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New Mega Trends in India

Macro to Micro Implications to Businesses, People, and Society

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NE81-MT

May 2015
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Contents

Section

Slide Numbers

Executive Summary

Research Scope, Objectives, and Methodology

27

Mega Trend 1Connectivity and Convergence

34

Mega Trend 2Bricks and Clicks

42

Mega Trend 3Social Trends

55

Mega Trend 4Economic Trends

62

Mega Trend 5Urbanization

71

Mega Trend 6Smart is the New Green with Smart Cities

80

Mega Trend 7Innovating to Zero

83

Mega Trend 8New Business Models

87

Mega Trend 9Future of Infrastructure

94

Mega Trend 10Future of Energy and Resources

101

Mega Trend 11Health, Wellness, and Wellbeing

111

Mega Trend 12Future of Mobility

117

Conclusion

128

Appendix

136

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Executive Summary

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Key Findings

While India will witness a high growth in population on one side, great progress will be witnessed in the
area of connectivity. It is anticipated that around 4 billion devices would be connected in 2025. This will
not only include mobile phones and tablets but also other connected devices, such as smart TVs.

Indias digital economy will explode with the proliferation of devices, and estimates for Indias Internet
economy (as measured by total ICT spending) to be $266 billion in 2020. The Internet economy will
account for nearly 7% of the countrys gross domestic product (GDP).

Online retail will emerge as one of the fastest growing industries in India, with a market potential of
$35.08 billion by 2025 that accounts for nearly 4% of total retail. This growth will compel many retailers
to move from a bricks model to a bricks and clicks model that amalgamates online channels with brick
and mortar stores.

India will emerge as a reliable and affordable satellite launch service provider and manufacturer for the
world. India can deliver a satellite in approximately 28 months, against the global average of 30 months.
By 2020, India will launch 76 satellites, 10 space missions, and 30 launch vehicles.

Mobile apps downloads in India will reach 10 billion apps by 2020. Key mobile-based industries such as
mobile banking and governance in India would benefit as a result, with a consolidated value of $9 billion
by 2020.
Source: Frost & Sullivan

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Key Findings (continued)

India's GDP will reach $3.4 trillion by 2020, but holds the potential to reach nearly $4 trillion if
investments and manufacturing growth are more aggressive than expected. In the aggressive growth
scenario, India could displace the UK and become the 5th largest economy by 2025 from its current
position as 10th.

India will gradually shift from a services-based economy to an industry-driven economy by 2025 with
increased contribution from industries and the manufacturing sector. Indias manufacturing sector, in
terms of gross value added to GDP (at the current growth rate), could reach $1,149 billion by 2022 and
contribute 25% to GDP.

Maharashtra would account for 15.8% of the country's total GDP, and the top 5 states will account for
45.7% of country's GDP in 2020.

India is expected to become one of the global leaders (top 5) in at least 10 big markets of the future. It
will be the 5th largest exporter in the globe and the largest manufacturer of chemicals. It will be also
become the largest consumer market for luxury goods and technology services, such as direct-to-home
TV and mobile apps.

10

India will become the 3rd largest automotive market by 2025, with nearly 7 million car sales during the
period. It will become the major manufacturing hub for cars in Asia with the likes of Hyundai expanding
manufacturing in India. Three out of 10 two-wheelers will be an electric vehicle.
Source: Frost & Sullivan

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Key Findings (continued)

11

Around 38% of the total population (534.8 million) of India will be living in urban regions in 2025 and
cities will account for 80% of India's GDP in 2030. States like Delhi, Tamil Nadu, Andhra Pradesh,
Karnataka, Maharashtra, Madhya Pradesh, West Bengal, and Gujrat will have urbanization rates over
30%.

12

India will have 3 Mega Cities and 4 Mega Regions by 2025, each with populations over 15 million, and
21 sustainable cities by 2025. A Mega City will have a minimum population of 8 million and will
contribute a GDP of $250 billion in 2025. Indias Mega Cities include Mumbai, Kolkata, and Delhi.

13

India will witness the development of smart cities this decade as the country embarks on an ambitious
plan to upgrade urban infrastructure. An estimated investment of $216 billion will be pumped into Indias
basic urban infrastructure to 2020, of which the government has stipulated close to $1.2 billion for smart
city investment.

14

With a planned 100 smarter cities in India, each of the 29 states in India will have at least 2 smart cities.
Three will be completed by 2019 along Indias most ambitious infrastructure project, the Delhi-Mumbai
Industrial Corridor.

15

India is expected to invest an estimated $1.2 trillion in total infrastructure (urban and rural) by 2017.
Private investment will constitute about 50% of the investment, most of which will be deployed on public
private partnership (PPP) basis. Transport infrastructure would account for a third of the investment.
Source: Frost & Sullivan

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Key Findings (continued)

16

India's Gen Y constitutes a third of the country's population and will join the working-age group, forming
67% of the working-age population by 2025. This will create the need for an additional 320 million jobs
in India by 2020.

17

India will emerge as the largest consumer class of the future, with middle class individuals accounting
for 66% of India's population (895 million) in 2020 and the lower middle class emerging as the biggest
middle class segment at 38%.

18

Frugal Innovation will become Indias key value proposition in manufacturing offering Value For Many.
Frugal Innovation business models have already yielded low-cost alternatives in simple goods like
tablets (Akash) to complex goods such as satellites (Mangalyaan cost 11% less than US and Chinese
satellites).

19

As India grows its stance as an industrial and knowledge economy, energy demand will grow to
1,509 mtoe in 2030; this is double the current demand. India will need to import nearly 1/3rd of its
demand in 2030. India will also turn to renewable sources and their generation could become a
formalized part of the grid.

20

Indias growth story to 2020 will also put pressure on its physical resources with significant gaps
expected in both food and water. Indias ground water is depleting at a fast rate of 25% and by 2025
could face water stress with a supply gap of 100 trillion litres.
Source: Frost & Sullivan

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Rise of Connected Devices in India


There will be 4 billion connected devices by 2025.

Devices

Data

Connections

4 billion connected
devices by 2025

10 exabytes monthly
traffic by 2020

500 million mobile


broadband connections
by 2025

2.5 billion mobile


devices by 2025

38 exabytes a month
mobile data traffic by
2020

1.36 billion cellular


connections by 2025

3 connected devices for


every user by 2025

18 mbps average Internet


speed by 2020

310 million 3G
broadband connections
by 2025

Source: IDCEMC Study; Ericsson; Cisco; Frost & Sullivan


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Connected Devices and Indias Internet Economy


Indias Internet economy (as measured by total ICT spending) will reach $266 billion by 2020, accounting for
nearly 7% of the countrys GDP.

Internet Economy Potential, India, 2020


Internet Economy as percent of GDP

Percent Breakdown of Internet Economy


8%

93%
Private
Economy

India GDP
$3.8 trillion
Internet
Economy*
$266 billion

Enterprise
Economy

Public
Economy

7%
55%
37%

*Internet economy here represents total ICT spending in India.


Source: ITU; OECD; Frost & Sullivan
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Mobile EconomyGrowth in Mobile Based Industries in India


Key mobile-based industries in India are expected to worth a consolidated $9 billion by 2020.

Potential of Industries in India

Potential in Key Mobile Based Industries, India, 2020


mHealth

mBanking

Size =
$500 Million

Size =
$5$6
Billion

mBanking in
India could cover
142 million
people by 2020
who are currently
unbanked and
dont have
access to
financial
services.

mHealth has
shown to reduce
default rates in
treatments to
almost 1% in
diseases such as
tuberculosis in
India.

mGovernance

mCommerce

mEntertainment

Size =
$1.0$1.5
Billion

Size = $1.3
Billion

Size =
$3.6$4.0
Million

mGovernance
facility will help a
large rural
population, as it
does not require
a PC or
knowledge of
English, which is
the case,
opposed to
eGovernance.

With close to 900


million wireless
subscribers and
150 million
mobile Internet
users in India,
mCommerce
presents itself
with a huge
potential.

There are nearly


300 million
subscribers for
premium content
services such as
mobile gaming,
images, video
downloads, and
so on in India
already.

= market size in terms of fee revenue (value added revenue) in 2020.

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Source: GSMA; TRAI; RBI; Frost & Sullivan


10

India GDP ProjectionsIndia Needs to Grow at 10% per Annum


Indias GDP will reach $3.4 trillion by 2020, but holds the potential to reach nearly $4 trillion if investments
and manufacturing growth is more aggressive than expected to 2020.

Nominal GDP, India, 20112020


7%

3.4
2.6

Current
Trajectory

1.9

2011

2014

2017

2011

3.8

2.0

2014

2017

Manufacturing
(% of GDP)

17.0%

Investment
(% of GDP)

40.0%

Manufacturing
(% of GDP)

25.0%

2020

2.9
1.9

34.8%

2.0

10%
Accelerated
Trajectory

Investment
(% of GDP)

2020

Note: GDP figures are in $ Trillion.


Source: International Monetary Fund; The Hindu; Business Line; Frost & Sullivan
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Indias Race to Superpower5th Largest by 2020 if Growth


Accelerates
India could displace UK to become the fifth largest economy in terms of nominal GDP by 2020.
Top 10 Countries by Unadjusted Nominal GDP, Globally, 2013 and 2020
2013

2020: Current

2020: Accelerated

United States

United States

United States

China

China

China

Japan

Japan

Japan

Germany

Germany

France
United

United Kingdom

Germany

5th

India

India

United Kingdom

Brazil

France

France

Russia

Brazil

Brazil

Italy

Russia

Russia

10th India

Italy

Italy

India's economy is 10th


largest and only about a
third of Japan's in terms of
absolute unadjusted
dollars (nominal GDP).

6th

India, growing at 7%, will


become the 6th largest
economy, overtaking its
BRICs counterparts Brazil
and Russia.

If India fulfills it vision to


become a manufacturing
hub, it could displace UK
and enter the top 5 by
2020.
Source: IMF; Frost & Sullivan

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India IncIndias Industrial Growth Forecast


The industrial cycle peaks one year after each GDP peaks. Based on this correlation, India Inc will realize
the full potential of the Indian revival story by 2018.
Correlation Between GDP and Industrial Growth, India, 20002019

Two Year Consistent High

3,500

Manufacturing Reaches New


Highs

Industrial production at a 2
year high

Manufacturing grew a record


9% from previous year

Production manufacturing
index and measures of
business and consumer
confidence increase

25
20

2,500

15

2,000

10

1,500

5
Revised Outlook

0
(5)

GDP

2019

2018

2017

2016

2015

2014

2013

2012

2010

2009

2008

Transition from public stimulus to


private-sector-led growth

2007

2006

2005

2004

2001

2000

2003

India became second


fastest growing economy in
the globe during the period

500
0

Despite a serious drop in


manufacturing, Indias revival was
quick due to service sector inputs

Strong Economy

2011

1,000

2002

GDP (Billion)

3,000

The next industrial


peak can be
anticipated in 2018, as
the effects of growing
demand and
improvements in
infrastructure trickle
down to manufacturing

Industrial Production Index (2007=100)

2018 Industrial Peak

(10)

Industrial Production Index


Source: US Federal Reserve; Frost & Sullivan

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India in the Industry League TableThe Future Big Industries of India


India is expected to become one of the global leaders (top 5) in at least 10 big markets of the future (2020).

Rank

Market

Region

Market Potential (2020)

Smartphones

Global

650 million smartphones

Direct-to-Home (DTH)

Global

120 million subscribers

All Exports

Global

$1 trillion value of exports

Automotive

Global

5 million cars by 2020

Retail

Global

$977 billion retail by 2020

Luxury

Asia

$15 billion by 2020

Steel

Global

63 million million tonnes (mt) output in 2020

Defense

Global

$65 billion spending by 2020

Chemicals

Global

$250 billion exports in 2020

Equity Market

Global

$3 trillion market value in 2020


Source: IBEF India Brand equity Foundation; Government of India; Frost & Sullivan

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14

Smart City Investment


India needs to invest an estimated $216 billion to 2020 for basic urban infrastructure, of which the
government has stipulated close to $1.2 billion for smart city investment.
Total Infrastructure Investment Needed, India, 20122020

Urban

Non-urban

$216
Billion

10%

20%

Total
Infrastructure
Investment =
$1.17 Trillion

$954
Billion

30%

40%

50%

60%

70%

80%

90%

100%

Share of Urban and Non-Urban Infrastructure Investment Measured in Percent

Half a percent
($1.2 billion) of
total urban
infrastructure
investment
needed will be
for smart
cities funded
by the public
sector.

Key Urban Infrastructure Clusters

Smart Cities

(Investment Need Projection to 2020)

0.5%

($1.2 Billion)

Water Supply

Waste
Management

Urban Roads

$18 billion

$27 billion

$95 billion

Traffic
Management

Renewal and
Development

$5 billion

$23 billion

Street
Lighting
$1 billion

Mass Transit

$25 billion

Others

$23 billion

Source: World Bank; High Powered Expert Committee of the Government of India (HPEC);
Planning Commission; Ministry of Urban Development; Frost & Sullivan
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Indian InfrastructureAn Estimated Trillion Dollar Investment


Private investment constituted about a third of infrastructure investment in the 11th Plan, and this is
projected at 50% for the 12th Plan period.

Infrastructure Planned Outlay, India,


20132017

2013

2014

2015

2016

2017

Cumulative Infrastructure Planned Outlay


by Segment, India, 20132017

148

172

201

231

272

Total
Infrastructure
Planned Outlay
$1.02 trillion
(20132017)

Roads and
Bridges

154

16%

Railways

123

12%

Ports

41

4%

Airports

20

2%

Telecom

174

17%

Others*

512

50%

Note: Infrastructure figures are in $ billion.


*Others include Electricity, Irrigation, Water Supply and Sanitation, Storage, oil and gas pipelines.
Source: Government of India; Frost & Sullivan
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eRetailing Landscape in India


Online B2C commerce is expected to reach $35.08 billion by 2025.

Online

$977
Billion
Top Segments

Non-online
$35.08
Billion

$490
Billion

Consumer Electronics

12.28

35%

Computer Hardware

8.77

25%

Apparel

7.02

20%

Books

4.21

12%

Jewelry/Luxury
Goods/Accessories

1.75

5%

Others*

1.05

3%

$942
Billion

$2 Billion

$488
Billion

2012

Percent of
2025 Sales Total Online
($ Billion) Retail Market

2025

Total

$35.08

100%

Key: Excludes B2B, C2C and Online Travel, Classifieds, and Banking.
*Others include categories such as flowers, gifts, greetings, home, and garden.
Source: Vizisense; Accel Partners; Internet and Mobile Association of India; Comscore; Frost & Sullivan
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The Middle Bulge


Middle class individuals will account for 69% of Indias population (934 million) in 2020, with lower middle
class emerging as the biggest middle class segment at 38%.
Income Pyramid, India, 2010 and 2020
2012
Income Per Annum

2020

1,236 million individuals

> Re 10,000,000 ($220,000)

1,354 million individuals

0.3%
(4)

Super
Rich

1%
(14)

0.3%
(4)

Rich

1%
(14)

0.4%
(5)

Affluent

3%
(41)

2%
(25)

Upper Middle
Class

9%
(122)

16%
(198)

Middle Class

22%
(298)

34%
(420)

Lower Middle
Class

38%
(515)

17%
(210)

Poor

6%
(81)

30%
(371)

Below
Poverty
Line

Re 10,000,000 ($220,000)

Re 5,000,000 ($110,000)

Re 2,000,000 ($44,000)

Re 1,000,000 ($22,000)

Re 340,000 ($7,500)

Re 150,000 ($3,200)

Re 70,000 ($1,116)
<Re. 70,000 ($1,116)

Poverty
Line

Note: Figures in the brackets are millions of individuals.


Poverty Line based on planning commission definition of
povertyRe. 4,365 per month per household.
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20%
(271)

Source: National Council for Applied Economic Research (NCAER); Frost & Sullivan
18

Working Age Demographic Dividend


India's Gen Y constitutes a third of the country's population and will join the working-age group, forming 42%
of the total working-age population by 2025.

2012

Age

2025

1,236 Million
Individuals

1,418 Million
Individuals

250 million jobs in rural


India
120 million jobs in urban
India

64 and above

36 million jobs for rural


women

34-64

12.5 million jobs for urban


women

15-34

0-14

4.5 million jobs for rural


non-literates

Female

Male

Female

Male

2 million jobs for urban


non-literates

Source: Frost & Sullivan


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Aging India
Indias aging population is expected to account for nearly 7% of its population by 2025.

Aging India Demands


Pharmaceuticals and health
supplements

1,600,000.00

Elderly care

1,200,000.00
1,000,000.00

eHealth

800,000.00
600,000.00
400,000.00

Senior social services

200,000.00
0.00
Above 64
35-64
15-34
0-14

2012
62,673.82
364,574.77
436,301.54
373,136.61

2025
102,252.72
490,689.47
468,249.02
357,552.99
Year

*Note: The population pyramid is based on the assumption that India will
continue its current one-child-per-family birth control policies.
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Leisure

Senior tourism

Elderly education
Life insurance
Healthcare equipment for
the elderly

Products

Population (Million)

1,400,000.00

Healthcare

Population Pyramid*, India, 2012 and 2025

Source: Frost & Sullivan


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Four Main Trends in Urbanisation


Development of Mega Cities, Mega Regions, Mega Corridors, and Rurban Towns.

Mega City
City with a minimum population of 8 million and a GDP of
$250 billion in 2025 (13 Mega Cities in 2011 and 25 Mega
Cities in 2025)

Example:

Mega Regions

Example:

Greater Mumbai

Cities combining with suburbs or other neighboring cities to


form regions (population over 15 million)

NCR Delhi (includes New Delhi,


Noida, Greater Noida,
Ghaziabad, Gurgaon, Faridabad)

Mega Corridors

Example:

The corridors connecting two major cities or Mega Regions


(60 km or more apart, and with a combined population of 25
million or more)

Delhi-Mumbai Corridor (with a


population of 203.57 million in
2025)

Rurban Towns
Villages upgraded to town status with at least 400 people
per square feet and 75% workforce migrated to jobs other
than agriculture

Example:
Gill, Punjab

Mega Slums
1 million urban poor live in an area measuring just 1.5
square miles

Example:
Dharavi, Mumbai
Image source: Dreamstime
Source: Frost & Sullivan

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India Urbanization Rate


Around 38% of the total Indian population will live in urban populations in 2025, and cities will account for
70% of Indias GDP in 2030.

Urbanization Rate of Highly Urban States


and Mega Cities in India in 2025

Key:
Mega Cities in 2025
Punjab
52.50%

Emerging Mega Cities


(over 4 million
population in 2025)

Delhi 98.8%
28.5 million

Haryana
46.31%
Ahmadabad
7.56 million

Kanpur
4.6 million

Jaipur
4.29 million
Madhya Pradesh
34.80%

Gujarat
53.04%
Surat
5.70 million
Mumbai 25.8
million
Pune
6.79 million

Maharashtra
61.01%

Karnataka
49.29%
Bangalore
9.57 million

Kolkata
20.1 million
Telengana
30.02%

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Urbanization
Rate

Contribution to
Countrys Urban
Population in 2025

Highly
Urban States

>30%

69%

Medium
Urban States

2530%

24%

Low Urban
States

<25%

7%

Hyderabad
9.09 million
Andhra
Pradesh
29.1%
Chennai
9.9 million
Tamil Nadu
74.78%

Note: Mega City is defined as a city with population of


over 8 million and GDP of $250 billion or more.

West Bengal
35.13%

Image source: Dreamstime


Source: Department of Economic Affairs; Ministry of Finance, India; Frost & Sullivan
22

India Future Energy Mix


Energy demand will grow to 1,508 MTOE in 2030, which is 2 times the current demand. India will need to
import nearly a third of its demand in 2030.

Key Energy Consumers, India, 2030

Primary Energy Demand,


India, 2010 and 2030

24%
1,600

25%

1,508

Industrial

1,400
Primary Energy Demand (MTOE)

Others**

Commercial
*Others

1,200

10%

Residential

Nuclear
1,000
800
600

41%

Renewables
Hydro

691

Import vs Domestic, India, 2030

Gas
30%

Liquids
400

Imports

Coal
Domestic
Capacity

200
0

70%
2010

2030
*Others include Agriculture/irrigation and government sector.
**Others include Waste and biomass.
Source: IEA; MOP; TERI; Planning Commission; Frost & Sullivan

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RenewablesFuture of Renewables Availability in India


The target for renewable energy capacity addition under the 12th five year plan is 30,000 MW, which will
take the share of renewable energy to roughly about 17% of the total installed capacity.

Percent Renewable
Installed Capacity,
India, 2010

Expansion Plans for Renewables


Installed Capacity, India, 20122022
12th Five Year Plan
(1 April 201231 March 2017)

12%

Percent Renewable Installed


Capacity, India, 2017

17%

Renewables

Power Generation Capacity

Solar

10,000 MW

Wind

15,000 MW

Small Hydro

2,100 MW

Biomass

2,900 MW

Total

30,000 MW

13th Five Year Plan


(1 April 201731 March 2022)

2010

Renewables

Power Generation Capacity

Solar

16,000 MW

Wind

11,000 MW

Small Hydro

1,500 MW

Biomass

2,000 MW

Total

30,500 MW

2017
Source: IEA; MOP;TERI; Planning Commission; Frost & Sullivan

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Healthcare Market Outlook for India


Given the poor healthcare infrastructure in India, major avenues for growth in the country lies in providing
low-cost hospitals and more accessible points of health care delivery.

Health Care Market, India, 20112018

Market Status, India, 2013

181
16%

64

2011

Market Nature

Fragmented

Market Penetration
Rate

Medium

Market Stage

Growth

2018F

Note: Figures are in $ Billion

Healthcare market growth driven by rapidly growing population, rising income levels, increased
insurance penetration and an increased prevalence of lifestyle-related diseases.
6.5 physicians
per 10,000
population
compared to
global average
of 14.2

Over 40,000
hospitals in
India

9 beds per
10,000 people
as compared
to global
average of 29
beds
Source: Frost & Sullivan

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Future Innovation in Mobility to Focus on the Wild Side

Unknown
Solutions

Technology Innovation

Wild Innovation

Traffic Prediction system

Mobility Integration

Dynamic Parking

New Mobility Products and


Services

ADAS Features

Micro Mobility Solutions

Known
Solutions

Improvement

Application Innovation

Micro Cars

Corporate Mobility Solutions

Electric and FC Cars

Car Sharing

Electric Bikes

Car Pooling
Bike Sharing

Met Needs

Unmet Needs
Source: Frost & Sullivan

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Research Scope, Objective, and Methodology

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Research Scope

Study Period

20122025

20152025
Forecast Period
(Short Term: 20152016, Mid Term: 20172018, Long Term: 20192025)

Geographical Scope

Industries Covered

India

Smart city market, mobility, retail, healthcare, government and security,


energy, ICT, and logistics

Source: Frost & Sullivan


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Research Aims and Objectives

Aims
The objective of the study is to identify and understand the Mega Trend smart is the new green that will
impact and shape the countrys economy, society, and culture. For the purpose of this study, smart is the
new green is categorized into smart cities and sustainable cities.
Objectives
To define and understand the concept of Mega Trend
To identify the Mega Trends expected to have the biggest impact on India
To identify and analyse the market structure of such Mega Trends
To analyse region-wise opportunities of investment in various sectors
To assess the impact of the key Mega Trends and sub-trends, based on the degree of importance and
certainty over the next decade
To carry out a macro-to-micro analysis to understand the unmet needs or inherent business
opportunities in relevant industries
Source: Frost & Sullivan
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Research Background

In addition to specific trends in urbanization, this research study also contains and captures content from
various other regional and global studies on Mega Trends.
P5DB-MT Mega Trends in India: Macro to Micro Implications of Mega Trends to 2020Completed
(February 2012)
M818-39 African Mega Trends: A Bright Vision for the 'Growing' ContinentCompleted (May 2012)
NAFD-MT Mega Trends in Latin America: A Future Outlook for the 'Next-Generation'Completed
(Dec 2012)
M847-MT Evolving Mega Trends To Transform Turkey into a Developed EconomyCompleted
(Jan 2013)
P6E3-MT Mega Trends in Indonesia: Macro to Micro Implications of Mega Trends to 2025Upcoming
M82C-MT Worlds Top Global Mega Trends To 2020 and Implications to Business, Society and
Cultures (2012 Edition)Upcoming
M75C-MT City as a Customer - Identifying Growth Opportunities in Cities of TomorrowCompleted
(April 2013)
M85D-MT Mega Trends in China: Macro to Micro Implications of Mega Trends to 2025Completed
(Jan 2013)
This study is also supplemented by our ongoing and continuous interaction with industry experts, industry
participants, partners, and in-house industry analysts.
Source: Frost & Sullivan
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Research MethodologyFrom Macro to Micro

Macro

Identify Mega Trend


Through Brainstorming Sessions
The unique Mega Trend of smart city was
selected through macro-economic analysis,
interviews, and 10 brainstorming sessions with
analysts globally.

Identify Sub-trend
Through Scenario-building Exercises
Through a collective 200-day scenario-building
exercise in which a global team used data
extracted from secondary and primary
sources, unique sub-trends were identified
with implications for society, the market, and
other key sectors.
Image source: Dreamstime
Source: Frost & Sullivan

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Research MethodologyFrom Macro to Micro (continued)

Micro

Assess the impact of the Mega Trend on a


Micro Level
The impact of the Mega Trend was analyzed
to determine how it will influence industries,
businesses, and people through scenariobuilding exercises with industry experts and
secondary research inputs.

4
Opportunities Analysis
Opportunities in key industries were analyzed,
and suggestions for products and solutions
were generated.

Image source: Dreamstime


Source: Frost & Sullivan
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Definitions Used in the Study

Term

Definition

Mega City

City with a population of over 8 million and a GDP of $250 billion or more

Mega Regions

Cities grow and merge to become Mega Regions, with populations of over 15 million

Mega Corridors

Corridors that connect two Mega Cities or Mega Regions

Sustainable Cities

Cities built on a green initiative, from buildings to transport, governance, city planning, energy, and
technology; these cities are either upgraded or built from scratch

Satellite Town

Town designed to house the overspill population of a major city, but located well beyond the limits of
that city, operating as a discrete, self-contained entity

Net Worth/Wealth

Market value of saleable assets, including real estate, minus debts

High Net Worth


Individuals

Individuals with a net worth of $1 million to $50 million

Ultra High Net Worth


Individuals

Individuals with a net worth above $50 million

eGovernance

Use of ICT by various sectors of the government, including both delivery of services and interaction
with citizens for announcements and notifications

mGovernance

Use of mobile services platform for delivering government services


Source: Frost & Sullivan

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Mega Trend 1Connectivity and Convergence

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Rise of Connected Devices in India


There will be 4 billion connected devices by 2025.

Devices

Data

Connections

4 billion connected
devices by 2025

10 exabytes monthly
traffic by 2020

500 million mobile


broadband connections
by 2025

2.5 billion mobile


devices by 2025

38 exabytes a month
mobile data traffic by
2020

1.36 billion cellular


connections by 2025

3 connected devices for


every user by 2025

18 mbps average Internet


speed by 2020

310 million 3G
broadband connections
by 2025

Source: IDCEMC Study; Ericsson; Cisco; Frost & Sullivan


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Connected Devices and Indias Internet Economy


Indias Internet economy (as measured by total ICT spending) will reach $266 billion by 2020, accounting for
nearly 7% of the countrys GDP.

Internet Economy Potential, India, 2020


Internet Economy as percent of GDP

Percent Breakdown of Internet Economy


8%

93%
Private
Economy

India GDP
$3.8 trillion
Internet
Economy*
$266 billion

Enterprise
Economy

Public
Economy

7%
55%
37%

*Internet economy here represents total ICT spending in India.


Source: ITU; OECD; Frost & Sullivan
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India Mobile Apps Economy


Mobile app downloads to reach 10 billion apps by 2020.

2013

2020

~1.5 billion apps


downloads

~10 billion apps


downloads

India Leads
Mobile apps
downloads in
popular mobile
stores
#3 in Google Play

X ~20
X

~35 apps
per device

apps per
device
#1 in Nokia OVI

~44 million
smartphones

~500 million
smartphones

Source: IDC; EMC; Cisco; Frost & Sullivan


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Mobile EconomyGrowth in Mobile Based Industries in India


Key mobile-based industries in India are expected to worth a consolidated $9 billion by 2020.

Potential of Industries in India

Potential in Key Mobile Based Industries, India, 2020


mHealth

mBanking

Size = $500
million

Size = $5
$6 billion

mBanking in
India could cover
142 million
people by 2020
who are currently
unbanked and
dont have
access to
financial
services.

mHealth has
shown to reduce
default rates in
treatments to
almost 1% in
diseases such as
tuberculosis in
India.

mGovernance

mCommerce

mEntertainment

Size =
$1.0$1.5
billion

Size = $1.3
billion

Size = $3.6
$4.0 million

mGovernance
facility will help a
large rural
population, as it
does not require
a PC or
knowledge of
English, which is
the case,
opposed to
eGovernance.

With close to 900


million wireless
subscribers and
150 million
mobile Internet
users in India,
mCommerce
presents itself
with a huge
potential.

There are nearly


300 million
subscribers for
premium content
services such as
mobile gaming,
images, video
downloads, and
so on in India
already.

= market size in terms of fee revenue (value added revenue) in 2020.

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Source: GSMA; TRAI; RBI; Frost & Sullivan


38

Space Jam
India will launch 76 satellites, 9 space missions, and 30 launch vehicles by 2025.

National Fiber Optic Network Connectivity Plan, India, 20152019

Plan Features
INSAT 3D
2011

SRE-II
2012

Mars Orbiter,
2015
Asteroid/Comet
Flyby 2017

IRNSS-1 to 7
20122014
Chandrayan-2
Plan Checkpoints

Approved $3.3
2019 will see all
billion for
of the 200,000
National Optic
gram
ASTROSTAT
Aditya-1, Solar
Fiber Network
panchayats
2012
Coronagraph,
2013
project
connected

GAGAN
(Satellite Navigation)

250,000 gram
panchayats
with optic fiber
networks
As of 2013
As of 2025
Geo-Stationary Satellites
30
40
Earth Observation Satellites
26
23
Navigation Satellite
1
5
Experimental/Small Satellites
10
8
Space Missions
4
9
Launch Vehicles
26 =
28
Space Centers & Units
18
18

200 gram
panchayats will
have Wi-Fi
hotspots

GSATs
6, 7, 9, 11, & 14
2
20112013
1

2015 =
Cover
50,000
GMPs

GSLV, Mk-II
2013

2013

2016 =
Cover
100,000
GMPs

2019 =
Cover
100,000
GMPs

GSLV, Mk-III TSTO (RLVTD)


2014

2025

Source: ISRO; Frost & Sullivan


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Big Data Explosion


India will enter the zettabyte (1,000 exabyte) era by 2017.

Percent Breakdown of Traffic by


Device, India, 2013 and 2025

Data Traffic, India, 20132025


3.6

Mobile
2.8

Enter the
Zettabyte
Era

2013

2025

35%

55%

2013

2025

75%

45%

Wired

1.25

0.12
2013

2017

Note: Data traffic figures are in 1,000 exabyte


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2020

2025
Source: IDCEMC Study; Ericsson; Cisco; Frost & Sullivan
40

Big Data and the Indian Analytics Software Market


The Big Data explosion is exponentially increasing analytics software market in India.

Percent of Analytics Software


Vendors Making more than INR1
Crore Revenue, India, 2011 and 2013

Key Target Verticals of Analytics


Product Vendors, India, 20132019
Defence and Security

4%

Manufacturing

4%

100%
90%
84%

80%
Percent

70%

Telecom

22%

60%
50%

Retail and CPG

17%

BFSI

17%

40%
30%
20%
10%

Cross Vertical/Multi
Vertical

12%

35%

0%
2011

2013

A majority of companies were start ups with small


revenue base and one product in the portfolio of
offerings. The growth, however, has been
massive, with nearly 70% making more revenue
than in 2011.

0%

10%

20%

30%

40%

The majority of Indian analytics companies are


coming up with products to target a wide array of
verticals. Of this, 34.8% of Indian analytics product
vendors offer a cross-vertical solution to be able to
target a maximum share of the pie.
Source: Frost & Sullivan

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Mega Trend 2Bricks and Clicks

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42

eRetailing Landscape in India


Online B2C commerce is expected to reach $35.08 billion by 2025.

Online

$977
Billion

Top Segments

Non-online
$35.08
Billion

$490
Billion

$942
Billion

$2 Billion

$488
Billion

Consumer Electronics

12.28

35%

Computer Hardware

8.77

25%

Apparel

7.02

20%

Books

4.21

12%

Jewelry/Luxury
Goods/Accessories

1.75

5%

Others*

1.05

3%

Total
2012

Percent of
2025 Sales Total Online
($ Billion) Retail Market

$35.08

100%

2025
Key: Excludes B2B, C2C and Online Travel, Classifieds, and Banking.
*Others include categories such as flowers, gifts, greetings, home, and garden.
Source: Vizisense; Accel Partners; Internet and Mobile Association of India; Comscore; Frost & Sullivan

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India Online Retail Audience


44 million Indians accessed retail sites from work or home in 2012, which was an increase of 18% from
November 2011, as they look to buy more goods online.

Top 10 Retail Sites by Unique Visitors*, India, November 2011


Total Unique Visitors
(000s)

Reach
(%)

Amazon Sites

6,805

14.7

Apple.com Worldwide Sites

3,426

7.4

Samsung Group

2,759

5.9

Flipkart.com

2,675

5.8

Homeshop18.com

2,286

4.9

Naaptol.com

2,145

4.6

Bookmyshow.com

2,125

4.6

Myntra.com

2,110

4.5

Priceindia.in

2,047

4.4

Alibaba.com Corporation

1,973

4.3

Total Retail

28,351

61.1

Total Internet: Total Audience

46,390

100.0

10

Online retailers in India are rapidly expanding to Tier II and Tier III markets, offering payment methods
such as Cash on Delivery options to the unbanked online consumer in non-metropolitan areas.
*Visitors Age 15+ Home/Work Locations
Source: comScore; Media Metrix; Frost & Sullivan
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India Online Shopping Preferences


Gen Y and social platforms dominate the online shopping scene in India. Security on online payments still a
concern as majority opt to pay cash on delivery.
Online Audience1

Payment Methods*

Entry Points1

Mostly Young, Mostly Male

Mostly Cash on Delivery

Mostly Social Media

75% of Indian online users are


below the age of 35 years

95% of eCommerce come


from social media portals

A 60/40 male-to-female ratio is


consistent across the retail
category

Cash/CoD continues to
dominate as security concerns
on online transactions run high
among Indian online
consumers

Online Audience, 2013

Payment Types by Volume, 2013

Female

Male

55+

MasterCard

45-54

Visa

35-44

Direct Debit

25-34

All Others

15-24

Cash on
Delivery

*Note:

Retail Web Sites Leads, 2013

Social Media

Search
Engines
**Others

Survey month and year, July 2014; survey respondents: 5,800 individuals above 15 years.

**Other sources include print media, telecommunication, and television advertisements.


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Source: comScore Media Metrix; Frost & Sullivan


45

Online Hypermarkets See Cash-on-Delivery Trump Online Payments


CoD accounts for 50% to 75% of orders placed with various online retailers, while the remaining opt for
credit card or Internet banking options.
Percent Breakdown of Number of Transactions by Payment Method, India, 2014
Minimum
Cash on
Delivery

50%
50%

Online
Payments

The government entity India Post delivered


transactions worth Rs. 280 ($44.3 million) CoD
option for firms like Flipkart, Snapdeal, and
Amazon.

Maximum
25%

Cash on
Delivery

The distribution, delivery or logistics market is


expected to be driven highly by this trend which
will touch about $9 billion by 2021.

Online
Payments
75%

Source: Frost & Sullivan


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What is Bricks and Clicks?


The retail model will evolve from a single/multiple channel model to an integrated hybrid cross channel
model.

Bricks (pre-2000)

Department
Stores

Supermarkets

Advent of Clicks (post-2000)

Hypermarkets

Online

Mobile
Payments

Mobile Apps

The FutureBricks and Clicks (2015 and Beyond)

Virtual
Stores

Interactive
Stores

Hyper Online
Markets

Source: Frost & Sullivan


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Bricks and Clicks Models Currently Being Adopted in India


Both online and high street retailers will experiment with new business strategies amalgamating bricks and
clicks.
Retailing Formats, India, 20132025
High

10

D
8

Online HyperMarkets (with


Cash-onDelivery)

Degree of Clicks

Click n Collect

6
5

Social
Commerce

Mobile
Commerce

3
Smaller Stores

2
1

Low

0
Low

Degree of Bricks

Note: The retailing formats have been plotted based on the degree of bricks and clicks involved in making the sale.
We have used both quantitative and qualitative reasoning to measure the degree of impact.
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High
Source: Frost & Sullivan
48

Online HypermarketsValuation Boom


Investments in online retail companies have skyrocketed from a mere $200 million to a staggering $10 billion
between 2008 and 2013.

Investment Valuation of Retail Companies, India, 20082013


Amount
Raised

Valuation

Value of
Goods Sold

$1.6 billion

$10 billion

$3 billion

$1 billion

$2 billion

$1 billion

$2 billion
(investment)

Not known

$1 billion

Groupon

$50 million

$100 million

$1 billion

Fashion and You

$48 million

$200 million

Not known

Naaptol

$32 million

Not known

Not known

Online Retailer

Flipkart
(as of November 2014)
Snapdeal
Amazon India

Indian firms are


averaging a 2.5 to 3.0
times valuation on their
gross merchandise
volume (GMV) which is
on par with the global
average.

Flipkart is the most highly


valued retailer at $10
billion and has claims of
becoming Indias first
$100 billion company by
2020.

Source: Frost & Sullivan


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Smaller StoresUrbanization Compelling Retailers to Shrink Store


Sizes
Retailer store sizes will be 15% to 20% smaller than the current average store size by 2020.

Big-box

Small-box
15%20%
Smaller

Examples of Small Format Stores

Shoppers
Stop
Shoppers Stop shrunk 5 of its 15
HyperCity stores larger than 80,000
square feet by more than half.

Spencers

Spencers Retail is currently changing


large-format ratio from 60:40 to 40:60.

More

Aditya Groups More has closed 40


of its large stores and is planning to
open smaller formats.
Source: Frost & Sullivan

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Mobile Omni-channel LinksEmerging Applications


Technology is converting buyers into multi-channel shoppers.

Location-based Services
Foursquare

India
SHOPPERS STOP

SHOPPERS STOP

US

Augmented Reality
Shoppers Stop

India

Body Scanners
Selfridges

UK UK
Holography
Diesel

Motion Sensing
Tesco Store Trek

US
US

QR Coding
Gitanjali
Jewellers

US
Image source: Dreamstime
Source: Frost & Sullivan

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Online Social Commerce Business Models in India


Use of social media platforms to engage with the customer with user-generated content to market and sell
the product.

Social
Merchandising

Subscription
Commerce

E.g., enMarkit

E.g., Gourmet Box

Collaborative
Consumption

E.g., Olx

Group Buying

Social Shops

E.g., Snapdeal

E.g., Facebook
Source: Frost & Sullivan

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Integration of Social Media and Retailing


Social media is still at its infancy in the Indian automotive industry. The level of engagements is limited and
few auto OEMs have started using Facebook and Twitter for promotions.

BMW IndiaNumber 2 Social


Brand

Audi IndiaNumber 1
Social Brand

Sentiment Analysis

Sentiment Analysis

Facebook Analysis

6%
23%

Neutral

2%

22%

97%

Overall strategy focuses on high quality


aspirational imagery by showing the
awesomeness of the brand

Likes
Shares

Positive

Comments

Negative

4%

Neutral

Shares

Positive

71%

2%

6%

Likes

1%

Facebook Analysis

Comments

Negative
72%

94%

Use of images and videos from events


Engagement activities for attending
events / win merchandise

Audi has the largest social media community with around 3.3 million Facebook likes, but currently the
growth rate is slow (1.4%) as compared to BMW India, which is growing at a rate of 3% each year and has
a social media community with around 2.7 million likes.
Source: Simplify 360; Frost & Sullivan
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Click and Collect Omni-channel Model


Click and collect emerges as the most preferred omni-channel model.

Click and Collect


Model
Retailer reserves

Amazon

Amazon has teamed up with


Bharat Petroleum to offer click
and collect from its In and Out
petrol forecourt stores in Delhi
and Mumbai.

Fortune
Group

There are target sales of 8% to


10% from omni-channels by
2016, and Fortune Group is
launching click and collect for
its chains Big Bazaar and
ezone.

Shoppers
Stop

Shoppers Stop is planning to


trial click and collect and click
and reserve options for all their
online orders in 2015.

customer orders placed

online with or (mostly)


without a fee
Shoppers collect their
order at a pick-up point
or from the store
Shoppers have to
identify themselves at

Click and
Collect
Pioneers
of India

the store or pick-up


point
Orders can be paid for
online or in cash while
collecting

Source: Frost & Sullivan


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Mega Trend 3Social Trends

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Social Trends in India


GenY, the working-age population, working women, and the great Indian middle class continue to be the
most influential segments of the population triggering new social, technological, and economic trends.

Substantial
Working
Population

34% of the Gen Y


population in 2020
800 million of the globes
youngest population
(034 years) by 2020

Gen Y

Geo
Socialization

Middle
Bulge
Sheconomy
Ageing
Population

Citizens Sans
Boundaries

Generational
Political
Shift

119 million additional


work force by 2020
40% women in Indian
working-age population in
2020
864 million middle class,
forming 62% of Indias
population in 2020

Image source: Dreamstime


Source: Frost & Sullivan
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The Middle Bulge


Middle class individuals will account for 69% of Indias population (934 million) in 2020, with lower middle
class emerging as the biggest middle class segment at 38%.
Income Pyramid, India, 2010 and 2020
2012
Income Per Annum

2020

1,236 million individuals

> Re 10,000,000 ($220,000)

1,354 million individuals

0.3%
(4)

Super
Rich

1%
(14)

0.3%
(4)

Rich

1%
(14)

0.4%
(5)

Affluent

3%
(41)

2%
(25)

Upper Middle
Class

9%
(122)

16%
(198)

Middle Class

22%
(298)

34%
(420)

Lower Middle
Class

38%
(515)

17%
(210)

Poor

6%
(81)

30%
(371)

Below
Poverty
Line

Re 10,000,000 ($220,000)

Re 5,000,000 ($110,000)

Re 2,000,000 ($44,000)

Re 1,000,000 ($22,000)

Re 340,000 ($7,500)

Re 150,000 ($3,200)

Re 70,000 ($1,116)
<Re. 70,000 ($1,116)

Poverty
Line

Note: Figures in the brackets are millions of individuals.


Poverty Line based on planning commission definition of
povertyRe. 4,365 per month per household.
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20%
(271)

Source: National Council for Applied Economic Research (NCAER); Frost & Sullivan
57

Wealth Pyramid
There will be over one million HNWIs in India (wealth over $1.5 million) and over 6,000 UHNWIs
(wealth over $50 million) by 2020.
Wealth Pyramid, India, 2010 and 2020
2013

2020

Over $1
billion

25

150

$500$1,000
million

35

187

$100$500
million

410

2,196

$50$100
million

350

3,589

$10$50
million

7,800

43,367

$5$10
million

12,700

680,082

$1$5
million

650,000

882,543

UHNWI: Ultra High Net Worth Individualabove net worth of $50 million
HNWI: High Net Worth Individualnet worth of $1$50 million
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UHNWIs
(8,222)

HNWIs
(1.8 million)

Note: Net Worth/Wealth includes value of all saleable assets,


including financial and non-financial assets, less debts.
Source: Credit Suisse Global Wealth Databook; Frost & Sullivan
58

Working Age Demographic Dividend


India's Gen Y constitutes a third of the country's population and will join the working-age group, forming
75% of the population by 2025.

2012

2025

1,236 million
Individuals

1,418 million
Individuals

250 million jobs in rural


India
120 million jobs in urban
India

64 and above

36 million jobs for rural


women

34-64

12.5 million jobs for urban


women

15-34

0-14

4.5 million jobs for rural


non-literates

Female

Male

Female

Male

2 million jobs for urban


non-literates
Source: Frost & Sullivan

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Aging India
Indias aging population is expected to account for nearly 7% of its population by 2025.

1,400,000.00

Pharmaceuticals and health


supplements

1,200,000.00

Elderly care

1,000,000.00

eHealth

800,000.00
600,000.00

200,000.00
0.00
Above 64
35-64
15-34
0-14

Senior social services


2012
62,673.82
364,574.77
436,301.54
373,136.61

2025
102,252.72
490,689.47
468,249.02
357,552.99
Year

*Note: The population pyramid is based on the assumption that India will
continue its current one-child-per-family birth control policies.
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Leisure

Senior tourism

400,000.00

Elderly education
Life insurance
Healthcare equipment for
the elderly

Products

Population (Million)

1,600,000.00

Aging India Demands

Healthcare

Population Pyramid*, India, 2012 and 2025

Source: Frost & Sullivan


60

Polar Family StructuresMulti-generational vs. Single Households


Future families will be 3 member households, demanding for smaller sized assets and smaller variants in all
consumer goods.
Households by Size, India, 2001
1

Average Household Size, India, 19712011

4%

11%

Average Household
Size

8%
2
3 to 5
6 to 8

28%

9 and
above

49%

Households by Size, India, 2011


1
2

6%

4%

6.0

5.3

5.5

5.5

5.3

4.8

5.0
4.0

3.1

3.0
2.0
1.0
0.0
1971

1981

1991

2001

2011

2021

Family Structure, India, 2011


10%

Rural
60%

Urban
40%

25%
Men
55%

3 to 5

Women
45%

6 to 8
9 and
above

55%

Married
70%

Single
30%

Source: Frost & Sullivan


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Mega Trend 4Economic Trends

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62

India GDP ProjectionsIndia Needs to Grow at 10% per Annum


Indias GDP will reach $3.4 trillion by 2020, but holds the potential to reach nearly $4 trillion if investments
and manufacturing growth is more aggressive than expected in 2020.

Nominal GDP, India, 20112020


7%

3.4
2.6

Current
Trajectory

1.9

2011

2014

2017

2011

Manufacturing
(% of GDP)

17.0%

Investment
(% of GDP)

40.0%

Manufacturing
(% of GDP)

25.0%

2020

3.8
2.9

1.9

34.8%

2.0

10%
Accelerated
Trajectory

Investment
(% of GDP)

2.0

2014

2017

2020
Note: GDP figures are in $ Trillion.
Source: International Monetary Fund; The Hindu; Business Line; Frost & Sullivan

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Indias Race to Superpower5th Largest by 2020 if Growth


Accelerates
India could displace UK to become the fifth largest economy in terms of nominal GDP by 2020.
Top 10 Countries by Unadjusted Nominal GDP, Globally, 2013 and 2020
2013

2020: Current

2020: Accelerated

United States

United States

United States

China

China

China

Japan

Japan

Japan

Germany

Germany

France
United

United Kingdom

Germany

5th

India

India

United Kingdom

Brazil

France

France

Russia

Brazil

Brazil

Italy

Russia

Russia

10th India

Italy

Italy

India's economy is 10th


largest and only about a
third of Japan's in terms of
absolute unadjusted
dollars (nominal GDP).

6th

India, growing at 7%, will


become the 6th largest
economy, overtaking its
BRICs counterparts Brazil
and Russia.

If India fulfills it vision to


become a manufacturing
hub, it could displace UK
and enter the top 5 by
2020.
Source: IMF; Frost & Sullivan

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India GDP by SectorIndustrial Output Contests Services Growth


The initiatives proposed under the 12th Five-year Plan will gradually shift Indias economy from a servicesbased economy to an industry-driven economy by 2025.
GDP Contribution by Sector: Current Trajectory, India, 2013 and 2020
2013

Services is the biggest sector


contributing 51% of GDP

2020

17%

32%

Industries will be the biggest segment


generating 40% of the GDP
20%

41%
Agriculture

Agriculture

Services

Services

Industries

Industries

39%

51%

Contribution to GDP growth


Services

Contribution to GDP growth


Services

35%

Industries

7%

Industries

Agriculture

5%

Agriculture

10

20
30
Percent

40

50

27%
20%
7%
0

10

20
30
Percent

40

50

Source: World Bank (World Development Indicators); Planning Commission of India; Frost & Sullivan
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Top 10 States Contributing to India GDP in 2010 and 2020


Madhya Pradesh enters top 10 list with Andhra Pradesh exit (owing to Telengana split).

Stable
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Delhi
2010$60.54 billion
2020$170.93 billion

Rajasthan
2010$66.91 billion
2020$192.53 billion

Gujarat
2010$120.71 billion
2020$345.31 billion

Increasing

Top 5 states to account


for 45.7% of countrys
GDP in 2020

10

Uttar Pradesh
2010$128.92 billion
2020$351.61 billion

Madhya Pradesh
2010$60.54 billion
2020$160.2 billion

Maharashtra
2010$257.85 billion
2020$726.01 billion
Karnataka
2010$93.02 billion
2020$275.70 billion

Kerala
2010$65.74 billion
2020$189.88 billion

West Bengal
2010$106.07 billion
2020$311.95 billion

Tamil Nadu
2010$127.30 billion
2020$346.91 billion
Note: The figures denote GDP at market prices.
Arrows denote movement in ranking in 2020 compared to 2010.
Source: Planning Commission of India; International Monetary Fund; Frost & Sullivan
66

India as Global Manufacturing HubThe Competitive Advantage


Indias manufacturing sector in terms of gross value added to GDP (at the current growth rate) could reach
$1,149 billion by 2022.
Manufacturing GVA, 20132022

Manufacturing Advantages, India and China, 2013

Manufacturing GVA
($ Billion)

1,400
1,149

1,200
884

1,000

310

403
$2 per
hour

200
0

$1 per
hour

China

Minimum Wages
Percent Contribution to GDP,
20132022

Contribution to GDP

30%

25%
22%

25%
15% 16%

17%

19%

15%

5,00,000
per year

China

600,000
per year

India

201320152017201820192022

20%

Among the largest producers of English


speaking graduates

524

600
400

Much Skilled Workforce

Among the lowest wages and the


largest working-age pool

680

800

Low Cost Labor and


Demographic Dividend

India

Engineering Graduates

Currency Advantage
Rupees value against the dollar (as
compared to china) is much more
attractive

Open Trade Favorable: FTAs


and FDI
FDI inflows are on the rise again
suggesting higher business confidence
40

$0.16

25

35
24

32

29

China

10%
$0.01

5%

Value Against Dollar

0%
2013 2015 2017 2018 2019 2022

India
2007 2008 2009 2010 2011 2012
Figures are in $billion
Source: NIC; Frost & Sullivan

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Emerging Manufacturing Trends in India


Improving manufacturing performance in India is a necessary condition for high growth and job creation.
Trends indicate a shift toward a more cost-efficient and high-return industry in the future.

High Value Goods

Frugal Engineering

Focus on Logistics
Infrastructure

The country is increasingly getting


recognized for high value goods
requiring a fair amount of engineering
precision and quality like automotive
components and electronics.

The country capitalizing its skilled


labor that is educated, knowledge
driven and at the same time cheaper
is giving India an advantage in
making low cost products.

The country is focusing on improving


the logistics infrastructure to push
manufacturing effectiveness
including efforts such as freight lanes
and tax incentives.

Export Value, India, 2015

Examples

Logistics Cost, India, 2015

Engineering
Goods

120

Auto Components

25

$35 Akaash Tablet


Average Price:
$70

$70 Godrej Fridge


Average Price:
$200

50 100 150
Billion $

$800 ECG
Average Price:
$2,000

$24 Water Purifier


Average Price:
$100

Freight Time
Logistics Costs

0%

20%
40%
20% 40% 60%
Percent

Figures are in $ billion

India is now directly supplying to


major global OEMs like General
Motors, Mitsubishi. The share of
export revenues from OEMs has
increased from 30% in 1999 to 70%
in 2005.

Instead of India following other


systems like Japans Lean
Manufacturing, India is looking to
create its own system with Frugal
Engineering that others could follow
and draw India an advantage.

Improvement in logistics
infrastructure could increase net
sales of key manufacturing industries
by nearly 3% to 4% through
reduction in expensive logistics
costs.
Source: Frost & Sullivan

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India IncIndias Industrial Growth Forecast


The industrial cycle peaks one year after each GDP peaks. Based on this correlation, India Inc will realize
the full potential of the Indian revival story by 2018.
Correlation Between GDP and Industrial Growth, India, 20002019

Two Year Consistent High

3,500

Manufacturing Reaches New


Highs

Industrial production at a 2
year high

Manufacturing grew a record


9% from previous year

Production manufacturing
index and measures of
business and consumer
confidence increase

25
20

2,500

15

2,000

10

1,500

5
Revised Outlook

0
(5)

GDP

2019

2018

2017

2016

2015

2014

2013

2012

2010

2009

2008

Transition from public stimulus to


private-sector-led growth

2007

2006

2005

2004

2001

2000

2003

India became second


fastest growing economy in
the globe during the period

500
0

Despite a serious drop in


manufacturing, Indias revival was
quick due to service sector inputs

Strong Economy

2011

1,000

2002

GDP (Billion)

3,000

The next industrial


peak can be
anticipated in 2018, as
the effects of growing
demand and
improvements in
infrastructure trickle
down to manufacturing

Industrial Production Index (2007=100)

2018 Industrial Peak

(10)

Industrial Production Index


Source: US Federal Reserve; Frost & Sullivan

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India in the Industry League TableThe Future Big Industries of India


India is expected to become one of the global leaders (top 5) in at least 10 big markets of the future (2020).

Rank

Market

Region

Market Potential (2020)

Smartphones

Global

650 million smartphones

Direct-to-Home (DTH)

Global

120 million subscribers

All Exports

Global

$1 trillion value of exports

Automotive

Global

5 million cars by 2020

Retail

Global

$977 billion retail by 2020

Luxury

Asia

$15 billion by 2020

Steel

Global

63 million million tonnes (mt) output in 2020

Defense

Global

$65 billion spending by 2020

Chemicals

Global

$250 billion exports in 2020

Equity Market

Global

$3 trillion market value in 2020


Source: IBEF India Brand equity Foundation; Government of India; Frost & Sullivan

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Mega Trend 5Urbanization

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Four Main Trends in Urbanisation


Development of Mega Cities, Mega Regions, Mega Corridors, and Rurban Towns.

Mega City
City with a minimum population of 8 million and a GDP of
$250 billion in 2025 (13 Mega Cities in 2011 and 25 Mega
Cities in 2025)

Example:

Mega Regions

Example:

Greater Mumbai

Cities combining with suburbs or other neighboring cities to


form regions (population over 15 million)

NCR Delhi (includes New Delhi,


Noida, Greater Noida,
Ghaziabad, Gurgaon, Faridabad)

Mega Corridors

Example:

The corridors connecting two major cities or Mega Regions


(60 km or more apart, and with a combined population of 25
million or more)

Delhi-Mumbai Corridor (with a


population of 203.57 million in
2025)

Rurban Towns
Villages upgraded to town status with at least 400 people
per square feet and 75% workforce migrated to jobs other
than agriculture

Example:
Gill, Punjab

Mega Slums
1 million urban poor live in an area measuring just 1.5
square miles

Example:
Dharavi, Mumbai
Image source: Dreamstime
Source: Frost & Sullivan

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India Urbanization Rate


Around 38% of the total Indian population will live in urban populations in 2025, and cities will account for
70% of Indias GDP in 2030.

Urbanization Rate of Highly Urban States


and Mega Cities in India in 2025

Key:
Mega Cities in 2025
Punjab
52.50%

Emerging Mega Cities


(over 4 million
population in 2025)

Delhi 98.8%
28.5 million

Haryana
46.31%
Ahmadabad
7.56 million

Kanpur
4.6 million

Jaipur
4.29 million
Madhya Pradesh
34.80%

Gujarat
53.04%
Surat
5.70 million
Mumbai 25.8
million
Pune
6.79 million

Maharashtra
61.01%

Karnataka
49.29%
Bangalore
9.57 million

Kolkata
20.1 million
Telengana
30.02%

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Urbanization
Rate

Contribution to
Countrys Urban
Population in 2025

Highly
Urban States

>30%

69%

Medium
Urban States

2530%

24%

Low Urban
States

<25%

7%

Hyderabad
9.09 million
Andhra
Pradesh
29.1%
Chennai
9.9 million
Tamil Nadu
74.78%

Note: Mega City is defined as a city with population of


over 8 million and GDP of $250 billion or more.

West Bengal
35.13%

Image source: Dreamstime


Source: Frost & Sullivan
73

Mega Regions in 2025 and Beyond


India will have four Mega Regions by 2025, and each with a population over 15 million.

New Delhi, Noida, Greater Noida,


Ghaziabad, Gurgaon, Faridabad
28.5 Million

Ahmedabad,
Gandhinagar
7.8 Million
Mumbai, Bhiwandi,
Kalyan, Thane,
Ulhasnagar
34.4 Million

Kolkata, Howrah
21.6 Million

Hyderabad, Secunderabad
9.14 Million

Pune, PimpriChinchwad
14 Million

Note: Mega regions are those regions that are


formed from the combination of cities and suburbs
having population of 15 million or more.

Mega Regions in 2025

Chennai,
Kanchipuram,
Pondicherry
15 Million

Potential Mega Regions in 2030

Potential Mega Regions after 2030

Source: Urban Planning Commission of India; Frost & Sullivan


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Mega Connection
India will see 8 Mega Corridors by 2021.
Delhi-Chandigarh
(Not avaiable)

Delhi-Dehradun
(Not avaiable)

Amritsar-Jalandhar
(Not avaiable)

Delhi-Jaipur
(Not avaiable)

Delhi Mumbai Industrial Corridor (204)


Udaipur-Kota (NA)

Delhi-Agra (Not avaiable)


Delhi-Bareily
(Not avaiable)

Guwahati-Jorhat
(Not avaiable)

Lucknow-Kanpur
(Not avaiable)
Mehsana-Valsa (48)
Jamnagar-Bhuj (4)
Ahmedabad- Junagarh
(6)
Bhavnagar-Porbandar (4)

Kolkata to Cuttack
(Not avaiable)

Mumbai-Ahmedabad (58)

Hyderabad- Vijaywada (10.3)


Hyderabad-Adilabad (2.8)

Mumbai-Nagpur (26)

Hyderabad-Hindupur (29.1)

Pune-Jalgaon (7.6)

Srikakulum-Nellore (25.3)
Bangalore-Belgaum
(38.5)

Chennai-Hosur (30.4)

Mangalore-Karwar
Chennai- Karaikudi (4.9)
Mysore-Kolar (8.6)
Coimbatore-Krishnagiri (13.4)
Population greater than 25 million
Population less than 25 million
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Tuticorin- Nagercoil (2.8)

Note: Mega Corridors are those corridors


that connect two major cities or Mega
Regions (60 km or more apart, and with a
combined population of 25 million or more)
The figures in brackets represent
population in million units
Source: Population Foundation of India;
Planning Commission of India;
Frost & Sullivan
75

Mega Corridor Case Study


The Delhi-Mumbai and Chennai-Bangalore-Mumbai business corridors that connects important industrialhubs of India is coming closer to reality.

Key Highlights
Dadri-Noida-Ghaziabad
Investment Region, UP

$90 Billion
The estimated funding from Japanese and
Indian and government on a 50:50 basis

Manesar-Bawal Investment
Region, Harayana

Delhi

1,483 km
Road length and 1,500 km rail link of DMIC
supported by financial and technical aid
from Japan

Delhi-Mumbai
Industrial Corridor

5 states that are being integrated are Delhi,


Haryana, Rajasthan, Gujarat, and
Maharashtra

Khushkera-BhiwadiNeemrana Investment
Region, Rajasthan

Maharashtra Dighi
Port Industrial Area
Belgaum and Hubli
Industrial Areas,
Karnataka
Special Investment Region
(SIR), Dharwad, Karnataka
National Investment and
Manufacturing Zone (NIMZ),
Tumkur, Karnataka

State Capital

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3 million employment opportunities in


manufacturing and processing industries

Mumbai
Mumbai-Bangalore-Chennai
Industrial Corridor

Chennai
Bangalore

Sriperambudur,
industrial area, Tamil
Nadu

Business Hub,
Chittoor, Andhra
Pradesh

2,391 km
Road length and 805 km rail link being
jointly developed by DIPP and the Japan
International Cooperation Agency (JICA)
4 states that are being integrated are Tamil
Nadu, Andhra Pradesh, Karnataka and
Maharashtra.
3 new industrial and Business Hubs
Chittoor, Dharwad and Tumkur

Source: DMIC; Economic Times; Frost & Sullivan


76

Urbanization Percolates to Rural AreasRurbanization


Of the increase in urbanization over this decade, 90% happened in the form of census towns under
Panchayat administration.
Schematic Representation of Urban
Panorama, India, 2020
Rurban Cities
E.g., Greater Noida

Rurban Population
Growth
30%

Satellite
Towns
E.g., Pikhuwa

City Population
Growth
15%

Potential
Mega City
E.g., Kanpur

Facts on Rurban Areas


At least 75% of male working population is
employed outside of the agricultural sector
Governed by municipalities or panchayats
Account for 90% of land area in India
Approximately 5,000* total rurban towns in
India as of December 2011

Contribution to GDP, India, 2020

Key Indicators

Facts

Household Income (2013)

Rs. 1,50,0003,60,000

Share of Indias Total Disposable


Income (2013)

40%

Internet Penetration (2013)

35%

Contribution to Total FMCG Sales


(2013)

40%

Large Cities

25%

Rurban Towns

25%

Villages

50%
0

0.2

0.4

0.6

*Includes Statutory and Census towns with less than 500,000 population.
Source: Frost & Sullivan
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Unacknowledged Urbanization in Villages


Over 2,400 settlements India were upgraded to urban from rural in 2011, owing to rising population rates
and growth of non-agricultural jobs in those areas.
Percent Breakdown of Indian Settlements by Type, India, 19712011
100%

Percent

80%
60%

50%
74%

Medium to Small Villages

65%
Very Large Villages
20%

40%

Emerging Mega Cities

14%
20%
0%

10%
16%
0%
1971

18%
3%
1991

27%

Mega Cities

3%
2011

Villages still vastly outnumber towns in India (Census 2011 estimated 8,000 urban centres, including
rurban towns, in a sea of 660,000 villages).
Since 1951, the proportion of rural India living in medium to small villages and hamlets (of fewer than
2,000 people) has decreased from 74% to an estimated 50% today.
The percentage of Indians living in large villages (more than 5,000 people) jumped from 10% to 20%.
Not all of these villages qualify as rurban towns, but most of them mimic urban living.
Source: Frost & Sullivan
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Mega SlumsCase Study Dharavi


Nearly 60% of the population growth in Mumbai has been among slum dwellers over the last decade.

Economic Snapshot of Dharavi and Mumbai, India, 2013

$650 million
annual
turnover

Over 1
million in
population

5,000
businesses
and 15,000
factories

Per capita
income:
$500-$2,000
per year

Image source: Dreamstime


Source: Frost & Sullivan
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Mega Trend 6Smart is the New Green with Smart Cities

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80

Smart City Investment


India needs to invest an estimated $216 billion to 2020 for basic urban infrastructure, of which the
government has stipulated close to $1.2 billion for smart city investment.
Total Infrastructure Investment Needed, India, 20122020

Urban

Non-urban

$216
Billion

10%

20%

Total
Infrastructure
Investment =
$1.17 Trillion

$954
Billion

30%

40%

50%

60%

70%

80%

90%

100%

Share of Urban and Non-Urban Infrastructure Investment Measured in Percent

Half a percent
($1.2 billion) of
total urban
infrastructure
investment
needed will be
for smart
cities funded
by the public
sector.

Key Urban Infrastructure Clusters

Smart Cities

(Investment Need Projection to 2020)

0.5%

($1.2 Billion)

Water Supply

Waste
Management

Urban Roads

$18 billion

$27 billion

$95 billion

Traffic
Management

Renewal and
Development

$5 billion

$23 billion

Street
Lighting
$1 billion

Mass Transit

$25 billion

Others

$23 billion

Source: World Bank; High Powered Expert Committee of the Government of India (HPEC);
Planning Commission; Ministry of Urban Development; Frost & Sullivan
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India Plans for Smart Cities


India is poised to have 100 smarter cities; three to be completed by 2019 in the Delhi-Mumbai Industrial
Corridor.
Proposed Smart Cities, India, 2014

Rajasthan
(7)

Gujarat
(7)

New
Delhi
(3)

Names of states and


number of smart cities
proposed within each
as of September 2014;
57 more to be unveiled

Uttar Pradesh
(6)

Maharashtra
(3)

Karnataka
(7)
Kerala
(7)
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Total Budget

$1.2 billion (2014 to 2015)

Funding
Mechanism

PPP Institution called 3P


set up to streamline
investment in infrastructure
projects

Early Entrants

IBM, Cisco, Dubai Telecom

Impact on
Economy

10% to 15% increase in


employment

Total Smart
Cities

100; at least 2 per 29


states

Andhra Pradesh
(2)

Tamil Nadu
(3)

Note: Please note the data in brackets refers to the number


of smart cities being planned for selected states.
Source: Ministry of Urban Development; Frost & Sullivan
82

Mega Trend 7Innovating to Zero

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83

Examples of Innovating to Zero


Emerging technologies are innovating to zero breaches of security, accidents, fatalities, and emissions in
2020.

Zero Time Business Incubation


Zero Energy Building
Off-the-grid buildings
On-site energy harvesting

Cutting edge IT
Zero Defects

Use of intelligent systems

Zero faults and zero errors


in manufacturing

Increase use of renewable


energy

Very strict quality control

Infrastructure and services that


convert ideas to
implementation in real-time
Instant file sharing networking
interfaces
Zero management gaps

Net zero energy hospitals

Zero processing time


Zero learning gaps

Zero Accidents
Carbon Neutral City

Zero Design-to-shelf (Retail)

Energy efficient buildings

Strong health and safety


measures

In-house design, cutting,


finishing

Greener transport

Safety days (e.g., Shell)

Continuous, speedy deliveries

Waste reduction and waste


recycling

Life-saving rules within


facilities

Direct point-of-sale data


collection

Increase use of renewable


energy

Active safety systems in


vehicles that override
drivers

Daily analysis of product sales


and customer feedback using
software analytics
Image source: Dreamstime
Source: Frost & Sullivan

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Power of Shunya (Zero)Examples of Innovating to Zero in India

BritanniaZero Iron Deficiency


1 out of every 3 malnourished children lives in IndiaUNICEF

Britannia distributes iron-fortified biscuits to school children in India through an


affordable delivery mechanism.

DuPontScience-based Solutions for Innovating to Zero


India has 16% of the worlds population and only 4% of the worlds
water resource to sustain itDuPont
DuPonts Zero Innovation Clusters:
Food and Nutrition and Sustainable Agriculture: Zero malnutrition, zero
food contamination, zero wastage, zero hunger
Energy and Mobility: Zero power cuts, zero dependence on fossil fuels
Safety and Sustainability: Zero workplace hazards, zero lives lost, zero
carbon footprints
Sustainable Infrastructure: Zero compromise on safety, performance, or
durability
Image source: Creative Commons
Source: Frost & Sullivan
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Macro-to-micro Implications of Innovating to Zero


Stakeholders in the United States should explore the following opportunities to leverage the Mega Vision of
Innovating to Zero.

OEMs are investing in


greener vehicles that
have a smaller carbon
footprint. New
technologies include
alternative hybrid and
electric powertrains and
lighter vehicles.
The Departments of
Transportation in Illinois,
Washington State, and
Minnesota have adopted
the goal of zero road
fatalities (modelled after
the Norwegian
government), paving the
way for new and improved
vehicular safety
technologies.

Zero
Emissions

Carbon Neutral
Cities

Macro-to-micro
Implications of
Innovating to Zero
Zero Deaths
in Accidents

Zero Carbon
Manufacturing

Identify key cities across


the United States that can
be carbon-neutral cities in
the future, modelled after
Seattle. The demand for
environment friendly
transportation services
such as car or bike
sharing, ride sharing, and
multi-modality will
increase.
The Hyundai Motor
Company recently began
assembly-line production
of zero-emission
hydrogen-powered
vehicles. A number of
automotive OEMs are
working toward the goal
of emission free
production.
Source: Frost & Sullivan

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86

Mega Trend 8New Business Models: Value for Many

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87

New Business ModelsValue for Many

New Business Models, Global, 2012

Personalization and
Customization
E.g., Nike and BMW
Co-creation
E.g., Quirky.com

Quirky.com

New Business Models

Pay as you go
PAYD* and PHYD**
Car Insurance

One-off Experience
E.g., BMW on Demand

*PAYPay as you drive;


**PHYDPay how you drive
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Image Source: Creative Commons


Source: Frost & Sullivan
88

Example of 'Value for Many' Business Models.


The US government should promote business models that can be scaled globally to sell to the global middle
class and the 5 billion people connected through the Internet.

Free

Premium

Value for Many


=

Group Buying

Freemium

SharingWhat is Yours is
Mine (P2P Business
Models)

Will Replace

Affordable Healthcare

Value for Money

Affordable Products

Micro Finance

Source: Frost & Sullivan


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89

Value for Many to Replace Value for Money


Godrej Chotu-Kool is a cheapest ice box (price ranging between $65 to $70) for the poor, which essentially
keeps water cool and vegetables fresh, but does not make ice.

Godrej Chotu-Kool

Unique
Marketing
Proposition

2
Low
Maintenance

The 6
Dimensions

3
Lifestyle
Proposition

Priced between $65-$70, Chotu-Kool is the cheapest


segment refrigerator in India.

It consumes only 55 watts of power, operates on


battery, and uses high-end insulation to remain cool
for long periods without power.

It offers rural India comfort, convenience, and social


status in a single product at an affordable price.

In addition to household usage, the products is being


positioned as a travel companion (picnic box).

The product is available only in rural and semi-urban


areas where customers cannot afford to spend above
$180 on freezers.

Tie up with the Indian Postal Department, the largest


distribution network, to sell refrigerators to village
homes through postmen.

5
Unique
Consumer

Low Price

4
Multiple
Applications

Launch Date

2009

Key Facts

~16,000 units sold in 2011; plans to sell


1 million by 2015

Operations

Maharashtra, Gujarat, Tamilnadu


Source: Frost & Sullivan

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Value for Many to Replace Value for Money (continued)


Aravind Eye Care Hospital is an assembly line type cataract operation provided to around 286,000 patients
each year.
Aravind Eye Care

Sustainable
Funding

Unique Health
Care Delivery
Model

Low Price

2
Low
Economies of
Scale

The 6
Dimensions

3
High
Productivity

Cost per surgery is around $18 in India, about 1% of


the cost in the United States.

The overall annual cost incurred by Aravind to deliver


eye care is $13.8 million, less than 1% of the cost
incurred by developed countries.

Assembly line model of surgery allows Aravind to


perform 2,000 surgeries compared to the national
average of 400 in a year.

Created a local internal capacity for the manufacture


of intra-ocular lens, thereby reducing its cost to $2 a
piece - strikingly less compared to the $150 in
developed countries.

To find patients, it pioneered the use of eye screening


camps to identify patients in need of cataract surgery.

Financed through a self-funding model, 35% of its


paying patients provide the funds needed to serve the
remaining non-paying 65%.

4
Local
Manufacturing

Launch Date

1976

Key Facts

Over 2.6 million outpatients and 315,000


eye surgeries conducted in 20102011

Operations

Hospitals in eight cities/towns in Tamil


Nadu
Source: Frost & Sullivan

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91

New Business ModelsGlobal Vehicle Platforms


By 2020, 12 key global OEM groups, with a total 154 platforms, will account for nearly 74% of the global
vehicle production.

Vehicle Platform Summary, Global, 2010 and 2020


PQ35,
MQB
35

XV, E

B, B0

Gamma,
Delta 3

HD,
HD

Global C,
Global C

33

SR1,
C-EVO

PF1,
BVH1

Vista,
Ace

PL2,
PL2

30
Total Number of Platforms

B,
Basic

32
2010

30

25

W,
MRA

27 27

2020

27

23

20

18

2010 Average = 18.6 Platforms


17

15

14

15
9

10

13
9

2020 Average = 12.8 Platforms

13

12
9

9
6

9
7

2010 Key Platform, 2020 Key Platform


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Geely Group

Daimler Group

BMW Group

Tata Group

PSA Group

Fiat-Chrysler Group

Ford Group

Hyundai Group

General Motors
Group

Renault-Nissan
Group

Toyota Group

Volkswagen Group

Source: Frost & Sullivan


92

Macro-to-micro Implications of New Business Models.


New business models in the United States will be driven by technology services and platforms that seek to
create innovative data driven models, partnerships, and convergence between products and industries.

Business models to
revolve around clicks;
increase in percentage of
consumer-initiated
business and well as
virtual transactions and
payments, resulting in the
creation of new consumerfunded business models;
multimodal selling
platforms; online C2C
transactions

Eco-innovation; more
models such as pay-asyou-go for car sharing,
bike sharing, and
insurance

New Selling
Platforms

Lower Price
Points

New business
models in the
United States
will promote
more peer-topeer and datadriven models
for innovation.

Green
Growth

Innovative
Marketing

Aggressive and
structural cost
reduction,
ultra low-cost cars

- Consumers to become
brand ambassadors and
advocates for social
media; reduced corporate
spending on conventional
market surveys;
popularization of new
research approachesfor
example, research on
consumers social media
behavior
Source: Frost & Sullivan

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Mega Trend 9Future of Infrastructure

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Indian InfrastructureAn Estimated Trillion Dollar Investment


Private investment constituted about a third of infrastructure investment in the 11th Plan, and this is projected
at 50% for the 12th Plan period.

Infrastructure Planned Outlay, India,


20132017

2013

2014

2015

2016

2017

Cumulative Infrastructure Planned Outlay


by Segment, India, 20132017

148

172

201

231

272

Total
Infrastructure
Planned Outlay
$1.02 trillion
(20132017)

Roads and
Bridges

154

16%

Railways

123

12%

Ports

41

4%

Airports

20

2%

Telecom

174

17%

Others*

512

50%

Note: Infrastructure figures are in $ billion.


*Others include Electricity, Irrigation, Water Supply and Sanitation, Storage, oil and gas pipelines.
Source: Government of India; Frost & Sullivan
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Infrastructure Funding Mechanisms


There is an anticipated funding gap of nearly $165 billion that could be addressed by Infrastructure
Development Funds (IDFs) and other financial instruments.

Funding Source for Infrastructure During


12th Five Year Plan, India, 20122017

32%

India launched its first ever IDF in 2014 (IIFCL


Mutual Fund) which will mobilize funds from
insurance and pension sectors to fund long term
infrastructure projects. This represents a total of
$165 billion opportunity to financial
companies in India.
IDFs

$165
billion

*Others

148

17%

17
51%
Government Funding
Expected Private Funding
Gap

*Others include funding from PPP, lending from commercial banks,


external commercial borrowing, and foreign direct investments
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Proposed Infra Debt Funds

Size

Citigroup and ICICI

$2.0 billion

IIFCL

$1.0 billion

IDFC

$1.5 billion

IL&FS & LIC

$2.0 billon
Source: Asian Development Bank South Asia Working Paper
Series (September 2014); Frost & Sullivan
96

Investment in Mass Transit Facilities by 2020


Urbanization is driving the creation of satellite towns and with that, increasing the need for mass
transport systems.

India to have 70 satellite towns by 2020 and


12 cities to receive one or more forms of
mass transport by 2020

1 Satellite
Township
26 Satellite
Townships
More than 6
Satellite
Townships
Metro Transit
System
Bus Rapid
Transit System
Source: Ministry of Urban Planning of India; Frost & Sullivan
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Future Transport Infrastructure Plans


High speed rail and dedicated freight corridors to boost industrial growth.

Diamond Quadrilateral
(GQ) Project
(high speed rail)

Dedicated Freight Corridors


(DFC)

Other Potential Higher


Speed Rail Projects

Delhi
Delhi

Ludhiana
Ahmedabad
Kolkata
Dankuni

Kolkata
Mumbai

Mumbai

Mumbai
Chennai

Chennai
Kochi
Largest high speed rail project
connecting 4 metros
Faster logistics, industrial, and job
development

Dedicated lines for freight, allowing


heavier and longer trains to
operate
Trains on dedicated freight
corridors will speed up to 120 km
per hour

Plans have been proposed to run


at least 4 other HSRs in India
MumbaiAhmedabad high-speed
rail corridor will be the first one to
operate

Source: The Hindu, Business Line; Frost & Sullivan


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Future Airport Modernization Plans


The number of passengers is expected to reach 421 million with 713 operational airports and $120 billion
investment in the 12th five year plan to 2017.
Airports Modernization Plans, India, 2020

Major International Airports


Domestic Airports, Upgradation
Greenfield Airports
Delhi

Kolkata

Airport Infrastructure Modernization


In 2011, India had 479 airports
(International: 17, Domestic: 454, and
Greenfield: 8).
In 2020, the Ministry of Civil Aviations
goal is to have 714 operational airports
(International: 16, Domestic: 673, and
Greenfield: 25).
Investment opportunities in airport
infrastructure development and new
aircrafts is estimated at $110 billion.

Mumbai

Focus Areas

2013

20112020

Passenger Traffic

160 million

421 million

Cargo Traffic

2.3 million tons

11.9 million tons

New Aircrafts

$80 billion

Airport Infrastructure

$30 billion

Chennai

Source: Airports Authority of India, 2010; Frost & Sullivan


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Port Development InitiativesBelow Par Performance


There is a proposed investment of $64.49 billion by 2020.
1
2
3

Okha
Bhavanagar
Varavai

Surat

5
6
7
8
9
10
11
12

Ratnagiri
Panaji
Karwar
Cozhikode

Maritime Agenda, India, 2010 2020

Sea Port Development Plans, India, 20102020

Additional Port Capacity = 2,204 MT


Planned Investment = $64.49 billion
Major Sea Ports

Key Features

Intermediate Sea Ports

Maritime Agenda 2010 to 2020 intends to


develop the Indian Ports capacity to 3,200 MT
by 2020.

Alaphuzha
Nagapattanam
Karaikal
Ennore
13 Machilipattanam

2 3

By 2020, the proposed investments in major


ports is expected to be $26.81 billion; in nonmajor ports it is expected to be $37.68 billion.
4

Jawaharlal Nehru Port


Mumbai (11.3)
Marmagao (8.8)

Paradip
(9.8)
Vishakhapatnam
13 14
(11.9)
Ennore

5
6
7

New Mangalore
(5.5)
Cochin
(3.1)
Note: Figures in parentheses
indicate share of port traffic.
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Additional Capacity, India, 20102020

Haldia
(8.3)

Content 12
8

11
9

(10.7)
Chennai
(10.8)

10
Tuticorin
(4.5)

Additional Capacity
(Million Tonnes)

14 Kakinada
Kandla (8.3) 1

Anticipated traffic at Indian ports would grow to


2,484.41 MT by 2019 to 2020 from the present
level of 849.89 MT at a CAGR of 11.3%.

1,200

699

1,020

485

1,000
800
600
400
200
0
2010-2012
2012-2017
2017-2020
Metro
Non Metro

Source: Ports Association of India; Maritime Agenda 2020; Frost & Sullivan
100

Mega Trend 10Future of Energy and Resources

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101

Indias Future Energy Mix


Energy demand will grow to 1,508 MTOE in 2030, which is 2 times the current demand. India will need to
import nearly a third of its demand in 2030.

Key Energy Consumers, India, 2030

Primary Energy Demand,


India, 2010 and 2030

24%
1,600

25%

1,508

Industrial

1,400
Primary Energy Demand (MTOE)

Others**

Commercial
*Others

1,200

10%

Residential

Nuclear
1,000
800
600

41%

Renewables
Hydro

691

Import vs Domestic, India, 2030

Gas
30%

Liquids

Imports

400

Coal
Domestic
Capacity

200
0
2010

2030

70%
*Others include Agriculture/irrigation and government sector.
**Others include Waste and biomass.
Source: IEA; MOP; TERI; Planning Commission; Frost & Sullivan

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LiquidsFuture of Oil Availability in India


The Ministry of Petroleum estimates that by 2035, India will be a 100% oil import market.

Oil Supply ChainOil Imports, India, 2000-01 to 2012-13


Crude Oil Production/Imports (Million Metric Tons)

200

185.8
Production of Crude Oil

171.7

180
Imports of Crude Oil

159.3

Around 80% of Indias oil


requirement is met through
imports making India highly
susceptible to oil supply and
pricing shocks.

163.6

160
132.8

140
121.7
111.5

120
100
80

90.0
74.3

78.7

95.7 99.5

Due to large dependence on


imported fuel, the price of
domestic fuel is expensive.

82.5

60
40

32.1 32.1 32.7 32.7 33.8 32.1 33.8 33.8 33.8 33.8

20

38.2 38.2 38.2

The increasing dependency


of crude imports would drive
the importance of fuel
efficiency.

Year
Source:Ministry of Petroleum & Natural Gas; Frost & Sullivan
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Natural GasFuture of Gas Availability in India


India is likely to be in CNG deficit for the next 20 years time as demand outstripping domestic supply by
nearly two times by 2030.

Natural Gas Demand, India, 20122030


800

Power plants
getting priority
allocation of
domestic CNG

10,000 MW
capacity of power
plants lying idle
because of nonavailability of gas

600
500

625

Deficit
442

Imports

400

358

227

250

307

272

300

250

248

180
130

200
100

713

63
101

0
2012-2013

72
103
2013-2014

Demand

Natural Gas Demand (MMSCMD*)

700

Availability of
auto CNG a
challenge

81
111
2014-2015

Domestic
Supply

100
121
2015-2016

157
2016-2017

172

2019-2020

212

2025-2026

231

2029-2030

Indias natural gas market has been in a supply deficit, primarily due to low domestic production and
inadequate transmission and distribution infrastructure.
*Million metric standard cubic meter per day.
Source: Gas Authority of India Limited; Frost & Sullivan
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CNG InfrastructureProposed/Under Construction Pipelines


Opposition from states and non-compliance by private players has delayed the establishment of Southern
and Eastern Grids.
Proposed Pipeline Routes, India, 2013

Fact

GAIL

RTGIL lost rights to lay pipeline in October,


2012 when it failed to meet construction
targets.

GSPL

Srinagar

RTGIL
(Scrapped)
Routing Centre

Bhatind
a
Jodhpur

Tamil Nadu has opposed the laying of


GAILs Kochi-Salem-Bangalore pipeline due
to alignment issues.

Guwahati

Bhilwara
Vijaypur
Gaya
Jagdishpur
Udaipur
Bhopal
Mehsana

The Tamil Nadu Government has requested


the court for additional time to submit a
revised proposal which has effectively
stalled GAILs current efforts.

Howrah

Ahmedabad
Haldia
Hazira

Paradip

Implication

Dahej
Malavaram/
Kakinada

Goa
Bangalore
Mangalore

Chennai
Salem

These have delayed the establishment of


the Southern grid and will likely affect the
availability of Natural Gas in the southern
region.

Tuticorin
Kochi

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Pipeline under
legal dispute

Source: Ministry of Petroleum & Natural Gas; Frost & Sullivan


105

Fuel Prices
There is little to differentiate between CNG and diesel by 2014 due to price revision in CNG prices, which
might lead to CNG being unattractive in existing markets.
New Delhi Fuel Prices, India, 2013 and 2014
80

($1.15)
72.40

($1.21)
76.00

Fuel Price (/litre or kg)

70
($0.83)
52.54

60

($0.83)
58.00

($0.90)
57.00
($0.72)
45.60

50
40
30
20
10
0
Petrol

Diesel
2013

CNG

2014

It has been assumed that that quantum of increase in diesel prices will be higher after elections and would reach
58 due to government endeavour to reduce under recoveries on diesel.

The LPG price remains stable due to market pricing and global market outlook for LPG.

A CNG price correction is due to the increase from 4.2US$/btu to 8.4US$/btu.


Source: Ministry of Petroleum & Natural Gas; Frost & Sullivan

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RenewablesFuture of Renewables Availability in India


The target for renewable energy capacity addition under the 12th five year plan is 30,000 MW, which will
take the share of renewable energy to roughly about 17% of the total installed capacity.

Percent Renewable
Installed Capacity,
India, 2010

12%

Expansion Plans for Renewables


Installed Capacity, India, 20122022

Percent Renewable Installed


Capacity, India, 2017

12th Five Year Plan


(1 April 201231 March 2017)

17%

Renewables

Power Generation Capacity

Solar

10,000 MW

Wind

15,000 MW

Small Hydro

2,100 MW

Biomass

2,900 MW

Total

30,000 MW

13th Five Year Plan


(1 April 201731 March 2022)

2010

Renewables

Power Generation Capacity

Solar

16,000 MW

Wind

11,000 MW

Small Hydro

1,500 MW

Biomass

2,000 MW

Total

30,500 MW

2017
Source: IEA; MOP; TERI; Planning Commission; Frost & Sullivan

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RenewablesFuture of Renewables Availability in India (continued)


By 2025, nuclear and renewable energy will be the only two natural resources available for meeting
additional power needs of India.

Electricity Scenario, India, 2025 (GWh)


Increase of coal imports by 200% and
crude oil imports by 100% by 2025.

Power tariff hikes in the range of 25% to


40% more than once every year.

Power deficits leading to more than 10%


reduction in industrial output or increase
in production costs due to diesel based
power backups.
Implementation of 60 solar city
programmes aimed at 10% reduction in
projected conventional energy demand
by 2018.
Source: IDFC; CMIE; MoWR; Grail Research; Planning Commission; Frost & Sullivan
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Future of Water in India


Increase in population, urbanization, and growth in agriculture and industries leading India to an impending
water stress by 2025.
Water Cycle, India, 2013
Cities reaching out to distant
water sources as far as 250
to 450 km

Growth of water
management techniques
include micro-irrigation, rain
water harvesting, and water
shed management
$176 billion investments in
irrigation and waste-water
treatment projects by 2017
and beyond

Source: IDFC; CMIE; MoWR; Grail Research; Planning Commission; Frost & Sullivan
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Future of Food in India


A silent revolution in Indias food supply chainsboth traditional and modernis driving Indias food security
and bridging the gap between demand and supply.

Food Projections, India, 2025

Initiatives to Meet Future Food Demand


Linking of production clusters with major
consumption areas via fast multi-modal transport
system for perishable items

Rise of Modern Private Food Wholesale and


Logistics and backward integration by retailers

$43 billion provisions in the XII plan for


developing agri-marketing infrastructure,
warehousing, and cold chain development

Supply

Demand

$378 Billion budgetary support in the XII plan


for agriculture diversification and improvement
of infrastructure

Note: Figures are in million tonnes.


Source: IDFC; CMIE; MoWR; Grail Research; Planning Commission; Frost & Sullivan
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Mega Trend 11Health, Wellness, and Wellbeing

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Healthcare Market Outlook for India


Given the poor healthcare infrastructure in India, major avenues for growth in the country lies in providing
low-cost hospitals and more accessible points of health care delivery.

Health Care Market, India, 20112018

Market Status, India, 2013

181
16%

64

2011

Market Nature

Fragmented

Market Penetration
Rate

Medium

Market Stage

Growth

2018F

Note: Figures are in $ Billion

Healthcare market growth driven by rapidly growing population, rising income levels, increased
insurance penetration and an increased prevalence of lifestyle-related diseases.
6.5 physicians
per 10,000
population
compared to
global average
of 14.2

Over 40,000
hospitals in
India

9 beds per
10,000 people
as compared
to global
average of 29
beds
Source: Frost & Sullivan

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Growth Avenues for Segments


Given the poor healthcare infrastructure in India, major avenues for growth in the country lies in providing
low-cost hospitals and more accessible points of health care delivery.
Total Healthcare Market: Growth Avenues for Segments, India, 20122017
Growth
Avenues

Healthcare
Delivery
Services

Medical
Imaging

Medium

Low

Patient
Monitoring

Implants and
Consumables

Pharmaceuticals

IVD

Low-cost
Hospitals
Single
Specialty
Chains
Day Care
Centers
Telemedicine
Wellness
Centers
Medical
Tourism
Health
Insurance
Healthcare
Information
Technology
High
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Source: Frost & Sullivan


113

Growth Avenues for SegmentsHealthcare Information Technology


The rise in the demand for quality healthcare facilities among the rapidly expanding middle-class and affluent
population increases the adoption of HCIT solutions.

HCIT Market: Revenue Forecast, India, 20112018


1,600.0
1,400.0
1,200.0
Revenue ($ Million)

Market growth
is fueled by
increase in the
population,
changing
disease profile
and increasing
disposable
income from
2011 to 2018

1,000.0
800.0
600.0
400.0
200.0
0.0

Other Revenue
Software Licensing Revenue

2011
228.8
76.3

2012
286.0
95.3

2013
357.5
119.2

2014
446.9
149.0

2015
558.6
186.2

2016
698.2
232.8

2017
872.8
291.0

2018
1,090.0
363.8

Year
Note: Software licensing includes hardware application licensing but does not cover system applications.
Source: Frost & Sullivan
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Growth Avenues for SegmentsCurrent Level of IT Adoption in Indian


Hospitals

CDSS

Low

High
1

CIS

RIS/PACS Low

LIS

Low

TeleLow
medicine

EMR

Low
1

Here 5 denotes 100% adoption IT in Hospitals


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High

High
5

High
5

Low

High
5

High Low
5

High

High Low
5

Low

Low

High Low
5

High

Low

Low

High Low
5

High

Low

Low

High

High Low
5

Low

High

High

High Low
5

High

Low

Low

High

Low

High
1

High

High
1

High
1

Low

Low

High
1

High
2

Low

Low
1

HIS

More than 250


Beds

100-250 Beds

50-100 Beds

Less than 50 Beds

Low

High

High Low
5

High

Source: Frost & Sullivan


115

Emerging Cloud-based Delivery of Healthcare


Cloud computing gaining traction and creating tangible value in real-world industries.

Benefits of Cloud-based Delivery of Healthcare, India, 2013


Company

Cost
Benefit

Time
Benefit

Resource
Utilization

Flexibility

Scalability

Other
Benefits

Narayana
Hrudayalaya
WIPRO
IMI Mobile
Max Healthcare
Shell Lubricants
J&K Government
Dr. Reddys Lab
AICTE
KPIT Cummins
Redbus
Flipkart
IndiaMart
Source: Frost & Sullivan
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Mega Trend 12Future of Mobility

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117

Indias Mobility Trends


Integrated mobility solutions in the future will provide door-to-door integrated mobility solutions.

Car Sharing and


Pooling

Ride Sharing

eHail

Zoomcar

Bla Bla Car

Ola

Myles

Trip Da

MyGaadi.com

Carzonrent India

ZingHopper

Uber

Micro Mobility
Solutions

Bajaj RE60
Quadricycles

Source: Frost & Sullivan


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Car SharingAlternative to Owning a Car


Car sharing is nascent, but taking cues from the global market.

Opportunities
Low-car ownership rates
Limited parking for private vehicles
Insufficient public transport
Challenges

Car Sharing
and Pooling
Zoom, a self-driving car
sharing company in India,
is currently the second
largest club in the
developing world with 100
cars in fleet and over 7,000
active users

Unique barriers such as preference to own a vehicle rather than


share/rent
Emergence of other alternative models such as Uber, self-driving
rentals, call taxis
Local Preferences (based on EMBRAQ Survey in Bangalore)
Preferred price: Rs. 200 per hour
Preferred locations: residential complexes, offices, airports, public
transit stations
Preference for New Cars, mostly SUVs and luxury vehicles
Source: Frost & Sullivan

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Ride SharingAlternative to Local Trains

Opportunities
Crowded trains and metros
Cheaper alternative to trains
Community-based system alleviate safety concerns

Ride Sharing
Bla Bla car ride
sharing service
launched in India in
2015 has started
offering the global
community service in
Delhi

Challenges

Insufficient public transport


Competition from auto rickshaws which make more than 229 million
passenger trips per day

Source: Frost & Sullivan


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Ridesharing Market in India


The unavailability of on-demand transport systems makes city-to-city ridesharing the next game changer in
Indian market, with no restraints placed on peer-to-peer ridesharing by the government.
Ridesharing: Ridesharing in India, 2014
First country in the Asian market for the company
$100 million funding received for expanding to emerging markets including India
Plans for monetarizing the service after a year of incubation
India is predicted to become on the companys largest market
Unavailability of tickets on short notice for intercity trips should be taken advantage of
Long distance city-to-city trips
Primary launch locations are New Delhi, Mumbai, and Bangalore
Aims to fill the gap in the long-distance market as an alternative to bus and train
Ladies Only option for women seeking all-female rides
Targetting the age group between 20 to 35 and creation of car club memberships
Corporate community to be made the focus due to the commute schedule
Available only to employees of organizations which are shortlisted and verified
Users login with facebook credentials and confirm their corporate affiliation with an
email verification
B2B and B2C business models by licensing the platform for corporations, and
subscription model for users
Source: Frost & Sullivan
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Ola and UberMiddle-class Indias New Ride

Opportunities
Easy bookings from any location through mobile phone or Web
sites
Easy payment options (online banking, mobile banking)

eHail

Safer ride: driven only by qualified licensed (commercial) drivers,


women chauffeurs are also available
No refusal from drivers: drivers cannot deny services to travel to
undesirable location

Ola currently operating


60,000 cabs in 52 Indian
cities and plans to
expand services to 200
cities by end of 2015

Challenges
Inconsistent Pricing: (E.g., Surge pricing or primetime pricing)
Lack of government mandates and clarity in organizational system

Source: Frost & Sullivan


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122

QuadricyclesReplacing Autos

Opportunities
Safer alternative to autos; carrying minimum of 3 passengers
Intra-city movements only

Micro Mobility
Solutions

Driven only by licensed (commercial) drivers

Challenges
Bajaj RE60, one of
the first to be
debuted and piloted
in India

Regulation to ensure fair pricing and enforcement


Lack of government mandates and clarity in organizational system

Source: Frost & Sullivan


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Car Sales Forecast


Car sales in India are expected to reach 5 million units in 2020 and expected to reach 7.5 million units by
2025.

Car Sales Forecast, India, 20092025


CAGR (FY2014FY2020) = 13.1%
CAGR (FY2014FY2025) = 10.5%

8.00

7.54

7.00

Car Sales (Million)

6.00
5.26
4.75

5.00
4.25
3.76

4.00
3.27
3.00

2.55

2.68

2.62

2.51

2.80

2.09
2.00

1.57

1.00
0.00
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015f FY2016f FY2017f FY2018f FY2019f FY2020f FY2025f

Assumptions: GDP Agriculture estimated to grow at a CAGR of 6.7%


Urban Population estimated to grow at a CAGR of 2.8%
Diesel Prices Estimated to stabilize at around INR 75
Central Interest rates to stabilize around 6.3%

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Note: Diesel Prices for New Delhi


Source: SIAM; Frost & Sullivan
124

Indian Car Market


India to is expected to become third largest car market in the globe by 2020 and is estimated to exceed the
United States by 2026.

Car Sales, Global, 2020

China

20.1

US

8.5

India

5.3

Japan

3.7

Brazil

3.6

Russia

3.2

Germany

3.2

UK

2.5

France

2.2

Italy

2.1

Key: The values are in Million


Source: LMC Automotive; SIAM; Frost & Sullivan
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Opportunity Pyramid 2014


Most of the opportunity today exists in the 5 to 10 lakhs segment for the vehicle manufacturers.

Opportunities in Vehicle Market, India, 2014


Volume Share

Luxury
market

High Cost:
>20 Lakhs

3%
Premium sedans
and SUVs

20%

37%

(21 models)

Sedans, premium hatchbacks


and C-SUVs (65 models)
OEM Focus today with new model/
Segment creation opportunity

Micro Cars, low cost hatchbacks, and vans


(33 models)

Middle to
Premium:
10-20 Lakhs

Characters
Competent with
features
High value for money
High volume
Good space

Low to
Middle:
5-10
Lakhs

Low Price:
0-5 Lakhs

30%
^Number of models are rounded and may not be accurate.
*Prices ex-showroom Delhi.
Source: Frost & Sullivan
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126

Opportunity Pyramid 2020


India to have 35% share of 10 to 20 lakhs vehicles from Sedan and SUV segment in 2020 due segmental
shift.
Opportunities in Vehicle Market, India, 2020

Volume Share

High Cost:
>20 Lakhs

10%

Luxury
market

35%

Customer shift
from hatchback
to SUVs and
sedans

30%

Sedans, premium hatchbacks,


and C-SUVs

Characters
Loaded with features

Premium
Sedans
and SUVs

Micro cars, low cost hatchbacks, and vans

Stylish exterior and


interiors
Competitive engines

Middle to
Premium:
10-20 Lakhs

Low to Middle:
5-10 Lakhs

Low Price:
0-5 Lakhs

25%
^Number of models are rounded and may not be accurate.
*Prices ex-showroom Delhi.
Source: Frost & Sullivan
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Conclusion

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128

From Macro to MicroTaking Mega Trends from Information to


Strategy Implementation

Macro

Micro

Analysis of
Opportunities
and Unmet
Needs

Mega Trend
Selected trends that
impact businesses and
markets

Impact on
Future Product/
Technology

Sub Trend
A sub-layer of trends that
has a wide ranging impact

Impact to Industry
Visualising the roadmap of
these critical forces through
scenario-building and macro
economic forecasts

Source: Frost & Sullivan


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129

Mega Trend MatrixUnderstanding Implications of Key Mega Trends


on the Indian Economy
Future
Economic
Growth

High

The Middle
Bulge

Generation Y

Degree of Impact on Indian Economy

Bricks and Clicks


Urbanization

She-conomy

Future Infrastructure

Smart Cities

Innovating
to Zero

Space
Jam

Health, Wellness,
and Well-Being

Value for Many


Business Model

Connectivity
and the Internet
Economy

Future Energy
Power Generation

Low

eMobility

Low

Degree of Certainty

Note: The size of the bubble represents the scale of opportunity within each Mega Trend.
These Mega Trends have been plotted based on quantitative and qualitative reasoning.
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High
Source: Frost & Sullivan
130

Macro to MicroImpact of Mega Trends on Cities, Businesses, and


Personal Lives in India

Mega Trend

Impact on Cities/Economy

Macro
Urbanization

Impact on Business
Micro

City infrastructure to become integrated,


green, and intelligent in terms of transport,
energy, healthcare, and buildings

New mobility solutions

Industrial hubs and investment regions to


be created along the DMIC

Specialized hospitals in city centers


and walk-in clinics in city suburbs

Adverse effects on human


healthprevalence of diabetes
and psychological stress to
increase

Gen Y will prefer public transportation; bus


passes to be replaced with biometric cards

Energetic workforce and highly skilled


labor

Future life to be largely dependent


on digital empowerment

Urban lifestyle to get completely


digitalized, on-demand and on-the-go

Personalization and customization of


products

Working age population to increase


competitive advantage for India

Online marketing tactics will increase


to target Gen Y

More women in workforce will boost India


GDP by 4-8% by 2020

Improved business results: Higher


representation of women board
members attain significantly higher
financial performance than those with
the lowest representation

Hub and Spoke Business model for


different industries (e.g., logistics)

Infrastructure projects to see a lot of PPP


synergies for deployment of customized
city solutions
Gen Y and
Youngest
Working Age
Population

She-conomy

Impact on Personal Lives

New Work Culture such as Working


from Home to become more
prevalent
Products and solutions supporting
single mothers will increase

Exorbitance to be replaced by
smart choices, such as public
transport

Schools to offer flexible school


schedules to support dual-job
households
Egalitarian relationships will
become stronger with more
flexible role negotiation
Prevalence of single mother
households, late marriages, and
children will increase

Source: Frost & Sullivan


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Macro to MicroImpact of Mega Trends on Cities, Businesses, and


Personal Lives in India (continued)
Mega Trend

Impact on Cities/Economy

Macro

Impact on Business

Impact on Personal Lives

Micro

Middle Bulge

Creation of affordable compact housing


options
Slum settlements will evolve to better
living standards with better amenities
Shopping centers, parks, and
entertainment hubs will thrive on
increase in middle class income

Low-cost business modelsIntegrating


supply chains, mobile retailing, pop-up
stores in slums
Affordable products, multi-packs, bundled
products will be more popular
Branded products to launch their own
cheap alternatives

Standard of living, house and


auto ownership will increase
Individual wealth to be financed
by loans
Middle class ownership of
branded products will increase

Wealth
Watchers

Creation of luxury hotels, recreation, and


resorts
Increase in creation of luxury apartments
with penthouses and real estate sprees

Luxury auto brands


Memberships and exclusive offers
More asset management services

Luxury lifestyle and multiple


homes in different locations
Outbound tourism will flourish as
the wealthy will vacation more in
exotic locations

Economy

Cities will see upscale infrastructure


facilities
Increase in commercial and industrial
zones
Creation of upgraded urban shelters

Profits in business investments


Reverse Brain Drain to see foreigners
take senior posts in MNCs holding
massive financial power
Good returns in businesses dealing with
luxury items, home furnishings,
restaurants, automobiles, and travel
agencies

Better living standards


Increase in household
consumption
Increased ownership of
expensive goods and services

Space Jam

Use of satellite-based tools in city


planning
Moving halls will adapt satellite
technology
City weather can be well monitored by
the use of satellite technology

Satellite technology used by farmers to


learn about the weather conditions and
prices of their products in local cities
Use of nanotechnology has resulted in
cheaper water purification appliances and
cheap medicines and drugs

Satellite TV has a given wide


range of entertainment options
Satellite phones makes
communication possible, even in
the most remote areas

Source: Frost & Sullivan


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132

Macro to MicroImpact of Mega Trends on Cities, Businesses, and


Personal Lives in India (continued)
Mega Trend

Impact on Cities/Economy

Macro
Connectivity and
Data Traffic

Impact on Business
Micro

Creation of technology-enabled city


services

Cloud computing to become more


integrated

Digital mapping and networking


facilities among the cities

Creation of wireless connectivity


enabled products and unique mobile
application

Intelligent IT-enabled traffic system

Increased use of online mobile


advertising and mobile banking
Innovating to Zero

E-mobility

Cities to see innovation concepts like

Increase use of green technology

Zero Discharge Sewage City

More use of recycled materials

Zero Fatal Accident Cities

Zero Discharge Cities

Carbon Neutral Cities

The increased use of electric vehicles


will require charging stations
Charging stations will be multifaceted, offering other products and
services such as confectionary
kiosks, diagnostic tool for cars, and
garage advisory services

Infrastructure
Development

Impact on Personal Lives

Fast and congestion-free transport


system in and around the city
Increase in number of flights
connecting the cities

Selling e-mobility solutions such as


battery leasing, energy subscription
packages, and after-sales services
Market green solutions such as solar
panels, wind turbines and CNHG to emobility client base
Increase in airports, ports, and air
traffic will create business opportunities
for raw material suppliers such as
cement and steel and facilitators such
as travel operators

Life will become easier with home


shopping and home banking
facilities
With increased connectivity,
people can video conference in
car, train, or plane
Environmentally conscious
lifestyle

Electric cars will satisfy the new


generations need for value for
money, comfort, safety,
performance,
fuel consumption, reliability, and
design
Travel time will be reduced
considerably due to sustainable
transport infrastructure

Source: Frost & Sullivan


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133

Macro to MicroImpact of Mega Trends on Cities, Businesses, and


Personal Lives in India (continued)
Mega Trend

Impact on Cities/Economy

Macro

Impact on Business

Impact on Personal Lives

Micro

Bricks and Clicks

Public areas such as railway


stations will feature online or
virtual kiosks

Online retailing will be integrated with


the other channels of retailing to
provide a unified experience
Adoption of mobile commerce will
increase with growing popularity of
location based deals and group buying
sites

Shopping will not be restricted by time


or place
Consumers will become more frugal
with access to bargain sites and
coupons
Use of branded merchandise will
increase with availability of large
discounts

Health Care Industry

Indian hospitals will evolve to


become medical centers
emulating the best practices in the
West
Medical centers will encompass
medical schools, inpatient, and
outpatient care
Medical Infrastructure: medical
labs, hospitals, diagnostic centres

Point-of-care services will expand


beyond hospital territories to mobile
vans and e-healthcare
Healthcare will be made more
affordable for the poor, without any
quality compromises
Rehabilitation centres, medical
textiles, medical equipment
Training and education: doctors,
managers, nurses, clinical research,
healthcare management
Telemedicine and medical outsourcing

Uptake of health care insurance will


increase
Gen Y, which prefers customization,
will demand supplemental or
voluntary insurance plans
E-healthcare sites will become as
popular as a ticket booking or bargain
site with the average Indian

Energy

India will shift its focus from the


traditional base-load plants to a
combination of base-load and
peaking plants, which are are
designed to help balance the
fluctuating power requirements

Focus on alternative sources of energy


such as biomass, solar, and kinetic
Every function in the value chain will
adopt a green strategy

The average Indian will become more


conscious of their energy
consumption
Use of smart grids, smart meters, and
appliances with smart technology will
constitute future homes
Source: Frost & Sullivan

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134

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Source: Frost & Sullivan
NE81-MT

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Appendix

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136

Research Methodology for India's Income PyramidPoverty Line

2010 NCAER Threshold for Poverty


Per month income per household
Identifying the Poverty Line

Urban

Less than Re 7,030

Rural

Less than Re 4,860

Average

Re 5,947

Annual

Re 71,364

Percent of People
Below Poverty Line

Total Population

Number of

Number of

People Under

Households Under

BPL

BPL

2012
29.5% (Rangarajan
expert panel

72,600,000 (divided by
1,219,000,000

363,000,000

estimate)1

Calculation
of BPL1

size 5)

Percent of People

2020

Below Poverty Line

Total Population

Number of

Number of

People Under

Households Under

BPL

BPL

20.5% (estimated
based on historical

average households

57,359,000 (divided by
1,399,000,000

286,000,000

averages)

average household
size of 5)

1Based

on RBI governor C Rangarajan Report


Source: National Council for Applied Economic Research (NCAER); Frost & Sullivan
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137

Research Methodology for Indias Income PyramidIncome Slabs and


Estimates

2010 Estimates: Taken from


NCAERCMCR Household
Survey, 2010

2010 Estimates: Taken from


NCAERCMCR Household
Survey, 2010

2020 Estimates: Based on


growth rates estimated using
NCAER forecasts for 2015
and 2025

2020 Estimates: Based on


growth rates estimated using
NCAER forecasts for 2015
and 2025

Identifying the
Number of People

Identifying the
Number of People

Poor

Based on the NCAER


definition of deprived, less
than Re 1,50,000

Segmented the NCAER slab


into two: category below BPL
(less than Re 70,000) and
category with income
between Re 70,000 and
150,000 or poor

Based on the NCAER


definition of aspirers, with
annual income of between
Re 150,000 and Re 340,000

2010 Estimates: Based on


growth rates estimated using
the historical data from
NCAERCMCR Household
Survey, 2004

2020 Estimates: Based on


growth rates calculated using
historical data from NCAER
survey

2020 Estimates: Based on


growth rates from NCAER
historical data

Identifying the
Number of People
Affluent,
Rich, and
Highly
Rich

Middle and
Upper
Middle Class

Identifying the
Income Bracket

2010 Estimates: NCAER


CMCR Door-to-Door
Household Survey, 2004,
and NCAERCMCR
Household Survey, 2010

Identifying the
Number of People

Lower Middle Class

Identifying the
Income Bracket

Identifying the
Income Bracket

Identifying the
Income Bracket

Based on the NCAER


definition of middle class, Re
340,000Re 1,700,000

Based on the NCAER


definition of rich from 2004
survey

Segmented the NCAER slab


into two categoriesmiddle
(Re 340,0001,000,000) and
upper (Re1,000,000
2,000,000)

Clear rich: Re 200,000


5,000,000

Sheer rich: Re 5,000,000


10,000,000

Super rich Above Re


10,000,000

Source: National Council for Applied Economic Research (NCAER); Frost & Sullivan
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Transport Corridor in India


The $13.6 billion Golden Quadrilateral Transport Corridor to Carry 40% of Indias Urban Road Traffic and to
Connect 500 Million Population by 2025.

Implications for 2025

To connect 3 Mega Cities and 21


smaller cities with populations of
more than 1 million in 2025
Generate employment for over 5
lakh people every day in 2025
6 lane expressways to be
completed in 2025 to facilitate
higher transport volume and
operations
Dedicated freight lanes to
support 60 percent of freight
transport traffic in 2025

Image source: NHAI.org


Source: Frost & Sullivan
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Mega Corridors in India


By 2021, populations of more than 527.17 million will be connected by Mega Corridors.

Number

Name of the Mega Corridor

States

Population
(Million)

Hyderabad-Ananthpur-Hindupur

Andhra Pradesh

29.1

Hyderabad-Vijaywada

Andhra Pradesh

10.3

Hyderabad-Nizamabad-Adilabad

Andhra Pradesh

2.8

Srikakulum-Vishakhapatnam-Kakinada-Guntur-Nellore
(Coastal Corridor)

Andhra Pradesh

25.3

Mumbai-Thane-Ahmedabad

Maharashtra

58

Mumbai-Nasik-Dhule-Amravati-Nagpur

Maharashtra

26

Pune-Ahmadnagar-Aurangabad-Jalgaon

Maharashtra

7.6

Bangalore-Belgaum

Karnataka

38.5

Mysore-Bangalore-Kola

Karnataka

8.6

10

Mangalore-Udipi-Karwar (Coastal Corridor)

Karnataka

3.9

Source: Population Foundation of India; Planning Commission of India; Frost & Sullivan
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Mega Corridors in India (continued)


By 2021, populations of more than 527.17 million will be connected by Mega Corridors.

Number

Name of the Mega Corridor

States

Population
(Million)

11

Mehsana-Gandhinagar-Ahmedabad-Vadodara-BharuchSurat-Valsa

Gujarat

48

12

Ahmedabad-Rajkot-Junagarhsa

Gujarat

13

Bhavnagar-Porbandar

Gujarat

14

Jamnagar-Morvi-Gandhidham-Bhu

Gujarat

15

Chennai-Krishnagiri-Hosu

Tamil Nadu

30.4

16

Coimbatore-Erode-Salem-Krishnagiri

Tamil Nadu

13.4

17

Chennai-Cuddalore-Tanjavur-Karaikud

Tamil Nadu

4.9

18

Tuticorin-Nagarcoil

Tamil Nadu

2.8

19

Delhi-Mumbai Industrial Corridor

Delhi, Mumbai, Rajasthan,


Haryana, UP, MP

203.6

Source: Population Foundation of India; Planning Commission of India; Frost & Sullivan
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141

Innovating to Zero in India

Zero Carbon Emission


State in India
Zero Carbon Emission:
Himachal to emerge Asias
first carbon neutral state.
The World Bank has agreed to
sanction a $450 million loan
for promoting sustainable
environmental growth in
Himachal Pradesh.

Zero Emission Car in India


Zero Tailpipe Emissions: Indian REVA
electric car is a zero emissions vehicle (ZEV)
The all-new electric REVA NXR to be
officially unveiled in 2012. The new Reva car
will be a 4-seater with a top speed of 104
km/hr, and the maximum distance covered in
a single charge has been doubled to 160 km,
compared to 80 km of earlier models of Reva
cars.

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Noida Zero Discharge' City


of India
4 new treatment plants (STPs)
with upgraded technology, at
a cost of $.03 billion, to make
Noida a Zero Discharge' city
by 2021.

Image source: Dreamstime


Source: Frost & Sullivan
142

Noida to be a 'Zero Discharge' City by 2021Case Study

Sewage System in Noida2011

Sewage treatment plants


(STP): 2 in number of 34
MLD and 27 MLD
The existing plants are all
based on the Upflow
Anaerobic Sludge Blanket
(UASB) system, a
technology that has become
obsolete

Sewage System in Noida2021 (Master Plan)

New sewage treatment plants (STP): 2 in


number of 69 MLD and 100 MLD. The
existing two plants will be with an
additional capacity to treat 25 MLD and
33 MLD.
The four additional and improved plants
will incorporate an upgraded, fully
automated technology called Sequential
Batch Reactor (SBR) technology.
Project initiated by the Noida Jal Nigam;
a cost of $30 million is proposed to
install the STPs.
The new plants will take care of the
sewer problem for the next 20 years and
can serve a population of 25 lakh plus.

Image source: Dreamstime


Source: Frost & Sullivan
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143

Forecasts of Electric Cars in India


Electric Vehicles Market: Forecasts of Sales in Units, India, 20092014
22,500
20,000

Units

17,500
15,000
12,500
10,000
7,500
5,000
2,500
0
PHEV
CEV
NEV

2009
810

2010
100
1,665

2011
900
8,220
NEV

2012
2,250
10,200
Year
CEV

2013
20
4,800
10,680

2014
30
8,300
12,100

PHEV

NEVs hold the majority share in 2009 and 2010 because Reva is the only company present in India.
CEVs such as Tara Tiny, Tata Indica Electric, and Mahindra Reva are expected to be launched in 2011.
Toyota Prius, a PHEV, is expected to be launched in 2014.
Source: Frost & Sullivan
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144

Product Life Cycle Analysis


Electric Vehicles Market: Life Cycle, India, 20092050
2009

Introduction

Early Electric
Vehicle
Adopters:
Reva

2012

Growth

Threats due to
Competitive
Technologies:
All vehicle manufacturers in
India launching CNG
variants of existing models

2020

Maturity

Growing Electric Vehicle


Adopters:
Tata Motors
Tara International
Mahindra
Bavina Motors

2040

Decline 2050

Saturation and Decline of


Electric Vehicles:
Fight for market share retention
and difficult to expand market
share significantly and growth of
fuel cells

The Indian electric vehicle market is at the nascent stage and will shift to the growth phase; it is expected to be
mature around 2025.
Source: Frost & Sullivan
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