at a rate of 16% over the next two years.

SECTOR CONTRIBUTION TO INDIAN ECONOMY

Logistics sector as a whole contributes nearly 5% to the economy

Source: MOSPI

Railways, 0.77%

Service Incidentalto Transport, 0.75%

Air Transport, 0.15%

Water Transport, 0.05%

Storage, 0.05%

Road Transport,

3.14%

Share of logistics sector in Gross Value Added

(2016-17)

Approved Freight Corridors

Proposed Freight Corridors

Mumbai Rajdhani Line

Broad Gauge

Narrow Gauge

Major Stations

RAILWAYS

Desired investment in the next 5 yearsUS$

130.7Bn

US$ 15

Bn

700

48

3500

3360

Sanctioned for Mumbai-Ahmedabad high speed

rail (Bullet Train) project

Stations to be fed with solar power in medium term

Stations to be redeveloped in 2017-18

Kilometers of railway lines to be commissioned in

2017-18

Kilometers of dedicated freight corridors by 2019

rd• 3 Largest railway system globally

• Employs 1.4 million peopleth• 4 Largest rail freight carrier

Dedicated Freight Corridors (DFC)

Source: Invest India, Ministry of Railways

Ambala

Delhi

Ajmer

Kota

RatlamAhmedabad

Vadodara

Agra

Jhansi

Mughal Sarai

Bhopal BilaspurAdra

Allahabad

VaranasiDhanbad

Nagpur

RaipurBhusawal

Mumbai

Panaji

Hubli

Chennai

Vijaywada

Kolkata

Kharagpur

AIR TRANSPORT

Strong growth in domestic passenger traffic as well as freight volume in air transport.

Source: DGCA

57.9

373.1

103.7

637.8

Air Transport

CAGR:15.7%

CAGR:14.3%

Passengers (Million)

2012-13

Cargo ('000 Tons)

2016-17

Air Transport recorded a GVA growth of 14.5% between 2013 and 2017.

CAGR:14.5%

4.18

7.18

2013 2017

Air Transport: GVA(Rs’000 Crores)

Source: MOSPI

ROAD TRANSPORT

National Highways constructed at record average of about 27KM/day at a cost of over US$18 Billion. Target of constructing highways at 40KM/Day in FY19.

Source: MORTH, *Targeted

• US$82 bn to be invested for 34,800 km of highways by 2022 under Bharatmala.

• 100% FDI allowed through automatic route

Bharatmala Pariyojana

Source: Invest India11.7 12.1

16.6

22.6

26.9

40.0

FY14 FY15 FY16 FY17 FY18 FY19*

Highway Construction(KM/Day)

Economic Corridors

Inter Corridors

Golden Quadrilateral

Feeder Routes

NS- EW Routes

SHIPPING AND PORTS

Source: Ministry of Shipping1:Gross Registered Tonnage

1030810508

11425

12352

2014 2015 2016 2017

Shipping: Indian Fleet Capacity 1(GRT )

The freight capacity (GRT) by Indian fleet increased at a healthy rate of 6.2% per year between 2014 and 2017.

• Cargo traffic handled by Indian ports increased from 649 Million Tonnes in FY07 to 1134 Million Tonnes in FY17

MundraKandla

Sikka

Pipavan

Dahej

Hazira

VadhavanMumbaiJNPT

DighiJaigarh

Mormuguo

NMPTBelikeri

Cochin

Kolkata

Sagar Island

DhamraParadip

GopalpurVizagGangavaram

Kakainada

Krishnapatnam

Katupalli

EnnoreChennai

KaraikalEnayam

Tuticorin

Cuddalore/Sirkazhi

Major Port

Non-major Port

Proposed CEZ

Greenfield Port

Source: Invest India

Coastal Economic Zones (CEZs)

LOGISTICS

Development of 35 Multi Modal Logistics Park (MMLP)

Jammu

Ambala

Jaipur

Kota

Valsad Nagpur

Pune Hyderbad

Cochin

Coimbatore

Chennai

Bangalore

Vijaywada

Visakhapatnam

Jagatsinghpur

Kolkata

Guwahati

Salience of Each Node

1-10

11-20

21-35

Source: Invest India

North Punjab

JalandharAmritsarGurudaspur

Delhi - NCR

DelhiFaridabadGurgaonGhaziabadSouth Punjab

LudhianaSangrurPatiala

North Gujarat

AhmedabadVadodara

South Gujarat

SuratBharuch

Mumbai

MumbaiMumbai SuburbsJnptMumbai PortThanaRaigad dist.

WAREHOUSING INDUSTRY IN INDIA EXPECTED TO GROW AT 10.6% CAGR TILL FY20

Source: Market research, analyst report on Booming warehousing sector in India

INR Bn 10.6%

1,004

893

1,125

1,251

1,382

1,523

FY20eFY19eFY18eFY17eFY16FY15

Expected increase in demand for warehousing from 2014 to 2019(e)

CAGR of material handling, currently valued at ~INR 50,000 Mn

Warehouses planning to expand their level of automation by 2018

57%

20%

70%

RECENT INVESTMENTS IN THE WAREHOUSING SPACE

Source: Expert discussions, press search

Promoter Facility type Cost (USD Mn.) Location

Origo Commodities India Warehouses 39 Multi States

Container Corporation of India Warehouses 32 Chhattisgarh

Indian Oil Corporation Petroleum storage depot 31 Assam

Mahindra & Mahindra Distribution centre 23 West Bengal

Kesar Multimodal Logistics Composite logistics hub 21 Madhya Pradesh

M P Warehousing & Logistics Corporation

Composite logistics hub 19 Madhya Pradesh

Rajasthan State WarehousingCorporation

Warehouse 19 Rajasthan

Essar Oil Petroleum storage depot 14 Maharashtra

Musaddilal Properties Warehouse 11 Madhya Pradesh

Shiva Gases Cold storage 9 Uttar Pradesh

Container Corporation of India Inland container depot 8 Himachal Pradesh

KLG Imports & Exports Cold storage 8 Himachal Pradesh

Gujarat State Seeds Corporation Godown 7 Gujarat

MULTIPLE MARKET DRIVERS SUGGEST A POSITIVE FUTURE FOR WAREHOUSING

• The e-commerce market in India was estimated at US$28.4 Bn in 2016, and is expected to grow at a CAGR of 31% to touch US$83 Bn by 2020. 25% of this is from e-commerce retail which is ~US$ 7 Bn

• The logistics sector specific to e-commerce retailing in India was valued at US$0.5 Bn in 2016 and is projected to witness a CAGR of ~48% to reach US$2.3 Bn by 2020

Source: Expert discussions, press search

• Because of the lack of infrastructure and broken cold chain, more than 30% of agro-produce is lost in fields post harvesting

• There is a shortage of more than 10 Mn tonnes of cold storage for agro-produce in India

• This implies the untapped potential in the market which the players can capitalize upon

• The manufacturing sector drives the warehousing space which is growing at a CAGR of 8% - where annual additional space required during 2016-20 is 42 Mn sqft

• This is because of growing consumer demand and the respective requirement for storage facilities for meeting present and future demand

• EXIM cargo is expected to increase to 2,800 MMT by 2020

• The average containers handled per ship hour in India is 18, as compared to 28 internationally. Improved efficiency in container handling would directly result in increased warehousing demand

Consumption-led demand

Agriculture based demand

Manufacturing-leddemand

EXIM based demand

COLD CHAIN INDUSTRY IN INDIA ISEXPECTED TO GROW AT A CAGR OF 15%

Source: Analyst report, Phillip Capital

CAGR growth of Cold-Chain industry from

FY12-17

Expected market size

by FY22

US$7.92 B

12%

Size of Cold-Chain industry in FY17

US$ 3.95 B

Cold Chain industry

Temperature Controlled Warehouses US$3.67B

Temperature Controlled Vehicles US$0.28B

Lower penetration and high wastage

provides huge opportunities for

development of post-harvest logistics,

storage marketing infrastructure and

innovate technology in cold chain

infrastructure

LARGE INVESTMENT OPPORTUNITIES IN THE COLD-CHAIN STORAGE INDUSTRY

Source: NCCD

Shortfall- 69.8 K MT

Investment Reqd.-US$10.58B

Shortfall- 52.8 K MT

Investment Reqd.-US$10.12B

Shortfall- 11.7 Mn MT

Investment Reqd.-US$1.8B

Shortfall- 8.32 K MT

Investment Reqd.-US$12.8M

Packing House Reefer Vehicles Cold Storage Ripening Chamber

3PL MARKET WHILE CURRENTLY SMALL, GROWING STEADILY

Source: Technavio report on 3PL Market in India

3PL currently accounts for only 9% of total outsourced logistics revenue

Non-3PL revenue share

3PL revenue share

91%

9%

78%

22% Outsourced logistics rev.share

Non outsourcedlogistics revenue share

3PL expected to grow by 20%+ CAGR to US$ 10.4 Bn

3PL Market in India ( US$ Billion)

10.4

4.0 4.8

5.78

2013 2014 2015

7

8.52

2016 2017 2018

LOGISTICS SECTOR EMPLOYING OVER ~22MN PEOPLE

22

2017

26

2018

30

2019

34

2020

40

2021

46

2022

Employment Generated

Axis Title

• Simplifying requirements for incentives (skilling institutes)

• Providing incentives to logistic players to hire/train talent

• Provide incentives to employees to get trained

• Tailor all certification programs around identified job roles

• Standardize certifications across industries to ensure acceptability and drive systemic employment

• Dept. of Logistics to work with NSDC and LSC to develop competence plan for major Govt. projects

• Skilling can be embedded as a part of a logistics SEZ or MMLP as a critical enabler

Incentivise training/hiring of trained manpower

Improve certification quality and licensing regulations

Promote skilling as an enabler for Govt. logistics projects

GROWTH DRIVERS

Favourable Demographics

Increasing disposable income

Technological Efficiency

Infrastructure Upgradation

Government policy support

• India accounts for approximately 17.5% of global population and is set to be world’s most populous country by 2028.

• A large and growing domestic market with 40% of its population below the age of 20

• Consumer class households are likely to reach 137 million in 2025 with a collective disposable income of US$ 1.5 trillion which would increase the demand for the sector.

• Adoption of latest technology and innovation is expected to reduce the transportation cost by bringing in efficiency and assist in consolidation of an otherwise fragmented market.

• Across spectrum infrastructure upgradation, e.g. logistics park, freight corridors, Bharatmala and Sagarmala projects etc. likely to provide a major fillip to the sector

• Infrastructure status to Transport sector

• GST regime will expedite to faster formalization of the logistics sector.

• Target to reduce the logistics cost from present 14% of GDP to less than 10% by 2022

INVESTMENTOPPORTUNITIES

04

BUSINESS FRIENDLY INVESTMENT ENVIRONMENT

• To serve 50% of freight movements

• Enable 10% reduction in transportation cost

• 12% cut in CO emissions2

• Economic corridors

• Inter corridors and feeder routes

• National corridor efficiency improvement

• Coastal and Port connectivity

• Greenfield expressways

• US$61.6 Billion infrastructure investment mobilization

• US$5.3-6.1 Billion logistics cost saving per annum

• US$110 Billion boost to exports

• Create additional capacity

• Set up MMLPs across DFCs to provide complete transport solution

• Efficient, reliable, safe and cheaper mobility option

Development of Multi Modal Logistics Parks (MMLP)

Bharatmala Pariyojana’ focuses on efficient freight and passenger movement

DFCCIL* setup to improve rail fright infrastructure in joint venture with foreign/private players

Increasing port efficiency via ‘Sagarmala’ Project

Source: MORTH, Invest India, DFCCIL ( *Dedicated Freight Corridor Corporation of India Limited)

INVESTMENT OPPORTUNITIES ACROSS THE VALUE CHAIN

{MMLP

• The concept is relatively new in India and hence untapped. Opportunities exist in management and operation of dry ports, warehouses, cargo terminals, cold chain, banking & office spaces and supply chain to transport commodities.

{Roadways• Fleet exchanges to bring together transport customers and vendors like the stock exchange model.

Electronic Toll Collection (ETC) would amount to estimated fuel savings of INR 86,000 Crores per annum.

{Railways • Re-development of railway stations, Freight terminal operations

{Ports & Shipping• Port Development, Port support services e.g pilotage, dredging, harboring and provision of marine assets

such as barges and dredgers

BUSINESS &REGULATORY ENVIRONMENTIN INDIA

05

REFORMS FOCUS

Fiscalprudence andaccountability

Integratedtax

regime

Enabling Ecosystem

Servicespush

Job creation and inclusive

growth

REGULATORY ENVIRONMENT – INDIA

Foreign Investment Framework

• Governed by Foreign Exchange Management Act, 1999

• Progressive liberalization in the policies

• Automatic route (No prior approval requirement) such as railway and road infrastructure

• Approval route (Prior government approval required before setup) such as multi brand retail trading

Foreign Direct Investment (FDI) in India

Evolution of foreign investment regulations

FDI INVESTMENT ROUTE

Under Automatic Route Prior Approval Route

No requirement of any prior regulatory approval

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Required approval from Govt. of India – Considered by respective Administrative Ministry/Department.

BUSINESS PRESENCE IN INDIA – FORM OF ENTITIES

Establishes local presence

Operates as a foreign company

Foreign Company

Liaison Office Project Office Branch Office Joint Ventures Limited Liability Partnership

Wholly Owned Subsidiary

Key considerations for choosing

investment vehicles

• Commercial considerations

• Regulatory framework (prior approval requirements for Chinese companies)

• Tax considerations

• Cost of operations{

This Report has been prepared by CII.