Академический Документы
Профессиональный Документы
Культура Документы
August 2011
August 2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
Real GDP grew at 8.6 per cent in 2010-11 compared to 8 per cent in 2009-10. The economy grew by 7.8 per cent in the first quarter of 2011-12. Inflation moderated to 9.1 per cent in April 2011 after peaking at over 16 per cent in January 2010. Service and manufacturing sector grew by 9.4 per cent and 7.9 per cent respectively in 2010-11. Agricultural sector made a significant contribution to the economy with a growth of 6.6 per cent in 2010-11. Industrial production clocked an annual growth of 6.3 per cent for 2010-2011. Consumer durables showed an annual growth of 3.8 per cent in April 2011. Gross fixed investment remains a major driver of economic growth, growing at an average of 11.5 per cent in 2010-11.
The Current Account Deficit (CAD) moderated to 2.6% of the GDP in 2010-11 at $44.3 billion due to fast growth in exports.
Source: Central Statistics Organisation
Growth is primarily driven by investment and government expenditure. Inflation is being neutralised with consistent economic growth. Services sector continues to drive GDP growth mainly through trade and finance.
Source: IMF; Economic Intelligence Unit; Estimates
Real GDP
Agriculture and allied activities Industry Services
Private final consumption expenditure Government final consumption expenditure Gross fixed capital formation Exports Imports Consumer Prices
2.7
15.8 22.3 10.9
6.6
(4.8) (6.8) 12.0
10.2
13.1 6.1 8.1
Public debt is slowly decreasing and is expected to be 50.2 per cent of GDP by 2012-13. Government expenditure is expected to remain at 16.1 per cent of GDP for 2010-11.
Fiscal Indicators (Per cent of GDP) Government Revenue Government Expenditure Government Balance Net Public Debt
External Sector
US$ million Trade Balance Goods: exports Goods: imports Service balance Income balance Current transfer balance Current account balance
US$ billion
Indias total international reserves are estimated to be US$ 603 billion in 2010-11.
439
121
289 287
479 140
340 354
603
2008-09 32% 42% Mauritius Singapore USA UK 4% 5% 7% 10% Source: DIPP Mexico Brazil
2010-11E China
Netherlands
Others
40000 20000 0 -20000 2008-09 2009-10 FDI FII 2010-11 2011-12(1st Quarter)
Source: DIPP Source: IMF Department of Industrial Policy and Promotion (DIPP), Government of India
Source: DIPP
August 2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
India targets to achieve annual FDI worth US$ 50 billion by 2012 and plans to double the inflows by 2017.
44%
21%
Inflow of Foreign Direct Investment (FDI) into India increased to US$ 88.52 billion in 2010-11. Economic growth backed by strong market fundamentals is the core attraction for global investments. Enabling business environment with conducive regulatory regime adds to the investment impetus. Large and growing talent pool along with reaffirmed impetus on infrastructure development is the primary enabler for investment inflow.
5% Source: DIPP
8% 8%
14%
Investment Intentions
400 350 300 250 200 5218 3991 178.6 327.2 25.8
2003
7,000
6,000
5,000 4,000 3,000 127.0 223.8 2,000 1,000 0
2007 2008 2009 2010
150
100 50 0 58.1
2004
77.5
2005
2006
Proposed investment
Number of proposals
Source: DIPP
2 3 4
Banking (private sector) Banking (public sector) Construction development projects including housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities and city and regional level infrastructure Drugs and pharmaceuticals including those involving the use of recombinant technology Health and medical services Hotel and tourism related industry Insurance
5 6 7 8
100 per cent 100 per cent 100 per cent 26 per cent
12
49 per cent
Government
13
Automatic
10
14
Source: Department of Industrial Policy and Promotion, Government of India 1 Discussion papers, Department of Industrial Policy and Promotion, Government of India
11
August 2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
Growth in economy is being driven by government expenditure. Government expenditure is fueled by food inflation, subsidies, focus on social and infrastructure sectors and short term debt servicing. Government revenue is showing a slow but sure positive growth trend.
0.00 -20.00 -40.00 -60.00 -80.00 -100.00 2 Qtr 2009 3 Qtr 2009 4 Qtr 2009 1 Qtr 2010 2 Qtr 2010 3 Qtr 2010 4 Qtr 2010 1 Qtr 2011
Revenue
Expenditure
Balance
13
The growth in industrial production was 7.7 per cent in the first quarter of 2011-12. Agricultural sector grew by a robust 6.6 per cent in 2010-11 adding to the economic growth. Services sector grew by 9.4 per cent in 201011. It is expected to grow by 9.5 per cent in 2011-12. 2
Source: 1 Central Statistics Organisation 2 Economic Intelligence Unit
While the Government had set itself a target of 9 per cent annual growth for 2011-12, it has been revised to a more realistic 8 per cent.1
Source: Central Statistics Organisation, RBI, Department of Economic Affairs, Centre for Monitoring Indian Economy
14
After peaking at over 16 per cent in January 2010, the annual rate of consumer price inflation has moderated, to stand at 9.1 per cent in April 2011, compared with 13.7 per cent in April 2010. Food price inflation fell from a peak of 20.9 per cent in first quarter of 2010 to 12.4 per cent in first quarter of 2011.
RBI has announced a tighter monetary policy to check inflation. A calibrated approach is being taken to curb inflation without unduly affecting growth.
Source: Central Statistics Organisation, RBI, Department of Economic Affairs, Centre for Monitoring Indian Economy
15
Rs/US$
49 48 47 46 45 44 43
Rupee is showing a robust resilience to fluctuations in global currencies. The rise in the currency is primarily due to strong inflows of foreign investment, attracted by Indias bright economic prospects. The current-account deficit is not expected to pose a threat to the rupee, as it is expected to average modestly at 2 per cent of GDP in 2011-151
Source: 1 Economic Intelligence Unit
2 Qtr - 3 Qtr - 4 Qtr - 1 Qtr - 2 Qtr - 3 Qtr - 4 Qtr - 1 Qtr 2009 2009 2009 2010 2010 2010 2010 2011
Rs/US$
Source: RBI
16
Foreign Trade
100,000 80,000 60,000
US$ million
A consistent growth in the exports is a clear contributor to the growth in economy. During April-June, 2011-12, exports grew by 45.7 per cent to US$ 79 billion and imports shot up by 36.2 per cent to US$ 110.6 billion. Trade balance has been fluctuating due to fluctuations in the global crude prices. The exporting sectors that registered strong growth during the quarter include engineering, petroleum products, gems and jewellery, readymade garments and electronics.
40,000 20,000 0 -20,000 -40,000 -60,000 -80,000 -100,000 -120,000 2 Qtr - 3 Qtr - 4 Qtr - 1 Qtr - 2 Qtr - 3 Qtr - 4 Qtr - 1 Qtr 2009 2009 2009 2010 2010 2010 2010 2011 Exports Imports Trade Balance
17
Interest Rates
13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 2 Qtr 2009 Source: RBI 3 Qtr 2009 4 Qtr 2009 1 Qtr 2010 2 Qtr 2010 3 Qtr 2010
At its latest review of monetary policy in June 2011, the Reserve Bank of India (the Central Bank) raised its benchmark interest rate, the repurchase (repo) rate, by 25 basis points to 7.5 per cent. Since March 2010, RBI has increased the repurchase rate 11 times with last update on 26th July 2011. This was done to maintain anti-inflationary stance in a calibrated manner, without affecting economic growth. The effect of tighter funds and likely slowdown in economic growth is reflected in the sentiment of the equity market.
Deposit Rate
Lending Rate
Sensex
25,000 20,000 15,000 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 2 Qtr - 3 Qtr - 4 Qtr - 1 Qtr - 2 Qtr - 3 Qtr - 4 Qtr - 1 Qtr 2009 2009 2009 2010 2010 2010 2010 2011 Sensex Source: BSE YoY %Change
10,000 5,000 0
18
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
Recognition to cold chains, postharvest storage and capital investment in fertiliser production as an infrastructure sub-sector. Proposal for setting up of National Mission for Protein Supplements to promote animal based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries. Promotion of organic farming methods, combining modern technology with traditional farming practices like green manuring, biological pest control and weed management.
Capital investment in the creation of modern storage capacity will be eligible for viability gap funding scheme of the Finance Ministry.
Proposal to review and enforce a reformed Agriculture Produce Marketing Act.
Source: National Budget, 2011-12
20
Foreign investors are permitted to invest in the equity schemes of SEBI registered Mutual Funds. Amendments in the Reserve Bank of India Act are proposed to be introduced in Parliament. Setting up of Central Electronic Registry under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. Setting-up a Financial Sector Legislative Reforms Commission to rewrite and streamline the financial sector laws, rules and regulations. Commission will complete its work by 2013.
Source: National Budget, 2011-12
21
Budget allocation of Rs. 52,057 crore (US$ 11.6 billion) for universalising access to secondary education, increasing the percentage of scholars in higher education and providing skill training. Vocationalisation of Secondary Education Scheme will be implemented to improve the employment of youth. The National Knowledge Network to link 1,500 Institutes of Higher Learning and Research through an optical fibre backbone.
Additional fund of Rs. 500 crore (US$ 111 million) to the National Skill Development Fund.
Allocate funds from National Clean Energy Fund (NCEF) for Green India Mission and launching environmental remediation programmes.
22
Proposal to create National Manufacturing and Investment Zones (NMIZs) to increase manufacturing component of economy from 16 to 25 per cent. National Mission for Hybrid and Electric Vehicles will be launched to provide green and clean transportation for the masses. Set-up 7 mega leather clusters during the financial year 2011-12. Jodhpur is included for the development of a handicraft mega cluster.
Microfinance
Creating a dedicated fund India Microfinance Equity Fund of Rs. 100 crore (US$ 22 million) with Small Industries Development Bank of India (SIDBI) for providing equity to smaller Mutual Fund institutions. Creation of a Womens SHGs Development Fund of Rs. 500 crore (US$ 111 million) to empower women and promote their SHG.
23
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
India Spends on
Clothing and Fashion 17% 10% 4% 6% 3% Electronics Furniture and Fixtures Food and Grocery 60% Others Beauty and Welness
India has approximately 222 million households, with more than 30 per cent of the population living in 5,000 cities and towns. 13 million people enter Indias urban work force each year. Indias population grew at 1.5 per cent during 200510. It is estimated that by about 2025 India will have 25 per cent of the worlds total workforce.
Companies are catering to rural demand - tapping the bottom of the pyramid - for inclusive growth.
The rural consumer market, which grew by 25 per cent in 2008, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers. This will be double the 2004-05 market size of US$ 220 billion.
Source: CII-Technopak White Paper (2009)
25
85%
15%
Modern
Retail Private Consumption Expenditure Government Expenditure Non Retail
Traditional
26
India is among the worlds youngest nations with a median age of 25 years as compared to 43 in Japan and 36 in the US. In 2025, more than 55 per cent of the population of India would be of working age. With a large working population, India can continue to be competitive globally.
Projected Median Age in 2025
25-60 15-24 5-14 0-4 0 500 2030 1000 2025 1500 2000
50 40 40 30 34 28 39
31
20
10 0 Brazil Russia India Median Age Source: World Population Prospects, 2010, UN China Mexico
27
Growth Rate
25.0% 20.0% 15.0% 10.0% 5.0%
Indias financial markets are robust and backed by strong fundamentals. The Securities Exchange Board of India (SEBI), the strong and independent capital markets regulator is committed to develop and regulate markets in a systematic way. The Bombay Stock Exchange (BSE) is the worlds largest stock exchange in terms of number of listed companies and the National Stock Exchange (NSE) is the world's third-largest stock exchange in terms of number of transactions. The Multi-Commodity Exchange of India (MCX) is among the top three bullion exchanges and top four energy exchanges of the world. National Securities Depository Ltd (NSDL), the first and largest depository for equity market in India manages more than 10 million demat accounts.
0.0%
Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Aggregate Deposits Gross Bank Credit
Source: RBI
74.0%
72.0% 70.0%
68.0%
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
28
Exports jumped 46.4 per cent in June 2011 to US$ 29.2 billion continuing the fast paced growth of the previous fiscal. Imports, too, continued to rise at a pace of 42.4 per cent to US$36.9 billion. The trade deficit for June 2011 is estimated at US$ 7.7 billion which was lower than the deficit of US$ 11.02 billion during April 2010. India is a leading exporter of IT services in the world. The US and the UK together account for a dominant share of Indias IT-BPO exports at approximately 61 per cent and 18 per cent, respectively. India is moving from cost competitive exports towards more value based exports both in goods and services. India accounts for approximately 1.64 per cent of global trade in goods and services currently.The government aims to double this share by 2020.
Source: RBI, Government of India
29
Source: RBI
Presence of large sector backward integration and competitors presents ideal scenario for businesses to grow with a large target market.
33.3 30.3
22.9 23.6 24.7 31.7 28.8
32.2 32.8
Indias industrial sector is expected to witness capital expenditure worth INR 22 trillion (US$ 483.5 billion) during 201013.
Electricity sector is expected to witness the highest capacity addition worth INR 4.4 trillion (US$ 96.6 billion) during 201013. Other sectors that are expected to witness significant investments during 201013 include:
Steel (INR 2,370 billion/US$ 52.1 billion). Roadways (INR 1,606 billion/US$ 35.3 billion). Telecommunications (INR 1,546 billion/US$ 34 billion). Petroleum products (INR 1,411 billion/US$ 31 billion).
30
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
August 2011
The automotive sector has been one of India's largest and fastest-growing manufacturing industries, with vehicle production (excluding two- and three-wheelers) increasing by over 130 per cent overall, to 2.9 million units a year, in the last six years leading to 2009-10.The Indian auto sector grew the fastest in the world at over 18 per cent during January-May 20111. India's automotive industry provides direct or indirect employment for over 10m people and accounts for around 5 per cent of industrial output. The automobile sector recorded a 28.2 per cent growth in production, 26.9 per cent in domestic sales and 30.6 per cent in exports during 2010-11 (Apr-Feb). The overall volume growth rate for the sector grew by17.6 per cent yoy and 2.6 per cent qoq during the first quarter of 2011-12. Strong economic growth is expected to support robust passenger-car sales growth in the period 2011-15, with new passenger-car sales forecast to expand at an average rate of 14.5 per cent a year. India is expected to be the seventh-largest automotive market in the world by year 2015. Low penetration levels coupled with a healthy and sustainable economic environment and favourable demographics supported by increasing per capita income levels are expected to drive long-term growth of the industry.
Source: 1 Society of Indian Automobile Manufacturers Economic Intelligence Unit
32
August 2011
Foreign carmakers continue to come to India in an attempt to secure a share of the growing domestic market. Super-luxury carmakers are beginning to enter the Indian market. The small-car market, which already accounts for twothirds of domestic sales, offers promising prospects for sales growth as increasing affluence enables more Indians to trade up from motorcycles. Sales of commercial vehicles are forecast to expand strongly rising by an annual average of almost 15 per cent a year in the next five years to around 830,000 units in 2015-16. The automotive components industry in India continues to grow rapidly as a result of lower costs and rising quality of production. The Indian automobile sector is expected to grow faster than US, Japan and Germany in the next 5 years.
Source: Economic Intelligence Unit
5.00 0.00
2012
2013
2014
2015
India
US
Japan
China
Germany
33
August 2011
National Mission for Hybrid and Electric Vehicles is proposed to be set up in collaboration with all stakeholders to encourage alternative fuel-based vehicles. Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty extended to batteries imported by manufacturers of electrical vehicles. Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology. Exemption granted from basic custom duty and special Countervailing Duty (CVD) to critical parts/assemblies needed for Hybrid vehicles. Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into Hybrid vehicles from 10 per cent to 5 per cent. Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted. Concession to factory-built ambulances from Excise Duty. Agricultural credit outlay increased to Rs. 4,75,000 crore (approx. US$ 107054) expected to increase demand for agricultural vehicles. Overall increased emphasis on infrastructure development is expected to boost demand for automobiles.
Source: National Budget, Government of India , 2011-12
34
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
August 2011
Energy
Sector Outlook
The total installed capacity in India is 169,748 MW1. Thermal sector is the largest source of power and contributes 111,034 MW to the total installed capacity. To meet the increase in the total peak power demand and energy requirement, an additional 75,000 MW of capacity is proposed to be added during 2012-17. Additionally, 13,000 MW of captive capacity will also be added to meet the captive demand. There will be a substantial increase in the transmission infrastructure of the country during 2012-17. There will be an increase of 90,000 Circuit Kilometers (Ckm) of transmission lines; 154,000 megavolt amperes (MVA) of substation capacity; and 27,350 MW of inter-regional transmission grid. The power sector in India has experienced significant growth in private investments since the enactment of the Electricity Act, 2003. The private sector currently contributes 35,145 MW to the total installed capacity. Market-based approach to unlock energy efficiency opportunities, estimated to be about Rs. 74,000 crore (approx. US$16,677 million) by 2014-15 with 19,000 MW avoided capacity addition. Excise duty exemption for Ultra Mega Power Projects (UMPP) equipment is expected to aid fast-track creation of new large-scale power generation capacities. Higher FII limit for investment in corporate bonds issued by infrastructure companies is expected to provide additional funding to the power sector.
Source: 1Central Electricity Authority (Data as on Dec. 2010) Ministry of Power, Government of India, Economic Intelligence Unit, National Budget 2011-12
36
August 2011
37
August 2011
Hydro 22%
Solar power
18 MW
Bio power* Thermal 54% Gas 10% Small Hydropower Renewable 11 % Nuclear 3% Note: Data as on 31st Dec 2010
2,632 MW
2,939 MW
Wind power
13,066 MW
Source: Ministry of New and Renewable Energy and Ministry of Power, Government of India
38
August 2011
Energy
Future Plans Power Sector (2012-2017)
2012-13 Capacity addition (MW) 2013-14 2014-15 2015-16 2016-17 Total
17,500
16,000
15,500
14,000
12,000
75,000
Total Power Sector Fund Requirement (Rs. Crores) Generation Transmission Distribution TOTAL Renewable Energy Sources (MW) Biomass/ Agri waste Bagasse Cogen Urban and Industrial Waste (U&I) Energy Small Hydro Power (SHP) Solar Wind Total
Total 5,11,375 2,09,500 3,97,500 11,18,375 Total Target for five years 400 1,350 220 1,610 3,700 11,000
Source: Ministry of New and Renewable Energy and Ministry of Power, Government of India
39
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
August 2011
Indias pharmaceutical industry production is valued at around Rs. 1 lakh crore (approx. US$ 20 billion) with exports being around 40 per cent. The Indian Pharma Industry globally ranks 3rd in terms of volume. Presently, India contributes around 20 per cent in terms of value in the global generic drugs market. The Indian pharmaceutical sector is expected to witness revenue growth momentum, driven by steady, ~14 per cent growth in domestic brand-named formulations and the continuing expansion of the international business. Domestic formulations are sustaining double-digit growth trajectory, mainly driven by the chronic segments anti-diabetes and cardiovascular which are growing by over 20 per cent and offer strong margins. Export formulations are likely to grow on the back of the continuous launch of products, forays into new areas, supplies under licensing deals and the launch of products with limited competition. Increase in personal income, government healthcare outlays and private domestic investment, combined with longer life expectancy, should allow per-head healthcare spending to rise to US$142 in 2015. While the retail segment is mainstay of the pharmaceuticals market (contributes 85-90 per cent of overall sales), the hospital segment is gaining importance driven by the rise in infrastructure and advent of corporate hospitals.
Source: Department of Pharmaceuticals, Government of India, Economic Intelligence Unit
41
August 2011
95 per cent of the domestic requirement being met through domestic production.
One of the lowest costs for innovation and clinical trials globally enabled by the low cost scientific pool
India has proven legal skills to evaluate IP and commercial strategies are available in top companies.
Emerging hub for Contract research, Bio-pharma, Clinical trials and Clinical data management.
42
August 2011
Incremental consumption from tier III-IV towns and rural markets, which constitute 20 per cent of the total market and are currently growing at 2530 per cent
43
August 2011
Increase in plan allocation for health by 20 per cent in 2011-12 to Rs.26,760 crore (approx. US$ 6,031 million). Scope of the Rashtriya Swasthya Bima Yojana to be expanded to widen coverage. Proposal to increase budgetary allocation for the department of pharmaceuticals to promote the research and development. Plans to allocate total amount of Rs 213 crore (approx. US$ 48 million) to the Department for financial year 2011-12 as compared to the budgetary allocation of Rs 198 crore (approx. US$ 45 million) in FY 2010-11. Proposal for budgetary allocation of Rs.132.31 crore (approx. US$ 30 million) during FY 2011-12 for the National Institute of Pharmaceutical Education and Research (NIPER) and allocation of Rs.8.28 crore (approx. US$ 2 million) for the projects of National Pharmaceutical Pricing Authority (NPPA). Additional health-related budget allocation, encompassing yoga, naturopathy and homeopathy, has been increased by 12.5 per cent year on year in 2011-12.
Source: National Budget, Government of India, 2011-12
44
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
August 2011
Indias US$ 450 billion retail market is the third-largest in Asia in terms of sales. Second-largest employment provider in India, after the agricultural sector, with approx. 15 per cent employment and expected to continue to account for a significant share of overall employment. The total retail spend is estimated to double in the next five years, of which organised retail is expected to grow at a CAGR of 22 per cent.
Consumer expenditure on food, beverages and tobacco is forecast to rise in absolute terms to US$588bn in 2015, from an estimated US$375.3bn in 2010. Growth in market demand for electrical appliances and household goods is forecast to average 13.7 per cent a year in 2011-15.
Multi-Sector Potential
46
August 2011
Increased spending on R&D wings by FMCG companies Substantial Expansion and Retailer Investment Plans
47
August 2011
Surcharge on domestic companies reduced to 5 per cent from 7.5 per cent. Enhancement of the exemption limit for the general category of individual taxpayers is expected to leave the consumers with a higher disposable income adding to the demand for consumer goods. Proposal to enlarge the scope of exemptions under the package of measures to incentivise food processing by providing full exemption from excise duty to air-conditioning equipment and refrigeration panels for cold chain infrastructure and conveyor belts used in cold storages and warehouses.
FDI up to 100 per cent allowed under the automatic route in Cash and Carry (wholesale)
1991 1997 2006
Government mulled over the idea of allowing 100 per cent FDI in singlebrand retail and 50 per cent in multibrand retail
2008 2011 2006
Liberalisation - Indian economy opened FDI up to 51 per cent allowed under the automatic route in select priority sectors
FDI up to 51 per cent allowed with prior Government approval in 'Single Brand Retail'
48
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
August 2011
The Indian IT sector has registered robust growth in the last two decades and more particularly in last five years. The industry is expanding beyond US/UK markets into several other emerging markets. The revenues from the sector are estimated to be US$ 74.4 billion in 2010-11, translating into CAGR of 22.5 per cent from 2004-05 to 2010-11. Spending on IT is expected to grow substantially in 2011-15, by an average of 16.9 per cent a year in US dollar terms. This would result in the industry becoming even more prominent in India than it is currently. Deal signings are strong across the tier 1 Indian IT firms. The deal pipeline for the Indian IT firms is stronger as compared to last year. The domestic market for the IT sector is also steadily increasing.
The current deal pipeline also includes many new first-time outsourcers from non-traditional verticals/geographies as well. The Indian IT companies are likely to gain market share in this multi-vendor outsourcing trend.
Source: Gartner Research, April 2011
50
August 2011
With a current estimated size of approx US$ 13 billion, the Indian Media and Entertainment industry is one of the fastest growing industries of India and is projected to grow at a CAGR of 13 percent to reach the size of approx. US$ 24 billion by 2014. The Indian animation industry is expected to grow at 20 percent to reach US$ 253 million by 2013 from the current US$ 122 million. The Indian gaming market alone has been estimated at US$ 239 million and is expected to grow at a CAGR of over 50 percent to reach US$ 1.3 billion by 2013. India is the second-largest telecom market in the world with 874.68 million subscribers as on May 31, 2011, which are estimated to reach approximately 1 billion by 2014. The telecom sector is one of the highest FDI-attracting sectors in India, and has recorded FDI inflow worth more than US$ 9 billion between 2000 and 2010. The overall tele-density in India is 73.11 and the total broadband subscriber base is 12.12 million at the end of May 2011. The rural markets are expected to be the next key growth drivers for the Indian telecom sector, given rural Indias growing population and disposable income. The governments push to increase mobile penetration rates is expected to generate increased demand for telecom equipment; domestic demand for telecoms equipment is forecasted to grow by around 10 per cent a year in the next few years.
Source: Telecom Regulatory Authority of India, Gartner Research, April 2011
51
August 2011
6,400
2,215 6,163 43,987 58,765 2009 89 257 175 8 8 20 8 8 14 587
7,412
2,477 7,403 49,767 67,059 2010 96 289 190 9 9 23 10 11 15 652
8,818
2,803 8,636 54,160 74,419 2011 105 337 206 10 10 28 14 15 17 742
10,267
3,186 10,066 57,637 81,155 2012 115 382 225 12 12 33 20 18 19 836
11,679
3,604 11,777 62,295 89,356 2013 125 448 246 14 14 39 26 23 21 956
52
August 2011
The lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary are expected to boost the margins of large IT companies. Parts and components of mobile handsets are exempted from Special Additional Duty until March 2012. The surcharge in case of domestic companies is proposed to be reduced from 7.5 per cent to 5 per cent and in case of foreign companies from 2.5 per cent to 2 per cent. Also, the dividend distribution tax rate will be reduced from 16.61 per cent to 16.22 per cent. The increase in the plan allocation for School Education by 24 per cent to Rs. 520.57 billion in FY 2011-12 would boost business opportunities for the IT-Education companies. Proposal for connecting 1,500 Institutions of Higher Learning and Research through optical fibres with the assistance of National Knowledge Network (NKN). Plans for set up of Sectoral Innovation Councils and State Innovation Councils in each state in alignment with the National Innovation Council.
Source: National Budget, Government of India, 2011-12
53
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
August 2011
Infrastructure Debt Funds Proposal to create Special Vehicles in the form of notified infrastructure debt funds. The Finance Bill, 2011 proposes to provide tax exemption from any income arising to an Infrastructure Debt Fund
FIIs in SPVs Since most of the infrastructure companies are organised in the form of SPVs , it is proposed to permit FIIs to invest in unlisted bonds of such SPVs with a minimum lock-in period of three years.
55
August 2011
Tax Exemption 100 per cent tax exemption in any 10 consecutive years within a period of 20 years after completion of the project. Long term Returns Concession period of upto 30 years for enabling long term returns and tolling rights for toll projects. Faster Implementation of Projects Government support for land acquisition, resettlement and rehabilitation - simplified procedures Funding of Projects Provision of funding to select road projects under the Economic Importance and Interstate Connectivity Schemes. Faster Approvals and Clearance Government Support on legal and operational aspects such as obtaining of registration licenses, environmental clearances etc.
56
August 2011
Civil Aviation Requirements issued by Directorate General of Civil Aviation (DGCA) for passenger facilitation.
Plan to set up Independent Civil Aviation Authority announced to replace the DGCA.
57
2011
58
2011
Transport and Logistics sector market size in India is estimated to be over US$ 125 billion employing over 45 million and growing at the rate of 30 to 40 per cent per annum. As per the Ministry of Commerce , over 160 Inland Container Depot (ICD)/Container Freight Stations (CFS) are functional in the country. Half of these are privately owned and the other half by Container Corporation of India Ltd (CONCOR), Central Warehousing Corporation (CWC) and State Governments. Over 70 new ICD/CFS facilities are under development by the private sector. Emerging market survey, 2011 (excluding China) by Transport Intelligence establishes Indias attractiveness:
Found nearly half the respondents agreeing that India would emerge as a major logistics hub in the future. Indias rapid growth and market size is the biggest attraction.
It is proposed to recognise cold chains and post-harvest storage as an infrastructure sub-sector. Key policies governing the sector include: Multimodal Transportation of Goods Act, 2000 (amended), Indian Railways Act, 1989, R3i Policy, Special Freight Train Operator Policy, Warehousing Act, 2007, Procedure for setting up ICD/CFS and Private Freight Terminal Policy.
Source: Emerging market survey, Transport Intelligence and National Budget 2011-12 Ministry of Commerce, Government of India
59
2011
Contents
The growth story continues Steady Growth Increasing Market Attractiveness Quarter Update Enablers of Indian growth story Key Developments Growth Enablers Sector update Automotive Energy Pharmaceuticals and Healthcare Retail and Consumer Goods Technology, Media and Telecommunications Transportation and Logistics
2011
Indias strong growth fundamentals, investment rates, fast working population growth and a rapidly expanding middle class are expected to ensure a steady economic performance. The economic growth is expected to be led by private investment and private consumption in the coming years. The concept of inclusive growth remains central to Indias development policy, as does the stabilisation of the public finances. Three dominant themes of the governments spending plan include: support for the farm sector, increased funding for infrastructure, increased focus on manufacturing sector and measures intended to damp down inflationary pressures. Further reforms are expected to open up previously closed sectors and raising limits on foreign ownership in others.
Source: RBI, CMIE, Economic Intelligence Unit
Real GDP is expected to grow at 8.6 per cent in 2011-12. Average annual growth rate will be around 8.8 per cent in 201213 to 2015-16. Agriculture, Industry and Services contribution to GDP is expected to grow by approx. 9.5 per cent, 48 per cent and 55 per cent respectively during 2010-15 (at constant 2004-05 prices).
Source: Economic Intelligence Unit
61
2011
India would continue to enjoy relatively rapid GDP growth. The governments stimulus measures are expected to boost short-term growth. The fiscal year budget contains a strong focus on fiscal consolidation. The national budget outlines a schedule of progressive deficit reduction, according to which the budget shortfall is targeted to narrow to 4.8 per cent in 2011-12 and 4.1 per cent in 2012-13. Part of the improvement in the fiscal position is expected to be a function of rapid economic growth.
Source: RBI, CMIE, Economic Intelligence Unit
62
2011
The government is expected to maintain its focus on stimulus measures. Disinvesting stakes (up to a maximum of 49 per cent) in state-owned firms and moving forward with modest reforms in order to increase competition is likely to be continued. It is expected that the previously closed sectors will open up and limits on foreign ownership in others will be raised. The government is expected to encourage private and foreign participation in areas such as education, healthcare and infrastructure to further its aim of inclusive economic growth. Rapid real GDP growth, overall liberalisation of the economy and a growing need for investment particularly in infrastructure and industry- are expected to lead to a more investor-friendly climate. Foreign investment is expected to be encouraged in the infrastructure sector and in underserved but highpotential areas, such as healthcare.
Source: RBI, CMIE, Economic Intelligence Unit
63
2011
The free-trade agreement (FTA) with the Association of South-East Asian Nations (ASEAN) that came into effect in January 2010 is expected to lead to the start of a significant reduction in tariffs. India is expected to push for more bilateral FTAs. Restrictions on outward direct and portfolio investment by companies and individuals, and on foreign borrowing, are expected to be relaxed further.
The government plans to introduce a Goods and Services Tax in 2012. It also wants to implement a new Direct Tax Code at the same time, which would reduce exemptions and also reform corporate tax and income tax laws and rates. Significant government control is expected to persist in the banking sector. Competition from private-sector banks is expected to increase. New rules are expected to make banking mergers and acquisitions easier and allow greater foreign investment in private domestic banks.
Source: RBI, CMIE, Economic Intelligence Unit
64
2011
Infrastructure is expected to improve most rapidly in sectors such as roads, telecom and ports. Government is expected to push development in core areas including water, sanitation and urban infrastructure. The level of investment in infrastructure is expected to rise and new models of Public-Private Partnership may evolve.
Source: RBI, CMIE, Economic Intelligence Unit
65
2011
DISCLAIMER
India Brand Equity Foundation (IBEF) engaged Deloitte Touche Tohmatsu India Private Limited to prepare this presentation and the same has been prepared by Deloitte in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Deloitte and IBEFs knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Several data sources have been used while preparing this presentation and they have been duly acknowledged at appropriate places. Deloitte and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Deloitte nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
66