Rajnish Kumar
State Bank of India
Regional Head, UK region
Index
India Economic Profile
Foreign Trade of India
Indian banking system
State Bank of India
Foreign Investment Promotion Board
Export oriented units & Special economic zones
Export promotion capital goods scheme
Key Industries
India Economic Profile
Key Statistics & Metrics
India at a glance
Understanding India
Rising Consumer spending
Growth of services
Demographic Dividend
Growth in Literacy & higher education
Indian manufacturing establishing itself on the global stage
Pervasive communications: Satellite & Cable TV, Mobile
telephony, fiber/broadband
Infrastructure growth: Highways, ports, Urban transport
Robust and well regulated Banking and Financial Sector
Mature political economy with development as its core agenda
India
Literacy: Total population: 64.8 per cent (2001 census)
Currency (code): Indian rupee (INR)
Transportation in India
Airports: 454
International Airports: Ahmedabad, Amritsar, Bengaluru, Chennai, Goa, Guwahati,
Hyderabad, Kochi,
Kolkata, Mumbai, New Delhi, Thiruvananthapuram
Railways: total: total: 63,327 route km (31st March, 2007)
Roadways: total: total: 3,316,452 km
Waterways: 14,500 km (2008)
Major Ports of Entry: Chennai, Ennore, Haldia, Jawaharlal Nehru Port Trust
(JNPT), Kolkata, Kandla, Kochi, Mormugao, Mumbai, New Mangalore, Paradip,
Tuticorin and Vishakhapatnam.
Natural Resources: coal (fourth largest reserves in the world), iron ore,
manganese, mica, bauxite, titanium ore, chromite, natural gas, diamonds,
petroleum, limestone, arable land.
Economic Profile of India
Indian Economy
India’s GDP has increased rapidly over the past 15 years from $250 billion to over US$ 1
trillion currently
India's GDP growth for 2009-10 has been revised upwards to 8 per cent over the previous
estimate of 7.4 per cent by the Central Statistical Organisation (CSO), on account of robust
growth in manufacturing and services sectors.
 Per capita income (average income) of Indians has grown by 10.5 per cent to US$ 947.21
in 2009-10 as against US$ 857.43 in 2008-09, at the current price
 The growth is driven by robust performance of the manufacturing sector on the back of
government and consumer spending
 According to government data, the manufacturing sector witnessed a growth of 16.3 per
cent in January-March 2010, from a year earlier
India Profile contd...
GDP Composition by Sector in 2009-10 (RBI estimate):
Agriculture
15%
Services: 56.9 per cent
Industry: 28.5 per cent
Agriculture: 14.6 per cent
Industry
28%
GDP Composition
Services
57%
Forex Reserves (2010-11): US$ 295 billion
Cumulative Value of Exports: (April 2010-November 2010) US$ 140.29 billion
Exports Commodities: Petroleum products, precious stones, machinery, iron and steel,
chemicals, vehicles, apparel,software,services.
Import Commodities: Wheat,Petroleum,Crude & products,Gold,Electronic goods,machinery
excpt electronic ,metal ores & metal scrap,organic chemicals,Iron & steel,Transport
equipments,inorganic chemicals,vegetable oils,fertilizers,pulses,sugar ,spices,cement ,rice.
Foreign Trade Composition
India Foreign Trade Data
Top ten largest Trading partners 2008-09
(Apr-Feb)
EXPORTS & IMPORTS : (US $ Million)
Trade 2008-09
(PROVISIONAL)
APRIL-
Country
(USD $ Bln)
DECEMBER
DECEMBER
CHINA PRP
36.27
EXPORTS(including re-exports)
USA
34.52
2009-10
16493
127182
U ARAB EMTS
33.93
2010-11
22500
164707
SAUDI ARAB
23.47
%Growth2010-11/ 2009-2010
36.4
29.5
GERMANY
15.02
SINGAPORE
14.06
UK
11.14
HONG KONG
11.14
BELGIUM
9.23
NETHERLAND
7.36
IMPORTS
2009-10
28251
207315
2010-11
25130
246724
%Growth2010-11/ 2009-2010
-11.1
19.01
2009-2010
-11758
-80133
2010-11
-2630
-82017
TRADE BALANCE
Summary of Trade with Ireland
IRELAND
Dated: 07/02/2011
Values in US $ Millions
S.No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Year 2005-2006
EXPORT
%Growth
India's Total Export
%Growth
%Share
IMPORT
%Growth
India's Total Import
%Growth
%Share
TOTAL TRADE
%Growth
India's Total Trade
%Growth
%Share
TRADE BALANCE
India's Trade Balance
279.77
103,090.53
0.27
161.91
149,165.73
0.11
441.68
252,256.26
0.18
117.87
-46,075.20
2006-2007
226.08
-19.19
126,414.05
22.62
0.18
289.51
78.81
185,735.24
24.52
0.16
515.58
16.73
312,149.29
23.74
0.17
-59,321.19
2007-2008
2008-2009
2009-2010
314.47
449.77
260.57
39.1
43.03
-42.07
163,132.18 185,295.36 178,751.43
29.05
13.59
-3.53
0.19
0.24
0.15
260.32
239.06
264.82
-10.08
-8.17
10.78
251,654.01 303,696.31 288,372.88
35.49
20.68
-5.05
0.1
0.08
0.09
574.78
688.83
525.39
11.48
19.84
-23.73
414,786.19 488,991.67 467,124.31
32.88
17.89
-4.47
0.14
0.14
0.11
54.15
210.71
-88,521.83 -118,400.95 -109,621.45
Note:The country's total imports (S.No.6) since 2000-2001 does not include
import of Petroleum Products (27100093) and Crude Oil (27090000)
DOC-NIC
Indian Banking System
Banking Sector Overview
Statistics of No. of Banks
Nationalised Banks
SBI & associates
Private sector banks
New Private sector banks
Foreign Banks
Source - Trend and Progress of Banking in India 2008-09.
As at March 2009
No.of Banks
20
7
15
7
30
Bank Group
SBI & associates
Nationalised Banks $
Foreign banks
Regional Rural banks
Other Sch.commercial banks
Non-sch commercial banks
TOTAL
2005
14006
35096
242
14763
6462
37
70606
As on 31st March
2006
2007
14294
14651
35848
37413
259
272
14776
14812
6828
7415
41
46
72046
74609
2008
15814
39204
279
15029
8294
46
78666
Notes : No. of offices includes administrative offices.
$ Includes IDBI Bank Ltd.
Data for 2005 to 2008 have been revised and data for 2009 are provisional.
Source : Master Office File (latest updated version) on commercial banks,
2009
16731
40766
295
15384
9186
46
82408
Banking system in India
•Indian banks continue to be well-regulated and monitored, have emerged stronger.
•20 Indian banks have been included in the annual international ranking by UK-based
Brand Finance® Global Banking 500.
•SBI ranks 36th amongst the Top 50 banks in the World, as per Brand Finance study
•The brand value of SBI increased from US$ 1.5 billion in 2009 to US$ 4.6 billion in 2010.
•According to RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled
Commercial Banks: March 2010’
Aggregate Deposits
Gross bank credit
Nationalised banks
51.9%
52.0%
SBI & associates
22.5%
23.1%
Other commercial banks
17.5%
17.4%
Foreign banks
5.0%
4.9%
Regional Rural banks
3.1%
2.5%
Banking system in India (contd...)
India has a well-organised and regulated banking system, in addition to an efficient credit infrastructure.
Well-developed
financial
infrastructure
Scheduled commercial banks
employed about 10 million
people in 2009.
Large workforce
in the banking
sector
Large workingage population
Advantage
India
A good mix of public and private
sector banks provides stability and
growth to the economy. In addition,
non-banking financial institutions,
co-operative
banks,
primary
agricultural societies etc., are
spread across the country to meet
local needs.
Good mix of
public and
private sector
banks
Well-defined
regulatory
framework
The Reserve Bank of India
(RBI) has well-formulated
regulations for the Indian
banking sector.
Talent pool
As of 2009, India had approximately 32 million graduates and 2.4 million post graduates.
To leverage these skills, a number of foreign banks have shifted their back office operations to India
Policy & Regulatory framework
Monetary
authority
Regulator and
supervisor of the
financial system
Related
functions
Role of the
Reserve Bank
of India (RBI)
Manager of
foreign
exchange
Developmental
role
Issuer of
currency
RBI
Formulates, implements and monitors the monetary policy.
Prescribes broad parameters of banking operations within which the country's banking and financial system functions.
Performs a wide range of promotional functions to support national objectives and increase financial inclusion.
Corporate Banking Products & Services
Working Capital Finance (cash credit, overdrafts, commercial paper etc.)
Project Finance (Greenfield, Expansions)
Infrastructure Finance (Roads, power, ports, airports etc.)
Deferred Payment Guarantees (for project imports)
Corporate Loans/Term Loans
Channel Financing (e.g auto dealers)
Loan Syndications
Financing Indian Firms for acquisitions overseas
Foreign Currency Loans (for capital expenditure)
Import/Export Finance (both funded and non funded)
Treasury products viz. spot/derivatives
State Bank of India
State Bank of India
Largest state-owned banking and financial services company in India
Government of India holds 60% stake in State Bank of India
The State Bank Group, with over 16,000 branches, has the largest banking
branch network in India
SBI presently has 131 offices / branches in 32 countries across the globe
SBI is the only Indian bank to be listed on the Fortune 500 list
SBI has 6 non-banking subsidiaries :
•SBI Life
•SBI Capital Markets Ltd
•SBI Fund Management Pvt Ltd
•SBI DFHI
•SBI Cards & Payment Services Pvt Ltd
•SBI Pension Fund Pvt Ltd
SBI’s Presence in Europe
Registered member of the FSA
Meets forex and funding requirements of European and (other branches)*
Active in Trade Finance business
Guarantees issued by SBI London are accepted by All International
Banks, Sovereigns and Organisations
SBI currently has 7 branches across the UK :
London, Birmingham, Golders Green, Harrow, Leicester, Manchester, Southall
 3 branches in Europe Antwerp, Paris, Frankfurt
3 New branches opening in U.K. Eastham, Wolverhampton & Coventry
SBI’s Products & Services
SBI is a one shop providing financial products / services of a wide range for large , medium
and small customers both domestic and international.
Personal Banking
NRI services
Agricultural & Rural Banking
International Banking
Corporate Banking
SME
Domestic Treasury
Others
Foreign Investment Promotion Board
Foreign Investment Promotion Board
The FIPB (Foreign Investment Promotion Board) is a government body that offers a
single window clearance for proposals on foreign direct investment in the country that are
not allowed access through the automatic route.
The Foreign Investment Promotion Board (FIPB) has been set up by Government to
enable expeditious disposal of proposals involving foreign investment in specified sectors.
The Board consists of Senior Secretaries drawn from different ministries
This high powered body discusses and examines proposals for foreign investment in the
country for restricted sectors on a regular basis.
 Currently proposals for investment beyond 600 crores require the concurrence of the
CCEA (Cabinet Committee on Economic Affairs).
The Board thus plays an important role in the administration and implementation of the
Government’s FDI policy.
The FIPB has started a e-filing aplication,only for FDI proposals where the Government of
India decides on the merits of the case, that is, those application which are not under
‘automatic route’ as laid out in the FDI policy.
FIPB review for period of Jan- Dec 2009
The Board met 18 times during the Year 2009 to consider 566 proposals, some of
them highly complex in nature with multi-layer corporate architecture spread across
many countries.
Profile of Proposals (in terms of the number of investment proposals)
Main countries are as follows:
Important Sectors covered:
i. Mauritius
ii. USA
iii. Singapore
iv. Germany
v. Japan
Netherlands
vii. Uk
viii. France
ix. Italy
i.Industrial appliances
ii.Telecommunication
iii.Software development
(though on automatic route, such proposals came to the
FIPB because of conversion, warrants, share swap, etc.)
i.Information and Broadcasting sector (including
publication and print media)
ii.Trading
iii.Power
Overseas Investment Policy
Indian overseas investment policies have been progressively liberalised and simplified to meet the
changing needs of a growing economy.
The policy, has expanded significantly in scope and size, especially after the introduction of Foreign
Exchange Management Act (FEMA) in June 2000.
The 200 per cent limit of the net worth of the Indian party was enhanced to 300 per cent in June
2007 under automatic route (200 per cent in case of registered partnership firms).
The Indian venture capital funds (VCFs) registered with the Securities and Exchange Board of
India (SEBI) are permitted to invest in equity and equity-linked instruments of off-shore venture capital
undertakings, subject to an overall limit of US$ 500 million and compliance with the SEBI regulations
issued in this regard.
The limit for portfolio investment by listed Indian companies in the equity of listed foreign
companies was raised in September 2007 from 35 per cent to 50 per cent of the net worth of the
investing company as on the date of its last audited balance sheet.
The aggregate ceiling for overseas investment by mutual funds, registered with SEBI, was
enhanced from US$ 4 billion to US$ 7 billion in April 2008. The existing facility allows a limited
number of qualified Indian mutual funds (MFs) to invest cumulatively up to US$ 1 billion in overseas
Exchange Traded Funds, as may be permitted by the SEBI, would continue.
FDI : Policy on repatriation of profits and dividends
Profit Repatriation means “to return foreign-earned profits or financial assets back to
the company’s home country”
India allows free repatriation of profits once all the local and central (tax) liabilities are met.
Repatriation of Dividend: Dividends are freely repatriable without any restrictions (net
after Tax deduction at source or Dividend Distribution Tax, if any, as the case may be). The
repatriation is governed by the provisions of the Foreign Exchange Management (Current
Account Transactions) Rules, 2000, as amended from time to time.
Repatriation of Interest: Interest on fully, mandatorily & compulsorily convertible
debentures is also freely repatriable without any restrictions (net of applicable taxes). The
repatriation is governed by the provisions of the Foreign Exchange Management (Current
Account Transactions) Rules, 2000, as amended from time to time.
Export Oriented Units &
Special Economic Zones
EOU’s & SEZ’s
Introduction
The EOU Scheme introduced by the Ministry of Commerce in early 1981, to compliment the
SEZ scheme.
The purpose of the scheme was to boost exports by creating additional production capacity .
The basic concept of Export Oriented Units policy are:
To create employment opportunities
Increase in Exports
Increase in Foreign Direct Investments
Growth & Development
Industrial Licenses not required
Domestic Labour law is applicable
Free to select the location of a project
EOU
Obligation of Export Oriented Units
The EOUs are required to achieve Positive Net Foreign Earning (NFE)
NFE shall be calculated cumulatively for a period of 5 years from the date of
commencing of production
Input / output norms to be maintained as FTP on the resultant product
Unutilized material can be disposed on payment of applicable duties
Major Sectors in EOUs:
GRANITE
TEXTILES / GARMENTS
FOOD PROCESSING
CHEMICALS
COMPUTER SOFTWARE
COFFEE
PHARMACEUTICALS
GEM & JEWELLERY
ENGINEERING GOODS
ELECTRICAL & ELECTRONICS
AQUA & PEARL CULTURE
EOU’s & SEZ
Features of EOU
 No license required for import.
 Exemption from Central Excise Duty in procurement of capital goods,
raw-materials,consumables spares etc. from the domestic market.
 Exemption from customs duty on import of capital goods, raw materials,
consumables spares etc.
 Reimbursement of Central Sales Tax (CST) paid on domestic purchases.
 100% Foreign Direct Investment permissible.
 Exchange earners foreign currency (EEFC) Account
 Facility to retain 100% foreign exchange proceeds in EEFC Account.
 Profits allowed to be repatriated freely without any dividend balancing requirement
Eligibility Criteria
 EOU can be set up by any entrepreneur for manufacturing of goods and also for rendering
services
 EOU can be set up for repair, reconditioning , re-making and re-engineering also
 EOU unit is required to achieve only positive NFE over a period of 5 years
Special Economic Zones
Introduction to Special Economic Zones:
In India, SEZs are the special zones created by the Government and run by GovernmentPrivate or solely Private ownership, to provide special provisions to develop industrial growth
in that particular area.
The government of India launched its first SEZ in 1965, in Kandla, Gujarat.
Main objectives of the SEZ Act 2005 are:
generation of additional economic activity;
promotion of exports of goods and services;
promotion of investment from domestic and foreign sources;
creation of employment opportunities and development of infrastructure facilities.
SEZ’s
Incentives & Facilities offered to units in SEZs for attracting investments , including foreign
investments include:
Duty free import/domestic procurement of goods for development, operation and
maintenance of SEZ units
100% Income Tax exemption on export income for SEZ units under Section 10AA of the
Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed
back export profit for next 5 years
Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
External Commercial Borrowing by SEZ units up to US $ 12500 billion in a year without
any maturity restriction through recognized banking channels.
Exemption from Central Sales Tax.
Exemption from Service Tax.
Single window clearance for Central and State level approvals.
Exemption from State sales tax and other levies as extended by the respective State
Governments.
SEZ
Major incentives and facilities available to SEZ developers include:Exemption from customs/excise duties for development of SEZs for authorized
operations approved by the BOA.
Income Tax exemption on income derived from the business of development of the
SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
Exemption from dividend distribution tax under Section 115O of the Income Tax Act.
Exemption from Central Sales Tax (CST).
Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
SEZs
Currently there are 114(as on Oct 2010) SEZs operating throughout India in the following
states:
•Karnataka - 18
•Kerala - 6
•Chandigarh - 1
•Gujarat - 8
• Haryana - 3
• Maharashtra - 14
• Rajasthan - 1
• Orissa – 1
• Tamil Nadu - 16
• Uttar Pradesh - 4
• West Bengal – 2
•Additionally more than 500 SEZs are formally approved (as on Oct 2010) by Government of
India.
SEZ
Approval mechanism
The developer submits the proposal for establishment of SEZ to the concerned State
Government.
The State Government has to forward the proposal with its recommendation within 45 days
from the date of receipt of such proposal to the Board of Approval.
The applicant also has the option to submit the proposal directly to the Board of Approval.
The Board of Approval has been constituted by the Central Government in exercise of the
powers conferred under the SEZ Act.
All the decisions are taken in the Board of Approval by consensus.
The Board of Approval has 19 Members.
Export Promotion Capital Goods Scheme
Export Promotion Capital Goods Scheme
Introduction to the EPCG Scheme:
The scheme was introduced by the Ministry of Commerce to allow import of capital goods at a low
customs duty
The Scheme has helped in boosting exports in the initial years of the introduction when the customs
duty on capital goods were very high
The scheme has primarily helped exporters to become more competitive as it reduces the initial cost
on capital goods
EPCG Scheme: The scheme allows import of capital goods for pre production, production and post
production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty
subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under
EPCG scheme to be fulfilled over a period of 8 years
The capital goods shall include spares (including refurbished/reconditioned,spares), tools, jigs, fixtures,
dies and moulds. EPCG licence may also be issued for import of components of such capital goods
required for assembly or manufacturer of capital goods by the licence holder.
Second hand capital goods without any restriction on age may also be imported under the EPCG
scheme.
An EPCG licence can also be issued for import of capital goods for supply to projects notified by the
Central Board of Excise and Customs wherein the basic customs duty on imports is 10% with a CVD of
16%
Export Promotion Capital Goods Scheme
Export Obligation:
The licence specifies the value of the resultant export product to be exported
The export obligation shall be fulfilled by the export of goods capable of being manufactured or produced by
the use of the capital goods imported under the scheme
Service providers to fulfill export obligation by earning FFE through rendering services
The export obligation can also be fulfilled by the supply of ITA-1 items to the DTA provided the realization is
in free foreign exchange
Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier
A person holding an EPCG licence may source the capital goods from a domestic manufacturer instead of
importing them. The domestic manufacturer supplying capital goods to EPCG licence holders shall be
eligible for deemed export benefit under the Policy.
Benefits to Domestic Supplier In the event of a firm contract between the EPCG licence holder and
domestic manufacturer for such sourcing, the domestic manufacturer may apply for the issuance of Advance
Licence for deemed exports for the import of inputs including components required for the manufacturer of
said capital goods.
Maintenance of Average exports under EPCG
The EPCG licence holder would have to maintain the average level of exports equivalent to the average of
the exports in the preceding three licencing years for the same and similar products
Key Industries
Manufacturing
Services
Infrastructure
Information Technology
Renewable Energy
Textiles & Apparel
Auto Component
Pharmaceuticals
Inorganic Chemicals
Gems & Jewellery
Metal
Leather Industry
Agriculture
 Food Processing/Processed food
 Agriculture Equipment
India attractiveness
 India has been ranked 2nd in global foreign direct investments in 2010 & continues to be among the top 5
attractive destinations for international investors during 2010-12
(United Nations Conference on Trade and Development (UNCTAD) in a report on world investment
prospects titled, 'World Investment Prospects Survey 2009-2012)
 A report released in February 2010 by Leeds University Business School, commissioned by UK Trade &
Investment (UKTI), ranks India among the top three countries where British companies can do better
business during 2012-14
 The 2010 survey of the Japan Bank for International Cooperation released in December 2010, conducted
among Japanese investors continues to rank India as the second most promising country for overseas
business operations, after China
 According to Ernst and Young's 2010 European Attractiveness Survey, India is ranked as the 4th most
attractive foreign direct investment (FDI) destination in 2010. However, it is ranked the 2nd most attractive
destination following China in the next three years
 The cumulative amount of FDI equity inflows from April 2000 to October 2010 stood at US$ 122.68 billion,
according to the data released by the Department of Industrial Policy and Promotion (DIPP)
Indian Investments Abroad
According to RBI data, investments by domestic companies in overseas joint ventures and
wholly-owned subsidiaries stood at US$ 10.3 billion during 2009-10.
Singapore, Mauritius, the Netherlands, the US and the British Virgin Islands accounted for 67
per cent of total outward foreign direct investment (FDI). Singapore and Mauritius remains top
destinations with more than 48 per cent share of the investments during 2009-10.
Overseas investments
Elecon Engineering Company Ltd, a material handling equipment, industrial gears and
transmission products manufacturer, has announced the acquisition of the UK-based
Benzlers-Radicon Group (BR Group) for US$ 34.34 million.
Biocon Ltd will set up its first overseas manufacturing and research facility in Malaysia with
an initial investment of around US$ 160.38 million.
Tata Motors has bought an 80 per cent stake in Italy-based Trilix Srl, a design and
engineering company for US$ 2.56 million.
Larsen & Toubro (L&T) signed an agreement with South Africa-based Befula Investments for
a joint venture to develop power transmission and distribution (T&D) projects in South Africa.
L&T will have a 72.5 per cent stake in the venture.
Thank you