India by Abdul

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Opportunities and challenges of

doing business with India

Dr. Abdul Quader Shaikh

Senior International Economist

U.S. Department of Commerce

1-800-USA-TRAD(E)

www.export.gov

December 1-3, 2009



Outline

� Overview of India

� Opportunities for U.S. Companies in India

� Challenges of doing business in India

� U.S. Commercial Service products, services

and resources available for U.S. companies

� Questions & Answers



Map of India



Why India?

� India, the world¶s fastest growing

free-market democracy, presentslucrative opportunities for all types of businesses

� Bilateral trade has almost doubled over the

last decade.

� US-India Economic Dialogue, consists of

six tracks: trade, finance, energy,

environment, commerce and agriculture



U.S.-India CEO Forum

� The CEO Forum presents a unique opportunity

for CEOs of U.S. companies that are doingbusiness in India to lend their expertise and perspectives on how to strengthen the bilateral commercial relationship for the benefit of both

countries and the world.

� The U.S.-India relationship has never beenstronger, and never before has the relationship

faced such a complex set of global challenges.



India: The Metrics

� 1.2 Billion People

� Rapidly Growing MiddleClass

� Private Consumption62% of GDP (39% in

China)

� 71% Under 35 (MedianAge 25)



India: The Market

� Strongest Global

Growth Market

� Sustained, Generational

� Diverse and Challenging

� Private-Sector EconomicVitality



India: The Momentum

� Soon to Become 3rd

Largest Global Economy

� Fastest GDP Growth inthe World in 3 Years

� World Bank forecast 8% growth in 2010

� More than 100 ForeignR&D Centers

� U.S.-India Trade andInvestment Blasting Off



India 17th largest export

market



India 18th largest Import

market



2008 U.S. Exports to India



2008 U.S Imports from

India



Challenges: Telecom



Opportunities



Don¶t Look Back

Keys to Success

� Strategic Thinking

� Forward Approach

� Market Perseverance

� Due Diligence

� Solid Partner



Tata¶s India witnesses 10 per centof the world¶s road deaths with just

1 per cent of its automobiles

Car



Best Export Prospects

� Airport and GroundHandling Equipment

� Computers andPeripherals

� Education Services

� Electric Power Generation, Distributionand Transmission

Equipment� Food Processing & Cold

Storage Equipment

� Machine Tools

� Medical Equipment

� Civil Nuclear Energy � Mining and Mineral

Processing Equipment

� Oil and Gas FieldMachinery

� Pollution ControlEquipment

� Safety and SecurityEquipment

� TelecommunicationsEquipment

� Textile Machinery

� Water Treatment



Airport Infrastructure

� G overnment of India plans to spend $9b through

2012 to improve airport infrastructure.± increase capacity at existing airports, upgrade metroand non-metro airports and develop new greenfield airports.

� Investment opportunities could reach $110b by 2020.

± $80b in U.S. aircraft

± $30b in airport infrastructure



Airport Infrastructure

� M aintenance, repair and overhaul ( M RO) and

training provide additional opportunities± $120b by 2020 (Ernst & Young)

± Opportunities include:

� Specialized consulting

� P roject management

� Airport operations

� Engineering



Civil Nuclear Energy

� Civil Nuclear Energy is perhaps the biggest

market opportunity in terms of potential export value to U.S. companies, valued at more than$150 billion over the next 30 years.

� The recent opening of the civil nuclear sector provides a huge market opportunity (reactors,raw materials, supplies) for U.S. companies.



Auto Components sector

� Indian auto components industry sector has anaverage annual growth of over 20% in the past few years

� Sales turnover of $18 billion in FY 2008

± exports of $3.6 billion and imports of $4.9 billion

� Indian auto components sector has a potential toreach $40 billion by 2016



Auto Components sector Best

Prospects forUS

exporters

� G ears and components, clutch components, brakes and components, valves, axles, shafts, engine parts, electrical components, suspension, and body building parts.

� P roducts and technologies to improve fuel efficiency and emission standards

� CNC machinery, production machinery, tools and dies

� Electric and hybrid vehicle market is projected to grow in thenext 3-5 years



Food Processing in India

� Ranked fifth largest industry in India in terms of

production, consumption, export, and expected growth.

� The processed food industry 6.3% of India¶sG DP .

� U.S. companies have a great opportunity toexport equipment for processing and packagingmeat, seafood, vegetables, fruits, cereals, oil

seeds, and other like item



Security

� W ith recent terror attacksin M umbai, security has

become a primary concern.

� According to industry contacts, the industry isestimated to reach $5 bover the next five years.



Electronic Security

� Approximately $100 m imported from the U.S.

� B

oth Union and State governments looking toput forth regulations that will make security moreaccessible. These include:± Reduction in their import customs duty to 5%

± Reduction in Excise duty to 4%± Reduction in state VAT to 2%

± Abolition of Service Tax levied on guarding services

± Classification of security systems as life safety

equipment



Medical Equipment

� H ealthcare market expected to reach $75 b by

2012 � M arket for medical equipment currently $2.3b

� Expected to reach $5b by 2012

� M arket for new dental equipment and technology growing rapidly

� M any hospitals and dentists prefer to import medical equipment for improved quality healthcare DOC



Hospital Improvement

� Shortage of hospitals for its growing 1.2bpopulation

� Opportunities might exist for hospital infrastructure and development

� Free government hospitals tend to beovercrowded and shabby

� Rural healthcare extremely inadequate

Source: Financial Times



Renewable Energy

� Three drivers affect the demand for more renewableenergy in India:

± ³First, the gap between existing electricity supply and demand is large and expected to grow´ ± ³Second, the need to strengthen energy security has

caused India to invest in renewable energy as a way todiversify their energy portfolio´

± ³Third, fossil fuels imports are increasingly susceptibleto price fluctuations, leaving India vulnerable to supply insecurity´

� The 11th Five Year P lan projections show that possible investments in renewable energy sourcescould be as much as $21b over ten years.



Retail Trade in India

� India¶ $ 420 billion retail market growing at 10% on anaverage last 5 years

� India Number one AT Karney¶s G lobal Retail Development Index beating China and Russia

� Retail trade to grow higher than G DP growth next 5

years� G rowing middle class with urbanization trend

� Shopping malls are becoming increasingly common inlarge cities



Retail Trade

� India is called a nation of shopkeepers

� 12 million ³mom and pop´ stores

� 78% of these are small and family owned � Only 14 companies run department stores

� Sales through department store is limited compared

with overall retail sales� Franchising is emerging as a popular mode

� Retail sector is underdeveloped compared other Asiancountries



Sahara Mall in Gurgaon



Challenges in IndiaTop U.S. Business Complaints

� Excessive government interference ± at all levels

� H igh tariffs & excessive indirect taxes� Restrictions on foreign investment

� Differential tax rates for foreign companies

� W eak protection of intellectual property � Substandard infrastructure with excessive

cost

�Corruption



Doing Business with India

World Bank Report� The World Bank's Doing Business in 2008 report

ranks India at 120 (of 178 countries) for overall"ease of doing business´

� The report also found that India was one of 24countries that made positive reformations thatmade trading across borders easier in their countries

� From 2006 to 2007, the report found that the ³Timeto export´ in India was reduced from 27 days to 18days

� The burden of documents, signatures, and days

required to complete an export or importtransaction is dauntin .



World Bank Ranking of Doing Business in India

Ease of... Doing Business 2009rank Doing Business 2008 rank Change in rank

Doing Business 122 120 -2

Starting a Business 121 114 -7

Dealing withConstruction P ermits

136 131 -5

Employing W orkers 89 89 0

Registering P roperty 105 114 +9

G etting Credit 28 25 -3

P rotecting Investors 38 33 -5

P aying Taxes 169 167 -2 Trading Across Borders 90 81 -9

Enforcing Contracts 180 180 0

Closing a Business 140 140 0

Source: Doing Business 2009, doingbusiness.org (Ranked out of 180 economies)



www.export.gov

� M arket Research Resources

�Trade Events

� Trade Leads

� Free Trade Agreement Information

� Tariff and Tax Information

� 1-800-USA-TRAD(E)



India Business Center:

www.export

.gov/india

� H ow to start trading withIndia

� India M arket Research

� India Duty and Tariff Information

� India Trade Events� India Trade Leads

� Scheduled IndiaW ebinars



Market Research Library



Market Research Reports

on India (1559)



� Trade specialists in 108 U.S. cities and more than 150 posts in 80 countriesworldwide...

Our Network & W

hat it can do for you

W e can...

� Locate international buyers, distributors & agents� P rovide expert help at every stage of the export process

� H elp you to enter new markets faster and more



Important Websites

Business Chamberswww.ciionline.org

www.ficci.com

www.amchamindia.com

www.uschamber.com

www.usibc.comwww.nasscom.org

www. indous.org

www.indiatradefair.com

www.infodriveindia.com

U.S. G overnment

H ttp://Export.gov/India

1-800-USA-TRAD(E) newdelhi.usembassy.gov

www.ita.doc.gov

www.export.gov www.tda.gov

www.exim.gov

www.opic.gov

www.buyusa.gov



The End.

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India by Abdul

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