SME SECTOR:
SMEs account for almost 90% of industrial units in India and 40% of value addition in the manufacturing sector. They contribute 35% to India’s merchandise exports. Indian SMEs are amongst the most dominant recruiters from the BRIC (Brazil, Russia, India, China) countries and there is evidence that this growth in SME- IT spend is likely to grow by 24%. This growth rate is the fastest amongst all BRIC countries, with Russia, China and Brazil following at 22.9%, 20.4% and 19.4% respectively. As per available statistics for India, the SME sector employs an estimated 31 million persons spread over 12.8 million enterprises and the labour intensity in this sector is estimated to be almost 4 times higher than the large enterprises.
TRADE:
India is an important trade partner for most developed and developing nations as it is one of the fastest growing economies in the world. India’s trade with the EU has risen above 55 billion euros. Due to India’s relatively restrictive trade regime, the World Bank ranked India 120 out of 178 economies in terms of ‘ease of doing business’ but India is working at fully realising its potential as a trade partner with the EU and other countries like Canada and Australia. Under the EU-India Foreign Trade Agreement (FTA) the EU is providing trade related technical assistance to India. The recent agreement between India and Canada will increase bilateral trade from the current $5 billion to $15 billion annually over the next 5 years. Similarly India and Australia are in talks to finalise a bilateral free trade agreement which will address liberalisation and removal of impediments to trade in goods. India surpassed the UK in becoming Australia’s 9th largest trading partner whereas Australia is known as India’s 10th largest trading partners. Bilateral trade has surpassed the $11 billion mark. India and Poland have signed a cooperation agreement to facilitate and boost each other’s SME sectors. Lakshmi Mittal owns 70% of the steel mills in Poland. Import and export between India and Poland crossed $1 billion in 2009.
PORTS:
During the last decade India’s maritime sector has increased its cargo traffic, shipping tonnage and private investment. By 2010 every 4th ship on order in the world will be serving Indian trade. International shipbuilding is expected to be 400 million DWT by 2010. India’s top priorities are improving connectivity by road and rail to all ports and dredging at all major ports to facilitate calling by larger ships. However Indian ports are still more expensive and tedious to conduct business with when compared to major Western ports. Private interest is however growing in developing Greenfield ports. In the next five years, many new ports are scheduled to be added, key ones of which are in Orissa, Andhra Pradesh and Maharashtra.
INFRASTRUCTURE:
In a galloping economy like India, there is an ever-increasing need for high-quality infrastructure, which Indian and international pundits agree, is lacking in many places. Road transport especially is the dominant sector in India. The total length of multilaned expressways is less than 1000 kms in contrast with the USA which has the highest at 89,000 kms followed by China at 54,000 kms. The National Highways Development Project (NHDP) is in Phase III of development adding 10,000 kms of 4-lane expressways and an additional 20,000 kms not included in the previous project. The private sector’s involvement however needs to be greater based on a Public-Private-Partnership (PPP) basis. Although India currently has 3.3 million kilometres of road in the world, the shortage of high-quality highways is one of the major hurdles against attracting FDI.
STEEL:
China and India are the major producers and consumers of steel in the world. Since 2008, however the global steel output fell as the recession hit the markets. The World Steel Association ranks India at No. 5 in the steel industry with an annual crude steel production of 55.2 million tonnes. China ranks first at 500.5 million tonnes, followed by Japan at 118.7 million tonnes, the US at 91.4 million tonnes and Russia at No.4 with 68.4 million tonnes. The Steel Authority of India Ltd. (SAIL) posted a growth of 28% in sales. Jindal Steel Works (JSW) sold more than 400,000 tonnes in October 2009, which is twice its sales in the past year.
ENERGY:
Worldwide energy consumption in 2008 was 474 exajoules, with 80% to 90% derived from fossil fuels. Of the 15.8 Terrawatts (TW) consumed, only 0.158 TW were harnessed from geothermal energy, wind or solar power. Renewable energy sources hence need more investment. Germany and China lead with investment over $7 billion, followed the US, Spain, Japan and India. India’s Central Electricity Regulatory Commission (CERC) states that there is currently 14,000 mw of renewable energy installed of which approximately 10,000 mw of wind power is mostly confined to Tamil Nadu and Rajasthan. Wind power is growing at a rate of 30% annually. Brazil has one of the largest renewable energy programs in the world, involving production of ethanol fuel from sugar cane and ethanol now provides 18% of the country's automotive fuel. The world’s largest solar power stations are in the US and Spain.
TELECOMMUNICATIONS:
The Indian telecommunications industry is the third largest telecommunications network in the world and second largest in terms of wireless connections. India has 506.04 million connections as of November 2009. The first and largest operator is the state-owned incumbent BSNL which is also the 7th largest telecom company in the world in terms of its number of subscribers. India's mobile phone market is the fastest growing in the world, with companies adding 16.67 million new customers a month. The total number of telephones crossed the 543 million mark in October 2009. The overall tele-density has increased to 44.85%. In the wireless segment, 17.65 million subscribers have been added in November 2009. The total wireless subscribers (GSM, CDMA & WLL (F) base is more than 543.20 million now. The wireline segment subscriber base stood at 37.16 million with a decline of 0.13 million in November 2009.
BANKING & FINANCE:
In India, accounting for 6% of the GDP and 11% of the services sector, the financial sector has doubled in the past 2 decades. The annual growth is placed at 10%. However, penetration into the heartland is low. ICRA Limited, a rating agency states that the public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. The global trend for worldwide banking in 2010 shows a focus on risk management on account of the recent financial crisis. Another global trend is alternative payments through the the proliferation of mobile banking and nontraditional suppliers such as retailers, phone companies and prepaid card vendors. According to Ernst & Young’s recently published Global IPO Update, Brazil and China accounted for 2/3 of the global capital raised in the second quarter of 2009. The Bernard Madoff $65 billion Ponzi scheme, among other scams exposed in 2009, alerted regulators in many countries. As a direct result, banks have to spend more money on compliance and risk management leading to a rise in the cost of doing business. In Asia, Singapore is known as “Switzerland of the East” with its $300 billion private banking assets. Singapore officials are planning to amend the Income Tax Act, which is likely to help the country to make OECD’S“white list”, further establishing itself as Asia’s private banking stronghold.
AGRO AND BIOTECHNOLOGY:
India has enormous growth potential in this sector on accont of its educated human resource and primarily because vast areas of the country are under cultivation with 75% of the country living in the rural sector, relying on agriculture. However India needs to make greater leaps in these fields, especially when compared to China and the EU. With rich biodiversity and well-developed base industries in pharmaceuticals and seeds, the Biotechnology sector has great scope to attract more investment. The Department of Biotechnology in India (DBT) is greatly responsible in generating skilled manpower as well as supporting R&D efforts of private industries. The biotechnology industry is attracting more talent, and this is reflected in the number of drug approvals. Since 2002, the biotech industry has overtaken pharma in the number of drugs approved in the US. According to the available estimates, the size of India’s market for biotechnology products could be between US $ 1.5 to US $ 2.5 billion depending upon how a biotechnology product is defined. Of this, the agriculture sector market is valued between US $ 450 to US $ 500 million and diagnostic/vaccines market at US $ 150 to US $ 420 million.
INFORMATION TECHNOLOGY:
India is one of the world’s leaders in Information Technology (IT). The top 5 IT hubs are Bangalore, Hyderabad, Chennai, National Capital Region (NCR) and Pune. India’s leading role in IT has been instrumental in cementing and furthering its relationships with the US and the EU. Out of the 400,000 IT engineers produced annually, 100,000 are technically competent and fluent in English. It is the 12th largest country in the world in terms of broadband Internet users. Bangalore, known as the Silicon Valley of India contributes 33% of Indian IT Exports. India's 2nd and 3rd largest software companies are head-quartered in Bangalore, as are many of the global SEI-CMM Level 5 Companies. It is estimated that Cap Gemini will soon have more staff in India than it does in its home market of France with more than 21,000 personnel in India. There has been increased bilateral cooperation in this sector between India and the EU since 2001. Tata Consultancy Services is one of the largest private sector employees in India with a core strength of over 140,000 people.