INDIA’S PROMISE
Challenges & Opportunities
APBO
March 2007
Political Uncertainty
Delhi, Capital City
POP: 13 million
COALITION
GOVERNMENTS
TO STAY
Bangalore
“Silicon Valley of India”
POP: 7 million
Cong+
219 Seats
BJP+
189 Seats
Left
61 Seats
Others
70 Seats
ECONOMIC
REFORMS
SECURE
UNITED PROGRESSIVE ALLIANCE
13 Constituents
Indian National Congress
Congress Allies
Left Front
UPA COMMON MINIMUM PROGRAM
Agriculture - “A New Deal For Rural India”
Infrastructure - “Building World Class”
Sonia Gandhi Pranab Mukherjee Sharad Pawar Prakash Karat Karunakaran
Employment - “Rozgar Badhao”
Education - “Improving Access and Excellence”
Health Care - “Creating Capabilities”
Water - “Better Access, Better Utilization”
Kamal Nath
Bhattacharyajee Nirpuam Sen
DMK
Praful Patel
Urban Renewal - “Humane and Modern”
UPCOMING STATE ASSEMBLY ELECTION
80 Parliamentary
Constituencies
4 Phase Poll
April / May
Population
179,000,000
Transparency
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BELL HELICOPTER
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MOTOROLA
Procurement Challenges
RED TAPISM
July 2006
1500 KM
8 Days
RED TAPE / TAX ANOMALIES / POOR INFRASTRUCTURE
Challenges in Infrastructure

48 new road projects worth $12 bn are presently under construction
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Indian Railways require $22 bn investment

India’s port upgrades require a total investment of $22 billion
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Domestic aircraft movements have shot up by 40%
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Modernization requires upgrading 25 of the country’s national airports
100,000 MW required by 2012
LAND ACQUISITION-SEZs
NANDIGRAM
16 KILLED
WEST BENGAL
68 WOUNDED
5000 POLICE
TOTAL BANDH
HIGHLY POLITICIZED – SEZs ON HOLD
HUMAN RESOURCE CONSTRAINT
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ITES/BPO INDUSTRY GROWING @ 45% Qtr
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QUALIFIED HELP IN SHORTAGE
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ATTRITION RATES > 30%
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FINISHING SCHOOLS REQUIRED
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CONTRACT LABOR & LABOR REFORMS A MUST
INDIA’S ECONOMIC LEADERSHIP
•Considered the “Father of India’s Economic Reforms”
•Economist by training, Strong free-market advocate
•Excellent rapport with President Bush
Manmohan Singh
Prime Minister
Montek Singh Ahluwalia
Planning Commission Deputy Chairman
•Private / Public Sector Interlocutor
•Economist by training, Oxonian
•World Bank background / Easily accessible
P. Chidambaram
Minister of Finance
• “Inclusive” Budget
•Supreme Court Advocate, Harvard MBA
•Pragmatic reformer
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%
200
180
160
140
120
100
80
60
40
20
0
• Open Skies: Boeing Sales
1995
2000
2006
GDP Growth Rate > 8%
• Patents Act -IPR Protection: Re-entry of Merck
• Retail (Single Product): Wal-Mart Entry
• Civilian Nuclear Cooperation – 123 Agreement
6 Million New Cell Phones
Registered Last Month!
•15 Special Economic Zones (SEZ’s) at present
42 approved for 2007
IT/ BPO Boom
More than 300 of the Fortune 500 are in India
IBM
Cognizant
General Electric:
Oracle
Hewlett-Packard
Honeywell
American Express
Dell
: 53,000 employees
: 48,000 employees
: 20,000 employees
: 18,000 employees
: 11,000 employees
: 7,000 employees
: 4,000 employees
: 3,800 employees
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
Blue Diamond Growers – India is 4th
largest and fastest growing market
Pepsi is a major player
with sales $700 mn
Coca Cola has major presence
throughout the country
$15 bn investment
opportunity in storage,
transportation,
and refrigeration facilities.
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
Fremont Group
DEFENSE TRADE
Next Steps in U.S.-India Strategic Partnership:
Major Opportunities in Defense Cooperation - $30 billion
F-18 Super
Hornet
C-131
Transport
P-3 Orion
GE-404
Engine
Bell 407
Helicopter
F-16 Fighting
Falcon
FireFinder
& PAC III
Pac-3
Antimissile
System
Boeing 737
Countermeasure
Equipment
US-INDIA SPACE PARTNERSHIP
An Important Component of Strategic Partnership

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
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
INNOVATION FRONTIER: R & D
India Development Centre,
Bangalore, Hyderabad
Labs India, Bangalore
R&D Centre, Bangalore
R&D Centre, Bangalore and Mumbai
Software Lab, Bangalore, Pune
India Engineering Centre, Bangalore
R&D Centre, Bangalore
Innovation Campus, Bangalore
Bangalore
INDIA LOOKS OUTWARD
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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 ?
ECONOMIC, IDEOLOGICAL, AND
STRATEGIC PARTNERS
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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
India is Rising, Becoming Vital to U.S. Interests
BARBOUR
GRIFFITH &
ROGERS
eMR
Technology
Ventures
U.S.-INDIA BUSINESS COUNCIL
Griffith & Rogers
Steptoe &
Johnson LLP
32 YEARS of GROWING ENTERPRISE
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
General Dynamics
CMS Energy
General Motors
The Coca-Cola Company Gerson Lehrman Group
Computer Associates
Guardian Life Insurance
Covanta Energy
Gerson Lehrman
Dell Computer Corp.
Guardian Life Insurance
Deloitte & Touche
Hughes Network Systems
Discovery CommunicationsIBM, Corporation
Dow AgroSciences
IDFC Ltd.
Dow Jones
Johnson & Johnson
DuPont, Inc.
J.P. Morgan Chase
eBay Inc.
K. Raheja Universal
Estee Lauder
Kotak Mahindra
Ford Motor Company
L-3 Communications
Fremont Group Limited
Lockheed Martin
McGraw-Hill
Target Corporation
Merck & Co.
Tata, Inc.
Microsoft Corporation
Texas Instruments
Monsanto
Textron Inc.
Motorola, Inc
Time Warner Inc.
News Corporation Ltd.
Thomson Financial
Northrop Grumman
United Parcel Service
Oracle Corporation
Vickery International
PanAmSat
Wal-Mart Inc.
Paul Weiss LLP
Watson Wyatt Worldwide
Pfizer Inc.
Xerox Corporation
Pratt & Whitney/United
Technologies
Sony Pictures Entertainment
Standard Chartered Bank
INDIA’S ENERGY SECURITY CHALLENGE
Gas pipeline from
Turkmenistan, through
Pakistan, but
questionable reserves
Oil discovery by
Cairn Energy in
2004; India’s
demand will
outstrip supply
Gas pipeline from
Iran, discouraged
by U.S.
Kakrapar- World’s
first thorium-based
nuclear reactor
Hydro-Electric Dam at
Narmada constrained by
problems with
environment
Coal supplies for 200
years, but high/ash,
low calorie value
Gas pipeline from
Myanmar through
Bangladesh discouraged
by U.S.
Tarapur- India’s
“civilian” nuclear
reactor requires
refueling
Gas discovery by
Reliance in 2003
but will service only
fraction of India’s
power needs