Indian Economy
An Opportunity Unlimited
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India: Fastest Growing Free Market Democracy
GDP Growth
Forex
FII Flow
FDI
Per Capita
Inflation
1990
4.9 percent
< USD 1 billion
USD 1 million (1993)
USD 97 million
USD 390
9 percent
2008*
8.7 percent
USD 309 billion as on
Mar 28, 2008
USD 16.1 billion in
2007-08
USD 12.7 billion in
2007-08 till
December (USD 16
billion in 2006-07)
USD 740
7.4 percent as
on March 29,
2008
2
* Annualized data used to show comparison with 1990
Source: Times of India, RBI, DIPP, Indian Budget, Rediff
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India: Among the Top-15 Countries in terms of GDP at
constant prices
The Indian economy has witnessed unprecedented growth…. Booming services and industry sectors are providing the
required impetus to economic growth
India's GDP at Current Prices: 2002-07
1200

Fastest GDP growth of 9.4 percent in 2006-07, since
last 18 years (at constant prices)

India’s GDP has witnessed high growth, and was the
second fastest growing GDP after China in 2006-07

The sound performance of each industry segment is
leading to the overall robust performance of the Indian
economy
800
600
400
200
469
556
638
737
830
1006
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
(AE)
Contribution of
Services increased from
48 percent to
55 percent
AE - Advance Estimates
1,200
1,000
Growth in sectors at Current Prices (2007-08):
Industry: 10.7%
Services: 8.9%
Agriculture: 2.6%
USD Billion
USD Billion
1000
800
561
600
398
400
191
200
0
Source: MOSPI Statistics
103
105
453
237
125
105
1999-00
2002-03
Agriculture
204
231
135
145
2005-06
Industry
2006-07
Services
270
176
2007-08
3
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India: Robust Economic Platform
India's Forex Reserves: 2001-08 (Till 28 March 2008)
350
309
USD Billion
300
Steadily increasing
Forex reserves offer
adequate security
against any possible
currency crisis or
monetary instability
250
150
100
In 2007-08 (till 28 March), Forex
reserves witnessed a growth of
approximately 55 percent over
2006-07.
199
200
141
152
2004-05
2005-06
112
54
75
50
0
2001-02
2002-03
2003-04
2006-07
2007-08
(Till 28
March)
External Debt-to-GDP Ratio
22
21.1
Falling Dollar inflates
the India’s external debt
20.4
Increased
confidence of
investors in Indian
companies has led
to a surge in cross
border borrowing by
corporate houses
Ratio
19
17.8
India’s Forex
reserves are in
excess of
external debt…
17.3
15.8
16
16.4
…the decreasing external debt to
GDP ratio indicates that India has
a sound economic platform
13
10
2001-02
2002-03
2003-04
Source: RBI Statistics
2004-05
2005-06
2006-07
4
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India: Surging Exports
Services sector has
been a major
contributor to
increased exports
from India
USD Billion
India's Exports: 2002-08
126
140
120
100
80
60
40
20
0
103
84
53
2002-03
Acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies
124
64
Quality and cost advantage are the two
important parameters leveraged by the
Indian producers to increasingly
market products and services
2003-04
2004-05
2005-06
2006-07
2007-08
(A prilDecember)*
* - 2007-08 provisional data for period of April to December only
India's Imports: 2002-08
250
191
USD Billion
200
Product imports by
India mainly include
petroleum products
and minerals
192
150
150
100
112
62
Petroleum products are the major
contributors towards India’s growing
imports
78
50
0
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
(A prilDecember)*
* - 2007-08 provisional data for period of April to December only
Source: Ministry of Finance (November Report)
5
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India: Attractive Investment Destination
With improved performance on PE ratio and ROE, Indian markets have attracted large
investments
FDI Inflow - India: 2001-08
India is ranked
18,000
15,730
second in AT
Kearney’s FDI
(2007)
13,500
USD Million
confidence index
185 percent
Increase
12,699
Electronic equipment,
manufacturing and telecom
have witnessed significant
FDI inflow
9,000
5,546
4,222
4,500
3,134
2,634
3,755
0
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
Net FII into India: 2001-07
FDI inflow for the
18
period 2006-07
16
of 185 percent over
the same period last
Large FII activity in India has
led to an upsurge in the
Sensex
year
149 percent
Increase
16.1
14
USD Billion
witnessed a growth
2007-08 (till
December)
12
10.0
10.2
10
8
9.4
6.7
6
4
2
1.8
0.6
0
2001-02
2002-03
2003-04
2004-05
2005-06 2006-07
2007-08
* FII growth momentum was restricted because of Sub Prime Crisis in 2007-08
Source: DIPP (October Report), SEBI
6
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India: Vibrant Capital Market
Sensex – The Bombay Stock Exchange index rise 20 times from 1990s to reach
20,000 mark in November 2007.
India is among the
major destinations
across the globe for
inflow of US Dollar
25000
11 December
2007 Crossed
20,000 mark
20000
Sensex has risen
20 times in the
period 1990-2007
15000
30 December 1999
Crossed 5,000 mark
07 February 2006
Crossed 10,000 mark
10000
5000
0
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1- -98
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1- l -0
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1- l -01
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1- -02
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1- l -02
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1- -03
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1- l -03
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1- -04
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1- l -04
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1- -05
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1- l -05
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1- -06
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1- l -06
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1- -07
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1- l -07
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n08
Emergence of
industry and
confidence of local
investors along with
the FIIs has led to
upsurge of the
Sensex
FIIs have infused
large investments
into the Indian
stock market
Encouraging
industry
performance
Increased local
investors’
confidence
7
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India: Vibrant Economy Driving M&A Activities
Number of Deals and Value
USD Billion
70
60
70
782
50
40
30
20
10
467
28.2
306
1,200
1,000
800
600
400
18.3
In 2007, there were a total of
676 M&A deals and 405 private
equity deals…
Number of deals
1,081
80
200
12.3
0
In 2007, the total value of M&A and
PE deals was USD 70 billion…
0
2004
2005
Deal Value
2006
2007
No. of Deals
… Total M&A deal value was
close to USD 51 billion…
Growth Drivers:
 Globalisation and increased competition
 Concentration of companies to achieve economies of
scale
 Cash Reserves with corporate
Private equity deals
value increased to USD
19 billion
Trends:
 Cross-border deals are growing faster than domestic deals
 Private Equity (PE) houses have funded projects as well as
made a few acquisitions in India
Source: Deal Tracker Grant Thornton, Economic Times
8
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Major M&A Deals Undertaken Abroad by India Inc.
Tata Steel buys Corus Plc
USD 12.1 billion
Hindalco acquired Novelis Inc.
USD 6 billion
Tata buys Jaguar and Land Rover
USD 2.3 billion
Essar Steel acquired Algoma Steel
USD 1.58 billion
Suzlon Energy Ltd. acquires REpower
USD 1.6 billion
9
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Major M&A and Investments Announcements in India
(1/2)
POSCO to invest in building steel
manufacturing plants and facilities in India by
2016
USD 12 billion
Vodafone buys Hutch
USD 11 billion
Plans to establish three manufacturing plants
to produce photo-voltaic units
USD 2 billion
Plans to spend on its development operations
in India over the next four years
USD 1.7 billion
10
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Major M&A and Investments Announcements in India
(2/2)
Plans investment in private equity in Indian
markets
USD 1 billion
Plans investment in private equity, real estate,
and private wealth management
USD 1 billion
Aditya Birla Group increased its stake in Idea
Cellular by acquiring 48.14-percent stake
USD 0.98 billion
Mylan Laboratories acquired a majority stake
in Matrix Laboratories
USD 0.74 billion
11
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India: Pacing Ahead to Emerge as a Major Economy in
the World
2007 Global Retail Development Index (GRDI)
India
80
Services sector
attracted interest of
major global players
and large
investments are
pumped in it
India is expected to
outperform its rivals
in the BRIC, in terms
of GDP growth rate,
from 2015
onwards…
60
2.9
Malaysia
2.8
Brazil
Indonesia
0
India Russia Vietnam Ukraine China
Chile
3.2
China
Thailand
40
20
2.3
2.3
1.3
3.2
2.6
1.6
1.8
3.3
1.4
2
1.2
1.5
1.5
Financial structure
Business environment
Latvia
1.4
1.1
People and skill availablity
Projected GDP Growth Rates for Select Upcoming Economies
8
GDP Growth Rate (%)
AT Kearney has
placed India as the
most preferable
destination for
Services sector
(2007)…
2007 Global Services Location Index
100
GRDI Score
… India is the top
destination in the AT
Kearney Global
Retail Development
Index (2007)
6
4
2
0
2005-10
2010-15
2015-20
2020-25
Brazil
Source: AT Kearney, BRIC Report
2025-30
China
2030-35
India
2035-40
2040-45
2045-50
Russia
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Why India? – Quote Unquote
“India has evolved into
one of the world's
leading technology
centers“.
“India is now truly a
land of opportunity”.
John Redwood
Economic
Competitiveness Policy
Group, UK
By 2032, India will be
among the three
largest economies in
the world.
“We came to India for the
costs, stayed for the
quality and are now
investing for innovation”.
- Dan Scheinman, Cisco
System Inc. as told to
Business Week, August
2005
BRIC Report,
Goldman Sachs
“India is a
developed country
as far as intellectual
capital is
concerned”.
Jack Welch
General Electric
“I have never seen
India so dynamic,
vibrant and full of
business
opportunities”.
Craig Barrett
Intel
Corporation
Peter Loescher
President and
Chief Executive
Siemens
“The Indian market has two
core advantages - an
increasing presence of
multinationals and an upswing
in the IT exports”.
“India is a very exciting
market and the luxury
car segment is growing
exponentially here”.
Mr Paul de Voijs
Managing Director
Volvo Car India
Travyn
Rhall,
ACNielsen
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