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1. Indian Economy Overview -P2 2. Trade and External Sector -P7 -----FDI-P11 -----FII-P17 3. Domestic Investments -P23 4. Indian Investments Abroad -P28 5. Agriculture -P33 6. Manufacturing -P39 7. Infrastructure -P41 -----Ports-P46 -----Power-P52 -----Railways-P58 -----Roads-P63 -----Services-P68 8. Consumer Markets -P72 9. Marketing and Strategy -P79 10. Rural Market -P86 11. Urban Market -P91 12. Economic Survey highlights 2007-08 -P97

Developed By-P.B.Bhanja

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Indian Economy Overview
Last Updated: January 2009 [TOP]
Indian economy has been witnessing a phenomenal growth since the last decade. After seeing a growth rate in excess of 9 per cent for the last 3 years, it is still holding its ground in the midst of the current global financial crisis. Pegging India's growth rate in the current year at between 7 and 8 per cent, the Union Finance Minister, Mr P Chidambaram, has reiterated that India would continue being the second fastest growing economy in the world despite the ongoing global economic slowdown. Though the global financial crisis have affected the Indian equity and foreign exchange markets, the macroeconomic brunt of the meltdown is not much due to the overall strength of the domestic demand and the largely domestic nature of its investment financing. Chidambaram has further assured that by the second half of the next fiscal, the economy would pick up and the government’s ‘stimulus measures’ would encourage growth and ensure "brisk” economic activities in the last few months of this fiscal year. Bob Buckle, an APEC Rim trade (based on rich nations) economist has stated that with India and China posting good growth rates, the world may come out of recession more easily. Further, according to the International Monetary Fund’s (IMF) prediction in October 2008, India is likely to grow at 7.8 per cent in 2008, and 6.3 per cent in 2009. As a measure to boost the economy and to ensure a 7 per cent growth, the government announced an approximately US$ 6.46 billion fiscal stimulus package, on December 7, 2008. The package entailed additional spending and excise duty cuts for increasing consumption. According to stock market regulator Security and Exchange Board of India (SEBI), the Indian stocks would be the first to bounce back in the current global financial crisis. SEBI is likely to initiate steps to limit over-leveraged hedge funds with the aim of bringing in more solidity to the unstable market. Leading global agencies have reiterated faith in the Indian economy. According to Crisil, a leading rating agency, India's retail securitisation market is better placed than the US, exhibiting more stability with few rating downgrades. "Investors in securitised paper in India have no reason to fear crippling losses of the kind that have hit their US counterparts," a Crisil release said. Further, as per a survey in Deutsch business magazine, Wirtschafts Woche, in spite of the global financial crisis, companies from developed economies such as Germany have shown confidence in India's economic future and are interested in growing their business in the country. Showing faith in India's robust future, around 94 per cent German companies plan to increase their businesses with the subcontinent, the survey stated.

Developed By-P.B.Bhanja

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After the signing of the US-India civil nuclear deal, India will now be partnering several countries for nuclear fuel technology projects, and this will further boost the economy. India and Russia signed 10 agreements in December 2008, including a pact on civil nuclear cooperation. Thorium Power, a US firm, and Punj Lloyd will be forming a nuclear fuel technology joint venture (JV). The JV will offer thorium fuel technology for light water reactors (LWR) in India.

The 2008-09 Fiscal
Subsequent to three years of plus 9 per cent growth in gross domestic product (GDP), India's growth rate in the current year is likely to come down to a more modest level of 7–8 per cent. • Foreign institutional investments (FII) in India became positive in November 2008, after net selling by them in September and October 2008 due to redemption pressures from abroad.

As per SEBI data, foreign institutional investors (FIIs) continued to flow into India with 120 new FIIs registering themselves during September and November 2008, since the global meltdown started in September. Even though some FIIs had pulled out, many FIIs see long-term value in India. Moreover, during the same period, 358 new sub-accounts were registered, which was the highest within three months, in 2008. • Foreign direct investment (FDI) in India from March-September 2008 increased by 137 per cent to US$ 17.21 billion, due to the inflows into construction, real estate, services, computer hardware and software firms. The government has also stated that the country would attract US$ 35 billion of FDI in the current year to March 2009. In August 2008, the average inflation stood near 12.5 per cent, which fell sharply in the third week of December, at 6.84 per cent, which was the lowest in the last 9 months. It was lower than Reserve Bank of India’s (RBI’s) target of 7 per cent for 2008–09. In the first half of the current fiscal, the money supply increased by 6.6 per cent against 8.2 per cent last year (from end of March 2008 end to end of September 2008). Net bank credit to the government and commercial sector increased by 6.8 per cent and 7.8 per cent, respectively. Growth in net foreign exchange assets of the banks slowed to 6.0 per cent compare to 11.0 per cent in the previous year. However, the non-monetary liabilities went. The central bank pumped in more money into the banking system, cutting CRR levels from 9.00 per cent to 5.5 per cent. Repo rate was also brought down to 7.5 per cent from 9 per cent. The growth in the gross tax collection is was 25 per cent till September 2008, against 24.5 per cent in September 2007.

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Developed By-P.B.Bhanja

Firms like Avishkaar India Micro Venture Capital Fund. India's per capita income is estimated to be around US$ 740. propel India into the middleincome category. Further. India has the third largest investor base in the world.8 billion in September 2008. India has the second largest area of arable land in the world.Bhanja .000 by 2025. Advantage India • According to The World Fact Book. Further. and Rural Innovations Network (RIN) are focussing on rural markets.4 per cent higher than US$ 12455 million during September 2007. consequently. India is projected to stay the youngest with its working-age population estimated to rise to 70 per cent of the total demographic by 2030 . the rural market will grow to a potential of US$ 1. Intel. Further.3 billion in the first week of November 2008. according to international consultancy firm Celent. many other major multinational companies (MNCs) and domestic players are keen to foray into the rural Indian market to capitalise on its growing opportunities. and Shell. venture capitals have started investing in technology firms focussed in rural areas. In 2008.9 billion by 2015 from the current US$ 487 million. • • Developed By-P. India is among the world's youngest nations with a median age of 25 years as compared to 43 in Japan and 36 in USA. Russia. India’s forex totalled to US$ 251.the largest in the world. India and China—countries. This growth rate will. Per Capita Income In 2007–08.000 by 2016-17 and US$ 4. Acumen Fund.10. 2008 added up to US$ 13748 million which was 10. Exports during September. India will see 70 million new entrants to its workforce over the next 5 years. After several global corporations like Microsoft.over 200 million tonnes of foodgrains are produced annually. The rural India growth story The Indian growth story is spreading to the rural and semi-urban areas as well. fruit and vegetables. making it one of the world's largest food producers .B. Of the BRIC—Brazil.000 across 23 stock exchanges. With the largest number of listed companies . the rural market has grown at an impressive rate of 25 per cent compared to the 7–10 per cent growth rate of the urban consumer retail market. India’s cumulative value of exports for the period between April-September. India's per capita income is expected to increase to US$ 2. The rural India success story is being replicated across a range of sectors in the rural markets. India is the world's largest producer of milk (100 million tonnes per annum). 2008 was US$ 94973 million compared to US$ 72556 million. sugarcane (315 million tonnes per annum) and tea (930 million kg per annum) and the second largest producer of rice.4 • • Total foreign investment inflow during the first half of 2008-09 was US$ 13.

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• India's healthy banking system with a network of 70,000 branches is among the largest in the world. In June 2007, the aggregate deposits of commercial banks were about US$ 445 billion (50 per cent of GDP) and the total bank credit stood at US$ 320 billion (36 per cent of GDP). NPA (non-performing assets) levels of banks in India are under 3 per cent, one of the lowest among emerging nations. According to a study by the McKinsey Global Institute (MGI), India's consumer market will be the world's fifth largest (from twelfth) in the world by 2025 and India's middle class will swell by over ten times from its current size of 50 million to 583 million people by 2025.

Growth potential
• Special Economic Zones are set to see major investments after the (SEZs) straightening out of certain regulatory tangles. According to India's Commerce Secretary, Mr G K Pillai, India has approved 513 SEZs till August 2008, of which 250 have been notified. Investments are expected to cross US$ 45.73 billion by December 2009, providing incremental employment to 800,000 people. In December 2008, the government has cleared 22 proposals for setting up Special Economic Zones (SEZs). The proposals included a major foreign direct investment (FDI) project a by Dubai-based developer. According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues,' India's telecom services industry revenues are projected to reach US$ 54 billion in 2012, up from US$ 31 billion in 2008. India saw a 23 per cent increase in IP (Internet Protocol) addresses with 2.6 million connections in the third-quarter ended September 2008. The government is planning to set up a special corpus of around US$ 10.48 billion for infrastructure projects. According to a report by Research on International Economic Relations (ICRIER), the retail business in India would grow at 13 per cent annually from US$ 322 billion in 2006–07 to US$ 590 billion in 2011–12. The unorganised Indian retail sector is expected to grow at about 10 percent per annum to reach US$ 496 billion in 2011–12. Despite the steady expansion of organised retailers, according to a study by Indian Council for Research on International Economic Relations (ICRIER), a Delhi-based think tank. According to a study by Evalueserve, a global research and analytics firm, India is likely to emerge as the next global hub for innovation and join the club of developed nations, with the country aiming to increase its research and development (R&D) expenditure in the coming years. India is targetting to increase its R&D spend to two per cent of the GDP by 2012 under the 11th Five-Year Plan, from less than one per cent earlier. Corporate India registered US$ 3.4 billion as mergers and acquisitions (M&As) during November 2008, as against US$ 850 million in November 2007. The figure stood at US$ 2.13 billion in October 2008.

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Future perfect
The Planning Commission has ruled out any changes in the average 9 per cent gross domestic product growth target of the 11th Five-Year-Plan, although there might be ‘some significant reduction in growth’ next year as a result of the global financial crisis.

Developed By-P.B.Bhanja

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India offers huge investment opportunities in various sectors and investments are likely to pour into these sunshine sectors: • • • The realty sector is likely to increase at the rate of 30 per cent annually during the next ten years, drawing US$ 30 billion as foreign investment. The Indian IT market is projected to see 18 per cent growth in 2008, touching US$ 38 billion. According to a McKinsey study, "The market size for the food consumption category in India is expected to grow from US$ 155 billion in 2005 to US$ 344 billion in 2025 at a compound annual growth rate of 4.1 percent." According to the India Retail Report 2009, compiled by research group Images F&R Research, the Indian retail industry is likely to touch US$ 390.68 billion by 2010. According to a McKinsey study, the Indian pharmaceutical industry is projected to grow to US$ 25 billion by 2010 whereas the domestic market is likely to more than triple to US$ 20 billion by 2015 from the current US$ 6 billion to become one of the leading pharmaceutical markets in the next decade. According to a monthly review by the Centre for Monitoring Indian Economy (CMIE), agricultural production is likely to increase significantly during fiscal year 2009. CMIE has projected a growth of 3.2 per cent during fiscal year 2009, for the GDP of agriculture and allied sectors. "This would be the fourth straight year of positive growth in agricultural production, with the first three years clocking an average growth of 5.5 per cent," CMIE stated. The allied sectors comprising livestock, forestry and logging, and fishing are likely to see a growth of 4.8 per cent during fiscal year 2009.

Developed By-P.B.Bhanja

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Trade and External Sector
Last Updated: January 2009 [TOP]
One of the factors responsible for the tremendous growth of the Indian economy has been its booming foreign trade. Foreign investment was the biggest source of accrual to India's foreign exchange reserves in 2007-08 at US$ 44.8 billion, as against US$ 15.6 billion in the previous fiscal. Portfolio investment inflow amounted to US$ 29.3 billion as against US$ 7.1 billion in the previous fiscal, whereas foreign direct investment (FDI) pumped in US$ 15.5 billion as against US$ 8.5 billion in the previous fiscal. During the April-November period of 2008-09, India attracted total foreign investments of US$ 12.034 billion. FDI stood at US$ 23.331 billion, however, there was a net outflow of portfolio investments (including FIIs) of US$ 11.297 billion. In November-end 2008, the country's forex stood at almost US$ 247.686 billion. Trade deficit during October 2008 at US$ 10.5 billion was higher by US$ 4.0 billion than US$ 6.5 billion in October 2007. The overall trade deficit during April-October 2008 widened to US$ 73.1 billion, an increase of US$ 27.4 billion (60.1 per cent) over the trade deficit of US$ 45.7 billion a year ago.

Estimated Capital Inflows in 2008-09
According to the economic outlook for 2008-09 released by the Prime Minister's Economic Advisory Council, total capital inflows in 2008-09 are estimated at US$ 70.9 billion. Aggregate FDI inflows are estimated at US$ 19.7 billion and portfolio inflows are likely to touch US$ 4.1 billion. Net inflows on account of loans are expected to be US$ 34 billion. Net banking capital inflow and inflows under "other capital" are likely to be more than adequate to finance the enlarged Capital Account Deficit (CAD), leaving about US$ 29 billion to accrue in the foreign exchange reserves of the RBI. In its August report, the Reserve Bank of India (RBI) had stated that FDI inflows in the first quarter of 2008-09 had touched US$ 10.073 billion, almost a billion more than the total FDI inflows (US$ 8.961 billion) in 2005-06. Given the global economic slowdown, the target, however, may not be met.

FDI
In 2007-08, India's FDI touched US$ 25 billion, up 56 per cent against US$ 15.7 billion in 2006-07. According to a report by the National Council of Applied Economic Research (NCAER), foreign investments in India grew three-fold in FY 2008 as against the capital inflow in the corresponding period last fiscal. The report stated, "In the first nine months of 2007-08, the net capital flows rose to US$ 83 billion from

Developed By-P.B.Bhanja

2008 as compared to 88. • According to the Gem and Jewellery Export Promotion Council (GJEPC).912 billion. about 82. Inflow of FDI equity for the month of September 2008 alone was US$ 2.41 billion in the corresponding period last year. 2008-09. The competitive advantage that India enjoys across a range of sectors has led to rapid increase in India's exports.4 per cent over the same period last year.November. increasing the cumulative FDI inflows for the period April-November 2008 to US$ 23. Indian cashew exports recorded a value increase of 36 per cent in the first three quarters of the current fiscal. 587 billion during April-December 2008 as compared with US$ 12.B.8 US$ 30 billion the country received during the corresponding period of the previous year. • • • • Developed By-P. Exports of soymeal. thereby increasing the FDI equity inflows for the period April-October 2008 to US$ 18. India's tobacco exports. 54 million in the first eight months of 2008-09 on better price realisation. surged by 68 per cent to touch US$ 454.7 billion." FDI equity inflows between April–September 2008 were US$ 17. in the same period a year back.18 million as compared to US$ 187.49 billion.33 billion.Bhanja . In November 2008. October 2008 has witnessed FDI inflows of US$ 1. a growth of 259 per cent over the same month in last year. which is widely used for human consumption and poultry feed.921 tonnes of cashew valued at US$ 468.083 billion. 485 billion in the same period last year. FDI inflows were US$ 1. 2008 was US$ 119. India's tea exports are projected to grow by more than 17 per cent and touch 210 million kg in 2008-09.56 million kg during January-July. According to figures released by the Cashew Export Promotion Council. the third largest in the world. 82 million during April-December in 2007-08.51 billion as against US$ 126. Exports Exports during 2007-08 grew by 23. India's soymeal exports rose sharply by more than 53 per cent during the first three quarters of 2008-09.December 2008 went up to more than 3 million tonnes against more than 2 million tonnes recorded during the same period in 2007-08. while cumulative value of exports for the period April. 64 million were exported during the first nine months of the current fiscal as against 86. a growth of 137 per cent over the same period last year. The country's tea exports have already surged to 105. registering a growth of 19. 08 million for the corresponding period last year. the shipments during the first seven months of 2008 touched US$ 255.312 tonne valued at US$ 343.86 million kg.301 billion as against US$ 99.02 per cent to total US$ 155.505 billion. The latest provisional figures as per the Commerce Ministry show that the country's exports during November 2008 were valued at US$ 11. Further. during April . India's gems and jewellery exports rose nine per cent to US$ 13.21 billion. In value terms also.56 billion.

9 billion in July-September 2007). Export of leather and leather products from the country reached US$ 3.7 per cent in the same period of the previous fiscal. India's total export of spices is likely to touch US$ 1. business and professional services.2 billion in 2008-09. Invisible receipts comprising services. to touch US$ 51. India's share in global service exports will increase to 6 per cent by 2012 from the current 2.1 billion in July-September 2008 (as compared to US$ 16. current transfers and income rose by 33. Foreign currency assets stood at US$ 238. up 70 per cent from the same period last year.968 billion as on November 28. External Sector India's Balance of Payments (BoP) accounts for July-September 2008 reiterates India's growing trade interactions with the world. the total quantity of iron ore shipped in November was 8.B.2 per cent in the same period of the previous fiscal.40 million tonnes of oilmeal in the first three months of the current financial year. domestic demand for business. mainly due to increase in receipts under private transfers along with steady growth in software services exports.74 million tonnes. At this level.Bhanja . On BoP. 2008. as compared with 16. India's trade relations with several countries have received an impetus with the numerous bilateral pacts and trade agreements signed recently.9 per cent in July-September 2008.5 per cent of trade deficit in Q2 of 2008-09 (79. net invisibles surplus financed 67. India exported 1.8 per cent in Q2 of 2007-08). At the same time.related services and investment income payments in the form of interest payments and dividends. invisible payments reflected outbound tourist traffic from India. rising payments towards transportation. With lower tariff (ASEAN) barriers.13 million tonnes in October. India's merchandise exports registered a growth of 24. on BoP basis.2 million.686 billion in November 2008. travel and transportation.6 per cent in JulySeptember 2008. recorded 45 per cent growth in JulySeptember 2008 against 22. against 4. Import payments.7 per cent.9 • India's iron ore exports doubled in November as compared to October. trade between India and ASEAN is expected to increase significantly from the present US$ 28 billion annually. • • • • • Foreign Exchange India's foreign exchange reserves touched US$ 247. Net invisibles (invisibles receipts minus invisibles payments) amounted to US$ 26. • The government is likely to sign a free trade agreement (FTA) with the Association of Southeast Asian Nations . India's natural rubber exports have surged 38 per cent in the April-July 2008.47 billion in 2008-09 According to a macro-track report by the National Council of Applied Economic Research (NCAER). Developed By-P. As per data compiled by Federation of Indian Mineral Industries (FIMI).

India has become the 10th largest trading partner of Australia.573 projects in the UK. and next-generation research.71 billion on the London Stock Exchange. the bilateral trade between UK and India has touched US$ 17. This is done to ensure that products with general high export intensity. India and Turkey aim to double bilateral trade to US$ 6 billion by 2010. Developed By-P. Spanish investment in India in the first three quarters of 2008 calendar year was US$ 158 million (or 114 million euros)— an increase of 500 per cent from the previous year. Focus Market schemes (FMS)-aimed at promoting exports to certain countries by offsetting high freight cost and other externalities—has been expanded to include 10 more countries. and is in the process of signing similar pacts with a host of countries. Spain. India has signed a bilateral investment promotion and protection agreement (BIPA) with Syria. Italy is looking forward to widening business opportunities in India. with bilateral investment touching US$ 2 billion. India and Canada have set off ten joint initiatives worth US$ 17 million in the field of science and technology. Simultaneously. would be considered for export incentive as a focus product for that particular country. • • • • • • • • • • • Foreign Trade Policy for 2008-09 Continuing with the government policy of integrating trade with the overall development of Indian economy. FMS would be calibrated with the Focus Product scheme (FPS)—aimed at giving a thrust to manufacture and export of certain industrial products which could generate large employment per unit of investment. Non-oil bilateral trade between India and Oman in the first quarter of 2008 registered an impressive growth of 35-40 per cent. India's economic ties with the UK are also through the 52 listed companies with a combined market capitalisation of US$ 15. Bilateral trade between the two countries added up US$ 100 million in 2007. According to Andrew Cahn. India has emerged as Dubai's second biggest trading partner during the first nine months of 2008 with imports from India worth US$ 10 billion and reexports to India worth US$ 8 billion. India and Syria have signed a revised double taxation avoidance agreement for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. especially in West Bengal. a British Government body that draws UK's overseas investments. the annual supplement 2008-09 to Foreign Trade Policy 2004-09 introduced new incentives.44 billion in 2007-08.Bhanja . Indian firms invested in 1.B. India and Singapore will be signing an agreement on IP rights' cooperation. CEO of UK Trade & Investment (UKTI). according to an estimate by a leading business chamber. not covered under FPS and which have low penetration in non-FMS countries. Singapore ranks fourth in terms of FDI in India during the period 1991-2008. which has a strong industrial base in the automotive and infrastructure sectors has witnessed a five-fold increase in its investments in India in 2008.10 • India-African bilateral trade is projected to grow by over nine times from US$ 26 billion now to US$ 150 billion by 2012. In 2007-08.

6793 INR Developed By-P. the government has announced many innovative steps in the final annual supplement to FTP 2004-09: • • • • • • • • • • • • • Extension of Duty Entitlement Pass Book scheme (DEPB) till May 2009 Interest at 6 per cent for late refunds Cutback of customs duty payable under EPCG scheme from 5 per cent to 3 per cent Lowering of average export obligation under EPCG scheme Extension of income tax exemption to 100 per cent Export Oriented Units (EOUs) beyond 2009 Additional duty-free credit of 2.5 per cent under Focus Product Scheme Addition of 10 more countries in the Focus Market Scheme Inclusion of IT and ITES and R&D in natural sciences under the Industrial Park Scheme Establishment of Export Promotion Councils for Telecom sector Besides the above initiatives. subject to minimum interest rate of 7 per cent. The government has released US$ 163. permitted EXIM Bank to obtain from RBI a line of credit of US$ 1. leather. 9 million towards payment of pending claims of Terminal Excise Duty. The focus of the fund is on boosting exports of India's small and medium enterprises in new and emerging markets like Africa and Latin America. in rupees or dollars. the money will be released as part of the Market Access Initiative (MAI) scheme of the commerce department. Duty Drawback and Central Sales Tax.02 million fund to promote the country's exports through Indian missions abroad. The government has provided an interest subvention of 2 per cent upto March-end on pre and post-shipment export credit for labour intensive exports such as textiles.5 per cent under Vishesh Krishi and Gram Udyog Yojana (VKGUY) Additional credit of 5 per cent for sports and goods industries under Focus Product Scheme Special focus initiative for IT sector Ensuring zero-rating of exports for domestic taxes Enhanced incentive of 2. • The government has established a US$ 1. To help out exporters. 80 million to ensure full refund of terminal excise duty/C ST. This will be used to provide pre-shipment and post-shipment credit. to Indian exporters at competitive rates. the government has taken several measures to boost exports during times of a global meltdown. • • • • Exchange rate used: 1 USD = 48. The government has also promised to provide additional funds of US$ 226. Termed the 'Challenge fund'.Bhanja . the government.11 Government Initiatives In order to promote trade.B. marine products and SME sector.03 billion. in a fiscal stimulus package announced in the first week of December 2008. gems & jewellery.

In the first quarter of 2008– 09. which increased to US$ 25. NRIs have pumped in US$ 513 million (on net basis) in NRI deposits in September 2008. Central Europe and Western Europe in terms of prospects of Developed By-P. the monthly capturing of fresh investments was US$ 15. about US$ 32. The approvals for such proposals went up about 50 per cent in 2008 as against 2007." The CaPex service. Mr Kamal Nath. according to Commerce Minister.27 billion received during same period last year. October 2008 has witnessed FDI inflows of US$ 1. a growth of 259 per cent over the same month in last year.32 billion in 2005–06. the report informed. The country posted a 45 per cent growth in foreign direct investment (FDI) with US$ 23. with new projects worth US$ 44. According to the Reserve Bank of India's (RBI) monthly bulletin. FDI inflows between April-October 2008 were US$ 18. Further.49 million hotel project of AAPC Singapore Pte Ltd.7 billion.95 million including an US$ 70.56 billion. In spite of the global meltdown. India was after China. and to US$ 32. said that on an average. The Foreign Investment Promotion Board (FIPB) has cleared around 30 proposals accounting for more than US$ 1.18 billion in 2006–07. Inflow of FDI equity for the month of September 2008 alone was US$ 2.14 billion. according to a report by the Centre for Monitoring Indian Economy (CMIE).89 billion in July. India continues to be regarded as one of the fastest expanding economies and the growth outlook for 2008–09 has been projected at a high sub-eight per cent by different rating agencies. a hotel management company this month. averaging at US$ 39. according to a global survey conducted by Ernst and Young in June 2008.49 billion. a horde of global corporations are keen on investing in India.79 billion. The government has in February 2009 approved 29 foreign direct investment (FDI) proposals worth US$ 118. Further. The FDI inflows between April-November 2008 stood at US$ 19. procedural relaxations. as against the US$ 9.70 billion. in fiscal year 2007–08.Bhanja . "Our close monitoring of projects through the CMIE CapEx service shows acceleration in the announcement of fresh investment. thereby increasing the FDI inflows for the period April-October 2008 to US$ 18. CMIE CapEx service received projects worth US$ 117.4 billion as foreign investment had poured into India. which is the highest since December 2006.70 billion.97 billion in 2007–08. the sustained growth in the economy. and a favourable investment regime.B.3 billion between April-December 2008.12 Foreign Direct Investment Last Updated: March 2009 [TOP] With continued liberalisation of the foreign direct investment (FDI) policy.21 billion in the last few months. India: A much favoured destination India has been rated as the fourth most attractive investment destination in the world. over the same period last year.

France and the UK behind.82 billion) ." A recent survey conducted by the Japan Bank for International Cooperation (JBIC) shows that India has become the most-favoured destination for long-term Japanese investment.5 billion over five years from 2006 to 2010. India is emerging as the most favoured investment destination for many countries.A (US$ 1. a position it has held since 2005. With 30 per cent votes.Bhanja .13 alternative business locations. from the seventh position. tax.25 billion). people and skills availability and business environment. Germany (US$ 538 million). According to the AT Kearney FDI Confidence Index 2007. The US Consul General. Aileen Crowe Nandi has said. in the automobile sector and also machine tools. according to Tourism Minister Anil Sarkar. electronics and IT. Sector-wise FDI The sectors bagging the maximum amount of FDI equity during April to October. In terms of cumulative FDI inflow. Cyprus (US$ 827 million).35 billion). India emerged ahead of the US and Russia.69 billion). As per the global survey of corporate investment plans carried out by KPMG International. and advisory services).90 billion).B. Telecommunications (US$ 1. U. India will see the largest overall growth in its share of foreign investment. and it is likely to become the world leader for investment in manufacturing. particularly. which received 21 per cent votes each. In terms of FDI equity inflows during April to October. In recent times. in the investment league table. Japan (US$ 223 million).99 billion). released in June 2008. Developed By-P. Japan is the fifth largest investor and Japan's FDI in India is estimated to be around US$ 5. U. Computer Hardware and Software (US$ 1. Japanese corporations have bought varying amounts of equity stakes in Indian firms. Vietnam and Thailand have plans for investing in the tourism sector in the Indian state of Tripura. Australia and many South-Asian countries such as Cambodia. (a global network of professional firms providing audit. France US$ 295 million). and UAE (US$ 186 million). the largest investments came from Mauritius (US$ 7. pushing Germany. helping it rise to the fourth. Its share of international corporate investment is likely to increase by 8 per cent to 18 per cent over the next five years.74 billion). Further. Construction Activities (US$ 1. India topped the AT Kearney's 2007 Global Services Location Index. 2008 are the Services Sector (US$ 3. Singapore (US$ 1.52 billion). India continues to be the second most preferred destination for attracting global FDI inflows. emerging as the most preferred destination in terms of financial attractiveness.S. Netherlands (US$ 740 million).K ( US$ 701 million). & Housing and Real Estate (US$ 1. "India is emerging as the most favoured destination for overseas investment and an important trading partner for the US.

from US$ 3. will be buying 27. Global players such as Wal Mart. have lined up investments to the tune of US$ 10 billion for the retail industry.000 stores in India by 2013. Norway-based Telenor has acquired Unitech Wireless with a US$ 1. Pavers England Footprint. Japanese telecom major. Leading global multiplex player Cinepolis plans to start its India operations with an investment of US$ 350 million. Ford India’s plans to expand its capacity in India will continue as per schedule. The Goldman Sachs Group will be making an overall investment of almost US$ 100 million in its wholly owned non-banking financial company. "FDI of about US$ 2.000 engines annually. NTT DoCoMo. The expansion programme entails doubling its car manufacturing capacity to 200. automobiles. • Footwear retail company. Swiss processing and packaging major. Moreover.B. Mr Sis Ram Ola. has plans to invest US$ 10 million for setting up 1.23 billion investment for a 60 per cent stake. General Motors India plans to invest US$ 500 million. in addition to US$ 1 billion it has already committed to invest in India. Finnish engineering and technology group. the company also plans to invest US$ 3 million on an R&D facility in Chennai. plans to invest US$ 100. • • Investment in the Indian realty market is set to increase to US$ 20 billion by 2010. with an investment of around US$ 33. electrical equipment apart from others. construction.31 per cent equity capital of Tata Teleservices for around US$ 2." The surge in mobile services market is likely to see cumulative FDI inflows worth about US$ 24 billion into the Indian telecommunications sector by 2010.000 units per year and an engine manufacturing facility with a capacity of producing 250. • • • • • • • • • Developed By-P. The project will be completed by early 2010. Metso started the development of its 49-acre multi-functional industrial facility. Marks & Spencers.84 billion till March 2008. Many big names in international retail are also entering Indian cities. Pratham Investments and Trading Private Ltd. in Rajasthan.85 million in its second plant in Maharashtra. Rosebys etc. According to Mines Minister.. • • Aggressive Investment Plans The surging economy has resulted in India emerging as the fastest growing market for many global majors.Bhanja . Tetra Pak International SA.48 billion.5 billion per annum is expected in the mining sector from the fifth year of implementation of the new National Mineral Policy (NMP). This has resulted in many companies lining up aggressive investment plans for the Indian market. American Tower Corporation (ATC) plans an investment of about US$ 500 million to buy a stake in an Indian telecom tower company. energy.28 million over two years.14 Now. global investors are also evincing interest in other sectors like telecommunication. General Motors will also invest US$ 200 million in its Talegaon plant near Pune for its powertrain project.

In a recent move.02 million over the next three years. lottery and atomic energy.UPS market in India. and also build closer alliances with their foreign partners. presently.5 billion for the same. The Reserve Bank of India (RBI) will now permit FDI up to 49 per cent in credit information companies with voting rights up to 10 per cent. France. Even indirect foreign investment would not be allowed in sectors where foreign investment is barred. The change in FDI norms will bring much respite to retailers who can now raise funds through stake sale in subsidiaries. will be investing US$ 5. agriculture. a subsidiary of Singapore-based All Green Energy Pvt Ltd. the government has announced that equity investments coming through companies with Indians having majority ownership and control would be taken as fully domestic equity. The government is also considering the removal of the incentive cap in wind energy which is restricted to projects up to 49 MW. like multi-brand retail. Singapore-based Universal Success Enterprises Ltd (USEL) has signed three pacts with the Gujarat government for infrastructure projects and will be investing about US$ 17. the government has made new amendments to these revised norms. part of Socemec. Socomec UPS India. StarragHeckert.Bhanja . • The Department of Industrial Policy and Promotion (DIPP) and the Finance Ministry are planning to remove the cap on FDI in single-brand retail and permit up to 100 per cent foreign investments as against the 51 per cent currently. With the changes in the FDI policy. Furthermore. A joint venture by Punj Llyod and US-based Thorium Power will see an investment of around US$ 1 billion for exploring commercial nuclear power opportunities.15 • All Green Energy India. energy and precision machinery markets. Targetting a 10 per cent share of the US$ 600 million . Additionally. is planning to invest US$ 31 million in two phases. • • Developed By-P.30 million for the development of 10 biomass-based renewable energy projects over the next three years. transport (automotive). and render caps on FDI redundant. sectors like retail. including surcharges. extensive re-organisation of company finances across many sectors would be seen and companies would now be subject to further dividend distribution tax of 15 per cent. with the revised FDI norms.B. • • • • Government Initiatives The government has taken significant steps to make foreign direct investment simpler. telecom and media amongst others would benefit greatly. a global company in the field of milling machine centres for the aerospace. will be investing around US$ 96. Socomec has inked alliances with 24 new business partners.

• • Investment by Indian companies in which foreign firms have beneficial investment will account as direct FDI. the inflow of FDI into India is likely to further accelerate. Exchange rate used: 1 USD = 51.Bhanja . The government has also proposed wide-ranging modifications in the guidelines FDI over various sectors. Looking ahead With the government planning more liberalisation measures across a broad range of sectors and continued investor interest. has assured that India will not be greatly affected by the current global meltdown and has expressed confidence about achieving the FDI target set for this year.B. The Union Commerce and Industry Minister in India.92 INR Developed By-P. Mr Kamal Nath. Direct investments made by NRIs to account as FDI.16 The government is now planning to permit FDI in investment companies as well.

tracks the price performance of the portfolio of listed Indian equity shares owned by FIIs.14 billion as on December 31. Ltd. 2009 stood at US$ 50950.938 compared with 3. Stagecoach Group Pension Scheme and Trustees of The Mine Workers Pension Scheme from UK. Among them are Llyods TSB Pension Trust. Mr Jagdish Capoor. As per SEBI. taking the total number of FIIs in India to 1. CEO of Instanex. 30 new FIIs and 104 new sub-accounts had registered till February last week in 2009.17 Foreign Institutional Investors Last Updated: March 2009 [TOP] India's exceptional growth story and its booming economy have made the country a favourite destination with foreign institutional investors (FIIs). According to the data given by the Securities and Exchange Board of India (SEBI). FIIs that have registered those from other countries include Canada. They are also the most successful portfolio investors in India with 102 per cent appreciation since September 30. Since then.20 million and in debts. 2009. In fact. Even the FII subaccounts have gone up over 30 per cent to 4. FII holdings in Indian markets reached US$ 88 billion in December 2008. The INSTANEX FII INDEX in India launched by Instanex Capital Consultants Pvt. Mumbai. "They … determine the direction of the market. As many as 330 FIIs have registered with SEBI since January 31. according to data given by the regulator. 45 new FIIs have registered with SEBI.795 in January last year. in March.609 as on January 31 this year. this year. According to Mr Gautam Chand. Majority of these FIIs are from the US and Europe. 2008. Australia. said FIIs are the largest institutional investors in India with holdings valued at over US$ 751. the UAE.Bhanja . foreign Developed By-P. There are also FIIs based out of Mauritius. according to the Bombay Stock Exchange Chairman. The Index comprises of the top 15 companies by value of FII holdings. Reviews are conducted quarterly and companies are deleted from the Index if they are not among the top 20 FII holdings.B. 2008. Taiwan and Singapore. Japan. 2003. FIIs have increased their investing activity and out of the 15 components. the FII investments in equities as on March 17.. number of registered FIIs stood at 1626 and number of registered subaccounts stood at 4972 as on March 17. According to the Index. It has continued to attract investment despite the Satyam non-governance issue and the global economic contagion impact on Indian markets. 13 showed the heightened interest of the FIIs.50 million at exchange rate of 1 USD = 40.34 INR. equalled US$ 6541. Some pension funds also feature in the list of the FIIs that have registered in 2009.

2 billion.Bhanja . As per the Securities and Exchange Board of India (SEBI). 24 bidders were allocated investments of US$ 5. as the US markets continue to weaken and yields of Indian public sector units (PSU) and corporate debt papers remain attractive. According to the Preqin report.18 institutional investors (FIIs) have started looking at India as an attractively-valued market despite the Satyam scandal. Developed By-P." Earlier. Partner. US$ 8 billion was available for allocation to FIIs and their sub-accounts in an open bidding platform.B. Specialist Advisory Services.81 million. FIIs have been finding investment in debt a more attractive proposition than equity. Trump Organization India Fund and Walton Street Capital India Fund I with US$ 1.18 million in first 11 trading sessions of 2009 from FIIs. the highest ever investment allocation by FIIs in India as compared to the net investment of FIIs in 2008 of US$ 2.39 billion. and corporate bonds) attracted US$ 426.500 million. This also includes real estate funds. an alternative assets research and consultancy group. and JP Morgan Chase Bank. Kotak Mahindra UK US$ 818. India is a growth story while everywhere else. FIIs decide their allocations for the year in January. 2009. but the total amount raised for 2008 would be 2-3 times of what has been invested. According to C G Srividya.5 million. Generally. 117 Pan-Asian private equity (PE) players—with India as focus— aim to raise funds worth US$ 59 billion. this bidding should kick off a sound FII investment trend in the near future. commercial papers. there is recession. Some of the FIIs such as Citi and Macquarie have increased the weightage for India. Since January 2009. PEs including Macquarie State Bank of India Infrastructure Fund with US$ 1. FII's net investment in debt instrument has declined by US$ 125.000 million investment each in real estate sector are some recent notable examples.86 million and Deutsche Bank International Asia US$ 700. This weightage helps investors decide the markets to invest. according to a Preqin research report. Seventy eight private equity players expected to raise US$ 24 billion in 2009 for investing in India—thrice that of last year—when 30 private equity players raised US$ 9. "In 2008. FIIs will invest in attractive PSU bonds floated by quasi-government entities like Power Finance Corporation and Rural Electrification Corporation. Standard Chartered Bank got the maximum bids of US$ 1. while Credit Suisse has said that the Indian market can go up by 30-40 per cent in 2009. PE investments in India was close to US$10 billion. says UK-based Preqin.14 million.05 billion. followed by Barclays Bank US$ 998. Meanwhile.4 million due to impact of the global slowdown. cash as a percentage of total assets under management (AUM) was just above 6 per cent in January 2008 and rose to 18 per cent in November 2008. On March 16. US$ 532. The bids have to be executed in the next 45 days. According to market experts. Debt instruments (government securities. Besides. Grant Thornton.8 billion.

Venture capital firms say the number of deals they are getting from ibankers currently has gone up significantly. consumer goods and infrastructure are expected to be more attractive. only 2-3 out of 10 deals came from i-bankers earlier. CMP Asia. The funds are looking up once again currently. the upgradation of India's sovereign ratings combined with the improvement in the macro-economic situation and growth fundamentals has led to a significant increase in FII investments in the debt market. Other FIIs such as Citigroup. Fidelity. Aberdeen Asset Management. UBS. when real estate and IT and ITES sectors enjoyed most of the attention. Citigroup. Simultaneously. principal at Draper Fisher Jurvetson. on December 4. education. Capital International and ABN Amro among others to enter the Price Indian financial market. According to Grant Thornton India. However. Reliance Industries (RIL). • • Developed By-P.59 billion. Copthal Mauritius Investment.Bhanja . Venture Intelligence. Earlier. Mutual fund houses have been net sellers in February 2009. Investments in sectors such as healthcare. According to Sachin Maheshwari.19 Investment banks (i-banks) are now looking at smaller venture capital deals in the US$ 2 million – US$ 7 million range. Goldman Sachs.38 billion as against US$ 2. Morgan Stanley. JP Morgan and Government of Singpaore already hold stakes in the company. Total investment in the country's debt market till November 2008 amounted to US$ 6. even as export-oriented businesses face impact of recession in US and Europe. the total number of private equity deals announced in 2008 stood at 312. It has attracted global majors like CLSA.4 billion from October 2008-February 2009. • The recent interest from foreign institutional investors in the stock of Housing Development Finance Corporation (HDFC) seems to have boosted the housing finance company's stock price. there were 82 PE deals worth US$ 1. Merrill Lynch. HSBC. Crown Capital. i-banks are now willing to work on lower margins. as per data available with the Bombay Stock Exchange. T RoweInternational.34 million. 2008. with the total announced value at US$ 10.B. as per deal tracking firm. 2009 is witnessing a broad-basing of sectors on the PE radar. Further. Baring PE Fund has bought major stakes in Mphasis. DB International. a leading software company in India in March 2009 for approx US$ 25. but about 5-6 currently come through this route. Fidelity FID Funds Mauritius has bought a substantial stake in UTV Software in March 2009 for approx. US$ 2. FIIs Europacific and Growth Fund of America Inc picked up stake in the company in March 2009. Some Investment Highlights The Indian growth story has continued despite the Satyam non-governance issue and the global economic slowdown. The mutual fund industry comprises of 35 fund houses. Funds are also increasingly buying stake in agro-based companies. Larsen and Toubro (L&T) and Infosys during the month.55 million. FIIs invested US$ 61. they were bullish on some select market heavyweights such as HDFC. Quite unlike in 2007 and 2008.83 million in equities showing confidence in the Indian stock market. given their relatively strong domestic demand.80 billion by the end of November 2007.

414.20 • Kotak Mahindra's investment banking business signed an exclusive alliance with GCA Savvian Group Corp.6 million from Intel Capital. for a minority stake in Biotor Industries (US$ 37. Fidelity Investments International has picked up close to seven per cent equity in Transport Corporation of India (TCI) for US$ 10. • • • • • • • • • • • • • • • Developed By-P. RREEF Alternative Investments. In March 2009. Citigroup. private equity and capital markets advisory services to private and public companies in India. Credit Suisse and Merrill Lynch and Co.72 million into its Indian retail stock broking and portfolio management services firm Morgan Stanley India Financial Services (MSIFS). through its Asia fund. Morgan Stanley.. Morgan Stanley is putting US$ 19. a subsidiary of the US-based Jefferies Group. In January 2009. FII Kotak Mahindra UK Ltd. which started operations in 2005. Private equity firm Blackstone has taken up a 26 per cent stake in MTAR Technologies for US$ 65 million. KPMG. In March of last year.8 million) are instances of continued interest of FIIs in Indian markets. London-based private equity firm.72 million. the global alternative investment management business of Deutsche Bank. Morgan Stanley Mauritius acquired a huge stake in Infrastructure Development Finance Corp (IDFC) from Goldman Sachs in March 2009 for US$ 11. HSBC Bank Mauritius Ltd bought over 51. which it had acquired in October 2008. bought a large stake in NIIT from another FII. Jefferies India Pvt Ltd. Goldman Sachs and BSMA have picked up a combined stake of over seven per cent in Gitanjali Gems at US$ 23.96 million of capital in its wholly-owned NBFC Pratham Investments and Trading Private Ltd. Lehman Brothers units in India. Nomura Holdings.75 million as capital in Pratham Investments after acquiring it. Greater Pacific Capital. Avendus helped One97 Communications raise US$ 8. in addition to cross border M&A and international capital markets services. a medium-sized Japanese bank run by bankers pooled from Goldman Sachs. initially launched a fund with a corpus of US$ 345 million. Goldman Sachs announced infusion of US$ 72. Inc. Swiss Finance Corporation Mauritius Ltd for over US$ 897. plans to invest over US$ 1 billion in the country. for international mergers and acquisitions (M&A) in the so-called India-Japan corridor.16 per cent stake in New Delhi Television Ltd (NDTV) and a minority stake in Sterling & Wilson Pvt. launched its equity sales.B. Ltd. The licence allows investment banks to offer M&A. trading and investment banking operations in India though its subsidiary Nomura Financial Advisory and Securities. The firm recently launched private wealth management services.51 million. announced it had received a category-1 merchant banking licence from SEBI.000 shares of Intellivisons Software for US$ 144. Eighty per cent of the fund has already been invested in India and China.. is planning to launch a new fund with a corpus of US$ 750 million to invest in India and China. Nomura has integrated the franchises of failed US investment bank.Bhanja . the largest Japanese securities firm.94 billion. primarily for the high-net worth individuals (HNI) and non-resident Indians (NRI). Goldman Sachs had infused US$ 22.61 million. The company. Recent deals by Blackstone in Nuziveedu Seeds (US$ 50 million) and Morgan Stanley. Goldman Sachs picked up an 8.

Leading private equity investor. These include American Airlines. printing solutions and ATM cash management business. Norway's sovereign wealth fund (SWF) has indicated that it would rejig its investment strategy to include markets like India. Private equity firm.Bhanja . Coxe travelled across India in mid-November with a group of influential fund managers who manage over US$ 1. The confidence that FIIs have in the Indian market can be ascertained by bigticket deals of global investors like Donald Coxe. the Bill & Melinda Gates Foundation. world's best emerging markets investor is also bullish on India. Bank of Korea." said Coxe. • • • • • Government Initiatives Developed By-P.9-billion private equity fund. Buying into the Indian Dream • In spite of the global meltdown. who manages US$ 24 billion. • According to Mr Moses Harding. IndusInd Bank. "The increase in limits for FII investment in corporate bonds from US$ 6 billion to US$15 billion. has picked up a majority stake in a new venture consisting of the domestic IT business of CMS Computers. as it is a large market not highly linked with the global market. As many as 120 new foreign institutional investors have registered in India since the global financial crisis broke out in September. especially consumer stocks. "India will be out of the emerging markets basket in the next cycle and your companies will have PE ratios in line with mature markets. has closed a US$ 2. FIIs continue to buy into the Indian dream. Mark Mobius of Templeton Asset Management. with increased focus on rural markets. should encourage more FII inflows into the bond market". • • • There is positive feedback from other big players in the FII segment as well. Venture capital (VC) firms such as Avishkaar India Micro Venture Capital Fund. JP Morgan. Mobius. its card printing. University of Southern California. Similarly. Blackstone.B. Reliance Industries Ltd has signed a US$ 400-million financing facility with global financial services firm. of which about US$ 1 billion is likely to be invested in Indian companies over the next four years. Acumen Fund and Rural Innovations Network have begun investing in rural-centric technology. China and Egypt. BMO itself manages assets worth US$ 375 billion. announced by the Government earlier this month. said that he was buying Indian stocks.5 trillion in assets.37 million in BPTP Ltd. We want to be here for that. The US$ 314-billion Norwegian fund will begin investing in real estate next year in India. the global portfolio strategist for BMO Capital Markets. a Delhibased real estate company.21 • JP Morgan Chase has invested approx. US$ 51. Executive Vice-President. International Finance Corporation. for its capital expenditure programme. Actis. and Warburg Pincus International.

SEBI has simplified the registration norms for FIIs and sub-accounts." SEBI has FII investment limit in government securities being increased to US$ 5 billion from US$ 3. Significantly. Institutional investors—including FIIs and their sub-accounts—have been allowed to undertake short-selling. SEBI did away with the 70:30 ratio of FII investment in equity and debt. subject to the approval of the board and the general body of the company passing a special resolution to that effect. "Unlike corporates registered here. • • • • • • • Exchange rate used: 1 USD = 50. corporates and other investors such as hedge funds to register directly as foreign institutional investors. So.Bhanja . In October 2008. and limit is 20 per cent of the paid-up capital in the case of public sector banks.5898 INR Developed By-P. The ceiling of 24 per cent for FII investment can be raised up to sectoral cap/statutory ceiling. the government and SEBI have taken several measures: • The Government of India has again reviewed the External Commercial Borrowing (ECB) policy and has increased the cumulative debt investment limit from US$ 6 billion to US$ 15 billion for FII investments in Corporate Debt. Foreign institutional investors (FIIs) will be one of the biggest gainers in the financial sector from the reduction in service tax announced in the Interim budget 2009-10. FIIs can acquire shares/debentures of Indian companies through the stock exchanges in India.B.22 FIIs are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). 2008. According to PricewaterhouseCoopers' Prasad Paranjpe. it has allowed investment managers. FIIs will see their brokerage costs come down because of the lower service tax. To further increase FII participation in the Indian market. lending and borrowing of Indian securities from February 1. Allowed foreign individuals. As a result. respectively. FIIs can now invest in equity and debt in any ration they seem fit.2 billion. advisors or institutional portfolio managers in the NRI category to be registered as FIIs. FIIs do not have any output service tax liability in India against which service tax payments can be offset. Under this scheme. The ceiling for overall investment for FIIs is 24 per cent of the paid-up capital of the Indian company. the two-percentage-point reduction will result in an equivalent cost saving.

the other sectors that attracted huge investments were realty.76 billion in the first half of 2008. steel. the government announced a US$ 6. real estate. Mr P.Bhanja .27 billion fiscal stimulus package on December 7. This increase in investments is across varied industrial sectors like retail. Bhushan Steel and JSW Steel among others. After a growth rate in excess of 9 per cent for the last 3 years.B. with both the public and private sector making investments to start new enterprises and ramp up existing firms. the Indian power sector received investments worth US$ 44. Pegging India's growth rate in the current year at between 7 and 8 per cent. has said that India would continue being the second fastest growing economy in the world. As a measure to boost the economy and to ensure a 7 per cent growth.47 billion for the same period.68 billion for the next two to five years. Vedanta Resources. After the power sector. 2008. infrastructure.80 billion from companies like Tata Steel. steel." The realty sector was second. stating. domestic investments continue to pour into various sectors. automobiles and telecommunication among others. the erstwhile Union Finance Minister. the report revealed. It was followed by the steel sector with investments worth US$ 24. accounting for almost 30. As a reiteration of this optimism. The retail sector. with US$ 34. retail and telecom.38 billion during the period. According to a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). with a growth rate of around 25 per cent.9 per cent of the overall investments in the corporate sector. "These sectors together saw capex (capital expenditure) plans worth US$ 145. it is still holding its ground in the midst of the current global financial crisis. The telecom sector had Developed By-P. Chidambaram. received investments worth US$ 20.23 Domestic Investments Last Updated: January 2009 [TOP] A Sustained Deluge India's economy has been seeing tremendous growth since the last decade.

26 billion for steel. Maharashtra tops the chart with investment commitments worth US$ 27.32 billion in the industrial sector over the last three years. The capacity expansion plans announced by Indian corporates were worth US$ 243 billion in the first six months of the current calendar year. Haryana has seen investments amounting to US$ 8.861 MW for the next five years was one of the investment highlights.32 billion between July-December 2007 according to the report on state-wise investments.67 billion are on the anvil. Airtel and Quippo Telecom Infrastructure. Investments by the Government • V K Kaul.77 billion to raise power generation capacity to 12. Overall. Gujarat will be receiving a humongous US$ 244. real estate. cement. Projects worth another US$ 16. counting as top preferred investment destinations by private players.76 billion in sectors like power. hospitality and telecom.23 billion towards a Greenfield aluminium and captive power plant. Indian as well as foreign investors signed over 8. Andhra Pradesh saw the second highest investment announcements with investment proposals by major industry groups like Reliance Industries. automobiles.01 billion for the next 10 years. National Aluminium Cooperation (NALCO) made the third largest announcement in Orissa worth US$ 3. The State of West Bengal also saw big ticket announcements worth US$ 19.B. "The sector attracted US$ 20. Orissa. manufacturing and hospitality sector. A total of 24 states were tracked by the research bureau.24 also attracted huge investments. announced that construction work on the dedicated freight corridor project will start in early 2009 with an initial investment of Developed By-P.500 MoUs during the Summit.57 billion figure. the Managing Director of Dedicated Freight Corridor Corporation of India Limited (DFCCIL). as against US$ 131.11 per cent of the total planned investments. While the announcement by Tata Power for investment of US$ 5. However. Andhra Pradesh. Apart from these investment plans. notably Maharashtra. Videocon Industries Ltd and GAIL India taking it to a neat US$ 24.Bhanja .80 billion as investment for various projects. Gujarat stole a march over all other states with massive investments announced during the Vibrant Gujarat Global Investors Summit held in January 2009. the state received a share of 10. West Bengal and Rajasthan.44 billion by major telecom players like Reliance Communication." A report by ASSOCHAM's research bureau revealed that the Indian economy is witnessing a fusillade of investments with five states. expenditure worth US$ 15. Hindujas Group. Reliance Industries announced its plan for setting up a semi conductor plant and other micro-technology units with investments worth US$ 5.73 billion is in the offing for sectors including steel. ports and shipping.

Power Grid Corporation of India Ltd (PGCIL) plans to spend US$ 1. In the annual investment plan for ports during 2008-09. • • • • • • • • • • • Public Sector Investments Some of major investments that have been lined up for the next few years by the government and public sector enterprises include: • The government of Karnataka has signed two separate MoUs with NTPC and Bharat Heavy Electricals (Bhel) for establishing thermal power plants of 4. Mangalore.64 billion. hotels. Further. The Cabinet Committee on Economic Affairs (CCEA) has ap proved four laning and six laning of various sections of national highways 18 and 47 at a cost of US$ 630.59 billion from the World Bank and the Asian Development Bank (ADB) for the construction of about 76 per cent of the proposed 2.B.739-km dedicated rail freight corridor (DFC). over the next three years.43 million over the next 10 years in port connectivity projects at Chennai.39 million. or the same.74 million for the 100 km stretch on the eastern corridor.78 billion to US$ 7. which will cover over 2.000 Mw aggregate capacity.16 billion. will entail an overall investment of over US$ 5. Tuticorin.14 million. This investment is part of the US$ 11.400 MW at Edlapur and Yermarus Developed By-P.69 billion for the development of power plants with 70. The Kerala State Electricity Board (KSEB) has proposed an overall capital investment of around US$ 278.80 million. The commissioning of the critical stretches of the entire project will be over by 2015-16.64 million. an IT Tower. southern railway is planning to invest around US$ 136. and is considering asking the Infrastructure Investment Finance Company Ltd (IIFCL) to create a corpus of over US$ 8. The railways is expected to tie up a loan of US$ 7.78 million and Sethusamudram Corporation at US$ 322.000 MW at Kudigi (Bijapur district). 16 new schemes and seven wind and other nonconventional energy projects. Ennore and Cochin.762 km. The Punjab government is planning a US$ 1.43 billion to develop the transmission system related to the 4. The government has decided to set up 30 Greenfield mega food parks (MFP) during the Eleventh Plan.000-MW Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh. The entire project. the power sector has set aside investments worth US$ 45. with each park receiving an investment of US$ 51.25 million per annum to raise its consumption of stainless steel and add brand new alloy-made wagons and coaches. The projects include the building of educational institutions.27 million for areas like generation.45 billion in the infrastructure sector within the next two years.Bhanja . and roadways amongst others. transmission and distribution sectors in 2009-10. the total projected investment is worth US$ 746. and 2. The government plans to invest around US$ 20. This includes major investments by the Dredging Corporation of India at US$ 100. The outlay is for five inprogress projects.24 billion outlay for increasing the inter-regional transmission capacity planned by PGCIL. Indian Railways plans an investment of US$ 437. According to Power Minister Mr Sushil Kumar Shinde.25 US$ 154.01 billion investment for developing the infrastructure of Mohali.

18 billion investments lined up in plans for Orissa despite the global slowdown. • • • Developed By-P. Uttar Pradesh and Chattisgarh.26 (Raichur). It is likely that they may put in a further US$ 407. Hindustan Construction Company has signed a MoU with the Gujarat Government to set up a 'Water Front City' at Dholera with an investment of US$ 8.17 million will be invested for the upgradation to Euro IV norms in petrol and diesel by April 2010. The Kudigi project will involve an investment of US$ 4. The Gujarat NRE Coke Group plans to invest around US$ 611. The project is likely to be completed by 2012.76 million of extra capital during 2008-09 to boost the insurance business.Bhanja . The company plans to take up two projects with a shared power generation capacity of 1.75 million. plans to set up a US$ 891.50 million in Gujarat over the next four to five years for setting up a coke plant. GAIL India Ltd will be investing US$ 1. a coal preparatory plant.22 billion.14 billion. Oil and Natural Gas Corp (ONGC).31 billion in equities and corporate bonds over the next four months. and waste heat based power plant. Life Insurance Corporation of India (LIC) will be investing US$ 6.01 billion over the next 3-4 years to develop a CNG corridor across India. Singareni Collieries Company Limited (SCCL) is planning to establish a 600MW merchant power plant in the Adilabad district with an investment of US$ 610. with an investment of US$ 50.59 million project in Tripura to increase the state's gas output. Additionally.000 acres and would take over 12 years for completion.36 million.980.67 million for the augmentation of its diesel and petrol refining capacity by 2011.35 million. The total investment outlay is US$ 1. it will also be setting up 500 MW wind energy farms at different six locations. alongside berthing.06 billion and the wind energy projects will see an investment of US$ 508. mechanised port at Astaranga in the Puri district of Orissa. An additional US$ 528. • • • • • • • • Private Capital Investment • • Vedanta Resources will be going ahead with its US$ 10." said company Chairman U D Choubey.22 billion in super thermal power projects in Madhya Pradesh. "We have identified 230 cities for retailing compressed natural gas (CNG) to automobiles and pipe cooking gas to households. in partnership with NTPC. The project entails the development of a new city built over 4. The Karnataka Power Corporation Limited (KPCL) and Bharat Heavy Electricals Limited (BHEL) will together partner financial institutions to propose a joint venture (JV) company with the aim to develop power generation in Karnataka. Chennai Petroleum Corporation (a group company of Indian Oil) will be investing around US$ 772. Indian private life insurers have pumped in US$ 610.16 of additional capital before the end of the 2008-09 fiscal. Bombardier Transportation Inc inked a MoU with the Gujarat government for making Metro Vehicle cars at the Savli facility. NTPC has announced an investment of US$ 1.B. The Hyderabad based Navayuga Engineering Company Limited (NECL) has inked a MoU with the Orissa government for setting up an all-weather. The KPCL-BHEL combine will own 52 per cent stake in the JV.

AMRL International Tech City plans to invest around US$ 162. Ennore Coke Ltd is planning to set up a 1 million-tonne plant with an estimated investment of over US$ 205. Punjab and Rajasthan over the next two years.000 people. the government cleared 22 proposals for setting up SEZs . Developed By-P. SatNav Technologies.85 million. in a tie-up with Maharashtra Industrial Development Corp (MIDC). Infrastructure Leasing and Financial Services.15 million by March 2010. Among the important SEZ projects that received formal approval are: • A 1.50 million-US$ 223. Anil Ambani's Reliance Communications (RCOM) is planning to invest US$ 1 billion for its 3G (third generation) telecom services.45 million-US$ 30.27 • • Tata Chemicals is planning to set up a manufacturing plant for customised fertilisers in Uttar Pradesh. in December 2008. a provider of navigation and global positioning system (GPS) technologies. Oriental Green Power is planning to establish eight biomass-based power plants across India with an investment of US$ 203. Investments are expected to cross US$ 45. will be making an incremental investment of US$ 10.Bhanja . Fortis Healthcare is going ahead with its expansion plans with an investment of US$ 500 million. RCOM is planning to start the services across India covering the top 50 cities. The project is likely to start in 2009.054 hectare multi-product SEZ by GVK Perambalur Pvt Ltd.73 billion by December 2009.15 million. providing incremental employment to 800.30 billion in the first phase.. State-run trading firm. Some major investments in upcoming SEZs are: • • Tata Realty and Infrastructure is planning to invest more than US$ 686.82 billion in SEZs in Maharashtra.000 from the current 700.B. with an investment of US$ 1. According to India's Commerce Secretary. Mr G K Pillai. The proposed plants will come up in Tamil Nadu. • • • • • • Special Economic Z ones Special economic zones (SEZs) are set to see major investments after certain regulatory tangles have been straightened. over 2009. has invited bids to set up SEZs in various sectors. with an investment of around US$ 10. has inked a MoU with the Orissa government for establishing a Greenfield integrated aluminium project in Orissa.87 million. will be investing about US$ 1. • • Further. India had approved 513 SEZs till August 2008.78 million for the development of a multi-product SEZ in Tamil Nadu. MMTC Ltd. Andhra Pradesh. of which 250 had been notified. an automotive component and system manufacturer.53 million for expanding the number of its cafes to around 1.05 million to build an IT SEZ in a joint venture with the Tamil Nadu government. MIDC will be developing 22 SEZs in Maharashtra. Cafe Coffee Day is planning an investment of US$ 24. RSB Metaltech Private Ltd. which would be spent mainly on acquisitions. Maharastra.

23 billion during July-September 2007.6 per cent over US$ 13. Hindustan Newsprint Paper and Pulp SEZ in Kerala. technology and knowledge. A 222-hectare port based SEZ in Maharashtra by JSW Jaigarh Port Pvt Ltd. Of the total investments. followed by loans at 29. According to RBI data.13 billion as against US$ 2. A formal approval was also given to a 48 hectare IT/ITeS SEZ in Tamil Nadu. attain economies of size and scale of operations. India's largest software exporter is focussing on emerging markets for growth opportunities.B. A pharma SEZ by Dr Reddy's Lab Ltd in Andhra Pradesh.3 per cent of the proposals for investment. either through mergers and acquisitions or direct investments in order to access high-growth markets.8 per cent and 12 per cent.Bhanja . equity constituted 74. Equity accounted for 51. Almost 35 per cent of the proposals for outward FDI Developed By-P.6 per cent were in the form of equity and the remaining 18. Exchange rate used: 1 USD = 49.4 per cent to US$ 3. to tap global natural resource banks and leverage international brand names for their own brand building.28 • • • • • • A petroleum and petrochemical SEZ by Nagarjune Oil Corporation. A textile park in Punjab by Ishan Developers and Infrastructure Pvt Ltd.97 billion in the corresponding period last year. respectively.194. TCS.180 proposals amounting to US$ 5. However. as against 452 proposals amounting to US$ 4.4 per cent.4 per cent in the form of loans. According to data released by the Reserve Bank of India.35 million as of March 2008. actual outward FDI during 2007-08 totalled US$ 17. total direct investment abroad stood at US$ 46.45 million. FDI Outflows According to the RBI report.6 per cent of the investment. in the previous year. Data on FDI in overseas joint ventures (JVs) and wholly-owned subsidiaries (WOSs) reveals that 1. 81. during July-September. a rise of 29.62 billion were cleared for investment abroad in joint ventures (JVs) and wholly owned subsidiaries (WOSs) during the quarter. during the second quarter of the current fiscal.43 million. while Moser Baer PhotoVoltaic (MBPV) plans to enter the US market and expand its presence in Europe by the end of the year. while guarantees and loans formed 13.1 per cent and guarantees at 19. outward foreign direct investment (FDI) grew 5. 2008.0196 INR Indian Investments Abroad Last Updated: March 2009 [TOP] A large number of Indian companies have been reaching out for overseas destinations. during the corresponding quarter of the previous year. (July-September 2007).

7 per cent growth over the previous year's figure of US$ 518 million. registering a 76. for the month of November alone. followed by non-financial services at 25 per cent. followed by non-financial services at 10 per cent.4 per cent of the amount of investments. as many as 21 PE transactions were confirmed during November with an announced value totalling US$ 449 million. eight were outbound wherein Indian companies acquired business abroad with a value of US$ 0. it was revealed that there were 322 completed deals wherein Indian buyers had bought companies in the major developed Developed By-P. Mergers and Acquisitions A significant part of Indian overseas investment has gone into acquisitions abroad.049 proposals amounting to US$ 11. almost 94 per cent of the total outward FDI proposals of US $5. the total number of PE deals during January-November 2008 stood at 295. automatic route covered 99. The number of outbound deals has far exceeded the domestic ones in terms of value break up'.40 billion. with an announced value of US$ 31. Grant Thornton. Proposals in trading covered activities. followed by British Virgin Islands with seven per cent. The remaining was through approval route. 63 per cent of the proposals were in manufacturing sector. in an analysis of deals between developing and developed economies since 2003.94 billion were cleared for investments abroad in JVs and WOSs. trading at 2 per cent and the balance was 'others'.62 billion were for investments. During 2007-08. a global consultancy firm. As per KPMG's EMIAT study. Out of the 15 cross-border deals in November. Within the manufacturing sector. The category of 'others' comprised activities such as. such as real estate development and mining. According to Grant Thornton's Special Advisory Services official. consultancy. which is higher than October 2008 at US$ 2. The most important acquisition has been that of UK-based Axon Group by HCL Tech for about US$ 658 million. Also. Equity accounted for 61. the proposals were primarily in construction. oil exploration. Considering the sectoral pattern. stock-broking and IT-enabled services.2 per cent of the proposals for investment. as against 1. with a total announced value of US$ 10. there were 26 M&A deals with a total announced value of US$ 3.95 billion.000 proposals amounting to US$ 8. Inflows from India's outward FDI amounted to US$ 916 million in FY 2008.11 billion.6 per cent of the proposals. 2. Further. In its latest report.04 billion. A sector-wise break up reveals that 46 per cent of the proposals were in manufacturing.29 were directed towards Singapore. Investment proposals in non-financial services included activities. drugs. trading at 2 per cent and the rest being 'others'.B.4 per cent. during July-September 2008. loans for 11.4 per cent.13 billion and comparatively higher than November 2007 levels at US$ 850 million. During the first half of 2008-09. telecom products and textiles. such as education. involving 96. and guarantees for 27.39 billion during the corresponding period last year. stated that 'The total number of M&A deals during the first 11 months of 2008 stood at 433. shipping. software development.Bhanja . around 23 per cent to Netherlands. Comparing the corresponding quarter of the previous year.

Godrej Consumer Products (GCPL) expanded its presence in the South African market this year by acquiring Kinky hair brand. The company has not divulged the details of the deal. Wehmeyer has a consolidated turnover of US$ 187.71 million and 43 retail outlets. Though the amount of the deal was not revealed. a Germany-based company and Kyowa Pharmaceuticals. in a deal estimated at US$ 340 million. Against this. Lupin Limited had acquired over 30 per cent stake in Generic Health Pty Ltd of Australia. which is a part of the US$ 10 billion healthcare giant Covidien. Africa and the Middle East. Pharma major. • • • • • • • Developed By-P. which is the sixth largest generic drug company in South Africa. Tata Communications.8 per cent of the London-listed firm's shareholders accepted the takeover offer made by the state-owned explorer's overseas arm.Bhanja . there were 340 concluded deals in which companies from developed countries acquired Indian companies. An investment of US$ 15 million would be made to amalgamate the operations of Spize TV and WorldTV.6 million non-resident Indians (NRI) population.9 billion) after 96. Indian apparel sourcing company Techno Life style has bought German retailer Wehmeyer for an undisclosed amount. The joint venture. Among the notable acquisitions are: • Reliance ADAG is acquiring 51per cent stake in UK-based currency exchange and money transfer firm No 1 Currency to foray into the international forex business and to tap into the 1. in its sixth overseas acquisition during the last five years. Al Shuwayer & Sons T&C Company Ltd as local partners. Oil and Natural Gas Corporation (ONGC) has taken control of Imperial Energy Plc for £1. This is the second company acquired by GCPL in South Africa after Rapidol—a marketer of permanent hair colorant—in 2006. over the next 2–3 years. Tata Communications has bought the 30 per cent stake in Neotel that was previously held by Eskom and Transnet. said N Srinath. ONGC Videsh Ltd (OVL). Zydus Cadila has bought Etna Biotech. in 2007. for its European DTH operations. a Japanese firm. The new acquisition will help the company in its efforts at vaccine research and development. DTH company. Crucell. HBL Power Company will have 40 per cent of joint venture equity. Lupin. has bought a majority stake in Pharma Dynamics (PD). after acquiring Hormosan Pharma. An overall investment worth US$ 50 million would be made.3 billion ($1. sources said the deal amounted to about US$ 24 million. will set up a unit to manufacture industrial batteries in the eastern province of KSA at an estimated cost of $28 million. managing director and CEO.B. "This reaffirms Tata Communications commitment to its expansion and investment plans in the emerging regions of Asia. Ranbaxy Fine Chemicals (RFCL) has bought the US-based speciality chemicals major Mallinckrodt Baker. Earlier. named Gulf Batteries Company Ltd. Spize TV.30 economies. HBL Power Systems Ltd is in the process of setting up a joint venture company in the Kingdom of Saudi Arabia (SA) with Advance Electronics Company Ltd (a government partner) and Abdullah H. has acquired France Telecom's European DTH operations called WorldTV Europe. which is a subsidiary of the Dutch biopharma company.

which will be operational by early 2010.63 million (S$ 25 million) in JOil (Singapore). plans to invest US$ 1. The bank already has three branches in the UK and will open one in Birmingham next month. jointly with Bahrain-based Arcapita Bank.Bhanja . UK's second largest auto component manufacturing company. National Aluminium Company Ltd (Nalco) has plans of setting up a US$ 2. Reliance Industries USA has acquired a polyester manufacturing facility in North Carolina for about US$ 12. Systems integrator.2 million from Unifi Kinston. for US$ 24 million. over the next five years. • • • • • Developed By-P. Punjab National Bank plans to expand its operation in the UK. Tanti group of companies. called the Tata Communications Exchange.5 per cent stake in EnPointe Global Services. • Tata Communications (TCOM. has bought Schlegel. The Essar group-owned. a part of the Essar Group. Essar Steel Holdings. around $180 million will be invested in the data centre. It plans to invest US$ 215 million in that company.6 billion for the development of an integrated steel plant. plans to acquire Philippines-based BPO.31 • • Reliance-ADAG is picking up 26 per cent stake with management control in a full-fledged financial services company in Saudi Arabia. Over the next financial year. with a capacity of 2.5 million tonnes. Ruia-owned. • • • • • Major investments India's foreign investments are testimony to the continued growth in the Indian economy and Indian companies.08 billion smelter project at Indonesia. has acquired 80. Of the $430 million. This is Quatrro's sixth acquisition and industry experts peg the deal in the range of US$ 25-30 million. Tata Chemicals will be investing US$ 16. The investment in Asia. for US$ 250 million. Wolverhampton and London. a Chinese wind energy firm. The segment has maintained a 20 per cent growth rate and attracted local and foreign investments of more than US$ 8 billion over the past three years. besides eyeing a US$ 5-million profit from the country's operations. According to Information Technology Industry Development Agency (ITIDA). which is a jatropha seeding company based in Singapore. Quatrro BPO Solutions has acquired UK-based Babel Media. it plans to open additional branches in Manchester. Allied Digital Services.B. IBM Daksh and Firstsource are investing into the Egyptian information and communications technology (ICT) segment. Aegis BPO. PeopleSupport. part of the company's $2-billion capex for FY09-11. Many Indian companies including Infosys. The joint venture partners will invest US$ 2 billion by 2012. earlier VSNL) is investing US$ 430 million for developing a data centre in Singapore and completing its Tata Global Network (TGN)—intra-Asia cable system. a subsidiary of the Nasdaq-listed Enpointe Technologies. has acquired Honiton Energy Holdings. Dunlop India. Indian FDI in Egypt stands at $800 million and is distributed over 200 Egyptian companies. in Minnesota. has been funded through a combination of debt and internal accruals.

ADA Group company Reliance Communications (RCom) plans to set up WiMax networks across 50 countries by 2011. though its subsidiary Volzhsky Abrasive Works. The consortium will be making an investment of US$ 23 million in its first phase of exploration.000 previously. With this agreement. CUMI will globally emerge as one of the biggest producers of silicon carbide and bonded abrasives. has become the first Indian oil company to enter Australia by buying two offshore petroleum exploration blocks.Bhanja . Indian companies would be getting direct access to new and more extensive markets. • • • • Looking Ahead With more mergers and acquisitions. Carborandum Universal Ltd (CUMI). from an earlier cap of US$ 4 billion. HCL BPO is looking for acquisitions of platform-based BPO firms in the US. for any current or capital account transaction or a combination of both. Tata Steel plans to build a plant in Vietnam. Allowing mutual funds to make an aggregate investment to the tune of US$ 5 billion in overseas avenues. Hiking the overseas investment limit from 300 per cent of the net worth to 400 per cent of the net worth in the energy and natural resources sectors. and new products and technologies. from US$ 100.5-million tonne. Indian fertiliser companies are planning to invest around US$ 5 billion in overseas joint ventures over the next three years. Last year.000 per financial year. and the proposed 4. the BPO arm of HCL Technologies had acquired two firms—UKbased Liberata Financial Services • • • • • • • Favourable Policy Changes In a bid to give further impetus to overseas investments. Hiking the limit on overseas portfolio investment by Indian companies from 35 per cent of their net worth to 50 per cent of their net worth. has entered into an agreement with Volgograd region administration in Russia for building a 100.32 • Essar Exploration & Production (EEPL). such as oil. RBI has exempted Indian corporates from seeking prior permission of the Central Government for international competitive bidding (ICB) in forex. Allowing Indian residents to remit up to US$ 200. The first phase of the complex is scheduled to be commissioned by the end of 2010. As part of a 50:50 consortium. Developed By-P. coal and mineral ores.000-tonne silicon carbide fusion plant. Tata Communications plans to invest more than US$ 2 billion by 2011. UK and Australia with revenues of up to $250 million.B. ONGC Videsh (OVL) has won an oil block in Colombia through an auction. gas. US$ 5 billion steel plant would be built through a joint venture with Vietnam Steel and Vietnam Cement Industries. The group will be investing US$ 50 million in the plant. a part of the Murugappa Group. the Reserve Bank of India (RBI) has further liberalised overseas investment norms for both direct and portfolio investment with the following steps: • • Raising the overall limit for overseas investment by domestic mutual funds from US$ 5 billion to US$ 7 billion.

5 per cent of the gross domestic product (GDP).9 per cent in 2006–07.67 million tonnes during 2007–08.5 per cent in 2006–07.B. Food grain production increased to an all-time record level of 230.33 which would enable them to increase their existing customer base and market hold. oilseeds. This would otherwise take years to develop through the organic route.8 per cent of sectoral gross domestic product (GDP) in 2000–01 to 3. Crop Production [Million tonnes] Developed By-P.5 per cent during the 10th Five-Year Plan. Agriculture draws its significance from the vital supply and demand links with the manufacturing sector and is a source of livelihood for the rural population of India. and fish production has been growing over the past few years to reach new levels. more overseas investments by leading Indian firms are on the anvil. In a bid to increase business and strengthen their global presence. The current revival in agriculture sector has been possible mainly due to a number of initiatives taken in the recent years. The production of the kharif crop suffered due to erratic rains and floods. The year 2007–08 was a year of record food grain production and procurement.9 per cent in 2003–04 to 9. the present rabi production is likely to be better and thus the overall food grain production in 2008–09 is likely to be even higher. Similarly. The average growth rate of agriculture and allied sectors during the last two years i. 2006–07 and 2007–08 has been more than 4 per cent as compared to the average annual growth of 2. fruits and vegetables. private sector investment has increased from 8.e. milk. While public sector investment in the farm sector has grown from 1. Agriculture Last Updated: March 2009 [TOP] Agriculture is one of the strongholds of the Indian economy and it accounts for 18.Bhanja ..

which contributes 9 per cent to the GDP.000 metric tonnes in the year beginning October 2008 compared with the 262.1 28. India is the largest producer of coconuts. wheat. Moreover. bananas. ginger. the non-traditional coffee growing areas are in Visakhapatnam and east Godavari districts in Andhra Pradesh. sugar. The report further states that agricultural biotech in India has immense potential and India can become a major grower of transgenic rice and several genetically engineered vegetables by 2010.5 per cent against 6. cotton. the agri-biotech sector in India has been growing at a whopping 30 per cent since the last five years.Bhanja .8 Production India has become the world's largest producer across a range of commodities due to its favourable agro-climatic conditions and rich natural resource base. Developed By-P. issues and challenges". According to a monthly review by the Centre for Monitoring Indian Economy (CMIE). turmeric and black pepper.000 hectares in 2008–09 compared to previous year’s levels. According to a Rabobank report titled "Indian agri-biotech sector: Emerging scenario. the coffee cultivation in non-traditional areas has expanded by 8 per cent to cross 50. fruits and vegetables. The food processing sector. and fishing are likely to see a growth of 4. 96. southern districts in Orissa (bordering Andhra Pradesh) and north-eastern states.7 15. milk and dairy products.2 per cent during fiscal year 2009.8 25. Some of the highlights of advance estimates of the production of major crops are: • India's coffee production is likely to increase by 12 per cent next year to 293. for the GDP of agriculture and allied sectors.000 tonnes forecast for this year.34 Rice Wheat Coarse cereals Pulses Oilseeds Cotton [million bales] Production of major crops increased to record levels this year.B.8 per cent during fiscal year 2009. The allied sectors comprising livestock.4 78. In India. agricultural production is likely to increase significantly and has projected a growth of 3. and is going to be an important driver of the Indian economy. is presently growing at 13. pulses. It is also the second largest producer of rice. and it is likely to sustain the growth in the future as well. cashew nuts. mangoes. forestry and logging.4 40.5 per cent in 2003–04.

India exported about 17. India's natural rubber exports have increased by 38 per cent in the April-July 2008–09. the increase is six per cent. export in value terms could grow by 20 per cent. Cashew exports touched US$ 413. Asia. India's exports of agricultural and processed food products posted a 38 per cent increase in the 2007– 08 fiscal.75 million kg in the same time of the previous year. Jain Irrigation Systems Ltd (JISL). bolstered by an increase in shipments of coarse cereals like maize. In dollar terms. Total exports increased to 23. an increase of 40.35 • The tea production in the country increased from 981 million kg as compared to 945 million kg in 2007. the shortfall is likely to be easily accomplished. The total tea export during January-December 2008 touched 196 million kg compared with 178.000 tonnes of fruits and vegetables in a year has bagged an order worth approx.816 tonnes in the corresponding period of the previous financial year.21 million. Soybean production is likely to touch an all-time high of 12 million tonnes in 2008–09.40 million tonnes of oil meal in the first three months of the current financial year. According to official data. a fruit and vegetable processing company which processes over 350. The total production is expected to cross 1000 million kg this year.16 million from its European customer for supply of dehydrated white onion in 2009. jowar and barley. • • • • • Horticulture Developed By-P. Africa and South America.581 bags of mild coffee during the current coffee year that runs from October to November.125 tonnes valued at US$ 856. • India’s overseas shipments of coffee rose by 9.73 million. APEDA.9 million tonnes valued at about US$ 4.2 per cent during the April-November period of 2008–09.Bhanja . shipments during April-January 2008–09 stood at 372. At present. • Exports According to the government's agri-trade promotion body.000 tonnes of spices. Against the target of US$ 871. Spice exports registered a 17 per cent increase in revenue in rupee value and five per cent in quantity this year compared to last year. around 70 per cent of the country’s agricultural and processed food exports are to developing countries in the Middle East. 20 per cent higher than the previous year. Industry sources believe that for the current financial year. according to the International Coffee Organisation. up 70 per cent from the corresponding period last year. India exported 1. India exported 227.37 billion in the previous year.998 tonnes during April-July as against 14.39 billion in FY 2007–08 against 10.74 million from exports of 425. According to industry experts. US$ 54.5 million tonnes of agricultural and processed foods worth about US$ 6.B. APEDA feels the exports will grow due to higher demand from Asian and African markets that are aggressively procuring relatively cheaper products from countries such as India.000 bags even as global coffee exports decreased by 1 per cent.000 bags of Robusta variety of coffee and 81.6 per cent to 300.

Tanflora. With a two-fold increase in the land already allotted to horticulture. US$ 220. (a cash crop yielding the promise of oil for production of bio-diesel. Around 4. quality upgradation market research and information. Moreover. with an investment of US$ 20. Jatropha is also widely cultivated across the western border of West Bengal. and ginger. from US$ 1.30 million for the development of nurseries in the public and private sectors and increasing productivity of crops. • • Developed By-P. Tanflora is hoping to double it by March 31. Manipur and Meghalaya. Jharkhand. Europe.Bhanja .18 million for a period of over three years to IGPB which will focus on research and development.49 million.B.60 million revenues in 2007–08.36 India is the second largest producer of both fruits and vegetables in the world and the National Horticulture Mission (NHM) aims at doubling horticulture production by 2012.66 million has been earmarked for horticulture development during this year. The Government will allocate US$ 1. The West Bengal Financial Corporation (WBFC) is setting up of small and medium enterprises in sectors such as agro-based businesses and floriculture. Tanflora. Under the NHM. The Indian state of Gujarat is striving to become a horticulture hub. is a equal joint venture between Tamil Nadu state government-owned TIDCO and MNA & Associates. Orissa. Australia. cultivation of the jatropha shrub. the state government now plans to bring in another 20 million hectares. Asia’s largest rose production farm. Middle and Far East countries. domestic and international promotion of Indian wine.000 cultivators in Nagaland and Manipur have taken up jatropha as an alternative crop. chilli.02 million revenue by 2010. It is looking at US$ 8.05 million for the development of organic spices by 2012. The Cabinet has given its nod for establishment of the Indian Grape Processing Board (IGPB) at Pune. In the North-East states of Nagaland. particularly on turmeric. Investments • • India is expected to spend around US$ 14. to foster sustainable development of the wine industry. and across Chhattisgarh.22 million for 2008–09. The Horticulture Department of Andhra Pradesh Government has announced an action plan for 2008–09 with an investment of US$ 152. Its production is expected to touch 25 million roses during the current year (12 million in 2008). 2009. grown primarily in wastelands) is becoming increasingly popular. is the first project to be declared as the country’s agri-export zone for cut roses. which has marketing tie-ups with major importers and auction centres in Japan. It plans to give up to a total of 5 per cent equity to jute farmers in the region. Andhra Pradesh Jute Development Centre Ltd (APJDC) will be setting up a jute park spread over 150-acre land in Visakhapatnam. It has sanctioned about US$ 43.

A weather-based agricultural insurance scheme is rolled out across select districts in 12 states during the Rabi season. family-run agro solutions company attracted US$5 million from ePlanet Ventures in December. This will provide a major boost to the bio-diesel sector. the government has given a US$ 12. food processing. Mahindra ShubhLaabh Services (MSSL). Allowing private sector companies engaged in business of warehousing or transport of food grains in procurement operations on behalf of the Food Corporation of India (FCI). • • • According to a recent report by research firm Four-S Services. crop protection.51 million in castor oil maker.B. Biotor Industries. has opened up opportunities for private equity (PE) players to invest in various areas including agri-biotech and seeds. • The Mahindra & Mahindra (M&M) group’s agri-business initiative.Bhanja . remove middlemen and ensure lower prices for end-consumer. Construction of seven Modern Terminal Markets with modern infrastructure facilities that will help farmers realise maximum returns for their produce. integrated cold chain management and logistics and distribution. to irrigate an area of 1. Blackstone invested US$ 50 million in Hyderabad-based Nuziveedu seeds. through its Asia fund. Giving a nod to the National Policy on Biofuels under which India will aim to raise blending of biofuels with petrol and diesel to 20 per cent by 2017. • • • Developed By-P. has tied-up with the Netherlands-based HZPC. Tata Chemicals has firmed up plans to set up a manufacturing plant for customised fertilisers at Babrala in Uttar Pradesh. Chennai-based Sree Ramcides. the lack of big integrated players in the agri-business. one of the largest hybrid seeds companies in India. Government Initiatives Government has been taking various progressive measures to accelerate the growth of this sector. Morgan Stanley picked up a minority stake for US$ 36. It has also approved the setting up of National Bio-fuel Coordination Committee and Bio-Fuel Steering Committee. who saw potential in this space on the back of strong demand and the sector's insulation from the credit-induced economic crisis in the West. • Agro-based companies In 2008.37 • The Andhra Pradesh government has sanctioned US$ 773. Indian agro-based companies attracted a host of private equity players.22 million acres in the drought prone areas of the Telangana region. a 36-year old. the world’s largest seed potato supplier. organic farming.23 billion waiver of farm loans. The company will invest close to US$ 10.02 million in this facility having a production capacity of 20 tonne per hour.68 million) for the Pranahita-Chevella Lift Irrigation Scheme. Some of the recent initiatives taken by the government include: • • In the 2008–09 budget.

to allow farmers to directly sell their produce to the buyers. • • • Road ahead Agriculture is set to play a more dynamic role in the economy.2 per cent in 2003–04 to 16 per cent for the 11th Plan.38 • The government has already approved 60 Agricultural Export Zones (AEZs). respectively by the end of the 11th Plan. The Rashtriya Krishi Vikas Yojana was also launched in 2007. Agriculture credit is likely to touch US$ 49. Under this the States are being provided with US$ 5. 8 million tonnes and 2 million tonnes. In the 2008–09 budget.B. services related to agro and allied sectors have been thrown open to 100 per cent foreign direct investment (FDI) through the automatic route.01 billion over the 11th Plan period for investment in various projects based on local requirements. It aims at enhancing the production of rice.1 million worth of funds under a scheme called Assistance to States for Infrastructure Development of Exports. the government has taken many steps to aid the growth of the sector and focus on the achievement of self-sufficiency in food grains. Exchange rate used: 1 USD = 49.05 billion in 2008. wheat and pulses by 10 million tonnes. four zones have been identified to provide US$ 12.Bhanja . The Government will provide an additional US$ 6.90 INR Developed By-P. A progressively larger number of states have been amending their Agricultural Produce Marketing Committee (APMC) Act.51 million over the 11th Plan (2007–2012). Significantly. Besides. The National Food Security Mission was launched in 2007. and agriculture share in total investment is up from 10.17 billion for new farm initiatives launched by states to double the growth rate in agriculture to 4 per cent over the 11th Plan period. with an outlay of US$ 979. with the government's increased focus on the sector. along the lines of the Model APMC Act.

39

Manufacturing
Last Updated: January 2009 [TOP]
Along with this, India offers abundant engineering and technical manpower, producing annually about 400,000 graduate engineers. Moreover, according to a study by ASSOCHAM, India will emerge as the fourth strongest economy among the G-20 countries after China, Russia and South Korea from the global crisis, given its robust forex reserves, high GDP growth rate and various fiscal and monetary measures taken to tackle the downturn.

Global Manufacturing Exports Hub
According to a CII-Mckinsey report, manufacturing exports could increase from US$ 48 billion in 2003 to US$ 300 billion in 2015, simultaneously increasing India’s share in world manufacturing trade from 0.8 per cent to 3.5 per cent. According to a report by KPMG titled 'Manufacturing India @ 75’, Indian manufacturing should aim for a five per cent global share by 2022. The report envisions India at the forefront of global manufacturing and trade of goods, a leader in skill-intensive sectors and a global hub of research & development (R&D) and design.

Developed By-P.B.Bhanja

40 Going Global
Indian manufacturers, with the tremendous expertise gained in the domestic market, are spreading their wings to reach out to global markets. Indian corporates have been busy taking aggressive steps through both acquisitions and Greenfield investments abroad. All these initiatives are likely to boost brand India in the global arena. Bharat Forge after multiple acquisitions has emerged as the world's second-largest manufacturer of axle beams, crankshafts, and other forged auto components. Similarly, Tata Steel after the acquisition of Corus has become the fifth largest steel producer in the world. Suzlon is the world's largest wind turbine generator (WTG) manufacturer. Ranbaxy Laboratories, India's largest pharmaceutical company, manufactures generic drugs in 11 countries, distributes and markets them directly in 49, and counts on foreign markets for 80 per cent of its revenue.

Government Initiatives
The Government has taken several initiatives to accelerate growth in this sector and improve competitiveness of Indian industry in general and manufacturing in particular: • • • • • • • Implementation of technology upgradation schemes for various sectors such as small scale industries, textiles, food processing among others. Implementation of industrial infrastructure upgradation programmes on cluster basis. Easier access to inputs at competitive prices and rationalisation and reduction in duty rates. Encouragement to foreign technology collaborations and liberalisation of FDI in manufacturing activities. Launch of 'Visionary Leadership in Manufacturing’ programme to generate 300 visionary leaders in manufacturing in the next three years. Implementation of Special Economic Zones Act. Starting the construction of Delhi-Mumbai Industrial Corridor in cooperation with Japan External Trade Organisation (JETRO).

To further encourage manufacturing growth, the government plans to set up Manufacturing Investment Regions (MIRs) on the lines of Petroleum and Petrochemicals Investment Regions (PCPIR).

Looking Ahead
According to the response of more than 340 of the world's largest international manufacturing companies from Europe, Americas and Asia Pacific in a study by global consultancy major, Capgemini, India is set to threaten China as the world's backyard for manufacturing in the next three to five years. It says companies are planning to offshore manufacturing activities primarily to India that will surpass its IT and BPO activities.

Developed By-P.B.Bhanja

41

Infrastructure
Last Updated: January 2009 [TOP]
The key to sustaining India's growth rate during a global meltdown lies in developing India's infrastructure. Keeping this in mind, the government is targeting an investment of US$ 20.38 billion over the next two years in the infrastructure sector. The scheme aims to take up infrastructure projects under public-private partnership with minimal private investment. The government has asked the Infrastructure Investment Finance Company Ltd (IIFCL) to put together a corpus of over US$ 8. 15 billion for this purpose. This is in addition to the US$ 320 billion that the government plans to invest for the upgradation of ports, railroads, highways and airports over the next 15 years.

Ports
The government has identified 276 projects entailing an investment of US$ 12 billion. These include development of new berths, expansion and upgradation of existing berths, deepening of channels, equipment modernisation and upgradation of rail and road connectivity. According to the Planning Commission, there is an investment opportunity of US$ 25 billion by 2011-12 in India's shipping and ports sectors, as the country seeks to

Developed By-P.B.Bhanja

04 billion has also been allocated during 2007-08 for the development of state roads. Of this amount. throughput enhancement on high density network routes. registering a 21 per cent increase over the previous year. This translates into an additional annual investment of roughly US$ 40 billion.000 million tonnes and non-major ports to 500 million tonnes capacity). shipping and inland waterways are likely to present a US$ 11. Segment-wise. the government has already taken many proactive measures like opening up a number of infrastructure sectors to private players. US$ 1. For this. modernisation of the railways.86 billion had been provided for the national highways and for state roads.Bhanja . a massive US$ 494 billion of investment is proposed for the Eleventh Plan period (2007-12).91 billion. The plan envisages enhancement of rail capacity.500 million tonnes (major ports capacity to 1. while the ports se ctor would provide a US$ 13.75 billion investment opportunity. an amount of US$ 1. Railroads The Indian Railways has taken up the most ambitious ever annual plan for fiscal 2008-09. An amount of US$ 0.5 billion is for national highways and US$ 0.66 billion including US$ 163. Airports The government plans to attract private players through public-private partnerships (PPP) for the development of over 300 airports and airstrips.33 million to be provided from the Central Road Fund.42 double its ports capacity to 1.25 billion investment opportunity.B. The Civil Aviation Ministry plans to develop 35 Greenfield airports across India by 2010 with an investment of US$ 35 billion for the proposed airports. Roads During 2007-08. traffic facility works and expansion and development of the network. which would increase the share of infrastructure investment to 9 per cent of GDP from 5 per cent in 2006-07. and introducing model concession agreements. entailing an enormous investment of US$ 7. The plan includes a total budgetary support of US$ 1.000 MW Developed By-P.36 billion for state roads. Some of the projects planned during the Eleventh Plan period include: Electricity • Adding power generation capacity of about 70. permitting foreign direct investment (FDI) into various sectors. Growth Potential According to the consultation paper circulated by the Planning Commission.

Building 3 airports in North East. 65. Airports • • • Upgrading 4 metro and 35 non-metro airports. Upgrading CNS/ATM facilities.000 km of national highways to two lanes Developing 1. in the North East Rural Roads Constructing 1. 92. National Highways • • • • • • Six-laning 6. Developed By-P. gauge conversion of over 10. 345 million metric tonnes (MT) in minor ports.464 km covering 78. with 200 million rural telephone connections.Bhanja .B. Irrigation • Development of 16 million hectares through major.244 km of new rural roads.736 km on North-South and East-West Corridors Four-laning 12.109 km of national highways Widening 20.000 km. including 3.737 km of roads. Upgrading 21 railway stations. Telecom and IT • • Reaching a telecom subscriber base of 600 million. and renewing and upgrading existing 1. medium and minor irrigation works. Attaining a broadband coverage of 20 million and 40 million internet connections.846 km of national highways. 10. Ports Capacity addition of 485 million metric tonnes (MT) in major ports. Introduction of private entities in container trains for rapid addition of rolling stock and capacity.43 • Providing electricity to all un-electrified hamlets and all rural households through the Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY).000 km of expressways Developing 8.500 km of Golden Quadrilateral and selected national highways Four-laning 6.300 km of new railway lines.304 rural habitations Railways • • • • Constructing dedicated freight corridors between Mumbai-Delhi and LudhianaKolkata.

Moreover. Total public sector investment is expected to be around US$ 296.500 acres at an estimated cost of US$ 1 billion are expected to be functional by 2012. Private investment is expected to account for over 65 per cent of total investment in telecom. with cargo terminals and rail lines. The central public sector enterprises in infrastructure sectors have also recorded a 32.11 billion.B. It will divert 160 TMC of water from the Pranahita river to an area of 12.59 billion. 74 billion in infrastructure projects.67 billion.04 billion for 2008-09 over 2007-08.10 million modernisation programme to boost its irrigation potential. The Power Grid Corp has cleared US$ 2. Kolkata will be getting an underwater rail connection with the extension of the Kolkata metro to its neighbouring city Howrah.Bhanja . the World Bank has said that it will lend US$ 14 billion to India by 2012 for infrastructure development. a major power plant and three cement factories. Sical Logistics is planning an investment worth US$ 358. 41 million of National Highway Development Programme. Singapore-based Universal Success Enterprises Ltd (USEL) has signed three pacts with the Gujarat government to invest US$ 17. Major Investments Total investment in infrastructure during the Eleventh Plan period is estimated to be around US$ 494. The Reliance Anil Dhirubhai Ambani Group (ADAG) has signed three accords worth US$ 2.95 billion is expected to be invested by the state governments. through a tunnel under the Hooghly river. Spending by the centre is expected to amount US$ 166. seaports and mixed-use industrial and urban development as focus areas in India.71 million for the development of a nation-wide multi-modal logistics network.000 acres in the drought-prone areas in the Telangana region.69 per cent jump in their planned investments to US$ 37. USEL has identified thermal power generation. • • • • • • Developed By-P. The project will connect Howrah and the information technology suburb of Salt Lake. the Indian logistics industry is expected to grow at 15 . while US$ 128. The Andhra Pradesh government has announced a US$ 787. Tamil Nadu and Andhra Pradesh. ports and airport sectors during the Eleventh Plan. Madhya Pradesh. The investments would be made for building a port jetty in Saurashtra.43 billion.44 According to a report by Cushman and Wakefield.20 per cent per annum to touch US$ 385 billion by 2015. Some major investments include: • The Cabinet Committee on Economic Affairs has approved six highway projects worth US$ 977. 110 logistics parks across 3. covering 639 km across Orissa. and would cost approximately US$ 1.20. The investment entails a common scheme for network for all the four regions.23 billion as investment in a range of projects in the current fiscal.14 billion with the Gujarat government. Maharashtra. Around 45 million sq ft of warehousing space will be ready in the next four years.

ports and other infrastructure projects are allowed to bring in from overseas.25. As per the new package. the limit was US$ 50 million. the Airport Financing Plan. The current scheme covers only villages with a population of 1.000 people and hills and tribal areas with 500 residents. Out of the total projected investment of US$ 301.53 billion would be spent entirely towards improvement of rural infrastructure. exploration and refineries sectors to bring in up to US$ 500 million in external commercial borrowing (ECB).26 billion to construct a 1.37 billion to be incurred by the centre and the states in the Eleventh Plan.000 villages and to 23 million households. providing drinking water to 55. Bharat Nirman. Vedanta Resources Group's subsidiary. the finance ministry has modified norms to permit companies in the mining. The Road Ahead The Eleventh Plan targets a growth rate of 9 per cent with emphasis on a broadbased and comprehensive approach that would lessen inequalities across regions and communities and improve the quality of life for all. and hills and tribal areas with a population of 250 or more people will be provided with roads.802 habitations with all-weather roads. Bharat Nirman targets providing electricity to the residual 1.02 billion under the existing Bharat Nirman programme. and the National Maritime Development Programme and the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) are efforts in the same direction. Mangalore.822 villages with telephones. for the improvement of India's rural infrastructure. all villages with a population of 500 or more people. The government is also likely to announce a new package for rural roads by providing an additional US$ 1.Bhanja . Earlier. Further. the ministry has stated a five-fold increase in the figure that companies building roads. Sterlite Energy. US$ 85.B.067 uncovered habitations. Given these initiatives. constructing 1. Ennore and Cochin. Developed By-P.185 km of new rural roads network.45 • Steel Authority of India (SAIL) and Larsen & Toubro (L&T) have signed a Memorandum of Understanding (MoU) for setting up a joint venture (JV) company to develop captive and independent power plants. the Indian infrastructure story will continue its successful run in the years to come.46. connecting the residual 66. over the next 10 years.980-megawatt (MW) thermal power project in Punjab. Tuticorin. Southern Railway is planning an investment of around US$ 137. • • Investment in Rural Infrastructure Improvement in rural infrastructure is one of the chief indicators of a nation's development and the government has started a special programme. and providing irrigation to an additional 10 million hectares besides connecting the remaining 66. is planning to invest US$ 2.35 million for port connectivity projects at Chennai. To enhance liquidity and check depreciation of the rupee. Initiatives such as the National Highways Development Programme (NHDP).

and would be through public-private partnerships.Bhanja . with major ports handling about 74 per cent of the total sea-borne traffic.0422 INR Ports Last Updated: January 2009 [TOP] The Indian coastline is dotted with 12 major ports and 187 minor ports. By 2012. and Kochi port will soon emerge as a transhipment hub for India. the Indian government targets increasing the cargo handling capacity of major ports by two folds to reach 1. The construction work Developed By-P. with around US$ 1. A majority of the country's international trade is carried out through maritime transport.5 billion metric tonnes (MT). Further. The Indian government has set up the National Maritime Development Plan (NMDP) to improve facilities at India's 12 major ports and it plans an expenditure of around US$ 12. According to Crisil research estimates. Jawaharlal Nehru. ports will grow by 160 per cent over the 2007–08 and 2011–12 period. will be seeing a massive expansion and upgradation drive. Under the plan.46 Exchange rate used: 1 USD = 49. India's foremost container port. The investments to achieve this would be around US$ 25 billion.78 billion slated for the development of port infrastructure. the first phase of the international container transhipment terminal (ICTT) project at Vallarpadam is likely to be completed.4 billion. including the deepening and widening of its main navigational channel.B. by November 2009. over the next five years.

the total cargo traffic handled by the 12 ports during April–September 2008–09 has been 261. These include development of new berths. This projected increase in port traffic will in turn necessitate capacity expansion of the ports.63 MT in 2006–07 to 1008. This will make Kochi an important shipping centre. Non-Major Ports Developed By-P.B.14 MT in the corresponding period last fiscal. deepening of channels. 276 projects entailing an investment of US$ 13.47 for the first phase of the international container transhipment terminal (ICTT) project is rolling speedily at Vallarpadam. The container trade went up to 7. driven by a buoyant world economy and high growth in merchandise exports. Container throughput at India's 12 major ports increased by 19.73 MT as against 244.2 million TEUs by 2007 from 2. the Indian port traffic is estimated to grow at the rate of 10–12 per cent per annum during 2007–12. exhibiting a growth of 12.78 MT handled in 2006–07.556 TEUs. expansion and upgradation of existing berths. If the current growth rate of 19 per cent is maintained.60 million TEUs (TwentyFoot equivalent Units) in the 12 months till March 2008. Navi Mumbai's Jawaharlal Nehru port (Nhava Sheva) handled 4. according to a study by ICRA. which was above 61 per cent of the overall throughput. India is also likely to emerge as a major destination for container operations.24 million tonnes (MT) of cargo in 2007–08. India's container throughput is likely to reach 21 million TEUs per year by 2016. The liberalisation of the economy has lead to a rapid growth of the container trade.06 million TEUs.03 per cent year-onyear for the fiscal year 2008.5 per cent over the past three years.94 per cent over 463. establishing it as India's largest and busiest port. Already. India’s overall container traffic posted a year-on-year growth of 19 per cent during the 2007–08. with the throughput touching 6.7 million TEU at its ports. During April to June 2008.47 million TEUs in 2000. Cargo throughput at the 12 ports has been rising by a compound annual growth rate of 9.Bhanja . equipment modernisation and upgradation of rail and road connectivity. The 12 major ports handled 6.95 MT by 2012. Port Traffic According to the Indian Ports Association. container throughput at Indian ports totalled to 1.056. Further. Container throughput at Jawaharlal Nehru port increased by 23 per cent year-onyear. reducing India’s dependence on foreign ports for transshipment. Further.18 per cent year on year. The overall port traffic at both major and minor ports are estimated to grow from 588. an increase of 11.70 billion have been identified. the 12 major ports together handled a total of 519.

is projected to rise to 839. the government has already decided to develop two international size shipyards for which the modalities are being finalised with the respective State Governments. It is estimated that the strong demand for cargo ships—coupled with the inability of market leaders China.4 per cent in 2007.2 per cent in the global shipbuilding market. India's share in global shipbuilding is expected to be around 15 per cent." He also said that his Ministry is making efforts to restructure the taxes and fiscal structure to remove the bottlenecks being faced by the shipbuilding industry. Road Transport and Highways. 49.60 million to US$ 778. several states have drawn up major capacity expansion plans to meet the expected surge in port traffic over the next five years. both existing and new ones such as Mundra. The Union Minister of Shipping. According to a FICCI report.7 billion in minor ports. as per a report prepared by I-Maritime Consultants. Moreover. Shipbuilding India presently finds a place among the leading shipbuilding nations in the world with a share of 1. Developed By-P. Furthermore.90 million in the last five years. Japan and South Korea to meet requirements—has propelled the flow of jobs to India.15 mtpa in Tamil Nadu. "We have already held interactions with the stakeholders and are formulating a new modified Shipbuilding Subsidy Scheme and would be circulating our proposal for comments of appraising agencies and Ministries very soon. Pipavav and Kakinada.B. Under the NMDP.31 MT during the 11th plan (2007–2012). 28.Bhanja . 55 mtpa in Orissa and 46 mtpa in Karnataka among others. 92 mtpa in Andhra Pradesh. by 2020 from 0.16 MT a year from the existing 228. the Investment Commission expects an investment of US$ 7. The Indian ship building industry comprising 27 shipyards including eight public sector and 19 private sector shipyards is on a roll driven by the booming maritime trade. Further. Moreover. the ship building industry has witnessed an unprecedented growth in demand for building new vessels which has led to a 359 per cent increase in the turnover of shipyards from US$ 216. The cargo handling capacity of India's non-major ports. By 2012. 104 mtpa in Maharashtra. Mr T R Baalu has said.9 mtpa in Kerala. it is likely to corner around 3 per cent of the global share with an annual turnover of US$ 3.48 India has 187 non-major or minor ports which come under the jurisdiction of the respective state governments.72 billion. These include 214 mtpa in Gujarat. The share of non-major ports in cargo traffic has increased from less than 10 per cent in 1990 to the current level of 26 per cent. the shipping industry is to be developed under a Special Economic Zone (SEZ) approach to set up ancillary industries next to shipyards. The closure of yards in Europe and other developed regions has given Indian shipbuilders an opportunity to capture a higher share of the international shipbuilding market.

while ports sector would provide an US$ 13.25 billion investment opportunity. • Larsen and Toubro Ltd has chosen Kattupalli port. Gujarat Shipbuilding. Gujarat-based Adani group is setting up a ship building and repair yard at a cost of about US$ 212.98 million. • Developed By-P. Key shipping companies. along with top-class management. This includes major investments by the Dredging Corporation of India at US$ 102. SCI has placed orders for 32 ships worth US$ 1. while Essar has ordered 12 ships worth US$ 630 million.58 million. a leading private shipyard. Mundra. • In the annual investment plan for ports during 2008–09.97 million megashipbuilding yard.000 MT and nonmajor ports to 500 MT capacity). have already placed orders worth US$ 3. the Pawan Kumar Ruia Group. many shipbuilders like ABG. in Thiruvallur district. Investments in Indian Ports According to the planning commission there is an investment opportunity of US$ 25 billion by 2011–12 in India's shipping and ports sectors. These. apart from skilled welders and fitters. such as Shipping Corporation of India (SCI). Great Eastern (GE) and Essar.225 million tonnes by 2013–14. are expected to be the growth drivers of the Indian shipbuilding industry. Dolphin Offshore. The ships are to be delivered during 2009–12. Segment-wise. the total projected investment is worth US$ 756 million. Larsen& Toubro. Private investment is in sharp focus with port capacity expected to double from 660 million tonnes in 2005–06 to 1.70 million. India has world-class naval engineers and architects. shipping and inland waterways are likely to present an US$ 11.500 MT (major ports capacity to 1. and will be further welcoming bids for its US$ 3 billion order of 40 ships. As per Industry reports. has decided to set up a greenfield shipyard in south Gujarat with an investment of US$ 255. GE has placed an order worth US$ 780 million for 14 ships. 40 per cent of Indian fleets will have to be replaced over the next 4–5 years in order to comply with the International Maritime Organisation's (IMO) regulations.B.75 billion investment opportunity. Bharati. as the location to build the over US$ 425.3 billion for 58 ships in Korea and China.06 million and Sethusamudram Corporation at US$ 326. Mercator Mech Marine and Startek Marine among others are lining up huge investments into this segment.87 billion. The new shipyard will be set up over 300 acres. Buoyed by this estimated surge in demand. as the country seeks to double its ports capacity to 1. near Chennai.49 The labour cost per worker in India being comparatively lower. • • Indian shipping companies are bullish on their expansion plans. Pipavav. ABG Shipyard.Bhanja .

Kochi. which will be setting up a seaport on the eastern coast. According to Crisil research estimates. 63 million for the dredging of a 14.50 • Jurong Port Authority of China has firmed up plans to set up a greenfield port on the east coast with Sical Logistics.48 million.B. eight infrastructure sectors.000 TEUs by December 31. The port project is estimated to cost about US$ 2. (a joint venture between Royal Dutch Shell and French oil major Total)." • • • • • • • • • • • • Eredene Capital Plc. will be developing its present liquefied natural gas (LNG) import terminal in Hazira (Surat) into a US$ 500 million multi-cargo port. Maruti Suzuki India Ltd (MSIL) and Mundra Port and Special Economic Zone Ltd (MPSEZL) signed an agreement for a mega car terminal. The Irish Port Authority is likely to invest in Jaigarh Port in Maharashtra.Bhanja . will be acquiring 24 per cent equity worth US$ 204.06 billion. Norddeutsche Landesbank. The international container transhipment terminal (ICTT) project. Hazira Port. Ltd. or KPCL. a UK-based company will be investing US$ 7. are expected to draw more than US$ 330. The 3i Group has also sought India’s Foreign Investment Promotion Board’s (FIPB) approval to invest a further US$ 165.30 billion investment in India over the 2007–08 and 2011–12 period. German bank.88 million (€600 million) from Indian companies in core sectors including shipping. Concor is also looking to build the Marauli port in Gujarat.10 billion to create additional capacity and infrastructure projects through the public-private partnership (PPP) mode by 2012. AllCargo Global Logistics. being developed at Vallarpadam. The Port of Rotterdam Authority. expected to be completed by December 2008 and we intend to construct container yards for supporting container cargo volume of additional 670. at Mundra in Kutch district of Gujarat. expected to be operational by December 2008.000 TEUs a year.34 million in a new Container Freight Station (CFS) near the Ennore port. 2009. has firmed up plans to set up two greenfield ports on both coasts of the country for an estimated investment of US$ 425.52 million in KPCL. will be the largest single player among the container terminals planned in India and the first to operate in a SEZ in India. Developed By-P. a multi-modal logistics service provider. including ports. Further. 3i Group Plc. Gujarat Pipavav Port Ltd (GPPL) would be investing a further US$ 53. according to Philip Littlejohn.97 million. Tuticorin Port Trust (TPT) is planning to invest US$ 1. UK-based Investment Company. "We have presently undertaken construction of an additional container yard to support a container cargo volume of 600. The initial investment is pegge d at US$ 21.82 million at Krishnapatnam Port Co. which manages Europe's biggest port—The Port of Rotterdam—plans to set up a company in partnership with a local private firm to manage ports in India. involving an initial investment of US$ 319. Managing Director of GPPL.29 million.5-metre draft to enhance accessibility to the port. has business worth US$ 843. Container Corporation of India (Concor) is eyeing offshore business opportunities to tap offshore businesses by securing ports and shipping facilities. Public sector logistics major.

Tariff Authority of Major Ports (TAMP) regulates the ceiling for tariffs charged by major ports/port operators (not applicable to minor ports). and is investing US$ 639.B.30 million. Increasing the rail connectivity of ports with the domestic market.45 million will be invested in the first phase. jetties. With the target of completing the programme for ports and shipping sector under the National Maritime Development Programme (NMDP). India's ports are likely to increase cargo handling capacity to 1. 100 per cent income tax exemption is provided for a period of 10 years for port developmental projects. with an investment of about US$ 20. Setting up a deep draft port in West Bengal with the facility to receive vessels requiring a minimum draft of 17 metres. and US$ 11. VTMS system. improve service quality and promote competitiveness.33 billion has been allocated for the same. The projects are likely to be developed in three phases over a period of five years and US$ 412. Government Initiatives The Indian government has prioritised the expansion and modernisation of ports as part of its initiatives in the upgradation of India’s infrastructure.61 billion. Ports will be now able to invest around US$ 103. 100 per cent foreign direct investment (FDI) under the automatic route is permitted for port development projects.51 • Oceanic Shipyard Limited (OSL). The Gujarat government has taken new initiatives for the Sagarkhedu programme (launched for the all round development of the coastal areas) to develop ship-building/repairing yards. 33 million in the two projects. The Ministry of Shipping is launching 10 major expansion projects in 2008–09 at an estimated investment of US$ 1. A further investment of over US$ 9. Developed By-P. increasing cargo handling capacities of the ports is crucial to India. • A comprehensive National Maritime Development Policy has been formulated to facilitate private investment. is likely to commission its ship building yard and oil rig manufacturing unit in Orissa by early 2011.Bhanja . training and introduction of new marine courses and implementation of schemes relating to RO-RO ferry services at 22 coastal areas of the state. Government has opened up all the areas of port operation for private sector participation. a 50:50 joint venture company by Apeejay Shipping Limited and Mumbai-based Bharti Shipyard Limited.03 million from the present US$ 10.07 billion will be made for 111 Shipping Sector Projects by 2015. Private firms are likely to invest about 65 per cent of this amount. • • • • • • • • • Looking ahead Traffic at the ports has been growing at a brisk pace and therefore. as foreign trade expands. To meet this demand. the Ministry of Shipping is considering raising the cap on new infrastructure investments made by major ports from their own reserves by 10 times.855 million tonnes (MT) by 2012 from the present 758 MT now. private ports. captive jetties.06 billion with 60 per cent of investments allocated for the Chennai mega container terminal.

70 million tonnes (MT) to be handled at major ports by 2011–12. During the previous five-year-plan period.41 MT would be needed.Bhanja . the Ministry of Power plans to electrify 120." Under the Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY). 53. Though the Indian shipbuilding industry is still in a budding stage it is estimated to corner a share of about 3 per cent with an annual turnover of US$ 3.B.000 villages in the current Five Year Plan (2007–12). The target for this fiscal is 50 lakh households.88 billion for providing electricity connections and for the distribution of infrastructure to the rural household.710997 EUR Power Last Updated: January 2009 [TOP] As the Indian economy continues to surge ahead. "A subsidy of US$ 5. Power Minister. Exchange rate used: 1 USD = 48.2835 INR 1 USD = 0. Therefore an additional capacity of around 403 MT has to be built up by 2011–12. it is estimated that capacity of about 800.52 To achieve the projected traffic target of 615.000 villages have been electrified and by 2012 everyone will get electricity. It has earmarked a total capital subsidy of US$ 6. This fiscal. The demand for power is growing exponentially and the scope of growth of this sector is immense. Rural Electrification Corporation (REC) is the nodal agency for the implementation of RGGVY. its power sector has been expanding concurrently to support the growth rate. we got a subsidy Developed By-P. the government has already provided electricity connections to 18-lakh below-the-poverty-line (BPL) households.84 billion has been provided for the XIth plan period for rural electrification. Sushil Kumar Shinde has said. The government targets providing electricity for all by 2012. against the current capacity of 397 MT. "So far.71 billion by 2012.

Montek Singh Ahluwalia." Chairman and Managing Director.96 MW at the end of 2001–02 to 145. said.B. Nuclear energy makes up the balance 2.372 ckm at the end of March 2012. respectively. grown thrice over. P Uma Shankar Shankar. will help strengthen the company's assets which have grown 10-fold to US$ 8. according to the Deputy Chairman of the Planning Commission. The bank has been contributing effectively in the transmission sector in India and largely to the development and strengthening of the Power Grid Corporation of India.6 per cent of the total installed capacity. and will be executed over the next 6–7 years. 88 million. • Bharat Heavy Electricals (BHEL) has got an important contract from Sultanate of Oman to develop a series of 126 mega watt gas turbine generators for the power projects planned by the Petroleum Development Oman (PDO). Rural Electrification Corporation (REC). Within this group.9 per cent. The World Bank has sanctioned a US$ 400-million loan to India's Power Grid Corporation.554.9 billion and revenues eightfold to US$ 1. Developed By-P.97 MW at the end of September 2008.3 per cent.120 MW of power. 10. • Capacity India's total installed capacity of electricity generation has expanded from 105. India ranks sixth globally in terms of total electricity generation. Presently. India has a capacity of about 145.76 MW.53 of US$ 1.57 MW of electricity. India will be adding 11. Crompton Greaves.64 MW of electricity.089 ckm at the end of 2006–07 and are further expected to expand to 293. Besides thermal and hydel power.3 billion.Bhanja . has plans to buy US or Europe-based manufacturers of power and industrial systems. Now many Indian power corporations are leaving global footprints.045. Simultaneously. Source-wise.7 per cent to the total power generation in the country producing 12. During the same period.5 per cent and 0.04 billion. a power solutions provider. This loan.194. gas and oil-based thermal power plants account for 53. The business is likely to be worth US$ 412. coal.642 circuit km (ckm) at the end of 2001–02 to 198. the fifth since 1993.347. renewable energy sources contribute 7.9 per cent contributing 4. thermal power plants account for an overwhelming 64. the total transmission lines network has been growing at a robust pace to expand the transmission network.600 MW.892. accounting for 24.000 megawatts of power generation capacity by March 2009.7 per cent of the total installed electricity generation capacity. Hydel power plants come next with an installed capacity of 36. the company's transmission networks have in fact. In fact. Total transmission lines have increased from 150. producing 92. Further.

With a targeted gross domestic product (GDP) growth rate of 8–10 per cent and an estimated energy elasticity of 0. MW %age 76.4–8 per cent. This.000 MW in the 11th Five-Year-Plan (2007–12). India's energy sector will require an investment of around US$ 120 billion–150 billion over the next five years.312 MW are currently being implemented.Bhanja . projects worth 63.470. according to a JP Morgan estimate. India's energy requirement is expected to grow at 6.81 Nuclear Power Generation Subsequent to the Indo-US nuclear deal and India getting clearance from the Nuclear Suppliers Group (NSG).5 1. The projects currently being implemented include 32 coal blocks having total extractable reserves of 9. would come up in the 11th Plan. India will now also be partnering several countries for nuclear fuel technology projects. Developed By-P. nuclear power generation is likely to throw up an opportunity of US$ 10 billion in the next five years.177 MW are in the private sector.50 billion.916 million tonnes (MT). 2008) Sector State Sector Central Sector Private Sector Total Source: CEA Growth Potential According to a report by KPMG and CII. Further.57 52.54 Total Installed Capacity (As on October 31.000 MW power. 18. and having the capacity to feed 29.05 13. implying an almost five-fold increase in India's energy requirement in the next 25 years. for the generation of 15. according to the Planning Commission estimates.0 22246.000 MW. Consequently. does not include captive generation projects.035. and projects whose benefits will be taken into account during the 12th plan period (2012–17). however.99 34. These have been allotted to various state and central public sector units and Independent Power Producers (IPPs).423 MW from the earlier estimate of 78. Of the earlier projected capacity of 78.8 per cent.B.752. Of these. up by 11.577 MW. The government has revised its target of power capacity addition to 90.46. such as the three ultra-mega-power projects.5 48. renewable projects (RE) projects worth US$ 16.577 MW to sustain the growth momentum of the economy. there is a need to increase the electricity generation capacity to sustain the growth momentum.

transmission. The government has also taken up some ambitious programmes like the Ultra Mega Power Projects (UMPP). and distribution companies for better transparency and accountability.B. Deregulation of the ancillary sectors such as coal. NPCIL will be developing a series of nuclear reactors with capacities between 1. Under the newly formulated CERC tariff guidelines for 5 years (2009–14) a 'special allowance' can be availed of by any thermal generating station if it • • • • • • Developed By-P. including a pact on civil nuclear cooperation. Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY). • • • Introduction of the Electricity Act 2003 and the notification of the National Electricity and Tariff policies. 2008. three fast breeder reactors and one advanced heavy water reactors by early 2009. became the first country to sign a civil nuclear agreement with India. As part of the Eleventh Five-Year-Plan. is likely to undertake 6800 MW of planned future projects which would translate into orders of US$ 10 billion over the next five years. Thorium Power. The sites for the same have already been identified. Allowing foreign equity participation up to 100 per cent in the power sector under the automatic route. India will also be exploring export opportunities and is planning to set up nuclear power reactors abroad. The JV will offer thorium fuel technology for light water reactors (LWR) in India. a US firm. BHEL and NTPC—will be setting up a company for the export of nuclear power reactors. the Nuclear Power Corporation of India Ltd (NPCIL). The agreement on the development of nuclear energy for peaceful purposes will facilitate wide-ranging bilateral civil nuclear cooperation. Accelerated Rural Electrification Programme and the goal of Power for All by 2012 among others to rapidly increase the installed capacity as well as expanding the network of people who have access to electricity. NPCIL will be commencing work on 12 reactors including eight pressurised heavy water reactors (700 MW each). India and Russia signed 10 agreements in December 2008. Providing income tax holiday for a block of 10 years in the first 15 years of operation and waiver of capital goods' import duties on mega power projects (above 1. Constitution of Independent State Electricity Regulatory Commissions in the states.Bhanja .000 MW to 1. • • • • • Government Initiatives The government has taken several proactive steps to open the sector for the private players and realise the full potential of the country in the power sector. GMR and Reliance Power have also expressed interest in nuclear power. a public sector undertaking spearheading India's nuclear power programme. Unbundling of the State Electricity Boards (SEBs) into generation. As per the JP Morgan report.650 MW at 5-6 sites along the country's coastline. gas or liquid-based thermal projects.55 • France on September 30.000 MW generation capacity). Three Indian public sector companies—the Nuclear Power Corporation. hydel projects and wind or solar projects of any size. Allowing the private sector to set up coal. and Punj Llyod will be forming a nuclear fuel technology JV.

13 billion of total corporate announcements made in the first half of calendar year 2008. • India's largest power utility.30 billion .03 billion. The Orissa government has cleared several power projects.600 MW.16 billion. an enterprise under the Ministry of New and Renewable Energy (MNRE). Indian Renewable Energy Development Agency (IREDA).50 billion to fund renewable energy (RE) sector projects during the 11th Five-Year-Plan.000-MW Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh.Bhanja .79 billion .B.000-MW generation capacity in the Twelfth Plan (2007–12) at an investment of US$ 4. The country's largest hydel power company National Hydro Power Corporation (NHPC) plans to double the power generation to over 10. according to an ASSOCHAM study. Damodar Valley Corporation (DVC) plans to add 5.09 billion for a 3200 MW coal-based mega power plant. entailing investments worth US$ 600 billion over the next ten years. Out of US$ 132. NTPC's proposal to invest US$ 4. The Power Grid Corporation of India Ltd (PGCIL) is planning to invest US$ 1.to ten-fold rise in power production. power sector attracted the maximum number of investment announcements totalling to US$ 40. • • • • • • • Private sector investments Developed By-P. will be investing around US$ 3. with US$ 5. The Tamil Nadu Electricity Board (TNEB) has inked a joint venture agreement with Bharat Heavy Electricals Ltd (BHEL) for setting up a 2 × 800 MW thermal power plant in Tuticorin district of Tamil Nadu with an investment of around US$ 1.000 MW by 2011– 12.03 million and Venture Ltd's proposal to set up a 1200 MW captive thermal project in Dhenkanal with US$ 1. The projects include the Astaranga Power Company's 2600 MW thermal power project with an investment of US$ 2.15 billion as investment.84 billion between January to June 2008. This would require a five.45 billion for the development of a transmission system associated with the 4.56 meets the requirement of expenses including renovation and modernisation (R&M). apart from the expense needed for the useful life for a unit. National Thermal Power Corporation (NTPC) would be investing up to US$ 36 billion by 2012 to transform itself into an integrated regional energy player and have an installed capacity of over 50. Investments A recent study titled “Powering India: The Road to 2017” by consultancy major McKinsey estimates India's power demand to increase from the present 120 gigawatt (GW) to 315–335 GW by 2017—100 GW higher than the current estimates—if India continues to grow at an average of 8 per cent over the next 10 years. The first phase of the project is likely to be completed by March 2012 and the second phase by September 2012. Kalinga Energy's proposal to set up a 1000 MW thermal project at Babudhakuli with an investment of US$ 879.000 MW. Haryana is planning an added capacity of 5000 Mega Watt (MW) by 2012 to its current capacity of 4.

an enterprise under the Ministry of New and Renewable Energy (MNRE).000 MW. Lanco plans to install 3000 MW hydro-power stations by 2015 with US$ 3. Reliance Infrastructure's Dahanu Thermal Power Station has been adjudged the winner of the CII's (Confederation of Indian Industry) prestigious National Award for Excellence in Water Management for the Year 2008. Consumer electronic maker Videocon plans to invest US$ 5.000 MW power. Each plant will have a power generation capacity of up to 8 mega watts (MW).000 MW of electricity from various hydro-power projects by the end of 2025. The company-'National Power Exchange Ltd'-will operate the power exchange at the national level.B. India's largest integrated private sector power utility company.16 billion to produce 5. in collaboration with the Gujarat State Petroleum Corporation (GSPC). and are likely to come up in Punjab. Haryana is planning an added capacity of 5000 Mega Watt (MW) by 2012 to its current capacity of 4.50 billion to fund renewable energy (RE) sector projects during the 11th Five. Bharat Heavy Electricals Ltd (BHEL) is planning to set up an integrated photovoltaic facility with an investment of around US$ 1. In partnership venture with Bharat Electronics Ltd (BEL). Tamil Nadu. Tata Consultancy Services (TCS) has set up a joint venture company along with NTPC Ltd.50 billion over the next five years to add 15.45 million for its 600 MW coal -based thermal power plant power unit in Punjab. India's Minister of State for Power. Essar is planning to invest about US$ 1 billion to set up a 1200 MW power project in Gujarat. and Rajasthan.Bhanja .32 million. which is a renewable energy generation company.14 million to start a project at Sinnar near Nashik to manufacture Solar Photovoltaic Modules. over the next two years. Jairam Ramesh has said that the country seeks to generate 50. Andhra Pradesh. The Developed By-P.02 per cent in the company and NTPC Ltd. PLG Power Limited will be investing US$ 103. Gujarat Alkalies and Chemicals Limited (GACL) will be setting up a 100 MW gas-based power plant at Dahej.600 MW.45 billion for the development of a transmission system associated with the 4.000 MW of power generation capacity. Indian Renewable Energy Development Agency (IREDA).57 • Reliance Energy Limited. will be investing around US$ 3.23 billion. NHPC Ltd and PFC. B C Jindal group plans to invest US$ 4.15 billion as investment. with an estimated cost of more than US$ 80. GVK Power and Infrastructure (GVKPIL) is planning an investment of US$ 49. is planning to develop eight biomass-based power plants with an investment of US$ 206. with US$ 5. Oriental Green Power. to set up an energy exchange. The Tata group has majority stake of 50. plans to invest US$ 12.Year-Plan.75 billion worth of investment. Maharastra. NHPC Ltd and PFC have16.39-US$ 226.67 per cent equity each.000 MW of hydro-power through its domestic resources by 2025.000-MW Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh.21 billion on building thermal power projects aggregating 5. The Power Grid Corporation of India Ltd (PGCIL) is planning plans to invest US$ 1. • • • • • • • • • • • • • • Looking ahead To feed its rapidly growing economy India is planning to get an additional 60.99 million.

000 MW would be generated from new hydel power projects in Jammu and Kashmir.000 MW of entire domestic hydel power production.58 river-intensive Indian state of Arunachal Pradesh alone would produce 25.200 MW Tamanthi project. the second largest in Asia. placing it in a much better position than many of the Fortune 500 companies.000 MW of hydel-power within the coming decade and trade it with India.4399 INR Railways Last Updated: February 2009 On Track Indian Railways is the world's fourth largest rail network. Sikkim.both on the physical and financial front.000 MW would be sourced from Bhutan. respectively. Indian Railways has been recording impressive growth rates . Uttarakhand and Himachal Pradesh. while the other 25. the cash surplus before dividend and net revenue are estimated at US$ 6.53 billion.Bhanja . and the second largest rail network under a single management. bolstered by [TOP] Developed By-P. India is also likely to raise the proportion of hydel power in the hydel-thermal mix from the present 25:75 to a more desirable 40:60 over the coming 25 years.17 billion and US$ 4.B. Further. Exchange rate used: 1 USD = 48. It is also the world's fourth largest freight carrier. In fact. For 2007-08. The residual 10. with the 1. Its recent successes following its remarkable turnaround to profitability have both intrigued and amazed management experts and generated a lot of interest in premier global business schools like Harvard and Wharton. India has also entered into a memorandum of understanding (MoU) with the Government of Myanmar to develop hydro-power projects in the Chindwin basin. Power flow between India and Nepal is also expected to go up once the latter start to generate 10.

78 billion in the last financial year (2007-08).33 million to be provided from the Central Road Fund. Railways' profits in 2008-09 will cross US$ 20.Bhanja . Buoyed by record US$ 5. The plan includes a total budgetary support of US$ 1. Railways has set a target of achieving US$ 21.33 billion compared to US$ 2. the Railways offered massive discounts to reduce inflation-related pressures on steel companies.99 billion during this period.319 million passengers travelled on the Railways during April-December 2008."The total passenger revenue earnings during first nine months of the financial year 2008-09 stood at US$ 3.08 per cent to reach 66.60 per cent against 4. traffic facility works and expansion and development of the network.6 crore tonnes of incremental loading in 2008-09. and throughput enhancement on high density network routes. Further.447 billion. The plan envisages enhancement of rail capacity.81 per cent. it had already created a fund worth US$ 5. modernisation of the railways.87 per cent growth in its revenue. entailing an enormous investment of US$ 7. In spite of the global recession. for iron ore loading.83 billion during the period between April-December 2008-09. the freight traffic of Railways sustained its growth during the last few months of 2008. Freight and Passenger Traffic The booming passenger and freight traffic has helped the Indian Railways in sustaining its growth momentum in 2008-09. It is now aiming at bettering that with 8. As per a Railways statement.11 billion by the first half of 2009. The overall revenue earnings from goods increased by 14. amounting to US$ 11. registering a 21 per cent increase over the previous year. The Railway Ministry has taken up the most ambitious ever annual plan for 2008-09.62 million tonnes and 72.28 billion earnings in the last fiscal. Developed By-P. over the same period last year.B.13 million tonnes respectively.66 billion including US$ 163. According to the Railways Minister Mr Lalu Prasad. improving customer services and implementing an inventive pricing strategy by following a differential pricing policy for freight traffic.98 billion during the same period last year.91 billion. registering an increase of 11. Freight loading during November and December 2008 increased by 1. The Railways boosted its freight revenue by increasing its axle loading. an increase of 6.29 per cent and 3." Almost 5. The Railways has registered 13.990 million passengers during the same period last year. The annual plan will have Internal and External Budgetary Resources (IEBR) funding of 79 per cent.59 its aggressive marketing policy.53 per cent to reach US$ 7. Particularly. it also announced a 40 per cent discount on iron ore for exports.

the Railways is expected to get a loan of US$ 7. which will cover over 2. Setting up a 1000 MW thermal power plant through a JV with NTPC at Nabi Nagar. Some of the ongoing projects are: • Indian Railways has undertaken the construction of a dedicated freight corridor. The entire project. wagon investment schemes.5 per cent over the previous year. V K Kaul. For 2008-09.288 tonnes of rail steel.core sector for setting up of logistic parks. the total production of steel bridge girders is likely to touch 8615 tonnes.78 billion to US$ 7. Production of wheels and axles went up by around 60 per cent in 2008 compared to last year. Renewal of 44. Ennore and Cochin. capacity increase and completion of new projects during the 11th Five Year Plan. for which it has decided to invite Public Private Partnership (PPP) in the non . Southern Railway is planning an investment of around US$ 137. Production of 3000 coaches in 2008. posting a growth of 12. over the next 10 years. along with the development of more than 7000 agricultural outlets throughout the country. Tuticorin.Bhanja . During 2008-09.09 billion.B. the Managing Director of Dedicated Freight Corridor Corporation of India Limited (DFCCIL). and sleeper renewal over 2382 kms. Rail renewal over 2941 kilometres (kms).10 million during April-September 2008.60 The revenue earnings from other coach-related activities totalled US$ 195. announced that construction work on the dedicated freight corridor project will start in early 2009 with an initial investment of US$ 154.70 million during April-September 2008 US$ 185.40 million for 2009-10. wagon leasing schemes. The commissioning of the critical stretches of the entire project will be over by 2015-16. which targets the upgradation and acquiring new assets of rolling stock.44 million for port connectivity projects at Chennai.73 per cent.739-km dedicated rail freight corridor (DFC).07 per cent. an increase of 5. The Railways Minister has announced plans to invest US$ 42.11 million.61 billion from the World Bank and the Asian Development Bank (ADB) for the construction of about 76 per cent of the proposed 2.22 billion for the modernisation.39.66 billion for improving the infrastructure.92 million slated for 2008-09 and US$ 614.74 million for the 100 km stretch on the eastern corridor. • • • • • • Developed By-P. warehouses.762 km.5 million of PSC sleepers has been set for open line works. showing an increase of 12. Infrastructural Expansion The Railways has lined up massive plans for the upgradation and expansion of its infrastructure. budget hotels. the railways has plans to spend US$ 7. The overall sundry earnings went up to US$ 104. with an investment of US$ 81. Mangalore. which will require 3. will entail an overall investment of over US$ 5. Further.64 billion. Bihar with an investment of US$ 1.

18 million) making ‘India a manufacturing hub for southern Asia and Africa’ in railway equipment. through a tunnel under the Hooghly River. A train wheel factory has been set up at Bela. The Indian Railways also has plans to set up key infrastructure facilities like freight nodal points.62 million. The Railways also plans to open the marketing. There would be around 20 logistic parks. in order to cater to the proposed Petroleum. • • • • • Foreign Investments To add further momentum to the high-speed passenger corridor project. Indian Railways is planning to spend US$ 573. operation and maintenance of the luxury train segment to private players to take advantage of the demand for such trains.69 million. Railways will also improve connectivity in the Paradeep region which includes the 82-km ParadeepHaridaspur broad gauge line. estimated to be built with an investment of about US$ 2. upgrade and expand its infrastructure. The Railway Board invited expressions of interest (EoI) for these projects. with an investment of US$ 118. The government also plans to set-up a new wheel factory at Chapra. Bihar. The project also consists of a few mega multi-modal logistic parks as hubs offering state-ofthe-art integrated logistic facilities. In 2008-09 alone. so as to complement its efforts to modernise. US$ 368. and a coach factory at Rae Bareli (at a combined cost of US$ 974. Container Park and a coaching complex in Paradeep.Bhanja . planned by the Railways. The Railways Ministry has invited applications for the setting up of multimodal logistic parks planned to be set through PPPs. a diesel locomotive factory at Marora. the Railway Ministry has signed a memorandum of understanding (MoU) with its French counterpart. 61 million will be invested during 2009-10 for upgrading signalling systems. Railway electrification target for the Eleventh Plan has been raised to 3500 Kms. an electric locomotive factory at Madhepura. The project is estimated to cost US$ 986. Railways plans to attract US$ 6. Kolkata will be getting an underwater rail connection with the extension of the Kolkata metro to its neighbouring city Howrah.B. It entails the building of logistic parks along the 3.15 billion of private investment. Chemical and Petrochemical Investment Region (PCPIR) in the region.4 million and will connect Howrah and the information technology suburb of Salt Lake. the Railways has the following plans for 2009-10 and beyond: • • • • • The network of the Railways in Mumbai is being further improved and the requirement of funds for these works in 2009-10 is US$ 102.61 • • Setting up a factory at Madhepura for producing 100 electric locomotives per year through JV route. Moving ahead. SNCF International. Indian Railways has signed similar agreements with Developed By-P.05 billion.63 billion in the next five years through public private partnerships.300-km Dedicated Freight Corridor (DFC). The Railways' plan to attract about US$ 24.12 million to improve telecommunication works till 2011-12. The Bela factory will produce one lakh wheels annually.

the Railways has adopted many new measures like Dynamic Pricing Policy. Aedas Ltd. Establishment of integrated logistic parks on unused lands. • • • • • • Innovative Initiatives The Railways is in a dynamic phase of growth with new initiatives planned to increase its revenue and optimally utilise its resources. Installation of Wi-Fi for providing wireless access at 500 stations. • Missouri-based American Railcar Industries (ARI) has entered into a strategic pact with auto component major Amtek in a 50:50 joint venture for manufacturing railcars. Introducing marketing rights for advertising on railway tickets and reservation charts. an increasing number of global players have evinced interest in taking part in this emerging segment.Bhanja . multi-purpose warehouses on surplus land with the Railways. Marg und Partner. Along with these. Von Gerkan. GE Equipment Services (GEES) has entered India by picking up a 15 per cent equity stake in Titagarh Wagons. Non-Peak Season Incremental Freight • • • • • • • • Developed By-P. with the cost of advertising being around US$ 1.PBI (USA) SYSTRAhas bagged the contract to provide consultancy services to (France) Bangalore Metro Rail Corporation.26 million per train. Russia. Alstom.PCI (Japan) . Terry Farrell and Partners. Italy. Development of 100 budget hotels with private participation in the vicinity of railway stations. many players like Mitsubishi Corporation. Development of agri-retail hubs. Toshiba.B. recyclable and have low-emission to generate certified emission reduction credits. Further. Bombardier Transportation will set up a Greenfield plant to make rail cars in Vadodara. Kawasaki. will set up a cast wheel manufacturing unit. With huge investment projects being thrown open for the private sector. Siemens. Obata and Kassabaum Inc and Arep Ville France among others have all shown keen interest to participate in various segments of railways. cold storage houses.64 million has already been sanctioned for it. the world's largest producer of rail cast wheels. Amsted Rail.62 the railways of Austria. South Africa and China for technical help and cooperation. and US$ 4. Indian Railways is planning to set an international management institute in New Delhi. • For the training of railway managers to meet future challenges. Introducing new generation trains that would be fuel-efficient. Siemens Transportation System has tied with public sector enterprise RITES for railway wagon production. The Railways has decided to increase its income through advertising on all Rajdhanis. Tariff Rationalization. Itochu. Hellmuth. The International Railway Strategic Management Institute will come up in collaboration with the International Union of Railways (UIC). Germany. A consortium of RITES Ltd (India) .

50. Malaysianbased Scomi Engineering in collaboration with Larsen &amp. The rail will run along two corridors – Anna Salai and Poonamallee high road – connecting Washermanpet to the airport and the Central railway station to St.590 kms of national highways which connect the state capitals. Against the in-house manufacturing capacity of 2500 passenger cars and 350 locomotives per annum. Loyalty Discount Scheme and Long-term Freight Discount Scheme among others to boost its capacity utilisation levels. Empty flow Direction Freight Discount Scheme. but carry about 40 per cent of the total traffic. The other district and rural roads have a length of 26. In an encouraging development. With further growth of the economy.99 billion.28. The 19. Of this.03 billion project.000 km. The total length of the rail would be 45 km.Bhanja . The project is expected to be complete by 2014-15.000 km and facilitate the linkage between the main roads and rural roads.9060 INR Road s Last Updated: January 2009 [TOP] Indian Roadways: OnThe Fast Lane In a large country like India.70. The state highways comprise of about 1. 4500 passenger cars and 700 locomotives are required to meet the future traffic needs. and provide accessibility to villages. whereas the major district roads have a total length of 4. ports and big cities. Indian Railways is the world's second busiest railway after China in terms of passenger-km and the third busiest overall. is expected to be complete in a period of 30 months and greatly reduce the burden on the existing railway network. Developed By-P. respectively. Toubro will execute the US$ 5.54-km-long monorail which will connect south Mumbai to the eastern suburbs (Jacob Circle to Chembur via Wadala).000 km. Exchange rate used: 1 USD = 48.34 million kilometers (kms). the Cabinet Committee for Economic Affairs cleared the Chennai metro rail project. aggregating over 3. In another development. 21 km would be elevated and 24 km underground.63 Discount Scheme. the estimated traffic level by the end of 2011-12 is expected to be about 8. India will have its first monorail in Mumbai soon. They account for only about 2 per cent of the country's total length of roads.B. The road network comprises of 66.amp. India has the world's second largest road network. an extensive and efficient transport system is imperative to its sustained economic development and national integration. estimated to cost US$ US$ 2.Thomas Mount.4 billion passengers and 1. Sustaining the Turnaround With a growth rate of 12 per cent.1 billion tonnes of freight per year.

64 According to the Planning Commission. a massive US$ 494 billion of investment is proposed for the Eleventh Plan Period (2007-12).737 km of roads.2. with allweather roads.000 or over 500 in hilly and tribal areas. It has also started the Bharat Nirman Programme that aims to cover every village having a population of over 1.5 billion over the five-year period starting from 2007-08. the states and the private sector are expected to be 34. which will increase the share of infrastructure investment to 9 per cent of GDP from 5 per cent in 2006-07. the government has already enacted many proactive measures like opening up a number of infrastructure sectors to private players. For the roads and bridges sector.1 billion up to 2012.9 per cent from 2007-08 to 2011-12.185 kms of road length is proposed to be constructed by 2009. Some of the projects planned during the Eleventh Plan period include: National Highways: • • • • • • Six-laning 6.500 km of the Golden Quadrilateral and selected national highways Four-laning 6. the shares of the centre. 146. Indian roadways is likely to grow at an amazing 100 per cent. in the North East Rural Roads: Developed By-P.231 billion tonne kms (BTK) has been put on road freight volumes for the period between 2011-12. The report further forecasts that during the specified period. According to the consultation paper circulated by the Planning Commission. Growth Potential The Indian government has launched the ambitious National Highway Development Programme (NHDP) involving a total investment of US$ 54.000 km of national highways to two lanes Developing 1000 km of expressways Developing 8.736 km on North-South and East-West corridors Four-laning 20.846 km of national highways. According to Crisil Research estimates. the road freight industry will be growing at a compound annual growth rate (CAGR) of 9. permitting foreign direct investment (FDI) into various sectors. the Eleventh Five Year Plan envisages a total investment of approximately US$ 78. and the expeditious completion of works approved under the different phases of the NHDP. and introducing model concession agreements. To achieve this. A target of 1. 000 km of national highways Widening 20.49 billion investment in India over the 2007-08 and 2011-12 period.8 and 34 per cent. The Eleventh Five Year Plan places high priority on the upgradation of India's infrastructure. respectively. For this. This translates roughly into US$ 40 billion annual additional investment. Of this. Indian roadways is among the eight infrastructure sectors expected to draw more than US$ 337. including 3.Bhanja .B. 31.

The Public-Private Partnership Appraisal Committee has also approved four-laning of Muzzafarnagar-Nepali farm section of NH-58 in Uttar Pradesh and Uttarakhand from Nepali to Dehradun.Bhanja .'Opportunities in Infrastructure and Resources in India' .B. Developed By-P.304 rural habitations. 88-845.65 • Constructing 1. Under the Special Accelerated Road Development Programme in the North East (SARDP-NE).13 million has been allocated for the upgradation of certain important stretches of NH 31 A.48 billion.464 km covering 78. It also gave the nod to an alternative highway between Siliguri and Gangtok with paved shoulders under Phase 'A' of SARDP-NE.investments of the order of US$ 500 billion are expected to take place in the coming years for developing roads and infrastructure. Other approved projects are Khagaria-Bhaktiarpur in Bihar.26 billion for an eight-lane access-controlled expressway. Approval for an alternative alignment of the four-lane NH 37 to bypass Kariranga and the modification of the four-laning of 315 km from Nagaon to Dibrugarh. An added investment of US$ 21. The projects are aimed at four-laning of national highways in eight states.93 million. 65. This is a part of the Outer Ring Road (ORR) project. the government has given the nod to 10 road projects which will be built in public-private partnership at an estimated cost of US$ 2.88 million. As part of a larger plan to improve the country's infrastructure. with an investment of US$ 1. Private Sector Investments According to a KPMG report . 92. Goa-Panaji. Huda will also lay out 33 radial roads with an investment of US$ 633. and it will carried out in three phases. The Hyderabad Urban Development Authority (Huda) will be investing about US$ 1. Five agencies are working on this project and it is likely to be completed by 2010. including Pune-Sholapur section of NH-9 in Maharashtra involving an estimated cost of US$ 218 million. and renewing and upgrading existing 1.24 billion. KuttipuramEdapally in Kerala and Armur-Adloor Yellareddy section in Andhra Pradesh. has also been given by the government.13 million for improving the transport system in Hyderabad. The Chennai port to Maduravoyal (NH4) in Tamil Nadu has also been cleared under the four-lane elevated road project and will be executed at an estimated cost of US$ 317.16 million and Patna-Buxar section in Bihar for US$ 382.244 km of new rural roads. the Cabinet Committee on Economic Affairs (CCEA) has agreed to the modifications to Phase A of the SARDP-NE. to facilitate road linkage to Sittwe port of Myanmar. CoimbatoreMettupalayam section of NH-67 in Tamil Nadu involving US$ 118. Increased resource requirement along with concern for managerial efficiency and consumer responsiveness has led to major involvement of the private sector via both construction contracts and build-operate-transfer (BOT) based on either toll or annuity basis.

98 billion on November 2008. American construction major Star Universal Resource Company has signed a Memorandum of Understanding (MoU) with the Government of Sikkim for the construction of an underground expressway between Sikkim and West Bengal. which included 21 highway projects to be taken up under NHDP Phase III and V. the PPPAC has granted approval to 87 projects.8 million. • • • • • • • Public Private Partnership Many road projects with public-private partnerships are also on the anvil.9 million. which includes 77 highway projects. Since its foundation in January 2006. International companies like Emirates Trading Agency (Dubai). with ten tunnels and as many bridges. These projects include the conversion of 882 km of four-lane national highways into six lanes at a total cost of US$ 2.09 million. International Participation With emerging investment opportunities. Deutsche Bank.B. at an estimated cost of US$ 70.66 • Reliance Energy has three contracts to four-lane 400 km of highway and is already working on four-laning five national highway projects in Tamil Nadu. The Public-Private Partnership Appraisal Committee (PPPAC) gave the nod to infrastructure projects worth US$ 5. It is also involved in the construction of a four-lane Gwalior by-pass at a cost of US$ 73. The consortium of Maytas Infra Private Limited and Nagarjuna Construction Company Ltd will four-lane the highway from Tindivanam and Pondicherry.41 million. which envisages a six-laned 165 km stretch connecting Greater Noida to Agra at a cost of US$ 554. Jaiprakash Associates Ltd (JAL) is implementing the Taj Expressway project. DS Construction will develop the Gwalior-Jhansi section on NH-75 which includes four-laning at a cost of US$ 159.Bhanja . covering 400 km and at an estimated cost of over US$ 762. Madhucon Projects has ongoing BOT projects with four toll-based road projects. IJM Corporation.93 million. L&T inter-state Road Corridor Limited is executing the four-laning of the 76km highway between Palanpur and Swaroopgunj on the East-West Corridor.42 million. Developed By-P. Era Constructions India Limited along with Karam Chand Thapar & Bros Limited will construct a section of the Delhi-Haryana Border to Rohtak. Indian road construction projects have become a preferred investment option for large foreign players. The proposed road.30 billion.80 million and is slated to be built in four years. will cost US$ 327. wherein about 2000-2500 kms of four-lane highways will be widened. More such mammoth projects are slated for the next financial year. Lanco Infratech has the contract to four-lane two highways in Karnataka at an estimated cost of US$ 247. Berhad (Malaysia) and the Isolux Corsan Group (Spain) are partnering with Indian companies with equity stakes between 10 to 51 per cent.

2008.97 billion in rural roads. While approximately US$ 46. The government has also announced an increase in the overseas borrowing amount of infrastructure sectors. to US$ 500 million from US$ 100 million. Malaysia's IJM Construction. • • Allows 100 per cent FDI under the automatic route in all road development projects. With incentives like 100 per cent income tax exemption for a period of 10 years. • • • • • • Looking Ahead According to a consultation paper by the Planning Commission. the government has taken a number of progressive reform initiatives.61 billion.11 billion. The government has taken steps to provide cheaper loans for highway projects and in the process will be expediting projects worth more than US$ 12. and US$ 1. Korea's Baelim.1 per cent of the total investment. Significantly.05 billion is projected to be invested in national highways.519 kms has been fixed by NHAI for the completion of construction across various phases of NHDP during 2008-09. investment in the roads sector during the Eleventh Plan is projected at US$ 93. Russia's Dyckerhoff. Private parties allowed to develop service and rest areas along the roads entrusted to them. A target of 3. As a step to improve the viability of road projects to be implemented on PPP mode.The planned completion dates for other phases of NHDP being executed by the National Highways Authority of India (NHAI) are: Developed By-P. Investors in identified highway projects permitted to recover investment by way of collection of tolls for specified sections and periods. The Ministry of Shipping and Road Transport is mulling over having a ‘green corridor' in highways solely for farmers with ‘no toll' charges. US$ 10.65 billion will be spent for state roads. SDN and Road Builders and Japan's Kajima and Taisei are undertaking projects floated by the National Highway Authority of India (NHAI) and other state governments.Bhanja . and formulation of model concession agreements among others. the private sector is projected to invest US$ 33. companies such as Turkey's Limak.42 billion in roads in the North-East. the NHAI provides grants/viability gap funding for marginal projects.B. Germany's Widmann AG. The green corridor would link rural roads with National Highways and is likely to be developed along with the six-lane project under the National Highways Development Programme. The Rules will establish uniformity in fee rate for public funded and private investments projects. the Cabinet Committee on Economic Affairs (CCEA) has agreed upon the National Highways Fee (Determination of Rates and Collection) Rules. Thailand's Italthai.67 Furthermore. 70 billion under separate phases of the NHDP. US$ 34. Government Initiatives To attract more investment into India's burgeoning infrastructure that is projected to attract US$ 500 billion as investments by 2012. accounting for 36.

24 billion for the year 2009-2010 for upgrading the city's roads and infrastructure. the roads of Delhi will be getting a facelift. An additional US$ 1 million technical assistance will also be provided for the improvement of road sector institutions.December. Indian roadways will be playing a significant role in the Indian growth story. Further.6 per cent of the overall average growth in GDP in the last eight years between 2000-01 and 2007-08.Bhanja . 2014 NHDP The Asian Development Bank (ADB) is extending a US$ 420 million loan to the Indian state of Bihar for the upgradation and expansion of the state highway network. 2012 NHDP Phase-VI . The sector has come to play an increasingly dominant role in the economy accounting for 59.December. The Government of India has also granted US$ 48 million for the project.B. Exchange rate used: 1 USD = 47. The Municipal Corporation of Delhi (MCD) plans to spend a massive US$ 1.December. Dun & Bradstreet said in its 'Economy Outlook 2009-10' report that the services sector will retain its importance in GDP and its contribution is expected to reach 58 per cent in 2009-10. With massive investments and large projects on the anvil.December. keeping the 2010 Commonwealth Games in mind. Developed By-P. Further. 2009 NHDP Phase-III .4080 INR Services Last Updated: March 2009 [TOP] The services sector is one of the most important segments of Indian economy in terms of its contribution to the gross domestic product (GDP) in recent years. The Bihar State Highways Project will be upgrading around 820 kilometers of roads under the state government's highway development program. It has been at the forefront of the rapid growth of the Indian economy. contributing nearly 63 per cent of the GDP in 2007-08. 2015 Phase-VII . 2013 NHDP Phase-V . over a period of 25 years.68 • • • • • NHDP Phase-II .December.

5 per cent in the corresponding period a year ago. insurance. Financing.33 million tonnes carried during the corresponding period last year.14 MT in the corresponding period last fiscal. Exports The growth of the Indian services sector has not been confined to the domestic market alone. • Apart from higher contribution to GDP.02. The survey revealed that Indian companies had the most positive outlook on profits among the BRIC countries with nearly 60 per cent expecting an increase in levels of business activity and 58 per cent expecting an increase in revenue. real estate and business services also grew by 9. • Community.9 per cent.69 As per the Central Statistical Organisation.5 per cent as against 11.7 per cent in 2006. according to a survey by KPMG.3 per cent increase over the corresponding period of 2007-08. Railways freight traffic increased to 751.30 million tonnes during AprilFebruary 2008-09 from 715.000. • • Foreign tourist arrivals (FTAs) during February 2009 stood at 5.Bhanja . Particularly impressive has been the broad-based growth of services on the trade front.000 in January 2009. social and personal services posted a robust 17. Mobile subscriber base in the country grew by 13.87. It is also reflected on its trade front. conducted across the BRIC (Brazil. The prospects for growth in the Indian services sector over the next year continues to be robust.B. compared to 4. Cargo handled at major ports during April–September 2008–09 has been 261. Information Technology Developed By-P. The government's announcement to cut service tax across the board from 12 per cent to 10 per cent is expected to benefit the consumers as well as the services sector. Also. Indicators Lead indicators suggest that the pace of expansion in the services sector activity is likely to be sustained even in the next financial year. Russia. Indian companies were the second most optimistic lot compared to others with regard to expecting an increase in new business over the next year. India's share in the global trade of services has increased from 2 per cent in 2004 to 2. registering a 9.45 million in February 2009. the sector is set to be benefitted by the recent government incentives announced as a part of the third stimulus package. the services sector has continued to grow even in the third quarter of 2008-09. • • Further. the sector has also been recognised globally as the prime driver of accelerated and diversified growth of the economy.3 per cent growth in the third quarter against 5. India and China) countries.73 MT as against 244. which is expected to continue even in the next fiscal.

Exports in the stood at US$ 31.B.October 2008 is the services sector (US$ 3. exports were likely to touch US$ 47 billion.1 million by 2010 and could employ as many as 50. in order to bring down their costs of operations. At present.35 billion). India is also likely to retain its tag as the backoffice of the world currently. the MT industry will be worth US$ 798. Despite global economic downtrend. Some of the major investments in the offing for the service sector include: Information Technology Developed By-P.84 billion till March 2008. India is in a comfortable position as the share of IT and ITbased services in China's export revenues comes to only just above three per cent. while te lecom and manufacturing contributed 20 per cent and 17 per cent. In its 'Strategic Review 2009' titled 'The IT-BPO Sector in India'. compared to over 26 per cent in India.000 people. As per a NASSCOM report. The US-based healthcare companies are expected to send more information technology projects to India. respectively. the medical transcription (MT) industry is looking for a further growth buoyed by a report of the NASSCOM stating that recession has not hit the healthcare industry. The sector is also set to witness an increase in investments.BPO exports sector shows Banking and Financial Services Institutions (BFSI) accounted for 41 per cent of the export pie in 2007-08. amid competition from its neighbouring country China.70 Exports for the Information Technology (IT) and Business Process Outsourcing (BPO) sectors are expected to touch US$ 60 billion–US$ 62 billion in 2010-11. Investments The sector that bagged the maximum amount of foreign direct investment (FDI) equity during April. according to a study done by Offshoring Research Network (ORN). according to the National Association of Software and Service Companies (NASSCOM). The surge in mobile services market is likely to see cumulative FDI inflows worth about US$ 24 billion into the Indian telecommunications sector by 2010. Healthcare Experts believe that the outsourcing of healthcare services from the US to India would continue. of which majority of them are for IT and information technology enabled services (ITeS) sectors. as per a report by Deutsche Bank Research.4 billion in 2007-08. from US$ 3. NASSCOM has said current fiscal (2008-09). A vertical break-up of India's IT. with the government approving 513 special economic zones (SEZs) till August 2008. in alliance with Duke University and research firm PricewaterhouseCoopers.Bhanja .

Exchange rate used: 1 USD = 50. Inditex is a leading fashion retailer based in Spain.71 Tata Consulting Services has signed a US$ 100 million agreement to provide IT services to a UK-based telecom company 4U Group. finance) to Bangalore-based Infosys. have entered into an informal tie up which will involve client referral arrangements.B. the retail arm of the Tata group. foreign law firms are not allowed to operate in India and the Bar Council of India prohibits joint ventures between foreign and domestic law firms. The hotel is coming up as part of the US$ 239. global entities are opting for tie-ups with Indian partners. has formed a joint venture with Inditex Group to develop and promote the foreign company's Zara stores in India. an Indian law firm. The partnership plans to open its first store next year in New Delhi. in anticipation of a possible opening up of the local legal se rvices industry to foreigners. joint training. ITES Chicago-based Global Hyatt Corporation has outsourced part of its financial and accounting transaction services to Genpact. In another major deal. as they are increasingly looking at establishing an India presence. and AZB & Partners. which is being built by the Dubai-based group.Bhanja . Mumbai and other major cities of India. the US$ 30 billion pharma company AstraZeneca has outsourced its end-to-end maintenance services for a variety of corporate services (such as human relations. But. Retail Trent. the world's largest law firm. Legal services UK-based Clifford Chance. At present.1439 INR Developed By-P. Tourism/Hospitality The US$ 3 billion Lulu Group has entered into a management contract with Marriot Hotels to run the 20-story 300-room business hotel property now under construction in Kochi.31 million hypermarketmultiplex-airlines tower complex. consultation and marketing.

the country is witnessing the creation of many new markets and a further expansion of the existing ones.B. Such developments in India's markets are expected to create major opportunities for Indian companies and multinationals (MNCs) alike and further fuel consumer demand in India. rural consumption levels are expected to rise to current urban levels by 2017.Bhanja .72 Consumer Markets Last Updated: February 2009 [TOP] Sustained Momentum As rapid socio-economic changes sweep across India. Despite the gloom in the global markets. With above 300 million people moving up from the category of rural poor to rural lower middle class between 2005 and 2025. India will continue to be the second fastest growing economy in the world and according to the Indian Minister for Commerce Developed By-P.

by 2012. "We've seen four distinct phases in 2008. LG Electronics' Sales and Marketing Director. said. said. only 14 per cent households in India will have annual household incomes of less than US$ 921. fast moving consumer goods (FMCGs). expensive products like LCD televisions and laptops are witnessing higher growth than their cheaper counterparts. The study states that 212 Indian towns are capable of sustaining the development of such hypermarkets in 2008. In the FMCG sector players continue to report good sales figures. approximately 315 hypermarkets are expected to come into existence in tier-I and tier-II cities across India by the end of 2011.Bhanja . Then October was huge. Executive Officer. according to the National Council for Applied Economic Research (NCAER) estimates. we've seen no drop. ASSOCHAM. "At both Big Bazaar and ezone. riding on the boom in organised retail sector. Marico's CEOConsumer Products. with most Indian companies denying any cutbacks from consumers.B. the Indian economy may well grow at over 7 per cent in 2008-09. Saugata Gupta. Maruti Suzuki India. Indian incomes are likely to grow three-fold over the next two decades and India will become the world's fifth-largest consumer market by 2025. from 58 per cent in 1995-96 and 25 per cent currently. Mr Kamal Nath.73 and Industry. with the highest ever retail sales. optimistic lot. moving up from its position in 2007 as the 12th-largest consumer market.8 per cent. Despite the prevailing gloom across global markets." Mayank Pareek. consumer durables and retail among others. while the consumer durable segment also recorded strong volume growth in the second quarter of the 2008-09 fiscal. it was seen that the June quarter of 2008-09 saw a sales growth of 24 per cent (year-on-year) compared to last year. says a joint study by consultancy firm KPMG and industry body. According to a study by the McKinsey Global Institute (MGI). we've seen good growth of about 25 to 30 per cent on a same-store basis.66. Further. Marketing and Sales. Then again November sales dropped only to again rise in December". Moreover. "In our categories. CEO of Future Group's ezone. Indian consumers and companies continue to be a confident. In fact. On similar lines. August to October saw some weakening. In an analysis (carried out by Economic Times) of the top 50 consumer goods and services firms. said. "We have not witnessed any pressure so far. V Ramachandran . Sales of daily consumption items went up by 5-10 per cent and the FMCG business increased by 18. The firms included in the analysis were from sectors like automobiles. In fact the festival period saw a growth of 40-50 per cent." said Manoj Kumar. April to June went okay. textiles." Rural Consumers Developed By-P.

According to a report jointly released by the C onfederation of Indian Industry (CII) and Ernst & Young. toothpastes. as per an NCAER report. cars. senior fellow at the National Council for Applied Economic Research (NCAER) said.Bhanja . "The overall FMCG market. This major consumer base accounts for 41 per cent of the Indian middle class having access to 58 per cent of the total disposable income. said. In spite of the economic slowdown. Mobile phones in rural India increased by around 13. the Indian FMCG industry is likely see robust 15 per cent growth in the third quarter of 2008-09 against the corresponding period last year. LG. the ‘lower middle income' group in rural areas has nearly doubled. " Most corporate who have expected sales of 3040 per cent from the smaller markets now hope to net in more than 60 per cent of their sales turnover from rural India." "I think the Indian FMCG industry's sales growth should be good in Q3. Nestle and P&G are other major corporates who are increasing their rural focus. Further. Sansui. liberal loan-waivers and a growing middle class. Tata Motors.74 Rural India has provided a beacon of hope to India Inc amidst the prevailing economic slowdown. it is the one of the most promising sectors in India. According to AC Nielsen. Samsung. two-wheelers and consumer durables accounting for a significant part of his spending. Dr Rajesh Shukla. by 2012. The growing consumption is the result of a growing middle class base in these areas. The mobile boom has now also hit rural India. of the next 250 million Indian wireless users. Buoyed by a plenteous harvest. M&M.B. Chairman of the Godrej Group. Hero Honda. with FMCG." he further said. rural India will have an over 60 per cent share of the total telecom subscriber base. and even candies saw more growth in rural markets than urban." FMCGs have seen over 20 per cent demand in rural markets ahead of the 17-18 per cent growth in urban India. Maruti. have recorded robust growth rates. Currently estimated at US$ 17. My expectation is that the industry will register a 25 per cent sales growth in Q3 200809. FMCG The FMCG sector has been registering double-digit growth in sales since the last couple of years.44 billion. Adi Godrej. Further. both urban and rural.72 per cent to touch 70. The overall number of rural households is estimated to grow to 153 million in 200910 from 135 million in 2001-02. the rural consumer is spending like never before. around 100 million (40 per cent) are expected to be from rural areas. Similarly. Philips. Beverage major Coca-Cola India has already introduced a large-scale retail programme tailor-made for tier II and tier III towns.83 million in the quarter-ending June 2008. Developed By-P. compared to urban areas. skin creams and lotions. mainstay categories like hair oils. shampoos.

the manufacture of luxury items in India can grow to US$ 500 million. 7.000 units by 2010. The luxury products market in India was estimated in excess of US$ 500 million and is likely to grow at a CAGR of 28 per cent to reach US$ 1. Further.5 billion. The report stated that with the core strengths in India's manufacturing sector. an analyst firm. several Indian FMCG companies have also been aggressively exploring global markets through both acquisitions and alliances. The market is expected to double by 2015. Global brands like Louis Vuitton and Frette are planning to set up their manufacturing base in India. In rural areas. in fact. India is set to become a manufacturing hub for global luxury brands over the next four to five years. In 2008. These products are estimated to propel the FMCG industry to grow by 16 per cent (in sales) during 2008-09. compared to 14. Car imports fell in 2008. four major acquisitions were made by three firms—Godrej Consumer Products (GCPL). Leading luxury car makers like Mercedes-Benz India.Bhanja . Luxury Products With the rapidly increasing number of millionaires in India. with consumers choosing to buy Indian made models by foreign car makers. With changing lifestyles.75 According to a FMCG sectoral report by Angel Broking. touching US$ 2. Tremendous growth is being recorded by value-added and aspirational products. may outdo their urban counterparts like Reliance Fresh and the Future Group-owned Food Bazaar chain. companies like ITC. In the past three years. ITC.5 per cent during 2007-08. From 5. According to a FICCI-Yes Bank report. Another promising trend is the growth of 'out-of-home consumption'. Developed By-P. Significantly. IDFC SSKI Securities has predicted a revenue growth of 18 per cent in the third quarter of 2008-09. they have acquired about 15 companies and have spread their presence in more than a dozen countries. The market is likely to further grow to 10. companies will be seeing profits in terms of margin expansions due to the correction in global commodity prices.500 luxury cars were sold in 2008.B. the concept of three core meals fast vanishing. the market for luxury brands is growing annually at a compound average growth rate (CAGR) of about 35 per cent. Emami and Dabur. which is emerging as a new section in the FMCG sector.2 billion by 2010. and Dabur are venturing into this market and are bringing out new product packaging for the segment.000 units in 2006. BMW and Audi are expecting improved sale figures in 2009. companies like Coca Cola India. Godrej Agrovet and DCM Shriram among others are growing rapidly in rural areas and.

" added Dasgupta. Whirlpool of India Limited (WIL) revealed. Developed By-P. According to a snap poll carried out by the Confederation of Indian Industry (CII). Korean major Samsung is planning to launch LCD-led live emitting diode (LED) TVs at US$ 1433. Pranay Dhabhai.Bhanja . Director and CEO . LG Electronics India is also planning to introduce air conditioners with new technology compressors and revamped designs. and Blu-ray technology home theatres and cameras in 2009. LG.23 million washing machine market in India by the end of 2009 and is launching a range of new products with an investment of US$ 4 million for the same. A flurry of hi-technology durables are expected to be introduced in the US$ 4.09 billion Indian durables market by March-April in 2009. said. Shantanu Das Gupta. 92 per cent the CEOs surveyed were expecting sales to increase by 10 per cent during 2008-09. Besides. Samsung. greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry. we plan to import 'dual-tech' larger capacity (two-door. India is the second largest two-wheeler market in the world. the fourth largest commercial vehicle market. the 11th largest passenger car market and is expected to be the third largest automobile market by 2030.B. Whirlpool is targeting a 22 per cent share of the US$ 430. four-door and sixdoor refrigerators) from our US-based factory. Automobiles Presently. Consumer Durables A combination of changing lifestyles. air conditioners and microwaves where we are not as strongly positioned as in the refrigerator category. Haier and Videocon are among companies planning new product launches in the coming months.76 Industry experts believe that the top-end consumer electronics segment in India is growing by 8-10 per cent annually. "For the coming season. Haier Appliances India. we will also launch ACs with a new look and feel. "We plan to increase WIL's market share across the four categories of home appliances to 20 per cent plus by 2010 with more emphasis on washing machines. across all category. Vice President-marketing." "In the product development area the investment in India. along with air conditioners with technological compressors and new designs. will be in the region of US$ 25-30 million in the next two years. higher disposable income. Similarly." Videocon Industries will also launch high-end LCD TVs and plasma TVs.

Bajaj Auto. iSuppli. Companies planning to enter India include Japanese testing firm Saki. Skoda Auto and Volkswagen.625 cars (46 per cent growth).60 million second plant at Bidadi.700 vehicles in December.59 billion by 2011. Mercedes Benz India has registered robust growth in 2008 with 3. BMW India sold over 2. Even though the auto industry witnessed slowdown in more recent times. has projected that the Indian audio/video consumer electronics industry will grow to US$ 6. an electronics market research firm. Similarly Audi India registered a growth of 201 per cent at 1. Maruti's dispatches to domestic dealers increased 5. In January 2009.B. even with the global auto industry being affected by the economic slowdown. its highest ever. Maruti Suzuki India achieved its highest-ever domestic and total sales in January this year. Developed By-P. near Bangalore.216 cars took place way back in November 2007.6 per cent to 67. Hong Kong's surface mount technology (SMT) company WKK. luxury cars have posted high double digit growth in India in 2008.50 billion auto loan market in the country.005 units during the month.050 units in 2008 against 349 units in 2007. Describing India as one of the promising emerging markets Toyota Motor Corporation is going ahead with its US$ 655.77 During April 2008. Global auto makers are still bullish on India.000 units. Its last biggest dispatch of 65. Even Hero Honda registered double digit growth in its volume shipment. In the luxury segment. Daimler Motors. Maruti Suzuki. car sales from manufacturers to dealers were expected to stage a recovery in January 2009. clearing the stocks piled up at dealerships. Indian auto majors. big auto companies registered positive car sales. To drive sales. Maruti posted retail sales of 76.Bhanja . reviving hopes of an upturn in demand. are entering the US$ 4. sales rose by more than 17 per cent in the car segment. while sales in the utility-vehicle segment rose by 31 per cent.500 units in 2008 against an estimated 2. Tata Motors and M&M are already offering loans through their own finance subsidiaries. compared to the corresponding month last year. growing at a CAGR of around 10 per cent. Singapore's Mydata (SMT) and USA's Indium (solder paste). 240 trucks (53 per cent growth) and 16 bus chassis. after dealers took on new stocks after selling off a huge inventory pile-up during December 2008. India's leading automaker registered a 20 per cent net sales growth for the June 2008 quarter and it also posted 12 per cent growth in volume terms. Consumer Electronics The rapidly growing consumer electronics market in India has spurred many leading manufacturers of the world to get into partnerships with local companies to set up shop in the country.

a market research company revealed that Indians are "the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months. a remarkable 30 points above the global average of 84. The Nielsen Global Consumer Confidence study. and 51 per cent of the Indians surveyed believed that they would be out of the recession in 12 months.B. According to a global online survey by A C Nielsen. As broadband connectivity grows in India – according to the Telecom Regulatory Authority of India (TRAI) India had 4. India tops in the Asia-Pacific region in its understanding of nutritional labels. Amongst many other companies. is also planning to foray into the market and launch a new kitchens division.73 million broadband internet connections at the end of August 2008 – online purchasing is growing. In fact.37 million modular kitchen segment is seeing a growth of 40 per cent. India was at the top of the survey with 114 points. Indians have emerged as the third biggest credit card users globally for online purchases. with credit cards being the preferred mode of payment. Consumer Confidence The Indian consumer remains one of the most upbeat globally. a staggering 78 per cent of Indians (who access internet) make purchases online. AsiaPacific. Developed By-P. and music (20 per cent) are some of the categories in which Indians made online purchases.78 Growth of Niche Segments and E-commerce Companies offering niche services within lighting .Bhanja . The online consumer survey was carried out in 51 markets from Europe. According to the Nielsen global online consumer survey. The energy-efficient lighting solutions market witnessed 30 per cent growth in the year 2008.and interior design are witnessing growth and are looking at fresh investments. a leading tile manufacturer. Furthermore. event tickets (23 per cent). With 59 per cent. around 59 per cent Indians said that they noticed packaged goods' labels containing nutritional information.for example energy-efficient lighting . the US$ 307. North America and West Asia. Online shopping has opened up new avenues and the survey found that books (46 per cent). electronic equipments (29 per cent)." stated the biannual report. Likewise. H&R Johnson. tours and hotel reservations (24 per cent). conducted by Nielsen. videos/DVDs/games (23 per cent). Indian consumers are also becoming more aware about the finer nuances of nutritional panels and labels. Companies like Philips Consumer Lifestyle and Bajaj Lighting are looking at continued investments in the segment. clothing/accessories/shoes (21 per cent). carried out by Nielsen in April 2008.

India will also become the 5th largest consumer market. increasing consumerism and the entry of more foreign players. By 2025.Bhanja . it is rising. surpassing Germany. According to a study by the McKinsey Global Institute (MGI). Developed By-P. moving up from the 12th position it occupied in 2007. The relative importance of basic necessities such as food and apparel is declining whereas for categories like communications and healthcare. The Indian consumer is rapidly evolving and is now being encouraged to see shopping as an experience and is spoiled for choice by a host of international brands selling their products at competitive prices. The spending pattern of the Indian consumer is also changing rapidly. And over 23 million Indians—more than the present population of Australia today—will be counted as billionaires. Indian markets are seeing revolutionary changes. India's middle class will swell by more than ten times—from its current size of 50 million.79 Marketing and Strategy Last Updated: March 2009 [TOP] With market liberalisation. to 583 million people—by 2025.B. The Boston Consulting Group (BCG) forecasts that Indian household spend is going to reach nearly US$ 325 billion by 2015 compared to US$ 150 billion in 2007.

9 billion by 2015 from the current US$ 487 million. according to AC Nielsen. Major corporations have tasted phenomenal success with innovative strategies such as smaller packaging. growing at over 10 per cent. cars. Also rural India is less affected by the global slowdown. The middle to high income households in rural India are now 17 per cent of the total rural population and are growing at 7 per cent. However this segment grew nearly 40 per cent in 2007 and is estimated to increase to 22 per cent by 2010. In the seventh annual Global Retail Development Index (GRDI) conducted in 2008.” The rural middle class has been steadily growing. presently. According to recent studies conducted by the National Council of Applied Economic Research (NCAER). rural India is home to 720 million consumers across 627. Further. 50 per cent of TV. toothpastes. Better than expected rainfall has got consumer-goods makers revising their sales targets for the countryside upwards. who have expected sales of 30-40 per Developed By-P. The trend-setters in this segment too are the usual suspects: FMCGs. and even candies showed better growth in rural markets than urban. skin creams and lotions. Rural Market—The Next Big Opportunity The rural market offers great untapped potential. In 2008. the rural market accounts for a hefty share in most market segments. India stood second as the most attractive destination for retail investment. shampoos. Says Dabur CEO Sunil Duggal.80 Although much of the new wealth and consumption will be created in urban areas.27 billion. Organised retailing comprises just 4. “The gap between the urban and rural spend is huge. fans. FMCG is clocking over 20 per cent demand in rural markets.6 per cent of the currently estimated Indian retail market. 70 per cent of toilet soaps. tea and wrist watches. according to international consultancy firm Celent.Bhanja . It is estimated that the Indian retail market will increase from US$ 330 billion in 2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015. Core categories such as hair oils. the rural market has grown at an impressive rate of 25 per cent compared to the 7-10 per cent growth rate of the urban consumer retail market. “Close to 50 per cent of our sales come from rural and semi-urban markets. rural households will also benefit enormously considering rural incomes have been rising. an increasing number of marketers are targeting it. The Indian Direct Selling Association (IDSA) estimates the industry turnover to grow two-fold in the next five years to touch US$ 1. customised development and positioning and a good distribution network. ahead of the 17-18 per cent growth coming from urban India. the rural market will grow to a potential of US$ 1. It is.55 per cent of LIC policies. bicycles.B. Today. Consequently. twowheelers and consumer durables. Most corporates.000 villages.

81 cent from the smaller markets. actually takes key influencers on a drive. Hero Honda. Coca-Cola has already rolled out a large-scale retail programme to tap potential in tier II and tier III towns. all the way from small towns and villages. senior fellow at NCAER. LG. For instance. Goldplus has quietly notched up US$ 77. called Parivartan.47 million worth of revenues and is growing at upwards of 50 per cent annually. Dabur India has rolled out specific programmes for each of its brands.” says Dr Rajesh Shukla. The company hopes to alter its portfolio and model mix for the rural market. now expects 40 per cent contribution from rural sales to its turnover this year. M&M. Nestle and are other major corporates who have ramped up their rural focus for the second P&G half. Maruti.Bhanja . mounting purchasing power. thus. screening audio-visuals and even encouraging visitors to check the purity of the gold they possess. The US$ 40-billion global white goods major LG Group expects rural consumers to push its revenues in India this year. Companies have launched affordable endowment life insurance plans such as MetLife India Insurance Company Ltd's. Samsung. as the rural sector is growing at a pace faster than urban sector resulting in higher disposable incomes and. now hope to net in more than 60 per cent of their sales turnover from rural India. marketers have to keep looking for an increasing number of innovative methods to increase sales. The experience does not end there. the group is served snacks and then dropped back home. Goldplus from Tata. focuses on inculcating knowledge of best practices in the retail business. The program. Sansui.B. The company. to the chain’s district outlet. That number was 58 per cent in 1995-96 and is 25 per cent currently. Even white goods companies are looking at the rural market as a saviour in these recessionary times. Brand Extensions Developed By-P. the jewellery retail venture of Titan Industries that specifically targets the small-town consumer. 'MetSuvidha'. and ensure that all segments are represented at the entry level. Philips. Innovative Marketing In a highly competitive environment. which has expanded its focus areas to the rural markets. After showcasing the store. It does this in its endeavour to compete with the local jeweller in smaller towns. NCAER estimates project that by 2012. only 14 per cent households in the country will have annual household incomes of less than US$ 871. Rural India may offer a business opportunity worth US$ 23 billion for the insurance companies if the segment can be wooed with innovative saving schemes at affordable premiums. Tata Motors.

Dabur. In terms of categories. especially the mid-level brands.” For instance. Nestle. Companies are likely to leverage their strong brands by introducing variants across high-end and low-end ranges. Marico and Godrej have adopted a brand extension strategy amid negative factors such as high inflation and the global financial crisis. Among the other launches. with most players rolling out products around this platform. Media and Communication Channels Word-of-mouth remains the most important influence in the buying decision of the Indian consumer . a fat-free packaged milk product in Delhi/NCR region.B. household-care and processed foods drove growth in the FMCG sector. brand extensions in personal-care. Among the top ten countries that attach maximum importance to the recommendation of the fellow consumer. It also introduced NesVita Pro-Heart. ‘health and wellness’ has been the major theme playing out. “There has been evidence of downtrading in the FMCG sector. Analysts believe that most of the new launches next year will also happen under these categories.a fact confirmed by 85 per cent users who participated in a recent global Nielsen Internet survey. FMCG companies such as Coca-Cola. manufacturers need to marginally tweak the production line to accommodate the new product as against a new brand which may require more infrastructure. Industry observers also feel that for most of the brand variants. Maggi Pichkoo (a tomato ketchup pouch pack) to Maggi Bhuna Masala (a readymade cooking aid). For the internet users. According to Ramesh Srinivas.Bhanja . According to Radio Audience Measurement data. Nestle launched a record number of variants this year—from its Maggi Cuppa Mania (the instant cup noodles). online opinions are at the third position with a 73 per cent vote. India ranks fourth while Hong Kong tops the list. Dabur too unveiled a pudina variant of its popular Hajmola brand apart from extending its Gulabari skin-care range. GlaxoSmithKline Consumer Healthcare India introduced Eno Orange. the FMCG companies launched 251 products (223 variants and 28 brands) in calendar year 2007 as against 191 (173 variants and 18 brands) in 2006. KPMG India’s National Industry Director (Consumer Markets). PepsiCo. 49 per cent listeners access radio from their mobile Developed By-P. TV ranks fifth in terms of trustworthiness at 65 per cent. Newspaper (77 per cent) is the second most trustworthy advertising medium.82 In a bid to garner higher market share and sustain long-term growth. In the processed foods segment. The industry pegs the number of variants and extensions launched this year to be in line with 2007. According to marketing research company IMRB.

Analysts believe that mobile marketing will be a much bigger opportunity in the next 2 years than the internet has been in the past 10 years. Developed By-P. Financial Services and Insurance companies) and . Fostered by its increasing popularity. According to analysts. and the green signal for MVNOs will leverage mobile advertising on the same account. This will open up more options for mobile advertising.Bhanja . which boasts of a higher return on investment and is far more measurable. MD. According to a FICCI-PwC report. Knorigin grew 82-100 per cent in 2008 and Malik expects it to grow at the same pace in 2009. as recessionary trends lead to tightening of advertising budgets across the board. Its better return on investment and the comparative ease with which its efficacy can be measured will ensure that the trend continues. it is expected to touch US$ 212. Rising interest in social networking in 2008 has made brands think seriously about online advertising. the online medium. says that the last few months have seen many new advertisers in the space.com companies only.1 million. video ads will the most popular form of online advertising as more and more brands are willing to put video ads on the internet. TV and radio. Mobile number portability rollout. mobile and digital signage) is expected to emerge as the medium of choice for advertisers. internet advertising was used by BFSI (Banking. According to Narasimha Jayakumar. While dominant communication channels in India include print. the mobile medium will see some interesting options. other consumer-oriented brands have also started using the medium. Viraj Malik. says that earlier.B. What makes the case stronger for the web is the fact that it is far cheaper than traditional media like television and print. say analysts. “In 2009. operators will focus on value-added services and data services to distinguish from and compete with new operators. just as the 2008 US elections were a defining moment in the use of internet and mobile services. Moreover. in 2009. The 3G roll out will drive the use of content-rich applications. This will come from a mix of three primary streams—SMS advertising. digital media advertising (internet. Of the available media. This will open a platform for mobile advertisers.91 million in 2011 from the current US$ 58. which controls a major chuck of the online advertising market. 3G services. Consider this: Google. it was the fastest growing segment in 2008. mobile internet advertising and mobile invertising (permission-based advertising). the 2009 general elections are likely to be an inflection point for the usage of mobiles in many different ways. is expected to get renewed attention from marketers.” Malik envisages. In the last 6 months.83 phones. Moreover. private FM is especially emerging as a preferred communication channel for the marketers in India. Malik adds that while volumes in internet advertising will grow as compared to mobile advertising. Percept Knorigin (digital advertising arm of Percept).

Celebrity Advertising and Recall Value As opposed to celebrity-fatigue in some developed societies. Marketers are not shying away from using social networking sites to promote their products. celebrity endorsement volume on television has gone up by more than six times. 'Bluecasting' or advertising via Bluetooth is also growing rapidly. it is more targeted. a division of TAM Media Research said there was a 49 per cent growth in celebrity endorsement ad volumes on TV during 2007 compared to 2006. ITC. travel companies and offline travel agencies have started advertising online. due to low penetration levels. However. LG and Samsung top the consumer goods majors who are upping their ad spends. is increasing them by 2 percentage points in the January-March quarter to support new products launches. For instance. President OgilvyOne. in the travel vertical.84 Business Head. Internet advertising constitutes a very small chunk of the overall ad pie in India. with an 81 per cent share of the audio-visual media endorsement pie. Google India.Bhanja . A Celebrity Endorsement Survey conducted by IMRB (India Market Research Bureau) and public relations firm IPAN states that 86 per cent Indians remember advertisements because of the celebrities that endorse them. companies are hiking ad spends in order to attract more customers.B. • Dabur which dropped ad spends by 50 basis points in the third quarter. Dabur.” he added. With the rise of Web 2. advertisers have found a new mode called viral advertising to get their message across. industry experts opine that this is set to change. Despite its advantages. The digital answer to word of mouth. “There has been a general awakening across markets with respect to the online medium as companies try to engage more with their customers. Moreover.” said Kaizad Pardiwalla. Increasing Ad Spends In spite of the global recession. viral advertising entails companies or marketers making messages so funny and interesting that consumers want to forward them to their friends and family. according to industry experts. celeb-endorsement in India ensures high recall. “There is more efficiency in the medium as it is measurable and you pay per click. the decision to sign up or sign out will vary according to product categories. budget hotels. But. Consumer products and telecom are leading the pack followed by realty and retail sectors. Travel. Since 2003.0 and the growth of user-generated content and social networks. A study by AdEx India. outshone other domains in terms of star-power. Cricket came second with a 14 per cent share. FMCG company Marico has just launched a co-branding exercise with a games application of Games2win on Orkut for its premium hair-care brand Hair & Care. Developed By-P. Bollywood.

which is the sixth highest percentage globally. Diesel (24 per cent). Convenient packaging assures consumers of the product quality and helps boost sales. who are now looking to attract consumers with tryvertising—or mainstream advertising that encourages them to try the sample or smaller-sized product—while also building brand image. Gucci (25 per cent). Growth in the retail sector has further revealed packaging as an effective brand communicator at the time of buying. Calvin Klein (34 per cent). have spelt great success for companies. Packaging and Design Both packaging and design are increasingly being seen as potent marketing tools for product differentiation and communication with the consumer. Christian Dior (16 per cent).B. washing powders. biscuits.47million this year – a 10 per cent increase over the previous year. April-May being peak season for beverage companies. Growing at an annual average rate of 26 per cent.6648 INR Developed By-P. who participated in the survey. ninth for Diesel and tenth for Fendi.with only Greece and Hong Kong ahead of it. Cosmetics player Emami group is also likely to hike the ad spends especially since the company plans to launch new products in the April-June quarter. spends naturally go up during the quarter. The company spends 4-5 per cent of its annual revenues on A&P. and coffee sachets.85 • Coca-Cola. The company is planning to back its new product launches mainly in refrigerators. India is the third highest buyer of Gucci products. In rural and semi-urban areas smaller packaging in product segments like shampoos. Of this. showed inclination towards buying branded products. The recent Asian Paints campaign marks a new trend among advertisers. snack items. Samsung would hike ad spends by 10-15 per cent this year.49 million would be spent above-the-line. toilet soaps. Thirty five per cent of Indian consumers. the sixth highest for Calvin Klein. Electronics and durables maker LG plans to spend US$ 77. The visual appeal of aesthetic designs and packaging particularly matters in high-end product segments. India has been identified as a significant driver in the global luxury market. and DKNY (10 per cent) are the top brands that Indian consumers spend on. while it was 46 per cent in Greece and 38 per cent in Hong Kong. Exchange rate used: 1 USD = 51.Bhanja . This rise in brand conscious has engineered a noticeable change in the luxury landscape in India. ACs and LCD TVs by strong campaigns. • • • Brand Consciousness A Nielsen Global Luxury Brands study (March 2008) reveals that India has the third highest brand-conscious population in the world . recently rolled out a new variant of Fanta nationally and picked up sponsorship for the GMR-owned IPL team. The local designer brands too score well in the index with 40 per cent. one of the biggest advertisers globally. US$ 46. Delhi Daredevils.

is not just witnessing an increase in its income but also in consumption and production.4 per cent in the current fiscal from 48. Rural India.Bhanja . Developed By-P.6 per cent in 1999-2000 on the back of strong growth in these sectors in the past five years.83 billion outlay for 2009-10 would benefit the rural economy as industry and services tend to have a better employment multiplier compared to the agriculture sector. the combined share of industry and services in rural GDP has risen to 58.145 million population. home to about two-thirds of the country’s 1. The recent interim Budget's focus on extending the National Rural Employment Guarantee Act (NREGA) to all states with a US$ 5. According to a National Council of Applied Economic Research (NCAER) analysis.B.86 Rural Market Last Updated: March 2009 [TOP] A silent revolution The Indian growth story is now spreading itself to India's hinterlands.

especially in categories including house construction materials. Developed By-P.Bhanja . Additionally. which was estimated at US$ 577 billion. including skin creams and lotions. the RMAI in its study has also revealed that there has been no impact of the economic slowdown on the rural economy. Significantly. many other major multinational companies (MNCs) and domestic players are keen to foray into the rural Indian market to capitalise on its growing opportunities. Intel and Shell. according to a recent study by the Rural Marketing Association of India (RMAI). the rural economy has not been impacted by the global economic slowdown. The study found that the rural and small town economy which accounts for 60 per cent of India’s income has remained insulated from the economic slowdown as employment opportunity and income streams are intact and growing steadily with consistent demand for goods and services. home to 720 million consumers across 627.87 The rural economy got a further boost with the farmer loan waiver of US$ 13. rural India would become bigger than the total consumer market in countries such as South Korea or Canada in another twenty years. The rural India success story is being replicated across a range of sectors in the rural markets. the B and C circles in India are outrunning major cities in terms of subscriber additions. hair oils. Therefore. Higher disposable surplus among consumers in these markets is leading to smart buying. Most companies are looking at the huge potential offered by the rural markets and shifting their focus from the already saturated urban markets. an AC Nielsen study for the April-September 2008 period reveals that in sectors.86 billion and the ambitious Bharat Nirman Programme with an outlay of US$ 34.000 villages. In fact. the rural markets are also offering great opportunities to marketers who are trying to find a way out of the current economic crisis. offers a huge consumer base for the companies to capture. toothpaste and candies. volume and value growth in rural markets have been significantly higher than urban markets. And it would grow almost four times from its existing size in 2007. apparels and durables. Rural consumers According to recent studies conducted by the NCAER. According to a McKinsey survey conducted in 2007.84 billion for improving rural infrastructure. rural India. The study further reveals that rural incomes are on the rise driven largely due to continuous growth in agriculture for four consecutive years. As per the cellphone-user statistics provided by the Cellular Operators Association of India (COAI). after several global corporations like Microsoft. Significantly. road connectivity and digital access to villages for marketers. A record harvest of 230 million tonne food grains last year coupled with a sharp increase of 40 per cent in minimum support price of wheat and paddy over a two-year period has resulted in farmer incomes rising sharply.B.

Developed By-P. In order to capture the growing rural consumers.Bhanja . ITC. The total number of rural household is expected to rise to 153 million in 2009-10 from 135 million in 2001-02. Hariyali Kisan Bazaars (DCM) and Aadhars (PantaloonGodrej JV).88 FMCG The rural consumers spend around 13 per cent of their income. more product launches and increased level of localised promotions and growth in rural markets. Kisan Sansars (Tata). With most of the retail markets getting saturated in tier-I and tier-II cities. hair oils. a jewellery retail venture of Titan Industries. is expected to lead consumer products companies to a steady 15-18 per cent topline growth during October-December 2008. the FMCG market especially in the skin creams and lotions. Major domestic retailers like AV Birla. and the rural market accounted for a robust 57 per cent share of the total FMCG market in India. with rural India accounting for 55 per cent of private retail consumption. overtaking the urban market (43 per cent)." Rural India accounted for almost half of the Indian retail market. Industry analysts state that the increased consumption is also the result of a growing middle class base in these markets.05 billion in September 2008. on fast moving consumer goods (FMCG). Most FMCG companies are now working on increasing their distribution in smaller towns and focussing on marketing and operations programme for semi-urban and rural markets. Also. for the April-September 2008 period. According to a study by AC Nielsen. adopted an innovative marketing strategy by driving small town consumers all the way from towns and villages to the chain's district outlet to showcase them the store and its product offerings. Choupal Sagars (ITC). toothpaste and candies categories witnessed a significantly higher volume and value growth than urban markets. suggesting a huge market. The urban-retail split in consumer spending stands at 9:11. as per a RMAI study. the second highest after food (35 per cent). the Anglo-Dutch consumer goods major. the next phase of growth is likely to be seen in the rural markets. Godrej. Project Shakti (Hindustan Unilever) and Naya Yug Bazaar are established rural retail hubs. "India's rural markets offer a sea of opportunity for the retail sector. Reliance Fresh. Goldplus from Tata.B. sector analysts predict that a combination of higher advertising spends. and many others have already set up farm linkages. Significantly. 03 billion in August 2008. Unilever is exporting the project to several developing world markets. Reliance. Retail According to a report—India Retail Report 2009—by Images FR Research. The FMCG industry in India was worth around US$ 16. buoyed by the success of Hindustan Unilever's innovative rural distribution model (Project Shakti) led by women's self-help groups. which was worth about US$ 266.

a joint Confederation of Indian Industries (CII) and Ernst & Young report reveals that of the next 250 million Indian wireless users. Developed By-P. Vihaan Network Ltd. a group company of Shyam Group.89 Pharmaceuticals The Indian pharmaceuticals market is regarded as one of the fastest growing in the world. has announced that the company will be investing additional US$ 6. According to a report by Mckinsey—Indian Pharma 2015—the rural and tier-2 pharma market will account for almost half of the growth till 2015. over the next one year. As on December 2008. Telecom service provider Tata Teleservices Limited. amounting to US$ 8. the rural teledensity was 12. BSNL also plans a US$ 125. which would reduce the cost of setting up telecom infrastructure by as much as 50 per cent. India will have 200 million rural telecom connections by 2012. has launched the world’s first zero opex GSM systems powered by solar energy rather than conventional sources. Bharat Sanchar Nigam Limited (BSNL) is likely to connect 148. The tier-2 market will grow to 44 per cent by 2015.83 million in April–June 2008. Several drug companies such as Cipla.4 per cent to touch US$ 25.000 villages with highspeed internet connectivity by March 2009. This will translate into improving rural health infrastructure on the ground and increased supply of medicines to the health centres in the rural areas. According to the Indian Communications and IT Minister. with most of the growth coming from rural markets. and by 2012.62 per hundred of population. which expects around 60-70 per cent of additions in subscriber base to come from rural areas.38 million spend on its rural telecom infrastructure in West Bengal. Experts believe this reduction will become increasingly vital as rural telephony increases. Telecommunication A Gartner forecast revealed that Indian cellular services revenue will grow at a compound annual growth rate (CAGR) of 18.72 per cent to reach 70. This growth can be further augmented with the government allocating US$ 2. The Telecom Regulatory Authority of India (TRAI) has recently released draft recommendations on rural telephony for overcoming various constraints coming in the way of increasing telecom penetration in rural India. Hetero and Emcure that supply into the Centre’s health programmes are expected to reap benefits from this government announcement. Mr A Raja.6 billion by 2011. rural users will account for over 60 per cent of the total telecom subscriber base in India. Lupin. CII also estimates the number of subscriber addition in rural areas to exceed the additions in metros by 2012 as about 120 million new users are expected to adopt wireless telephony in rural areas as compared to about 62 million in the metros.35 billion for the National Rural Health Mission (NRHM) in the interim budget 2009. Mobile phones in rural India also grew by close to 13. Almost 45 per cent of the growth will take place in tier-2 markets.B.77 million in Gujarat to set up 100 cell sites by August 2009.Bhanja . Also. approximately 100 million (40 per cent) are likely to be from rural areas. Ipca.8 billion.

71 to US$ 36. Rural markets' share in Maruti's overall sales during April-January 2009 has gone up to 8. weather forecasts. with its utility vehicle. Mahindra & Mahindra is also bullish on the rural and semi-urban markets. dairy farming.5 per cent from 3. washing machines 15 per cent and refrigerators 12 per cent. the company has set up a dedicated 'rural vertical' under the theme 'Har Gaaon. TVS Motor also echoed the sentiment. Airtel's new initiative will offer mobile handsets bundled with Airtel mobile connection ranging from US$ 30. A survey carried out by RMAI has revealed that 59 per cent of durables sales come from rural markets.5 per cent in the same period last year. rural health initiatives. India is the second largest two-wheeler market in the world.B. which registers around 50 per cent of its sales from the rural and semi-urban markets. microwave ovens 26 per cent. Maruti Suzuki has also launched a pan-India campaign—'Mera Sapna Meri Maruti'—to reach out to consumers in rural areas. The study further stated that during April-October 2008. the 11th largest passenger car market in the world. Developed By-P. the rural markets are booming. and is expected to be the seventh largest automobile market by 2016. the automobile market remains untapped in rural India which has a strong purchasing power. While growth in urban markets has been flat or negative. Hyundai Motors India has introduced a new marketing initiative—'Ghar Ghar Ki Pehchaan'—to tap the India rural car market.Har Aangan' to penetrate untapped rural and upcountry markets.90 Airtel has tied up with IFFCO to reach farmers directly. the television segment in the rural and small towns witnessed a growth of 29 per cent. insulated from economic downturn. the biggest bike maker. etc. Farmers will receive free voice messages on farming techniques.Bhanja . This growth is on the back of entry-level products and largely driven by rural and semi-urban markets. Recognising its potential. air conditioners 17 per cent... Scorpio clocking 60-65 per cent sales from the rural markets as against 20 per cent earlier. Consumer durables The rural market is growing faster than the urban markets. Passenger car and two-wheeler companies are driving on rural roads to push sales. Sensing a huge opportunity many automobile companies are trying to woo the rural consumer. The importance of rural India remains the same for Hero Honda. Auto companies are also being helped in this rural push by their growing partnerships with public sector banks. Similarly.84. although the penetration level in rural area is much lower. Reliance Communication has also targetted the rural segment in a big way with its low tariff initiative like the Grameen Programme for rural subscribers. Automobiles Presently. all of which enjoy a good presence in the rural belt and have a ready list of potential customers. the fourth largest commercial vehicle market. However.

which is completely changing the way one connects with rural consumers. Industry analysts also expect the FMCG sector in rural areas to grow 40 per cent against 25 per cent in urban. Further. Mobile connectivity is helping marketers transcend the traditional forms of communication with them. the rural per capita consumption of FMCGs would equal to current urban le vels by 2017. the semiurban and rural life insurance market is expected to rise from US$ 5 billion to US$ 20 billion by 2012. the country will see the creation of many new markets and further expansion of the existing ones. Samsung has also rolled out its 'Dream Home' road show which was to visit 48 small towns in 100 days in an effort to increase brand awareness of its products. Developed By-P. According to international consultancy firm Celent.6694 INR Urban Market Last Updated: February 2009 [TOP] With incomes rising in India. US$ 80. Recently.83 billion to be incurred by the centre and the states in the Eleventh Plan. according to a study by the McKinsey Global Institute (MGI). Exchange rate used: 1 USD = 51.82 billion would be spent entirely towards improvement of rural infrastructure. rural markets account for well over 60 per cent of the national demand. In the given scenario. coauthored by National Council of Applied Economic Research's (NCAER) Rajesh Shukla and Future Capital Research's Roopa Purushothaman. Further. urban markets will continue to fuel the Indian economy for quite some time to come. LG has set up 45 area offices and 59 rural and remote-area offices.9 billion by 2015 from the current US$ 487 million.B. Further. with around 45 per cent of Indians living in urban areas by 2050. the mobile revolution is also sweeping the hinterland of the country. Rural markets are growing at double the pace of urban markets and for many product categories. up from 30 per cent in 2007-08. going beyond the basic necessities. 'The Next Urban Frontier: Twenty Cities to Watch'. Road ahead The development of rural infrastructure is an important priority for the government and out of the total projected investment of US$ 283. The telecom industry is also expected to grow from 100 million connections to 300 million by 2012. spending and consumption are also on the rise with an increasing number of people purchasing many more items. India is likely to see rapid urbanisation. many leading consumer durable companies are now increasing their presence in rural India. As more areas get urbanised. According to a new study. rural markets in India will grow to a potential of US$ 1.Bhanja .91 Besides the strong growth of consumer goods in rural areas. Indian incomes are likely to grow three-fold over the next two decades and India will become the world's fifth-largest consumer market by 2025. As per RMAI.

and Raymond have plenty of expansion plans for 2009. The size of the organised retail sector by 2010 is expected to reach US$ 51 billion. Despite the economic slowdown plaguing the western countries. reiterated that despite the gloom in the global markets. Mahindra & Mahindra (M&M) has entered the retail sector with the introduction of its specialty format. In fact. with most Indian companies saying that there have been no cutbacks from consumers. • • Developed By-P. Organized Retail Comes of Age in India'.B. retailers are still optimistic about the Indian growth story. By 2011. estimates that the Indian consumer market is likely to grow four times by 2025. watches and fragrances) will soon enter India. Aggressive marketing efforts and expansion plans by leading retailers are on. Retailers such as Spencer's Retail. Retailers are also foreseeing further drops in rentals in 2009 and they are optimistic about their expansion plans for 2009. Shoppers Stop. pens. Future Group. Bata India. India's overall retail sector is likely to grow to US$ 419. The estimated share of organised retail in total retail by 2010 is 12 per cent. Indian retailers are a happy lot. Mr Kamal Nath. with 30-40 per cent drop in retail rentals. Recently.92 India has not been greatly impacted by the prevailing global downturn. cigarette lighters. India will continue to be the second fastest growing economy in the world and the Indian economy may well grow at over 7 per cent in 2008-09. The annual growth of the retail market in India is expected to be around 8 per cent.93 billion by 2015. Dupont will have around 8-9 retail outlets in India. optimistic lot. to sell infant care and maternity products. a French luxury brand (which sells men's luxury leather goods. the following findings were revealed: • • • • • • • • The total size of the retail market in India in 2008 was estimated at US$ 353 billion. Another McKinsey report 'The rise of Indian Consumer Market'. The total retail market size in India is likely to touch US$ 416 billion by 2010. The present share of organised retail sector is estimated at 7 per cent. Westside. • S T Dupont. the Indian Commerce Minister. Wills Lifestyle. The expected investment into modern retailing formats over the coming 4-5 years is around US$ 25-30 billion. The estimated annual growth of organised retail sector is 40 per cent.Bhanja . Mom & Me. In another joint study conducted recently by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and KPMG. Indian consumers and companies continue to be a confident. Retail According to the recent report by McKinsey & Company: 'The Great Indian Bazaar.

• • • Developed By-P. car sales from manufacturers to dealers was expected to stage a recovery in January 2009.B. said. Pranay Dhabhai. The new entrants include M&M's Xylo. "For the coming season. CEO of Future Group's ezone. Haier and Videocon are among companies planning new product launches in the coming months. 28 million washing machine market in India by the end of 2009. Korean major Samsung is planning to launch LCD-led live emitting diode (LED) TVs at US$ 1410. and Blu-ray technology home theatres and cameras in 2009. In fact. V Ramachandran. expensive products like LCD televisions and laptops are witnessing higher growth than their cheaper counterparts. a large number of hi-technology durables are expected to flood the US$ 4. we plan to import 'dual-tech' larger capacity (two-door. global auto makers are still bullish on India. the festival period saw a growth of 40-50 per cent. In fact. and is launching a range of new products with an investment of US$ 4 million for the same. • • • • • • • Automobiles • Even though the auto industry witnessed slowdown in more recent times. Moreover. leading retailers like the Future Group and Spencer's Retail will be expanding and upgrading their present stores in 2009. On similar lines." Whirlpool is also on the expansion mode and is targeting a 22 per cent share of the US$ 423. "We have not witnessed any pressure so far.72. particularly in the suburbs. LG Electronics India is also planning to introduce air conditioners with new technology compressors and revamped designs. Moreover. LG Electronics' sales and marketing director. and Bisk Farm. Indian carmakers will be launching 50 new models in 2009. LG." Videocon Industries will also launch high-end LCD TVs and plasma TVs. are planning to set up new stores."said Manoj Kumar. "At both Big Bazaar and ezone. we will also launch ACs with a new look and feel.03 billion Indian durables market by March-April in 2009. Besides. said.69 million second plant at Bidadi. after dealers took on new stocks after selling off a huge inventory pile-up during December 2008. Turtle Ltd. despite dipping sales figures. Describing India as one of the promising emerging markets. Ford India's plans to expand its capacity in India will also continue as per schedule. along with air conditioners with technological compressors and new designs. Toyota Motor Corporation is going ahead with its US$ 644. we've seen good growth of about 25 to 30 per cent on a same-store basis. fourdoor and six-door refrigerators) from our US-based factory. Others like Wills Lifestyle. Director and CEO . In fact. Similarly. near Bangalore. Fiat's Linea sedan. Urban Market • Consumer Durables • • The Indian consumer durables market seems to be relatively untouched by the economic slowdown.Bhanja .93 • In West Bengal. Tata's Nano and Maruti Suzuki's Ritz among many others. Samsung. Haier Appliances India.

Zegna.Bhanja . Marico's CEO-consumer products. players continue to report good sales figures. some brands are also waiting for the government to allow 100 per cent FDI in retail. Louis Vuitton. The market is expected to double by 2015. ETAM. Rino Greggio and Lee Cooper were amongst the first brands to get FDI permission under the single-brand retail window. sportswear retailer Puma. touching US$ 2. La Perla.000 units in 2006. Salvatore Ferragamo." Across urban markets. Llardo.94 • In the luxury segment. Luxury Products According to a FICCI-Yes Bank report. we've seen no drop. "India remains the most important destination for international brands outside their home markets due to its solid economic fundamentals and growth opportunities. With changing meal-time habits and the concept of three core meals fast vanishing. BMW and Audi are expecting improved sales figures in 2009. companies like Coca Cola India. against 14. Lerros and S Oliver.5 billion. luxury cars have posted high double digit growth in India in 2008.5 per cent during 200708. Jimmy choo and Toy Watch have also forayed into India. The market is likely to further grow to 10. About eighteen months after foreign direct investment (FDI) was allowed in singlebrand retail. In fact. 7.000 units by 2010. Sanjeev Mohanty. there has been a tremendous growth in the sales of valueadded and aspirational products. said. Dolce & Gabbana. Fendi. Benetton India's Managing Director.2 billion by 2010. From 5. Developed By-P. These products are expected to drive the FMCG industry to grow by 16 per cent during 2008-09.B. Nike. At the same time. around 37 foreign brands have made a foray into India and many are planning to set up shop here. and Dabur are venturing into this avenue and are bringing out new packaging for products in this segment. said. even with the global auto industry being affected by the economic slowdown." Brands like Damro. in spite of the current economic turmoil. the luxury products market in India is estimated in excess of US$ 500 million and is likely to grow at a CAGR of 28 per cent to reach US$ 1. Leading luxury car makers like Mercedes-Benz India. While many others like Armani. • FMCGs ASSOCHAM has said that the FMCG sector will grow at 25 per cent. Saugata Gupta. ITC. Another promising trend is the growth of 'out-of-home consumption' which is emerging as a new section in the FMCG sector. Marks & Spencer. luggage brand Piquadro.500 luxury cars were sold in 2008. "In our categories.

In the television market preference is changing from CRT technology to Flat Panel Display Televisions (FPTV). Inox. The number of TV channels is increasing rapidly. Cinemax. FM channels are proliferating small towns too. and even religion. Direct Selling The direct selling market in India will benefit from the global recession with the segment posting 20 per cent growth annually to reach an expected US$ 1 billion by 2012. According to a report by Marketsmonitor. Indore. cinema to reading. new age engagements like gaming and net-based activities.B. Entertainment With rising stress levels in urban lifestyles. the Indian consumer electronics industry is expected to grow at a rate of 10 per cent to 12 per cent in the coming years. Fame and PVR Cinemas. Big players in the segment are Adlabs. Singapore's Mydata (SMT) and USA's Indium (solder paste). from TV to music. fun is a very serious business in Indian cities.Bhanja . Further as per the report: • • • • • There will be an increase in volume sales of washing machines in the fully automatic category during 2008-09 to 2011-12. fitness. The AC market is expected to grow at 30 per cent to 35 per cent in the coming years. The repertoire is wide. 'Booming Consumer Electronics Market in India'. Nashik.95 Consumer Electronics The rapidly growing consumer electronics market in India has spurred many leading manufacturers of the world to get into partnerships with local companies to set up shop in the country. Sales figures for frost-free refrigerators are growing rapidly compared to the direct-cool category. Moradabad. Aurangabad. Hong Kong's surface mount technology (SMT) company WKK. Companies planning to enter India include Japanese testing firm Saki. Lucknow. Kanpur and Amritsar. The Indian media and entertainment industry has the potential to touch US$ 200 billion by 2015. The spawning of multiplexes in India has spread to tier II and III cities like Ludhiana. Fast Food Market Developed By-P. Leading direct selling companies like Amway India and Oriflame Cosmetics are planning to cover more areas in the country. MP3 players and digital video appliances are expected to grow at a doubledigit rate.

urban Indians are indulging their taste buds like never before. a market research company revealed that Indians are "the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months. The US$ 2 million restaurant market in India is growing at 28 per cent a year. While most leading companies are cutting costs in the US and Europe. Further. accounting for almost 20 per cent of the global WiMAX subscriber base. up from 5. Cafe Coffee Day is planning an investment of US$ 24.45 million broadband subscribers in India on December 31. • • E-commerce The increase in the PC and internet penetration along with the growing preference of Indian consumers to shop online has given a tremendous boost to e-tailing–the online version of retail shopping.6504 INR Developed By-P. Many domestic and global restaurateurs are on an expansion mode.28 million in November. dining chains and restaurants like Pizza Hut.96 With world cuisine at their doorsteps. In fact. over 2009." stated the biannual report. Blue Foods. conducted by Nielsen. E-tailing in lingerie and fresh fruit businesses is also doing well. Road Ahead The Indian consumer remains one of the most upbeat globally. According to TRAI there were 5. they see India as a strategic market. Future Group and its private equity arm Indivision India Partners have acquired a controlling 50 per cent plus equity stake in the multi-cuisine lifestyle restaurants chain. Domino's.11-30.5 million WiMAX subscribers by 2012. art.000 from the current 700. 2008. which can fuel their growth. Several online retailers are reporting good business in categories like travel. Exchange rate used: 1 USD = 49. books and music. it is widely believed that the Indian market will fuel the growth of MNCs in the coming years.Bhanja .14 million for expanding its number of cafes to around 1. Nirula's and KFC are now bullish on setting up their stores in smaller cities and tier II and III markets. The Nielsen Global Consumer Confidence study. • With the increasing competition in large cities. the WiMAX Forum has projected that India will have more than 27.B.

by Finance Minister P Chidambaram. comes against the backdrop of India's growth slowing down this fiscal after posting a 9.6 per cent in 2007-08 as against 3. The Economic Survey for 2007-08.B.4 per cent in the current fiscal from 12 per cent in FY07.97 Economic Survey highlights 2007-08 Last Updated: February 2008 [TOP] A report on the state of India's economy with suggested policy prescriptions in areas ranging from government finances to external trade was tabled in the Parliament. Developed By-P.6 per cent expansion in 2006-07 and fears of US recession. authored by the Chief Economic Advisor Arvind Virmani. The Economic Survey has: • • • Set a target of 9 per cent GDP growth during the 11th Plan (2007-2012) Projected that inflation would stand at 4. and a slow down in manufacturing sector growth at 9.8 per cent in 2006-07.Bhanja .4 per cent during the current fiscal Forecast a lower agriculture growth at 2.

4 per cent in current financial year. removal of constraints on agriculture and urban land supply Export growth at 20.8 per cent Talent shortage leading to high attrition and rising wages.88 million as on December 31.7 per cent in 2007-08.3 per cent in 2007 Number of telephone connections at 272.6 per cent in 2007-08 from 3. contributing to cost-push inflation The Economic Survey favours liberalising debt and currency markets.2 per cent p. compared to 9. retail Food procurement.6 per cent in previous fiscal Government projects lower agriculture growth at 2. Raise FDI in insurance.14 billion.8. 2007. as against the previous year's growth of 3. Inflation led by food items Rupee up 9. forestry and fishing sector is estimated to grow at 2. since April '07 Economy slows down to 8.3 million tons last year The agriculture.6 billion from a year ago Total foodgrains production marginally high at 219.98 Other highlights of the Economic Survey: • • • • • • • • • • • • • • • • • • • • Current inflation level is positive Inflation projected at 4. distribution spend up in FY07-08 Greater debt and equity issues in primary market Developed By-P.B.implying that average income can virtually double in a decade India April-Nov '07 FDI at US$ 11. lower from 12 per cent in 2006-07 Government sets target of 9 per cent GDP growth during 11th Five Year Plan (2007-2012) Outlook for exports in 2008-09 may not be as bright due to global slowdown and exchange rate development Foreign reserves at US$ 290.Bhanja . up by US$ 91.4 per cent in 2007-08.8 per cent in 2006-07 Manufacturing sector to grow at 9.8 per cent vs. .a.3 million tons in 2007-08 from 217. Dollar.6 per cent during 2007-08.9 per cent The government has set an ambitious target of providing 200 million telephone connections in the rural areas by the end of 2012 The rate of growth of per capita income has sharply climbed to 7. tele-density at 23.

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