INDIA’S GROWTH STORY AND IT’S DRIVERS

8/2/2019 INDIAS GROWTH STORY AND ITS DRIVERS

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3/4/12

INDIAS GROWTH

STORY AND ITSDRIVERS

BY:Bhola Singh(2011054)

Dushyant Chaturvedi(201170)Esheeta Ghosh (201171)Gavaksh Mangla(2011080)Anurag Vinayak(2011092)

Abdullah(2011244)


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The Indian

Economy


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India has a very mixed economy, ranging very old-

fashioned agricultural techniques to the state-of-the-art Information Technology Industry that hastransformed Bangalore into the IT capital of Asia.

Recently India has enjoyed massive economic

growth, people are flocking to invest in India andour people are growing steadily richer.

India is the second fastest growing major economy

with a 7% to 9% increase in GDP per year. India isalready the fourth largest economy in the world.

India has seen a huge amount of foreign directinvestment in the country, totaling 178 billion

dollars in 2010 and is said to be one of the

THE GROWTH STORY


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Contd..

Indian companies have gone on a buyingrampage, with Tata Steel acquiring Corus, Mittalbuying Arcelor and Tata buying Jaguar and LandRover from Ford.

Every year Indias middle class is increased by40,000,000 new members which shows that thewealth is truly entering society

The Bombay Stock Exchanges value has beenconsistently rising, currently worth 54 lakhcrore, the largest in South East Asia.


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INDIAS GDP GROWTH


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INDIAS GDP GROWTH

RATE


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GDP GROWTH RATE

SINCE 2004


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INDIAS PER-CAPITA

INCOME


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GROWTH

manufacturing

16%

trade

14%

communication

11%

agriculture(crop)

10%

construction

10%

real

estate,ownershipof

dwellings &business

services

8%

banking&insurance

8%

other services

7%

transport byother

means

6%

Rest

10%

ContributiontoGrowth(2002 -3to2007 -8)


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GROWTH DRIVERS

Agriculture

Manufacturing

Communication

Trade

Banking and Insurance

TransportConstruction

Real Estate

Other Services


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RETAIL AND SUPPLY

CHAIN


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RETAIL GROWTH IN INDIA

India is fifth most attractive emerging retailmarket: a potential goldmine.

Indian retail is largest among all

industries(450 billion $).10% - Indias GDP.

Growth rate 20-25%

8% - employment

Potentiality to grow 637 billion $ by 2015.


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RETAIL FORMATS IN INDIA

Malls

Specialty stores

Discount storesDepartment stores

Hypermarts / Supermarts

Convenience storesMulti brand outlets


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RETAIL FORMATS CONTD.

Types of Retailers

Small/

Medium

SizeRetailer

LargescaleRetailers

Consumer Co-opStores

DirectMktg/Channel lessRetailing

1.MobileRetailers,Hawkers.

2.Convenience

stores.

3.Specialty Stores

1.Super Market.

2.Departmental Stores.

3.Discount stores.

4.ManufacturersShowroom

5.Super stores.

(CombinationStores,Hypermarkets)

1.Co-op stores.

2 .Sahakari Bhandars.

1.In home Selling.

2.Telemarketing.

3.Mail Order sale.

4.VendingMachine


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GROWTH OF RETAIL IN INDIA


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INDUSTRY REVOLUTION

Retailing in India can be traced toemergence of the neighborhood "Kirana "stores catering to the convenience of the

consumers.Era of government support for rural retail:

Indigenous franchise model of store chainsrun by Khadi & Village Industries

Commission1980s experienced slow change as India

began to open up economy.

Textiles sector with companies like

Bombay Dyeing, Raymond's, S Kumar'sand Grasim first saw the emer ence of

GROWTH OF RETAIL IN INDIACONTD



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1990s saw a fresh wave of entrants with a shiftfrom Manufactures to Pure Retailers.

For e.g. Food World, Subhiksha and Nilgiris in

food and FMCG; Planet M and Music World inmusic; Crossword and Fountainhead in books.

Post 1995 onwards saw an emergence ofshopping centers.

Targeted to provide a complete destinationexperience for all segments of society

Emergence of hyper and super markets tryingto provide customer with 3 Vs - Value, Variety

and Volume.


CONTD


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GROWTH OF RETAIL IN INDIA CONTD

FACTORS FOR GROWTH OF ORGANISED RETAIL

SECTOR

q Growth of Indian Economy: Second fastest

q Emerging opportunities in service sector

Capital no longer a constraint easy loans

Increase in the young working population

qIncreasing working women population

q Hefty pay pockets

q Nuclear families in urban areas

Changing Cultural Habits


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CONTD ..,

Multiple drivers leading to a consumption boom:

Favorable demographics

Growth in income

Increasing population of working women

Raising aspirations: Value added goods sales


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CONTD..,

Rural markets emerging as a hugeopportunity for retailersreflected in theshare of the rural market across most

categories of consumption

ITC is experimenting with retailing through its e-

Choupal and Choupal Sagar rural hypermarkets.

HLL is using its Project Shakti initiativeleveraging women self-help groups to explore

the rural market.


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CHANGING SCENERIO OF SUPPLYCHAIN


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AGRICULTURE


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Agriculture (also called farming or husbandry) is the cultivation ofanimals, plants, fungi and other life forms for food, fiber, and otherproducts used to sustain life.

Share in GDP2007-08 was 16.4%2008-09 was 15.7%2009-10 was 14.6%
http://en.wikipedia.org/wiki/Animalshttp://en.wikipedia.org/wiki/Planthttp://en.wikipedia.org/wiki/Fungihttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Fiberhttp://en.wikipedia.org/wiki/Fiberhttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Fungihttp://en.wikipedia.org/wiki/Planthttp://en.wikipedia.org/wiki/Animals


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Factors Affecting the AgriculturalGrowth


IMPACT OF RETAIL ON AGRICULTURE &AGRICULTURE.

CHANGES IN TECHNOLOGY.

India produces 235 million tones f food grain fr m 170 million hectares.

Monsoon dependent


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Agricultural front , the organisedretailers are providing farmers withinputs.

Has increased the net realisations offarmers with disintermediation formiddlemen.

IMPACTS ON AGRICULTURE AND


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To provide the cheapest & best produce,organised retail could help the Indian

farmers directly & banks indirectly in agri.Lending .

Investment into cold storage chain willresult in significant efficiency on supplychain.

IMPACTS ON AGRICULTURE ANDAGRICULTURE LENDING CONTD

IMPACTS ON AGRICULTURE AND


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Entry of retail giants leads to

-greater investment in farm technology(Bharti, Pepsi,Reliance)

-Aggregate demand for bank credit-Help bankers in credit expansion &

monitoring

Contract farming spreads very fast- Farmers to get better price

- Improves farm production through

modern techniques

IMPACTS ON AGRICULTURE ANDAGRICULTURE LENDING CONTD


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FARMER

CONSUMER

DEALERS OFSEEDS,

FERTILISERS,PESTICIDES, ETC.

Backward linkages

WHOLESALERRETAILER

Forward linkages

BANK


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STRATEGIES TO TAP THE GROWTH

OPPORTUNITIESEffective deployment of agriculture officers

with special target .

Finance entire commodity chain from farmersto retailers.

Targeting standard accounts of other banks.

Taking partnership route to drive growth inagriculture.

Thrust on investment credit.



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OPPORTUNITIES CONTD

n Innovative & need based products

n Banks need to prepare big ticket loan

n Linkage on the lines of farm to fork

n Promotion of channel credit throughcorporate customers .


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IN A NUTSHELL

qThe huge potential in Agriculture sector & lackof sufficient rural & semi urban branches inprivate sector banks, the Nationalised Banks

has huge scopes..q It is certain that the competitive battlefield of

bankers will shift in the near future.

q Let us take AGRI. LENDINGS to a higher

growth trajectory through new strategies andAfter all, the colour of money has always beengreen in India.


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MANUFACTURINGIndustry accounts for 28% of the GDP and

employ 14% of the total workforce.

The Indian industrial sector underwent

significant changes as a result of the economicreforms of 1991, which removed importrestrictions, brought in foreign competition, ledto privatization of certain public sector

industries, liberalized the FDI regime, improvedinfrastructure and led to an expansion in theproduction of fast moving consumer goods.

Textile manufacturing is the second largest

source of employment after agriculture and


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Manufacturing contributes to

79% of FDI investment27-29% of India GDP53% of Indian exportsWorld's second largest small car market

One of only three countries that makes its

own supercomputersWorld's largest producer of milk, tea and

pulses and the worlds largest livestockpopulation

Second largest producer of food includingfruits and vegetables.

Worlds largest diamond cutting and polishing

centre and the second largest jewellerymarket.


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KEY SECTORS:

Auto Industry: The Indian auto industry is aUSD 44 bn industry (Automotives

is USD 34 bn and Auto components is

USD 10 bn)

Chemicals: The size of chemical industry in

India (Petrochemicals to Paints) is USD30 bn

Electronics:The electronics industry is USD


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Food Processing: A USD 70 bn industry

growing at 9% to 12%

Gems & Jewellery: A USD 13 bn industry

(Gold growing at 15% p.a andDiamond growing at 27% p.a)

Leather: Industry size is USD 4 bn

Machine Tools: Industry Size is USD 225 mn


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Indian manufacturingis forecasted to growat 12%-14% over the

next decade andsectors like

Automotive, FoodProcessing and

Pharmaceuticals areexpected to be thegrowth drivers

Leather Jewellery

TextilesChemicals

75% ofmfg

exports

EnggGoods

Gems


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India's manufacturing output is

USD 450 bn

Indias liberalization, key policyinterventions, competition andinfrastructure build up have been keydrivers

Indias manpower advantage,indigenous technology advantagehave played a leading role inachieving domestic competitiveness

Many Indian sectors (e.g. Textiles,Glass, Automotive, Jewellery, Leather,

Agro based, Pharmaceuticals, etc)have achieved export competitiveness

Regional FTAs, FDI in select sectors,stable currency, stable economicregime have been key drivers

This interplay has

enhanced Indias

competitiveness

Indian manufacturing exports havebeen growing at a CAGR of 14% forthe last five years


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Some other growth drivers for manufacturing

Joint ventures of Indian companies withforeign companies (Maruti-Suzuki).

Education sector is growing, so it providesskilled workforce for the industry(4 to 5 lac

engineers per year)

Increased competition.

Tax break provided by the govt. in certain

areas and setting up of SEZ.Growth of banking sector has led to easy

availability of

funds.


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Telecom Sector Growth

TELECOM SECTOR


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TELECOM SECTORGROWTH DRIVERS

Growth Drivers of the Indian Telecom Market:

High Disposable Income: The growth in GDP hasresulted in increasing disposable income among theindividual population. Therefore the young Indianpopulation is increasingly investing more money invarious entertainment and communication servicesthus fuelling growth of the telecom sector.

Mobility and Connectivity: The growing need of

high mobility and staying connected is the primedriver for the entire category. This is true for peoplefrom different age groups and occupation. Thisinnate need coupled with availability of handsets

and connectivity at affordable price points hastri ered the rowth of telecom in India.


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Operators are tailoring service packages

for low-end users making mobile servicemore affordable like:

Micro Prepaid Cards: Recharge options as low as

INR 10 (USD 0.25)

Life Time Validity: All operators offer a lifetimeprepaid plan which maintains the phone numberfor life for free incoming calls if recharged every 3or 6 months

Full Value Recharge: Talk time of value equal to therecharge amount

Free In-Network Calls: Some operators have startedfree unlimited local in-network calls

Group Calls: Unlimited calls among a limited set of

people at a particular cost.


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Exponential Growth


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YearAnnual

Additions(inmillions)

Average MonthlyAdditions(in

millions)

2002 5.23 0.44

2003 17.49 1.46

2004 19.49 1.62

2005 27.86 2.32

2006 64.14 5.35

2007 85.27 7.11

2008 113.26 9.44

2009 178.25 14.85

2010 227.12 18.93

Monthly Mobile SubscriberAdditions


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Long Distance Peak TariffRates (Rs/min)


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Local Calls Tariffs (Rs/min)


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Export Trade


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Exports over the

years

LIST OF EXPORT PROMOTION


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Duty drawback scheme

Under Duty Drawback Scheme relief ofCustoms and Central Excise Duties suffered onthe inputs used in the manufacture of exportproduct is allowed to Exporters. The admissibleduty drawback amount is paid to exporters bydepositing it into their nominated bank account. Duty exemption scheme

Duty Exemption Scheme is an exportpromotion scheme and it enables import of inputsrequired for export production free of Customsduty. Advance Licences are issued under Duty

Exemption Scheme to allow import of inputs,

LIST OF EXPORT PROMOTIONSCHEMES

(GROWTH DRIVERS)


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INDUSTRYThe Indian Banking sector has been successful in

maintaining its growth trajectory due followingfactors:

low defaulter ratio

least complicated financial products regular intervention by central bank

proactive adjustment of monetary policy and socalled conventional banking culture, which helpedthe industry survive through global financialturmoil.

Macro-level drivers

favourable demographics


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INITIATIVESThe Indian government is contemplating on

enabling public sector banks to raise lots ofadditional capital without the central authoritylosing control over them. For the purpose, thegovernment is considering forming a single holding

company to unite 21 state-run banks as it wouldprovide room for innovation in capital infusion.

Moreover, to keep a check on home loan andcorporate defaulters, the Government would

introduce the Enforcement of Security Interest andRecovery of Debts Laws (Amendment) Bill, 2001,during the Winter Session of Parliament. The newBill, that could curtail lending rates for retail as well

as corporate loans, proposes amendments for nine

R d Ah d


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Annual expenditure on information technology(IT) will increase by over 50 per cent fromcurrent Rs 6,500 crore (US$ 1.33 billion) per yearto Rs 10,000 crore (US$ 2.04 billion) per annum

by Indian Banks in next couple of years. Thisinvestment would come as a part of the secondphase of technological up-gradation by bankswherein they want to deploy technologiespertaining to customer relationship management(CRM), analytics and mobility.

Indian banking industry would stand as the thirdlargest in the world by 2025 wherein its assets

size is poised to mark US$ 28,500 billion by 2025

Road Ahead


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Transport Sector

TRANSPORT SECTOR


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TRANSPORT SECTOR

ROADS: India has one of the largest road networks in the world,

aggregating to about 33 lakh kilometers at present. Though the NationalHighways, which is the responsibility of Central Government, has length ofroads, carries over 40 percent of the total traffic across the length andbreadth of the country.

Pradhan Mantri Gram Sadak Yojana boosted rural economy bylinking villages to cities.

RAILWAYS: Indian Railways has grown into a vast network of 6,909stations spread over a route length of 63,327 kilometers with a

fleet of 8,153 locomotives, 45,350 passengers service vehicles,


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Shipping: Shipping plays an important role inthe transport sector of India's economy.Approximately, 90 per cent of the country'strade by volume (70 per cent in terms ofvalue) is moved by sea. India has the largestmerchant shipping fleet among thedeveloping countries and ranks 20th amongst

the countries with the largest cargo carryingfleet with 8.83 million GT as on 01.06.2008and the average of the fleet being 18 years.

Civil Aviation: Under the ministry of civilaviation. The number of airports in India is124.There is tough competition among thedomestic airlines and number of international

players running the flights to major business


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R EA L

E STAT E


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Growth DriversThe Indian real estate industry is expected to be valued at US$ 180 billion (INR

8,640 billion) by 2020.

The real estate sector inIndia is on arapid growth trajectory. In ashort span

of time, the industry hasevolved from a highlyfragmented andunorganised market into a

semi-organised market, witha large number of listedcompanies.

India has a youngpopulation.

Urbanisation isincreasingsteadily.

Growth in theservices sector

telecom, financialservices and IT &ITeS has beensignificant.

Household income isrising.

Highgrowthprojections

Multiplegrowth

drivers

Rapidevolution

of thesectorAdvantageIndia

There is a significantshortage of low-

cost and affordable housingin the country. TheGovernment of India (GoI)has announced low interest

rates for home loans up toINR 2 million. Meanwhile,several developers,attracted by the opportunityin this segment, havelaunched affordable housingprojects.

Demand for

affordablehousi

ng

Increased

foreign

investments

FDI of up to 100 percent is

allowed under theautomatic route inmost asset classes.

Well-

definedregulatory

framework

The GoI has well-drafted national- and state-level regulations for theIndian real estate sector.Some old laws are either being amended or repealed to introducereforms to the industry.


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Marketoverview

The real estate sector is a key growth driver of the countrys economy.Thecontribution of the residential segment alone to Indias GDP is around 5 to 6 per cent.

The real estate sector is one of the highest FDI-attracting sectors in India, withrecorded FDI inflow of more than US$ 8.9 billion (INR 403 billion) between April2000 and September 2010.

Favourable demographics (a young population and increasing urbanisation)and growth in the services

sector, especially the IT & ITeS sector, have primarily driven growth in the realestate industry.

DLF, Unitech, Ansal Properties, K. Raheja Corporation and Parsvnath Developersare among the major

Indian players in the sector.

In the last decade, FDI in real estate has increased due to the growing interest offoreign players in theIndian market. Over the last decade, many international players, including

developers such as Emaar,Ascendas, Keppel Land,Tishman Speyer and Nakheel Group, and investors suchas Morgan Stanley, Och-Ziff Capital, Citigroup, Goldman Sachs, JP Morgan,Warburg Pincus and DeutscheBank, have entered theIndian real estate market.


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Market

segments

In recent years, the industry has evolved from a highly fragmented andunorganised market into a semi- organised market.

The sector can be divided into residential, commercial, retail andhospitality asset classes.

Residentialspace Commercial(office)space

Specialeconomiczones(SEZs)

HospitalityspaceRetailspace

Realestatesector

row r vers n ar ous


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row r vers n ar ousSegmentsResidential Space

Commercial Space

Rapid urbanisation the urban population is estimated to reach 590 million by2030.

Decreasing household size growth in the number of nuclear families is leading toan

to be home to 91 million middle-class households by 2030.

The growing working age population in the 1560 age group is expected to reach

918 The demand for affordable housing is growing, which is a priority segment for boththe

Rapid urbanisation the urban population is estimated to reach 590 million by2030.

Decreasing household size growth in the number of nuclear families is leading toan

to be home to 91 million middle-class households by 2030. The growing working age population in the 1560 age group is expected to reach918

The demand for affordable housing is growing, which is a priority segment for boththe


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Various Segments

Contd..Retail Space

Hospitality Space

Consumerism is increasing on the back of rising disposable income.

Organised retailing has grown.

The entry of international retailers has boosted industry growth.

Expansion by domestic retailers has also given impetus to the industry.

The hospitality segment has witnessed robust demand growth, primarily due tostrong growth in

India is becoming increasingly popular as a medical tourism destination.

International sporting events such as the Cricket World Cup and Formula 1 in 2011

are expected to According to a research by the World Travel & Tourism Council, travel and tourismdemand in India is


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GrowthdriversDemand pullfactors Supply pushfactors

GrowingIndian real

estate

Impact

Impact

Increasing occupier base.

Significant rise indemand for

office/industrialspace.Demand for new avenuesfor

entertainment, leisure andshopping.Creation of demand for newhousing.

Entry of several domestic andforeign players;

increasing competition andconsumer

affordability.Easy access to project-financingoptions.Increased developers risk appetiteand large-

scale development.Improved quality of real estateassets.Development of new urban areasand effective

utilisation of prime land parcels inlarge cities.

Policy and regulatory reforms (100per cent

FDI relaxation).

Positive outlook of global investors.

Fiscal incentives to developers.

Simplification of urban developmentguidelines.

Infrastructure support anddevelopment

initiatives from the GoI.

Robust and sustainedmacroeconomic

growth.Upsurge in industrial andbusiness

activity, especially in new

economysectors.Favourable demographicparameters.Significant rise inconsumerism.Rapid urbanisation.

Availability of a range offinancing

options at affordableinterest rates.


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OpportunitiesThe long-term view on the Indian real estate industry is positive, as fundamentaldemand drivers such as

increasing urbanisation, favourable demographics, growth of the services sectorand rising incomes are still

intact.Major

housingshortage

Retail space

expected toincreasein ruralmarkets

Growth of the services sector and organised retail, increasing urbanisation,rising income levels, contracting household sizes and the easy availabilityof home loans are key growth drivers of the industry.

India has one of the largest number of retail outlets in the world. In the pastfew years, retail development has been taking place not only in major citiesand metros, but also in tier-II and tier-III cities.

Going forward, companies are expected to tap rural markets as their keygrowth drivers. This is expected to increase the demand for retail outlets inrural areas.

According to the Eleventh Five Year Plan (20072012), the housing shortagein urban areas was estimated at 24.7 million units in 2007, of which morethan 88 per cent was in the economically weaker section (EWS). Meanwhile,the housing shortage in rural areas was estimated at 47.4 million units in

2007. For the Plan period, the total housing requirement (including backlog)is estimated at

26.5 million units.

This provides real estate developers with ample growth opportunities, asunmet demand remains significant.


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DRIVERS

Schemes like MNREGA which created lots ofjobs for rural people.

Then huge growth in BPO & IT industrybecause of outsourcing from west.

Setting up of SEZ

Large growth in education (MBA &

engineering colleges)

Indian economy is driven by consumption andis less dependent on exports like that of china.

BIBLIOGRAPHY


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BIBLIOGRAPHYwww.indiastats.com

www.wikipedia.com

Economic Growth by Pulapre Balakrishnan

Indian Retail Industry-Its Growth, Challenges And

Opportunities- An Article by Dr. M. Dhanabhakyam.

Financing Agriculture-A Journal of Agriculture &Rural Development, Jan-Feb-2008 Issue.

Morgan Stanley Research Publication, Nov.24, 2010Economics.

Sources: Confederation of Real Estate DevelopersAssociation of India (CREDAI) website, accessed 12March 2010; Ernst & Youn -FICCI Real Estate Re ort
http://www.indiastats.com/http://www.indiastats.com/


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INDIA’S GROWTH STORY AND IT’S DRIVERS

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