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See all Premium member Presentation Transcript Slide 1: Macro Business Environment in India & Opportunities for Investment Umang goel Bhabha institute of technology Slide 2: Largest Democracy Slide 3: Stable Democratic System Sub-continental Nation – Religious, Ethnic & Linguistic diversity Federal structure: 28 states 18 languages Multi-party system: Changes in government through elections both at Centre and state levels Coalition governments at Centre for over 10 years Strong independent judicial system Free vibrant, strong media (mushrooming growth in print as well as electronic media) Slide 4: Stable Democratic System Gradual liberalization Industrial licensing dismantled Trade liberalization – tariff/tax reduction Opening up of FDI Government regulation to facilitation Closed economy Centralized planning Government permission necessary for Setting up industrial plant Import of capital goods / technology Expansion of capacity Key sectors of economy reserved for public sector only 1990s Completion of integration with global economy Financial/capital markets reforms as consolidation Tariff down to 10%. To reach ASEAN levels by 2010 Bilateral Comprehensive Economic Partnership Agreements with EU, Japan, ASEAN etc in pipeline 2000-2005 Prior to 1990s Democracy Gradual incremental policy changes Broad consensus across parties and civil society. Slide 5: India - a strong and vibrant economy Slide 6: Macroeconomic stability Trends in Inflation- WPI (%YoY) Forex Reserves (USD bn) Steady increase in forex reserves. Moderate inflation over last few years Source: Reserve Bank of India, CMIE % Slide 7: Economy – high growth rates Source: Reserve Bank of India, CMIE (%) Slide 8: Economy – high growth rates leading to increasing FDI Increasing FDI trend Source: RBI, DIPP Source: Reserve Bank of India Svgs & Cap Formation % of GDP ( Current prices) 23.1 26.3 33.8 32.4 0 5 10 15 20 25 30 35 40 Goss domestic savings Gross domestic capital formation FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Slide 9: Source: Reserve Bank of India Trade liberalization – reduction in tariffs Despite a secular reduction in peak tariffs, the tax to GDP ratio is still showing an upward trend Trend in Peak Custom Duty ASEAN levels committed to be reached by 2010 (%) 14.2 13.38 14.52 16.95 15.43 12 13 14 15 16 17 18 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 Tax/ GDP ratio Source: Reserve Bank of India Source: FICCI conference, March 14 – 15 th 2007 Slide 10: Capital Markets playing an increased role in the economy Improving ratio of market cap / GDP Equity Market Reforms SEBI – Independent Regulator Corporatization and Demutualisation Scheme of 19 stock exchanges to make them “for profit” entity : FDI flow started in BSE , NSE Screen-based nation-wide trading Scripless settlement Electronic transfer of securities Market Capitalisation as Percent of GDP (As at end-March)) Source: Reserve Bank of India India’s market cap to GDP ratio crossed 100% this fiscal year Source: Reserve Bank of India, SEBI Handbook Slide 11: Credible independent Central Bank Sound professional management High Degree of autonomy of India’s Central Bank Macroeconomic stability - Stable currency Rupee exchange rate Source: RBI ( INR / USD) INR/ USD 17.94 31.39 35.47 42.04 47.68 45.94 45.29 0 10 20 30 40 50 60 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 Slide 12: Developments in Banking Sector Banking business growing consistently Deposits grew by 17% CAGR (1998-06) Advances grew by 21% CAGR (1998-06) Source: RBI Banking Business growing over the years Improved banking governance exhibited by declining Gross NPAs Share of private sector banks increased from 9% in 1996 to 21% in 2006 Slide 13: Going Forward Slide 14: Going forward Source: Goldman Sachs, Global Economic Paper No 152, 22 January 2007 India’s GDP (in US$ terms) will surpass that of the US before 2050, to make it the second largest economy Goldman Sachs has revised its timelines for India’s GDP exceeding the G6’s GDP New India Projection Italy France/UK Germany Japan US Cars indicate when Indian US$GDP exceeds that of the Country 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Slide 15: Investment Opportunities Slide 16: Investor-friendly, liberal open-market economy Source: Reserve Bank of India Government is focused on improving the business and investment environment No licensing required, except in five sectors 100% FDI permitted in manufacturing (except atomic energy) 100% FDI permitted in most service sectors Investments, dividends, fees are freely repatriable Foreign investments allowed in capital markets State Government compete for Investor Friendly Image Slide 17: Large skill and intellectual capital base Investor-friendly, liberal open-market economy Strong emphasis on human resource development Skills missions being launched Up gradation of workers training Increased public spending in Education and health Over 2.5 million graduates added every year Most of them English-speaking 300,000 Engineers 150,000 IT professionals Slide 18: Firms in India – globally competitive 69% of survey respondents report higher profitability averages in India than they do globally 91 percent of MNC’s make profits in India compared to 45- 50 percent in China Slide 19: Indian firms seek global reach Tata Steel bought Corus Plc Hindalco acquired Novelis Inc. Suzlon Energy Ltd. acquired REpower Dr. Reddy’s acquired Betapharm United spirits acquired W&M USD 12.1 billion USD 6 billion USD 1.6 billion USD 0.5 billion USD 0.5 billion Acquisition made Tata Steel world’s fifth largest steel producer globally Acquisition made Hindalco the world's largest aluminum rolling company Acquired German’s third largest generic companies Acquisition made United Spirits world's second largest spirit company Acquisition made Suzlon world's third largest wind power company Slide 20: MNCs finding location of R&D in India : Increases global competitiveness India- Attractive location for R&D Large R&D facility of major MNCs Microsoft IBM ADOBE SAP Sony Ericsson Dell The DaimlerChrysler Boeing Texas Instruments Slide 21: Infrastructure Opportunities Slide 22: Infrastructure Opportunities : Indian Telecom Industry Growth of Indian telecom (wireless) sector….. Source: Credit Suisse, Press, Analyst Reports, TRAI Slide 23: Infrastructure Opportunities : Indian Telecom Industry (contd.) Effective Mobile Tariffs (Rs/min) Mobile Subscribers Base (millions) NTP-99 3rd & 4th Cellular operator 7.2 3.1 4.2 3.1 1.9 1.2 14.5 15.3 1 0.9 1.2 1.9 3.6 6.4 12.8 33.3 51.5 89.5 147 0 2 4 6 8 10 12 14 16 18 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Dec-06 0 20 40 60 80 100 120 140 160 0.9 Lowering of ADC from 30% to 10% of Sector Revenues Effective mobile tariff Mobile Subscriber Base WLL Introduced led by conducive regulatory framework…… Going forwards – key issues ….. Adequate availability of spectrum - A constrain in India Infrastructure requirement - 350,000 telecom towers by 2010, as against 125,000 in 2007 To achieve 500 mn subscribers base by 2010 will require significant investment in telecom equipment manufacturing space Slide 24: Infrastructure Opportunities : Civil Aviation Delhi-Mumbai being modernized through PPP New private international airport at Bangalore, Hyderabad become operational- 2008 USD 85 bn to develop Airport infrastructure Boeing and Airbus have a combined order book of 400 aircraft from India at present Slide 25: Infrastructure Opportunities : Power / Roads / Ports Infrastructure: USD 475 bn in investments planned in next five years Power Energy shortage at 7.7% / Peak shortage of 12.3% Ongoing projects: 52000 MW: Investment US$ 60 bn Private Ultra Mega Power Projects (4000 MW / USD 4 bn each) thr’ Competitive Bids Roads Annual growth 12 -15% in passenger traffic and 15 -18% for cargo Investment Opportunities US $ 30 billion till 2012 Ports 960 million tonnes of traffic by 2013-2014 7.7 % p.a. growth expected in cargo handling till 2013-2014 Investment opportunities: US $ 20 bn till 2012 Slide 26: PPP Projects Awarded Source : Ministry of Commerce, Government of India Source: World Bank report and PPPinindia.com – the study did not include Power sector Public – Private participation being encouraged Significant plans to improve the country’s infrastructure Slide 27: Thank You You do not have the permission to view this presentation. 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