INDO-US Mehta-Choudhary Feb 2604

04/23/23 Zoom Group of Companies 1

INDO – US Trade Bilateral Cooperation


INDO – US Trade Bilateral Cooperation

Indo-US political and economic relations strengthened in the recent Indo-US political and economic relations strengthened in the recent

past. past.

Economic cooperation and outlook are very positive Economic cooperation and outlook are very positive

Trade performed at the highest levelTrade performed at the highest level

Military cooperation is at its highMilitary cooperation is at its high

Number of Joint exercises held between the two countries Number of Joint exercises held between the two countries

India has world class engineering, R&D capabilities at a scale (and cost) that cannot be India has world class engineering, R&D capabilities at a scale (and cost) that cannot be

replicated (elsewhere in the world) - a senior Boeing official replicated (elsewhere in the world) - a senior Boeing official


INDO – US Trade Bilateral Cooperation at its best!

India, one of the top 20 merchandise exporters to the USAIndia, one of the top 20 merchandise exporters to the USA Exports to USA from India at US $ 12.1 billion (during the first 3 quarters of Exports to USA from India at US $ 12.1 billion (during the first 3 quarters of

2003) 2003)

Commodity imports from US to India at US $ 4.5 billion during the Commodity imports from US to India at US $ 4.5 billion during the

above periodabove period

Top 3 export commodities from India to US – Manufactured Top 3 export commodities from India to US – Manufactured

goods classified by material, miscellaneous manufacturing goods classified by material, miscellaneous manufacturing

articles and chemicals & related articlesarticles and chemicals & related articles

Top 3 import commodities to India from US – Machinery & Top 3 import commodities to India from US – Machinery &

transport equipment, chemicals and related articles and transport equipment, chemicals and related articles and

miscellaneous manufactured articles miscellaneous manufactured articles


INDO – US – Commodity wise Trade

127

828298 165

755 832

362

5205

1804

816 557

3579

194 394

0

1000

2000

3000

4000

5000

6000

Food & liveanimals

Crudematerials

Chemicals Mfg Goods M/C &Transport

equip

Misc mfgGoods

Others

Imports into India from US Exports from India to US

Import – Export Composition of India with US in 2002 (in Million USD)

Others include Beverages & Tobacco, Mineral fuels, lubricant and related items, Animal & Veg oils, fats & waxes and commodities and transactions


INDO – US: Current Trade Sectors

Computers & Peripherals Computer and hardware sales in India in 2001 was US $ 4 billion 75% of hardware requirements met through imports – likely to

increase once India moves to zero duty regime Imports from US at $ 550.0 Mn.

Education Services US Exports at $ 1.6 Bn in 2003 Indian students approx 70,000 enroll in US universities every

year.

Computer S/W and servicesComputer S/W and services Software, Services and ITES, BPO exports from India in 2002-Software, Services and ITES, BPO exports from India in 2002-

03 was US$ 10 billion03 was US$ 10 billion 80-85% of the Indian ITES-BPO exports are to the US80-85% of the Indian ITES-BPO exports are to the US



Environmental Technology Indian environmental management market size: US $ 3.2 billion 40% of India’s environmental technology equipment imports

are from US

Air Conditioning & Refrigeration Equipment Indian market size is estimated at US $ 821 million Despite being world’s second largest food producer, India does

not have adequate cold chain network • Offers a good potential for US in this segment

Telecommunication EquipmentTelecommunication Equipment Subscriber base expected to increase to 120 million by 2008Subscriber base expected to increase to 120 million by 2008 An investment of US$ 5.5 billion is expected in the next 3 yearsAn investment of US$ 5.5 billion is expected in the next 3 years Demand for telecom cables also likely to increase due to Demand for telecom cables also likely to increase due to

expansion projects by the governmentexpansion projects by the government



Biotechnology Indian market for biotech products: US $ 344 million Expected to grow at 35-40% per annum

Medical Equipment Indian market size is estimated at US $ 1.85 billion; Imports

account for 61% Private sector entry into Indian insurance market has opened

vast scope for high-end medical facilities and healthcare equipment

Airport & Ground Support Equipment SystemAirport & Ground Support Equipment System International and domestic air passenger traffic to grow by 7% International and domestic air passenger traffic to grow by 7%

and 12.5% respectively by 2010and 12.5% respectively by 2010 3 international airports are being planned with private sector 3 international airports are being planned with private sector

participationparticipation US companies have good investment opportunities in aviation US companies have good investment opportunities in aviation

& communication equipments & communication equipments


INDO – US Trade – Prospective Sectors

Textile Machinery Demand for textile machinery is expected to grow rapidly Potential sub-sectors include processing industry, knitting

machinery, garment machinery, spinning machinery and shuttleless air or water jet looms and shuttle looms.

Franchising Potential markets include healthcare, food and beverages,

computers, hotels, entertainment centers and retailing

PowerPower State Electricity Boards have started massive plant State Electricity Boards have started massive plant

renovation and modernization plansrenovation and modernization plans Annual equipment requirement for the above estimated at Annual equipment requirement for the above estimated at

US $ 2 billionUS $ 2 billion

Auto Components Indian Auto components exports to reach US $ 1.1 billion,

38.8% higher than the previous fiscal. By 2005, 10 auto components plants would have been

relocated to India from US and Europe


INDO – US Trade – Prospective Sectors

Indian Industry targets to raise exports to US$ 15 billion by Indian Industry targets to raise exports to US$ 15 billion by

2005 and Foreign Direct Investment (FDI) to US$ 25bn by 2010. 2005 and Foreign Direct Investment (FDI) to US$ 25bn by 2010.

Indian Industry has identified following sectors for greater Indian Industry has identified following sectors for greater

Indo-US cooperation:Indo-US cooperation:

information technologyinformation technology

financial servicesfinancial services

infrastructureinfrastructure

small sectorsmall sector

environment environment

energy and energy and

telecommunications. telecommunications.


India: A Robust Economy

The world’s fastest growing, democratic free market economy & The world’s fastest growing, democratic free market economy &

fourth largest in terms of Purchasing Power Parity (PPP) fourth largest in terms of Purchasing Power Parity (PPP)

GDP growth soared to a record 8.4% in second quarter of 2003 GDP growth soared to a record 8.4% in second quarter of 2003

and is forecast at 8.2% for 2003-2004.and is forecast at 8.2% for 2003-2004.

India’s foreign exchange reserves are over US$107 billionIndia’s foreign exchange reserves are over US$107 billion

India attracted US$ 2.22 billion of FDI during April- October 2003. India attracted US$ 2.22 billion of FDI during April- October 2003.

U.S. has approximately 39% share of FDIs in India.U.S. has approximately 39% share of FDIs in India.

India received 15% of total FII into global emerging markets. Of India received 15% of total FII into global emerging markets. Of

538 FIIs registered in India, 220 are from the US. They have 538 FIIs registered in India, 220 are from the US. They have

almost 50% share of all FIIs investment in India.almost 50% share of all FIIs investment in India.


India: Scripting Future Histories

Exports of software services logged in a 26% growth during 2002-03Exports of software services logged in a 26% growth during 2002-03

Software Technology Parks of India act as ‘single-window’ in providing Software Technology Parks of India act as ‘single-window’ in providing

services & incubation infrastructure to SMEs.services & incubation infrastructure to SMEs.

3500 firms out of 39 Software Parks export over US$ 8 billion worth of IT 3500 firms out of 39 Software Parks export over US$ 8 billion worth of IT

products & services.products & services.

It is forecast that by 2008, IT services & back-office work will swell to US$ 57 It is forecast that by 2008, IT services & back-office work will swell to US$ 57

billion annually billion annually

Eg. Infosys, Wipro, SatyamEg. Infosys, Wipro, Satyam

Software & ITES - BPO.Software & ITES - BPO.

Talent pool & professionalsTalent pool & professionals

A vast pool of English speaking & skilled manpower, which rates high on A vast pool of English speaking & skilled manpower, which rates high on

qualification, capabilities & work ethics.qualification, capabilities & work ethics.

Eg. Sabeer Bhatia, Rajat Gupta, Vinod Khosla Eg. Sabeer Bhatia, Rajat Gupta, Vinod Khosla


India: Scripting Future Histories

Textile IndustryTextile Industry World’s largest exporter of cotton yarn and holds a 25% share in global tradeWorld’s largest exporter of cotton yarn and holds a 25% share in global trade

The Government’s National Textile Policy aims to increase the value of The Government’s National Textile Policy aims to increase the value of

textile & apparel exports to US$ 50 billion by 2010.textile & apparel exports to US$ 50 billion by 2010.

Eg. Arvind MillsEg. Arvind Mills

Pharmaceuticals & BiotechnologyPharmaceuticals & Biotechnology The Indian pharma industry has the highest number of plants approved by The Indian pharma industry has the highest number of plants approved by

the FDA outside the USA.the FDA outside the USA.

Pharma exports to the US stood at US$ 450 million in 2002-03.Pharma exports to the US stood at US$ 450 million in 2002-03.

Eg. Ranbaxy, WockhardtEg. Ranbaxy, Wockhardt

Manufactured goodsManufactured goods

Food & BeveragesFood & Beverages Eg. UnitedEg. United BreweriesBreweries


Indian Government Initiatives

Major tariff reductions have been announced by Indian Finance Major tariff reductions have been announced by Indian Finance Ministry w.e.f January 9, 2004Ministry w.e.f January 9, 2004 Reduction of peak tariff rates by 5% to 20%Reduction of peak tariff rates by 5% to 20% Elimination of 4% Special Additional Duty (SAD) Elimination of 4% Special Additional Duty (SAD) Reduction of customs duties on equipment for projects from 25% to 10%Reduction of customs duties on equipment for projects from 25% to 10% Reductions in duties on meters and items related to electricity transmission and Reductions in duties on meters and items related to electricity transmission and

distribution distribution Sharp reductions on information technology and electronic equipment, including cell Sharp reductions on information technology and electronic equipment, including cell

phones and computers phones and computers Major reductions in life-saving drugs and equipment, and other medical items Major reductions in life-saving drugs and equipment, and other medical items Reduction or elimination of excises and taxes on air travel, air fuel and related items Reduction or elimination of excises and taxes on air travel, air fuel and related items Exemption from custom and excise duties available to drinking water supply projects Exemption from custom and excise duties available to drinking water supply projects

Above initiatives are expected to boost the imports from US in the future


Thank You

INDO-US Mehta-Choudhary Feb 2604

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