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Institute for High Performance

India in 2012
Tough times ahead: No room for complacency
By Raghav Narsalay, Mamta Kapur, Ryan Coffey, Aarohi Sen and Smriti Mathur. January 2012

Content
1. Introduction 2. This could be the year that 3. Calendar of events 4. Macro trends for 2012 5. Key themes for the year ahead A weak fiscal situation could pull down growth Managing inflation will help India pursue its inclusive-growth agenda Measured trade liberalization necessary to stabilize Indias long-term growth Revival of investment will hinge on the governments ability to deliver reforms An energy crisis could choke growth 6. Spotlight-Indias growing trade with emerging markets 7. Sector outlook Automotive Banking Chemicals Defense Education Fast-Moving Consumer Goods Healthcare Information Technology Infrastructure Media and Entertainment Oil and Gas Pharmaceuticals Power Real estate Retail Telecommunications 8. References
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3 4 5 6 7 7 8 9 10 11 12 14 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 22 23

Introduction
There is little doubt that the Indian economy will face an uphill battle in 2012. During the second half of 2011, a variety of factors, including monetary tightening, rupee depreciation and continued turmoil in the Eurozone, fuelled anxiety about Indias macroeconomic and industrial outlook for 2012. GDP growth dropped to 6.9 percent in the quarter ending in September 2011, registering the slowest year-on-year increase in the past two years. Policymakers approach of pushing for growth with less focus on the productive dynamic has translated into increased signs of macro stability risks emerging in the form of higher inflation, fiscal deficit and current account deficit. Sustaining high growth is likely to be the overarching concern in 2012, although the risk of inflation will remain, largely because of a weakening rupee. Over the last two years, the Reserve Bank of India (RBI), Indias central bank, has aggressively sought to rein in inflation, raising the benchmark rate 13 times since March 2010. While interest-rate hikes have not curbed inflation, monetary tightening has hit businesses, slowing investments and triggering deferment of corporate capital-expenditure (CapEx) plans. Moreover, higher interest rates are proving especially harmful to growth in sectors like housing, automotive and consumer durables, as consumers become more cautious about making new purchases. The negative impact of a gradual slowdown in these sectors is now spreading to other critical industries such as steel and cement. The Indian governments strong fiscal position, which had enabled it to prime the economy when the global recession struck in 2008, is now wavering. Indias fiscal deficit has risen sharply, forcing the government to borrow at higher-than-ever rates. Moreover, tax revenues are expected to suffer, given the slowdown in the manufacturing and infrastructure industries. Budgets for developmental and income-support programs aimed at helping Indias rural heartlands will likely take a major hit, compelling rural consumers to save more and spend less. The recent depreciation of the Indian rupee will make exports more attractive. However, new orders from struggling advanced economies have been subdued and will likely continue placing downward pressure on domestic industrial production in early 2012. Moreover, slowing FDI and volatility in export revenues will continue to exert pressure on the Indian rupee. Nevertheless, among large economies, Indias potential to bounce back remains undisputed. With a clear demographic advantage, increasing disposable income, an expanding middle class and large pools of untapped demand in rural markets, Indias domestic consumption will likely fuel the nations economic growth for years. Nevertheless, policy support would help to sustain faith in this growth opportunity. Reforms in key sectors such as retail and insurance must be implemented quickly to attract investment. As India drafts its next Five Year Plan in 2012, it will have a unique opportunity to outline an agenda for inclusive growth and effective governance that can help rebuild trust among its citizens. For Indian businesses, 2012 will be the year to explore new strategies for boosting efficiency and stimulating growth. Companies will need to find fresh ways to cut costs, improve productivity and manage risks to internalize the impact of inflation, rising interest rate and rupee volatility. They must also remember the demand side too is showing signs of fatigue. In this report, we present ideas that can help businesses in India and elsewhere prepare for the new realities of Indias changing macroeconomic and business environment. We recognize that the most successful businesses will invest in immediate priorities without losing sight of tomorrow. As always, we offer these ideas as starting points for lively dialogue about new business directions. We invite your comments and we look forward to the ensuing discussions. Please feel free to contact us at: raghav.narsalay@accenture.com and mamta.kapur@accenture.com.

This could be the year that


The Direct Tax Code (DST) and Goods and Services Tax (GST) are implemented, simplifying the tax regime and bringing more predictability into the tax system India signs a free trade agreement on services and investment with ASEAN, strengthening regional integration and promoting greater physical connectivity in the region The first Indo-Russian nuclear power project is commissioned, cementing bilateral ties between the two countries The worlds first Meta University allowing students to take courses across different universitiestakes off in India, promoting multidisciplinary learning at the higher education level The Lokpal anti-corruption bill is implemented, bringing politicians and civil servants under the lens Pakistan operationalizes Most Favored Nation status for India, opening up new trade opportunities for the two countries The Regulatory Authority for Real Estate comes into existence, improving accountability and transparency in the sector

Calendar of events
2012 January
India and China hold boundary talks at the Special Representatives (SR) level India begins its first renewable energy college

February

Elections in five Indian states-Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa

March

India signs services FTA with ASEAN and New Zealand India announces new national water policy

April

May

Direct tax code comes into affect Creation of a national information utility or public distribution system network (PDSN)

Commissioning of the first IndoRussian nuclear power project, the Kundankulam reactor Ministry of Environment and Forests brings out the E-waste Rules 2011, regarding management and handling of hazardous substances

June

Nokia launches a tablet in India The worlds first Meta University takes off in India

July

Delivery of INS Tarkash, a warship bought from Russia

August

September

Tata Motors introduces Air Car in India Data.gov platform, a joint venture between the US and Indian government gets completed

Installed capacity of solar power goes up to 700MW in Gujarat Japans leading refractory producer, Krosaki Harima, sets up a refractory mud plant in India Daimler launches its electric vehicle

October

Pakistan gives Most Favoured Nation status to India India to host World Steel Conference

November

Panasonics Jhajjar plant becomes operational Michelin starts tyre production in India

December

Delivery of Indias aircraft carrier INS Vikramaditya from Russia Indias longest tunnel at 11KM, connecting Qazigund with Banihal, gets completed Ratan Tata retires as Chairman of the Tata Group

2013
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Macro trends for 2012


Economic growth
3,500 3,000 US$ billion 2,500 2,000 1,500 1,000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 4 2 0 12 Percentage (year-on-year) 10 8 6

Foreign direct investment (FDI) flows


70.0 60.0 50.0 US$ billion 40.0 30.0 20.0 10.0 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nominal GDP (US$ billion)

Real GDP growth percentage (year-on-year)

FDI outflows

FDI inflows

Source: International Monetary Fund, September 2011

Source: Economist Intelligence Unit, December 2011

Industrial production
18.0 16.0 14.0 12.0 Percentage

(% change year-on-year)

Current account
0.0 -20.0 -40.0

0.0 -1.0

US$ billion

10.0 8.0 6.0 4.0 2.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

-60.0 -80.0 -100.0 -120.0

-2.0 -3.0 -4.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Current account balance (US dollars)

Current account as a percentage of GDP

Source: Economist Intelligence Unit, December 2011

Source: Economist Intelligence Unit, December 2011

Macroeconomic indicators Real GDP growth rate Industry growth rate Services growth rate Domestic savings rate Exports (US$ billion) Imports (US$ billion) Inflation rate (wholesale price index-%)

Target for FY2011-12 8.2% 7.1% 10% 34% 330 484 6.5% for FY2011-12

Likely

Probable

Unlikely

Note: Target figures from the Review of the Economy 20011/12 published by the Economic Advisory Council to the Prime Minister of India

Percentage (year-on-year)

Key themes for the year ahead


A weak fiscal situation could pull down growth
Indias fiscal deficit will continue to constrain the nations economic growth in 2012. The gross fiscal deficit has already touched 74.4 percent of the budget estimates in the first seven months of the fiscal year 2011-2012. The higher deficit has stemmed mainly from a huge increase in the governments subsidy burden, its lower-than-expected collection of corporate taxes and its inability to meet its disinvestment target for the year. The government has raised only 70 percent of its disinvestment target in the first eight months of 2011-2012. Given that government expenditures are increasing and revenue streams are shrinking, meeting the budgeted target of 4.6 percent of GDP in 2012 looks unlikely. The rising deficit is stepping up the governments borrowing requirements, putting pressure on market liquidity. The situation is compounded by a widening current-account deficit resulting from a mounting trade deficit. The twin deficits (fiscal and currentaccount deficits) account for close to 9 percent of GDP. (Adding the state governments deficits would take the combined deficit past the double-digit mark.) Under these conditions, the danger of crowding out of investors is all too real. Higher government borrowing is also putting upward pressure on sovereign bond yieldsincreasing the cost of financing government borrowing. In addition, the adverse fiscal situation is hurting the governments ability to finance its flagship developmental initiatives, which pumped up demand in rural areas during the 2008 global recession. To mitigate twin-deficit risks, the government must return to a path of fiscal consolidation. This will require further reforms in the tax structure to ensure revenue buoyancy. It will also call for a sharper focus on the quality of expenditures, with an emphasis on reducing subsidies. Some major tax reforms are already in the pipeline for 2012, which if implemented as per plan can boost government revenues quickly. These include the introduction of an integrated Goods and Services Tax (GST) by Centre and State governments to simplify the tax regime and improve tax compliance. Meanwhile, operationalizing a Direct Taxes Code (DTC) could improve the efficiency of direct tax allocation and equity.

Business implications:
Diversify sources for raising capital, as liquidity in domestic market is expected to remain tight due to high government borrowings Re-evaluate and rationalize supply chain network to sync with the new GST regime Identify business opportunities in governments efforts to better subsidy spend and reduce overall expenditure level (for example, technology for payment transfers)

Managing inflation will help India pursue its inclusivegrowth agenda


Despite continued monetary tightening and 13 interest-rate hikes by the Reserve Bank of India since March 2010, reigning in inflation continues to pose a serious challenge. Headline inflation, which also factors in manufactured items, besides food and fuel, has been above 9 percent mark since December 2010. It stood at 9.11 percent in December 2011 and RBI has projected it to fall to 7 percent by March 2012. Food inflation numbers have started showing signs of moderation; the latest data from the government showed food inflation at 0.42 percent as on December 17, 2011, the lowest in almost six years1. We expect inflation to ease only gradually in the year ahead as demand-supply imbalances persist. High inflation has started taking its toll on consumption demand in India, with sectors such as consumer durables, automotive and fast-moving consumer goods (FMCG) experiencing a growth slowdown. High prices coupled with high interest rates, on the back of monetary tightening, are forcing families to cut back on spending, leading to sluggish revenue growth across sectors. High interest rates and a bearish mindset among businesses have slowed investment in capacity building. This bodes poorly for Indias ability to address the structural supply-side pressures, such as inadequate infrstructure, that contribute to high inflation. The dangerous concoction of slowing growth and investment could also limit the Indian economys ability to generate jobs.

Business implications:
Work with suppliers to expand capacity and plug inflationary pressure points along the supply chain Invest in disruptive innovations to develop sustainable and cost-effective solutions for Indias population at the bottomof-the-pyramid Identify areas across the supply chains to profitably engage rural consumers as suppliers, intermediaries and customers

Measured trade liberalization necessary to stabilize Indias longterm growth agenda


India has taken significant steps to deepen integration with the global economy over the last two decades, especially in the area of trade. The country has substantially opened its trade borders through a variety of free trade agreements (FTAs) and now leads other major Asian economies in the number of FTAs, with 13 such deals in effect and 12 more under negotiation with large trade partners like the European Union and Canada. As a result, Indias exports and imports of goods and services have more than doubled since the 1990sfrom 23 percent of GDP to 50 percent in 2009-2011. If trade flows are considered alongside capital flows, the rise in openness (measured as current receipts and payments plus capital receipts and payments) is even more dramaticjumping from around 42 percent of GDP in the 1990s to 107 percent in the recent period2. While integration has largely supported Indian business growth thus far, in 2012, the downside risk of the countrys integration with the global trading system will increasingly come to the fore. FTAs have opened new export markets, but they have simultaneously exposed Indian firms to greater import competition. With a prolonged slowdown in EU and US two of Indias major export markets likely to cut Indias export growth in 2012 (year-on-year export growth already fell to 11 percent in October 2011, down from 82 percent in July 2011), the potential loss of domestic market share to import competition poses an increasingly pressing threat for Indian business. Manufacturers are particularly vulnerable (year-onyear manufacturing output dropped by 6 percent in October 2011)3. Trade liberalization deals with lower cost regional neighbors continue to result in rising finished goods imports that could undermine domesticallybased producers competitive edge in key sectors, including textiles and machinery. In a year of depressed export growth, a more measured approachone guided by businesswill be critical to ensuring that further trade liberalizationincluding ongoing FTA negotiations with the EU and China do not result in import competition that substantially threatens Indian businesses capacity to tap into domestic growth.

Business implications:
Develop a diversified geographic portfolio that mitigates economic risks Utilize free trade agreements to reduce supply chain costs and access new markets Invest in enhancing efficiency of capital, labour and technology to successfully compete against cheap imports Leverage knowledge of domestic markets to erode the price competitiveness of competitors

Revival of investment will hinge on the governments ability to deliver reforms


Corporate confidence to push for higher investment has remained weak in India post the credit crisis. In 2009, companies focused on repairing their balance sheets while in 2010 and 2011, corporate confidence recovered only gradually because of heightened global economic uncertainty. Domestic factors such as rising inflation, increased cost of capital, policy uncertainty and increasing land-acquisition and environmentalclearance issues have further deterred investments in the country. The government needs to take accelerated steps to revive investments to return the economy on high-growth path. The recently announced National Manufacturing policy will set the stage for future investment and growth. The policy aims to increase manufacturings contribution to GDP from 15 to 25 percent by 2022 and create 100 million new jobs. The establishment of National Manufacturing and Investment Zones (green field integrated industrial townships with state-of-the-art infrastructure and land use on the basis of zoning) will begin in 2012 and will promote additional capacity expansion in manufacturing. Another major reform initiative pertains to the recently released draft of the New Land Acquisition Act, which aims to improve transparency in acquisition, particularly in rural areas. Difficulties with land acquisition and environmental clearances have been complicating manufacturers expansion plans. Some of the most-ambitious projects (eg. Poscos plan to invest US$12 billion to set up a 14-million tonne unit in Orissa and ArcelorMittals projects in Jharkhand, Orissa and Karnataka, amounting to US$1.5-3 billion each) have been stalled because of problems related to land acquisition. A key step towards resolving issues related to compensation, rehabilitation of local population while respecting their sentiments and ensuring higher productivity from rural and urban land would be to pass the recently tabled Land Acquisition Bill so that it becomes a law. Labor reform is another area calling for attention. Several instances of wage-related worker unrest that erupted in 2011, particularly in the automotive and mining sectors, eroded production and growth. Moreover, owing to rigid labor laws (such as high severance costs and difficulties in hiring and firing workers), many firms are using contract laborers, who fall outside the purview of such regulations. This has further spurred unrest among traditional workers, as seen with Marutis Gurgaon plant. A large part of Indias total workforce still works in the unorganized sector, pointing to the need to increase the number of formal jobs and to restructure current labor policies.

Business implications:
Participate in the creation of physical and social infrastructure through innovative public private partnerships Collaborate with other stakeholders to empower contractual and permanently employed labour with technical and business skills Support sustained participation of local populations and experts towards developing long term income generating programs for local populations Work closely with the policymakers to position India on a path of sustainable economic growth in terms of technology transfer, sharing knowledge and skills and growing new markets

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An energy crisis could choke growth

Over the last two decades, growth in domestic energy production has failed to keep pace with Indias exploding energy needs. As a result of inadequate mining and refinery capacity, India has yet to unleash the full potential of its domestic coal endowmentthe third largest in the worldand its estimated that insufficient coal production continued to contribute to a third of the countrys total power deficit over the last fiscal year4. But Indias energy challenges are not limited to production shortfalls. Poor distribution infrastructure also constrains supplyside growth. Not only does India lack the infrastructural capacity to deliver more energy to meet rising demand, inefficiencies in existing distribution infrastructure has resulted in an average of 30 percent energy loss during transmission and distribution one of the highest rates in the world5. The demand-side picture is not much better, with Indias industrial sectorone of the worlds most energy-intensivecontinuing to push domestic energy consumption upward (industrial output contributes to 16 percent of Indias GDP while consuming 45 percent of commercial energy). The result is a rapidly yawning gap between domestic energy supply and demand that is being filled by increasing energy imports (the annual value of oil imports alone is expected to rise nearly 18 percent in 2012)6.

In 2012, weakness in the rupee (the rupee depreciated almost 20 percent against the US dollar in the last five months of 2011) will magnify the negative impact of foreign energy dependence on business risk and profits in India7. Though depressed global consumption may lead to a slight moderation of global energy prices, the rupees weakness is likely to result in a price hike on energy imports and a higher debt service burden in rupee terms that would squeeze domestic profit margins in 20128. Curbing energy prices and Indias dependence on energy imports requires policy support and reform to address the countrys supply-side energy shortcomings. To this end, the government needs to accelerate the overhaul in the countrys energy distribution infrastructure with investment in technologies such as the smart grids while supporting the expansion of new alternative energy sources. The National Solar Mission (which aims to generate 20,000 MW of solar power by 2020) and the National Mission on Enhanced Energy Efficiency (which has targeted to deliver annual fuel savings of about 23 million tons oil equivalent) offer hope if implementation and funding improve in 2012.

Business implications:
Invest in energy saving technologies and processes and develop alternative sources of energy supply Diversify sources of supply by forging strategic alliances and key partnerships with suppliers and to secure resource supply in the long term Utilize free trade agreements as a platform to cost-effectively source clean and smarter energy technologies Shape pro-growth approaches to regulation by working closely with policymakers

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Spotlight
Indias growing trade with emerging markets
Over the last decade, Indias deepening integration into the global economy has coincided with a strengthening of trade ties with other emerging markets. The proportion of Indias exports to emerging economies increased by almost 20 percent, from 46 percent in 2000 to 65 percent in 2010, with four of Indias top export destinations in emerging markets. Imports from emerging markets have grown albeit at a slower pace, increasing from 51 percent in December 2000 to 59 percent in December 20109. Trade growth between India and emerging markets is only likely to accelerate in 2012. Through initiatives like Indias Look East Policy, the Indian government continues to put in place the structural support to strengthen trade ties with Asian, African and South American countries. The countrys trade with Chinawhich grew at a compound annual growth rate of 37 percent between 2000 and 2010is only likely to speed up in 2012 on the back of a recent US$16 billion bilateral investment and trade deal10.

Figure 1: Exports/Imports to emerging markets as percent of total


65 60 55 50 45 40 35 30 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Haver Analytics; IMF DOTS

Imports

Exports

Figure 2: Growth in trade with select emerging markets Country China Indonesia South Korea Iran Nigeria South Africa Malaysia Brazil
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Export value CAGR (2000/01-2010/11) 37.07 31.57 24.77 28.23 19.31 29.07 20.59 33.16

Rank in total trade value 2010-2011 (imports + exports) 2 9 11 13 14 18 19 24

Source: Indian Ministry of Commerce; Accenture analysis

In July 2011, the Indian government continued to open up new inroads into Africa for Indian business by announcing over 250 training positions for African students and researchers in sectors where Indian firms have market leading expertise including rural electrification, small hydropower, and wind energy11. Emerging markets in South America are also interested in deepening ties with India. Recently ambassadors from four countries-Uruguay, Paraguay, Mexico and Peruexpressed interest in tapping Indian expertise in areas including information technology, oil and agriculture through new bilateral trade pacts12. The success of Indian companies in 2012 will depend more than ever on their ability to tap into these new opportunities in emerging markets, especially as they look to counter depressed demand at home and increased risk in developed markets. Because of their innovative lowcost business models and ability to operate on razor-thin margins, Indian companies are well-placed to take advantage of Indias growing ties with emerging market. For instance, Bharti Airtels, an Indian telecoms provider, success in Africaincluding its successful 2010 acquisition of Zains African operationshas elevated it to the worlds fifth largest mobile operator by subscribers13. Manufacturers also stand to benefit. Tata chemicals recently launched

efforts to explore marketing the Tata Swach, an innovative low-cost water purifier developed for Indias rural consumers, across Asia, Africa and South America. While there are downsides to growing emerging market tradefor instance, domestic competition in low-cost finished good imports or Indias ballooning US$20 billion trade deficit with China14the business and economic benefits of strengthening emerging market trade remains immense. A recent analysis by Accenture and Oxford Economics reveals that growing trade with emerging markets has the potential to boost Indias GDP by US$155.8 billion by 2020. Though concerns have also been expressed that opening up trade threatens domestic jobs in India, the econometric research found that trade with emerging markets will likely have a positive impact on job creation in India, with the potential to create 28.2 million jobs in India by 202015.

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Sector outlook
Automotive
Competition intensifies in the small- and medium-sized car International segment carmakers set up shop
Competition continues to heat up in Indias small-and medium-sized automotives segment. Premium foreign-car manufacturers such as Toyota and Honda, are still playing catch-up to more established players like Maruti and Hyundai, but are gradually gaining a foothold in Indias market. Toyota and Honda plan to continue launching new models in 2012 and are proving adept at striking the right balance between price and performance demanded by Indias consumers. The newest automotive players, like Chevrolet, Nissan and Renault, also intend to ramp up new model launches in 2012. excise and customs duty benefits proposed for hybrid, electric, fuel-cell and hydrogen-cell technology-based vehicles2012 may see this segment finally gain momentum. equity investment, on the assumption that it would erode their control and thus threaten jobs and benefits. Indias largest bank, the State Bank of India (SBI), may face a financial crisis in the fiscal year 2012-2013 if the central government fails to invest in the companys proposed rights issue. The banks tier-one capital is the lowest among its counterparts.

Electric-vehicles market heats up


Indias central government plans to have as many as 7 million electric vehicles on Indian roads by 2020. According to a recent report, India could see sales of more than 6-7 million such vehicles by 2020, of which almost 5 million would be two wheelers. Mahindras recent acquisition of Reva and Chevrolets launch of an electric version of its Beat model point to strong future demand in the electric-car segment. Other players that have already developed this technology, such as Maruti, Hyundai and Tata Motors, have been waiting on the sidelines for clear policy decisions from the government. With the recent launch of the National Mission for Hybrid and Electric Vehiclesalong with 14

An increasing number of new entrants are planning to set up manufacturing capabilities in India and are scouting potential land acquisitions across the country. Reports suggest that Renault is planning another factory after its successful launch of its joint production facility alliance with Nissan in Chennai. Renault may invest another US$2 billion in building a factory to produce at least 400,000 small cars every year. French car manufacturer PSA Peugeot Citroen has opted for the state of Tamil Nadu for its US$785 million manufacturing facility. The plant will have a capacity of 300,000 units a year and will cater to domestic and international demand.

Banking moves toward financial inclusion


According to Indias Ministry of Finance, the government has already achieved 62 percent of its target to bring 73,000 villages under the banking net by March 2012. This financial-inclusion drive could lead to the creation of more than 50 million new bank accounts in rural areas. The plan is to include all the villages with populations of more than 2,000 in the banking network by the end of 2012. At present, only 38 percent of the 85,300 bank branches in India are in rural areas, and only 40 percent of Indians have access to banking facilities. The finance minister has emphasized the need to expand and strengthen banks branch networks in Indias northeastern states. Out of 69 unbanked blocks in the northeast region, 27 blocks have banking services. The remaining 42 unbanked blocks are in the states of Arunachal Pradesh, Manipur and Nagaland and are not likely to receive services by the end of March 2012.

Banking
Crisis lurks for publicsector banks
Challenges to loan growth, liquidity and asset quality will intensify in the medium term for Indias banking sector. Given their loan profile, margin track record and inferior asset quality, public-sector banks are more vulnerable to these challenges than private banks. Moreover, the government has not kept its promise to provide fresh equity support to public-sector banks, and the lack of support is further hindering their operations. On the other hand, these banks oppose the inflow of private

Chemicals
Fertilizer input costs rise with new potash deal
After a three-month standoff, Indian fertilizer companies have agreed to buy potash at an average price of US$470 a ton. Tata Chemicals, Coromandel International, Zuari Industries and Indian Farmers Fertiliser Cooperative signed import deals with Canpotex, the North American potash cartel, for 670,000 tons of potash for the period October 2011 through March 2012. India is the largest importer of potash, followed by China and Brazil, with imports touching a record 6.4 million tons in 2010. But while China has its own mines and has invested in overseas mines, India is significantly exposed to global price volatility when it comes to potash supply, because it has no domestic reserves.

to have grown from about 729,000 units in FY09 to about 1,607,000 units in FY11. On the other hand, import duties on feedstock and fuels such as naptha will continue to encourage imports.

Organisation will help facilitate research and technology development capabilities through joint projects, collaborative research and industry and academia participation.

Defense
Defense expenditure witnesses massive growth
Having spent close to US$80 billion over the last decade on defense, the Indian government has decided to significantly ramp up expenditures over the next five years to an expected US$100 billion. Most of this will likely be spent on modernization programs and procurement of artillery howitzers, combat aircrafts, armored vehicles and upgrades to existing inventory. India will also award the 126 multi-role fighter jet contract in 2012 after initial screening in 2011, which left only two players in the fray.

Defense sees greater private participation


The defense sector in India is exploring opportunities to step up the level of private participation. Recently, the Ministry of Defence approved a proposal to sell 10 percent equity in state-owned Hindustan Aeronautics Ltd (HAL) over the next 10 years, starting in 2012. With revenues of about US$2.6 billion, HAL counts among Asias largest aerospace and defense entities and has not reported any shortage of funds in recent years. The decision to divest stake is therefore considered a positive move toward privatization. On the other hand, Tata Power, through its Strategic Electronics Division, recently won the contract to modernize the airfield infrastructure of the Indian Air Force. The program aims to improve airfields ability to handle the fleet of modern combat aircraft to be inducted by the air force and signals increasing private participation in strategic defense areas.

Regional trade agreements continue to support strong import growth


Although the recent depreciation of the rupee against the dollar has made imports costlier, the demand for chemicals will continue to drive strong import growth for India, thanks to supporting factors such as regional trade agreements (RTAs). An apt example is Indias radial-tire market, which imports heavily from China, Thailand and South Korea. Both of these export countries are part of the APAC trade agreement and attract significantly lower customs duties. The import of radial tyres for medium and heavy trucks is reported

Defense collaborations continue to rise


Indias status as a stable geopolitical power and a major purchaser of defense equipment will lead to many new collaborations with other countries in 2012. One important milestone in such defense collaborations is the joint military exercise to be held between India and China in late 2012. The bilateral military exchanges resumed in April 2011 after the Indian prime ministers visit to China for the BRICS summit. India will also pursue collaborative defense R&D with the United Kingdoms Defence Science and Technology Laboratory. Indias Defense Research and Development

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Education
Final decision may come on foreign investment
The Foreign Education Providers bill, intended to allow 100 percent foreign direct investment (FDI) in the education sector, went through many rounds of discussion in 2011 and may see the light of day in 2012. The Human Resource Development Ministry has already gone one step further to encourage FDI by rejecting the standing committees suggestion that foreign institutions should come to India by invitation only. Instead, the ministry believes that its regulations can ensure the quality of institutions that invest in India. To be sure, some foreign institutions are still waiting for greater clarity on regulations. However, others like Educomp Solutions have already formed joint ventures to test the market.

out of 1,000 teaching hours each year, 200 hours will be devoted to vocational courses. There will also be seven levels of certification that will end at the university level.

Players enter new product segments


Consumer products makers plan to enter alternative product segments that would offer higher profits and overcome pressure on margins. For instance, Heinz India, the market leader in ketchup and milk-based beverages, plans a foray into cereal. Additionally, sugar confectionery maker Perfetti Van Melle intends to launch packaged potato chips and salty snacks under its Stop Not brand18.

Technology adoption accelerates


Indias government also recognizes the immense potential of technology in education, evidenced by the recent launch of the ultra low-cost Aakaash tablets exclusively for students. Additionally, Educomp Solutions, an education-solutions provider, has launched its digital class transformation system (CTS) in the state of Gujarat. The CTS could strongly supplement traditional methods of learning in classrooms with digital instruction, assessment materials and applications. Educomp already caters to around 150 schools in Gujarat and 8,000 schools in India. It plans to add 100 more schools in Gujarat by the close of March 2012.

Companies look to expand abroad


To capitalize on the emerging-market surge, Indian FMCG companies want to expand their operations into other developing economies. For instance, Dabur will invest up to US$39.2 million to set up plants in South Africa, Kenya and Sri Lanka by 201219. Moreover, after a two-year acquisition spree, Marico now seeks acquisitions in the beauty and wellness segment in Asian and African countries such as Thailand, Malaysia, Singapore and Kenya20.

Focus sharpens on skill development


The National Mission on Skill Development, under the chairmanship of Indias prime minister, has set a target of developing skills for 500 million persons by 2022. Efforts on various fronts are being made to achieve this target, starting with the restructuring of the vocational education scheme. The Ministry of Human Resources has proposed the National Vocational Education Qualifications Framework (NVEQF), which recently recommended introducing vocational education at the secondary stage. Starting in 2012, vocational studies will be a comprehensive course that students can pursue along with arts, science and commerce courses in senior secondary classes across all boards. The NVEQF will start from Class IX onward (certification level 1), where

Fast-Moving Consumer Goods


Margins face pressure
Profit margins of Indias fast-moving consumer goods (FMCG) companies will be squeezed in 2012, owing to volatile commodity prices as well as a weakening rupee. Some FMCG companies are considering price hikes to offset pressure on their margins. For instance, Godrej Consumer Products is thinking about increasing prices of some products in the early months of 2012. The company already raised prices during 201116. Dabur India may do the same with its health and food brands, particularly toothpaste17.

New packaging norms emerge


Indias Ministry of Consumer Affairs, Food & Public Distribution issued a notification on 19 consumer product categories to be sold in standardized package sizes, to go into effect starting in July 2012. FMCG companies have recently started reducing package sizes to manage declining operating margins in an inflationary scenario. If this regulation is implemented, these companies will have to use standard packaging sizes; some may need to introduce new sizes in a few product categories21.

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Healthcare
Private players speed up expansion plans
The Indian healthcare sector could generate more than 40 million new jobs and US$200 billion in increased revenues by 2020, according to the report Indias New Opportunities- 2020. Realizing the magnitude of this opportunity, private healthcare players, domestic and international, are revving up their investment plans. For example, Fortis Healthcare recently announced the launch of two more hospitals, one in Hyderabad and the other in Agra, taking its hospital network count to 68. Fortis also acquired its sister firm, Singaporebased arm Fortis Healthcare International for US$665 million as part of its plan to consolidate domestic and international operations. In addition, it recently acquired a 65 percent stake in Hoan My Medical Corporation. One of Vietnams largest private healthcare provider groups, Hoan My has more than 1,100 beds across six hospitals.

Emphasis increases on low-cost healthcare


The Indian government plans to increase spending on low-cost healthcare from 1.3 percent to 2.5 percent of GDP during the 12th Five Year Plan (2012-2017) period. This spending will cover the building of more healthcare facilities and hospitals as well as the setting up of more medical colleges and nurse training institutes. Vaatsalya, Indias first hospital network focused exclusively on Indias tier-two and three towns, recently raised an additional US$10 million to expand its network in 2012. Additionally, Fortis Healthcare plans to set up a second brand of hospitals aimed at smaller towns and cities, with a target of 25 hospitals in three years. The company is also launching a nationwide Mother & Child program for the poor under the aegis of the Fortis Foundation.

Strong domestic growth continues


The upbeat domestic IT-BPO spending trend will continue in FY2012, as the industry grows at an anticipated 16 percent to reach US$20 billion. Indias domestic market for IT will enjoy the fastest growth in the APAC region. We expect domestic IT spending to significantly increase in verticals like automotive and healthcare. Even the Indian government, with its focus on e-governance and inclusion, will continue to invest heavily in IT to achieve its developmental goals. Moreover, the expansion of the IT industry into tier-two and-three cities will fuel the creation of new jobs and serve as a source of fresh recruits from these communities.

Information Technology

Inward consolidation is Export revenues drive growth set to rise


Life Healthcare Group, South Africas third-largest private hospitals group, will acquire a 26 percent stake in Max Healthcare Institute, for around US$103 million in cash. Life Healthcare will invest by subscribing to new shares of Max Healthcare. This constitutes the largest FDI inflow in the Indian healthcare sector and will reduce Maxs debt by an estimated US$180 million. US medical-devices maker Welch Allyn also plans to expand its presence in India. Offering a wide range of products including stethoscopes, ophthalmoscopes, blood-pressure monitors and cardiopulmonary and thermometry devices, Welch Allyn has drawn up an aggressive five-year strategy that calls for revenues of US$5 million by 2015. Exporting of software and services is expected to grow to the tune of 16-18 percent for FY2012, though rupee volatility could put pressure on software exports margins. NASSCOM expects to see exports grow across a broad range of offering types. Business process outsourcing (BPO) especially could see a turnaround in terms of export growth, primarily owing to the rise in demand for offshore BPO services in sectors like customer management, accounting, banking and finance. HR outsourcing is also rising, apart from billing BPO services and supply management BPO. The IT and BPO sectors alone will create as many as 250,000 jobs in 2012, most of them during January through March.

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Infrastructure
Infrastructure projects face delays
Delays in government and regulatory decision-making have caused several road, railway, port and other infrastructure projects to fall behind schedule. According to Standard & Poors report, India needs to reform policies concerning project execution and long-term funding to overcome its infrastructure challenge, which could prevent it from achieving its target of 9-9.5 percent annual growth during 2012-2017. The slow pace of reforms and a lack of long-term funding could hurt profitability and delay several projects in 201222.

construction-equipment market through subsidiaries or joint ventures. Several global players from countries such as Japan, Britain, Sweden and United States already have a presence in India. But the markets growth potential is now attracting interest from companies in other countries, most notably China, Finland, Germany, Italy, South Korea, Spain and Turkey24.

Foreign media houses look to expand their presence in India


Many overseas media and entertainment houses are looking to expand their operations in India, drawn by the healthy growth in the sector. These companies include NBC, Time Warner, Viacom and Sony28. US media giant the Walt Disney Company is also seeking to expand its presence in India, plans to buy out shares held by public shareholders and original promoters of UTV Software Communications and delist the company in a deal valued at around US$392.5 million29.

The infrastructure debt fund is launched


The Indian government will likely launch the nations infrastructure debt fund in early 2012. The finance ministry drafted the structure of the fund in June 2011 and plans to use the fund as the primary instrument to finance the countrys long-term investments in infrastructure25. This fund will provide an alternative to banks for local developers looking to raise long-term, low-cost funding for infrastructure projects26.

Deteriorating investments hurt the sector


The uncertain economic environment is causing investments to dry up in the infrastructure sector. According to the ratings agency Fitch, increased borrowing cost is bound to hurt projects structured with thin financial margins, because most infrastructure projects are funded by banks. A material reduction in rates seems unlikely. In addition to the negative investment environment, the infrastructure sector could be threatened by a slowdown in GDP growth, rising inflation and interest rates, and a depreciating currency23.

The industry moves toward digitization


The Indian government has introduced a bill to change the Cable TV Networks Regulation Act in a way that will make digitization mandatory. While the plan is for complete digitization of cable television in the four metros by 2012, the next target will be cities with population of more than 1 million30. At an expected investment of up to US$7.85 billion, digitization of TV signals will give consumers a broader choice of channels at a lower price31.

Media and Entertainment


Print media drive growth
The Indian media sector is expected to grow briskly in 2012, driven especially by robust growth in print media. The Indian digital printing industry is forecasted to achieve a compounded annual growth rate (CAGR) of 85 percent in 2011-2012, according to the All India Federation of Master Printers. This increase will likely derive from growth in the countrys economy and the rise in advertising expenditures across media platforms27.

Global companies set the stage for entering Indias constructionequipment market
Indias government anticipates a US$1 trillion investment in the countrys infrastructure sector during the 12th Plan period. In response, several global firms are keen to enter the emerging Indian earthmoving-and 18

Oil and Gas


Depreciating rupee could spell trouble for oil companies
The rupee, which depreciated 15-20 percent in 2011, is expected to exert pressure on oil marketing companies, including Indian Oil Corporation, HPCL and BPCL, by raising the price of oil imports. In addition, these companies balance sheets will be negatively affected by the weaker rupee, as the fall in the currency will increase their debt-servicing costs32.

largest crude supplier, India is also looking at Saudi Arabia for alternate supplies36.

of the United States signal foreign pharmaceutical firms growing appetite for Indian pharma.

Deregulation may be in Stricter quality controls the offing come into play
The Indian government may deregulate diesel and liquefied petroleum gas (LPG) pricing in 2012. The government proposes offering subsidized cooking gas only to the poor. It also plans to discuss with oil companies, industry associations and other stakeholders the notion of urging the rich to voluntarily give up subsidized LPG cylinders. The earlier proposal limiting the number of subsidized cylinders to four per year was shelved by the government, which now wants to follow the PDS shops model. Through this model, people who could afford to do so stopped buying food from PDS shops even though they had ration cards37. Under the current proposal, the ministers, members of Parliament, bureaucrats and senior managers at public-sector companies would be among the first people asked to give up subsidized LPG voluntarily38. The Indian pharmaceutical industry will soon have to adopt bar-coding systems to track and trace drugs origins to align with global measures against counterfeit drugs. Bar coding on primary packaging (bottles, vials or strips) for exports will begin in July 2012. Bar coding for secondary packaging (such as packets) will be made mandatory starting in January 2012. Swift adoption of this new system will be critical to the Indian pharmaceutical industrys export competitiveness, as countries including Malaysia, China and Turkey have already complied with these norms. The Planning Commission has also recommended strengthening the infrastructure and manpower of the national drug regulator, Central Drug Standard Control Organization. It has urged the government to pump US$1.2 billion into tightening the drug regulatory system at both the central and state levels during the 12th Five Year Plan period. Other suggestions made by the Planning Commission include setting up an independent authority for regulation and control of all medical devices.

Investment in new explorations continues


The Indian government will likely award oil and gas blocks offered for bidding in the ninth round of the New Exploration Licensing Policy by March 201233. This will enable the awarded companies to explore and produce oil and gas in the region. Moreover, India is expected to secure unconventional hydrocarbon sources to meet energy needs by launching its first bid round for exploration of shale gas during the 12th Plan period34.

Pharmaceuticals

FDI inflows swell Soaring demand With the Indian government underscores the need for alternative supplies removing caps on greenfield and the brownfield foreign investment in
Indias fuel demand could rise 3.8 percent in 2012, led by diesel and petrol, according to the International Energy Agencys forecast. Demand for diesel is expected to increase to 1.44 million B/D in 2012, increasing by 5.5 percent over 2011, while demand for petrol could increase by 6.7 percent (388,000 B/D) in 201235. In addition, crude shipments from Saudi Arabia to Indian refiners will likely increase in 2012 with the addition of plants in India. After a lingering payment dispute with Iran, Indias secondpharmaceuticals sector, multinational players likely will ramp up their efforts to acquire domestic pharmaceutical firms in 2012. Although the Reserve Bank of India recently removed the automatic approval system in brownfield investments, this may not significantly affect international players expansion plans. Recent acquisitions such as the Ranbaxy Laboratories buyout by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care by Abbott Laboratories

Greater gains emerge from the patent cliff


As more and more patents expire, Indian drug makers like Ranbaxy could start generating major profits from exporting generics to developed markets. Drugs such as Lipitor, an anti-cholesterol pill manufactured by the worlds largest drug maker, Pfizer, was one of the most profitable products for the company and has sales in excess of US$10 billion a year. It lost patent protection in November 2011, and Ranbaxy won approval from the US Food and Drug

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Administration (FDA) to sell a generic version of Lipitor in the US market. Drugs with combined annual sales of US$150 billion could go off-patent by 2015, intensifying competition in the generics market and fueling a drop in prices. India has the highest number of FDA-approved pharmaceutical manufacturing facilities outside the United States. Thus, Indian pharmaceutical manufacturers could see a significant boost to their bottom lines.

Power companies losses could extend to customers


The growing gap between tariffs and the cost of producing electricity is the primary factor behind the US$13.7 billion in losses that Indias power companies endured in the last fiscal year41. Moreover, with Indias domestic supply of coal expected to be sluggish, the Ministry of Power is advising power companies to import coal to meet their requirements. However, with the cost of imported coal shooting up to US$120 a ton, power companies must brace for larger losses, which may translate into higher customer tariffs42.

Indian companies continue expanding their revenue source on foreign soil


A number of Indian companies are taking up power-sector projects outside India. For instance, a consortium led by Madhucon Projects is setting up two units of a 150 MW coal-fired power project in South Sumatra46. Moreover, NTPC has signed an agreement with the Electricity Generation Company of Bangladesh to provide critical services such as maintenance, recruitment and training as well as quality and environment management for a 240 MW gas-based Siddhirganj power plant near Dhaka in Bangladesh47.

Power
A coal shortage threatens the power sector
Indian power companies could be compelled to cut their production because of a shortage of coal stocks in the country. The shortage will likely exceed 200 million tons during the 12th Five Year Plan period if urgent measures are not taken to bridge the gap, according to the Ministry of Coal39. With domestic coal production struggling to keep pace with the capacity addition in the power sector, more than 40,000 MW of new generation capacity could get stranded in the coming years for want of fuel. This constitutes almost 70 percent of the power capacity slated to come between 2012 and 2017 and could delay new power projects being established across the country40.

Focus continues on alternative power sources


India is keen to take aggressive steps in the field of renewable energy to meet its increasing demand for electricity. To that end, the government has set a goal to generate 2 GW (2,000 MW) of solar power by March 201343. Business conglomerate Larsen and Toubro (L&T) plans to enter wind-based power projects. L&Ts infrastructure finance division is also exploring opportunities to develop wind-based power projects globally44. In addition, the Asian Development Bank, a multilateral funding agency, agreed to lend US$48 million to Reliance Power for its solar energy plant in Rajasthan, showing its support for Indias alternative-power sector. The project also marks Reliance Powers entry into the solar-energy business and the companys plans to expand its renewable-energy portfolio45.

Real Estate
The forecast for sector growth is grim
Indias residential and commercial real estate market will remain cautious in early 2012 because of prevailing uncertainty in the global market and the likelihood of further interest-rate hikes by RBI, according to real estate consultants Jones Lang LaSalle in their report, India Real Estate Forecast 2012 Across Asset Classes. While the absorption rate in the residential sector will likely be low with a decline in new launches, demand for commercial real estate is expected to remain stable in 201248.

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Focus sharpens on the green-building sector


India is a world leader in the greenbuilding sector, and its position will strengthen further in 2012. Adding to Indias existing 800 green buildings, the Indian Green Building Council will facilitate development of 200 green buildings by 2012. The council also plans to apply green practices to a 1 billion square feet area (up from the current half-a-billion square feet) and train 5,000 accredited professionals in such practices49.

Retail
Rural India promises growth in the sector
Indias retail sector counts among the largest in the world and is a major employer domestically. Industry experts believe that Indian retail will be worth US$521 billion by 201253. One force driving this increase is sales growth in Indias rural areas. Rural consumers are augmenting basics with purchases of more contemporary products such as diapers, colognes and chocolates54. This trend presents an opportunity for retailers to experiment with different products in the rural market and could stimulate growth in the sector throughout India.

entered India earlier, owing to policy restrictions on their ownership and control of their brands57. However, with the new policy regime, the retail sector will expand and Indian consumers will have more brands to choose from.

Indian conglomerates expand their retail presence

The Real Estate Bill imposes accountability in the sector


The Indian government has drafted the Real Estate (Regulation and Development) Bill 2011, which is expected to be tabled in the parliament in 2012. This bill aims to curb malpractice in the lightly regulated real estate sector. The new legislation that will arise from this bill will push for more accountability and transparency in the sector50.

Big companies enter low-cost housing segment


Tata Group intends to pilot prefabricated homes at a unit price of US$628 for Indias rural market by the end of 2012 and to gather initial feedback from consumers to improve the product51. Meanwhile, Mahindra plans to enter the affordable-homes segment as well, by building houses costing up to about US$19,600 in metros and US$9,800-US$13,700 in tier-two and-three cities52.

Reliance Industries will enter the fast-food business with its own brand in 2012. The company plans to take on established international fast-food brands such as McDonalds and Dominos as well as local chains including Jumbo King and Saravana Bhavan. Reliance intends to launch its first stores in Delhi, Mumbai and Bangalore in the form of independent outlets as well as in food courts58. Moreover, Godrej Group has decided to double the number of stores in its retail venture, Godrej Natures Basket. The Indian government postponed its India has 16 Natures Basket stores so decision to open up the retail sector far. With average individual spending to FDI in 2011. In 2012, industry bodies and companies are expected to on gourmet food more than doubling over the past three years in India, continue pushing the government to allow higher FDI in the sector. Industry Godrej aims to scale up its operations with increased product offerings at firmly believes that reforms to FDI 59 regulations in the retail sector are vital its stores . for driving growth in the sector and the Indian economy overall55. Even farmer associations have been pressuring the government to open the retail sector, on the assumption that doing so could bring farms greater market access56. India has not opened its retail industry to foreign investors. However, it will likely remain a preferred destination for global retailers eyeing emerging markets to offset worsening economic The proposal to allow 100 percent conditions in the developed world. foreign ownership of multi-brand For example, Swiss retail chain Dufry retail in India has been put on hold. International and InterGlobe Retail, Nevertheless, the Indian government a sister concern of IndiGo Airlines, will allow 100 percent FDI in singlehave partnered with the Delhi Metro brand retail. This will pave the way for Rail Corporation (DMRC) to set up foreign brands such as Prada, Ikea and globally renowned Hudson News GAP (among many others) to enter Cafes across 57 metro stations. India because they sell a single brand Hudson News currently operates more under one roof. These brands had not than 500 shops in 10 countries across the globe, and the tie-up with DMRC would be its first foray in India60.

Multi-brand retail pushes for higher FDI

India remains the preferred destination for foreign retailers

Foreign players increase their presence in India

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In addition, US-based retail giant Wal-Mart is setting up a research and software development center in Bangalore to develop technologies and solutions for its global e-commerce business. Wal-Mart has launched this venture through its global e-commerce division, WalmartLabs, which develops technologies in social and mobile commerce for global shoppers61.

semi-urban sectors, mobile operators are considering raising call tariffs. Stagnation in the urban segment is also pushing operators to move to rural areas, which has increased their operational costs and put further pressure on margins66. The high price that mobile operators had to pay for 3G licenses has further pressured margins, increasing the likelihood that operators will raise tariffs.

will make advanced telecom services available to Indian consumers70.

Indian telecom companies expand abroad


Indias second-largest telecom tower company, Viom Networks, plans to expand its operations globally, particularly in Africa as well as West and East Asia71. In addition, IMImobile, the Hyderabad-based mobile data technology company, will likely expand its African operations in 201272. After entering Africa with its mobile service, Bharti Airtel has partnered with Samsung for exclusive distribution rights for some of Samsungs wireless products in 17 African countries for the first six months after their launch73. This will help Bharti Airtel broaden its presence and product offerings throughout Africa.

Telecommunications Telecom industry may


Indian telecom sector grows witness consolidation
Because of pressure on margins and stiff competition in the sector, the Mobile-device sales in India are telecom industry is pushing for a expected to rise over 8.5 percent to liberal merger and acquisition policy reach 231 million units in 2012, up that can encourage consolidation. from 213 million units in 201162. In Consequently, sector regulators addition, the data-center co-location incorporated some guidance on M&A and hosting market in India could be policy in the draft of the National worth about US$609 million in Telecom Policy (NTP) 2011. In 2012, primarily thanks to service addition, recent regulations regarding providers efforts to expand their data- spectrum management and licensing center business63. frameworks stipulate that the market share of any entity resulting from M&A should not be above 35 percent of the total subscriber base67. This is expected to fuel consolidation in the industry.

Telecom companies take 3G services to the next level

With the leading mobile-service providers becoming comfortable with offering 3G services, the sector is expected to grow, particularly in terms of subscribers64. 3G services in India could reach 50 million subscribers by 2012. In addition, the telecom ministry has stated that India has capacity in the spectrum to move to fourth generation (4G) services. Thus, advanced services could be launched in the country in 201265.

Reforms are implemented


The proposed NTP 2011 will likely be implemented in 2012. The policy aims to lay out revised rules that will make the telecommunications sector more transparent, relax M&A norms to encourage consolidation and give more control to the industry regulator, Telecom Regulatory Authority of India (TRAI)68. In addition, state-run telecom operator BSNL also plans to lease out spare capacity of its 60,000-strong network of towers to private players as a way to generate revenue from its infrastructure. This will benefit private players seeking to expand their network, as BSNL has infrastructure across the remotest regions of India69. Moreover, the Telecom Ministry has suggested the rollout of 4G technology by the end of 2012, which

Mobile operators raise call tariffs


Recent growth in the mobile sector stemmed from call rates of 30 paise per minute in India, which count among the lowest in the world. However, as the sector matures and hits stagnation in Indias urban and 22

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