Summer months coming to an end , both farmers and policy makers in the country are hoping for a good

monsoon this year, given that the monsoon is crucial as a source of irrigation for 60 percent of the farms in India and approximately two thirds of India's population depend upon agriculture for their livelihood. With India being the world's second biggest producer of rice, sugar and cotton; inflation risingfood inflation rose by 8.55 percent in the week ending May 14and the direct correlation between disposable income and ample rainfall, a timely and evenly-distributed monsoon also augurs well for the economy as a whole. On a silver lining, PM Manmohan Singh signed a slew of trading and investment agreements with countries across the African continent and offered them three-year credit lines of USD 5 billion to achieve their development goals, while attending the India Africa Forum Summit in Ethiopia. India-Africa trade stood at USD 46 billion in 2010 with India setting an ambitious target of reaching USD 70 billion by 2015.

Transportation and Logistics

The airfreight sector in India is witnessing a steep and consistent growth over the last few years. Driven by India's strong GDP growth, rising domestic consumption and EXIM trade as well as supply side improvements, the air freight market has grown at a CAGR of 8.5 percent (FY06-FY10) to reach 1.95 million tonnes in FY10. It is expected to grow at a higher CAGR 10.5 percent over the next few years to reach 3.2 million tonnes by FY15. This growth will, in turn, be supported by planned investments of over INR 80,000 crores1 in the airport sector in the XIIth Five Year Plan, more than double of the INR 36,000 crores2 in the XIth Plan, leading to the development of world class airport infrastructure at Delhi,Mumbai, Chennai, Hyderabad, Bengaluru and several other locations and corresponding strong traffic growth in these key hubs. However, these trends stretch well beyond the metropolitan cities into Tier 2 locations creating novel opportunities

Aggressive emergence of Tier 2 air cargo hubs

Against the overall growth of CAGR 8.5 percent between FY06 and FY10, the air freight market at metro/tier 1 hubs has grown at a CAGR of 8.3 percent from 1.27 million tonnes to 1.75 million tonnes. In contrast, the tier 2 hubs have grown at a CAGR of 11.8 percent from 132,000 tonnes to 207,000 tonnes in the same period

Amongst the larger micro-markets, Cochin has

experienced the steepest growth doubling volume to 42,000 tons in four years. Trivandrum and Ahmedabad are other large markets that have demonstrated good growth. crucial destination catering to the increasing freight demand in North-Western India. Among other tier 2 cities handling sub-10,000 tonnes volume, a firm trend appears with respect to North-Eastern India. Guwahati (CAGR~2.3 percent), the traditional leader, is being overtaken by Agartala (22.9 percent) and Imphal (31.1 percent). Though these high growth rates can be attributed to low base volumes, the actual volume handled by these twin cities have risen drastically to compete with Guwahati's benchmark of ~ 5,000 tonnes. The key drivers behind increased freight handling at airports such as Cochin, Trivandrum and Ahmedabad include rising local demand, improved international connectivity and the resultant hubbing activity and expanding cargo-handling infrastructure. Other emerging hubs such as Pune, Jaipur, etc.5 are witnessing high growth rates primarily driven by increasing domestic volumes, freight handling services by low cost airlines and better connectivity Pune and Calicut are other locations that have broken into 10,000 tons+ category in the same period and are growing at a CAGR ~20 percent Jaipur, given the growth rate of CAGR 27.3 percent, seems to be the next

Segregated by attractiveness for 3PL players and freight forwarders Further analysis suggests that these upcoming hubs can be broadly classified into two categories - 1) attractive-for-3PL players, and 2) attractive-for-freight forwarders - based on the hub's domestic versus EXIM focus. There are ample opportunities for players across the logistics value chain to enter and/or expand their presence within India's air freight sector, driven by strong demand as well as improved carrier services. While metro or Tier 1 cities will continue to dominate the overall market, we believe that it is the new set of Tier 2 cities that represent new and uncluttered opportunities. Service provider firms will do well to evaluate their presence, focus and service orientation in these new locations in the context of this unprecedented growth being experienced in these locations.

Key Recent Deals

Targ et Continental Warehousing Nhava

Retail Industry
The retail sector in the nation of 1.2 billion people is estimated to have annual sales of $450 billion, with nearly 80 percent of the market controlled by tiny family-run shops. After years of debate, foreign direct investment in retail may soon be a reality with a panel of secretaries expected to approve the framework for allowing global retail chains to set up shop in India .This will revolutionized the retail sector.

Indian retail sector accounts for 22% of the country's GDP and contributes to 8% of total employment Hypermarkets, currently accounting for 14% of mall space are expected to witness high growth Demographic dividend with over 50% of country populace under 25 years of age is a prime driving factor for modern retail sector Organized retail, or large chains, makes up only 6 percent of the market but is expanding at 20 percent a year. This is driven by the emergence of shopping centre and malls, and a middle class of close to 300 million people that is growing at just under 2 percent a year.

In July 2010, India took a tentative step towards opening up its organized retail sector to foreign companies by putting out a discussion paper, but it steered clear of suggesting changes to an existing investment cap.

India only allows foreign direct investment in cash-and-carry, or wholesale, ventures; there are restrictions on foreign investment in retail because of opposition from millions of small shopkeepers that are valuable vote banks during elections.

Foreign retailers can enter retail through franchise arrangements with local players, and are allowed to own up to 51 percent in single-brand retail, while 100 percent ownership is permitted in cash-and-carry ventures.

LOCAL COMPANIES
Pantaloon Retail is the country's largest-listed retailer, with hypermarket chain Big Bazaar, supermarket Food Bazaar and the apparels brand Pantaloons.

Other prominent players are Tata Group's Trent, K Raheja group-owned Shoppers Stop , Reliance Retail, a unit of Reliance Industries, Aditya Birla Retail and RPG Group, which runs the Spencer hypermarkets.

MAJOR FOREIGN PLAYERS

Wal-Mart Stores Inc has a cash-and-carry operation with local partner Bharti Enterprises, the parent of leading mobile services provider Bharti Airtel . It operates four cash-and-carry outlets in India.

Tesco , UK's largest retailer, has a tie-up with Trent for a franchise agreement for its hypermarket chain Star Bazaar.

Germany's Metro AG operates six wholesale stores in India and will add up to four new wholesale stores in India in 2011.

Marks & Spencer, UK-based department store, operates an apparel retail and has a joint venture with Reliance Retail.

France's Carrefour will open its first cash-and-carry store in India's capital, New Delhi. The world's second-biggest retailer has been seeking a local partner to get into hyper or supermarkets in the country.

Education
Preschool segment in India is experiencing high growth and expected to be a billion dollar market by 2012. The market is valued at USD 300 million in 2008 and it is expected to grow at an annual rate of 36 percent. Preschools are primarily an urban trend with rapid proliferation of organized preschool chains in metros. About 11.5 percent of the urban children between two to four years are going to preschool in India. The organized segments accounts for 17 percent of the market 1. It is a fast-growing market and is attracting investments from many private players. With low-entry barriers and franchisee business model, pre-school market is set to flourish in India in the coming years.

Key Trends
Many corporate houses have shown interest in setting Yash Birla group has set up two playschools in Mumbai up their own chain of preschools in India. name Globe tot'ers. Camlin started with its own brand-Alpha kids. Plans to expand to 100 schools by 2013. Kangaroo kids signed about 400 joint ventures with builders and key

partners. Kidzee, euro kids and Kangaroo kids are upgrading to K-

12 schools and majority of their preschool population will be potential customers

IT-ITES

Indian companies are looking at both organic and inorganic growth strategies in order to increase their capabilities. CoEs around technologies such as Remote Infrastructure Management, Cloud Computing, Unified Communications, Mobility, etc. have been established by a few companies. Companies have also started moving from service-line expertise to vertical expertise. For example, Tech Mahindra recently established a CoE in UK to provide a range of services to Public Sector clients. Firms lacking scale have targeted inorganic growth strategies; for example, ABB acquired Metsys and integrated its R&D capabilities to its Process Automation division. Partnerships with academia - IIT Kharagpur and Microsoft India launched the Microsoft CoE in Intellectual Property Research and Technology Policy. Partnering with other companies to develop solutions - Cognizant teamed up with Eagle Genomics to develop a cloud-based platform for Pistoia Alliance. Evangelizing technology start-ups by partnering with VC's -Infosys operates a VC firm 'Catamaran Venture Fund' which funds technology start-ups. Indian companies are still at a nascent stage when it comes to innovation. While large MNCs have been able to conduct breakthrough research in India; their Indian counterparts have been unable to match their levels because of limited dinvestments made in R&D. They both utilize India more as an 'Engineering Support' destination than for developing 'Product Leadership' solutions. Indian ITBPO companies are 'late adopters' in this markets and have started focusing on innovation only in the recent past. Patent filings by Indian IT and Telecom companies are only 0.37 percent of the total patent filings in India in 2010-11.Only 150 of the total patents filed in India came from Indian IT and Telecom firms such as Infosys, TCS, etc., depicting that smaller players are still mainly focusing on volume sales by offering

services at cheaper prices.