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  • TAMIL NADUThe destination of choice

    TAMIL NADU

    Competitive advantage analysis

    Opportunities in Tamil Nadu

    Government support package

    Why Tamil Nadu?

    Chennai

    INDIAINDIA

    IT SEZ I & II

    IT SEZ I & II

    IT SEZ

    IT SEZIT SEZ

    IT SEZIT SEZ

    IT SEZ

  • 2

  • INDIAThe EmergingPowerhouse of the 21st century

    3

    Worlds largest democracy

    Second largest emerging market (USD 3.0 trillion)

    Liberal Foreign Investment Regime

    Skilled and competitive labour force

    Amongst the highest rates of return on investment

    Large domestic market

    Independent judiciary

    Worlds largest digital elections

    Trade:Exports USD 210 Bn (2005-2006), up from USD 95 Bn (2001-02)

    Accelerated consumer demand:1Mn Cars, 12 Mn TVs, 38 Mn mobiles, 8 Mn credit cards.

    Population: 20-30 Mn people joining Indias middle class every year of 150 Mn today

    Worlds back-office services:USD 20 Bn, growing at over 30%

  • INDIAAdvantage

    4

    India Advantage

    Profit from

    local sales

    Use India for IT & ITES ServicesNew product development,Engineering services, BPO

    Manufacture for Exports Back-end Services

    Improve costs &

    quality forEurope &

    others

    A very rapidly growing domestic market :

    *CAGR 30%+

    Global recognition for back-end services

    A proven case for IT, embedded systems and IC design

    Attractive for manufacturing investments

    Skilled employee base

    Fast and upcoming modern infrastructure (SEZs)

    Proximity to EU and MEA market

    Faster delivery and lesser pipeline inventory

    *CAGR- Compounded Annual Growth Rate

  • 5

    India is a Ten Billion Dollar domestic ICT market today

    India IT Industry - Year 2006: An Overview

    IT Industry Industry Turnover USD 37.40 Bn + Hardware Domestic USD 7.00 Bn Hardware Exports: USD 1.70 Bn Software Domestic USD 16.02 Bn Software Exports: USD 31.09 Bn

    ICT Industry PC Installed Base: 22 Mn Shipments: 5.49 Mn Penetration/ 1000: 20 Mn Phone Installed Base: 150 Mn Shipments: 50.00 Mn Penetration/ 1000 : 136 Mn Television Installed Base: 130 Mn Shipments: 12.00 Mn Penetration/ 1000 : 120 Mn

    Access Internet Users: 50 Mn +Mobile Phone Subscriber Base: 242 Mn Broad band Connection: 2.5 Mn TV penetration: 152 Mn Cable TV: 70.0 Mn

  • INDIAFuture potential

    6

    Indian IT Industry offers great Business opportunities!Have you partnered with it as yet?

    India can be the ideal base for outsourcing both hardware, software and services.

    Domestic IT hardware market slated to be USD 8 Bn by end-2008.

    ICT Market expected to grow from USD 64.0 Bn to USD 73 Bn.

    PC sales can touch 28 Mn by end-2008 from existing 5.3 Mn in 2004.

    Software and Services exports expected to cross USD 50 Bn by 2008 - Mckinsey, 2003

  • 7

    Special Economic Zone (SEZs)- a platform for growth

    For SEZ Developers / Co-developers / SEZ Units

    Income tax holiday for 15 years (Tax Saving of 33%)

    No Dividend Distribution Tax(Tax saving of 15% on the profit)

    No Minimum Alternate Tax (MAT) (Tax saving of 10%)

    Indirect tax exemptions in :

    Excise Duty (Tax Saving of 8% to 16%)

    Customs Duty (Tax saving of 12.5% to 23%)

    Local Sales Tax / VAT (Tax saving of 12.5%)

    Central Sales Tax (CST) (Tax saving of 3%)

    Exemptions from stamp duty (9%),

    Service Tax (12.36%) etc..

    100% FDI allowed (subject to certain reinvestment conditions)

    Splitting-up/reconstruction and transfer of previously used plant and machinery - allowed

    For ITA bound products, including electronics / hardware: NIL Customs duty on imports from outside of SEZ

    INDIAFuture potential

  • 8

    INDIAFuture potential

    SEZ s - a new investment catalyst

    Voluntary SEZ land sale is new Government Policy

    SEZ in India will stay, with strong support from Ministry of Commerce & Industry

    - Formal approvals have been given for 453 proposals

    - In Principle approvals for 136 proposals and

    notified 207 proposals.

    Investments

    - USD 3 Bn as on 31st Mar 2007 with 100 notified SEZ approved

    - USD 13 Bn by Dec 2009 with these 100 notified projects

    - USD 75 Bn when all the 234 SEZ are operational.

    Employment opportunity by 2009 estimated 1.5 Mn

    Exports estimated at over USD 24 Bn

    Concerns surrounding land acquisitions have been resolved by Government initiative.

    SEZ are self contained with

    - Supplier co location makes it fully self contained

    - Can have their own captive Power Plant, water and sewage systems

    - Logistics issues fully addressed

    Good all-in-onestrategy foran India ProductionPlatform

  • TAMIL NADUThe destination of choice

    9

    Why Tamil Nadu and Chennai ?

    Tamil Nadu ranked Best among the Indian States for investments

    -Source: Report of Confederation of Indian Industry (CII).

    Stable Political climate and Investor-friendly Government.

    Growth rate higher than 9%. One of the fastest growing state economies in India.

    Tamil Nadu #1 in skilled manpower availability in India.

    Lowest Manpower costs in India and Cost of Living lower in Chennai than other competing locations.

    Peaceful labour climate man-days lost due to labour unrest is close to Nil

    fDI magazine of Financial Times rated Tamil Nadu as the Asian region of the Future 2005-06 with maximum FDI potential.

    Infrastructure development of Chennai rated better than other states/cities by independent site evaluation studies of Ford, World Bank, BMW, Foxconn, Stanchart, Nokia, Flextronics, Motorola, Samsung, etc.,

  • TAMIL NADUInfrastructure-A win-win situation

    10

    Tamil Nadu- The Key advantages

    1st in Skilled manpower availability.

    1st in Manufacturing Units

    2nd in value addition.

    2nd in employment.

    3rd largest economy in India.

    3rd in Industrial output

    Quality of Human resources is the key differentiator of Tamil Nadu

    Infrastructure development of Tamil Nadu and Chennai rated better than other states/cities by several independent studies.

  • 11

    TAMIL NADUThe destination of choice

    Sector-wise software export of Tamil Nadu 2007-08

    Area of Expertise Export USD Mn

    Application Software 3917.00CAD / CAM 143.00BPO 285.00Other IT Enabled Services 1068.00 Product Development 427.00System Software 1211.00Others 71.00

    7122.00

    Application Software:...................... 55%

    CAD/CAM:....................................... 2%

    BPO:............................................... 4%

    Other IT Enabled Services:............. 15%

    Product Development:...................... 6%

    System Software:............................. 17%

    Others:.............................................. 1%

    Source - STPI, Chennaiwww.chennai.stpi.in/perform_software.htm

  • 12

    TAMIL NADUThe destination of choice

    Software Exports from Tamil Nadu 2007 - 08Chennai Centre - Growth rate - 37.60%

    Amount in Millions (USD)

    *STPI Units 6425Other Units(Non-STP units) 43**MEPZ - SEZ 302Other SEZ 352

    Total Software Exports from Chennai centre 7122

    Hardware Exports (STPI) 53Offshore (Units under STPI) 4,690Onsite (Units under STPI) 1,735

    Some Big Names...ABN Amro Central Enterprises Cognizant Technology Solutions Xansa Electronic Data Services Honeywell Technology Polaris Slash Support Teledata Ford Information Technology Services Computer Associates Alcatel Development Centre, Chennai Wipro HCL TCS Infosys Satyam iNautix Technologies Office Tiger iGate Global Solutions World Bank Sutherland Global American Megatrends Scientific Atlanta India Technology California Software Company Verizon Data Services Hexaware Technologies Caterpillar India Bosch Scope International KLA Tencor Perot Systems Philips HP Accenture Intelnet isoft City group e-serve International, Zylog, RR Donnelley

    *STPI- Software Technology Parks of India. **MEPZ- Madras Export Processing Zone

  • 13

    Software Export Growth in Tamil Nadu

    Source:

    Software Technology Park of India

    *STPI- Software Technology Parks of India.

    6000

    7000

    5000

    4000

    3000

    2000

    1000

    02001-02

    1160.6

    ExportsUSD in Million

    2002-03

    1403.3

    2003-04

    1693.5

    2004-05

    2384.4

    2005-06

    3144.4

    2006-07

    5049.0

    2007-08

    7122.0

    1600

    1400

    1200

    1000

    800

    600

    400

    200

    02001-02 2002-03 2003-04 2004-05 2005-06 2006-07

    Number of*STPI Approved Units

    761808

    989

    1095

    1256

    1415

    2007-08

    1554

  • Software Export Growth in Tamil Nadu

    USA 4273 60

    UK 1425 20

    Japan 71 1

    Germany 71 1

    Middle East 142 2

    Europe 71 1

    Other Asian Countries 214 3

    Rest of the World 855 12

    7122 100

    USD in Mn %

    Source: STPI, Chennai

    Countrywise Software exports of

    Tamil Nadu 2007 - 08

    14

  • 15

    TAMIL NADUThe destination of choice

    1. Textiles & Ready made Garments 24%

    2. Agro and Other commodities 12%

    3. Marine products 04%

    4. Minerals 07%

    5. Leather 08%

    6. Chemical & Allied Products 05%

    7. Engineering Goods 15%

    8. Electronic Goods & Computer Software 25%

    Tamil Nadu Exports 2006-07

    Total Ex

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