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INCREDIBLE INDIA: A BILLION OPPORTUNITIES by Susmita G Thomas Ambassador of India Turkey

INCREDIBLE INDIA: A BILLION OPPORTUNITIES by Susmita G Thomas Ambassador of India Turkey. June 13, 2013. WHAT IS THE INDIA STORY?. Even though the world has just discovered it, the India growth story is not new! It is continuing for over 25 years.

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INCREDIBLE INDIA: A BILLION OPPORTUNITIES by Susmita G Thomas Ambassador of India Turkey

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  1. INCREDIBLE INDIA: A BILLION OPPORTUNITIES by Susmita G Thomas Ambassador of India Turkey June 13, 2013

  2. WHAT IS THE INDIA STORY?

  3. Even though the world hasjust discovered it, the Indiagrowth story is not new! It is continuing for over 25 years

  4. Today’s India….is an emerging economic powerhouse India among Top 15 countries in terms of GDP at constant prices Third largest economy in the world in terms of GDP at Purchasing Power Parity (PPP) (After US & China) Straddles traditional Sea routes through Indian Ocean connecting Asia / Europe / Middle East Enjoys relatively high cost arbitrage for manufacturing & services industries in developed world India has recently overtaken Japan in 2013 (GDP – PPP) Fast -growing educated motivated young population (urban and rural) ; median age 27 yrs; consumption well below optimum levels Has huge manpower base (1.2 bn) , diversified natural resources & relatively strong macro-economic fundamentals

  5. 28 Years of Growth (%) Average annual GDP growth 10 GDP growth forecast in 2012-13 is 6.0% & 2013-14 at 7.2% 8.9 8 6.0 6 3.5 4 1.0 2 0 1900-1950 1950-1980 1980-2002 2002-2007

  6. POPULATION GROWTH IS SLOWING (%) 2.5 2.2 2.1 2.0 1.8 1.5 1.5 1.0 1.0 0.5 0 1901-1950 1951-1980 1981-1990 1991-2000 2001-2010 Sources: 1900-1990: Angus Madison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001)

  7. POPULATION IS TURNING MIDDLE CLASS! (m) 0 32% 22% 8% 400 368 300 200 220 100 65 1980 2000 2011 Source: The Consuming Class, National Council of Applied Economic Research, 2002

  8. POVERTY IS CONSISTENTLY DECLINING (%) 50 1% of India’s population(10 million) has been crossing poverty line each year for 25 years Equals ~ 250m 46 40 30 26 20 16 10 0 1980 2000 2010

  9. PER CAPITA INCOME HAS BEEN CONSISTENTLY INCREASING! 1,178 1980 2012 3,650 US$ ppp Source: World Bank

  10. LITERACY IS RISING (%) 100 80 80 65 52 60 40 17 20 0 1950 1990 2000 2010 Source: Census of India (2001)

  11. WHERE DO WE STAND TODAY? • Growth fell to 6.7% in 08-09; 7% in 09-10, still 6% in 2012 • GDP growth predicted at 6.9 to 7.2% in 2013-2014 • Growth is still in positive integers • Pain has been less than in China • Competitive companies have recovered faster. • Risk of protectionism has receded • Recovery has been among the global front-runners

  12. HUGE CHANGES HAVE TAKEN PLACE SINCE Economic REFORMS in 1991…

  13. India continues on this path of dramatic growth … As a result India will emerge as a “top 4” world economies by 2025 (gdp us$ bn)

  14. India has unprecedented rise in external trade …. • Strong domestic consumption linked with buoyant international trade in goods & services . (52 % growth 2011-12) @US$160 Bn exports • Indian products with cost advantage adds an edge to Indian companies • Imports by India include petroleum products, minerals machinery and electronic goods • India ranks 21 in leading global exporters (2009) & 14 among global importers • In commercial services trade India is at 12th rank in global exporters India exported 87 bn $ of commercial services in 2009

  15. India now IS an attractive investment destination… • FDI inflow for the period April 2000- August 2011 reached $ 219billion • UNCTAD’s World Investment Prospects Survey 2010-12 ranks India second most favored investment destination (after China, Brazil, United States & Russian Federation) • Singapore (9%), USA (7%), UK (5%), Netherlands (4%), Cyprus (4%), Japan (4%), Germany, France & UAE are among the top ten investors • Ranked third in A.T. Kearney FDI Confidence Index 2010 • Construction (including Roads & Highways, Housing & Real Estate) are among sectors attracting high FDI equity (7%)

  16. India NOW ATTRACTIVE INVESTMENT DESTINATION….

  17. RISE OF GLOBALLY COMPETITIVE PRIVATE COMPANIES

  18. The economy is growing even IN REAL, NON-TRADTIONAL Ways!

  19. GlobalLyRankED Human Resources

  20. SKILLED ENGLISH SPEAKERS “By 2010 India will have world’s largest number of English speakers”“When 300 million Indians speak a word in a certain way, that will be the way to speak it.” Professor David CrystalCambridge Encyclopedia of the English Language

  21. WHERE ARE WE GOING? India no. 2 in 2050 India’s GDP will exceed that of Italy, France, Germany & Japan by 2040

  22. PER CAPITA INCOME On a ppp basis ($000) 40 30 20 10 0 2000 2005 2020 2040 2066 37,000 16,800 5,800 3,050 2,100

  23. INDIA WILL BE MORE MIDDLE CLASS WITH INCREASED PURCHASING POWER West of theKanpur-Chennai line East of theKanpur-Chennai line 50% 50% Kanpur- 32% 22% 8% 1980 2000 2010 2020 2040

  24. HIGH NET WORTH INDIVIDUALS 20.5% & GROWING

  25. HOW THE WORLD VIEWS India

  26. Comparing India & turkey

  27. Trade varied, independent of any one or volatile item, touched US$7 billion in 2011….

  28. Relations robust, stronger trade links shows potential for huge economic growth…

  29. Sector Snapshots: construction & FURNITURE

  30. construction

  31. Competitiveness of India's infrastructure lags behind GLOBAL benchmarks… Roads Quality Rail Road Quality

  32. Overall Competitiveness of India's infrastructure Quality of overall infrastructure

  33. Potential pvt sector in infrastructure is significant in next 10 years… Planning Commission Data on Infrastructure Investment in India

  34. Thus Creating significant opportunities for pvt sector in xiith plan 2014-17….

  35. Resulting in significant opportunities for pRIVATE sector…. National Highway Dev Program Expressways State Highway Development Remaining NHs Total 20527 6,355 10,000 20,529 57,411

  36. CONSTRUCTION ADVANTAGE INDIA The Indian construction industry has been on a high growth trajectory for more than a decade, led by buoyancy in sectors such as real estate and infrastructure. High growth in construction sectors India produces more than 0.4 million engineers every year. Moreover, India’s cost of skilled labour is the lowest in the world, with an entry-level engineer available at an average cost of about US$ 8,000 per annum. The Union Budget 2012-13 has allocated US $883 billion (INR 50 Lakh crore) to the infrastructure sector, reflecting the Government of India (GoI)’s strong focus on the development of India’s infrastructure. Availability of skilled manpower Strong government focus Advantage India Government expenditure on infrastructure is likely to result in increased construction expenditure of nearly US$ 253. 94 billion (INR 12,189 billion) between 2008–09 and 2012–13). High growth potential Easy availability of raw material India is the fifth-largest producer of crude steel in the world (2008), with a production volume of 54.5 million tonnes. Modern technology

  37. Overview of construction industry…. All values in Billion USD

  38. Proposed investments IN major sectors in 2012-17

  39. Requirements of human resources for construction by 2022…. To sustain the growth of construction India needs an additional 4 million workforce

  40. CONSTRUCTION MATERIALS • Increased Government expenditure on infrastructure will result in increased construction expenditure of ~ US$ 253.94 billion in 2008–13. • Growth of construction materials industry directly linked to Indian economy, growing with investments in infrastructure/ related sectors. • Construction equipment market divided into 4: - earth-moving equipment, material-handling equipment and cranes, concrete equipment and road-building equipment. • 200 Indian manufacturers service construction equipment market. • Production of cranes &lifts/escalators is to rise by 20.3% and 11.9%, respectively in 2012-13 • Equipment sales expected to grow by 26% over previous year. • Currently, the equipment market is largely import driven, with India importing construction machinery worth US $181 million in 2009, up by 55 per cent over 2008.

  41. Base costs OF CONSTRUCTION MATERIALS….

  42. Indirect taxes….

  43. CONSTRUCTION – POLICY AND REGULATORY FRAMEWORK • The GoI has permitted 100 per cent FDI in construction and development projects to attract more investment. Some of the key specifications are US$ 2 million limit on lump sum payments under the automatic route. • Royalty to be levied as 5 per cent on domestic sales and 8 per cent on exports, net of taxes. • The depreciation on general plant and machinery is proposed at about 15 per cent. • Specific initiatives by the GoI that positively impact the engineering sector are Tariff protection on capital goods has been removed. • Various initiatives are focussed on infrastructure development and construction. • The GoI has also introduced initiatives to increase power generation and improve the quality of power supply. • Custom duties on various equipment have been reduced.

  44. CONSTRUCTION - OPPORTUNITIES • The roads and bridges sector will continue to be a major demand driver for the construction industry, with the National Highway Development Program (NHDP) expected to generate orders worth US$ 55 billion over the next five years. • In addition, the maintenance of national and state highways and other roads is likely to create demand for road construction and maintenance-related equipment and materials. • Increased government focus on the development of greenfieldports and airports and capacity expansion at existing ports is expected to maintain a consistent demand for construction equipment and materials. • Other demand drivers include water and irrigation projects, urban infrastructure development, urban transportation projects, and water supply and sanitation projects. • Capacity expansion in the steel, cement, oil refining and power sectors to meet growing infrastructure investments in India, is also expected to generate demand for construction equipment. • •The equipment rental business is another opportunity driver, with the industry expected to double in size to 16 per cent by 2015. • •The export opportunity is expected to grow on the back of rising cost pressures on developed countries and due to the emergence of low-cost competitive suppliers and original equipment manufacturers (OEMs) in India.

  45. FURNITURE

  46. FURNITURE: TWO SECTORS

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