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Indian Economy
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India: Fastest Growing Free Market Democracy
8.8% average annual GDP growth rate from 2003–04 to 2007–08
GDP Growth
Forex
FII Flow
FDI
Per Capita
Inflation
1990
4.9 per cent
< US$ 1 billion
US$ 1 million (1993)
US$ 97 million
US$ 390
9 per cent
2008
9.0 per cent *
US$ 300.01 billion as
on August 08, 2008
US$ 16.1 billion in
2007–08
US$ 25 billion in
2007–08
US$ 740
12.14 per cent as
on September
13, 2008
Sources: Times of India, RBI, RBI, DIPP, Indian Budget, Rediff, The Economic Times, iGovernment, RBI
* Annualised data used to show comparison with 1990
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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
India's GDP at Constant Prices: 2002–08
1200
27 per cent
Increase

Fastest GDP growth of 9.4 per cent in 2006–07.

India’s GDP (8.7 per cent) has witnessed high growth
and was the second fastest-growing GDP after China
(11.4 per cent) in 2007–08.

The sound performance of each industry segment is
leading to the overall robust performance of the Indian
economy.
800
600
1068
400
200
469
556
638
838
737
188
0
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
Contribution of
Services—
increased from 48
per cent in 1999–
00 to 53 per cent
in 2007–08
A pr-Jun
08
1,200
1,000
Growth in sectors at Constant Prices (2007–
08):
Industry: 10.8%
Services: 8.5%
Agriculture: 4.5%
USD Billion
USD Billion
1000
800
564
439
600
398
400
191
200
0
103
105
237
125
105
314
204
135
245
154
1999–00
2002–03
2005–06
2006–07
Agriculture
Industry
Services
Source: MOSPI Statistics, RBI, MOSPI
190
2007–08
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India: Demographic Dividend
Population Median Age (in years) in 2006
45

Young population (under 25) accounts for about 50
per cent of India’s total population.

India’s urban population accounted for 29 per cent of
the entire population in 2006. It is projected to reach
37.8 per cent by 2025.
Years
36
27
18
9
33
36
37
China
US
Russia
43
24
0
India
Japan
Growth in Working Age Population (15–64 years) by 2010 (in
million)

India is expected to register the largest addition
to the working age population in the world by
2010.

India is expected to be powered by the largest
working age population worldwide by 2050.

India’s labour costs, as a percentage of value
added, are one of the lowest among Asian
countries.
Stock
Position
2005
World
4,168
India
691
Africa
500
China
934
South East Asia
362
Latin America
359
Southern Asia
Additions to Working Age Population by
2010
314
71
64
44
33
31
17
132
US
Europe
200
Japan
85
10
0
497
-3
-5
45
95
145
195
245
295
345
In million
Source: India Brand Equity Foundation, United Nations Statistics, United Nations Statistics, Legal Week
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India: Robust Economic Platform
India's Forex Reserves: 2001–08
350
In 2007–08, forex reserves
witnessed a growth of
approximately 56 per cent over
2006–07.
250
USD Billion
Steadily increasing
forex reserves offer
adequate security
against any possible
currency crisis or
monetary instability
310
300
199
200
141
150
152
112
100
54
75
50
0
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
India’s forex
reserves are in
excess of
external debt…
External Debt-to-GDP Ratio
22
21.1
20.4
Increased
confidence of
investors in Indian
companies has led
to a surge in crossborder borrowings
by corporate houses
Ratio
19
18.8
18.6
17.8
17.2
17.8
16
…the decreasing external debt to
GDP ratio indicates that India has
a sound economic platform
13
10
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
Source: RBI Statistics
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India: Surging Exports (1/2)
Services sector has
been a major
contributor to
increased exports
from India
USD Billion
India's Exports: 2002–08
180
160
140
120
100
80
60
40
20
0
159
126
103
84
53
2002–03
64
43
2003–04
2004–05
2005–06
2006–07
2007–08
Exports in June 2008
amounted to US$ 14.6
billion, increasing by 23.5
per cent from June 2007
A pr-Jun 08
Acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies
India's Imports: 2002–08
300
239
Product imports by
India mainly include
petroleum products
and minerals
USD Billion
250
185
200
150
150
100
112
62
78
73
Imports in June 2008
amounted to US$ 24.4
billion, increasing by 25.9
per cent from June 2007
50
0
2002–03
2003–04
2004–05
2005–06
Source: RBI Statistics
2006–07
2007–08
A pr-Jun 08
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India: Surging Exports (2/2)
Exports of Top Five Commodities*
S.No.
Commodity
Amount (in US$ mn)
Percentage Growth (2006–07)
Percentage share in
total exports
1
Petroleum (crude and products)
24,025.55
40.69
16.82
2
Gems and jewellery
17,745.57
24.25
12.43
3
Machinery and instruments
7,850.26
30.45
5.50
4
Rmg cotton including accessories
6,722.09
7.79
4.71
5
Drugs, pharmaceuticals and fine
chemicals
6,589.02
24.93
4.61
* Data for April-Feb 2007-08 (Provisional)
Imports of Top Five Commodities*
S.No.
Commodity
Amount (in US$ mn)
Percentage Growth (2006–07)
Percentage share in
total exports
1
Petroleum (crude and products)
70,542.95
34.97
32.75
2
Electronic goods
18,407.72
27.77
8.55
3
Machinery except electrical and
electronics
17,490.72
40.88
8.12
4
Gold
15,241.83
17.50
7.08
5
Iron and steel
7,610.25
41.12
3.53
* Data for April-Feb 2007-08 (Provisional)
Source: DGFT
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India: Attractive Investment Destination
With improved performance on PE ratio and ROE, Indian markets have attracted large
investments
FDI Equity Inflow —India: 2001–08
India is ranked
27,000
24,579
22,500
56 percent
increase
18,000
15,730
second in AT
confidence index
(2007)
USD Million
Kearney’s FDI
13,500
FDI for June 2008 amounted to
US$ 3,931 million
10,072
9,000
4,222
4,500
5,546
3,134
2,634
3,755
0
2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 Apr–Jun
08
The computer software and
hardware sector has received
12.37 per cent of the total FDI
inflow between April 2000 and
July 2008
Net FII into India: 2001–08
18
FDI inflow for the
period 2007–08
of 56 per cent over
the previous year
140 per cent
increase
14
USD Billion
witnessed a growth
16.1
16
12
10.0
10.2
10
9.4
8
6.7
6
4
2
1.8
0.6
0
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
* FII growth has slowed down owing to the Sub Prime Crisis in 2007–08
Source: DIPP (October Report), SEBI, DIPP
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India: Vibrant Economy Driving Overseas M&A Activity
Number of Deals and Value
1,081
80
1,000
60
50
782
40
20
10
…In July and August 2008, 74 M&A
deals with an approximate value
of US$ 5.2 billion were
announced
467
600
28.2
306
12.3
800
400
18.3
Number of deals
USD Billion
70
30
1,200
70
200
0
In 2007, the total value of M&A and
private equity deals was US$ 70
billion…
0
2004
2005
Deal Value
2006
2007
No. of Deals
In 2007, there were a total of
676 M&A deals and 405 private
equity deals…
… Total M&A deal value was
close to US$ 51 billion
Growth Drivers:
 Globalisation and increased competition
 Concentration of companies to achieve economies of
scale
 Cash reserves with corporates
Private equity deal
value increased to US$
19 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, IBEF, RBI
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Major M&A Deals Undertaken Abroad by India Inc.
Tata Steel bought Corus Plc in 2007
US$ 12.1 billion
Hindalco acquired Novelis Inc. in 2007
US$ 6 billion
Tata bought Jaguar and Land Rover in
2007
US$ 2.3 billion
Essar Steel acquired Algoma Steel in
2007
US$ 1.58 billion
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Major M&A Deals Undertaken Abroad by India Inc.
Suzlon Energy Ltd. acquired REpower in
2007
US$ 1.6 billion
ONGC acquired Imperial Energy PLC in
2008
US$ 2.8 billion
Infosys acquired Axon Group Plc. in 2008
US$ 0.81 billion
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Major M&A and Investment Announcements in India
POSCO to invest in building steel
manufacturing plants and facilities in India by
2016
US$ 12 billion
Vodafone bought Hutch in the year 2007
US$ 11 billion
Plans to establish three manufacturing plants
to produce photo-voltaic units
US$ 2 billion
Plans to spend on its development operations
in India by 2012
US$ 1.7 billion
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Major M&A and Investment Announcements in India
Plans to invest in six private equity funds in
Indian market
US$ 0.185 billion
Plans network expansion in India
US$ 4 billion–US$ 5
billion
Plans expansion of cement capacity in India
Over US$ 1 billion
Acquired 17 per cent stake in Devas
Multimedia in 2008
Over US$ 75 million
Source: The Economic Times
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Indian Companies Fuelling Future Expansions
Plans to provide services in the Sri Lankan
market
US$ 0.2 billion
Plans to invest in the Uganda market
US$ 0.5 billion
Plans to invest in its recently acquired
polyester manufacturing facility in North
Carolina
Source: International Business Times, The Financial Express, IBEF, SifyBroadband
US$ 0.215 billion
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India: Pacing Ahead to Emerge as a Major Economy in
the World
2008 Global Retail Development Index (GRDI)
India
80
Services sector
continues to attract
interest from major
global players and
large investments
are being pumped
into it
India is expected to
outperform other
BRIC countries in
terms of GDP
growth rate from
2015 onwards
3.2
China
2.9
60
Malaysia
2.8
40
Thailand
Brazil
2.3
1.4
2.3
1.3
3.2
2
1.2
2.6
1.4
1.6
1.8
1.5
20
Indonesia
0
India Russia Vietnam Ukraine China
Chile
3.3
1.5
Financial structure
Business environment
Egypt
1.1
People and skill availablity
Projected GDP Growth Rates for Select Upcoming Economies
8
GDP Growth Rate (%)
AT Kearney lists
India as the most
preferable
destination for the
services sector
(2007)
2007 Global Services Location Index
100
GRDI Score
India ranks second
in the AT Kearney
Global Retail
Development Index
(2008)
6
4
2
0
2005–10
2010–15
2015–20
2020–25
Brazil
Source: AT Kearney, BRIC Report
2025–30
China
2030–35
India
2035–40
2040–45
2045–50
Russia
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Why India?—Quote Unquote
“India has evolved into
one of the world's
leading technology
centres.”
“India is now truly a
land of opportunity.”
John Redwood
Economic
Competitiveness Policy
Group, UK
“We cannot remain a
global industry leader
without a strong
presence in India.”
Karl Slym
GM India
“By 2032, India will be
among the three
largest economies in
the world.”
BRIC Report,
Goldman Sachs
“India is the future
and the future is
here. Critical
operations are
happening here.”
Anil Menon
IBM Software
“India today is not an
emerging economy.
It has fully emerged
and it is in full
bloom.”
Craig Barrett
Intel
Corporation
Olli-Pekka
Kallasvuo Nokia
“The Indian market has two
core advantages—an
increasing presence of
multinationals and an upswing
in IT exports.”
“India is a very exciting
market and the luxury
car segment is growing
exponentially here.”
Paul de Voijs
Managing Director
Volvo Car India
Travyn
Rhall
ACNielsen
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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
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