China Import Forum 2013

Presentation on
Indian Industry

Introduction
First I will give a brief outline about the

overall scenario of Indian Economy

followed by a snapshot of the trade
between India and China and the
investment opportunity. I shall then discuss
about some specific promising industries
where there exist huge opportunities for
growth and investment.

Indian Economy
-Indias economy has been one of the fast growing

economies of the world. It is the third largest economy of

the world in terms of purchasing power parity. From 2004
to 2011, Indias quarterly GDP growth rate averaged over
8%. The overall growth in GDP in 2010-11 was 8.5%.
-India enjoys immense geographical advantage as a hub
for serving the South Asian, Middle East, European and
African markets.
-The Indian economy is characterized by strong macroeconomic fundamentals. We have a well-developed
financial system, young and qualified labor force, dynamic
private sector and growing savings and investment rate.
-We see both trade and investment to play a big role in
driving economic growth, as it has done for China. Trade
accounts for 43% of GDP right now. Our objective is faster
and inclusive growth.

INDIAN ECONOMYKEY CHARACTERESTICS

9th largest economy in terms of

nominal GDP and 3rd largest in terms

of purchasing power parity (PPP)

INDIAN ECONOMYKEY CHARACTERESTICS

9th largest economy in terms of

nominal GDP and 3rd largest in terms

of purchasing power parity (PPP)

Bilateral Trade
-In so far as the question of bilateral

relationship is concerned, India and China

have developed stable and close relationship
over the last 30 years. A strong component of
our partnership is trade and economic
relationship between our two countries which
has seen spectacular growth over the last few
years. The bilateral trade which was
US$3billion in 2000 has reached US$ 67 billion
in 2012 and the target to realize is to increase
the bilateral trade to US$100 billion by 2015.

India-China Bilateral
Trade

Total India-China
Trade
Growth %
Indias Exports
to China
Growth %
Chinas Exports
to India
Growth %

2000

2010

2011

2012

2.9

61.74

73.9

66.47

46.46

42.66

19.71

-10.1

1.35

20.86

23.41

18.8

62.78

52.19

12.26

-19.6

1.57

40.88

50.49

47.67

34.83

38.25

23.5

-5.7

(All figures in US$ billions)

Overview of Indian
Industries
Over the years agriculture has been the major source of livelihood of

the Indian population. However, after Independence the founding

fathers saw the nation progressing with a decent industrial base. This
triggered the formulation of programs and strategies to construct a
proper infrastructure for speedy industrialization.
Post 1980s India saw industrial liberalization which achieved further
impetus in mid-1991.For formulation and implementation of industrial
policy and strategies for industrial development the Department of
Industrial Policy & Promotion was established by Government of India
in 1995. With progressive liberalization of the Indian economy,
initiated in July 1991, there has been a consistent shift in the role and
functions of this Department. The DIPP is also responsible for
formulation of the FDI policy and facilitation of FDI inflows into the
country.
-Since its liberalization policy India has opened several public sector
enterprises. India has been successful in achieving autonomy in
producing different basic & capital products.
Industry today accounts for 27% of Indias GDP as compared to 47% of

Chinas. Manufacturing accounts only for 16%.

-I shall now discuss about a few industrial sectors which have huge

potential of growth and investment

Automotive
-The automotive sector in India, comprising of the automobile and auto

component sub sectors, is one of the key segments of the economy having
extensive forward and backward linkages with other key segments of the
economy.

-It contributes about 4% to Indias Gross Domestic Product (GDP) and 5% to

Indias industrial production.

-Favorable demographics ( 60% of 1.2 billion people are below 30 years of

age), expanding population, abundant availability of skilled talent, and a
maturing automotive components segment have propelled India-based
automotive companies to play an important role globally.

-While international companies are eyeing India for top line growth, the
country also remains a favored outsourcing hub for many automotive
multinationals.

-India has a well-developed, globally competitive auto ancillary industry

and has established automobile testing and R&D centers. The country
enjoys natural advantage and is among the lowest cost producers of steel
in the world.

Heavy Engineering
At present, the heavy engineering industry,

including machine tools contributes 12% to the

total manufacturing activity and provides critical
input, i.e. machinery and equipment to the
remaining sectors covered under the
manufacturing activity.
India ranks first in the field of engineering research
& development & design outsourcing industry.
-In ER & India has 22% share of global revenues in
ER&D
engineering exports constitute 25% of Indias
overall exports.

Power Equipment
-There are about 675 manufacturers of electrical machinery in

India including Heavy electrical power generation Equipment

like Boiler, Turbine & Generator sets. Nearly 90% of them are
small &medium manufacturers.

-The State-owned Bharat Heavy Electricals Limited (BHEL) is

the largest manufacturer of electrical and power equipment.
The Product range includes transmission line towers, HT
Switchgear, transformers, motors (FHP, LT, HT & DC), AC
generators, conductors, capacitors, cables, energy meters,
etc.

-The performance of the power equipment industry is closely

linked to the addition in power generation capacity. Huge
investments have been planned in augmenting the power
generation capacity in the country, but, the power equipment
manufacturing industry has not kept pace with the overall
growth in power production.

Textile Machinery
-The Indian Textiles Industry contributes 14% of industrial

production, 4% of GDP and 10.63% of countrys export earnings

and provides direct employment to over 35 million people.
-Government of India has projected to increase the countrys
share of textiles and apparels in world trade from the current
level of 4.5% to 8% and reach exports of US$ 80 billion by 2020.
-With the government planning to develop India into a textile

hub, the industry will be investing heavily in new textile

machinery, particularly in areas like weaving, processing,
special process finishing machines (plasma finishing), highspeed knitting and garmenting machineries etc

-The textile machinery industry is a significant component of the

capital goods industry. The industry comprises of 1,446 units of
which 598 units produce complete machines and about 848
units are producing parts and accessories as well as equipment
for testing and monitoring of fibers and textiles.

Electronics
-At present about two-thirds of domestic electronic components demand is met

through imports. Moreover, Indias electronics hardware production constitutes

only around 1.31% of the global production.

-The global electronics industry is one of the fastest growing in the world and
demand in the Indian market is expected to touch US$ 400 billion by 2020.

-Since Indias domestic production is projected to account for only US$ 100 billion,
the electronics sector provides very a good opportunity for investment. The size of
the manufacturing opportunity lies in the gap between the expected demand in
the country and the rate of domestic production.

-Indias electronics industry is expected to grow at 22% per year, which is 7 times
the global rate. The primary demand drivers are sectors like telecom, defense, IT
and e-governance, automotive, consumer electronics, and energy.
-With large pan-India government projects such as the national optical fiber
network, the national knowledge network and e-governance programs, the move
is expected to open up huge opportunities for domestic production and foreign
investment in the electronics sector.
-Moreover, the cable TV digitization, mandated by the government, is expected to
spur demand for Set Top Boxes as well as High Definition Television sets. Demand
for low cost innovative products such as touch-screen tablets for education and
medical devices are other demand drivers.

Pharmaceuticals

-The annual turnover of the Indian Pharmaceutical Industry reached US$ 20 billion) during the year
2010-11.
-The share of export of drugs, pharmaceuticals and fine chemicals is more than US$ 8.6 billion.
-By 2020, the Indian pharmaceutical market is expected to touch sales of US$ 74 billion.
-The size of Indias drug formulation market is about US$ 10.3 billion and it ranks third in volume
and 10th in value globally.
-India is one of the largest vaccine producers in the world and exports to about 150 countries. It
also meets around 40-70% of the WHO demand for DPT (diphtheria, pertussis or whooping cough
and tetanus) and BCG (bacilli calmette-guerin) vaccine against tuberculosis and almost 90% of its
demand for the measles vaccine.

-The strength of the Indian Pharmaceutical industry is in developing cost effective technologies in
the shortest possible time for drug intermediates and bulk activities without compromising on
quality. This is realized through the countrys strengths in organic chemicals synthesis and
process engineering.

-Many Indian companies maintain high standards in purity, stability and international safety,
health and environmental protection in production and supply of bulk drugs. This speaks of the
high quality standards maintained by a large number of Indian Pharma companies.

-Indias pharmaceutical sector is gaining a global leadership position and Indian generics today
constitute nearly a fifth of global supplies.
- Indian drug-makers are looking to building relationships with global Pharma companies for joint
research and development and widening distribution networks through marketing alliances. Other
potential thrust areas include bio-pharmaceuticals, contract research and manufacturing, and new
drug research

Food Processing Industry

-The US$ 135 billion food processing industry in India is projected to grow at a

compound annual growth rate of 10% to reach US$ 200 billion by 2015.
- Food processing industry in India is supported by a great agro-climatic
diversity suitable for round the year cultivation of crops. In terms of
production, India is among the worlds major food producers.
-The country accounts for 17% animal, 12% plant and 10% fish genetic
resources of the globe; and 16% of cattle, 57% of buffalo, 17% of goats and
5% of sheep population of the world. These numerous advantages and factor
conditions like low cost of labor put India in an enviable position to produce a
wide variety of food crops and commercial crops for domestic consumption
as well as export.
-The Indian Foods & Beverage industry is poised for a significant leap forward.
The total food production in India is expected to double in the next ten years
and there is ample opportunity for huge investments in food and food
processing technologies, skills and equipment.

-An estimated investment of US$ 17.5 billion is required in the food

processing industry to achieve the goals projected in Indias Vision 2015.

-Investments are needed in various stage of the supply and value chain,
proper research, farm and lab connectivity, up-gradation of technology, skill
and manpower training,

Rubber Machinery Industry

-There are about 10 units for the manufacture of

rubber machinery mainly required for tire / tube

industry.
-The fast growth of the automobile industry is
driving the growth of the rubber machinery
industry.
- The tire market in India is expected to grow at a
compounded annual growth rate (CAGR) of 12%
between 2011 and 2015. One of the key factors
contributing to this market growth is the growing
demand for automobile products. The tire market
in India has also been witnessing the emergence of
tubeless tires and growing demand for radial tires.

Initiatives by Government of
India
-In October 2010, the Government of India announced Indias new

National Manufacturing Policy with the objective of enhancing the share

of manufacturing in GDP to 25% within a decade and creating 100 million
jobs.
-The Policy envisages specific interventions broadly in the areas of
industrial infrastructure development through the creation of large
integrated industrial townships called National Investment and
Manufacturing Zones (NIMZs); improvement of the business environment
through rationalization and simplification of business regulations;
development of appropriate technologies for sustainable growth
-Indian Government has established several special zone schemes to
encourage export-oriented enterprises. These include Special Economic
Zones (SEZ), Export Processing Zones (EPZ), Software Technology Parks
(STP), and Export Oriented Units (EOU). These schemes are governed by
separate rules and granted different benefits.
-SEZs are treated as a foreign territory, allowing businesses operating in
SEZs to operate outside the domain of the customs authorities, avoid FDI
equity caps, receive exemptions from industrial licensing requirements,
and enjoy tax holidays and other tax breaks.
-EPZs are industrial parks with incentives for foreign investors in exportoriented businesses.
-STPs are special zones with similar incentives for software exports.

Investment opportunities
-With its large scale investment absorption capacity and with

strong economic fundamentals India offers attractive returns to

prospective investors. India with its consistent growth,
abundant skilled manpower, a well developed banking system,
and vast market provides enormous opportunities for
investment.
-India welcomes investment by Chinese enterprises in
infrastructure and manufacturing and other sectors, where
there are tremendous opportunities for Chinese enterprises to
investment.
-India is keen to expand rapidly its manufacturing sector, which
again presents a vast opportunity for Chinese investors. Almost
all the sectors of Indian economy are open for Foreign Direct
Investment (FDI) with sectoral limits and stipulations.
-Nearly 100 Chinese companies have established
offices/operations in India. Many large Chinese State-owned
companies in the field of machinery and infrastructure
construction have undertaken projects in India and have opened
project offices in India.

THANK YOU

CONSULATE GENERAL OF INDIA

SHANGHAI