INDIA

FASTEST GROWING
FREE MARKET DEMOCRACY
IN A GLOBAL ECONOMY

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

meattle@pbcnet.com

www.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

THE INDIA STORY

1947 : Year of Indian Independence

Todays India is one of the fastest growing Democratic Market Economy,

well on its 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
Indias GDP will exceed Italys in 2016, Frances in 2019, Germanys in 2023
and Japans in 2032
INDIA TO BECOME THE 3RD LARGEST ECONOMY IN THE WORLD BY 2032
AND
THE STORY BEGAN IN 1947

India Pre - Liberalization

Planned Industrial Development

Industry Licensing and Quotas
Dominance of Public Sector
Restriction on Private Investment
Socialism
Mixed Economy

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

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

India Liberalization Stage - Strategies Developed

Governments 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

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

+ 2.1 % per annum

Industry

+ 6.6 % per annum

Services

+ 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

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

27.2

43.9
28.1
28.0

1990-91

1995-96

32.2

40.6

Agriculture

52.4

48.9
27.2
23.8

2000-01
Industry

27.1
20.5

2004-05

Services

11

Agriculture

India
the worlds most irrigated land mass
worlds 2nd largest exporter of rice & 5th largest exporter of wheat

Food production: Indias Ranking in the World

1st

Tea, Milk

2nd

Rice, wheat, sugar

12

Manufacturing

Rate of growth
2003-04

7%

2004-05

9.2 %

Diversified base of world class capabilities

State-of-the-art technologies
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

9.1 %

2004-05

8.9 %

Sectors Driving Growth

- ITES
- Healthcare
- Financial Services
- Education

Source:Economic survey, 2004 - 05

14

Average GDP growth - India & the World

6.2

5.5

4.9

4.7
3.3

2.9

2.9

Brazil

USA

Philippines

Mexico

Indonesia

Thailand

India

2.0

S.Korea

9.5
8.5
7.5
6.5
5.5
4.5
3.5
2.5
1.5

9.4

China

Growth (%)

Average GDP Growth (1990-2001)

Source: WDI, World Bank, 2003

15

Rising share of Indias external trade in GDP

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

Share of external trade in GDP

40
30

18.1

23.1

25.5

26.9

30.3

28.9

31.6

32

20
10
0
1991-92 1994-95 1997-98

19992000

2000-01 2001-02 2002-03 2003-04

16

Macro Economic Indicators (2004 - 05)

Land Area:

3.29 m sq. km.

Population:

1.09 b

GDP:

US $ 630 b

Real GDP Growth:

6.9 %

Gross Domestic Savings:

28.1 % (2003 - 04)

Gross Domestic Investment:

26.3% (2003 - 04)

Per Capita Income:

US $ 580

Inflation Rate:

6.4 %

17

Macro Economic Indicators (2004-05)

Exchange Rate:

US $ 1 = 43.75

Merchandise Exports:

US $ 80b

Merchandise Imports:

US $ 106b

Services Exports:

US $ 51b

Foreign Direct Investment:

US $ 5.5b

Foreign Portfolio Investment:

US $ 8.9b

Direct Investment Abroad:

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

US $ 1.6 b

India - 8th largest investor in the UK

No of investments

440

No of Indian companies with

operations in Singapore

1,441

20

India Leading The World

Hero Honda - Largest producer of motorbikes in the world

Moser Baer - Worlds 3rd largest producer of optical media
Hero Cycles - Worlds largest bicycle producer
Bharat Forge - Amongst the worlds top 3 forgings manufacturers
UB Group - Worlds 2nd largest producer of alcoholic beverages
Paharpur Cooling Towers - Worlds 2nd largest manufacturer of
Cooling Towers

21

India Leading The World

Apollo Hospitals - Single largest hospital chain in South Asia

TISCO - worlds cheapest producer of steel
Reliance Industries - Worlds 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 - Worlds 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.REDDYS

Dr.Reddys 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 Indias second
largest pharmaceutical company and the youngest among its peer group
Dr. Reddys 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. Reddys 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

Japan

1,858

India

1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

South Korea
Singapore
1,105
1,054

Australia
China

965

Hong Kong
548
393

Taiwan
263 172
36 22 17 8

Malaysia
7

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

34b
from US $ 5.12 b to US $ 11.50

MNCs leveraging the India Advantage

35

FDI INFLOWS TO INDIA

7000

6125

6000
5000
4000

5036

5526
4674

4029

3000
2000
1000

0
2000-01

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 Companys 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 companys 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

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

Why India?

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"
Chris Cramer, International Managing
Director, CNN 2004

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

40

INDIA ADVANTAGE

41

The India Advantage

Excellent network
of research laboratories

Well-developed
base industries

Pro active
policy framework

Proficiency in
English

Rich biodiversity

Low manpower
costs

Extensive clinical trial

opportunities

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

Partnership Driver - Skilled Manpower
Global Growth in Working-Age
Population (15~64) Over the Ne xt
Six Y ears (Mln)
Stock
Position 2004

World

Availability of Skilled
Manpower, 2003

Addl workin g
age pop ulation
by 2010

375

4,087

Availability of Qua lified

Engineers, 2003

10 = High

10 = High

1 = Low

1 = Low

Singapore

7.4

India

8.9
7.9

India

675

83

USA

7.3

Singapore

Africa

477

73

India

7.2

USA

China

921

56

Germany

7.1

Hong Kong

6.9

S E Asia

355

41

Hong Kong

7.1

Germany

L America

352

38

Japan

7.0

6.7

Taiw an

6.7

Mexico

6.4

W Asia
USA

127

20

197

13

W Europe
123
Source:
UN, Morgan
Japan
ISO:90 01 :20 0 0

85

0.04
Stanley
-3

6.6

Taiw an
Korea
Mexico
China

5.7
5.3

Korea

7.3

5.8

Source: IMD Competitiveness

Yearbook
China
3.92003
4.3

44

The Cost Advantage

Average wage / year (in thousand US dollars)

30

25

28

25
20
15
10
5

5.88

6.4

6.5

7.2

7.2

8.9
6

2.4

Source: NASSCOM

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

20.32

15
8.35

10
5

2.27

0.75

0.43

0.35

China

India

Indonesia

0
USA

Korea

Source: IMD Competitiveness yearbook, 2003

Mexico

46

Import duty Reductions

Reduction in Peak Customs Duties on Manufactured items

160
140

in per cent

120

150

100

110

80
60
40

50

20

42

38.5

Mar-97

Mar-00

30

25

20

Mar-02

Mar-03

w.e.f March
2004

0
1991

Mar-92

Mar-95

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 Indias 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

up to 26 %

Telecom

up to 74 %

Civil Aviation

up to 49 %

Real estate & construction sector

up to 100 %

Integrated township development

up to 100 %

Tea plantation

up to 100 %

52

The India Advantage: Infrastructure

Road length

2.5 m km

Second largest road network in the world

Railway routes

63,000 km

Cargo handled

298 m tonnes

Electricity installed capacity

126,000 MW

Sixth in world electricity generation

Telephone Connections

77 m lines

Fixed lines (Dec, 2004)

44.76 m

8th largest telecom network in the world

Source: Department of Economics & Statistics, Tata Services Ltd

53

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

US $ 24 b
28 %

CAGR (since 1999)

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

2002- 03

70 % growth in employment

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)

US$ 7 b

Size 2010 (estimated)

US$ 25 b

CAGR

16.6 %

(1995 - 2002)

Exports

23 %

CAGR(1995 - 2002)

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%

2001-2002
27%

2000-2001
20%

- 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 Indias 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

$ 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

US

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 1990s, 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

By 2012
Total Exports By 2010

US $ 6.8b
US $ 17b
US $ 5b

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

* Source: ACMA

69

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
70private telecom
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

Export

Import

Total Trade

Balance of Trade

1997- 98

239.01

27.77

266.78

211.24

1998 - 99

118.71

37.25

155.96

81.46

1999 - 00

143.68

56.31

199.99

87.37

2000 - 01

201.63

62.97

264.60

138.66

2001- 02

248.63

95.17

343.80

153.46

2002 - 03

473.23

123.98

597.21

349.25

2003 - 04

321.54

122.11

443.65

199.43

2004 - 05

393.90

181.87

575.77

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

74
Electronic goods

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 worlds 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 )

1996

1999

2001

CO 2

1000 PPM

455

350

339

C arbon
mon oxide
O z one

0.055 ug / m 3

BDL#

BDL#

BDL#

100 ug / m 3

BDL#

BDL#

Formalde hyde 0.4 mg / m 3

0.278

ASHRAE**
Standard
(m axim um )

2002

2004

2005^

331

341

345

10 mg / m 3

BDL#

BDL#

BDL#

BDL#

0.005 mg / m 3

BDL#

N.A.

N.A.

BDL#

BDL#

0.012 mg / m 3

BDL#

N.A.

N.A.

300-500 ppm

Le ad

1.5 mg / m 3

0.003

BDL#

1.5 ug / m 3

BDL#

N.A.

N.A.

Ni troge n
dioxi de
Su lphur
dioxi de
SPM

100 ug / m 3

67

38

34

100 ug / m 3

32

33

35

365 ug / m 3

69

40

32

365 ug / m 3

31

32

32

260 ug / m 3

1047

593

390

260 ug / m 3

389

399

404

672

502

355

349

356

354

45

18.5

10

10

N.A.

N.A.

m3

RSP

75 ug /

Be nz e ne

10 ug / m 3

C arci noge ni c

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
^
Data validated to August 2005
*

**

78

IAQ Results After IAQ Program At PBCTM - STIP

1996 - 2005
Param e te r

AS HRAE*
S tan dard
(m axim um )

CO 2

1000 PPM

C arbon
mon oxi de
O z on e

0.055 u g / m 3
100 u g / m 3

Formal de h yde 0.4 mg / m 3

Le ad

1.5 mg / m 3

Ni troge n
di oxi de
S u l ph u r
di oxi de
S PM

100 u g / m

1996

1999

2001

818

369

358

BDL

BDL

BDL

BDL

BDL

BDL

0.156

0.013

BDL#

0.087

BDL#

BDL#

30

22

22

20

28

23

260 u g / m 3

606

118

94

RS P

75 u g / m 3

218

55

47

Be n z e n e

10 u g / m 3

365 u g / m 3

18.5

BDL

AS HRAE* *
S tan dard
(m axim um )

2005 ^

351

357

362

BDL#

0.072

0.070

100 u g / m 3

BDL#

N.A.

N.A.

0.5 m g / m 3

BDL#

N.A.

N.A.

1.5 u g / m 3

BDL#

N.A.

N.A.

20

21

22

365 u g / m 3

23

19

19

260 u g / m 3

92

90

82

46

39

37

BDL#

N.A.

N.A.

BDL

2004

700
ppm
e xce ss
of
3
ambi
e n/ tm
10
mg

100 u g / m

2002

C arci n oge n i c

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

79

Air Quality Management Grow Fresh Air

Areca Palm
(Living Room Plant)

Sansevieria Trifasciata
(Bed Room Plant)

Using toxin removing plants to clean the air

Biotechnology originally developed by NASA, USA and research done by
PBC - STIP on plants suitable for the Delhi climate

80

SME: ADDING VALUE

81

SMEs IN EU

Category

Max.# Employees

Max. Turnover
Euro m

Medium

249

50

Small

49

10

Smallest

Wef. January 2005

82

SMEs 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

SSI

Ancillary

1985

3.5

4.5

1991

7.5

1997

30

30

1999

10

10

Source: Ministry of SSI, Govt. of India

INR 10 m =
US $ 227,000

83

Contribution Of SMEs Across Diverse Economies

Share of total
establishments

Share of
output

Share of
employment

Share of
exports

India

95%

40%

45%

35%

Japan

99%

52%

72%

13%

Taiwan

97%

81%

79%

48%

Singapore

97%

32%

58%

16%

U.S.A

98%

n.a.

53%

n.a.

Korea

90%

33%

51%

40%

Malaysia
Indonesia

92%
99%

13%
36%

17%
45%

15%
11%

Country

84

Technology & SSI

To say it in Sam Pitrodas 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

85

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

86

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 countrys
hosiery exports
Agra (Uttar Pradesh) produces 150,000 shoes per day
valued at US $ 1.3 m
Ludhiana (Punjab) produces 95 % of the countrys woolen
knitwear, 85 per cent of countrys sewing machines and
60 per cent of bicycle and bicycle parts

87

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

88

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

89

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

90

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

35% of National
Exports

95% of Industrial Units

SSI
An Engine of Growth

Over 27 m
Employed

Over 11 m
Units

7% of GDP

93

Growing Competitiveness of SSI

Year

Total
SSI Units
(million)

Registered
SSI Units
(million)

Unregistered Employment
SSI Units
(million)
(million)

Employment
per Unit

Exports
US $
(billion)

1998- 99 9.3

1.2

8.1

22

2.4

11

2002- 03 11

1.5

9.5

26

2.4

20

2004- 05 12
(P)

10

28

2.3

24

Source: Ministry of SSI

The Average Export per unit is US $ 2,000

94

Growing Productivity & Quality Controls

Year

Average Capital
US $

Employment Per Unit

Production
US $

1993-94

2,100

6.3

17,000

1999-00

3,700

3.6

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

96

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

98

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

99

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

100

THANK YOU

101