1. Indian Economy – Opportunities Unlimited

2. Fastest Growing Free Market Democracy

3. Contribution of Services - increased from 49 to 54 percent
India: Ranks Among the Top-15 Countries in terms of GDP at constant prices
Indian economy has witnessed an unprecedented growth….
Sound performance of each industry segment is leading to the overall robust performance of Indian economy
Indian economy is the 4th largest in terms of PPP – USD 3.9 trillion in 2006
Contribution of Services - increased from 49 to 54 percent
Registered highest second quarter growth since i.e. 9.2 percent
Indian GDP has registered one of the fastest growth rates across the globe
India ranks 4th in terms of PPP across the globe
Indian economy is expected to be 3rd largest by 2050
India is the only economy, which is expected to surge ahead at the growth rate significantly above 5 percent during the period
India will be among top three nations contributing towards the global growth in next 15 years (12.2 percent) following only China and USA
Booming Indian markets providing impetus to the economic growth

4. India: Robust Economic Platform
Ever rising Forex reserves providing adequate cushion against any possibility of currency crisis or monetary instability
India’s enhanced economic performance has been major contributor towards increased Forex reserves
External debt-to-GDP ratio has shown remarkable improvement…..
India’s Forex reserves are in excess of external debt……
India has the fifth largest FOREX reserves in developing countries across the globe
Indian Forex reserves have increased at a CAGR of 24 percent over the last 15 years
The decreasing external debt to GDP ratio indicates that India has a sound economic platform
…..at present level of Forex reserves, the country has adequate cover for 12 months of imports

5. Return on the Investments in India (2006 Q1)
India: Attractive Investment Destination
India is ranked second in AT Kearney FDI confidence index
With the better performance on PE ratio and ROE, Indian markets have attracted large investments
200 percent Increase
Return on the Investments in India (2006 Q1)
MARKET
PE Ratio
P/B Ratio
RoE (%)
India
16.1
4.53 22
China
10.62
2.06 17
Indonesia
10.26
3.09 NA
Korea
9.85
1.84 16
Malaysia
13.21
1.82
Taiwan
12.17 2 11
Thailand
9.84
2.32 23
EM Asia
11.19
2.12 15
Latin America
9.35
2.46 18
EM Europe
10.9
2.39
Telecom and Electronics topped the list of inward FDI
FDI inflow for the period April – December 2006 witnessed a growth of 151 percent over the same last year
FII registered with SEBI increased from 540 in 2004 to 920 in June 2006
India is the second most favoured destination for FDI after China
Electrical equipments and telecom sector are the largest recipient of the FDI
Foreign Direct Investment in the country has grown three-fold to $16 billion in , encouraging the government to set an ambitious target of $25 billion for this year. "The FDI in the previous fiscal has touched $16 billion as against $5.5 billion in
This fiscal, FDI will touch 25 billion dollars, driven primarily by services, telecom manufacturing, auto and auto components
Mauritius has been the largest contributor towards FDI into India…..

6. India: Surging Exports
Services sector has been a major contributor to increased exports from India.
The quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market their products and services
The acceptance of Indian products along with the cost advantage has provided an edge to Indian companies.
The Indian companies have chalked out extensive plans to increase their presence abroad
USA and UK are major countries that have large share of bilateral trade with India.
Asia and Oceania are the major geographic segments that have contributed towards the increasing bilateral trade with India
Petroleum products and metals have been the principal product category by India
It is expected that exports from India will increase to a level of USD 300 billion in next 10 years
It is expected that 8 million new jobs will be created in next 5 years in exports
Petroleum products are the contributor towards the growing imports by India
Imports of products by India mainly includes petroleum products and minerals

7. 2006 Global Retail Development Index (GRDI)
India: Pacing Ahead to Emerge as the Major Economy in the Globe
India has been ranked superior to other major countries by many prominent surveys…
2006 Global Retail Development Index (GRDI)
AT Kearney placed India among the top three in its FDI confidence index…
… retail market along with services sector has been attracting lot of interest from the major players
India is expected to outperform its rivals in the BRIC, in terms of GDP growth rates from 2015 onwards…
India is among the top five major developing economies of the world
Various parameters / indexes substantiate this fact, leading to increased inflow of investments in India

8. India: Vibrant Economy Driving M&A Activities
Growth Drivers:
Globalization of competition
Concentration of companies to achieve economies of scale
Lower interest rates and vibrant global markets
Cash Reserves with Corporate
Trends:
Ratio of Size of acquisition to the size of acquirer has grown from 10 percent in 2004 to 25 percent in 2006.
Cross-border deals are growing faster than domestic
Private Equity houses have funded projects as well as done some acquisitions in India.
SECTOR
USD (Mn)
Automotive
518
Manufacturing
933
Banking and Financial
1375
Media
630
Chemicals & Plastics
1133
Oil & Gas
384
Electrical & Electronics
896
Pharma & biotech
2520
Energy
1484
Telecom
2198
FMCG, Food and Beverages
1327
Others
4006
IT & ITES
2903
Total
20305
In 2006, there were a total of 480 M&A deals and 302 private equity ones…
… Average deal size close to USD 36 million…
Vibrant economy and surplus of funds are causing increased M&A activity in India
The number of deals have increased considerably as well as the average value of deals
Telecom, electrical equipments, auto are major sector involved in the M&A activity in India
…Contribution of private equity deals to total number of deals have increased from nearly 9 percent in 2004 to 28 percent in 2006

9. Major M&A Deals Undertaken Abroad by India Inc.
Tata Steel buys Corus Plc.
USD 12.1 billion
Hindalco acquired Novelis Inc.
USD 6 billion
Essar Steel acquired Algoma Steel
USD 1.58 billion
Videocon Industries acquired Daewoo Electronics Corporation Limited
USD 730 million
Indian FDI abroad has increased 6 times during the period
Major destination for the Indian investments are the US, Russia, Mauritius, the UK, Sudan
Indian companies have also been very active in terms of M&A deals abroad. The companies have not only focussed on SMEs in the other countries but also undertaken M&A deals with well established corporations.
Easy availability of funds and global aspirations are the major drivers for Indian companies to undertake M&A deals abroad
Tata Tea has acquired 30-percent stake in the US based Energy Brands Inc.
USD 677 million

10. Major M&A and Investments Announcements in India
Vodafone buys Hutch
USD 11 billion
Plans to spend on its development operations in India over the next four years
USD 1.7 billion
Plans investment in private equity, real estate, and private wealth management
USD 1 billion
Aditya Birla Group increased its stake in Idea Cellular by buying percent stake
USD 0.98 billion
These deals are only indicative of the scenario in India.
Increased M&A deals leads to consolidation in market as well as facilitates in delivering international quality products and services to India.
The transfer of technology has also increased through high M&A deals in India
Renault, Nissan and Mahindra & Mahindra to set up Greenfield automobile plant in Chennai.
USD billion
Mylan Laboratories acquired a majority stake in Matrix Laboratories
USD 0.74 billion

11. India: Astounding Demographics
Growth in the higher income categories of India’s population, has lead to a burgeoning affluent section of society, which has significant level of purchasing power
DEMOGRAPHIC TRANSFORMATION OF INDIA
Annual Household Income
(in USD) 2 9 48
221
726 9 17 74
285
710 20 33
120
404
613
Rich (Above )
High Income ( )
(Million Population)
Consuming class ( )
Working class ( )
Needy (Below 10200)
(E)
* In PPP terms
By 2009, India will have 1.1 million individuals with a wealth of USD 100,000
Increasing per-capita income coupled with emerging middle class has provided necessary impetus to the consumerism in India
Increased market potential and better buying capacity are the major drivers pulling major MNCs to India and provide quality products and services

12. India: Increasing Working Population
Growth in Global Working Age Population (15-64)
Stock Position
2005
Addition to working age population by 2010
World ,168
India
Africa
China
South East Asia
Latin America
Southern Asia
USA
Europe
Japan
In Million
Increased working population and quality of the workforce enable the companies to increase operations in India
Buoyant employment conditions are leading to the increased disposable income thus making large market potential
Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as a clear winner and by 2050 it will have the largest working age population.

13. Growth Expected in India
To sustain the GDP growth of more than 8 percent India requires an investments of USD 1.5 trillion in the next five years
2006
2008
2010
GDP – USD 900 billion
GDP growth rate – 9%
Services Contribution – %
FDI limit is expected to be 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.
Balance of Trade – Should be positive with increased level of exports as compared with imports
Investment goal – USD 370 billion
GDP – USD 750 billion
GDP growth rate – 9.5%
Services Contribution – 60 %
FDI limit is expected to be close to 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.
Balance of Trade – Should increase with surging exports as compared with imports
Investment goal – USD 305 billion
GDP – USD 590 billion
GDP growth rate – 9 %
Services Contribution – 54 %
FDI limit not 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.
Balance of Trade – USD (46.2) billion
Investment goal – USD 250 billion
Increasing FDI confidence, supportive government policies, improving regulatory environment, etc. offers good platform for growth of economy

14. India’s Sunrise Sectors1
Infrastructure 2
Automobile 3
Telecom 4
Semiconductor 5
Aviation 6
Defense

15. India to Gain in terms of Economic Prosperity due to Continued Government Initiatives in Infrastructure Sector
Railways has initiated process to develop dedicated freight corridor…
‘Golden Quadrilateral’, ‘North-South’ and ‘East-West’ corridors are the major road infrastructure being undertaken by the government. 96 percent work of Golden Quadrilateral has been completed
Project ‘Sethusamundram’, which involves dredging of the Palk Strait to facilitate maritime trade through it
Project ‘Sagarmala’ – a USD 22 billion project for the modernisation of major and minor ports
Increase in traffic is expected to amount to percent for passenger traffic and percent for cargo traffic…
The government has initiated the process of up-gradation and modernisation of national airports worth USD 9 billion by 2010.
It has also initiated process of modernisation of other non-metro airports (more than 40 cities)
Private sector can set up coal, gas or liquid based thermal projects, hydel projects and wind or solar projects of any size. Mega power projects permitted in India.
Foreign equity participation upto 100 percent is allowed in the power sector through automatic route.
… Government of India spends approximately USD 4 billion annually on road development
Government has identified infrastructure as a priority sector to sustain the momentum of the GDP growth rate. The investment goal for infrastructure sector are:
Power – USD 140 billion by 2010
Roads – USD 25 to 30 billion by 2010
Ports – USD 8 to 10 billion by 2010
Civil Aviation – USD 15 to 17 billion by 2010
Telecom – USD 22 billion by 2010
There is increasing competition between full services carriers and low cost carriers…..
Railways dedicated freight corridors in the Western and Eastern high-density routes. The investment is expected to be about Rs. 22,000 crore (US $ 5 bn)
100% FDI under the automatic route is permitted for all road development projects 100% income tax exemption for a period of 10 years
India has extensive road network of 3.3 million kms. Highways constitute 2 percent of the total network but share 40 percent traffic load
India has 13 major ports and 187 minor ports. The total traffic handled by the ports was million tonnes during the period April 2006-January 2007
There are 125 airports and out of these 11 are designated international airports. Indian government has initiated process of modernization of Delhi airport infrastructure
India has 128,581 MW of installed power generation capacity. Coal plants constitute 57 percent of the total installed capacity

16. India’s Sunrise Sector: Automobile
Largest two wheeler manufacturer….
……Fifth largest CV manufacturer in the world
Domestic production of auto components has increased to USD 10 billion in , a jump of 17 percent…
Exports have grown by 30 percent to USD 1.8 billion
The Indian automobile sector generates a revenue of USD 34 billion per year. Its contribution to GDP is around 3-4 percent.
Production and domestic sales figures for commercial vehicles are growing at a rate of approximately 24 percent.
Production and domestic sales of two wheelers are growing at a rate of approximately 15 and 14 percent respectively.
Production
Domestic Sales

17. India’s Sunrise Sector: Telecom
The Indian mobile market is witnessing strong growth and is slated to become the third largest in the world behind US and China in the next two to three years
India ranks among the top 10 countries of the world with regards to its telecom network.
Tele-density has more than doubled in the last 3 years.
India has 40.3 million wireline subscribers and million wireless (mobile and WLL-F) subscribers.
Mobile communication and internet penetration are adding to the momentum of telecommunication sector

18. India’s Sunrise Sector: Semiconductor
India has developed strong competence in design side of semiconductor industry….
Many international players such as Intel, AMD, etc have established their R&D centres in India, which assists them to develop novel products at fast pace
Captive semiconductor units in India contribute 62 percent to the total revenues being generated by the industry….
Indian companies have chalked out plans to establish fabrication units thus catering to the overall demand from designing to manufacturing phase
India has approximately 125 companies operating in the semiconductor domain
Over 135 aircraft have been added in the last two years alone. By 2010, India's fleet strength will stand at 500–550.
Airbus pegs India’s demand for airliners at 1100 aircraft, worth US$ 105 billion, over the next 20 years. According to Civil Aviation Minister Praful Patel, the country will need 1,500 to 2,000 passenger planes in 10 years, up from 260 now.

19. Investment Opportunities in Indian Aviation Industry
Activities in the Indian Aviation Industry
Global aviation major Boeing plans to invest approximately USD 280 million to establish airplane maintenance facility and a pilot training centre. The company estimates that Indian market will require 470 airplanes worth USD 35 billion by 2025.
GMR has undertaken project for modernisation of Delhi airport. The project worth is USD 1.94 billion.
Airbus plans to invest USD 1 billion over a period of 10 years to establish training centres, maintenance, repair and overhauling (MRO) centre, and engineering and design centre in India.
EADS plans to invest USD 2.57 billion over a period of next 15 years to establish technology centre in India.
Indian carriers have placed orders for approximately 480 aircrafts to be delivered by State operated carriers – Indian airlines and Air India have placed orders worth USD 8 billion for approximately 100 aircrafts to modernise its fleet.
The demand for corporate jets has increased and it is estimated that number of corporate jets in India will be 300 in next 18 months.
Canadian avionic firm – CAE plans to expand its operations in India. It plans to aggressively market its simulation and modelling technologies to civil and military aviation customers.
Carrier
Proposed Requirement
Air India
50 Aircrafts
Indian Airlines
43 Aircrafts
Jet Airways
30 Aircrafts
Air Deccan
60 Aircrafts
Kingfisher
48 Aircrafts
Spicejet
20 Aircrafts
Indigo
100 Aircrafts
GoAir
15 Aircrafts
Paramount
5 Aircrafts
Magic Air
10 Aircrafts

20. Why India? – Quote Unquote
India is among the three most attractive FDI destinations in the world
India has among the highest returns on foreign investment
US Department of Commerce
A T Kearney FDI Confidence Index 2005
By 2032, India will be among the three largest economies in the world
BRIC Report Goldman Sachs, October 2003
“India is a developed country as far as intellectual capital is concerned.”
“We came to India for the costs, stayed for the quality and are now investing for innovation.”
Jack Welch General Electric
- Dan Scheinman, Cisco System Inc. as told to Business Week, August 2005

21. Contact IBEF at j.bhuyan@ciionline.org
For detailed information on India, visit the IBEF website:
Contact IBEF at

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