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 India at a glance, political environment, economics, investment environment
1. INDIA AT A GLANCE - 5,000 year old ancient civilization, world’s largest democracy.
- 1.1 billion population; GDP $1,131 Billion (GDP growth rate 8%).
- Largest English speaking nation in the world; 18 official languages, 325 languages, 1,652 dialects.
- 3.28 million sq. kilometers – Area; 29 states, 5 union territories; 7,516 kilometers – Coastline.
- 5600 dailies, 15000 weeklies, 20000 periodicals in 21 languages, combined circulation 142 million.
- 2nd largest pool of scientists and engineers in the world.
- 3rd largest standing army force, over 1.5Million strong.
- World’s largest movies industry producing over 800 films / year.
- Natural resources: coal (fourth largest reserves in the world), iron ore, manganese, mica, bauxite, titanium ore, chromites, natural gas, diamonds, petroleum, limestone, arable land.
- Religions: Hindu 80.5 %, Muslim 13.4 % per cent, Christian 2.3 %, Sikh 1.9 %.
- 35% of Silicon Valley start-ups are run by Indians.
- In the USA: 38% of doctors in the USA and 12% of scientists are Indians
- 36% of NASA scientists, 34% of Microsoft employees, 28% of IBM employees, 17% of INTEL scientists, 13% of XEROX employees… are Indians.
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2. POLITICAL ENVIRONMENT
The 1950 Constitution provides for a parliamentary system of Government with a bicameral parliament and three independent branches: the executive, the legislature and the judiciary. The country has a federal structure with elected Governments in 29 States. 3. ECONOMICS (OCTOBER 2008)
Basic Information Credit Agencies
| Modody's: Baa3; S&P: BBB-; Fitch: BBB- | Nominal GDP (2007)
| US$1.131 billions | Population (2007)
| 1.110 millions
| Total Trade / GDP (2007)
| 32.8% | | Currency | Indian Rupee | Exchange regime
| Managed float | Current exchange rate (Nov16, 2008)
| US$1 = INR 48.825; EUR1 = INR 61.52
| Main sources of foreign exchange (exc FDI)
| Manufactured goods, Remittances
| Main merchandise export destination
| USA = 17%
| Main imports
| Manufactured goods 31%; Mineral fuels 10% |
- GDP - composition by sector: Agriculture: 17.6 %; Industry: 29.4 %; Services: 52.9 % (2007 est.)
- Labour force: 516.4 million (2007 est.)
- Investment (gross fixed): 34.6 per cent of GDP (2007 est.)
- Industrial production growth rate: 8.9 per cent (2007 est.)
- Exports: US$ 150.8 billion f.o.b. (2007 est.)
- Exports commodities: petroleum products, textile goods, gems and jewellery, engineering goods, chemicals, leather products
- Exports partners: US 17%, UAE 8.3 %, China 7.%, UK 4.3 % (2006)
Key Economic Indicators
Source: EIU, EDC Economics
Fiscal policy: The budget for the 2008-2009 fiscal year projects continued improvements for the deficit, to 2.5% of GDP, and tax revenues, to 13% of GDP. However, the budget omits large subsidies for food, oil and fertilizers, as well as other subsidies programs which will probably bring the actual deficit closer to 4% of GDP. Infrastructure spending will see some improvements, with increase of 20% for power, road and rail, and 50% for ports.
Outlook: Reflecting the favorable prospect of growth rate of Indian economy, the orders received by Indian companies have increased 68.6% to US$ 32.48 billion during January-October 2007 compared to US$ 19.26 billion in the same period last year. - India is among the five countries sharing 50 per cent of the world production (or GDP).
- FDI inflows have jumped by almost three times to US$ 15.7 billion in 2006-07 as against US$ 5.5 billion in 2005-06.
- The aggregate income of the top 500 companies rose by 28.4 per cent in 2006-07 to total US$ 469.51 billion.
- India's National Stock Exchange (NSE) ranks first in the stock futures and second in index futures trade in the world.
- Twenty Indian firms have made it to the list of Boston Consulting Group's 100 New Global Challenger Giants list.
- According to a study by the McKinsey Global Institute (MGI), India's consumer market will be the world's fifth largest (from twelfth) in the world by 2025.
- The number of companies incorporated has increased at an annual average of 55,000 companies in the last two years to 865,000, from 712,000 companies at the end of 2005.
- Four Indians and seven Indian microfinance companies make it to the Forbes list of Top10 world's wealthiest CEOs World's Top 50 Microfinance Institutions, respectively.
- India has the most number of private equity (PE) funds operating amongst the BRIC markets.
- Mumbai has been ranked tenth among the world's biggest centers of commerce in terms of the financial flow volumes by a survey compiled by MasterCard Worldwide.
Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 %t, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world.
4. INVESTMENT ENVIRONMENT
India’s Foreign Investment policy allows 100% FDI in most sectors. However, sectors that are closed to foreign investment include agriculture, trade atomic energy, and railways. Currently, foreign companies are only allowed to own 10% of a business in the retail sector. Prime Minister Manmohan Singh is trying to convince his coalition partners to open up FDI along the lines of what is allowed in other industries. Recent changes in the composition of the coalition make him more likely to succeed.
FDI limits for other sectors are as follows: - Banking - 74%
- Non-banking financial companies (stock broking, credit cards, financial consulting, etc.) - 100%
- Insurance - 26%
- Telecommunications - 74%
- Private petrol refining - 100%
- Construction development - 100%
- Coal & lignite - 74%
- Trading - 51%
- Electricity - 100%
- Pharmaceuticals - 100%
- Transportation infrastructure - 100 %
- Tourism - 100%
- Mining - 74%
- Advertising - 100%
- Airports - 74%
- Films - 100%
- Domestic airlines - 49%
- Mass transit - 100%
- Pollution control - 100%
- Print media - 26% for newspapers and current events, 100 % for scientific and technical periodicals
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