Doing Business in Indiaonline.wsj.com/adimg/hsbc-emi-india.pdf · Section 3 Doing Business In India...
Transcript of Doing Business in Indiaonline.wsj.com/adimg/hsbc-emi-india.pdf · Section 3 Doing Business In India...
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Contents
Section 1 India – An Overview
Section 2 Trade
Section 3 Doing Business In India
Section 4 HSBC In India
Disclaimer: This presentation pertains to investment issues, financial markets and other related areas and is for information purpose only. Investors and interested parties should seek to get relevant business related information directly from the concerned government body
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• Population: 1.17 billion (Est. 2009)
• Average literacy rate is 65%
• Land area: 1.27 million square miles (1/3 of US)
• Languages: 18 Languages (English widely used)
About India – Snapshot
2005
785877
India GDP (USD Bn)
1115 1175 1175
1381
16381800
1600
1400
1200
1000
0
200
400
600
800
2006 2007 2008 2009 2010e 2011e
Source: HSBC Research
Did you know – India is the world’s largest democracy
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Investment Climate
Favourable demographics (Rise of the “Great Indian Middle Class”)• More than 35% of the Indian population is between 15 – 35 (Working population to rise to 70% by 2030)• 2nd fastest growing HNWI market (20.5%) with over 100k HNWIs (Merrill Lynch Report)
Access to labour and skills (Cost Advantage) • Over 380 universities, 11,200 colleges and 1,500 research institutions• World’s largest pool of English speaking scientists & engineers • Labour cost (US$ p.a.) @ 2200, as against 3600 China, 6600 Brazil, 8500 Poland • Less than US$ 7,500 p.a. for a call center agent in India (US$ 19,000 in US, US$ 17,000 in Australia)
Financing (Credit Growth 30%+)• Credit ratings of SMEs introduced• Firms’ new investments financed by commercial bank credit: 27.7% (India) v.s 14.7% (globally)*
Infrastructure• Largest road network in the world (3.85Mn kms) • 12 major & 187 minor ports over 7,500 kms of coastline • 5th largest installed power capacity of 123GW • Privatization of airports, ports, road projects
* World Bank survey
Did you know – India is 1 of only 3
counntries to make its own supercomputers
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• GDP to touch USD 1,600 Bn by 2011 from USD 785Bn in 2005 (over 100% growth in 6 years)
• GDP growth rate in the 7% - 10% range over the last 5 years
• Growing trade relations and wider diversification across countries
– Share of US in total trade down from 14.1% in 1991 to 11.4% in 2008-09
– Share of China up from 0.9% in 1991 to 5% in 2008-09
– ASEAN, WANA and South Asian economies account for 37% of Indian exports and 39% of imports
• Foreign trade growing at a rate more than twice the growth rate of GDP
India in the global context
Did you know – India is the world’s
12th largest, 2nd fastest growing economy
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Trade flows – India
Source: Ministry of Commerce, Govt. of India (2008-09)
4.6% share in exports and 2.5% share in imports
Amongst top 5 export destinations for India
Rank Imports (Top 10) %Growth %Share
1 China 19.7 10.7
2 UAE 76.5 7.8
3 Saudi Arabia 2.6 6.6
4 USA (11.9) 6.1
5 Iran 13.1 4.1
6 Germany 21.5 3.9
7 Switzerland 21.6 3.9
8 Australia 42 3.6
9 Kuwait 24.5 3.2
14 Singapore (5.7) 2.5
Rank Exports (Top 10) %Growth %Share
1 UAE 56.5 13.2
2 USA 2.0 11.4
3 China (13.9) 5.0
4 Singapore 14.4 4.6
5 Hongkong 5.4 3.6
6 UK (0.8) 3.6
7 Germany 24.7 3.4
8 Netherlands 20.9 3.4
9 Saudi Arabia 37.7 2.8
10 Belgium 6.5 2.4
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Trade flows and FDI – India/Singapore
Major items of trade
Exports from India:
• Mineral oils & fuels
• Jewellery, precious stones
• Electrical machinery
• Aluminium and products
Imports into India:
• Products of mineral oils
• Electrical equipment
• Organic chemicals
• Optical/Medical instruments
FDI from Singapore to India:
• Exports from India:
• FDI from Singapore to India:
• Cumulative FDI : USD 9.5Bn (9% share)
• Highest inflows from any country apart from Mauritius
2006
5.30%4.80% 4.50%
4.60%
5.43
Exports from India (USD Bn) % Share
6.05 7.38 8.44
6%
5%
4%
3%
2%
1%
0%
9
8
7
6
5
0
1
2
3
4
2007 2008 2009
2006
2.3%
3.0%3.2%
2.5%
3.35
Imports into India (USD Bn) % Share
5.48 8.12 7.65
3.5%
2.5%
3%
2%
1%
0.5%
1.5%
0%
9
8
7
6
5
0
1
2
3
4
2007 2008 2009
Source: Ministry of Commerce, Govt. of India
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What can you do in India?
Did you know – In area terms, India
is 70% the size of Europe
Tap the consumer base
Tap the cost advantage
Tap the trade opportunity
Access India Tap industry
expertise
Tap the talent pool
Tap the financial opportunity
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How can you access India
Foreign Direct Investment: Automatic Route - Equity limits – Insurance (26%) – Airlines (Domestic/cargo)/ Telecom services/Private sector banks (74%) – Pharmaceuticals, Non banking financial companies, Food processing (100%)
Foreign Direct Investment: With Prior Permission (Foreign Investment Promotion Board) – News & current affairs (26%) – Broadcasting - Cable, DTH (49%) – Trading (100%) – Development of airports (100%)
Foreign Portfolio Investment: Investment in primary and secondary markets – Registration with Securities and Exchange Board of India – Own up to 10% of the paid-up capital of an Indian company – Foreign Institutional Investors can cumulatively hold up to 24% of paid-up capital of a company
Did you know – India is 1 of only 3
countries to make its own supercomputers
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How can you access India
Indian Company
Joint Venture• Strategic alliances with Indian partners where sectoral caps exist
Advantages: – Established distribution / marketing set up of the Indian partner – Available financial resource & contacts of the Indian partners
Wholly Owned Subsidiary• Treated as a domestic company (limited liability) for tax purposes
Advantages: – Provides flexibility of operations
Did you know – 100 of Fortune 500 have R&D facilities
in India
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How can you access India
Foreign concern
Liaison Offices, Representative Offices• No commercial or industrial activity may be undertaken
Branch Offices• Manufacturing and Trading companies may open branch offices • Specific Central Bank approval required • Indian transfer pricing applies
Advantages: – Can acquire immovable property – Post-tax profits freely repatriable
Project Offices• For those that have been awarded an Indian project• Treated as a branch office for tax purposes• No prior permission required from RBI
Did you know – India has the world’s
second largest pharma industry after China
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Key success factors for doing business in India
• Understanding the diversity of the Indian market
• Picking the right locations – Infrastructure – Skill – Customers
• Constant innovation: Investment in R&D • Patience: Harvest the opportunities
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Accessing India – A case study
Key objective Sustainability
Business model Access India: Plotting the
roadmap Infrastructure
Legal frameworkFinancial
investment
Did you know – India is the world’s
second largest small car market
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Accessing India – A case study
Key Objective – Source quality raw materials at a low cost – Manufacture at a low cost for existing customers – Export goods to tap consumer base in India – Manufacture in India & tap the Indian consumer base
Business Model – JV with Indian company – Setup Indian company – Part outsourced – Franchise model
Legal framework - Starting business – Registrar of Companies (ROC) – MoA & Certificate of incorporation – PAN & Tax Account number – Mumbai Shops & Establishment Act registration – Registration for VAT, Profession tax, Employee PF – ESIC (medical insurance) registration
Sustainability – Capacity expansion: Rapid growth – Tackling diversity: Local markets – Improving cost efficiency: High volume - Low value – Investment in R&D: Local innovation
Infrastructure – Location: Government policy – Property: Lease v/s buying – Supply chain & logistics: Trusted partnership – Resourcing: Skill matching – Distribution & Marketing: Market knowledge
Financial InvestmentIf government approval required – Approval by Foreign Investment Promotion Board (FIPB) – Post which below procedure appliesIf automatic approval – Notify RBI within 30 days of receipt of inward remittances – File documents within 30 days of issue of shares30
day
s (M
umba
i)
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Some attractive sectors
Market sectors with the most upside potential in India in the next three years
Source: Investment Climate in BRIC Nov06: Survey of CFA institute members
Basic Materials
Other
Media & Publishing
Transportation
Oil & gas, energy, utilities
Travel, hotel & tourism
Automotive
Health care, biotech & pharmaceuticals
Agriculture, food processing
Capital goods & industrials
Consumer goods & services & retailing
Real Estate
Construction
Communications, technology & telecoms
Banking, finance & insurance
3%
5%
6%
10%
10%
12%
14%
16%
18%
22%
29%
32%
38%
41%
57%
Did you know – India is one of six
countries that launches it’s own satellites
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HSBC in India
• Coverage with 50 branches• Presence in 29 cities• Plan for over 30 new branches*
The Leading International Bank in India
*Subject to approvals
Kolkata
iabmuM
Chennai
Coimbatore
New Delhi
Ahmedabad Vadodara
Chandigarh
Pune
Nagpur
Visakhapatnam
Trivandrum Kochi
Noida
Gurgaon
Bangalore Mysore
Jaipur
Ludhiana
Hyderabad
Indore
Patna
Raipur
Nashik
Surat Guwahati
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Trade ServicesExport/Import Financing
Documentary Credit
Structured Trade Finance
Instant@dvice
Documentary Collection
9.6% & 9.3% of India’s exports and imports throughput
Business FinanceFinancing of fixed assets and working capital
Local and foreign currency loans
Channel financing
Bill Discounting
Domestic and export factoring
Treasury and Capital MarketForeign Exchange products
Interest rate products
Customised/ structured solutions
Transaction BankingPayments & Cash Management
Global e-banking package - HSBCnet
Host to Host solution - HSBC Connect
End-to-end supply-delivery chain solutions
Coverage of 4000 locations - Over 500 top tier clients
Flexible MIS/Automated Reconciliation Services
A full servicing offering
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Our Approach
We understand that no two businesses are the same
We understand that each one of you have your unique operating environment
We follow the ‘Solutions’ Approach after thoroughly understanding your business
We strive to provide a unique solution of a bundle of products and services on the basis of the life stage of your business
Did you know – India is the largest producer of milk, 2nd largest of food
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Providing the right solution at each stage of the business
– Current Accounts
– Internet Banking
– Access to over 23,000 VISA ATMs
– Trade Services
– Cash Management
– Factoring Solutions
– Unsecured Business overdraft
– Loans against Property
– Relationship Manager
– Transaction Banking
– Forex management / Treasury
– Lending lines for Trade / Working capital
– Escrow Services
– IPO Services
– Term Loans
– Commodities Financing – Growth funding (PE / Capital Mkts)
– Multi currency accounts – Outsourcing (Payroll / Payments) – Seamless cross border banking – Growth funding
(PE / capital markets) – Aquisition Funding /
Investment Banking – Risk management
Initial Stage Growth Stage Consolidation
Start up Stable Business Rapid Growth Niche Market Position Market Leader (Global / Local)
Time Scale
Ban
king
Req
uire
men
ts
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A success story
An international IT consulting company, started in 1999, delivering affordable business and technology solutions. HSBC’s total exposure stands at $100M, growing from $7M four years ago
HSB
C F
acili
ties – Checking accounts
– FX limits
– Working Capital
– Fex limits
– Facilities - $7m
– Term loan
– PCM and Trade
– HSBCnet
– Corporate cards (2k)
– Cross border (SGH, UAE, GER, UK)
– Derivatives
– Collecting bankers
– Aquisition funding
– Dividend payment
– Capex funding ($18m)
– Cross border (Netherlands, AUS, Dubai)
– Total Facilities - $60m+
Cor
pora
te E
volv
es – Aggressive growth – 2 new centers – Acquisition of $10M – Goes Public $ 54M
– 2 new facilities
– Acquisition of $6.5M
2004-05$55m2003-04
$20m
2005-06$102m
2006-07$130m
2007-08$180m
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Key achievements
Best Global Supply Chain Finance Provider 2008 Best Pre-Shipment Financing Solution 2008 Best Internet Trade Finance Bank in Central and Eastern Europe 2008 Best Supply Chain Finance Provider in the Middle East 2008 Best Trade Finance Provider in the UK 2006 - 2009 Best Trade Finance Provider in HK 2002 - 2009 Best Trade Finance Provider in Saudi Arabia 2009 (SABB) Best Overall Bank for Cash Management in Asia 2008 Best Overall Bank for Cash Management in Middle East 2008 Best Bank for Payments & Collections in Asia 2008 Best Bank for Payments & Collections in Middle East 2008
Best Global Trade Finance Bank 2008 Best Islamic Trade Finance Bank 2008 Best Trade Finance Bank in the Middle East and North Africa 2008 Leading Trade Services Bank in Asia-Pacific 2008 Leading Trade Services Bank in the Middle East and North Africa 2008
Best Online Trade Finance Bank 2007 – 2008 Best Factoring House 2003-2008 Best Trade Finance Bank in the Middle East & North Africa 2006 - 2008 Best International Trade Bank in China 2008 Best International Trade Bank in Malaysia 2008 Best International Trade Bank in Pakistan 2008 Best Factor provider Poland 2008 Best Factor provider UK 2008
Best Debt House Turkey Best Domestic Cash Management Bank in India, Indonesia, Malaysia, Brunei, Taiwan and Sri Lanka, 2008 Overall Customer Satisfaction Rated No 1 in Asia, 2008 Best Cash Management House in Asia, 2008 Best Bank in Hong Kong 2001-2008
Best Cash Management Bank in Middle East, & Africa 2008 Best Bank in Asia for Cash Management, 2008
Best Trade Finance Bank in Asia 1999 - 2008 Best Trade Finance Bank in Hong Kong 2008 Best Trade Finance Bank in Taiwan 2008 Best Trade Finance Bank in Vietnam 2008 Most Innovative Trade Solution 2008 Best Transaction Bank in Asia, 2008
Best Transaction Bank in Hong Kong, 2008 Best Cash Management – Hong Kong, 2008 Best Cash Management Bank in Southeast Asia, 2008 Best Bank for Payments and Receivables, 2008
Best Trade Finance Bank in Asia 1997 - 2008 Best Trade Finance Bank in Hong Kong 2008 Best Cash Management Bank in Hong Kong, 2008 Best Foreign Commercial Bank in China Best Foreign Commercial Bank in Vietnam Best Foreign Commercial Bank in Malaysia
Hong Kong – Best Local Cash Management Bank Indonesia – Best Foreign Cash Management Bank Taiwan - Best Foreign Cash Management Bank
Best Trade Finance Bank 2003 - 2008 Cargonews Asia
The Most Innovative Cash Management Provider in Asia, 2008 Best Trade Bank in Asia 2008 – Trade and Forfaiting Review