The Year Gone By: 2014-15 2 - Dun & Bradstreet IndiaThe Year Gone By: 2014-15 Macroeconomic and Sectoral Outlook 2015-16 basis shows higher growth rate of 6.6% during FY14, indicating

Preface .........................................................1

The Year Gone By: 2014-15 .............................2

India’s Economic Outlook: 2015-16 ................. 11

Sectoral Outlook• Banking ........................................................17

• Automobiles ..................................................18

• Pharmaceuticals .............................................20

• Textiles .........................................................23

• Real Estate ....................................................26

• Metals ..........................................................29

• Insurance ......................................................31

• Power ...........................................................33

• IT - Business Process Management ....................35

• Telecom ........................................................38

• Retail ............................................................40

Some Concerns to Growth .............................43

D&B’s Key Macroeconomic Forecast ................44

Contents

1Macroeconomic and Sectoral Outlook 2015-16

Preface

After a period of policy stasis for long, FY15 turned out to be a period of policy precedence. The formation of a stable Government at the Center after 30 years helped build an environment of confidence among investors, corporate and the common citizens.

The initiation of several laudable measures by the government such as ‘Make in India’ to make India a global manufacturing hub, ‘Digital India’ to deliver broadband to the ‘Gram Panchayats’, establishing ‘Smart Cities’, undertaking a series of smaller steps to ensure ease of doing business coupled with a focused thrust on infrastructure which entails ‘Industrial and Dedicated Freight Corridors’ along with pledge to provide ‘power, road, housing and medical facilities’ to all has essentially laid the foundation of a strong growth trajectory of the Indian economy in the years to come. Thus, the World Bank and the IMF projected India to emerge as the fastest growing economy.

D&B expects India’s growth prospects to remain vibrant during FY16 as the partial unclogging of domestic policy logjam bears fruit and additional debottlenecking steps such as clearing of labour and land hurdles can be expected from the Government during the course of the fiscal. Even as the pace of reforms has been slower than what was initially expected, a start has indeed being made.

As we expect the domestic growth to be driven by a robust services sector, a rapid rebound in industrial sector in FY16 is not expected. That said, ongoing regulatory measures coupled with acceleration of policy efforts towards removal of input bottlenecks in the area of land and power, continued de-bottlenecking of stalled investments and projects, pick-up in mining sector activity, easing of business processes and buoyancy in business sentiment are likely to improve the production scenario to a certain extent.

Moreover, the collapse of international commodity prices, especially crude oil prices, has been a boon for the domestic economy feeding into lower inflation and lower subsidy bill for the Government. Nonetheless, the forecasts for growth face certain challenges such as fragile and tepid recovery in some developed markets, a below normal monsoon, geo-political tension and non-revival in corporate investment, which could dent the growth trajectory.

Kaushal SampatPresident & Managing Director - IndiaDun & Bradstreet


The Year Gone By: 2014-15The Indian economy continued to demonstrate resilience in the face of a tepid global recovery during FY15. The series of events in 2014 clearly sets it apart from the last couple of years - the formation of a stable government after 30 years, RBI’s move to flexible inflation-targeting from the multiple indicator approach (1998) and fiscal decentralization has been some of the noteworthy events during the year.

Globally, the collapse of international commodity prices, especially crude oil prices, has been a boon for the domestic economy feeding into lower inflation and lower subsidy bill for the government. Inflation rate and inflationary pressures have abated beyond the target set by the Reserve Bank of India (RBI) which led to the initiation of the monetary policy easing cycle from the last quarter of FY15. Nonetheless, global deflation of manufactured products coupled with, surplus capacity in domestic market had weakened the pricing power of domestic manufacturers who experienced weak profit levels during the year FY15.

The corporate sector was also impacted from the non-revival in the demand conditions. Consumption demand failed to revive during the year as the impact of uneven rainfall on crop production impacted rural consumption as well. Indicators like sales of tractors and two wheelers point to persisting weak rural demand during FY15. Consumer durables sector has thus been the worst performing segment in the Index of Industrial Production (IIP) during FY15.

Added to this, the corporate sector remained highly leveraged. Mirroring the weak industrial activity, IIP growth remained weak and volatile. Moreover, growth in core sector slumped to a 16-month low in Feb-15 due to lower growth in natural gas, steel, fertilizes and petroleum products.

There was also significant slowdown in bank credit to the industrial sector during FY15 as non-performing assets in the banking sector increased. Growth of overall bank credit decelerated sharply in Sept-2014, lowest since Oct-2009. The rising non-performing asset with the banking sector and the increase in corporate debt restructuring had in fact emerged as one of the eminent risks for the economy during 2015. As credit disbursement slowed down, the borrowing needs of the corporate sector moved from the bank towards commercial paper (CP) and external commercial borrowings. Reflecting the weak corporate performance, business confidence has eased from the ‘stable Government’ driven high witnessed at the start of the fiscal.

Amidst the not so encouraging data sets, the newly estimated data for India’s output based on the revised methodology by the Central Statistical Organisation has set a conundrum for India’s growth story. The GDP at current market prices for India according to new methodology for FY14 stands at ` 113.45 tn (growth of 13.6%) while according to the old estimates its stands at slightly higher level at ` 113.55 tn with a growth rate of 12.3%. However, the estimation on gross value added at basic prices

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The Year Gone By: 2014-15

Macroeconomic and Sectoral Outlook 2015-16

basis shows higher growth rate of 6.6% during FY14, indicating a recovery phase from FY14, (compared to 4.7% as per the old estimates) when the disaggregated macroeconomic indicators point otherwise.

Besides the new revised GDP data, upbeat financial markets also enthused some optimism. Pro-active liquidity management by the RBI led to easing of money market rates in general. The weighted average call rates as well as long term yields for government bond had considerably moderated since end-August 2014. Amidst abundant global liquidity, FII inflows continued into Indian markets leading to a rally in financial markets in India in the second half of FY15 with equity markets scaling historic highs. Forex reserves thus, reached heightened levels supporting rupee. Rupee has appreciated with RBI strengthening its reserves and continued foreign inflows. The current account deficit also narrowed, supporting rupee, led by fall

in trade deficit and increase in invisibles. However, even as the trade deficit has shrunk (17-month low in Feb-15) it was accompanied by deterioration in exports growth.

After a period of policy stasis, FY15 turned out to be a period of policy precedence. After formation of stable Government at the Centre, the year FY15 has witnessed a series of policy reforms that was long pending and stuck amidst administrative hurdles. A number of proactive steps have been taken including focus on ease of doing business, boosting entrepreneurship, easing of FDI norms in sectors including insurance. While the government’s approach has been to undertake a series of smaller steps instead of a few big-bang announcements, the focus has been multi-directional, with emphasis on governance and easing different processes. This has clearly set the stage for bigger initiatives to follow.



Real GVA at basic price, after growing by 4.9% and 6.6% in FY13 and FY14 respectively, continued its momentum of recovery in the current fiscal year. During Q1-Q3 FY15 real GVA at basic price grew by 7.4%

India’s real GVA (Basic Prices)

Source: MOSPI

Within industrial sector, electricity, gas, water supply & other utility services grew significantly by 9.6% during Q1-Q3 FY15 whereas, manufacturing sector moderated marginally to 5.4% (Q1-Q3 FY15) as against 5.6% in the comparable period of the previous fiscal. However mining & quarrying and construction sector registered a growth of 3.5% and 4.6% respectively in Q1-Q3 FY15 as against 3% each in Q1-Q3 FY14.

Industrial component of GVA

Source: MOSPI

The financial, real estate & professional services (13.7%) led to overall service sector growth by 10.7% in Q1- Q3 FY15 as against 10.0% in year ago period. However, growth in trade, hotels, transport, communication & services related to broadcasting and public administration, defense & other services moderated to 8.4% and 9.1% respectively during Apr-Dec FY15 as compared to 11.5% and 10.0% respectively in Apr-Dec FY14.

Services component of GVA

Source: MOSPI

Index of industrial production (IIP)High interest rates, elevated level of inflation, slow investment activities and sluggish demand conditions resulted in a decline in industrial production during the last three years. However, in the current fiscal, IIP recovered from a decline of 0.1% during FY14 to around 2.8% (Apr-Feb FY15) on account of softening of inflation, improving business sentiments and improvement in mining and electricity sectors. The mining (1.5%) and manufacturing (2.2%) sectors showed sign of revival during Apr-Feb FY15 against a decline of 0.7% each in the corresponding period last fiscal, whereas the electricity sector continued its growth momentum, registering a growth of 9% (Apr-Feb FY15) against 6.2% in the year-ago period.

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Sign of revival in IIP

Source: MOSPI

Food products and beverages, wood and products of wood & cork except furniture; articles of straw & plating materials, rubber and plastics products, other non-metallic mineral products, basic metals, machinery and equipment n.e.c., motor vehicles, trailers & semi-trailers and furniture; manufacturing n.e.c. sectors showed signs of revival during FY15. Electrical machinery & apparatus n.e.c. (21%) was the fastest growing sector within manufacturing, while radio, TV and communication equipment & apparatus (-53.7%) continued its declining trend during FY15.

Top five performing manufacturing sectors in FY15 constitute around 31% of overall manufacturing activities (% y-o-y)Sn. Sectors Weights % Apr-Feb-14 Apr-Feb-15

1 Electrical machinery & apparatus n.e.c. 19.8 17.1 21.3

2 Basic metals 113.4 -0.5 13.4

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Luggage, handbags, saddlery, harness & footwear; tanning and dressing of leather products

5.8 5.4 9.9

4 Other transport equipment 18.2 5.9 6.2

5 Food products and beverages 72.8 -2.1 5.7

Note: Weight in 000’sSource: MOSPI

Top five non-performing manufacturing sectors in FY15 constitute only around 17.0% of overall manufacturing activities Sn Sectors Weights % Apr-Feb-14 Apr-Feb-15

1 Chemicals and chemical products 100.6 9.5 -1.1

2Medical, precision & optical instruments, watches and clocks

5.7 -2.7 -2.0

3Publishing, printing & reproduction of recorded media

10.8 0.7 -4.4

4 Office, accounting & computing machinery 3.1 -14.4 -37.8

5Radio, TV and communication equipment & apparatus

9.9 -26.8 -53.7

Note: Weight in 000’sSource: MOSPI

Under used based classification, basic goods (7.4%) and capital goods (6.0%) witnessed a revival in their performance during Apr-Feb FY15. Due to sluggish demand conditions, intermediate goods moderated to 1.6% in Apr-Feb FY15 against 3.3% in previous fiscal.

Falling discretionary consumption demand in face of high interest rate and weak consumer confidence impacted consumer goods, and as a result, the sector contracted by 3.7% during the period Apr-Feb FY15.

IIP-used based sectors

Source: MOSPI



Core industriesDuring Apr-Feb-15, growth in core industries (comprising 38% of weight in IIP) moderated to 3.8% against 4.2% in year ago period.

Electricity (8.6%), coal (8.5%) and cement (6.7%) registered a significant growth in the current fiscal due to the enhanced performance of thermal power generation, increase in captive mining and due to capacity addition in the cement sector. Structural constrains, no major discovery in oil fields and lack of capacity addition led to decline in production of crude oil, natural gas, petroleum refinery products and fertilizers respectively. However, cheap imports of steel products are affecting the steel production.

Eight core infrastructure sectors registered higher growth than IIP

Source: Ministry of Commerce & Industry

Final consumption expenditure - Government & PrivateAs a consequence of subdued consumption activities and elevated interest rates, overall consumption expenditure moderated by 6.2% during Apr-Dec FY15 as against 7.2% in Q1-Q3 FY14. Government’s final consumption expenditure moderated significantly to 9.7% in FY15 (Q1-Q3) as compared to 14.0% during same period last year.

Overall consumption expenditure remained subdued

Note: Data represent 3-month moving averageSource: MOSPI

Inflation WPI inflation continued to moderate for the third consecutive year; during FY15 it witnessed a growth of 2.0% against a growth of 7.4% and 6.0% respectively in FY13 and FY14. Primary articles moderated to 14-year low to 3.0% in FY15 whereas, food articles moderated to 9-year low of 6.1%. On account of falling global crude oil prices, index of fuel & power declined by 1.0% in FY15 against a growth of 10.2% in FY14. Low fuel cost and subdued demand condition led to a moderation in manufacturing inflation to a five-year low at 2.4% in FY15.

Moderation of commodity prices

Source: Ministry of Commerce, IMF and IEA

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Retail inflation (CPI combined) and core inflation in retail segment moderated significantly to 5.9% and 5.6% respectively in FY15 against a growth of 10.8% and 8.1% respectively during FY14.

Retail Inflation moderated across all the segments (% y-o-y)

Weights % FY14 FY15CPI combined 100 10.8 5.9Food and beverages 45.86 13.8 6.5Pan, tobacco and intoxicants 2.38 10.3 8.1Clothing and footwear 6.53 10.4 7.3Housing 10.07 8.5 6.9Fuel and light 6.84 8.7 4.2Miscellaneous 28.32 7.2 4.6

Source: MOSPI

Money and bankingAfter keeping repo rate unchanged during Apr-14 to Dec-14, the repo rate and SLR was reduced by 50 bps in Q4 FY15, due to fall in the inflation rate below the target level set by the RBI.

Easing of policy rate after 12 months

Source: RBI

Continuing the subdued trend, growth in bank credit and aggregate deposits moderated to 9.5% and 11.4% respectively during FY15 from a growth of 13.9% and 14.1% respectively in FY14.

Credit and deposit growth rate

Source: RBI

Deployment of bank credit in the agricultural sector (16.5%) witnessed a significant growth in Apr-Feb FY15 as against 13.1% in the year ago period. However, during Apr-Feb FY15, deployment of bank credit to micro & small, medium and large industries (6.0%), services (7.0%) and priority sector as a whole (9.8%) moderated as against a growth of 13.2%, 17.1% and 20.0% respectively during Apr-Feb FY14.

External tradeUneven and slow pace of global recovery during the current financial year dragged overall exports to a decline of 1.2% in FY15 as against a growth of 4.7% in FY14.

The average share of manufacturing exports increased to 66.0% of total exports during Apr- Jan FY15 from 63% of total exports during FY14. Engineering goods (19.3%) and readymade garments (14.0%) were the fastest growing exports sectors in Apr-Jan FY15 whereas, electronic goods declined by 16.7% during the same period against a growth of 7.9% in Apr-Jan FY14.



Export growth in major manufacturing sectors in FY15 so far

Source: CMIE

Imports recovered from a decline of 8.3% in FY14 to a marginal decline of 0.6% FY15. Non-oil imports increased by 8.4% to around US$ 309.3 bn during FY15, whereas oil imports declined by 16.1% to around US$ 138.3 bn.

Movement of non-oil and oil-imports in FY15

Source: Ministry of Commerce & Industry

Current Account Deficit (CAD)India’s trade deficit contracted to US$ 112.5 bn in Apr-Dec 2014 from US$ 116.9 bn in Apr-Dec 2013. Supported by a modest rise in net services receipts, the CAD tracked the trade deficit and shrank to US$ 26.2 bn in Apr-Dec 2014 (1.7 % of GDP) from US$ 31.1 bn in April-December 2013 (2.3 % of GDP).

Net inflows under the capital and financial account (excluding change in foreign exchange reserves) rose to US$ 61.7 bn in Apr-Dec 2014 from US$ 39.6 bn in Apr-Dec 2013.

CAD remained range bound during Apr-Dec FY15

Source: RBI

FIIFII inflows during FY15 stood at US$ 45.7 bn as compared to US$ 8.9 bn in FY14. On account of revival in the domestic economy, strong inflows of around US$ 27.3 bn took place during FY15 in debt market compared to outflow of US$ 4.6 bn in FY14. Inflow of foreign investment led to surge in the foreign exchange reserves to US$ 343 bn as on 3-Apr-15. FDI inflows in equity increased significantly by 36.1% (y-o-y) to US$ 25.5 bn during Apr - Jan FY15 as compared to US$ 18.8 bn during Apr -Jan FY14.

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Foreign exchange reserves at record high

Source: RBI

Volatility in the movement of rupee declined significantly due to increase in foreign exchange reserves, led by FIIs, lowering of current account deficit and hope of revival in the economy. However, the Rupee still remains over valued as per real effective exchange rate (REER trade based weight of 6 currencies).

Currency remains over valued

Source: RBI



National Income Accounts – Change in base year and highlights of change in methodologyIn FY15, national account statistics changed its current base year from 2004-05 to 2011-12 and undergone significant change in the methodology and reporting of GDP data. Some of the major changes are mentioned below:• As per international best practices, industry-wise estimates will be presented as Gross Value Added

(GVA) at basic prices, while GDP at market prices will henceforth be referred to as GDP.• Sector-wise estimates of gross value added (GVA) will now be given at basic prices instead of factor

cost. The relationship between GVA at factor cost, GVA, at basic prices, and GDP (at market prices) is given below: GVA at basic prices = CE + OS/MI + CFC + production taxes less production subsidies GVA at factor cost = GVA at basic prices - production taxes less production subsidies GDP = ∑ GVA at basic prices + product taxes - product subsidies (where, CE : compensation of employees; OS: operating surplus; MI: mixed income; and, CFC: consumption of fixed capital. Production taxes or production subsidies are paid or received with relation to production and are independent of the volume of actual production. Some examples of production taxes are land revenues, stamps and registration fees and tax on profession. Some production subsidies are subsidies to Railways, input subsidies to farmers, subsidies to village and small industries, administrative subsidies to corporations or cooperatives, etc. Product taxes or subsidies are paid or received on per unit of product. Some examples of product taxes are excise tax, sales tax, service tax and import and export duties. Product subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to farmers, households, etc. through banks, and subsidies for providing insurance to households at lower rates).

• Comprehensive coverage of the corporate sector both in manufacturing and services by incorporation of annual accounts of companies as filed with the Ministry of Corporate Affairs (MCA) under their e-governance initiative, MCA21.

• Comprehensive coverage of the financial sector by inclusion of information from the accounts of stock brokers, stock exchanges, asset management companies, mutual funds and pension funds, and the regulatory bodies including the Securities and Exchange Board of India (SEBI), Pension Fund Regulatory and Development Authority (PFRDA) and Insurance Regulatory and Development Authority (IRDA).

• Improved coverage of activities of local bodies and autonomous institutions, covering around 60 per cent of the grants/transfers provided to these institutions.

• Owing to these changes, estimates of GVA both at aggregate and sectoral levels have undergone changes. The sector-wise shares in aggregate GVA have undergone significant revision especially in the case of manufacturing and services (Figure 1). Changes have also been observed in the growth rates in GVAs of individual sectors and contribution of each sector to overall GVA due to use of sales tax and service tax data for estimation in the years 2012-13 and 2013-14. Caution needs to be exercised while comparing estimates and growth rates from the earlier series to the new series.

• Improved coverage of activities of local bodies and autonomous institutions, covering around 60% of the grants/transfers provided to these institutions.

• Change in the savings rate measurement to ‘Gross Savings % Gross National Disposable Income (GNDP)’ from the earlier of ‘Gross Savings % GDP’.

Source: Economic Survey FY15


India’s Economic Outlook: 2015-16This time around in last year we presented our outlook for FY15, expecting a gradual growth recovery in the event of an improved policy environment, revival of large stalled projects and most importantly a stable Government at the Centre. Although this trajectory has largely played out, when we look across an array of economic indicators, mixed signals continue to prevail. On one hand, CPI inflation has edged lower, CAD has narrowed and the rupee is displaying remarkable resilience, while on the other, industrial production remains anaemic, credit offtake is weak and growth in core sector has slumped to a 16-month low. Business confidence has eased from the ‘stable Government’ driven high witnessed at the start of the fiscal.

We would consider this as a glass half full in view of the modest slowing evident in economic momentum. This is because even as the pace of reforms has been slower than what was initially expected, a start has indeed been made. A number of proactive steps have been taken that include easing of FDI norms, fast-tracking environmental nod, passing the Mines and Minerals (Development and Regulation) Act, stepping up on public investments in infrastructure and cutting red tape amongst others. These changes in economic incentives are starting to bear fruit. Early signs of gradual pickup in investment demand are being visible. Stalling of projects has started to decline while new investment announcements are growing substantially.

These initiatives are certainly adding lustre to the picture but are not sufficient to propel the economy too far ahead. Many more such structural bottlenecks to infrastructure and manufacturing growth will have to be addressed in order to grease the wheels of the expansion. A nervous wait lies ahead. The big question that now lingers is how the economic landscape would look like in FY16. For this, D&B has selected certain key macro-economic indicators and charted out their future path, which in turn would determine the course of the overall economic environment during the next fiscal year.

Real GVA to grow by 8.4% in FY16Economic growth is likely to accelerate in FY16 as the partial unclogging of domestic policy logjam (clearing stalled projects and boosting mining) bears fruit and additional debottlenecking steps such as clearing of labour and land hurdles can be expected from the Government during the course of the fiscal. The fall in food inflation and lower fuel prices along with improving income growth would have a positive rub-off on discretionary spending and strengthen aggregate demand. The focus on public investments in infrastructure- roads, railways, power and rural development- in the Budget would not only “crowd in” private investments gradually but is also likely to have large multiplier effects on the growth of the economy via output and employment. Conflating these assessments and assuming a normal monsoon, we expect India’s economic growth as measured by gross value-added (GVA) at basic prices to grow by 8.4% in


India’s Economic Outlook: 2015-16

FY16 as against an estimated 7.4% growth in FY15. Most of the contributions are expected to come from the second half of FY16. Real GVA (Basic Prices)

Source: MOSPI and D&B IndiaNote: E: D&B Estimate, F: D&B Forecast

Disaggregating GVA data on a sectoral basis, the uptick in GVA growth during FY16 is expected to be driven by a robust services sector growth. The services sector is expected to maintain the resilience in FY16 as well. The expected improvement in domestic economic conditions, uptick in business sentiment, easing credit conditions and partial industrial recovery during the second half of FY16 would enable the service sector to continue supporting economic growth. The government’s initiative on a digital drive across the nation (Digital India) is expected to boost the domestic IT sector. The services sector is expected to grow by 10.9% in FY16 from an estimated 10.8% in FY15.

Sectoral growth in GVA components


Weak consumption and investment demand, slowdown in global demand along with the delay in the global economic recovery have all contributed to a severe slump in industrial activities in India over the past two years. Rapid rebound in industrial sector in FY16 is not expected. That said, ongoing regulatory measures coupled with the acceleration of policy efforts towards removal of input bottlenecks in the area of land and power are likely to improve the production scenario to a certain extent. Industrial activity is expected to accelerate to 6.2% during FY16, largely driven by continued de-bottlenecking of stalled investments and projects, pick-up in mining sector activity, governments’ push to make India a manufacturing hub through initiatives such as `Make in India’, easing of business processes and buoyancy in business sentiment. The second half of FY16 is more likely to witness some impact of the reform process. However, industrial growth is not expected to find support from external demand which is likely to remain weak.

D&B expects the pace of agricultural growth to accelerate to 4.2% in FY16 from an expected 1.7% in FY15 given the low base. The projection for agricultural output is based on the assumption of normal monsoon. However, El-Nino type climatic condition may effect agricultural output in FY16.

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Private Final ConsumptionExpenditure (PFCE) at current priceis expected to gain strength during FY16The erosion of purchasing power by inflation, elevated interest rates and weak consumer confidence took its toll on private consumption demand during FY15. As a result, D&B expects PFCE at current price to post a modest growth of 10.3% in FY15 as against a growth of 15.3% during FY14. Going forward, D&B expects PFCE to grow at around 12.6% in FY16. The recovery in PFCE is expected to be driven by the following factors:

• Falling fuel prices, moderation in inflation and expected improvement in income would increase the purchasing power of consumers

• Expected lower interest rates and pent-up demand

• Expected pick-up in consumer and business confidence during second half of FY16

• Financial inclusion schemes such as Pradhan Mantri Jan Dhan Yojana could provide some boost to consumption demand from the rural sector

PFCE to gain strength by FY16


Industrial growth to resurrect from H2 FY16Industrial output continued to witness slowdown in FY15. Elevated interest rates, surplus capacity in domestic market coupled with global deflation of manufactured products weakened the pricing power of domestic manufacturers and did not bode well for industrial production. Added to this, the corporate sector remained highly leveraged. Consumer durables sector has been the worst performing segment in Index of Industrial Production (IIP) during the previous fiscal.

D&B expects the IIP to register a moderate growth of 2.9% in FY15. Going ahead, D&B expects industrial activity to gather pace and grow by 6.0% during FY16, with substantial gains coming from the second half of FY16. The uptick in industrial activity is expected to be supported by the following factors:

• Government’s thrust on infrastructure, pick up in implementation of stalled projects and ease in environmental clearances.

• Anticipated easing of input bottlenecks towards H2 FY16 would accelerate industrial production.

• The passage of the Mines and Minerals (Development and Regulation) Act by the Parliament would provide impetus to mining activity.

• Easing of inflationary pressures and pickup in economic activity in H2 FY16 are likely to support private consumption demand, thereby driving the consumer durables sector which has been one of the worst performing segments under the IIP.



Industrial production to perform better in FY16


Investment rate to improve marginally in FY16Subdued investment rate in the current scenario was driven by significant deleveraging of businesses, sluggish sales and excess capacities. The investment outlook is likely to improve once the ongoing structural reform translates in to higher economic activity. The simplification of the regulatory regime for investors, increase in foreign direct investment limits in sectors including insurance and railways is likely to stimulate investment in the economy. Turnaround in the investment cycle will also be driven by the ‘Make in India’ campaign which involves developing industrial corridors, new manufacturing cities, logistic hubs and residential townships along the “Dedicated Railway Freight Corridors”. The Government has taken a number of initiatives in the Union Budget FY16 to provide a boost to the infrastructure sector. The total additional public investment is planned to be ̀ 1.25 tn in FY16, out of which ` 700 bn would be capital expenditure from budgetary outlay. The focus on public investments in infrastructure- roads, railways, power and rural development- in the Budget would not only “crowd in” private investments gradually but is also likely to have large multiplier effects on the growth of the economy via output, employment and also spur investments in the manufacturing

space. The expected continuation and acceleration of policy efforts to unclog structural bottlenecks would provide major push to overall investment. Early signs of gradual pickup in investment demand are already visible. Stalling of projects has started to decline while new investment announcements are growing substantially.

However, the current fiscal would witness the foundation being laid for investment demand to revive. A game-changing recovery in investment can be expected only after FY16. D&B expects Investment rate (Gross Domestic Capital Formation as a % of GDP) to be at 32.7% in FY15 and in FY16 investment rate is likely to edge up, albeit marginally, to 33.5%.

Investment rate to improve, albeit marginally


Savings rate (Saving as % of GNDI) to remain flatIn an effort to boost household savings, the Budget hiked the exemption limit for investments by individual tax payers in financial instruments to ` 1.5 lakh. Even as we expect improvement in income growth, savings rate is likely to remain broadly unchanged at around 31.8% during FY16 from an expected 31.1% in FY15.

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Savings rate to remain almost unchanged

Source: MOSPI and D&B India Note: E: D&B Estimate, F: D&B Forecast

Upturn in credit growth High interest rate environment along with risk aversion by banks due to deteriorating asset quality and sluggish investment demand dampened credit growth of banks during FY15. Corporates increasingly relied on commercial paper and domestic as well as external public issuances to meet their credit requirements.

The Government has started taking several policy initiatives including efforts to revive stalled projects. These and several other expected growth-boosting measures by the Government could bring about some revival in investment activity and provide support to credit offtake. There would however be a lag before investment plans are firmed up and credit requirements of firms in various sectors pick up. Declining number of stalled projects is likely to help in improving asset quality of banks going forward. With expected improvement in macro-economic conditions, softening of interest rates and traction in public investments, credit growth is likely to pick up to 12.5% in FY16 from a moderate growth of 9.5% in FY15.

Credit growth to pick up in FY16

Source: RBI and D&B India Note: E: D&B Estimate, F: D&B Forecast

WPI Inflation to average at 3.7% during FY16Barring the headwinds from the likely lower production of food to overall inflation, the decline in the crude oil prices through its direct and second round impact and lower demand side pressures is likely to aid inflation to ease down along the “glide path”. D&B expects WPI inflation to edge up to 3.7% in FY16 from 2.0% in FY15. Administered price corrections, weak agricultural production and geo-political issues are likely to pose upside risk to WPI inflation during the next year.

Inflation is expected to go up

Source: Ministry of Commerce and Industry and D&B India Note: E: D&B Estimate, F: D&B Forecast



Yields to ease marginallyYields in the gilts market have been on the downside during the current fiscal largely owing to liquidity adjustment measures taken by the RBI and repo rate cut. D&B estimates the 10 year G-sec yield to be at 7.7% in FY15 and further ease to 7.3% in FY16. Moderating inflation coupled with expectation of further monetary easing and likely FII inflows in the debt market would facilitate yields to ease further. The yields of the T-bills are likely to remain slightly lower during FY16 as compared to FY15 as credit conditions improve.

Rupee to appreciate marginallyThe disruptive movements in the rupee have been minimized to a great extent amidst financial market volatility across emerging markets. This was attributed to the policy responses that were put in place to overcome the stress through reduction in CAD which in turn built resilience through significant accretion of foreign reserves (US$ 343 bn as on 03-Apr-15). Going ahead in the near term, the hike in Fed rate (anticipated in mid-2015) is likely to have a strong impact on the movement in rupee. D&B expects that the rupee is fairly well-positioned to brace the impact of the interest rate rise in the US. The rupee is likely to appreciate and stand at around 62.20 per US Dollar by end of FY16. The following factors are likely to lend support to the Indian currency:

• The government is expected to speed up the implementation process for key reform measures which are aimed at improving investment scenario and business optimism. This will help in further renewing optimism among foreign investors.

• Reduction in the current account deficit (CAD)

• Favourable growth-inflation dynamics

• Decline in the share of short-term debt in total debt

External demand to remain afloatD&B expects exports to grow by only 1.2% during FY15 as global economic activity continued to remain weak. Going ahead, D&B expects exports to grow by around 10% in FY16. The double digit growth will be a result of a lower base effect and likely improvement in external demand conditions.

External demand to remain afloat

Source: Ministry of Commerce and Industry and D&B India Note: E: D&B Estimate, F: D&B Forecast

Fiscal deficit to rein inD&B expects fiscal headwinds to partially subside in FY16 as the new government is likely to adhere to fiscal discipline and build on the fiscal consolidation steps taken so far. D&B expects the fiscal deficit to be at 3.9% during FY16, lower than 4.1% estimated for FY15. Slow growth in tax collections and a shortfall in disinvestment proceeds would be the two major roadblocks towards attainment of fiscal consolidation going ahead.


Sectoral OutlookBanking

The fiscal year 2015-16 will be particularly challenging for the banking sector as a whole. Even as the anticipated improvement in economic activity is likely to benefit the banking sector, a

number of factors will continue to plague the industry. Concerns over asset-quality deterioration (more perceptibly for public sector banks), higher provisions, capital shortfall accentuated by the Basel-III commitments could continue to take a toll on banks’ performance. Rate cuts if not accompanied by considerable improvement in demand conditions could prove to be unfavourable for the credit environment, especially capex requirements.

Credit growth may revive marginallyThe Government has started taking several policy initiatives including efforts to revive stalled projects. These and several other expected growth-boosting measures by the Government could bring about some revival in investment activity and provide support to credit offtake. There would however be a lag before investment plans are firmed up and credit requirements of firms in various sectors pick up. With expected improvement in macro-economic conditions, credit growth is likely to pick up, albeit moderately, in the second half of FY16.

Asset quality concerns will persistDeteriorating asset quality has turned into a major area of concern for the entire banking industry and by extension the Indian economy. This has been attributed to the slowdown of the Indian economy which impinged credit growth and also had a strong bearing on revenues of firms. The investment related policy log-jams further weakened the repayment capacities of corporates and coupled with the inadequate credit appraisal processes of banks, particularly PSBs, led to a disproportionate rise in the NPAs. Gross NPAs of the banking sector mounted to 4.5% of total credit advanced in Sep 14 from 4.1% of total credit advanced in Mar 14. The net NPA as percentage of total net advances also increased to 2.5% in Sep 14 from 2.2% in Mar 14. Besides, potential pressures on asset quality have also intensified with the significant increase in restructured assets as indicated by higher Corporate Debt Restructuring (CDR).

The gradual improvement in the economic environment and faster resolution of stalled projects is likely to help recovery of sectors like infrastructure and manufacturing. This is expected to gradually alleviate some stress on banks’ asset quality by the second half of FY16. Banks have started adopting a more cautious approach towards lending. This in combination with the various measures such as establishment of the Bankruptcy Code announced in the Union Budget FY16 should help reduce the pace of fresh additions to NPAs in FY16.


Sectoral Outlook

That said, the overall NPA ratio would still be higher once the RBI’s regulatory forbearance, under which banks were allowed to qualify restructured assets as standard, comes to an end starting Apr 15.

Capital requirement for complying with the Basel III requirementsThe Basel III capital regulation has been implemented in India effective Apr 01, 2013, which will be fully implemented in a phased manner by Mar 31, 2019. The vicious cycle of economic slowdown, corporate earnings slowdown, increase in NPAs, increase in the proportion of restructured assets and depressed profitability of the banking sector has led to a situation where banks, particularly PSBs, will be severely challenged to raise the required capital to comply with the Basel III requirements in FY16. The RBI has introduced a number of changes in bonds issued under Basel III international banking norms. The revised norms allow banks to issue tier-II capital with original maturity of at least five years, against 10 years earlier and widen the investor base for additional tier-I capital bonds to include retail investors. In the current depressed equity valuation of PSU banks, these relaxations would to a certain extent, facilitate banks in meeting their capital requirements in FY16. However, mid-sized PSU with their relatively low equity valuations and mounting bad assets, could face enormous challenges in raising the required capital. This could have a debilitating effect on their credit profiles.

The capitalisation profile of private banks in FY16 is likely to be better than that of PSBs. Their strong performance would enable them to raise core equity capital directly through the markets.

Support from regulatory changesA number of regulatory changes announced by the RBI in recent months are likely to lend support to the banking sector in FY16. A particularly significant move was the RBI’s decision to allow banks to issue long-term bonds to raise funds for infrastructure

and affordable housing without maintaining statutory reserves such as CRR (cash reserve ratio) and SLR (statutory liquidity ratio). These incentives while enhancing the banks’ ability for lending to the infrastructure sector would also enable them to mitigate, to a certain extent, the asset-liability mismatch (ALM) issues faced while extending project loans to infrastructure and affordable housing sectors. The Union Budget 2015-16 has taken its first step towards providing greater functional autonomy and improving governance of public sector banks by announcing its intent to set up an autonomous bank board bureau for public sector banks. Many such positive regulatory initiatives could be expected in the coming fiscal that would help in reinforcing the dynamism of the banking system.

AutomobilesFavourable economic factors to boost domestic sales of automobiles going forwardWith economic recovery

expected in FY16, demand for automobiles across the various categories is likely to receive the required impetus. The growth in the automobile industry has been on an accelerated mode since FY14 and this trend is expected to continue into FY16. While sales growth in commercial vehicles is expected to enter the positive trajectory, growth would accelerate in the passenger vehicles and two & three-wheeler segments, driven by expected moderation in interest rate, fall in ownership cost and improvement in economic activity & consumer sentiments.

Besides improvement in business sentiments, lower fuel prices, ease in financing cost coupled with new product launches lined up augurs well for the

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Sectoral Outlook


growth of the overall automobile industry in the short to medium term. While the above mentioned parameters are more current in nature, fundamental advantages such as favourable demographics, increasing working age population, rising income levels, nuclearisation of families, rising urbanization, increased thrust on infrastructure development, foreign investment policies, rising discretionary spending, increasing affordability & aspiration level of Indian consumers, concept of second vehicle, along with demonstration effect are indicating towards a favourable environment for the automotive sector in India in the long-term.

The Government’s increased thrust on the auto industry through the Make in India programme is expected to further increase foreign investments into the sector and drive the Indian auto industry towards becoming a preferred global manufacturing hub.

Short-term growth outlookCommercial VehiclesThe expected recovery in economic activity in FY16, pick up in infrastructure & mining activities, project clearances, lower fuel price along with expected softening of interest rates are expected to result in the pent up demand getting converted into actual sales, particularly of medium & heavy duty vehicles. After two consecutive years of poor performance, the decline in M&HCV sales was arrested in FY15. The expected improvement in demand for M&HCVs is likely to trickle down to the light commercial vehicle segment.

Moreover, demand for pre-owned commercial vehicles is likely to witness traction given the expected increase in construction activity. Further, with inflation expected to moderate, the purchasing power of consumers is expected to improve, thereby leading to greater consumption and movement of goods. The Jawaharlal Nehru National Urban Renewal Mission Phase 2 would provide a boost to bus volumes. Further, export growth will be high on

agenda of CV manufacturers, providing the much needed impetus to overall sales volumes. These factors augur well for the commercial vehicles industry going forward, particularly the light vehicle segment.

Passenger VehiclesDomestic sales performance of passenger vehicles has been lacklustre in the recent 3-4 years, as compared to double-digit growth recorded during FY10 and FY11. Nevertheless, going forward, sales growth is expected to accelerate in FY16. Expectations of healthy economic growth in the year ahead, declining fuel prices, new product launches and moderation in inflation would encourage households to spend on discretionary products such as cars and utility vehicles.

Two WheelersGrowth in sales of two wheelers has accelerated since FY13 on the back of strong replacement demand and new product launches by OEMs. Fall in cost of ownership due to decline in fuel prices and expected reduction in interest rate augurs well for boosting sales of two wheelers in FY16, although weakened rural demand remains an area of concern.

While motorcycles will continue to drive overall sales volumes of two-wheelers, the buoyant sales performance of the scooter segment is likely to continue into FY16. Moreover, contribution of scooters in overall two-wheeler volumes has been on an upward trend since FY07. This trend is expected to continue into FY16 on account of the lower penetration of scooters as also on the back of new product launches and the recent fall in ownership cost.

Signs of revival in investment scenarioNotwithstanding the inadequate capacity utilisation levels in the automobiles industry and weakened demand in the recent quarters, the industry is


Sectoral Outlook

witnessing a revival in investment sentiments in the recent past, as reflected in the surge in new projects announced during FY15. Buoyant long term demand prospects of the Indian automobile industry and cost advantage from exports perspective are prompting OEMs to announce fresh investments/expansion plans.

Automobiles: New investment projects announced (` bn)

Source: CMIE

Key issues and challenges facing the industryRising customer expectations and the presence of several players fighting for market share with a plethora of products has led to cut-throat competition in the vehicle market. This, in turn, has kept profit margins of the OEMs under pressure. At the same time, in the recent past, weakened demand and therefore vehicle offtake, both in the domestic and exports markets, have further kept profit expansion under pressure.

Infrastructure is a major driver of growth for the auto industry. Although over the years the country has witnessed considerable infrastructure growth, the same has failed to keep pace with growing demand, thereby hampering overall expansion and growth of the auto industry.

Shortage of skilled manpower is another major challenge for the automotive sector. As per the National Skill Development Corporation, there would be skilled manpower requirement of 15 million in the next 10 years in the industry.

Apart from high input prices and rising customer expectations, some of the other critical challenges facing the Indian automobile industry today are the increasingly stringent emission and safety regulations and integration with the global markets. Meeting the stringent international emission related norms and safety standards calls for significant investment in research and development and capacity building activities. Integrating with the global markets necessitates building capabilities to meet competition at the global level as also lowering the product lifecycles and reducing the time-to-market for new products.

PharmaceuticalsThe Indian pharmaceutical industry is characterized by low production and R&D costs along with cheap manpower. The ability of the industry to capitalize on these strengths has made it

the third largest in the world in terms of production volume. India exports pharmaceuticals to several countries worldwide such as the US, Germany, France, Russia and the UK. The industry is currently grappling with the price cap extended on 450 drugs, which resulted in lower revenues in the domestic market in FY15. The export market also suffered a setback in FY15.

Despite recording a modest growth in FY15, the pharma sector continues to remain upbeat in the wake of government-led schemes and initiatives in making India the world leader in end-to-end drug manufacturing.

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Sectoral Outlook


Price Cap – The deterrent to revenue growthIn a recent move, the government extended the price cap on 52 more drugs taking the total number to 450. The drugs added to the list include those used in treatment of cancer and skin disorders in addition to antibiotics and painkillers. Post price cap, the price of drugs has fallen by nearly 40%, significantly impacting revenues. In another development, the government’s decision to exempt certain medicines and medical products from education cess is expected to lower the prices of such drugs and medical devices where excise duty is applicable. The move will lower the prices of drugs and medical devices where excise duty is applicable.

Uncertain export climateThe changing landscape in the overseas markets also impacted sales in the current fiscal. Export targets are not likely to be met in FY15 due to delayed regulatory approvals in the US and currency depreciation in several countries such as Russia, Ukraine and Venezuela. Consolidation in the US market has increased competition in the market and narrowed down the price margins of manufacturers. Developments in the US market directly impact Indian manufacturers as India exports over US$4 bn worth of products to the US, out of total annual exports worth nearly US$15 bn. Exports to the US are likely to recover in FY16.

Exports to benefit from several patents expiring in USAlthough the sluggish pace of approvals in the US is expected to continue in the near-term, exports are expected to benefit from drugs worth an estimated US$300 mn going off patent in the US between 2010-15. India stands to gain as it supplies nearly 25-30% of generics sold in the US.

Growth-inducing factors in the domestic marketThe policies of the Government aimed at making quality healthcare affordable to all, increasing access to healthcare in rural and urban areas and increasing penetration of healthcare insurance is expected to complement growth in the Indian pharmaceutical market.

Factors favouring the industry include low rural penetration, rising healthcare spending, rapid urbanisation, lifestyle-related diseases, growth in aging population, technological advancements and wide range of products manufactured. Increase in government spending on National Rural Health Management and National Health Insurance Programme augur well for the sector. Government-led initiatives such as the Jan Aushadhi, Pharma Vision 2020 and making India the Drug Discovery and Global Pharma Innovation Hub by 2020, will positively impact the sector.

Companies trying to cash in on low rural penetration Drug sales in rural markets are growing at a higher rate than in urban markets. Pharma companies are focusing on rural markets to counter the effects of price controls. Companies are hiring more personnel to tap the rural markets as price cuts have made medicines more affordable to the rural consumers.

Generics will continue to leadIn the domestic market, generics are expected to fuel growth in this fiscal supported by the ‘Jan Aushadhi’ campaign. As part of the campaign, the Government will make available low cost generic drugs from July 1, 2015. The medicines would be procured in bulk from public and private drug manufacturers and rebranded as ‘Jan Aushadhi’. In the initial stage, the government will sell 504 essential drugs including antibiotics, painkillers,


Sectoral Outlook

vitamins and medicines used in the treatment of cardiovascular, respiratory, diabetes and gastroenterology diseases. In the second phase, medical devices will be included and list of medicines will be expanded.

The OTC market is also expected to record substantial growth with pharma companies and chemists increasing their presence in rural markets.

Patented drugs constitute a very small portion of the market pie owing to high costs. Increase in disposable income is likely to accelerate demand for patented drugs going forward.

Favourable investment climate to make india an attractive investment destinationThe sector is expected to witness a spur in investment activity during FY16. Nearly 54 projects valued at an estimated ` 50 bn are expected to come on stream in this fiscal.

Foreign direct investment (FDI) inflows during the April ’14 – Jan ’15 period totaled US$ 1,259 mn, which is 5% of the total FDI inflows in the country during the same period.

Recent government announcements that are expected to boost investment: In February 2015, 100% FDI through the automatic route for the medical devices segment was allowed. The new FDI policy encompasses all kinds of medical instruments, diagnostic tools and products, any technology and products including clinical implants. The move is expected to boost the manufacturing of medical devices in the country. It is also expected to drive M&As and collaborations to develop new technologies.

During the Vibrant Gujarat Summit held in January 2015, nearly 201 MoUs worth ` 50 bn were signed. Most of the MoUs were in the formulations, APIs and medical device segments.

In a bid to garner investment worth ` 300 bn in phases, Telangana has proposed to set up India’s largest integrated pharmaceutical city near Hyderabad.

India has the potential to emerge as global R&D hubIndia has the potential to emerge as a cost-effective hub for R&D activities. The availability of cheap yet skilled manpower is a distinct advantage. An increase in R&D investment also calls for a robust Intellectual Property Rights (IPR) regime to ensure process and product protection. The government’s vision of making India the Drug Discovery and Global Pharma Innovation Hub by 2020 will work in its favour. Some of the objectives of this vision include the target of achieving every 5th drug to be discovered/developed in India and capturing 15-20% of worldwide R&D investments.

Issues plaguing the industryIncreased R&D activity in the sector requires a stable and effective IPR regime that would protect innovation. A stable regulatory environment for clinical trials would help in bringing new drugs earlier into the country. The slow rate of launching new drugs is partly due to prolonged clinical trials and partly because foreign innovators fear their loss of monopoly rights owing to India’s patent policies.

Pharma manufacturers also have to deal with the issue of compulsory licensing (CL), which means that the government allows another manufacturer to produce the patented product/process without the consent of the patent owner. CLs are granted when public health is at stake due to exclusivity granted

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Sectoral Outlook


to a product. CLs cause substantial revenue loss to companies.

Lastly, price control has been the bone of contention between the pharma producers and the regulator. In the government-controlled pharma industry, price controls will continue to stay.

Opportunities in clinical trials and bulk drug manufacturingThe clinical trials market in India offers high growth potential given the availability of a huge population base, bio-diversity and low costs involved in conducting the trials. However, guidelines issued by the government have not been encouraging to the segment. The slow pace is expected to continue through FY16 unless the guidelines are reversed.

The government is chalking out strategies to reduce India’s dependence on China for import of bulk drugs. The revival of HAL and IDPL is on the cards. Favourable policies and initiatives are the need of the hour to boost the segment.

The Department of Pharmaceutical has assigned 2015 as the ‘Year of Active Pharmaceutical Ingredients’ to emphasize the importance of the sector.

ConclusionRapid urbanization, sedentary lifestyles and lifestyle-related diseases are expected to increase the demand for cardiovascular, anti-diabetes, anti-depressants and anti-cancer drugs. Rise in income levels are expected to increase demand for high-end drugs and total spending on healthcare by households is also expected to rise in FY16.

The untapped rural market provides yet another potential for growth. Pharma companies along with chemists are increasing their presence in rural areas. Corporate hospital groups are also

diversifying into rural and semi-urban areas. The focus on rural health programmes, life saving drugs and preventive vaccines bodes well for the pharma companies.

The government’s recent announcement to waive local clinical trials for select cancer drugs is a positive sign for drug marketers, translating into huge revenues. The waiver would be allowed only if the drug has been safely marketed in other countries.

The proposal in Budget 2015-16 to reduce duties on specified inputs used in the manufacture of medical video endoscopes, exemption of artificial heart devices from duties, and the exemption of ambulance services from the scope of service tax could make certain critical healthcare services cheaper.

TextilesCurrently India is the second largest textile manufacturer in the world with its manufacturing base comprising 24% of global installed spindle capacity and 8% of installed rotor

capacity. Textile sector employs ~45 million peopledirectly and indirectly, making it the second largestemployer after agriculture.


Sectoral Outlook

Indian Textile Industry

Source: Make in India website

Installed Capacity (in Units)

Cloth Production (in Mn Sq.mts)

Spindles 48.7 Mn Cotton Cloth 27,373Rotors 7.8 Mn Non-Cotton Cloth 13,133Looms 4.7 Blended Cloth 7,689

Source: Ministry of Textiles, Production Data for April – December 2014

After going through one of the worst phases of growth during the last quarter of FY14 and initial few quarters of FY15, when demand from exports and domestic markets declined, the sector has witnessed revival on both domestic and export front. In the coming quarters, both export and domestic demand for textile products is expected to strengthen.

• Textile industry to benefit from the “Make in India” campaign unveiled by the government of India.

• Exports set to increase in the coming years as Indian textile mills prepare to fill in the gap created due to lower exports by Chinese mills.

• Exports to be more broad based by increasing the number of export destinations, from the current scenario of concentration among few western economies.

• Domestic demand to strengthen in the coming quarters, in line with expected improvement in economic growth in the country.

• Mechanization levels in the sector to witness an improvement as more and more mills opt to strengthen their manufacturing infrastructure to improve efficiency.

Inclusion of textile industry in Government of India’s “Make in India” policy to bolster domestic as well as export growth in the sectorMake in India campaign outlined in 2014 by the government is aimed at strengthening the manufacturing base in the country. Inclusion in the Make in India program would immensely benefit the textile sector as the government undertakes sector specific initiatives and implements policies and programs to improve overall business climate and investments. This measure is expected to attract private investments into all segments of textile industry – starting from yarn processing to textile finishing. In addition, export promotion measures would help the sector achieve its stated goal of US$ 300 bn of exports by 2024-25.

Exports to strengthen on the back of revival of demand in traditional market and penetration into new geographiesConsumer demand for textiles products in the US market is expected to strengthen in the coming quarters as US economic growth is seen to be stabilizing. Since US is the largest export market for Indian textile manufacturers, this revival would improve textile exports from India.

To lower dependency on the US and European market, Indian government is taking measures to encourage textile exporters to explore alternate markets in Latin America and Asia. Initially exports to these markets would be minimal but are expected to gain strength as consumption pattern in emerging markets in Latin America and Asia increase.

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Sectoral Outlook


Textile exports from China are expected toslow down in the coming years, presentingan opportunity for Indian mills to increasetheir market share in international marketsIncreasing labour cost in China is eroding the competitive advantage enjoyed by Chinese mills in the international textile market, presenting an opportunity to Indian mills who are currently the second largest exporters of textile products. In addition to increase in cost of production, the decision by Chinese mills to move up the value chain from exports of basic textile products to value added products too is expected to benefit Indian textile manufacturers. These two developments expected to unravel in the coming years would directly help in increasing textile exports from India.

Domestic demand for textile products set to recover owing to improving economic scenarioPick up in industrial activity, improvement in business sentiment in key service sector industries like IT-BPM, softening of inflation and cut in interest rate is expected to improve economic growth in coming quarters. Resultant revival in domestic consumer demand would lift textile consumption in the country.

Higher demand for textile products in the coming quarters, as a result of developments outlined above would push up the capacity utilization ratio in Indian textile industry. Increasing capacity utilization and prospect of continued increase in consumer demand as the economy improves would prompt textile mills to embark on capacity expansion initiatives. Consequently, capital expenditure in the textile industry is expected to see a revival.

Signs of revival in investments Capital investments in the textile sector is witnessing a revival with projects worth hundreds of crores being announced in the past 6 months. Several of

these projects are scheduled to come online over the next couple of years, adding capacity in the sector when consumer demand is expected to fully revive from the current slump. Announcement of these mega projects is a reflection of improving confidence among textile mills about the prospect of demand revival in the coming years.

Major capital investment projects announced during the past 6 months

Company Project Investment (` million)

Century Textiles & Industries Limited

Shahada Viscose Filament Yarn Expansion Project 1250

Sutlej Textiles & Industries Limited

Daheli (Bhilad) Home Textiles Division Expansion Project

890

Aditya Birla Nuvo Limited

Bhubaneswar Greenfield Garment Manufacturing Project

750

Sumeet Industries Ltd

Surat Colour FDY Yarns Project 100

S R F LimitedModernisation of Gwalior Technical Textile Plant Project

660

Filatex India Limited

Dahej Downstream Value Added Products Project 2500

Source: CMIE Capex

Issues and challenges facing the sectorIn the international market, Indian textile exports face tough competition from exports from Pakistan, Bangladesh, Vietnam and Cambodia. Favorable tariff measures enjoyed by these countries in European markets have directly impacted textile exports from India. While Indian textile exporters have to pay high duty to export to European markets, textile exports from Pakistan, Bangladesh and Cambodia are duty free. Since European countries form the second largest export destination (after the US), losing out market share in this region would negatively impact the industry.

In addition to increasing competition in European markets, Indian mills – especially cotton yarn manufacturers – also face the prospect of lower yarn demand from China, one of the largest markets. In 2014, the Chinese government introduced a


Sectoral Outlook

new cotton policy which encourages textile mills in the country to consume domestically produced cotton and yarn in place of imports. This policy shift has lowered the overall cotton and cotton yarn imports made by Chinese mills. As Indian cotton yarn manufacturers have high level of exposure to Chinese textile mills, this policy shift has a direct impact. With the policy unlikely to be rolled back, Indian yarn producers will have to penetrate new export markets.

Real EstateThe real estate sector in India is not just a major employer but also has a strong multiplier effect on several key manufacturing industries such as cement, steel, chemicals, paints, tiles and

other fittings. As per the National Housing Board (NHB), the housing and real estate industry ranked third among the 14 major industries in terms of its linkage effect.

After a moderate FY15, the year FY16 will be a year to watch out for with several amendments and policy announcements taking shape. Focused government policies and reforms such as REITs and liberalisation in FDI are expected to have a positive effect on the sector.

Sectoral growth outlookGreater investment avenues to boost the sectorThe Union Budget 2015-16 provided the much needed impetus to the real estate sector. A slew of measures were announced to attract foreign investment in the Alternative Investment Funds (AIFs). For the first time, foreign investment had been allowed in AIFs, enabling Private Equity (PEs) to leverage international money, thereby easing

flow of investment in real estate sector. Further, a tax pass through status were given to AIFs. This will support enhanced participation from NRI and institutional investors which remain primary targets of AIFs.

The Union Budget also relaxed the FDI norms in real estate to enhance participation. The minimum floor area was reduced to 20,000 sq m from the earlier 50,000 sq.m. Further, the minimum capital requirement for FDI was brought down to US$ 5 mn from US$ 10 mn earlier. This step is expected to boost development in Tier II and Tier III cities in the near future.

REITS set to make an entry in IndiaThe much awaited introduction of Real Estate Investment Trusts (REIT) was announced in the Union Budget 2013-14. Subsequently, the Union Budget 2015-16 paved ways for the launch of REITs by scrapping the capital gains tax for sponsors of REITs. The REITs will enable establishment of a new asset class, offering opportunity for portfolio diversification to its investors. REITs invest in income generating rental assets and are mandated to offer recurring dividends. It helps channelize savings from small and medium size investors to investments in real estate. The establishment of REITS in India is expected to provide the necessary impetus to the commercial real estate which is currently reeling under acute fund shortage.

Progressive reforms expected to ease out some pressure from the sectorSignificant percentage of the real estate projects were stalled/shelved/abandoned due to issues like land acquisition and environmental clearances during previous few years. The government is proactively trying to address these key concerns hampering growth of the sector. Policy based efforts initiated in the form of Real Estate Regulatory Bill and the new Land Acquisition Bill are expected to enhance transparency in the sector in the near future.

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Sectoral Outlook


Major infrastructure projects like industrial corridors & Smart Cities expected to boost the sectorMajor residential & commercial development can be expected in the vicinity of major infrastructure development projects like industrial corridors, national highways and metros. Cities passing through major industrial corridors are expected to become major investment destinations in the near future.

Moreover, the Prime Minister’s vision of creating 100 Smart Cities as satellite towns of larger cities aims at modernizing the existing mid-sized cities. This concept involves a mix of residential, commercial, social and infrastructural development. As per the Union Budget of 2014-15, the master planning of three new smart cities in the Chennai-Bengaluru Industrial Corridor region, viz., Ponneri in TN, Krishnapatnam in AP and Tumkur in Karnataka is expected to be completed soon. This definitely paves way for development of new residential and commercial markets.

Segment-wise growth outlook

1. Residential SegmentThe residential segment accounts for a major chunk of the real estate sector. Rapid urbanization, demographic growth and an expanding middle class has led to increasing demand in this sector. According to the data released by Centre for Monitoring Indian Economy (CMIE), as on Mar-2015, ` 6,723 bn worth of projects were under implementation in the housing construction sector, compared with ` 6,307.5 bn as on Mar-2014. The housing sector accounted for more than 60% of the total cost involved across the real estate sector. Financing from Scheduled Commercial Banks grew at a CAGR of 14.8% to the housing segment (including housing under priority lending) between CY 2010-2014.

Affordable housing continue to keep up the growth pace backed by strong government supportAffordable housing segment is expected to benefit from the ‘Housing for All by 2022’ target set by the new government as announced in the Union Budget 2015-16. Tax incentive schemes have been introduced and the deduction limit on account of interest on loan of self-occupied house property has been increased from ` 1.5 lakh to 2 lakh. Also a sum of ` 40 bn has been allocated to National Housing Bank (NHB) to increase the flow of cheaper credit for affordable housing to the urban poor/ Economically Weaker Sections (EWS)/ Low Income Groups (LIG) segment. Additionally, NHB has been allocated an additional sum of ` 80 bn to channelize flow of credit through Rural Housing Fund (RHF). The RBI too has relaxed some norms pertaining to issue of long-term bonds by banks for financing affordable housing. With additional investment, affordable housing is expected to attract interest of big developers who generally shy away from entering this segment.

Tier II & Tier III cities – Growth engines for the sectorWhile demand in Tier I cities or metros bounced back in Q1 FY15, demand from Tier II & Tier III cities like Coimbatore, Pune, Indore, Guwahati and Patna spearheaded the sector. As per the NHB Residex, residential prices in these cities showed an upward trend compared to previous quarter. Owing to a sizeable jump in economic activities and planned/ongoing major infrastructure projects, the Tier II & Tier III cities are expected to witness traction in the near future. Also, soaring real estate prices and scarcity of land across major cities have triggered many real estate players to tap new locations.

Demand for residential plots expected to riseThere is an increasing demand for residential plots (non-agricultural) located in the outskirts of major cities and towns. This is majorly marketed as a second home option or retirement home targeted


Sectoral Outlook

to upper middle class and high income class. Also, people generally prefer to purchase plots to make some medium to long term gains.

2. Commercial & Retail SegmentThe commercial real estate segment is largely linked to the macro-economic stability and performance of the industrial and services sector. In CY14, bank lending to commercial real estate registered a growth of 17.5%. Akin to the trend in residential, many developers in the commercial space are also observed to be exploring new locations owing to stagnating demand and rise in rentals and escalated prices of office spaces in major cities.

E-commerce: The next big wave for commercial real estateThe growing prominence of e-commerce in India appears to be having a positive impact on the commercial real estate business. In the recent years, these companies seem to be driving demand for office spaces and warehouses, which in turn is fuelling growth of commercial real estate in the country.

Sectors such as BFSI, IT & ITeS expected to drive demand of commercial office spacesAs per NASSCOM, the IT & ITeS sector has the potential to reach US$ 300 bn in revenues by 2020. This clearly signifies the growth potential in this sector and the upcoming demand for commercial office spaces. Additionally, the fast growing BFSI sector is also expected to generate large employment opportunities in the near future, which in turn would generate the demand for office spaces.

Demand for improved healthcare facilitiesThe healthcare sector comprising of hospitals, clinics and medical laboratories is growing fast backed by strong demand for improved medical services. With major concentration in metros and Tier I and Tier II cities, this sector is expected to drive demand for real estate in the near future.

Entry of private players in the education sectorThe education domain has witnessed a turnaround in the recent years with several private players entering this segment. Schools, colleges and several professional training institutions are spreading wings not just in metros but also many Tier II and Tier III cities. With increased demand for better educational infrastructure, this sector is expected to drive growth of real estate in the near future.

Accelerated Investments & Clearances: Key for the growth of the sectorWhile the overall outlook for the sector remains positive, active participation of the government, investors and lending institutions for the overall development in the sector will play a greater role in the next five years.

1. The participation of REITs in India is expected to aid the development of real estate, especially the commercial space.

2. Low interest rates are another crucial aspect to encourage investment in real estate. Revisions in repo rates that get adequately passed on to home buyers can be beneficial for the sector.

3. In the recent years, HNI & NRI investors have adopted a cautious approach towards real estate sector owing to domestic instability. A host of projects were abandoned due to lack of promoter interest in the last few years. These investments are crucial for the growth and stability of the sector and needs to be encouraged.

4. Further, growth of industries that form key forward and backward linkages to the real estate sector needs to be aligned with the real estate sector.

5. Lastly, speedy and hassle free environmental and other clearance can help prevent delays.

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Sectoral Outlook


The key challenges that the Indian real estate industry is facing today are:

• Lack of clear land titles

• Absence of title insurance

• Absence of industry status

• Lack of adequate sources of finance

• Shortage of labour, especially skilled labour

• Rising manpower and material costs

• Approvals and procedural difficulties

MetalsGlobally, outlook for the mining and metals industry remains volatile, as sharp deceleration in commodity prices led to restructuring and consolidation of business operations and eroded

investor confidence in the sector. However, domestically, the formation of a new stable government at the Centre has reaffirmed the corporate and consumer sentiment significantly. Moreover, adoption of various structural and pro-business reforms is likely to put the economic growth back on track in a phased manner. Expected improvement in domestic growth with fiscal policy gearing to an investment-led growth strategy is likely to improve demand, both domestic and foreign, for the overall metal sector. Given the thrust on fast-tracking stalled projects by the government followed by undertaking large flagship projects such as industrial & economic corridors and dedicated freight corridors (5 industrial corridors are proposed to be created out of which work on Delhi – Mumbai Industrial corridor is in progress), domestic demand for metals is expected to witness some improvement going ahead. Moreover, with proposals for the construction of 100 smart cities and The Mines and Minerals (Development and Regulation) Amendment Ordinance 2015, would

enable the metal sector in India to gain a strong foothold, despite the slump in the global market.

Weak consumption demand amidst the sluggish economic growth and raw material availability concern translated into a decelerated metal production in 2014. Domestic steel production, the key base metal, was adversely impacted due to restriction on iron ore mining in Karnataka and Goa which disrupted the raw material supplies to steel manufacturers. The uplifting of ban on iron ore mining provided some boost to the mining output. During April-Feb 2015-16, industrial production attained a growth of 2.6% owing mainly to recovery in the mining sector and strong growth in the electricity sector.

Favourable policy initiatives to support the metals and mining sectorDuring the period FY11 to FY14, several mining leases were either suspended or closed down. Following that, an enabling policy environment is being designed to provide a fair level playing field to investors, both domestic and foreign.

Regulatory uncertainty has been addressed by passing ordinances to streamline land acquisition, e-auctioning of coal blocks for private companies, and auctioning of iron ore and other new coal mines. In order to lay down robust & transparent system, an Ordinance was promulgated to legally enable the Government to re-allocate 204 coal mines cancelled by the court. With the recently concluded auction of coal mines in two phases (as on March 2015), the public exchequer has been able to garner more than ` 1.93 lakh crore. The Parliament has passed the Coal Mines (Special Provisions) Bill 2015 on 20th March, 2015 to ensure smooth transfer of right, title and interests in the mine along with its land and other associated mining infrastructure.


Sectoral Outlook

To give a fillip to the mining sector, the provisions of the Mines and Minerals (Development & Regulation) Act, 1957 (MMDR) has been amended with the objectives of providing greater transparency in allotment by auctioning mining leases, attracting private investment and high technology by promoting easy transferability and also obtaining an increased share for the state governments.

Modest rise in domestic metal prices is expected on account of shortage in supply of key input materialCurrently, global industry is facing oversupply of iron ore and coal given increase in production subsequent to the upliftment of the mining restriction on mines in Australia and Indonesia. Additionally, contracting demand from China, world’s largest iron ore consuming nation, has resulted in steady fall in iron ore prices. Even in the wake of declining global prices, we expect the domestic metal prices of semi-finished and finished metal products to firm up moderately as a result of shortages in domestic input supplies. However, this scenario is also likely to result in increasing import bill and impact the performance of the industry players at operating level.

Investment potentialThe country has immense potential for mining resources and reserves and is currently among the top 10 global producers of many minerals. There is significant scope for new mining capacities in iron ore, bauxite, and coal. Booming construction, automobiles, and packaging industries are expected to lend substantial support to the metals and mining sector. The Government of India has allowed 100% foreign direct investment (FDI) in the mining sector under the automatic route. The MMDR Act will enable better legislative environment for investment and technology.

Under the newly revised MMDR Act, except for coal and lignite coal, lignite and atomic minerals which has a maximum lease period of 30 years, mining leases for all other metals shall be granted for a period of 50 years. On expiry of the lease, instead of being renewed, the leases shall be put up for auction.

Recent reform measures in the infrastructure sector, FDI in railways and defence, plans to start coal block auctions and plans to start power plants in the private sector with all approvals in place are expected to address infrastructure bottlenecks and boost growth prospects for the metal sector in the medium term to long run.

The proposed investment in railways to the tune of ` 8.56 tn for a period of 5 years i.e. 2015-19, announced in the Railway Budget 2015-16, would boost demand for steel.

An Inter Ministerial Group (IMG) has been set up in the Ministry of Steel for coordination and expediting implementation of various investment projects (` 10 bn or more) in the manufacturing/infrastructure sector including the steel sector to ensure that steel production capacities come up quickly and minimize cost and time over runs.

Challenges in India’s mining sectorThe mining sector is still fraught with many issues and challenges which need to be addressed to fully realise the potential for mining resources and boost the domestic industrial activity.

• Highly regulated industry

• Difficult to get mining permits

• Excess capacity in some of the major sectors

• Social license to operate

• Competition for land usage

• Weak infrastructure

• Corruption issues

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Sectoral Outlook


InsurancePolicy initiatives likely to drive growth in life insurance segment in FY16Given the low life insurance penetration in India and the large untapped rural

‘un-insured’ population, insurers are expected to further expand distribution in rural areas for inclusive growth.

In FY14, growth in the life insurance business resumed with first year premium including single premium growing at a positive double digit rate of 12.1% after registering a decline in the previous two years. However, during Apr–Dec 2014, the life insurance industry registered decline in first year premium income by 13% due to slowdown in demand and thus savings and as IRDA’s new product regulations aimed at increasing the benefits for policy holders from Jan 14. Life insurance companies have come under a new regulatory regime since CY14 and can sell only new products.

With the stable new Government at the Centre, improving economy and business & consumer sentiments, demand for insurance products such as ULIPs and pension products, and regulatory reforms; life insurance sector is expected to strengthen over the coming next few years.

Favorable demography, growing financial awareness, new product launches, ‘customer centricity’ emerging as a key focus area among insurers, growing role of digitization in the sector, expansion of operations and supportive regulatory developments including Government’s focus on Jan–Suraksha and social security for all will drive growth in the insurance sector thereby aiding life and non-life insurance providers in tapping the untapped and un-insured regions. Universal social

security system is a much creditable initiative of the Government.

Low penetration level poses opportunities for long term growth in the non-life insurance segmentMotor insurance segment continued to dominate the non-life insurance segment with the highest share of 47.9% in gross direct premium within India during FY14 followed by health insurance (22%). However, penetration levels of non-life insurance in India are low at 0.8% in FY14, highlighting potential for substantial growth in the non-life insurance sector. The non-life business in India is expected to strengthen on account of improvement in GDP growth and rise in income levels which would drive demand for non-life insurance products.

Health and Motor insurance will continue to drive growth. Government has undertaken several initiatives to enhance insurance penetration, especially in the health insurance segment. The Pradhan Mantri Suraksha Bima Yojana has been announced in the Union Budget 2015-16 to cover accidental death risk of ` 0.2 mn for a premium of just ` 12 per annum. Similarly, Pradhan Mantri Jeevan Jyoti Bima Yojana has been launched to cover both natural and accidental death risk of 0.2 mn at a premium of ` 330 per year, for the age group of 18-50 years.

Tax incentives for insurance products will also support insurance demand. The Government has increased the deduction limit under section 80D to ` 25,000 from ` 15,000 for health insurance premium; and for senior citizens the limit has been increased from ` 20,000 to ` 30,000. Senior citizens above 80 years of age with no health insurance cover are allowed a deduction of ` 30,000 towards medical expenses. All these announcements made in the Union Budget 2015-16 will drive people to take health insurance thereby driving growth.


Sectoral Outlook

InvestmentRegulatory developments such as passage of “The Insurance Amendment Bill” to govern the sectorThe raising of the foreign direct investment (FDI) cap from 26% to 49% in the sector will lead to surge in the flow of capital in the country from foreign partners, boost operational efficiency & competition and aid in significant increase in insurance penetration. It will lead to enhancement of domain capital in the area of products and technology to facilitate growth of the industry. It would also lead to increase in customer coverage in rural and semi urban areas and employment.

With the capital inflow, more players are expected to enter the market. Insurance companies are expected to focus on upgrading infrastructure and increase hiring to enhance penetration thereby creating job opportunities in the sector. The number of branch offices is also expected to increase along with the number of employees and agents. With digitisation gaining prominence, insurance companies are expected to provide jobs in online channels, data analytics and IT domain.

Increased technology spending to be expectedInsurance spending on digital technologies is expected to increase going forward as insurers in India are working to digitize processes, gain customer insights and advance to next gen technical capabilities.

The insurers are expected to develop and adopt new distribution and marketing channels such as web aggregators, online distribution and mobile applications, to widen reach, reduce cost of distribution and promote growth. With the rapid growth in the use of mobile technology, insurers are expected to work on products and services catering to the mobile lifestyle. Many insurers are looking at mobile as a vital contact point for

improving the overall customer experience besides a sales channel. Insurers are looking at the mobile channel due to increasing smart phone adoption; for anytime/ anywhere/any device access; to cope with competition; reduce costs and cross-selling/up-selling prospects.

Insurance companies are also looking to incorporate social media plans with traditional customer relationship management (CRM) to improve experience for customers’ and insurers’ branding propositions.

Challenges going ahead• Cost efficiency

Insurance is a capital intensive sector and insurance companies need to infuse capital at regular intervals to fund business. Insurers incur expenses such as setup cost, maintenance, marketing & advertising, commission and other expenses. Given the high cost structure of the sector, the challenge for insurance companies is to curb these expenses and improve efficiencies for sustainable long term profitable growth.

• Competition Insurance products compete with physical assets like gold and property and other financial products such as fixed deposits and mutual funds for a portion of household savings. The share of household savings flowing into financial instruments (financial savings rate) has dropped from 12% in FY10 to 7.1% in FY13. Within gross financial savings, the proportion of life insurance has decreased from 20% in FY11 to 17% in FY14. (As savings data calculated based on old methodology).

Insurance companies need to focus on increasing awareness, offering customized, simple and transparent products to enable insurance in becoming one of the attractive investment avenues. With the passage of The Insurance Amendment Bill, new players are expected to enter the market.

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Sectoral Outlook


With intensified competition among players and customers asking for customization, insurers need to focus on product innovation and customer centricity.

PowerThe Indian power industry constitutes the most critical component of the country’s infrastructure and consists of power generation, transmission and distribution utilities. According to Central

Electricity Authority (CEA), as of Jan 2015, India had 258 gigawatts (GW) of installed electricity generating capacity, majority of which is from coal-based thermal power plants. As on Dec 31, 2014, 56.5% of the cumulative capacity addition target from conventional sources (set for the 12th Five Year Plan) has already been achieved with the individual targets achieved by the central, state, and private sectors being 39.2%, 64.5%, and 63.6%, respectively.

In the long run, the Indian power sector will provide significant growth and investment opportunities as the Government is focused on attaining ‘Power for All’ and taking various initiatives in promoting private sector participation in transmission & distribution, privatisation of distribution franchisees and enhancing focus on improving efficiency and introducing advanced technology.

The government in the World Economic Forum 2015 has envisaged an investment of around US$ 250 bn across different segments in the power sector. Of the total investment of US$ 250 bn, maximum investment of US$ 100 bn is likely to be in the renewable energy sector. The transmission and distribution segment is likely to get an investment of around US$ 50 bn while power generation segment will attract an investment of around US$ 60-70

bn along with an investment of around US$ 5-6 bn in energy efficiency projects. The government has also given emphasis to the renewable energy sources for power generation in the Union Budget 2015-16, but in the short run, renewable energy can only compliment and not substitute coal-based power generation as the power projects based on renewable sources of energy still operate at a low Plant Load Factor as compared to the coal based power plants.

Increase in clean energy cess applicable to coal and delay in auctioning of all cancelled coal blocks may impact power sectorIn the Union Budget 2015-16, the Government of India has proposed ‘plug-and-play’ model for largeinfrastructure projects, which will help in faster implementation of projects. Further, in the Union Budget 2015-16, the government’s announcement of setting up of 5 new Ultra Mega Power Plants (UMPPs) of 4,000 MW each entailing total investments of around ` 1 tn will lead to greater investments in the sector in the medium to long term.

However, government’s announcement of increasing clean energy cess from ` 100 to ` 200 per metric tonne of coal is likely to impact the sector. As around 60% of the power generation installed capacity in our country is coal-based, this increase in coal cess is likely to increase the generation cost which in turn may lead to an increase in power tariff for the end consumers. Further, in Sep 2014, the Supreme Court passed the judgment of cancelling of coal blocks allocated between 1993 and 2011. Subsequent to the Supreme Court Judgement, the Government has started auctioning the cancelled coal blocks. Till March 2015, the Government has auctioned 34 coal blocks to various players in various industries via auction route. Successful and timely auction of all balance coal blocks will help the thermal power industry in meeting its raw material requirement and may reduce the dependency on


Sectoral Outlook

import of coal. However, any delay in auctioning of balanced coal blocks is likely to cause delay in adding new generation capacity.

Need for enhanced investment for large scale installed generation capacity addition remains to be the key focus area for the power sectorIndia’s power sector has grown significantly over the years with demand growing at a fast rate. To further augment the growth and meet the growing demand, there is a need to increase the power generating capacity in the country as well as to ensure power availability to all, across geographical boundaries.

There is a strong need to increase proportion of the supply from renewable sources to reduce greenhouse gas emission and to ease reliance on the fossil fuels. In line with this objective, the government took initiative aimed at augmenting renewable capacity recently in Union Budget 2015-16 by revising renewable energy generation capacity target to 175,000 MW by 2022, comprising 100,000 MW of solar energy, 60,000 MW of wind energy, 10,000 MW of biomass energy and 5000 MW of small hydro.

To tap the immense opportunity in the area of capacity expansion and to bridge the increasing gap between demand and supply there is an immediate need of enhancing investment across the value chain in the power sector. These areas if addressed would not only entail greater investment in the sector but also alleviate much of the issues in the sector:

1. Significant investments are required for enhancing power generation capacity, particularly in the renewable energy. Also, initiatives should be taken to improve the investment environment for the private companies.

2. Increased investment and focus on establishing strong transmission capacity is required to reduce the congestion in transmission network which led power plants to operate at sub optimal capacities.

3. An adequate investment in the distribution network is also required to improve the quality of electricity supply for the existing consumers as well as the targeted consumers in the next five years.

Issues and challengesThe Indian power sector has to go a long way to attain the required capacity addition matching with the ever growing power demand of the country. Few challenges faced by the industry are:

1. Fuel SuppliesFuel availability is one of the major concerns of the industry. As around 60% of the power generation installed capacity is coal-based and majority of planned capacity addition is also coal dependent, limited availability of domestic coal leads to increased dependence on imported coal with the cascading result of high power generation costs. In FY14, the power sector in India consumed 489.4 million tonnes of coal. However, despite having large coal reserves, India is increasingly dependent on imported fossil fuel.

2. Less focus on renewable sources of energy Though the government is taking various initiatives to promote renewable projects but as stated in the 12th Five Year Plan, the share of renewable energy sources in total energy consumption will be as low as 2% by 2021. Therefore, consistent expansion of renewable energy and its utilisation is crucial.

3. Transmission and distribution losses A big challenge facing the power distribution sector is the large Aggregate Technical and Commercial (AT&C) losses leading to financial un-viability. The AT&C losses are leading to increasing

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Sectoral Outlook


gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR) which are affecting the distribution companies in recovering the cost of supply.

4. Acquisition of landLand acquisition for establishment of power plants and substations has become a major challenge. Further, lack of updated land records and lack of proper land acquisition laws act as an obstacle in the implementation of major power projects. Thus, there is a need to amend the existing Land Acquisition Act to make the process of land acquisition faster and less cumbersome for which the Central Government is trying to pass a bill but is facing opposition from the political parties. Thus, if the new Bill relating to land acquisition gets passed, it may help the industry.

5. Delay in environmental and forest clearances Obtaining forest and environmental clearance is a mandatory requirement for the transmission projects where the line traverses through the forest. The lengthy & cumbersome process and involvement of different levels of officials at State and Central Government level often leads to delay in the projects affecting the project completion schedule. Thus there is a need to take various measures to speed up the clearances process.

6. Lack of skilled manpowerTrained and skilled manpower is an essential pre-requisite for rapid development of the power sector. However, the industry faces severe shortage of skilled manpower, owing to the shortage of training institutes and availability of alternative and more lucrative career options. Therefore, development of skilled manpower by creation of adequate number of modern technical training institutes and setting up of regional skill development centres is the need of the hour for the industry.

IT-BPMOver the years, India has emerged as one of the most favorable destinations for IT (Information Technology) and business process outsourcing. In FY14, the Indian IT-BPM (Information

Technology – Business Process Management) industry continued to retain its leadership position as a global offshoring destination, accounting for about 55% share in the global sourcing market in FY14.

Growth in FY15 was impacted by the volatility in the global macro-economic conditions such as slowdown in the European economy and unstable currency market. However, the total revenues of the Indian IT-BPM industry is expected to touch US$ 166 bn in FY16 increasing from US$ 146 bn in FY15, increasing by 14% y-o-y. The export revenue is expected to increase between 12%-14% and reach between US$ 110 bn-112 bn in FY16 from US$ 98.5 bn in FY15 (as per NASSCOM’s estimate).

However, as the US being a major trading partner for the Indian IT-BPM industry, improvement in the US economy augurs well for the Indian IT-BPM industry to sustain growth. Rise in Global Technology spending on the back of improving business environment augurs well for the country’s IT-BPM industry.

The domestic market revenue is expected to outperform the export growth in FY16. This growth will be driven by improvement in macro-economic environment coupled with various new initiatives by Indian government like launch of ‘Digital India’ program & plan to develop 100 smart cities which will provide a boost to the industry. Also, significant surge in use of the smart phones, growing Internet


Sectoral Outlook

penetration and boom of e-commerce is likely to provide boost to the growth of social media, analytics and cloud.

The changing market dynamics have forced companies to adopt innovative business strategies such as diversifying in terms of products & services, geographically and also vertical mix. While the BFSI sector was worst hit during the slowdown period, it still looks promising for Indian IT-BPM players and companies can tap this sector with newer set of products and services offerings along with tapping other opportunities like e-governance. As more and more government departments adopt and implement projects to offer online services, it offers huge opportunity for the IT companies to design the IT architecture.

Thus, overall the short-term outlook of the Indian IT-BPM industry looks promising. Disruptive technologies, digitization and emergence of new business models among others will fuel growth in the near future.

• IT ServicesThe IT services segment is expected to grow at a healthy pace in the near future. The growth will be driven by improved economic scenario in the US, improvement in overall business confidence and enhanced IT spending by the BFSI vertical. Further, with the newly formed government’s initiative to digitize India with technology being at the epicenter will boost the growth of this sector.

• BPMAs per NASSCOM, the Indian BPM market is expected to reach US$ 50 bn by 2020. There is expected to be a major shift from handling traditional processes towards managing more integrated process and offering technology optimised services. Further, corporates are likely to prefer to work with niche technology vendors and break their large deal sizes

into smaller ones and derive a good pricing advantage.

• Engineering and research & development (ER&D) servicesAs per NASSCOM, the revenues from ER&D sector is expected to reach between US$ 37-45 bn by 2020, largely driven by flexible business models, availability of engineering talent pool and increasing pressures on global firms to cut product development cost. The sector is likely to witness more global companies setting up their captive R&D centres in the country.

• HardwareThe hardware sector’s demand is likely to be driven by need for storage as enterprises are looking for expanding their IT infrastructure, given marginal improvement in global macro-economic scenario. Products that are expected to drive demand include notebooks/laptops and tablets, whereas desktops will see a decreasing share.

Investment potentialAs far as investment is concerned, the IT companies would continue their investment in developing newer set of products and solutions. The investment areas which holds potential for the IT companies are as mentioned below:-

• Rising demand for ‘Enterprise Applications’ With the surge in the user base of smart devices, including smartphones and tablets, such devices are increasingly making their way into corporate planning and operations. The corporates especially in the banking and telecom sectors are making investment in developing enterprise mobile applications which will allow customers to access account information and perform transactions. This offers immense investment potential for IT companies to develop customised enterprise applications.

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Sectoral Outlook


• ‘Internet of Things’ poised to transform businesses and generate limitless opportunities for IT companiesPotential investment areas are as mentioned below:-

• For businesses: Investment is required to develop business intelligence and analytics solutions that will analyze the employee’s productivity, schedule meetings and provide feedback on customer’s usage pattern and help corporates in acquiring new clients among others.

• For government: Investment is required to develop solutions that will help in controlling and managing government’s public related systems such as managing traffic and electricity supply among others.

• For consumers: The IT companies can offer solutions that will empower consumers and offer convenience such as home automation solutions including managing home energy and safety & security solutions.

• Government’s technology centric initiatives offer tremendous investment potential for IT companiesThe current government and its technology-centric initiatives such as launch of, ‘Digital India’ program, development of smart cities, revised national e-Governance plan and UIDAI is creating a need to develop large scale IT infrastructure and promote corporate participation. Further, the government has also allocated a sum of ` 5,000 mn under the National Rural Internet and Technology Mission. This initiative offers tremendous investment opportunities for the IT companies to partner with the government and implement and restructure new and existing schemes.

• SMAC offers significant opportunities to IT companies in building new IT infrastructure Emerging technologies present an entire new gamut of opportunities for IT firms in India. Cloud represents the largest opportunity under

SMAC, increasing at a CAGR of approximately 30% to reach around US$ 650-700 bn by 2020. SMAC, big data and other emerging technologies will result in significant investment in new IT infrastructure by both public and private sectors in the coming years.

• Digitization in the television industry The digitization in the television industry has created a need for developing set-top boxes with every digital TV set. Digitization requires building sophisticated electronic equipment built on cost-efficient semiconductors. Further, the service providers will have the opportunity to build two-way networks that will give subscribers new interactive services built on new infrastructure and modems.

• Booming domestic e-commerce market offers substantial investment opportunities The retail e-commerce sale in India is growing at an unprecedented rate. Though the e-commerce sector is still at a nascent stage, it is expected to get bigger in the near future, driven by increasing penetration of Internet and increasing usage of smart devices for performing transactions. These factors support the growth of the IT-BPM industry.

• Betting big on AfricaSignificant investment can be made in order to tap the current under-developed IT market in Africa. The increased African government’s thrust on building IT infrastructure and services, growing income levels & middle class population and entry of MNCs in various other sectors has pushed the demand for developing IT infrastructure. Revenue share from this market is likely to increase from current single digit over the next few years.

• Exemption of inputs used in manufacturing of computers from, ‘Special Additional Duty’ (SAD) In the recent Union Budget, the inputs used in the manufacture of computers were exempted from SAD, while at the same time it imposed an


Sectoral Outlook

education cess on imported electronic products to ensure a level playing field between domestically produced goods and imported goods. This will encourage investment of the domestic IT companies in manufacturing computers.

Cost containmentIn order to retain long-term competitiveness, companies have to focus on cost containment. Since manpower cost is largest in terms of cost for IT companies, increasing efficiency and productivity like revenue per employee will help to control cost. Increased thrust on collaboration with multiple universities to upgrade the skill sets of the local talent will help IT companies in increasing the labor productivity and controlling the manpower cost. Secondly, since significant portion of their revenue is impacted by movement in rupee value, hedging foreign currencies and financial re-engineering will help in controlling cost.

Sector-specific issues & challengesAlong with the phenomenal growth of the Indian IT-BPM industry, the challenges faced by the industry players have grown manifold. Some of the major challenges are as under:-

• Maintaining cost competitiveness: Emerging low cost destinations such as Philippines, Ireland and Mexico will give tougher competition to the Indian IT companies in the near future. In order to retain their cost competitiveness, the Indian IT companies are likely to continue to shift their base from metros to tier-II and tier-III towns.

• Smaller IT companies will face increased pressure: With increasing globalization, smaller IT companies will be pushed to introduce new products, services and process. Smaller firms will face high pressure from big players as well as from customers who demand cost-effective solutions.

• Talent retention: High attrition rate is one of the biggest challenges for the Indian IT-BPM

industry. Smaller IT companies will face greater challenge in retaining skilled talent as they will find it difficult to match the pay packages of their larger peers.

• Increasing cyber threats: The Indian IT companies are facing challenges in addressing advanced cyber and data security threats. They will have to frame new set of strategies and develop innovative solutions that are forward leaning and address the complex dynamics of the altering data security landscape.

TelecomThe Indian telecommunication industry is one of the fastest growing in the world. In spite of legal hurdles relating to the 2G spectrum allocation, lack of clarity on spectrum sharing, lack of consolidation

and high debt levels, the industry posted robust earnings in FY14 due to a spike in demand for data and high speed Internet services (especially in tier 1 cities). The industry is also expecting longer term investments post the announcement of a “Digital India” by the new Government.

Outlook for Telecom sector:• Successful spectrum auction – The government

successfully collected ` 1.09 lakh crore within two weeks into the spectrum auction of 2015. Intense bidding took place to acquire airwaves in circles where their permits were expiring. However, the noteworthy part was the robust bidding for the 800MHz and 1800 MHz spectrums which are suitable for 4G. Spectrum bids were significantly higher than the reserve prices (for example, 133% over the reserve price in Maharashtra) showing the industry’s favourable outlook in terms of subscriptions.

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• Prevalence of LTE going forward – In FY16, multiple Indian telecom players are expected to launch high speed 4G data services on a more efficient 1800 MHz spectrum. Only 2 companies have been able to provide 4G services in India currently and that too with limited connectivity. However, with major new players entering the market and a very successful 1800 MHz spectrum auction in March 2015, 4G is expected to drive the industry going ahead. Due to a constant need for faster downloads and streaming speeds especially in the tier 1 cities, Indian subscribers are expected to adopt 4G in a big way for mobile data and high-speed Internet.

• Affordable smartphones – The government’s “Make in India” campaign will provide an impetus to domestically manufactured smartphones. In the Union Budget 2015-16, excise duty on LED lamps was reduced from 12% to 6% and Special Additional Duty of customs on circuit boards for LED lights and LED lamps has been abolished. Both are integral components of smartphones. This is expected to bring down the costs of smartphones and lead to an increase in ownership. Eventually, increase in the usage of smartphones would lead to an increase in voice and Internet data usage.

• Digital India and NOFN plans – The National Optical Fibre Network (NOFN) project of the government aims to provide high speed broadband connectivity to 25 million Gram Panchayats and the Union Budget 2015-16 reiterated the need to accelerate the same. This would lead to a larger outreach of telecom services resulting in a larger subscriber base. The government’s initiative to create 100 smart cities and satellite smart cities would also result in greater demand for telecom services due to adoption of technology and facilities like public Wi-Fi.

Out of a total of 244,729 Gram Panchayats (GPs) in India, 97,480 GPs have been taken under phase 1 of the NOFN project. 30,851 Kms of Pipe and 17355 Kms of cable have already been laid under the project for a total of 7,470 GPs.

The all-India subscriber base stood at 933 mn in 2013-14, an increase of 3.4% over the previous year and a 10.3% CAGR growth over the past 5 financial years. The Central Plan outlay in the Union Budget for 2015-16 to the Department of Telecommunications went up from ` 135.01 bn (estimates) in FY15 to ` 228.85 bn in FY16. A substantial increase in budgetary support to the Department of Telecommunications highlights the importance given to the sector. Driven by 3G and 4G services, a massive demand for Internet services can be expected in India in 2015-16. There is also a lot of scope for growth of Machine to Machine services in the Government’s ambitious US$ 1.1 bn smart city program. Owing to such factors, the Indian telecom sector is expected to grow especially in the wireless and data space. Majority of this growth should be a result of an increase in the wireless subscriber base.

Among its major initiatives, the Government plans to roll out free wi-fi in 2500 cities and towns over the next 3 years. The same would be implemented by BSNL involving an investment of ` 70 bn. It would be in similar lines with private service providers who have entered into contracts to provide free wi-fi services to airports and other public places for a stipulated period of time post which these services would be chargeable. A lot of private players have also invested in the sector mainly in the development of telecom infrastructure including towers. Projects worth approximately ` 1145 bn were under implementation in the sector during FY15. Moreover, during FY15 new projects worth ` 80.6 bn were announced. Even though meager, it has trebled in value terms compared to FY13.


Sectoral Outlook

Some of the major ongoing projects are as follows:

Company Name Project Type Amount (` bn)

BSNL Network Expansion Plans 420

Bharti Infratel Ltd. Multi location new towers project 10.8

Viom Networks Ltd. Multi location towers project 1.5

Indus Towers Ltd. Tower project in West Bengal 1.5

Bharti Realty Pvt. Ltd. Rajarhat Eastern Campus Project 1.3

Source: CMIE Capex

A very successful spectrum auction, growing requirement for high-speed Internet, e-governance initiatives, digitization adopted by almost every sector from BFSI to retail, spurt in e-commerce, the Government’s Digital India campaign, a rapidly growing subscriber base and an expectation of the much needed consolidation within the industry, is expected to be favourable for the growth of the industry during FY16 and beyond.

ChallengesIn spite of strong potential, a lot of players have found it difficult to grow in the Indian telecom industry due to stiff competition. Due to unfavourable M&A guidelines and an uneasy exit route for smaller players, the industry has not been able to consolidate, which is the need of the hour. Competition has led to unsustainable pricing, which although favourable for consumers, has created an unsustainable financial situation for service providers. Although initiatives have been taken by TRAI and industry associations, the Government has still not given clarity on the same.

RetailThe diverse economic profile along with huge population base has contributed significantly to the growth of retail industry in the past. On the demand side, rising personal disposable income,

growing urbanization, improvement in employment and changing aspiration level of Indians has supported the consumerism and retail expansion in India. The sector has been witnessing rapid transformation from unorganized to the organized, giving place to modern retail format which gives unique shopping experience to the customer. In the last decade, the industry witnessed the emergence of e-retailing which gained huge acceptance amongst the consumer and is witnessing healthy growth.

Some of the key dynamics that will continue to drive the growth trajectory of rapidly evolving retail sector in FY16 are:

• Expected pickup in domestic GDP growth during FY16 augurs well for the retail industry

Expected improvement in economic activity given improved policy environment and falling inflation rate is likely to provide required impetus to retail sector in coming years. Further, expected moderation in interest rates is likely to support consumption of various consumer products.

• Rapid transformation from brick to click based retail format

Further, growing Internet penetration coupled with constant adoption of high end communication devices available with cheap data services is building the future of organized retail industry in India to steadily transform from Brick to Click format i.e. store operated retailing to online retailing/e-tailing. Increasing

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Sectoral Outlook


time poverty, rising internet penetration and the convenience of purchasing products online are the most prominent factors that are driving the growth of India’s online retail market. Efficient customer servicing facilities offered by retailers such as cash on delivery, good replacement policy and such other factors has boosted the trust and comfort of customers to opt for online shopping. Further, the growth of logistics and reverse logistic to ensure speedy, secure, and safe delivery of the precious and delicate items has been fuelling the growth of the online retail in India.

• Retailers to explore Omni-channel retailing to remain competitive in retail Industry

With rapid growth of social media, the industry participants are visioning rising penetration of disruptive technologies in retail sector where retailers are exploring multi-channel sales format including physical retail stores, online stores, television, mobile app stores and telephone sale. Consequently, retailers have entered into marketing arrangement with leading online and on air-retailing companies to sell their products. Online retailers have also launched their online mobile apps to increase their reach to the customers.

Investment opportunity in Retail sectorWith key demand for various consumer goods expected to remain buoyant, the retail sector requires substantial investment towards up-gradation of back-end infrastructure facilities to deal with various supply side challenges. These include investment in storage and warehousing, cold storage, technology driven logistic arrangement and road infrastructure to improve supply chain infrastructure and therefore help in protecting margins of the retailers.

Also, with growing penetration and competition in online retailing the need for ace delivery boys is rising rapidly for completion of product delivery to end customer.

Key ChallengesAmongst all the positive factors that favour the growth of the organized retail industry, the dynamics of the industry are governed by overall economic growth which influences the income growth and customer’s propensity to spend on discretionary items. Indian retail industry’s performance continued to witness sluggish growth on the back of subdued economic growth in the past few years. Thus, the industry faces downside risk of sluggish economic growth along with certain inherent challenges. Some of these include shortage of skilled manpower, high operating cost due to infrastructure bottlenecks related to road, power, and water, rigid regulations, and high rental cost. With existing challenges mentioned above, India slipped to 20th rank on Global Retail Development Index (GRDI) 2014 among the top 30 developing countries from 14th position in 2013.

• Inadequate Supply Chain Infrastructure: In India about 35-40% of the total food product produced in the country is wasted due to lack of adequate supply chain infrastructure. Also, due to infrastructure bottleneck and paucity of trained logistic personnel; India has one of the highest logistic costs against global average which results in high operating cost for the various industry participants in retail sector. Due to the above mentioned challenges, India slipped to 54th amongst 160 countries on Logistics Performance Index (LPI) 2014 (survey conducted by World Bank) against 47th rank amongst 155 countries surveyed in 2013.

• Delay in Implementation of Goods & Services Taxes: Under current tax regime (state level VAT), companies maintain their warehouses in every state which increases the inventory,


Sectoral Outlook

maintenance and infrastructure costs. The likely introduction of GST would simplify the tax structure and is expected to have a favorable impact on logistics services sector as well as on retail industry. Buts its implementation has been delayed in every successive year and is now announced to be implemented on 1st April 2016. Consequently, retail sector will continue to deal with the anomalies of the differential taxation structure in the current fiscal.

• Political uncertainty on the adoption of Multi Brand FDI in Retail: Government introduced 100% FDI in Single Brand Retailing and 51% in Multi Brand Retailing in September 2012. However, the decision to introduce 51% FDI in Multi Brand retailing faced huge resistance from majority of states and till date has won the support of less than half of 28 states. As against the likely reversal of the FDI policy expected initially with the formation of new government (NDA government), the Ministry of Textile under the new government now view to

allow FDI in multi- brand retail under automatic route but only in Indian apparels brands. Currently, FDI policy allows for FDI investment only in foreign brand and retail operated by international entity. In the absence of clarity on FDI policy, many foreign investors are holding back their investment plans and looking for alternative opportunity.

• Absence of any uniform National Retail Policy: Currently, there are no well-defined, clear rules pertaining to e-commerce. As a result, the industry is being split by channels of trade. Retail can at most be segregated by categories of products and services traded rather than by channels or brands. The industry has been seeking modifications on this for a substantial time-period.

• Further, Indian online retail is hampered by poor infrastructure, low Internet penetration, and slow data downloading speed at 3G network and difficulties with basic enablers like online payments.


Some Concerns to GrowthProspects for the Indian economy have definitely brightened in view of abatement of high inflationary pressures, the Union Budget reiterating thrust in investment infrastructure, uptick in the mining activity, upbeat domestic financial market conditions, expected easing of interest rate cycle and most importantly policy initiatives taken by the current government. In fact, India is touted to emerge as the fastest growing economy by the World Bank and the IMF. In spite of the expected increase in growth, we still see some downside risks to our forecasts.

• Fragile and tepid recovery in some developed markets might dent external demand conditions

• If actual monsoon turns out to be below normal, not only agricultural growth would be impacted, the resultant increase in food prices would lead to reversal in the downward inflation trajectory.

• While it is expected that crude oil prices would stay at lower levels, geopolitical tension or sudden supply shocks may lead to sharp increase in global crude oil prices which in turn could waver the upright domestic growth momentum given the various direct or indirect linkages that crude oil has for the economy.

• Changes in global liquidity in the event of a shift in the US Fed’s monetary policy stance i.e. sudden or sharp hike in interest rate than generally anticipated from near zero-levels coupled with investor risk aversion could adversely impact the size and direction of FII flows and thereby the exchange rate of India.

• Non revival in corporate investment and infrastructure building could be a major hindrance to the resumption in the industrial activity.

• Lack of visible improvement in the pace of implementation of various projects could stall capital formation and thereby dampen growth impulses.

• Delay in implementing of key policy measure and reforms due to low majority in upper house.


D&B’s Key Macroeconomic ForecastVariables FY13 FY14 FY15 FY16 (F)

Real SectorNominal GDP (` Bn)# 99885 113451 124173 139147Nominal GDP Growth (y-o-y %)# 13.1 13.6 9.5 12.1Real GVA (at basic price) (` Bn)# 85992 91698 98524 106759Real GVA (at basic price) Growth (y-o-y %)# 4.9 6.6 7.4 8.4Real GVA- Sector wiseAgriculture (` Bn)# 15235 15793 16058 16729Agriculture Growth (y-o-y %)# 1.2 3.7 1.7 4.2Industry (` Bn)# 27795 29053 30542 32424Industry Growth (y-o-y %)# 2.4 4.5 5.1 6.2Services (` Bn)# 42963 46852 51923 57604Services Growth (y-o-y %)# 8.0 9.1 10.8 10.9Sectoral Share (%)Agriculture# 17.7 17.2 16.3 15.7Industry# 32.3 31.7 31.0 30.4Services# 50.0 51.1 52.7 54.0IIP (y-o-y %)# 1.1 -0.1 2.9 6.0Private Fixed Consumption Expenditure (PFCE) Current (y-o-y %)# 15.4 15.3 10.3 12.6Gross Saving (% Gross National Disposable Income)# 31.1 30.0 31.1 31.8Investment Rate % to GDP# 36.6 32.3 32.7 33.5

Inflation Rate (Average %)WPI- All Commodities 7.4 6.0 2.0 3.7WPI-Manufactured Products 5.4 3.0 2.4 3.2

Monetary (End Period)15-91 days' Treasury Bill (yield) 7.9 8.5 8.2 7.210 Year G-Sec (yield) 8.0 8.9 7.7 7.3M3 (Growth Rate %) 13.6 13.4 11.1 13.0Bank Credit (Growth Rate %) 14.1 13.9 9.5 12.5

External SectorExchange Rate (USD/INR) (End Period) 54.39 60.10 62.59 62.20Exchange Rate (USD/INR) (Average) 54.41 60.50 61.14 62.50Exports-BOP (US $ Bn)# 306.6 318.6 322.4 354.7Exports (Y-O-Y Growth)# -1.0 3.9 1.2 10.0Imports-BOP (US $ Bn)# 502.2 466.2 469.5 521.1Imports (Y-O-Y Growth)# 0.5 -7.2 0.7 11.0Trade Balance (US $ Bn)# -195.7 -147.6 -147.0 -166.4Current Account Balance % of GDP# -4.8 -1.7 -1.6 -1.7

Public FinanceFiscal Deficit 4.9 4.4 4.1 3.9

Note:- # Estimate for FY15, other wise refers to actual Source: RBI,MOSPI and Union Budget

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The Year Gone By: 2014-15 2 - Dun & Bradstreet IndiaThe Year Gone By: 2014-15 Macroeconomic and Sectoral Outlook 2015-16 basis shows higher growth rate of 6.6% during FY14, indicating