Economic Liberalization

in India
Past Achievements
and Future Challenges
1
THE INDIA STORY
1947 : Year of Indian Independence
Todays India is one of the fastest growing Democratic Market Economy,
well on its way to be integrated with the world economy

The famous Goldman Sachs report ( Dreaming with BRICs: The Path to
2050 ) states that, among Brazil, Russia, India and China, India will grow
the fastest over the next 30 to 50 years by leveraging its demographic
advantages and through continued development

Indias GDP will exceed Italys in 2016, Frances in 2019, Germanys in 2023
and Japans in 2032

INDIA TO BECOME THE 3
RD
LARGEST ECONOMY IN THE WORLD BY 2032


AND
THE STORY BEGAN IN 1947

Planned Industrial Development

Industry Licensing and Quotas

Dominance of Public Sector

Restriction on Private Investment

Socialism

Mixed Economy


India Pre - Liberalization

Liberalization of
Industrial Licensing

De-licensing
De-control
De-regulation
Broad banding
Abolition of registration

FERA Liberalization

Liberalization of foreign investment
Liberalization of Technology Import
The New Industrial Policy for liberalization-1991

MRTP Liberalization

Abolition of threshold assets limit
No MRTP clearance needed for
expansions, mergers

Curtailment of Public
Sector
Several industries hitherto reserved
for public sector opened up to private
sector

Only eight core industries remain
reserved for the public sector

Purview of Board for Industrial and
Financial Reconstruction (BIFR)
extended to Public sector
The New Industrial Policy for liberalization - 1991
Governments role changed to Regulator from Licensor

All Licenses Rationalized

Active participation of private sector

FDI being Welcomed (100%) - Automatic Route

Barriers Dismantled & Procedures Simplified

Indian Industries Actively Investing Abroad

Bureaucracy - Less Government is Good Governance

Allowing Market Forces to Govern the Efficient Allocation of
Resources with Minimum State Intervention

Reducing and rationalising foreign trade barriers
India Liberalization Stage - Strategies Developed
India - One of the fastest growing economies in the world
Average GDP growth (1995 -2005) : 6.2 % per annum
Average annual growth (1995 - 2005)
Agriculture & Allied : + 2.1 % per annum
Industry : + 6.6 % per annum
Services : + 7.8 % per annum
Average Per Capita Income growth (1995 - 2005): 3.8 % per annum
Inflation down to a single digit level continuously for the last ten years
Foreign exchange reserves increased from US $ 2 b (March 1991)
to US $ 145 b (September 2005)

Merchandise Exports : +20 % average rate of growth in last three years

Booming Services Exports from US $ 4.6 b in 1990-91 to US $ 51.3 b in
2004-05
Economic Scenario : Post Liberalisation

Balance of Payments surplus (US $ 26 b in 2004 - 05)

External Debt Service Ratio down from 26.2 % in 1995 to 6.2 % in 2005

Foreign Direct Investment (FDI) : Average +US $ 5 b pa in the last
five years.

Foreign Portfolio Investment : US $ 11.4 b in 2003-04 and
US $ 8.9 b in 2004-05

Reforms continuing and have unleashed dynamic forces
putting the economy on a trajectory of unparalleled economic
growth in the future

The Indian Government is working in close co-operation with
industry and trade to mitigate the remaining problems and
constraints

Broad consensus across the political spectrum on the need for
and direction of the reforms. Some issues still need to be resolved
Economic Scenario : Post Liberalization
28.0
23.8
20.5
27.2
40.6
43.9
48.9
52.4
32.2
28.1
27.2
27.1
0
10
20
30
40
50
60
1990-91 1995-96 2000-01 2004-05
Agriculture Industry Services
Share Of Services Sector In GDP On The Rise (%)

Hero Honda - Largest producer of motorbikes in the world
Moser Baer - Worlds 3rd largest producer of optical media
Hero Cycles - Worlds largest bicycle producer
Bharat Forge - Amongst the worlds top 3 forgings manufacturers
UB Group - Worlds 2nd largest producer of alcoholic beverages
Paharpur Cooling Towers - Worlds 2
nd
largest manufacturer of
Cooling Towers

India Leading The World
India Leading The World

Apollo Hospitals - Single largest hospital chain in South Asia
TISCO - worlds cheapest producer of steel
Reliance Industries - Worlds largest producer of PTA, a chemical
used in textile production
Mahindra & Mahindra - Amongst top 3 tractor manufacturers in the
world
Telco - Amongst top 3 truck manufacturers in the world
Welspun - Worlds largest producer of terry-towels
Gujarat Ambuja - Amongst top 5 cement producers in the world
Some Indian Examples Benchmarked with the
Best In The World
Success Story of RELIANCE
The Reliance Group founded in 1932, is India's largest business house with
total revenues of over US $ 22.6 b and exports of US $ 3.6 b

It began as a an SME

The Group's activities span exploration and production of oil and gas, refining
and marketing, petrochemicals, textiles, financial services, insurance, power,
telecom and infocom initiatives

The Group exports its products to more than 100 countries the world over

Reliance Group revenue is equivalent to about 3.5 % of India's GDP

The Group contributes nearly 10 % of the country's indirect tax revenues and
over 6% of India's exports

Today, the Reliance Group has one of the largest family of shareholders in the
world
Success Story of WIPRO
Wipro was set up in the backdrop of the small town of Amalner in
Maharashtra in 1945

An SME and primarily an oil factory, the chief products were
Sunflower Vanaspati and 787 laundry soap

It was in the early eighties that Wipro made its foray into the Infotech
arena

With this began the Wipro Infotech story

Today, Wipro stands at the firmament, as a trusted and experienced
provider of a comprehensive range of IT services, solutions and
products, worldwide



Success Story of BHARTI
Bharti Enterprises has successfully focused its strategy on telecom
while straddling diverse fields of business

It all began as a Small Industry

Bharti Tele-Ventures is today acknowledged as one of India's finest
companies, and its flagship brand 'Airtel', has over 12 million customers
across India

Recently, Bharti has successfully launched an international venture with
EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh
Agri- products exclusively to markets in Europe and USA

Success Story of DR.REDDYS
Dr.Reddys Laboratories was founded in 1984, with a capital of US $40,000 in cash and
US $120,000 in bank loan

In fact, it is this spirit of entrepreneurship that has shaped the company to become
what it is today

Today, the company with revenues of US $446 m, in fiscal year 2005, is Indias second
largest pharmaceutical company and the youngest among its peer group

Dr. Reddys started its drug discovery programme in 1993 and within three years it
achieved its first breakthrough by out licensing an anti-diabetes molecule to Novo
Nordisk in March 1997

With this very small but significant step, the Indian industry went through a paradigm
shift in its image from being known as just copycats to innovators!

Through its success, Dr. Reddys pioneered drug discovery in India

Today, the company manufactures and markets API (Bulk Actives), Finished Dosages
and Biologics in over 100 countries worldwide, in addition to having a very promising
Drug Discovery Pipeline
Success Story of BIOCON
Biocon is India's leading biotechnology enterprise

Over the past 25 years, they have evolved from an small enzyme manufacturing
company to a fully integrated biopharmaceutical enterprise, focused on healthcare

At Biocon, success has been their ability to develop innovative technologies and
products and to rapidly leverage them to adjacent domains

This unique "integrated innovation" approach has yielded a host of patented
products and technologies that have enabled multi-level relationships with their
global clientele

As India's first and leading biotechnology company, Biocon extends its support to
numerous community outreach and corporate citizenship initiatives with special
concentration in the areas of healthcare, education and environment

The Biocon Foundation, set up in 2004 has recently launched Arogya Raksha
Yojana, a unique health initiative for rural India

Success Story of Paharpur Cooling Towers
In its over four decades of existence, Paharpur has come to be acknowledged as the
pioneer in the Indian cooling tower industry

It all began as a small industry with a capital of US $ 11,000

At today's selling prices, Paharpur has sold cooling towers valued at over US$ 1 b

If these cooling towers were all working together, they would be able to cool more than 265
million liters of water every minute or 382 b liters in 24 hours

The Paharpur team consists of highly qualified engineers & professionals with over 1,000
man years of experience in the field of cooling tower application engineering, designing,
erection and trouble shooting

Paharpur has pioneered several improvements in cooling tower design and operation and
has emerged as one of the largest cooling tower manufacturers in the world, with exports
to more than 40 countries

INTERNATIONAL SUCCESS STORIES
1,858
1,105
1,054
965
548
393
263
172
36 22
17
8 7
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1
Japan
India
South Korea
Singapore
Australia
China
Hong Kong
Taiwan
Malaysia
Sri Lanka
New Zealand
Philippines
Thailand
India attracts second highest private
equity investment in Asia
Total equity flow to India between 1999 and 2004 doubled
from US $ 5.12 b to US $ 11.50 b
Preferred Destination For Foreign Equity Investors
Source: NASSCOM
MNCs leveraging the India Advantage
Trained manpower
and knowledge base
Rich biodiversity
Extensive clinical trial
opportunities
Excellent network
of research laboratories
Well-developed
base industries
Pro active
policy framework
Proficiency in
English
Low manpower
costs
The India Advantage
Working
age
population
to rise
to 65%
Urban
population
to rise
to 40%
30-40 mn
people
joining
middle
class
every
year
By 2020
Demographics: A strong demand driver
Source: IMD Competitiveness Yearbook 2003 Source: UN, Morgan Stanley


Growing Knowledge Pool
Total Compensation for Workers in Heavy
Manufacturing (US$ per Hour)
20.32
8.35
2.27
0.75
0.43 0.35
0
5
10
15
20
25
USA Korea Mexico China India Indonesia
Source: IMD Competitiveness yearbook, 2003
Low Wages
10th largest economy in the world - 4th in terms of PPP

Will overtake Japan in PPP terms by 2010, to be 3
rd
largest in the world

Large entrepreneurial base and diversified manufacturing structure

Large reservoir of skilled labour at internationally competitive cost

Vast pool of scientifically and technically qualified manpower of 20m

A large domestic market - 300 m + strong middle class population
having substantial purchasing power

Largest democratic set - up

A broad based and transparent legal framework including arbitration


India - Economic Enablers
Vast network of bank branches, financial institutions and well-organized
capital and money markets

A network of technical and management institutes of highest
international standards for development of human resources

India has a record of meeting its international financial obligations as
per schedule and has never been a defaulter

No communication barrier, as English is the most prevalent business
language

Strong and vibrant small scale sector that is keen to establish
strategic alliances with their foreign counterparts
India - Economic Enablers

Supportive infrastructure base

Strategic location for third country markets, particularly in the rapidly
growing south and south-east Asian countries

The strategic location of India and its easy and efficient access to the
Middle East, East European countries, CIS countries, Africa, South East Asia
and Asia-Pacific countries places it in a unique position as a sourcing ground
for entering into strategic alliances in export-oriented industries

Foreign companies can take advantage of Indias strategic location and tap
the markets of these countries.
India is slowly but surely emerging as an attractive destination for foreign
investment

Liberalized industrial and foreign investment policies

India - Economic Enablers
Recognising the need and the potential in certain areas, the Government
has also come out with specialised packages of incentives for setting up
projects in the fields of power, roads and highways, telecommunications,
mining, drugs and pharmaceuticals,hydrocarbons, shipping and ports,
tourism, electronics, food processing, etc

The Government is vigorously promoting and approving foreign direct
investment keeping in view the objective of attracting at least US $ 10 b
per annum

The Government is very keen to attract sizeable foreign investment into
infrastructural projects like roads, power, ports, telecommunications, etc.
as the demand for infrastructural services is expected to rise several
times to match the projected economic growth of around 8 % per annum
in the next ten years
India - Economic Enablers
Road length 2.5 m km
Second largest road network in the world

Railway routes 63,000 km

Cargo handled 298 m tonnes

Electricity installed capacity 126,000 MW
Sixth in world electricity generation

Telephone Connections 77 m lines

Fixed lines (Dec, 2004) 44.76 m
8th largest telecom network in the world
Source: Department of Economics & Statistics, Tata Services Ltd
The India Advantage: Infrastructure
Indian Brains Abroad
Though foreign multinational have dominated the research agenda in India
to date, a growing number of Indians who have worked abroad are
returning home with cash, contacts and confidence to set up companies
of their own
These are people who have the experience and exposure to best practices
abroad
For the first time, Indians who have been exposed to the world, realize they
can do something just as good and they can be world-class
They have an attitude to meet challenges and succeed and also give back
something to their country

35 % of Doctors in USA
36 % of NASA Scientists in USA
35 % of Silicon Valley Start-Ups are by Indians
India emerging as outsourcing hub
BUSINESS OPPORTUNITIES
Opportunity in various Industry Sectors

Software

Biotechnology

Outsourcing

Retailing

Real Estate

Auto Components

Telecommunication

Media & Entertainment

The Indian Outsourcing industry is moving up the value chain

It is BPO today but the future is for Knowledge Process Outsourcing
(KPO), Financial Process Outsourcing (FPO) and Legal Process
Outsourcing (LPO)

It is providing value through domain expertise rather than process
expertise

India, in the new knowledge economy, is all set to emerge as a global
KPO,FPO and the LPO hub

It is estimated to capture 71 % of the world market by 2010 against
56 % today giving it a market of US $12 b

There are new opportunities, given that there is a serious shortage of
quality teachers, in the USA

Opportunities in Outsourcing
The remote education market is expected to be US $ 15 b by 2008
The current leaders are Engineering design US $ 400 m, basic
data search, integration and management US $300 m and Biotech and
Pharma US $ 280 m
The Compounded estimated annual growth of KPO for India is 50 %
whereas BPO will grow at about 30 %
KPO is expected to engage 250,000 people by 2010
It will be in areas such as biotechnology,animation and graphics,design
in aerospace & automotive, health care, pharma research, learning
solutions, data management, customer analytics and entertainment
FPO will include insurance underwriting, risk assessment, equity
research and corporate market research



Opportunities in Outsourcing
WINNING
ATTITUDE
Differentiating themselves through the products and services they provide

Standing out by creating special interfaces with their customers and building
unique ways by which they can be held accountable by them

Building a very strong quality story

Benchmarking innovations against well set, globally accepted standards and
aim for targets, creating an environment and culture of innovation within the
organization

Developing systems to nurture innovation making full use of the availability of
information and by rightful dissemination of knowledge to foster goal driven
innovation

Building efficient processes to cut time - to- market

Providing opportunities to their people to do roles that go beyond their
existing work profiles

Providing continuing education
It Is All About Attitude - Management
Need to hone their skills

More adaptive thinking

Greater entrepreneurial drive to find new horizons of growth with a competitive
spirit

Foresight with a fierce unrelenting passion to execute and act today to improve the
future

Bring change more aggressively and lead the organization to implement
sustainable changes

Energizing their team and inspiring them for excellent team performance

Delegating authority to allow people to perform


It Is All About Attitude Business Person
Ability to reach out to a wide international network for ideas and problem
solving

Understanding on how things get decided and done

Using customized strategies to influence specific stakeholders

Executive maturity and emotional wisdom to respond to others and
embody the aspirations of ones organization

Inner strength to do the right thing at the right time

Courageous dedication to super ordinate goals, doing what is right and
what will make India great

To keep learning and be abreast of new technology

It Is All About Attitude Business Person
The early burst of reforms in the early to mid nineties made sweeping changes such as

Reduction in tariff barriers
Removal of barriers to entry in industry
Removal of controls in the financial sector
Encouragement to foreign investment and technology
Rationalization of tax structure

These have ensured macroeconomic stability and driven the economy towards greater
competitiveness

These measures have also helped India in emerging as a resurgent, vibrant and
dynamic nation, leading global growth

India is the second fastest growing economy in the world after China
India was able to withstand the repercussion of the global economic crisis
Indias participation is required in all global negotiations ranging from global trade to
climate related deals
Economic Reforms

Economic Reforms
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G
r
o
w
t
h

(
%
)
GDP GDP Growth Rate
Source: Economic survey 2010-11 and CSO
GDP has surged from 5.7% during
1991-00 to 7.7% during 2001-11
-
0
.
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%
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.
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5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1
9
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1
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9.0%
Y
-
O
-
Y

G
r
o
w
t
h

(
%
)
Per Capita Income Growth in Per Capita Income
GDP
Per Capita Income

Per Capita Income has more than
doubled from Rs. 15,826 in 1991
to Rs. 41,129 in 2011; has been
increasing at an average annual
rate of about 7% since 2004
Robust GDP Growth
GDP has undergone a marked structural change over a span of two decades
Agriculture contribution has shrunk to 16.6% in 2011 from 34.0% in 1991
Share of tertiary sector has increased commendably, in fact is becoming
engine of growth
Flat growth in Secondary sector is however, a cause of worry given the
reducing employment elasticity of agricultural sector
34.0%
23.2%
42.7%
Agriculture, 16.6%
Industry, 25.7%
Services, 57.7%
Composition of GDP (1991 v/s 2011)
1991
2011
Source: Economic survey 2010-11 and CSO
Structural change in GDP composition
Savings as a proportion of GDP moved up by more than ten percentage points
from 22.8% in 1991 to 33.7% in 2010

Investment to GDP ratio also jumped from 26.0% to 30.8%, however expected
to declined to 29.5% in 2011 due to rising interest rate


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G
r
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(
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)
Savings Investment Savings as % of GDP Investment as % of GDP
Source: Economic survey 2010-11 and CSO
Savings & Investment % of GDP
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2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
(
U
S
$

B
i
l
l
i
o
n
)
Merchandise Exports Merchandise Imports
Merchandise exports soared to cross
US$250 bn in 2011 from US$ 18.5 bn in
1991, about 14 fold increase

Service exports went up to US$132 bn in
2011 from mere US$ 4.6 bn in 1991,
registering a CAGR of 18.3%
Backed by robust exports of IT and
ITes services; close to $60 billion in
2010-11

Merchandise and Service imports grown
at a CAGR of about 14.0% and 17.1%
respectively
Faster rise in imports over exports
have undoubtly widened trade deficit
yet it has helped in keeping global
demand alive in the wake of the
global economic crisis
Trade as a proportion of GDP has
increased magnificently from 9.0% in
1991 to 87.9% in 2011


Source: RBI
4
.
6
5
.
0
4
.
7
5
.
3
6
.
1
7
.
3
7
.
5
9
.
4
1
3
.
2
1
5
.
7
1
6
.
3
1
7
.
1
2
0
.
8
2
6
.
9
4
3
.
2
5
7
.
7
7
3
.
8
9
0
.
3
1
0
6
.
0
9
5
.
8
1
3
2
.
0
3
.
6
3
.
8
3
.
6
4
.
7
5
.
5
7
.
5
6
.
7
8
.
1
1
1
.
0
1
1
.
6
1
4
.
6
1
3
.
8
1
7
.
1
1
6
.
72
7
.
8
3
4
.
5
4
4
.
3
5
1
.
5
5
2
.
0
6
0
.
0
8
4
.
3
-10.0
10.0
30.0
50.0
70.0
90.0
110.0
130.0
150.0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
(
U
S
$

B
i
l
l
i
o
n
)
Service Exports Service Imports
Merchandise Trade
Service Trade
Merchandise & Service Trade
FDI inflows have grown multiple fold from just US$ 97 mn in 1991 to US$ 30.4
bn with an average annual compound growth rate of 33.3%

FDI inflows as a proportion of total foreign investment inflows has fallen from
157.8% in 2008-09 to 49.1% in 2011 due to faster rise in portfolio investment

Indian companies have made an outward investment totaling US$80 billion in
the first decade of the century mostly in developed economies
9
4
.
2
%
9
7
.
0
%
5
6
.
4
%
1
4
.
1
%
2
5
.
6
%4
3
.
8
%
4
6
.
0
%6
6
.
1
%
1
0
2
.
5
%
4
1
.
6
%
5
9
.
3
%
7
5
.
2
%
8
3
.
7
%
2
7
.
5
%
3
9
.
4
%
4
1
.
8
%
7
6
.
5
%
5
6
.
1
%
1
5
7
.
8
%
5
3
.
8
%
4
9
.
1
%
0
5000
10000
15000
20000
25000
30000
35000
40000
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
U
S
$

M
i
l
l
i
o
n
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
F
D
I

a
s

%

o
f

T
o
t
a
l

F
o
r
e
i
g
n

I
n
f
l
o
w
s
FDI Inf lows As % of Total f oreign Investment Inf lows
Source: RBI
FDI Inflows
Steps taken over the last two decades have resulted into maturing of nascent
financial market. Further, robust economic growth and fast pace of
globalization has led to buoyant investors sentiment

SENSEX has increased from a level of 1908.9 in 1991 to 18518.2 in 2011 at
a CAGR of 12.0%
Trends in Capital Market - SENSEX ans BSE 100
0.0
3,000.0
6,000.0
9,000.0
12,000.0
15,000.0
18,000.0
21,000.0
1
9
9
1
1
9
9
3
1
9
9
5
1
9
9
7
1
9
9
9
2
0
0
1
2
0
0
3
2
0
0
5
2
0
0
7
2
0
0
9
2
0
1
1
SENSEX BSE 100
Source: BSE, bseindia.com
India - Sensex
CIIs Initiative on Socio Responsibilities
Corporate Social Responsibility
Set up Social Development and Community Affairs Council in 1995
Developed Action Agenda for Affirmative Action and worked to generate
awareness and intensify industry efforts
Facilitates industry interventions in society through NGO partnerships
Undertakes public health and community welfare activities in factories
Spearheaded the India Business Trust for HIV/AIDS

Environment Management
Set up Environment Management Division after Rio Summit in 1992
Initiated Green Building movement in India through its Centre of Excellence
Green Business Center
Engages in climate change mitigation efforts

48
Social indicators
Overall literacy rate has gone up from just
over half to almost three-quarters during
1991 and 2011
Literacy level among female folk which
constitutes about half of the population
has nearly doubled

Among young people, the rates are higher
as the Right to Education law kicks in
Source: Economic Survey
52.2%
74.0%
64.1%
82.1%
39.3%
65.5%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Overall Males Females
1991 2011
35.6%
27.5%
35.0%
28.3%
37.0%
25.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Total Rural Urban
1991 2005
Overall, poverty has declined by eight
percentage points from as high as 35.6% in
1991 to 27.5% in 2005
Decline was more pronounced in urban areas
as compared to rural areas
Urban poverty fell by double digits. Rural
poverty came down by seven percentage
points
Literacy Rates
Poverty Estimates
Source: Planning Commission
Sector Deficit Eleventh Plan (2007-12) Targets
Roads/
Highways
65,590 km of NH comprise only 2% of
network; carry 40% of traffic; 12% 4-
laned; 50% 2-laned; and 38% single-
laned
6-lane 6,500 km in GQ; 4-lane 6,736 km NS-
EW; 4-lane 20,000 km; 2-lane 20,000 km;
1,000 km Expressway
Ports
Inadequate berths and rail/road
connectivity
New capacity: 485 m MT in major ports; 345
m MT in minor ports
Airports
Inadequate runways, aircraft handling
capacity, parking space and terminal
buildings
Modernize 4 metro and 35 non-metro
airports; 10 greenfield airports
Railways
Old technology; saturated routes; slow
speeds (freight: 22 kmph; passenger: 50
kmph)
8,132 km new rail; 7,148 km gauge
conversion; modernize 22 stations;
dedicated freight corridors
Power
13.8% peaking deficit; 9.6% energy
shortage; 40% transmission and
distribution losses; absence of
competition
Add 78,577 MW; access to all rural
households
Source: Planning Commission
Major Plans for Infrastructure Development
Power and Road
Source: CMIE, Industry Analysis Service
Installed Capacity in Power Sector: All India
66,086.3
153,774.8
-
20,000.0
40,000.0
60,000.0
80,000.0
100,000.0
120,000.0
140,000.0
160,000.0
180,000.0
1991 2011
M
W
Total installed capacity has more than doubled
during 1991 and 2011
Even after 20 years, thermal power remained the
most dominant form
There is a need to change the present composition
in favour of hydro, nuclear and other bio-produce
power to conserve coal for industrial purposes
Road Length
2,327.4
4,236.4
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
4,500.0
1991 2008
(

0
0
0
'

K
m
)
Source: Ministry of Road, Transport and Highways
Public-private-multilateral partnerships have
been successful in implementing highways
program
NHAI to award 7,994 km of highway projects
in the FY 2012
Going to generate demand for cement,
steel, and bitumen of worth Rs 42,000 crore
Though the sectoral performance has
improved, yet to be enhanced considerably
to ensure optimal utilization of resources
and to avoid overrunning of cost


Installed Capacity: Power
Road Length
Steel and Telecom
Steel production has surged nearly five fold
in last 20 years

India fourth largest steel producer in the
world and is expected to become the
second largest producer by 2013
Steel production capacity to touch 120
Million Tonnes by 2013 and over 150
Million Tonnes by 2020
Source: CMIE, Industry Analysis Service
Finished Steel Production
13,566.0
66,013.0
-
10,000.0
20,000.0
30,000.0
40,000.0
50,000.0
60,000.0
70,000.0
1991 2011
(
0
0
0
'

T
o
n
n
e
s
)
Telecom Subscriber Base
5.1
826.9
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1991 2011
(
M
i
l
l
i
o
n
s
)
Source: Department of Telecommunications, Ministry of Communications and Information Technology

Private sector participation has lead to sharp
reduction in tariffs and rapid increase in
penetration of basic/mobile telephones
Registering a CAGR of 29.0% during 1991
and 2011
Teledensity improved from 0.6 (per 100
person) in 1991 to 66.2 twenty years later
Finished Steel Production
Telecom
High inflation level above comfortable zone 9.4% in June 2011

Industrial slow down IIP has grown by 5.6% in May 2011 as compared to 8.5% in May 2010

Falling investment - 30.8% in 2010 to 29.5% in 2011

High interest rates have impacted credit to MSMEs in manufacturing sector as well as key
industries Non food credit growth to MSMEs declined from 21.1% in April, 2010 to 20.6% in April,
2011

Inadequate infrastructure continues to be a major structural bottleneck

Shrink in FDI inflows due to structural bottlenecks In 2010-11, FDI inflows shrunk by 28% to
US$ 27 billion from a level of US$ 38 billion in 2009-10

Weak enforcement and monitoring

Likely overshooting of fiscal deficit Though fiscal deficit is budgeted at 4.6% for FY 2012,
however, developments in recent months like deceleration in growth, high crude oil prices, high subsidy
and rising interest rates are casting doubts

Challenges

Investment Climate:
FDI in sectors such as retail, insurance, defence, etc needs to be expanded drastically
Rapid clearance of large projects

Financial Sector Reforms:
Liberalize financing guidelines
Facilitate increased access to international debt markets
Encourage development of the corporate debt market

Agriculture Sector Reforms:
Allow FDI in food retailing to integrate distorted supply chain
Encouragement to PPP model in strengthening agriculture research and extension programmes
Exempting horticulture produce from APMC Act
Move towards unified national market and allow free movement of produce

Infrastructure:
For greater investment in infrastructure policy framework needs to be made more friendly

Social Sector:
Much better delivery of government services to the poor with the support of state governments
Agenda for further reforms
CII has been a strong partner to government during the reforms period and will
continue to build the partnership of Government and industry to make India a
developed nation in the next two decades
THANK YOU