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INDIA’S PROMISE Challenges & Opportunities

INDIA’S PROMISE Challenges & Opportunities . APBO March 2007. Political Uncertainty. Delhi, Capital City POP: 13 million. COALITION GOVERNMENTS TO STAY. ECONOMIC REFORMS SECURE. Cong+. 219 Seats. BJP+. 189 Seats. Left. 61 Seats. Others. 70 Seats. Bangalore

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INDIA’S PROMISE Challenges & Opportunities

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  1. INDIA’S PROMISE Challenges & Opportunities APBO March 2007

  2. Political Uncertainty Delhi, Capital City POP: 13 million COALITION GOVERNMENTS TO STAY ECONOMIC REFORMS SECURE Cong+ 219 Seats BJP+ 189 Seats Left 61 Seats Others 70 Seats Bangalore “Silicon Valley of India” POP: 7 million

  3. UNITED PROGRESSIVE ALLIANCE 13 Constituents Indian National Congress Congress Allies Left Front UPA COMMON MINIMUM PROGRAM Agriculture- “A New Deal For Rural India” Infrastructure - “Building World Class” Employment - “Rozgar Badhao” Education- “Improving Access and Excellence” Health Care- “Creating Capabilities” Water - “Better Access, Better Utilization” Urban Renewal- “Humane and Modern” Sonia Gandhi PranabMukherjee Sharad Pawar Prakash Karat Karunakaran Kamal Nath Praful Patel Bhattacharyajee Nirpuam Sen DMK

  4. UPCOMING STATE ASSEMBLY ELECTION 80 Parliamentary Constituencies 4 Phase Poll April / May Population 179,000,000

  5. Transparency • BELL HELICOPTER • MOTOROLA Procurement Challenges

  6. RED TAPISM July 2006 1500 KM 8 Days RED TAPE / TAX ANOMALIES / POOR INFRASTRUCTURE

  7. Challenges in Infrastructure 48 new road projects worth $12 bn are presently under construction Indian Railways require $22 bn investment India’s port upgrades require a total investment of $22 billion Domestic aircraft movements have shot up by 40% Modernization requires upgrading 25 of the country’s national airports 100,000 MW required by 2012

  8. LAND ACQUISITION-SEZs NANDIGRAM 16 KILLED WEST BENGAL 68 WOUNDED TOTAL BANDH 5000 POLICE HIGHLY POLITICIZED – SEZs ON HOLD

  9. HUMAN RESOURCE CONSTRAINT • ITES/BPO INDUSTRY GROWING @ 45% Qtr • QUALIFIED HELP IN SHORTAGE • ATTRITION RATES > 30% • FINISHING SCHOOLS REQUIRED • CONTRACT LABOR & LABOR REFORMS A MUST

  10. INDIA’S ECONOMIC LEADERSHIP • Considered the “Father of India’s Economic Reforms” • Economist by training, Strong free-market advocate • Excellent rapport with President Bush Manmohan SinghPrime Minister Montek Singh AhluwaliaPlanning Commission Deputy Chairman P. ChidambaramMinister of Finance • Private / Public Sector Interlocutor • Economist by training, Oxonian • World Bank background / Easily accessible • “Inclusive” Budget • Supreme Court Advocate, Harvard MBA • Pragmatic reformer

  11. SCORECARD ON REFORMS • Progress • Insurance FDI up to 26% • Telecom up to 74% • Oil/Gas, Roads, Ports up to 100% • Real estate opened to 100% • Open Skies: Boeing Sales • Patents Act -IPR Protection: Re-entry of Merck • Retail (Single Product): Wal-Mart Entry • Civilian Nuclear Cooperation – 123 Agreement • 15 Special Economic Zones (SEZ’s) at present • 42 approved for 2007 GDP Growth Rate > 8% 6 Million New Cell Phones Registered Last Month!

  12. IT/ BPO Boom More than 300 of the Fortune 500 are in India IBM : 53,000 employees Cognizant : 48,000 employees General Electric: : 20,000 employees Oracle : 18,000 employeesHewlett-Packard : 11,000 employeesHoneywell : 7,000 employees American Express : 4,000 employeesDell: 3,800 employees

  13. MANUFACTURING Automobile Components - Worth $15 bn 20 % Annual Growth in Exports • Ford – Producing 30,000 units; Doubling Capacity in 2006-2009 timeframe • General Motors – Expecting to sell 30,000 units in 2006; output to be doubled • Boeing - $12.1 bn sale of civilian aircraft to Air India with significant co-production; recognition of India’s manufacturing prowess

  14. OPPORTUNITIES IN AGRICULTURE $15 bn investment opportunity in storage, transportation, and refrigeration facilities. Blue Diamond Growers – India is 4th largest and fastest growing market Pepsi is a major player with sales $700 mn Coca Cola has major presence throughout the country McDonald’s has introduced the McVeggie burger and Veg Pizza McPuff Domino Pizza, Pizza Hut and Kentucky Fried Chicken have all established restaurants in India.

  15. U.S. DEFENSE COMPANIES Fremont Group

  16. DEFENSE TRADE Next Steps in U.S.-India Strategic Partnership: Major Opportunities in Defense Cooperation - $30 billion F-18 Super Hornet C-131 Transport P-3 Orion GE-404 Engine Bell 407 Helicopter F-16 Fighting Falcon Pac-3 Antimissile System Boeing 737 Countermeasure Equipment FireFinder & PAC III

  17. US-INDIA SPACE PARTNERSHIP An Important Component of Strategic Partnership • Indian Space Program 5th largest after U.S., Russia, Europe, China • $450 mn annual budget, but due to lower wages is equivalent to multi-billion dollar program in U.S. • Space Exploration – Chandrayan I: India plans to launch its first unmanned mission to the moon by 2008 • NASA agreement with ISRO to send scientific instruments into space aboard India’s Chandrayan I • Export Control Regimes; Strategic Partnership Challenges

  18. NEXT WAVE: PHARMACEUTICALS • $6.5 bn and growing at 8-10% • 4th largest pharmaceutical industry in the world • Expected by 2008 to be worth $12 billion • Private Hospitals firmly entrenched: Apollo, Manipal, Escorts, Max Healthcare • Medical Tourism

  19. INNOVATION FRONTIER: R & D Labs India, Bangalore India Development Centre, Bangalore, Hyderabad R&D Centre, Bangalore R&D Centre, Bangalore and Mumbai Bangalore Software Lab, Bangalore, Pune India Engineering Centre, Bangalore R&D Centre, Bangalore Innovation Campus, Bangalore

  20. INDIA LOOKS OUTWARD • Tata Group - $12 BN • Reliance - $22 BN • Essar - $9 BN • Birla - $6 BN • Videocon–Daewoo Electronics-$650 • Dr. Reddy’s Lab–Betapharm - $570 • Ranbaxy–Terpia - $324 • VSNL Tyco Global-$130

  21. WHY INDIA ?

  22. ECONOMIC, IDEOLOGICAL, AND STRATEGIC PARTNERS • Coherent democracy; Pluralist/Secular • 1/5th World’s Population; 2nd largest military in the world • Common Values: Against Terrorism, Trafficking, Narcotics • Ideological Partner re: Nepal, Sri Lanka, Bangladesh, China • Common Law Judicial System • 2nd largest number of Doctors, Engineers, PhDs in the world • 100,000 Students to U.S. Each Year • 1.8 mil Americans of Indian Origin • Politically significant; Politically integrated • 54% of Indian Population is under the Age of 25 India is Rising, Becoming Vital to U.S. Interests

  23. BARBOUR GRIFFITH & ROGERS eMR Technology Ventures U.S.-INDIA BUSINESS COUNCIL 32 YEARS of GROWING ENTERPRISE Steptoe & Johnson LLP Griffith & Rogers Accenture Adobe Systems, Inc. Akin Gump LLP Altria Group, Inc. AM General LLC Amas Investment & Project Services Amway Corporation Andrews Kurth LLP Baker & McKenzie LLP Bank of America Bloomberg Boeing Company Cargill Caterpillar, Inc.CBay Systems Chevron CMS Energy The Coca-Cola Company Computer Associates Covanta Energy Dell Computer Corp. Deloitte & Touche Discovery CommunicationsDow AgroSciences Dow Jones DuPont, Inc. eBay Inc.Estee LauderFord Motor Company Fremont Group Limited General Dynamics General Motors Gerson Lehrman Group Guardian Life Insurance Gerson Lehrman Guardian Life Insurance Hughes Network Systems IBM, Corporation IDFC Ltd. Johnson & Johnson J.P. Morgan Chase K. Raheja Universal Kotak Mahindra L-3 Communications Lockheed Martin McGraw-Hill Merck & Co. Microsoft Corporation Monsanto Motorola, Inc News Corporation Ltd. Northrop Grumman Oracle CorporationPanAmSat Paul Weiss LLP Pfizer Inc. Pratt & Whitney/United Technologies Sony Pictures Entertainment Standard Chartered Bank Target Corporation Tata, Inc. Texas Instruments Textron Inc. Time Warner Inc. Thomson Financial United Parcel Service Vickery International Wal-Mart Inc. Watson Wyatt Worldwide Xerox Corporation

  24. INDIA’S ENERGY SECURITY CHALLENGE Oil discovery by Cairn Energy in 2004; India’s demand will outstrip supply Hydro-Electric Dam at Narmada constrained by problems with environment Gas pipeline from Turkmenistan, through Pakistan, but questionable reserves Coal supplies for 200 years, but high/ash, low calorie value Gas pipeline from Iran, discouraged by U.S. Gas pipeline from Myanmar through Bangladesh discouraged by U.S. Kakrapar- World’s first thorium-based nuclear reactor Gas discovery by Reliance in 2003 but will service only fraction of India’s power needs Tarapur- India’s “civilian” nuclear reactor requires refueling

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