INDIA’S PROMISE Challenges & Opportunities : INDIA’S PROMISE Challenges & Opportunities APBO March 2007


Slide2: Delhi, Capital City POP: 13 million Bangalore “Silicon Valley of India” POP: 7 million BJP+ 189 Seats Left 61 Seats Others 70 Seats Cong+ 219 Seats Political Uncertainty COALITION GOVERNMENTS TO STAY ECONOMIC REFORMS SECURE


UNITED PROGRESSIVE ALLIANCE: UNITED PROGRESSIVE ALLIANCE Sonia Gandhi Pranab Mukherjee Kamal Nath Praful Patel Sharad Pawar Bhattacharyajee Nirpuam Sen Karunakaran DMK 13 Constituents Indian National Congress Congress Allies Prakash Karat Left Front UPA COMMON MINIMUM PROGRAM Agriculture - “A New Deal For Rural India” Infrastructure - “Building World Class” Employment - “Rozgar Badhao” Education - “Improving Access and Excellence” Health Care - “Creating Capabilities” Water - “Better Access, Better Utilization” Urban Renewal - “Humane and Modern”


UPCOMING STATE ASSEMBLY ELECTION : UPCOMING STATE ASSEMBLY ELECTION Population 179,000,000 80 Parliamentary Constituencies 4 Phase Poll April / May


Transparency: Transparency BELL HELICOPTER MOTOROLA Procurement Challenges


RED TAPISM: RED TAPISM 1500 KM 8 Days RED TAPE / TAX ANOMALIES / POOR INFRASTRUCTURE July 2006


Challenges in Infrastructure: Challenges in Infrastructure 48 new road projects worth $12 bn are presently under construction Indian Railways require $22 bn investment India’s port upgrades require a total investment of $22 billion Domestic aircraft movements have shot up by 40% Modernization requires upgrading 25 of the country’s national airports 100,000 MW required by 2012


LAND ACQUISITION-SEZs : LAND ACQUISITION-SEZs NANDIGRAM WEST BENGAL 5000 POLICE 16 KILLED 68 WOUNDED TOTAL BANDH HIGHLY POLITICIZED – SEZs ON HOLD


HUMAN RESOURCE CONSTRAINT: HUMAN RESOURCE CONSTRAINT ITES/BPO INDUSTRY GROWING @ 45% Qtr QUALIFIED HELP IN SHORTAGE ATTRITION RATES > 30% FINISHING SCHOOLS REQUIRED CONTRACT LABOR & LABOR REFORMS A MUST


Slide10: INDIA’S ECONOMIC LEADERSHIP Manmohan Singh Prime Minister Montek Singh Ahluwalia Planning Commission Deputy Chairman P. Chidambaram Minister of Finance Considered the “Father of India’s Economic Reforms” Economist by training, Strong free-market advocate Excellent rapport with President Bush Private / Public Sector Interlocutor Economist by training, Oxonian World Bank background / Easily accessible “Inclusive” Budget Supreme Court Advocate, Harvard MBA Pragmatic reformer


Slide11: SCORECARD ON REFORMS Progress Insurance FDI up to 26% Telecom up to 74% Oil/Gas, Roads, Ports up to 100% Real estate opened to 100% Open Skies: Boeing Sales Patents Act -IPR Protection: Re-entry of Merck Retail (Single Product): Wal-Mart Entry Civilian Nuclear Cooperation – 123 Agreement 15 Special Economic Zones (SEZ’s) at present 42 approved for 2007 GDP Growth Rate > 8% 6 Million New Cell Phones Registered Last Month!


IT/ BPO Boom: More than 300 of the Fortune 500 are in India IBM : 53,000 employees Cognizant : 48,000 employees General Electric: : 20,000 employees Oracle : 18,000 employees Hewlett-Packard : 11,000 employees Honeywell : 7,000 employees American Express : 4,000 employees Dell : 3,800 employees IT/ BPO Boom


Slide13: MANUFACTURING Automobile Components - Worth $15 bn 20 % Annual Growth in Exports Ford – Producing 30,000 units; Doubling Capacity in 2006-2009 timeframe General Motors – Expecting to sell 30,000 units in 2006; output to be doubled Boeing - $12.1 bn sale of civilian aircraft to Air India with significant co-production; recognition of India’s manufacturing prowess


OPPORTUNITIES IN AGRICULTURE: OPPORTUNITIES IN AGRICULTURE $15 bn investment opportunity in storage, transportation, and refrigeration facilities. Blue Diamond Growers – India is 4th largest and fastest growing market Coca Cola has major presence throughout the country Pepsi is a major player with sales $700 mn McDonald’s has introduced the McVeggie burger and Veg Pizza McPuff Domino Pizza, Pizza Hut and Kentucky Fried Chicken have all established restaurants in India.


U.S. DEFENSE COMPANIES: U.S. DEFENSE COMPANIES Fremont Group


DEFENSE TRADE : DEFENSE TRADE F-18 Super Hornet FireFinder & PAC III P-3 Orion F-16 Fighting Falcon GE-404 Engine Bell 407 Helicopter C-131 Transport Boeing 737 Countermeasure Equipment Pac-3 Antimissile System Next Steps in U.S.-India Strategic Partnership: Major Opportunities in Defense Cooperation - $30 billion


Slide17: Indian Space Program 5th largest after U.S., Russia, Europe, China $450 mn annual budget, but due to lower wages is equivalent to multi-billion dollar program in U.S. Space Exploration – Chandrayan I: India plans to launch its first unmanned mission to the moon by 2008 NASA agreement with ISRO to send scientific instruments into space aboard India’s Chandrayan I Export Control Regimes; Strategic Partnership Challenges US-INDIA SPACE PARTNERSHIP An Important Component of Strategic Partnership


NEXT WAVE: PHARMACEUTICALS: NEXT WAVE: PHARMACEUTICALS $6.5 bn and growing at 8-10% 4th largest pharmaceutical industry in the world Expected by 2008 to be worth $12 billion Private Hospitals firmly entrenched: Apollo, Manipal, Escorts, Max Healthcare Medical Tourism


Slide19: R&D Centre, Bangalore India Development Centre, Bangalore, Hyderabad India Engineering Centre, Bangalore Software Lab, Bangalore, Pune Labs India, Bangalore Innovation Campus, Bangalore Bangalore R&D Centre, Bangalore and Mumbai INNOVATION FRONTIER: R & D R&D Centre, Bangalore


INDIA LOOKS OUTWARD : INDIA LOOKS OUTWARD Tata Group - $12 BN Reliance - $22 BN Essar - $9 BN Birla - $6 BN Videocon–Daewoo Electronics-$650 Dr. Reddy’s Lab–Betapharm - $570 Ranbaxy–Terpia - $324 VSNL Tyco Global-$130


WHY INDIA ?: WHY INDIA ?


Slide22: Coherent democracy; Pluralist/Secular 1/5th World’s Population; 2nd largest military in the world Common Values: Against Terrorism, Trafficking, Narcotics Ideological Partner re: Nepal, Sri Lanka, Bangladesh, China Common Law Judicial System 2nd largest number of Doctors, Engineers, PhDs in the world 100,000 Students to U.S. Each Year 1.8 mil Americans of Indian Origin Politically significant; Politically integrated 54% of Indian Population is under the Age of 25 ECONOMIC, IDEOLOGICAL, AND STRATEGIC PARTNERS India is Rising, Becoming Vital to U.S. Interests


Slide23: Accenture Adobe Systems, Inc. Akin Gump LLP Altria Group, Inc. AM General LLC Amas Investment & Project Services Amway Corporation Andrews Kurth LLP Baker & McKenzie LLP Bank of America Bloomberg Boeing Company Cargill Caterpillar, Inc. CBay Systems Chevron CMS Energy The Coca-Cola Company Computer Associates Covanta Energy Dell Computer Corp. Deloitte & Touche Discovery Communications Dow AgroSciences Dow Jones DuPont, Inc. eBay Inc. Estee Lauder Ford Motor Company Fremont Group Limited General Dynamics General Motors Gerson Lehrman Group Guardian Life Insurance Gerson Lehrman Guardian Life Insurance Hughes Network Systems IBM, Corporation IDFC Ltd. Johnson & Johnson J.P. Morgan Chase K. Raheja Universal Kotak Mahindra L-3 Communications Lockheed Martin McGraw-Hill Merck & Co. Microsoft Corporation Monsanto Motorola, Inc News Corporation Ltd. Northrop Grumman Oracle Corporation PanAmSat Paul Weiss LLP Pfizer Inc. Pratt & Whitney/United Technologies Sony Pictures Entertainment Standard Chartered Bank Target Corporation Tata, Inc. Texas Instruments Textron Inc. Time Warner Inc. Thomson Financial United Parcel Service Vickery International Wal-Mart Inc. Watson Wyatt Worldwide Xerox Corporation Griffith & Rogers BARBOUR GRIFFITH & ROGERS eMR Technology Ventures Steptoe & Johnson LLP U.S.-INDIA BUSINESS COUNCIL 32 YEARS of GROWING ENTERPRISE


Slide24: INDIA’S ENERGY SECURITY CHALLENGE Gas pipeline from Iran, discouraged by U.S. Coal supplies for 200 years, but high/ash, low calorie value Oil discovery by Cairn Energy in 2004; India’s demand will outstrip supply Gas discovery by Reliance in 2003 but will service only fraction of India’s power needs Tarapur- India’s “civilian” nuclear reactor requires refueling Kakrapar- World’s first thorium-based nuclear reactor Gas pipeline from Turkmenistan, through Pakistan, but questionable reserves Gas pipeline from Myanmar through Bangladesh discouraged by U.S. Hydro-Electric Dam at Narmada constrained by problems with environment