GROWTH RATE OF TERTIARY SECTOR OF INDIA

MANAGERIAL ECONOMICS
MARKETING 2014-16
GROUP-3
ASHISH SINGH
ABHISHEK
ISHA
ASHISH RAWAT
RASHID
SANJEET
TERTIARY SECTOR IN INDIA


Introduction
Also known as the Service Sector, the development of a country's services sector is an indicator of its economic
development. India's services sector is a vital component of its economy, as it presently accounts for around 60 per
cent of its gross domestic product (GDP). It has matured considerably during the last few years and has been
globally recognized for its high growth and development.
The growth in the services sector in India is expected to be around 5.6 per cent in FY 15 owing, particularly, to the
growth in the IT sector. The services sector in India comprises a wide range of activities, including trading,
transportation, communication, financial, real estate and business services, and community, social and personal
services.
The HSBC's Services Purchasing Managers' Index (PMI) touched a 17 month high at 54.4 points in June 2014 as
compared to 50.2 points in May 2014. Also, services expanded 6.7 per cent in FY 14, according to data from the
Central Statistical Office.

Market Size
The services sector in India attracts the highest foreign domestic investment (FDI) equity inflows, accounting for
about 17.96 per cent of the total equity inflows. In the period April 2000 - June 2014, the services sector in India
attracted FDI inflows amounting to about US$ 40,197.21 million, according to data released by Department of
Industrial Policy and Promotion (DIPP).
According to International Data Corporation (IDC), the total mobile services market revenue in India will reach US$
29.8 billion by 2014 and is expected to touch US$ 37 billion in 2017 with a compound annual growth rate (CAGR) of
5.2 percent.

Manufacturing and services sectors in India expanded at a faster pace than China during June while emerging
market output registered the strongest upturn in business activity since March quarter of 2013, as per an HSBC
survey.

India's logistics sector is valued at US$ 110 billion and is projected to touch US$ 200 billion by 2020. The sector will
double its growth in seven years from the present growth rate of 15 per cent, as per Mr KV Mahidhar, Head, CII
Institute of Logistics.

Legal process outsourcing firms see new opportunities in Europe, a market that is expected to grow to US$ 8.56
billion in 2020 from US$ 1.39 billion at the end of 2013.
Investments

The Indian services sector has seen some major investments in the recent past, from foreign as well as private
Indian corporates. Some of the major developments and investments in this sector are as follows:
Employees' Provident Fund Organization (EPFO) has launched an online registration facility for employers,
a move that will help firms get provident fund (PF) code within a day. Applicants can also track the status
of their application through the website.
Fosroc, an international company in construction solutions space, plans to set up its fourth plant in West
Bengal along with its already existing three plants, one each in Karnataka, Uttarakhand and Gujarat. Its
products include cement and concrete technology as well as chemicals for water and fireproofing and
finishing.
Uber has introduced its affordable line of UberX cabs across three cities in India. These cabs are priced
about 25-40 per cent cheaper than its flagship Uber Blacks. India is the second biggest market in terms of
cities covered for Uber, which is presently valued at US$ 18 billion.
Ad factors, India's largest public relations (PR) firm and The Holmes Report's 'Asia-Pacific Financial
Consultancy of the Year' in 2013, has set up its Sri Lanka office in Colombo. This is Adfactors PR's third
office in Asia outside India, after Dubai and Singapore. The new company, Adfactors Public Relations
Lanka (Private) Ltd, will offer its suite of communications services to Sri Lanka-based businesses - both
domestic and international.
BlackBerry plans to launch a healthcare service that will integrate thousands of medical devices to enable
early detection of illnesses, in partnership with healthcare technology firm NantHealth as it looks beyond
smartphones in the Indian market.
Within months of launching its one-day delivery service, online retail site Amazon.in has launched same-
day delivery in Mumbai. The website has also launched a pickup service in Delhi and Mumbai, where
customers could pick up their orders from In & Out stores situated at filling stations of Bharat Petroleum
Corporation Limited (BPCL).
Government Initiatives

India plans to double India's exports of goods and services by the end of 12
th
Five Year Plan period, over the level
achieved at the end of the 11
th
Five Year Plan period. The long-term objective is to double India's share in global
trade by the end of 2020 through adoption of appropriate strategies.
Strong and consistent emphasis on self-reliance in its economic development programmes over the years by the
Government of India has also enabled India to build up a big and versatile cadre of professionals. They now have
expertise and skills across a vast and wide-ranging spectrum of disciplines, such health care, tourism, education,
engineering, communications, transportation, information technology, banking, finance, management, among
others.
A sizeable part of this workforce of professionals makes up the country's growing consultancy sector, which is
offering its accumulated experience and expertise at home and abroad.
The government of India has adopted a few initiatives in the recent past. Some of these are as follows:
India has joined hands with Bangladesh and is expected to begin coastal shipping services from October
2014, as part of the proposed agreement between the two nations to open sea routes to promote
bilateral trade. This bilateral trade agreement is valued at around US$ 6 billion.
India's government cloud infrastructure, Meghraj, went live recently. The government cloud (g-cloud)
now offers infrastructure, platform, storage, and software as a service for the Indian public sector. The g-
cloud will allow the Indian government to handle unprecedented technology infrastructure requirements
sustainably as it digitizes more departments.


Road Ahead

The Indian banking sector has the potential to become the fifth largest banking sector globally by 2020 and the
third largest by 2025.
India also has the potential to build a US$ 100 billion software product industry by 2025 riding on its IT services
market, according to Indian Software Product Industry Roundtable (iSPIRT).
Further, the healthcare services industry is also set to grow and touch the US$ 2 billion mark by 2015, while the
insurance sector in India is projected to touch US$ 350-400 billion by 2020.
Exchange Rate Used: INR 1 = US$ 0.0165 as on August 26, 2014




References: Media Reports, Press Releases, DIPP publication, Press Information Bureau, Indian budget
publication




Tertiary sector: -
(Transport, Storage & Communication, Trade, Hotel & Restaurant, Public
Administration, Banking & Insurance, Others)

Banking Sector of India
Introduction

India is considered among the top economies in the world, with tremendous potential for its banking sector to
flourish. The last decade witnessed a significant upsurge in transactions through ATMs, as well as internet and
mobile banking.
The country's banking industry looks set for greater transformation. With the Indian Parliament passing the
Banking Laws (Amendment) Bill in 2012, the landscape of the sector has duly changed. The bill allows the Reserve
Bank of India (RBI) to make final guidelines on issuing new licenses, which could lead to a greater number of banks
in the country. The style of operation is also slowly evolving with the integration of modern technology into the
banking industry.
In the next 5-10 years, the sector is expected to create up to two million new jobs driven by the efforts of the RBI
and the Government of India to expand financial services into rural areas. Two new banks have already received
licenses from the government, and the RBI's new norms will offer incentives to banks to spot bad loans and take
necessary recourse to curb the practices of rogue borrowers.

Market size

The size of banking assets in India totalled US$ 1.8 trillion in FY 13 and is expected to touch US$ 28.5 trillion in FY
25.Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over FY 06-13. In FY 13,
total deposits were US$ 1,274.3 billion.
The revenue of Indian banks increased from US$ 11.8 billion to US$ 46.9 billion over the period 2001-2010. Profit
after tax also reached US$ 12 billion from US$ 1.4 billion in the period.
Credit to housing sector grew at a CAGR of 11.1 per cent during the period FY 08-13. Total banking sector credit is
anticipated to grow at a CAGR of 18.1 per cent (in terms of INR) to reach US$ 2.4 trillion by 2017.
In FY 14, private sector lenders experienced significant growth in credit cards and personal loan businesses. ICICI
Bank saw 141.6 per cent growth in personal loan disbursement in FY 14, as per a report by Emkay Global Financial
Services. The bank also experienced healthy growth of 20.8 per cent in credit card dues, according to the report.
Axis Bank's personal loan business also grew 49.8 per cent, with its credit card business expanding by 31.1 per
cent.










Investments

HDFC Bank and state-owned United Bank of India plan to tap the equity markets to raise funds to enhance capital
base and lending. HDFC Bank plans to raise Rs 10,000 crore (US$ 1.66 billion) while the board of Kolkata-based
United Bank will seek approval for raising about Rs 1,300 crore (US$ 216.47 million) by selling shares to increase its
capital base.
Export-Import Bank of India (Exim Bank) will increase its focus on supporting project exports from India to South
Asia, Africa and Latin America, as per Mr Yaduvendra Mathur, Chairman and MD, Exim Bank. The bank has moved
up the value chain by supporting project exports so that India earns foreign exchange. In 2012-13, Exim Bank had
lent support to 85 project export contracts valued at Rs 24,255 crore (US$ 4.03 billion) secured by 47 companies in
23 countries.
IndusInd Bank will soon begin its asset reconstruction business. The private-sector lender plans to partner asset
reconstruction companies (ARCs) for this venture. "I think our new initiative, which is going to launch in the next
two months, is about asset reconstruction. We will do asset reconstruction within the bank but in tie-ups with
ARCs. The business plan is ready. We believe a huge stock of assets is coming into the ARCs as a business area that
we need to look at and we will exploit," as per Mr Romesh Sobti, CEO and MD, IndusInd Bank.
Jammu and Kashmir (J&K) Bank plans to increase its presence outside India. The bank is looking to establish
branches in London and Dubai to enhance its relationship with current customers who have business interests in
West Asia and Europe. "We have a number of business relationships in these countries and it makes sense for us to
have a presence there," as per Mr Mushtaq Ahmad, Chairman and CEO, J&K Bank.


Government Initiatives

The RBI has announced a few measures in its bi-monthly monetary policy on June 3, 2014 which includes an
increase in the foreign exchange remittance limit to US$ 125,000 from the previous limit of US$ 75,000.
State Bank of India (SBI) has announced a one-year rural fellowship programme 'SBI Youth for India (SBI YFI)' for
2014 to draft the country's youth to become change agents in the country's rural regions. The programme is for
young professionals who are keen to leadthe change for a better India.
The RBI has simplified the rules for credit to exporters. Exporters can now receive long-term advance credit from
banks for up to 10 years to service their contracts. Exporters have to have a satisfactory record of three years to
receive payments from banks, who can adjust the payments against future exports.
The RBI has enabled overseas investors, including foreign portfolio investors (FPIs) and non-resident Indians (NRIs),
to invest up to 26 per cent in insurance and related activities through the automatic route.


Road Ahead

India's banking industry could become the fifth largest banking sector globally by 2020 and the third largest by
2025. These days, banks in India are turning their focus to servicing clients and improving their technology
infrastructure, which can help better customer experience and give them a competitive edge. The popularity of
internet and mobile banking is at an all-time high, with customer relationship management (CRM) and data
warehousing anticipated to drive the next wave of banking technology in the country.

Banking Sector in India
Growth in credit off-take Growth in deposits


Growth of ATMs Market share of bank group by deposits






Financial Services in India
Introduction

India's services sector has always served the Indian economy well, accounting for nearly 57 per cent of the gross
domestic product (GDP). Here, the financial services segment has been a significant contributor.
The financial services sector in India is dominated by commercial banks which have more than 60 per cent share of
the total assets; other segments include mutual funds, insurance firms, non-banking institutions, cooperatives and
pension funds.
The Government of India has introduced reforms to liberalise, regulate and enhance the country's financial
services industry. Presently, the country can claim to be one of the world's most vibrant capital markets. In spite of
the challenges that are still there, the sector's future looks good.
Market size
The size of banking assets in India reached US$ 1.8 trillion in FY 13 and is projected to touch US$ 28.5 trillion by FY
25.
Information technology (IT) services, the largest spending segment of India's insurance industry at Rs 4,000 crore
(US$ 665.78 million) in 2014, is anticipated to continue enjoying strong growth at 16 per cent. Category leaders are
business process outsourcing (BPO) at 25 per cent and consulting at 21 per cent.
Investments
During FY 14, foreign institutional investors (FIIs) invested a net amount of about Rs 80,000 crore (US$ 13.31
billion) in India's equity market, according to data by Securities and Exchange Board of India (SEBI).
Insurance companies in India will spend about Rs 12,100 crore (US$ 2.01 billion) on IT products and services in
2014, a 12 per cent increase over the previous year, according to Gartner Inc. The forecast includes spending by
insurers on segments such as internal IT (including personnel), telecommunications, hardware, software, and
external IT services. The Rs 1200 crore (US$ 202.47 million) software segment is predicted to be the fastest
growing external segment, with overall growth of 18 per cent in 2014.
The following are some of the key developments and investments in the Indian financial services sector:
About 75 per cent of the insurance policies sold by 2020 would be in one way or another influenced by
digital channels during the pre-purchase, purchase or renewal stages, according to a report by Boston
Consulting Group (BCG) and Google India. This report, Digital@Insurance-20X By 2020, predicts that
insurance sales from online channels will increase 20 times from present-day sales by 2020, and
overall internet influenced sales will reach Rs 300,000-400,000 crore (US$ 49.9-66.54 billion).
Export-Import Bank of India (Exim Bank) will focus more on supporting project exports from India to South
Asia, Africa and Latin America, as per Mr Yaduvendra Mathur, Chairman and MD, Exim Bank. The bank has
moved up the value chain by lending support to project exports so that India earns foreign exchange. In
2012-13, Exim Bank had supported 85 project export contracts valued at Rs 24,255 crore (US$ 4.03 billion)
secured by 47 companies in 23 countries.
Private-sector lender IndusInd Bank will soon begin its asset reconstruction business. It plans to partner
asset reconstruction companies (ARCs) for this venture. "I think our new initiative, which is going to
launch in the next two months, is about asset reconstruction. We will do asset reconstruction within the
bank but in tie-ups with ARCs. The business plan is ready. We believe a huge stock of assets is coming into
the ARCs as a business area that we need to look at and we will exploit," said Mr Romesh Sobti, CEO and
MD, IndusInd Bank.
Association of Mutual Funds in India (AMFI) has reported that the mutual fund industry's assets under
management (AUM) have gone past the Rs 10 trillion (US$ 166.37 billion) mark in May, 2014. The AUM of
the Indian mutual fund industry rose to Rs 10.11 trillion (US$ 168.19 billion) in May from Rs 9.45 trillion
(US$ 157.21 billion) in April.



Government Initiatives

In an effort to enable banks to provide greater choice in insurance products through their branches, a proposal
could be made which will allow banks to act as corporate agents and tie up with multiple insurers. A committee set
up by the Finance Ministry of India is likely to suggest this model as an alternative to the broking model.
The Reserve Bank of India (RBI) has simplified the rules for credit to exporters. Exporters can now receive long-
term advance credit from banks for up to 10 years to service their contracts. They have to have a satisfactory
record of three years to get payments from banks, who can adjust the payments against future exports.
The RBI has enabled foreign investors, including foreign portfolio investors (FPIs) and non-resident Indians (NRIs),
to invest up to 26 per cent in insurance and related activities via the automatic route. "Effective from February 4,
2014, foreign investment by way of FDI, investment by FIIs/FPIs and NRIs up to 26 per cent under automatic route
shall be permitted in insurance sector," as per the RBI.

Road Ahead

India is among the world's top 10 economies, driven by its strong banking and insurance sectors. The country is
expected to become the fifth largest banking sector in the world by 2020, as per a joint report by KPMG-CII. The
report anticipates bank credit to increase at a compound annual growth rate (CAGR) of 17 per cent in the medium
term which will lead to better credit penetration. Life Insurance Council, the industry body of life insurers in India,
has also estimated a CAGR of 12-15 per cent over the next few years for the segment.

Investor breakup Mutual Fund AUMs



Segment-wise breakup for Non-life Total HNWI liquid assets
Insurance premiums

Insurance Sector in India
Introduction

With 36 crore policies, India's life insurance sector is the biggest in the world. The sector consists of 52 insurance
companies, of which 24 are in life insurance business and 28 in non-life. The life insurance industry in the country
is projected to increase at a compound annual growth rate (CAGR) of 12-15 per cent in the next five years. The
industry plans to hike penetration levels to five per cent by 2020, and has the potential to top the US$ 1 trillion
mark over the next seven years.
The optimistic outlook is helped to a large degree by the Government of India's efforts to strengthen the sector.
The Union Cabinet in July approved a proposal to relax foreign direct investment (FDI) limit in the domestic
insurance sector to 49 per cent from 26 per cent, signaling the government's intent to draw capital and investment
into the sector.

Market size

The total market size of the insurance sector in India was US$ 66.4 billion in FY 13. It is projected to touch US$ 350-
400 billion by 2020.
India was ranked 10
th
among 147 countries in the life insurance business in FY 13, with a share of 2.03 per cent.
The life insurance premium market expanded at a CAGR of 16.6 per cent from US$ 11.5 billion to US$ 53.3 billion
during FY 03-13. The non-life insurance premium market also grew at a CAGR of 15.4 per cent in the same period,
from US$ 3.1 billion to US$ 13.1 billion.
Digital@Insurance-20X By 2020, by Boston Consulting Group (BCG) and Google India forecasts that insurance sales
from online channels will grow 20 times from present day sales by 2020, and overall internet influenced sales will
touch Rs 300,000-400,000 crore (US$ 49.63-66.18 billion).
Investment corpus in India's pension sector is projected to cross US$ 1 trillion by 2025, following the passage of
the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013, as per a joint report by CII-EY
on Pensions Business in India.






Key Investments

The following are some of the major investments and developments in the Indian insurance sector:
IGATE Corporation has bagged its largest multi-year deal ever, worth US $200 million, in the second quarter (April-
June) of 2014. "IGATE has signed a multi-year, platform-based contract with CNA Financial, which is America's
eighth largest insurance company to design, implement and manage claim and policy holder administration of
CNA's long-term care (LTC) business," as per an official.
Export Credit Guarantee Corporation of India Ltd (ECGC) has signed a memorandum of understanding (MoU) on
co-operation with the Export Credit Insurance Agencies (ECA) of BRICS countries. The MoU will help strengthen
collaboration among BRICS countries' ECA by setting up a framework of co-operation. This will help to support and
promote international trade between BRICS countries.
Indian insurance companies are expected to spend Rs 117 billion (US$ 1.93 billion) on IT products and services in
2014, an increase of a 5 per cent from 2013, as per Gartner Inc. The forecast takes into account expenditures of
insurers on internal IT (including personnel), software, hardware, external IT services and telecommunications.
Also, insurance companies in India are likely to spend Rs 4.1 billion (US$ 67.84 million) on mobile devices in 2014,
an increase of 35 per cent from 2013.
Kotak Mahindra Old Mutual Life Insurance Ltd has launched Kotak Assured Income Accelerator, a plan that takes
into account the ever-increasing cost of living by paying an increasing annual guaranteed income in the payout
phase. The product also gives the insured the convenience of three different payment and payout terms to suit
their different needs.
Future Generali India Life Insurance Company Ltd has launched Care Plus Plan, a pure term insurance plan. Future
Generali Care Plus is a simple protection plan, which offers financial security to the family at affordable rates. The
plan provides two options - Future Generali Care Plus Classic Option for cover up to Rs 2,500,000 (US$ 411,366.51)
and Future Generali Care Plus Premier Option for cover of Rs 2,500,000 (US$ 411,366.51) and beyond.
General insurance companies are starting to cover pre-hospitalisation expenses such as out-patient department
and wellness services, apart from the standard hospitalisation expenses. Additionally, these companies are
offering several other features such as Worldwide Emergency Cover, disease-specific covers, health maintenance
benefits, value-added services in the form of discounts, etc.










Government Initiatives

The Union Budget 201 4-15 increased the FDI limit in insurance to 49 per cent. The increase in the FDI limit could
help the insurance industry in two ways. One, this could help companies access capital more easily and, two, it
could act as a trigger for listing of insurance players, which will offer a better benchmark to value these companies.
In a bid to facilitate banks to provide greater choice in insurance products through their branches, a proposal could
be made which will allow banks to act as corporate agents and tie up with multiple insurers. A committee
established by the Finance Ministry of India is likely to suggest this model as an alternative to the broking model.

Life Insurance density Market share of major Companies in
Term of total life insurance premium collected





Break up-of non-life insurance Growth in life insurance premiums
Market in India




Road Ahead

The future of India's insurance sector looks good, driven by the country's favourable demographic, greater
awareness, supportive government which enacts policies that improve business, customer-centric products, and
practices that give businesses the best environment to grow. India's insurable population is anticipated to touch 75
crore in 2020, with life expectancy reaching 74 years. Life insurance is projected to comprise 35 per cent of total
savings by the end of this decade, compared to 26 per cent in 2009-10.

Indian Telecom Industry
Brief Introduction

Telecom services have been recognised the world over as an important tool for socio-economic development of a
nation. It is one of the prime support services needed for rapid growth and modernisation of various sectors of the
economy. India is currently the worlds second-largest telecommunications market and has registered exceptional
growth in the past few years. The reasons for growth of the telecom sector in India are reform measures by the
Government of India, active participation of the private sector, and wireless technology.
The National Telecom Policy 2012 (NTP-2012) was announced with the objective to maximise public good by
facilitating reliable, secure and affordable telecommunication as well as broadband services in India. This along
with the deregulation of foreign direct investment (FDI) norms have made the telecommunications sector one of
the fastest growing and a top five employment opportunity generator in the country. The telecommunications
sector attracted FDI to the tune of US$ 14,163.01 million in the period April 2000 March 2014.

Market Size

Indias GSM operators added 2.58 million rural subscribers in April 2014, taking the total to 297.16 million. Also,
Cellular Operators Authority of Indias (COAI) data suggests that the overall GSM subscriber base increased by 4.97
million in April 2014 taking the total GSM subscriber base to 726.90 million customers.
The COAI data also suggests that telecom provider Bharti Airtel provided the most number of customers in the
month of April, about 990,000 new subscribers followed by Vodafone and Idea Cellular.
It has been predicted by Ericsson that India's mobile subscriber base will grow from 795 million in 2013 to 1145
million subscribers by 2020.
Data traffic powered by third-generation (3G) services grew at 146 per cent in India in 2013, higher than the global
average, according to an MBit Index study by Nokia Siemens Networks (NSN).
With Bharti Airtel becoming the second largest telecommunications provider in Nigeria and Tata Communications
entering into strategic partnerships with countries such as Australia, Germany, Austria and Malaysia, it can be
observed that Indian telecommunication providers are doing quite well in the global market.

Investments

The telecommunications sector in India is rapidly growing and due to its potential, there has been a number of
investments in the recent past. Some of the notable few are as follows:
Aircel, in a move to expand its retail footprint in India, plans to set up 200 more XPRESS stores in the
country, thereby taking the total number of these franchisee-owned, franchisee-operated model XPRESS
stores to 500 by the middle of 2015.
Reliance Jio Infocomm has signed deals with Ascend Telecom Infrastructure and Tower Vision to share
their towers. Tower Vision has a portfolio of 8,400 towers while Ascend Telecom has 4,250. These deals
will help the telecom unit of Reliance Industries to roll out its much awaited high speed data and voice
services sooner and at a lower cost across India.
Vodafone India has extended its Project Samridhi to Karnal in rural Haryana, in a bid to boost sales and
provide employment opportunity to women in the region. Under the project, Vodafone has appointed
100 women, to sell e-top-ups and prepaid recharges.
Reliance Communications (RCom) has entered into inter-circle roaming partnerships with Aircel and Tata
Teleservices Ltd to offer 3G services on a pan-India basis. This agreement will enable RComs GSM
customers to access 3G services while on roaming even outside its network.
Tata Communications has entered into strategic partnerships with NEXTDC in Australia, Interxion in
Germany and Austria, and Pacific Link Telecom in Malaysia. These partnerships will help the company to
scale up data centre footprints in newer geographies.
Vodafone Business Services (VBS) launched managed video conferencing service for enterprises to offer
an experience of world class virtual face-to-face-like interaction with various participants anytime,
anywhere. The service offers a seamless conferencing experience and is independent of device and
network boundaries.









Government Initiatives

The Government of India has taken several initiatives to boost the telecommunications sector in India. Some of the
recent notable initiatives are as follows:
The Government of India has planned to establish a nearly 1,200-km direct subsea optic fibre cable link
between the Indian mainland and Andaman and Nicobar Islands to improve telecom connectivity in this
strategically located archipelago.
The Ministry of Communication and Information Technology is planning to extend basic mobile coverage,
including voice calling, in far-flung areas of eight northeastern states, at an estimated cost of over Rs
5,000 crore (US$ 843.5 million).
The Department of Telecom (DoT) has planned to set up an application development centre with an
outlay of Rs 1,000 crore (US$ 168.54 million) over a three-year period. The move aims to generate income
for the Universal Services Obligation (USO) fund in addition to the revenue share received from telecom
operators.
The Department of Space (DoS) plans to waive satellite bandwidth charges payable by Bharat Sanchar
Nigam Ltd (BSNL) to sustain the state-run telecommunication operations in the Andaman and Nicobar,
Lakshadweep archipelagos and strategic border regions across the northeastern states.
A top-level team from DoT has been sent to participate in a global convention in Israel to showcase India
as a world-class networks gear manufacturing hub. The team has been sent to showcase India's telecom
gear manufacturing abilities and policies, in a bid to boost bilateral trade.



Composite of Telephone subscribers in India Wireless and wireline revenue in India



Telephone subscribers in India Wireless market shares in India





Road Ahead

To propel the Indian economy forward, the government is using the telecom industry as an effective channel to
reach and serve its citizens. The NTP-2012 has targeted 100 per cent tele-density and 600 million broadband
connections by 2020. It has visualised doubling the current telecom capacity and increasing its reach to 95 per cent
of India while providing broadband level of internet capability.
DoT is promoting a vision of green telecom by which it plans to convert 50 per cent of urban and 30 per cent of
rural towers to renewable energy. Various policy initiatives by the Indian government have led to a complete
transformation of the industry in the last decade. It has achieved a phenomenal growth during the last few years
and is poised to grow further. It has also been speculated that this sector will generate about 4.1 million additional
jobs by 2020.







Cumulative FDI Inflows




Media and Entertainment Industry Sector of India

Brief Introduction

The Indian media and entertainment (M&E) industry is full of potential and has a tremendous impact on the
countrys economy. As per a FICCIKPMG report, Indias M&E industry reaches 161 million TV households; 94,067
newspapers; about 2000 multiplexes; and 214 million internet users, of which 130 million access the Internet on
their mobile phones.
The industry grows with each passing day and plays a significant role in creating awareness on many issues that
impact the masses. Indias population is over 1.2 billion. These numbers give the M&E industry in India a
tremendous opportunity for growth. A few years ago, the idea of reaching and engaging the countys population
seemed improbable. That scenario has completely changed today and the current industry is armed with digital
technologies, modern mobile devices, penetration of broadband internet and digital cinema, and considerable
backing from the Central Government.

Market Size

Indias M&E industry registered a growth of 12 per cent in 2013 and touched Rs 91,800 crore (US$ 15.27 billion).
The industry has the potential to grow at 14.2 per cent to more than Rs 1.78 trillion (US$ 29.61 billion) in the next
four years, as per a report by FICCIKPMG.
The television industry in India, which was estimated at Rs 41,720 crore (US$ 6.94 billion) in 2013, is projected to
increase at a compound annual growth rate (CAGR) of 16.2 per cent over 201318, to reach Rs 88,500 crore (US$
14.72 billion) by 2018.
With an estimated market size of US$ 5 billion, India is the 14th biggest advertising market globally, as per the
latest edition of the Gunn Report. Digital advertising is also expected to witness a CAGR of 27.7 per cent by 2018.

Media and Entertainment of India





Investments

The foreign direct investment (FDI) inflows in information and broadcasting (I&B) sector (including print media)
during April 2000 to March 2014 stood at US$ 3,712.72 million, as per the data released by Department of
Industrial Policy and Promotion (DIPP).
The following are some of the major investments and developments in the M&E sector:
Infosys has entered into collaboration with telecom company Orange to offer Internet TV to its customers. In a
statement, the company said that it will create a portfolio of interactive TV apps on the Orange Live-box Play. The
apps will be powered by Infosys Digitize Edge, an integrated digital content monetisation platform. Also, Infosys
will use this cloud-based platform to facilitate Orange to provide a range of lifestyle-centric video and contextual
over-the-top (OTT) services through its TV apps to improve viewer experience.
Vodafone India has entered into collaboration with Disney Indias Interactive business to bring about games and
applications for both smart and feature phones. Our association with Vodafone is a step forward in our strategic
relationship with them and creates an additional destination for exciting games and apps for their users, as per
Mr Sameer Ganapathy, Vice President and Head, Interactive, Disney India.
Zee Entertainment Enterprises Ltd will soon launch Zindagi, an entertainment channel featuring syndicated
content from Pakistan. While the first set of content will be sourced from Pakistan, the company is also actively
sourcing content from various geographies such as Turkey, Latin America, and Egypt, as per Mr Punit Goenka, MD
and CEO, Zee Entertainment Enterprises Ltd.
San Francisco-based digital music services company Rdio signed an agreement to acquire Pune-based music
streaming service, Dhingana, in March 2014. India is a tremendously vibrant market for music and culture and
one of the largest and most important in the world," as per Mr Anthony Bay, CEO, Rdio.
Guardian Corporation will establish a Dinosaur Park, which will be among Indias largest indoor theme parks with
more than 23 attractions. Its been over two decades since India became a part of the global economy, but we still
lack good entertainment destinations. We want to contribute in filling this gap by offering the design and
development services for amusement parks, theme parks and museums, said Mr Manish Sabade, Chairman,
Guardian Corporation.


Government Initiatives
Non-news channels, as per Mr Bimal Julka, Secretary, Ministry of I & B, Government of India. The Cabinet
Committee on Economic Affairs (CCEA) has given the go-ahead for the proposal of the Ministry of I&B with regard
to the 12th Five-Year Plan scheme of All India Radio (AIR) and Doordarshan Broadcasting Infrastructure and
Network Development at a cost of Rs 3,500 crore (US$ 582.34 million). The two primary components of the
proposal are the continuing schemes of the 11th Five-Year Plan and new schemes of the 12th Five-Year Plan. As
part of the 11th Plan scheme, the capacity of Doordarshan's Direct to Home (DTH) is being increased to 97
channels from 59 channels. During the 12th Five-Year Plan, the capacity is expected to further increase to 250
channels.
The Indian and Canadian governments signed an audio-visual co-production deal in February 2014. The deal would
help producers from both India and Canada to harness their artistic, technical, creative, financial and marketing
resources for co-productions and, subsequently, lead to exchange of culture and art among the two countries.
Further, the Centre has given the nod for licences to 45 new news and entertainment channels in the country.
Among those who have secured the licenses include established names such as Sony, Star, Viacom and Zee.
Currently, there are 350 broadcasters which cater to 780 channels. We want more competition and we wanted to
open it up for the public. So far, we have approved the licences of 45 new channels. Its a mix of both news and

Road Ahead

Indias M&E industry will continue to bank on the digital area in future. With a growing internet user base of over
200 million, the industrys potential to generate revenue is vast. In 2013, telecom companies started focusing on
data as a way to generating revenue. Also, advertising agencies competed with each other to acquire in the social
media and digital domains. These developments suggest a bright future for the M&E industry in the country.
It is also time for the M&E sector to start looking at opportunities outside India. Africa and the Middle East are two
of the fastest growing M&E markets, and Indian M&E companies would do well to explore these regions.
Exchange Rate Used: INR 1 = US$ 0.0166 as on June 27, 2014

Transportation (Railways, Roads & Other Transport)
Railways sector of India
Introduction

The Indian Railways is among the biggest in the world. It plays a major role in looking after the transportation
needs of the country, while also bringing together the diverse geographies and helping promote national
integration. The railway network is ideal for long-distance travel and movement of bulk commodities, being an
energy efficient and economic mode of transport.
With a total route network of about 64,600 km spread across 7,146 stations, with 19,000 trains operating the
routes every day, India's railway network is recognized as one of the largest railway systems in the world under
a single management.
Urbanisation is driving passenger growth in the country. Consequently, the Government of India has focused on
investing on railway infrastructure by relaxing norms and making investor-friendly policies. It is moving swiftly to
facilitate foreign direct investment (FDI) in railways to improve infrastructure for freight and high-speed trains.
Presently, private sector companies are looking to invest in rail projects, a development which is helped largely by
the government's approval of a policy in 2012, which enabled private ownership of some railway lines.


Market size

The total approximate earnings of the Indian Railways on originating basis during FY 14 were Rs 140,485.02 crore
(US$ 23.38 billion) compared to Rs 121,831.65 crore (US$ 20.28 billion) during FY 13. Earnings stood at Rs
12,064.46 crore (US$ 2.01 billion) in April 2014 as against Rs 11,010.98 crore (US$ 1.83 billion) during the same
period in 2013, an increase of 9.57 per cent.
The total goods earnings during FY 14 were Rs 94,925.02 crore (US$ 15.8 billion) as against Rs 82,852.54 crore (US$
13.79 billion) in FY 13. Earnings stood at Rs 8,204 crore (US$ 1.36 billion) the month of April 2014 as against Rs
7,624 crore (US$ 1.26 billion) in April 2013.
The total approximate numbers of passengers booked during April 2014 were 685.85 million and the total
passenger revenue earnings during the same period stood at Rs 3,406.76 crore (US$ 567.07 million).In the period
FY 07-13, revenues from the passenger segment expanded at a compound annual growth rate (CAGR) of 10.9 per
cent.




Investments

The following are some of the major investments and developments in the Indian railways sector:
The India Railways has decided to run premium trains on 36 new routes in an effort to cater to the
summer rush as well as gain extra revenue. Through premium trains, the transporter will look to provide
faster and comfortable travel to customers who are ready to pay a higher price. These trains will run on
corridors which lead to hill stations and religious places, such as Shimla, Jammu, Kathgodam,
Mahabaleshwar and Tirupati, among others.
Online railway ticket bookings almost trebled to reach 14.02 million units in March 2014, indicating that
people are increasingly adopting the digital medium to plan their travel. "The online booking of railway
tickets increased from 3.63 million in March 2013 to 14.02 million in March 2014, registering a year-on-
year (y-o-y) growth of 286 per cent," according to the monthly tracker of Internet and Mobile Association
of India (IAMAI) and IMRB.
The Metro rail link between Noida and Greater Noida has been given the go-ahead from the Urban
Development Ministry. The 30 km link will cost around Rs 5,000 crore (US$ 832.25 million), with
the construction work expected to commence after a Memorandum of Understanding (MoU) is signed
between the Noida Authority and the Delhi Metro Rail Corporation (DMRC).
Steel Authority of India Ltd (SAIL) has won contracts for supplying over 117,000 tonnes of rails through
successful bids for two global tenders floated by Rail Vikas Nigam Ltd (RVNL) for major upcoming
passenger rail line projects in India. The combined value of the contracts is over Rs 650 crore (US$ 108.18
million).
Commuters could be travelling in high-speed trains in India very soon, with the Indian Railways focusing
on incorporating new technology to trains. The first high-speed rail is likely to connect Mumbai and
Ahmedabad, two of western India's most important financial hubs. The train is also expected to bring
down travel time between these two cities to two hours, from the current eight hours. The Railways is
also trying to attain speeds of 160-200 km/hour on existing tracks.

Freight earning of Indian Railways Revenue Breakup of Indian Railways by
Segments






Passenger earning Indian Railways Gross Revenue of Indian Railways


Government Initiatives

The Railway Board is actively considering the implementation of the recommendations of the High Level Safety
Review Committee (Kakodkar Committee). The 106 recommendations made by the Committee pertain to general
safety matters, empowerment at working level, organizational structure, vacancies in critical safety category,
shortage of critical safety spares, human resource development with focus on education and training research and
safety architecture, among others.
The Union Cabinet has given the go-ahead for establishing a new rail coach manufacturing unit at Kolar, Karnataka.
The unit will produce 500 coaches per annum at an anticipated cost of Rs 1,460.92 crore (US$ 243.14 million)
excluding the cost of land, with active participation of the Karnataka government. The Ministry of Railways will
provide 50 per cent of the finances with the Government of Karnataka providing land, free of cost, and the rest 50
per cent of the project completion cost with escalation.
The Asian Development Bank (ADB) and the Indian government signed loan agreements worth about US$ 605
million for three separate projects, earlier this year. The projects will aim to improve rail services, power and roads
in the country. To enhance rail services along some of the most critical freight and passenger transport routes, a
US$ 130 million loan has also been signed, which is part of the US$ 500million Railway Sector Investment
Programme approved by ADB in 2011.

Road Ahead

The already massive network of the Indian Railways is growing. To meet this demand, an outlay of US$ 95.6 billion
has been approved for the sector by the Planning Commission for the 12th Five-Year Plan. Freight traffic also looks
likely to increase with investments and active participation of private sector companies. Additionally, investments
to the tune of US$ 42 billion are anticipated in metro rail networks in the country by 2020.


FREIGHT TRAFFIC PROJECTIONS ON DEDICATED FREIGHT CORRIDOR (IN MMT)


Roads of India
Introduction
India possesses the second largest road network in the world. The 4.7 million km network transports over 60 per
cent of all goods in India and 85 per cent of the country's total passenger traffic. Road activity has progressively
increased over the years as connectivity between cities, towns and villages in the country has improved.
This growth in automobiles and freight movement requires a road network good enough to carry the traffic. The
Government of India, perhaps seeing this need, has set aside 20 per cent of the total investment of US$ 1 trillion
for infrastructure during the 12th Five-Year Plan (2012-17), to develop the country's roads.

Market size

The value of roads and bridges infrastructure in India is anticipated to grow at a compound annual growth rate
(CAGR) of 17.4 per cent over FY 12-17. The country's roads and bridges infrastructure was valued at US$ 6.9 billion
in 2009 and is projected to touch US$ 19.2 billion by 2017.
As on March 31, 2012, India had 2,409 public-private partnership (PPP) projects across the infrastructure sector, of
which 874 were for roads and highways. Road construction projects awarded to build-operate-transfer (BOT)
companies recorded a CAGR of 17.1 per cent over FY 06-13.
The financial outlay for road transport and highways grew at a CAGR of 19.4 per cent in the period FY 09-14. For FY
14, the Planning Commission of India provided an outlay of US$ 6.9 billion for the road segment.

Key Investments

Some of the key investments and developments in the Indian roads sector are as follows:
IRB Infrastructure Developers Ltd has received the Letter of Award from National Highways Authority of India
(NHAI) for four laning of Yedeshi-Aurangabad section of NH-211 which totals about 190 km. The estimated cost of
this toll project is Rs 3,200 crore (US$ 532.64 million) and the project will be undertaken on design, finance, build,
operate and transfer (DFBOT) basis. The company has also bagged a Rs 2,300 crore (US$ 382.76 million) project for
four-laning of Kaithal-Rajasthan border section of NH-152/65 in Haryana. The construction period for the project is
910 days.
The Canada Pension Plan Investment Board (CPPIB) plans to invest about US$ 332 million in infrastructure projects
in India through an investment with Larsen & Toubro (L&T). The Toronto-based pension fund manager will initially
invest about US$ 166 million in L&T's unit, L&T Infrastructure Development Projects Ltd; it will invest an additional
US$ 166 million within 12 months of the initial investment.
Hindustan Construction Company Ltd (HCC) has bagged contracts worth Rs 726 crore (US$ 120.82 million). One
contract is a Rs 433 crore (US$ 72.09 million) order from Bihar Rajya Pul Nirman Nigam to construct a 2.9 km four-
lane bridge between Nasriganj and Daudnagar over the river Sone in Bihar. HCC also received orders totalling Rs
293 crore (US$ 48.78 million) from its businesses in the water, nuclear and industrial segments.
NHAI has started a portal where information related to all highway projects under PPP mode will be made
available. "NHAI proposes to place all information relating to projects taken up by them under private public
partnership mode in the public domain to be available on a link - www.nhai.org.in," as per an official statement.


Government Initiatives

The Indian government plans to set up a finance corporation with an amount of Rs 1 trillion (US$ 16.65 billion), in
collaboration with Japanese investors, to fund projects in the road segment. The Japanese partners are expected
to have a 26 per cent stake with assured returns of nine per cent, as per a source of the roads ministry.
The Government of India has approved road projects worth about Rs 40,000 crore, which include around Rs 20,000
crore (US$ 3.33 billion) highway projects in Jammu & Kashmir (J&K), Rs 15,000 crore (US$ 2.49 billion) road-
building projects in the Northeast, a Rs 6,000 crore (US$ 999.04 million) road network in Uttarakhand and the
realignment of roads in Himachal Pradesh.
The Ministry of Road transport and Highways and the Department of AIDS control, Ministry of Health and Family
Welfare have signed a Memorandum of Understanding (MoU) with the objective to provide HIV
preventive services to transport sector workers, by spreading awareness about HIV/AIDS, encouraging behavioral
change, conducting health education, training and service delivery, etc.






Road Ahead

India's rising population demands proper infrastructure. The Centre has helped in this regard through policies that
have attracted involvement from the private sector, which is now a key player in the progress of road
infrastructure in India.
The Indian Government plans to develop a total of 66,117 km of roads under different programmes such as
National Highways Development Project (NHDP), Special Accelerated Road Development Programme in North East
(SARDP-NE) and Left Wing Extremism (LWE). It has set a target of building 30 km of road a day from 2016.
Further, about two-thirds of NHDP road projects (ex-phase IV) have not been awarded as yet, thus offering a
massive opportunity to private players in the coming years.

Ports of india
Introduction

The Indian ports and shipping industry plays a crucial role in sustaining growth in the country's trade and
commerce. India currently ranks 16th among the maritime countries, with a long coastline of about 7,517
kilometers (km) with 13 major ports (12 government and one corporate) and about 200 non-major ports currently
operating on the western and eastern coasts of the country. According to the Ministry of Shipping, around 95 per
cent of India's trade by volume and 70 per cent by value happens through maritime transport.
Driven by new manufacturing and power projects and higher cargo traffic at ports, the sector is poised for
significant development. During 2013-14, India's major ports handled 555.50 million tonnes (MT) of cargo as
compared to 545.83 MT handled in 2012-13, registering a growth of 1.8 per cent.
The State governments have realised the strong growth potential and the increasing need for robust port
infrastructure, and have consequently provided sops and a favourable investment climate which are attracting
investments from private players into the sector.

Market size

Cargo traffic at Indian ports stood at 911.5 MT in FY 12 and is expected to touch 1,758 MT by FY 17. During April
and May 2014, India's major ports handled 95.87 MT of cargo as against 91.48 MT handled during the
corresponding period last year, an increase of 4.8 per cent, according to statistics released by the Indian Ports
Association (IPA).
Of the major ports, Mormugao Port posted highest growth in traffic (24.48 per cent) during April and May 2014,
followed by Mumbai Port (14.35 per cent), Kamarajar Port (13.90 per cent), V.O. Chidambaranar Port (13.67 per
cent) and Kolkata Dock System (12.36 per cent) as compared to the same period last year. In terms of volume,
Kandla port led the pack with 15.31 MT of traffic handled followed by Paradip port at 11.73 MT during the same
period.
In 2013-14, coal cargo traffic (thermal coal and coking coal) volumes rose by 20.6 per cent to 104.5 MT from 86.7
MT a year ago. Among commodities, there was an increase of 25 per cent in handling of fertilisers in April 2014 in
comparison to April 2013. Iron ore handling has also shown an increase of 16.8 per cent during the month.







Investments

The Indian ports sector received foreign direct investment (FDI) worth US$ 1,635.40 million between April 2000
and May 2014, according to the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and
Industry.
The ports sector in India awarded 30 projects in 2013-14 entailing an investment of over Rs 20,000 crore (US$ 3.32
billion), marking a threefold increase over the preceding year.
The following are some of the major investments and developments in the Indian ports sector:
Adani Ports & Special Economic Zone (APSEZ) has executed a definitive agreement with L&T Infrastructure
Development Projects Ltd and Tata Steel to acquire 100 per cent stake in the Dhamra Port Company Ltd
(DPCL) for Rs 5,500 crore (US$ 915.17 million).
The Jawaharlal Nehru Port Trust (JNPT) and the Port of Singapore Authority (PSA) have signed a
concession agreement for the Port's fourth container terminal worth Rs 8,000 crore (US$ 1.33 billion). It
currently operates container terminals in Kolkata, Tuticorin and Chennai ports, with a total capacity of 2
million twenty-foot equivalent units (TEUs). The fourth container terminal would have a capacity of 4.8
million TEUs.
Paradip port plans to set up hybrid cargo terminals - captive-cum-common user facility - as part of its
expansion plans. Paradip will be the first government port to offer this facility and will provide private
investors the flexibility to ensure optimum unitisation of the port capacity.
L&T Shipbuilding Ltd is diversifying its cargo handling capacity at Katupalli Port to include automobiles and
oil products in addition to container handling. Originally, the Katupalli port planned to handle a total of 25
MT of cargo, of which 24 MT was containerised cargo and the rest steel and project cargo.

Government Initiatives

The government has allowed FDI of up to 100 per cent under the automatic route for projects related to the
construction and maintenance of ports and harbours. A 10-year tax holiday has been given to enterprises engaged
in the business of developing, maintaining and operating ports, inland waterways and inland ports.
The Minister for Road Transport, Highways and Shipping Mr Nitin Gadkari said that his ministry will coordinate
with other ministries of Environment & Forests, Tourism, Power and Water Resources, River Development and
Ganga Rejuvenation for development of transport and tourism along the river Ganga.
The Cochin Steamer Agents Association (CSAA) will take the lead to improve the cargo throughput by organizing
marketing initiatives in the hinterland in association with the port management, terminal operator and various
other stakeholders. The Association has plans to improve the business through Kochi by attracting more cargo via
business interactive meetings. A 20 per cent growth target in container volume has been fixed for 2014-15.
The National Maritime Agenda 2010-2020 is an initiative of the Ministry of Shipping to outline the framework for
the development of the port sector. The agenda also suggests policy-related initiatives to improve the operating
efficiency and competitiveness of Indian ports.









Road Ahead

Increasing investments and cargo traffic point to a healthy outlook for port support services. These include
operation and maintenance (O&M) services such as pilotage, harbouring and provision of marine assets like barges
and dredgers. The Planning Commission of India in its 12th Five Year Plan expects a total investment of Rs 180,626
crore (US$ 30.05 billion) in the ports sector.
Through its Maritime Agenda 2010-2020, the Ministry of Shipping has set a target capacity of over 3,130 MT by
2020, largely through private sector participation. More than 50 per cent of this capacity is expected to be created
at non-major ports.
Visakhapatnam port looks forward to a bright year in 2014-15, as several development projects are on the verge of
completion, and the port expects to handle not less than 65 MT of cargo during the year, according to Mr GVL
Satya Kumar, Deputy Chairman, Visakhapatnam Port Trust.






Cargo trafic at Non-Profit major ports Indias external trade flows

Cargo trafic at major ports Containers trafic at major ports


Tourism & Hospitality Industry in India

Introduction

The tourism and hospitality industry is one of the largest segments under the services sector of the Indian
economy. Tourism in India is a key growth driver and a significant source of foreign exchange earnings. In India, the
sector's direct contribution to gross domestic product (GDP) is expected to grow at 7.8 per cent per annum during
the period 2013-2023.
The tourism sector in India is flourishing due to an increase in foreign tourist arrivals (FTA) and a larger number of
Indians travelling to domestic destinations. According to statistics available with the World Travel and Tourism
Council (WTTC), revenues gained from domestic tourism rose by 5.1 per cent in 2013 and is expected to increase
by 8.2 per cent this year. Hotels are also an extremely important component of the tourism industry. The Indian
hospitality sector has been growing at a cumulative annual growth rate of 14 per cent every year, adding
significant amount of foreign exchange to the economy.
The role of the Indian government, which has provided policy and infrastructural support, has been instrumental in
the growth and development of the industry. The tourism policy of the government aims at speedy
implementation of tourism projects, development of integrated tourism circuits, special capacity building in the
hospitality sector and new marketing strategies.


Market size

The total market size of the tourism and hospitality industry in India stood at US$ 117.7 billion in 2011 and is
anticipated to touch US$ 418.9 billion by 2022.
FTAs during the period January-June 2014 stood at 3.54 million as compared to FTAs of 3.36 million during the
corresponding period of 2013, registering a growth of 4.5 per cent. FTAs during June 2014 were 492,000 as
compared to 451,000 during June 2013, a growth of 11.5 per cent.
Foreign exchange earnings (FEE) during January-June 2014 stood at Rs 56,760 crore (US$ 9.44 billion)as compared
to FEEs of Rs 51,587 crore(US$ 8.58 billion)during the same period last year, registering a growth of 17.9 per cent.
FEEs during June 2014 were Rs 8,458 crore (US$ 1.41billion).
The number of tourists availing the tourist Visa on Arrival (VOA) scheme during January-June 2014 have recorded a
growth of 28.1 percent. During the period, a total number of 11,953 VOAs have been issued as compared to 9,328
VOAs during the corresponding period of 2013.

Investments

The foreign direct investment (FDI) inflows in hotel and tourism sector during the period April 2000March 2014
stood at US$ 7,348.09 million, as per the data released by Department of Industrial Policy and Promotion (DIPP).
The following are some of the major investments and developments in the Indian tourism and hospitality sector:



Government Initiatives

The Ministry of Tourism has launched a web-based Public Delivery System to ease the process of filing applications
by the travel trade service providers seeking recognition from the Ministry, and also to bring in transparency in
granting the approvals. All the applications will now be examined, processed and approved within 45 days from
the receipt of completed applications.
www.tripigator.com, a travel planning engine, was launched in Delhi in partnership with Incredible India
of India's largest integrated travel company Thomas Cook's human resources and staffing arm Ikya Group
plans to buy Hofincons InfoTech and Industrial Services. The deal is estimated to be valued around Rs 75-
100 crores (US$ 12.47-16.63 million).
Hyatt has announced the opening of Hyatt Raipur, its sixth Hyatt-branded property in India. "We are
delighted to introduce the first Hyatt-branded hotel to Raipur. Hyatt hotels are intimate, upscale hotels
that offer authentic hospitality in a vibrant environment," as per Mr Pablo Graf, Senior Vice President -
Operations, Hyatt Hotels & Resorts, South West Asia.
Lemon Tree Hotels plans to invest Rs 1,000 crore (US$ 166.35 million) to ramp up room capacity from
2,800 to 8,000 across the country by the end of 2017. "Our ramp-up will include rooms in our upscale
brand Lemon Tree Premier, mid-scale brand Lemon Tree Hotels and economy brand Red Fox," said Mr
Sumant Jaidka, COO, Lemon Tree Hotels.
Oberoi Realty plans to bring iconic luxury brand Ritz-Carlton to Mumbai. The American brand hotel is
being planned in Worli and is expected to come up by 2016 at a cost of Rs 750 crore(US$ 124.75million).
Movenpick Hotels and Resorts has signed a management agreement to operate a new hotel in Kochi, its
third property in India. The hotel will be owned by ITMA Hotels India Pvt Ltd, an associate company of
Jomer Properties and Investments.
Ministry of Tourism, on May 5, 2014. The website instantly generates personalised travel itineraries with fewer
inputs and significantly reduces users' efforts by replacing 10 tabs with one tab.
The Ministry has also launched a campaign 'Clean India' to sensitise all sections of the society on the importance of
cleanliness and hygiene in public places, particularly monuments and tourist destinations. The campaign is a blend
of persuasion, education, training, demonstration and sensitisation of all sections of the society.
The Ministry of Tourism has been making efforts to develop quality tourism infrastructure at tourist destinations
and circuits in the country. It has sanctioned Rs 4,090.31 crore (US$ 680.52 million) for a total number of 1,226
tourism projects, which includes projects related to Product/Infrastructure Development for Destination and
Circuits (PIDDC), Human Resource Development (HRD), Fairs and Festivals, and Adventure and Rural Tourism for
infrastructure augmentation.



Road Ahead

India is projected to be number one for growth globally in the wellness tourism sector in the next five years,
clocking over 20 per cent gains annually through 2017, according to a study conducted by SRI International.
The government's decision to introduce the electronic visa facility (e-Visa) will give a much needed boost to
inbound travel in India. Enforcing the electronic travel authorisation (ETA) before the next tourism season, which
starts in November, will result in a clear jump of at least 15 per cent, and this is only the start, as per Mr Madhavan
Menon, Managing Director, Thomas Cook India.

Expected share of Tourists by expenditure Direct contribution of tourism and
hospitality to GDP






Expected Segment wise revenu share Tourisms total contrbution to GDP





IT And ITeS
Introduction

The information technology (IT) and information technology enabled services (ITeS) industry has been one of the
key driving forces fuelling India's economic growth.
The industry has not only transformed India's image on the global platform, but also fuelled economic growth by
energising the higher education sector (especially in engineering and computer science). It has employed almost
10 million Indians and hence, has contributed a lot to social transformation in the country.
Furthermore, Indian firms, across all other sectors, largely depend on the IT & ITeS service providers to make their
business processes efficient and streamlined. The Indian manufacturing sector has the highest IT spending
followed by automotive, chemicals and consumer products industries.
Indian organisations are turning to IT to help them grow business in the current economic environment. IT is seen
as a change enabler and a source of business value for organisations by 85 per cent of the respondents, according
to a study by VMware.
The Indian IT-business process outsourcing (BPO) sector, including the domestic and exports segments, continue to
grow from strength to strength, witnessing high levels of activity both onshore as well as offshore. The companies
continue to move up the value-chain to offer higher end research and analytics services to their clients.




Market size

The growth in the Indian IT industry is expected to be around 30 per cent and the overall sales are projected to
touch US$ 17 billion in FY 15, according to Manufacturers' Association of Information Technology (MAIT).
The Indian IT infrastructure market - comprising server, storage and networking equipment - is expected to grow
by four per cent in 2014 to touch US$ 1.9 billion, according to Gartner.
The IT services market in India is expected to grow at the rate of 8.4 per cent in 2014 to Rs 476,356 million (US$
7.88 billion), according to International Data Corporation (IDC).
Indian insurance companies plan to spend Rs 117 billion (US$ 1.93 billion) on IT products and services in 2014, a
5 per cent increase from 2013, as per Gartner.
Indian enterprises are enhancing their IT security operations capabilities across departments. The Indian market
for security infrastructure and services is expected to grow from US$ 989 million this year to US$ 1.4 billion by
2017, as per Gartner.

Investment

Indian IT's core competencies and strengths have placed it on the international canvas, attracting investments
from major countries.
According to data released by the Department of Industrial Policy and Promotion (DIPP), the
computer software and hardware sector attracted foreign direct investment (FDI) worth Rs 60,503.21 crore (US$
10.01 billion) between April 2000 and June 2014.
Some of the major investments in the Indian IT and ITeS sector are as follows:
Tata Communications plans to invest more than US$ 200 million to double its data centre capacity in India
to 1,000,000 square feet over three years.
Wipro has bagged a US$ 1.2 billion outsourcing deal from Canadian utilities major ATCO. As part of the
deal, Wipro will take over the IT subsidiary of ATCO, ATCO I-Tek, in an all-cash deal worth US$ 195 million.
L&T Technology Services has bought 74 per cent equity stake in Thales Software India Pvt Ltd, to
strengthen its avionics business. This collaboration will enhance L&T's expertise in high-end avionics
software.
The Technopark-Technology Business Incubator plans to set up 'OpeniSpace', an open innovation space
on its campus, for innovators and young student entrepreneurs. The 'OpeniSpace' start-up space will
provide plug-and-play facilities with 4 to 12 seats along with Wi-Fi internet connectivity for young
entrepreneurs.
Mphasis has announced the launch of an e-Surveillance and Power Efficiency Solution 'ProTecht', in
partnership with Delta Power Solutions. The partnership will enable Mphasis Payment Managed Services
(MPMS), to offer the most comprehensive single window solution for ATM security and power efficiency
innovation across the ATM industry.
Apax Partners has bought a 1.5 per cent stake worth Rs 57.84 crore (US$ 9.56 million) in software
products and services provider Persistent Systems in a public market transaction.




Government Initiatives

The Government of India played a key role with public funding of a large, well-trained pool of engineers and
management personnel who could forge the Indian IT industry.
The Central Government and the respective state governments are expected to collectively spend US$ 6.4 billion
on IT products and services in 2014, an increase of 4.3 per cent over 2013, according to a study by Gartner.
Some of the major initiatives taken by the government to promote IT and ITeS sector in India are as follows:
The Government of India plans to reduce the requirement of the built up area from 50,000 square metres
to 20,000 square metres and capital conditions for FDI from US$ 10 million to US$ 5 million for
development of smart cities. It has allocated a sum of Rs 7,060 crore (US$ 1.16 billion) in the current fiscal
for the project of developing 'one hundred Smart Cities'. The Government of India also plans to launch a
pan India programme 'Digital India' with an outlay of Rs 500 crore (US$ 82.71 million).
The government has pledged to support the growth of domestic information technology capabilities in
both hardware and software focused on enabling the timely delivery of citizen services and creating
new jobs opportunities, especially in rural areas.
India plans to set up industrial parks in the pharmaceutical and information technology (IT) sectors in
China to strengthen India-China trade and investment ties.
The Government of India will develop new manufacturing clusters for electronic goods in eight cities as
part of its agenda to boost manufacturing, according to Mr Ravi Shankar Prasad, Union Minister for
Communications and Information Technology, Government of India.
More than 20 small and medium enterprises (SMEs) in the IT sector have recently received land allotment
letters from the Government of Punjab to set up their units with an investment of Rs 500 crore (US$ 82.71
million).




Road Ahead

Globalisation has had a profound impact in shaping the Indian IT industry with India capturing a sizeable chunk of
the global market for technology sourcing and business services. Over the years, the growth drivers for this sector
have been the verticals of manufacturing, telecommunication, insurance, banking, finance and, of late, the
fledgling retail revolution. As the new scenario unfolds, it is getting clear that the future growth of IT and ITeS will
be fuelled by the verticals of climate change, mobile applications, healthcare, energy efficiency and sustainable
energy. Traditional business strongholds will make way for new geographies, there would be new customers and
more and more of SMEs will go for IT application and services.
Demand from emerging countries is expected to show strong growth going forward. Tax holidays are today
extended to the IT sector for STPI and SEZs. Further, the country is providing procedural ease and single window
clearance for setting up facilities.

Market size of IT Industry of India Sector-Wise breakup of export revenue

Domestic IT market by customer segment Domestic revenue from IT and BPM

Comparision Bettween Primary, Secondary and Tertiary Sectors
Year Primary Sector Secondary Sector Tertiary Sector
1950-60 55.3 14.8 29.8
1960-70 47.6 19.6 32.8
1970-80 42.8 21.3 35.9
1980-90 37.3 22.3 40.3
1990-2000 30.9 23.3 45.7
2000-2010 21.8 24.5 53.7
2010-2014 15.7 27.4 56.9
Conclusion :

India has the second fastest growing services sector (Tertiary sector) in the world with a compound annual growth
rate at 9 per cent, just below China's 10.9 per cent, during 2001 to 2012, by Economic Survey.
Among the world's top 15 countries in terms of GDP, India ranked 10th in terms of overall GDP and 12th in terms
of services GDP in 2012.
India has the second fastest growing services sector with CAGR at 9 per cent, just below China's 10.9 per cent,
during the last 11-year period from 2001 to 2012, by Economic Survey.
It said that services share in world GDP was 65.9 per cent but its share in employment was only 44 per cent in
2012.
In India, the services sector had a high share in income at 56.9 per cent in 2012 with a lower share of 28.1 per cent
in employment, it added.
In 2013-14 the growth rate of the services sector at 6.8 per cent is marginally lower than in 2012-13. This is due to
deceleration in the growth rate of the combined category of trade, hotels, restaurants, transport, storage and
communications.
Some services like software and telecom were big ticket items that gave India a brand image in services.
Indications of revival in the world GDP and trade growth in general and of developed countries in particular, could
help in revival of the tourism and shipping sectors.
Further India need to revamp its port services as it does not have world class facilities.
Third-generation ships are not able to enter the harbour and goods have to be offloaded outside in smaller ships,
adding to costs. Its immediate focus should be on building world class ports providing world class services, by
Economic Survey.
Proposal has been initiated by Indian Railways, for making suitable changes in the existing FDI policy in order to
allow foreign investment in railways, to foster creation of world class rail infrastructure.
The proposal envisages allowing FDI in all areas of the rail sector except railway operations. Even in railway
operations, FDI is proposed in PPP projects, for suburban corridors, high speed train systems, and dedicated freight
lines, by Economy Survey.
While privatization of railways has been successful in some countries like Japan, it has failed in some others like
the UK.
So this proposal needs to be examined carefully and quickly to allow privatization/ FDI in areas where it is feasible,
by Economic Survey.




Source: - The Times of India