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The Embassy of Iceland in India


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India: Opportunities

Unlimited

Rahul ChongthamTrade Representative

5 November 2009


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India is a union of states with Parliamentary

system of Govt.

28 States & 7 Union Territories

Land Area: 3.29 Million sq.km

Population: 1.2 Billion

Language: English & Hindi

Independence Day: 15 August 1947

Republic Day: 26 January 1950

GDP (PPP) US$ 3.29 trillion (2008 est.)

GDP (Official exchange rate) US$ 1.21 trillion(2008 est.)

Age structure:0-14yrs ( 31%)15-64 ( 63.6%)65 years & over ( 5.3%)

India : Basic Facts


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India: Fastest Growing Free Market Democracy

9.50% 9.70%

9.00%

6.70%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009

GDP Growth

GDP Growth


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World Bank Growth Forecast For 2009

5.10%

7.20%

-4.5%

-3%

-6.80%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

India China EU US Japan

GDP Growth

India China EU US Japan


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GDP Composition by Sector (2008 2009)

57.30%17%

25%

Services

Agriculture

Industry

Growth in sectors 2005 - 2008

Indicators 2005 -06 2006 - 07 2007 - 08 2008 -09

gri & Allied 5.80% 4% 4.90% 1.60%

Industry 10.20% 11% 8.10% 3.90%

Services 10.60% 11.20% 10.90% 9.70%


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India: An Attractive Investment Destination

World Investment Report 2008 fromUNCTAD affirms India as the secondmost attractive FDI destination in theworld.

Top 5 Sector attracting FDI are:- Services- Computer Software & Hardware- Telecom- Housing & Real Estate- Construction sectors

FDI is open to almost all sectors.

9

22.8

34.4

41.5

0

5

10

15

20

25

30

35

40

45

2005 -06 2006 - 07 2007 - 08 2008 -09

Foreign Direct Investment

US $ Billion


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India Overseas Direct Investment (ODI)

5.04

13.1

18.417.7

0

2

4

68

10

12

14

16

18

20

2005 -06 2006 - 07 2007 - 08 2008 -09

US $ Billion

Increase in Indias ODI is due to large scale acquisitions byIndian companies growing appetite for an overseas presence andhunt for energy assets .

65% of ODI was routed through tax-friendly countries.


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Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1 billionUSD 12.1 billionTata Steel buys Corus PlcTata Steel buys Corus Plc

USD 6 billionUSD 6 billionHindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.

USD 1.58 billionUSD 1.58 billionEssar Steel acquired Algoma SteelEssar Steel acquired Algoma Steel

USD 730 millionUSD 730 millionVideocon Industries acquired Daewoo

Electronics Corporation Limited

Videocon Industries acquired Daewoo

Electronics Corporation Limited

USD 1.6 billionUSD 1.6 billionSuzlon Energy Ltd. acquires REpowerSuzlon Energy Ltd. acquires REpower


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Major M&A and Investments Announcements in India

USD 11 billionUSD 11 billionVodafone buys HutchVodafone buys Hutch

USD 0.98 billionUSD 0.98 billionAditya 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, andprivate wealth management

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

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 0.905 billionUSD 0.905 billion

Renault, Nissan and Mahindra & Mahindra has

initiated a Greenfield automobile plant project in

Chennai.

Renault, Nissan and Mahindra & Mahindra has

initiated a Greenfield automobile plant project in

Chennai.

Mylan Laboratories acquired a majority stake in

Matrix Laboratories

Mylan Laboratories acquired a majority stake in

Matrix LaboratoriesUSD 0.74 billionUSD 0.74 billion


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Movement of Indias Foreign Exchange Reserve

050

100

150

200

250

300

350

March

1991

March

2006

March

2007

March

2008

March

2009

Sep 2009

5.8

151.6

199.2

309.7

251.9280.98

Foreign Exchange Reserve

US $ Billion

Increase in FDI and FII has facilitated an increase in forex reserves.

Increase Forex Reserves has enabled prepayment of certain highcost foreign currency loans of the government.

It offers adequate security against any possible currency crisis ormonetary instability.


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India: Vibrant Capital Market

0

5000

10000

15000

20000

25000

25Jul,1990

15Jan,1992

11Feb,2002

7Feb,2006

6July,2007

8Jan,2008

22Jan,2008

23July,2008

17Oct,2008

18Dec,2008

18May,2009

23Jul,2009

7Sep,2009

30Sep,2009

BSE Sensex

BSE Sensex

The Sensex breached the 17000 mark on 30th September 2009 asFII inflows continued to flood the market. This level was last seenin May 2008.


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India: Foreign Trade

0

50

100

150

200

250

300

2005 - 06 2006 - 07 2007 - 08 2008 - 09

103.1126.3

163 168.7149.2

185.6

251

287.8

Export Import

Indias Merchandise Exports/Imports

*All figures in US $ Billion

0

20

40

60

80

100

120

2005 - 06 2006 - 07 2007 - 08 2008 - 09

57.7

73.8

90.1

101.2

34.544.3

52.5 51.4

Export Import

Indias Services Exports/Imports

Petroleum products are the major

contributors towards Indias growingimports

Services sector has been a major

contributor for the increase in exportsfrom India.

Quality and cost advantage are twoimportant parameters leveraged by theIndian producers to market their products and services

* All figures in US $ Billion


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Merchandised Trade between Iceland & India

*All figures in US $ Million

Main Export items:

Animal and vegetable fats and oils, organic & inorganic chemicals, rawhides and skins, animal hairs, machinery and mechanical appliances etc.

Main Import items:

Organic chemicals, pharma products, rubber and leather articles, saddlesand harness, apparels and clothing accessories, iron and steel, toys,games and sports requisite etc.

Particulars 2003-04 2004-05 2005-06 2006-07 2007-08

Export 9.53 2.3 6.32 3.73 3.78

Import 17.6 12.91 13.05 11.48 13.77

Total Trade 27.13 15.21 19.37 15.21 17.55


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Fifth-largest telecom networkin the world; second largestamong the emerging economies.

The Indian telecom industry

generated revenues of approximately US$ 32 billion in200708 with a growth rate of 60per cent over previous year.

It witnessed a CAGR of

approximately 29 per cent from200203 to 200708.

Indian Telecom Industry

9

10

11

15

20

43

0 10 20 30 40 50

2002 - 03

2003 - 04

2004 - 05

2005 - 06

2006 - 07

2009 - 10 (E)

Revenues of Indian Telecom Industry:

2002-10

US $ Billion


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The mobile subscriber base in India islikely to reach 500 million by 2010.

On an average, over 8 million users areadded per month, making India theworlds fastest growing wireless services

market.

The subscriber base grew at a CAGR of43.6 per cent from June 2004 to June 08.

As on June 2008, India had a tele-

density of 28.33 per cent. Tele-density inthe rural areas is even lower at 9.2 per cent.

The government is promoting telecommanufacturing by providing tax sops and

establishing telecom-specific SEZs.


76.53

104.22

153.42

225.01

325.79

0 100 200 300 400

2004

2005

2006

2007

2008

Telecom Subscriber Base in

India

Subscribers in Million

7.049.61

13.9619.86

28.33

0

10

20

30

2004 2005 2006 2007 2008

Teledensity in India

Per Cent


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The total number of internet subscribers grew from 9.22 million inJune 2007 to 11.66 million in June 2008.

BSNL is the largest Internet Service Provider followed by MTNL.


Top Five Internet Service Providersby Market Share (as on June 2008)

50.96%

16.49%

7.47%

7.07%

4.84%

BSNL MTNL Bharti Airtel Reliance Sify


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Market Share ofWireless Operators in India

(as of June 2008)

15.00%

1.00%

24.00%

18.00%

17.00%

9%

9%

4%

2% 1%

BSNL MTNL Bharti Airtel Reliance Vodafone

Idea TATA Aircel Spice Others

Bharti Airtel has crossed 100 Million subscriber mark in May 2009.


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Opportunities for Telecom Companies

3G Services

Worldwide Interoperability for Microwave Access (WiMax)

Managed Service

Virtual Private Network

Enterprise Telecom Services

Rural Telephony

Value-Added Services


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IndianTelecom Industry

Recommendations

The VAS segment will offer ample opportunities to Icelandiccompanies keen on tapping this sector. Demand for good VAScontent providers from mobile operator is expected to increase whenthe 3G spectrum rolls out early next year. We will see more VAS in

banking, gaming, advertising, mobile commerce applications whichwill improve margins over current SMS value added services.

The Embassy of Iceland in India can assist Icelandic companies tomarket their products and services as well as identify potentialIndian partners for JVs.

Participating in trade exhibitions such as India Telecom-International Exhibition & Conference will provide the right exposurefor Icelandic companies to enter the Indian telecom sector.


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Indian Energy Sector

Installed capacity: 145,440 MW as on September 2008.

Thermal - 64%

Hydro - 25% Other Renewables - 8%

Nuclear - 3%

State Sector - 53%

Central Sector - 34% Private Sector - 13%

Coal is the dominant source contributing 53% of the energygeneration in the thermal segment.

Besides hydro energy, wind energy dominates the renewable powergeneration in India


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Projected Growth

Present Per capita Consumption 631 kwh

Per capita Consumption by 2012 1,000 kwh

Peak demand Estimation by 2012 157 GW

Investment requirement by 2012 USD 100 Billion

Generation USD 50 Billion

Transmission & Distribution USD 50 Billion

Power for all by 2012


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Capacity Addition Targets & Achievements

Five Year Plan Year Target Achievement

Eighth Plan 1992 - 1997 30,538 16,423

Ninth Plan 1997 - 2002 40,245 19,015

Tenth Plan 2002 - 2007 41,110 21,180

Eleventh Plan 2007 - 2012 78,577 N.A.*

In the first 2 years of the Eleventh Five Year Plan only 12500 MWwas added.

The current power shortfall in India is 15000 MW.


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Small Hydro Project (SHP) upto 25 MW

Total installed capacity of Hydro Power in India 36,348 MW.

Indias exploitable Hydro Electric potential is estimated to be 150,000MW. So far only 23% of this potential has been harnessed.

An estimated potential of about 15,000 MW of SHP exist in India.Ministry of New & Renewable Energy identified 5415 potential sites withan aggregate capacity of 14,305.47 MW for projects up to 25 MWcapacity.

The government has fixed a target to add 1400 MW during the 11th Plan

(2007-12).

Year Target (inMW)

Capacity additionduring the year (in MW)

Cumulative SHP installedcapacity

2007-08 200 205.25 2180.84

2008-09 250 248.93 2429.77


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StateWise Identified Small Hydel Sites And Potential Up To 25MW Capacity (as on 31.3.2009)

S.No Name of State IdentifiedNumber of Sites

Total Capacity ( InMW)

1 Andhra Pradesh 489 552.29

2 Arunachal Pradesh 566 1333.04

3 Assam 60 213.844 Bihar 94 213.75

5 Chhatisgarh 164 706.62

6 Goa 9 9.1

7 Gujarat 292 196.97

8 Haryana 33 110.059 Himachal Pradesh 547 2268.41

10 Jammu & Kashmir 246 1411.72

11 Jharkhand 103 208.95

12 Karnataka 128 643.16

13 Kerala 247 708.1

14 Madhya Pradesh 99 400.58

15 Maharashtra 253 762.58

16 Manipur 113 109.1

17 Meghalaya 102 229.81


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StateWise Identified Small Hydel Sites And Potential Up To 25MW Capacity (as on 31.3.2009)

S.No Name of State IdentifiedNumber of Sites

Total Capacity ( InMW)

18 Mizoram 75 166.94

19 Nagaland 99 196.98

20 Orissa 222 295.4721 Punjab 234 390.02

22 Rajasthan 67 63.17

23 Sikkim 91 265.54

24 Tamil Nadu 176 499.31

25 Tripura 13 46.86

26 Uttar Pradesh 220 292.16

27 Uttaranchal 458 1609.25

28 West Bengal 203 393.79

29 A&N Island 12 7.91

TOTAL 5415 14305.47

23 States have announced policies for setting upcommercial SHP projects through private sector participation.


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Indian Energy Sector Geothermal Energy

Indian Geothermal provincescan produce up to 10600 MW ofpower.

Government has identified 340hot springs in the country and

are planning to develop some ofthe Geothermal fields for powergeneration.


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Indian Energy Sector Geothermal Energy

International consultant, GeothermEx Inc., USA has identified hasidentified 6 most promising Geothermal sites for development inorder of the following ranking:

Tattapani in Chhatisgarh

Puga in Jammu & Kashmir

Cambay Graben in Gujarat Manikaran in Himachal Pradesh

Surajkund in Jharkhand

Chhumanthang in Jammu & Kashmir

National Hydro Power Corporation (NHPC) has been appointed by

the government as the nodal agency to promote geothermal energyin India. NHPC plans to develop 2 to 5 MW geothermal power plantat Puga.

Chhatisgarh Renewable Energy Development Agency (CREDA) is

currently developing the Tattapani geothermal site.


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Key Players

(i) National Hydro Power Corporation (ii) Tata Power (iii) ReliancePower (iv) Jaiprakash Hydro Power (v) L&T (vi) Bhilwara Energy (vii)Athena Energy & (viii) State renewable energy agencies such asCREDA, OREDA, etc.

Recommendations:

As most renewable energy projects in India are with the StateGovernments, Embassy of Iceland in India can assist Icelandiccompanies to approach the concerned State Governments.

The Embassy can also facilitate link-ups with Indian energy

companies for possible JVs.

It would be beneficial for Icelandic energy companies to participatein trade exhibitions such as the Renewable Energy India Expo.


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Indian IT & IT Enabled Services Sector

Total IT revenues reached US$ 64billion in 2008-09 growing at 33 percent over previous year.

Contribution of IT/ITeS industry toIndias GDP has grown from 1.2 percent in 1998 to an estimated 5.5 percent in 2008.

BFSI vertical continues to accountfor the largest share of exports at 31per cent. Telecom vertical accountsfor second largest share of the pie at19 per cent.

40.8

23.2

Exports Domestic

Revenue segmentation of IT/ITeS sector in 2008 (US$)

IT/ITeS industry: On a steady growth track


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Size of the domestic market in 2008was US$ 23.2 billion.

Hardware accounted for about 50per cent of the total domestic IT-BPOspend.

Direct employment for four millionand indirect employment for 10 to 12million by 2015.

IT/ITeS industry: On a steady growth track

11.5

7.9

2.2

1.6

Hardware IT Services Software BPO

Indian domestic market, 2008(US$ billion)


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Key Indian IT Players in the Sector

Tata Consultancy Services, Wipro, Infosys, HCL Technologies, TechMahindra, Patni Computer Systems, I-Flex solutions Ltd, L&T Info Tech Ltdand Polaris Ltd.

TCS won a US$1.2 billion IT & operations support deal from the NielsenCompany.

British Telecom awarded a US$1 billion contract to Tech Mahindra.

GM awarded Wipro a 5-year contract valued at US$300 million

ABN AMRO awarded a US$500 million 5-year contract to TCS, Infosys &Patni Computers.

Infosys won US$250 million outsourcing deal from Philips Electronics.

Large Off-Shoring Contracts


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Costadvantage

Cost of an engineer is about 20 40 per cent of comparable cost inEuropean Union (EU)

Selling, general and administrative costs approximately 80 per cent ofcomparable cost in EU Average offshore billing rate of US$ 20 to 35 per hour; about 50 to 70per cent lower than EU

Ease of scalability

675,000 technical graduates per annum, of which 4,00,000 areengineers Over 50,000 MBAs graduating per annum Leading firms add more than 10,000 new employees per annum

Global and 24/7 delivery capability

India: Value proposition


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Domestic Market

Overall size of the domestic market in 2008 was US$ 23.2 billion. It iscurrently growing at 20 per cent.

Domestic IT market is dominated by the hardware spending accountingfor over 50 per cent of the total spending.

Government is taking up e-governance initiatives and increasing its ITspends/outlays

Demand for domestic BPO services increasing rapidly, with nicheverticals like healthcare and retail fast gaining traction apart from thetraditional verticals ofBFSI and manufacturing

Key Opportunities


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Knowledge Process Outsourcing (KPO)

KPO opportunities exist in R&D, business & technical analysis,animation and design, business market research, etc.

Engineering services outsourcing

Range of services includes engineering and designing solutions acrossdiverse industry verticals like telecommunications, automotive,construction, aerospace, utilities and industrial design.

Legal Process Outsourcing

Over 1 million lawyers and over 70,000 law graduates passing out everyyear; Cost arbitrage -Indian lawyers billing one-tenth of their UScounterparts (US$ 40 to $60 in India compared to US$ 350 per hour in theUS).

Key Opportunities


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Research and analytics

India emerged as the choice destination for their front-end research andanalysis divisions, migrating from the back-room services off-shoring.

Testing services outsourcing

Indian export revenues from software testing services were estimated atUS$ 385 million in 2006-07.

Software products

Indian software products segment presently forms a very smallpercentage of the overall Indian IT-ITeS industry. Top 10 companiescontributed 85 per cent to segment revenues.

Key Opportunities


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Recommendations

Embassy of Iceland in India can assist Icelandic companies tomarket their products & services to the fast growing Indian domesticmarket.

Trade associations like NASSCOM, FICCI & CII can facilitatemeetings & link-ups with Indian companies.

Indian Embassy in Iceland can be approached for information ongovernment projects such as National e-Governance Plan.

Icelandic companies can showcase their products & services byparticipating in trade exhibitions like Convergence India.

Business Consultants.


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Indian Food Processing Sector

Size of the food processing sector was USD$ 70 Billion in 2005 andis expected to reach USD$ 90 Billion in 2012.

India accounts for only 1.5% of the international food trade.

Only 2% of agri-produce is processed.

Sector declared high priority by the government and has set atarget to double process food production by 2015.

Huge investment opportunities in food processing technology and

equipments.

India is the worlds second largest producer of food.

Product Quantity Rank

Milk 90 million tonnes Highest in the world

Fruits & Vegetables 150 Million tonnes 2nd largest

Livestock 485 million Largest

Poultry 489 Million

Food Grain 204 million tonnes 3rd largest

Fish 7.5 million tonnes 3rd largest


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Indian Food Processing Sector

One of the largest producer of food in the world.

India has diverse agro-climatic conditions and has a large anddiverse raw material base suitable for food processing.

Rapid urbanization, increase literacy and rising per capita have allcause rapid growth and changes in demand patterns, leading totremendous new opportunities for exploiting the large latent market.An average Indian spends about 50 per cent of householdexpenditure on food items.

Indias comparatively cheaper workforce can be effectively utilized

to setup large low cost production bases for domestic and exportmarkets.

Excellent opportunities exist in fruit & vegetable processing, meat,fish & poultry processing, packaging, convenience food & drinks,milk products.

Advantage India: Food Processing


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Indian Film Industry

Indian film Industry is the Worlds largest in terms of filmsproduced as well as the number of cinema-goers. It produces almostas many films as the US, Japan and China combined.

India dominates world of Films

Country

No. Of Feature FilmsProduced

Theatre Admissions(In Million)

Average TicketRate (US$)

India 1132 3290 0.5

US 520 1364 7.2

Japan 418 161 11.7China 400 196 2.2

France 240 190 8.8

Germany 185 129 9

Spain 173 108 8.4

Italy 155 112 8.5

Rep of Korea 113 151 5.9

UK 102 164 9.5


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Indian Film Industry

FICCI-KPMG study values the Indian Film Industry at USD$ 2.11billion and projects its growth at 9.1% till 2013.

Opening of the film industry to foreign investment has led to manyglobal production units entering the industry.

Recent Collaboration:

- Dreamworks Studios and Reliance ADA Group production deal valued atUSD$ 825 Million

- Walt Disney and Yash Raj Films are partnering to produce animated films.

- Warner bros is currently funding film projects.

- Sony pictures entertainment recently co-produced a film with SCB Films.

The number of countries wooing Bollywood is increasing. Exoticlocations experienced film crews and tax breaks are amongst theincentives being offered by these countries.


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india opportunities unlimited

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