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India’s Experience in Investment Encouragement

India’s Experience in Investment Encouragement. Anjan Roy Chief Economist and Head of Research FICCI 12 th Industrialists’ Conference Doha, Qatar November 22-23, 2009. In this presentation …. FDI policy in India – Evolution over time. Foreign investment flows into India.

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India’s Experience in Investment Encouragement

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  1. India’s Experience in Investment Encouragement Anjan Roy Chief Economist and Head of Research FICCI 12th Industrialists’ Conference Doha, Qatar November 22-23, 2009

  2. In this presentation….. FDI policy in India – Evolution over time Foreign investment flows into India Investor’s perception about India What makes India a leading investment destination? FDI and India’s industrial transformation

  3. FDI policy in India - Evolution over time • FDI policy in India has evolved over the years from being ‘very restrictive’ to being ‘very open’ • We have moved from a small ‘positive list’ to a small ‘negative list Source – FICCI Compilation

  4. FDI policy in India - Evolution over time • Policy liberalization is a continuous and irreversible process • In 2008, FDI was further liberalized in 7 key economic sectors including civil aviation, commodity exchanges, construction, industrial parks etc • Foreign companies are actively engaged in India across sectors • National Highway Development Program • Delhi Metro Project • NELP Round VIII – Auctioning of Oil and Gas blocks • Award of 3G Licenses • Private equity players, hedge funds etc. wooing global clients with funds focused on India on themes like infrastructure growth, retail revolution, energy sector boom, economic reforms

  5. Foreign investment flows into India Source - DIPP, Ministry of Commerce and Industry, Government of India

  6. Investor’s perception about India • AT Kearney FDI Confidence Index 2007 placed India at the second position globally Source – A T Kearney

  7. Investor’s perception about India • FICCI Survey of Foreign Direct Investors in India shows that MNCs are BULLISH on India • Our last survey, findings of which were released in early 2007 showed • Almost seven in ten foreign investors are making profits in their Indian operations. • 91% of the companies making profits were successful in meeting their profitability targets in India. • An overwhelming 87% of the respondents feel that there exist opportunities for greater FDI in India. • Nearly 83% of the respondents are considering expansion of their Indian operations. Source – FICCI FDI Survey

  8. What makes India a leading investment destination? • India is world’s largest functional democracy, with a population of over billion people • India is second fastest growing economy after China • India has followed a calibrated globalization process • liberalization of FDI regime • reduction in import tariff • fully convertible current account • moving towards fuller capital account convertibility • compliance with WTO norms • India’s commitment towards reforms continues…..

  9. What makes India a leading investment destination? • India has the advantage of being one of the youngest country… Source: United Nations • In the year 2006, about 52% of India’s population was below 25 years • Median age would be 30 years even as late as 2025 • India’s work force (15-59 years) would go up by around 324 million by 2050.

  10. Strong knowledge base…. What makes India a leading investment destination? • India’s educational infrastructure • Over 380 universities (11,200 colleges) • 1,500 research institutions and around • 9,000 PhDs • Over 200,000 engineering graduates • Over 250,000 post graduates and • 2,000,000 graduates • India has a significant English speaking • population Source : A.T. Kearney India has the third largest scientific and technical manpower in the world The number of MNCs undertaking R&D activity in India has gone up from 100 in the year 2003 to 300 in 2007

  11. What makes India a leading investment destination? Given the demography & rapidly growing middle class, India has huge untapped market potential….. • India’s middle class constitutes 50 million people at present. Likely to go up to 583 million people by 2025 • Households that can afford discretionary spending likely to go up from 8 million at present to 94 million by 2025 Source : McKinsey Global Institute

  12. FDI and India’s industrial transformation • FDI’s contribution to economy and industry has been immense • There are cases where the face of Indian industry changed completely after FDI was allowed • Example – Automobile sector • Volumes have increased; Quality has improved tremendously; Auto exports have started on a large scale; Auto ancillary industry has got a boost; Consumer is spoilt for choice – Numerous offerings increasing by the day • We have absorbed FDI flows because of our manpower and a strong base of professionals • India’s economic milieu has cross fertilized with the positives of FDI and led to advancement of knowledge industries

  13. Thank you FICCI Federation House, 1, Tansen Marg, New Delhi 110001 ficci@ficci.com www.ficci.com

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