vibrant gujarat - services sector profile

Services Sector ProfileFinancial Services, Tourism and IT/ ITeS

SECTOR PROFILE

Table of Contents

1. India - preferred investment destination

2. Gujarat - preferred investment destination in India

3. Services in Gujarat - overview and focus sub sectors

4. Services focus sub-sectors

4.1 Financial Services

4.1.1 Overview

4.1.2 Gujarat scenario

4.1.3 Investment opportunities

4.2 Tourism

4.2.1 Overview


4.2.2 Policy initiatives and interventions planned


4.3 Information Technology (IT)/Information Technology enabled Services (ITeS)

4.3.1 Overview


4.3.3 Policy initiatives and interventions planned


5. Advantage Gujarat

6. Doing Business in Gujarat

7. Key Government Agencies

INDIA - PREFERRED INVESTMENT DESTINATION

01

1

INDIA - PREFERRED INVESTMENT DESTINATION

9th largest economy in the world by nominal GDP and 3rd largest by purchasing

power parity (PPP)

Recorded the highest growth rates in the mid-2000s

One of the fastest growing economies in the world (GDP growth rate – 8.6% in 2011)

GDP growth rate

Sectors’ contribution to GDP

India is one of themajor G-20 economies:

ththe 17 largest exporter andth11 largest importer in the world

Main Export Partners

ndThe 2 preferred global investment destination

(World Investment Prospects Survey 2010-2012 by UNCTAD)

USD 254 billion of FDI inflows between April 2000 and

March 2012

Main Import Partners

US 13%

UAE 12%

China 8%

Hong Kong4%

China12%

UAE 7%

Saudi Arabia6%

US6%

Australia5%

FDI Confidence Index, 2012A.T. Kearney Survey

FDI - Top Sectors

9.5% 9.6% 9.3%6.8% 8.0% 8.6%

0.0%

5.0%

10.0%

15.0%

2006 2007 2008 2009 2010 2011

1.52

1.52

1.6

1.73

1.87

0 0.5 1 1.5 2

Germany

US

Brazil

India

China

Services30%

Telecommunications12%

Computer softwareand hardware

11%

Real estate11%

Constructionactivities

10%

Power7%

Automobile industry

6%

Metallurgical industries

5%

Pharmaceuticals5%

Petroleum and natural

gas3%

No Change

Decline

Growth

- 200 400 600 800 1,000 1,200

Agriculture Industry ServicesUSD, billion

16%

17%

17%

18%

19%

20%

25%

26%

26%

26%

25%

26%

59%

58%

57%

56%

56%

54% 2006-07

2007-08

2008-09

2009-10

2010-11

2011-12(A)

(Q)

Trade Scenario, USD billion

0

50

100

150

200

250

300

350

400

1990-91 1994-95 2000-01 2004-05 2010-11

Export Import

CAGRExports

14%

CAGRImports

14%

02

World's largest democracy with1.2 billion people

Land of abundant natural resources and diverse climatic conditions

Enabling business environment with greater global participation

Strong Market Fundamentals

Access to technology as a result of the IT revolution

Impetus on Infrastructure Development

Progressive simplification and rationalization of direct and indirect tax structures

Competitivelypriced skilledlabour

democr naturand div

Strong MarkFundamen

Impetus on InfrastrucDe

pric

enwith gr

technology as a r

simplificrationaliza

ADVANTAGE INDIA

03

04

GUJARAT - PREFERRED INVESTMENT DESTINATION IN INDIA

2

05

Gujarat’s Degree of Openness (ratio of exports from state to Gross State Domestic Product)

53%

A highly industrialized state - Gross State Domestic Product contribution from manufacturing sector

28%

Growth in agricultural output in the state over the last 10 years 11%

Double digit growth rate with Gross State Domestic Product of USD 75 billion(2010-11) growing at a five year average of

10%

26%A state with one of the highest share in investments under implemented projects in India

A state with a high and growing literacy rate 79%

Increase in seat availability in technical institutions over last 3 years 100%

A state with a population of 60 million and one of the highest urbanization levels 43%

GUJARAT HAS BEEN RANKED 1ST AS PER THE “ECONOMIC FREEDOM RANKINGS FOR THE STATES OF INDIA, 2012” REPORT

SERVICES - OVERVIEW AND FOCUS SUB SECTORS

306

SERVICES SECTOR : BIGGEST CONTRIBUTOR TO INDIA’S GDP

07

Source: Ministry of Finance, Central Statistical Organization

GDP by Economic Activity(at 2004- 05 Constant prices) in %

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Services Sector - contributed58% to GDP in year 2010-11

Community, Social andPersonal services

Financing, Insurance, Real Estateand Business services

Construction

Electricity, Gas and Water Supply

Manufacturing

Trade, Hotels and Transportcommunication

Mining and quarrying

Agriculture and fishing

SERVICES FOCUS SUB-SECTORS

08

IT / ITES

Tourism

FinancialServices 4

09

FINANCIAL SERVICES

4.1

OVERVIEW

10

4.1.1

FINANCIAL SERVICES – INDUSTRY STRUCTURE

11

Financial services industry mainly comprises BFSI (Banking, Financial Services (including mutual funds) and Insurance

Estimates of the Industryare taken at constant

prices (2004-05)

Services Sector inIndia

FinancialServicesIndustry

Banking Insurance Mutual Funds

Non-BankingFinancial

Companies(NBFC)

Tourism,Hotel, Trade

IT/ITeS

RealEstate

BusinessServices

Health,education,

socialservices

Infrast-ructure

Legal

Accoun-ting,

auditingR&D

Telecommuni-

cation

Contributesaround 5% of India’s GDP

Source: Reserve bank of India, Central Statistical organization, PwC Analysis

DEMAND FOR FINANCIAL SERVICES IN INDIA

12

Source: Ministry of Finance ,IBEF , Department of Industrial Promotion

Significant potential :

• Rising incomes are driving demand for financial services across income brackets

• The size of Indian gross national savings stood at USD 539 billion in 2010 and is estimated to be USD 1,455 billion by 2016.

• Over 90% household savings are invested in bank deposits and only 10 per cent in other financial asset classes.

• Innovative and customized products are expected to shift money from bank deposits to these emerging asset classes

• The large quantum of savings by Indians presents immense opportunities for financial intermediaries to move savings to more productive channels

“Given India's continued economic growth, the financial sector will provide 10 to 11 million jobs by 2020 “

– ”GIFT Corporate Presentation “

Cumulative FDI Inflows(Apr. 2000 - Dec. 2010) in USD million

Construction Activities(including roads andHighways)

Housing and RealEstates

Telecommunication

Computer Software &Hardware

Services Sector(Financial and Nonfinancial)

8964

9380

10258

10601

26454

FINANCIAL SERVICES: STRUCTURE OF INDIAN BANKING SECTOR

13

Source: Reserve bank of India

Reserve Bank of India

Banks Financial Institutions

Private Sector Banks(27)

Foreign banks(32)

Regional rural banks (84)

Urban Cooperativebanks(1674)

Rural cooperative creditInstitutions(96,751)

Public sector banks(27)

Scheduled commercial banks Cooperative credit

Institutions

All-institutions India financial

State -level Institutions

Other Institutions

FINANCIAL SERVICES: BANKINGINDIAN BANKING SECTOR HAS GROWN AT A HEALTHY AND STEADY PACE

14


Credit

Growth:

• Credit off-take has surged at a CAGR of about 20% in the same period

• Demand has grown for both corporate and retail loans

Growth drivers: Loan growth has been driven by strong economic growth, rising consumerism and income levels

433532

635

743

906

0

100

200300

400

500600

700

800

9001000

2007 2008 2008 2010 2011

Growth in credit off take over past few years

In U

SD b

illio

n

578

718

875

1,023

1,206

0

200

400

600

800

1000

1200

1400

2007 2008 2008 2010 2011

Growth in deposits over past few years

In U

SD b

illio

n

Deposits

• Growth: Over 18% CAGR during FY06-11

• Growth drivers: Deposit growth has been driven by strong growth in savings amid rising disposable income levels

Gross National Savings expected

to touch USD 1,455 billion in 2016

CAGR 20%

CAGR 18%

FINANCIAL SERVICES : BANKING

15


7.74

17.38

1.65 0.835.86

33.45

05

10152025

303540

State Bank ofIndia & itsAssociates

NationalisedBanks

Foreign Banks Regional ruralbanks

Private SectorBanks

All ScheduledCommercial

banks

Share of Banks in outstanding credit:

• Scheduled Commercial banks: 50%

• Nationalized bank : 26%

• SBI and its associates : 11.5%

• Private Sector : 8.76%

• Foreign banks : 2.4%

• Rural banks : 1.2%

11.67%

40.51%

2.56%

9.13%

16.71%

9.13%

7.27%

3.02%Agriculture

Industry

Transport Operators

Professional and Other Services

Personal Loan

Trade

Finance

All others

Bank group-wise distribution of outstanding credit of scheduled commercial banks – 2010 ( in INR lakh crore)

Indian commercial banks have

increasing exposure to industry sector

especially power sector.

Industry wise credit given by banks -2010

FINANCIAL SERVICES IN INDIA: STRUCTURE OF INDIAN INSURANCE INDUSTRY

16

Source: Reserve bank of India, IBEF

Ministry ofFinance

(Government ofIndia)

InsuranceRegulatory and

DevelopmentAuthority

(IRDA)

Life Insurance(24 players)

Public (1)

Private (23)

Non LifeInsurance (24

players)

Public (6)

Private (18)

Re-(1 player)

insurancePublic (1)

Registered insurers in India

(As on 30th September 2011)

FINANCIAL SERVICES IN INDIA: INSURANCE

17

Source: IRDA

0

1

1

2

2

3

3

4

4

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Non-Life Life

0.6 0.70.8 1

1.2

1.8

2.3

2.53.0

3.3

• Insurance industry CAGR of 21% from 2001 to 2010.

• Life insurance industry recorded a premium income of INR 2.9 lakh crore during 2010-11.

• Non-life insurance industry underwrote total premium of INR 0.4 lakh crore in 2010-11

Total Premium income of Life and Non Life Insurers (in INR Lakh Crore)

CAGR : 21%

Life Insurance

LIC 70%

Privatesector30%

Non-Life Insurance

Public59%

Private41%

FINANCIAL SERVICES IN INDIA: MUTUAL FUNDS

18

Source: IBEF

• Asset management industry in India is among the fastest-growing in the world

• Total Assets –Under-Management (AUM) have clocked a CAGR of 28% over the period 2005 to 2010

• The global recession in 2008 led to a dip in the total AUM. However, the industry rebounded to 30 per cent higher AUM than pre-recession levels in a period of two years from 2008 to 2010

• Corporate investors account for nearly half of the total AUM in India, while retail investors account for one-fourth

• AUM in India is expected to increase by 57% during 2010-14

42

68

114

85

138

46

62%68%

-25%

62%

-67%-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

0

20

40

60

80

100

120

140

160

2005 2006 2007 2008 2009 2010

Mutual Fund AUMs (2005-2010)

Investor break up, March 2010

Corporates

USD

bill

ion

Gro

wth

rate

19%

3% 1%

Retail

HNI's

Bank/Fis

FII's

51%

26%

FINANCIAL SERVICES IN INDIA: NBFCS

19

Source: IRDA

Non Banking Financial Companies (NBFC) in India

NBFCs are rapidly gaining prominence as intermediaries in the retail finance space

Growth so far:

• More than 80% of equipment leasing and hire purchase activity in India is financed by NBFCs

• The AUM of NBFCs in retail finance has doubled over the period 2007-10

• In terms of market share in retail finance (except housing finance) space, NBFCs have been able to improve their market share from 26% to 38% over 2007-10

Future outlook:

• Going forward the AUM is expected to double again over the period 2010-13

• By 2013, the NBFC share of retail finance (except housing finance) is expected to rise to 47%, almost at par with the market share of banks

Entity Main business

1. Asset finance companies Financing of real / physical assets

2. Investment companies Acquisition of securities including primary dealers which deal in underwriting and market making for government securities.

3. Loan companies Providing loans, advances for any activity other than its own, excludes EL/HP/Housing Finance Companies

FINANCIAL SERVICES IN INDIA: NOTABLE TRENDS

20

Source: IBEF

• New distribution channels like bancassurance, online distribution and NBFCs have widened the reach and reduced the operational costs

• The life insurance sector has witnessed the launch of innovative products such as Unit Linked Insurance Plans (ULIPs)

Insurance

• India’s AUM has grown at 28% CAGR over 2005-2010, and the total AUM stood at USD 146 billion as of March 31, 2011.

• The AUM of equity and balanced funds, focus segments of retail investors, grew by 20 per cent CAGR in the same period

• In FY09, SEBI has removed entry load to bring about more transparency in commissions – thus encouraging longer-term investment

• NBFCs has been serving unbanked customers by pioneering retail asset backed lending, lending against securities and microfinance

• NBFCs are aspiring to emerge as a one-stop shop for all financial services

Mutual Funds

NBFCs

GUJARAT SCENARIO

21

4.1.2

TERTIARY/SERVICES SECTOR IS THE BIGGEST CONTRIBUTOR TO GUJARAT ECONOMIC BASKET

22

Source: Socio Economic review of Gujarat 2010-2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

GDP of Gujarat by Economic activity( at 2004-05 constant prices) in %

Public adminstration and other services

Banking and Insurance , real estate andBusiness services

Trade, Hotels and Transportcommunication

Manufacturing

Electricity,gas and watersupply, construction

Agriculture, Forestry andlogging, Mining and Quarrying

Tertiary Sector - contributed43% to GSDP in the

year 2010 -11

FINANCIAL SERVICES IN GUJARAT

23

Source: Socio Economic review of Gujarat 2010-2011

The Banking industry of Gujarat has been growing at a very rapid pace

Gujarat witnessing good growth both in advances and deposits in the year 2010-2011.

6091

6433

5900600061006200630064006500

2009-10 2010-11

Branches of scheduled commercialbanks(in Nos)

2.3

2.7

1.6

1.9

0

0.5

1

1.5

2

2.5

3

2009-10 2010-11

Aggregate Deposits and Advances (in INRLakh Crore)

Deposits

Advances

61.471

24,95519,859

9,826

71,975

31.40124,825

11,605

Sector Advances have grown across sectorsin the recent years

2010

2011

• The ratio of priority sector advances to net banking credit stood at 46% - well above the benchmark level of 40%

• Ratio of agricultural advances to net banking credit was also above the benchmark level of 18% which stood at 20%

In C

rore

Priority Sector Advances

Agricultural Advances

SSI Advances Weaker Advances

Section

GIFT- GUJARAT INTERNATIONAL FINANCE TECH CITY -THE CONCEPT AND POSITIONING

24

Source: GIFT, Government of Gujarat

Project Brief and background

GIFT is conceptualized as the first Financial Services Special Economic Zone to be developed as a global financial hub. With its strategic location, state of the art infrastructure, green and intelligent buildings it is poised to become a globally benchmarked International Finance Centre providing exciting opportunities for financial services and IT/ITeS sectoral companies.

Project Details

• GIFTCL – Gujarat International Finance Tec-City Company Ltd has been incorporated in partnership with IL&FS (Premiere institution with proven track record and pioneer in launching PPP projects)

• Government of Gujarat through GUDC to be the lead agency

GIFT aspires to catalyse India’s large financial services potential by offering world class infrastructure

and world class talent

To target 6-8% of financial services potential in India

Creation of 1 million direct

and Indirect Jobs

Up to 90 million sq.ft

of real estate office and residential

space

INVESTMENT OPPORTUNITIES

25

4.1.3


26

Source: GIFT, Government of Gujarat

Financial Serviceoperations

Financial Servicescorporate centre

Select productmarkets

Capital markets andtrading

IT ServicesITes/BPO Services

CoreFinancialServices

GIFT’s target business segments

• National Financial Services Operation hub

• Regional/Functional head quarters for financial service players

• National headquarters for players

• Private banking hub for NRIs/Regional HNWs

• International Microfinance hub

• International commodity trade hub

• Participation in global capital markets

• Global hub for IT services for financial services sector

• Global hub for BPO services for financial services sector

Investment opportunities

• Upto 90 million Sq. ft of real estate office and residential space

• Opportunities for development ofresidential spaces

• Opportunities for development of several urban amenities like hotels, convention centre, leisure destinations like restaurants, golf clubs etc

TOURISM

27

4.2

OVERVIEW

28

4.2.1

TOURISM

29

Travel & Tourism industry holds a significant position in the global context on account of its contribution to revenue, employment and investments

RevenueTotal industry revenue: - USD 6 trillion ~ 9% of global GDP, - will be over USD 14 trillion by 2019. USD 1 Trillion of overall export income (USD 3 billion per day).

WorkforceOver 260 million people (directly and indirectly employed) - 7% of total employment worldwide

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

2009

2019Personal Travel & Tourism

Business Travel

Government Expenditures

Capital Investment

Visitor Exports

Other Exports

0100200300400500600700800900

1000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

International Tourist Arrivals (million)

International Tourist Receipts (US $ Billion)

• Strong rebound in global tourism trends in 2010 with international tourist arrivals grown by 6.6%

• 4.7% growth in international tourism receipts Increase from about USD 85 billion to USD 919 billion in 2010

Sources: World Travel and Tourism Council, Annual Review, 2011 World Tourism Organization, International Tourism Trends 2011

Travel and Tourism Industry has rebounded after recession with

strong increase in tourist arrivals

Capital investmentUSD 650 billion investment ,approximately - 4.5% of the total capital investment worldwide

GLOBAL TOURISM OVERVIEW

30

Sources: World Tourism Organization, International Tourism Trends 2011 edition

Asia and Pacific regions have emerged as key drivers of Travel and Tourism

Industry growth

Break up by purpose of travel

15%

27%

51%7%

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%

World Europe Asia andPacific

Americas Africa

Average Annual Growth rate from 2000-2010

World Europe Asia and Pacific

Americas Africa Middle East

Middle East

Leisure , Recreation and Holiday

VFR, Health, Religion, Other

Not Specified

Business and Professional

Leisure and recreation are the most popular purpose of travel

Present contribution of different regions to total Travel & Tourism industry revenue

1.90%

North East Asia

South East Asia

Oceania

South Asia

6.70%

6.80%

6.20%

INDIA-TOURISM SECTOR OVERVIEW

31

Travel and Tourism Industry in India has grown, in terms of tourist arrivals, contribution to country’s GDP and employment generated

Total contribution of Travel and Tourism Industry to GDP is expected to grow by 9% from current INR 3,680 billion (4.5% of GDP) in 2011 to INR 8,523 billion (4.9% of GDP) by 2021

Revenues generated by Travel and Tourism (INR billion)

India Travel and Tourism: Key facts

-10.0%

- 5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0

100

200

300

400

500

600

700

800

2005 2006 2007 2008 2009 2010

Total Tourist Arrivals in India (mn) YoY India GrowthYoY World Growth

Total Tourist Arrivals in India and Globally Employment generated by Travel and Tourism

Travel and Tourism sector’s contribution

2011 2021 (estimated)

Total employment 7.5% 8.1%

Total exports 3.8% 11.4%

Total investment 4.7% 8.7%

900080007000600050004000300020001000

0

20012002

20032004

20052006

20072008

20092020

20112021

Direct Indirect Induced

5000045000400003500025000200001500010000

50000

2011 2021Direct Indirect Induced

Sources: World Travel and Tourism Council, T&T Economic Impact, India 2011

Sources: Indian Tourism Statistics, Ministry of Tourism , Government of India

INDIA TOURISM SECTOR OVERVIEW

32

Sources: World Travel and Tourism Council, T&T Economic Impact, India 2011

Foreign tourists arrivals and contribution to earnings has been increasing significantly

• Tourism in India is mostly domestic in nature with foreign tourists comprising less than 1% of total tourists (6.3 million in 2011 and 5.8 million in 2010 compared to 740 million total tourists in 2010.

• While total tourists witnessed a 8.7% CAGR in India during 2005-10, foreign tourist arrivals grew 8.2% in the same period

• Foreign Exchange Earnings (FEE) from tourism in India reached almost INR 776 billion in 2011 – nearly five times of that in 2000 (INR 156 billion)

• While total foreign tourist arrivals to India grew at about 8.2% between 2005-10, FEE grew at a higher rate of about 17% in the same period – indicating that the average spending per foreign tourist has been increasing year on year

The nature of travel spending is skewed towards Leisure spending which

contributed INR 3,003 billion in 2011 and is expected to more than double by 2021

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

0

1

2

3

4

5

6

7

2005 2006 2007 2008 2009 2010 2011

Foreign Tourist Arrivals (mn) YoY Growth Rate

28.50%

71.50%

Contribution Business vs Leisure

to T&T GDP

Business Spending Leisure Spending

Sources: Indian Tourism Statistics, Ministry of Tourism , Government of India

India Foreign Tourist Arrivals and Growth Rate

INDIA-TOURISM SECTOR OVERVIEW

33

Hotel Industry in India is an undersupplied market and witnessing strong growth

• India currently has approximately 6 lakh hotel rooms only. As of 2008, the number of approved hotels by ministry of tourism, government of India stood at 1,593.

• After the impact of global recession, 2010 witnessed overall growth in occupancies from 59% to over 62% and average hotel rates increased by 10% led by increase in international leisure demand, strong growth in domestic leisure demand and growth emanating from Meetings, Incentives , Conventions and Events market (MICE). F&B has been steady in terms of contribution to revenue which is led by room rentals

56%

58%

60%

62%

64%

66%

68%

70%

0500

100015002000250030003500400045005000

2006-07 2007-08 2008-09 2009-10 2010-11

Presence of global and national brands

2010-11

2009-10

2008-09

2007-08

2006-07

0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Rooms F&B and Banquets Others

Average Room Rates and Occupancy Sources of Revenue

INDIA TOURISM SECTOR OVERVIEWHOTEL INDUSTRY: FUTURE OUTLOOK

34

Hotel Industry is being driven by growth of the travel and tourism industry, domestic tourism and a demand for budget hotels. Over 100,000 new hotel rooms are estimated to enter Indian market by 2015. Around 60% of these are estimated to be under active development.

Intercontinental Hotels Group

Starwood Hotels & Resorts Hilton Hotels

Intercontinental Hotels Group, the world’s largest hotel group by number of rooms plans to launch 19 holiday express hotels in India by 2016. IHG currently runs 7 out of the 12 hotels in India in the luxury segment.

Starwood hotels and resorts worldwide which owns brands like Le Meridien and Sheraton intends to set up 100 hotels in India by 2015. It currently has 32 hotels but its focus might now be on the mid market segment.

Hilton Worldwide plans to develop around 50 more hotels in India. The 19 hotels over the next 4-5 years will have approximately 3000 rooms covering luxury, full and focussed service offerings with brands like Doubletree, & Hilton Garden Inn

Factors driving the hotel industry in India

• Supportive policies and initiatives: 100% FDI allowed in the hotel industry, Dedicated Hospitality Development and Promotion Board (HDPB) for fast approvals & clearances to hotel projects

• Increase in business traffic due to rising GDP and India’s emergence as an outsourcing hub

• Strong domestic demand due to rise of middle class and change in cultural attitude of citizens

Marriott International

Marriott International plans to open around a 100 properties in India by 2015, which will increase its presence by a whopping 1000% in the country bringing brands like Ritz Carlton , Fairfield and others

Accor, another international hotel chain with nine hotels in India under brands like Mercure, Ibis and Novotel plans to raise the number to 90 by 2015 . It also has set up an investment fund to further its programme

Accor Hotels

Source: Secondary Research

INDIA TOURISM SECTOR OVERVIEW

35

Brand India: Getting Global Recognition

World’s Leading Destination & World’s Leading Tourist Board• World Travel Mart 2011 Awards for India Tourism

Leading Tourism Destination Award to India

in Shanghai - China• at the Asia World Travel Awards 2008 -“Asia and Indian Ocean” Ceremony,

India amongst top 2 most favored countries for tourists world-wide

consecutively for the second year• as ranked by Conde Nast Traveller, UK in its Readers Travel Awards 2008 -

India bagged the World Travel Award 2008

14th World Travel Market (WTM) - London• for its role in developing and promotion of "Responsible Tourism” at

GUJARAT SCENARIO

36

4.2.2

GUJARAT TOURISM SECTOR OVERVIEW

37

Tourist arrivals in the state experiencing strong growth – better than the country’s average

• Total tourist arrivals to Gujarat in 2010-11 stood at approximately 19 million as compared to around 10 million in 2005, thus witnessing a 85% growth in tourist arrivals.

• International tourist arrivals grew at CAGR of 15% since 2005. This can be attributed to growing prominence of the State as a major business hub and it being one of the choicest destinations for foreign direct investments in India. Robust infrastructure, a very high rate of urbanization and supportive policies for tourism promotion have been the other contributors.

• The overall year on year growth rate of total tourist arrivals in Gujarat has been higher than that of India as a whole, indicating a better performance by the state on the tourism map.

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0

5000000

10000000

15000000

20000000

25000000

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Total Tourist Arrivals YoY Growth Rate of Total Tourist Arrivals

YoY Growth Rate of International Tourists YoY Growth Rate of Tourist Arrivals in India

Major tourism circuits are spread out across state, though Ahmedabad, Ambaji and Dwarka

continue to be the major tourist destinations

the

North Gujarat Circuit comprising

of Himatnagar & Palanpur

Ahmedabad Circuit, consistingof Ahmedabad, Gandhinagar,Modhera and Surendranagar

Kutch Circuit

Saurashtra Circuit comprising of Rajkot, Junagadh, Veraval,

Somnath,Dwaraka & Porbandhar South

GujaratCircuit

Consisting ofSaputara, NavsariSurat and Baroda


38

Sources: Tourism Corporation of Gujarat Ltd, Department of Tourism, Government of Gujarat

• A high percentage of tourist arrivals from within the State indicates a stable growth of tourism in future

• Domestic tourism primarily led by tourists from within the State is gradually giving way to tother Indian states which stands at almost 22% has increased from 19% in 2007. This can be attributed to growing awareness of the state’s tourism assets and a booming economy.

ourist arrivals from

76.03%Within

21.98%

1.99%

OtherIndianStates

Foreigner/NRIs

Maharashtra

Madhya Pradesh

Rajasthan

Uttar Pradesh

Bihar

West Bengal

Other North Indian States

Others

Break up of domestic tourist arrivals to GujaratState wise Break up of tourist arrivals

from Other Indian States

State is also experiencing steady growth in international tourism

0.00 0.10 0.20 0.30 0.40 0.50

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

International Tourism is increasingly growing in Gujarat and the total international tourist arrivals to Gujarat is almost 2% - which is higher than the 1% figure for India

Others, 30%

China, 4%

Singapore, 6

Canada, 3%Germany, 4 Italy, 8%

Australia, 4%

USA, 9%

France, 10%

United Kingdom, 22


39

RELIGIOUS & SPIRITUAL

• Popular religious destinations like Dwarka and Somnath

• Akshardham Temple at Gandhinagar

• Famous sites of Jainism – Palitana and Girnar

• Islamic Dargahs at Sarkhej and Unjha

• Parsee pilgrimages – three of the most important four

WILDLIFE TOURISM

• 4 National Parks and 21 Sanctuaries

• One of the only abode of of Asiatic lions at GIR Sanctuary

• Popular Bird Sanctuary at Nalsarovar , Thol Lake and Khijadiya

• India’s first Marine national park at Gulf of Kutch

• Desert Wildlife at Kutch

WELLNESS & MEDICAL

• World class hospitals at Ahmedabad, Surat, Vadodara, Karamsad, Nadiad offering high quality treatments at affordable rates

• Home of Ayurveda for centuries – Jamnagar one of the most important place for ayurvedic studies

• Medical spas and cosmetic treatments

NATURE & BEACH

•with numerous pristine beaches at Ahmedpur Mandvi, Chorwad , Golden Sand at Surat and many others

• Hill Stations like Saputara and Pavagadh

• Desert tourism at the Rann of Kutch including the popular Black Hill

One of the longest coastlines dotted

HERITAGE TOURISM

•ancient Harappan civilization sites at Lothal , Dholavira at Kutch

• World Heritage Site at Champaner

• Several popular monuments like Shaking Minarets and Adalaj Step well

• Historical forts at Diu, Junagadh

• Several Heritage hotels and resorts – Kutch, Palanpur, Wankaner, Gondal & other places

Popular archaeological sites including

RURAL AND CULTURAL

•Kutch – Winner of PATA Grand Award 2010 for rural tourism

• Rich handicrafts of Kutch

• Tribals and ethnic communities of Dangs and Chotta Udaipur

• Various festivals and events like the Modhera dance festival, longest dance festival in the World – Navratri celebrations

Rural Tourism site at Hodka Village


40

Tourism Sector Drivers : innovative campaigns, festivals and events

Modhera Dance Festival

International Kite Flying Festival

Navratri – 9 Nights Dance festival

Rann Utsav - Kutch Desert

Khushboo Gujarat Ki – Brand Campaign with Indian cinema star Amitabh Bachhan - Several campaigns featuring the star shot

at multiple locations across the state to increase awareness of state’s diverse tourism assets


41

Tourism Sector Drivers : Robust Infrastructure

Airport Infrastructure

Road, Rail Network & Port Infrastructure

Educational Infrastructure

Power Urban nfrastructure

12 Domestic Airports (highest

in any Indian State) and 1

International Airport

Over 74,000 km of road network and 5,000 km of

rail network connecting all

parts of the State. Well developed

Ports -opportunities

for Sea Cruises & ferries

Well established institutes of

Hospitality and Hotel Management

which provide a ready talent pool

for the tourism industry

A power surplus State with excellent

availability of electricity for

hospitality and other industries

Several urban infrastructure

initiatives including

development of urban transport like BRTS,

Metro

POLICY INITIATIVES AND INTERVENTIONS PLANNED

42

4.2.3


43

Tourism Sector Drivers : Government Supporting Agencies & Policies

Guj-Tour Development Company Ltd (GUJTOUR)

• Being set up with a corpus of INR 1 billion to develop, create and market tourism-related infrastructure, products & projects

• Process for selecting the financial partner of GTDC is currently underway

Tourism Corporation of Gujarat Limited (TCGL)Setup in 1975 – has been responsible for promoting tourism related commercial projects.

It has a special cell for mobilizing investment in the tourism sector.Two SPVs have been set up for tourism development in Gujarat:

Gujarat Tourism Opportunities Ltd (GUJTOP)

• Setup in 2007 to identify tourist sites for development and to set up project development fund

• Responsible for conducting feasibility studies for several locations across Gujarat and spotting tourism opportunities

Marketing & Promotion

• FAM tours organised for tour operators, column writers of travel magazine and photographers

• Tourism Information Bureau (TIB) opened at Jaipur and 14 new Tourist Reception Centers (TRCs)

opened at ST bus stations

• Websites started in 7 different languages

• Road shows on regular basis all over India

• Gujarat Tourism Guide published as PPP initiative

• MOU signed with West Bengal, Tamil Nadu, Rajasthan, Kerala, Uttar Pradesh and Himachal Pradesh


44

Tourism Sector Drivers: Supportive Policies

Highlights of the Tourism Policy 2010

• Industry Status to the Tourism sector - this will enable investors to avail benefits which are extended to other industries through Industrial Policy 2009

• Land Acquisition & Allotment

• Concession in Electricity Duty / tariff

• Tax holidays (as and when proposed)

• Tourism Incentive Package Scheme (TIPS): 2010-2015 is being proposed by the Government, which shall offer special incentives

• Tax holidays on Luxury Tax, VAT on food and beverages, Entertainment Tax

• Concessions such as interest subsidy, reduction of Electricity duty and VAT on natural gas

• Modifications in the lending criteria to cover wider tourism related projects like amusement parks, wayside facilities , service oriented projects like travel agencies, tour operators etc

Increased Budgetary Allocations to promote tourism sector

35

100

164183

200

0

50

100

150

200

250

2005-06 2006-07 2009-10 2010-11 2011-12

INR

CRO

RE

Other Policies

• Entertainment tax reduced to 25% as compared to the earlier rate of 50%

• No luxury tax on rooms up to tariff of INR 500

- from INR 501 to INR 2,000 - 4% - above INR 2,000 per room - 6%

• Electricity duty reduced to 25% from earlier 35%

• VAT on food reduced to 4% as against about 12% in most other states

These incentives make investments in hotels, restaurants & entertainment facilities very attractive


45

4.2.4

Current Locations - 13 Nos. Chotila, Bhachau, Vataman Chokdi (Ahmedabad), Siddhpur, Lunavada, Vasda,

Unjha, Viramgam, Piplod Santalpur, Maitral,Dhari

OPPORTUNITIES IN GUJARAT TOURISM

46

Augmentation of accommodation facilities and wayside amenities

0

5000000

10000000

15000000

20000000

25000000

0

10000

20000

30000

40000

50000

60000

70000

2004 2011

Hotel Rooms

Total Tourist Arrivals

Linear (Hotel Rooms)

Linear (Total TouristArrivals)

Gujarat’s popular religious and spiritual destinations witness long queues and heavy rush especially during festivals.

Budget hotels and accommodation facilities provide a potential investment

opportunity . State government also envisages development of Wayside

amenities centres .

Envisaged accommodation type in Dakor-Utkantheshwar Fagvel – Champaner – Pavagadh Circuit alone locations cost funds investment

(INR million) (INR (INRmillion) million)

Star rated (3/4) leisure, adventure and entertainment park cum resort Utkantheshwar 2000 500 1500

Star rated (3/4) leisure, adventure, ecotourism resort Balasinor 150 37 113

Economic accommodation facilities Balasinor 5 1 4

Development of star rated (3/4) leisure resort / hotel Dakor , Champaner Each 600 Each 150 Each 450

Economic accommodation facilities Champaner 25 6 19

Suggested Indicative Public Private

Way Side Amenities• Rest rooms /Budget Hotels / Motels• Restaurant / Food / Refreshment facilities• Tourist information centre, Internet Cafes / kiosks, Telephone booths, ATMs / FOREX providers• First aid• Petrol pumps, Car-wash, Auto-parts shops, repair Shops, Parking Lots • Highway Facility Centre separate for Truckers/Passenger cars and buses

Estimated investment: INR 50 million per location


47

Film-citie Film-studiosAmusement

ParksDigital Gaming

ZonesMultiplexes Sound &

Light ShowsSports

Complex Water-parks

Special Entertainment Zones (SEnZs)

• Identification of specific zones to promote leisure and MICE Tourism • ISEnZ’s expected to consist of quality hotels, resorts and restaurants • IAdditionally upcoming Industrial clusters to identify and reserve land plots for tourism clusters • IGrant of Long term lease of land for setting up of tourism infrastructure projects related to tourism

Media and entertainment project investments

Special Project at Dholera Special Investment Region

• Proposed Components of Development:• Film City and Theme Parks over 1,350 hectares• Resorts and Hotels over 3,600 hectares• Adventure Sports Facilities Total Area under Tourism Development: 6,320 hectares

Special Project at Aliya Bet

• Proposed Components of Development:• Entertainment Zone and Film City• Amusement Parks, Resorts, Golf Course and Other Eco – Tourism Facilities • Aquaculture Zone with Aqua Ponds and Aqua Marine Zones • Cruise Ship Circuit • Water Sports and other Recreational facilities like Boating, Sky trains • Proposed Development is in 169 sq km out of which: • Entertainment Zone - 36 sq km of area• Aqua Culture Zone – 62 sq km• Forest Zone 47 sq km• Proposed Investment Size - INR 5,300 crore

48

• Components of Development

Hotels and Resorts

• Adventure Sports Park and Mini Golf Course

• Commercial centers

• Entertainment zones

• Training Institutes

• Lake Development

• Health and wellness facility

• Total area of Development across 91 Ha.

•

Special project at Marina

• State-Of-The-Art Marina to be developed at Umbargaon, Suvali, Miyani , Odedar, Porbandar

• Development and operation of the marina with construction of jetty, Berthing facilities, Lay By,

Anchorage, amenities required for small craft, yacht and speed boats

• Associated facilities like rest room, restaurant, Club House, etc. for vessel/ yacht crews

• Indicative Investment at each location estimated at INR 120 crore.


Other Entertainment and Leisure Project Investments

Special project by Saputara Destination Department


49

Restaurants & Floating Hotels Drive-in resorts

Cruise and Ferry Services

Water sports Maritime museums

Sea Park / Aquarium

Development of Beach Tourism Projects

Typical Project Components

Leisure & Amusement

• Hotels, Resorts, Spa, Clubs• Beach sports & amenities• Golf Courses• Theatre & Cultural Events

Touring & Adventure

• Canoeing, Kayaking & Sailing• Para-Gliding• Scuba, Diving, Snorkeling • Nature Trail Hike• Ferry services

Locations Nalia Mandvi, Suvali, Nargol, Beyt Dwarka, Okhamadhi,

Gopnath Relia, Somnath

Typical area of project: 5 – 10 hectares, Estimated investment INR 100 crore

SR. No Location District Total Area

1 Naliya Mandvi Una, Junagadh 25 Ha.

2 Suvali Surat --

3 Bet Dwarka Jamnagar 87.38 ha

4 Okha Madhi Jamnagar 250.2 Ha.

5 Nargol Umbargaon, Valsad 24.9 ha

6 Gopnath Reliya Talaja, Bhavnagar 19.23 Ha.

7 Somnath Junagadh 91.65 Ha.

50


Promotion of Religious and Spiritual Tourism Locations

Upgrading of basic infrastructural facilities like connectivity, water supply, drainage and health care already being undertaken by the Government for most religious destinations across the State like Dwarka, Ambaji, Dakor, Palitana, Somnath , Girnar and other places to promote development and private sector interest.

Restaurants Hotels & Resorts Dharamshalas

Local public transport Renovation

Recreation facilities

Integrated Plan for Holistic Development of Somnath : Project Rs 200 Crore

• Provision of Basic Infrastructure: Road, internal road work, electricity, water, solid waste management, sewerage systems

• Site Specific tourist facilities -

- Somnath Lake , Bhalka Pond and Garden area , Bhidbhanian Mahadev, Golakhdham, Sun Temple

Integrated Development of Dakor: Project Cost Rs 50 Crore

• Provision of Basic Infrastructure: Internal road widening, electricity, water supply, solid waste management & sewerage systems etc

• Site Specific Tourist facilities-

- Padukali bridge , Gomti Ghaat, Parking at 3 entry points, Jetty for boating, Temple arrival plaza development, Lighting and decoration

Tourism Circuit: Dwarka-Bet Dwarka-Nageshwar-Gopi Talaav : Project Cost Rs 85 Crore

• Traffic and crowd management systems

• Site Specific activities like -

- Parikrama path , New Gomti Ghat

- Restoration of old Gomti Ghat

- Temple and Beach Developments


51

Heritage Tourism Projects

Factor’s that make Gujarat a potent heritage tourism destination:

• State once had a concentration of more than 200 princely states

• Has diverse architecture styles and cultural significance to showcase

• Cultural fairs and festivals add to the unique experience for tourists

Key Project Categories :

• Star Category Heritage Hotel with Exhibition Cum Convention Centre

• Creating unique tourism experience by clubbing Heritage Tourism with Eco-Tourism and with Rural and Craft Tourism

Locations

Poshina, Danta, Vijaynagar, Ahmedabad,

Patan, Modhera, Wadhvan, Wankaner,

Gondal, Palitana, Balasinor, Vadodara,

Jambooghoda, Chota Udaipur,

Rajpipla, Sayla

52


Airports and Airstrips Projects

GUJSAIL – Gujarat State Aviation Infrastructure Limited has been set up under the aegis of tourism development department by Government of Gujarat for building infrastructure and training human resources for the aviation sector of Gujarat.

GUJSAIL plans development of airports, air-strips and helicopter services at several locations, likely to be in PPP mode – this opens up plentiful opportunity for private sector participation. Process for four airstrips at – Ambaji, Dwarka, Ankleshwar and Palitana has begun

• Bhavnagar

• Bhuj

• Gandhidham

• Mundra

• Porbandar

• Keshod

Amreli

• Mandvi (Kutch)

• Ankleshwar

• Palitana

• Ambaji

• Dwarka

• Girnar

• Somnath

• Dwarka

• Bet Dwarka

• Ambaji

• Palitana

•

The State Government is also planning to establish a regional airline on PPP

mode – State might look into assuring the private operator a guaranteed minimum

seat utility

Airports Airstrips Helicopter services


53

World’s Tallest Statue Proposed as the Symbol of Unity

Sardar Patel – One of the tallest leaders and respected freedom fighters of the Indian freedom

struggle.

The Government of Gujarat plans to immortalize the Iron Man of India by building the world’s tallest statue

which will stand 182 metres tall. The Statue of Unity which will come up at Sadhu Island, 3.5 km south of Sardar Sarovar Dam is planned to be developed as a major tourism epicentre. The Statue would have lifts

to ferry tourists to the top of the Statue where restaurants and other facilities are planned as an

additional crowd puller.

The iconic tourism destination is also expected to provide a big fillip to the overall tourism footfalls in the State and catapult the State as a major player in

the national as well as global tourism landscape

Opportunities to Invest

Development of the structure

Tourism projects and services around the structure

Hotel, Convention Centre, Memorial Garden and Visitor Centre Building

54

IT/ITES

4.3

OVERVIEW

55

4.3.1

56

INDIA – IT/ITES SCENARIO

LARGE INDUSTRY

The Indian IT industry is a USD 88 billion industry with 80% of the revenues coming from exports. It has been growing at a CAGR of about 17% in last 5 years (FY07-FY11).

The Indian IT & ITeS sector employs over 2.5 million skilled people. Employment has been growing at a CAGR of about 20% in during FY07-FY11.

The per capita GDP contribution of IT-BPO employees is about 80 times that of a person employed in the agriculture sector

The IT-BPO industry currently contributes 14% to India‘s total exports

Between 2000 and 2011, the IT/ITeS sector received cumulative FDI of USD 107 billion

India is referred to as the back office of the world, with its strong cost advantages and skilled work force in providing ITeS.

GROWING INDUSTRY

IT / ITeS industry is expected to be USD 320 billion by 2020. The CAGR for the decade (2011-2020) is pegged at 15%

Domestic BPO market would increase to USD 2.5 billion by 2014

The Indian electronics turnover is expected to be USD 400 billion by 2020.

TRAI is targeting a 10-fold increase in broadband subscribers to 100 million by 2014 from existing 10.3 million

Industry has also started to impact rural areas – rural BPO organizations employed more than 5,000 people in FY2009

3140

46 5059

70

0

10

20

30

40

50

60

70

80

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 (e)

Revenue share by main components

IT

ITeS

Software Products andEngineering services

Hardware

IT/ITeS exports in USD billion

50%

20%

17%

13%

INDIA – IT/ITES SCENARIO

57

Industry characteristics

• Major segments: 1. IT Services, 2. ITeS – BPO, 3. Software products and Engineering Services, 4. Hardware

- Segment-size: IT services is the biggest in size (the revenue from IT services constitutes about 50% of the total industry revenues)

- Segment growth: Software products & Engineering services are fastest growing (CAGR – 27.5%) and slowest growing segment is Hardware (CAGR – 17%)

• Larger companies depend more on export and smaller ones more on domestic market – hence, larger companies would prefer an SEZ over other IT space (such as an IT Park) because of export incentives provided in SEZs.

• In the future, domestic market would be the growth driver for the IT industry – even the top 10 companies’ revenue dependency on domestic market would increase.

Source: NASSCOM

IT 50%

Services

ITeS -BPO. 20%

SoftwareProducts &

EngineeringServices

17%

Hardware13%

CAGR 21.8%CAGR 10.5%

CAGR 23.1%

CAGR 27.5%

Revenues of different components of IT/ITeS Industry. CAGR for FY05 to FY 10.

67.20%40.80%

25.20%

32.80%59.20%

74.80%

0%

20%

40%

60%

80%

100%

Top 1-10 Top 11-50 Top 51-100

Export and domestic % aggregate revenue oftop 100 software vendors (FY10)

Export Domestic

IT services form the largest portion of IT/ITeS revenues

58

INDIA – INTERNATIONAL FOCUS

Global sourcing from India of IT/ITeS accounts for 55% of the global market in offshore IT services and garnering 35% of the ITeS/BPO market

A majority of the Fortune 500 and Global 2000 corporations are sourcing IT/ITeS from India

India accounts for around 28 per cent of IT and BPO talent among 28 low-cost countries.

90-95% of Indian hardware production market is presently benefitting foreign players

Bilateral development cooperation

• Focused on over 25 priority countries in Middle East regions, Africa, Asia, Latin America, Europe, North America, etc.

• Given due recognition to India’s strength in IT sector, several countries in South America, Caribbean region, Africa and CIS regions are approaching Indian government for seeking technical assistance in the area of IT infrastructure, networking, capacity building, HRD and e-government etc.

• Countries with whom we have bi-lateral understanding

- Africa – Ghana, Mauritius, Tanzania, Madagascar, Namibia, Zambia, Uganda, Seychelles, Lesotho, Tunisia

- Asia – Myanmar, Vietnam, Thailand, Brunei, Lao PDR, Mongolia, Malaysia, Saudi Arabia, South Korea, Egypt, Israel, Sri Lanka, Japan

- CIS Countries – Uzbekistan, Tajikistan, Armenia, Belarus, Turkmenistan, Russia, Kazakhstan

- Europe - Republic of Bulgaria, France, EU

- Oceanic Countries – Australia and Fiji

- USA

1125

599

293

147

1150

645

309

153

0 200 400 600 800 1000 1200 1400

Engineering and R&D

Hardware

Packaged software

BPO

USD billion

Globalspending of

USD 1.7billion

20112010

Rest of the worldincluding Asia:

9% Americas 60%

Europe 31%

Importers of Indian IT/services

ITeS

Source: Department of Electronics and Information Technology, GoI

FUTURE OUTLOOK

59

Source: PwC analysis

The total IT / ITeS industry in India should be USD 230 billion to USD 320 billion compared to about USD 90 billion today

We have projected the Indian IT sector demand for four different scenarios as tabulated below.

Scenario Description Projected CAGR CAGR (Exports) (Domestic)

Scenario 1 If assumed that future growth will be same as last 5 years' CAGR (FY07-FY11) 17% 15%

Scenario 2 (Base case) If NASSCOM projections are used 13% 14%

Scenario 3 (Optimistic) If CAGR is 2% more than NASSCOM projection 15% 16%

Scenario 4 (Pessimistic) If CAGR is 2% less than NASSCOM projection 11% 12%

Projected

50

100

150

200

250

300

Export Revenue Projections in billion USD

-

20

40

60

80

100

120

Domestic Revenue Projections in billion USD

-

Scenario 2 Scenario 1 Scenario 3 Scenario 4

20072008

20092010

20112012

20132014

20152016

20172018

20192020

20072008

20092010

20112012

20132014

20152016

20172018

20192020

Scenario 4Scenario 2 Scenario 1 Scenario 3

60

FUTURE OUTLOOK

The total employment in IT / ITeS industry should reach 6.5 million to 9.5 million people compared to about 3 million people currently

We have projected the Indian IT sector employment figures for four different scenarios as tabulated below.

Scenario Description ProjectedYoY growth YoY growthrate (Exports) rate (Domestic)

Scenario 1 If assumed that growth CAGR will be same as past few years 28% 9%

Scenario 2 (Base case) If NASSCOM projections are used 12% 11%

Scenario 3 (Optimistic) If CAGR is 2% more than NASSCOM projection 14% 13%

Scenario 4 (Pessimistic) If CAGR is 2% less than NASSCOM projection 10% 9%

Projected


• Considering all the scenarios, the total employment in IT / ITeS industry in India should reach 6.5 million to 9.5 million people compared to about 3 million people currently

• A large portion of this employment is expected to occur in the ITeS (BPO/KPO) exports sector, followed by IT exports and then in the domestic market.

Expected changes in educational profile of the workforce - A large portion of the workforce are currently engineers and MCAs – over 80%. The proportion of graduates of science and other streams engaged in software development is expected to show significant increase from about 5% to 10% currently to about 15% to 20%. This would be driven by the following factors:• Demonstrated willingness by firms to train graduates and employ them in software development and functionality

testing.• Increasing desire by graduates from such stream to enter into attractive IT industry.• Pricing pressure and the need to remain cost competitive which would drive IT companies to develop a relatively low cost talent pool.

-50

100 150 200 250 300

Employment projections in IT exports


-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Employment projections in domestic IT market


No

of p

eopl

e (in

lakh

)

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20182019

2020

No

of p

eopl

e

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

61


1) Increase in Global IT Services spending:

The IT spending is expected to grow at 6.3% globally in the next 5-6 years. Given the growth in the spending base, as well as India being poised to increase its share from current levels of about 7% in the IT Services space, it is well poised to tap into the global IT spending. The market is expected to triple from US $ 500 billion today to US $ 1.5 to 1.7 trillion by 2022.

2) Growth in domestic spending:

As per the BRIC Report of Goldman Sachs, India is likely to be the only country among BRICs to clock GDP growth between 5% and 6% across all years till 2050. This would fuel growth in a host of downstream industries where IT adoption would be high, such as BFSI. Other areas which will drive domestic demand are increasing government spend on IT and e-governance. Industry adoption will be spearheaded in BFSI, telecom, retail, and healthcare.

3) The Indian domestic market is fast emerging as a globally significant market for services. Critical areas like Aerospace, Defence and e-Governance beckon Indian IT vendors and global giants eager to participate in the Indian growth story driven by domestic consumption and demand for services.

By 2020 new verticals (Public sector and Defence, Healthcare, Utilities, Printing and Publishing) and new geographies (BRIC) will account for 50-55% growth in the addressable market.

Post 2020, growth drivers in addition to traditional IT and BPO services for large companies (in the Fortune 500) in US and EU will arise from Small and Medium Businesses (SMBs), public sector, healthcare, media, and utilities. A significant portion of the growth would be driven by markets in BRIC countries, APAC, Japan, and Rest of the world.

1) Expansion of Indian operations of global companies

Companies are increasingly investing in developing their Indian operations as think-tanks to their global operations. Companies like GE have already been successful in developing rule changing healthcare solutions through their Indian R&D set up. This is enabling them to establish a presence in the cost conscious SE Asian market in the short run and remain globally relevant in the long run.

2) Policy incentives by states

The increasing participation of various states in India to tap into India’s IT/ITeS growth story has opened up entirely new possibilities for both, companies as well as the people at large. An attractive business centric taxation and benefits regime has seen a greater interest amongst the IT/ ITeS provider community as well as a more widespread distribution of wealth across the country. We expect this trend to continue in the near future.

Markets beyond US and EU, especially BRIC and APAC will be major growth areas in the future. These markets are expected to witness growth much more than the US and EU.

Expansion of IT and ITeS Industry to tier-2 and tier-3 cities is critical for achieving cost competitiveness and inclusive growth. And this expansion is expected looking at markets opening up further and supported by large investments in innovation, skill building, IP creation, and development of IT infrastructure in tier-2 and tier-3 cities.

GROWTH DRIVERS AND GROWTH AREAS

Key reasons for growth in demand

Key reasons why India will be able to capture the above demand Areas that will capture demand

Areas driving demand

Source: PwC analysiss

62

GUJARAT SCENARIO

4.3.2

63

Source: http://www.gnr.stpi.in, GIL; Gujarat Electronics & Software Industries Association (GESIA), Commissionerate of Information Technology

IT/ITES – GUJARAT SCENARIO

564681

1,268

1,035 1150

0

200

400

600

800

1000

1200

1400

2006-07 2007-08 2008-09 2009-10 2010-11

IT exports from Gujarat in Rs. crore

The stretch between Ahmedabad and Gandhinagar is now being developed as a knowledge corridor. Land has been allotted and several IT parks and centres of excellence are taking shape here.

More than 1,000 ICT & BPO companies are operational in Gujarat.

127 new companies are registered with the Commissionerate of Information Technology.

More than 1,250 companies are registered with Gujarat Electronics & Software Industries Association (GESIA)

IT units in Gujarat are spreading their markets from the US to other regions like Europe, Middle East and Africa

I n f ra s t ru c t u re ava i l a b l e at I nfoc i t y - Gandhinagar, GNFC Infotower - Ahmedabad, Astron IT Tech Park - Ahmedabad and another one is coming in Baroda

14 Special Economic Zones have beenplanned specifically for IT/ITeS – 7 are

notified and 7 have secured formal approval

Ahmedabad

Vadodara

Valsad

Gandhinagar

64

EXISTING IT INFRASTRUCTURE

Infocity in Gandhinagar

STPI Gandhinagar has its jurisdiction over entire Gujarat Province, and Union Territories

of Daman, Diu and Dadra-Nagar Haveli.

Gandhinagar

Ahmedabad

• Gujarat International Finance Tec-City (GIFT) - A one stop destination for global financial services industry spread over 500 acres between Gandinagar & Ahmedabad

• The Infocity is a global ITeS Outsourcing hub developed over 150 acres in Gandhinagar, provides world class infrastructure to BPO, KPO, Software development & other ITeS outsourcing companies.

• It has received an award for best conceptualized IT Park in India

• It acquires all benefits of STPI

• Companies present in Infocity are listed below

Multi-services Domestic EZS tariff area

250 acre 250 acre 7.5 mn. sq. m. FSI/FAR Green belt Building

height

3.6 50.59 mn. sq. m. 400 m.

Built space

Source: GIL; Gujarat Urban Development Corporation (GUDC); http://www.theinfocity.net

Accede Learning and Information P. Ltd

Arth Infosoft Vavni Services Pvt. Ltd. Nusun Genetics Research ltd You TELCOM

Echelon BPO private Ltd. Tata Communication Outsourcing Services P. Ltd Maxim India

Effective Tele Services Tata Consultancy Services BlazeNet Ltd. Navinya CADsoft Pvt. Ltd.

iServe Systems Pvt. Ltd. Cybage BSNL Vyapar Capital Market

Smruti Compubits C-Metric Solutions P. Ltd E Fact Geo global Private Ltd

Perfect IT Solutions Futures First E-Voice Teleservices Varologic Pvt. Ltd

Apcons Infotech, Stay In Front GIPL

65

Source: NASSCOM; Director of Technical Education, Gujarat State

IT/ITES – GUJARAT SCENARIO

About 50% of the IT/ITeS service providers are looking to move or expand to tier 2 cities for perceived benefits like availability of low-cost skilled resources, lower real estate cost and lower attrition.

Potential benefits of moving or expanding to Tier 2 cities from Tier 1 cities (among IT/ITeS service providers)

71%

57%

50%

36%

29%

21%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Availability skilled resources

of low-cost

Lower real estate costs

Lower attrition

Presence of SEZs

Regional language capabilities

CSR initiatives - like Rural BPO

Even with labour and real estate costs on the rise, the

locations in Gujarat (Ahmedabad, Gandhinagar, Vadodara

and Surat) offers cost benefits relative to

urrent hubs

66

KEY ENABLERS FOR SECTOR IN GUJARAT

Gujarat is fast emerging as an ideal destination for IT, ITeS

business to scale new heights

Today 90% of IT services works in India take place from major six destinations – Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Pune, In the coming year I clearly envision 40% of IT services work happening outside of these six cities. This gives Ahmedabad a major opportunity to be become a major IT destination in the future in the ICT space. With an integrated IT Policy, initiatives like GSWAN, e-governance and GIFT, Gujarat has immense potential to become the next IT hub – Mr. Som Mittal, President, NASSCOM

Growth in IT space in Gujarat is expected at CAGR of 15% over the next 10 years – Mr. Som Mittal

RobustPhysical,

Social andindustrial

infrastructure

Business friendly

governance and investor friendly IT

Policy &initiatives

Land Bankavailability

and relativelylower real

estate

Skilled humanresource

advantage and lower cost of manpower.

Lowest BPOattrition rate

Growing ITSEZs andperipheral

industries ofIT

Lowest start -up and operational

costs

Gujarat an ideal destination

for IT / ITeS

evolving as

67

Source: The Times of India

GUJARAT – IT EDUCATION

-

20,000

40,000

60,000

Diploma Bachelorsdegree

Mastersdegree

No. of seats available in engineeringcolleges in Gujarat during 2010-11

Self Finance

Grant in aid

Government

Zone Colleges IT seats

Ahmedabad 8 600

Gandhinagar 16 1,080

Rajkot 12 660

Surat 4 225

V.V. Nagar 11 840

Total 51 3,405

The All India Council of Technical Education (AICTE) has given approval to 9,600 additional seats in the

engineering colleges in Gujarat from 2012

• Gujarat has 82 MCA colleges with 6,670 seats (2012). There is an increase of nearly 1000 seats in intake capacity from 5,716 seats in 2011

68

POLICY INITIATIVES AND INTERVENTIONS PLANNED

4.3.3

69

Source: Department of Electronics and Information Technology, MoC&IT, GoI

GROWTH DRIVERS POLICY SUPPORT BY GOVERNMENT OF INDIA

Continuous liberalization and reform policies for export promotion and Tax/duty incentives

• Software Technology Parks of India (STPIs) was set up as an Autonomous Society in 1991 for the promotion of software exports from the country. There are currently 51 STPI centres where apart from exemption from customs duty available for capital goods, there are also exemptions from service tax, excise duty, and rebate for payment of Central Sales Tax.

• Enacted comprehensive legislation (IT Act 2000) which covers copyright protection and cyber laws Copyright and Intellectual Property Rights (IPR) of computer software covered under the Copyright Law.

• Special Economic Zones (2005) offer a wide range of duty concessions and exemptions for IT exports

• National eGovernance Programmes (NeGP) approved in 2006, comprising of 27 Mission Mode Projects (MMPs) and 8 components

• Policy formulated for Information Technology Investment Regions (ITIRs) in 2007. These would be endowed with excellent infrastructure to reap the benefits of co-siting, networking and greater efficiency through use of common infrastructure and support services.

• Task Force to Stimulate Growth was set up in 2009

• Constitution of the Technical Advisory Group for Unique Projects (TAGUP) in 2010, under the chairmanship of Nandan Nilekani, to develop IT infrastructure

• National Policy on Electronics was released in 2011 aiming at achieving a turnover of USD 400 Billion by 2020 involving investment of about USD 100 billion and employment to around 28 million by 2020 and to set up over 200 Electronic Manufacturing clusters.

• National Policy on IT 2011 was drafted in 2011 for encouraging development of IT/ITeS sector in the country.

• National Telecom Policy 2011 – to provide affordable and reliable broadband on demand by the year 2015, to provide high speed and quality broadband access to all village panchayats by 2014 and to achieve 175 million broadband connections by 2017 and 600 million by 2020.

70

GROWTH DRIVERS-NATIONAL POLICY ON IT 2011

AIMs at MARKING A CHANGE

•Industry from USD 88 Billion at present to USD 300 Billion by 2020

• To expand exports from USD 59 Billion at present to USD 200 Billion by 2020.

• To create a pool of 10 million additional skilled manpower in ICT.

• To make at least one individual in every household e-literate.

• To provide fiscal benefits to SMEs and start-up ventures in key industrial verticals

• To gain big global mkt share in cloud-based services & mobile-based value-added services

• To leverage ICT for key Social Sector initiatives

• To strengthen the Regulatory and Security Framework for ensuring a Secure Cyberspace ecosystem

• To attract investments in IT in Tier-II & III cities

To increase revenues of IT and ITeS

Domestic Exports

• Strategies formulated in the Policy to achieve targets

• Creating ecosystem for a globally competitive IT/ITeS Industry

• Human Resource Development

• Promotion of Innovation and R&D in IT Sector

• Enhancing productivity and competitiveness in key sectors through ICT

• Creating an ecosystem for Internet and mobile driven Service Industry

• Enabling Service Delivery through e-Governance

• Mobile based Value added Services

• Development of Language Technologies

• GIS based IT Services

• Security of Cyber Space


100

200

Targetedrevenue inUSD billion

by 2020 59

Currentrevenue in USD billion

in 2011

29

Enabling ITPolicy 2011

71

Source: The Times of India

FOSTERING GROWTH OF IT/ITESPOLICY SUPPORT BY GOVERNMENT OF GUJARAT

Active promotion and strengthening of educational infrastructure in the state to supply skilled manpower

•companies

• Set up a certification mechanism which will prescribe certain tests to ascertain candidates’ skills in different areas suitable for employment in IT sector.

GoG promotes training institutes which provide specialized training in domain specific skills required by ITeS

Promotion of KPO based industries

Incentives

• On case to case basis, a special package of incentives will be offered for mega IT projects

• Financial Assistance to high-tech park will be administered

The State Government has constituted an IT Task Force for the development IT Sector in Gujarat

Gujarat has crossed many milestones in its e-Governance endeavors

IT Policy of Gujarat – key features

• To attract investments in IT sector so as to achieve a turnover of Rs.5000 crore.

• To promote and develop employment opportunities in the IT sector and provide direct employment to 200,000 persons

• Identify suitable government land and reserve those for IT industry / IT Parks.

• Assist IT industry/infrastructure units in acquiring land under the Land Acquisition Act

• Advise the UDAs/ Municipal Corporations to develop town planning schemes in such a manner that land parcels are made available for development of IT Industry / IT parks.

• State shall facilitate grant of SEZ status to IT Industry / IT Parks subject to the provision of SEZ Act/rules.

72

IT/ITES INITIATIVES IN GUJARAT


The Gujarat State Wide Area Network (GSWAN) connects the State capital with all its 25 districts and 225 block headquarters. It is Asia’s largest Internet Protocol-based network.

The National Association of Software and Service Companies or Nasscom has formed Regional Council for Gujarat with a view to develop the information and communication technology sector in the state

There is a steep rise in the number of technical institutions,larger number of technical graduates than 10 years ago. There are more than 100engineering colleges

GESIA and GIL have jointly initiated the development of the comprehensive Directory of Gujarat’s ICT Industry. The Gujarat IT Directory would serve as the SINGLE WINDOW reference point to anyone requiring information regarding ICT sector of Gujarat.

GIFT is conceptualized as thefirst Financial Services SEZ to be developed as a global financial hub. With its strategic location, state of the art infrastructure, green and intelligent buildings it is poised to become a globally benchmarked International Finance Centre providing exciting opportunities for financial services and IT/ITeS sectoral companies.

• GoG rolled out at least 50 citizen-centric services for online interactions with people,.

• Started a special incentive package for semiconductor industry which is unique in India in terms of incentives.

• Formed a IT Programme Implementation Committee in Department of Science and Technology

The total investment planned in the shelf of projects in IT sector is Rs. 4,289 crore by 2020

73

Taluka level SWAGAT was launched 2 years ago. GoG has initiated rural edition of SWAGAT, called 'Gram SWAGAT' in villages from 01 February 2011.

IT/ITES INITIATIVES IN GUJARAT

After E-Gram project for providing basic IT connectivity to all the district, taluka and village panchayats, the GoG is now all set to launch a comprehensive e-panchayat project in order to createa complete database and monitor all the activities taken up in the rural areas.

Gujarat has received the United Nations Public Service Award (UNPSA), 2010, for its State Wide Attention on Grievances withApplication of Technology (SWAGAT), in the category 'Improving Transparency,Accountability and Responsiveness in Public Service'.

The Government of Gujarat has been triple awardedin the National e-governanceawards this year given by the Government of India.

The official portal of Hon'ble CM of Gujarat(www.narendramodi.in) got the prestigious eGov 2.0 award for the 'Most innovative use of social Media'. State Portal(www.gujaratindia.com) too won an award for the 'Most user friendly portal

74



4.3.4

75


• During the Vibrant Gujarat Investment Summit 2011, 115 MoUs were signed for the IT/ITeS sector as against 20 MoUs in the 2009 Summit.

• The proposed investment amounted to Rs. 68,565 crore and could provide employment to 320,000 people.

• Foreign Investments proposed in the sector by USA were about Rs. 5300 crore employing 14000 people.

46507

142992

68,565

320,000

0

50000

100000

150000

200000

250000

300000

350000

Investment in Rs. crore Employment

2009 VG Summit 2011 VG Summit

Emergency services

Cloud based services and solutions

SEZs

Hardware manufacturing

Urban and rural planning – using GIS, remote sensing

Knowledge Process Outsourcing

Data / Computer Centres

Execution of E-Governance initiatives

IT based education and trainings

76

GUJARAT – IT GIANTS KEEN TO INVEST IN GUJARAT

Source: Department of Science & Technology (DST)

Patni Computer System Ltd. (was India's sixth-largest software exporter before the acquisition) now iGate Patni, has been present in the state for many years. It now provides effective solutions to over 350 Fortune 1000 clients globally across verticals, clocking a revenue of USD1 billion.. It started with a strength of400 people and now has a diversified,well-trained and motivated talent poolof 26000 people which works cohesivelyto deliver solutions to clients across the Americas, EMEA and Asia-Pacific.

Gujarat serves as an inspiration for the entire country. One of India’s most industrialized states, Gujarat’s per capita GDP is almost twice the national average. The time is now ripe for the state to emerge as the country’s most vibrant ICT Hub

Mr. Kishore Chitale, Head-India Domestic Business,

Capgemini India

0 500 1000 1500 2000 2500

2010

2013 (e)

No: of employees of Gujarat - CEO, Mr, Harsh Chitale

HCL Infosystems in

Focus growth areas for Gujarat will be semiconductors/IT

Hardware, BPO/KPO, IT/ITeS services

Infosys and Mahindra Satyam expressed interested in setting up facilities in Gujarat. Infosys

BPO is also considering coming into Gujarat

77

ADVANTAGE GUJARAT

5

78

GUJARAT – THE STATE WITH STRATEGIC LOCATION

79

GUJARAT – INDIA’S ECONOMIC POWERHOUSE

80

GUJARAT – ROBUST INFRASTRUCTURE

81

GUJARAT – STRONG URBAN, SOCIAL AND EDUCATIONAL INFRASTRUCTURE

82

GUJARAT – LAND OF INNOVATIVE HUMAN CAPITAL

GUJARAT – NEW PARADIGM FOR INDUSTRIAL GROWTH

The current phase – involving Integrated development of large areas like SIRs,

PCPIR and DMIC – is poised to transform the industrial scenario in the state

Phase of industrial development

Leve

l of I

nteg

ratio

n

83 productclusters

202 IndustrialEstates

SEZs• Multi product• Chemical• Textile• Pharma• IT / ITeS• Electronics• Engineering• Biotech• Gems & Jewellery

Integrated large areadevelopments

• Special Investment Regions (>100 sq. km.) and Industrial Areas (50-100 sq. km.)

• CorridorDelhi Mumbai Industrial

• GIDC Industrial Estates• Petroleum, Chemicals and Petrochemicals Investment Region• Knowledge corridor• Logistics parks• Theme towns

Phase I Phase II Phase III Phase IV

83

84

GUJARAT - PROACTIVE GOVERNANCE

Source: Socio-Economic Review Gujarat, 2011-12, Department of Economic affairs, March 2009

85

OPPORTUNITIES TO INVEST IN GUJARAT

86

OVERALL FRAMEWORK FOR DOING BUSINESS

Source: TERI, GEDA

DOING BUSINESS IN GUJARAT

87

6

88

TAX FRAMEWORK

89

EXCHANGE CONTROL REGIME

90

FRAMEWORK FOR SETTING UP INDUSTRY IN GUJARAT

91

7KEY GOVERNMENT AGENCIES

92

INDUSTRIAL PROMOTION FACILITATORS

93

KEY CONTACT PERSONS

Department of Science & TechnologyShri Ravi Saxena, IAS,

Additional Chief SecretaryPhone: 91-79-23259999

E-mail: [email protected]

Gujarat Informatics Limited Shri Neeta Shah - Director (e-Governance and

Center of Excellence) Phone: 91-79-23256022 Fax: 91-79-23238925

Email: [email protected]

Mr. Vipul Mitra Principal Secretary (Tourism, Pilgrimage and

Devasthan Management)Industries and Mines Department

Phone: +91 79 23250583, Fax: +91 79 23250587www.gujarattourism.com

Mr. Ramakant JhaDirector,

Gujarat International Finance Tec City Co. Ltd. Phone: +91 79-30018300/27912511

Fax: +91 79-27912516www.giftgujarat.in

Mr. Sanjay Kaul, IASManaging Director,

Tourism Corporation of Gujarat Ltd Phone/Fax: +91 79 [email protected]

www.gujarattourism.com

Mr. Jagdish ShahAssistant General ManagerIndustrial Extension Bureau

Phone: +91 79 [email protected]

www.indextb.com

ndHead Office: Block No. 18, 2 Floor, Udyog Bhavan, GH-4, Sector 11, Gandhinagar 382 010 Gujarat, INDIA Phone: +91-79-23250492/93 Fax: +91-79-23250490

www.indextb.com, www.ic.gujarat.gov.in E-mail: [email protected] Regional Office: A-6, State Emporia Building, Baba Kharak Singh Marg, New Delhi 110 001, INDIA

Telefax: 011-23747002, 23360049 E-mail: [email protected]

For more details and online registration, log on to www.vibrantgujarat.com

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