INDIAN ECONOMY AND TRENDS

1. INDIAN ECONOMY AND TRENDS JANUARY 2015 For updated information, please visit www.ibef.org

2. INDIAN ECONOMY AND TRENDS • Strengths………………………….3 • Trends…………………………….11 • Reforms……………………………22 • Outlook…………………………….36 JANUARY 2015 For updated information, please visit www.ibef.org

3. STRENGTHS

4. INDIAN ECONOMY AND TRENDS LARGE & SKILLED LABOUR FORCE SUPPORTS INDIAN ECONOMY Skilled labour force • National Skill Development Corporation (NSDC) to provide training to 3.3 million students this year • It currently provides training in 33 sectors • About USD200 million proposed for NSDC in the 2014-15 budget • Second largest number of engineers and scientists • Second largest English-speaking population in the world • Home to educational institutes of global repute – IITs and IIMs • Low average salary of USD5,000–10,000 p.a. The NSDC initiative High competency Large & Skilled Labour Force • Working age population* expected to increase from 58 per cent in 2001 to 64 per cent by 2021 • The average age predicted to be 29 years in 2020, lower than China and the US • Expected to be home to 25 per cent of the world’s skilled workforce by 2025 • 1.5 million graduates pass out every year • 250 million people expected to join the Indian workforce by 2030 • Number of engineering colleges has increased from 1,511 in 2006-07 to 3,345 in 2014-15 Expanding workforce Age demographics Large pool Source:*Working age refers to age group of 18-65 JANUARY 2015 For updated information, please visit www.ibef.org

5. INDIAN ECONOMY AND TRENDS CHEAP AND SKILLED LABOUR MAKES INDIA MOST FAVOURED DESTINATION FOR OUTSOURCING • India has more than 20 CMM (Capability Maturity Model)level 5 companies • In 2008, India claimed ~65 per cent of all offshored IT business and ~43 per cent of business process work • India leads the outsourcing market • Indian outsourcing market stood at USD20.8 billion in 2013 • The global outsourcing market expected to hit USD233 billion by 2020 • Indian outsourcing market expected to grow to USD50 billion by 2020 from its current worth of USD20.8 billion Top destination • 2000s • Entry of IT majors • BPO becomes the mainstream industry in India • All big Indian IT companies, such as Infosys and HCL, entered the BPO segment • India emerges as one of the biggest players in the outsourcing industry • The decade of unprecedented growth in the services sector • Indian BPOs handle 56 per cent of the world’s business process outsourcing • 1990s • Liberalisation in 1991 • GE sets up office in India • Private industries allowed in the telecom sector (National Telecom Policy) • Multiple liberalisation reforms set up the foundation for strong growth Growth stage Policy push • 1980s • Airline companies, such as, British Airways set up back offices in India Seeding stage • Service sector constitutes ~60 per cent of Indian GDP JANUARY 2015 For updated information, please visit www.ibef.org

6. INDIAN ECONOMY AND TRENDS SPENDING BY MIDDLE CLASS POPULATION DRIVING GROWTH USD21.3 trillion USD35.0 trillion USD55.7 trillion Spending by global middle class • India has a very dynamic consumer market driven largely by the huge middle class population • The household consumption expenditure levels grew at a CAGR of 12.5 per cent to USD1.1 trillion in 2011 • Rising per capita consumption and population will further boost the aggregate consumption • By 2020, India projected to be the world’s third largest middle class consumer market behind China and the US • By 2030, India likely to surpass both countries with an aggregated consumer spending of nearly USD13 trillion • Increasing young population, rise in disposable income and change in lifestyle is driving the consumer market • Sophisticated and innovative public and private services launched to cater to rising customer needs. For example, private cab services such as Uber, Ola Cabs and e-commerce websites like Flipkart, Myntra, Snapdeal, etc • The consumer service industry is emerging as a sunrise industry and attracting investments • The e-commerce sector is one of the sectors which has witnessed large investments Source: “The Emerging Middle Class in Developing Countries”, HomiKharas, OECD JANUARY 2015 For updated information, please visit www.ibef.org

7. INDIAN ECONOMY AND TRENDS Mining & quarrying DIVERSIFIED ECONOMY PROVIDING VARIOUS INVESTMENT OPPORTUNITIES Electricity, gas & water supply Sector-wise GDP share in 2013-14 ( per cent of GDP) • India has a diversified economy with no individual sector accounting for more than 25 per cent share • Various major sectors, such as consumers, infrastructure and automobile, are poised for strong growth • Availability of a large number of investment avenues mitigates the risk of being exposed to a limited number of sectors, which can be adversely impacted during a downturn Construction Trade, hotels, transport & communication Community, social & personal services Key snapshots of some sectors • Hyundai and Honda export cars from India to European and other Asian countries • Since the liberalisation in the telecom sector, the sector witnessed huge investments • Indian textile exports in 2013 are estimated to be around USD40 billion, with garments accounting for 40 per cent • Indian e-commerce industry expected to grow from USD11 billion in 2014 to USD20 billion in 2015 Manufacturing Financing, insurance, Real Estate & Business services • All major auto companies have their factories in India • The telecom sector attracted USD1.3 billion foreign investment in 2013-14 • India overtook Germany and Italy to become the second largest exporter of textiles in 2013 • Indian pharmaceuticals industry expected to expand at a CAGR of 23.9 per cent to USD55 billion by 2020 Source: Planning Commission JANUARY 2015 For updated information, please visit www.ibef.org

8. INDIAN ECONOMY AND TRENDS CONDUCIVE ENVIRONMENT FOR INVESTMENT • RBI is among the best central banks in the world • It controls the monetary policy of India and acts as a watchdog over the banking system • SEBI acts as the regulator of the twin stock exchanges – the BSE and NSE • Indian regulatory system was applauded for its strong mechanisms that weathered the 2008 global crisis Strong financial regulatory system • Indian banking system is a huge network of 151 commercial banks with more than 100,000 branches • Seventeen Indian banks rank in the top 500 global banks list, with SBI at the top among the Indian banks • In line with the recent ‘Jan DhanYojna’ initiative, more than 110 million new bank accounts were opened • A strong banking system creates a strong investment environment and increases liquidity Robust Indian banking system • India currently ranks 142 on the Ease of Doing Business list • The new government has set up a mandate to rise to the 50th place on this list in the next two years • New measures taken by the government to facilitate business like digitisation and a one-stop licensing system would significantly boost India’s ranking • Rise in investment interests from global companies is a sign of improvement in the economy and the process • BSE is the world’s largest stock exchange in terms of number of listed companies; NSE takes the third spot in terms of number of transactions • India entered the elite club of world’s 10 largest stock markets • In 2014, net foreign investment in equity and debt markets was USD16.1 billion and USD26.3 billion, respectively Prominent stock exchange Ease of doing business JANUARY 2015 For updated information, please visit www.ibef.org

9. INDIAN ECONOMY AND TRENDS SPIRIT OF ENTREPRENEURSHIP • The year 2014 saw a spurt of start-ups in India, with more than 1,200 new ventures being set up • Over USD5 billion were invested in Indian start-ups in 2014 with more than 300 deals • Innovation in education, affordable healthcare and competitiveness of small businesses are seen as important trends in the emerging entrepreneurial activity • Dynamic entrepreneurs are launching new businesses across the country, selling products online, providing healthcare, education, communication to the growing aspiring population of the Indian middle class • E-commerce and the service industry saw highest investments in 2014 • Rapid growth in the use of the Internet, and mobile and online shopping as well as the success of online retailers, such as Flipkart and Snapdeal, has made the Indian start-up space a favoured destination for investors across the world • Government has taken initiatives to boost entrepreneurship in the country • USD1.6 billion start-up fund set by the Government of India • One stop e-portal for all licenses set up by the government • Process of applying for Industrial License & Industrial Entrepreneur Memorandum made online on a 24×7 basis through eBiz portal • Validity of industrial licence extended to three years • The Technology Incubation and Development of Entrepreneurs (TIDE) scheme was launched and revised, and extended to 2017 to assist institutions of higher learning to strengthen their technology incubation centres and enable young entrepreneurs to initiate technology start-up companies for commercial exploitation of technologies developed by them JANUARY 2015 For updated information, please visit www.ibef.org

10. INDIAN ECONOMY AND TRENDS RISING INVESTMENTS IN THE INDIAN MARKET Flipkart raised USD1.7 billion in 2014 The company was valued at USD11 billion after the recent money raising In two rounds of funding in 2014, Flipkart raised around USD2 billion SoftBank pumped in USD627 million in e-commerce company Snapdeal Invested USD210 million in taxi service provider Ola Cabs Amazon has pledged USD2 billion of investment in its Indian arm Venture capital investors are expected to raise USD2 billion in 2015 The company was valued at USD11 billion after the recent money raising L Capital Asia, the private equity fund sponsored by the LVMH Group, will make a couple of investments worth around USD50 million each in India this year Ratan Tata invested in Snapdeal, Bluestone and UrbanLadder.com in 2014, signalling huge potential in the Indian online retail industry Source: News articles JANUARY 2015 For updated information, please visit www.ibef.org

11. trends

12. INDIAN ECONOMY AND TRENDS INDIA ON GROWTH PATH SUPPORTED BY KEY REFORMS AND HIGHER INVESTMENTS • GDP growth at factor cost ( per cent) • GDP and components – growth ( per cent) • According to the World Bank, Indian economy is estimated to expand 6.4 per cent during FY15 • Higher investment in the infrastructure sector, key reforms in taxation, coal mining auctions, among others would boost the economy • Current decrease in crude prices would support narrow deficits • The government plans to spend USD1 trillion on infrastructure during FY12–17 • Growth in the Indian economy is mainly supported by growth in the service and industry sectors • The government would introduce Goods and Services Tax (GST), which would create substantial savings for companies on logistics. This would positively affect on industrial production • Major contributors were the finance and real estate sectors, which witnessed double-digit growth in the last 7–8 years Source: Monthly Economic Report, Ministry of Finance, Aranca Research; PE: preliminary estimates ;1R: First Revision; AE: Advanced Estimates JANUARY 2015 For updated information, please visit www.ibef.org

13. INDIAN ECONOMY AND TRENDS COUNTRY TO RECORD HIGHEST FOODGRAIN PRODUCTION IN FY 2014 Production of major agricultural crops (in Million Tonnes) • Scanty rainfall in FY10 affected foodgrain production. Orissa, Jharkhand and Bihar faced a deficit of 55 per cent, 47 per cent and 28 per cent, respectively • Foodgrain production increased at a CAGR of 2.4 per cent from 234 million tonnes in FY09 to an estimated 264 million tonnes in FY14 • Major growth was observed in production of pulses, which rose at CAGR of 6.1 per cent from 15 million tonnes in FY09 to an estimated 20 million tonnes in FY14 • India ranks second in the production of rice, sugarcane, potatoes, wheat, garlic and tomatoes • During FY13, Indian household spent USD20.3 billion on food, indicating good business opportunity • The country has estimated highest ever foodgrain production of 264 million tonnes during FY14 Source: Monthly Economic Report, Ministry of Finance, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

14. INDIAN ECONOMY AND TRENDS IMPROVING TRADE BALANCE (1/2) Export-import and trade balance (USD Billion) Oil and non-oil imports (USD Billion) • Lower demand in the US and Europe affected exports negatively, widening trade deficits in FY13 • During FY09–14, exports rose at a CAGR of 11 per cent, while imports rose at a CAGR of 8.2 per cent • India’s trade balance reached a negative USD190 billion in FY13, which improved 27.8 per cent to a negative USD137 billion in FY14 • Decreasing crude prices by more than half in six months would support India to narrow trade deficit as oil imports comprise ~37 per cent of the total imports Source: Provisional data as per the Press Note of the Ministry of Commerce and Industry, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

15. INDIAN ECONOMY AND TRENDS IMPROVING TRADE BALANCE (2/2) • Top five Importing commodities ( per cent) (FY 2014) • Top five exporting commodities ( per cent) (FY 2014) • During 2013, India’s petroleum imports comprised 20 per cent from Saudi Arabia, 22 per cent from other Middle East countries and 14 per cent from Iraq • Of the total exports, oil contributes ~21 per cent • During FY14 export of oil and minerals increased to USD64.7 billion from USD62.1 billion a year earlier • The automobile industry contributed 4.1 per cent to total exports. India is the seventh largest producer of automobiles in the world Source: Department of Commerce, EIA, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

16. INDIAN ECONOMY AND TRENDS INCREASING FOREIGN CURRENCY ASSETS • Foreign Currency Assets (USD Billion) • The fall in oil prices from USD113 per barrel in January 2013 to USD51 per barrel as of January 2015 has helped India to increase foreign currency assets to USD293 billion as of November 2014 • Moreover, Indian currency got strengthened against USD in FY14 compared to FY13 when it was trading at all time high of ~INR69 per 1USD • Rapidly rising exports compared with imports has supported a rise in foreign assets. Exports rose at a CAGR of 11 per cent during FY09–14, while imports increased at a CAGR of 8.2 per cent for the corresponding period Source: Monthly Economic Report, Ministry of Finance, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

17. INDIAN ECONOMY AND TRENDS IIP GEARING TOWARD THE RIGHT AND POSITIVE DIRECTION Industrial Production – General Index ( per cent) • Index of Industrial Production (IIP) strengthened 1.9 per cent for the period of April to October 2014 • Electricity grew the most (10.7 per cent) for April to October 2014, followed by basic goods (7.6 per cent) • Although there are small positive changes in IIP, heavy positive changes are expected due to key reforms under approval and increasing investment in infrastructure • IIP for the month of November, 2014 increased drastically by 3.8 per cent • Index of Industrial Production four out of nine components ( per cent) Source: Monthly Economic Report, Ministry of Finance, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

18. INDIAN ECONOMY AND TRENDS GROWTH OF EIGHT CORE SECTOR NECESSARY FOR OVERALL GROWTH IN INDUSTRIAL PRODUCTION Total production growth (per cent) in core infrastructure commodities • Eight core infrastructure industries reported a growth of 4.3 per cent during April to October 2015 • The highest growth was reported by Electricity (10.5 per cent), followed by Coal of (8.5 per cent) • These eight industries contribute ~38 per cent to the industrial production • The thermal power sector witnessed increased investment as India targeted capacity addition of 174.9 GW by 2022 • Production growth ( per cent) in eight core infrastructure commodities Source: Monthly Economic Report, Ministry of Finance, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

19. INDIAN ECONOMY AND TRENDS RISING INVESTMENTS IN INFRASTRUCTURE AND DEVELOPMENT PROJECTS • Outlay of USD3.8 billion is planned for highways for the current year • Infrastructure development worth USD19 billion is planned during 2012–17 • Completed 100 public private partnership projects (PPPs) and 165 more PPPs are under construction • Investment of USD31 billion in national highways is expected in the next five years Road and Highways • Indian Railways plans to award projects worth USD1 trillion through the PPP model • Budget 2015 lays emphasis on diamond quadrilateral network of high-speed rails to connect major metro cities and business centres • Projects worth USD40 billion have been approved for establishing rail connectivity between major ports • Railways • The government is targeting a capacity addition of 88.5 GW by 2017 and 86.4 GW during 2017–22 in the thermal power sector • The government aims to have 20,000 MW of solar power by 2022 • Investment worth USD1 trillion is planned for the infrastructure sector during FY2012–17 • Investment worth USD650 billion is estimated in the urban infrastructure over the next 20 years • The government is under process to launch urban development mission to develop 500 cities with a population of more than 100,000 • Construction • Thermal Power and Renewable Energy Source: Make in India, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

20. INDIAN ECONOMY AND TRENDS INFLATION MEETING THE CENTRAL BANK’S TARGET All commodity Inflation and repo rate (per cent) Inflation components (per cent) • RBI has targeted a 6 per cent inflation by January 2016 • Inflation for November 2014 came down to 0.0 per cent supported by easing of fuel and food prices as these two components are substantial part of the Consumer Price Index • The government curbed exports of some of the foodgrains(potatoes and onions). In July 2014, the government sold five million tonnes of rice in the open market • The government restricted gold imports from time to time to control the FX rate • Seeing inflation under control, RBI on January 15, 2015 decreased Repo Rate by 25 bps Source: Monthly Economic Report, Ministry of Finance, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

21. reforms

22. INDIAN ECONOMY AND TRENDS INCLUSIVE INDIA – THE GROWTH AGENDA Central government’s expenditure on social services (% of total expenditure) • India has renewed its growth strategies to target rising inequality as well as overall well-being of Indians • Inequality as measured by the Gini coefficient, a measure of statistical dispersion, dropped from 36.8 in 2010-11 to 33.4 in 2011-12 • Inequality in India is not as much as in other emerging economies. Among the BRICS (Brazil, Russia, India, China and South Africa) nations, the Gini coefficient in South Africa was the highest at 0.63, followed by Brazil (0.55 in 2012), China (0.43) and Russia (0.40) • The new government has launched various new schemes such as Jan DhanYojna, PradhanMantriAadarsh Gram Yojna and Direct Benefit Transfer Scheme Source: Economic Survey 2013-14 *RE: Revised Estimates BE: Budget Estimates JANUARY 2015 For updated information, please visit www.ibef.org

23. INDIAN ECONOMY AND TRENDS PRADHAN MANTRI JAN DHAN YOJANA (PMJDY) – A SCHEME FOR FINANCIAL INCLUSION (1/2) • About • Benefits • Key Statistics • PMJDY was launched in August 2014 under the supervision of the Finance Ministry • This scheme was launched to make available basic financial services to the weaker sections (income wise) of the society • The government aims to ensure that low income society takes the benefit of savings bank account, need-based credit, remittance facility, insurance and pension • The government aims to achieve at least one saving banks account for every household, financial literacy, and access to credit, insurance and pension facilities • To Account Holder: • By opening an account a beneficiary would get a RuPay debit card and an in-built accident insurance coverage of nearly USD1,650 • All government benefits would be transferred to the account of beneficiary to avoid unnecessary delay • An Indian citizen above the age of 10 years can open an account with zero balance, which would enhance awareness regarding financial services • An account holder can take a loan of nearly USD80 after six months of opening of an account • Banking facilities, such as checking account balance and transferring funds, are available even on mobile phones • To Economy: • Cash inflow to the banking sector and, in turn, to the economy • More people would become aware of financial services • Government benefits would be transferred without unnecessary delay and transfer would be made to the concerned individual/s • As of January 12, 2015, there were 111.6 million bank accounts • Total account balance was USD1,438 million • A total of 94.1 million RuPay debit cards have been issued • The target was to achieve 100 million accounts by January 26, 2015, which was achieved well before the set date Source: PradhanMantri Jan DhanYojana Website, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

24. INDIAN ECONOMY AND TRENDS PRADHAN MANTRI JAN DHAN YOJANA (PMJDY) – KEY STATISTICS (2/2) Rural vs. urban bank accounts (in million) • Bank type wise accounts (in million) • Bank type wise account balance (in million) Bank type wise number of RuPay debit cards (in million) Source: PradhanMantri Jan DhanYojana Website, Aranca Research All data as on January 12, 2015 JANUARY 2015 For updated information, please visit www.ibef.org

25. INDIAN ECONOMY AND TRENDS PRADHAN MANTRI SANSAD ADARSH GRAM YOJANA (PMSAGY) – A SCHEME FOR RURAL DEVELOPMENT • About Main objectives • Key Insights • The scheme was launched in October 2014 under the supervision of the Department of Rural Development • PMSAGY is an Indian government initiative to open the door for good politics and develop a demand-driven rather than supply-driven village • Main objective of the scheme is to improve basic amenities, productivity, human development, and holistic development of gram panchayats • Sansad (MP) is free to select any village except their own and in-law’s village • Developing a process for the development of gram panchayats • To improve the standard of living and quality of life of all the sections of the people by: • Improving basic amenities • Higher productivity • Better standard of living • Enhancing livelihood opportunities • Reducing disparities • Widening social mobilisation • To develop local governance in a way that motivates and inspires neighbouring gram panchayats • To present identified Adarsh Grams as schools of local development to train other gram panchayats • Scheme targets to cover 2,500 villages by 2019 • Apart from MPs, many influential and famous personalities and companies have adopted villages under this scheme • SachinTendulkar adopted a village in Andra Pradesh • ICICI Bank adopted a village in Gujarat Source: PM India Website, Department of Rural Development, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

26. INDIAN ECONOMY AND TRENDS SMART CITIES AND BULLET TRAINS – BUILDING A NEW INDIA • Smart Cities Bullet trains – A diamond quadrilateral rail project • Government of India plans to build 100 smart cities and modern satellite towns near the existing cities • Need for new smart cities arose due to increasing number of people in the urban areas wanting a better livelihood and lifestyle • According to United Nations, Indian urban population is expected to touch 843 million by 2050 • In Budget 2015; • USD1.2 billion has been allocated for smart cities • USD83 million has been allocated for the digital India initiative • FDI norms have been relaxed • The PPP model to be used to upgrade infrastructure in 500 urban areas • India aims to invest USD1.2 trillion over the next 20 years in transportation, energy and public security to build smart cities • Employment is expected to rise 10–15 per cent • Seven new smart cities and a 1,500 km industrial corridor across six states have been planned with an investment of USD100 billion • Relaxation in FDI norms for construction is expected to improve the government’s efforts in developing smart cities • The Indian rail system is the world’s largest passenger carrier • Considering the importance of Railways in India, the government announced a diamond quadrilateral network of high-speed rail in Budget 2015 • A diamond quadrilateral rail line would cover major metro cities and growth centres of the country • The objective of this high-speed rail network is to reduce journey hours and take the rail system to international standards • This project would comprise seven routes, including Mumbai-Ahmedabad, Howrah-Haldia, New Delhi-Patna, and Hyderabad-Chennai • The government is considering to implement this project through the PPP model • At present, the Mumbai-Ahmedabad route is under feasibility study by experts from France and Japan and is expected to be completed by 2015 • Apart from the bullet trains to be run at a speed of 350 km per hour, national transporter is also considering a semi-high speed rail between Delhi and Agra • Semi-high speed trains would run at a speed of 160 to 200 km per hour Source: PM India Website, Department of Rural Development, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

27. INDIAN ECONOMY AND TRENDS MAKE IN INDIA – SHAPING UP INDIAN MANUFACTURING (1/2) • About Main objectives • New process: New de-licensing and deregulation measures • eBiz portal has been made available 24*7 for online application of Industrial License and Industrial Entrepreneur Memorandum • Validity of the Industrial License has been extended to three years • Industrial licensing has been removed for most of the components of defence products • State government has been asked to launch self-certification and third-party certification under the Boilers Act • All returns are turned into online filling in unified form • Items having dual use in military and civilian applications have been deregulated • Clearance process turned online • Self-certification has been introduced for all non-risky and non-hazardous businesses • The Make in India campaign was launched in September 2014 • The campaign is set of plans to cut red tape, develop infrastructure and create a business-friendly environment • At present, manufacturing share in the GDP is 15 per cent and the government aims to reach 25 per cent • The objective of the campaign is to make India a better place to do business and create employment opportunities which would result in better purchasing power • This campaign would boost up manufacturing activity. Key reforms would support the decrease in the cost. For example, Goods and Service Tax (GST) would create substantial savings for a company operating in the logistics segment • Boost in manufacturing activity would lead to increased employment, thus improving the purchasing power • Self-reliability on indigenous products would control trade deficits • Indian products would enter international markets due to improved cost structure Source: Make in India Website, News Articles, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

28. INDIAN ECONOMY AND TRENDS MAKE IN INDIA - GIVING NEW SHAPE TO INDIAN MANUFACTURING (2/2) • Policy on defence sector has been liberalised • FDI cap raised from 26 per cent to 49 per cent • Portfolio investment in the defence sector has been permitted up to 24 per cent under the automatic route • 100 per cent FDI is allowed in the defence sector for modern and state-of-the-art technology on a case-by-case basis Defense • 100 per cent FDI under automatic route is permitted in construction, operation and maintenance for specified infrastructure projects in railways • Railways • Insurance: • Increase in the FDI limit from 26 per cent to 49 per cent • Foreign companies are permitted to open branches in India to write reinsurance business • Mining: • Ordinance has been issued for auctioning of mines containing minerals • For construction sector, norms easing are underway • Construction Insurance and Mining Ordinance Source: Make in India Website, News Articles, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

29. INDIAN ECONOMY AND TRENDS CLEAN GANGA AND ECO-FRIENDLY REFORMS • Clean Ganga • Major Initiatives Swachh Bharat • Initially India launched Ganga Action Plan (GAP) in 1986 covering Uttar Pradesh, Bihar and West Bengal • This was followed by National Ganga River Basin Authority, which was formed in 2009 with the objective to reduce pollution • National Mission of Clean Ganga (NMCG) was formed in 2011 with following main objectives: • To promote inter sectoral co-ordination for effective planning and management for controlling pollution in Ganga and rejuvenation of the river by adopting river basin approach • To ensure minimum ecological flows in to the river to maintain the quality • In the last three decades, India has spent nearly USD8.4* billion on cleaning Ganga • Initiatives: • Ganga Guard Corps has been set up to prevent people from polluting Ganga • In Budget 2015, Government has allocated USD334 million for cleaning 2,525 km long Ganga river • To maintain the quality of Yamuna river following initiatives are done: • Fine of USD82 for throwing Puja offerings into the river • Fine of USD820 for dumping wastes • Real Estate and Construction activities are banned on the banks of the river Yamuna • The campaign was launched on October 02, 2014 • India’s biggest cleanliness campaign as 3 million government employees, schools and college students had participated • The objective of the campaign is to make India clean place to live by providing sanitation to all places in next five years • Target: • Making all towns, villages and cities clean and providing them with good sanitation • Safe drinking water, establishing waste disposal system, and clean roads & lanes • Cost: • USD32.2 billion of expenditure is estimated • Of this, USD22 billion would be spent on building toilets in villages Source: Clean Ganga Mission Website, News Articles, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

30. INDIAN ECONOMY AND TRENDS BETI BACHAO BETI PADHAO SCHEME • About Main objectives • Key Insights • The government to launch `BetiBachao, BetiPadhao' (BBBP) scheme on January 22, 2015 • The scheme was issued to address the issue of declining sex ratio • The government has set out USD16 million for this scheme for 2014-15 • USD7.4 million and USD6.6 million will be allocated in 2016 and 2017 • It will be under the Ministry of Women and Child Development (WCD) • The child sex ratio in India dropped from 927 girl children for every 1,000 boys in 2001 to 919 girls for every 1,000 boys in 2011 • This brought to the fore the need to bring in steps to improve the sex ratio • The main objectives of the scheme are • Prevent gender biased, sex selective elimination • Ensure survival & protection of the girl child • Ensure education of the girl child • Strengthening the implementation of Preconception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 (PC&PNDT Act) with strict punishments in case of violations • Scheme targets to cover 2,500 villages by 2019 • A toilet in every girls’ school in 100 vulnerable districts • A state-level innovation fund to promote best practices in improving child sex ratio and gender inequities • The 2014-15 Budget also proposed that the Ministry of Road Transport and Highways will spend USD8 billion on pilot testing a scheme for safety of women on Public Road Transport • Setting up "Crisis Management Centres" in all the districts of Delhi in all government and private hospitals in 2015 Source: vikaspedia.in, news articles, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

31. INDIAN ECONOMY AND TRENDS STATES BOOSTING GROWTH BY INNOVATIVE METHODS • Over the years, many Indian states have come up with reforms at the state level • Developing states, such as Sikkim, Bihar, Gujarat, Goa, have shown higher growth during 2004–13 compared with developed states like Maharashtra and Karnataka JANUARY 2015 For updated information, please visit www.ibef.org

32. INDIAN ECONOMY AND TRENDS BIG TICKET REFORMS BY THE NEW GOVERNMENT TO TRANSFORM THE ECONOMY • New labour laws issued to end ‘Inspector Raaj’ • Single window compliance window for companies • Schemes like ShramSuvidha Portal, a new web-based labour inspection system, unique account numbers for members ofEmployees Provident Fund Organisation, new skill development and apprenticeship scheme launched Labor law • FDI limit in insurance sector raised to 49 per cent from 26 per cent • FDI in defence sector raised to 49 per cent, and to 100 per cent in railway infrastructure • These initiatives along with ‘Make in India’ campaign will bring in investments FDI • Direct Benefits transfer (DBT) scheme started to reduce delays and losses in the transfer of benefits • DBT expected to control misuse of LPG subsidy by ~15 per cent • Government approved USD7.1 billion rural electrification scheme, USD0.9 billion for strengthening of power distribution and transmission in six North Eastern states and many other power sector reforms to achieve the target of 24 x 7 electricity to all Indians by 2019 • Goods and Service Tax is the new tax system to be implemented to replace all indirect taxes • The government expects to implement GST by next year • GST is expected to add as much as two percentage points to the country’s GDP growth Deregulation of diesel • The government deregulated diesel in October 2014 • Will reduce the government subsidies as subsidy on diesel cost was USD10 billion in FY2014 GST Others Source: government websites, Make in India website, news articles, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

33. INDIAN ECONOMY AND TRENDS • The new government has realised the importance of building relationships with the world, especially neighbouring countries, for fostering development and stability • Since the formation of the new government, the Prime Minister has engaged with many foreign countries such as the US, China, Japan, Australia BUILDING UP THE FOREIGN RELATIONS India’s Prime Minister visits Australia after 28 years PM NarendraModi visits Japan and US in first few months of his tenure as PM Had heads of all big economies visiting India in 2014 - US, China, Russia, UK US President Barack Obama to be the Chief Guest for the Republic Day • Prime Minister visited the neighbouring countries like Myanmar, Bhutan, Nepal that were taken for granted for many years • The neighbouring countries are vital for the safety of the country Indian Prime Minister visits Nepal after 17 years Visited all the SAARC countries and proposed strengthening of SAARC India proposed investments in Myanmar and Bhutan to help them in their development path BRICS bank to be set up, with an Indian to head it for the first five years • Mending foreign relations along with the growing India story has led to huge investment plans proposed by many countries US has shown its willingness to invest US 41 billion in India in next 3-4 years Japan and China have pledged to invest USD30 and 25 billion in India, respectively Indian companies ink USD2.1 trillion pact to buy diamonds from Russia India and Australia sign civil nuclear deal – an important measure for India’s energy prospects Source: News articles, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

34. outlook

35. INDIAN ECONOMY AND TRENDS Improving Business sentiments • One stop online portal for business clearances • Reduction in repo rate by 25 bps to boost economic activities • Increasing investment in start-ups shows the confidence in economy • Pace of reforms • Deregulating diesel prices • Ordinance on Insurance • Ordinances on mines • Make in India campaign • Labor reforms • Increasing FDI caps INDIA – TO LEAD THE GLOBAL GROWTH WAGON ` • Macro-economic factors • Inflation dropping below the RBI’s target of 6 per cent before scheduled • As per World Bank, GDP growth rate of India is estimated to out pace China • IIP growth of 3.8 per cent beats the estimate in November’14 • Increased Investment • USD1 trillion investment in infra • USD1 trillion worth of projects to be awarded by the Indian Railway • Investment worth USD101 billion pledged by US, China and Japan Source: Economic Times, Aranca Research JANUARY 2015 For updated information, please visit www.ibef.org

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