Banking

The banking industry in India is sufficiently capitalized and regulated. The

economic and financial conditions here are better than in any other country.
Liquidity, credit, and market studies have proven Indian banks to be resilient.
They have negotiated the downturn in the global economy well.

The Reserve Bank of India (RBI) is the topmost body monitoring the Banking
Industry. Any shortcomings or discrepancies are dealt with by the RBI.

The banking industry in India is divided into scheduled and non-scheduled banks.
67,000 scheduled bank branches are located in India. They consist of cooperative
banks and commercial banks. The PSBs (Public Sector Banks) form the base of
this sector in India. They account for 78% of the assets in the banking sector. The
Private Sector banking is making headway. They are leading in mobile banking,
phone banking, ATMs, and Internet Banking sectors.

Sectors of the banking industry include investment banking, retail, and private
banking. Investment banking is a growing sector with more Indians looking to
invest funds in mutual funds and stocks rather than the traditional fixed deposits
and schemes.

Retail banking is when the bank deals with individual customers rather than
corporations. Services offered by these banks are normal savings, personal loans,
checking accounts, and debit/credit cards amongst others. This is also a growing
sector as the drive for cashless transactions is growing. More people are opting
for debit and credit cards. Private banking is where the personalized financial
services are provided to individuals or corporations of high worth.

All these sectors are showing immense growth prospects. Internet banking is also
gaining prominence. The phone banking sector is also gaining in popularity.
Thus, the entire banking sector is growing and offers immense potential.

This is why foreign banks are increasingly establishing their base in India. JP
Morgan, Standard Chartered, Bank of America, and many other international
banks have established centers in India to tap its potential.

FDI in this sector has been raised. 74% FDI via the automatic route is allowed in
the private sector banks. This means that the aggregate foreign investment in any
private bank considering all sources should be up to 74% of the paid-up capital.
In the case of nationalized banks, the Portfolio and FDI investment’s maximum
limit is 20%. This cap also applies to the investment in state banks and other
associated ones.
Even with the global recession, the investment in the banking industry is still
prevalent though the volume may have been reduced. The FDI entries in the
country grew by 145% between 2006 and 2007 and by 46.6% during 2007–2008.
The FDI in 2009 was down to 18.6%. However, with the recession abating the
investments are sure to rise.

The government is also encouraging foreign investment in this sector, as the entry
of foreign players will help the sector. FDI in Indian banking can lead to improved
efficiency, better capitalization, and improved adaptability. So the government is
attracting FDI, FII, and NRIs in this field.

Overall, the Indian banking industry has immense potential for further growth
and expansion.

Introduction

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently
capitalised and well-regulated. The financial and economic conditions in the
country are far superior to any other country in the world. Credit, market and
liquidity risk studies suggest that Indian banks are generally resilient and have
withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking
models like payments and small finance banks. RBI’s new measures may go a
long way in helping the restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries
with India’s Immediate Payment Service (IMPS) being the only system at level 5
in the Faster Payments Innovation Index (FPII).*

Market Size

The Indian banking system consists of 27 public sector banks, 21 private sector
banks, 49 foreign banks, 56 regional rural banks, 1,562 urban cooperative banks
and 94,384 rural cooperative banks, in addition to cooperative credit
institutions.^^ In FY07-18, total lending increased at a CAGR of 10.94 per cent
and total deposits increased at a CAGR of 11.66 per cent. India’s retail credit
market is the fourth largest in the emerging countries. It increased to US$ 281
billion on December 2017 from US$ 181 billion on December 2014.

Investments/developments

Key investments and developments in India’s banking industry include:

 • As of September 2018, the Government of India launched India Post
Payments Bank (IPPB) and has opened branches across 650 districts to
achieve the objective of financial inclusion.
• The total value of mergers and acquisition during 17 in NBFC diversified
financial services and banking was US$ 2,564 billion, US$ 103 million and
US$ 79 million respectively @.
• The biggest merger deal of FY17 was in the microfinance segment of
IndusInd Bank Limited and Bharat Financial Inclusion Limited of US$ 2.4
billion @.
• In May 2018, total equity funding's of microfinance sector grew at the rate
of 39.88 to Rs 96.31 billion (Rs 4.49 billion) in 2017-18 from Rs 68.85
billion (US$ 1.03 billion) #.

Government Initiatives

• As of September 2018, the Government of India has made the Pradhan

Mantri Jan Dhan Yojana (PMJDY) scheme an open ended scheme and has
also added more incentives.
• As part of government’s capital infusion plan of Rs 65,000 crore (US$ 9.70
billion) in 21 public sector banks during FY19, Rs 11,336 crore (US$ 1.69
billion) will be infused in Punjab National Bank, Andhra Bank, Allahabad
Bank, Corporation Bank and Indian Overseas Bank.

Road Ahead

Enhanced spending on infrastructure, speedy implementation of projects and

continuation of reforms are expected to provide further impetus to growth. All
these factors suggest that India’s banking sector is also poised for robust growth
as the rapidly growing business would turn to banks for their credit needs.
Also, the advancements in technology have brought the mobile and internet
banking services to the fore. The banking sector is laying greater emphasis on
providing improved services to their clients and also upgrading their technology
infrastructure, in order to enhance the customer’s overall experience as well as
give banks a competitive edge.
India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach
US$ 1 trillion by FY2023 driven by the five-fold increase in the digital
disbursements.
Software
The software industry is continuously expanding in India. It is a leading
destination for the IT and IT-enabled services worldwide. Per NASSCOM, the
leading body for the software industry in India, the gross revenue has grown from
1.2% from 1997–1998 to 5.8% from 2008–2009.

India is the preferred destination for companies and their business needs. The
factors that attract potential investors are the huge talent pool offered by India,
good infrastructure, and low costs. What's driving the software industry in India
is the quality of services being offered. Most of Indian companies are CMM level
5 certified.

The software solutions industry is a major revenue earner. The BPO (Business
Process Outsourcing) and KPO (Knowledge Process Outsourcing) industry is
surging with more companies looking to offshore their customer service
departments. Besides, there are newer areas that are emerging that are making
India a potential winner for investors.

The BPO industry is continuously growing. Per the NASSCOM study, the BPO
sector is set to reach US$ 30 billion in exports by 2012 and has been growing at
a rate of 35% for the past 3 years. The verticals, such as banking, retail, and
telecom, offer more possibilities for the future.

The KPO industry that is currently estimated at US$ 4 billion is set to grow to
US$ 10 billion by 2012. Internet publishing is gaining popularity with more
offshore deals being made.

Software giants, such as Infosys, Wipro, and TCS, are providing software
solutions to clients overseas. IT parks have been developed in all major Indian
cities. Bengaluru in particular is referred to as the silicon valley of India. Many
MNCs, such as Capgemini and Yahoo, have forayed into the Indian market and
are tapping the huge talent base in India. The software solutions industry is thus
expanding continuously.

The web development and design industry is also a prominent area. It is the web
site of the company that a potential customer first views and rates. And with the
growth of the Internet as a medium for all forms of business, this sector offers
immense growth potential.

The animation industry is growing fast in India and is attracting investors. This
sector is showing signs of achieving a growth rate of about 30%. Another area is
the gaming industry. This industry also shows a lot of promise.
According to a study by CRISIL, engineering services outsourcing (ESO) is
likely to be the next big thing in the outsourcing industry. This sector is projected
to increase to US$ 7.5 billion by 2012.

Realizing the potential of the IT industry, the government has created Special
Economic Zones and is contemplating to create Investment regions to further
boost this industry.

Future Scope:

The BPO sector will amount to 10% of the global market share by 2010. If India
just sustains its share in the global market, its exports will surpass US$ 330 billion
by 2020. Thus, the scenario for the Indian software industry looks good and
potential investors can look towards India's software industry as a good bet.

Introduction

The global sourcing market in India continues to grow at a higher pace compared
to the IT-BPM industry. India is the leading sourcing destination across the world,
accounting for approximately 55 per cent market share of the US$ 185-190 billion
global services sourcing business in 2017-18. Indian IT & ITeS companies have
set up over 1,000 global delivery centres in about 80 countries across the world.
More importantly, the industry has led the economic transformation of the
country and altered the perception of India in the global economy. India's cost
competitiveness in providing IT services, cost savings of 60–70 per cent over
source countries, continues to be the mainstay of its Unique Selling Proposition
(USP) in the global sourcing market. However, India is also gaining prominence
in terms of intellectual capital with several global IT firms setting up their
innovation centres in India.
India has become the digital capabilities hub of the world with around 75 per cent
of global digital talent present in the country.

Market Size

India’s IT & ITeS industry grew to US$ 167 billion in 2017-18. Exports from the
industry increased to US$ 126 billion in FY18 while domestic revenues
(including hardware) advanced to US$ 41 billion.
Spending on Information Technology in India is expected to grow over 9 per cent
to reach US$ 87.1 billion in 2018.*
India’s Personal Computer (PC) shipment advanced 11.4 per cent year-on-year
to 9.56 million units in 2017 on the back of rise in the quantum of large projects.
Revenue from digital segment is expected to comprise 38 per cent of the
forecasted US$ 350 billion industry revenue by 2025.

Investments/ Developments

Indian IT's core competencies and strengths have attracted significant

investments from major countries. The computer software and hardware sector in
India attracted cumulative Foreign Direct Investment (FDI) inflows worth US$
32.23 billion between April 2000 to June 2018, according to data released by the
Department of Industrial Policy and Promotion (DIPP).
Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are
diversifying their offerings and showcasing leading ideas in blockchain, artificial
intelligence to clients using innovation hubs, research and development centres,
in order to create differentiated offerings.
Some of the major developments in the Indian IT and ITeS sector are as follows:

• Nasscom has launched an online platform which is aimed at up-skilling

over 2 million technology professionals and skilling another 2 million
potential employees and students.
• Revenue growth in the BFSI vertical stood at 10.3 per cent y-o-y in the first
quarter of 2018-19.
• As of March 2018, there were over 1,140 GICs operating out of India.
• Private Equity (PE)/Venture Capital (VC) investments in India's IT & ITeS
sector reached US$ 7.6 billion during April-December 2017.

Government Initiatives

Some of the major initiatives taken by the government to promote IT and ITeS
sector in India are as follows:

• The government has identified Information Technology as one of 12

champion service sectors for which an action plan is being developed.
Also, the government has set up a Rs 5,000 crore (US$ 745.82 million)
fund for realising the potential of these champion service sectors.
• As a part of Union Budget 2018-19, NITI Aayog is going to set up a
national level programme that will enable efforts in AI* and will help in
leveraging AI* technology for development works in the country.

Road Ahead

India is the topmost offshoring destination for IT companies across the world.
Having proven its capabilities in delivering both on-shore and off-shore services
to global clients, emerging technologies now offer an entire new gamut of
opportunities for top IT firms in India. Export revenue of the industry is expected
to grow 7-9 per cent year-on-year to US$ 135-137 billion in FY19. The industry
is expected to grow to US$ 350 billion by 2025 and BPM is expected to account
for US$ 50-55 billion out of the total revenue.
Pharmaceuticals

Amongst all the countries that fall under the category of developing countries, the
Indian pharmaceutical industry is one of the biggest and the most advanced. This
industry has been a boon to the Indian economy. It provides employment to a
huge number of people and ensures that vital drugs are made available to the huge
population of India at affordable rates.

The drugs and pharmaceutical industry plays a pivotal role in the economic
development of India. Being a very intense knowledge-based industry, it offers
innumerable business opportunities for investors worldwide. Indian
pharmaceutical exports accounts for export to more than 200 countries around the
world. The annual turnover of pharmaceutical products contributes to about US$
17 billion. In recent times, the Indian pharmaceutical industry has shown
tremendous growth in terms of infrastructure development, product usage, and
technology.

The pharmaceutical industry in India provides several opportunities for

investments and trade due to the following factors:

1. With respect to India's huge population it is an excellent center for clinical

trials.
2. India has efficient and cost-effective sources for getting a hold of generic drugs,
especially the drugs that are going off their patents in the coming years.
3. India has abundant manpower with strong scientific, technical knowledge.
4. The cost involved for research and development is very low.
5. The production cost of quality drugs in bulk quantities is very low.
6. India houses excellent laboratories with world-class facilities. It has
laboratories that specialize in process development and the development of cost-
efficient drug manufacturing technology.
7. India is self-reliant in terms of the production of bulk drugs. Almost 70% of
the requirements for the formulation of drugs is available within the country itself.
8. Another important factor that is responsible for attracting foreign investments
in the Indian pharmaceutical sector is the increasing balance of trade in the
pharma sector.
9. India's fast growing biotech industry, which offers great potential in the
international market, also has contributed in making the pharma sector in India
an attractive industry to make investments.
10. Besides the presence of different systems of medicines, such as Siddha,
Naturopahy, Ayurveda, Homeopathy apart from its strengths in manufacturing
makes the Indian pharmaceutical industry an attractive industry to invest in.
Due to all these advantageous factors, India is recognized as one of the leading
players in pharmaceuticals in the global market.

The Indian pharmaceutical industry got a major boost with the signing of the
General Agreement on Tariffs and Trade in 2005. This agreement helped India to
recognize global patents. After recognizing global patents, the Indian
pharmaceutical market has become a sought-out destination for foreign players
to invest in the sector. Also, investment in pharmaceutical industry has vastly
increased over the years since the industrial licensing for a huge number of drugs
and pharmaceutical products has been abolished.

The Department of Chemicals and Petrochemicals, which falls under the Ministry
of Chemicals and Fertilizers, overlooks all the planning, developing, and
regulating of the pharmaceutical industry in India. The ministry permits up to
100% foreign investment provided that the investor adheres to certain stipulations
laid down by the government. The ministry allows for exemption from price
control for a period of 15 years if the product is patented under the Indian Patent
Act and is developed through indigenous R&D in the country.

Thus, with such remarkable initiative of the Indian government, the Indian
prospective pharmaceutical industry looks extremely positive for attracting more
foreign investments.

Introduction

India is the largest provider of generic drugs globally. Indian pharmaceutical

sector industry supplies over 50 per cent of global demand for various vaccines,
40 per cent of generic demand in the US and 25 per cent of all medicine in UK.
India enjoys an important position in the global pharmaceuticals sector. The
country also has a large pool of scientists and engineers who have the potential
to steer the industry ahead to an even higher level. Presently over 80 per cent of
the antiretroviral drugs used globally to combat AIDS (Acquired Immune
Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

Market Size

The pharmaceutical sector was valued at US$ 33 billion in 2017. The country’s
pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over
2015–20 to reach US$ 55 billion. India’s pharmaceutical exports stood at US$
17.27 billion in 2017-18. In 2018-19 these exports are expected to cross US$ 19
billion.
Indian companies received 304 Abbreviated New Drug Application (ANDA)
approvals from the US Food and Drug Administration (USFDA) in 2017. The
country accounts for around 30 per cent (by volume) and about 10 per cent (value)
in the US$ 70-80 billion US generics market.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services,
bio-agriculture, bio-industry and bioinformatics is expected grow at an average
growth rate of around 30 per cent a year and reach US$ 100 billion by 2025.

Investments and Recent Developments

The Union Cabinet has given its nod for the amendment of the existing Foreign
Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI
up to 100 per cent under the automatic route for manufacturing of medical devices
subject to certain conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth
US$ 15.83 billion between April 2000 and June 2018, according to data released
by the Department of Industrial Policy and Promotion (DIPP).
Some of the recent developments/investments in the Indian pharmaceutical sector
are as follows:
• In August 2018, the market grew by 8.7 per cent year-on-year with sales
of R
• s 11,342 crore (US$ 1.69 billion).
• During April-June 2018, pharmaceutical sector in India witnessed private
equity and venture capital investments of US$ 396 million.
• In 2017, Indian pharmaceutical sector witnessed 46 merger & acquisition
(M&A) deals worth US$ 1.47 billion
• The exports of Indian pharmaceutical industry to the US will get a boost,
as branded drugs worth US$ 55 billion will become off-patent during 2017-
2019.#

Government Initiatives

Some of the initiatives taken by the government to promote the pharmaceutical

sector in India are as follows:
• The National Health Protection Scheme is largest government funded
healthcare programme in the world, which is expected to benefit 100
million poor families in the country by providing a cover of up to Rs 5 lakh
(US$ 7,723.2) per family per year for secondary and tertiary care
hospitalisation. The programme was announced in Union Budget 2018-19.
• In March 2018, the Drug Controller General of India (DCGI) announced
its plans to start a single-window facility to provide consents, approvals
and other information. The move is aimed at giving a push to the Make in
India initiative.
 • The Government of India is planning to set up an electronic platform to
regulate online pharmacies under a new policy, in order to stop any misuse
due to easy availability.
• The Government of India unveiled 'Pharma Vision 2020' aimed at making
India a global leader in end-to-end drug manufacture. Approval time for
new facilities has been reduced to boost investments.
• The government introduced mechanisms such as the Drug Price Control
Order and the National Pharmaceutical Pricing Authority to deal with the
issue of affordability and availability of medicines.

Road Ahead

Medicine spending in India is expected to increase at 9-12 per cent CAGR

between 2018-22 to US$ 26-30 billion, driven by increasing consumer spending,
rapid urbanisation, and raising healthcare insurance among others.
Going forward, better growth in domestic sales would also depend on the ability
of companies to align their product portfolio towards chronic therapies for
diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-
cancers that are on the rise.
The Indian government has taken many steps to reduce costs and bring down
healthcare expenses. Speedy introduction of generic drugs into the market has
remained in focus and is expected to benefit the Indian pharmaceutical
companies. In addition, the thrust on rural health programmes, lifesaving drugs
and preventive vaccines also augurs well for the pharmaceutical companies.
Leather
The leather industry in India holds a very prominent place in the Indian economy.
The leather and leather products industry is one of the oldest manufacturing
industries in India. The Indian leather industry provides employment to about 2.5
million people in the country and has an annual turnover of approximately US$
5,000,000.

The industry has a massive potential for providing more employment, growth,
and exports. Recently, the exports of leather and leather products have gained
massive momentum. The exports of Indian leather goods have registered
phenomenal growth. This is mainly because great emphasis has been placed on
the planned development of the leather industry and at the optimal utilization of
available raw materials.

Over the years the leather industry in India has undergone drastic change from
being a mere exporter of raw materials in the early 60's and 70's to now becoming
an exporter of finished, value-added leather products. The main reason behind the
transformation is the several policy initiatives taken by the government of India.
The proactive government initiatives have yielded quick and improved results.
Thanks to the government efforts today, the Indian leather industry has attained
a prominent place in the Indian export and has made the industry one of the top 7
industries that earn foreign exchange for the country.

Since India adopted the globalization and liberalized economic policies in 1991,
the leather industry has flourished consistently in several ways and has
contributed heavily to the Indian exchequer. Though the industry has developed,
it still has great potential for more growth and investments. Investing in Indian
leather industry is particularly advantageous because the industry is poised to
grow further and achieve a major share in the global trading market.

The government of India in its Foreign Trade Policy for 2000–2009 has identified
the leather sector as a focus sector in view of its immense potential for export
growth and generation of employment generation prospects.

Investment opportunities in the leather industry lie in different segments related

to the industry, which include tanning and finishing of leather products,
manufacturing of leather garments, manufacturing of leather footwear and
footwear parts, and manufacturing of leather goods, such as harness and saddlery
amongst a host of other opportunities.

Amongst all the industries mentioned above the footwear industry in particular
holds greater potential for investments. India produces approximately 700 million
pairs of leather footwear every year and accounts for an 18% share of the total
Indian leather export.

After footwear manufacturing of leather goods promise great investment

opportunity. Manufacturing of leather products, such as wallets, travel wares,
belts, and handbags offer great returns on investment.

India is one of the best destinations in the world for investing in the leather
industry because India is endowed with abundant raw materials required for the
industry to grow. India has a huge population of cattle. India accounts for 21% of
the world’s cattle and buffalo and 11% of the world’s goat and sheep population.
Apart from the easy availability of raw materials, investors are able to enjoy an
easy and abundant supply of skilled manpower, world-class technology,
competent and favourable environmental standards, and the devoted support of
allied industries.

Several leading international leather goods manufacturing brand names, such as

Hugo Boss, Tommy Hilfiger, Versace, Guess, and DKNY, have invested in India
and are engaged in sourcing leather goods from India.

SWOT Analysis of Indian Leather Industry

STRENGTHS

• Existence of more than sufficient productive capacity in tanning.

• Easy availability of low cost of labour.
• Exposure to export markets.
• Managements with business background become quality and environment
conscious.
• Presence of qualified leather technologists in the field.
• Comfortable availability of raw materials and other inputs.
• Massive institutional support for technical services, designing, manpower
development and marketing.
• Exporter-friendly government policies.
• Tax incentives on machinery by Government.
• Well-established linkages with buyers in EU and USA.

WEAKNESSES

• Low level of modernisation and upgradation of technology, and the integration

of developed technology is very slow.
• Low level of labour productivity due to inadequate formal training / unskilled
labour.
• Horizontal growth of tanneries.
• Less number of organised product manufacturers.
• Lack of modern finishing facilities for leather.
• Highly unhygienic environment.
• Unawareness of international standards by many players as maximum number
of leather industries are SMEs.
• Difficulties in accessing to testing, designing and technical services.
• Environmental problems.

OPPORTUNITIES

• Abundant scope to supply finished leather to multinationals setting up shop in

India.
• Growing fashion consciousness globally.
• Use of information technology and decision support software to help eliminate
the length of the production cycle for different products
• Product diversification - There is lot of scope for diversification into other
products, namely, leather garments, goods etc.
• Growing international and domestic markets.

THREATS

• Entry of multinationals in domestic market.

• Stiff competition from other countries.(The performance of global competitors
in leather and leather products indicates that there are at least 5 countries viz,
China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive
than India.)
• Non- tariff barriers - Developing countries are resorting to more and more non
– tariff barriers indirectly.
• Improving quality to adapt the stricter international standards.
• Fast changing fashion trends are difficult to adapt for the Indian leather
industries.
• Limited scope for mobilising funds through private placements and public
issues, as many businesses are family-owned.
 Textile
The textile industry in India is at the forefront worldwide. The industry is largely
dependent on exports. About 27% of the foreign exchange in India is through
textiles. It is thought to be around a US$ 52 billion industry and is estimated to
reach US$ 115 billion by 2012. The domestic and international markets are on
their way upward. In fact, India's exports worldwide are projected to rise to 7%
from the existing 4% during this time period. At present they are showing a
growth rate of 15%.

There are various kinds of fabrics available in the Indian market, namely cotton,
silk, woollen, jute, and others that are popular overseas. These fabrics are in huge
demand and heavily exported.

Potential Areas of Investment:

• Indian Retail Industry:

A major area that is propelling the textile industry is the Indian retail market. The
Indian retail industry is going through a golden phase. Apparels and textiles are
the second-highest grosser for the retail industry. With organized retail growing
in India and an increase in the purchasing power of Indians, the textile industry
is set to expand. This bodes well for the Indian textile Industry. The industry grew
at 13% domestically and is stated to grow 5–7% further.

• Exports:

Indian-made textiles and handicrafts are exported to many countries. The US is

the primary market for exports, but the overall count of countries totals 100.
Readymade garments form the largest segment in exports with a 41% share. As
per the records of the Textiles Ministry, India sent textiles amounting US$ 17
billion, an increase of 7% over last year.

India is being considered as a textiles hub because of the easy availability of raw
materials, skilled labor, and good designing capabilities. World-famous labels,
such as Hugo Boss and Diesel, are also importing fabrics from India. Thus,
exports benefits of this industry are enormous.

• Textile Machinery:

This is yet another area that offers investment potential. The government has
reduced customs duties on textile machinery imported from overseas. The
government has also lowered restrictions on the capital goods import prompting
 more imports from overseas in this field. Equipment for cotton spinning,
finishing, carding, and weaving is being imported from abroad.

By providing technological input along with machinery, training, and buy-back

possibilities, investment in this field can be further encouraged and sales boosted.

Incentives provided by the government:

To further propel the textile industry, the government of India has brought
into force a number of steps:

1. It has allowed a 100% FDI via the automatic path.

2. It has de-reserved knitwear and readymade garments from the banner of small-
scale industries.
3. It has initiated TUFS (Technology Upgradation Fund Scheme) to upgrade and
modernize the existing textile industry, which offers investment potential.
4. Textile parks are being set up under SITP (Scheme for Integrated Textile Parks),
which is stated to attract foreign investment to the extent of US$ 4.3 billion.
5. It has also announced financial waivers to hand loom industries and is providing
concessional loans for this industry.

Thus, the Indian textile industry is on a forward path and offers many incentives
for growth.

Introduction

India’s textiles sector is one of the oldest industries in Indian economy dating
back several centuries. India's overall textile exports during FY 2017-18 stood at
US$ 39.2 billion.
The Indian textiles industry is extremely varied, with the hand-spun and hand-
woven textiles sectors at one end of the spectrum, while the capital intensive
sophisticated mills sector at the other end of the spectrum. The decentralised
power looms/ hosiery and knitting sector form the largest component of the
textiles sector. The close linkage of the textile industry to agriculture (for raw
materials such as cotton) and the ancient culture and traditions of the country in
terms of textiles make the Indian textiles sector unique in comparison to the
industries of other countries. The Indian textile industry has the capacity to
produce a wide variety of products suitable to different market segments, both
within India and across the world.
Market Size

The Indian textiles industry, currently estimated at around US$ 150 billion, is
expected to reach US$ 250 billion by 2019. India’s textiles industry contributed
seven per cent of the industry output (in value terms) of India in 2017-18.It
contributed two per cent to the GDP of India and employs more than 45 million
people in 2017-18.The sector contributed 15 per cent to the export earnings of
India in 2017-18.
The production of raw cotton in India is estimated to have reached 34.9 million
bales in FY18^.

Investment

The textiles sector has witnessed a spurt in investment during the last five years.
The industry (including dyed and printed) attracted Foreign Direct Investment
(FDI) worth US$ 2.97 billion during April 2000 to June 2018.
Some of the major investments in the Indian textiles industry are as follows:
• The Cabinet Committee on Economic Affairs (CCEA), Government of
India has approved a new skill development scheme named 'Scheme for
Capacity Building in Textile Sector (SCBTS)' with an outlay of Rs 1,300
crore (US$ 202.9 million) from 2017-18 to 2019-20.
• In May 2018, textiles sector recorded investments worth Rs 27,000 crore
(US$ 4.19 billion) since June 2017.

Government Initiatives

The Indian government has come up with a number of export promotion policies
for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles
sector under the automatic route.
Initiatives taken by Government of India are:
• The Textile Ministry of India earmarked Rs 690 crore (US$ 106.58
million) for setting up 21 ready made garment manufacturing units in seven
states for development and modernisation of Indian Textile Sector.
• The Directorate General of Foreign Trade (DGFT) has revised rates for
incentives under the Merchandise Exports from India Scheme (MEIS) for
two subsectors of Textiles Industry - Readymade garments and Made ups
- from 2 per cent to 4 per cent.
• As of August 2018, the Government of India has increased the basic
custom duty to 20 per cent from 10 per cent on 501 textile products, to
boost Make in India and indigenous production.
• The Government of India announced a Special Package to boost exports
by US$ 31 billion, create one crore job opportunity and attract investments
worth Rs 80,000 crore (US$ 11.93 billion) during 2018-2020. As of August
 2018 it generated additional investments worth Rs 25,345 crore (US$ 3.78
billion) and exports worth Rs 57.28 billion (US$ 854.42 million).
• The Government of India has taken several measures including Amended
Technology Up-gradation Fund Scheme (A-TUFS), scheme is estimated to
create employment for 35 lakh people and enable investments worth Rs
95,000 crore (US$ 14.17 billion) by 2022.

Road Ahead

The future for the Indian textile industry looks promising, buoyed by both strong
domestic consumption as well as export demand. With consumerism and
disposable income on the rise, the retail sector has experienced a rapid growth in
the past decade with the entry of several international players like Marks &
Spencer, Guess and Next into the Indian market.
High economic growth has resulted in higher disposable income. This has led to
rise in demand for products creating a huge domestic market.
Agricultural

Introduction

Agriculture is the primary source of livelihood for about 58 per cent of India’s
population. Gross Value Added by agriculture, forestry and fishing is estimated
at Rs 17.67 trillion (US$ 274.23 billion) in FY18.
The Indian food industry is poised for huge growth, increasing its contribution to
world food trade every year due to its immense potential for value addition,
particularly within the food processing industry. The Indian food and grocery
market is the world’s sixth largest, with retail contributing 70 per cent of the sales.
The Indian food processing industry accounts for 32 per cent of the country’s
total food market, one of the largest industries in India and is ranked fifth in terms
of production, consumption, export and expected growth. It contributes around
8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and
Agriculture respectively, 13 per cent of India’s exports and six per cent of total
industrial investment.

Market Size

During 2017-18* crop year, food grain production is estimated at record 284.83
million tonnes. In 2018-19, Government of India is targeting foodgrain
production of 285.2 million tonnes. Milk production was estimated at 165.4
million tonnes during FY17, while meat production was 7.4 million tonnes. As
of September 2018, total area sown with kharif crops in India reached 105.78
million hectares.
India is the second largest fruit producer in the world. Production of horticulture
crops is estimated at record 307.16 million tonnes (mt) in 2017-18 as per second
advance estimates.
Total agricultural exports from India grew at a CAGR of 16.45 per cent over
FY10-18 to reach US$ 38.21 billion in FY18. In April-August 2018 agriculture
exports were US$ 15.67 billion. India is the largest producer, consumer and
exporter of spices and spice products. Spice exports from India reached US$ 3.1
billion in 2017-18. Tea exports from India reached a 36 year high of 240.68
million kgs in CY 2017 while coffee exports reached record 395,000 tonnes in
2017-18.
Food & Grocery retail market in India was worth US$ 380 billion in 2017.

Investments
According to the Department of Industrial Policy and Promotion (DIPP), the
Indian food processing industry has cumulatively attracted Foreign Direct
Investment (FDI) equity inflow of about US$ 8.57 billion between April 2000
and June 2018.
Some major investments and developments in agriculture are as follows:
• The first mega food park in Rajasthan was inaugurated in March 2018.
• In 2017, agriculture sector in India witnessed 18 M&A deals worth US$
251 million.
• A loan agreement of US$ 318 million was signed between the Government
of India, Government of Tamil Nadu and the World Bank in December
2017 for the ‘Tamil Nadu Irrigated Agriculture Modernization Project'
through which is expected to benefit around 500,000 farmers in the state.

Government Initiatives

Some of the recent major government initiatives in the sector are as follows:
• In September 2018, the Government of India announced Rs 15,053 crore
(US$ 2.25 billion) procurement policy named ‘Pradhan Mantri Annadata
Aay SanraksHan Abhiyan' (PM-AASHA), under which states can decide
the compensation scheme and can also partner with private agencies to
ensure fair prices for farmers in the country.
• In September 2018, the Cabinet Committee on Economic Affairs (CCEA)
approved a Rs 5,500 crore (US$ 820.41 million) assistance package for the
sugar industry in India.
• As of March 2018, the Government is working on a plan to provide air
cargo support to promote agriculture exports from India.
• The implementation of Pradhan Mantri Fasal Bima Yojana (PMFBY) will
be made faster and the government is aiming to increase the coverage under
the scheme to 50 per cent of gross cropped area in 2018-19.
• The Government of India is going to provide Rs 2,000 crore (US$ 306.29
million) for computerisation of Primary Agricultural Credit Society
(PACS) to ensure cooperatives are benefitted through digital technology.
• Around 100 million Soil Health Cards (SHCs) have been distributed in the
country during 2015-17 and a soil health mobile app has been launched to
help Indian farmers.
• With an aim to boost innovation and entrepreneurship in agriculture, the
Government of India is introducing a new AGRI-UDAAN programme to
mentor start-ups and to enable them to connect with potential investors.
• The Government of India has launched the Pradhan Mantri Krishi Sinchai
Yojana (PMKSY) with an investment of Rs 50,000 crore (US$ 7.7 billion)
aimed at development of irrigation sources for providing a permanent
solution from drought.
 • The Government of India plans to triple the capacity of food processing
sector in India from the current 10 per cent of agriculture produce and has
also committed Rs 6,000 crore (US$ 936.38 billion) as investments for
mega food parks in the country, as a part of the Scheme for Agro-Marine
Processing and Development of Agro-Processing Clusters (SAMPADA).
• The Government of India has allowed 100 per cent FDI in marketing of
food products and in food product e-commerce under the automatic route.

Road Ahead

India is expected to achieve the ambitious goal of doubling farm income by 2022.
The agriculture sector in India is expected to generate better momentum in the
next few years due to increased investments in agricultural infrastructure such as
irrigation facilities, warehousing and cold storage. Furthermore, the growing use
of genetically modified crops will likely improve the yield for Indian farmers.
India is expected to be self-sufficient in pulses in the coming few years due to
concerted efforts of scientists to get early-maturing varieties of pulses and the
increase in minimum support price.
The government of India targets to increase the average income of a farmer
household at current prices to Rs 219,724 (US$ 3,420.21) by 2022-23 from Rs
96,703 (US$ 1,505.27) in 2015-16.
Going forward, the adoption of food safety and quality assurance mechanisms
such as Total Quality Management (TQM) including ISO 9000, ISO 22000,
Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing
Practices (GMP) and Good Hygienic Practices (GHP) by the food processing
industry will offer several benefits.
Gems and Jewellery
Introduction

The Gems and Jewellery sector plays a significant role in the Indian economy,
contributing around 7 per cent of the country’s GDP and 15 per cent to India’s
total merchandise exports. It also employs over 4.64 million workers and is
expected to employ 8.23 million by 2022. One of the fastest growing sectors, it
is extremely export oriented and labour intensive.
Based on its potential for growth and value addition, the Government of India has
declared the Gems and Jewellery sector as a focus area for export promotion. The
Government has recently undertaken various measures to promote investments
and to upgrade technology and skills to promote ‘Brand India’ in the international
market.
India is deemed to be the hub of the global jewellery market because of its low
costs and availability of high-skilled labour. India is the world’s largest cutting
and polishing centre for diamonds, with the cutting and polishing industry being
well supported by government policies. Moreover, India exports 75 per cent of
the world’s polished diamonds, as per statistics from the Gems and Jewellery
Export promotion Council (GJEPC). India's Gems and Jewellery sector has been
contributing in a big way to the country's foreign exchange earnings (FEEs). The
Government of India has viewed the sector as a thrust area for export promotion.
The Indian government presently allows 100 per cent Foreign Direct Investment
(FDI) in the sector through the automatic route.

Market size

Gold demand in India rose to 338.70 tonnes between January to June 2018. India's
gems and jewellery exports stood at US$ 13.18 billion between April - August
2018*. During the same period, exports of cut and polished diamonds stood at
US$ 10.31 billion, thereby contributing about 78.22 per cent of the total gems and
jewellery exports in value terms. Exports of gold coins and medallions stood at
US$ 201.75 million and silver jewellery export stood at US$ 239.04 million
between April – August 2018.
The gems and jewellery market in India is home to more than 300,000 players,
with the majority being small players. Its market size is about US$ 75 billion as
of 2017 and is expected to reach US$ 100 billion by 2025. It contributes 29 per
cent to the global jewellery consumption.
India is one of the largest exporters of gems and jewellery and the industry is
considered to play a vital role in the Indian economy as it contributes a major
chunk to the total foreign reserves of the country. The Goods and Services Tax
(GST) and monsoon will steer India’s gold demand going forward.
Investments/Developments

The Gems and Jewellery sector is witnessing changes in consumer preferences

due to adoption of western lifestyle. Consumers are demanding new designs and
varieties in jewellery, and branded jewellers are able to fulfil their changing
demands better than the local unorganised players. Moreover, increase in per
capita income has led to an increase in sales of jewellery, as jewellery is a status
symbol in India.
The cumulative Foreign Direct Investment (FDI) inflows in diamond and gold
ornaments in the period April 2000 – June 2018 were US$ 1.15 billion, according
to Department of Industrial Policy and Promotion (DIPP).
Some of the key investments in this industry are listed below.
• Deals worth Rs 8,000 crore (US$ 1.19 billion) were made at the Indian
International Jewellery Show held in August 2018.
• Companies such as PC Jewellers, PNG Jewellers, Popley and Sons, are
planning to introduce a virtual-reality (VR) experience for their customers.
The customer will have to wear a VR headset, through which they can
select any jewellery, see the jewellery from different angles and zoom on
it to view intricate designs.

Government Initiatives

• The Government of India would notify a new limit for reporting about
transactions in gold and other precious metals and stones to authorities, to
avoid the parking of black money in bullion.
• The Bureau of Indian Standards (BIS) has revised the standard on gold
hallmarking in India from January 2018. The gold jewellery hallmark will
now carry a BIS mark, purity in carat and fitness as well as the unit’s
identification and the jeweller’s identification mark. The move is aimed at
ensuring a quality check on gold jewellery.
• The Government of India has planned to set up a Common Facility Center
(CFC) at Thrissur, Kerala.
• The Gems and Jewellery Export Promotion Council (GJEPC) signed a
Memorandum of Understanding (MoU) with Maharashtra Industrial
Development Corporation (MIDC) to build India’s largest jewellery park
in at Ghansoli in Navi-Mumbai on a 25 acres land with about more than
5000 jewellery units of various sizes ranging from 500-10,000 square feet.
The overall investment of Rs 13,500 crore (US$ 2.09 billion).

Road Ahead

In the coming years, growth in Gems and Jewellery sector would be largely
contributed by the development of large retailers/brands. Established brands are
guiding the organised market and are opening opportunities to grow. Increasing
penetration of organised players provides variety in terms of products and
designs. Online sales are expected to account for 1-2 per cent of the fine jewellery
segment by 2021-22. Also, the relaxation of restrictions of gold import is likely
to provide a fillip to the industry. The improvement in availability along with the
reintroduction of low cost gold metal loans and likely stabilisation of gold prices
at lower levels is expected to drive volume growth for jewellers over short to
medium term. The demand for jewellery is expected to be significantly supported
by the recent positive developments in the industry.
Automobile
India has a huge automobile industry. The country ranks 4th in Asia and 9th in the
world as the world's largest automobile Industry. India has an annual production
of approximately about 2.3 million units.

Presently, India is the world's largest manufacturer of tractors, second-largest

manufacturer of two-wheelers, and fifth-largest manufacturer of commercial
vehicles.

The automobile industry in India gained momentum after the liberalization in

1991. The industry has continued to grow consistently and is increasingly
becoming competent in the global market. In the recent past, India has seen an
upsurge in the automobile industry thanks to its relaxed restriction on the
investment policies in the sector. India's overall economic growth has also played
a significant role in attracting foreign investors to invest in the automobile sector
of the country.

The automobile sector in India has displayed great advances in relation to the
utilization of new technologies and being flexible in the wake of the changing
business scenario.

Both the central government of India and its state governments have taken several
measures to draw investments in the sector and further accelerate the growth of
the industry in the country. The government has liberalized the norms for foreign
investment in the sector. Presently the government permits 100% direct foreign
investment in the sector.

The government has also undertaken several policy measures and incentives to
boost investment in the automobile sector of India. The most prominent policy is
Auto Policy, which was drawn in 2000. This policy basically aims to establish a
globally competitive automobile industry in India and contribute to the Indian
economy.

The important objectives of the Auto Policy are:

1. Making India a global source for auto components

2. Aiding the development of vehicles that can be driven by alternative energy
sources
3. Developing domestic safety methods that are on par with international
standards
4. Steering India's software industry into the automobile technology
 5. Making India an international hub for manufacturing small and cheap
passenger cars
6. Being the global center for manufacturing two-wheelers
7. Ensuring a balanced transition to open trade at a minimal risk

Thus, this ambitious Auto Policy of India aims not only to make India grow in
the sector but also attract huge investment in the country.

The Department of Heavy Industry, which falls under the Ministry of Heavy
Industries and Public Enterprises, is the leading agency responsible for promoting
the growth and development of the automobile industry in India.

The department assists the industry's growth through policy initiatives, providing
technological collaboration, upgrading, and R&D facilities to the automobile
manufacturers.

Also, the growth of Indian middle class and their increased purchasing power
supported by strong macro-economic fundamentals have been instrumental in
attracting major auto manufacturers in India. Several global players, including
leading automobile manufacturers Suzuki and Honda, have invested heavily in
India and have managed to tap the Indian market.

All these factors and the initiatives of the government is an indication that the
Indian automobile Industry has been emerging as a new sector that has unlimited
potential for growth and has promise to offer valuable returns on investments.
The automobile sector has not only been meeting the requirements of the
domestic market but has been penetrating deep into the international market.

Introduction

The Indian auto industry became the 4th largest in the world with sales increasing
9.5 per cent year-on-year to 4.02 million units (excluding two wheelers) in 2017.
It was the 7th largest manufacturer of commercial vehicles in 2017.
The Two Wheelers segment dominates the market in terms of volume owing to a
growing middle class and a young population. Moreover, the growing interest of
the companies in exploring the rural markets further aided the growth of the
sector.
India is also a prominent auto exporter and has strong export growth expectations
for the near future. Automobile exports grew 26.56 per cent during April-July
2018. It is expected to grow at a CAGR of 3.05 per cent during 2016-2026. In
addition, several initiatives by the Government of India and the major automobile
players in the Indian market are expected to make India a leader in the two-
wheeler and four-wheeler market in the world by 2020.

Market Size

Domestic automobile production increased at 7.08 per cent CAGR between

FY13-18 with 29.07 million vehicles manufactured in the country in FY18.
During April-July 2018, automobile production increased 16.69 per cent year-on-
year to reach 10.88 million vehicle units.
Overall domestic automobiles sales increased at 7.01 per cent CAGR between
FY13-18 with 24.97 million vehicles getting sold in FY18. Auto sales in July
2018 witnessed a year-on-year growth rate of 7.9 per cent across segments, driven
by 46.24 per cent growth in three-wheeler sales in terms of percentage.
Premium motorbike sales in India crossed one million units in FY18. Two leading
luxury car manufacturers, BMW and Mercedes-Benz, recorded their best-ever
half yearly sales in India during January-June 2018. Sales of BMW grew 13 per
cent year-on-year to 5,171 units and sales of Mercedes-Benz grew 12.4 per cent
year-on-year to 7,171 units.
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in
2017-18.

Investments

In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few months.
The industry has attracted Foreign Direct Investment (FDI) worth US$ 19.29
billion during the period April 2000 to June 2018, according to data released by
Department of Industrial Policy and Promotion (DIPP).
Some of the recent/planned investments and developments in the automobile
sector in India are as follows:
• Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$
155.20 million) to launch 20-25 new models across various commercial
vehicle categories in 2018-19.
• Mahindra & Mahindra (M & M) is planning to make an additional
investment of Rs 500 crore (US$ 77.23 million) for expanding the capacity
for electric vehicles in its plant in Chakan.
• Hyundai is planning to invest US$ 1 billion in India by 2020. SAIC Motor
has also announced to invest US$ 310 million in India.
• Mercedes Benz has increased the manufacturing capacity of its Chakan
Plant to 20,000 units per year, highest for any luxury car manufacturing in
India.
Government Initiatives

The Government of India encourages foreign investment in the automobile sector

and allows 100 per cent FDI under the automatic route.
Some of the recent initiatives taken by the Government of India are -
• The government aims to develop India as a global manufacturing centre
and an R&D hub.
• Under NATRiP, the Government of India is planning to set up R&D
centres at a total cost of US$ 388.5 million to enable the industry to be on
par with global standards
• The Ministry of Heavy Industries, Government of India has shortlisted 11
cities in the country for introduction of electric vehicles (EVs) in their
public transport systems under the FAME (Faster Adoption and
Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The
government will also set up incubation centre for start-ups working in
electric vehicles space.

Achievements

Following are the achievements of the government in the past four years:
• Number of vehicles supported under FAME scheme increased from 5,197
in June 2015 to 192,451 in March 2018. During 2017-18, 47,912 two-
wheelers, 2,202 three-wheelers, 185 four-wheelers and 10 light
commercial vehicles were supported under FAME scheme.
• Under National Automotive Testing And R&D Infrastructure Project
(NATRIP), following testing and research centres have been established in
the country since 2015
o International Centre for Automotive Technology (ICAT), Manesar
o National Institute for Automotive Inspection, Maintenance &
Training (NIAIMT), Silchar
o National Automotive Testing Tracks (NATRAX), Indore
o Automotive Research Association of India (ARAI), Pune
o Global Automotive Research Centre (GARC), Chennai
• SAMARTH Udyog – Industry 4.0 centres: ‘Demo cum experience’
centres are being set up in the country for promoting smart and advanced
manufacturing helping SMEs to implement Industry 4.0 (automation and
data exchange in manufacturing technology).

Road Ahead

The automobile industry is supported by various factors such as availability of

skilled labour at low cost, robust R&D centres and low cost steel production. The
industry also provides great opportunities for investment and direct and indirect
employment to skilled and unskilled labour.
Indian automotive industry (including component manufacturing) is expected to
reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers
are expected to grow 9 per cent in 2018.
Insurance
Introduction

The insurance industry of India consists of 57 insurance companies of which 24

are in life insurance business and 33 are non-life insurers. Among the life insurers,
Life Insurance Corporation (LIC) is the sole public sector company. Apart from
that, among the non-life insurers there are six public sector insurers. In addition
to these, there is sole national re-insurer, namely, General Insurance Corporation
of India (GIC Re). Other stakeholders in Indian Insurance market include agents
(individual and corporate), brokers, surveyors and third party administrators
servicing health insurance claims.
Out of 33 non-life insurance companies, five private sector insurers are registered
to underwrite policies exclusively in health, personal accident and travel
insurance segments. They are Star Health and Allied Insurance Company Ltd,
Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance
Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health
Insurance Company Ltd. There are two more specialised insurers belonging to
public sector, namely, Export Credit Guarantee Corporation of India for Credit
Insurance and Agriculture Insurance Company Ltd for crop insurance.

Market Size

Government's policy of insuring the uninsured has gradually pushed insurance

penetration in the country and proliferation of insurance schemes.
Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in
FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51
trillion (US$ 23.38 billion) from non-life insurance. Overall insurance penetration
(premiums as % of GDP) in India reached 3.69 per cent in 2017 from 2.71 per
cent in 2001.
In FY19 (up to August 2018), premium from new life insurance business
increased 6.20 per cent year-on-year to Rs 755.88 billion (US$ 11.28 billion). In
FY19 (up to July 2018), gross direct premiums of non-life insurers reached Rs
49,067.47 crore (US$ 7.32 billion), showing a year-on-year growth rate of 13.91
per cent.

Investments and Recent Developments

The following are some of the major investments and developments in the Indian
insurance sector.
• In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance
policy for individuals.
 • Insurance sector companies in India raised around Rs 434.3 billion (US$
6.7 billion) through public issues in 2017.
• In 2017, insurance sector in India saw 10 merger and acquisition (M&A)
deals worth US$ 903 million.
• India's leading bourse Bombay Stock Exchange (BSE) will set up a joint
venture with Ebix Inc to build a robust insurance distribution network in
the country through a new distribution exchange platform.

Government Initiatives

The Government of India has taken a number of initiatives to boost the insurance
industry. Some of them are as follows:
• National Health Protection Scheme will be launched under Ayushman
Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than
100 million vulnerable families. The scheme will be launched on
September 25, 2018.
• Over 47.9 million famers were benefitted under Pradhan Mantri Fasal
Bima Yojana (PMFBY) in 2017-18.
• The Insurance Regulatory and Development Authority of India (IRDAI)
plans to issue redesigned initial public offering (IPO) guidelines for
insurance companies in India, which are to looking to divest equity through
the IPO route.
• IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1
(AT1) bonds that are issued by banks to augment their tier 1 capital, in
order to expand the pool of eligible investors for the banks.

Road Ahead

The future looks promising for the life insurance industry with several changes
in regulatory framework which will lead to further change in the way the industry
conducts its business and engages with its customers.
The overall insurance industry is expected to reach US$ 280 billion by 2020.
Demographic factors such as growing middle class, young insurable population
and growing awareness of the need for protection and retirement planning will
support the growth of Indian life insurance.
Service

Introduction

The services sector is not only the dominant sector in India’s GDP, but has also
attracted significant foreign investment flows, contributed significantly to exports
as well as provided large-scale employment. India’s services sector covers a wide
variety of activities such as trade, hotel and restaurants, transport, storage and
communication, financing, insurance, real estate, business services, community,
social and personal services, and services associated with construction.

Market Size

The services sector is the key driver of India’s economic growth. The sector has
contributed 55.65 per cent of India’s Gross Value Added at current price in Q1
2018-19 and employed 28.6 per cent of the total population. Net service exports
stood at US$ 18.7 billion in Q1 2018-19 (P).
Nikkei India Services Purchasing Managers' Index (PMI) stood at 51.5 in August
2018. During the same month, business sentiments of service providers were
recorded to be at their strongest levels since January 2015.

Investments

Some of the developments and major investments by companies in the services

sector in the recent past are as follows:
• Leisure and business travel and tourism spending are expected to increase
to Rs 14,127.1 billion (US$ 216.9 billion) and Rs 806.4 billion (US$ 12.4
billion) in 2018, respectively.
• India’s earnings from medical tourism could exceed US$ 9 billion by 2020.
• Indian healthcare companies are entering into merger and acquisitions with
domestic and foreign companies to drive growth and gain new markets.

Government Initiatives

The Government of India recognises the importance of promoting growth in

services sectors and provides several incentives in wide variety of sectors such as
health care, tourism, education, engineering, communications, transportation,
information technology, banking, finance, management, among others.
Prime Minister Narendra Modi has stated that India's priority will be to work
towards trade facilitation agreement (TFA) for services, which is expected to help
in the smooth movement of professionals.
The Government of India has adopted a few initiatives in the recent past. Some
of these are as follows:
 • Under the Mid-Term Review of Foreign Trade Policy (2015-20), the
Central Government increased incentives provided under Services Exports
from India Scheme (SEIS) by two per cent.
• Government of India is working to remove many trade barriers to services
and tabled a draft legal text on Trade Facilitation in Services to the WTO
in 2017.

Road Ahead

Services sector growth is governed by both domestic and global factors. The
Indian facilities management market is expected to grow at 17 per cent CAGR
between 2015 and 2020 and surpass the US$19 billion mark supported by
booming real estate, retail, and hospitality sectors.
The implementation of the Goods and Services Tax (GST) has created a common
national market and reduced the overall tax burden on goods. It is expected to
reduce costs in the long run on account of availability of GST input credit, which
will result in the reduction in prices of services.
Chemical
India is predominantly an agrarian economy. The Indian economy mainly
depends upon its agricultural produce. The agricultural output contributes to
about 25% of the country's GDP. As a result of the chemical fertilizers being one
of the related parts of the agriculture, there is tremendous scope for the growth of
the chemical fertilizer industry.

Today, the Indian chemical fertilizer industry is developing fast in terms of using
the latest world-class technology. Indian manufacturers of chemical fertilizers are
now adopting some of the most advanced manufacturing processes to prepare
innovative new products to supplement the Indian agriculture. India is also ranked
as the third-largest exporter and producer of nitrogenous fertilizer.

In the present day scenario, there are more than 57 large-sized and 64 medium-
and small-sized chemical fertilizer production units in India. The main objective
of these chemical fertilizer industries is to make sure that there is a proper supply
of primary and secondary fertilizers to the Indian crops in adequate quantities.
Some of the prominent products manufactured by the Indian fertilizer industry
are nitrogenous fertilizers, phosphate-based fertilizers, calcium ammonium
nitrate, urea, ammonium sulfate, and other complex fertilizers.

The chemical fertilizers industry in India has performed a significant role in

enabling the increased supply of essential nutrients to plants. It has also helped
India achieve the objective of being self-sufficient in the production of food
grains and has accelerated the growth of agriculture.

The chemical fertilizer industry is one of the most energy-intensive sectors, and
it is very vital from the viewpoint of environmental discussions. Today, there is
a great need to increase the productivity of chemical fertilizers through
implementation of pollution-free and environment-friendly technologies. This
will be helpful in achieving economic, social, and environmental development
objectives.

The chemical fertilizer industry of India gained momentum after India adopted
the liberalization and globalization policy in 1991. The government aimed to
reduce subsidies and attract new investments by decontrolling all the phosphatic
and potassic fertilizers.

The Department of Fertilizers is the nodal organization that is responsible for the
planning, development, and promotion of the chemical fertilizer industry in India.
This department also monitors the production, distribution, and imports of
fertilizers. Besides, it is also responsible for management and provides financial
assistance to the investors who are investing in the sector.

The Indian Chemical Fertilizer industry promises a great future for investments.
India's demand for fertilizers is set to increase its supply manifold in the near
future. Thus, there are great investment opportunities for foreign investors to
invest in the Indian chemical fertilizers industry, optimize the fertilizer
production through the use of modern technology, and gain valuable returns. The
government of India has made ambitious plans to set several chemical fertilizer
projects in place. These plans aim to increase the production of fertilizers; thus,
there are a lot of opportunities for new investors to enter into a joint venture with
government undertakings and earn good returns on investments.

Great potential lies ahead for foreign investors looking to invest in the chemical
fertilizers industry in India if they invest in the state of Gujrat as the state is
foreseen to be a leading state in the production of fertilizers.