Professional Documents
Culture Documents
Richard S Andrews
Executive Director
Economic Analytical Unit
Key points
• Services sector is key to India’s
development prospects
• This makes it a particularly prospective
sector for Australian companies.
• While Australia is already capitalising to
some extent, there is scope to do more
• But…need to be in it for the long haul
Services and India’s development
• Phenomenal growth in high-end services
has driven India’s recent performance.
• The question is – can growth in one sector
translate into an “Indian development
model” based on services?
• Services: 60 per cent of the Indian
economy – and growing.
Services sector gaining ground
Sector shares in GDP (at factor cost and 1999-00 prices),
in per cent, 1990–91 to 2005–06
100%
80%
60%
40%
20%
0%
1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Communications 15.1
Banking 11.8
Education 9.9
Distribution 8.1
Construction 5.2
Dwellings 4.1
Railways 3.2
Postal 1.8
Storage 1.7
50 35
45 Exports Imports
30
40
25
35
30 20
US$ b
US$ b
25
15
20
15 10
10
5
5
0
0
1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Travel Transportation Other commercial services Travel Transportation Other commercial services Total services
Total services Software services Other business services
Source: Ministry of Finance 2006, Chapter 6 and Appendix Table 6.3. Pre 1999–00 data from RBI 2005b, Table 146. Pre 2003–04 software services data from RBI
Database on Indian Economy, available at https://cdbmsi.reservebank.org.in/cdbmsi/servlet/login/, accessed January 2006.
1. The IT/ITES boom
• India’s boom driving “tradability revolution” for
services and emergence of multi-directional
international supply chains
– India’s business services
imports have boomed at the same time as exports
– Opportunities for collaboration, participation in supply
chains, and just staying up to date with international
developments.
– But highly competitive
• Also opportunities in other high-end services
such as biotechnology
2. Dynamic enablers
• Telecommunications – critical to ongoing
IT/ITES boom
– Huge growth (especially in mobile market) but huge
competition
– Mainly niche opportunities for Australia
• Finance – crucial to spreading growth
– Increasing affluence giving rise to demand for new
financial products
– Opportunities for project finance generated by need
for infrastructure development
– Ongoing reforms in banking and insurance
Dynamic enablers (cont)
• Energy and transport infrastructure – will
determine sustainability of India’s boom
– Recognition by government of need for external
involvement
– Improved public sector fiscal position and
mechanisms for drawing in foreign capital and
expertise
– Australian companies (e.g. SMEC, Clough, Leighton)
operating successfully already
– Specific areas of Australian expertise – airports etc
• Education (key Australian export)
– Watch for changing profile
To be continued …
• Retail – burgeoning middle class drives
demand for international standard retailing
– Structural and cultural shifts required with
major implications for logistics and other
industries
• Tourism/hospitality
– Greater accessibility of travel (deregulated
airlines) will drive demand for expanded
facilities (e.g. middle-range hotels)
Australia’s presence
• Australia’s second fastest growing
services market after China - but it’s
mostly education
• Increasing number of Australian success
stories
• Momentum from recent government –
level visits and initiatives builds on
generally favourable perceptions
• Plenty of competition for limelight
To remember
• India is a “long haul” investment destination –
reflected in differing assessments
– Rewards can be great and business environment is
becoming increasingly transparent
– Need to understand nature of business relationship &
– Pursue targeted marketing strategy: India is not a
homogeneous market.
– But difficulties should not be underestimated – talk to
others who are doing it.