Embed Size (px)
Citation preview
1
The India Advantage after the
Comprehensive Economic Partnership Agreement
At KCCI12 March 2010
H.E. Mr. Skand R. TayalAmbassador of India
2
• President Lee Myung-bak’s State Visit to India on 24-27 January 2010.
• Strategic Partnership. • Comprehensive Economic Partnership Agreement.
3
India - FactsArea 3.3 million sq. km.
Population 1.1 billion
GDP (PPP) $5.16 trillion (2008 est.)
$1.3 trillion (nominal)
{11th (nominal); 3rd (PPP)}
GDP growth 6.7% (2009)
7.8% (2010) projected
GDP per capita $1021 (nominal); $4543 (PPP)
GDP by sector Agriculture: 19.9%
Industry: 19.3%
Services: 60.7% (2006 est.)
4
The Growth Story
India GDP 2007-08:US $ 1.16 trillion
555
India’s Decadal GDP Growth rate
Source: Handbook of Statistics on Indian Economy, Reserve Bank of India
3.683.29 3.45
5.17
6.05
7.89
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
1950-51 to1959-60
1960-61 to1969-70
1970-71 to1979-80
1980-81 to1989-90
1990-91 to1999-00
2000-01 to2008-09
% GDP Growth
6
INDIAN ECONOMYINDIAN ECONOMY
Source : Hindu Business Line, February 13th, 2010
39% jump in capital goods augurs well for investments; GDP growth likely to top 7.2%.
INDUSTRY ROLLS AT 16.8 PER CENT IN DECEMBER 2009
7
Macro-economic stability
Forex Reserves (USD bn)
5.8 6.420 22
3242
75
141
192
303
0
50
100
150
200
250
FY
91
FY
92
FY
93
FY
94
FY
95
FY
96
FY
97
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08 (March 7 08
Steady increase
in forex
reserves now
standing at
$ 290 Billion.
13.7
4.45.4
0
2
4
6
8
10
12
14
16
FY
91
FY
92
FY
93
FY
94
FY
95
FY
96
FY
97
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
Moderate
inflation
over last few
years
Trends in Inflation- WPI (%YoY)
8Source: Reserve Bank of India
Trend in Peak Custom Duty
ASEAN levels committed to be reached by 2010
(%)
150
110
85
65
5045
4035
30
2012.5 10
0
20
40
60
80
100
120
140
160
FY
91
FY
92
FY
93
FY
94
FY
95
FY
96
FY
97
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
Source: FICCI conference, March 14 – 15 th 2007
Trade liberalization – reduction in tariffs
9
Increasing FDI trnd
Source: RBI, DIPP
Source: Reserve Bank of India
Svgs & Cap Formation % of GDP ( Current prices)
23.1
26.3
33.832.4
0
5
10
15
20
25
30
35
40
Goss domestic savings Gross domestic capital formation
FY9
1
FY
92
FY
93
FY
94
FY
95
FY
96
FY
97
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
Increasing FDI Inflows
05
1015202530
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09 (tillJan)
Years
Actu
al In
flow
in U
S$Bn
Economy – high growth rates leading to increasing FDI
10
INDIAN ECONOMYINDIAN ECONOMY
Source : Financial Express, January 17th, 2010
INDIA INC INVESTMENTS RISE BY MORE THAN 50 PER CENT IN 2009
11
INDIAN ECONOMYINDIAN ECONOMY
INDIA TO BE USD2 TRILLION ECONOMY BY 2015
As per a report by Enam Securities titled 'India Strategy‘, India will be a USD2 trillion economy in the next five years as its GDP growth is likely to average at 12 per cent in nominal terms, powered by a huge consumption demand.
This growth will be led by the huge consumption demand in sectors like FMCG, power, auto (small car hub), IT and pharma.
Insurance companies, financial services and equity markets will flourish as the country's annual savings pool grows to USD700 billion from USD400 billion at present.
"More than half of this (USD700 billion) could flow into financial savings.
With favourable demographics and average seven per cent real growth, India can sustain more than 30 per cent savings rate akin to the Asian tigers, or China and Japan.
Source : Business Standard, November 16th, 2009
12
Drivers of the India Growth Story
13
India’s Integration with East Asia……..
• India is active participant in the ongoing Asian economic regionalism. It is the second nation, after Singapore, in Asian region, having/negotiating/proposed maximum number of FTAs.
• Till date, the total number of India’s FTA (both proposed and concluded) is 32. Out of this , 19 are with the Asian countries.
• Already concluded FTAs with East Asian countries:
India-Korea CEPA India-ASEAN FTA India-Singapore CECA India-Thailand FTA
• Proposed/under consultation/under
negotiation India-Japan India-Australia India-New Zealand
14
Why India?
• India to be the 5th largest consumer market by 2025• India is world’s largest functional democracy with a
population of over One Billion people• India second fastest growing major economy after China.• Full National Treatment for Foreign Companies
Incorporated in India• Profits & Dividends can be Freely Repatriated• Stable & Well Developed Banking System
India has followed a calibrated globalization process – liberalization of FDI regime – reduction in import tariff– fully convertible current account– moving towards fuller capital account convertibility– compliance with WTO norms
15
Position India ChinaRelative Difference
(%)
HR manager 15,100 32,000 112 %
Marketing manager 14,300 25,800 80%
Project manager 10,000 23,400 134%
Software developer 10,300 13,400 30%
Financial analyst 8,400 13,200 57%
Accountant 5,700 9,000 58%
Sales representative 4,700 5,100 8%
Production worker 1,900 2,300 21%
Average annual pay for various jobs in India & China (US$)
Source : FICCI Compilation
India’s labour costs as a percentage of value added are one of the lowest among Asian countries
India’s Cost Competitiveness
16
690000
530000
350000
420000
470000
300000
350000
400000
450000
500000
550000
600000
650000
700000
750000
India China J apan USA Europeancommunity
Source – Morgan Stanley
Annual additions to the stock of science and engineering graduates
Large Intellectual Capital base
17
18
Untapped Market PotentialFigures for Penetration rate
(per 1000 people)
Market size
(Annual sales in Mn)
Passenger cars
10 1.1
Motorcycles 39 5.8
Cellular subscribers
500 100
Internet subscribers
6 1.1
Televisions 104 12
While the absolute size of the market is large, penetration rates are still low – vast untapped potential
Source – Morgan Stanley
19
Power
Energy shortage at 7.7% / Peak shortage of 12.3%
Ongoing projects: 52000 MW: Investment US$ 60 bn
Private Ultra Mega Power Projects (4000 MW / USD 4 bn each) thr’
Competitive Bids
Roads
Annual growth 12 -15% in passenger traffic and 15 -18% for cargo
Investment Opportunities US $ 30 billion till 2012
Ports
960 million tonnes of traffic by 2013-2014
7.7 % p.a. growth expected in cargo handling till 2013-2014
Investment opportunities: US $ 20 bn till 2012
Infrastructure Opportunities: Power / Roads / PortsInfrastructure: US$ 510 bn in investments planned in next five years
20
INDIAN POWER INDUSTRYINDIAN POWER INDUSTRYULTRA MEGA POWER PROJECTS IN PROGRESS
UMPP Developer Fuel linkage EPC contractScheduled date of
commissioning
Mundra, Gujarat Tata Power CompanyTwo coal mines of Indonesia's Bumi Resources, in which TPC has acquired 26 per cent stake
Awarded - Doosan Heavy Industries, Toshiba Corporation
Two units by 2012
Sasan, Madhya Pradesh
Reliance Power Limited
Moher, Moher-Amlohri extension and Chattrasal coal blocks at Singrauli coalfields. The Chattrasal block is under development
Awarded - Reliance Infrastructure Limited
Two units by December 2011, all six units by April 2013
Krishnapatnam, Andhra Pradesh
Reliance Power Limited
Three Indonesian coal mines
Talks on with Doosan Heavy Industries, Toshiba and Larsen & Toubro
September 2013 - October 2015
Tilaiya, JharkhandReliance Power Limited
Kirandhari B and C coal blocks, North Karanpura
Talks on with Reliance Infrastructure Limited
By 2015
EPC : Engineeering, procurement and construction
UPCOMING ULTRA MEGA POWER PROJECTS
Project State Current status
Kudgi Karnataka Ministry of Power's approval received
Munge Maharashtra Project site finalised
Cheyyur Tamil Nadu Project site finalised
Bedabaha Orissa Land acquisition in process, coal blocks alloted
Source : POWERLINE, February 2009
21
INDIAN POWER INDUSTRYINDIAN POWER INDUSTRYNUCLEAR POWER SECTOR
Source : Indian Infrastructure, September 2009
India has a flourishing and largely indigenous nuclear power programme and expects to have 20,000 MWe nuclear capacity on line by 2020.
Nuclear Power Corporation of India Limited (NPCIL) has a monopoly in the Indian nuclear power market.
At present India has a nuclear capacity of 4,120 mw from 17 nuclear reactors.
Prime Minister, Dr. Manmohan Singh has referred to the target to provide 20 GWe by 2020, as "modest" and capable of being "doubled with the opening up of international cooperation."
More recently on 30th September,2009, Dr. Manmohan Singh indicated that using India’s unique three stage programme, our nuclear industry could potentially yield 4,70,000 MW of power by 2050.
““In India, we see nuclear energy as a vital component of our energy mix… Our nuclear industry is poised for a major expansion, and there will be huge opportunities for the global nuclear industry to participate in (this) expansion… If we can manage our (nuclear) programme well, our three-stage strategy could yield potentially 4,70,000 MW of power by 2050”
– Prime Minister, Dr. Manmohan Singh, 30th September 2009
22
PORTS IN INDIAPORTS IN INDIA
Consultancy
Technical Engineering
Financial
Operatorship
Construction
Dredging
Ancillary Services
Towage
Pilotage
Supply of Equipment
Port Connectivity
Rail
Road
Water
Warehousing and Distribution
Ship Yards
INVESTMENT OPPORTUNITIES IN THE PORT SECTOR
23
ROADS IN INDIA
100 per cent foreign direct investment (FDI) allowed under the automatic route in all road development projects.
With incentives like 100 per cent income tax exemption for a period of 10 years, the NHAI provides grants/viability gap funding for marginal projects, and formulation of model concession agreements among others.
Investors in identified highway projects permitted to recover investment by way of collection of tolls for specified sections and periods.
The government has also announced an increase in the overseas borrowing amount of infrastructure sectors, to USD500 million from USD100 million.
In order to tide over the shortage of funds, the road transport and highways ministry has proposed priority sector status for road development, allowing private highway developers more funds from banks.
GOVERNMENT INITIATIVES
Source : Indian Brand Equity Foundation
24
RAILWAYS IN INDIA
DEDICATED FREIGHT CORRIDOR PROJECT – ROUTE MAP
Source : Ministry of Indian Railways
25
RAILWAYS IN INDIA
METRO RAIL SYSTEMSGOVERNMENT KEEN ON TRANSPORT ALTERNATIVES
As huge upfront capital investment required for every metro project, government is promoting joint venture and public private partnership (PPP) routes for the metro projects.
Bombardier Transportation estimates that the Investment opportunities for greenfield metro rail projects and related equipment (excluding locomotives) in India will be around USD3.5 billion by 2014.
Further, it expects the annual demand for metro rail coaches in India to reach 1,000 units by 2011.
Source : Indian Infrastructure December 2009
26
INDIAN TELECOM INDUSTRYINDIAN TELECOM INDUSTRY
Source : Indian Infrastructure, August and November 2009
A BRIEF OUTLOOK
The Indian telecom industry continues its growth trajectory amidst the economic slowdown –
As per the Telecom Regulatory Authority of India (TRAI) during January 2009 :
Total Telephone subscriber base reached 581.81 Million
Wireless subscription reached 545.05 Million
Wireline subscription declined to 36.76 19. 90 Million new additions in wireless Wireline subscription declined by 0.31 Million Overall Tele-density reached 49.5 Broadband subscription is 8.03 million
FDI inflows during 2008-2009 touched Rs 117.27 billion (USD 2.56 billion), during April-November 2009 it reached Rs 108.11 billion (USD 2.22 billion).
Anticipated launch of 3G and Wi-Max services.
New operators launching services.
Rural telephony to witness strong growth.
27
INDIAN TELECOM INDUSTRYINDIAN TELECOM INDUSTRY
Source : Confederation of Indian Industry (CII) Ernst & Young report titled ‘India 2012: Telecom Growth Continues’
Total telecom subscriber base to reach close to 690 - 700 million by 2012.
Wireless subscriber growth to continue, expected to reach 640 - 650 million in 2012.
The fixed line base is estimated to reach approximately 45 - 50 million in 2012.
India’s telecom services industry revenue projected to reach USD54 billion.
Rural telecom will be the new growth constituency with tele-density levels reaching about 40 per cent.
25 - 30 million 3G subscribers estimated by 2012, WiMax subscribers to reach 8 - 10 million.
By 2012, internet and broadband subscribers to reach 45 million and 25 - 30 million respectively while 196 million subscribers are expected to access the internet through the mobile.
FUTURE OUTLOOK
As per the Reliance Equities report, released in September 2009, the number of telecom towers
in India in 2010-2011 is projected to grow to 337,375 from an estimated 282,074 in 2009-2010.
28
Chemicals
• Indian consumption levels 1/10th of global average• New Petroleum, Chemicals and Petrochemicals
Investment Region (PCPIR) policy. Each PCPIR to have 250 sq.km area, refinery/petrochemical feed stock company.
• These regions to be in West Bengal, Gujarat and Andhra Pradesh.
• 6th IndiaChem 2010 (Exhibition and Conference) to be held in Mumbai 28-30 October at Bombay Exhibition Centre. It would focus on chemicals, technologies, process plant machinery, control and automation systems and petrochemicals. Japan was partner country in 2004 and Korea is requested for 2010.
• www.indiachem.in
29
Several factors make India a favourite investment destination
30
Consumer Market in India
1. Low margin – high volumes model.2. 506 million Mobile phones. 3. Consumer looking for a “deal.”4. 40 million new consumers coming
into market every year. 5. Single use products – shampoo in
sachets. 6. Appliances designed for power
failures.
31
Indian Subsidiaries Outshine Overseas ParentsBetter Financial Performance
Trends visible in many sectors: IT, auto, pharma & consumar durables
Overseas parent Sales Growth
(%)
Indian Subsidiary Sales Growth
(%)Unilever 8.6 Hindustan Unilever 11.6
Siemens 14 Siemens India 56
ABB 2.5 ABB India 32
Colgate 4.5 Colgate India 26
Hyundai Motors 6 India (exported a million cars!) 25
Samsung Global 15 Samsung India 29
LG Global 12.5 LG India 21
32
Bilateral Context
• Excellent political relations• President Lee’s landmark State Visit in Jan ‘10• Growing economic content – trade in 2008 was
15.6 billion dollars.• Bilateral Trade Target for 2014 is US$ 30
Billion• CEPA is operational from January, 2010• Indian market hospitable to Korean business.• Leading Korean Companies household names.
33
Share of Top Sectors Attracting FDI Inflows from
South Korea Rank Sector Percentage FDI
Inflows fromSouth Korea
1. Automobile Industry 18.07
2. Metallurgical Industries 15.18
3. Electronics 14.73
4. Housing & Real Estate 9.96
5. Industrial Machinery 7.41
Total Investment from Korea 1.6 Billion
(from January 2000 to May 2009)
34
Potential Areas for Korean Investments in India
• Auto & Auto Ancillary• Defense• Pharmaceutical & Chemical Products • Healthcare• Information Technology • Infrastructure• Shipping & Ports• Textile, Garment & Apparel Industry• Mechanical tools• Machinery• Food Processing Industries• Solar Power
35
Example - Hyundai Motor India Ltd.
[HMIL]• Fastest Growth in Exports
from India - Total of 1 million cars in 2010
• No. 1 Exporter of Automobiles from India
• Accounts for 66% of Total Passenger Car Exports from India
• Exports to over 113 countries from India (120 by end 2010)
• Biggest Operations outside of Korea in India
• Over 50% of production in India is Exported
Year Exports (Cars)
1999 202000 3,8232001 6,0922002 8,245 2003 30,4162004 75,8712005 96,5602006 113,3392007 126,7492008 243,9192009 210,007
Total 975,041
Source: Business Line
36
Information Technology• Indian IT-BPO sector US$ 71 billion
• Software and services exports US$ 47 billion in 2008
• Indian IT companies are experts in:– Custom Application Development and
Maintenance (CADM)– System Integration– IT Consulting– Application Management– Computer Aided Designing (CAD)– Legal Process Outsourcing– Animation Industry
• IT Enabled Services
37
India – Preferred IT Services Supplier to the World
Company Outsourcing for
IT ServicesIT Services
Infosys
Tata Consultancy Services (TCS)
Wipro
Goldman Sachs, Aetna, Northwestern Mutual, Am Ex DHL, Verizon
GE, Honda, UBS, HSBC
Transco, HP – Compaq, Nortel, General Motors, CISCO, Sony
IT Enabled Services
Mphasis BFL
Spectramind
Citi Group, Accenture, Auto Zone, Capital One
Dell, American Express, Capital One
Recent IT Contracts for Indian Companies
1. British Petroleum with TCS, Infosys & Wipro
2. Etisalat DB telecom with Tech Mahindra (S161 million)
3. Cardiff City Council with Tata Consultancy Services ($248 million)
38
Pharmaceutical Industry in India
1. Medicines at affordable cost2. Third largest in the world in volume terms3. Over $20 billion in terms of value4. Exports over $8 billion worth of drugs and
pharmaceuticals to US, Europe, Japan, Australia, etc.
5. Advantage in GENERIC DRUGS ($80 billion worth drugs patent expiring by 2012.
6. Ranbaxy – majority share bought by Daiichi-Sankyo worth $4.6 Billion.
39
Global Reach of Indian Pharmaceuticals
US FDA Approved
Pharma Plants in India
65
US Pharma Patents
for Indian formulations
>200
Indian Pharma Companies Manufacturing for
CIPLA Ivey, Watson Pharma, Eon Labs
Shashun Chemicals Eli Lily, Glaxo-SmithKline Pharma
Lupin Laboratories Apotex, APP, Watson Pharma
Torrent Pharma Novo Nordisk (26 million vials /
annum of insulin)
40
Partnership in Space, Science & Technology
• On 26 May 1999 India’s Polar Satellite Launch Vehicle PSLV C2 successfully launched Korean satellite KITSAT-3 into space.
• India has 54 satellites in space.
• 22 Satellites launched for companies from Germany, Italy, Belgium, Indonesia and Argentina.
• India’s capacity to design, fabricate, launch and track satellites on own Launch Vehicles.
• Chandrayaan orbiting the Moon.
• $10 Million Common Fund for R&D in S&T.
41
Comprehensive Economic Partnership Agreement
[CEPA]To deepen co-operation in –
• Trade in goods
• Information Technology
• Transfer of Technology
• Manufacturing sector
• Services sector
• Movement of professionals
42
Comprehensive Economic Partnership Agreement
[CEPA]Complete exemption from Basic Customs
duty (‘BCD’) • to 104 specified items • Main products include - printed books,
aircrafts, aircraft engines, parts of aircraft engines, helicopters specified industrial robots, telephone answering machines, etc.
Benefit of concessional BCD provided to 962 specified items
• nuclear reactors, steam or other boilers, engines, combined refrigerator-freezers, dish washing machines, hair drying/ hand drying apparatus, golf cars, motorcycles with specified cylinder capacity, etc
Benefits/ Concessio
ns effective
from January 1,
2010
43
CEPA Benefits
• Encourage Korean companies to setup manufacturing in India
• Korean Companies can Import Raw Materials, Inputs used in Manufacturing at Concessional Import Duty in India
• Export to Korea from India with Export Benefits & Concessional Import Duty in Korea
44
Leverage India’s Human Resources
• R&D Laboratories in India.– Samsung, LG, Hyundai Motors.
• Indian Engineers and IT Experts in Korea.– Designing & Research (~1000).– Scientists and Researchers in Korean Universities
(~600).• Indian experts will make Korean companies more
competitive globally - Middle-East contracts. • CEPA opens new doors
– 163 categories of professionals from India can work on contracts in Korea.
45
LIST OF PROFESSIONALS (ANNEXURE 8-A OF CEPA)
1 Computer Hardware Design Engineers
2 Computer network products developer
11 Telecommunication Machinery Engineers and Researchers
21 Wireless communication network manager
22 Electrical circuit manager
30 Optical communication products Design developer
33 Wireless phone developer
34 Digital receiver developer
38 Communication network operation Engineers
43 CDMA technology research developer
52 Computer System Supervision Professionals
53 Computer System Designers and Analysts
59 System Software Programmers
65 Application Software Designers and Analysts
66 Network Programmers
68 Data management application programmer
69 Financing management application programmer
72 Database Designers and Analysts
73 Database Programmers
79 LAN Engineers
46
81 WAN Engineers
84 Web Engineers and Programmers
86 General management consultant
87 Financial management consultant
88 Marketing management consultant
89 Human resources management consultant
93 Electrical Measurement and Control Engineers and Researchers
117 Farming machine (design) Engineers
124 Special Engineering Design Service for automobile (automobile designer)
129 Petroleum and Chemical Engineers and Researchers
130 Rubber and Plastic Engineers and Researchers
131 Pesticide and Fertilizer Engineers and Researchers
134 Natural gas Chemical Engineers
140 Electrical Products Development Engineers and Researchers
141 Power Plant Engineers and Researchers
149 Ship Engineers and Researchers
156 Biologist
157 Biochemist
159 Civil Construction Engineers
160 Advertising Professionals
161 Computer Game Programmers
163 Assistant English Teachers6 for primary and secondary schools
47
Success of Korean Companies in India
1. Pioneers are Samsung Electronics (1995), Hyundai Motors (1996) and LG Electronics (1997).
2. Now >400 Korean Corporations in India with more than US$1.5 billion investment.
3. POSCO proposes US$12 billion investment – progress slow but steady.
4. 65% Korean companies in profit.24% showing growth but still in deficit11% in deficit.
5. Recent Entrants: Woori Bank, Samsung SDS, Korean
IT Corporation.
48
Indian Companies in South Korea
http://www.indochamkorea.org
49
Gujarat Vittal Innovation City FEZ
• Support by KOTRA and Korea Land Corporation.
• 800 Acres Area Reserved for Korean SMEs.
• Trilateral MoU between Korea Land Corporation, GVIC and Government of Gujarat.
• Korean Ecosystem.
• 70 Korean companies have expressed interest.
• Electronics, specialty chemicals, components, light engineering.
50
The New BrandMade in INDIA
in Partnership with KOREA
