Visit of the Vice President of the Oriental Republic of Uruguay, Mr. Danilo Astori, to the Republic of India, February 2011

Uruguay

• Strongest democracy and social and political stability in Latin America

• Continued growth and investment despite global slump

• Best labor value for money in the region

• Highest internet and PC penetration in Latin America

• New law to make investment even more attractive

Uruguay: remarkable performancein Latin America

2

Rio de Janeiro2,400 km72-96 hrs

São Paulo1,970 km72-96 hrs

Porto Alegre870 km

24-48 hrs

Montevideo

Buenos Aires250 km24 hrs

Asunción1,550 km72-96 hrs

Santiago1,900 km72-92 hrs

Uruguay:A safe, reliable and

competitive location, providing an unbeatable

logistics base in the heart of the wealthiest region of

South America

Gateway to the Region

3

Access to a Large and Wealthy MarketAccess to a large and growing consumer market due to our

membership in MERCOSUR and our open economy

Uruguay MERCOSUR

Population (millions) 3.3 242

Area (km2) 176,215 11,878,244

GDP 2009 (US$ billions) 31.6 2,144

GDP per capita 2009 (US$) 9,458 8,859

GDP growth rate 2009 (%) 2.9 0

4

Sources: Central banks and national statistics institutes

Political and Social Stability

Factor Uruguay in South America

Low Corruption(Transparency International 2010)

2

Democracy Index(The Economist Intelligence Unit 2010)

1

Economic Freedom Index(Heritage Foundation 2011)

2

Quality of Living(Mercer Eco-City Ranking 2010)

1

Low Cost of Living (Mercer Cost of Living City Ranking 2010)

4

5

Modern Infrastructure

• World-class port facilities in Montevideo, a regional hub par excellence for South America’s Southern Cone region

• Boasts Latin America’s most dense highway network

• 2009: new airport terminal, Colonia ferry port and Montevideo ring road

• Reliable electric supply (mostly from renewable sources)

6

Quality of electricity supply (ranking)

US 23

Ireland 25

Chile 30

Spain 36

Uruguay 37

Hungary 46

Italy 47

New Zealand 56

Brazil 63

Argentina 93

Source: World Economic Forum’s Global Competitiveness Report 2010-2011

19

1

21

0 25

9

27

3 30

9 35

3 40

2

35

1

36

7

29

3 33

4

42

5 45

5 51

9

59

6

67

5

58

8

60

9

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007 2008 2009 2010

Tho

usa

nd

s o

f u

nit

s

Containers TEUS

Goods in transit:2009: 47.3% – 2010: 51.4%

Platform for the RegionMovement of containerized cargo in the port of Montevideo

7

Source: National Ports Authority (ANP)Notes:• Includes imports, exports, transit and transfer• TEU = Twenty-feet Equivalent Unit

• Only country in world to meet goal of full countrywide coverage of school-age children and teachers

• Students covered: 380,000

• Teachers trained: 18,000

• Total free Wi-Fi spots in Montevideo: 250

• Thanks to the plan, 220,000 households (out of 1,280,000) received their first computer; half of them belong to the poorest 20% of the population

One Laptop Per Child (Plan Ceibal)Helping our future workforce eliminate the technology gap

8

Quality of Life

• Free from natural disasters

• Tolerant country: no ethnic, racial or religious conflicts

• Excellent sanitary level. Child mortality rate: 9.5 every 1,000 (2009), vs. 22.8 in Latin America (2007)

• Third safest country in Latin America, evidenced by the booming second home market (Latin Business Chronicle 2009 Index)

• Ranked among the first countries, with the Scandinavian countries and Japan, in US-based Freedom House’s Freedom in the World Survey 2009

9

Global Peace Index (ranking)

New Zealand 1

Ireland 6

Uruguay 24

Spain 25

Chile 28

Italy 40

Argentina 71

Brazil 83

US 85

Source: Economist Intelligence Unit 2010

Tourism and Entertainment

• Uruguay is the champion in tourism in LatAm according to Latin Business Chronicle's Latin Tourism 2010 Index

• Over 2 million tourists per year (≈60% of the population)

• Tourism represents over 6% of GDP

• Four Seasons, Conrad, Radisson, Sheraton operate in Uruguay

• Continued investments: - Setai Group, US (US$ 80 M) - Sofitel, France (US$ 63 M)- Fasano, Brazil (US$ 50 M)- Pestana, Portugal (US$ 15 M)

• US$ 1.5 billion were invested in tourism-related real estate over the last 5 years

10

Beneficial Promotion Systems

• The government recognizes the important role of the FDI and maintainsa favorable investment climate

•Uruguay has a track record of attracting large investments in agricultural, industrial, services and infrastructure

• Investment Law (Nº 16,906) - January 1998:

Domestic and foreign investors are treated equally

Foreign investments do not require prior authorization or registration

Free transferability of capital and profits overseas

• In 2008 the government created a one-stop shop to assist investors and an automatic, predictable, transparent and effective mechanism that benefits a broader base of firms and specifies objective criteria for granting incentives

Comprehensive legal framework for investment

11

• Exemption from Corporate Income Tax* for up to 100% of the amount invested and for a period of up to 25 years, which depend on a matrix of targets and indicators, and the size of the project.

Indicators

o Employment creation

o Territorial decentralization

o Export growth

o Increased added value

o Increased research, development and innovation

o Use of clean technologies

o Impact of the project on the national economy

12

Beneficial Promotion SystemsTax benefits

* Corporate Income Tax exists only at the national level (25%)

* Approximate amounts; ranges depend on the value of the UI (indexed unit)

Income Tax Exemption Depends on the Size of the Investment:

13

Project size(denomination)

Project size*

(in US$ millions)Maximum % of investment to be deducted from taxes

Maximum period(years)

Small Up to 0.3 60 5

Medium S1 Up to 1.3 70 15

Medium S2 Up to 6.7 80 20

Large S1 Up to 13 90 25

Large S2 Up to 48 90 25

Large S3 Up to 670 100 25

Very Large More than 670 100 25

• Exemption of Wealth Tax on civil works, for 8 years in Montevideo and for 10 years in other regions, and on fixed assets throughout their life.

• Exemption of import taxes and fees on fixed assets declared non-competitive with the domestic industry.

• 100% refund of VAT, under the exporters regime, on the acquisition of materials and services for civil works in the domestic market.

14

Beneficial Promotion SystemsOther tax benefits

15

•Temporary Admission is the tax-free introduction of foreign goods to the domestic market from outside the national customs territory, with a specific purpose other than consumption, to be exported, within 18 months, in the state in which they were introduced or after having been subject to certain processing, manufacturing, repairing or value added processes, with effective occupation of labor.

•The Temporary Admission regime also applies to machinery and equipment from any source, entering temporarily for maintenance, repair or upgrade.

Temporary Admission(similar to the drawback regime)

Free Trade Zones

•Users 100% exempt from:

• Corporate Income Tax

•Wealth Tax

• Import levies

•Any other tax created or to be created in the future*

• Can develop industrial, commercial or service activities

• Technology and service-oriented business parks operating as FTZs in Montevideo:

• Aguada Park

• Zonamerica

• Parque de las Ciencias (2011)

• World Trade Center Free Zone (2011)

1616

*Companies within the FTZs must pay social security contributions for their Uruguayan employees.

Free Ports and Free Airports

17

• Only free ports on South America’s Atlantic coast

• Free transit of goods, no authorizations or formal procedures are required

• Within port facilities, goods are exempt from:

oall import taxes or charges

oall domestic taxes (e.g. VAT)

• Services rendered are exempt from VAT

• Foreign registered companies are exempt from wealth tax and income tax

• Diverse operations may be performed on the merchandise, including warehousing, repackaging, relabeling, classification, grouping, ungrouping, consolidation, deconsolidation, manipulation or fractioning as well as value adding tasks that do not modify the nature of the product

Information Technology

• #1 software exporter in Latin America (US$ 68 per capita, followed by Costa Rica with US$ 33)

• #1 technology country in Latin America (Latin BusinessChronicle’s Latin Technology 2010 Index)

• Highest total telephone penetration in Latin America:123 mobile lines per 100 residents in 2009

• Connection to Global Crossing cable due in 2011 will enable a much faster connectivity

• Broad tax benefits

18

(*) based on the Internet, broad band, fixed lines and cell phones penetration

Tata Consultancy Services (TCS)

• In 2002 TCS chose Uruguay to set up its offshore global development center for Spanish-speaking customers (nearshore IT services, solutions from Microsoft, SAP, Business Intelligence and Quality Consulting)

• Uruguay represents a strong platform for TCS in the development,financial, legal and training areas, having at present over 800 employees

• TCS has its regional training center in Montevideo

• “Apart from security and good weather conditions in Uruguay, theadvantages it offers as an outsourcing centre include a well-educatedhuman resource and a time zone opposite to that of India, enabling a24x7 service for customers”

Case Study: TCS

19

GABRIEL ROZMANVP for Emerging Markets

Dairy Industry

• Uruguayan milk production accounts for 0.3% of total world production, but represents 2% of world exports

• Global dairy imports could increase between 23% and 57% by 2017 as compared to the 2005-2007 average

20

10% 9%

20%

34%

51%

67%

78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

US Canada Argentina European Union

Australia Uruguay New Zealand

Dairy Products Exports(% of production in milk equivalents, average 2006-2008)

Source: FAO-USDA

• Competitive advantages:

Great experience in milk and dairy products production

Well irrigated land and mild climate

More than 80% of arable land

Free from natural disasters risk

Case Study: Olam

New Zealand Farming Systems Uruguay (NZFSU)

• Company established in Uruguay and quoted in Auckland

• Controlled by the Indian group Olam

• Operates 31 dairy farms and plans to have a total of 49 by 2012

• The total investment to date has been more than US$ 200 million

• “NZFSU was established to capitalize on the opportunities to acquire dairy farms in Uruguay, where the New Zealand production system, once adapted to the local conditions, can produce results comparable to those achieved in New Zealand.”

21

• Optimal logistic location in South America’s Southern Cone where the Río de la Plata, Paraná and Uruguay Rivers converge with the Atlantic Ocean

• Deep water ports operating under free port regimes. Bid for second container terminal in the Montevideo port coming soon

• Latin America’s densest highway network

• New airport terminal, new ring road in Montevideo and expansion of highway to Colonia

22

Logistics and Transport

22

• RDCs allow users to:

Cut logistic costs, delays and stocks

Store and perform diverse operations on thethe goods

Save money that would have been spent on import and export levies

• The goods arrive just in time to other MERCOSUR countries, Bolivia, Chile and Mexico (due to trade agreements with these countries)

• Time taken trucks to main destinations:

o Argentina: 24 hours

o Brazil: 24-96 hours

o Chile: 72-96 hours

o Paraguay: 72-96 hours

23

Regional Distribution Centers (RDCs)

1.7%2.6%2.8%3.3%

4.0%5.0%5.0%

7.5%7.5%

8.3%8.5%

9.7%10.5%

0% 5% 10% 15%

EurozoneUSA

JapanGermany

RussiaChile

MexicoBrazil

ArgentinaPeru

UruguayIndia

China

24

5.0%

7.5%

4.6%

7.6%

8.9%

2.9%

8.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2004 2005 2006 2007 2008 2009 2010 E

Cumulative Annual Growth Rate (2004–2009): 6.1%

Sources: Central Bank of Uruguay ; 2010 E: IMF, World Economic Outlook, October 2010

GDP growth in constant values

Source: FMI, World Economic Outlook, October 2010

Estimated GDP growth in 2010

A Strong Economy

Booming Foreign Direct Investment

FDI in South America(2009, % of GDP)

Uruguay’s FDI flows(US$ millions)

25

194 41

6

332

847

1493

1330

1840

1267

0

500

1000

1500

2000

2500

2002 2003 2004 2005 2006 2007 2008 2009

FDI increased considerably in 2002–2009

1.1%

1.2%

1.5%

1.6%

3.5%

3.8%

4.0%

0% 2% 4% 6%

Argentina

Ecuador

Colombia

Brazil

Peru

Chile

Uruguay

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

Source: ECLAC

Goods and Services (2009, % of total exports)

Strong Growth in Exports

Source: BCU and TradeMap. Data in USD millions

26

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2002 2003 2004 2005 2006 2007 2008 2009

Services

Goods

Exports have tripled in the past 6 years

Goods

75%

Services

25%

Uruguayan Exports(US$, millions)

Sources: Central Bank of Uruguay (BCU) and TradeMap

Sources: BCU and TradeMap

Main Destinations of Goods Exports2010

27

MERCOSUR33%

European Union22%

Asia19%

Rest of Europe10%

Rest of South America

8%

North America5%

Africa3%

Source: National Customs Administration

Export Break-OutMain products and services

Goods (2010) Services (2009)

28

Tourism61%

Transport16%

Other company services

9%

IT8%

Financial services

4%

Other2%

Sources: Central Bank of Uruguay (BCU) and Trademap; Uruguay XXI’s calculations

Meat, 19%

Cereals, 12%

Oil, Soybeans

and Seeds, 11%Wood

pulp, 10%Dairy

products, 8%

Wood products,

4%

Plastics, 4%

Wool, 3%

Other, 30%

Republic of

India -

Uruguay

Source: National Customs Administration

30

37 35

49

75

48

69

4 5 8 8 10 14

-34 -30

-41

-66

-37

-55

-80

-60

-40

-20

0

20

40

60

80

100

2005 2006 2007 2008 2009 2010

Imports

Exports

Balance

Trade Balance Uruguay-IndiaUS$ million

Main Exported Products2010

Source: National Customs Administration

31

64%9%

9%

6%

4%3%2% 2%

(HS 5101) Wool, not carded or combed

(HS 5112) Woven fabrics

(HS 4403) Wood in the rough

(HS 4104) Leather of bovine/equine animal

(HS 4302) Tanned or fressed furskins and pieces

(HS 5103) Waste of wool

(HS 4107) Leather of other animal

(HS 3906) Acrylic polymers in primary forms

(HS 7802) Lead waste and scrap

Other

Main Imported Products2010

Source: National Customs AdministrationNote: Data does not include statistics of oil imports

32

6%5%

5%

5%

4%

4%

3%3%

3%

62%

(HS 8703) Cars (incl. station wagon)

(HS 2933) Organic compounds

(HS 3907) Polyacetals

(HS 3808) Insecticides, fungicides, herbicides

(HS 2926) Nitrile-function compounds

(HS 8701) Tractors

(HS 7210) Flat-rolled prod of iron or non-al/s

(HS 6110) Jerseys, pullovers, cardigans, etc.

(HS 3004) Medicament mixtures

Other

33

Bilateral Treaties Uruguay-India

•Agreement to avoid double taxation

•Agreement on reciprocal protection of investments (in process)

34

Examples of foreign investments

Examples of foreign investments

35úblcica

Visit of the Vice President of the Oriental Republic of Uruguay, Mr. Danilo Astori, to the Republic of India, February 2011

Uruguay