INDIAS GROWTH STORY AND ITS DRIVERS

Click to edit Master subtitle style BY: Bhola Singh(2011054) Dushyant Chaturvedi(201170) Esheeta Ghosh (201171) Gavaksh Mangla(2011080) Anurag Vinayak(2011092) Abdullah(2011244)
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The Indian Economy

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THE GROWTH STORY

India has a very mixed economy, ranging very old-

fashioned agricultural techniques to the state-ofthe-art Information Technology Industry that has transformed Bangalore into the IT capital of Asia. growth, people are flocking to invest in India and our people are growing steadily richer.

Recently India has enjoyed massive economic

India is the second fastest growing major economy

with a 7% to 9% increase in GDP per year. India is already the fourth largest economy in the world.
India has seen a huge amount of foreign direct

investment in the country, totaling 178 billion dollars in 2010 and is said to be one of the 3/4/12

THE GROWTH STORY Contd..

Indian companies have gone on a buying

rampage, with Tata Steel acquiring Corus, Mittal buying Arcelor and Tata buying Jaguar and Land Rover from Ford.

Every year Indias middle class is increased by

40,000,000 new members which shows that the wealth is truly entering society

The Bombay Stock Exchanges value has been

consistently rising, currently worth 54 lakh crore, the largest in South East Asia.
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INDIAS GDP GROWTH

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INDIAS GDP GROWTH RATE

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GDP GROWTH RATE SINCE 2004

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INDIAS PER-CAPITA INCOME

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WHAT IS DRIVING THIS GROWTH

Cnrb to t G w ( 02 o ti ui no r t 20 o h -3 o 07 t 20 -8 )
t a s otb oh r r np r y t e ma s en 6 % Rs et 1% 0 m uat r g a f cuin n 1% 6

oh rs r ic s t e ev e 7 %

tae rd 1% 4

b n in & s r n e a k g inua c 8 %

c m u ic t n o mn aio 1% 1 ra el et t , wes ipo saeo n r h f d e g & uin s wllin s b s es s r ic s ev e 8 %

c nt u t n o sr cio 1% 0

ar u uec o ) gic lt r ( r p 1% 0

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GROWTH DRIVERS
Agriculture Manufacturing Communication Trade Banking and Insurance Transport Construction Real Estate Other Services 3/4/12

OTHER SERVICES: RETAIL AND SUPPLY CHAIN

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RETAIL GROWTH IN INDIA

India is fifth most attractive emerging retail

market: a potential goldmine. industries(450 billion $).

Indian retail is largest among all 10% - Indias GDP. Growth rate 20-25% 8% - employment Potentiality to grow 637 billion $ by 2015.

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RETAIL FORMATS IN INDIA

Malls Specialty stores Discount stores Department stores Hypermarts / Supermarts Convenience stores Multi brand outlets

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RETAIL FORMATS CONTD.

Types of Retailers
Small/ Medium Size Retailer
1.

Large scale Retaile rs

1.Super Market.

Consum er Co-op Stores

1.Co-op stores.

Direct Mktg/Chan nel less Retailing

1.In home Selling.

Mobile Retailers, Hawkers. Convenience stores.

2.Departmental Stores. 2 .Sahakari Bhandars. 2.Telemarketing. 3.Mail Order sale. 3.Discount stores. 4.Manufacturers Showroom 5.Super stores. (Combination Stores,Hypermarkets) 4.Vending Machine

2.

3.

Specialty Stores

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GROWTH OF RETAIL IN INDIA

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GROWTH OF RETAIL IN INDIA CONTD

INDUSTRY REVOLUTION

Retailing in India can be traced to

emergence of the neighborhood "Kirana " stores catering to the convenience of the consumers. Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission 1980s experienced slow change as India began to open up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's 3/4/12 and Grasim first saw the emergence of

GROWTH OF RETAIL IN INDIA CONTD

1990s saw a fresh wave of entrants with a shift

from Manufactures to Pure Retailers. For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books. Post 1995 onwards saw an emergence of shopping centers. Targeted to provide a complete destination experience for all segments of society Emergence of hyper and super markets trying to provide customer with 3 Vs - Value, Variety and Volume. 3/4/12

GROWTH OF RETAIL IN INDIA CONTD

FACTORS FOR GROWTH OF ORGANISED RETAIL SECTOR

q Growth of Indian Economy: Second fastest q Emerging opportunities in service sector Capital no longer a constraint easy loans Increase in the young working population q Increasing working women population q Hefty pay pockets q Nuclear families in urban areas Changing Cultural Habits 3/4/12

CONTD ..,

Multiple drivers leading to a consumption boom:

Favorable demographics Growth in income Increasing population of working women Raising aspirations: Value added goods sales
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CONTD..,
Rural markets emerging as a huge

opportunity for retailers reflected in the share of the rural market across most categories of consumption
ITC is experimenting with retailing through its e-

Choupal and Choupal Sagar rural hypermarkets.

HLL is using its Project Shakti initiative

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leveraging women self-help groups to explore the rural market.

CHANGING SCENERIO OF SUPPLY CHAIN

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AGRICULTURE

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Agriculture (also called farming or husbandry) is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Share in GDP 2007-08 was 16.4% 2008-09 was 15.7% 2009-10 was 14.6%

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Factors Affecting the Agricultural Growth

GROWTH OF RETAIL IN INDIA IMPACT OF RETAIL ON AGRICULTURE &

AGRICULTURE.

CHANGES IN TECHNOLOGY. India produces 235 million tones f food grain frm

170 million hectares.

Monsoon dependent

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 Agricultural front , the organised

retailers are providing farmers with inputs.

Has increased the net realisations of

farmers with disintermediation for middlemen.

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IMPACTS ON AGRICULTURE AND AGRICULTURE LENDING CONTD

To provide the cheapest & best produce,

organised retail could help the Indian farmers directly & banks indirectly in agri. Lending .
Investment into cold storage chain will

result in significant efficiency on supply chain.

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IMPACTS ON AGRICULTURE AND AGRICULTURE LENDING CONTD

Entry of retail giants leads to

-greater investment in farm technology (Bharti, Pepsi,Reliance) -Aggregate demand for bank credit -Help bankers in credit expansion & monitoring
Contract farming spreads very fast

- Farmers to get better price - Improves farm production through modern techniques 3/4/12

Backward linkages
DEALERS OF SEEDS, FERTILISERS, PESTICIDES, ETC.

FARMER BANK Forward linkages

WHOLESALER RETAILER

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CONSUMER

STRATEGIES TO TAP THE GROWTH OPPORTUNITIES

Effective deployment of agriculture officers

with special target . to retailers.

Finance entire commodity chain from farmers Targeting standard accounts of other banks. Taking partnership route to drive growth in

agriculture.
Thrust on investment credit.
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STRATEGIES TO TAP THE GROWTH OPPORTUNITIES CONTD

n Innovative & need based products n Banks need to prepare big ticket loan n Linkage on the lines of farm to fork n Promotion of channel credit through

corporate customers .

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IN A NUTSHELL
q The huge potential in Agriculture sector & lack of sufficient rural & semi urban branches in private sector banks, the Nationalised Banks has huge scopes.. q It is certain that the competitive battlefield of bankers will shift in the near future. q Let us take AGRI. LENDINGS to a higher growth trajectory through new strategies and After all, the colour of money has always been green in India.
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MANUFACTURING
Industry accounts for 28% of the GDP and

employ 14% of the total workforce.

The Indian industrial sector underwent

significant changes as a result of the economic reforms of 1991, which removed import restrictions, brought in foreign competition, led to privatization of certain public sector industries, liberalized the FDI regime, improved infrastructure and led to an expansion in the production of fast moving consumer goods.
Textile manufacturing is the second largest
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Manufacturing contributes to 79% of FDI investment 27-29% of India GDP World's second largest small car market 53% of Indian exports

One of only three countries that makes its

own supercomputers

World's largest producer of milk, tea and

pulses and the worlds largest livestock population

Second largest producer of food including

fruits and vegetables.

Worlds largest diamond cutting and polishing

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centre and the second largest jewellery market.

KEY SECTORS: Auto Industry: The Indian auto industry is a USD 44 bn industry (Automotives is USD 34 bn and Auto components is USD 10 bn)

Chemicals: The size of chemical industry in India (Petrochemicals to Paints) is USD 30 bn

3/4/12 Electronics:The electronics industry is USD

Food Processing: A USD 70 bn industry growing at 9% to 12%

Gems & Jewellery: A USD 13 bn industry (Gold growing at 15% p.a and Diamond growing at 27% p.a)

Leather:

Industry size is USD 4 bn

Machine Tools: Industry Size is USD 225 mn

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Gems Indian manufacturing

is forecasted to grow Leather at 12%-14% over Jeweller the y next decade and sectors like of 75% mfg Automotive, Food exports Processing and Textiles Chemic als Pharmaceuticals are expected Engg be the to Goods growth drivers

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Indias liberalization, key policy interventions, competition and infrastructure build up have been key drivers This interplay has enhanced Indias competitiveness Indias manpower advantage, indigenous technology advantage have played a leading role in achieving domestic competitiveness

Regional FTAs, FDI in select sectors, stable currency, stable economic regime have been key drivers

Many Indian sectors (e.g. Textiles, Glass, Automotive, Jewellery, Leather, Agro based, Pharmaceuticals, etc) have achieved export competitiveness

India's manufacturing output is USD 450 bn

Indian manufacturing exports have been growing at a CAGR of 14% for the last five years

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Some other growth drivers for manufacturing

Joint ventures of Indian companies with

foreign companies (Maruti-Suzuki).

Education sector is growing, so it provides

skilled workforce for the industry(4 to 5 lac engineers per year)

Increased competition. Tax break provided by the govt. in certain

areas and setting up of SEZ. availability of funds.

Growth of banking sector has led to easy

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Telecom Sector Growth

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TELECOM SECTOR GROWTH DRIVERS Growth Drivers of the Indian Telecom Market:
High Disposable Income: The growth in GDP has

resulted in increasing disposable income among the individual population. Therefore the young Indian population is increasingly investing more money in various entertainment and communication services thus fuelling growth of the telecom sector. high mobility and staying connected is the prime driver for the entire category. This is true for people from different age groups and occupation. This innate need coupled with availability of handsets and connectivity at affordable price points has 3/4/12 triggered the growth of telecom in India.

Mobility and Connectivity: The growing need of

Operators are tailoring service packages Micro Prepaid Cards: Recharge options as low as for low-end 0.25) making mobile service INR 10 (USD users moreTime Validity: All operators offer a lifetime Life affordable like:
prepaid plan which maintains the phone number for life for free incoming calls if recharged every 3 or 6 months
Full Value Recharge: Talk time of value equal to the

recharge amount

Free In-Network Calls: Some operators have started

free unlimited local in-network calls people at a particular cost.

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Group Calls: Unlimited calls among a limited set of

Exponential Growth

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Monthly Mobile Subscriber Additions

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 3/4/12 Annual Additions(in millions) 5.23 17.49 19.49 27.86 64.14 85.27 113.26 178.25 227.12 Average Monthly Additions(in millions) 0.44 1.46 1.62 2.32 5.35 7.11 9.44 14.85 18.93

Long Distance Peak Tariff Rates (Rs/min)

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Local Calls Tariffs (Rs/min)

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Export Trade

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Exports over the years

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Under Duty Drawback Scheme relief of Customs and Central Excise Duties suffered on the inputs used in the manufacture of export product is allowed to Exporters. The admissible duty drawback amount is paid to exporters by depositing it into their nominated bank account. Duty exemption scheme Duty Exemption Scheme is an export promotion scheme and it enables import of inputs required for export production free of Customs duty. Advance Licences are issued under Duty Exemption Scheme to allow import of inputs, 3/4/12

LIST OF EXPORT PROMOTION SCHEMES (GROWTH Duty drawback scheme DRIVERS)

GROWTH IN INDIAS BANKING INDUSTRY

The Indian Banking sector has been successful in maintaining its growth trajectory due following factors:
low defaulter ratio least complicated financial products regular intervention by central bank proactive adjustment of monetary policy and so

called conventional banking culture, which helped the industry survive through global financial turmoil. Macro-level drivers
3/4/12 favourable demographics

GOVERNMENTS INITIATIVES

The Indian government is contemplating on

enabling public sector banks to raise lots of additional capital without the central authority losing control over them. For the purpose, the government is considering forming a single holding company to unite 21 state-run banks as it would provide room for innovation in capital infusion. corporate defaulters, the Government would introduce the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2001, during the Winter Session of Parliament. The new Bill, that could curtail lending rates for retail as well 3/4/12 as corporate loans, proposes amendments for nine

Moreover, to keep a check on home loan and

Road Ahead
Annual expenditure on information technology

(IT) will increase by over 50 per cent from current Rs 6,500 crore (US$ 1.33 billion) per year to Rs 10,000 crore (US$ 2.04 billion) per annum by Indian Banks in next couple of years. This investment would come as a part of the second phase of technological up-gradation by banks wherein they want to deploy technologies pertaining to customer relationship management (CRM), analytics and mobility. largest in the world by 2025 wherein its assets size is poised to mark US$ 28,500 billion by 2025 3/4/12

Indian banking industry would stand as the third

Transport Sector

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TRANSPORT SECTOR

ROADS: India has one of the largest road networks in the world,

aggregating to about 33 lakh kilometers at present. Though the National Highways, which is the responsibility of Central Government, has length of roads, carries over 40 percent of the total traffic across the length and breadth of the country.

Pradhan Mantri Gram Sadak Yojana boosted rural economy by linking villages to cities.

RAILWAYS: Indian Railways has grown into a vast network of 6,909

stations spread over a route length of 63,327 kilometers with a fleet of 8,153 locomotives, 45,350 passengers service vehicles, 3/4/12

Shipping: Shipping plays an important role in

the transport sector of India's economy. Approximately, 90 per cent of the country's trade by volume (70 per cent in terms of value) is moved by sea. India has the largest merchant shipping fleet among the developing countries and ranks 20th amongst the countries with the largest cargo carrying fleet with 8.83 million GT as on 01.06.2008 and the average of the fleet being 18 years.

Civil Aviation: Under the ministry of civil

aviation. The number of airports in India is 124.There is tough competition among the domestic airlines and number of international 3/4/12 players running the flights to major business

RE AL
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ES TAT E

Growth Drivers
The Indian real estate industry is expected to be valued at US$ 180 billion (INR 8,640 billion) by 2020. India has a young population. Urbanisation is increasing steadily. Growth in the services sector telecom, financial services and IT & ITeS has been significant. Household income is rising.

Multiple growth driv ers

High growth projecti ons

There is a significant shortage of lowIncre cost and affordable housing FDI of up to 100 per ased in the country. The cent is foreig Government of India (GoI) allowed under the n has announced low interest Wellautomatic route in invest rates for home loans up to defined most asset classes. ments INR 2 million. Meanwhile, regula several developers, tory attracted by the opportunity frame The GoI has well-drafted national- and state-level regulations for the this segment, have in work Indian real estate sector. launched affordable housing Some old laws are either being amended or repealed to introduce projects. reforms to the industry.

Advant age In di a

Rapid evolution of the sector

The real estate sector in India is on a rapid growth trajectory. In a short span of time, the industry has evolved from a highly fragmented and unorganised market into a semi-organised market, with a large number of listed companies.

Deman d for afford able housi ng

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Market overvie w

The real estate sector is a key growth driver of the countrys economy.The contribution of the residential segment alone to Indias GDP is around 5 to 6 per cent. The real estate sector is one of the highest FDI-attracting sectors in India, with recorded FDI inflow of more than US$ 8.9 billion (INR 403 billion) between April 2000 and September 2010. Favourable demographics (a young population and increasing urbanisation) and growth in the services sector, especially the IT & ITeS sector, have primarily driven growth in the real DLF, Unitech, Ansal Properties, K. Raheja Corporation and Parsvnath Developers estate industry. are among the major Indian players in the sector. In the last decade, FDI in real estate has increased due to the growing interest of foreign players in the Indian market. Over the last decade, many international players, including developers such as Emaar, Ascendas, Keppel Land,Tishman Speyer and Nakheel Group, and investors such as Morgan Stanley, OchZiff Capital, Citigroup, Goldman Sachs, JP Morgan,Warburg Pincus and Deutsche Bank, have entered the Indian real estate market.

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Ma seg rke men t ts

Residential space Commerci al (office) space

Real estat e secto r

Retail space Hospitality space Special economic zones (SEZs)

In recent years, the industry has evolved from a highly fragmented and unorganised market into a semi- organised market. The sector can be divided into residential, commercial, retail and hospitality asset classes.

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Growth Drivers in Various Segments

Residential Space
Rapid urbanisation the urban population is estimated to reach 590 million by 2030. Decreasing household size growth in the number of nuclear families is leading to an to be home to 91 million middle-class households by 2030. The growing working age population in the 1560 age group is expected to reach 918

Commercial Space

The demand for affordable housing is growing, which is a priority segment for both the Rapid urbanisation the urban population is estimated to reach 590 million by 2030. Decreasing household size growth in the number of nuclear families is leading to an to be home to 91 million middle-class households by 2030. The growing working age population in the 1560 age group is expected to reach 918 The demand for affordable housing is growing, which is a priority segment for both the

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Growth Drivers in Various Segments Retail Space Contd..

Consumerism is increasing on the back of rising disposable income. Organised retailing has grown. The entry of international retailers has boosted industry growth. Expansion by domestic retailers has also given impetus to the industry.

Hospitality Spacewitnessed robust demand growth, primarily due to The hospitality segment has
strong growth in India is becoming increasingly popular as a medical tourism destination. International sporting events such as the Cricket World Cup and Formula 1 in 2011 are expected to According to a research by the World Travel & Tourism Council, travel and tourism demand in India is

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Growth Demand pull factors drivers

Robust and sustained macroeconomic growth. Upsurge in industrial and business activity, especially in new economy Favourable demographic sectors. parameters. Significant rise in consumerism. Rapid urbanisation.

Supply push factors

Policy and regulatory reforms (100 per cent FDI relaxation). Positive outlook of global investors.

Growing Indian real est ate

Fiscal incentives to developers. Simplification of urban development guidelines. Infrastructure support and development

Imp options at affordable act rates. interest

Significant rise in demand for

Availability of a range of financing

Imp initiatives from the GoI. act of several domestic and Entry

Increasing occupier base.

office/industrial space. for new avenues Demand for

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entertainment, leisure and shopping. demand for new Creation of housing.

foreign players; increasing competition and consumer Easy access to project-financing affordability. options. Increased developers risk appetite and largescale development. Improved quality of real estate assets. Development of new urban areas and effective utilisation of prime land parcels in large cities.

Opportunities
The long-term view on the Indian real estate industry is positive, as fundamental demand drivers such as increasing urbanisation, favourable demographics, growth of the services sector are still and rising incomesAccording to the Eleventh Five Year Plan (20072012), the housing shortage intact.
Major housing shortage in urban areas was estimated at 24.7 million units in 2007, of which more than 88 per cent was in the economically weaker section (EWS). Meanwhile, the housing shortage in rural areas was estimated at 47.4 million units in 2007. For the Plan period, the total housing requirement (including backlog) is estimated at 26.5 million units.

Retail space expected to increase in rural markets

This provides real estate developers with ample growth opportunities, as unmet demand remains significant. Growth of the services sector and organised retail, increasing urbanisation, rising income levels, contracting household sizes and the easy availability of home loans are key growth drivers of the industry. India has one of the largest number of retail outlets in the world. In the past few years, retail development has been taking place not only in major cities and metros, but also in tier-II and tier-III cities. Going forward, companies are expected to tap rural markets as their key growth drivers. This is expected to increase the demand for retail outlets in rural areas.

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SOME MORE GROWTH DRIVERS

Schemes like MNREGA which created lots of

jobs for rural people.

Then huge growth in BPO & IT industry

because of outsourcing from west.

Setting up of SEZ Large growth in education (MBA &

engineering colleges)
Indian economy is driven by consumption and
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is less dependent on exports like that of china.

BIBLIOGRAPHY
www.indiastats.com www.wikipedia.com Economic Growth by Pulapre Balakrishnan Indian Retail Industry-Its Growth, Challenges And

Opportunities- An Article by Dr. M. Dhanabhakyam.

Financing Agriculture-A Journal of Agriculture &

Rural Development, Jan-Feb-2008 Issue. Economics.

Morgan Stanley Research Publication, Nov.24, 2010 Sources: Confederation of Real Estate Developers

Association of India (CREDAI) website, accessed 12 3/4/12 March 2010; Ernst & Young-FICCI Real Estate Report

Thank You
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