Globalization

And Indian
Economy
A looK through ‘History’

India: Fastest Growing Free Market Democracy

Indian Economy –A Snapshot

Economy of India is the eleventh largest economy in the world by

nominal GDP.

The fourth largest by purchasing power parity (PPP).

By 2008, India had established itself as the world's second-fastest

growing major economy

India's large service industry accounts for 55% of the country's Gross
Domestic Product (GDP) while the industrial and agricultural sector
contribute 28% and 17% respectively.
Infrastructure Challenge
INFRASTRUCTURE CAN BE A GROWTH CONSTRAINT
India Economic Growth triggered by economic reforms in 1991which led to a huge growth in services,
manufacturing and global trade
The infrastructure development has not kept pace with the growth in manufacturing and services sector
leading to a bottleneck
Huge Investment Requirement for physical infrastructure for power, roads, ports, airports and railways

…INITIATIVES IN THE RIGHT DIRECTION

Strong political will and Improved policy environment: Electricity Act, Draft Maritime Policy, Draft Civil
Aviation policy, etc
Ring fencing of funds earmarked for infrastructure
Nomination of implementation authorities
Urgency to bring about commercial viability is apparent
Momentum of private participation picking up, with innovative financing concepts like ‘Public Private
Partnerships’ and ‘Viability Gap Funding’
India: Among the Top-15 Countries in
terms of GDP at constant prices
India: Robust Economic Platform
• India’s enhanced economic performance has been the major
contributor towards increased Forex reserves

• Steadily increasing Forex reserves offer adequate security

against any possible currency crisis or monetary instability

• Forex reserves witnessed an increase of 200 percent for the

period 1990-2007

• Increased confidence of investors in Indian companies have

led to a surge in cross border borrowing by the corporate
houses
Sectors of Indian Economy
India: Investment Destination
• India is ranked second in AT Kearney FDI confidence index

• Telecom and Electronics topped the list of inward FDI

• FDI inflow for the period 2006-07 witnessed a growth of 180

percent over the same period last year

• Mauritius has been the largest contributor towards FDI into

India…..
Bric Survey

Projected GDP Growth Rates for Select Upcoming Economies

8

6
GDPGrowth Rate (%)

0
2005-10 2010-15 2015-20 2020-25 2025-30 2030-35 2035-40 2040-45 2045-50

Brazil China India Russia

 India : Exports and
Imports India's Exports: 2002-07 (till February 2007) 180
India's Import: 2002-07 (till February 2007)
162.30
149.65
112.40 160
120 103.42 140
111.89

USD Billion
100 83.81 120
USD Billion

80 63.95 100 78.28

52.81 80 61.52
60
60
40 40
20 20
0 0
2002-03 2003-04 2004-05 2005-06 2006-07 2002-03 2003-04 2004-05 2005-06 2006-07
(upto Feb. (upto Feb.
07) 07)
Major Deals Undertaken Abroad by India Inc.

Tata
TataSteel
Steelbuys
buysCorus
CorusPlc
Plc USD
USD
USD12.1
12.1
12.1billion
billion
billion
Tata
TataSteel
Steelbuys
buysCorus
CorusPlc
Plc

Hindalco
Hindalcoacquired
acquiredNovelis
NovelisInc.
Inc. USD
USD6 6billion
billion
Hindalco
Hindalcoacquired
acquiredNovelis
NovelisInc.
Inc.

Essar USD
USD 1.58
1.58 billion
EssarSteel
Steelacquired
acquiredAlgoma
AlgomaSteel
billion
Steel

Suzlon USD 1.6 billion

SuzlonEnergy
EnergyLtd.
Ltd.acquires
acquiresREpower
REpower

Videocon
VideoconIndustries
Industriesacquired
acquiredDaewoo
Daewoo USD 730 million
Electronics Corporation Limited
Electronics Corporation Limited
Major Investments Announcements in India
Vodafone USD
USD 11
11 billion
Vodafonebuys
buysHutch
billion
Hutch

Plans
Plansto
tospend
spendononits
itsdevelopment
developmentoperations
operationsinin USD 1.7 billion
India
Indiaover
overthe
thenext
nextfour
fouryears
years

Plans
Plansinvestment
investmentininprivate
privateequity,
equity,real
realestate,
estate,and
and USD 1 billion
private wealth management
private wealth management

Aditya
AdityaBirla
BirlaGroup
Groupincreased
increasedits
itsstake
stakeininIdea
Idea USD
USD 0.98
0.98 billion
billion
Cellular by acquiring 48.14-percent stake
Cellular by acquiring 48.14-percent stake

Renault,
Renault,Nissan
Nissanand
andMahindra
Mahindra&&Mahindra
Mahindrahas
has
initiated USD 0.905 billion
initiated a Greenfield automobile plant projectinin
a Greenfield automobile plant project
Chennai.
Chennai.

Mylan
MylanLaboratories
Laboratoriesacquired
acquiredaamajority
majoritystake
stakeinin USD
USD 0.74
0.74 billion
billion
Matrix
MatrixLaboratories
Laboratories
India: Pacing Ahead to Emerge as a Major
Economy in the World
• India has been ranked superior to other major countries by many
prominent surveys…

• AT Kearney placed India among the top three in its FDI confidence
index…

• … the retail market along with the services sector has been
attracting the interest of major players

• India is expected to outperform its rivals in the BRIC, in terms of

GDP growth rates, from 2015 onwards…
Growth Expected in India
To
Tosustain
sustainthe
theGDP
GDPgrowth
growthof
ofmore
morethan
than88percent,
percent,India
Indiarequires
requiresan
aninvestment
investmentof
ofUSD
USD1.5
1.5trillion
trillionininthe
thenext
nextfive
five
years
years

2010
2010
 GDP – USD 900 billion
 GDP growth rate – 9%
2008
2008  Services contribution – 60-65 %
 GDP – USD 750 billion  FDI limit is expected to be 100
percent in major industry sectors
 GDP growth rate – 9.5%
such as Telecom,
2006
2006  Services contribution – 60 % Semiconductors, Automobiles,
etc.
 GDP – USD 590 billion  FDI limit is expected to be close to
100 percent in major industry  Balance of Trade – Should be
 GDP growth rate – 9 % positive with increased level of
sectors such as Telecom,
 Services contribution – 54 % Semiconductors, Automobiles, exports as compared with imports
etc.  Investment goal – USD 370 billion
 FDI limit not 100 percent in major
industry sectors such as Telecom,  Balance of Trade – Should
Semiconductors, Automobiles, increase with surging exports as
etc. compared with imports
 Balance of Trade – USD (-)46.2  Investment goal – USD 305 billion
billion
 Investment goal – USD 250 billion
Why India? – Quote Unquote
“India has evolved into
India is among the three one of the world's
most attractive FDI leading technology India has among the
destinations in the centers“. highest returns on
world.
foreign investment.
Craig
CraigBarrett
Barrett
Intel
IntelCorporation
Corporation
AATTKearney
Kearney
FDI
FDIConfidence
ConfidenceIndex
Index2005
2005 US
USDepartment
Departmentofof
By 2032, India will be Commerce
Commerce
among the three largest
economies in the world.

“The Indian market has two core

BRIC
BRICReport,
Report,Goldman
GoldmanSachs
Sachs advantages - an increasing
presence of multinationals and
“We came to India for the
an upswing in the IT exports”.
costs, stayed for the quality
and are now investing for
innovation”. “India is a developed
country as far as Travyn
TravynRhall,
Rhall,
ACNielsen
ACNielsen
intellectual capital is
concerned”.
--Dan
DanScheinman,
Scheinman,Cisco
CiscoSystem
SystemInc.
Inc.as
astold
toldto
to
Business
BusinessWeek,
Week,August
August2005
2005

Jack
JackWelch
Welch
General
GeneralElectric
Electric