Slide 1: 

Macro Business Environment in India & Opportunities for Investment Umang goel
Bhabha institute of technology

Slide 2: 
Largest Democracy

Slide 3: 
Stable Democratic System Sub-continental Nation – Religious, Ethnic &
Linguistic diversity Federal structure: 28 states 18 languages Multi-party system:
Changes in government through elections both at Centre and state levels Coalition
governments at Centre for over 10 years Strong independent judicial system Free
vibrant, strong media (mushrooming growth in print as well as electronic media)

Slide 4: 
Stable Democratic System Gradual liberalization Industrial licensing dismantled
Trade liberalization – tariff/tax reduction Opening up of FDI Government
regulation to facilitation Closed economy Centralized planning Government
permission necessary for Setting up industrial plant Import of capital goods /
technology Expansion of capacity Key sectors of economy reserved for public
sector only 1990s Completion of integration with global economy Financial/capital
markets reforms as consolidation Tariff down to 10%. To reach ASEAN levels by
2010 Bilateral Comprehensive Economic Partnership Agreements with EU, Japan,
ASEAN etc in pipeline 2000-2005 Prior to 1990s Democracy Gradual incremental
policy changes Broad consensus across parties and civil society.

Slide 5: 
India - a strong and vibrant economy

Slide 6: 
Macroeconomic stability Trends in Inflation- WPI (%YoY) Forex Reserves (USD
bn) Steady increase in forex reserves. Moderate inflation over last few years
Source: Reserve Bank of India, CMIE %

Slide 7: 
Economy – high growth rates Source: Reserve Bank of India, CMIE (%)

Slide 8: 
Economy – high growth rates leading to increasing FDI Increasing FDI trend
Source: RBI, DIPP Source: Reserve Bank of India Svgs & Cap Formation % of
GDP ( Current prices) 23.1 26.3 33.8 32.4 0 5 10 15 20 25 30 35 40 Goss domestic
savings Gross domestic capital formation FY91 FY92 FY93 FY94 FY95 FY96
FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06

Slide 9: 
Source: Reserve Bank of India Trade liberalization – reduction in tariffs Despite a
secular reduction in peak tariffs, the tax to GDP ratio is still showing an upward
trend Trend in Peak Custom Duty ASEAN levels committed to be reached by 2010
(%) 14.2 13.38 14.52 16.95 15.43 12 13 14 15 16 17 18 FY91 FY92 FY93 FY94
FY95 FY96 FY97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06
FY 07 Tax/ GDP ratio Source: Reserve Bank of India Source: FICCI conference,
March 14 – 15 th 2007

Slide 10: 
Capital Markets playing an increased role in the economy Improving ratio of
market cap / GDP Equity Market Reforms SEBI – Independent Regulator
Corporatization and Demutualisation Scheme of 19 stock exchanges to make them
“for profit” entity : FDI flow started in BSE , NSE Screen-based nation-wide
trading Scripless settlement Electronic transfer of securities Market Capitalisation
as Percent of GDP (As at end-March)) Source: Reserve Bank of India India’s
market cap to GDP ratio crossed 100% this fiscal year Source: Reserve Bank of
India, SEBI Handbook

Slide 11: 
Credible independent Central Bank Sound professional management High Degree
of autonomy of India’s Central Bank Macroeconomic stability - Stable currency
Rupee exchange rate Source: RBI ( INR / USD) INR/ USD 17.94 31.39 35.47
42.04 47.68 45.94 45.29 0 10 20 30 40 50 60 FY91 FY92 FY93 FY94 FY95 FY96
FY97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07

Slide 12: 
Developments in Banking Sector Banking business growing consistently Deposits
grew by 17% CAGR (1998-06) Advances grew by 21% CAGR (1998-06) Source:
RBI Banking Business growing over the years Improved banking governance
exhibited by declining Gross NPAs Share of private sector banks increased from
9% in 1996 to 21% in 2006

Slide 13: 
Going Forward
Slide 14: 
Going forward Source: Goldman Sachs, Global Economic Paper No 152, 22
January 2007 India’s GDP (in US$ terms) will surpass that of the US before 2050,
to make it the second largest economy Goldman Sachs has revised its timelines for
India’s GDP exceeding the G6’s GDP New India Projection Italy France/UK
Germany Japan US Cars indicate when Indian US$GDP exceeds that of the
Country 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Slide 15: 
Investment Opportunities

Slide 16: 
Investor-friendly, liberal open-market economy Source: Reserve Bank of India
Government is focused on improving the business and investment environment No
licensing required, except in five sectors 100% FDI permitted in manufacturing
(except atomic energy) 100% FDI permitted in most service sectors Investments,
dividends, fees are freely repatriable Foreign investments allowed in capital
markets State Government compete for Investor Friendly Image

Slide 17: 
Large skill and intellectual capital base Investor-friendly, liberal open-market
economy Strong emphasis on human resource development Skills missions being
launched Up gradation of workers training Increased public spending in Education
and health Over 2.5 million graduates added every year Most of them English-
speaking 300,000 Engineers 150,000 IT professionals

Slide 18: 
Firms in India – globally competitive 69% of survey respondents report higher
profitability averages in India than they do globally 91 percent of MNC’s make
profits in India compared to 45- 50 percent in China

Slide 19: 
Indian firms seek global reach Tata Steel bought Corus Plc Hindalco acquired
Novelis Inc. Suzlon Energy Ltd. acquired REpower Dr. Reddy’s acquired
Betapharm United spirits acquired W&M USD 12.1 billion USD 6 billion USD 1.6
billion USD 0.5 billion USD 0.5 billion Acquisition made Tata Steel world’s fifth
largest steel producer globally Acquisition made Hindalco the world's largest
aluminum rolling company Acquired German’s third largest generic companies
Acquisition made United Spirits world's second largest spirit company Acquisition
made Suzlon world's third largest wind power company
Slide 20: 
MNCs finding location of R&D in India : Increases global competitiveness India-
Attractive location for R&D Large R&D facility of major MNCs Microsoft IBM
ADOBE SAP Sony Ericsson Dell The DaimlerChrysler Boeing Texas Instruments

Slide 21: 
Infrastructure Opportunities

Slide 22: 
Infrastructure Opportunities : Indian Telecom Industry Growth of Indian telecom
(wireless) sector….. Source: Credit Suisse, Press, Analyst Reports, TRAI

Slide 23: 
Infrastructure Opportunities : Indian Telecom Industry (contd.) Effective Mobile
Tariffs (Rs/min) Mobile Subscribers Base (millions) NTP-99 3rd & 4th Cellular
operator 7.2 3.1 4.2 3.1 1.9 1.2 14.5 15.3 1 0.9 1.2 1.9 3.6 6.4 12.8 33.3 51.5 89.5
147 0 2 4 6 8 10 12 14 16 18 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-
04 Mar-05 Mar-06 Dec-06 0 20 40 60 80 100 120 140 160 0.9 Lowering of ADC
from 30% to 10% of Sector Revenues Effective mobile tariff Mobile Subscriber
Base WLL Introduced led by conducive regulatory framework…… Going
forwards – key issues ….. Adequate availability of spectrum - A constrain in India
Infrastructure requirement - 350,000 telecom towers by 2010, as against 125,000 in
2007 To achieve 500 mn subscribers base by 2010 will require significant
investment in telecom equipment manufacturing space

Slide 24: 
Infrastructure Opportunities : Civil Aviation Delhi-Mumbai being modernized
through PPP New private international airport at Bangalore, Hyderabad become
operational- 2008 USD 85 bn to develop Airport infrastructure Boeing and Airbus
have a combined order book of 400 aircraft from India at present

Slide 25: 
Infrastructure Opportunities : Power / Roads / Ports Infrastructure: USD 475 bn in
investments planned in next five years Power Energy shortage at 7.7% / Peak
shortage of 12.3% Ongoing projects: 52000 MW: Investment US$ 60 bn Private
Ultra Mega Power Projects (4000 MW / USD 4 bn each) thr’ Competitive Bids
Roads Annual growth 12 -15% in passenger traffic and 15 -18% for cargo
Investment Opportunities US $ 30 billion till 2012 Ports 960 million tonnes of
traffic by 2013-2014 7.7 % p.a. growth expected in cargo handling till 2013-2014
Investment opportunities: US $ 20 bn till 2012

Slide 26: 
PPP Projects Awarded Source : Ministry of Commerce, Government of India
Source: World Bank report and PPPinindia.com – the study did not include Power
sector Public – Private participation being encouraged Significant plans to improve
the country’s infrastructure

Slide 27: 
Thank You