Services Sector ProfileFinancial Services, Tourism and IT/ ITeS
SECTOR PROFILE
Table of Contents
1. India - preferred investment destination
2. Gujarat - preferred investment destination in India
3. Services in Gujarat - overview and focus sub sectors
4. Services focus sub-sectors
4.1 Financial Services
4.1.1 Overview
4.1.2 Gujarat scenario
4.1.3 Investment opportunities
4.2 Tourism
4.2.1 Overview
4.2.1 Gujarat scenario
4.2.2 Policy initiatives and interventions planned
4.2.3 Investment opportunities
4.3 Information Technology (IT)/Information Technology enabled Services (ITeS)
4.3.1 Overview
4.3.2 Gujarat scenario
4.3.3 Policy initiatives and interventions planned
4.3.4 Investment opportunities
5. Advantage Gujarat
6. Doing Business in Gujarat
7. Key Government Agencies
INDIA - PREFERRED INVESTMENT DESTINATION
01
1
INDIA - PREFERRED INVESTMENT DESTINATION
9th largest economy in the world by nominal GDP and 3rd largest by purchasing
power parity (PPP)
Recorded the highest growth rates in the mid-2000s
One of the fastest growing economies in the world (GDP growth rate – 8.6% in 2011)
GDP growth rate
Sectors’ contribution to GDP
India is one of themajor G-20 economies:
ththe 17 largest exporter andth11 largest importer in the world
Main Export Partners
ndThe 2 preferred global investment destination
(World Investment Prospects Survey 2010-2012 by UNCTAD)
USD 254 billion of FDI inflows between April 2000 and
March 2012
Main Import Partners
US 13%
UAE 12%
China 8%
Hong Kong4%
China12%
UAE 7%
Saudi Arabia6%
US6%
Australia5%
FDI Confidence Index, 2012A.T. Kearney Survey
FDI - Top Sectors
9.5% 9.6% 9.3%6.8% 8.0% 8.6%
0.0%
5.0%
10.0%
15.0%
2006 2007 2008 2009 2010 2011
1.52
1.52
1.6
1.73
1.87
0 0.5 1 1.5 2
Germany
US
Brazil
India
China
Services30%
Telecommunications12%
Computer softwareand hardware
11%
Real estate11%
Constructionactivities
10%
Power7%
Automobile industry
6%
Metallurgical industries
5%
Pharmaceuticals5%
Petroleum and natural
gas3%
No Change
Decline
Growth
- 200 400 600 800 1,000 1,200
Agriculture Industry ServicesUSD, billion
16%
17%
17%
18%
19%
20%
25%
26%
26%
26%
25%
26%
59%
58%
57%
56%
56%
54% 2006-07
2007-08
2008-09
2009-10
2010-11
2011-12(A)
(Q)
Trade Scenario, USD billion
0
50
100
150
200
250
300
350
400
1990-91 1994-95 2000-01 2004-05 2010-11
Export Import
CAGRExports
14%
CAGRImports
14%
02
World's largest democracy with1.2 billion people
Land of abundant natural resources and diverse climatic conditions
Enabling business environment with greater global participation
Strong Market Fundamentals
Access to technology as a result of the IT revolution
Impetus on Infrastructure Development
Progressive simplification and rationalization of direct and indirect tax structures
Competitivelypriced skilledlabour
democr naturand div
Strong MarkFundamen
Impetus on InfrastrucDe
pric
enwith gr
technology as a r
simplificrationaliza
ADVANTAGE INDIA
03
04
GUJARAT - PREFERRED INVESTMENT DESTINATION IN INDIA
2
05
Gujarat’s Degree of Openness (ratio of exports from state to Gross State Domestic Product)
53%
A highly industrialized state - Gross State Domestic Product contribution from manufacturing sector
28%
Growth in agricultural output in the state over the last 10 years 11%
Double digit growth rate with Gross State Domestic Product of USD 75 billion(2010-11) growing at a five year average of
10%
26%A state with one of the highest share in investments under implemented projects in India
A state with a high and growing literacy rate 79%
Increase in seat availability in technical institutions over last 3 years 100%
A state with a population of 60 million and one of the highest urbanization levels 43%
GUJARAT HAS BEEN RANKED 1ST AS PER THE “ECONOMIC FREEDOM RANKINGS FOR THE STATES OF INDIA, 2012” REPORT
SERVICES - OVERVIEW AND FOCUS SUB SECTORS
306
SERVICES SECTOR : BIGGEST CONTRIBUTOR TO INDIA’S GDP
07
Source: Ministry of Finance, Central Statistical Organization
GDP by Economic Activity(at 2004- 05 Constant prices) in %
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Services Sector - contributed58% to GDP in year 2010-11
Community, Social andPersonal services
Financing, Insurance, Real Estateand Business services
Construction
Electricity, Gas and Water Supply
Manufacturing
Trade, Hotels and Transportcommunication
Mining and quarrying
Agriculture and fishing
SERVICES FOCUS SUB-SECTORS
08
IT / ITES
Tourism
FinancialServices 4
09
FINANCIAL SERVICES
4.1
OVERVIEW
10
4.1.1
FINANCIAL SERVICES – INDUSTRY STRUCTURE
11
Financial services industry mainly comprises BFSI (Banking, Financial Services (including mutual funds) and Insurance
Estimates of the Industryare taken at constant
prices (2004-05)
Services Sector inIndia
FinancialServicesIndustry
Banking Insurance Mutual Funds
Non-BankingFinancial
Companies(NBFC)
Tourism,Hotel, Trade
IT/ITeS
RealEstate
BusinessServices
Health,education,
socialservices
Infrast-ructure
Legal
Accoun-ting,
auditingR&D
Telecommuni-
cation
Contributesaround 5% of India’s GDP
Source: Reserve bank of India, Central Statistical organization, PwC Analysis
DEMAND FOR FINANCIAL SERVICES IN INDIA
12
Source: Ministry of Finance ,IBEF , Department of Industrial Promotion
Significant potential :
• Rising incomes are driving demand for financial services across income brackets
• The size of Indian gross national savings stood at USD 539 billion in 2010 and is estimated to be USD 1,455 billion by 2016.
• Over 90% household savings are invested in bank deposits and only 10 per cent in other financial asset classes.
• Innovative and customized products are expected to shift money from bank deposits to these emerging asset classes
• The large quantum of savings by Indians presents immense opportunities for financial intermediaries to move savings to more productive channels
“Given India's continued economic growth, the financial sector will provide 10 to 11 million jobs by 2020 “
– ”GIFT Corporate Presentation “
Cumulative FDI Inflows(Apr. 2000 - Dec. 2010) in USD million
Construction Activities(including roads andHighways)
Housing and RealEstates
Telecommunication
Computer Software &Hardware
Services Sector(Financial and Nonfinancial)
8964
9380
10258
10601
26454
FINANCIAL SERVICES: STRUCTURE OF INDIAN BANKING SECTOR
13
Source: Reserve bank of India
Reserve Bank of India
Banks Financial Institutions
Private Sector Banks(27)
Foreign banks(32)
Regional rural banks (84)
Urban Cooperativebanks(1674)
Rural cooperative creditInstitutions(96,751)
Public sector banks(27)
Scheduled commercial banks Cooperative credit
Institutions
All-institutions India financial
State -level Institutions
Other Institutions
FINANCIAL SERVICES: BANKINGINDIAN BANKING SECTOR HAS GROWN AT A HEALTHY AND STEADY PACE
14
Source: Reserve bank of India
Credit
Growth:
• Credit off-take has surged at a CAGR of about 20% in the same period
• Demand has grown for both corporate and retail loans
Growth drivers: Loan growth has been driven by strong economic growth, rising consumerism and income levels
433532
635
743
906
0
100
200300
400
500600
700
800
9001000
2007 2008 2008 2010 2011
Growth in credit off take over past few years
In U
SD b
illio
n
578
718
875
1,023
1,206
0
200
400
600
800
1000
1200
1400
2007 2008 2008 2010 2011
Growth in deposits over past few years
In U
SD b
illio
n
Deposits
• Growth: Over 18% CAGR during FY06-11
• Growth drivers: Deposit growth has been driven by strong growth in savings amid rising disposable income levels
Gross National Savings expected
to touch USD 1,455 billion in 2016
CAGR 20%
CAGR 18%
FINANCIAL SERVICES : BANKING
15
Source: Reserve bank of India
7.74
17.38
1.65 0.835.86
33.45
05
10152025
303540
State Bank ofIndia & itsAssociates
NationalisedBanks
Foreign Banks Regional ruralbanks
Private SectorBanks
All ScheduledCommercial
banks
Share of Banks in outstanding credit:
• Scheduled Commercial banks: 50%
• Nationalized bank : 26%
• SBI and its associates : 11.5%
• Private Sector : 8.76%
• Foreign banks : 2.4%
• Rural banks : 1.2%
11.67%
40.51%
2.56%
9.13%
16.71%
9.13%
7.27%
3.02%Agriculture
Industry
Transport Operators
Professional and Other Services
Personal Loan
Trade
Finance
All others
Bank group-wise distribution of outstanding credit of scheduled commercial banks – 2010 ( in INR lakh crore)
Indian commercial banks have
increasing exposure to industry sector
especially power sector.
Industry wise credit given by banks -2010
FINANCIAL SERVICES IN INDIA: STRUCTURE OF INDIAN INSURANCE INDUSTRY
16
Source: Reserve bank of India, IBEF
Ministry ofFinance
(Government ofIndia)
InsuranceRegulatory and
DevelopmentAuthority
(IRDA)
Life Insurance(24 players)
Public (1)
Private (23)
Non LifeInsurance (24
players)
Public (6)
Private (18)
Re-(1 player)
insurancePublic (1)
Registered insurers in India
(As on 30th September 2011)
FINANCIAL SERVICES IN INDIA: INSURANCE
17
Source: IRDA
0
1
1
2
2
3
3
4
4
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Non-Life Life
0.6 0.70.8 1
1.2
1.8
2.3
2.53.0
3.3
• Insurance industry CAGR of 21% from 2001 to 2010.
• Life insurance industry recorded a premium income of INR 2.9 lakh crore during 2010-11.
• Non-life insurance industry underwrote total premium of INR 0.4 lakh crore in 2010-11
Total Premium income of Life and Non Life Insurers (in INR Lakh Crore)
CAGR : 21%
Life Insurance
LIC 70%
Privatesector30%
Non-Life Insurance
Public59%
Private41%
FINANCIAL SERVICES IN INDIA: MUTUAL FUNDS
18
Source: IBEF
• Asset management industry in India is among the fastest-growing in the world
• Total Assets –Under-Management (AUM) have clocked a CAGR of 28% over the period 2005 to 2010
• The global recession in 2008 led to a dip in the total AUM. However, the industry rebounded to 30 per cent higher AUM than pre-recession levels in a period of two years from 2008 to 2010
• Corporate investors account for nearly half of the total AUM in India, while retail investors account for one-fourth
• AUM in India is expected to increase by 57% during 2010-14
42
68
114
85
138
46
62%68%
-25%
62%
-67%-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
0
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009 2010
Mutual Fund AUMs (2005-2010)
Investor break up, March 2010
Corporates
USD
bill
ion
Gro
wth
rate
19%
3% 1%
Retail
HNI's
Bank/Fis
FII's
51%
26%
FINANCIAL SERVICES IN INDIA: NBFCS
19
Source: IRDA
Non Banking Financial Companies (NBFC) in India
NBFCs are rapidly gaining prominence as intermediaries in the retail finance space
Growth so far:
• More than 80% of equipment leasing and hire purchase activity in India is financed by NBFCs
• The AUM of NBFCs in retail finance has doubled over the period 2007-10
• In terms of market share in retail finance (except housing finance) space, NBFCs have been able to improve their market share from 26% to 38% over 2007-10
Future outlook:
• Going forward the AUM is expected to double again over the period 2010-13
• By 2013, the NBFC share of retail finance (except housing finance) is expected to rise to 47%, almost at par with the market share of banks
Entity Main business
1. Asset finance companies Financing of real / physical assets
2. Investment companies Acquisition of securities including primary dealers which deal in underwriting and market making for government securities.
3. Loan companies Providing loans, advances for any activity other than its own, excludes EL/HP/Housing Finance Companies
FINANCIAL SERVICES IN INDIA: NOTABLE TRENDS
20
Source: IBEF
• New distribution channels like bancassurance, online distribution and NBFCs have widened the reach and reduced the operational costs
• The life insurance sector has witnessed the launch of innovative products such as Unit Linked Insurance Plans (ULIPs)
Insurance
• India’s AUM has grown at 28% CAGR over 2005-2010, and the total AUM stood at USD 146 billion as of March 31, 2011.
• The AUM of equity and balanced funds, focus segments of retail investors, grew by 20 per cent CAGR in the same period
• In FY09, SEBI has removed entry load to bring about more transparency in commissions – thus encouraging longer-term investment
• NBFCs has been serving unbanked customers by pioneering retail asset backed lending, lending against securities and microfinance
• NBFCs are aspiring to emerge as a one-stop shop for all financial services
Mutual Funds
NBFCs
GUJARAT SCENARIO
21
4.1.2
TERTIARY/SERVICES SECTOR IS THE BIGGEST CONTRIBUTOR TO GUJARAT ECONOMIC BASKET
22
Source: Socio Economic review of Gujarat 2010-2011
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
GDP of Gujarat by Economic activity( at 2004-05 constant prices) in %
Public adminstration and other services
Banking and Insurance , real estate andBusiness services
Trade, Hotels and Transportcommunication
Manufacturing
Electricity,gas and watersupply, construction
Agriculture, Forestry andlogging, Mining and Quarrying
Tertiary Sector - contributed43% to GSDP in the
year 2010 -11
FINANCIAL SERVICES IN GUJARAT
23
Source: Socio Economic review of Gujarat 2010-2011
The Banking industry of Gujarat has been growing at a very rapid pace
Gujarat witnessing good growth both in advances and deposits in the year 2010-2011.
6091
6433
5900600061006200630064006500
2009-10 2010-11
Branches of scheduled commercialbanks(in Nos)
2.3
2.7
1.6
1.9
0
0.5
1
1.5
2
2.5
3
2009-10 2010-11
Aggregate Deposits and Advances (in INRLakh Crore)
Deposits
Advances
61.471
24,95519,859
9,826
71,975
31.40124,825
11,605
Sector Advances have grown across sectorsin the recent years
2010
2011
• The ratio of priority sector advances to net banking credit stood at 46% - well above the benchmark level of 40%
• Ratio of agricultural advances to net banking credit was also above the benchmark level of 18% which stood at 20%
In C
rore
Priority Sector Advances
Agricultural Advances
SSI Advances Weaker Advances
Section
GIFT- GUJARAT INTERNATIONAL FINANCE TECH CITY -THE CONCEPT AND POSITIONING
24
Source: GIFT, Government of Gujarat
Project Brief and background
GIFT is conceptualized as the first Financial Services Special Economic Zone to be developed as a global financial hub. With its strategic location, state of the art infrastructure, green and intelligent buildings it is poised to become a globally benchmarked International Finance Centre providing exciting opportunities for financial services and IT/ITeS sectoral companies.
Project Details
• GIFTCL – Gujarat International Finance Tec-City Company Ltd has been incorporated in partnership with IL&FS (Premiere institution with proven track record and pioneer in launching PPP projects)
• Government of Gujarat through GUDC to be the lead agency
GIFT aspires to catalyse India’s large financial services potential by offering world class infrastructure
and world class talent
To target 6-8% of financial services potential in India
Creation of 1 million direct
and Indirect Jobs
Up to 90 million sq.ft
of real estate office and residential
space
INVESTMENT OPPORTUNITIES
25
4.1.3
INVESTMENT OPPORTUNITIES
26
Source: GIFT, Government of Gujarat
Financial Serviceoperations
Financial Servicescorporate centre
Select productmarkets
Capital markets andtrading
IT ServicesITes/BPO Services
CoreFinancialServices
GIFT’s target business segments
• National Financial Services Operation hub
• Regional/Functional head quarters for financial service players
• National headquarters for players
• Private banking hub for NRIs/Regional HNWs
• International Microfinance hub
• International commodity trade hub
• Participation in global capital markets
• Global hub for IT services for financial services sector
• Global hub for BPO services for financial services sector
Investment opportunities
• Upto 90 million Sq. ft of real estate office and residential space
• Opportunities for development ofresidential spaces
• Opportunities for development of several urban amenities like hotels, convention centre, leisure destinations like restaurants, golf clubs etc
TOURISM
27
4.2
OVERVIEW
28
4.2.1
TOURISM
29
Travel & Tourism industry holds a significant position in the global context on account of its contribution to revenue, employment and investments
RevenueTotal industry revenue: - USD 6 trillion ~ 9% of global GDP, - will be over USD 14 trillion by 2019. USD 1 Trillion of overall export income (USD 3 billion per day).
WorkforceOver 260 million people (directly and indirectly employed) - 7% of total employment worldwide
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
2009
2019Personal Travel & Tourism
Business Travel
Government Expenditures
Capital Investment
Visitor Exports
Other Exports
0100200300400500600700800900
1000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
International Tourist Arrivals (million)
International Tourist Receipts (US $ Billion)
• Strong rebound in global tourism trends in 2010 with international tourist arrivals grown by 6.6%
• 4.7% growth in international tourism receipts Increase from about USD 85 billion to USD 919 billion in 2010
Sources: World Travel and Tourism Council, Annual Review, 2011 World Tourism Organization, International Tourism Trends 2011
Travel and Tourism Industry has rebounded after recession with
strong increase in tourist arrivals
Capital investmentUSD 650 billion investment ,approximately - 4.5% of the total capital investment worldwide
GLOBAL TOURISM OVERVIEW
30
Sources: World Tourism Organization, International Tourism Trends 2011 edition
Asia and Pacific regions have emerged as key drivers of Travel and Tourism
Industry growth
Break up by purpose of travel
15%
27%
51%7%
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%
10.00%
World Europe Asia andPacific
Americas Africa
Average Annual Growth rate from 2000-2010
World Europe Asia and Pacific
Americas Africa Middle East
Middle East
Leisure , Recreation and Holiday
VFR, Health, Religion, Other
Not Specified
Business and Professional
Leisure and recreation are the most popular purpose of travel
Present contribution of different regions to total Travel & Tourism industry revenue
1.90%
North East Asia
South East Asia
Oceania
South Asia
6.70%
6.80%
6.20%
INDIA-TOURISM SECTOR OVERVIEW
31
Travel and Tourism Industry in India has grown, in terms of tourist arrivals, contribution to country’s GDP and employment generated
Total contribution of Travel and Tourism Industry to GDP is expected to grow by 9% from current INR 3,680 billion (4.5% of GDP) in 2011 to INR 8,523 billion (4.9% of GDP) by 2021
Revenues generated by Travel and Tourism (INR billion)
India Travel and Tourism: Key facts
-10.0%
- 5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2010
Total Tourist Arrivals in India (mn) YoY India GrowthYoY World Growth
Total Tourist Arrivals in India and Globally Employment generated by Travel and Tourism
Travel and Tourism sector’s contribution
2011 2021 (estimated)
Total employment 7.5% 8.1%
Total exports 3.8% 11.4%
Total investment 4.7% 8.7%
900080007000600050004000300020001000
0
20012002
20032004
20052006
20072008
20092020
20112021
Direct Indirect Induced
5000045000400003500025000200001500010000
50000
2011 2021Direct Indirect Induced
Sources: World Travel and Tourism Council, T&T Economic Impact, India 2011
Sources: Indian Tourism Statistics, Ministry of Tourism , Government of India
INDIA TOURISM SECTOR OVERVIEW
32
Sources: World Travel and Tourism Council, T&T Economic Impact, India 2011
Foreign tourists arrivals and contribution to earnings has been increasing significantly
• Tourism in India is mostly domestic in nature with foreign tourists comprising less than 1% of total tourists (6.3 million in 2011 and 5.8 million in 2010 compared to 740 million total tourists in 2010.
• While total tourists witnessed a 8.7% CAGR in India during 2005-10, foreign tourist arrivals grew 8.2% in the same period
• Foreign Exchange Earnings (FEE) from tourism in India reached almost INR 776 billion in 2011 – nearly five times of that in 2000 (INR 156 billion)
• While total foreign tourist arrivals to India grew at about 8.2% between 2005-10, FEE grew at a higher rate of about 17% in the same period – indicating that the average spending per foreign tourist has been increasing year on year
The nature of travel spending is skewed towards Leisure spending which
contributed INR 3,003 billion in 2011 and is expected to more than double by 2021
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
0
1
2
3
4
5
6
7
2005 2006 2007 2008 2009 2010 2011
Foreign Tourist Arrivals (mn) YoY Growth Rate
28.50%
71.50%
Contribution Business vs Leisure
to T&T GDP
Business Spending Leisure Spending
Sources: Indian Tourism Statistics, Ministry of Tourism , Government of India
India Foreign Tourist Arrivals and Growth Rate
INDIA-TOURISM SECTOR OVERVIEW
33
Hotel Industry in India is an undersupplied market and witnessing strong growth
• India currently has approximately 6 lakh hotel rooms only. As of 2008, the number of approved hotels by ministry of tourism, government of India stood at 1,593.
• After the impact of global recession, 2010 witnessed overall growth in occupancies from 59% to over 62% and average hotel rates increased by 10% led by increase in international leisure demand, strong growth in domestic leisure demand and growth emanating from Meetings, Incentives , Conventions and Events market (MICE). F&B has been steady in terms of contribution to revenue which is led by room rentals
56%
58%
60%
62%
64%
66%
68%
70%
0500
100015002000250030003500400045005000
2006-07 2007-08 2008-09 2009-10 2010-11
Presence of global and national brands
2010-11
2009-10
2008-09
2007-08
2006-07
0.00% 20.00% 40.00% 60.00% 80.00% 100.00%
Rooms F&B and Banquets Others
Average Room Rates and Occupancy Sources of Revenue
INDIA TOURISM SECTOR OVERVIEWHOTEL INDUSTRY: FUTURE OUTLOOK
34
Hotel Industry is being driven by growth of the travel and tourism industry, domestic tourism and a demand for budget hotels. Over 100,000 new hotel rooms are estimated to enter Indian market by 2015. Around 60% of these are estimated to be under active development.
Intercontinental Hotels Group
Starwood Hotels & Resorts Hilton Hotels
Intercontinental Hotels Group, the world’s largest hotel group by number of rooms plans to launch 19 holiday express hotels in India by 2016. IHG currently runs 7 out of the 12 hotels in India in the luxury segment.
Starwood hotels and resorts worldwide which owns brands like Le Meridien and Sheraton intends to set up 100 hotels in India by 2015. It currently has 32 hotels but its focus might now be on the mid market segment.
Hilton Worldwide plans to develop around 50 more hotels in India. The 19 hotels over the next 4-5 years will have approximately 3000 rooms covering luxury, full and focussed service offerings with brands like Doubletree, & Hilton Garden Inn
Factors driving the hotel industry in India
• Supportive policies and initiatives: 100% FDI allowed in the hotel industry, Dedicated Hospitality Development and Promotion Board (HDPB) for fast approvals & clearances to hotel projects
• Increase in business traffic due to rising GDP and India’s emergence as an outsourcing hub
• Strong domestic demand due to rise of middle class and change in cultural attitude of citizens
Marriott International
Marriott International plans to open around a 100 properties in India by 2015, which will increase its presence by a whopping 1000% in the country bringing brands like Ritz Carlton , Fairfield and others
Accor, another international hotel chain with nine hotels in India under brands like Mercure, Ibis and Novotel plans to raise the number to 90 by 2015 . It also has set up an investment fund to further its programme
Accor Hotels
Source: Secondary Research
INDIA TOURISM SECTOR OVERVIEW
35
Brand India: Getting Global Recognition
World’s Leading Destination & World’s Leading Tourist Board• World Travel Mart 2011 Awards for India Tourism
Leading Tourism Destination Award to India
in Shanghai - China• at the Asia World Travel Awards 2008 -“Asia and Indian Ocean” Ceremony,
India amongst top 2 most favored countries for tourists world-wide
consecutively for the second year• as ranked by Conde Nast Traveller, UK in its Readers Travel Awards 2008 -
India bagged the World Travel Award 2008
14th World Travel Market (WTM) - London• for its role in developing and promotion of "Responsible Tourism” at
GUJARAT SCENARIO
36
4.2.2
GUJARAT TOURISM SECTOR OVERVIEW
37
Tourist arrivals in the state experiencing strong growth – better than the country’s average
• Total tourist arrivals to Gujarat in 2010-11 stood at approximately 19 million as compared to around 10 million in 2005, thus witnessing a 85% growth in tourist arrivals.
• International tourist arrivals grew at CAGR of 15% since 2005. This can be attributed to growing prominence of the State as a major business hub and it being one of the choicest destinations for foreign direct investments in India. Robust infrastructure, a very high rate of urbanization and supportive policies for tourism promotion have been the other contributors.
• The overall year on year growth rate of total tourist arrivals in Gujarat has been higher than that of India as a whole, indicating a better performance by the state on the tourism map.
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0
5000000
10000000
15000000
20000000
25000000
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Total Tourist Arrivals YoY Growth Rate of Total Tourist Arrivals
YoY Growth Rate of International Tourists YoY Growth Rate of Tourist Arrivals in India
Major tourism circuits are spread out across state, though Ahmedabad, Ambaji and Dwarka
continue to be the major tourist destinations
the
North Gujarat Circuit comprising
of Himatnagar & Palanpur
Ahmedabad Circuit, consistingof Ahmedabad, Gandhinagar,Modhera and Surendranagar
Kutch Circuit
Saurashtra Circuit comprising of Rajkot, Junagadh, Veraval,
Somnath,Dwaraka & Porbandhar South
GujaratCircuit
Consisting ofSaputara, NavsariSurat and Baroda
GUJARAT TOURISM SECTOR OVERVIEW
38
Sources: Tourism Corporation of Gujarat Ltd, Department of Tourism, Government of Gujarat
• A high percentage of tourist arrivals from within the State indicates a stable growth of tourism in future
• Domestic tourism primarily led by tourists from within the State is gradually giving way to tother Indian states which stands at almost 22% has increased from 19% in 2007. This can be attributed to growing awareness of the state’s tourism assets and a booming economy.
ourist arrivals from
76.03%Within
21.98%
1.99%
OtherIndianStates
Foreigner/NRIs
Maharashtra
Madhya Pradesh
Rajasthan
Uttar Pradesh
Bihar
West Bengal
Other North Indian States
Others
Break up of domestic tourist arrivals to GujaratState wise Break up of tourist arrivals
from Other Indian States
State is also experiencing steady growth in international tourism
0.00 0.10 0.20 0.30 0.40 0.50
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
International Tourism is increasingly growing in Gujarat and the total international tourist arrivals to Gujarat is almost 2% - which is higher than the 1% figure for India
Others, 30%
China, 4%
Singapore, 6
Canada, 3%Germany, 4 Italy, 8%
Australia, 4%
USA, 9%
France, 10%
United Kingdom, 22
GUJARAT TOURISM SECTOR OVERVIEW
39
RELIGIOUS & SPIRITUAL
• Popular religious destinations like Dwarka and Somnath
• Akshardham Temple at Gandhinagar
• Famous sites of Jainism – Palitana and Girnar
• Islamic Dargahs at Sarkhej and Unjha
• Parsee pilgrimages – three of the most important four
WILDLIFE TOURISM
• 4 National Parks and 21 Sanctuaries
• One of the only abode of of Asiatic lions at GIR Sanctuary
• Popular Bird Sanctuary at Nalsarovar , Thol Lake and Khijadiya
• India’s first Marine national park at Gulf of Kutch
• Desert Wildlife at Kutch
WELLNESS & MEDICAL
• World class hospitals at Ahmedabad, Surat, Vadodara, Karamsad, Nadiad offering high quality treatments at affordable rates
• Home of Ayurveda for centuries – Jamnagar one of the most important place for ayurvedic studies
• Medical spas and cosmetic treatments
NATURE & BEACH
•with numerous pristine beaches at Ahmedpur Mandvi, Chorwad , Golden Sand at Surat and many others
• Hill Stations like Saputara and Pavagadh
• Desert tourism at the Rann of Kutch including the popular Black Hill
One of the longest coastlines dotted
HERITAGE TOURISM
•ancient Harappan civilization sites at Lothal , Dholavira at Kutch
• World Heritage Site at Champaner
• Several popular monuments like Shaking Minarets and Adalaj Step well
• Historical forts at Diu, Junagadh
• Several Heritage hotels and resorts – Kutch, Palanpur, Wankaner, Gondal & other places
Popular archaeological sites including
RURAL AND CULTURAL
•Kutch – Winner of PATA Grand Award 2010 for rural tourism
• Rich handicrafts of Kutch
• Tribals and ethnic communities of Dangs and Chotta Udaipur
• Various festivals and events like the Modhera dance festival, longest dance festival in the World – Navratri celebrations
Rural Tourism site at Hodka Village
GUJARAT TOURISM SECTOR OVERVIEW
40
Tourism Sector Drivers : innovative campaigns, festivals and events
Modhera Dance Festival
International Kite Flying Festival
Navratri – 9 Nights Dance festival
Rann Utsav - Kutch Desert
Khushboo Gujarat Ki – Brand Campaign with Indian cinema star Amitabh Bachhan - Several campaigns featuring the star shot
at multiple locations across the state to increase awareness of state’s diverse tourism assets
GUJARAT TOURISM SECTOR OVERVIEW
41
Tourism Sector Drivers : Robust Infrastructure
Airport Infrastructure
Road, Rail Network & Port Infrastructure
Educational Infrastructure
Power Urban nfrastructure
12 Domestic Airports (highest
in any Indian State) and 1
International Airport
Over 74,000 km of road network and 5,000 km of
rail network connecting all
parts of the State. Well developed
Ports -opportunities
for Sea Cruises & ferries
Well established institutes of
Hospitality and Hotel Management
which provide a ready talent pool
for the tourism industry
A power surplus State with excellent
availability of electricity for
hospitality and other industries
Several urban infrastructure
initiatives including
development of urban transport like BRTS,
Metro
POLICY INITIATIVES AND INTERVENTIONS PLANNED
42
4.2.3
GUJARAT TOURISM SECTOR OVERVIEW
43
Tourism Sector Drivers : Government Supporting Agencies & Policies
Guj-Tour Development Company Ltd (GUJTOUR)
• Being set up with a corpus of INR 1 billion to develop, create and market tourism-related infrastructure, products & projects
• Process for selecting the financial partner of GTDC is currently underway
Tourism Corporation of Gujarat Limited (TCGL)Setup in 1975 – has been responsible for promoting tourism related commercial projects.
It has a special cell for mobilizing investment in the tourism sector.Two SPVs have been set up for tourism development in Gujarat:
Gujarat Tourism Opportunities Ltd (GUJTOP)
• Setup in 2007 to identify tourist sites for development and to set up project development fund
• Responsible for conducting feasibility studies for several locations across Gujarat and spotting tourism opportunities
Marketing & Promotion
• FAM tours organised for tour operators, column writers of travel magazine and photographers
• Tourism Information Bureau (TIB) opened at Jaipur and 14 new Tourist Reception Centers (TRCs)
opened at ST bus stations
• Websites started in 7 different languages
• Road shows on regular basis all over India
• Gujarat Tourism Guide published as PPP initiative
• MOU signed with West Bengal, Tamil Nadu, Rajasthan, Kerala, Uttar Pradesh and Himachal Pradesh
GUJARAT TOURISM SECTOR OVERVIEW
44
Tourism Sector Drivers: Supportive Policies
Highlights of the Tourism Policy 2010
• Industry Status to the Tourism sector - this will enable investors to avail benefits which are extended to other industries through Industrial Policy 2009
• Land Acquisition & Allotment
• Concession in Electricity Duty / tariff
• Tax holidays (as and when proposed)
• Tourism Incentive Package Scheme (TIPS): 2010-2015 is being proposed by the Government, which shall offer special incentives
• Tax holidays on Luxury Tax, VAT on food and beverages, Entertainment Tax
• Concessions such as interest subsidy, reduction of Electricity duty and VAT on natural gas
• Modifications in the lending criteria to cover wider tourism related projects like amusement parks, wayside facilities , service oriented projects like travel agencies, tour operators etc
Increased Budgetary Allocations to promote tourism sector
35
100
164183
200
0
50
100
150
200
250
2005-06 2006-07 2009-10 2010-11 2011-12
INR
CRO
RE
Other Policies
• Entertainment tax reduced to 25% as compared to the earlier rate of 50%
• No luxury tax on rooms up to tariff of INR 500
- from INR 501 to INR 2,000 - 4% - above INR 2,000 per room - 6%
• Electricity duty reduced to 25% from earlier 35%
• VAT on food reduced to 4% as against about 12% in most other states
These incentives make investments in hotels, restaurants & entertainment facilities very attractive
INVESTMENT OPPORTUNITIES
45
4.2.4
Current Locations - 13 Nos. Chotila, Bhachau, Vataman Chokdi (Ahmedabad), Siddhpur, Lunavada, Vasda,
Unjha, Viramgam, Piplod Santalpur, Maitral,Dhari
OPPORTUNITIES IN GUJARAT TOURISM
46
Augmentation of accommodation facilities and wayside amenities
0
5000000
10000000
15000000
20000000
25000000
0
10000
20000
30000
40000
50000
60000
70000
2004 2011
Hotel Rooms
Total Tourist Arrivals
Linear (Hotel Rooms)
Linear (Total TouristArrivals)
Gujarat’s popular religious and spiritual destinations witness long queues and heavy rush especially during festivals.
Budget hotels and accommodation facilities provide a potential investment
opportunity . State government also envisages development of Wayside
amenities centres .
Envisaged accommodation type in Dakor-Utkantheshwar Fagvel – Champaner – Pavagadh Circuit alone locations cost funds investment
(INR million) (INR (INRmillion) million)
Star rated (3/4) leisure, adventure and entertainment park cum resort Utkantheshwar 2000 500 1500
Star rated (3/4) leisure, adventure, ecotourism resort Balasinor 150 37 113
Economic accommodation facilities Balasinor 5 1 4
Development of star rated (3/4) leisure resort / hotel Dakor , Champaner Each 600 Each 150 Each 450
Economic accommodation facilities Champaner 25 6 19
Suggested Indicative Public Private
Way Side Amenities• Rest rooms /Budget Hotels / Motels• Restaurant / Food / Refreshment facilities• Tourist information centre, Internet Cafes / kiosks, Telephone booths, ATMs / FOREX providers• First aid• Petrol pumps, Car-wash, Auto-parts shops, repair Shops, Parking Lots • Highway Facility Centre separate for Truckers/Passenger cars and buses
Estimated investment: INR 50 million per location
OPPORTUNITIES IN GUJARAT TOURISM
47
Film-citie Film-studiosAmusement
ParksDigital Gaming
ZonesMultiplexes Sound &
Light ShowsSports
Complex Water-parks
Special Entertainment Zones (SEnZs)
• Identification of specific zones to promote leisure and MICE Tourism • ISEnZ’s expected to consist of quality hotels, resorts and restaurants • IAdditionally upcoming Industrial clusters to identify and reserve land plots for tourism clusters • IGrant of Long term lease of land for setting up of tourism infrastructure projects related to tourism
Media and entertainment project investments
Special Project at Dholera Special Investment Region
• Proposed Components of Development:• Film City and Theme Parks over 1,350 hectares• Resorts and Hotels over 3,600 hectares• Adventure Sports Facilities Total Area under Tourism Development: 6,320 hectares
Special Project at Aliya Bet
• Proposed Components of Development:• Entertainment Zone and Film City• Amusement Parks, Resorts, Golf Course and Other Eco – Tourism Facilities • Aquaculture Zone with Aqua Ponds and Aqua Marine Zones • Cruise Ship Circuit • Water Sports and other Recreational facilities like Boating, Sky trains • Proposed Development is in 169 sq km out of which: • Entertainment Zone - 36 sq km of area• Aqua Culture Zone – 62 sq km• Forest Zone 47 sq km• Proposed Investment Size - INR 5,300 crore
48
• Components of Development
Hotels and Resorts
• Adventure Sports Park and Mini Golf Course
• Commercial centers
• Entertainment zones
• Training Institutes
• Lake Development
• Health and wellness facility
• Total area of Development across 91 Ha.
•
Special project at Marina
• State-Of-The-Art Marina to be developed at Umbargaon, Suvali, Miyani , Odedar, Porbandar
• Development and operation of the marina with construction of jetty, Berthing facilities, Lay By,
Anchorage, amenities required for small craft, yacht and speed boats
• Associated facilities like rest room, restaurant, Club House, etc. for vessel/ yacht crews
• Indicative Investment at each location estimated at INR 120 crore.
OPPORTUNITIES IN GUJARAT TOURISM
Other Entertainment and Leisure Project Investments
Special project by Saputara Destination Department
OPPORTUNITIES IN GUJARAT TOURISM
49
Restaurants & Floating Hotels Drive-in resorts
Cruise and Ferry Services
Water sports Maritime museums
Sea Park / Aquarium
Development of Beach Tourism Projects
Typical Project Components
Leisure & Amusement
• Hotels, Resorts, Spa, Clubs• Beach sports & amenities• Golf Courses• Theatre & Cultural Events
Touring & Adventure
• Canoeing, Kayaking & Sailing• Para-Gliding• Scuba, Diving, Snorkeling • Nature Trail Hike• Ferry services
Locations Nalia Mandvi, Suvali, Nargol, Beyt Dwarka, Okhamadhi,
Gopnath Relia, Somnath
Typical area of project: 5 – 10 hectares, Estimated investment INR 100 crore
SR. No Location District Total Area
1 Naliya Mandvi Una, Junagadh 25 Ha.
2 Suvali Surat --
3 Bet Dwarka Jamnagar 87.38 ha
4 Okha Madhi Jamnagar 250.2 Ha.
5 Nargol Umbargaon, Valsad 24.9 ha
6 Gopnath Reliya Talaja, Bhavnagar 19.23 Ha.
7 Somnath Junagadh 91.65 Ha.
50
OPPORTUNITIES IN GUJARAT TOURISM
Promotion of Religious and Spiritual Tourism Locations
Upgrading of basic infrastructural facilities like connectivity, water supply, drainage and health care already being undertaken by the Government for most religious destinations across the State like Dwarka, Ambaji, Dakor, Palitana, Somnath , Girnar and other places to promote development and private sector interest.
Restaurants Hotels & Resorts Dharamshalas
Local public transport Renovation
Recreation facilities
Integrated Plan for Holistic Development of Somnath : Project Rs 200 Crore
• Provision of Basic Infrastructure: Road, internal road work, electricity, water, solid waste management, sewerage systems
• Site Specific tourist facilities -
- Somnath Lake , Bhalka Pond and Garden area , Bhidbhanian Mahadev, Golakhdham, Sun Temple
Integrated Development of Dakor: Project Cost Rs 50 Crore
• Provision of Basic Infrastructure: Internal road widening, electricity, water supply, solid waste management & sewerage systems etc
• Site Specific Tourist facilities-
- Padukali bridge , Gomti Ghaat, Parking at 3 entry points, Jetty for boating, Temple arrival plaza development, Lighting and decoration
Tourism Circuit: Dwarka-Bet Dwarka-Nageshwar-Gopi Talaav : Project Cost Rs 85 Crore
• Traffic and crowd management systems
• Site Specific activities like -
- Parikrama path , New Gomti Ghat
- Restoration of old Gomti Ghat
- Temple and Beach Developments
OPPORTUNITIES IN GUJARAT TOURISM
51
Heritage Tourism Projects
Factor’s that make Gujarat a potent heritage tourism destination:
• State once had a concentration of more than 200 princely states
• Has diverse architecture styles and cultural significance to showcase
• Cultural fairs and festivals add to the unique experience for tourists
Key Project Categories :
• Star Category Heritage Hotel with Exhibition Cum Convention Centre
• Creating unique tourism experience by clubbing Heritage Tourism with Eco-Tourism and with Rural and Craft Tourism
Locations
Poshina, Danta, Vijaynagar, Ahmedabad,
Patan, Modhera, Wadhvan, Wankaner,
Gondal, Palitana, Balasinor, Vadodara,
Jambooghoda, Chota Udaipur,
Rajpipla, Sayla
52
OPPORTUNITIES IN GUJARAT TOURISM
Airports and Airstrips Projects
GUJSAIL – Gujarat State Aviation Infrastructure Limited has been set up under the aegis of tourism development department by Government of Gujarat for building infrastructure and training human resources for the aviation sector of Gujarat.
GUJSAIL plans development of airports, air-strips and helicopter services at several locations, likely to be in PPP mode – this opens up plentiful opportunity for private sector participation. Process for four airstrips at – Ambaji, Dwarka, Ankleshwar and Palitana has begun
• Bhavnagar
• Bhuj
• Gandhidham
• Mundra
• Porbandar
• Keshod
Amreli
• Mandvi (Kutch)
• Ankleshwar
• Palitana
• Ambaji
• Dwarka
• Girnar
• Somnath
• Dwarka
• Bet Dwarka
• Ambaji
• Palitana
•
The State Government is also planning to establish a regional airline on PPP
mode – State might look into assuring the private operator a guaranteed minimum
seat utility
Airports Airstrips Helicopter services
OPPORTUNITIES IN GUJARAT TOURISM
53
World’s Tallest Statue Proposed as the Symbol of Unity
Sardar Patel – One of the tallest leaders and respected freedom fighters of the Indian freedom
struggle.
The Government of Gujarat plans to immortalize the Iron Man of India by building the world’s tallest statue
which will stand 182 metres tall. The Statue of Unity which will come up at Sadhu Island, 3.5 km south of Sardar Sarovar Dam is planned to be developed as a major tourism epicentre. The Statue would have lifts
to ferry tourists to the top of the Statue where restaurants and other facilities are planned as an
additional crowd puller.
The iconic tourism destination is also expected to provide a big fillip to the overall tourism footfalls in the State and catapult the State as a major player in
the national as well as global tourism landscape
Opportunities to Invest
Development of the structure
Tourism projects and services around the structure
Hotel, Convention Centre, Memorial Garden and Visitor Centre Building
54
IT/ITES
4.3
OVERVIEW
55
4.3.1
56
INDIA – IT/ITES SCENARIO
LARGE INDUSTRY
The Indian IT industry is a USD 88 billion industry with 80% of the revenues coming from exports. It has been growing at a CAGR of about 17% in last 5 years (FY07-FY11).
The Indian IT & ITeS sector employs over 2.5 million skilled people. Employment has been growing at a CAGR of about 20% in during FY07-FY11.
The per capita GDP contribution of IT-BPO employees is about 80 times that of a person employed in the agriculture sector
The IT-BPO industry currently contributes 14% to India‘s total exports
Between 2000 and 2011, the IT/ITeS sector received cumulative FDI of USD 107 billion
India is referred to as the back office of the world, with its strong cost advantages and skilled work force in providing ITeS.
GROWING INDUSTRY
IT / ITeS industry is expected to be USD 320 billion by 2020. The CAGR for the decade (2011-2020) is pegged at 15%
Domestic BPO market would increase to USD 2.5 billion by 2014
The Indian electronics turnover is expected to be USD 400 billion by 2020.
TRAI is targeting a 10-fold increase in broadband subscribers to 100 million by 2014 from existing 10.3 million
Industry has also started to impact rural areas – rural BPO organizations employed more than 5,000 people in FY2009
3140
46 5059
70
0
10
20
30
40
50
60
70
80
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 (e)
Revenue share by main components
IT
ITeS
Software Products andEngineering services
Hardware
IT/ITeS exports in USD billion
50%
20%
17%
13%
INDIA – IT/ITES SCENARIO
57
Industry characteristics
• Major segments: 1. IT Services, 2. ITeS – BPO, 3. Software products and Engineering Services, 4. Hardware
- Segment-size: IT services is the biggest in size (the revenue from IT services constitutes about 50% of the total industry revenues)
- Segment growth: Software products & Engineering services are fastest growing (CAGR – 27.5%) and slowest growing segment is Hardware (CAGR – 17%)
• Larger companies depend more on export and smaller ones more on domestic market – hence, larger companies would prefer an SEZ over other IT space (such as an IT Park) because of export incentives provided in SEZs.
• In the future, domestic market would be the growth driver for the IT industry – even the top 10 companies’ revenue dependency on domestic market would increase.
Source: NASSCOM
IT 50%
Services
ITeS -BPO. 20%
SoftwareProducts &
EngineeringServices
17%
Hardware13%
CAGR 21.8%CAGR 10.5%
CAGR 23.1%
CAGR 27.5%
Revenues of different components of IT/ITeS Industry. CAGR for FY05 to FY 10.
67.20%40.80%
25.20%
32.80%59.20%
74.80%
0%
20%
40%
60%
80%
100%
Top 1-10 Top 11-50 Top 51-100
Export and domestic % aggregate revenue oftop 100 software vendors (FY10)
Export Domestic
IT services form the largest portion of IT/ITeS revenues
58
INDIA – INTERNATIONAL FOCUS
Global sourcing from India of IT/ITeS accounts for 55% of the global market in offshore IT services and garnering 35% of the ITeS/BPO market
A majority of the Fortune 500 and Global 2000 corporations are sourcing IT/ITeS from India
India accounts for around 28 per cent of IT and BPO talent among 28 low-cost countries.
90-95% of Indian hardware production market is presently benefitting foreign players
Bilateral development cooperation
• Focused on over 25 priority countries in Middle East regions, Africa, Asia, Latin America, Europe, North America, etc.
• Given due recognition to India’s strength in IT sector, several countries in South America, Caribbean region, Africa and CIS regions are approaching Indian government for seeking technical assistance in the area of IT infrastructure, networking, capacity building, HRD and e-government etc.
• Countries with whom we have bi-lateral understanding
- Africa – Ghana, Mauritius, Tanzania, Madagascar, Namibia, Zambia, Uganda, Seychelles, Lesotho, Tunisia
- Asia – Myanmar, Vietnam, Thailand, Brunei, Lao PDR, Mongolia, Malaysia, Saudi Arabia, South Korea, Egypt, Israel, Sri Lanka, Japan
- CIS Countries – Uzbekistan, Tajikistan, Armenia, Belarus, Turkmenistan, Russia, Kazakhstan
- Europe - Republic of Bulgaria, France, EU
- Oceanic Countries – Australia and Fiji
- USA
1125
599
293
147
1150
645
309
153
0 200 400 600 800 1000 1200 1400
Engineering and R&D
Hardware
Packaged software
BPO
USD billion
Globalspending of
USD 1.7billion
20112010
Rest of the worldincluding Asia:
9% Americas 60%
Europe 31%
Importers of Indian IT/services
ITeS
Source: Department of Electronics and Information Technology, GoI
FUTURE OUTLOOK
59
Source: PwC analysis
The total IT / ITeS industry in India should be USD 230 billion to USD 320 billion compared to about USD 90 billion today
We have projected the Indian IT sector demand for four different scenarios as tabulated below.
Scenario Description Projected CAGR CAGR (Exports) (Domestic)
Scenario 1 If assumed that future growth will be same as last 5 years' CAGR (FY07-FY11) 17% 15%
Scenario 2 (Base case) If NASSCOM projections are used 13% 14%
Scenario 3 (Optimistic) If CAGR is 2% more than NASSCOM projection 15% 16%
Scenario 4 (Pessimistic) If CAGR is 2% less than NASSCOM projection 11% 12%
Projected
50
100
150
200
250
300
Export Revenue Projections in billion USD
-
20
40
60
80
100
120
Domestic Revenue Projections in billion USD
-
Scenario 2 Scenario 1 Scenario 3 Scenario 4
20072008
20092010
20112012
20132014
20152016
20172018
20192020
20072008
20092010
20112012
20132014
20152016
20172018
20192020
Scenario 4Scenario 2 Scenario 1 Scenario 3
60
FUTURE OUTLOOK
The total employment in IT / ITeS industry should reach 6.5 million to 9.5 million people compared to about 3 million people currently
We have projected the Indian IT sector employment figures for four different scenarios as tabulated below.
Scenario Description ProjectedYoY growth YoY growthrate (Exports) rate (Domestic)
Scenario 1 If assumed that growth CAGR will be same as past few years 28% 9%
Scenario 2 (Base case) If NASSCOM projections are used 12% 11%
Scenario 3 (Optimistic) If CAGR is 2% more than NASSCOM projection 14% 13%
Scenario 4 (Pessimistic) If CAGR is 2% less than NASSCOM projection 10% 9%
Projected
Source: PwC analysis
• Considering all the scenarios, the total employment in IT / ITeS industry in India should reach 6.5 million to 9.5 million people compared to about 3 million people currently
• A large portion of this employment is expected to occur in the ITeS (BPO/KPO) exports sector, followed by IT exports and then in the domestic market.
Expected changes in educational profile of the workforce - A large portion of the workforce are currently engineers and MCAs – over 80%. The proportion of graduates of science and other streams engaged in software development is expected to show significant increase from about 5% to 10% currently to about 15% to 20%. This would be driven by the following factors:• Demonstrated willingness by firms to train graduates and employ them in software development and functionality
testing.• Increasing desire by graduates from such stream to enter into attractive IT industry.• Pricing pressure and the need to remain cost competitive which would drive IT companies to develop a relatively low cost talent pool.
-50
100 150 200 250 300
Employment projections in IT exports
Scenario 2 Scenario 1 Scenario 3 Scenario 4
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Employment projections in domestic IT market
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No
of p
eopl
e (in
lakh
)
20042005
20062007
20082009
20102011
20122013
20142015
20162017
20182019
2020
No
of p
eopl
e
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
61
Source: PwC analysis
1) Increase in Global IT Services spending:
The IT spending is expected to grow at 6.3% globally in the next 5-6 years. Given the growth in the spending base, as well as India being poised to increase its share from current levels of about 7% in the IT Services space, it is well poised to tap into the global IT spending. The market is expected to triple from US $ 500 billion today to US $ 1.5 to 1.7 trillion by 2022.
2) Growth in domestic spending:
As per the BRIC Report of Goldman Sachs, India is likely to be the only country among BRICs to clock GDP growth between 5% and 6% across all years till 2050. This would fuel growth in a host of downstream industries where IT adoption would be high, such as BFSI. Other areas which will drive domestic demand are increasing government spend on IT and e-governance. Industry adoption will be spearheaded in BFSI, telecom, retail, and healthcare.
3) The Indian domestic market is fast emerging as a globally significant market for services. Critical areas like Aerospace, Defence and e-Governance beckon Indian IT vendors and global giants eager to participate in the Indian growth story driven by domestic consumption and demand for services.
By 2020 new verticals (Public sector and Defence, Healthcare, Utilities, Printing and Publishing) and new geographies (BRIC) will account for 50-55% growth in the addressable market.
Post 2020, growth drivers in addition to traditional IT and BPO services for large companies (in the Fortune 500) in US and EU will arise from Small and Medium Businesses (SMBs), public sector, healthcare, media, and utilities. A significant portion of the growth would be driven by markets in BRIC countries, APAC, Japan, and Rest of the world.
1) Expansion of Indian operations of global companies
Companies are increasingly investing in developing their Indian operations as think-tanks to their global operations. Companies like GE have already been successful in developing rule changing healthcare solutions through their Indian R&D set up. This is enabling them to establish a presence in the cost conscious SE Asian market in the short run and remain globally relevant in the long run.
2) Policy incentives by states
The increasing participation of various states in India to tap into India’s IT/ITeS growth story has opened up entirely new possibilities for both, companies as well as the people at large. An attractive business centric taxation and benefits regime has seen a greater interest amongst the IT/ ITeS provider community as well as a more widespread distribution of wealth across the country. We expect this trend to continue in the near future.
Markets beyond US and EU, especially BRIC and APAC will be major growth areas in the future. These markets are expected to witness growth much more than the US and EU.
Expansion of IT and ITeS Industry to tier-2 and tier-3 cities is critical for achieving cost competitiveness and inclusive growth. And this expansion is expected looking at markets opening up further and supported by large investments in innovation, skill building, IP creation, and development of IT infrastructure in tier-2 and tier-3 cities.
GROWTH DRIVERS AND GROWTH AREAS
Key reasons for growth in demand
Key reasons why India will be able to capture the above demand Areas that will capture demand
Areas driving demand
Source: PwC analysiss
62
GUJARAT SCENARIO
4.3.2
63
Source: http://www.gnr.stpi.in, GIL; Gujarat Electronics & Software Industries Association (GESIA), Commissionerate of Information Technology
IT/ITES – GUJARAT SCENARIO
564681
1,268
1,035 1150
0
200
400
600
800
1000
1200
1400
2006-07 2007-08 2008-09 2009-10 2010-11
IT exports from Gujarat in Rs. crore
The stretch between Ahmedabad and Gandhinagar is now being developed as a knowledge corridor. Land has been allotted and several IT parks and centres of excellence are taking shape here.
More than 1,000 ICT & BPO companies are operational in Gujarat.
127 new companies are registered with the Commissionerate of Information Technology.
More than 1,250 companies are registered with Gujarat Electronics & Software Industries Association (GESIA)
IT units in Gujarat are spreading their markets from the US to other regions like Europe, Middle East and Africa
I n f ra s t ru c t u re ava i l a b l e at I nfoc i t y - Gandhinagar, GNFC Infotower - Ahmedabad, Astron IT Tech Park - Ahmedabad and another one is coming in Baroda
14 Special Economic Zones have beenplanned specifically for IT/ITeS – 7 are
notified and 7 have secured formal approval
Ahmedabad
Vadodara
Valsad
Gandhinagar
64
EXISTING IT INFRASTRUCTURE
Infocity in Gandhinagar
STPI Gandhinagar has its jurisdiction over entire Gujarat Province, and Union Territories
of Daman, Diu and Dadra-Nagar Haveli.
Gandhinagar
Ahmedabad
• Gujarat International Finance Tec-City (GIFT) - A one stop destination for global financial services industry spread over 500 acres between Gandinagar & Ahmedabad
• The Infocity is a global ITeS Outsourcing hub developed over 150 acres in Gandhinagar, provides world class infrastructure to BPO, KPO, Software development & other ITeS outsourcing companies.
• It has received an award for best conceptualized IT Park in India
• It acquires all benefits of STPI
• Companies present in Infocity are listed below
Multi-services Domestic EZS tariff area
250 acre 250 acre 7.5 mn. sq. m. FSI/FAR Green belt Building
height
3.6 50.59 mn. sq. m. 400 m.
Built space
Source: GIL; Gujarat Urban Development Corporation (GUDC); http://www.theinfocity.net
Accede Learning and Information P. Ltd
Arth Infosoft Vavni Services Pvt. Ltd. Nusun Genetics Research ltd You TELCOM
Echelon BPO private Ltd. Tata Communication Outsourcing Services P. Ltd Maxim India
Effective Tele Services Tata Consultancy Services BlazeNet Ltd. Navinya CADsoft Pvt. Ltd.
iServe Systems Pvt. Ltd. Cybage BSNL Vyapar Capital Market
Smruti Compubits C-Metric Solutions P. Ltd E Fact Geo global Private Ltd
Perfect IT Solutions Futures First E-Voice Teleservices Varologic Pvt. Ltd
Apcons Infotech, Stay In Front GIPL
65
Source: NASSCOM; Director of Technical Education, Gujarat State
IT/ITES – GUJARAT SCENARIO
About 50% of the IT/ITeS service providers are looking to move or expand to tier 2 cities for perceived benefits like availability of low-cost skilled resources, lower real estate cost and lower attrition.
Potential benefits of moving or expanding to Tier 2 cities from Tier 1 cities (among IT/ITeS service providers)
71%
57%
50%
36%
29%
21%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Availability skilled resources
of low-cost
Lower real estate costs
Lower attrition
Presence of SEZs
Regional language capabilities
CSR initiatives - like Rural BPO
Even with labour and real estate costs on the rise, the
locations in Gujarat (Ahmedabad, Gandhinagar, Vadodara
and Surat) offers cost benefits relative to
urrent hubs
66
KEY ENABLERS FOR SECTOR IN GUJARAT
Gujarat is fast emerging as an ideal destination for IT, ITeS
business to scale new heights
Today 90% of IT services works in India take place from major six destinations – Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Pune, In the coming year I clearly envision 40% of IT services work happening outside of these six cities. This gives Ahmedabad a major opportunity to be become a major IT destination in the future in the ICT space. With an integrated IT Policy, initiatives like GSWAN, e-governance and GIFT, Gujarat has immense potential to become the next IT hub – Mr. Som Mittal, President, NASSCOM
Growth in IT space in Gujarat is expected at CAGR of 15% over the next 10 years – Mr. Som Mittal
RobustPhysical,
Social andindustrial
infrastructure
Business friendly
governance and investor friendly IT
Policy &initiatives
Land Bankavailability
and relativelylower real
estate
Skilled humanresource
advantage and lower cost of manpower.
Lowest BPOattrition rate
Growing ITSEZs andperipheral
industries ofIT
Lowest start -up and operational
costs
Gujarat an ideal destination
for IT / ITeS
evolving as
67
Source: The Times of India
GUJARAT – IT EDUCATION
-
20,000
40,000
60,000
Diploma Bachelorsdegree
Mastersdegree
No. of seats available in engineeringcolleges in Gujarat during 2010-11
Self Finance
Grant in aid
Government
Zone Colleges IT seats
Ahmedabad 8 600
Gandhinagar 16 1,080
Rajkot 12 660
Surat 4 225
V.V. Nagar 11 840
Total 51 3,405
The All India Council of Technical Education (AICTE) has given approval to 9,600 additional seats in the
engineering colleges in Gujarat from 2012
• Gujarat has 82 MCA colleges with 6,670 seats (2012). There is an increase of nearly 1000 seats in intake capacity from 5,716 seats in 2011
68
POLICY INITIATIVES AND INTERVENTIONS PLANNED
4.3.3
69
Source: Department of Electronics and Information Technology, MoC&IT, GoI
GROWTH DRIVERS POLICY SUPPORT BY GOVERNMENT OF INDIA
Continuous liberalization and reform policies for export promotion and Tax/duty incentives
• Software Technology Parks of India (STPIs) was set up as an Autonomous Society in 1991 for the promotion of software exports from the country. There are currently 51 STPI centres where apart from exemption from customs duty available for capital goods, there are also exemptions from service tax, excise duty, and rebate for payment of Central Sales Tax.
• Enacted comprehensive legislation (IT Act 2000) which covers copyright protection and cyber laws Copyright and Intellectual Property Rights (IPR) of computer software covered under the Copyright Law.
• Special Economic Zones (2005) offer a wide range of duty concessions and exemptions for IT exports
• National eGovernance Programmes (NeGP) approved in 2006, comprising of 27 Mission Mode Projects (MMPs) and 8 components
• Policy formulated for Information Technology Investment Regions (ITIRs) in 2007. These would be endowed with excellent infrastructure to reap the benefits of co-siting, networking and greater efficiency through use of common infrastructure and support services.
• Task Force to Stimulate Growth was set up in 2009
• Constitution of the Technical Advisory Group for Unique Projects (TAGUP) in 2010, under the chairmanship of Nandan Nilekani, to develop IT infrastructure
• National Policy on Electronics was released in 2011 aiming at achieving a turnover of USD 400 Billion by 2020 involving investment of about USD 100 billion and employment to around 28 million by 2020 and to set up over 200 Electronic Manufacturing clusters.
• National Policy on IT 2011 was drafted in 2011 for encouraging development of IT/ITeS sector in the country.
• National Telecom Policy 2011 – to provide affordable and reliable broadband on demand by the year 2015, to provide high speed and quality broadband access to all village panchayats by 2014 and to achieve 175 million broadband connections by 2017 and 600 million by 2020.
70
GROWTH DRIVERS-NATIONAL POLICY ON IT 2011
AIMs at MARKING A CHANGE
•Industry from USD 88 Billion at present to USD 300 Billion by 2020
• To expand exports from USD 59 Billion at present to USD 200 Billion by 2020.
• To create a pool of 10 million additional skilled manpower in ICT.
• To make at least one individual in every household e-literate.
• To provide fiscal benefits to SMEs and start-up ventures in key industrial verticals
• To gain big global mkt share in cloud-based services & mobile-based value-added services
• To leverage ICT for key Social Sector initiatives
• To strengthen the Regulatory and Security Framework for ensuring a Secure Cyberspace ecosystem
• To attract investments in IT in Tier-II & III cities
To increase revenues of IT and ITeS
Domestic Exports
• Strategies formulated in the Policy to achieve targets
• Creating ecosystem for a globally competitive IT/ITeS Industry
• Human Resource Development
• Promotion of Innovation and R&D in IT Sector
• Enhancing productivity and competitiveness in key sectors through ICT
• Creating an ecosystem for Internet and mobile driven Service Industry
• Enabling Service Delivery through e-Governance
• Mobile based Value added Services
• Development of Language Technologies
• GIS based IT Services
• Security of Cyber Space
Source: Department of Electronics and Information Technology, GoI
100
200
Targetedrevenue inUSD billion
by 2020 59
Currentrevenue in USD billion
in 2011
29
Enabling ITPolicy 2011
71
Source: The Times of India
FOSTERING GROWTH OF IT/ITESPOLICY SUPPORT BY GOVERNMENT OF GUJARAT
Active promotion and strengthening of educational infrastructure in the state to supply skilled manpower
•companies
• Set up a certification mechanism which will prescribe certain tests to ascertain candidates’ skills in different areas suitable for employment in IT sector.
GoG promotes training institutes which provide specialized training in domain specific skills required by ITeS
Promotion of KPO based industries
Incentives
• On case to case basis, a special package of incentives will be offered for mega IT projects
• Financial Assistance to high-tech park will be administered
The State Government has constituted an IT Task Force for the development IT Sector in Gujarat
Gujarat has crossed many milestones in its e-Governance endeavors
IT Policy of Gujarat – key features
• To attract investments in IT sector so as to achieve a turnover of Rs.5000 crore.
• To promote and develop employment opportunities in the IT sector and provide direct employment to 200,000 persons
• Identify suitable government land and reserve those for IT industry / IT Parks.
• Assist IT industry/infrastructure units in acquiring land under the Land Acquisition Act
• Advise the UDAs/ Municipal Corporations to develop town planning schemes in such a manner that land parcels are made available for development of IT Industry / IT parks.
• State shall facilitate grant of SEZ status to IT Industry / IT Parks subject to the provision of SEZ Act/rules.
72
IT/ITES INITIATIVES IN GUJARAT
Source: Department of Electronics and Information Technology, GoI
The Gujarat State Wide Area Network (GSWAN) connects the State capital with all its 25 districts and 225 block headquarters. It is Asia’s largest Internet Protocol-based network.
The National Association of Software and Service Companies or Nasscom has formed Regional Council for Gujarat with a view to develop the information and communication technology sector in the state
There is a steep rise in the number of technical institutions,larger number of technical graduates than 10 years ago. There are more than 100engineering colleges
GESIA and GIL have jointly initiated the development of the comprehensive Directory of Gujarat’s ICT Industry. The Gujarat IT Directory would serve as the SINGLE WINDOW reference point to anyone requiring information regarding ICT sector of Gujarat.
GIFT is conceptualized as thefirst Financial Services SEZ to be developed as a global financial hub. With its strategic location, state of the art infrastructure, green and intelligent buildings it is poised to become a globally benchmarked International Finance Centre providing exciting opportunities for financial services and IT/ITeS sectoral companies.
• GoG rolled out at least 50 citizen-centric services for online interactions with people,.
• Started a special incentive package for semiconductor industry which is unique in India in terms of incentives.
• Formed a IT Programme Implementation Committee in Department of Science and Technology
The total investment planned in the shelf of projects in IT sector is Rs. 4,289 crore by 2020
73
Taluka level SWAGAT was launched 2 years ago. GoG has initiated rural edition of SWAGAT, called 'Gram SWAGAT' in villages from 01 February 2011.
IT/ITES INITIATIVES IN GUJARAT
After E-Gram project for providing basic IT connectivity to all the district, taluka and village panchayats, the GoG is now all set to launch a comprehensive e-panchayat project in order to createa complete database and monitor all the activities taken up in the rural areas.
Gujarat has received the United Nations Public Service Award (UNPSA), 2010, for its State Wide Attention on Grievances withApplication of Technology (SWAGAT), in the category 'Improving Transparency,Accountability and Responsiveness in Public Service'.
The Government of Gujarat has been triple awardedin the National e-governanceawards this year given by the Government of India.
The official portal of Hon'ble CM of Gujarat(www.narendramodi.in) got the prestigious eGov 2.0 award for the 'Most innovative use of social Media'. State Portal(www.gujaratindia.com) too won an award for the 'Most user friendly portal
74
INVESTMENT OPPORTUNITIES
Source: Department of Electronics and Information Technology, GoI
4.3.4
75
INVESTMENT OPPORTUNITIES
• During the Vibrant Gujarat Investment Summit 2011, 115 MoUs were signed for the IT/ITeS sector as against 20 MoUs in the 2009 Summit.
• The proposed investment amounted to Rs. 68,565 crore and could provide employment to 320,000 people.
• Foreign Investments proposed in the sector by USA were about Rs. 5300 crore employing 14000 people.
46507
142992
68,565
320,000
0
50000
100000
150000
200000
250000
300000
350000
Investment in Rs. crore Employment
2009 VG Summit 2011 VG Summit
Emergency services
Cloud based services and solutions
SEZs
Hardware manufacturing
Urban and rural planning – using GIS, remote sensing
Knowledge Process Outsourcing
Data / Computer Centres
Execution of E-Governance initiatives
IT based education and trainings
76
GUJARAT – IT GIANTS KEEN TO INVEST IN GUJARAT
Source: Department of Science & Technology (DST)
Patni Computer System Ltd. (was India's sixth-largest software exporter before the acquisition) now iGate Patni, has been present in the state for many years. It now provides effective solutions to over 350 Fortune 1000 clients globally across verticals, clocking a revenue of USD1 billion.. It started with a strength of400 people and now has a diversified,well-trained and motivated talent poolof 26000 people which works cohesivelyto deliver solutions to clients across the Americas, EMEA and Asia-Pacific.
Gujarat serves as an inspiration for the entire country. One of India’s most industrialized states, Gujarat’s per capita GDP is almost twice the national average. The time is now ripe for the state to emerge as the country’s most vibrant ICT Hub
Mr. Kishore Chitale, Head-India Domestic Business,
Capgemini India
0 500 1000 1500 2000 2500
2010
2013 (e)
No: of employees of Gujarat - CEO, Mr, Harsh Chitale
HCL Infosystems in
Focus growth areas for Gujarat will be semiconductors/IT
Hardware, BPO/KPO, IT/ITeS services
Infosys and Mahindra Satyam expressed interested in setting up facilities in Gujarat. Infosys
BPO is also considering coming into Gujarat
77
ADVANTAGE GUJARAT
5
78
GUJARAT – THE STATE WITH STRATEGIC LOCATION
79
GUJARAT – INDIA’S ECONOMIC POWERHOUSE
80
GUJARAT – ROBUST INFRASTRUCTURE
81
GUJARAT – STRONG URBAN, SOCIAL AND EDUCATIONAL INFRASTRUCTURE
82
GUJARAT – LAND OF INNOVATIVE HUMAN CAPITAL
GUJARAT – NEW PARADIGM FOR INDUSTRIAL GROWTH
The current phase – involving Integrated development of large areas like SIRs,
PCPIR and DMIC – is poised to transform the industrial scenario in the state
Phase of industrial development
Leve
l of I
nteg
ratio
n
83 productclusters
202 IndustrialEstates
SEZs• Multi product• Chemical• Textile• Pharma• IT / ITeS• Electronics• Engineering• Biotech• Gems & Jewellery
Integrated large areadevelopments
• Special Investment Regions (>100 sq. km.) and Industrial Areas (50-100 sq. km.)
• CorridorDelhi Mumbai Industrial
• GIDC Industrial Estates• Petroleum, Chemicals and Petrochemicals Investment Region• Knowledge corridor• Logistics parks• Theme towns
Phase I Phase II Phase III Phase IV
83
84
GUJARAT - PROACTIVE GOVERNANCE
Source: Socio-Economic Review Gujarat, 2011-12, Department of Economic affairs, March 2009
85
OPPORTUNITIES TO INVEST IN GUJARAT
86
OVERALL FRAMEWORK FOR DOING BUSINESS
Source: TERI, GEDA
DOING BUSINESS IN GUJARAT
87
6
88
TAX FRAMEWORK
89
EXCHANGE CONTROL REGIME
90
FRAMEWORK FOR SETTING UP INDUSTRY IN GUJARAT
91
7KEY GOVERNMENT AGENCIES
92
INDUSTRIAL PROMOTION FACILITATORS
93
KEY CONTACT PERSONS
Department of Science & TechnologyShri Ravi Saxena, IAS,
Additional Chief SecretaryPhone: 91-79-23259999
E-mail: [email protected]
Gujarat Informatics Limited Shri Neeta Shah - Director (e-Governance and
Center of Excellence) Phone: 91-79-23256022 Fax: 91-79-23238925
Email: [email protected]
Mr. Vipul Mitra Principal Secretary (Tourism, Pilgrimage and
Devasthan Management)Industries and Mines Department
Phone: +91 79 23250583, Fax: +91 79 23250587www.gujarattourism.com
Mr. Ramakant JhaDirector,
Gujarat International Finance Tec City Co. Ltd. Phone: +91 79-30018300/27912511
Fax: +91 79-27912516www.giftgujarat.in
Mr. Sanjay Kaul, IASManaging Director,
Tourism Corporation of Gujarat Ltd Phone/Fax: +91 79 [email protected]
www.gujarattourism.com
Mr. Jagdish ShahAssistant General ManagerIndustrial Extension Bureau
Phone: +91 79 [email protected]
www.indextb.com
ndHead Office: Block No. 18, 2 Floor, Udyog Bhavan, GH-4, Sector 11, Gandhinagar 382 010 Gujarat, INDIA Phone: +91-79-23250492/93 Fax: +91-79-23250490
www.indextb.com, www.ic.gujarat.gov.in E-mail: [email protected] Regional Office: A-6, State Emporia Building, Baba Kharak Singh Marg, New Delhi 110 001, INDIA
Telefax: 011-23747002, 23360049 E-mail: [email protected]
For more details and online registration, log on to www.vibrantgujarat.com
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