INDIA FASTEST GROWING FREE MARKET DEMOCRACY IN A GLOBAL ECONOMY

Presentation by: Kamal Meattle, CEO, PBC-STIP, New Delhi, India

www.pbcnet.com
1

meattle@pbcnet.com

CONTENTS

• THE INDIA STORY • INDIAN SUCCESS STORIES • INTERNATIONAL SUCCESS STORIES

• INDIA ADVANTAGE
• BUSINESS OPPORTUNITIES • BUSINESS OPPORTUNITES FOR PHILIPPINES • SME : ADDING VALUE • WINNING ATTITUDE • ACKNOWLEDGEMENT
2

THE INDIA STORY

3

1947 : Year of Indian Independence

Today’s India is one of the fastest growing Democratic Market Economy, well on it’s way to be integrated with the world economy The famous Goldman Sachs report ( Dreaming with BRICs: The Path to 2050 ) states that, among Brazil, Russia, India and China, India will grow the fastest over the next 30 to 50 years by leveraging its demographic advantages and through continued development India’s GDP will exceed Italy’s in 2016, France’s in 2019, Germany’s in 2023 and Japan’s in 2032 INDIA TO BECOME THE 3RD LARGEST ECONOMY IN THE WORLD BY 2032 AND… THE STORY BEGAN IN 1947
4

India Pre - Liberalization

• Planned Industrial Development • Industry Licensing and Quotas • Dominance of Public Sector

• Restriction on Private Investment
• Socialism • Mixed Economy

5

The New Industrial Policy for liberalization-1991

De-licensing De-control • Liberalization of Industrial Licensing De-regulation Broad banding Abolition of registration

• FERA Liberalization

Liberalization of foreign investment Liberalization of Technology Import

6

The New Industrial Policy for liberalization - 1991

Abolition of threshold assets limit • MRTP Liberalization No MRTP clearance needed for expansions, mergers

Several industries hitherto reserved for public sector opened up to private sector • Curtailment of Public Sector

Only eight core industries remain reserved for the public sector

Purview of Board for Industrial and Financial Reconstruction (BIFR) extended to Public sector
7

India Liberalization Stage - Strategies Developed
• Government’s role changed to Regulator from Licensor • All Licenses Rationalized • Active participation of private sector • FDI being Welcomed (100%) - Automatic Route

• Barriers Dismantled & Procedures Simplified
• Indian Industries Actively Investing Abroad • Bureaucracy - Less Government is Good Governance • Allowing Market Forces to Govern the Efficient Allocation of Resources with Minimum State Intervention

• Reducing and rationalising foreign trade barriers

8

Economic Scenario : Post Liberalisation
• India - One of the fastest growing economies in the world • Average GDP growth (1995 -2005) : 6.2 % per annum • Average annual growth (1995 - 2005) Agriculture & Allied Industry Services : : : + 2.1 % per annum + 6.6 % per annum + 7.8 % per annum

• Average Per Capita Income growth (1995 - 2005): 3.8 % per annum
• Inflation down to a single digit level continuously for the last ten years • Foreign exchange reserves increased from US $ 2 b (March 1991) to US $ 145 b (September 2005) • Merchandise Exports : +20 % average rate of growth in last three years • Booming Services Exports from US $ 4.6 b in 1990-91 to US $ 51.3 b in 2004-05
9

Economic Scenario : Post Liberalization
• Balance of Payments surplus (US $ 26 b in 2004 - 05) • External Debt Service Ratio down from 26.2 % in 1995 to 6.2 % in 2005

• Foreign Direct Investment (FDI) : Average +US $ 5 b pa in the last five years.
• Foreign Portfolio Investment : US $ 11.4 b in 2003-04 and US $ 8.9 b in 2004-05 • Reforms continuing and have unleashed dynamic forces – putting the economy on a trajectory of unparalleled economic growth in the future • The Indian Government is working in close co-operation with industry and trade to mitigate the remaining problems and constraints • Broad consensus across the political spectrum on the need for and direction of the reforms. Some issues still need to be resolved 10

Share Of Services Sector In GDP On The Rise (%)

60 50 40 30 20 10 0

32.2

40.6 27.2

43.9 28.1 28.0

48.9 27.2 23.8

52.4 27.1 20.5

1990-91

1995-96 Agriculture

2000-01 Industry Services

2004-05

11

Agriculture

India

• the world’s most irrigated land mass
• world’s 2nd largest exporter of rice & 5th largest exporter of wheat Food production: India’s Ranking in the World

1st 2nd

Tea, Milk Rice, wheat, sugar

12

Manufacturing

• Rate of growth

2003-04
2004-05 • State-of-the-art technologies

7%
9.2 %

• Diversified base of world class capabilities • TQM,TPM, Six Sigma & Lean Manufacturing - part of everyday practice • Diversified industrial base with supporting ancillary industries

• Overseas acquisitions worth US$ 500 m

13

Services

• Consistent growth
2003-04 2004-05 • Sectors Driving Growth - ITES - Healthcare - Financial Services - Education 9.1 % 8.9 %

Source:Economic survey, 2004 - 05
14

Average GDP growth - India & the World
Average GDP Growth (1990-2001) 9.4

9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5
China

Growth (%)

6.2 5.5 4.9 4.7 3.3 2.9 2.9 2.0 India Philippines Thailand Indonesia USA S.Korea Mexico Brazil

Source: WDI, World Bank, 2003
15

Rising share of India’s external trade in GDP

Target : To double share of exports from 0.7 % to 1.5 % of world trade

16

Macro Economic Indicators (2004 - 05)

• Land Area: • Population: • GDP: • Real GDP Growth: • Gross Domestic Savings: • Gross Domestic Investment: • Per Capita Income: • Inflation Rate:

3.29 m sq. km. 1.09 b US $ 630 b 6.9 % 28.1 % (2003 - 04) 26.3% (2003 - 04) US $ 580 6.4 %

17

Macro Economic Indicators (2004-05)

• Exchange Rate: • Merchandise Exports: • Merchandise Imports: • Services Exports: • Foreign Direct Investment: • Foreign Portfolio Investment: • Direct Investment Abroad:

US $ 1 = 43.75 US $ 80b US $ 106b US $ 51b US $ 5.5b US $ 8.9b US $ 1.5b

18

INDIAN SUCCESS STORIES

19

Indian MNCs - On a global buying spree

• Number of foreign firms acquired by Indian companies during 2001 - 03

120

• Total worth
• India - 8th largest investor in the UK • No of investments • No of Indian companies with operations in Singapore

US $ 1.6 b

440 1,441

20

India – Leading The World

• Hero Honda - Largest producer of motorbikes in the world • Moser Baer - World’s 3rd largest producer of optical media • Hero Cycles - World’s largest bicycle producer • Bharat Forge - Amongst the world’s top 3 forgings manufacturers • UB Group - World’s 2nd largest producer of alcoholic beverages • Paharpur Cooling Towers - World’s 2nd largest manufacturer of

Cooling Towers

21

India – Leading The World

• Apollo Hospitals - Single largest hospital chain in South Asia

• TISCO - world’s cheapest producer of steel
• Reliance Industries - World’s largest producer of PTA, a chemical used in textile production

• Mahindra & Mahindra - Amongst top 3 tractor manufacturers in the
world • Telco - Amongst top 3 truck manufacturers in the world

• Welspun - World’s largest producer of terry-towels
• Gujarat Ambuja - Amongst top 5 cement producers in the world

22

Some Indian Examples Benchmarked with the Best In The World

23

Success Story of RELIANCE
The Reliance Group founded in 1932, is India's largest business house with total revenues of over US $ 22.6 b and exports of US $ 3.6 b

It began as a an SME
The Group's activities span exploration and production of oil and gas, refining and marketing, petrochemicals, textiles, financial services, insurance, power, telecom and infocom initiatives The Group exports its products to more than 100 countries the world over Reliance Group revenue is equivalent to about 3.5 % of India's GDP The Group contributes nearly 10 % of the country's indirect tax revenues and over 6% of India's exports Today, the Reliance Group has one of the largest family of shareholders in the world
24

Success Story of WIPRO

Wipro was set up in the backdrop of the small town of Amalner in Maharashtra in 1945 An SME and primarily an oil factory, the chief products were Sunflower Vanaspati and 787 laundry soap It was in the early eighties that Wipro made its foray into the Infotech arena With this began the Wipro Infotech story Today, Wipro stands at the firmament, as a trusted and experienced provider of a comprehensive range of IT services, solutions and products, worldwide

25

Success Story of BHARTI

Bharti Enterprises has successfully focused its strategy on telecom while straddling diverse fields of business It all began as a Small Industry Bharti Tele-Ventures is today acknowledged as one of India's finest companies, and its flagship brand 'Airtel', has over 12 million customers across India Recently, Bharti has successfully launched an international venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri- products exclusively to markets in Europe and USA

26

Success Story of DR.REDDY’S
Dr.Reddy’s Laboratories was founded in 1984, with a capital of US $40,000 in cash and US $120,000 in bank loan

In fact, it is this spirit of entrepreneurship that has shaped the company to become what it is today
Today, the company with revenues of US $446 m, in fiscal year 2005, is India’s second largest pharmaceutical company and the youngest among its peer group

Dr. Reddy’s started its drug discovery programme in 1993 and within three years it achieved its first breakthrough by out licensing an anti-diabetes molecule to Novo Nordisk in March 1997
With this very small but significant step, the Indian industry went through a paradigm shift in its image from being known as just ‘copycats’ to ‘innovators’! Through its success, Dr. Reddy’s pioneered drug discovery in India Today, the company manufactures and markets API (Bulk Actives), Finished Dosages and Biologics in over 100 countries worldwide, in addition to having a very promising Drug Discovery Pipeline
27

Success Story of BIOCON

Biocon is India's leading biotechnology enterprise Over the past 25 years, they have evolved from an small enzyme manufacturing company to a fully integrated biopharmaceutical enterprise, focused on healthcare At Biocon, success has been their ability to develop innovative technologies and products and to rapidly leverage them to adjacent domains This unique "integrated innovation" approach has yielded a host of patented products and technologies that have enabled multi-level relationships with their global clientele As India's first and leading biotechnology company, Biocon extends its support to numerous community outreach and corporate citizenship initiatives with special concentration in the areas of healthcare, education and environment The Biocon Foundation, set up in 2004 has recently launched Arogya Raksha Yojana, a unique health initiative for rural India
28

Success Story of Paharpur Cooling Towers

In its over four decades of existence, Paharpur has come to be acknowledged as the pioneer in the Indian cooling tower industry It all began as a small industry with a capital of US $ 11,000

At today's selling prices, Paharpur has sold cooling towers valued at over US$ 1 b
If these cooling towers were all working together, they would be able to cool more than 265 million liters of water every minute or 382 b liters in 24 hours The Paharpur team consists of highly qualified engineers & professionals with over 1,000 man years of experience in the field of cooling tower application engineering, designing, erection and trouble shooting Paharpur has pioneered several improvements in cooling tower design and operation and has emerged as one of the largest cooling tower manufacturers in the world, with exports to more than 40 countries
29

Success Story of Standipack

A successful SSI unit set up in 1980, in NCR, Delhi • It is the largest lube oil flexible packaging company in India producing packaging materials, machinery and systems and doing contract packaging • Produces /contract packages over 300 m packages a year, for the oil majors in Delhi, Kolkata, Chennai and Mumbai

• Patents in most countries of the World

30

Success Story of Paharpur Business Centre & Software Technology Incubator Park

• Began operations in 1990 in New Delhi, with an equity capital of Less than US $ 15,000 • Current net worth of US $ 10 m

• Provides a suite of 28 services, employing 450 persons
• Has Fortune 500 companies, MNC's and corporate, as clients • Has five international certifications, ISO 9001, ISO 14001, SA 8000, OHSAS 18001 and HACCP • Commitment to UN Global Compact
31

Success Story of Paharpur Business Centre & Software Technology Incubator Park

• Publishes its annual Sustainability Report following the GRI system • Reports its triple bottom line - relating to profit, environment and sustainability

• Now providing technical support to setting up of a 1.7 m ft2 Software Park near Delhi that has been given the SEZ status by the GOI – ‘The Haryana Technology Park’
• Company showcased by CII at the World Summit on Sustainable Development in Johannesburg in 2002 for its sustainability initiatives • Its USP is the Clean Indoor Air in its Center in Delhi - Certified Mountain Quality Air using biotechnology developed by NASA, USA to clean air
32

INTERNATIONAL SUCCESS STORIES

33

Preferred Destination For Foreign Equity Investors
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1 1,105 1,054 965 548 393 263 172 36 22 17 8 7 1,858 Japan India South Korea Singapore Australia China Hong Kong Taiwan Malaysia Sri Lanka New Zealand Philippines Thailand

India attracts second highest private equity investment in Asia Total equity flow to India between 1999 and 2004 doubled Source: NASSCOM
34

from US $ 5.12 b to US $ 11.50 b

MNCs leveraging the India Advantage

35

FDI INFLOWS TO INDIA

7000 6000 5000 4000 3000 2000 1000 0 2000-01 4029

6125 5526 5036 4674

*

2001-02

2002-03

2003-04

2004-05

FDI Inflows ($ million)

36

International Brands Utilizing The Indian Knowledge Base
• More than 100 global companies outsource R&D facilities from India


GE John F Welch Technology Centre – Company’s largest research outfit outside the USA
GE Medical Systems – India as sole sourcing base for its portable ultrasound scanner


Monsanto – First non-US research facility
Eli Lilly – largest research facility in Asia and 3rd largest in the world

Texas Instruments – Digital Signal Processor developed in India – controls 50% of the world market
AVL, Austria – India as base to do R&D for the company’s Japan centre
37

Case Study of Selected German Companies in India
Beiersdorf

Problems at beginning: • Existence of rival company (Nivea) in the market (personal hygiene market)
Reason for success: • Relative name recognition • Adaptable Indian staff • Suppliers who are willing to cooperate • Immense support in form of technology and know-how transfer from side of Germans • Great market potential What is important for business-collaboration with India? • • • Patience and endurance Local manager who knows mother company Collection of experience through business connections

38

Case Study of Selected German Companies in India
Daimler Benz • • Decentralized research was quite essential Achievement of local representation to assess market specified interests

Why India?
• • • Great resources of highly qualified scientists as staff Availability of human capital with low labor costs Internationality: English language and understanding of European culture (due to British history, existence of numerous institutions, administrations, school etc) Economic Policy
39

India – A Preferred Destination
"India has the potential to deliver the fastest growth over the next 50 years with an average rate of more than 5 per cent a year for the entire period” Dominic Wilson, Senior Global Economist and Vice President, Goldman Sachs 2005 "We want to bring to the world various facets of this extraordinary country, its people and progress" “India's highly educated workforce, management talent, rule of law, transparency, cultural affinity and regulator environment are more favorable than China's.” A T Kearney, FDI Index 2004

“Quite simply, I was blown away by what I saw on my first trip to India” Stephen Roach, Managing Director & Global Chief Economist, Morgan Stanley 2004

Chris Cramer, International Managing Director, CNN 2004

40

INDIA ADVANTAGE

41

The India Advantage
Excellent network of research laboratories Well-developed base industries

Proficiency in English

Pro active policy framework

Rich biodiversity

Extensive clinical trial opportunities

Low manpower costs

Trained manpower and knowledge base
42

Demographics: A strong demand driver

By 2020

Working age population to rise to 65%

Urban population to rise to 40%

30-40 mn people joining middle class every year
43

Growing Knowledge Pool

Source: UN, Morgan Stanley

Source: IMD Competitiveness Yearbook 2003
44

The Cost Advantage

Costs for offshore work 30 - 50 % lower than in USA / Europe
45

Low Wages
Total Compensation for Workers in Heavy Manufacturing (US$ per Hour)
25 20.32 20 15 10 5 0 USA Korea Mexico China India Indonesia 8.35 2.27 0.75 0.43 0.35

Source: IMD Competitiveness yearbook, 2003

46

Import duty Reductions

Reduction in Peak Customs Duties on Manufactured items
160 140

in per cent

120 100 80 60 40 20 0

150 110

50
1991 Mar-92 Mar-95

42
Mar-97

38.5
Mar-00

30
Mar-02

25
Mar-03

20
w.e.f March 2004
47

India - Economic Enablers
10th largest economy in the world - 4th in terms of PPP

Will overtake Japan in PPP terms by 2010, to be 3rd largest in the world
Large entrepreneurial base and diversified manufacturing structure Large reservoir of skilled labour at internationally competitive cost

Vast pool of scientifically and technically qualified manpower of 20m
A large domestic market - 300 m + strong middle class population having substantial purchasing power Largest democratic set - up A broad based and transparent legal framework including arbitration

48

India - Economic Enablers
Vast network of bank branches, financial institutions and well-organized capital and money markets

A network of technical and management institutes of highest international standards for development of human resources

India has a record of meeting its international financial obligations as
per schedule and has never been a defaulter No communication barrier, as English is the most prevalent business language Strong and vibrant small scale sector that is keen to establish strategic alliances with their foreign counterparts

49

India - Economic Enablers

Supportive infrastructure base

Strategic location for third country markets, particularly in the rapidly growing south and south-east Asian countries

The strategic location of India and its easy and efficient access to the Middle East, East European countries, CIS countries, Africa, South East Asia and Asia-Pacific countries places it in a unique position as a sourcing ground for entering into strategic alliances in export-oriented industries Foreign companies can take advantage of India’s strategic location and tap the markets of these countries.

India is slowly but surely emerging as an attractive destination for foreign investment
Liberalized industrial and foreign investment policies
50

India - Economic Enablers
Recognising the need and the potential in certain areas, the Government has also come out with specialised packages of incentives for setting up projects in the fields of power, roads and highways, telecommunications, mining, drugs and pharmaceuticals,hydrocarbons, shipping and ports, tourism, electronics, food processing, etc

The Government is vigorously promoting and approving foreign direct investment keeping in view the objective of attracting at least US $ 10 b per annum

The Government is very keen to attract sizeable foreign investment into infrastructural projects like roads, power, ports, telecommunications, etc. as the demand for infrastructural services is expected to rise several times to match the projected economic growth of around 8 % per annum in the next ten years

51

India - Economic Enablers

Sector FDI Limits • Defence • Telecom • Civil Aviation • Real estate & construction sector • Integrated township development • Tea plantation

up to 26 % up to 74 % up to 49 % up to 100 % up to 100 % up to 100 %

52

The India Advantage: Infrastructure
• Road length Second largest road network in the world 2.5 m km

• Railway routes
• Cargo handled

63,000 km

298 m tonnes

• Electricity installed capacity
Sixth in world electricity generation • Telephone Connections • Fixed lines (Dec, 2004) 8th largest telecom network in the world

126,000 MW

77 m lines

44.76 m

53
Source: Department of Economics & Statistics, Tata Services Ltd

Indian Brains Abroad
• Though foreign multinational have dominated the research agenda in India
to date, a growing number of Indians who have worked abroad are returning home with cash, contacts and confidence to set up companies of their own • These are people who have the experience and exposure to best practices abroad • For the first time, Indians who have been exposed to the world, realize they can do something just as good and they can be world-class • They have an attitude to meet challenges and succeed and also give back something to their country • 35 % of Doctors in USA • 36 % of NASA Scientists in USA • 35 % of Silicon Valley Start-Ups are by Indians • India emerging as outsourcing hub
54

BUSINESS OPPORTUNITIES

55

Opportunity in various Industry Sectors

• Software • Biotechnology

• Outsourcing
• Retailing • Real Estate • Auto Components • Telecommunication • Media & Entertainment
56

Opportunities in Software

• The Software industry in India is witnessing an explosive growth and expects to generate US $ 87 b including US $ 50 b from exports by 2008 • More than 150 global business giants have set up research and development facilities in India Some of these firms are GE, Microsoft, TI, HP, IBM, Daimler Chrysler and Motorola • Bangalore has over 150,000 software engineers and a concentration of hi-tech companies • Delhi and NCR is the 3rd largest exporter of Software services from India

• More than 70,000 software professionals enter the Indian market each year

57

Opportunities in Software – The China Connection

• China has a worker base equal to India's in terms of cost, quality and scale • In future, the Indian software Industry will use China as a base to cater to the local markets including Japan • Indian firms such as HCL, TCS, Infosys and Wipro have already opened centers in China to outsource technology talent

58

Growing IT Market Size (2002 - 03) Growth rate CAGR (since 1999) US $ 24 b 28 % 46 %

Share of IT and BPO 2008 projection

1.4 % of GDP 7%

Exports (2003 - 04) Growing at

+ US $ 12 b + 30 % pa

Employment Over 650,000 Second largest employer in IT services sector
59

Opportunities in Biotechnology
• Biotechnology is a fast emerging sector in India

• The consumption of biotech products in India was US $ 1.8 b in 1999 and is expected to cross US $ 4.2 b by 2010
• It is estimated that 10 % of the researchers and 15% of the scientists in pharmaceuticals and biotech R&D in USA are of Indian origin • India is churning out 2 m graduates, 300,000 post graduates and 1,500 PhD's, every year • Biocon, the first biotech company was launched in 1978 • Indian Firms such as Shantha Biotech, Bharat Biotech, Dr. Reddy's Lab and Biocon are all very successful firms
60

Biotech Market - A consistent Uptrend
25 % growth in investment 70 % growth in employment

2002- 03

74 % growth in R&D manpower Size 2003 - 04 US $ 705 m US $ 5 b annual revenues 2010

1 m skilled jobs 10 % of global industry

Source: Confederation of Indian Industry (CII)

61

Pharma Market
Size (2002- 03) Size 2010 (estimated) CAGR (1995 - 2002) US$ 7 b US$ 25 b 16.6 %

Exports
CAGR(1995 - 2002)

23 %

Volume – wise

8 % of global market

4th largest in the world

Share of formulations

80 %
62

Opportunities in Outsourcing
• The Indian Outsourcing industry is moving up the value chain

• It is BPO today but the future is for Knowledge Process Outsourcing (KPO), Financial Process Outsourcing (FPO) and Legal Process Outsourcing (LPO)
• It is providing value through domain expertise rather than process expertise • India, in the new knowledge economy, is all set to emerge as a global KPO,FPO and the LPO hub • It is estimated to capture 71 % of the world market by 2010 against 56 % today giving it a market of US $12 b • There are new opportunities, given that there is a serious shortage of quality teachers, in the USA
63

Opportunities in Outsourcing

• The remote education market is expected to be US $ 15 b by 2008 • The current leaders are Engineering design – US $ 400 m, basic data search, integration and management – US $300 m and Biotech and Pharma – US $ 280 m • The Compounded estimated annual growth of KPO for India is 50 % whereas BPO will grow at about 30 % • KPO is expected to engage 250,000 people by 2010 • It will be in areas such as biotechnology,animation and graphics,design in aerospace & automotive, health care, pharma research, learning solutions, data management, customer analytics and entertainment • FPO will include insurance underwriting, risk assessment, equity research and corporate market research
64

ITES - BPO Sector
Contribution of IT Enabled Services in total IT exports 1999-2000 20%

2002-2003 33%

2000-2001 20% 2001-2002 27%

- ITES exports projected to touch US$ 24 b by 2008 - India offers combination of cost-quality-scale advantage
65

Opportunities in Retail Sector
The ongoing buoyancy in India’s spending, arising from the changing demographics and the resultant rise in income levels, has resulted in a distinct consumer preference for value-added products across the retail spectrum, providing a platform for the rapid growth of the retailing sector which could emerge as one of the fastest growing sector in coming years • Organized retailing industry to rise from US $ 4b to US $ 15b by 2010 The total retailing industry, estimated at US $ 200b is largely in the unorganized sector with organized retailing accounting for less than 2 % (US $ 4b) The organized retailing segment to grow fourfold in 5 years According to NCAER, the Indian middle class (household income between US $ 4,500 – 23,000) currently at 92m, is expected to cross 153m by 2010 Substantial mall construction: The number of malls is expected to rise from the current 40 to around 250 by 2010 Close to 50m sq. ft. of retail space is expected to be developed over the next 5 years
66

• • •

Opportunities in Real Estate
• The US $ 50 b Indian real estate market is booming and expected to grow at 25 per cent annually

• The boom owing to the consumption powered growth of the country's economy has seen investors planning nearly 250 new shopping malls by 2008, as against just three that existed till 2002
• The central government adopted a regulation in 2005 allowing foreigners to bid for Indian construction projects with local partners and also reducing their minimum land - holding limit from 100 acres to 25 acres • Enthused by the liberalized investment guidelines, a slew of foreign builders are rushing to launch projects in Asia's third largest economy

• Expected annual shortfall of 20 m housing units by 2011 Mumbai alone would need more than 180,000 housing units
• An opportunity – for developing large- scale commercial and residential townships in six cities – Kolkata, Bangalore, Mumbai, Chennai, Hyderabad and New Delhi
67

Opportunities in Auto Components

The Indian automotive industry has grown at a staggering pace over the last few years The US$ 6.8 b industry has registered a CAGR of 17 % between 1998 - 2003 and is projected by ACMA to grow at a 15 % CAGR till fiscal 2012 The opening up of the sector over the last decade has caught the attention of global auto majors In the 1990’s, economic liberalization allowed foreign automakers such as Hyundai, Ford, Toyota and GM set up base in India They also persuaded their overseas components suppliers to set up local manufacturing bases in India For example, Delphi followed General Motors and opened their plant in the state of Gujarat in 1995 and Visteon followed Ford in 1998
68

Opportunities in Auto Components

• Present Industry size

US $ 6.8b

By 2012
• Total Exports By 2010 • Key Features

US $ 17b
US $ 5b

- Suitability as a low cost manufacturing base for MNCs - Costs 20 - 30 % lower, compared to USA - High product quality, superior design & engineering

capabilities

69
* Source: ACMA

Opportunities in Telecommunication
• Until 1995, during the more than forty years of government monopoly, there were 9.4 m telephone connections

• There are 46.2 m fixed line subscribers and 52.2 m mobile phones
• The mobile phone market is growing at 2 m per month • Estimated rise in Cellular by 100 m subscribers by 2007 • Basic telephone connections 175 m by 2010 • 100 % FDI in telecom equipment manufacturing

• Almost 2 m wireless subscribers getting added every month
• Unlike many developed countries, the GSM and CDMA technologies co - exist • The outsourcing boom would not have occurred without the private telecom 70 sector

Opportunities in Media & Entertainment
• The Indian media and entertainment industry, with the prominent segments being films, television, and music has grown in recent times • The entertainment industry is currently generating revenue of US $ 7.2b • The average growth budget for films has been increasing by 15 % p.a

• Another high growth segment of the entertainment industry is television broadcasting
• The present size of this segment is estimated to be US $ 1b • The penetration of cable TV, in the rural segment is expected to grow by 12 % pa • The music industry in India is expected grow at 20 % pa • FM radio broadcasting has been privatized
71

BUSINESS OPPORTUNITIES FOR PHILIPPINES

72

Bilateral Trade
Value in US $ m
Year 1997- 98 1998 - 99 1999 - 00 2000 - 01 2001- 02 2002 - 03 2003 - 04 2004 - 05 Export 239.01 118.71 143.68 201.63 248.63 473.23 321.54 393.90 Import 27.77 37.25 56.31 62.97 95.17 123.98 122.11 181.87 Total Trade 266.78 155.96 199.99 264.60 343.80 597.21 443.65 575.77 Balance of Trade 211.24 81.46 87.37 138.66 153.46 349.25 199.43 212.03

Source: Ministry of Commerce, India

73

Major Indian Exports To Philippines
• Meat & preparation • Drugs, Pharmaceuticals & fine Chemicals

• Rubber manufactured products except footwear
• Plastic & Linoleum Products • Primary & semi finished iron steel

Major Indian Imports From Philippines
• Metal ores & scrap
• News print • Non - ferrous metals • Gold • Electronic goods
74

Potential for Business
• IT & ITES • Sharing information & technology for clean environment • Gems and Jewelry • Natural and Herbal Products

• Renewable Energy Sources
• Dairy • Drugs and Pharmaceuticals • Construction and Material and services • Mining • Oil and Gas
75

Deteriorating Air Quality
The major sources of air pollutants Motor vehicles Industrial plants Burning and construction work The continuing increase in motor vehicles and population, the inadequate mass transit system, worsening traffic conditions, the establishment of pollutive industries, the widespread practice of open burning, and inadequate enforcement, if not adequately addressed, are bound to contribute to increasing air pollution in the surrounding areas The most effective approach in improving air quality is to stop the generation of pollutants at their source This involves replacing a highly pollutive technology or energy source with a nonpolluting or a less polluting one, including shifting to cleaner fuels
76

Air Quality Management
The world’s best practices in preventing air pollution and maintaining ambient air quality reflect the creative use of technology and fuel options, which range from • Use of cleaner vehicle fuels - CNG, Gasohol, Biodiesel, Fuel cell, Electricity • Solar energy • Wind energy • Mass transportation systems – Underground, Monorail • Usage of Appropriate technologies for ‘Green Buildings’ • Innovative urban planning incorporating walkways and bike lanes
77

Improvement Of Ambient Air - Nehru Place Greens, New Delhi 1996 - 2005
Parame te r ASHRAE* Standard (m axim um ) 1000 PPM 0.055 ug / m 100 ug / m 3
3 3

1996

1999

2001

ASHRAE** Standard (m axim um ) 300-500 ppm 10 mg / m
3

2002

2004

2005^

CO 2 C arbon monoxide O z one

455 BDL
#

350 BDL
#

339 BDL
#

331 BDL
#

341 BDL
#

345 BDL# N.A. N.A. N.A. 35 32 404 354 N.A.

BDL# 0.278 2 67 69 1047 672 45

BDL# BDL
#

BDL# BDL
#

0.005 mg / m 3 0.012 mg / m 1.5 ug / m 3 100 ug / m 3 365 ug / m 3 260 ug / m 3 C arcinoge nic
3

BDL# BDL
#

N.A. N.A. N.A. 33 32 399 356 N.A.

Formalde hyde 0.4 mg / m Le ad Nitroge n dioxide Sulphur dioxide SPM RSP Be nz e ne
*

1.5 mg / m 3 100 ug / m 3 365 ug / m 3 260 ug / m 3 75 ug / m 10 ug / m
3 3

0.003 38 40 593 502 18.5

BDL# 34 32 390 355 10

BDL# 32 31 389 349 10

American Society for Heating, Refrigeration, Air Conditioning Engineers 62-1999 (revised) American Society for Heating , Refrigeration, Air Conditioning Engineers 62-2001 (revised) # Below Detectable Level  Any presence of Benzene is carcinogenic 78 ^ Data validated to August 2005
**

IAQ Results After IAQ Program At PBCTM - STIP 1996 - 2005
Parame te r AS HRAE* S tan dard (m axim um ) 1000 PPM 818 0.055 u g / m 3 100 u g / m 3 BDL BDL Formal de h yde 0.4 mg / m 3 0.156 Le ad Ni troge n di oxi de S u l ph u r di oxi de S PM RS P Be n z e n e 1.5 mg / m 3 100 u g / m
3 #

1996

1999

2001

AS HRAE** S tan dard (m axim um ) 700 ppm e xce ss of ambi e n t 3 10 mg / m 100 u g / m 3 0.5 mg / m 3 1.5 u g / m 3 100 u g / m
3

2002

2004

2005 ^

CO 2 C arbon mon oxi de O z on e

351 BDL# BDL# BDL# BDL# 20 23 92 46

357 0.072 N.A. N.A. N.A. 21 19 90 39
#

362 0.070 N.A. N.A. N.A. 22 19 82 37 N.A.

369 BDL BDL
#

358 BDL BDL BDL
#

#

#

#

0.013 BDL# 22 28 118 55 BDL#

#

0.087 30

BDL# 22

365 u g / m 3 20 260 u g / m 3 75 u g / m 10 u g / m
3 3

365 u g / m 3 23 94 47 BDL# 260 u g / m 3 C arci n oge n i c

606 218 18.5

BDL

N.A.

American Society for Heating, Refrigeration, Air Conditioning Engineers 62-1999 (revised) American Society for Heating , Refrigeration, Air Conditioning Engineers 62-2001 (revised) Below Detectable Level 79  any presence of Benzene is carcinogenic

Air Quality Management – Grow Fresh Air

Areca Palm (Living Room Plant) Using toxin removing plants to clean the air

Sansevieria Trifasciata (Bed Room Plant)

Biotechnology originally developed by NASA, USA and research done by

PBC - STIP on plants suitable for the Delhi climate
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SME: ADDING VALUE

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SME’s IN EU

Category Medium Small Smallest

Max.# Employees 249 49 9

Max. Turnover m 50 10 2

Euro

Wef. January 2005

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SME’s IN INDIA
The definition of small-scale industries (SSI), is given below
Norms for Definition of SSI in India Maximum Limit of Investment in plant and machinery in INR m

Year
1985 1991

SSI
3.5 6

Ancillary
4.5 7.5

1997
1999

30
10

30
10

Source: Ministry of SSI, Govt. of India INR 10 m = US $ 227,000
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Contribution Of SME’s Across Diverse Economies
Share of total establishments 95% 99% 97% 97% 98% 90% 92% 99% Share of output 40% 52% 81% 32% n.a. 33% 13% 36% Share of employment 45% 72% 79% 58% 53% 51% 17% 45% Share of exports 35% 13% 48% 16% n.a. 40% 15% 11%
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Country India Japan Taiwan Singapore U.S.A Korea Malaysia Indonesia

Technology & SSI
To say it in Sam Pitroda’s words “ Technology is for problem solving at personal, community and national levels It is about doing things differently It is about change in mindset, processes, products and preferences Technology is about opportunities and experiences” • This is where the SSI is creating a successful niche for itself.

• Technology is empowering people at all levels cutting across sectors
• This has helped India graduate from being a promising economy to one of the fastest growing economies

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SSI Dominant Sectors In India
• • • • • • • • Textiles, Knitwear, Garments, Woolen and Hosiery Leather and Leather products including footwear and garments Food Processing Drugs, Pharmaceuticals and Biotech Auto parts and components Chemicals, Dyes and intermediaries Hand Tools Electronic Industry particularly relating to design and measuring •Glass and Ceramic items including tiles •Information Technology and ITES •Rubber and Plastic Products, Parts & Components •Bicycle and Bicycle parts •Foundries – Ferrous and Cast Iron •Lubricant Manufacturing •Gems and Jewelry •Paper and Paper products, Corrugated Boxes
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SSI Enablers - CLUSTERS

• 350 SSI and 2,000 artisans clusters • Panipat (Haryana) accounts for 75 % of the total blankets produced in India • Tirupur (Tamilnadu) contributes 80 % of the country’s hosiery exports • Agra (Uttar Pradesh) produces 150,000 shoes per day valued at US $ 1.3 m • Ludhiana (Punjab) produces 95 % of the country’s woolen knitwear, 85 per cent of country’s sewing machines and 60 per cent of bicycle and bicycle parts
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SUPPORT FOR SSI

Dedicated Ministry and allied organisations offer • Policy Support - Reservation, Priority Sector Lending, SEZ, Labor • Institutional support - Through testing centres, tool rooms, entrepreneurship development institutes, training, warehousing • Partnership support - Sub-contracting, ancillarisation & vendor development • Marketing Support - Through Trading Houses, Subsidizing the participation at international Trade Fairs, sales promotion and

business travel

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Additional Government Initiatives

• Credit Guarantee Fund Trust Scheme • Collateral free loans of lenders to SSIs up to US $ 58,000 • Payment to SSI suppliers should be made within 120 days • Reimbursement scheme in respect of ISO 9000 Quality Certification

• Instituting marketing development assistance scheme

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POLICY FRAMEWORK: Important Features

• • • • • •

Reservation of items for exclusive purchase from SSI

358 items reserved for preferential purchase from SSI

Price preference up to 15 % on Government purchase

Development of Industrial Estates In selected towns

Technology : Adoption of new technology

Technology up gradation of existing units
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Networking of SSI for Globalization

• The promotion of inter-firm linkages • Use of Internet: Web Portals like eBay have opened a new avenue, which the SSI are using as a tool, for marketing

• The increasing presence of Multinational corporations have opened new opportunities for subcontracting

91

SSI Sector Facilitating Institutions
Technology Support NSIC, SIDO, SISIs,RTCs,PPDCs, TBSE

Funding Institutions Banks, SIDBI, SFCs, SIDCs, NSIC

Technical Training SIDO, SISIs, EDIs, TCOs , PPDCs, DICss, CFTIs

SSI Sector

Marketing SIDO, NSIC,SSIDCs, EPCs

Industrial Infrastructure SIDCs, SSIDCs, HUDCO

Entrepreneurship Development SIDO, EDI, NIESBUD, SISIs Specialized Institutions

92

Contribution Of SSI In India

> 8,000 Products

95% of Industrial Units

35% of National Exports

SSI An Engine of Growth Over 11 m Units

Over 27 m Employed

7% of GDP

93

Growing Competitiveness of SSI
Year Total SSI Units (million) Registered SSI Units (million) 1.2 Unregistered Employment SSI Units (million) (million) 8.1 22 Employment per Unit Exports US $ (billion) 11

1998- 99 9.3

2.4

2002- 03 11

1.5

9.5

26

2.4

20

2004- 05 12 (P) Source: Ministry of SSI

2

10

28

2.3

24

The Average Export per unit is US $ 2,000
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Growing Productivity & Quality Controls

Year 1993-94 1999-00

Average Capital US $ 2,100 3,700

Employment Per Unit 6.3 3.6

Production US $ 17,000 71,000

Source: Second Census & Sample Survey of 1999-2000 by DC(SSI)

50 % of the total number of ISO 9001 / 14001 certified units are from the SSI Sector

95

WINNING ATTITUDE

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It Is All About Attitude - Management
• Differentiating themselves through the products and services they provide

• Standing out by creating special interfaces with their customers and building unique ways by which they can be held accountable by them
• Building a very strong quality story • Benchmarking innovations against well set, globally accepted standards and aim for targets, creating an environment and culture of innovation within the organization • Developing systems to nurture innovation making full use of the availability of information and by rightful dissemination of knowledge to foster goal driven innovation • Building efficient processes to cut time - to- market • Providing opportunities to their people to do roles that go beyond their existing work profiles

• Providing continuing education

97

It Is All About Attitude – Business Person

• Need to hone their skills • More adaptive thinking • Greater entrepreneurial drive to find new horizons of growth with a competitive spirit • Foresight with a fierce unrelenting passion to execute and act today to improve the future • Bring change more aggressively and lead the organization to implement sustainable changes • Energizing their team and inspiring them for excellent team performance

• Delegating authority to allow people to perform

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It Is All About Attitude – Business Person

• Ability to reach out to a wide international network for ideas and problem solving • Understanding on how things get decided and done • Using customized strategies to influence specific stakeholders

• Executive maturity and emotional wisdom to respond to others and embody the aspirations of ones organization
• Inner strength to do the right thing at the right time • Courageous dedication to super ordinate goals, doing what is right and what will make India great • To keep learning and be abreast of new technology

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Acknow ledgement
PHDCCI – PHD Chamber of Commerce and Industry

CII – Confederation of Indian Industry
FICCI – Federation of Indian Chamber of Commerce and Industry Assocham – Associated Chamber of Commerce and Industry of India

IGCC – Indo German Chamber of Commerce
IACC – Indo American Chamber of Commerce ICRIER – Indian Council for Research in International Economic Relations

NASSCOM – National Association of Software and Service Companies
USCAN – Uniting Services Consulting Advocacy and Networking Paharpur Business Centre – The International Division
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THANK YOU

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