SPECIAL ECONOMIC ZONES AN INDIAN PERSPECTIVE INTRODUCTION Jute Industry Jute is otherwise known as the 'Golden Fiber' -a plant

that produces a fiber, mainly used for sacking and cordage. This raw material is used for sacks, globally and is the most versatile fibers of nature. Different forms of handicrafts also use this fiber. Jute is cheap and important among all textile fibers, after cotton.

Potential of Jute industry The jute industry has been expanding really fast spanning from a wide range of life style consumer products, with all courtesy to the versatility of Jute. Innovative ways of bleaching, dyeing and finishing processes - the jute industry now provides finished jute products that are softer, have a luster and also an aesthetic appeal. Changing scenario of Jute industry At present, jute has been defined as an eco-friendly natural fiber with utmost versatility ranging from low value geo-textiles to high value carpet, apparel, composites, decoratives, upholstery furnishings etc. In future, a number of jute mills and mini-jute plants have been seen to be engaged in jute products and jute blended yarns. We all know that the uses of jute are manifold, with the traditional usage pattern remaining constricted to packing, hessian and carpet backing. The jute sector in India engages a key role in the Indian economy, providing direct employment to about 0.26 million workers, and supporting the lives of around 4.0 million farm families. Around 0.14 million people are believed to be engaged in the tertiary sector, that supports the jute industry. Currently it also contributes to exports to the tune of about Rs. 1000 crore. Jute Production in India Import of Raw Jute in 2008-09 has dropped by 66% in quantity and by 55% in value terms, whereas import of jute products saw a surge by 23% in quantity and by 47% in value terms when compared with the figures of 2007-08. The EXIM Policy states that import of raw jute and jute products in India should be considered as free items without duty.

Import of jute and jute products in last 3 years Qty: M.Ton and Value: Rs. /Lakhs Period 2008 - 2009 Qty. Value Qty. 2007 - 2008 Value Qty. 2006 - 2007 Value 1,71,800 19,672.39 94,363 15,031.15

Raw Jute Jute Products

59,042 8,900.31 70,935 20,299.48

57,688 13,809.41

60,932 17,162.87

State-wise Jute production in the last 3 years Period: July-June / Area: '000 Hectares / Qty: '000 Bales 2006-07 State Area 2007-08 Area 610 1251 657 50 4 4 3 2008-09 (Estimated) Production 8216 147 61 11 1 35 6 584 1402 674 104 (0.1) 8 6 2 10160 50 21 1 Area 7900 Production

Production 595 1253 559 48 8411 131 60 6 (0.5) 35 6 -

West Bengal Bihar 127

Jharkhand Assam 58 Orissa 5

Uttar Pradesh Tripura 1 Meghalaya Nagaland Others Total 792 4 4 2 -

10316 814

10219 812

as SEZ ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. An SEZ is a trade capacity development tool, with the goal to promote rapid economic growth by using tax and business incentives to attract foreign investment and technology. Today, there are approximately 3,000 SEZs operating in 120 countries, which account for over US$ 600 billion in exports and about 50 million jobs. By offering privileged terms, SEZs attract investment and foreign exchange, spur employment and boost the development of improved technologies and infrastructure.

There are 13 functional SEZs and about 61 SEZs, which have been approved and are under the process of establishment in India.

Most developing countries in the world have recognized the importance of facilitating international trade for the sustained growth of the economy and increased contribution to the GDP of the nation. As part of its continuing commitment to liberalization, the Government of India has also, since the last decade, adopted a multi-pronged approach to promote foreign investment in India. The Government of India has pushed ahead with second-generation reforms and has made several policy changes to achieve this objective.

The SEZ policy was first introduced in India in April 2000, as a part of the Export-Import ( EXIM ) policy of India. Considering the need to enhance foreign investment and promote exports from the country and realizing the need that level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally, the Government of India in April 2000 announced the introduction of Special Economic Zones policy in the country deemed to be foreign territory for the purposes of trade operations, duties and tariffs. To provide an internationally competitive and hassle free environment for exports, units were allowed be set up in SEZ for manufacture of goods and rendering of services. All the import/export operations of the SEZ units is on self-certification basis. The units in the Zone are required to be a net foreign exchange earner but they wouldl not be subjected to

any pre-determined value addition or minimum export performance requirements. Sales in the Domestic Tariff Area by SEZ units is subject to payment of full Custom Duty and as per import policy in force. Further Offshore banking units are being allowed to be set up in the SEZs.

The policy provides for setting up of SEZ's in the public, private, joint sector or by State Governments. It is also being envisaged that some of the existing Export Processing Zones would be converted into Special Economic Zones. Accordingly, the Government has converted Export Processing Zones located at Kandla and Surat (Gujarat), Cochin (Kerala), Santa Cruz (Mumbai-Maharashtra), Falta (West Bengal), Madras (Tamil Nadu), Visakhapatnam (Andhra Pradesh) and Noida (Uttar Pradesh) into a Special Economic Zones. In addition, 3 new Special Economic Zones were approved for establishment at Indore (Madhya Pradesh), Manikanchan Salt Lake (Kolkata) and Jaipur and have already commenced operations.

India is one of the first countries in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports. Asia s first EPZ was set up in Kandla in 1965. With a view to create an environment for achieving rapid growth in exports, a Special Economic Zone policy was announced in the Export and Import (EXIM) Policy 2000. Under this policy , one of the main features is that the designated duty free enclave to be treated as foreign territory only for trade operations and duties and tariffs. No licence required for import. The manufacturing, trading or service activities are allowed. To provide a stable economic environment for the promotion of Export-import of goods in a quick, efficient and hassle-free manner, Government of India enacted the SEZ Act, which received the assent of the President of India on June 23, 2005. The SEZ Act and the SEZ Rules, 2006 ( SEZ Rules ) were notified on February 10, 2006. The SEZ Act is expected to give a big thrust to exports and consequently to the foreign direct investment ( FDI ) inflows into India, and is considered to be one of the finest pieces of legislation that may well represent the future of the industrial development strategy in India. The new law is aimed at encouraging public-private partnership to develop world-class infrastructure and attract private investment (domestic and foreign), boosting economic growth, exports and employment.

The Ministry of Commerce and Industry lays down the regulations that govern the setting up and administering of the SEZs. The Central Government isfunctioning, while the State Governments play a significant lead role in the development of SEZs in their respective States by stipulating the conditions to be adhered to by an SEZ and granting the necessary approvals. The policy framework for SEZs has been enacted in the SEZ Act and the supporting procedures are laid down in SEZ Rules. The Special Economic Zone Act 2005 came into force with effect from 10th February 2006, with SEZs Rules legally vetted and approved for notification. The SEZs Rules, inter-alia, provide for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. Investment of the order of Rs.100, 000 crores over the next 3 years with an employment potential of over 5 lakh is expected from the new SEZs apart from indirect employment during the construction period of the SEZs. Heavy investments are expected in sectors like IT, Pharma, Bio-technology, Textiles, Petro-chemicals, Auto-components, etc. The SEZ Rules provides the simplification of procedures for development, operation, and maintenance of the Special Economic Zones and for setting up and conducting business in SEZs. This includes simplified compliance procedures and documentation with an emphasis on self-certification; single window clearance for setting up of an SEZ, setting up a unit in SEZs and clearance on matters relating to Central as well as State Governments; no requirement for providing bank guarantees; contract manufacturing for foreign principals with option to obtain sub-contracting permission at the initial approval stage; and ImportExport of all items through personal baggage.

With a view to augmenting infrastructure facilities for export production it has been decided to permit the setting up of Special Economic Zones (SEZs) in the public, private, joint sector or by the State Governments. The minimum size of the Special Economic Zone shall not be less than 1000 hectares. Minimum area requirement shall, however, not be applicable to product specific and port/airport based SEZ. This measure is expected to promote self-contained areas supported by world-class infrastructure oriented towards export production. Any private/public/joint sector or State Government or its agencies can set up Special Economic Zone (SEZ).

This paper explores the Indian policy framework for an SEZ, it further discusses the various

incentives available to an SEZ and an SEZ Unit, and the recent legal and regulatory developments pertaining to SEZs in India. Steel Last Updated: October 2010 Sector structure/Market size The steel industry in India has been moving from strength to strength and according to the Annual Report 2009-10 by the Ministry of Steel, India has emerged as the fifth largest producer of steel in the world and is likely to become the second largest producer of crude steel by 2015-16. Led by strong demand for autos and engineering services, the domestic steel demand in India remains robust, as per Moody's sectoral analysis on Asia's steel sector. According to the analysis, the outlook for the domestic operating environment is positive, driven by robust growth in infrastructure, autos and construction and constrains on additional supply by 2011. Recently, Mr Virbhadra Singh, Minister for Steel, said that India will become the world's second-largest steel producer by 2012, with a capacity of 124 million tonnes (MT) as part of the push being given to assist overall infrastructure development. Production India's steel production during 2009-10 was 64.88 million tonne (MT), up 11 per cent from a year ago, according to Mr A Sai Pratap, Minister of State for Steel. During the second quarter ended September 2010, steel majors Tata Steel and Steel Authority of India Ltd (SAIL) reported a high growth in steel sales. SAIL registered sales of 3.17 MT in the period under review, while Tata Steel's total sales for the quarter stood at 1.66 MT which is around 14 per cent higher than the corresponding quarter last year. Meanwhile, JSW Steel's production during the quarter grew by 8 per cent to 3.14 MT on the back of a steady rise in demand. Consumption The domestic steel consumption grew by 9.8 per cent to 29.82 MT during April-September 2010 over the year-ago period, on the back of steady demand from sectors like automobile and consumer durables. As per the provisional data from the Ministry of Steel, consumption was at 27.15 MT in the

same period a year ago. In September 2010, steel consumption rose 4.1 per cent to 4.72 MT, against 4.53 MT in the year-ago period. Investments A host of steel companies have lined up major investment proposals. Furthermore, with an expanding consumer market, the Indian steel industry is likely to receive huge domestic and foreign investments. The domestic steel sector has attracted a staggering investment of about US$ 238 billion, according to Mr A Sai Prathap, Minister of State for Steel. This consists of nearly 222 MoUs signed between the investors and various state governments mostly in the states of Orissa, Jharkhand, Chhattisgarh and West Bengal. Tata Steel plans to invest US$ 226.17 million to commission its proposed ferroalloys plant and bar mill at its industrial park at Gopalpur and a greenfield steel plant at Kalinga Nagar.Essar Steel plans to expand its exclusive steel showrooms, Hypermart and retail outlet, Expressmart in Madhya Pradesh.JSW Steel plans to invest US$ 17 billion over the next 10 years to ramp up capacity from 7.8 million tonne per annum (MTPA) to 32 mtpa through greenfield and brownfield projects.Jindal Steel has completed the acquisition of Oman-based Shadeed Iron and Steel Co LLC for US$ 464 million.Japan's Nippon Steel will begin a manufacturing operation in India making steel pipes for use in automobiles and plans to invest US$ 37 million on production and sales operations. Government Initiative As per the Press Information Bureau (PIB), during 2009, the government took a number of fiscal and administrative steps to contain steel prices. Central value added tax (CENVAT) on steel items was reduced from 14 per cent to 10 per cent with effect from February 2009. Moreover, in the Union Budget 2010-11, the government has allocated US$ 37.4 billion to the infrastructure sector and has increased the allocation for road transport by 13 per cent to US$ 4.3 billion which will further promote the steel industry.

Steel Sector structure/Market size

The steel industry in India has been moving from strength to strength and according to the Annual Report 2009-10 by the Ministry of Steel, India has emerged as the fifth largest producer of steel in the world and is likely to become the second largest producer of crude steel by 2015-16.

Led by strong demand for autos and engineering services, the domestic steel demand in India remains robust, as per Moody's sectoral analysis on Asia's steel sector. According to the analysis, the outlook for the domestic operating environment is positive, driven by robust growth in infrastructure, autos and construction and constrains on additional supply by 2011.

Recently, Mr Virbhadra Singh, Minister for Steel, said that India will become the world's second-largest steel producer by 2012, with a capacity of 124 million tonnes (MT) as part of the push being given to assist overall infrastructure development.


India's steel production during 2009-10 was 64.88 million tonne (MT), up 11 per cent from a year ago, according to Mr A Sai Pratap, Minister of State for Steel.

During the second quarter ended September 2010, steel majors Tata Steel and Steel Authority of India Ltd (SAIL) reported a high growth in steel sales. SAIL registered sales of 3.17 MT in the period under review, while Tata Steel's total sales for the quarter stood at 1.66 MT which is around 14 per cent higher than the corresponding quarter last year.

Meanwhile, JSW Steel's production during the quarter grew by 8 per cent to 3.14 MT on the back of a steady rise in demand.


The domestic steel consumption grew by 9.8 per cent to 29.82 MT during April-September 2010 over the year-ago period, on the back of steady demand from sectors like automobile and consumer durables. As per the provisional data from the Ministry of Steel, consumption was at 27.15 MT in the same period a year ago. In September 2010, steel consumption rose 4.1 per cent to 4.72 MT, against 4.53 MT in the year-ago period.


A host of steel companies have lined up major investment proposals. Furthermore, with an expanding consumer market, the Indian steel industry is likely to receive huge domestic and foreign investments.

The domestic steel sector has attracted a staggering investment of about US$ 238 billion, according to Mr A Sai Prathap, Minister of State for Steel. This consists of nearly 222 MoUs signed between the investors and various state governments mostly in the states of Orissa, Jharkhand, Chhattisgarh and West Bengal.

Tata Steel plans to invest US$ 226.17 million to commission its proposed ferroalloys plant and bar mill at its industrial park at Gopalpur and a greenfield steel plant at Kalinga Nagar.

Essar Steel plans to expand its exclusive steel showrooms, Hypermart and retail outlet, Expressmart in Madhya Pradesh.

JSW Steel plans to invest US$ 17 billion over the next 10 years to ramp up capacity from 7.8 million tonne per annum (MTPA) to 32 mtpa through greenfield and brownfield projects.

Jindal Steel has completed the acquisition of Oman-based Shadeed Iron and Steel Co LLC for US$ 464 million.

Japan's Nippon Steel will begin a manufacturing operation in India making steel pipes for use in automobiles and plans to invest US$ 37 million on production and sales operations.

Government Initiative

As per the Press Information Bureau (PIB), during 2009, the government took a number of fiscal and administrative steps to contain steel prices. Central value added tax (CENVAT) on steel items was reduced from 14 per cent to 10 per cent with effect from February 2009.

Moreover, in the Union Budget 2010-11, the government has allocated US$ 37.4 billion to the infrastructure sector and has increased the allocation for road transport by 13 per cent to US$ 4.3 billion which will further promote the steel industry.

Exchange rate used: 1 USD = 42.21 INR (as on October 2010)

Telecommunications Last Updated: December 2010

The Indian telecommunications industry is one of the fastest growing in the world. The industry has witnessed consistent growth during the last year on the back of rollout of newer circles by operators, successful auction of third-generation (3G) and broadband wireless access (BWA) spectrum, network rollout in semi-rural areas and increased focus on the value added services (VAS) market. According to the Telecom Regulatory Authority of India (TRAI), the number of telephone subscriber base in the country reached 742.12 million as on October 31, 2010, an increase of 2.61 per cent from 723.28 million in September 2010. With this the overall tele-density (telephones per 100 people) has touched 62.51. The wireless subscriber base has increased to 706.69 million at the end of October 2010 from 687.71 million in September 2010, registering a growth of 2.76 per cent. Meanwhile, Indian Global System of Mobile Communication (GSM) telecom operators added 17.45 million new subscribers in November 2010, taking the all-India GSM cellular subscriber base to 526.18 million, according to the Cellular Operators Association of India (COAI). The GSM subscriber base stood at 508.72 million at the end of October 2010. Value-Added Services (VAS) Market Mobile value added services (VAS) include text or SMS, menu-based services, downloading of music or ring tones, mobile TV, videos and sophisticated m-commerce applications. As per a report, India Telecom 2010 released by KPMG in December 2010, currently, the VAS market is worth US$ 2.45 billion-US$ 2.67 billion, which is around 10 per cent of the total revenue of the wireless industry. The share of VAS in wireless revenue is likely to increase to 12-13 per cent by 2011, on the back of increased operator focus on VAS due to continuous fall in voice tariffs, increasing penetration of feature rich handsets, availability of vernacular content and increased user adoption of VAS applications. Major Investments The booming domestic telecom market has been attracting huge amounts of investment which is likely to accelerate with the entry of new players and launch of new services. According to the Department of Industrial Policy and Promotion (DIPP), the telecommunications sector which includes radio paging, mobile services and basic telephone services attracted foreign direct investment (FDI) worth US$ 1,062 million during April-October 2010-11. The cumulative flow of FDI in the sector during April 2000 and October 2010 is US$ 9,993 million.

As per an industry report the telecom industry witnessed merger and acquisition (M&A) deals worth US$ 16.60 billion during April-December 2010, which represented 28.26 per cent of the total valuation of the deals across all the sectors during the period analysed. There were 10 inbound, outbound and domestic M&A deals in the telecom sector during the first nine months of the current fiscal. The biggest M&A deal in the sector was made by telecommunications service provider Bharti Airtel through the acquisition of Zain s African mobile services operations in 15 countries. The deal involved a transaction of US$ 10.7 billion. In another deal, Bharti Airtel acquired 100 per cent stake of Telecom Seychelles Ltd for US$ 62 million. Other major M&A deals included the acquisition of 95 per cent stake in Infotel Broadband for US$ 1,032.26 million by Reliance Industries and 26 per cent stake of US-based mobile chipmaker Qualcomm s Indian arm for US$ 57.72 million by India's Tulip Telecom and Global Holding. Further, India-based GTL Infrastructure Ltd has bought 17,500 telecom towers of Aircel Ltd. for US$ 1,702.95 million. Going Global In March 2010, Bharti Airtel bought the African operations of Kuwait-based Zain Telecom for US$ 10.7 billion, driving the Indian player into the league of top ten telecom players globally. The Reserve Bank of India (RBI) has liberalised the investment norms for Indian telecom companies by allowing them to invest in international submarine cable consortia through the automatic route. In April 2010, RBI issued a notification stating "As a measure of further liberalisation, it has now been decided... to allow Indian companies to participate in a consortium with other international operators to construct and maintain submarine cable systems on co-ownership basis under the automatic route." The notification further added, "Accordingly, banks may allow remittances by Indian companies for overseas direct investment." Tele-medicine With increase in cell phone users to around 700 million and introduction of 3G services soon in the country, remote treatment and diagnosis of patients through mobile phones would become a reality in the near future. In fact, a few telecom operators and value-added service developers are planning to use mobile phones for diagnostic and treatment support, remote disease monitoring, health awareness and communication.

The Gujarat health department plans to connect all villages through its telemedicine network. The state government has so far expanded the reach of telemedicine services from 53 villages in 2008 to 453, and hopes to cross 500 villages soon. Jay Narayan Vyas, state health minister, said "First thing we plan to do is to start the 104 service over the phone. People can call up and talk to paramedics in call centers who can suggest the primary action to be taken in case of any health emergency. Also, they would be able to suggest generic and over the counter drugs." Telecommunications Last Updated: December 2010 3G Services The Department of Telecom has taken the pioneering decision of launching of 3G services by BSNL and MTNL and initiation of process for auction of spectrum for 3G services to private operators. Allocation of spectrum for 3G and BWA services was done through a controlled simultaneous, ascending e-auction process. All the 71 blocks that were put up for auction across the 22 service areas in the country were sold, leaving no unsold lots. Auction for 3G spectrum ended on May 19, 2010 after 183 rounds of intense bidding over a span of 34 days. The Government is expected to morph revenue worth US$ 14.6 billion. All the available slots across 22 circles have been sold to seven different operators. A pan-India bid for third generation spectrum stood at US$ 3.6 billion. The Anil Ambani-led Reliance Communication bagged the highest number of 13 circles at a cost of US$ 1.9 billion, followed by Bharti Airtel in 12, Idea in 11 and Vodafone and the Tatas in nine circles each, according to the Department of Telecommunications. MTNL and BSNL will have to pay US$ 1.42 billion and US$ 2.2 billion respectively. 3G spectra have already been allotted to successful bidders for commercial use on September 1, 2010 as per the timelines indicated in the Notice Inviting Application (NIA) and in the Letter of Intent issued after the bid amounts were deposited. The 3G spectrum has been allotted to AirTel, Aircel, Vodafone, S Tel, Reliance, Idea Cellular and Tata Cellular Services who won the bids through the electronic auction spread over a period of 34 days in respect of 3G and 16 days in respect of BWA. The BWA spectra have also been assigned to the successful bidders which are Aircel, Augere, Tikona, Qualcomm, Infotel and Bharti. 3G & BWA spectrum would enable users to have value added services like video streaming, mobile internet access, higher & faster data downloads.

Manufacturing The Indian telecom industry manufactures a vast range of telecom equipment using state-of-the-art technology. As per a press release by the Ministry of Communications & Information Technology, the production of telecom equipments in value terms is expected to increase from US$ 10.87 billion during 2008-09 to US$ 11.87 billion in 2010-2011. Favourable factors such as policy moves taken by the Government, incentives offered, large talent pool in R&D and low labour cost can provide an impetus to the industry. Exports increased from US$ 89.24 million in 2002-03 to US$ 3 billion in 2009-10 accounting for 26 per cent of the total equipment produced in the country and it is expected to increase to US$ 3.33 billion in 2010-11. Meanwhile, telecom regulator TRAI has released a consultation paper on Encouraging Telecom Equipment Manufacturing in India seeking views of stakeholders for promoting research and development (R&D) and manufacturing of telecom equipment in the country. The consultation paper issued on December 28, 2010 aims at discussing, debating and finalising measures for promotion of R&D and creation of intellectual property as well as manufacture of telecom equipment and electronic components in India. Further, the Indian mobile handsets market continued to grow in the third quarter 2010 as well to record a quarter-on-quarter growth of 3.6 per cent to touch 40.08 million units in the quarter, according to market intelligence firm IDC s India Quarterly Mobile Handsets Tracker. The year 2010 is expected to end with total mobile handset sales of 155.9 million units. The study further showed that the Finnish handset maker Nokia had the largest share of 31.5 per cent in terms of units shipped during the third quarter of 2010. Nokia was followed by the Chinese brand G Five in terms of unit shipments market share and Korean handset manufacturer Samsung occupied the third slot. According to a report by technology researcher Gartner Inc, India ranks fourth in manufacturing telecom equipment in the Asia-Pacific (Apac) region. The country has a 5.7 per cent share of the region's total telecom equipment production revenue of US$ 180 billion in 2009. "We expect India to move up to the third spot (after China and South Korea) with a share of 8.5 per cent of the total (estimated) Apac telecom equipment production revenue of US$ 277 billion by 2014,"

Gartner said. The firm estimates India's telecom equipment production revenue to grow at a CAGR of 17.1 per cent to reach US$ 22.6 billion in fiscal 2014. India will be the fastest growing telecom equipment production market in the Apac region over the next five years, it predicts. Rural Telephony The rural Telephone connections have gone up from 3.6 million in 1999 to 12.3 million in March 2004 and further to 200.77 million in March 2010. Their share in the total telephones has constantly increased from around 14 per cent in 2005 to 32.75 per cent at the end of October 2010. The rural subscribers have grown to 243.04 million at the end of October 2010. The wireless connections have contributed substantially to total rural telephone connections; it stands at 233.95 million in October 2010. During 2010-11, the growth rate of rural telephones was 21.05 per cent as against 18.69 per cent of urban telephones. The private sector has contributed to the growth of rural telephones as it provided about 84.27 per cent of rural telephones during October 2010. The government plans to connect all revenue villages in India either through landline, mobile or WLL by February 2011. We have already connected about 96 per cent of the revenue villages. The remaining 25,000 villages will have connectivity by February 2011, stated Mr Sachin Pilot, Minister of State for Communications and IT. Further, the Government, under Bharat Nirman II Programme, has envisaged providing broadband coverage to all 250,000 Gram Panchayats by 2012. Policy Initiatives The government plans to formulate a comprehensive National Telecom Policy 2011 including the recognition of Telecom as infrastructure and as an essential service, encouraging Green Telecom, steps to accelerate migration from IPv4 to IPv6 at the earliest, release of IPv6 standards by Telecom Engineering Centre for implementation in the country, etc., as per a press release by the Ministry of Communications & Information Technology. Further, the government plans to take concrete steps towards finalisation of National Broadband Plan including strategy for implementation and initiation of steps for roll out of optical fibre.

The government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry. In the area of telecom equipment manufacturing and provision of IT-enabled services, 100 per cent FDI is permitted No cap on the number of access providers in any service area. In 2008, 122 new Unified Access Service (UAS) licences were granted to 17 companies in 22 services areas of the country Revised subscriber based criteria for allocation of Global System of Mobile Communication (GSM) and Code Division Multiple Access (CDMA) spectra were issued in January 2008 To provide infrastructure support for mobile services a scheme has been launched to provide support for setting up and managing 7,436 infrastructure sites spread over 500 districts in 27 states. As on December 31, 2009, about 6,956 towers had been set up under the scheme According to the Consolidated Foreign Direct Investment (FDI) Policy document, the FDI limit in telecom services is 74 per cent subject to the following conditions: This is applicable in case of Basic, Cellular, Unified Access Services, National/ International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added Services Both direct and indirect foreign investment in the licensee company shall be counted for the purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entity. In any case, the 'Indian' shareholding will not be less than 26 per cent FDI up to 49 per cent is on the automatic route and beyond that on the government route. FDI in the licensee company/Indian promoters/investment companies including their holding companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 per cent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/or unfriendly entities The investment approval by FIPB shall envisage the conditionality that the Company would adhere to licence Agreement

FDI shall be subject to laws of India and not the laws of the foreign country/countries The Road Ahead According to a report published by Gartner Inc in June 2009, the total mobile services revenue in India is projected to grow at a compound annual growth rate (CAGR) of 12.5 per cent from 2009-2013 to exceed US$ 30 billion. The India mobile subscriber base is set to exceed 771 million connections by 2013, growing at a CAGR of 14.3 per cent in the same period from 452 million in 2009. This growth is poised to continue through the forecast period, and India is expected to remain the world's second largest wireless market after China in terms of mobile connections. "The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at double-digit rates for next three years as operators focus on rural parts of the country," said Madhusudan Gupta, senior research analyst at Gartner. "Growth will also be triggered by increased adoption of value-added services, which are relevant to both rural and urban markets." Mobile market penetration is projected to increase from 38.7 per cent in 2009 to 63.5 per cent in 2013, according to Gartner. The much-awaited mobile number portability was launched on November 25, 2010 in Haryana and will be available to more than 700 million subscribers from January 20, 2011 across the country. As continued efforts of the Government to increase competition in the market and to provide wider choice to customer, Mobile Number Portability will be an important step.

Automobile Industry in India Driving the most luxurious car has been made possible by the stiff competition in the automobile industry in India, with overseas players gathering the same momentum as the domestic participants. Every other day, we have been hearing about some new launches, some low cost cars all customized

in a manner such that the common man is not left behind. In 2009, the automobile industry is expected to see a growth rate of around 9%, with the disclaimer that the auto industry in India has been hit badly by the ongoing global financial crisis.

The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by the MNCs. Potential of the Automobile industry In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors.

Turnover of Automobile Manufacturers(In USD Million) Year In USD Million 14,880 16,544 20,896 27,011 34,285

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

The figures show that the automobile sector in India has been growing robustly. The market shares of the different types of vehicles will clearly depict the demand pattern in this sector. Domestic Market Share for 2008-09 Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers 76.49%. 15.96% 3.95% 3.6%

The Iron and Steel Industry is a major industry in India. This industry drives the industrial progress of the country. It is one of the key industries in India, and several small- and medium-scale industries depend on it. The transport and communication industry is dependent on it and so is the power and fuel industry. After 2005, the Indian steel industry has come a long way. It is now the fifth-largest producer globally. The production amounts to 55 million tonnes a year and these accounts for over 7% of the global production. SAIL (Steel Authority of India) has surpassed steel majors like Arcelor Mittal and others in profits reported in 2009. From the total production of 200 MT, 50% of it is exported. Exports for iron ore have increased by 17% due to demand from China. Also, with the reduction in the export duty on iron ore from 15% to just 5%, this has given this sector a further boost. Furthermore, reduction in the freight rates of railways has only proved to be beneficial. Many steel companies have come up with investment proposals in this sector. Due to the growing demand in the domestic market and also globally, this industry is set to receive more funds. Per the Investment Commission, India is to receive US$ 30 billion over the coming 5 years. Another factor driving investments in this industry is the availability of raw materials. Due to the fall in the prices of the commodities internationally, the government has reduced the custom duty. It also grants full exemption on some agricultural and industrial commodities. Products, such as pig iron, semi-finished products, and flat products, are now eligible for a basic duty of 5%. The government also plans to put forth US$ 350 billion for construction and improved infrastructure, which will add to the potential of this sector. As the demand for steel is expected to grow in conventional areas, such as construction, automotive, housing, steel tubes, pipes, and packaging, this sector offers good prospects. Specialized steel will be in demand in hi-tech engineering industries. These industries include power generation, fertilizers, and the petrochemical industry. The Union Budget has hiked the allocation for development of highways and the budget allocated for railways. This further increases the need for iron and steel. There is also huge demand in the oil and gas sector. The profits that can be gained in this sector are about $US 118 billion in the coming 5 years. Also, due to the global demand for steel tubes and pipes,

this sector holds viability. With growth in the aviation sector and rail transport, the demand for stainless steel is going to rise further. Yet another plus is that the government has withdrawn 10% on the exports of steel products. According to a study by ICICI, the Indian iron and steel industry is likely to meet 19% of the global demand in the coming years. Thus, this sector offers tremendous growth prospects in the time to come. The government of India has taken several initiatives to attract foreign investments in India. Not only foreign establishments but also entrepreneurs from India can reap the benefits of the growing Indian Market.


Last Updated: December 2010

Sector structure/Market size India is the world's second largest producer of cement according to the Cement Manufacturers Association. During September 2010, the cement production touched 12.54 million tonnes (MT), while the cement despatches quantity was 12.56 MT during the month. The total cement production during AprilSeptember 2010-11 reached 81.54 MT as compared to 77.22 MT over the corresponding period last fiscal. Further, cement despatches also witnessed an upsurge from 76.50 MT during April-September 2009-10 to 81.10 MT during April-September 2010-11.

Moreover, the government's continued thrust on infrastructure will help the key building material to maintain an annual growth of 9-10 per cent in 2010, according to India's largest cement company, ACC. In January 2010, rating agency Fitch predicted that the country will add about 50 million tonne cement capacity in 2010, taking the total to around 300 million tonne. Further, speaking at the Green Cementech 2010, a seminar jointly organised by the Confederation of Indian Industry (CII) and the Cement Manufacturer's Association in Hyderabad in May 2010, G Jayaraman, Executive President, Birla Corporation Ltd, said that in 2009, 40 MT of capacity was added and he expects a similar trend to follow this year. New Investments Cement and gypsum products have received cumulative foreign direct investment (FDI) of US$ 1,971.79 million between April 2000 and September 2010, according to the Department of Industrial Policy and Promotion (DIPP). Dalmia Bharat Enterprises plans to invest US$ 554.32 million to set up two greenfield cement plants in Karnataka and Meghalaya. Bharathi Cement plans to double its production capacity by the end of the current financial year by expanding its plant in Andhra Pradesh, with an investment of US$ 149.97 million. Madras Cements Ltd is planning to invest US$ 178.4 million to increase the manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT from 2 MT by April 2011. My Home Industries Limited (MHI), a 50:50 joint venture (JV) between the Hyderabad-based My Home Group and Ireland's building material major CRH Plc, plans to scale up its cement production capacity from the existing 5 million tonne per annum (mtpa) to 15 mtpa by 2016. The company would undertake this capacity expansion at a cost of US$ 1 billion. Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5 million MT clinker and grinding unit in Rajasthan. Moreover, in June 2010, Shree Cement signed a memorandum of understanding (MoU) with the Karnataka government to invest US$ 423.6 million for setting up a cement unit and a power plant. US$ 317.7 million will be used to set up a cement manufacturing unit with an annual capacity of 3 mtpa while the balance will be for the 100 mega watt power plant.

Jaiprakash Associates plans to invest US$ 640 million to increase its cement capacity. Swiss cement company Holcim plans to invest US$ 1 billion in setting up 2-3 greenfield manufacturing plants in the country in the next five years to serve the rising domestic demand. Holcim is present in the country through ACC and Ambuja Cements and holds around 46 per cent stake in each company. While ACC operates 16 cement plants, Ambuja Cements controls five plants in India. The Aditya Birla group is the largest cement-making group by capacity in the country and controls Grasim Industries and Ultratech Cement. Government Initiatives The cement industry is pushing for increased use of cement in highway and road construction. The Ministry of Road Transport and Highways has planned to invest US$ 354 billion in road infrastructure by 2012. Housing, infrastructure projects and the nascent trend of concrete roads would continue to accelerate the consumption of cement. Increased infrastructure spending has been a key focus area. In the Union Budget 2010-11, US$ 37.4 billion has been provided for infrastructure development. The government has also increased budgetary allocation for roads by 13 per cent to US$ 4.3 billion. Gujarat plans to treble its cement production capacity in 3-5 years. Proposals have been invited from cement companies such as ACC, ABG, Ambuja Cement, Emami, Indiabulls, Adani group, Ultratech and L&T and the state hopes to raise its capacity from 20 million tonnes per annum to 70 million tonne. The state will host the biennial Vibrant Gujarat Global Summit in January 2011 and expects to witness investment proposals worth US$ 13.2 billion in the cement sector. Exchange rate used: 1 USD = 45.42 INR (as of December 2010)

Pharmaceuticals Last Updated: December 2010 India's pharmaceutical industry is now the third largest in the world in terms of volume and stands 14th in terms of value. According to data published by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total turnover of India's pharmaceuticals industry between September 2008 and September 2009 was US$ 21.04 billion. Of this the domestic market was worth US$ 12.26 billion. The Indian pharmaceuticals market is expected to reach US$ 55 billion in 2020 from US$ 12.6 billion in 2009, according to a report India Pharma 2020: Propelling access and acceptance, realising true potential by McKinsey & Company. The report states that the market has the further potential to reach US$ 70 billion by 2020 in an aggressive growth scenario. Moreover, according to an Ernst & Young and industry body study, the increasing population of the higher-income group in the country, will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015. Besides, the report said the domestic pharma market is estimated to touch US$ 20 billion by 2015, making India a lucrative destination for clinical trials for global giants. Further, IMS Health India, which tracks drug sales in the country through a network of nationwide drug distributors, estimates the healthcare market in India to reach US$ 31.59 billion by 2020. Growth The Indian pharmaceutical market reached US$ 10.04 billion in size, with a value-wise growth rate of 20.4 per cent over the previous year s corresponding period on a Moving Annual Total (MAT) basis for the 12 months ended July 2010, according to data from IMS Health India. Cipla maintained its leadership position in the domestic market with 5.27 per cent share, followed by Ranbaxy. The highest growth in the domestic market was for Mankind Pharma, which grew 37.2 per cent. Leading companies in the domestic market such as Sun Pharma (25.7 per cent), Abbott (25 per cent), Zydus Cadila (24.1 per cent), Alkem Laboratories (23.3 per cent), Pfizer (23.6 per cent), GSK India (19 per cent), Piramal Healthcare (18.6 per cent) and Lupin (18.8 per cent) had impressive growth during July 2010, shows the data.

According to the All India Organisation of Chemists and Druggists (AIOCD), the pharmaceuticals industry in India will grow by over 100 per cent over the next two years. "The people are increasingly becoming health conscious and the sell of all types of medicines, particularly anti-biotic, will zoom up in the coming years. We expect the business to double by 2012", as per JS Shinde, President, AIOCD. According to Shinde, the pharmaceutical industry is currently growing at the rate of 12 per cent, but this will accelerate soon. The sale of all types of medicines in the country stands at US$ 9.61 billion, which is expected to reach around US$ 19.22 billion by 2012. India's domestic pharmaceutical market is valued approximately at US$ 12 billion in 2010, and has shown a strong growth of 21.3 per cent for the 12 months ending September 2010, as per consulting firm Pricewaterhouse Coopers (PwC). It estimates that over the next 10 years, the domestic market will grow to US$ 49 billion, at a compounded annual growth rate (CAGR) of 15 per cent. Further, a RNCOS report titled 'Booming Pharma Sector in India' projects that the formulations industry is expected to prosper parallel to the pharmaceutical industry. It is expected that the domestic formulations market in India will grow at an annual rate of around 17 per cent in 2009-10, owing to increasing middle class population and rapid urbanisation. Diagnostics Outsourcing/Clinical Trials According to the research published by RNCOS titled 'Indian Diagnostic Market Analysis' published in January 2010, the Indian diagnostic services are projected to grow at a CAGR of more than 20 per cent during 2010-2012. Some of the major Indian pharmaceutical firms, including Sun Pharma, Cadilla Healthcare and Piramal Life Sciences, had applied for conducting clinical trials on at least 12 new drugs in 2010, indicating a growing interest in new drug discovery research. Generics According to Mr Srikant Kumar Jena, Union Minister of State for Chemicals and Fertilisers, India tops the world in exporting generic medicines worth US$ 11 billion and currently, the Indian pharmaceutical industry is one of the world's largest and most developed.

Moreover, as per a press release by research firm RNCOS in May 2010, the report titled Booming Generics Drug Market in India' projects the Indian generic drug market to grow at a CAGR of around 17 per cent between 2010-11 and 2012-13. Mr Anand Sharma, Union Minister of Commerce and Industry and Lim Hng Kiang, Minister for Trade and Industry, Singapore , have signed a 'Special Scheme for Registration of Generic Medicinal Products from India' in May 2010, which seeks to fast-track the registration process for Indian generic medicines in Singapore. According to Lim Hng Kiang, "What we have agreed is that if your (Indian) generics have already cleared the regulations of one of the five countries/ regions - US, Canada, the European Union, UK or Australia Singapore will take that as 'already cleared' and we will import it (the generic medicines) without any additional clearances." Mr Sharma said, "This (understanding) will facilitate quick registration and approvals (of Indian generic drugs) in Singapore. It is a major movement forward. One-fourth of the world's generics come from India. This has ensured easy availability of life-saving medicines particularly where affordability has been an issue." Government Initiative 100 per cent foreign direct investment (FDI) is allowed under the automatic route in the drugs and pharmaceuticals sector including those involving use of recombinant technology. (DIPP) The Government plans to set up a US$ 639.56 million venture capital (VC) fund to give a boost to drug discovery and strengthen the pharma infrastructure in the country. According to Mr Ashok Kumar, Secretary, Department of Pharmaceuticals, the Government had issued an expression of interest (EoI) for technical and financial bids for the selection of a global level consultant (GLC) for the preparation of a detailed project report (DPR) in order to develop India as a drug discovery and pharma innovation hub by 2020. The Drugs and Pharmaceuticals Manufacturers Association has received an in-principle approval for its proposed special economic zone (SEZ) for pharmaceuticals, bulk drugs, active pharmaceutical ingredients (APIs) and formulations to be located at Nakkapalli mandal in Visakhapatnam district, according to a government press release.

According to Mr Srikant Kumar Jena, Union Minister of State for Chemicals and Fertilisers, the Department of Pharmaceuticals has prepared a "Pharma Vision 2020" for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose provides requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures. The government plans to open 3,000 Jan Aushadhi stores, which sell unbranded generic drugs at heavy discounts to branded drugs, in the next two years Investment The healthcare sector has attracted growing investor support in 2010 with nearly a tenth of the total private equity funding going to this sector. In the third quarter the calendar year 2010, a total of US$ 2,047 million was invested across 88 deals, of which 9 per cent were healthcare deals, according to research firm Venture Intelligence. Further, in October 2010, the pharma, healthcare and biotech sector witnessed five merger and acquisition transactions (M&A) worth US$ 250 million, according to global consultancy firm Grant Thornton. The drugs and pharmaceuticals sector has attracted FDI worth US$ 1,825.43 million between April 2000 and September 2010, according to data published by Department of Industrial Policy and Promotion (DIPP). Some of the major investment developments in the sector include: Hyderabad-based Natco Pharma plans to raise US$ 22.22 million to fund its expansion plans and research activities. Private equity major Sequoia Capital has made its first investment in the pharmaceutical sector in the country by investing US$ 15.86 million into Celon Labs, which will use the funds to double its manufacturing facility. Belgium based Helvoet Pharma, part of the Daetwyler Group is setting up its first greenfield production facility in Khandala Industrial Area, phase I (SEZ), on Pune- Bangalore Highway, near Pune.

The company has invested US$ 26.56 million for the plant.

Swiss Pharma major Lonza AG, would invest around US$ 55.33 million through its Indian subsidiary in a phased manner in Genome Valley project, Hyderabad, said Stefan Borgas, CEO, Lonza. Chennai-based Bafna Pharmaceuticals plans to raise around US$ 4.43 million for its future expansion by issuance of warrants and shares. Hyderabad Menzies Air Cargo Private Limited, a joint venture between GMR Hyderabad International Airport Limited (GHIAL) and Menzies Aviation, has launched India's first airport-based pharma zone, a dedicated pharmaceutical cargo storage and handling facility, at Hyderabad. The project involved an investment of US$ 1.22 million. Road Ahead According to a report by PwC in April 2010, India will join the league of top 10 global pharmaceuticals markets in terms of sales by 2020 with the total value reaching US$ 50 billion. Aviation Last Updated: December 2010 The Indian aviation industry has witnessed an impressive growth during the past few years, with major contribution from the civil aviation segment. The market has been strongly supported by the government and the private sector. Availability of skilled manpower along with favourable business environment will position India as one of the most attractive investment destinations in the coming years. It is currently the 9th largest aviation market in the world. On the basis of strong market fundamentals, it is anticipated that the civil aviation market will register more than 16 per cent CAGR during 2010-2013. Mr Praful Patel, Union Civil Aviation Minister has stated that the airline industry in India has grown by 400 per cent in a short span of about six-and-a-half years. He said in 10 years Indian market will be the third largest aviation market after the US and China Passengers carried by domestic airlines from January June 2010 were 46.8 million as against 39.4

million in the corresponding period of year 2009 thereby registering a growth of 18.9 per cent according to data released by the Directorate General of Civil Aviation (DGCA).

In terms of market share, private carrier Jet Airways was the market leader with 19.2 per cent share, closely followed by Kingfisher Airlines with 19.1 per cent, Indigo with 17.3 per cent, National Aviation Company Limited (NACIL) with 17.1 per cent, Indigo with 16.4 per cent, SpiceJet with 13.3 per cent, JetLite with 7.0 per cent and GoAir with 6.9 per cent during the month of November 2010. Significantly, Delhi's IGI airport is the busiest airport in the country at present, handling an average of about 843 flights per day. On November 29, 2010, it handled its highest ever traffic with 865 operations. Some US$ 100 billion in aircraft orders will be up for grabs over the next 20 years. Boeing's current market outlook (2009-2028) predicts that the country will require 1,000 aircraft worth US$ 100 billion over the next two decades, according to Dinesh Keskar, President of Boeing and FICCI Aviation Committee chairman. Leading aircraft manufacturers Airbus and Boeing have expressed optimism over the growth of the civil aviation industry in India. As per Airbus, the country would need 1,032 new aircrafts worth around US$ 138 billion by 2028. On a similar note, Boeing has also predicted that the sector would require 1,150 commercial jets worth US$ 135 billion in the next 20 years. The Hyderabad International Airport has been ranked amongst the world's top five in the annual Airport Service Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing. The Hyderabad International Airport is being managed by a public-private joint venture of the GMR Group, Malaysia Airports Holdings Berhad and the State Government of Andhra Pradesh along with the Airports Authority of India (AAI). Timothy J Roemer, the US Ambassador to India has said that the US will work with the Indian government and the domestic private sector to make the country an aviation hub. Speaking at India Aviation 2010, Roemer said that the public-private initiative, US-India Aviation Programme, would work together with the DGCA on helicopter aviation security. The AAI is set to spend over US$ 1.02 billion in 2010, towards modernisation of non-metro airports. AAI is planning the city-side development of 24 airports, including those at Ahmedabad and Amritsar. Additionally, 11 new greenfield airports have been identified to reduce passenger load on existing airports, according to Praveen Seth, member-operations, AAI. AAI also plans to spend around US$ 3.07 billion in the next five years for developing, upgrading and modernising metro and non-metro airports.

With the growth in the industry, airport retailing has also gained pace in the recent times. Development of new terminals and airports such as the recently inaugurated T3 in New Delhi has provided added impetus to this segment. The highest margin earners in this segment are food and beverages, beauty product, electronic items, apparel etc. It has been predicted that airports would provide around 300,000-400,000 square feet retail space by 2015. Many companies are also planning to leverage on this growing segment by launching specific products for air travellers. For instance, French premium skincare brand L'Occitane is planning to develop a special range to cater to the airport retailing segment. Investment Policy The consolidated document on FDI policy was released on March 31, 2010. Currently, for the civil aviation sector (Airports): FDI up to 100 per cent is allowed under the automatic route for greenfield projects. For existing projects, FDI up to 100 per cent is allowed; while investment up to 74 per cent under the automatic route and beyond 74 per cent under the government route. Government initiatives To create world class airports, the government has recognised the need for the involvement of private players in the development of airport infrastructure. Development of airports at Delhi and Mumbai has been taken up under Public Private Partnership (PPP) mode. The capital expenditure is funded through private equity, borrowings, and internal resources of joint venture companies. The development work of Mumbai airport is likely to be completed by 2012 whereas the work of a new terminal (Terminal 3) at Indira Gandhi International Airport at Delhi got completed in July 2010. The development work of Kolkata and Chennai International airport has been taken up by Airport Authority of India whereas Bangaluru and Hydrabad international airports have been developed on PPP mode as greenfield airports. The AAI has taken up the development of 35 non metro airports. As per the Economic Survey of 2009-10, out of 35 airports, 9 have been completed and put in operation. The other projects are in progress and likely to be completed by 2010-11 The adoption of Open Sky Policy has resulted in the entry of several new privately owned airlines and increased frequency / flights for international airlines.

Road Ahead Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$ 80 billion towards new aircraft and US$ 30 billion towards the development of airport infrastructure, according to the Investment Commission of India. In the largest deal in civil aviation history, Delhi-based low-cost domestic carrier IndiGo has placed an order for 180 aircraft with European-aircraft maker, Airbus. The deal is valued at US$ 15.6 billion. Lufthansa Cargo and GMR group have signed an agreement to develop Rajiv Gandhi International Airport as a South Asian cargo hub, with focus on pharmaceutical exports. Kingfisher Airlines and American Airlines, both members of the Oneworld alliance, will begin their codeshare and frequent flyer arrangement in 2011, the two airlines have announced.

Textiles Last Updated: November 2010 The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP) and 17 per cent to the country s export earnings, according to the Annual Report 2009-10 of the Ministry of Textiles. The industry provides direct employment to over 35 million people and is the second largest provider of employment after agriculture. According to the Ministry of Textiles, the total cloth production increased by 10.2 per cent during September 2010 as compared to September 2009. The highest growth was observed in the powerloom sector (13.2 per cent), followed by hosiery sector (9.1 per cent). The total cloth production during AprilSeptember 2010 has increased by 2.1 per cent compared to the same period of the previous year. As per the latest data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), Kolkata, the total textile exports during April-July 2010 (provisional) were valued at US$ 7.58 billion as against US$ 7.21 billion during the corresponding period of the previous year, registering an increase of 5.20 per cent in rupee terms. The share of textile exports in total exports was 11.04 per cent during April-July 2010, according to the Ministry of Textiles.

As per the Index of Industrial Production (IIP) data released by the Central Statistical Organisation (CSO), cotton textiles has registered a growth of 8.2 per cent during April-September 2010-11, while wool, silk and man-made fibre textiles have registered a growth of 2.2 per cent while textile products including wearing apparel have registered a growth of 3 per cent. As per a Ministry of Textiles press release dated November 2, 2010, India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020. Technical Textile Segment According to the Ministry of Textiles, technical textiles are an important part of the textile industry. The Working Group for the Eleventh Five Year Plan has estimated the market size of technical textiles to increase from US$ 5.29 billion in 2006-07 to US$ 10.6 billion in 2011-12, without any regulatory framework and to US$ 15.16 billion with regulatory framework. The Scheme for Growth and Development of Technical Textiles aims to promote indigenous manufacture of technical textile to leverage global opportunities and cater to the domestic demand. Further, the government is set to launch US$ 44.21 million mission for promotion of technical textiles, while the Finance Ministry has cleared setting up of four new research centres for the industry, which include products like mosquito and fishing nets, shoe laces and medical gloves. As per a joint study of the Ministry of Textiles and an industry body, the global technical industry is estimated at US$ 127 billion and its size in India is pegged at US$ 11 billion. Government Initiative According to the Ministry of Textiles, investment under the Technology Upgradation Fund Schemes (TUFS) has been increasing steadily. During the year 2009-10, 1896 applications have been sanctioned at a project cost of US$ 5.23 billion. The cumulative progress as on December 31, 2009, includes 27,477 applications sanctioned, which has triggered investment of US$ 45.5 billion and amount sanctioned under TUFS is US$ 18.9 billion of which US$ 16.4 billion has been disbursed so far till the end of April, 2010. The Ministry of Textile has sanctioned a total of US$ 133 million under TUFS during September 2010.

Moreover, in May 2010, the Ministry of Textiles informed a parliamentary panel that it proposes to allocate US$ 785.2 million for the modernisation of the textile industry. The Scheme for Integrated Textile Park (SITP) was approved in July 2005 to facilitate setting up of textiles parks with world class infrastructure facilities. 40 textiles park projects have been sanctioned under the SITP, out of which 25 textile parks are already in operation. Ms Panabaaka Lakshmi, Minister of State for Textiles, stated on November 25, 2010 under the SITP, about US$ 763.7 million has been invested into the scheme and generated employment for 15,000 textiles workers. Further, 100 per cent FDI is allowed in the textile sector under the automatic route. In the Union Budget 2010-11 presented in February 2010, the Finance Minister made the following announcements to benefit the textile industry: The central plan outlay for the industry has been enhanced to US$ 1.03 billion. Of this US$ 521.4 million is for TUFS, US$ 76 million for SITP, US$ 80.2 million for handlooms, US$ 69.3 million for handicrafts and US$ 98.4 million for sericulture. Allocation for textiles and jute industry is US$ 713.4 million. The total allocation for village and small enterprises sector which include handicrafts and handlooms is US$ 210.3 million. US$ 31.5 million has been provided for development of mega clusters in handlooms, handicrafts and powerloom sectors. Customs duty at 4 per cent for import of readymade garments for retail sales has been withdrawn. The micro small medium enterprises in textiles sector have been given full CENVAT credit on capital goods in one installment in the year of receipt of such goods and the facility of payment of excise duty in quarterly basis. The Minister of Textiles launched the Knitwear Technology Mission being setup at Tirupur, Tamil Nadu, as part of Plan Scheme of the Ministry. The Mission is aimed at upgrading the technology and skill levels in the knitwear segment of the textile industry, to bring in more export competitiveness. Investments

The textiles industry has attracted foreign direct investment (FDI) worth US$ 861.47 million between April 2000 and September 2010, according to data released by the Department of Industrial Policy and Promotion. NSL Textiles has set up a textile processing facility at Chandolu near Guntur, Andhra Pradesh with an investment of US$ 64.23 million. TT Ltd, an integrated textile and knitwear manufacturing and exporter, plans to invest US$ 33.46 million to enhance its yarn making capacity and retail venture. Textiles company Alok Industries will be investing US$ 193.46 million over the next two years to increase capacity across its product portfolio. The amount would be spread equally for the two-year period with an investment of US$ 96.73 million being made each year. The Road Ahead The Synthetic and Rayon Textile Export Promotion Council (SRTEPC) has set a target to more than double the export of man-made textile from the country. Presently, the global man-made fibre (MMF) trade accounts for 60 per cent of the total trade in textiles. SRTEPC plans to increase exports to US$ 6.2 billion by capturing four per cent market share by 2011-12, stated G.K. Gupta, Chairman, SRTEPC. With an increased focus on catering to the domestic market, the denim industry is India expects the production capacity to rise by 100 million metres by 2011. According to the Textile Association of India (TAI), the denim manufacturing capacity, which stands at 600-650 million metres per annum, is set to witness an addition by another 100 million metres wherein 70 per cent focus will be on the domestic market. Insurance Last Updated: December 2010 The US$ 41-billion Indian life insurance industry is considered the fifth largest life insurance market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance Council. Life insurance companies have witnessed a 70 per cent jump in new premium collection during the first five months of the financial year. According to data released by the Insurance Regulatory and Development Authority (IRDA), insurance companies garnered US$ 11.73 billion in new business premium during April-August 2010, against US$ 6.90 billion in the corresponding period last year.

State-owned LIC gained the most, with an increase of 88 per cent in new business premium income. At the same time, private sector insurance recorded a 34 per cent increase in income from sales of new policies. New business income collected by ICICI Prudential stood at US$ 576.60 million during AprilAugust. SBI Life remained in the third position after registering a 40 per cent increase in new sales to US$ 531.87 million from US$ 379.20 million in April-August 2009. HDFC Standard Life saw a robust 54 per cent increase in new business. General Insurance According to data released by IRDA, the general insurance industry recorded 22.76 per cent year-onyear (y-o-y) growth in gross premium underwritten during April October 2010. The industry collected gross premium of US$ 5.29 billion during April October 2010 compared with US$ 4.31 billion in the same period last year. The public sector players posted 21.09 per cent y-o-y growth in gross premium during April October 2010 over the corresponding period last year. At the same time, private players recorded a 25.19 per cent y-o-y increase in gross premium. The state-run insurers fared better than their private counterparts, with New India Insurance collecting the maximum premium of US$ 916.77 million during April-October 2010, compared to US$ 770.25 million in the same period last year, growing by 19.04 per cent. According to the IRDA's Summary Reports of Motor Data of Public and Private Sector Insurers - 2009-10, nearly 28.4 million policies were issued and a total premium of US$ 2.31 billion was collected. Health Insurance The Indian health insurance market has emerged as a new and lucrative growth avenue for both the existing players as well as the new entrants. According to a latest research report "Booming Health Insurance in India" by research firm RNCOS released in April 2010, all emerging trends including the key factors driving the market growth. Furthermore, the report also identifies what could be the possible growth areas for expansion and gives a detailed overview of the competitive landscape. The Indian health insurance market has continued to post record growth in the last two fiscals (2008-09 and 200910). Moreover, as per the RNCOS estimates, the health insurance premium is expected to grow at a compound annual growth rate (CAGR) of over 25 per cent for the period spanning from 2009-10 to 2013-14.

According to a report published by Yes Bank and an industry body in November 2009, the medical insurance sector would account for US$ 3 billion in the next three years. Health insurance premium collections were US$ 1.75 billion in 2009-10 compared with US$ 893.76 million in the previous year, IRDA said in its annual report for 2009-10. It should, however, be noted that figures for 2009-10 include policies served by third party administrators (TPAs) as well as those directly served by insurers whereas figures for 2008-09 include policies served by TPAs only. Bancasssurance Private insurers have adopted bancassurance in a much bigger way than the state-owned Life Insurance Corporation (LIC) in recent years. Bancassurance is distribution of insurance products through a bank's network. In 2008-09, private insurers forked out US$ 44.64 million as commission for bancassurance, while the payout by LIC for this distribution model was only US$ 26,075, as per official data. According to Towers Watson India, Bancassurance Benchmarking survey 2009-10, released in May 2010, bancassurance will play a crucial role in the overall development of the Indian insurance sector with the channel expected to generate 40 per cent of private insurers premium income by 2012, compared to the current 25-28 per cent. In general insurance, presently 17 per cent of premium income comes from bancassurance. LIC HFL Financial Services, a subsidiary of housing mortgage lender LIC Housing Finance, has tied up with public sector insurer United India Insurance for distribution of non-life products of the latter. Investments The Indian insurance unit of Dutch financial services firm ING plans to invest US$ 51 million in 2010/11 to fund expansion in India. Private life insurer Future Generali India will expand its distribution network by opening around 100 branches in addition to its existing network of 91 branches during 2010. It will also increase the agency force by 21,000 to 65,000 people. Max Bupa, the health insurance JV between UK's Bupa and the Max Group said on December 7 it would invest over US$ 100.35 million in the next four years to expand its business. Max Bupa Health Insurance

Chief Executive Damien Marmion said in the next 3-4 years the equity base of the company should be US$ 156.11 million. Investment Policy According to a guidance note released by IRDA, the regulator has increased the lock-in period for all unit-linked insurance plans (ULIPS) to five years from the current three years, thereby making them long-term financial instruments, which basically provide risk protection. The commission and expenses have also been reduced by evenly distributing them throughout the lock-in period. Moreover, IRDA said that insurers will provide a mortality cover or a health cover to all ULIPS, other than pension and annuity products, thereby increasing the risk cover component on them. IRDA has ordered life insurers to offer customers a guaranteed return of 4.5 per cent per annum on pension and annuity plans. In a move that would result in lower capital requirement for life insurers, the IRDA has asked them to initiate the process of calculating economic capital from March 2010. Indian Pharmaceutical Industry The pharmaceutical industry in India is among the most highly organized sectors. This industry plays an important role in promoting and sustaining development in the field of global medicine. Due to the presence of low cost manufacturing facilities, educated and skilled manpower and cheap labor force among others, the industry is set to scale new heights in the fields of production, development, manufacturing and research. In 2008, the domestic pharma market in India was expected to be US$ 10.76 billion and this is likely to increase at a compound annual growth rate of 9.9 per cent until 2010 and subsequently at 9.5 per cent till the year 2015.

Industry Trends The pharma industry generally grows at about 1.5-1.6 times the Gross Domestic Product growth Globally, India ranks third in terms of manufacturing pharma products by volume

The Indian pharmaceutical industry is expected to grow at a rate of 9.9 % till 2010 and after that 9.5 % till 2015 In 2007-08, India exported drugs worth US$7.2 billion in to the US and Europe followed by Central and Eastern Europe, Africa and Latin America The Indian vaccine market which was worth US$665 million in 2007-08 is growing at a rate of more than 20% The retail pharmaceutical market in India is expected to cross US$ 12-13 billion by 2012 The Indian drug and pharmaceuticals segment received foreign direct investment to the tune of US$ 1.43 billion from April 2000 to December 2008 Challenges

Every industry has its own sets of advantages and disadvantages under which they have to work; the pharmaceutical industry is no exception to this. Some of the challenges the industry faces are: Regulatory obstacles Lack of proper infrastructure Lack of qualified professionals Expensive research equipments Lack of academic collaboration Underdeveloped molecular discovery program Divide between the industry and study curriculum Government Initiatives

The government of India has undertaken several including policy initiatives and tax breaks for the growth of the pharmaceutical business in India. Some of the measures adopted are:

Pharmaceutical units are eligible for weighted tax reduction at 150% for the research and development expenditure obtained. Two new schemes namely, New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been launched by the Government. The Government is contemplating the creation of SRV or special purpose vehicles with an insurance cover to be used for funding new drug research The Department of Pharmaceuticals is mulling the creation of drug research facilities which can be used by private companies for research work on rent

Pharma Export

In the recent years, despite the slowdown witnessed in the global economy, exports from the pharmaceutical industry in India have shown good buoyancy in growth. Export has become an important driving force for growth in this industry with more than 50 % revenue coming from the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be $8.25 billion as per the Pharmaceutical Export Council of India, which is an organization, set up by the Government of India. A survey undertaken by FICCI, the oldest industry chamber in India has predicted 16% growth in the export of India's pharmaceutical growth during 2009-2010. Key players in Indian Pharmaceutical Industry

There are several national and international pharmaceutical companies that operate in India. Most of the country's requirements for pharmaceutical products are met by these companies. Some of them are briefly described below:

Ranbaxy Laboratories Limited is the biggest pharmaceutical manufacturing company in India. The company is ranked at the 8th position among the global generic pharmaceutical companies and has presence in 48 countries including world class manufacturing facilities in 10 countries and serves to customers from over 125 countries. Ranbaxy Laboratories 2009-2010 Q3 Net Profit Results showed a profit of Rs 116.6 crore as compared to Rs 394.5 crore deficit, recorded during the corresponding period last fiscal. Dr. Reddy's Laboratories manufactures and markets a wide range of pharmaceuticals both in India and abroad. The company has 60 active pharmaceutical ingredients to manufacture drugs, critical care products, diagnostic kits and biotechnology products. The company has 6 FDA plants that produce active pharma ingredients and 7 FDA inspected and ISO 9001 and ISO 14001 certified plants. Dr. Reddy's Q1 FY10 result shows the revenues of the company at Rs. 18,189 million which is up by 21%. During this quarter the company introduced 24 new generic products, applied for 22 new generic product registrations and filed 4 DMFs. Cipla is an Indian pharmaceutical company renowned for the manufacture of low cost anti AIDS drugs. The company's product range comprises of anthelmintics, oncology, anti-bacterials, cardiovascular drugs, antibiotics, nutritional supplements, anti-ulcerants, anti-asthmatics and corticosteroids. Cipla also offers other services like quality control, engineering, project appraisal, plant supply, consulting, commissioning and know-how transfer, support. For the financial year 2008-09 the company registered an increase of 22% in sales and other income over the previous year. Nicholas Piramal is the second largest pharmaceutical healthcare company in India. The brands manufactured by the company include Gardenal, Ismo, Stemetil, Rejoint, Supradyn, Phensedyl and Haemaccel. Nicholas Piramal has entered into join ventures and alliances with several international corporations like Cheissi, Italy; IVAX Corp; UK, F. Hoffmann-La Roche Ltd., Allergan Inc., USA etc. Glaxo Smithkline (GSK) is a United Kingdom based pharma company; it is the world's second largest pharmaceutical company. The company's portfolio of pharma products consist of central nervous system, respiratory, oncology, vaccines, anti-infectives and gastro-intestinal/metabolic products among others. On November 2009, the FDA had announced that the H1N1 vaccine manufactured by GSK would join the list of the four vaccines approved. Zydus Cadila also known as Cadila Healthcare is an Indian pharmaceutical company located in Gujarat. The company's 1QFY2010 results show the net sales at Rs880.3cr which is higher than the

estimated Rs773cr. The net profit was Rs124.8cr which was increase of 39%; the increase was on account of higher sales and improvement in the OPM. India's Domestic Pharmaceutical Market (12 Months Ended January 2009)


Size ($ Billion) Market Share (%) 6.9 13.4 5.0 .29 .27 3.6 11.5 4.3 3.9 6.8 -1.2 11.7 100.0 9.9

Growth Rate (%)

Total Pharma Market Cipla .36 5.3 .34


Glaxo Smithkline Piramal Healthcare Zydus Cadila .24

Source: ORG IMS

Future Scenario

With several companies slated to make investments in India, the future scenario of the pharmaceutical industry in looks pretty promising. The country's pharmaceutical industry has tremendous potential of growth considering all the projects that are in the pipeline. Some of the future initiatives are: According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market for MNCs selling expensive drugs by 2015 The study also says that the domestic pharma market is likely to reach US$ 20 billion by 2015

The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic pharmaceutical sector Public spending on healthcare is likely to raise from 7 per cent of GDP in 2007 to 13 per cent of GDP by 2015 Dr Reddy's Laboratories has tied up with GlaxoSmithKline to develop and market generics and formulations in upcoming markets overseas Lupin, a Mumbai based pharmaceutical company is looking to tap opportunities of about US$ 200 million in the US oral contraceptives market Due to the low cost of R&D, the Indian pharmaceutical off-shoring industry is designated to turn out to be a US$ 2.5 billion opportunity by 2012

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