The Embassy of Iceland in India

India: Opportunities
Unlimited
5 November 2009

Rahul Chongtham
Trade Representative
India : Basic Facts
 India is a union of states with Parliamentary
system of Govt.

 28 States & 7 Union Territories

 Land Area: 3.29 Million sq.km

 Population: 1.2 Billion

 Language: English & Hindi

 Independence Day: 15 August 1947

 Republic Day: 26 January 1950

 GDP (PPP) – US$ 3.29 trillion (2008 est.)

 GDP (Official exchange rate) – US$ 1.21 trillion

(2008 est.)

 Age structure:
0-14yrs ( 31%)
15-64 ( 63.6%)
65 years & over ( 5.3%)
India: Fastest Growing Free Market Democracy
World Bank Growth Forecast For 2009
 GDP Composition by Sector (2008 – 2009)

Growth in sectors 2005 - 2008

Indicators 2005 -06 2006 - 07 2007 - 08 2008 -09

Agri & Allied 5.80% 4% 4.90% 1.60%
Industry 10.20% 11% 8.10% 3.90%
Services 10.60% 11.20% 10.90% 9.70%
India: An Attractive Investment Destination

 World Investment Report 2008 from

UNCTAD affirms India as the second
most attractive FDI destination in the
world.

 Top 5 Sector attracting FDI are:

- Services
- Computer – Software & Hardware
- Telecom
- Housing & Real Estate
- Construction sectors

 FDI is open to almost all sectors.

 India Overseas Direct Investment (ODI)

 Increase in India’s ODI is due to large scale acquisitions by

Indian companies growing appetite for an overseas presence and
hunt for energy assets .

 65% of ODI was routed through tax-friendly countries.

Major M&A Deals Undertaken Abroad by India Inc.

Tata USD 12.1 billion

TataSteel
Steelbuys
buysCorus
CorusPlc
Plc

Hindalco USD 6 billion

Hindalcoacquired
acquiredNovelis
NovelisInc.
Inc.

Essar USD 1.58 billion

EssarSteel
Steelacquired
acquiredAlgoma
AlgomaSteel
Steel

Suzlon USD 1.6 billion

SuzlonEnergy
EnergyLtd.
Ltd.acquires
acquiresREpower
REpower

Videocon
VideoconIndustries
Industriesacquired
acquiredDaewoo
Daewoo USD 730 million
Electronics Corporation Limited
Electronics Corporation Limited
Major M&A and Investments Announcements in
India

Vodafone USD 11 billion

Vodafonebuys
buysHutch
Hutch

Plans
Planstotospend
spendononits
itsdevelopment
developmentoperations
operationsinin USD 1.7 billion
India
Indiaover
overthe
thenext
nextfour
fouryears
years

Plans
Plansinvestment
investmentininprivate
privateequity,
equity,real
realestate,
estate,and
and USD 1 billion
private wealth management
private wealth management

Aditya
AdityaBirla
BirlaGroup
Groupincreased
increasedits
itsstake
stakeininIdea
Idea USD 0.98 billion
Cellular by acquiring 48.14-percent stake
Cellular by acquiring 48.14-percent stake

Renault,
Renault,Nissan
Nissanand
andMahindra
Mahindra&&Mahindra
Mahindrahas
has USD 0.905 billion
initiated
initiated a Greenfield automobile plant projectinin
a Greenfield automobile plant project
Chennai.
Chennai.

Mylan
MylanLaboratories
Laboratoriesacquired
acquiredaamajority
majoritystake
stakeinin USD 0.74 billion
Matrix
MatrixLaboratories
Laboratories
 Movement of India’s Foreign Exchange Reserve

 Increase in FDI and FII has facilitated an increase in forex reserves.

 Increase Forex Reserves has enabled prepayment of certain high

cost foreign currency loans of the government.

 It offers adequate security against any possible currency crisis or

monetary instability.
 India: Vibrant Capital Market

 The Sensex breached the 17000 mark on 30th September 2009 as

FII inflows continued to flood the market. This level was last seen
in May 2008.
 India: Foreign Trade
India’s Merchandise Exports/Imports India’s Services Exports/Imports

* All figures in US $ Billion * All figures in US $ Billion

 Petroleum products are the major  Services sector has been a major
contributors towards India’s growing contributor for the increase in exports
imports from India.

 Quality and cost advantage are two

important parameters leveraged by the
Indian producers to market their
products and services
 Merchandised Trade between Iceland & India
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08

Export 9.53 2.3 6.32 3.73 3.78

Import 17.6 12.91 13.05 11.48 13.77

Total Trade 27.13 15.21 19.37 15.21 17.55

* All figures in US $ Million

Main Export items:

Animal and vegetable fats and oils, organic & inorganic chemicals, raw
hides and skins, animal hairs, machinery and mechanical appliances etc.

Main Import items:

Organic chemicals, pharma products, rubber and leather articles, saddles

and harness, apparels and clothing accessories, iron and steel, toys,
games and sports requisite etc.
 Indian Telecom Industry

 Fifth-largest telecom network

in the world; second largest
among the emerging economies.

 The Indian telecom industry

generated revenues of
approximately US$ 32 billion in
2007–08 with a growth rate of 60
per cent over previous year.

 It witnessed a CAGR of
approximately 29 per cent from
2002–03 to 2007–08.
 Indian Telecom Industry
 The mobile subscriber base in India is
likely to reach 500 million by 2010.

 On an average, over 8 million users are

added per month, making India the
world’s fastest growing wireless services
market.

 The subscriber base grew at a CAGR of

43.6 per cent from June 2004 to June 08.

 As on June 2008, India had a tele-

density of 28.33 per cent. Tele-density in
the rural areas is even lower at 9.2 per
cent.

 The government is promoting telecom

manufacturing by providing tax sops and
establishing telecom-specific SEZs.
 Indian Telecom Industry
Top Five Internet Service Providers
by Market Share (as on June 2008)

 The total number of internet subscribers grew from 9.22 million in

June 2007 to 11.66 million in June 2008.

 BSNL is the largest Internet Service Provider followed by MTNL.

 Market Share of Wireless Operators in India
(as of June 2008)

 Bharti Airtel has crossed 100 Million subscriber mark in May 2009.
 Opportunities for Telecom Companies
 3G Services

 Worldwide Interoperability for Microwave Access (WiMax)

 Managed Service

 Virtual Private Network

 Enterprise Telecom Services

 Rural Telephony

 Value-Added Services
 IndianTelecom Industry
Recommendations

 The VAS segment will offer ample opportunities to Icelandic

companies keen on tapping this sector. Demand for good VAS
content providers from mobile operator is expected to increase when
the 3G spectrum rolls out early next year. We will see more VAS in
banking, gaming, advertising, mobile commerce applications which
will improve margins over current SMS value added services.

 The Embassy of Iceland in India can assist Icelandic companies to

market their products and services as well as identify potential
Indian partners for JVs.

 Participating in trade exhibitions such as India Telecom-

International Exhibition & Conference will provide the right exposure
for Icelandic companies to enter the Indian telecom sector.
 Indian Energy Sector
Installed capacity: 145,440 MW as on September 2008.
 Thermal - 64%
 Hydro - 25%
 Other Renewables - 8%
 Nuclear - 3%

 State Sector - 53%

 Central Sector - 34%
 Private Sector - 13%
 Coal is the dominant source contributing 53% of the energy
generation in the thermal segment.

 Besides hydro energy, wind energy dominates the renewable

power generation in India
 Indian Energy Sector
Projected Growth

 Present Per capita Consumption – 631 kwh

 Per capita Consumption by 2012 – 1,000 kwh
 Peak demand Estimation by 2012 – 157 GW
 Investment requirement by 2012 – USD 100 Billion
 Generation – USD 50 Billion
 Transmission & Distribution – USD 50 Billion

Power for all by 2012

 Indian Energy Sector
Capacity Addition – Targets & Achievements

Five Year Plan Year Target Achievement

Eighth Plan 1992 - 1997 30,538 16,423

Ninth Plan 1997 - 2002 40,245 19,015

Tenth Plan 2002 - 2007 41,110 21,180

Eleventh Plan 2007 - 2012 78,577 N.A.*

 In the first 2 years of the Eleventh Five Year Plan only 12500 MW
was added.

 The current power shortfall in India is 15000 MW.

 Indian Energy Sector
Small Hydro Project (SHP) upto 25 MW
 Total installed capacity of Hydro Power in India – 36,348 MW.

 India’s exploitable Hydro Electric potential is estimated to be 150,000

MW. So far only 23% of this potential has been harnessed.

 An estimated potential of about 15,000 MW of SHP exist in India.

Ministry of New & Renewable Energy identified 5415 potential sites with
an aggregate capacity of 14,305.47 MW for projects up to 25 MW
capacity.

 The government has fixed a target to add 1400 MW during the 11th Plan
(2007-12).
Year Target (in Capacity addition Cumulative SHP installed
MW) during the year (in MW) capacity
2007-08 200 205.25 2180.84
2008-09 250 248.93 2429.77
 Indian Energy Sector
State Wise Identified Small Hydel Sites And Potential Up To 25
MW Capacity (as on 31.3.2009)
S.No Name of State Identified Total Capacity ( In
Number of Sites MW)

1 Andhra Pradesh 489 552.29

2 Arunachal Pradesh 566 1333.04
3 Assam 60 213.84
4 Bihar 94 213.75
5 Chhatisgarh 164 706.62
6 Goa 9 9.1
7 Gujarat 292 196.97
8 Haryana 33 110.05
9 Himachal Pradesh 547 2268.41
10 Jammu & Kashmir 246 1411.72
11 Jharkhand 103 208.95
12 Karnataka 128 643.16
13 Kerala 247 708.1
14 Madhya Pradesh 99 400.58
15 Maharashtra 253 762.58
16 Manipur 113 109.1
17 Meghalaya 102 229.81
 Indian Energy Sector
State Wise Identified Small Hydel Sites And Potential Up To 25
MW Capacity (as on 31.3.2009)
S.No Name of State Identified Total Capacity ( In
Number of Sites MW)
18 Mizoram 75 166.94
19 Nagaland 99 196.98
20 Orissa 222 295.47
21 Punjab 234 390.02
22 Rajasthan 67 63.17
23 Sikkim 91 265.54
24 Tamil Nadu 176 499.31
25 Tripura 13 46.86
26 Uttar Pradesh 220 292.16
27 Uttaranchal 458 1609.25
28 West Bengal 203 393.79
29 A&N Island 12 7.91
TOTAL 5415 14305.47
 23 States have announced policies for setting up
commercial SHP projects through private sector
participation.
Indian Energy Sector – Geothermal Energy
 Indian Geothermal provinces
can produce up to 10600 MW of
power.

 Government has identified 340

hot springs in the country and
are planning to develop some of
the Geothermal fields for power
generation.
 Indian Energy Sector – Geothermal Energy
 International consultant, GeothermEx Inc., USA has identified has
identified 6 most promising Geothermal sites for development in
order of the following ranking:
 Tattapani in Chhatisgarh
 Puga in Jammu & Kashmir
 Cambay Graben in Gujarat
 Manikaran in Himachal Pradesh
 Surajkund in Jharkhand
 Chhumanthang in Jammu & Kashmir

 National Hydro Power Corporation (NHPC) has been appointed by

the government as the nodal agency to promote geothermal energy
in India. NHPC plans to develop 2 to 5 MW geothermal power plant
at Puga.

 Chhatisgarh Renewable Energy Development Agency (CREDA) is

currently developing the Tattapani geothermal site.
 Indian Energy Sector
Key Players
(i) National Hydro Power Corporation (ii) Tata Power (iii) Reliance
Power (iv) Jaiprakash Hydro Power (v) L&T (vi) Bhilwara Energy (vii)
Athena Energy & (viii) State renewable energy agencies such as
CREDA, OREDA, etc.

Recommendations:
 As most renewable energy projects in India are with the State
Governments, Embassy of Iceland in India can assist Icelandic
companies to approach the concerned State Governments.
 The Embassy can also facilitate link-ups with Indian energy
companies for possible JVs.
 It would be beneficial for Icelandic energy companies to participate
in trade exhibitions such as the Renewable Energy India Expo.
 Indian IT & IT Enabled Services Sector
IT/ITeS industry: On a steady growth track

 Total IT revenues reached US$ 64

billion in 2008-09 growing at 33 per
cent over previous year.

 Contribution of IT/ITeS industry to

India’s GDP has grown from 1.2 per
cent in 1998 to an estimated 5.5 per
cent in 2008.

 BFSI vertical continues to account

for the largest share of exports at 31
per cent. Telecom vertical accounts
for second largest share of the pie at
19 per cent.
 Indian IT & IT Enabled Services Sector
IT/ITeS industry: On a steady growth track
Indian domestic market, 2008
 Size of the domestic market in 2008 (US$ billion)

was US$ 23.2 billion.

 Hardware accounted for about 50

per cent of the total domestic IT-BPO
spend.

 Direct employment for four million

and indirect employment for 10 to 12
million by 2015.
 Indian IT & IT Enabled Services Sector
Key Indian IT Players in the Sector
 Tata Consultancy Services, Wipro, Infosys, HCL Technologies, Tech
Mahindra, Patni Computer Systems, I-Flex solutions Ltd, L&T Info Tech Ltd
and Polaris Ltd.
Large Off-Shoring Contracts
 TCS won a US$1.2 billion IT & operations support deal from the Nielsen
Company.
 British Telecom awarded a US$1 billion contract to Tech Mahindra.
 GM awarded Wipro a 5-year contract valued at US$300 million
 ABN AMRO awarded a US$500 million 5-year contract to TCS, Infosys &
Patni Computers.
 Infosys won US$250 million outsourcing deal from Philips Electronics.
 Indian IT & IT Enabled Services Sector
India: Value proposition
Cost advantage

 Cost of an engineer is about 20 – 40 per cent of comparable cost in

European Union (EU)
 Selling, general and administrative costs approximately 80 per cent of
comparable cost in EU
 Average offshore billing rate of US$ 20 to 35 per hour; about 50 to 70
per cent lower than EU

Ease of scalability
 675,000 technical graduates per annum, of which 4,00,000 are
engineers
 Over 50,000 MBAs graduating per annum
 Leading firms add more than 10,000 new employees per annum

Global and 24/7 delivery capability

 Indian IT & IT Enabled Services Sector
Key Opportunities
Domestic Market

 Overall size of the domestic market in 2008 was US$ 23.2 billion. It is
currently growing at 20 per cent.

 Domestic IT market is dominated by the hardware spending accounting

for over 50 per cent of the total spending.

 Government is taking up e-governance initiatives and increasing its IT

spends/outlays

 Demand for domestic BPO services increasing rapidly, with niche

verticals like healthcare and retail fast gaining traction apart from the
traditional verticals of BFSI and manufacturing
 Indian IT & IT Enabled Services Sector
Key Opportunities
Knowledge Process Outsourcing (KPO)

 KPO opportunities exist in R&D, business & technical analysis,

animation and design, business market research, etc.

Engineering services outsourcing

 Range of services includes engineering and designing solutions across

diverse industry verticals like telecommunications, automotive,
construction, aerospace, utilities and industrial design.

Legal Process Outsourcing

 Over 1 million lawyers and over 70,000 law graduates passing out every
year; Cost arbitrage -Indian lawyers billing one-tenth of their US
counterparts (US$ 40 to $60 in India compared to US$ 350 per hour in the
US).
 Indian IT & IT Enabled Services Sector
Key Opportunities
Research and analytics

 India emerged as the choice destination for their front-end research and
analysis divisions, migrating from the back-room services off-shoring.

Testing services outsourcing

 Indian export revenues from software testing services were estimated at

US$ 385 million in 2006-07.

Software products

 Indian software products segment presently forms a very small

percentage of the overall Indian IT-ITeS industry. Top 10 companies
contributed 85 per cent to segment revenues.
 Indian IT & IT Enabled Services Sector
Recommendations
 Embassy of Iceland in India can assist Icelandic companies to
market their products & services to the fast growing Indian domestic
market.

 Trade associations like NASSCOM, FICCI & CII can facilitate

meetings & link-ups with Indian companies.

 Indian Embassy in Iceland can be approached for information on

government projects such as National e-Governance Plan.

 Icelandic companies can showcase their products & services by

participating in trade exhibitions like Convergence India.

Business Consultants.
 Indian Food Processing Sector
India is the world’s second largest producer of food.
Product Quantity Rank
Milk 90 million tonnes Highest in the world
Fruits & Vegetables 150 Million tonnes 2nd largest
Livestock 485 million Largest
Poultry 489 Million
Food Grain 204 million tonnes 3rd largest
Fish 7.5 million tonnes 3rd largest

 Size of the food processing sector was USD$ 70 Billion in 2005 and
is expected to reach USD$ 90 Billion in 2012.
 India accounts for only 1.5% of the international food trade.
 Only 2% of agri-produce is processed.
 Sector declared high priority by the government and has set a
target to double process food production by 2015.
 Huge investment opportunities in food processing technology and
equipments.
 Indian Food Processing Sector
Advantage India: Food Processing
 One of the largest producer of food in the world.

 India has diverse agro-climatic conditions and has a large and

diverse raw material base suitable for food processing.
 Rapid urbanization, increase literacy and rising per capita have all
cause rapid growth and changes in demand patterns, leading to
tremendous new opportunities for exploiting the large latent market.
An average Indian spends about 50 per cent of household
expenditure on food items.
 India’s comparatively cheaper workforce can be effectively utilized
to setup large low cost production bases for domestic and export
markets.
 Excellent opportunities exist in fruit & vegetable processing, meat,
fish & poultry processing, packaging, convenience food & drinks,
milk products.
 Indian Film Industry
India dominates world of Films
Country No. Of Feature Films Theatre Admissions Average Ticket
Produced (In Million) Rate (US$)

India 1132 3290 0.5

US 520 1364 7.2
Japan 418 161 11.7
China 400 196 2.2
France 240 190 8.8
Germany 185 129 9
Spain 173 108 8.4
Italy 155 112 8.5
Rep of Korea 113 151 5.9
UK 102 164 9.5

 Indian film Industry is the World’s largest in terms of films

produced as well as the number of cinema-goers. It produces almost
as many films as the US, Japan and China combined.
 Indian Film Industry
 FICCI-KPMG study values the Indian Film Industry at USD$ 2.11
billion and projects its growth at 9.1% till 2013.
 Opening of the film industry to foreign investment has led to many
global production units entering the industry.
 Recent Collaboration:

- Dreamworks Studios and Reliance ADA Group production deal valued at

USD$ 825 Million

- Walt Disney and Yash Raj Films are partnering to produce animated films.

- Warner bros is currently funding film projects.

- Sony pictures entertainment recently co-produced a film with SCB Films.

 The number of countries wooing Bollywood is increasing. Exotic
locations experienced film crews and tax breaks are amongst the
incentives being offered by these countries.
Thank you