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India Buisness Opportunity

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The total wealth of India has tripled in a decade to $3.5 trillion and is expected to double again in the next 5 years (source: Credit Suisse)



1.1 million jobs were created in India in 2010 and this year will see 12.9% salary hike for the employed according to Aon Hewitt, a global HR consultancy group

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The urban-household income would top $4 trillion in next 20 years (US Dept. of Commerce) The Population is expected to be over 1.50 billion by 2050 from the current 1.16 billion; the number of people living in the cities will increase to 590 million by 2030 from the current 340 million, and 180 million new workers will get added into India’s work force by 2030.



By 2020, additional 800 universities and 35,000+ colleges are required to enable the targeted 46 million children to avail college education



The Boston Consulting Group sees a shortfall of 200,000 engineers, 400,000 other graduates and 150,000 vocationally trained workers in the coming years.

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There is only 1 doctor for every 1700 people in India and 1 nurse for every 1250 people 40% of fruits and vegetables produced in India goes wasted India added 18.99 million mobile phone connections in January 2011 alone taking the total figure to 771.18 million



Only 3% have insurance of any kind and less than 1% of Indians participate in Indian stock market

India Business Opportunities

india business opportunities Driven by a growth rate of over 8% in 2010 and a 350 million strong middle-class with increasing purchasing power, the Indian market today is reshaping the world’s economy. India’s GDP crossed the trillion dollar mark in 2007 and is currently in 4th position (PPP) after US, China and Japan. Investment in almost every sector (Education, Food, Energy, Health Care and Retail) of the Indian economy has a promise of high returns that has caught the attention of investors and businesses across the world. Considering that restaurants keep you waiting, malls are packed, movie theatres are full, and airlines and hotels are overbooked showcase the increasing appetite of the Indian consumer. As an example, recognizing that Indian youths strongly favor branded clothes, Levis introduced a special brand ‘Spykar’ for India that is a runaway success. So far only Multi National Companies (MNCs) with their vast resources, know-how and the right connections have been the major beneficiaries of this phenomenal growth in India. Small and Medium Enterprises (SMEs) and Entrepreneurs are just becoming aware of the growth story of India. A simple analysis, taking into account the increasing population (See side box), growing consumption and the shrinking agricultural land, shows that there is a very lucrative market for US companies with products or technologies in the following areas: • Food & Beverages: food processing, food packaging, food warehouse and transport, health drinks, etc.

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Home based: home décor products, kitchenware essentials, bed and bath, etc. Healthcare: diagnostics and testing, medical equipment, health supplements, clean air and water products, etc.



Education: medical/nursing, ‘train the teacher’ programs, automotive mechanics, medical technicians, advanced courses in the upcoming fields of genetics and nanotechnologies. For human resource and skill requirements in the healthcare services industry, your can download a full report by National Skill Development Corporation of India at entryindia.com/files/Healthcare/healthcare.pdf



Consultancy Services: engineering, business development, product development, security analysis, etc.



Infrastructure: waste management, solar and wind technologies, temperature controlled warehouses, air and noise pollution control technologies, towing trucks, and automated parking lot equipment.

Similar business prospects abound in other sectors such as home land security, media & entertainment, hotel/motel, financial investment services, etc. One of the business formats that is rapidly gaining acceptance is "Franchising" which is growing at a rate of 30% annually. While legal infrastructure and ecosystem are in place in India, one must do a thorough research, and due diligence of the potential Franchisee and create binding agreements covering all important aspects of the Franchising before making any investments. One must also understand business norms of India and seek professional help in navigating the paper trail, IP protection, and Tax implications etc. before undertaking partnership agreements with the Franchisee. Top sectors with franchising opportunities are Education and Healthcare due to a huge mismatch between supply and demand now and in the coming years. You may want to take advantage of the fact that US Commercial Service (Dept. of Commerce) regularly takes Trade Missions of US Franchisors to India. Another popular model is Public Private Partnership (PPP) with the Government of India through a ‘tender’ process. In the Infrastructure sector, for example, India is expected to invest $1.2 trillion in revamping or upgrading its ports, roads, bridges, energy plants, etc. Again the US Commerce Service can be instrumental in making the opportunities in this area available to US companies in a timely fashion and help with responding to the RFPs and with the required paperwork. All of the above present a historic opportunity for the SMEs and Entrepreneurs in the US to expand beyond borders to India. US companies with the right know-how have almost unfair advantage for success for several reasons:



President Obama’s National Export Initiative has set a target of doubling US exports to $2 trillion by 2015. To meet this objective, the US Administration has initiated huge incentives to support US exports. Commerce Dept.'s International Trade Administration (ITA) budget is raised by 20 percent to $534 million and 300 international trade specialists are added to help US companies export US goods and services.



Indians have a very favorable view (76%) of the US according to a Global Attitudes Survey. Indian Government officials make regular visits to the US to meet with the industry experts and to promote business and trade opportunities.



The government of India offers multiple incentives to US companies doing business in India. Government incentives include duty free import of capital goods and raw materials, reimbursements of Central Sales Tax, Tax holiday for specified period, 100 per cent repatriation of profits for subcontracting facilities and more.

The following are some selected resources to begin your India strategy:

1.

Reports a. US Commercial Service’s ‘Country Commercial Guide’ on India: buyusa.gov/india/en/ccg2010.doc b. McKinsey Global Institute’s report on India’s urbanization at mckinsey.com/mgi/reports/freepass_pdfs/india_urbanization/MGI_india_urbanization_fullreport.pdf

2.

Websites a. US Commercial Service: buyusa.gov/india/en/ b. India Brand Equity Foundation: ibef.org c. India: Data, Projects and Research by World Bank: worldbank.org.in/ d. entryindia.com for information and services for SMEs and Entrepreneurs

3.

India Business and Travel Guide, indiabusinessandtravelguide.com

MACRO ECONOMIC INDICATORS Population Gross Domestic Product (GDP) during 2010-11 Gross National Income (GNI) during 2010-11 Per Capita Income in 2010-11 Overall Industrial growth (March 2011) Forex Reserves ( for the week ended June 10,2011 ) 1.21 billion US$ 1,597.5 billion US$ 1,584.2 billion US$ 1226.4 7.3 per cent US$ 310.50 billion

Amount of FDI inflows during 2010-11 (April 2010US$ 19.4 billion March 2011)

Cumulative amount of FDI inflows (August 1991 to US$ 146.3 billion March 2011)

Exchange rate INR/1 USD (as on June 21, 2011) Exports April 2011 Imports April 2011 Average literacy rate (census 2001) Life expectancy for males Life expectancy for women

44.9

US$ 23.8 billion

US$ 32.8 billion 64.8% 63.9 years 66.9 years

India at a glance
Area : 3.3 Million sq. km Location: The Indian peninsula is separated from mainland Asia by the Himalayas. The Country is surrounded by the Bay of Bengal in the east, the Arabian Sea in the west, and the Indian Ocean to the south. India occupies a major portion of the south Asian subcontinent. Geographic Coordinates: Lying entirely in the Northern Hemisphere, the Country extends between 8° 4' and 37° 6' latitudes north of the Equator, and 68°7' and 97°25' longitudes east of it. Indian Standard Time: GMT + 05:30 Telephone Country Code: +91 Capital: New Delhi Border Countries: Afghanistan and Pakistan to the north-west; China, Bhutan and Nepal to the north; Myanmar to the east; and Bangladesh to the east of West Bengal. Sri Lanka is separated from India by a narrow channel of sea, formed by Palk Strait and the Gulf of Mannar. Coastline : 7517 km encompassing the mainland, Lakshadweep Islands, and the Andaman & Nicobar Islands. Climate: The climate of India can broadly be classified as a tropical monsoon one. But, in spite of much of the northern part of India lying beyond the tropical zone, the entire country has a tropical climate marked by relatively high temperatures and dry winters. There are four seasons - winter (December-February), (ii) summer (March-June), (iii) south-west monsoon season (June-September), and (iv) post monsoon season (October- November) Terrain: The mainland comprises of four regions, namely the great mountain zone, plains of the Ganga and the Indus, the desert region, and the southern peninsula. Natural Resources: Coal, iron ore, manganese ore, mica, bauxite, petroleum, titanium ore, chromite, natural gas, magnesite, limestone, arable land, dolomite, barytes, kaolin, gypsum, apatite, phosphorite, steatite, fluorite, etc. Political Profile Country Name: Republic of India ; Bharat Ganrajya Government Type: Democratic Republic with a Parliamentary system of Government. Administrative Divisions : 28 States and 7 Union Territories. Constitution: The Constitution of India came into force on 26th January 1950. The Constitution of India is the fountain source of the legal system in the Country. Executive Branch: The President of India is the Head of State, while the Prime Minister is the Head of the Government and runs office with the support of the Council of Ministers who forms the Cabinet. Legislative Branch: The Federal Legislature comprises of the Lok Sabha (House of the People) and the Rajya Sabha (Council of States) forming both the Houses of the Parliament. Judicial Branch: The Supreme Court of India is the apex body of the Indian legal system, followed by other High Courts and subordinate Courts. National Days:

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26 th January (Republic Day) 15 th August (Independence Day) 2 nd October (Gandhi Jayanti; Mahatma Gandhi's Birthday)

Demographic Profile Population (Census 2011): 1210.19 Million Males: 623.72 Million, Females: 586.46 Million) Birth Rate (2001 census): 24.8 Percent Death Rate (2001 census): 8.9 Percent Density of Population (Census 2011) : 382 Persons per square kilometer Life expectancy at Birth (As of September 2005) : Males : 63.9 Years, Females : 66.9 Years Ethnic Groups: All the five major racial types - Australoid, Mongoloid, Europoid, Caucasian, and Negroid find representation among the people of India. Religions: According to the 2001 census, out of the total population of 1,028 million in the Country, Hindus constituted the majority with 80.5%, Muslims came second at 13.4%, followed by Christians, Sikhs, Buddhists, Jains, and others. Languages: There are 22 different languages that have been recognised by the Constitution of India, of which Hindi is an Official Language. English has by law been designated the language for official purposes. Literacy Rate (Census 2011): 74.04 Percent Males: 31.98 Percent, Females: 49.10 Percent

Advantage India • • • • • • • • • World's largest democracy with 1.2 billion people. Stable political environment and responsive administrative set up. Well established judiciary to enforce rule of law. Land of abundant natural resources and diverse climatic conditions. Rapid economic growth: GDP to grow by 8.5% in 2010-11* and 9.0% in 2011-12. India's growth will start to outpace China's within three to five years and hence will become the fastest large economy with 9-10% growth over the next 20-25 years (Morgan Stanley). Investor friendly policies and incentive based schemes. Second most attractive Foreign Direct Investment (FDI) location in the world: India received a total of US$ 25.9 billion of FDI in 2009-10. Healthy macro-economic fundamentals: Investment rate is expected to be 37% in 2010-11 and 38.4% in 2011-12 while Domestic Savings rate is expected to be 34% in 2010-11 and 36% in 2011-12. India's economy will grow fivefold in the next 20 years (McKinsey). Cost competitiveness; low labour costs. Total labour force of nearly 530 million. Large pool of skilled manpower; strong knowledge base with significant English speaking population. Young country with a median age of 30 years by 2025: India's economy will benefit from this "demographic dividend". The proportion of population in the working age group (15-59 years) is likely to increase from approximately 58% in 2001 to more than 64% by 2021. Huge untapped market potential. The urban population of India will double from the 2001 census figure of 290m to approximately 590m by 2030 (McKinsey). Progressive simplification and rationalization of direct and indirect tax structures. Reduction in import tariffs. Full current account convertibility. Compliance with WTO norms. Robust banking and financial institutions.

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"* India's financial year is from April to March. 2010-11 above means April 2010-March 2011."

Indian Economy India has undergone a paradigm shift owing to its competitive stand in the world. The Indian economy is on a robust growth trajectory and boasts of a stable annual growth rate, rising foreign exchange reserves and booming capital markets among others. Indian economy is estimated to grow at 8.6 percent in 2010-11 as compared to the growth rate of 8.0 percent in 2009-10. These GDP figures are based at factor cost at constant (2004-05) prices in the year 2010-11.The growth rate of 8.6 per cent in GDP during 2010-11 has been due to the robust growth rates of over 8 per cent in the sectors of manufacturing, construction, trade, hotels, transport and communication, financing, insurance, and, real estate and business services. Agriculture sector registered a growth rate of 5.4 percent in 2009-10. A growth rate of 18.3 percent is estimated for GDP at current prices in the year 2010-11. Agriculture Sector The agriculture, forestry and fishing sector is likely to show a growth of 5.4 per cent in its GDP during 2010-11, as against the previous year’s growth rate of 0.4 per cent.The estimate of GDP from agriculture in 2010-11,according to the Department of Agriculture and Cooperation (DAC),production of foodgrains and oilseeds is expected to grow by 6.5 per cent and 11.9 per cent, respectively, as compared to the previous agriculture year. The production of cotton and sugarcane is also expected to rise by 41.2 per cent and 15.2 per cent, respectively, in 2010-11. Among the horticultural crops, production of fruits and vegetables is expected to increase by 4.1 per cent and 3.8 per cent, respectively, during the year 2010-11. Industry Sector The growth in GDP for mining and quarrying and manufacturing sectors during 2010-11 is expected to be 6.2 and 8.8 percent respectively over previous year. According to the latest estimates available on the Index of Industrial Production (IIP), the index of mining and manufacturing registered growth rates of 8.0 per cent and 10.0 per cent during April-November, 2010. The estimated growth rate for construction sector is 8.0 percent in 2010-11. The key indicators of construction sector, namely, cement production and steel consumption have registered growth rates of 4.4 per cent and 8.8 per cent, respectively during April- December, 2010. Services Sector The estimated growth in GDP for the trade, hotels, transport and communication sectors during 201011 is placed at 11.0 per cent, mainly on account of growth during April- November, 2010-11 of 14.9 per cent in passengers handled in civil aviation , 21.3 per cent in air cargo handled and 40.9 per cent in stock of telephone connections. The sales of commercial vehicles witnessed an increase of 34.1 per cent per cent in April-December, 2010. The financing, insurance, real estate and business services sector is expected to show a growth rate of 10.6 per cent during 2010-11, on account of 14.0 per cent growth in aggregate deposits and 22.6 per cent growth in bank credit during April- November 2010 (against the respective growth rates of 18.6 per cent and 10.1 per cent in the corresponding period of previous year). The growth rate of community, social and personal services during 2010-11 is estimated to be 5.7 per cent

INVESTMENT POTENTIAL FOR INVESTMENT IN INDIA



India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market. India is also one of the few markets in the world, which offers high prospects for growth and earning potential in practically all areas of business.



According to the Federation of Indian Export Organisations (FIEO) , the country's exports would cross USD 300-billion in 2011-12."In FY 11, exports touched USD 246-billion and we expect it to reach the USD 300-billion mark in FY 12. Asia, Latin America and Caribbean (LAC) region and Africa have been the main contributors to this growth," FIEO President, Ramu Deora, said.Also, the signing of Comprehensive Economic Cooperation Agreement (CECA) and Free Trade Agreement (FTA) with Asian countries is expected to raise Asia share in our exports to 55 per cent by 2014, he said.



India's petroleum refining capacities is expected to rise to 240 million tonnes per annum (MTPA) by March 2012 from the current 188 MTPA, attracting an estimated investment of US$ 13.5 billion-US$ 14.6 billion. The capacity addition is believed to boost country's exports of petroleum products, informed a top government official.S Sundereshan, secretary, ministry of petroleum & natural gas, government of India stated that the country would have an excess petroleum refining capacity of around 90 million tonnes per annum in next 12 to 18 months. "Currently, we have an installed refining capacity of 188 MTPA, while several green field refinery projects are lined up and are expected to be operational by March 2012. This will increase the total refining capacity to 240 million tonnes," he said . Currently, India's total demand for the petroleum products is pegged at around 140 MTPA. This creates a spare capacity of 48 million tonnes per annum at the refineries. The spare capacity will increase to around 90 million tonnes per annum. The domestic demand is expected to be around 142-143 tonnes per annum."We will be actually exporting a total of 90 million tonnes of petroleum products to some of the most developed countries including the US and European countries," added Sundereshan.



Mobile value-added services will generate US$ 12.3 billion in sales by 2015, more than double the US$ 4.0 billion figure currently, consulting firm PricewaterhouseCoopers said in a report. The present student community will be the largest consumers of value-added services in the next four years, the study revealed. It also adds that the new generation of content users will demand more entertainment and utility-based services. As students become tomorrow's working class, capable of high income & high propensity to pay, they are likely to generate incremental revenue of US$ 3.3 billion in 2015. The consulting firm had sampled 1,050 respondents across Delhi, Mumbai, Hyderabad, Bangalore, Chennai, Bhubaneswar, Kochi, Ahmedabad, Pune and Kolkata, for its study. PwC projects the working population to make up around 50% of the subscriber base, which is expected to be around 1.2 billion in 2015, therefore increasing revenue flows.



The Indian biotechnology sector is expected to touch the US$10 billion mark by 2015 on the back of emerging opportunities across various verticals, namely biopharma, agri-biotechnology, industrial biotechnology among others. Presently, the biotechnology sector in the country is estimated to be around US$ 4 billion of which around 40 per cent is contributed by Karnataka. “Bangalore hosts 52 per cent of the core biotechnology companies in the country and around five top biotech companies are in the city. It shows the favourable ecosystem for biotechnology industry in the state. We will make further efforts to boost growth of the industry,” B.S Yeddyurappa, Karnataka chief minister, said after inaugurating Bangalore India Bio 2011. He also said that the state was about to open four biotechnology parks in various parts of the state. Presently, the state is in the process of promoting biotech finishing schools to create skilled workforce for the industry.

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