Investment Opportunities in

India

7/11/2013 1
 Indian Economy – An Overview
 Economic Growth
 Sustained economic performance
 Average since 1991 6.2%
 2004-05 6.9%
 Forecast till 2050 –Goldman Sachs 5 % p.a.
 Services account for over 50% of GDP
 Manufacturing sector grew at 9% in 2004-05
 Trade (2004-05)
 Exports growth 24% in 2004-05 reaching US$80 billion
 Imports growth 35% reaching US$106 billion
 Investment
 Foreign Investment - US$16 billion in 2003-04
 Mature Capital Markets
 NSE third largest, BSE fifth largest in terms of number of
trades
 Well developed banking system
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 Fiscal Reforms
 Rationalisation of tax structure – both direct
and indirect
 Progressive reduction in peak rates of
duties;
 Direct and indirect taxes further reduced this
year
 Peak Custom duty reduced to 15%
 Corporate Tax reduced to 30% India among the
 Tariff to be aligned with ASEAN levels top reformers in
 Value Added Tax introduced from 1st April 2003: World
Bank’s Doing
2005
Business in 2005
 Rupee made fully convertible on trade
account

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 ‘Made in India’

 Third most attractive destination for manufacturing

 ATKearney’s FDI Confidence Index 2004
 Indian industry equally competitive in a wide range of
manufacturing skill-intensive products:
 Apparels, electrical and electronics components;
speciality chemicals; pharmaceuticals; etc.
 Automotive components: Major MNC’s & their OEMs
sourcing high-quality components from India
 Volvo, GM, GE, Chrysler, Ford, Toyota, Unilever,
Cliariant, Cummins, Delphi
 Indian companies now having manufacturing presence
in multiple countries
 Over 55% of approved outward investment by India
companies in manufacturing activities

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 Human Resources
 India’s competitive edge - its highly-skilled manpower
 Over 380 universities (11200 colleges)
 1500 research institutions
 Over 200,000 engineering graduates
 Over 300,000 post graduates from non-engineering
colleges
 2,100,000 other graduates
 Around 9,000 PhDs
 Knowledge workers in software industry increased from
56,000 in 1990-91 to 650,000 in 2003;
 to reach 2 million by 2008
 Due to its young demographic profile, India would
continue to be surplus in working population for a long-
time

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 Competitive Strengths

Rank out of 102 countries

 Availability of scientist and engineers 3

 Quality of management schools 8
 State of cluster development 17
 Quality of scientific research institutions 20
 Government intervention in corporate investment 34
 Quality of educational system 36
 Sophistication of financial markets 37
 Foreign ownership restrictions 41

(Source: World Economic Forum’s ‘Global Competitiveness Report, 2003-04’)

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 Investing in India – Entry Routes

Investing in India

Prior Permission
Automatic Route
(FIPB)

General rule By exception

No prior permission Prior Government
required Approval needed
Only information to the
Reserve Bank of India Decision generally
within 30 days of inflow/ Within 4-6 weeks
Issue of shares

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 Policy on FDI
 FDI up to 100% is allowed under the ‘Automatic
Route’ in all activities except:
 Sectors attracting compulsory licensing
 Transfer of shares to non-residents under certain
circumstances
 Investor having existing venture in same field
 Equity/route limit in few sectors under sectoral
policies
 Investment made receive National Treatment
 Bilateral Investment Promotion and Protection
Agreement with 57 countries
 National and Most Favored Nation Treatment to
investment; Investment protection features

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 100% FDI Under ‘Automatic Route’

Infrastructure Sector
 Electricity generation (except atomic Manufacturing Activities
energy)  All manufacturing activities except
 Electricity transmission & distribution defence items
 Mass Rapid Transport System  items reserved for small-scale
 Roads and Highways sector
 Toll Roads & Vehicular bridges
 Ports and Harbors Services Sector
 Hotel and tourism  Health, education, Research &
 Townships, housing, built up Development services
infrastructure and construction  Tourism services;
development  Consultancy services
 Construction & design services.

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 Recent Policy Initiatives

 FDI up to 100% allowed under the automatic route

for development of townships, housing, built up
infrastructure and construction development
projects

 FDI in domestic airlines increased to 49% and

allowed under automatic route

 Fresh guidelines for investment with previous joint

ventures in same field issued

 Transfer of shares from residents shareholders put

on automatic route
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 India: FDI Outlook

 Third most attractive investment destination –

AT Kearney’s FDI Confidence Index, 2004
 Second most attractive destination for manufacturing and
telecommunication services

 Among the top 3 investment ‘hot spots’ for

the next 4 years
 UNCTAD & Corporate Location – April 2004

 Most Preferred Off shoring destination - AT

Kearney’s 2004 Offshore Location Attractiveness
Index

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 Civil Aviation

 Investment Policy
 In the airports, FDI up to 100% permitted
 In domestic airlines, FDI up to 49% permitted
subject to no direct or indirect equity participation
by foreign airlines
 100% investment by NRIs

 Investment Opportunities
 Modernisation of International airports at Delhi,
Mumbai, Chennai and Kolkata
 Modernisation of non -metro airports
 Private sector participation is allowed in support
services and aircraft manufacture

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 Civil Aviation
Project on Offer

Development of Metro and non Metro Air ports

1. Modernisation of Chennai Airport US $ 444 million

2. Modernisation of Kolkatta Airport US $ 177 million

3. Modernisation of Delhi Airport US $ 666 million

4. Modernisation of Mumbai Airport US $ 555 million

5. Development of 25 non Metro Airports US $ 888 million

6. Development of Greenfield Airport at Goa US $ 340million

7. Development of Greenfield Airport at Pune US $ 340 million

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Contact person: Ms. S. Narendra, Deputy Secretary, Ministry of Civil Aviation, TeL; 24610987
7/11/2013 14
Contact person: Ms. S. Narendra, Deputy Secretary, Ministry of Civil Aviation, TeL; 24610987
7/11/2013 15
Contact person: Ms. S. Narendra, Deputy Secretary, Ministry of Civil Aviation, TeL; 24610987
 Civil Aviation
Airports – Traffic Projections

Passenger
• By 2010: 90-100 million (59 million domestic passengers & 35
million intl. Passengers)

Cargo
• By 2010: 3360 thousand tonnes Airports – Traffic Projections

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Contact person: Ms. S. Narendra, Deputy Secretary, Ministry of Civil Aviation, TeL; 24610987
 Special Economic Zones
 Policy
 Duty free zones, deemed foreign
territories
 FDI up to 100% permitted in
almost all manufacturing activities
 Transfer of goods from DTA to
 Incentives
SEZ treated as exports,
 Units to be net foreign exchange
earner within 5 years. No export
commitments
 No limits on DTA sales
 Can be set up in the public,
private or joint sector
 Single Window Clearance System
7/11/2013
New Law
on SEZ
 For developer: Income tax
exemption for a block of 10 years
in 15 years
 For units: 100% Income Tax
exemption for first 5 years, 50%
for next 5 years and 50% of the
ploughed back export profits for
next 5 years
 Exemption from indirect taxes;
excise, sales, services tax, etc.
 Freedom to raise ECB with out
any maturity restrictions
17
 Thank You

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 Telecommunications
 Among the fastest growing telecom markets
60
 550,000 km of optical fibre cable laid
 Cellular phones increasing by 2 million every month
6
50  To reach 200 million in 3 years
 Lowest mobile tariff in the world
40  Share of privet sector 46%; expected to cross 50%
No. in million

19.5 by year end

 Tele-density of 9, expected to be 20 in next three
30
years
48.7  New Broad Band Policy envisages:
20 17.7  20 million broadband subscribers by 2010
28.2  Investment Opportunities
10  Setting up manufacturing facilities;
5  Supply of hand sets and equipments
2.4 10.5
1.5 3.1 5.5  Telecom & Value added service.
0 1.6
2000 2001 2002 2003 2004 2005
(up to
April)
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 Roads
 Policy:
 FDI up to 100% is permitted for construction and
maintenance of roads, highways, vehicular bridges, toll
roads, vehicular tunnels.
 Ten year tax holiday for road and highway projects;
 Investment Opportunities
 India has a road network of 3.3 million kilometers
 18,000 km of highways being developed under National
Highway Development Programme;
 Investment US$20 billion envisaged
 Projects for 10,000 km would be on offer
 Major programmes being taken up
 Many more opportunities in the States;

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 Ports
 Policy & Incentives
 FDI up to 100% permitted for construction and
maintenance of ports and harbours.
 Ten year tax holiday
 Public-private partnership
 12 major ports, 185 minor ports
 12 private/ captive projects with investment of
US$ 600 million completed
 24 projects with investment of US$1.6 billion
under implementation/award
 Investment requirement of US$22 billion to
develop maritime sector
 Ports & Shipping
 Inland waterways

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 Tourism
Investment Policy
• FDI up to 100% is allowed under the automatic route in townships, housing,
built-up infrastructure and construction development projects including
housing, commercial, premises, hotels, resorts, hospitals, educational
institutions, recreational facilities etc.
Projects on Offer
• International Trade cum Convention Centre , Jaipur
 Offered to private sector for designing, finance, construct, operate and maintain the
facility
 Estimated cost Us $ 22 million
 Time frame for implementation 18 months
• Development of Tijara Fort, Alwar
 Private sector would require to restore the Fort and develop interior & surroundings
of the fort, would be provided for long term lease
 Estimated cost Us $ 5.5 million
 Time frame for implementation 18 months
• Championship Golf Course, Udaipur, Jodhpur or Jaipur
 Land would be acquired and offered on long term lease
 Estimated cost Us $ 5.5 million excluding land cost
 Time frame for implementation 18 months
• International Convention Centre , Bangalore
 Karnataka Govt would acquire the land for investors
 Facilities to be provided in convention Centre : Exhibition space of 50000 sq Mt, food
court, Conference Hall & suites, Convention Centre, shopping malls, health club, golf
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course, % & 7 star hotels, handicraft village, multiplexes etc. Contact person: Mr. Amitabh
Kant, Joint Secretary, Ministry
 Estimated cost Us $ 111 million of Tourism,
 Urban Infrastructure

FDI Policy
 FDI upto 100% is allowed in townships, housing, built-up
infrastructure and construction development projects

Opportunities
 Us$ 26 billion proposed to be invested in next 5 years in
urban infrastructure in 60 cities as a part of National
Urban Renewal Mission
 The Mission covers physical infrastructure such as water,
lighting, sanitation, energy & housing.

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 CII
 Petroleum Refining
Status
 Total 18 refineries with production of 116 million tonnes (April- Feb.
2004-05) in terms of crude through put.
 by the year 2006-07 demand is expected to increase to 155 million tonnes
per annum.
FDI Policy
 FDI is permitted up to 100% under automatic route in private sector
Indian companies

Investment opportunities
 Additional refining capacity of about 110 million tonnes per annum
excluding EOUs is planned for implementation by the end of tenth
plan( 2002-07)
 Investment requirement of over US $ 22 billion.
 Opportunity for the transfer of technologies for upgrading the bottom
of the barrel and to meet the predominant demand for middle
distillates and also to improve the quality of petroleum products to
make them environment-friendly and globally competitive.

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 Banking Sector

Status
 No of Scheduled Banks: 362( As on March 2003) *
 Indian Private Sector Banks: 30 (market share: 10%)
 Foreign Banks: 36 (market share: 12%)

FDI Policy
 FDI up to 74% from all sources under automatic route is
permitted in Private Sector Banks subject to conformity of
guidelines issued by RBI
 Foreign Bank can also establish as branch or Wholly owned
subsidiary

7/11/2013 * Source: Indian bank Association 25

http://www.indianbanksassociation.org/home/
 Textiles

 Indian textiles sector:

 Turnover US$37 billion;
 Exports US$13 billion;
 Investments of US$11 billion in the last five years;
 India is 2nd largest producer of cloth and 3rd largest
producer of cotton yarn;

 Textiles sector has the potential to reach US$85

billion by 2010
 Exports can reach US$50 billion
 Garments to account for 50% of exports;
 Investment required US$30 billion

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 Pharmaceuticals

 Indian Pharmaceutical : A US $ 4 billion industry (retail sales)

 Exports: US $ 3.18 billion (2003-2004)
 The country ranks 4th worldwide accounting for 8% of world’s production by
volume and 1.5% by value.

Opportunities
 Due to rising costs of R&D overseas, greater tendency towards outsourcing
and networking.
 Increasing competence in molecular biology, immunology and biotechnology
 Potential for clinical research and initiating clinical trials
 An efficient and cost effective source for procuring generic drugs especially
the drugs going off patent in the next few years.

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 Biotechnology
India’s inherent strengths
 Rich Biodiversity
 Large reservoirs of valuable diagnostic and clinical data
 Vibrant and inventive pharmaceutical industry;
 World class network of educational and research institutions
 Known strengths in mathematics, logic and computational
skills
 Super Computing and Software strengths enable extensive
use of bio-informatics in new drug discovery

Opportunities :
 Biotech based new drugs / pharmaceuticals
 Bio-technology parks get all facilities of 100% EOU

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 Food Processing
 Third largest producer of food items
 Largest milk producer
 Largest livestock population;
 2nd largest in fruits & vegetables
 Opportunities in food processing sector
 50% of household income spent on food items
 With increasing income levels and urbanisation fast
growth in demand of processed food expected; over
250 million strong middle class
 Low levels of value addition in food sector: only 7%
 New Integrated Food Law being enacted
 Investment of US$ 28 billion required to raise food
processing from 2% to 8-10%.
 Investment opportunities in
 Processing of fruit & vegetable, meat, fish & poultry,
milk products, packaged food & drinks.
 Establishing infrastructure, cold chain, etc.

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 Power
Projects on offer
 Bairabi dam Hydro Electric project (80mw) –Mizoram
 Ministry of environment and forests has granted environment
clearance to the project.
 CEA has issued techno economic clearance of the project
 Athirapilly Hydro Electric project (160 MW) Kerala
 Ministry of environment and forests has granted environment
clearance to the project.
 Techno economic clearance of the project has been accorded
 Matnar Hydro Electric Project (60 MW) Chhattisgarh
 Environment and forest clearances are yet to be obtained.
 Techno economic clearance of the project has be accorded

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Contact person: Mr. Dev Dutt, Under Secretary, Ministry of Power,
TeL; 23715507
 Power
Projects on offer

Private Sector Hydro Electric

Projects
•Dhamwari Sunda (70 MW) Himachal Pradesh
by M/s Dhamwari Power Company Ltd
economic clearance of the project has been
accorded
•Alliain Duhangan (192 MW), Himachal
Pradesh , by M/s A.D. Hydro Power Ltd
•Karcham Wangtoo (100 MW) Himachal
Pradesh by Karcham Hydro Corporation Ltd.
•Srinagar (330 MW), Uttaranchal by M/s
Alaknanda hydro Power Co. Ltd.

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Contact person: Mr. Dev Dutt, Under Secretary, Ministry of Power,
TeL; 23715507