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© Confederation of Indian Industry1
CII’s Agenda – 2010-11 CII’s Agenda – 2010-11 and beyond……and beyond……
CII’s Agenda – 2010-11 CII’s Agenda – 2010-11 and beyond……and beyond……
© Confederation of Indian Industry
2008-09 2009-10 2010-11 E
Agriculture 1.6 -0.2 2.0 – 3.5
Industry 3.9 8.2 8.5 – 9.0
Services 9.8 8.7 9.3 – 9.5
GDP 6.7 7.2 8.0 – 8.5
CII Estimates GDP Growth at 8.0 – 8.5% in 2010-11CII Estimates GDP Growth at 8.0 – 8.5% in 2010-11
• Rainfall during 2009 was significantly deficient at 23% led to decline in agricultural production
• A recovery in agriculture likely in the coming year leading to upside in GDP growth; Industry and services to remain strong as capacity expansions take place to take advantage of rising demand
Source: CSO, CII Research
• India has weathered the global economic crisis better than other countries – EIU.• India considered an emerging economic superpower and part of G20.
2
© Confederation of Indian Industry
India’s economic outlook remains very robust…India’s economic outlook remains very robust…
“India has the potential to grow fastest over the next 30-50 yrs…if development proceeds successfully”
0
1
1
2
$2T
2009
$1.2T
2015(estimate)
$1.8T
India real GDP (at 2009 prices)
GDP expected to grow at ~ 8% to reach ~$2T by 2016
0
10
20
30
40
$50T
China
44
US
35
India
28
2050 GDP
103 1Currentrank
India projected to be #3 largest economy by 2050
Calendar year; Exchange rate: INR50= USD1Source: Euromonitor; EIU; Goldman Sachs (BRIC report)
8% CAGR
*
3
© Confederation of Indian Industry
However we face Significant Challenges However we face Significant Challenges
• Global developments: Developments in EU-Greece highlight the fact that global conditions will remain volatile for some time; excessive dependence on foreign capital inflows is not recommended for India
• Exchange rate: Currency fluctuations being driven by external conditions will have an impact on the real sector; important role for RBI in preventing excessive volatility
• Trade prospects: Improving with stabilisation in the global economy but growth in developed economies will remain weak in the near term; need to diversify markets
• Inflation: urgent need to get inflation under control; monetary policy cannot be the only instrument when the drivers food, fuel and commodities.
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© Confederation of Indian Industry
However we face many significant challengesHowever we face many significant challenges
Source: 1(% of total population) Expert Group on Methodology for Estimation of Poverty - chaired by Prof. Suresh D. Tendulkar, 2010 2 2005 PPP adjusted figure based on “World Bank poverty estimate for developing world” (2008);
*China and Brazil >90% (% of pop. aged 15+)- Euromonitor^ Transparency International- India scored 3.4/10 where highest was 9.4 (New Zealand)
• High Poverty rates:- Unacceptable poverty (37%1)- 456M2 people live on <$1.25/day
• Low literacy rates ~70% of population- among
the lowest in the emerging markets*
• Corruption & red-tapism Ranked #84 out of 180
countries on corruption index
• High Poverty rates:- Unacceptable poverty (37%1)- 456M2 people live on <$1.25/day
• Low literacy rates ~70% of population- among
the lowest in the emerging markets*
• Corruption & red-tapism Ranked #84 out of 180
countries on corruption index
Current
• Widening “job gap” in next 5 years:
17M job gap- ~94M new people will seek
jobs but only 77M new jobs will be created
• Widening “job gap” in next 5 years:
17M job gap- ~94M new people will seek
jobs but only 77M new jobs will be created
Future
5
© Confederation of Indian Industry
Two biggest sources of employment in our economy are Two biggest sources of employment in our economy are agriculture & private sectoragriculture & private sector
Note: *Excludes unorganized workers in the organized sector; ^consists of those in the working age group (15-59) actively seeking employment;1 includes community, social and personal services; 2 includes mining and quarrying; transport, storage and communication; finance, insurance, real estate; electricity , water etcSource: Registrar General of India; NSSO; Indiastat; Labour Bureau of India
0
20
40
60
80
100%
Urban(29%)
Rural(71%)
402Others
Construction
Manufacturing
Trade, hotel,restaurant
Agriculture
402
Public
Private
201
Employment by location & sector (M); FY 2007
Services
6
© Confederation of Indian Industry
-25
0
25
50
75
100
125
Expected increase in number of jobsby sector (M); FY 2007-12
FY 2007-12
58
FY 2007- 17
120
-4
Going forward, the private sector will need to be the Going forward, the private sector will need to be the primary driver of creating new jobsprimary driver of creating new jobs
Note: Excludes unorganized workers in the organized sector; ^consists of those in the working age group (15-59) actively seeking employment; * includes community, social and personal services; ^ includes mining and quarrying; transport, storage and communication; finance, insurance, real estate; electricity , water etcSource: Registrar General of India; NSSO; Indiastat; Labour Bureau of India
Private sector growth needs to increase from projected 9.5% growth to ~12%+ annually to close job gap
Private sector growth needs to increase from projected 9.5% growth to ~12%+ annually to close job gap
Finance, insurance, realestate and business services,
Trade, hotel, restaurant
Manufacturing
Community, social and personalservices
Construction
Transport, storage andcommunication
Agriculture
Mining & quarrying
Elec. gas & water supply
7
© Confederation of Indian Industry
Four key enablers for faster sustainable growth – over Four key enablers for faster sustainable growth – over the medium termthe medium term
CII Theme 2010-11: Business for livelihoodCII Theme 2010-11: Business for livelihood“Businesses are part of civil society”
“Creating jobs is the best CSR activity”
Create jobs & livelihoodsSustainable enterprise
Education
Innovation
Qualified talentpool
Effective business practices
Employability
Entrepreneur-ship
3
4
1
2
8
© Confederation of Indian Industry
How do we achieve this vision?How do we achieve this vision?
We need to aim for sustained 10% GDP growthWe need to aim for sustained 10% GDP growth
9
© Confederation of Indian Industry
Vision 2010-11Vision 2010-11
Agriculture Manufacturing Services Infrastructure
Soci
al a
nd C
orpo
rate
im
pera
tives
Business for livelihood(Education & Employability, Innovation & Entrepreneurship)
• Art, sports & literature
• Healthcare
• Inclusive society & affirmative action
• Economic policy, reforms, governance & implementation
• Energy, water & climate change
• Urbanization & future cities
• Education & skills
• Corporate governance
• Entrepreneurship, innovation & competitiveness
• Trade & globalization
10
© Confederation of Indian Industry
Ten Point Agenda for 10% GrowthTen Point Agenda for 10% Growth
1. Agriculture needs to grow at a sustained rate of 4%
2. Manufacturing needs to register 11-12% long term average growth
3. Service sector needs to remain robust and a growth driver
4. Physical Infrastructure needs to be of global standards
5. Education would have to be the centre of reforms
6. Skill development would need a massive step up
7. Labour environment and rules need to be conducive to employment creation
8. Delivery mechanisms of Government need to be streamlined
9. Need New Urban Centres to come up as growth poles
10. The financial sector reforms need to be fast tracked to enable financing of a high
growth, large economy – particularly focusing on long term funding instruments
and Financial Inclusion
Aim is to Achieve a Sustainable and Inclusive 10% Growth by 2014Aim is to Achieve a Sustainable and Inclusive 10% Growth by 2014
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© Confederation of Indian Industry
1. Achieving 4% Sustained Agriculture Growth1. Achieving 4% Sustained Agriculture Growth
To do:To do:• Raise farm productivity by improving quality of inputs• Better Supply Chain Management• Improving Market linkages• Optimal and Sustainable use of available land• Right Pricing of Power and Water
CII initiatives•Special Task Forces constituted to address issues related to agriculture
•Special Task Force on Monsoons
CII initiatives•Special Task Forces constituted to address issues related to agriculture
•Special Task Force on Monsoons
Virtual stagnation in Agriculture due toVirtual stagnation in Agriculture due to• Poor infrastructure• Collapse of Agricultural Extension System• Decline in public investment in agriculture/ irrigation• Fragmentation of land holdings
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© Confederation of Indian Industry
2. Achieving 11-12% Long Term Manufacturing Growth2. Achieving 11-12% Long Term Manufacturing Growth
• Need an Enabling Manufacturing Policy to include– Simpler clearances and approval mechanism– Encouragement to Green Manufacturing Technologies– Appropriate Infrastructure– Flexible labour rules without diluting social security
net– Easier exit policy
• Friendly tax system – GST and a well considered DTC• FTAs and CECA/CEPAs to be entered into with care and
consideration• Government support needed for Technology infusion,
development and upgradation in select sectors• Land Acquisition and R&R Laws to be in keeping with
requirement of industrialization
• CII working with DIPP on New Manufacturing Policy• 2010-11 would see a huge thrust to the Cluster programme of CII
• CII would release a white paper on Land Acquisition and R&R • CII would set up a VLFM Institute
• CII working with DIPP on New Manufacturing Policy• 2010-11 would see a huge thrust to the Cluster programme of CII
• CII would release a white paper on Land Acquisition and R&R • CII would set up a VLFM Institute
Proposed NMIZ Policy addresses these issues, therefore, needs quick enactment
• Every additional 1% growth in manufacturing creates 20-30 million additional jobs
• Need to develop strengths in labour-intensive sectors such as textiles, consumer electronics, furniture and industrial machinery
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© Confederation of Indian Industry
3. Taking Services to the Next Level3. Taking Services to the Next Level
• CII Initiatives in the services sector include– Developing PPP model in healthcare space with Planning Commission– Policy dialogue with Planning Commission for a comprehensive retail policy– Dialogue with the Ministry of Tourism for upgrading skills of the manpower
required in the Tourism & Hospitality Sector for the Commonwealth games. – CII to facilitate Policy dialogues on Roadmap for accelerating growth of
broadband in India to reach 695 million users by 2014– Facilitating policy dialogues for Broadcast Regulation and Distribution platforms
Key policy changes required in services sector include‾ Enhanced FDI participation in select areas of services‾ Set up a National Services Competitiveness Council‾ Iron out Centre-state issues in the services sector‾ Improve the viability of the informal sector in services‾ Rationalise taxation issues in the sector
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© Confederation of Indian Industry
4. Creating world class infrastructure4. Creating world class infrastructure
• Roads and highways: Improve dispute resolution mechanism for road development
• Power sector: Push distribution reforms in the power sector through privatisation of large discoms, reduction in AT&C losses and peak load management
• Civil Aviation: Timely policy intervention for settling the issues regarding airport infrastructure; provision of space for establishment of MRO facilities; and, rationalization of high sales tax on ATF
• Ports & Shipping: Corporatise major ports and improve port evacuation facilities for improving port connectivity
• A CII-MoRTH Joint Task Force created to identify issues of concern in the roads sector and suggest solutions
• CII National Committee on Civil Aviation consulting with Airports Economic Regulatory Authority
• A CII-MoRTH Joint Task Force created to identify issues of concern in the roads sector and suggest solutions
• CII National Committee on Civil Aviation consulting with Airports Economic Regulatory Authority
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© Confederation of Indian Industry
Education Education (primary and secondary) (primary and secondary) delivery system needs delivery system needs significant improvementsignificant improvement
High drop out rates throughout schoolingHigh drop out rates throughout schooling
• Teacher to student ratio of 1:60 at primary level
• Only half of 5th standard students can read 2nd standard text in 2008
• Only 28% across grades could do simple division sums in 2008
Poor quality of delivery – stagnation/decline in learning & comprehension Poor quality of delivery – stagnation/decline in learning & comprehension
Source: Annual report, Department of School Education & Literacy; Forbes India Budget 2010 analysis; Annual Status of Education Report (Rural) 2008
0
20
40
60
80
100%
Initialenrolment
100
ClassI -V
-26
ClassVI -VI I
-24
ClassIX-X
-1238
Highschool
16
© Confederation of Indian Industry
Education Education (tertiary): (tertiary): Gross enrolment rates are very low Gross enrolment rates are very low vs. other countriesvs. other countries
GER in tertiary institutions is considerably lesser than other countriesGER in tertiary institutions is considerably lesser than other countries
Gross Enrolment Ratio= (number of students enrolled in a level of education regardless of age)/ (population of official school age for that level)Source: UIS data center; UNESCO Institute for Statistics; Department of Higher Education; Lit search
0
20
40
60
80
100%
Gross enrolment ratio in tertiary education (2007)
USA
82
Norway
76
UK
59
Brazil
30
China
23
India(2006)
12
Govt of India aspires to achieve 30% enrolment in tertiary education by 2020Govt of India aspires to achieve 30% enrolment in tertiary education by 2020
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© Confederation of Indian Industry
5. Education – The Big Agenda5. Education – The Big Agenda
ObjectiveObjectiveTo create the intellectual infrastructure and knowledge workers needed to sustain high growth trajectory in a competitive global environment
CII Policy InitiativesCII Policy Initiatives- Policy Advocacy to make teaching an attractive professional proposition by
addressing remuneration issues. Retaining talent in the teaching profession- Developing practical modules to encourage private investment in the education
sector- Support for foreign universities coming to India (Foreign Educational Institution-Entry
and Regulation Bill 2010)- Public-Private-Partnership in developing industry oriented curriculum and
developing industry role in accreditation and rating of institutions
CII, in partnership with GoI will establish 30 Industry-Academia Innovation Centres across the country – one in each state
CII, in partnership with GoI will establish 30 Industry-Academia Innovation Centres across the country – one in each state
18
© Confederation of Indian Industry
Improving employability is an urgent needImproving employability is an urgent need
Source: International Labor Organization; World Bank – Human Development Report, 2006; CLSA, March 2008; Credit Suisse, December 2007; 11th plan document; Planning Commission - t ask force on employment opportunities, 20011 India Labour Report 2007 (http://www.teamlease.com/images/news_image/coverage2009/dec09/Addressing_22dec09_All.jpg) 2 http://www.bpowatchindia.com/bpo_news/infosys_spends_rs750_crore_on_training_workforce/august-11-2008/infosys_spends_rs750_crore_on_training_workforce.html
0
20
40
60
80
100%
5
28
6875 78 80
96
Proportion of vocationallytrained labour force (Aged 20-24 yrs)
IndiaMexico
UKGermany
CanadaJ apan
Korea
Inadequate vocational training…Inadequate vocational training…
• ~53% of employed youth suffer from skill deprivation1
• Barely 10-15% non-engineering graduates are employable1
• Only ~25% engineering graduates1 considered directly employable; e.g., Infosys’ annual training budget is ~Rs 750 Cr2
……leads to an employability crisisleads to an employability crisis
19
© Confederation of Indian Industry
6. Stepping up Skill Development6. Stepping up Skill Development
ObjectiveObjectiveTo make India the skills capital of the world. Develop the skills needed to support the rapid expansion of manufacturing and services, and develop a more productive and sophisticated agriculture sector
CII Policy InitiativesCII Policy Initiatives- CII is working with Universities to develop vocational training centers. There is already
a CII-Delhi University Vocational training program- Setting up of new skills centres : Gurgaon with ITE Singapore and Balasore with
IndiaCan - CII has build sector specific Skills Councils for Agriculture , Hospitality, and Automobile
in partnership with the EU. Other such councils are on the anvil- CII is partnering with Ministry of Rural Development to develop vocational training in
rural areas based on local demand for skills and provide placement services for the trained workers
Launch of 10 new CII Skill Development CentresLaunch of 10 new CII Skill Development Centres
20
© Confederation of Indian Industry
7. Conducive Labour Policy to Create Employment7. Conducive Labour Policy to Create Employment
ObjectiveTo bring together industry, governments, and labor rights groups and create a policy environment that supports employment generation, inclusiveness and productivity enhancement. To develop best practices in labor management and standards that meets global benchmarks
CII Policy Initiatives- CII is working closely with government for the simplification and rationalization of labor laws- CII is developing best practices and practical modules for contract labor keeping in mind the
objectives of livelihood sustainability- CII is working with industry and other stakeholders on occupational safety and is an active
participant in the National Safety Council- CII is closely involved in the policy formulation process with the Central Apprenticeship
Council and the Central Board for Workers Education
CII to release White Paper on Labour RegulationsCII to release White Paper on Labour Regulations
21
© Confederation of Indian Industry
8. Improving Government Delivery Systems8. Improving Government Delivery Systems
• Quick implementation of Unique Identification Scheme• Move to a system of cash transfers or coupons compared to present system
of subsidy in specific items• Significant improvement possible in case of targeting food subsidies by
moving to food coupons that can be redeemed against food supplies in any retail outlet
• Greater devolution of power to local governance bodies such as Panchayats in rural areas and municipalities in urban areas
• Willingness of government bodies to work with private sector for ensuring better delivery: PPPs in education and health services are promising
• Set up regular monitoring/ assessment system using special groups comprising experts, government officials and industry, in areas where large outlays are made by government
CII Task Force on Technology for Inclusive Development
CII-State Government Monitoring and Implementation Task Forces
National Sectoral Task Forces (Government / CII) on monitoring and implementation
CII Task Force on Technology for Inclusive Development
CII-State Government Monitoring and Implementation Task Forces
National Sectoral Task Forces (Government / CII) on monitoring and implementation
22
© Confederation of Indian Industry
9. New Urban Centres as Growth Poles9. New Urban Centres as Growth Poles
• To overcome these problems, need to give increased power to ULBs through ensuring their financial independence and viability
• Need to implement 74th Constitutional amendment• Enhance execution capabilities by devolution of operational and financial power to
local bodies• Encourage PPPs to create ‘Enabling Environment’ at State Level
• CII to facilitate dialogue on Real Estate Regulation Bill
• CII report on “Intelligent Urbanisation – A Roadmap for India” throws light on how technology has a role in meeting India’s urbanisation goals
• CII to facilitate dialogue on Real Estate Regulation Bill
• CII report on “Intelligent Urbanisation – A Roadmap for India” throws light on how technology has a role in meeting India’s urbanisation goals
• Structural challenges driven by nature of urbanization in India i.e. unprecedented scale, high density cities and predominantly Brownfield
• Policy limitations – private participation and Urban Local Bodies functioning with poor execution capabilities
• Administrative problems – Municipalities are overburdened resulting in poor levels of service delivery
23
© Confederation of Indian Industry
10. Financing High Growth10. Financing High Growth
• Develop Rupee denominated corporate debt market for raising long-term capital
• Increase access to international debt markets
• Expansion in capital base of banking system
• Greater FDI needed in Insurance and Banking
• Resources currently locked up in financing government debt needs to be freed
CII is creating New Task Forces on:
-Financial Stability & Development; and
-Financial Inclusion
CII is creating New Task Forces on:
-Financial Stability & Development; and
-Financial Inclusion
24
© Confederation of Indian Industry
Small /micro entrepreneurs account for ~50% of jobs, but Small /micro entrepreneurs account for ~50% of jobs, but multiple issues hamper growthmultiple issues hamper growth
Note: Self employed people may or may not be “entrepreneurs”, and may or may not be skilled
0
20
40
60
80
100%
People employed(FY07)
Ag
ricu
ltu
re
402
By type
Self
em
plo
yed
Re
gu
lar
/ca
sua
lw
ork
ers
201
Private>10
Pri
va
te<
10
Public
201
Total employed
By ownership
Self/small scale employment accounts for large portion of workforce
• Little or no education, and no vocational training
• Access to credit
• Lack of social security
• Self-employment for minority communities (inclusive growth)
• Corruption, especially at grassroots
Multiple issues to consider
Non-agri employed
25
© Confederation of Indian Industry
InnovationInnovation
Need to develop India specific Innovation Ecosystem Model for meeting challenges
unique to India’s context
A Public funded – privately managed endowment needs to be created, which would
address the early stage finance requirement of innovation
Favourable Policies and Incentives to increase Industry’s investment in Innovation
(R&D/Design/IPR) from current level of 0.2% of GDP to 1% of GDP in next five years
through Industry-Academia/R&D institutions-Government Partnership
CII, in partnership with Ministry of Science and Technology, will establish “Global Innovation and Technology Alliance (GITA)” to implement Government’s Technology and Innovation Initiatives –
national and international
CII, in partnership with Ministry of Science and Technology, will establish “Global Innovation and Technology Alliance (GITA)” to implement Government’s Technology and Innovation Initiatives –
national and international
26
© Confederation of Indian Industry
Inclusiveness and Affirmative ActionInclusiveness and Affirmative Action
Indian Industry shares the nation’s resolve to address the deprivation
suffered by the SC/ST communities and commits to stepping up its
Affirmative Action agenda in the years to come to ensure that India
becomes a land of equal opportunity
CII has developed a voluntary Code of Conduct for members to implement
positive discrimination
CII would take the success stories among its members in the area of
affirmative action across the country to encourage similar initiatives in
other firms.
CII has created a Affirmative Action Fund with industry contributions to finance
affirmative action activities in the private sector
CII has created a Affirmative Action Fund with industry contributions to finance
affirmative action activities in the private sector
27
© Confederation of Indian Industry
Corporate GovernanceCorporate Governance
Key Issues
• Inadequate number of qualified / competent independent directors• Unutilized whistle blowing mechanisms
Focus Areas for CII
• Directors Training & Orientation • Directors’ Liability Issues• Effective whistle blowing methods
28
Proactive advocacy for adoption of CII Voluntary Recommendations on
Corporate Governance
Proactive advocacy for adoption of CII Voluntary Recommendations on
Corporate Governance
© Confederation of Indian Industry
Trade and GlobalizationTrade and Globalization
CII Goals
Double India’s goods and services exports by 2014 from current levels, double India’s
share in world exports by 2020
Substantially expand industry linkages in global production chain and access global
market through strategic acquisitions and joint ventures abroad
CII Policy
Develop a dedicated commercial intelligence mechanism for Indian industry
Focus on capacity building on quality accreditation, export cycle management and
logistics to make Indian industry more competitive
Engage with government to ensure trade agreements have positive outcomes for industry
and are equipped to deal with industry concerns on emerging trade issues like non-tariff
barriers, labor and environmental standards
Focus on sector specific export competitiveness strategies
29
© Confederation of Indian Industry
• 30 Overseas Business Delegations to key countries (China, Japan, S Korea, UK, USA, Germany, France)
• 15 Planned meetings with Heads of State (South Africa, Russia, France, UK, Japan, S Korea, Canada)
• CEOs Forums with countries of strategic interest (14 new Countries identified – focus on emerging economies)
• Regional Conclaves in emerging markets of LAC, Africa, CIS• Strategic dialogues – Track – II with China• Business Summits – ASEAN, EU, IBSA, Pakistan
Global EngagementGlobal Engagement
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© Confederation of Indian Industry31