Confederation of Indian Industry
State of the Indian Economy, July 2008
© Confederation of Indian Industry
State of the Indian Economy
1
Robust GDP Growth
2
Manufacturing & Services are leading the way
3
Strong Macro Economic Fundamentals
4
Growing Externalisation of the Economy
© Confederation of Indian Industry
Robust GDP Growth
1
Large and Growing Economy
GDP growth projections:
GDP & Inflation (2007- 08)
7.7% to 9.5% for 2008-09
GDP
Targeted to reach 10% by 2012

growth: 9%
Average Inflation: 5.1%
GDP Growth (% )
8
6
4
2
0
6.8
Per Capita Growth(% )
4.9
4.3
7.3
6.3
5.5
4.2
1.9
1970-71 to
1991(Pre
Reform)
1992-93 to
2007-08
1992-93 to
1999-00
AE Stands for Advance Estimates
© Confederation of Indian Industry
2000-01to
2007-08
Robust GDP Growth (%)
1
9.4
9.6
9.0
8.5
7.5
5.8
4.4
3.8
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
India is the 4th largest economy in terms of PPP
GDP of India is US $ 3787.3 billion in PPP terms
© Confederation of Indian Industry
Robust GDP Growth
1
15
Growth has been propelled by Industry & Services
11.9
10.7
10.3
9.6
10
11
10
9.6
8.1
9
9.4
5.76.4
5
8.5
7.5
5.8
4.5
4.4
3.7
-5
-7.2
-10
GDP
Agriculture
Industry
QE=Quick Estimates,RE= Revised Estimates
Source: CSO
© Confederation of Indian Industry
Services
2007-08(AE)
2006-07 (QE)
0
2005-06
2004-05
2003-04
-0.2
2000-01
0
2002-03
3.8
2001-02
Per cent
5.8
6.3
Robust GDP Growth
1
GDP Composition Undergoing a Drastic Change
1990-91
2006-07
18.5%
54.9%
41%
32%
26.6%
27%
Agriculture
Industry
Services
Source: Reserve Bank of India
© Confederation of Indian Industry
2
Manufacturing & Services are leading the way
Sectoral Growth
Industry: Improving Trend in Sectoral Growth (%)
Items
2004-05 2005-06 2006-07 2007-08(AE)
Industry
9.8
10.15
11
8.1
Mining and Quarrying
7.5
4.87
5.7
4.7
Manufacturing
8.7
8.98
12
8.8
Electricity, gas & water supply
7.5
4.68
6
6.3
Construction
14.1
16.46
12
9.8
Source: CSO,
AE Stands for Advance Estimates
© Confederation of Indian Industry
2
Manufacturing & Services are leading the way
Sectoral Growth
Services: Improving Trend in Sectoral Growth (%)
Items
Services
Trade,hotels,transport
& communication
Financial, real estate
& business services
Community, Social
and personal Services
2005-06 2006-07 2007-08(AE)
10.34
11.9
10.7
11.51
11.8
12.0
11.41
13.9
11.8
7.21
6.9
7.3
Source: CSO,
AE Stands for Advance Estimates
© Confederation of Indian Industry
Strong Macro Economic Fundamentals
3
35.9
36
Rising Savings & Investment
34.8
34
Gross Domestic Savings
32
% of GDP
Gross Domestic Investment
30
28
26
24
22
2000-01
2001-02
2002-03
2003-04
2004-05
Source: CSO
© Confederation of Indian Industry
2005-06
2006-07
Strong Macro Economic Fundamentals
3
Corporate Performance: growing top line
36
35.76
10.9
12.6
11.8
16.2
11.9
12
13.7
13.8
17.75
19
18.4
18
16.4
13.2
16
18.6
12
7.9
8
4.1
%
20
23.5
22.1
20.4
24
24
22.9
28
29
28.4
27.9
16.9
29
32
4
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- Q1
Q2
Q3
Q4
H1
Q3
Q4
00
01
02
03
04
05
06 06-07 06-07 06-07 06-07 07-08 07-08 07-08
Manfg.
Services
Source: CMIE
© Confederation of Indian Industry
4
160
60
185.7
83.6
103.1
111.5
63.8
80
61.4
100
78.1
120
52.7
US dollars in billions
140
126.4
149.2
180
185.7
Value of Exports and Imports
200
155.5
Growing Externalisation of the Economy
40
20
0
2002-03
2003-04
2004-05
2005-06
Year
Exports
Imports
© Confederation of Indian Industry
2006-07
2007-08
Growing Externalisation of the Economy
4
Trade as a % of GDP is on a rise
41
40
Total
Exports
35
Invisibles,net
Imports
25
21.1
20
15
13.9
10
6
5
© Confederation of Indian Industry
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
0
1990-91
% of GDP
30
Growing Externalisation of the Economy
4
Trade Performance
2002-03
2003-04
2004-05
2005-06
Exports
2006-07
Imports
Source: DGCI&S
© Confederation of Indian Industry
27.01
29.33
23.03
23.88
27.7
23
42.7
27.3
19.4
20.3
21.1
30.8
Impressive Growth in Export and Import (%)
2007-08
Growing Externalisation of the Economy
4
Foreign Capital Inflows ( US $ Billion)
Expanding Foreign Investment
19.4
20.0
15.0
10.0
5.0
7
0.0
Direct Foreign Investment
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
-5.0
Portfolio Foreign Investment
Source: RBI
FDI in 2007-08: US$ 25 billion
© Confederation of Indian Industry
Growing Externalisation of the Economy
4
Rapid Expansion in Foreign Reserve (US $ Bn)
2001-02
2002-03
2003-04
2004-05
2005-06
Source: RBI
© Confederation of Indian Industry
199.2
143.9
51.0
2000-01
135.6
40.0
1990-91
107.0
2.2
2.24
72.0
299.2
Forex Reserves US $ 301 billion (As on June 28, 2008)
2006-07
2007-08
4
Growing Externalisation of the Economy
India’s FDI Abroad: Rapid Increase
11.01
(US Billion $)
2.93
0.76
2000-01
1.39
2001-02
1.82
1.93
2002-03
2003-04
2.27
2004-05
Source: RBI
© Confederation of Indian Industry
2005-06
2006-07
Sectors of Opportunity in India






Infrastructure
Manufacturing
Services
Technology
Agri-products
Education
© Confederation of Indian Industry
Investment Estimate for Infra Sectors
(US$ bn)
Tenth Plan Eleventh Plan
2002-2007 2007-2012
Energy
70.5
150.4
Roads and bridges
31.7
76.1
Telecommunication
22.5
65.1
Railways
20.3
62.2
Irrigation
32.1
53.1
Water supply and
sanitation
15.6
48.6
Ports
1.3
18.0
Airports
2.1
8.5
Storage and gas
4.4
10.5
200.5
492.4
Total
© Confederation of Indian Industry
Policy Framework for Infrastructure







Public Private Partnership to build confidence and extend
support to private sector participation
Open to Private Sector Participation
Government investment to increase over the period 20072012
100% FDI allowed in most sectors
Tax Incentives to encourage investments
International bidding – open & transparent
Independent Regulatory Authorities
© Confederation of Indian Industry
Sectoral Perspective – Airports
•
•
•
•
Number of operational airports: 88
Passengers handled in 2006-07: 96 million; growth of 31%
Freight carried in 2006-07: 1.6 MT; growth of 11%
Number of scheduled operators: 14
350 MT in 2020
96 million in 06-07
Projected Investment of US$ 9 billion by 2012





The fast growth of air traffic has resulted in straining the aviation
infrastructure, leading to air traffic congestion and delays
Major upgradation of airport infrastructure, modernisation of
communication, navigation & surveillance facilities are currently being
undertaken
Modernisation of Delhi and Mumbai airports as well as greenfield airports
at
Hyderabad and Bangalore are being developed by the private sector
35 non-metro airports are also being revamped by the government
© Confederation of Indian Industry
Welcome !
The Indian Infrastructure Sector
welcomes participation across all areas
:

Advisory

Engineering

Project Management

Project Development

Construction

Financing

Operations & Maintenance
© Confederation of Indian Industry
MANUFACTURING IN INDIA
Advantage INDIA
•Indian manufacturing sector is
expected
to grow at 12% to 14 % over the next
decade
•India is ranked 48 in the latest GCI
index
•The quality of Indian work force is
one of India’s key competitive
advantages
•Indian economy expected to grow at
8% to 10% over the next decade
INDIA IS AMONG THE MOST
COMPETENT MANUFACTURING
LOCATIONS FOR A WIDE
VARIETY OF REASONS
© Confederation of Indian Industry
India: A Market of Opportunities
3rd largest car market – 7.4 m vehicles in Apr-Dec 2007
surpassing China
 Among the world’s largest cable TV networks - 70 mn
connections
 Number of telephone lines have increased 10-fold in the
last decade
 Major investments in infrastructure and manufacturing
providing impetus to growth.
Agriculture and Food Processing:
nd largest producer of vegetables, 3rd
 14 agri-zones – 2
largest in fruits, 91 mn tons of rice production
 Food processing to be next engine of growth
 $23.5 bn investments in pipeline over next 3 years

© Confederation of Indian Industry
Some Opportunity Areas in Manufacturing
in India














Automotives
Automotive Components
Machine Tools
Electrical & Power Equipment
Earthmoving and Construction Equipment
Process Plant Equipment
Textile Machinery
Steel
Consumer Durables
Castings and Forgings
Telecom and Telecom Equipment
Textiles
Chemicals
Oil and Gas
© Confederation of Indian Industry
Automotive Components





India has a very large diversified automotive components industry
which exports 51% of its production.
There has been a production growth rate of 20% in the automotive
component industry in April-June 2008(estimated) over same period
in 2007.
Indian automotive companies are well positioned in terms of skills,
price and quality to cater to global supply chains.
A number of global players are currently sourcing components for
their global supply chain from India, these include Ford, General
Motors, Volvo etc.
Indian Auto component companies are looking for technology upgradation to cater to international requirements.This includes fully
automated Weingarten press lines,single location forging
facilities,fully integrated CAD-CAM-CAE, high crankshaft
manufacturing capacity,in-house tool making and online
procurement.
© Confederation of Indian Industry
Machine Tools





The Indian machine tool industry is approximately a $ 0.5 billion
industry,manufacturing metal cutting, metal forming, conventional
and automated machine tools.
There has been a significant shift from general purpose machines to
CNCs which now constitutes 70% of total production.
There has been a 23% rate of growth in the industry in April-June
2008 (estimated)over same period in 2007. Approximately 4.7% of
the production in India is exported. Exports include CNC Lathes,
vertical machining centres, grinding machines, etc.The export
destinations are USA, Germany, China, Italy, Mexico, Canada, UK
and Brazil.
In the 1980’s, the machine tools industry acquired a wide range of
technology for modernization, especially for special purpose
machine tools.
The industry is looking at up-grading technology, especially in
auxiliary equipment supplies. The areas of interest include gear
cutting, CNC grinding, high pressure forming, laser applications,
software for 5 axis machining, near net shape forming, hydro
forming and high speed pressing.
© Confederation of Indian Industry
Electrical & Power Equipment


The Indian electrical and power equipment industry is a $ 6.3
billion industry.
The industry has seen the following trends in growth rate in AprilJune 2008 (estimated) over same period in 2007 :






Transformers – 4.1%
Motors & Starters – -14.58%
Boilers – 35%
Export in 2007-08 grew by 14%
India has a competitive advantage in Transformers, Switch Gears
above 1000V, Steam Boilers, Steam Vapour Turbines etc.
The larger players have access to modern technologies. There is a
technology lag in areas like precision control of AC motors, linear
motors and software engineering for various applications.
In process innovation, Indian companies have adopted CAD / CAM
design optimization etc. However, the use of remote diagnostics to
identify defects is still limited.
© Confederation of Indian Industry
Key Services Sectors in India

HEALTHCARE

TOURISM

RETAIL

LEGAL SERVICES

ACCOUNTING SERVICES
© Confederation of Indian Industry
HEALTHCARE
The Big Opportunity :
• World’s largest industry : revenues of US$ 2.8 trillion
• India – Revenues : US# 30 Billion , contributes 5% to GDP,
Employment provider to 4 million people
• By 2025 : US$ 100 Billion in revenues and 10% of GDP
• Healthcare in India is dominated by the Private players :
10 largest national healthcare networks would absorb 30%
of the market share by 2025.
© Confederation of Indian Industry
HEALTHCARE
Key Success Drivers :
• Medical Value Travel / Medical Tourism : US$ 2 billion by
2012
- world class treatment at fraction of cost (almost 1/10th)
- no waiting time for surgeries
• Outsourcing of Diagnostics, Pathology and Lab tests to
India due to high cost differential
• Clinical Trials : availability of huge patient pool, and cost
advantage of testing of drugs at 60% of price
• Health Insurance : less than 10% of population insured for
any sort of health insurance
© Confederation of Indian Industry
TOURISM
The Big Opportunity :
• Indian Tourism second only to China
- Contributes 5.9% to GDP
- Provides Employment to 41.8 million people
• World Travel and Tourism Council has named India,
along with China, as one of the fastest growing tourism
industries for next 10-15 years
• Liberal investment norms : 100% FDI allowed through
automatic route
© Confederation of Indian Industry
TOURISM
Key Success Drivers :
India offers many options to the world traveler :
•
•
•
•
•
•
•
•
Medical Tourism
Adventure tourism
Heritage Tourism
Wellness Tourism
Pilgrimage Tourism
Golf-Tourism
Eco-Tourism
Wildlife tourism
© Confederation of Indian Industry
RETAIL
Key Success Drivers :
• India topped AT Kearney’s annual Global Retail
Development Index for 3rd consecutive year : ranked as
most attractive market for Retail investment globally
• Consumer class of 400 million with rising disposable
incomes, sense of optimism within the economy, deep
rooted entrepreneurial culture provide a big fillip to the
sector
• Liberalized norms for investment by Government of
India
- 100% FDI in Cash-and-Carry through automatic route
- 51% in FDI in single brand outlets
© Confederation of Indian Industry
THANK YOU
www.cii.in
© Confederation of Indian Industry