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8/3/2019 Indian Economy Oppurtunties Unlimted
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SUBJECT- ECONOMICS
8/3/2019 Indian Economy Oppurtunties Unlimted
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Indian EconomyOpportunities Unlimited
Indian EconomyOpportunities Unlimited
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India: Fastest Growing Free Market Democracy
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India: Among the Top-15 Countries in terms of GDP at constant prices
205 223319 347
103 91
116117
104 109
155168
0
100
200
300
400
500
600
700
1999-00 2002-03 2005-06 2006-07
USD
Billion
Services Agriculture Industry
The Indian economy has witnessed an unprecedented growth. Booming Indian services and
industry sector are providing the required impetus to the economic growth
The soundperformance of each
industry segment isleading to the
overall robustperformance of the
Indian economy
Indian economy is
the 4th largest in
terms of PPP USD4.1 trillion in 2006
Indias GDP
witnessed highgrowth and was thesecond fastest
growing GDP afterChina
Growth in sectors (2006-07):
Industry: 10.9%
Services: 11%
Agriculture: 2.7%
Fastest GDP growth of 9.4percent in 2006-07, since last 18
years
Contribution of
Services -
increased from
49 percent to
55 percent
Contribution of
Services -
increased from
49 percent to
55 percent
India's GDP: 2002-07
424484
534590 631
0
100
200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07
USD
Billion
GDP at Constant Prices
4%
8.5% 7.5%
8.4%9.4%
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5
India: Robust Economic Platform
India's Forex Reserves: 2001-07 (Till 22 June 2007)
5475
112
141152
199
213
0
50
100
150
200
250
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
(Till 22June)
USD
Billion
External Debt-to-GDP Ratio
21.120.4
17.817.3
15.8
16.4
10
13
16
19
22
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Ratio
Indias enhancedeconomic
performance hasbeen the major
contributor towardsincreased Forex
reserves
Steadily increasingForex reserves offer
adequate securityagainst any possible
currency crisis ormonetary instability
Falling Dollar inflatesthe Indias external debt
Increasedconfidence of
investors in Indiancompanies have led
to a surge in crossborder borrowing by
the corporatehouses
Forex reserveswitnessed an
increase of 200percent for the
period 1990-2007
at present level of Forexreserves, the country has
adequate cover for 12 months ofimports
Indias Forexreserves are in
excess ofexternal debt
the decreasing external debt toGDP ratio indicates that India has
a sound economic platform
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India: Surging Exports
India's Import: 2002-07 (till February 2007)
61.5278.28
111.89
149.65162.30
0
20
4060
80
100
120140
160
180
2002-03 2003-04 2004-05 2005-06 2006-07
(upto Feb.
07)
U
SD
Billion
India's Exports: 2002-07 (till February 2007)
52.8163.95
83.81103.42
112.40
0
20
40
60
80
100
120
2002-03 2003-04 2004-05 2005-06 2006-07
(upto Feb.
07)
USDBillion
Petroleum products are the majorcontributors towards Indias growing
imports
Quality and cost advantage are the two
important parameters leveraged by the
Indian producers to increasingly
market their products and services
Services sector has
been a majorcontributor toincreased exports
from India
Imports of productsby India mainly
includes petroleumproducts and
minerals
Indian companieshave chalked out
extensive plans toincrease their
presence abroad
Acceptance ofIndian products
along with the costadvantage has
provided an edge toIndian companies
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7India: Attractive Investment Destination
Net FII into India: 2001-07
1.80
0.60
10.00 10.209.40
6.72
0
2
4
6
8
10
12
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
USD
Billion
India is ranked
second in ATKearney FDIconfidence index
Telecom andElectronics topped
the list of inward FDI
FDI inflow for theperiod 2006-07
witnessed a growthof 180 percent over
the same period lastyear
Mauritius has beenthe largest
contributor towardsFDI into India..
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 16
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 15
With improved performance on PE ratio and ROE, Indian markets have attracted
large investmentsFDI Inflow - India: 2001-07
4,222
3,134 2,634
3,755
5,546
15,730
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
USDM
illion 180 percent
Increase
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8India: Vibrant Capital Market
India is among themajor destinations
across the globe forinflow of US Dollar
i.e. FIIs
Sensex risen 15times in the period
1990-2007
Sensex The Bombay stock exchange index has risen 15 times from 1990s to
reach 15,000 mark in July 2007
FIIs augmented
support by infusing
large investments
in Indian stock
market
Exorbitant
industry
performance
Increased local
investors
confidence
Emergence ofindustry and
confidence of localinvestors along with
the FIIs has led toincreased movement
of sensex-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
7/1/1997 7/1/1998 7/1/1999 7/1/2000 7/1/2001 7/1/2002 7/1/2003 7/1/2004 7/1/2005 7/1/2006 7/1/2007
IN
R
7/9/2007Crossed
15,000mark
Crossed 14,000 mark
Crossed 10,000 mark
Crossed 5,000 mark
12/30/1999
2/7/2006
1/12/2007
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9India: Vibrant Economy Driving M&A Activities
SECTORUSD(Mn)
SECTORUSD(Mn)
Automotive 518 Manufacturing 933
Banking and Financial 1,375 Media 630
Chemicals andPlastics
1,133 Oil & Gas 384
Electrical andElectronics
896 Pharma &biotech
2,520
Energy 1,484 Telecom 2,198
FMCG, Food andBeverages
1,327 Others 4,006
IT and ITES 2,903 Total 20,305
Growth Drivers:
Globalisationofcompetition
Concentration of
companies toachieve
economies ofscale
Lower interest
rates and vibrantglobal markets
Cash Reserveswith Corporates
Number of Deals and Values
12.3
18.3
28.2
306
467
782
0
5
10
15
20
25
30
2004 2005 2006
USDB
illion
0
100
200
300
400
500
600
700
800
900
Numberofdeals
Deal Values No. of Deals
Contribution of private
equity deals to total
number of deals have
increased from nearly 9
percent in 2004 to 28
percent in 2006
In 2006, there were a
total of 480 M&A deals
and 302 private equity
deals
Average deal size close to
USD 36 million
Trends:
Ratio of the Size ofacquisition to the
size of acquirerhas grown from 10
percent in 2004 to25 percent in 2006.
Cross-border
deals are growingfaster than
domestic deals
Private Equity (PE)houses have
funded projects aswell as made a few
acquisitions inIndia
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10Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1 billionUSD 12.1 billionTata Steel buys Corus PlcTata Steel buys Corus Plc
USD 6 billionUSD 6 billionHindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.
USD 1.58 billionUSD 1.58 billionEssar Steel acquired Algoma SteelEssar Steel acquired Algoma Steel
USD 730 millionUSD 730 millionVideocon Industries acquired Daewoo
Electronics Corporation Limited
Videocon Industries acquired Daewoo
Electronics Corporation Limited
USD 1.6 billionUSD 1.6 billionSuzlon Energy Ltd. acquires REpowerSuzlon Energy Ltd. acquires REpower
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11Major M&A and Investments Announcements in India
USD 11 billionUSD 11 billionVodafone buys HutchVodafone buys Hutch
USD 0.98 billionUSD 0.98 billionAditya Birla Group increased its stake in Idea
Cellular by acquiring 48.14-percent stake
Aditya Birla Group increased its stake in Idea
Cellular by acquiring 48.14-percent stake
USD 1 billionUSD 1 billionPlans investment in private equity, real estate,and private wealth management
Plans investment in private equity, real estate,and private wealth management
USD 1.7 billionUSD 1.7 billionPlans to spend on its development operations
in India over the next four years
Plans to spend on its development operations
in India over the next four years
USD 0.905 billionUSD 0.905 billion
Renault, Nissan and Mahindra & Mahindra
has initiated a Greenfield automobile plant
project in Chennai.
Renault, Nissan and Mahindra & Mahindra
has initiated a Greenfield automobile plant
project in Chennai.
Mylan Laboratories acquired a majority stake
in Matrix Laboratories
Mylan Laboratories acquired a majority stake
in Matrix LaboratoriesUSD 0.74 billionUSD 0.74 billion
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12India: Pacing Ahead to Emerge as a Major Economy in the World
Projected GDP Growth Rates for Select Upcoming Economies
0
2
4
6
8
2005-10 2010-15 2015-20 2020-25 2025-30 2030-35 2035-40 2040-45 2045-50
GDPGrow
thR
ate(%)
Brazil Ch ina India Russia
0
20
40
60
80
100
India Russia VietnamUkraine China Ch ile Latvia
GRDIScore
2007 Global Retail Development Index (GRDI)2007 Global Services Location Index
3.3
2.6
3.2
2.8
2.9
3.2
1.5
1.8
1.2
1.3
2.3
2.3
1.1
1.5
1.6
2
1.4
1.4
Indonesia
Brazil
Thailand
Malaysia
China
India
Financial structure People and skill availablity
Business environment
India has been
ranked superior toother majorcountries by many
prominent surveys
AT Kearney placedIndia among the top
three in its FDI
confidence index
the retail marketalong with the
services sector hasbeen attracting the
interest of majorplayers
India is expected to
outperform its rivalsin the BRIC, in termsof GDP growth rates,
from 2015onwards
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13India: Astounding Demographics
Per Capita Income
393
461519
583
651
0
100
200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07
USD
2
9
48
221
726
9
17
74
285
710
20
33
120
404
613
2001-02 2005-06 2009-10(E)
Rich (Above 115,000)
High Income (57,000 115,000)
Consuming class (23,000 57,000)
Working class (10,200 23,000)
Needy (Below 10,200)
Annual Household Income
(in USD)
* In PPP terms
Population(million)
Increasing per capita incomecoupled with an emerging middle
class has provided the necessaryimpetus to consumerism in India
Growth in the higher
income categoriesof Indias populationhas created an
affluent section ofsociety, which has
significant level ofpurchasing power
Increasing per capitaincome and large
population movinginto middle class
has led to high levelof consumerism in
India
DEMOGRAPHIC TRANSFORMATION OF INDIA
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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.
India: Increasing Working Population
-3
0
10
17
31
33
44
64
71
314
-5 45 95 145 195 245 295 345
Stock Position 2005
South East Asia 362
Southern Asia 132
India 691
Africa 500
China 934
Latin America 359
USA 200
Europe 497
Japan 85
World 4,168
In Million
Addition to Working Age Population by 2010
Growth in Global Working Age Population (15-64)
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GDP USD 590 billion
GDP growth rate 9 %
Services contribution 54 %
FDI limit not 100 percent in majorindustry sectors such as Telecom,Semiconductors, Automobiles, etc.
Balance of Trade USD (-)46.2billion
Investment goal USD 250 billion
20062006
GDP USD 750 billion
GDP growth rate 9.5%
Services contribution 60 %
FDI limit is expected to be close to100 percent in major industrysectors such as Telecom,Semiconductors, Automobiles, etc.
Balance of Trade Shouldincrease with surging exports ascompared with imports
Investment goal USD 305 billion
20082008
GDP USD 900 billion
GDP growth rate 9%
Services contribution 60-65 %
FDI limit is expected to be 100percent in major industry sectorssuch as Telecom,Semiconductors, Automobiles, etc.
Balance of Trade Should be
positive with increased level ofexports as compared with imports
Investment goal USD 370 billion
20102010
Growth Expected in India
To sustain the GDP growth ofmore than 8 percent, India requires an investmentofUSD 1.5 trillion
in the nextfive years
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India has among the
highest returns on
foreign investment.
- Dan Scheinman, Cisco System Inc. as told
to Business Week, August 2005
We came to India for the
costs, stayed for the
quality and are now
investing for innovation.
A T Kearney
FDI Confidence Index 2005
India is among the
three most attractiveFDI destinations in the
world.
Jack Welch
General Electric
India is a developed
country as far as
intellectual capital is
concerned.
USDepartment of
Commerce
By 2032, India will be
among the three
largest economies inthe world.
BRIC Report, Goldman Sachs
Why India? Quote Unquote
Travyn Rhall,
ACNielsen
The Indian market has two
core advantages - an
increasing presence of
multinationals and an upswing
in the IT exports.
Craig Barrett
Intel Corporation
India has evolved into
one of the world's
leading technologycenters.
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DISCLAIMER
This presentation has been prepared jointly by the India Brand Equity Foundation (IBEF) andEvalueserve.comPvt. Ltd., EVALUESERVE (Authors).
All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. Thesame may not be reproduced, wholly or in part in any material form (including photocopying or storing it in anymedium by electronic means and whether or not transiently or incidentally to some other use of thispresentation), modified or in any manner communicated to any third party except with the written approval ofIBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of thispresentation to ensure that the information is accurate to the best of the Authors and IBEFs knowledge andbelief, the content is not to be construed in any manner whatsoever as a substitute for professional advice.
The Author and IBEF neither recommend or endorse any specific products or services that may have beenmentioned in this presentation and nor do they assume any liability or responsibil ity for the outcome ofdecisions taken as a result of any reliance placed in this presentation.
Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or
omission on the part of the user due to any reliance placed or guidance taken from any portion of thispresentation.
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