Brand India is built on the foundation of the three key values of its economic resilience, democratic culture and

scientific and technical knowledge pool, which are driving the Indian growth story. Our economic resilience has enabled us to become an emerging economy and embark on a steady march towards becoming a knowledge-led economy. With Brazil, Russia and China, India is part of the BRIC group of economies, spurring global growth. India is successfully outsourcing software, services, and products to the West and our dynamic consumer class, which has come into its own, is generating sizeable wealth. Indias emerging economy status and its admirable handling of the recent worldwide recession are clear indications of the countrys potential for growth. Our vibrant democratic culture and higher levels of transparency in public affairs as compared to many other developing countries are also strengthening Brand India. Besides, the country has a large and qualified English-speaking scientific and technical knowledge pool which is the backbone of its software and life sciences industries. Not only is our software industry one of the biggest and the best in the world, but we are also fast moving towards transforming ourselves into a knowledge economy by riding this information technology (IT) wave. The lowcost-high-value advantage inherent to Indian biotechnology points to a booming life sciences sector. I believe that value addition through innovation, higher education, infrastructure development, and agricultural productivity are very critical drivers of Brand India. At the moment, we follow the fee-for-service model. However, things are set to change to project-based and consulting services. The wild scramble to manufacture generics and me-too offerings is likely to shift to proprietary products. We can and must pursue innovation far more cost effectively than the developed world, delivering affordable outcomes that can address a number of unmet needs in healthcare, food, energy, and environmental sustainability. Thus, I believe that we will invest in innovation that can take us up the value chain. To sustain high economic growth, Indias higher education will need to undergo transformational change. Today, most higher learning is irrelevant and not tied to the world outside that will change to project-based and experimental learning. India has also realized that with it needs to enhance its infrastructure to propel

growth. So, the power sector, roads and the transport system, airports and ports are set to improve in the days to come. India is basically an agricultural economy. Biotechnology will be critical to increase productivity and produce better quality and pest-resistant yields. With the help of BT, agricultural productivity is expected to reach global levels. India has a strong scientific and engineering talent base. That coupled with an outward-looking attitude to international partnering on the research and development front has helped the Indian pharmaceutical and biotechnology sectors become world-class. Another attribute is the industry's ability to occupy a prime position in the development of generics and pervade US and European markets with a low-cost advantage. While this ability was cultivated because of the need to develop affordable drugs for the Indian market, it eventually helped us access global markets. This is an opportune time for the industry to concentrate on creativity and harness its innovation potential more aggressively.

Infrastructure IBEF The countrys core sector, comprising six key infrastructure industries, accelerated by 5.1 per cent year-on-year in April 2010, compared with 3.7 per cent in April 2009, according to the data released by the Union Ministry of Commerce and Industry. The growth was primarily led by an increase in the production of cement, which stood at 18.87 million tonnes (MT), compared to 17.36 MT during April 2009. Electricity production grew by 6 per cent in April 2010, as against 6.7 per cent in the same month of the previous fiscal. Finished steel production registered a growth of 4.7 per cent during the month, against a decline of 1.3 per cent in the corresponding period of 2009. Among other industries, production of crude petroleum rose by 5.2 per cent, as against minus 3.1 per cent, while production of petro-products registered an increase of 5.3 per cent, as compared to a contraction of 4.5 per cent during April 2009.

Infrastructure investment in India is set to grow dramatically. As per Union Minister for Finance, Mr Pranab Mukherjee, India would require to develop a rupee-denominated long-term bond market for funding the infrastructure sector that requires an investment of around US$ 459 to US$ 500 billion by 2012. Further, investment in the infrastructure sector is expected to be around US$ 425.2 billion during the Eleventh Five Year Plan (2007-12), as against US$ 191.3 billion during the Tenth Plan. Meanwhile, private investment into the sector is also projected to increase to US$ 157.3 billion in the Eleventh Plan, as compared to US$ 47.84 billion in the Tenth Plan. This investment is likely to be fulfilled through public-private-partnership (PPP) projects that are based on long-term concessions. Clearance has been given to nine new investment proposals of around US$ 1.05 billion by the State Level Single Window Clearance Authority (SLSWCA). Out of these nine proposals, five were from the cement sector, two for setting up aluminium conductor units, and one each for developing a petroleum coke plant and a maize processing unit. Meanwhile, a committee on infrastructure under Prime Minister Dr Manmohan Singh will conduct quarterly review of development of power, road, ports, civil aviation and railways sectors, announced the Planning Commission of India recently. Further, the cabinet committee on infrastructure (CCI) will handle specific infrastructure cases that may require necessary policy correction or solving issues affecting projects. Notably, truck sales, a key indicator of goods movement, registered a growth of 74 per cent during May 2010, as per the data released by the Indian Foundation for Transport Research and Training (IFTRT). The increase in the demand for cargo transportation from the agricultural and manufacturing sectors was one of the contributing factors in the increase in the truck sales. In order to develop eco-friendly infrastructure for new cities in the DelhiMumbai Industrial Corridor (DMIC), Japan-based consultants such as Nikken Sekkei, Mitsubishi and IBM Japan would work along with DMIDC and three state governments. The project, expected to be completed by 2018, as per Mr Anand Sharma, Union Minister for Commerce and Industry is by far the worlds biggest infrastructure project.

Ports The major ports in India handled 45.8 million tonnes cargo in February 2010, as compared to 45.2 million tonnes in February 2009. The cargo growth during April-February 2010 registered an increase of 5.5 per cent as compared to the corresponding period in the 2009 fiscal, as per data released by the Indian Ports Association (IPA). The annual combined capacity of the major and non-major ports in the country will be 1.5 billion tonnes by 2012, stated by Minister of Shipping, Mr G K Vasan, while speaking at the Logistics Outsourcing Summit organised by the Confederation of Indian Industry (CII). The Union Cabinet has given the approval to the Shipping Ministry for declaring Andaman and Nicobar ports as major port, stated Union Minister of Shipping, Mr G K Vasan. The Cabinet Committee on Infrastructure (CCI) has approved a proposal to develop the fourth container terminal at the Jawaharlal Nehru Port (JNPT), the country's busiest port, at an estimated cost of US$ 1.44 billion. The government also cleared a proposal to build standalone container handling facility at Mumbai port at a cost of US$ 129.6 million. The project would be implemented within two years from the date of the award of the project. Airports The domestic airlines flew about 4.78 million passengers in May 2010, an increase of almost 22 per cent over the number carried in the same period in the previous year. The Union Minister of State for Civil Aviation, Mr Praful Patel, stated that the country will become the top-five civil aviation markets in the world in the next five years. India is the ninth largest civil aviation market in the world at present. The Airports Authority of India (AAI), the agency responsible for civil aviation infrastructure, is likely to spend over US$ 1.01 billion on the modernisation of non-metro airports in the current year. Aircraft manufacturing companies, Boeing and Airbus, remain upbeat over

India's aviation growth potential. Airbus has forecast that India will need 1,032 new aircraft worth US$ 138 billion by 2028, while Boeing has forecast that the country will require 1,000 aircraft worth US$ 100 billion over the next two decades. Mumbai Airport posted its highest ever monthly passenger traffic in its history in December 2009. According to Mumbai International Airport (MIAL), the Chhatrapati Shivaji International Airport (CSIA) saw a record 2.53 million passengers in December 2009. This number is the highest-ever passenger volume handled by the airport in its history, with the previous high standing at 2.38 million passengers in January 2008. The government has mandated MIAL with the task of upgrading and modernising CSIA, which is a joint venture between the Airports Authority of India and the GVK-SA consortium. Railroads During the first month of the 2010-11 fiscal, the Railways reported an increase of 9.69 per cent in its total earnings at US$ 1.62 billion, as compared to US$ 1.5 billion in the same month last fiscal. The Railways garnered US$ 459 million in total passenger earnings in April 2010, compared to US$ 411.6 million in April 2009. According to the Department of Industrial Policy and Promotion (DIPP), the foreign direct investment (FDI) inflow into railways related components has been US$ 109.56 million from April 2000 to March 2010. Roads An in-principal approval for converting 10,000 km of state roads to national highways has been given by the Empowered Group of Ministers (EGoM). It is estimated that around US$ 3.3 billion would be required over the next five years to undertake this project. Further, the Cabinet Committee on Infrastructure (CCI) has approved four highway projects of about US$ 543.8 million on June 10, 2010. These projects would cover states such as Gujarat, West Bengal, Bihar, Uttar Pradesh and Madhya Pradesh. Anil Dhirubhai Ambani Group (ADAG)s flagship company Reliance

Infrastructure Ltd (R-Infra) won a US$ 197.3 million project from the National Highways Authority of India (NHAI). It is the tenth road project it won from the NHAI. Earlier, R-Infra won a US$ 218.3 million road project from the Gujarat government, within a week after winning the US$ 380 million Pune-Satara Road project from the National Highway Authority of India (NHAI). The project is to execute a 71 kilometre four-six lane corridor connecting the ports of Mundra and Kandla in Gujarat. Recently, the elevated expressway between Silk Board junction and Electronic City junction, built for US$ 165.5 million, was opened to public use. A consortium comprising Soma Enterprise Ltd, Nagarjuna Construction Company and Maytas Infra Ltd constructed the 9.985 km long elevated road project. The project, executed through a special purpose vehicle, Bangalore Elevated Tollway Ltd, was built on a build operate transfer basis for the NHAI. Investments The infrastructure sector seems to have emerged as a favourite for the private equity (PE) in 2010. According to Venture Intelligence data, so far in 2010, there have been 19 deals in this sector at an approximate investment of US$ 1.1 billion, as compared to 14 deals with an investment of US$ 257.5 million during the same period last year. JSW Energy (Bengal) Limited, a special purpose vehicle (SPV) for the Bengal power and coal project, plans to invest around US$ 423.6 million in coal mine development. Sembcorp Utilities, a Singapore-based company, has bought 49 per cent stake in Thermal Powertech Corporation India Ltd, a SPV and subsidiary of Gayatri Projects Ltd, for US$ 235.1 million. An investment of around US$ 425 million has been made by a consortium of investors led by Morgan Stanley Infrastructure Partners along with Goldman Sachs Investment Management, General Atlantic LLC (GA), Everstone Capital, Norwest Venture Partners and others in Asian Genco Pte (AGPL), an infrastructure company.

Larsen & Toubro (L&T), the countrys largest engineering company, will invest around US$ 5.46 billion to build its thermal power business in the next five years. L&T Power, the wholly-owned subsidiary of L&T, will have a generation capacity of 5,500 MW, including hydro power, by 2015. Larsen and Toubro Ltd also formed a joint venture with Malaysia-based SapuraCrest Petroleum to install pipelines and construct offshore rigs and platforms in India, the Middle East and South East Asia. Tata Power has lined up investments of US$ 5.19 billion for its upcoming plants in Mundra, Maithon and Jojobera over the next three years. Tata Power and Reliance Power are coming up with UMPPs with a combined generation capacity of close to 16,000 MW. Jindal Steel & Power, which has a production capacity of 1,000 MW, plans to add another 4,380 MW thermal power and 6,100 MW hydro power capacity in the next five years. Government Initiatives The infrastructure finance companies (IFC) are being included in the category of non-banking finance company (NBFC) by the Reserve Bank of India (RBI). The IFCs would require a capital adequacy ratio of 15 per cent and the similar criteria of NBFCs would be applied to IFCs as well. Further, RBI stated that at least 75 per cent of the assets of these institutions should be used in infrastructure and their net owned funds should be US$ 64.6 million or more. While presenting the Union Budget this year, the Finance Minister has announced the allocation of US$ 37.7 billion, around 46 per cent of the total plan outlay of US$ 81 billion for 2010-11 to infrastructure sectors. In the last fiscal, this proportion was about 30 per cent. The Government of India has envisaged capacity addition of 100,000 MW by 2012 to meet its mission of power to all. Recently, a ministerial group discussing large power plants with a capacity to generate 4,000 MW of power has approved, in principle, a proviso requiring such plants that will be awarded in the future to use local power generation equipment. The move is expected to provide a fillip to domestic manufacturing. The decision on so-called ultra mega power plants, or UMPPs, will also benefit domestic power generation equipment manufacturers such as state-owned Bharat Heavy Electricals Ltd (Bhel) and Larsen and Toubro Ltd (L&T), which has a joint venture with Mitsubishi Heavy Industries Ltd (MHI) of

Japan. At least three joint ventures, between Toshiba Corp. of Japan and JSW Group; Ansaldo Caldaie SpA of Italy and GB Engineering Enterprises Pvt. Ltd; and Alstom SA of France and Bharat Forge Ltd are looking to start manufacturing power equipment in India. Further, the government is also implementing the National Solar Mission, aimed at setting up 20,000 MW of solar power capacity by 2020. The Asian Development Bank (ADB) has approved a financial assistance for US$ 200 million under the Assam Power Sector Enhancement Investment Programme. The project has some innovative features like franchisee-based distribution, off-grid electrification with renewable energy, reduction in CHG emissions through efficiency gains. The road transport and highways ministry has proposed priority sector status for road development, allowing private highway developers more funds from banks. Exchange rate used: 1 USD = 45.02 INR (as on May 2010) 1 USD = 47.03 INR (as on June 2010) IT: Sector structure/Market size The Indian information technology (IT) industry has played a key role in putting India on the global map. Thanks to the success of the IT industry, India is now a power to reckon with. According to the annual report 2009-10, prepared by the Department of Information Technology (DIT), the IT-BPO industry is expected to garner a revenue aggregate of US$ 73.1 billion in 2009-10 as compared to US$ 69.4 billion in 2008-09, growing at a rate of over 5 per cent. The report predicts that the Indian IT-BPO revenues may reach US$ 225 billion in 2020. According to DIT, the Indian software and services exports is expected to reach US$ 49.7 billion in 2009-10 as compared to US$ 47.1 billion in 2008-09, registering an increase of 5.5 per cent in dollar terms. Further, the IT services exports is estimated to grow from US$ 25.8 billion in 2008-09 to US$ 27.3 billion in 2009-10, showing a growth of 5.8 per cent.

Moreover, according to a study by Springboard Research published in February 2010, the Indian information technology (IT) market is expected to grow at around 15.5 per cent in 2010, on the back of growing investor confidence and favourable initiatives taken by the government. The data centre services market in the country is forecast to grow at a compound annual growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to US$ 2.2 billion by the end of 2011, according to research firm IDC India's report published in March 2010. The IDC India report stated that the overall India data centre services market in 2009 was estimated at US$ 1.39 billion. As per a report by the Internet and Mobile Association of India (IAMAI) and market research firm IMRB, the total number of Internet users in India reached 71 million in 2009. The number of active users increased to 52 million in September 2009 from 42 million in September 2008, registering a growth of 19 per cent yearon-year, stated the report. According to IDC India, during January-March 2010, total PC sales in India reached 2,240,000 units registering a year-on-year increase of 33 per cent over the same period in 2009. Desktop PC sales witnessed a year-on-year increase of 18 per cent during January-March 2010, over the corresponding period last year to reach 1,436,000 units. The sales of Notebook computers also increased by 72 per cent year-on-year, clocking 803,000 shipments. Outsourcing India is a preferred destination for companies looking to offshore their IT and back-office functions. It also retains its low-cost advantage and is a financially attractive location when viewed in combination with the business environment it offers and the availability of skilled people. Some big deals in the outsourcing space include:

Wipro Ltd, an IT services company, has entered into a strategic collaboration with Hitachi Data Systems, to offer co-branded products and services on Hitachi Technology in India. Software company, Tata Consultancy Services (TCS) has won a multi-year outsourcing contract from Norway-based telecom company, Telenor Norway to provide application maintenance and development services. HCL Technologies has entered into a five-year IT infrastructure outsourcing deal with Singapore Exchange (SGX) for US$ 110 million. The company

has also won a US$ 500 million strategic IT outsourcing contract from USbased drug manufacturer, Merck Sharp and Dohme (MSD). Computer services firm, Mahindra Satyam has signed a four-year offshore contract with Denmark-based IT company, KMD for US$ 48 million. Software exporter Patni Computer Systems won a five-year IT and backoffice contract potentially worth around US$ 200 million from US-based health insurance provider Universal American.

Domestic Markets The market for enterprise networking equipment in India is estimated to grow from US$ 1 billion in 2008 to US$ 1.7 billion by 2012, recording a compounded annual growth rate (CAGR) of 15 per cent during this period, according to a study by Springboard Research titled Epicenter of GrowthIndian Enterprise Networking Equipment Market Report' released in December 2009. Investments

Between April 2000 and March 2010, the computer software and hardware sector received cumulative foreign direct investment (FDI) of US$ 9,872.49 million, according to the Department of Industrial Policy and Promotion. The total investments of EMC Corporation, a leading global player of information infrastructure solutions in India, will touch US$ 2 billion (over US$ 2.01 billion) by 2014. Syntel, an IT company, plans to invest around US$ 50 million in its global development centre in Chennai. Russian IT security software provider, Kaspersky Lab, will be investing US$ 2 million in its India operations at Hyderabad during the next financial year.

Government Initiatives

The government has constituted the Technical Advisory Group for Unique Projects (TAGUP) under the chairmanship of Nandan Nilekani. The Group would develop IT infrastructure in five key areas, which includes the New Pension System (NPS) and the Goods and Services Tax (GST) The government set up the National Taskforce on Information Technology and Software Development with the objective of framing a long term National IT Policy for the country Enactment of the Information Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions

Setting up of Software Technology Parks of India (STPIs) in 1991 for the promotion of software exports from the country, there are currently 51 STPI centres where apart from exemption from customs duty available for capital goods there are also exemptions from service tax, excise duty, and rebate for payment of Central Sales Tax. But the most important incentive available is 100 per cent exemption from Income Tax of export profits, which has been extended till 31st March 2011 Government is also setting up Information Technology Investment Regions (ITIRs). These regions would be endowed with excellent infrastructure and would reap the benefits of co-siting, networking and greater efficiency through use of common infrastructure and support services

Moreover, according to NASSCOM government, IT spend was US$ 3.2 billion in 2009 and is expected to reach US$ 5.4 billion by 2011. Further, according to NASSCOM, there is US$ 9 billion business opportunity in e-governance in India. Road Ahead The Indian information technology sector continues to be one of the sunshine sectors of the Indian economy showing rapid growth and promise. According to a report prepared by McKinsey for NASSCOM called 'Perspective 2020: Transform Business, Transform India' released in May 2009, the exports component of the Indian industry is expected to reach US$ 175 billion in revenue by 2020. The domestic component will contribute US$ 50 billion in revenue by 2020. Together, the export and domestic markets are likely to bring in US$ 225 billion in revenue, as new opportunities emerge in areas such as public sector and healthcare and as geographies including Brazil, Russia, China and Japan opt for greater outsourcing.

Automobiles IBEF Introduction: The growth of the Indian middle class along with the growth of the economy over the past few years has attracted global auto majors to the Indian market. India provides trained manpower at competitive costs making India a favoured global manufacturing hub. Propped by the increase in its car sales after the launch of General Motors (GM) new model Beat, along with the robust growth in the Indian automobile sector, Kevin E Wale, President and Managing Director, General Motors China Group stated that India should be among the top ten markets for the company globally by 2011. Production: In recent times, India has emerged as one of the favourite investment destinations for automotive manufacturers.

Nissan Motor India has announced its 'Made-in-India' compact car (hatchback) Nissan Micra at its manufacturing plant at Oragadam, near Chennai. Toshiyuki Shiga, Chief Operating Officer, Nissan Motor Company stated that the India-made Micra will supply to strategic markets such as Europe, Middle East and Africa The German luxury car major, BMW has launched four new variants of its new-generation 5-Series sedan in India In a bid to capture a bigger share of the ever-expanding consumer base of luxury segment automobiles in India. Volkswagen has launched its luxury sedan model Phaeton, its latest luxury model Hyundai plans to bring forth an upgraded version of i30, latest C segment five-door hatchback which is designed by Hyundai European team in Germany and is based on the Hyundai i-flow HED-7 hybrid concept. As per the manufacturer, i30U has entered mass production in March 2010 after debuting at the Geneva Motor Show

Y V S Vijay Kumar, Executive-Vice President, Hindustan Motors India stated that the companys Thiruvallur plant has a capacity of 12,000 units and in two years, the company plans to double its manufacturing capacity to reach 24,000 units. India's second largest heavy commercial vehicle maker Ashok Leyland Ltd and Japanese car maker Nissan Motor Co. Ltd announced the launch of three light commercial vehicles (LCVs) from 2011 through 2013 According to Andrew Palmer, senior vice-president, Nissan, the company will start marketing a light commercial vehicle (LCV) under its brand name, from its Oragadam plant near Chennai, in the second half of 2011 Honda Motorcycle and Scooters India (HMSI), the Indian subsidiary of Japanese auto giant Honda Motor Corporation, will launch its superbike 2010 VFR 1200F in India by December 2010, according to a HMSI executive

Domestic Market/ Sales:

According to the Society of Indian Automobile Manufacturers (SIAM), overall vehicle sales grew 30 per cent in May 2010 to 1,208,851 units, and 8 per cent over the previous month of April 2010. Two wheeler sales rose 29 per cent, with motorcycle sales increasing 26 per cent to 725,311 units, and scooter sales rising 45 per cent to 157,509 units in May 2010. Commercial vehicle sales rose 58 per cent in May 2010. According to SIAM, the medium and heavy commercial vehicle (M&HCV) segment registered a growth of 33.5 per cent at 245,058 units and total commercial vehicle (CV) sales went up by 38.3 per cent to 531,395 units in 2009-10. At an estimated 25 per cent growth, while the M&HCV segment would be about 306,000 units, total CV sales would be about 664,000 units in 2010-11. Passenger vehicles sales alone grew by 33.93 per cent in the month of April 2010 as per SIAM report. The growth within this segment was largely driven by a 39.48 per cent growth witnessed in passenger car sales whereas exports continue to grow stronger for the industry as overall exports posted a growth of 87.61 per cent as reported by SIAM. Furthermore, the three wheelers segment witnessed a sales increase of

20.41 per cent in April 2010 over April 2009. Two wheeler segment also continued the growth trend registering an upswing of 22.07 per cent at 8,55,670 in April 2010 compared with 7,00,987 in the corresponding period of last year. Mahindra and Mahindra (M&M) became the world's number one tractor company by selling a record of 1.59 lakh tractors in 2009 surpassing John Deere of the US.

Road Ahead: R Seshasayee, managing director, Ashok Leyland, stated that the company plans to invest around US$ 436.6 million over the next two years. The commercial vehicle major said it had earmarked US$ 262 million for capex in addition to investments earmarked for the various joint ventures (JVs) to the tune of US$ 174.7 million. The market for electric vehicles, particularly two-wheelers or e-bikes, is expected to grow with the governments at the Centre and states offering fiscal incentives and as awareness about the ecological benefits of using these vehicles spreads, according to Ms Hemalatha Annamalai, Founder and Chief Executive Officer of Ampere Vehicles Pvt Ltd (AMPVL), Coimbatore. Furthermore, following the initiative taken by the Society of Manufacturers of Electric Vehicles (SMEV), the government has given duty concession on the import of certain key components needed by the industry. In addition, the Tamil Nadu Government has also reduced Value Added Tax (VAT) from 12.5 per cent to four per cent benefitting the industry. Pune-based Automotive Research Association of India (ARAI) and DSM of the Netherlands have entered into an alliance to develop new lighter materials that could substitute metals in the automotive industry, and help auto components shed weight. According to the Society of Indian Automobile Manufacturers (SIAM), total commercial vehicle (CV) sales is estimated to grow to 664,000 units in 2010-11, while the medium and heavy commercial vehicle (M&HCV) segment would be about 306,000 units. The Indian automotive industry is all geared up for a roller coaster journey of growth and there is every reason to remain positive about the Indian auto

sector in the future. Exchange rate used: 1 USD = 46.61 INR (as on May 2010)

Consumer Markets IBEF According to a McKinsey Global Institute (MGI) study titled 'Bird of Gold': The Rise of India's Consumer Market, the total consumption in India is likely to quadruple making India the fifth largest consumer market by 2025. Urban India will account for nearly 68 per cent of consumption growth while rural consumption will grow by 32 per cent by 2025. India ranks first in the Nielsen Global Consumer Confidence survey released in May 2010. India is one of the fastest growing markets in the world and the current consumer belief that recession would soon be a thing of the past has filled Indians with confidence, said Piyush Mathur, Managing Director, South Asia, The Nielsen Co. With 127 index points, India ranked number one in the recent round of the survey, followed by Indonesia (116) and Norway (115). According to an Ernst & Young transactions report released in May 2010, the Indian consumer sector is attracting more interest from both private equity (PE) and mergers and acquisitions (M&A).

This heightened level of PE interest is evidenced by three PE deals which have happened in the consumer space in quick succession in the last few months Henderson Equity Partners' investment in Genesis Colors, IL&FS' private equity investment in The Mobile Store and investment by Bain Capital & TPG Growth in Lilliput Kidswear, said Ajay Arora, Partner, Transaction Advisory Services, Ernst & Young. Retail The BMI India Retail Report for the third-quarter of 2010 released in May 2010 forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. Moreover, for the fourth time in five years, India has been ranked as the most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm A T Kearney in its eighth annual Global Retail Development Index (GRDI) 2009 published in June 2009. Consultancy firm Technopak said that the organised modern retail segment in India will grow by over three times during the next five years (from 2010), to reach a figure of US$ 80 billion. Raghav Gupta, President, Technopak, observed that the country's modern consumption level will double within five years to an annual figure of US$ 1.5 trillion from the present level (taking 2010 as the reference year) of US$ 750 billion. In order to tap the growing opportunity in the segment, Aditya Birla Retail plans to invest up to US$ 44.34 million in 2010-11 to expand its 'More' brand. The group will open 100 new supermarkets of 'More' and 8-10 new hypermarkets under the More Megastore brand. The Raheja Group promoted department store chain, Shoppers Stop has lined up investments worth US$ 54 million to open 25 more stores in the next four years, as demand for lifestyle products picks up in June 2010. Besides penetrating deeper into metros where it already has a presence, Shoppers Stop will enter eight new cities such as Bhopal, Vijayawada and Siliguri, among others, said Govind Shrikhande, Chief Executive, Shoppers Stop Ltd. Moreover, leading watchmaker Titan Industries Limited announced to

invest about US$ 21.83 million for opening 50 premium watch outlets Helios in the next five years to attain a sales target of US$ 87.31 million. Furthermore, international chains such as Wal-Mart are increasingly looking at India. Wal-Mart Stores Inc, the world's biggest retailer, plans to accelerate its rollout of wholesale stores in India. Raj Jain, Chief of Indian Operations for Arkansas-based Wal-Mart, said the firm now expects to open 10-12 wholesale centres in India over two to three years, from an earlier target of five years, as real estate prices have become more attractive. Direct Selling The Indian direct-selling industry is likely to see major competition with both domestic and international majors such as Nu Skin, Burlington, Salad Master and Golden Warp planning to start operations in two years. According to Chavi Hemanth, Secretary General, Indian Direct Selling Association (IDSA), The Indian market is clearly a growth story in every sphere of economic activity. We receive more than three membership enquiries every week. Direct selling firm Tupperware India, known for its storage containers plans to foray into the rural markets in the next two-three years. "We have solid plans for the rural market. We are working on bringing products for rural people as well, said Asha Gupta, Managing Director, Tupperware India. Direct selling fast moving consumer goods (FMCG) company, Amway India Enterprises is aiming at a 25 per cent growth to clock US$ 545.7 million by 2012. The company posted revenues of US$ 307.1 million in 2009, which was 22 per cent higher than its 2008 revenue. Rural Consumers Mega retail chains are looking to build a high-quality supply chainretailers such as Bharti-Wal-Mart, Carrefour and Reliance are working to strengthen their supply chain formula by roping in farmers as stakeholders. Despite being the biggest names in the trade, these retailers are ploughing rural areas to teach innovative farming methods and find the best suppliers among them.

Hindustan Unilever Ltd (HUL) is planning to significantly increase its rural reach. Currently, HUL products reach approximately 250,000 rural retail outlets and the company intends to scale it up to nearly 750,000 outlets in two years time. Swiss FMCG player, Nestle plans to make further inroads into the rural markets. The company has asked its sales team to deliver 6,000 new sales points every month in rural areas to expand presence in Indian villages, according to Antonio Helio Waszyk, Chairman and Managing Director, Nestle India. FMCG According to a FICCI-Technopak report, India's FMCG sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion by 2018. The report states that implementation of the proposed goods and services tax (GST) and the opening of foreign direct investment (FDI) are expected to fuel growth further and raise the industry's size to US$ 47 billion by 2013 and US$ 95 billion by 2018. According to figures released by market researcher Nielsen, demand for personal care products grew faster in rural areas than urban areas during the period January-May 2010. In shampoos, rural demand grew by 10.7 per cent in value terms, while in urban markets, it rose by 6.8 per cent. Similarly, toothpaste sales grew by 9.1 per cent in rural India and by 4.4 per cent in urban markets. Furthermore, according to data from market researcher Nielsen, the FMCG industry posted a 14 per cent sales growth year-on-year in April 2010, the highest in eight months. Consumer Durables According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the consumer durables and electronics sector has registered a 30 per cent growth during January-March 2010. According to the industry body, the total size of consumer durables and electronics sector is around US$ 6.58 billion. While flat panel display registered a growth of 70 per cent, air conditioner (AC) sales increased by 50 per cent. Additionally, the industry also witnessed a 40 per cent healthy growth in

home appliances business during the same quarter. Automobiles Passenger vehicles sales shot up 33 per cent to 554,000 units in the AprilJune 2010 quarter over the year-ago period, according to the Society of Indian Automobile Manufacturers (SIAM). Moreover as per SIAM, the Indian passenger vehicle market is likely to grow by 12-13 per cent for the year ending March 2011. German luxury car-manufacturer Audi aims to increase its market share in India to 25 per cent from the present 20 per cent by end of 2010. It aims to sell 2,700 units in the country by the end of 2010 as against 1,658 in 2009.The company plans to invest US$ 36.8 million in building production capacity by 2015. Toyota Motor Corp will invest about US$ 103 million to produce engines and transmissions for the Etios compact car in India developed for the local market. Yamaha is planning a major initiative in rural India by launching more models in the affordable price range in 2010. We are very strong in Tier 1 and Tier II cities. Now onwards, our focus will be rural India (Tier III towns). We will launch more models in the affordable price range to dominate the rural market," according to Pankaj Dubey, National Business Head, India Yamaha Motor. At present, around 15 per cent of its sales come from the rural market and Dubey sees this demand increasing substantially in 2010. If Yamaha is looking at the rural market, US-based Harley Davidson, the iconic heavyweight motorcycle maker is targeting the urban consumers in India. Harley Davidson opened its first outlet in Hyderabad recently and plans to open more across the country. According to Anoop Prakash, Managing Director, Harley-Davidson India, the company will open outlets in other cities including Delhi and Mumbai before the end of 2010. Exchange rate used: 1 USD = 46.81 INR (as on June 2010)