indian eco opport threats

7/31/2019 Indian Eco Opport Threats

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The Indian Economy:Opportunities And Trends

#1


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#2

1. India: The canvas

2. Little known facts about India

3. Economic fundamentals

4. Key reforms moving forward

5. Indian Economy - Opportunities


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#3

India : The canvas

Largest democracy

Independent judicial system

4th largest economy in terms of PPP

Strong institutional network

Rapidly growing consumer market

Strong private sector-75% of industrial

GDP

Large pool of skilled manpower

Decade long, on-going reforms

Well balanced package of fiscal incentives


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#4

The new India : emerging knowledge leader

Software exports projected to reach US $ 50 bn by 2008

203 of Fortune 1000 companies among clients of Indian ITcompanies

50 million English speaking Indians can be employed in ITenabled services with a potential to earn US $ 1 trillion

US $ 17 bn opportunity for India in IT enabled services

Potential to emerge as a world leader in biotech - a US$4.5 bn. opportunity


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#5







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#6

Little known facts about India

3rd largest car market - 600,000 vehicles in 1999surpassed China

Among worlds most elaborate cable TV network - 33 mnconnections

Cellular telephony has increased from zero to around 4mn users

Number of telephone lines have increased 7-fold in thelast decade. This is equal to the number of lines added inthe first 45 years


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Little known facts about India

Two Indian labs among select group of labs engaged instem cell research

IT enabled services - all back office work of BritishAirways done out of India and GE Capital also has a majorpresence in India

Emerging hub for cost effective and quality healthcare -people travelling even from countries like UK forhealthcare services


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GDP growth

5.86.1

0

1

2

3

4

5

6

7

1980's 1990's

Per

cent

Per capita income growth

3.5

4.3

0

1

2

3

4

5

1980's 1990's

Per

cent

Source: Reserve Bank of India

Sustained growth in GDP and per capita income

Economic fundamentals


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39.142.8 44.0 43.8 45.5

46.1 47.9 49.054.1

28.024.2

25.3 25.125.3 24.7

26.9 27.021.5

32.9 33.0 30.7 31.129.2 29.2

25.2 24.0 24.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990-91 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02

Tertiary Secondary Primary

Increasing contribution of the services sector (54%)

Economic fundamentalsTrend in composition of GDP


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21.6926.42 29.37

32.49

38.04 40.18

54.1

0

5

10

15

20

25

3035

40

45

50

55

60

1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02

US $ billion Year end reserves

Foreign exchange reserves have now crossed US $ 60 bn

Economic fundamentalsComfortable forex reserves


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Current Account Deficit / GDP

-1.0

-1.7

-1.2-1.4

-1.0 -1.0

-0.5

1.3

-2.0

-1.0

0.0

1.0

2.0

94-95 95-96 96-97 97-98 98-99 99-00 00-01 01 02

Per cent

Source: Reserve Bank of India

Economic fundamentalsCurrent account surplus


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GDP : 5.4%Industry : 2.9%Services : 6.2%Agriculture : 5.7%Inflation : 1.6%(WPI)Current account de : 1.3%Foreign Exchange : US $ 54 Bn

In spite of the global slowdown, India was

the second fastest growing economy

Economic fundamentals 2001-02


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Economic fundamentals 2002-03: The Good News

Quarterly GDP at factor cost at constant (1993-94) prices for Q1 of2002-03 has showed a growth rate of 6.0 per cent over thecorresponding quarter of previous year.

The Index of Industrial Production has exhibited a growth of 4.9% inApril-August 02-03, as compared to 2.4% in the same period in theprevious year.

Under Used-based classification the capital goods sector hasexhibited a growth of 7.3% in April-July 02-03 as compared tonegative growth of 6.6% last year.

Exports post strong growth: Indias exports during April-August,

2002-2003 are valued at US $ 19766.26 million which is 13.37%higher than the level of US $ US $ 17435.88 million during April-August, 2001-2002


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Economic fundamentals 2002-03: The Not So Good News

Weakest monsoon in 14 years will affect overall economicgrowth. (Impact can be offset to an extent by adequatespending on infrastructure)

US-Iraq conflict has led to soaring crude oil prices andrising costs for the Indian industry.

Consumer-durable sector has posted a negative growth of5% in April-August 02-03 as compared to 9.3% in the sameperiod in the previous year. Consumer goods on thewhole have posted a growth of 10.8% in April-August 02-03.


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Key reforms moving forward

Liberal FDI norms

FII investment limits raised from 49% up to the FDIsectoral caps

Non Tariff Barriers removed - almost everything allowed

for imports


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Special Economic Zones on international lines being setup in major locations

Reduction & moderation of tax rates

Peak rate of customs duty reduced to 30%(committed to bring it down to two slabs 20% and10% by 2004)

Corporate tax rate at 36.75% for domestic companiesand 42% in the case of foreign companies

Move to introduce VAT by April 1, 2003


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Private sector participation in insurance allowed Many players in the life and non-life commenced

operations

Insurance Amendment Bill 2001 passed

ECB norms further liberalised & simplified

Entry norms for investments by foreign corporates and

foreign individuals relaxed Move to reduce Government shareholding in nationalised

banks to 33%

Labour reforms

Enabling environment for infrastructure development

Strengthening the financial infrastructure


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Key reforms moving forward: Union Budget 2002-03

Many reforms carried forward in key sectors agriculture, infrastructure, financial sector, textiles,

housing, tourism, entertainment and socialinfrastructure

Agriculture

futures and forward trading to cover all agricultural

commodities removal of SSI reservations for various agricultural

equipment items

decanalisation of export of commodities and phasingout of remaining export controls


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Infrastructure Urban Reforms Incentive fund to incentivise states to

carry out reforms in rent control, land ceiling, stampduty

Infrastructure Equity Fund to encourage privatesector participation

Financial sector demutualisation of stock exchanges,

legislative changes to strengthen capital marketregulator SEBI

a comprehensive new legislation covering creditors

rights, asset reconstruction and securitisation


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Move towards capital accountability convertibility hike in the automatic approval for Indian companies

investing overseas from $50 million to $100 million

no prior approval for overseas joint ventures wherethe capital does not exceed 50 per cent of net worth

permission for Mutual Funds to invest in ratedsecurities overseas

Taxation reforms Rationalisation and move towards two-tier customs

duty structure by 2004-05

A uniform Value Added Tax (VAT) to be introduced byApril 2003


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#23

Key reforms moving forward new initiatives

Faster privatisation

Implementation of infrastructure projects

Measures to revive stock markets

Restructuring financial sector


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#24

Year No. Of Cos. In which equitysold Targetreceipt

for theyear

ActualReceipts

1991-92 47 (31 in one tranche a nd 16in other) 2500 3038

1992-93 35 (in 3 tranche s) 2500 19131993-94 3500 Nil 1994-95 13 4000 48431995-96 5 7000 3621996-97 1 5000 3801997-98 1 4800 9021998-99 5 5000 53711999-00 2 10000 18292000-01 4 10000 18702001-02 10 12,000 5640 #2002-03

6

12,000

4505 #

Total 48 * 66,000 30653 #

Total number of companies in which disinvestment has taken place so far.

# Figures (inclusive of amount expected to be realised, control premium, dividend/dividend

tax and transfer of surplus cash reserves prior to disinvestment etc.)


Faster privatisation


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#25

S.No. State Length in km

1. Andhra Pradesh 1014

2. Bihar 206

3. Delhi 25

4. Gujarat 485

5. Haryana 152

6. Jharkhand 192

7. Karnataka 623

8. Maharashtra 488

9. Orissa 440

10. Rajasthan 725

11. Tamil Nadu 342

12. Uttar Pradesh 753*

13. West Bengal 401

Total 5,846

State-wise details of the status of the Golden Quadrilateral Road Project - An amount ofRs.5180 crore has been spent on the project upto 31.5.2002.


Infrastructure Development -Roads


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Number of new legislation on the anvil: Fiscal Responsibility The Electricity Airports Bio Diversity Banking Companies and FIs Financial Companies Patents Communications Convergence


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Investment

Requirementin Energyup to 2012 and

other infrastructureareas

LNG Terminals

$ 10 bn

Refineries

$ 22 bnCoal

$ 26 bn

PowerGeneration

$ 143 bn

Transmission &Distribution

$ 116 bn

Oil & Gas

$ 100 bn

Cross-CountryPipelines$ 10 bn0

Roads

US $40 billion

Railways US$ 15 Billion

PortsUS $ 20 Billion

Indian Economy: Opportunities


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#29

Information technology Software and Services - $50 bn by 2008

IT-enabled Services - $17 bn by 2008

E-Commerce - $8.9 bn

Biotechnology

$4.5 bn by 2010

Retail

$300 bn by 2010

Healthcare

Regional hub

$ 16 bn potential

Media, Entertainment $6.5 bn by 2005


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Telecom provides big opportunity in India

Low telephone penetration provides large scope

Total connections growing at 20 per cent

23 million strong network today which is third largestamong emerging economies

Power Attempts are being made to move ahead with project

implementation in the various states

A number of Independent Power Producer projectsfinalised in the state of Andhra Pradesh


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Ports major initiatives being undertaken

leasing out of port assets allowed

creating additional assets - container terminals,berths, storage facilities etc.

Roads

many projects being undertaken corridor to connect the north and the south

four-laning of over 35,000 kms of national highways


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Confederation of

Indian Industry

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