IMPACT OF INDIAN GOVERNMENT ON INTERNATIONAL TRADE

Zinnov | 2

The primary reason behind the economic struggle has been a weak government in the past 5 years

Governance Related Factors

Global Economic downturn affected India’s exports and services business

Global Slowdown

No strong figurehead emerged from the coalition government

Leadership Crisis

Slowdown of economic reforms made India an unsuitable destination to run business

Policy Paralysis

Improper action plan and poor allocation of funds resulted in delayed projects that led to overruns of 15 BN

Implementation

Bottlenecks

Government accused of multiple scams such as $5bn Telecom Spectrum scam, $29bn Coal mine scam, etc.

Corruption

Zinnov | 3

Difference between single party government and coalition government

Ideology similarity

Faster decision making

Higher Accountability

More Stability

Heterogeneous representation

Greater policy scrutiny

SINGLE PARTY COALITIO

N

Electorate’s mandate for a Stable Government

Empowered Government

Zinnov | 4

The “Growth Levers” present a massive potential opportunity for the Technology MNCs

Total Opportunity Size for Technology

Companies

Digitization $7B

Infrastructural Improvements

$11BPush for

Manufacturing$7.3B

Technology in Healthcare & Agriculture

$0.7B

Year 2014-

15

Government Investments in

technology (Year 2014-15)

Opportunity by Technology Areas

$26

Billion

Communication

Technology$4 BN

Computing & Storage

$2.6 BN

Software

$4.2 BN

Engineering & Machinery

$6.6 BN

IT Services

$5.9 BN

IoT

$2.7 BN

Zinnov | 5

Modi has focused on re-energizing bilateral relations through an emphasis on forging investment partnerships

Japanese government’s promise of investing $35 billion (3.5 trillion yen) into infrastructure projects in India 

Areas of partnership include rejuvenation of Ganga, smart cities, transport systems, skill development and next generation infrastructureTarget to double Japan’s FDI and the number of Japanese companies in India within five years

 Beijing committed investment of about $20 billion in India over the next five years Setting up of two Chinese industrial parks in Maharashtra and Gujarat

 China will play a role in development of high speed railways in India and the first project will focus on upgrading some of the existing railway lines and stations in India

JapanChina

USA

Five-year Trade and Economic Development Plan’ that seeks to reduce the bilateral trade imbalance and strengthen investment cooperation 

USIBC (US-India Business Council) has identified investments worth $ 41 billion by its members into India in the next 3 years

Zinnov | 6

The first 100 days of the government has already demonstrated positive impact

Let us script a glorious future…

IT+IT=IT; Indian talent + Information technology = India Tomorrow

Don't compromise in manufacturing; Stress on Zero defect, Zero effect

A son of a poor man is standing in front of you today. This is the

strength of a democracy.

5.7% GDP Growth Apr-Jun - highest in nine quarters Aim to lower fiscal deficit to 4.1% of GDP by Mar 201513% Rise in NCAER’s1 quarterly Business Confidence

Index in June 2014 INR 7,060 crores allocated to build Smart Cities1.5 crore bank accounts opened in 1 day2

49% FDI limit in Defense and Insurance

14 # of IITs, IIMs and AIIMs to be setup

MODI’S 100 DAYS GOVERNMENT

Zinnov | 8

India is already home to the most prestigious manufacturing companies globally

Source: World Bank – Doing Business report series, BJP manifesto

5Revive Manufacturing

World’s 3rd largest

Motorcycle manufacturer

One of the largest Aluminium Rolling

companiesBiggest producer of

Primary Aluminium in Asia

World’s largest producer of

polyester yarn and fibre

World’s 5th largest Wind

Turbine manufacturer

World’s largest Motorcycle

manufacturerLargest Oracle Siebel CRM Implementation

in India

World’s 2nd largest producer

of Viscose Rayon Fibre

Zinnov | 9

5Revive Manufacturing

With Modi’s impetus on “Zero Defect” manufacturing, India will soon be the global hub for MFG (1/2)

Source: World Bank data, BJP manifesto

2007 2008 2009 2010 2011 2012152 191 185 203 246 249

8921141

1460 14771813

2342Manufacturing, Value

Added (USD billion)

India China2014

2020

14% 20%

Execution Plan

FDI in Defence Sector

Labor Intensive Industries

Investment along the Dedicated Freight & Industrial Corridors

NIMZs* outside DMIC

Region

Clear Tax Policy

Manufacturing, Value Added ( as %

of GDP)

*NIMZ : National Investment and Manufacturing Zones  | DMIC : Delhi-Mumbai Industrial Corridor

Modi aims at cranking up the share of manufacturing in India’s Gross

Domestic Product

Introduction : FDI

Since 2001, India has allowed foreign direct investment (FDI) up to 26 per cent in its defence industry. The policy has, however, not been successful in bringing about any meaningful financial or technological inflows, primarily because of the lack of incentives in the policy for foreign investors.

Keeping in view India’s underdeveloped R&D and production base, and various defence industry-related policies and provisions whose success is contingent upon a liberal inflow of FDI, an increase in the foreign investment cap up to 100 percent would be logical, instead of a fixed cap-based method, which may be a constraint to desirable inflows.

Defence Budget:

2009 - 10 2010 - 11 2011 - 12 2012 - 13 2013 - 140

5

10

15

20

25

30

35

40

45

28.34 29.7432.88 33.7

40.73

ALLOCATION OF DEFENCE BUDGET SERVICE

WISE

Army Air Force Navy DRDO Other

17.485.21

Army Air Force NavyDRDO OFB Other

5 12012 - 13 2013 - 14

24

191

50

27.91

0.4748.93

Select Sector-wise FDI inflow, April 2000 to May 2010

Source: http://dipp.nic.in/fdi_statistics/india_fdi_index.htm. Rank

Sector

Amount of FDI inflows (US $ million)

1 Service Sector 24,227.48

2 Computer Software & Hardware

10,168.37

3 Telecommunications 9821.17

4 Housing &Real Estate 8519.25

5 Construction & Activities 8190.85

6 Soaps & Cosmetics 173.19

7 Timber products 37.07

8 Defence Industries 0.15

Grand Total 120,155.25

Year

Development

2001 Defence Sector opened to Private Industry 26% FDI

2002 Defence Acquistion Council(DAC) created Buy Category introduced

2003 Buy and Make category wit ToT introduced

2004 Kelkar committee constituted for revision of Defence Procurement Policy and participation of private sector

2005-2009 Defence Offset Policy formulated (2005) and Defence Offset facilitation Agency (DOFA) created

Make & Buy and Make Indian categories (2006 & 2008)introduced

2011 Offset scope enhanced to include aerospace and Internal Security

July 17th 2013

FDI increased to 49% (waiting for parliament approval)

FDI IN DEFENCE : IMPACT ON TRADE

Greater FDI inflow in defence sector provides substantive

economic advantages.

Transfer of advanced sensitive technology.

Making India as a home market (major domestic sales market and

global manufacturing hub)

Benefit to private defence manufacturers in funding as well as

technology.

THINK BUSINESS THINK INDIA

• The salient features of the SEZ Policy are:• SImplified procedure for deveent , operations and

maintenance of SEZs and for setting up units and conducting business in SEZs;

• Single-window clearance for setting up of SEZ;• Single-window clearance for setting up units in SEZ;• Single-window clearance on matters relating to

Central as well as State

MAKE IN INDIA : BACKGROUND• The aim is to take the share of manufacturing in the

country’s GDP• from a stagnant 16% currently to 25% by 2022, as stated in

the National Manufacturing Policy, and to create 100 million jobs by 2022.

• India had fallen to a lowly 134th rank out of 189 countries this year (three down from 2013) in the World Bank’s Ease of Doing Business rankings.

• Currently, it takes 12 procedures and 27 days to start business, 35 procedures and 168 days to get construction permits and 1420 days to enforce contracts in India.

• Make In India: Origin• This initiative has its origin in the Prime Minister's

Independence Day speech where he gave a clarion call to 'Make In India' and 'Zero Defect; Zero Effect' policy.

• Make In India: Aim• To convert India into a global manufacturing hub, to

help create jobs and boost economic growth.• To urge both local and foreign companies to invest in

India.

• JIGAR GALA 514• SANCHIT GANGAR 515• YASH JAIN 517• MOHIT MALDE 523• HARSH SHAH 538• PRIYANSHU SHAH 543