INDIA’S PROMISE Challenges & Opportunities
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Transcript of INDIA’S PROMISE Challenges & Opportunities
INDIA’S PROMISEINDIA’S PROMISE Challenges & Challenges & Opportunities Opportunities
APBOAPBO March 2007March 2007
Delhi, Capital City
POP: 13 million
Bangalore“Silicon Valley of
India” POP: 7 million
BJP+ 189 Seats
Left 61 Seats
Others 70 Seats
Cong+ 219 Seats
Political Political UncertaintyUncertainty
COALITION GOVERNMENTS
TO STAY
ECONOMIC REFORMS
SECURE
UNITED PROGRESSIVE UNITED PROGRESSIVE ALLIANCEALLIANCE
Sonia Gandhi Pranab Mukherjee
Kamal Nath Praful Patel
Sharad Pawar
BhattacharyajeeNirpuam Sen
Karunakaran
DMK
13 Constituents
Indian National Congress
Congress Allies
Prakash Karat
Left Front
UPA COMMON MINIMUM PROGRAM
Agriculture - “A New Deal For Rural India” Infrastructure - “Building World Class” Employment - “Rozgar Badhao” Education - “Improving Access and Excellence” Health Care - “Creating Capabilities” Water - “Better Access, Better Utilization” Urban Renewal - “Humane and Modern”
UPCOMING STATE ASSEMBLY UPCOMING STATE ASSEMBLY
ELECTIONELECTION
Population 179,000,000
80 Parliamentary Constituencies
4 Phase Poll April / May
TransparencyTransparency
BELL HELICOPTER BELL HELICOPTER
MOTOROLA MOTOROLA
Procurement Challenges
RED TAPISMRED TAPISM
1500 KM8 Days
RED TAPE / TAX ANOMALIES / POOR INFRASTRUCTURE
July 2006
Challenges in InfrastructureChallenges in Infrastructure
48 new road projects worth $12 bn are presently under construction
Indian Railways require $22 bn investment
India’s port upgrades require a total investment of $22 billion
Domestic aircraft movements have shot up by 40%
Modernization requires upgrading 25 of the country’s national airports100,000 MW required by 2012
LAND ACQUISITION-LAND ACQUISITION-SEZs SEZs
NANDIGRAM
WEST BENGAL
5000 POLICE
16 KILLED
68 WOUNDED
TOTAL BANDH
HIGHLY POLITICIZED – SEZs ON HOLD
HUMAN RESOURCE HUMAN RESOURCE CONSTRAINTCONSTRAINT
ITES/BPO INDUSTRY GROWING @ 45% Qtr ITES/BPO INDUSTRY GROWING @ 45% Qtr
QUALIFIED HELP IN SHORTAGEQUALIFIED HELP IN SHORTAGE ATTRITION RATES > 30%ATTRITION RATES > 30%
FINISHING SCHOOLS REQUIREDFINISHING SCHOOLS REQUIRED
CONTRACT LABOR & LABOR REFORMS A CONTRACT LABOR & LABOR REFORMS A MUSTMUST
INDIA’S ECONOMIC INDIA’S ECONOMIC LEADERSHIPLEADERSHIP
Manmohan SinghPrime Minister
Montek Singh AhluwaliaPlanning Commission Deputy
ChairmanP.
ChidambaramMinister of Finance
•Considered the “Father of India’s Economic Reforms”•Economist by training, Strong free-market advocate•Excellent rapport with President Bush
•Private / Public Sector Interlocutor•Economist by training, Oxonian•World Bank background / Easily accessible
• “Inclusive” Budget•Supreme Court Advocate, Harvard MBA
•Pragmatic reformer
SCORECARD ON REFORMSSCORECARD ON REFORMSProgress Progress
• Insurance FDI up to 26% Insurance FDI up to 26% • Telecom up to 74% Telecom up to 74% • Oil/Gas, Roads, Ports up to 100%Oil/Gas, Roads, Ports up to 100%
• Real estate opened to 100%Real estate opened to 100%
• Open Skies: Boeing SalesOpen Skies: Boeing Sales
• Patents Act -IPR Protection: Re-entry of MerckPatents Act -IPR Protection: Re-entry of Merck
• Retail (Single Product): Wal-Mart EntryRetail (Single Product): Wal-Mart Entry
• Civilian Nuclear Cooperation – 123 AgreementCivilian Nuclear Cooperation – 123 Agreement
•15 Special Economic Zones (SEZ’s) at present 42 approved for 2007
GDP Growth Rate > 8%GDP Growth Rate > 8%
6 Million New Cell Phones Registered Last Month!
020406080
100120140160180200
1995 2000 2006
More than 300 of the Fortune 500 are in India
IBMIBM :: 53,000 employees 53,000 employeesCognizantCognizant :: 48,000 employees 48,000 employeesGeneral Electric:General Electric: :: 20,000 employees 20,000 employeesOracleOracle : : 18,000 employees18,000 employeesHewlett-PackardHewlett-Packard :: 11,000 employees 11,000 employeesHoneywellHoneywell :: 7,000 employees 7,000 employeesAmerican ExpressAmerican Express : : 4,000 employees4,000 employeesDellDell : : 3,800 employees3,800 employees
IT/ BPO BoomIT/ BPO Boom
MANUFACTURINGMANUFACTURING
Automobile Components - Worth $15 bn 20 % Annual Growth in Exports
Ford – Producing 30,000 units; Doubling Capacity in 2006-2009 timeframe
General Motors – Expecting to sell 30,000 units in 2006; output to be doubled
Boeing - $12.1 bn sale of civilian aircraft to Air India with significant co-production; recognition of India’s manufacturing prowess
OPPORTUNITIES IN AGRICULTUREOPPORTUNITIES IN AGRICULTURE
$15 bn investment opportunity in storage,
transportation, and refrigeration facilities.
Blue Diamond Growers – India is 4th Blue Diamond Growers – India is 4th
largest and fastest growing marketlargest and fastest growing market
Coca Cola has major presence Coca Cola has major presence
throughout the countrythroughout the country
Pepsi is a major player Pepsi is a major player
with sales $700 mn with sales $700 mn
McDonald’s has introduced the McVeggie McDonald’s has introduced the McVeggie
burger and Veg Pizza McPuffburger and Veg Pizza McPuff
Domino Pizza, Pizza Hut and Kentucky Fried Domino Pizza, Pizza Hut and Kentucky Fried Chicken Chicken
have all established restaurants in India.have all established restaurants in India.
U.S. DEFENSE COMPANIESU.S. DEFENSE COMPANIES
Fremont Group
DEFENSE TRADE DEFENSE TRADE
F-18 Super Hornet
FireFinder & PAC
III
P-3 Orion
F-16 Fighting Falcon
GE-404 Engine
Bell 407 Helicopter
C-131 Transport
Boeing 737 Countermeasure Equipment
Pac-3 Antimissile
System
Next Steps in U.S.-India Strategic Partnership:Major Opportunities in Defense Cooperation - $30
billion
Indian Space Program 5Indian Space Program 5thth largest after U.S., Russia, Europe, China largest after U.S., Russia, Europe, China
$450 mn annual budget, but due to lower wages is equivalent to $450 mn annual budget, but due to lower wages is equivalent to multi-billion dollar program in U.S.multi-billion dollar program in U.S.
Space Exploration – Chandrayan I: India plans to launch its first Space Exploration – Chandrayan I: India plans to launch its first unmanned mission to the moon by 2008unmanned mission to the moon by 2008
NASA agreement with ISRO to send scientific instruments into space NASA agreement with ISRO to send scientific instruments into space aboard India’s Chandrayan Iaboard India’s Chandrayan I
Export Control Regimes; Strategic Partnership ChallengesExport Control Regimes; Strategic Partnership Challenges
US-INDIA SPACE US-INDIA SPACE PARTNERSHIPPARTNERSHIPAn Important Component of Strategic Partnership
NEXT WAVE: NEXT WAVE: PHARMACEUTICALSPHARMACEUTICALS
$6.5 bn and growing at 8-10% $6.5 bn and growing at 8-10%
4th largest pharmaceutical 4th largest pharmaceutical industry in the worldindustry in the world
Expected by 2008 to be Expected by 2008 to be worth $12 billionworth $12 billion
Private Hospitals firmly entrenched: Private Hospitals firmly entrenched: Apollo, Manipal, Escorts, Max HealthcareApollo, Manipal, Escorts, Max Healthcare
Medical TourismMedical Tourism
R&D Centre, Bangalore
India Development Centre,Bangalore, Hyderabad
India Engineering Centre, Bangalore
Software Lab, Bangalore, Pune
Labs India, Bangalore
Innovation Campus, Bangalore
Bangalore
R&D Centre, Bangalore and Mumbai
INNOVATION FRONTIER: R & DINNOVATION FRONTIER: R & D
R&D Centre, Bangalore
INDIA LOOKS OUTWARD INDIA LOOKS OUTWARD
Tata Group - $12 BNTata Group - $12 BN Reliance - $22 BNReliance - $22 BN Essar - $9 BNEssar - $9 BN Birla - $6 BNBirla - $6 BN
•Videocon–Daewoo Electronics-Videocon–Daewoo Electronics-$650 $650 •Dr. Reddy’s Lab–Betapharm - Dr. Reddy’s Lab–Betapharm - $570$570•Ranbaxy–Terpia - $324Ranbaxy–Terpia - $324•VSNL Tyco Global-$130VSNL Tyco Global-$130
WHY INDIA ?WHY INDIA ?
Coherent democracy; Pluralist/SecularCoherent democracy; Pluralist/Secular 1/5th World’s Population; 21/5th World’s Population; 2ndnd largest military in the largest military in the
worldworld Common Values: Against Terrorism, Trafficking, Common Values: Against Terrorism, Trafficking,
NarcoticsNarcotics Ideological Partner re: Nepal, Sri Lanka, Bangladesh, Ideological Partner re: Nepal, Sri Lanka, Bangladesh,
ChinaChina Common Law Judicial SystemCommon Law Judicial System 22ndnd largest number of Doctors, Engineers, PhDs in the largest number of Doctors, Engineers, PhDs in the
worldworld 100,000 Students to U.S. Each Year100,000 Students to U.S. Each Year 1.8 mil Americans of Indian Origin1.8 mil Americans of Indian Origin Politically significant; Politically integratedPolitically significant; Politically integrated 54% of Indian Population is under the Age of 2554% of Indian Population is under the Age of 25
ECONOMIC, IDEOLOGICAL, AND ECONOMIC, IDEOLOGICAL, AND STRATEGIC PARTNERSSTRATEGIC PARTNERS
India is Rising, Becoming Vital to U.S. Interests
AccentureAdobe Systems, Inc.Akin Gump LLPAltria Group, Inc.AM General LLCAmas Investment & Project ServicesAmway CorporationAndrews Kurth LLPBaker & McKenzie LLPBank of AmericaBloombergBoeing CompanyCargillCaterpillar, Inc.CBay Systems
ChevronCMS EnergyThe Coca-Cola CompanyComputer AssociatesCovanta EnergyDell Computer Corp.Deloitte & ToucheDiscovery CommunicationsDow AgroSciencesDow JonesDuPont, Inc.eBay Inc.Estee LauderFord Motor CompanyFremont Group Limited
General DynamicsGeneral Motors Gerson Lehrman GroupGuardian Life InsuranceGerson LehrmanGuardian Life InsuranceHughes Network SystemsIBM, CorporationIDFC Ltd.Johnson & JohnsonJ.P. Morgan ChaseK. Raheja UniversalKotak MahindraL-3 CommunicationsLockheed Martin
McGraw-HillMerck & Co.Microsoft CorporationMonsantoMotorola, IncNews Corporation Ltd.Northrop GrummanOracle CorporationPanAmSatPaul Weiss LLPPfizer Inc.Pratt & Whitney/United TechnologiesSony Pictures EntertainmentStandard Chartered Bank
Target CorporationTata, Inc.Texas InstrumentsTextron Inc. Time Warner Inc.Thomson FinancialUnited Parcel ServiceVickery InternationalWal-Mart Inc.Watson Wyatt WorldwideXerox Corporation
Griffith & Rogers
BARBOUR GRIFFITH &
ROGERS
eMR Technology Ventures
Steptoe & Johnson LLP U.S.-INDIA BUSINESS COUNCIL
32 YEARS of GROWING ENTERPRISE
INDIA’S ENERGY SECURITY INDIA’S ENERGY SECURITY CHALLENGECHALLENGE
Gas pipeline from Iran, discouraged
by U.S.
Coal supplies for 200 years, but high/ash, low calorie value
Oil discovery by Cairn Energy in 2004; India’s demand will
outstrip supply
Gas discovery by Reliance in 2003 but will service only fraction of India’s power
needs
Tarapur- India’s “civilian” nuclear reactor requires
refueling
Kakrapar- World’s first thorium-based nuclear
reactor
Gas pipeline from Turkmenistan,
through Pakistan, but questionable
reserves
Gas pipeline from Myanmar through
Bangladesh discouraged by U.S.
Hydro-Electric Dam at Narmada
constrained by problems with environment