India¶s Relations with SAARC, ASEAN & the EU India¶s upcoming service sector

Globalization & Regionalization (Economic) University of Wroclaw Meha Lodha 6th January 2010

Contents 


Introduction India & Regional Organizations
SAARC ASEAN EU 

India¶s Service Sector

Introduction

Facts 
      

Mixed Economy Population 1.17 billion - 1/6th of world¶s population 1.3% annual population growth 66% Literacy rate 22% below Poverty Line 7.8% Unemployment Rate 1.064 males/female Life expectancy 65 years

From 1991...  

   

From socialist inspired economy to market based system Economic liberalisation Automatic approval of FDI in many sectors Constant economic growth Increasing life expectancy, literacy rates Privatization, foreign competition

India and SAARC

South Asian Association for Regional Cooperation 
  

 

Economic and political organization Established 1985 Bangladesh, Bhutan, Maldives, Nepal, Pakistan, India, Sri Lanka & Afghanistan SAPTA enforced in 1995 SAFTA ² No customs duty by 2016 Keen interest ² Ch, J, SK, USA

Share of SA Regional GDP

SAARC Economic Indicators

Source: World Development Indicators 2007 and World Development Report 2008.

Far from successful 
  

Political differences, low trade and investment flows Intra-regional trade barriers ² low intra-SAARC trade High protectionism by India SAFTA restrictions reduce scope of integration

India and ASEAN

India & ASEAN 
       

Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Burma, Laos, Cambodia 1992 Sectoral dialogue partner (trade, investment, tourism, science & technology) 1995 Full dialogue partner 1996 ASEAN Regional Forum Since 2002 Summit Level Meetings Aug 2009 FTA signed Singapore ± Single largest ASEAN investor in India ASEAN 600 m, India 1 b population ASEAN +6

AIFTA 
   



ASEAN-India Free Trade Area Effect from 1st Jan 2010 ASEAN¶s seventh largest trading partner Lift import tariff on >80% of traded products between 2013 and 2016 5% tariff on sensitive goods 2016 Tariffs maintained on 489 very sensitive goods

India¶s trade with ASEAN (B$)

50 45 40 35 30 27.0 25 20 15 10 5 0 2000-01 2001-02 2002-03 Exports 2003-04 Imports 2004-05 2005-06 2006-07 2007-08 11.4 24.4 21.7 36.1 32.6 44.1

Growth (%) in total trade

Source: Ministry of Commerce & Industry, GOI

India and the EU

India & the EU 
   

 

One of the 1st countries to develop relations with EU EU is India¶s largest trading partner (20%) EU is the largest exporting destination of India¶s exports (21%) followed by the US (15%), UAE (9.5%) and China (6.5%) Exports ± Diamonds, petroleum products, textiles, leather Imports ± Aircrafts, machinery, Only 1.98% of EU¶s imports EU has plan to pursue FTA with India

India¶s trade with EU (B$)

45 40 35 30 26.9 25 20 15 10 5 0 -5 2000-01 -2.6 2001-02 2002-03 Exports 2003-04 Imports 2004-05 2005-06 2006-07 2007-08 18.8 19.7 15.1 31.1 28.7

Growth (%) i total trade

Source: Mi istry of Commerce & Industry, GOI

Services 
  

 

Export interest for India IT services & BPO Health Services (including doctors, nurses, telemedicine, etc) Engineering services (including consultancy) Architectural services Banking services Audio ± Visual services 

    

Import interest for India Banking & insurance Retail Telecommunications Education Environmental services Legal Services

S urc : F CC (F D RAT ON OF ND AN CHAMB RS OF COMM RC & NDUSTRY)

FDI
Cumulative FDI (from April 2000 to January 2008) U.A.E Switzerland Countries Japan USA EU Mauritius 0 5,000 10,000 15,000 20,000
$M

590 638 2,563 2,816 4,221 10,227 20,984 25,000
£¢ ¡¡ 

Singapore

Cumulative FDI (From April 2000 to Januray 2008)

r i cu ul iv FD 
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Top 5 sectors attracting FDI inflows from EU
Amount of FDI inflows Ranks Sector Services Sector 1 (Including Financial & Non-Financial) 2,417.32 35.92 In US$ Sector·s share in total FDI inflows From E.U

2

Computer Software & Hardware

366.89

5.49

3

Automobile Industry (Including Passenger Cars Etc.)

359.19

5.33

4 5

Chemicals (Other Than Fertilizers) Electronics

322.68 241.33 3,707.41

4.93 3.83 55.5

Total of above

India¶s investments in EU 
 

Largest overseas investment destination UK is the sought after destination in EU Food, beverages, pharmaceuticals, engineering
Growth Rate and Value of India¶s Direct Investment in EU
Year Growth (%) Value($ million) 83.1 297.4 -50 265.76 687.3 330.15 164.5 600.1 4729.99

2002-03 2003-04 2004-05 2005-06 2006-07

Arcelor Mittal 
 

 

Largest steel company in the world 2006 Mittal Steel (India) take over of Arcelor (Luxembourg) Opposition from France, Luxembourg & Spain Threat of trade war between India and France European Commission approval ± no change in European Economic Area Market Structure

India¶s Service Sector

Leading exporters of commercial services, growth 2000 - 2007

IT & BPO
USD billi n   



Share in exports ± 1% in 1990 to 18% in 2001 Bangalore (India¶s Silicon Valley) Chennai India and EU ± Joint R&D

Particulars IT S rvic - Exports - Domestic IT S-BPO - Exports - Domestic Engineering services, R&D and S f are pr duc s - Exports - Domestic Hardware Total IT industry - Exports - Domestic

FY 2004

FY 2005

FY 2006

FY2007 E

7.3 3.1 3.4 3.1 0.3

10.0 3.5 5.2 4.6 0.6

13.13 4.5 7.2 6.3 0.9

18.1 5.6 9.5 8.3 1.2

2.9 2.5 0.4 5.0 21.6 13.4 8.3

3.9 3.1 0.7 5.9 28.4 18.2 10.2

5.3 4.0 1.3 7.0 37.4 24.1 13.2

6.5 4.9 1.6 8.2 47.8 31.9 15.9

Thank You!

G-20 


IBSA 
   

Since 1999 Organi ati n of i portant industriali ed and developing economies to discuss key issues in global economy India - Founding member and c air country in 2002

Since 2003 India, Brazil, South Africa South-South Cooperation Agriculture, trade, transport, science & technology, defense and others

Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation  Since 1997  Create enabling environment for rapid economic development

Asian Development Bank  

 

Fighting poverty in Asia and the Pacific India - founding member India received micro finance support for private enterprises 2009 - $ 2.9 b fund for proposed projects in India

India¶s Exports
100% 80% 60% 40% 20% 0%

20072008 19 13 16 21 10 S

20062007 18 16 15 21 10 N

20052006 16 18 16 23 10

20042005 17 18 16 22 10 N

20032004 16 19 15 23 9 si

20022003 14 22 15 23 9

20012002 13 21 13 23 8

20002001 13 22 14 24 7 W N

W N North meric N S si N U Countries (27)

U Countries (27)

North meric

Sources   

http://dipp.nic.in/fdi_statistics/india_FDI_Sept ember2009.pdf http://www.economywatch.com/foreign-directinvestment/fdi-india/ http://business.mapsofindia.com/fdi-india/

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