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INDIA THEINDIA THE

INVESTMENT HUBINVESTMENT HUB

Team c3

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IntroductionIntroduction Foreign Direct Investment(FDI)

Foreign direct investment (FDI) or foreign investment

refers to long term participation by other countries into

India.

It usually involves participation in management, joint-

venture, transfer of technology and expertise.

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India is the second most important FDIdestination (after China) for transnationalcorporations during 2010-2012.

FDI for 2009-10 was at $ 25.88 billion.

Mauritius, Singapore, US and the UK wereamong the leading sources of FDI.

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Foreign Institutional Investment(FII)

Foreign institutional investor means an entity

established or incorporated outside India which

proposes to make investment in the financial markets

of India.

Investors must register with the SEBI to participate in

the market.

Placing limits on FII ownership in Indian companies.

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Positive Indian economy, fast-growing market has made

India an attractive destination for FII.

Institutional investors include Hedge funds, Insurance

companies, Pension funds and Mutual funds.

Hot money- The money coming through FII, this money

can be taken out at any time from the market

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Role Play

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BADAN 11

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INDIA - AN INVESTMENT

HUB

TOPIC OF THE DAY

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SOFTWARE INDUSTRYSOFTWARE INDUSTRY

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INVESTMENT POLICY

Automatic route for foreign equity up to 100 percent

100 percent foreign investment permitted in units set upexclusively for exports.

Tax holiday to R&D up to 10 years with 125% concession

Simplification and liberalization on export and importpolicy.

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OPPORTUNITIES

IT-BPO industry is reached US$ 73.1 billion in 2009-10witnessing a growth of over 5 per cent.

India has the second largest English-speaking workforce inthe world.

Job Creation: 1million direct and 2-3 million indirect.

High quality standards with CMM level 5 companies and250 fortune 500 clients.

Joint software development in super computing applications.

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FUTURE PROSPECTS

India is growing @ 9% every year.55% of thegrowth is contributed by Services sector.

As per NASSCOM, the Indian IT exports areanticipated to attain US$ 175 billion by 2020out of which the domestic sector will accountfor US$ 50 billion in earnings.

NASSCOM said that the domestic IT-BPO is

expected to grow by 25-27 per cent duringFY12

Huge inflows of foreign direct investments .

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GROWTH OF IT

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PHARMACEUTICAL SECTORPHARMACEUTICAL SECTOR

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Low cost of production. Large pool of installed capacities

Efficient technologies for large number ofGenerics.

Large pool of skilled technical manpower.

Increasing liberalization of governmentpolicies.

STRENGTHS

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OPPORTUNITIES

Aging of the world population. Growing incomes.

Growing attention for health.

New diagnoses and new social diseases.

Spreading prophylactic approaches. Saturation point of market is far away

New delivery systems.

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Current Scenario

Pharma industry turnover is of about US$ 12billion

Pharma export value reached about US$ 4.7billion

About 2.91% of total FDI into the country

Drugs and pharmaceuticals sector is at 8thrank in India's top 10 FDI attracting sectors.

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Future Scenario

US$ 8 billion market for MNCs selling expensive drugsby 2015

Domestic pharma market is likely to reach US$ 20billion by 2015

US$ 6.31 billion will be invested in the domesticpharmaceutical sector

Dr Reddy's Laboratories has tied up withGlaxoSmithKline

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AUTOMOTIVEAUTOMOTIVE

INDUSTRYINDUSTRY

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The Automotive Industry in India -FACTS

9th largest automobile industry .

2nd largest two and three-wheeler market.

4th largest in Heavy Trucks.

Largest tractor manufacturer.

Annual production of over 2.6 million units. The monthly sales of passenger cars in India exceed 1 lac units.

The automobile industry received FDI worth US$ 436 million in2010.

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Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers

. %76 49

.%

1596 . %3 60

. %3 95

SEGMENTATION F AUTOMOBILEINDUSTRY

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Future prospect of IndianAutomotive Sector :

Nissan Motors plans to export 250,000 vehiclesmanufactured in its India plant by 2011.

General Motors announced its plans to export about50,000 cars manufactured in India by 2011.

Maruti Udyog has set up the second car with aninvestment of Rs 6,500 crore.

Hyundai will bring in more than Rs 3,800 crore to India.

Tata Motors will be investing Rs 2,000 crore in its smallcar project.

General Motors will be investing Rs 100 crore and Fordabout Rs 350 crore.

By 2016,industry is expected to grow by 13%, to reach amark of US$ 120-159 billion.

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ENERGY SECTORENERGY SECTOR

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RENEWABLES IN INDIARENEWABLES IN INDIA

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Renewables in India: Potential & ProspectRenewables in India: Potential & Prospect

India is the 4th largest country.

Wind, Hydro, Biomass and Solar are main renewable energy

sources.

Ideal investment destination for renewable energy equipment

manufacturers and service providers.

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The country has an estimated renewable energy potential of

around 85,000 MW from commercially exploitable sources:

Wind - 45,000 MW; small hydro - 15,000 MW and

biomass/bioenergy - 25,000 MW.

India has outlined ambitious capacity expansion and investment

plans for the eleventh five year plan period (FY 2007- FY

2012).

It has proposed an addition of 15,000 MW of Renewable Energy

generation capacities during the period.

EREC 2050 69% . New renewables 40%.

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FOREIGN INVESTMENT POLICYFOREIGN INVESTMENT POLICY

Foreign investors - joint venture - for setting up of

renewable energy-based power generation projects.

Build-own-operate basis.

Foreign investors can also set up a liaison office in India.

Liberalized foreign investment approval regime to facilitate

foreign investment and transfer of technology through

joint ventures.

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Proposals for up to 74% foreign equity participation in a

joint venture qualify for automatic approval.

100% foreign investment as equity is permissible with the

approval of Foreign Investment Promotion Board (FIPB).

Various chambers of commerce and industry associations in

India can be approached for providing guidance to the

investors in finding appropriate partners .

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FMCGFMCG

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Shares of FMCG are considered defensive rather

and fluctuating with the market.

Shares are priced high.

Shares of HUL are priced at a price Earning

multiple of 30, ITC at 29 and Nestle at over 50.

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Does it make sense to invest in FMCG stocks?

Historical Perspective:

Merit in investing in defensive stocks.

Between Jan 2008 and Mar 2009, sensex fell around 60%, but

drop in FMCG was restricted to 30%.

Stable earnings and not earnings growth decides the valuation.

Free cash generation capacity.

Return on equity.

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Should you buy?

Beyond a certain level, stocks of even strong companies

become unattractive.

Today most stocks are above their respective historical

averages.

Britannia Industries current earning multiple of 75, against the

past average of 27, GlaxoSmithKline is at 35 compared to

the average of 20, Nestle and HUL at 50 and 30

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Compared to past averages of 30 and 35.

The obvious culprit is liquidity. Rather thanbehaving like defensive stocks, FMCGs havemoved along with the market

Company Price (Mar-10) PE

Colgate-Palmolive

870.40 26.13

Dabur 94.45 38.24

ITC 173.10 29.68Nestle 3774.45 50.43

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In recent times, FMCGs have moved up with the market,

contrary to conventional wisdom that they are

defensive. They may or may not fall. So invest your

money selectively.

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GROWTH OF GDP

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Modern BankingTechnology

- Dr. Firdos T. Shroff

Scenarios for RiskManagement and

Global InvestmentStrategies

- Rachel Ziemba,William T. Ziemba

The future of foreigninvestment in

Southeast Asia - Nick J. Freeman,

Frank L. Bartels

Capital Market

Dalal Street

indiarealestatemonitor.com/.../what-makes-india-a-good-investment-hub

www.vibrantgujarat.com/do

cuments/news/Newsletter-Issue-05.pdf

www.moneycontrol.com/.../indias-image-as-investment-hub-to-be-

hit-experts_368555.html

REFERNCES