www.ibef.org

Indian Economy

An Opportunity Unlimited

Indian Economy

An Opportunity Unlimited

2www.ibef.org

India: Fastest Growing Free Market Democracy

GDP Growth Forex FII Flow FDI Per Capita Inflation

1990 4.9 percent < USD 1 billion USD 1 million (1993) USD 97 million USD 390 9 percent

2007* 9.4 percent

(8.9 percent for Q2 2007-08)

USD 246 billion

(USD 276 billion in 2007-08 till December)

USD 15 billion

(USD 18 billion in 2007-08 till 14th Jan)

USD 16 Billion

(USD 9.2 billion in 2007-08 till October)

USD 797 3.4 percent

Source: Times of India

* Annualized data used to show comparison with 1990

3www.ibef.org

India's GDP at Current Prices: 2002-07

469556 638

737830

477

0

100200

300

400500

600

700800

900

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(H1)

US

D B

illio

n

105 105 135 145

103 125204 231

191237

398453

0

100

200

300

400

500

600

700

800

900

1999-00 2002-03 2005-06 2006-07

US

D B

illio

n

Agriculture Industry Services

India: Among the Top-15 Countries in terms of GDP at constant prices

The Indian economy has witnessed unprecedented growth…. Booming services and industry sectors are providing the required impetus to economic growth

The sound performance of each industry segment is leading to the overall robust performance of the Indian economy

India’s GDP has witnessed high growth, and was the second fastest growing GDP after China in 2006-07

Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years (at constant prices)

Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years (at constant prices)

Contribution of Services -

increased from 48

percent to 55 percent

Contribution of Services -

increased from 48

percent to 55 percent

Growth in sectors at Current Prices (2006-07):Industry: 16.2%Services: 16.3%Agriculture: 10.2%

Growth in sectors at Current Prices (2006-07):Industry: 16.2%Services: 16.3%Agriculture: 10.2%

Source: MOSPI Statistics

Estimated contribution to GDP by various sectors for H1 (2007-08) are: Industry – 138.5 billion, Agriculture – 73.8 billion and Services – 268.8 billion

4www.ibef.org

India: Robust Economic Platform

India's Forex Reserves: 2001-08 (Till 28 December 2007)

5475

112141 152

199

276

0

50

100

150

200

250

300

20

01

-02

20

02

-03

20

03

-04

20

04

-05

20

05

-06

20

06

-07

20

07

-08

(Till

28

De

cem

be

r)

US

D B

illio

n

External Debt-to-GDP Ratio

21.120.4

17.817.3

15.816.4

10

13

16

19

22

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Ra

tio

Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability

Falling Dollar inflates the India’s external debt

Falling Dollar inflates the India’s external debt

Increased confidence of investors in Indian companies has led to a surge in cross border borrowing by corporate houses

In 2007-08 (till 28 December), Forex reserves witnessed a growth of approximately 39 percent over 2006-07.

In 2007-08 (till 28 December), Forex reserves witnessed a growth of approximately 39 percent over 2006-07.

India’s Forex reserves are in

excess of external debt…

…the decreasing external debt to GDP ratio indicates that India has a sound economic platform

…the decreasing external debt to GDP ratio indicates that India has a sound economic platform

Source: RBI Statistics

5www.ibef.org

India: Surging Exports

India's Imports: 2002-08

6278

112

150

191

130

0

50

100

150

200

250

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-

October)*

US

D B

illio

n

India's Exports: 2002-08

5364

84103

126

86

020406080

100120140

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-

October)*

US

D B

illio

n

Petroleum products are the major contributors towards India’s growing imports

Petroleum products are the major contributors towards India’s growing imports

Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services

Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services

Services sector has been a major contributor to increased exports from India

Product imports by India mainly include petroleum products and minerals

Acceptance of Indian products along with the cost advantage has provided an edge to Indian companies

* - 2007-08 provisional data for period of April to October only

* - 2007-08 provisional data for period of April to October only

Source: Ministry of Finance (November Report)

6www.ibef.org

Net FII into India: 2001-07

1.80.6

10.0 10.2 9.4

6.7

18.0

02468

101214161820

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(till 14

January)

US

D B

illio

n

170 percent Increase

India: Attractive Investment Destination

India is ranked

second in AT

Kearney’s FDI

confidence index

(2007)

FDI inflow for the

period 2006-07

witnessed a growth

of 185 percent over

the same period last

year

With improved performance on PE ratio and ROE, Indian markets have attracted large investments

FDI Inflow - India: 2001-07

4,2223,134 2,634

3,7555,546

15,730

9,277

0

4,500

9,000

13,500

18,000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(till

October)

US

D M

illio

n185 percent Increase

Source: DIPP (October Report), SEBI

Electronic equipment, manufacturing and telecom have witnessed significant

FDI inflow

Electronic equipment, manufacturing and telecom have witnessed significant

FDI inflow

Large FII activity in India has led to an upsurge in the Sensex

Large FII activity in India has led to an upsurge in the Sensex

7www.ibef.org

0

5000

10000

15000

20000

25000

1-Jul-97

1-Feb-98

1-Sep-98

1-Apr-99

1-Nov-99

1-Jun-00

1-Jan-01

1-Aug-01

1-Mar-02

1-Oct-02

1-May-

03

1-Dec-03

1-Jul-04

1-Feb-05

1-Sep-05

1-Apr-06

1-Nov-06

1-Jun-07

1-Jan-08

11/12/2007 Crossed 20,000 mark

30 December 1999Crossed 5,000 mark

07 February 2006Crossed 10,000 mark

09 July 2007Crossed 15,000 mark

India: Vibrant Capital Market

India is among the major destinations across the globe for inflow of US Dollar

Sensex has risen 20 times in the period 1990-2007

Sensex – The Bombay Stock Exchange index has risen 20 times from 1990s to reach 20,000 mark in November 2007.

FIIs have infused large investments

into the Indian stock market

Encouraging industry

performance

Increased local investors’ confidence

Emergence of industry and confidence of local investors along with the FIIs has led to upsurge of the Sensex

8www.ibef.org

India: Vibrant Economy Driving M&A Activities

Growth Drivers: Globalisation and increased competition Concentration of companies to achieve economies of

scale Cash Reserves with corporate

Number of Deals and Value

28.2

70

18.3

12.3

782

1,081

467

306

0

10

20

30

40

50

60

70

80

2004 2005 2006 2007

US

D B

illio

n

0

200

400

600

800

1,000

1,200

Nu

mb

er

of d

ea

ls

Deal Value No. of Deals

Private equity deals value increased to USD 19 billion

In 2007, there were a total of 676 M&A deals and 405 private equity deals…

… Total M&A deal value was close to USD 51 billion…

Trends: Cross-border deals are growing faster than domestic deals Private Equity (PE) houses have funded projects as well as

made a few acquisitions in India

Source: Deal Tracker Grant Thornton, Economic Times

In 2007, the total value of M&A and PE deals was USD 70 billion…

9www.ibef.org

Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1 billion USD 12.1 billion Tata Steel buys Corus PlcTata Steel buys Corus Plc

USD 6 billion USD 6 billion Hindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.

USD 1.58 billion USD 1.58 billion Essar Steel acquired Algoma Steel Essar Steel acquired Algoma Steel

USD 1.6 billion USD 1.6 billion Suzlon Energy Ltd. acquires REpower Suzlon Energy Ltd. acquires REpower

USD 1.1 billion USD 1.1 billion United Spirits Ltd. acquired Whyte & Mackay

United Spirits Ltd. acquired Whyte & Mackay

10www.ibef.org

Major M&A and Investments Announcements in India (1/2)

USD 11 billion USD 11 billion Vodafone buys HutchVodafone buys Hutch

USD 1.7 billionUSD 1.7 billionPlans to spend on its development operations in India over the next four years

Plans to spend on its development operations in India over the next four years

USD 2 billion USD 2 billion Plans to establish three manufacturing plants to produce photo-voltaic units

Plans to establish three manufacturing plants to produce photo-voltaic units

USD 12 billion USD 12 billion POSCO to invest in building steel

manufacturing plants and facilities in India by 2016

POSCO to invest in building steel manufacturing plants and facilities in India by

2016

11www.ibef.org

USD 0.98 billion USD 0.98 billion Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake

Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake

USD 1 billionUSD 1 billionPlans investment in private equity, real estate, and private wealth management

Plans investment in private equity, real estate, and private wealth management

Mylan Laboratories acquired a majority stake in Matrix Laboratories

Mylan Laboratories acquired a majority stake in Matrix Laboratories

USD 0.74 billionUSD 0.74 billion

Major M&A and Investments Announcements in India (2/2)

USD 1 billionUSD 1 billionPlans investment in private equity in Indian markets

Plans investment in private equity in Indian markets

12www.ibef.org

India: Pacing Ahead to Emerge as a Major Economy in the World

Projected GDP Growth Rates for Select Upcoming Economies

0

2

4

6

8

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

GD

P G

row

th R

ate

(%

)

Brazil China India Russia

0

20

40

60

80

100

India Russia Vietnam Ukraine China Chile Latvia

GR

DI S

core

2007 Global Retail Development Index (GRDI) 2007 Global Services Location Index

3.3

2.6

3.2

2.8

2.9

3.2

1.5

1.8

1.2

1.3

2.3

2.3

1.1

1.5

1.6

2

1.4

1.4

Indonesia

Brazil

Thailand

Malaysia

China

India

Financial structure People and skill availablityBusiness environment

AT Kearney has placed India as the most preferable destination for Services sector (2007)…

Services sector attracted interest of major global players and large investments are pumped in it

India is expected to outperform its rivals in the BRIC, in terms of GDP growth rate, from 2015 onwards…

Source: AT Kearney, BRIC Report

… India is the top destination in the AT Kearney Global Retail Development Index (2007)

13www.ibef.org

BRIC Report, Goldman Sachs

BRIC Report, Goldman Sachs

“I have never seen India so dynamic, vibrant and full of

business opportunities”.

- Dan Scheinman, Cisco System Inc. as told to

Business Week, August 2005

- Dan Scheinman, Cisco System Inc. as told to

Business Week, August 2005

“We came to India for the costs, stayed for the

quality and are now investing for innovation”.

John RedwoodEconomic

Competitiveness Policy Group, UK

John RedwoodEconomic

Competitiveness Policy Group, UK

“India is now truly a land of opportunity”.

Jack WelchGeneral Electric

Jack WelchGeneral Electric

“India is a developed country

as far as intellectual capital is

concerned”.

Peter Loescher President and

Chief Executive Siemens

Peter Loescher President and

Chief Executive Siemens

By 2032, India will be among the three

largest economies in the world.

Why India? – Quote Unquote

Travyn Rhall,

ACNielsen

Travyn Rhall,

ACNielsen

“The Indian market has two core advantages - an

increasing presence of multinationals and an upswing

in the IT exports”.

Craig BarrettIntel

Corporation

Craig BarrettIntel

Corporation

“India has evolved into one of the world's leading technology

centers“.

Mr Paul de Voijs Managing Director

Volvo Car India

Mr Paul de Voijs Managing Director

Volvo Car India

“India is a very exciting market and the luxury

car segment is growing exponentially here”.

14www.ibef.org

DISCLAIMER This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and Evalueserve.com Pvt. Ltd., EVALUESERVE (“Authors”). All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF.  This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of the Author’s and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. The Author and IBEF neither recommend or endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed in this presentation. Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.