www.ibef.org
Indian Economy
Opportunities Unlimited
Indian Economy
Opportunities Unlimited
www.ibef.org 2
India: Fastest Growing Free Market Democracy
GDP Growth Forex FII Flow FDI Per Capita Inflation
1990 4.9 percent < USD 1 billion USD 1 million (1993) USD 97 million USD 390 9 percent
2008* 9.0 percent USD 310.7 billion as on June 13, 2008
USD 16.1 billion in 2007–08
USD 25 billion in 2007–08
USD 740 11.91 percent as on July 17, 2008
Sources: Times of India, , RBI, RBI, DIPP, Indian Budget, Rediff, The Economic Times
* Annualized data used to show comparison with 1990
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India's GDP at Constant Prices: 2002–07
469 556 638737
8381068
0
200
400
600
800
1000
1200
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08*
US
D B
illio
n
105 105 135 154 190103 125
204245
314
564
191237
398439
0
200
400
600
800
1,000
1,200
1999–00 2002–03 2005–06 2006–07 2007–08
US
D B
illio
n
Agriculture Industry Services
India: Among the Top 15 Countries in terms of GDP at constant prices
The Indian economy has witnessed unprecedented growth. Booming services and industry sectors are providing the required impetus to economic growth
Contribution of Services -
increased from 48
percent to 53 percent
Contribution of Services -
increased from 48
percent to 53 percent
Growth in sectors at Constant Prices (2007–08):
Industry: 10.8%Services: 8.5%
Agriculture: 4.5%
Growth in sectors at Constant Prices (2007–08):
Industry: 10.8%Services: 8.5%
Agriculture: 4.5%
Source: MOSPI Statistics, RBI
* RE - Revised Estimates
Fastest GDP growth of 9.4 percent in 2006–07, since
last 18 years (at constant prices)
India’s GDP has witnessed high growth and was the
second fastest growing GDP after China in 2007-08
The sound performance of each industry segment is
leading to the overall robust performance of the Indian
economy
27 percent Increase
www.ibef.org 4
India: Robust Economic Platform
India's Forex Reserves: 2001–08
5475
112141 152
199
310
0
50
100
150
200
250
300
350
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
US
D B
illio
n
External Debt-to-GDP Ratio
21.120.4
17.818.6
17.217.8
18.8
10
13
16
19
22
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
Ra
tio
Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability
Increased confidence of investors in Indian companies has led to a surge in cross border borrowing by corporate houses
In 2007-08, Forex reserves witnessed a growth of approximately 56 percent over 2006-07.
In 2007-08, Forex reserves witnessed a growth of approximately 56 percent over 2006-07.
India’s Forex reserves are in
excess of external debt…
…the decreasing external debt to GDP ratio indicates that India has a sound economic platform
…the decreasing external debt to GDP ratio indicates that India has a sound economic platform
Source: RBI Statistics
www.ibef.org 5
India: Surging Exports
India's Imports: 2002–08
6278
112
150
185
236
0
50
100
150
200
250
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
US
D B
illio
n
India's Exports: 2002–08
5364
84103
126
156
0
20
40
60
80100
120
140
160
180
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
US
D B
illio
n
Petroleum products are the major contributors towards India’s growing imports
Petroleum products are the major contributors towards India’s growing imports
Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services
Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services
Services sector has been a major contributor to increased exports from India
Product imports by India mainly include petroleum products and minerals
Acceptance of Indian products along with the cost advantage has provided an edge to Indian companies
Source: Ministry of Finance (May 2008)
Exports in April 2008 amounted to USD 14.4 Billion increasing by 31.5 percent from April 2007 …
Exports in April 2008 amounted to USD 14.4 Billion increasing by 31.5 percent from April 2007 …
Imports in April 2008 amounted to USD 24.2 Billion increasing by 36.6 percent from April 2007 …
Imports in April 2008 amounted to USD 24.2 Billion increasing by 36.6 percent from April 2007 …
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Net FII into India: 2001–08
1.80.6
10.0 10.29.4
6.7
16.1
0
2
4
6
8
10
12
14
16
18
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
US
D B
illio
n
140 percent Increase
India: Attractive Investment Destination
India is ranked
second in AT
Kearney’s FDI
confidence index
(2007)
FDI inflow for the
period 2007-08
witnessed a growth
of 56 percent over
the last year
With improved performance on PE ratio and ROE, Indian markets have attracted large investments
FDI Equity Inf low - India: 2001–08
4,222 3,134 2,6343,755
5,546
15,730
24,579
11,880
0
4,500
9,000
13,500
18,000
22,500
27,000
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 J an–Mar(08)
US
D M
illio
n
Source: DIPP (October Report) , SEBI
Electronic equipment, manufacturing and telecom have witnessed significant FDI inflow
Electronic equipment, manufacturing and telecom have witnessed significant FDI inflow
Large FII activity in India has led to an upsurge in the Sensex
Large FII activity in India has led to an upsurge in the Sensex
* FII growth momentum was restricted because of Sub Prime Crisis in 2007-08
FDI for April 2008 amounted to USD 3749 Million
FDI for April 2008 amounted to USD 3749 Million
56 percent Increase
www.ibef.org 7
India: Vibrant Capital Market
India is among the major destinations across the globe for inflow of US Dollar
Sensex has risen 20 times in the period 1990-2007
Sensex – The Bombay Stock Exchange index has risen 20 times from 1990s to reach 20,000 mark in November 2007.
FIIs have infused large investments
into the Indian stock market
Encouraging industry
performance
Increased local investors’ confidence
Emergence of industry and confidence of local investors along with the FIIs has led to upsurge of the Sensex
0
5000
10000
15000
20000
25000
1-Ju
l-97
1-Ja
n-98
1-Ju
l-98
1-Ja
n-99
1-Ju
l-99
1-Ja
n-00
1-Ju
l-00
1-Ja
n-01
1-Ju
l-01
1-Ja
n-02
1-Ju
l-02
1-Ja
n-03
1-Ju
l-03
1-Ja
n-04
1-Ju
l-04
1-Ja
n-05
1-Ju
l-05
1-Ja
n-06
1-Ju
l-06
1-Ja
n-07
1-Ju
l-07
1-Ja
n-08
1-Ju
l-08
11 December 2007 Crossed 20,000 mark
07 February 2006Crossed 10,000 mark30 December 1999
Crossed 5,000 mark
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India: Vibrant Economy Driving M&A Activities
Growth Drivers: Globalisation and increased competition Concentration of companies to achieve economies of
scale Cash Reserves with corporates
Number of Deals and Value
28.2
70
18.312.3
782
1,081
467
306
0
10
20
30
40
50
60
70
80
2004 2005 2006 2007
US
D B
illio
n
0
200
400
600
800
1,000
1,200
Nu
mb
er
of d
ea
ls
Deal Value No. of Deals
Private equity deal value increased to USD 19 billion
In 2007, there were a total of 676 M&A deals and 405 private equity deals… … Total M&A deal value was
close to USD 51 billion…
Trends: Cross-border deals are growing faster than domestic deals Private Equity (PE) houses have funded projects as well as
made a few acquisitions in India
Source: Deal Tracker Grant Thornton, Economic Times, IBEF, RBI
In 2007, the total value of M&A and PE deals was USD 70 billion…
…First two months of 2008 have already seen 92 M&A valued at approximately USD 6 Billion
www.ibef.org 9
Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1 billion USD 12.1 billion Tata Steel buys Corus PlcTata Steel buys Corus Plc
USD 6 billion USD 6 billion Hindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.
USD 2.3 billion USD 2.3 billion Tata buys Jaguar and Land RoverTata buys Jaguar and Land Rover
USD 1.6 billion USD 1.6 billion Suzlon Energy Ltd. acquires REpower Suzlon Energy Ltd. acquires REpower
USD 1.58 billion USD 1.58 billion Essar Steel acquired Algoma Steel Essar Steel acquired Algoma Steel
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Major M&A and Investments Announcements in India
USD 11 billion USD 11 billion Vodafone buys HutchVodafone buys Hutch
USD 1.7 billionUSD 1.7 billionPlans to spend on its development operations in India over the next four years
Plans to spend on its development operations in India over the next four years
USD 2 billion USD 2 billion Plans to establish three manufacturing plants to produce photo-voltaic units
Plans to establish three manufacturing plants to produce photo-voltaic units
USD 12 billion USD 12 billion POSCO to invest in building steel
manufacturing plants and facilities in India by 2016
POSCO to invest in building steel manufacturing plants and facilities in India by
2016
www.ibef.org 11
USD 0.98 billion USD 0.98 billion Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14 percent stake
Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14 percent stake
USD 1 billionUSD 1 billionPlans investment in private equity, real estate, and private wealth management
Plans investment in private equity, real estate, and private wealth management
Mylan Laboratories acquired a majority stake in Matrix Laboratories
Mylan Laboratories acquired a majority stake in Matrix Laboratories
USD 0.74 billionUSD 0.74 billion
Major M&A and Investments Announcements in India
USD 1 billionUSD 1 billionPlans investment in private equity in Indian markets
Plans investment in private equity in Indian markets
www.ibef.org 12
Major M&A and Investments Announcements in India
USD 0.185 billionUSD 0.185 billionPlans to invest in six private equity funds in Indian market
Plans to invest in six private equity funds in Indian market
Plans expansion of network in IndiaPlans expansion of network in India USD 4–5 billionUSD 4–5 billion
Plans expansion of cement capacity in IndiaPlans expansion of cement capacity in India Over USD 1 billionOver USD 1 billion
Source: The Economic Times
www.ibef.org 13
USD 0.5 billion USD 0.5 billionPlans to invest in the Uganda marketPlans to invest in the Uganda market
Indian Companies Fuelling Future Expansions
USD 0.2 billionUSD 0.2 billionPlans to provide services in the Sri Lanka market
Plans to provide services in the Sri Lanka market
Plans to invest in its global expansion effortsPlans to invest in its global expansion efforts Over USD 2 billionOver USD 2 billion
RIL is planning to invest in its recently acquired polyester manufacturing facility in
North Carolina
RIL is planning to invest in its recently acquired polyester manufacturing facility in
North CarolinaUSD 0.215 billionUSD 0.215 billion
Source: International Business Times, The Financial Express, IBEF, SifyBroadband
www.ibef.org 14
India: Pacing Ahead to Emerge as a Major Economy in the World
Projected GDP Growth Rates for Select Upcoming Economies
0
2
4
6
8
2005–10 2010–15 2015–20 2020–25 2025–30 2030–35 2035–40 2040–45 2045–50
GD
P G
row
th R
ate
(%
)
Brazil China India Russia
0
20
40
60
80
100
India Russia Vietnam Ukraine China Chile Egypt
GR
DI S
core
2008 Global Retail Development Index (GRDI) 2007 Global Services Location Index
3.3
2.6
3.2
2.8
2.9
3.2
1.5
1.8
1.2
1.3
2.3
2.3
1.1
1.5
1.6
2
1.4
1.4
Indonesia
Brazil
Thailand
Malaysia
China
India
Financial structure People and skill availablityBusiness environment
AT Kearney has placed India as the most preferable destination for Services sector (2007)…
Services sector continues to attract interest from major global players and large investments are being pumped into it
India is expected to outperform its rivals in the BRIC, in terms of GDP growth rate, from 2015 onwards…
Source: AT Kearney, BRIC Report
… India ranks second in the AT Kearney Global Retail Development Index (2008)
www.ibef.org 15
BRIC Report, Goldman Sachs
BRIC Report, Goldman Sachs
“I have never seen India so dynamic, vibrant and full of
business opportunities”.
- Dan Scheinman, Cisco System Inc. as told to
Business Week, August 2005
- Dan Scheinman, Cisco System Inc. as told to
Business Week, August 2005
“We came to India for the costs, stayed for the
quality and are now investing for innovation”.
John RedwoodEconomic
Competitiveness Policy Group, UK
John RedwoodEconomic
Competitiveness Policy Group, UK
“India is now truly a land of opportunity”.
Jack WelchGeneral Electric
Jack WelchGeneral Electric
“India is a developed country
as far as intellectual capital is
concerned”.
Peter Loescher President and
Chief Executive Siemens
Peter Loescher President and
Chief Executive Siemens
By 2032, India will be among the three
largest economies in the world.
Why India? – Quote Unquote
Travyn Rhall,
ACNielsen
Travyn Rhall,
ACNielsen
“The Indian market has two core advantages - an
increasing presence of multinationals and an upswing
in the IT exports”.
Craig BarrettIntel
Corporation
Craig BarrettIntel
Corporation
“India has evolved into one of the world's leading technology
centers“.
Mr Paul de Voijs Managing Director
Volvo Car India
Mr Paul de Voijs Managing Director
Volvo Car India
“India is a very exciting market and the luxury
car segment is growing exponentially here”.
www.ibef.org 16
DISCLAIMER This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and Evalueserve.com Pvt. Ltd., EVALUESERVE (“Authors”). All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of the Author’s and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. The Author and IBEF neither recommend or endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed in this presentation. Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.