EU – India Economic Relations in Perspective Vision for 2020 By- Munish Dayal President, Business Banking

YES Bank The Only “Greenfield” private bank set up in the last decade Professional Entrepreneurship ‘Indian’ bank catering to “Emerging India” Knowledge driven strategy Focus on SME Banking Unique One Bank Model – Integrated Product Offering New generation Technology One of 20 most wired companies Nasscom award for Innovations in IT

India has strong Macro Fundamentals - Current Indian economy in a resilient mode in terms of GDP growth… Growth Oriented GDP (%)1 Source: Indiastat.com Increasing International Trade3 Increasing share of services in GDP2 Strong Forex Reserves4 Source: Central Statistical Organisation …along with rising forex rate and reserves …and has an increasing share in international trade With Services Sector gaining importance….

A change is taking place in the regulatory environment… FDI allowed in almost all sectors Import duties rationalised Single window clearance Expediting clearances through escalatory mechanisms Greater transparency brought about through e- governance Days taken to start business Level of complexity According to Transparency International’s ’04 Corruption Perception Index India’s score is 2.8 out of 10. India ranks 90 out of 145 on the Transparency International Corruption Perceptions. To do business in India….

The transformation… Slow rate of growth Bureaucratic Protected and slow Small consumer markets Weak infrastructure One of the world’s fastest growing economies Reasonably proactive Opening up of sectors for investment Promising consumer markets Infrastructure needs improvement Yesterday Today India is the world’s largest democracy

India today… Has world-class recognition in IT, bio-technology and space Is the largest English speaking nation in the world Has the world’s largest single-location forging facility Has the second largest petrochemical facility in the world Is the lowest cost steel producer in the world Is the largest 2 wheeler manufacturer in the world Is the second largest tractor manufacturer in the world Is the fifth largest commercial vehicle manufacturer in the world Is among six countries that launch satellites and does so even for Germany, Belgium, South Korea, Singapore and EU countries Is one of the few countries that has built its own Supercomputer

India and the EU: Strategic Economic Partners

India EU: Export Import Trends Trends in Bilateral Trade and Investment: India and the EU In 2005, bilateral trade in goods grew by an impressive 20% On average, between 2001 and 2005, this growth has been 11% EU is India’s largest trading partner Accounts for nearly 1/5 th of India’s external trade India is EU’s 10th main partner Accounts for 1.8% of trade Trade in Commercial Services has also increased substantially 10% average annual growth EU is India’s largest source of Foreign Direct Investment Amounting to Euro 1100 million in 2004 India’s inflows into EU: Euro 600 million in 2003

India EU: Export Import Trends (contd…) Trade with India has been increasing both in terms of exports and imports: Balance went from M Euro to 2199 M Euro Trade with EU has been increasing : However Imports exceeded Exports by almost 5500 M Euro in 2005 resulting in a negative balance

India EU: Export Import Trends (contd…) India’s share in total EU imports though miniscule (at 1.6% in 2005) has been increasing EU’s share in Indian imports is substantial at 21.3 % in 2005 India’s share in total EU exports though miniscule (at 2.0% in 2005) showed a 0.5 % increase from EU’s share in Indian Exports is substantial at 22% in 2005 The EU : Major Indian Trade Partner

Primary Areas and Products of Trade and Investment Account for over 50% of EU imports from India but share of this in EU’s total imports is less than 8% India’s share in EU imports is miniscule. Potential needs to be appropriately harnessed through the creation of strategic economic partnerships

Primary Areas and Products of Trade and Investment Account for over 62% of EU exports to India The potential of India in the EU Imports of Agriculture needs to be appropriately harnessed through the creation of strategic economic partnerships

Harnessing the Potential

India’s share in EU imports though increasing is miniscule India’s Offering…Trade Potential India’s share in EU imports stood at 1.6% in 2005, registering a slight increase from 1.4% in 2001

Public Private Partnerships

Public Private Partnership (PPP) Government objective Maximize Service to the common man at an affordable price with minimum use of government funds Best achieved through Public Private Partnerships in provision of infrastructure and enabling services Three Models available for public private partnership Model 1 Private Sector and Government as partners invest with an objective to earn returns from the investment Model 2 Private Sector invests - Government provides soft funds to the project to reduce user charges and capital investments Model 3 Private Sector Invests -Government rationalizes the user charges

Offerings in a PPP Environment Role of the Government 1. Create an enabling and regulatory framework for the private sector participation 2. Provide land (or other strategic resource) along with some seed capital and leverage the same by inviting private sector 3. Monitor and regulate the performance of the Private sector participants to ensure service levels PSP Options 1. Service Contract 2. Management Contract 3. Lease 4. Concession 5. BOT/BOO 6. Divestiture PPP Models 1: Soft Fund Model 2 : User Price Rationalization Model

The Way Forward

Increasing trade potential awareness in India and the EU Strengthening trade arrangements Promoting dialogue and commercial arrangements Developing Strategic Economic Partnerships Joint Ventures Equity Participation in Agri Projects Strengthening Infrastructure; such as Trade Links Air Routes

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