ROARING INDIAN TIGER

ROARING INDIAN TIGER
In January at the World economic forum in davos,switzerland, an extremely fruitful national branding campaign of india was done by the CII(Confederation of indian industry).Its slogan “India everywhere”.At Times Square,NY, where even the biggest brands don’t get an oppurtunity to showcase their products,brand india was given a new dimension.”Incredible India!”. India has plunged itself right into the global arena and fighting it out succesfully with the big boys of the world.trully india must have never seen such a golden era knocking at it’s door but now every other global company wants an oppurtunity to get hold of the india’s door knob as everyone makes a beeline to tap a robust economy in the making.
The economy swelled by 8.2 per cent last year, at a slightly better rate than 8.1 per cent, CSO (Central Statistical Organization) had estimated in February, positioning India as the world’s second fastest growing economy after the dragon, China’s impressive 9.8 per cent. Seven Indian firms have been named as the emerging global contenders to the world’s top-notch companies by S&P (Standard and Poor’s) further strengthening India’s position as a global player and a force to be reckoned with. The annual list consists of 300 mid-size publicly traded companies spreading across 32 countries and 10 sectors that are expected to pose as the biggest contenders to the world’s top companies. Nicholas Piramal, Siemens India, Oriental Bank of Commerce, Chennai Petroleum, UTI Bank, Bharat Forge and Punjab National Bank have found a place in the S&P Global Challengers list.
CHART NO.1.GIVEN IN PRINTOUT.



India produces over 70,000 diploma holders and 850,000 graduates every year. Indian institutes of medicine, management and engineering produce around 250,000 graduates every year. In addition India,
produces 4 lakh engineers and overall close to 7,00,000 university students graduating in science and engineering way ahead of china and the US. The number of UGC-recognized universities augmented from 27 in 1950-51 to 272 in 2001-02; colleges from 580 to 11,100 in the same period. The number of engineering colleges has increased three folds in the last ten years, from 400 to 1,200.
India’s economy seems to be on the rampage and to provide a fitting testimony to it is the increase in consumption of crude oil. India is growing at humongous pace and is one of the world’s fastest growing purchasers of crude oil. India’s share in oil consumption has increased from 1.8% in 1990 to 3.7% in early 2006.India recorded growth of 100.3% between 1990-2003 as compared to an overall world’s growth of 17.9%.

OIL CONSUMPTION (million barrels per day) CHART NO.2 GIVEN IN PRINTOUT.

The fact that India is a roaring tiger comes from the fact that India’s proudest son L.N.Mittal has successfully not only established the world’s largest steel company by acquiring Arcelor to make the world’s first 100 (million ton capacity) steel company but also by putting brand INDIA in the global map where India in the modern era never takes a backseat. Also that the world’s second largest cola company PepsiCo has Indra Nooyi as its CEO speaks volumes of the India emerging as a global power. The presence of six Indian companies in the global fortune 500 lists including IOC (Indian oil corporation) just outside the global 150 suggests that India is ready to emerge as a strong player in the world market.
The recent acquisitions by the TATA group including the largest overseas deal of $677 million to acquire 30% of energy brands inc to get hold of the American market including the around $200 million acquisition of eight’o clock coffee earlier sets the tone that Indian companies no longer just make up the numbers but also interested in moving up to the head of the order. In 2005, Boeing received orders worth $15 billion from Indian carriers, including an order for 68 airplanes worth $11.4 billion from state-run Air India in the Paris Air show dominated by indian high flyers.
India is one of the largest automobile markets trailing behind China and the US. The Indian passenger car market is growing at a furious pace and it recently crossed the 1 million mark for the year ended 2005.the burgeoning middle class is attracting carmakers that were reluctant to enter India. But now even the profitable of companies would not want to fritter away the opportunity to enter India. Lamborghini, Bentley, Rolls Royce, Porsche all have arrived by 2005 and have big plans for the Indian automobile market.

Automobile domestic sales trends.

Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 509088 541491 696153 820179 882094
Utility Vehicles 104253 113620 146388 176360 194577
MPVs 61775 52087 59555 65033 66366
Total Passenger Vehicles 675116 707198 902096 1061572 1143037

Stocks markets are the perfect indicators of a country’s economic progress. The 30-share benchmark stock market index (Sensex) has nearly quadrupled from 3,300 in March 2003 to 12,200 in September. It is slated to increase by 20 percent over the next few years. The BSE (Bombay stock exchange) and the NSE (National stock exchange) have maintained their world rankings of 5 and 3 respectively.
CHART NO.3 GIVEN IN PRINTOUT



global investors are making a beeline to make investments in india’s stock markets and they sure are betting on india as their next money spinning option.
The telecom industry has never been on such a high before. India has recently joined the 100 million mobile club joining the likes of China and the US.teledensity levels has increased to 16% and in august 2006,Indian telecom operators added 5.9 million users as against 5.19 users of china to set the record for adding the highest numbers of new mobile subscribers in august.
India is a very young nation with almost 50% of the population under 25 and 25% of all people in the world, under the age of 25 live in India. The spurt in growth that India has been witnessing in the last half a decade or so is for sure to be carried forward by the young brigade of today in the next couple of decades. India has a great savings rate of around 28%, which in turn will fuel investment. Quotas and tariffs have been brought down and exports are growing at 20% annually. India is now plump with foreign reserves with over $160 billion in august, 2006.
India thus with its youthful vigour is ready to take on the world and prove a point in the coming century to the world under whose subjugation it had been all these centuries.

PRODIGOUS GROWTH IN OUTSOURCING.

Outsourcing is the where India has plunged and propelled itself into the global arena. India has copious and proficient English speaking manpower only second to the US in terms of English speaking pool and the fact that 50 percent of Indian companies have put in place diverse levels of ISO (The International Organization for Standardization) which has created sets of quality standards such as ISO 9001:2000,ISO 9001: 2001.In a world where IT has become the spine of businesses worldwide, 'outsourcing' is the process by which a company dispenses part of its work to another company, making it accountable for the implementation and design of the business process under strict advice regarding requirements and specifications from the outsourcing company. This process is beneficial to both the outsourcing company and the service provider, as the outsourcer is able to reduce costs and bring about upsurge in quality in non core areas of business and utilize his expertise and abilities to the maximum.
And this is where Indian companies fit in best and has resulted in a $17.2 billion Indian outsourcing industry. According to Gartner, a market research firm, the magnitude of the global BPO market by 2007 would be $173bn, of which $24.23bn would be outsourced to offshore contractors. Out of this, India has the capability to make $13.8bn in revenue. That’s an amazing amount of moolah raked in by India.
India is even now the No. 1 destination for that work for a rising number of American companies. India's rock-bottom wages just and an amazing pool of talented manpower that speaks English are some of the reasons that attract US companies to outsource their businesses in India. The average annual income in the US is $42,027 versus a paltry average annual income of $737 for India. An American college student earns five times more than his Indian equivalent. And the Indian student is willing to put in 12-hour per day, six days a week. The end result being that U.S companies is supposed to employ more than 15 lakh service workers in India by 2008, a threefold increase from present day scenario.
India's outsourcing income rose 32 percent to reach US$6.6 billion in the second quarter of 2006. India thus continues to remain the most attractive terminus for Western companies to transfer their back-office work. Such is the prodigious growth of Indian BPO companies that India’s numero uno third party BPO WNS raised $89.5 million from its IPO and its share price jumped 7% on the initial day itself. This is ample testimony to the fact that US investors have huge faith in the BPO firm WNS and the Indian BPO scenario.
While it might be despair for the UK workers, ringing cash for Indians. Orange is closing a call centre in Peterlee, Durham. The company had originally proclaimed plans to cut 100 jobs in Solihull, West Midlands while generating 300 new jobs in India, where it has a 1,000 people are already employed.
Outsourcing of business processes like billing and customer support started towards the end of the 1990s when MNCs established wholly owned subsidiaries. Some of the earliest players in the Indian market were GE Capital and British Airways. The ITES or BPO industry is a budding and juvenile sector in India. Although the arrival was late, the industry has grown astoundingly and has now become an integral part of the export-oriented IT software and services environment. MNCs formed the lion’s share of the ITES\BPO sector but it gradually gave way to leading it software organizations and third party service providers. Today, Indian companies are offering an array of outsourced services ranging from transcription, to Web sales, marketing, billing services and database marketing, tax processing, transaction document management, accounting, HR hiring, biotech research and customer care.
The central government realizing the potential of the ITES\BPO sector established ‘Export Enterprise Zones’. The central government is providing support to combat various problems (chief being attrition problems). Tax holidays are now being provided to ITES\BPO sector. Everything seems to be in the right direction for the Indian ITES\BPO sector.
NASSCOM (The National Association of Software and Services Companies) acts as a consultant for the ITES/BPO sector and conducts various research activities, which has resulted in regular inflow of moolah by foreign companies. During 2003-2004.the ITES\BPO sector realized a 54 percent growth in revenues. India's portion of the global offshore outsourcing market for software and back-office services is 44%. According to the National Association of Software Companies (Nasscom), India’s premier trade body of the IT software and services industry, technology and IT services exports in India were worth $17.2bn (£9.5bn) in the year ended March 2005, a rise of 34.5% over the previous year. A further increase of 30% in exports is predicted in the next twelve months, to reach $22.5bn. The US accounts for 68% of Indian exports.
The Indian ITES\BPO segment continued to rally by raking in strong year on year growth of 37% for the financial year 2005-2006.The growth is being driven by a steady increase of offerings that is beyond their existing service lines. The Indian IT/BPO segment is expected to employ over 1.1 million Indians by the year 2008. In terms of job creation, the ITES-BPO industry is expanding at over 50 percent. In 2003-2004 close to 70,000 jobs were added in the ITES/BPO sector. The growth story of the ITES\BPO sector is complementing employment numbers as well. The figures below by NASSCOM show the upturn in employment figures with each passing financial year.

EMPLOYMENT FIGURES IN THE ITES\BPO SECTOR.CHART NO 1 GIVEN IN PRINTOUT.

EXPORTS (ITES\BPO) IN USD BILLION.CHART NO.2 GIVEN IN PRINTOUT.



After BPO, India is turning into a global hub for KPO (Knowledge Process Outsourcing). KPO would grow at 46 percent to become a 17$ billion sector by 2010 out of which 70% that is about $12 billion will be outsourced to India.KPO entails high-end processes like patents, investment research, property rights, valuation researches. Companies are shifting towards providing high-end services, which includes R&D (research and development) and even providing legal support.
Global companies that have invested in research and development in India include General motors; Motorola as well as pharmaceutical majors like Pfizer and GlaxoSmithKline.Many Indian pharmaceutical companies have tied up with foreign companies in co-developing drugs through clinical trials and research.
India’s large pool of lawyers who have knowledge about the British legal system offer legal services are cornering a miniscule share in the foreign market by doing legal research at good rates thus opening up a whole new segment of legal outsourcing.
The service provided by many Indian companies is of good quality and provided at a reasonable cost. Foreign companies are attracted towards outsourcing their business in India because of low rates but stay in India for their quality services and the future of outsourcing is upbeat for India

indian realty boom

Real estate has always been about location. Nevertheless, over the years, it’s becoming more about name. Driven by optimistic growth in the economy, real estate in India is booming. India has been one of the great places for such a thing to happen. Cities lying lifeless or inactive for decades are suddenly coming alive with sounds of giant hammers striking at old structures to pull them down and making space for new buildings to come up.
The government was devoid of the funds or the facilities to meet the escalating demand for houses for all the people. Thus the government of India has momentum to the construction and development sector by allowing 100% foreign direct investment (FDI) under the automatic route in order to induce investment in the vital infrastructure sector.
Real estate development in India focuses on two primary areas: retail and residential. Analysts have said that the size of the Indian real estate market is about $15bn, and that it’s currently growing at a pace of about 30% annually. Much of the growth is due to the boom in IT and IT-enabled services, which need fully developed properties. This sector is also projected to require more than 66m square feet of space over the next five years.
The commercial property market has also been growing fast, almost at a compounded annual growth rate of over 30% in the past five years, with the demand for office space estimated to rise to over 15m sq feet in ‘05, from over 3m sq feet in 1998.A major boost received by the Indian realty sector is that the global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets and envisaged a remarkable 20% growth rate for the organized retail segment by 2010.
Various developers and builders are working overtime to satiate the demand for all breeds of property — residential, commercial and retail. Triggered by a robust economy, middle class disposable income, credit friendly environment, and sunrise sectors like retail, favourable income tax treatment of home loans and the government’s infrastructure friendly policies, they all want to leverage the current property boom.
Just look at the real estate stocks, viewed with trepidation until two years ago, going through the roof.In the same period, Mahindra Gesco surged from Rs 140.70 to close at 740.30 (september16th), despite a 6.20% drop from the previous day’s close.
The current cumulative demand for real estate ranges from 120 - 151 million sq ft, and is likely to touch around 1,055 million sq ft by 2010. By then, the capital requirement will have bloated to $68 billion.
The C&W(cushman and wakefield) study says that urban India alone requires 12 million housing units with scope for 400 townships in 5 years across 30-35 cities, each with a 5 lakh population. Property consultants say that last year, around 24 million sq ft of new commercial land was absorbed nationally, accounting for almost Rs 6,600 crore of capitalisation.

An even more heartening fact is that mortgage credit is only 6% of India’s gross domestic product (GDP). Compare this with 18-25% in Hong Kong and Malaysia and 65% in the US. Also, the average age of the Indian home owner has slid from 45 years to 27 years. And the mortgage has gone up from 10 to 20 years.
A recent study has revealed that more than 60 percent of the Fortune 1000 corporations are off shoring to India either directly or indirectly. L.N Mittal known as the (steel numero uno) who has just pulled of a historic deal with Arcelor (the second largest steel company in the world) to establish the first 100 million ton capacity steel company in the world cant resist the temptation of taking a plunge into the Indian realty market. LNM IV Ltd will acquire a 10-15-pct stake in India bulls Housing Finance, a fully owned arm of India bulls.
US-based real estate company Hines plans to invest over $300 million (over Rs 1,300 crore) over the next 4-5 years to develop projects in association with local partners. Hines, which manages about $12.5 billion of property across various countries, is targeting to develop various residential as well as commercial projects in the country.
Indian real estate industry has received a positive complement of sorts. India’s real estate industry has made impressive strides in becoming a more transparent sector over the past 2 years said Jones Lang LaSalle's in its latest edition of Real Estate Transperency Index (RETI). India has moved up from low transparency market to semi-transparency market. India's legal regulatory framework, professional standards and transaction process have been counted as positives. Jones Lang laSalle's RETI places India among the top 10 globally improved real estate markets.
IT-BPO companies account for 78% of total commercial space absorption in India. IT-ITeS companies acquire currently about 130 million square feet and the demand by them is expected to shoot up to 500 million sq ft by 2010. Several big BPO-Ites firms have closed huge property dealings that include lucent technologies, which acquired 350,000 square feet in Bangalore; TCS closed a 300,000 sq ft deal in Chennai, Satyam (200,000 sq ft-Chennai), Wipro (154,000 sq ft-Chennai) and CSC (125,500 sq ft-Gurgaon).
According to Nasscom-McKinsey data, over 1 million more people will be added in the IT-ITeS sectors by 2010. This will result in a demand for over 100 million sq ft of office space by 2010.
A population of 1.1 billion and a workforce of 496.4 million serve a great potential for real estate investors in India. The talent pool of intellectual capital and cost effectiveness gives India a competitive edge in the real estate scene. Relaxation of FDI rules and tax incentives for NRI s, the Government has for sure encouraged increase in foreign capital. Global investors investing in real estate India can certainly look for a 25% ROI.
Increase in mass consumption, shifting trends in the pattern of consumption of luxury goods and purchasing power ,corporate houses have ventured into retail in a big way. Take the case of RPG Spencer’s largest presence in South India with FoodWorld, MusicWorld and Health and Glow. Apart from this there have been other major players like Birlas, Tatas and now Reliance is thinking on similar lines.
There has been more than 40% rise in realty prices in the past year.in markets like bangalore,kolkata,chennai and pune, property prices have gone up by 50%.several BPO companies have moved operations to tier II cities like hyderabad and kochi to cut costs. Properties with great potential are being leased out to multinationals, large corporates, banks or embassies are the most in demand. In Mumbai and Delhi, lease rentals are as high as 10-13% of the value of a residential property and 13-14% for furnished apartments and offices. Residential property prices have gone up by 30-100% in Delhi.
Kolkata, Gurgaon, Bangalore, noida, Chennai and hyderabad steer the business process outsourcing (BPO) boom in the country with several towers in their heart. Gurgaon, for instance, is peppered with abundant office buildings, shopping malls and residential highrises in various stages of completion to cater to the ever-rising demand of the succesful middle class. Multiple expanse of land in Noida and Gurgaon, which were lying in vain just a year ago, have unexpectadly sprung to life, being transformed into residential or commercial property.
The construction growth is at an unparalled scale in India to meet the mounting requirements of India's high-tech sector. It's a building boom where 70-80% of the demand is being led forward by software services and (BPO)business and process outsourcing companies.
To top it all, a US $I billion project that is slated to put india on the pinnacle of the world. The world’s tallest building with 135 stories at noida on the outskirts of delhi is a great essence of a rapidly growing and resurgent india and also states the condition of the energetic indian real estate sector.It is to be built on a 140 hectare plot and it would be 710 metres high which would easily surpass the 508 metre high Taipei 101 by 202 metres.this US $1 project is slated to be open for business by 2013.

india on the rise

India is soaring across the board. It not only is clocking over 8 percent growth but with it is also attracting substantial foreign direct investment. India substituted the United States as the 2nd most attractive FDI location; up from 3rd place in 2004 and reaching it’s highest position ever. India’s software and it sector has attracted the eyeballs of many foreign investors but global investor interest in other areas is building up. India has raised FDI caps in the telecom, banking, petroleum, aviation and other sectors.
Foreign direct investment (FDI) in India leapt 41.5% in the financial year 2005-06, figures released April 29 .FDI rose to US$7.5 billion in the 12 months ended March 2006 from $5.3 billion a year earlier. In contrast, China drew $60.3 billion in FDI during calendar year 2005 and $14.25 billion in the first three months of 2006.although the dragon seems to be hot on its heels, India is for sure registering strong FDI growth on a year-to-year basis. India's FDI flows continue to be skill intensive, and concentrated in information and technology areas. India needs $150 billion worth of investments to upgrade the country's weak infrastructure over the next 10 years.
India for sure is on the right track of garnering those FDI as it is considering opening up FDI across a wide range of sectors that includes oil and airports.

FDI INFLOWS.
YEAR FDI ($ MILLION)
1990-1991 96
1998-1999 2380
1999-2000 2093
2000-2001 3272
2001-2002 4734
2002-2003 3217
2003-2004 2388
2004-2005(April –September) 1979
2005-2006(April- September) 2304
Source: The telegraph.

The above figures show that global investors are certainly interested in India. The latest data of Standard & Poor’s study (released in March 2005) predicts that India had one of the fastest FDI growth rates among individual countries – an annual average of 28 per cent between 1999 and 2005.
Bill Gates in his recent visit to India has announced that the Microsoft will invest around $ 1.7 billion over the next four years in India. Intel the largest computer chips company of the world has decided to invest over $ 1 billion in India. CISCO has announced plans to spend $ 1.1 billion over the next 3- 4 years in India. For Microsoft, India is emerging as a big market to exploit as Microsoft doesn’t have much in stake in China. Buying of shares to the tune of $ 1.5 Billion in Bharti Tele ventures by Vodaphone from Warburg Pincus is another big FDI inflow into India.
General motors (GM) are slated to pump in $300 million for its manufacturing facility in Maharashtra. Another gargantuan automobile company Honda will invest $200 million. Suzuki and Nissan have declared investments of $800 million and $700 million respectively. Mitsubishi chemicals have a $370-million investment plan in haldia. Mauritius-based Global Communication Service Holdings has invested $278 million in Aircel while Associated Financial Services Mauritius invested $120 million in Citi Consumer Finance.
The top ten investing countries were Mauritius, the US, Japan, Netherlands, the UK, Germany, Singapore, France, South Korea and Switzerland.
India has a huge network of technical and management institutions of highest international standards for development of excellent human resources Strategic location of the country for the third world markets particularly for the rapidly growing South and South East Asian countries is a major factor in pulling global investors into India. India has a large pool of English speaking people, which is another aspect of India being able to attract FDI.India has a burgeoning middle class that is roping in big money from foreign institutions with the hope of tapping such a large pool of middle class households.
Investors in the heavy and light manufacturing sectors have a positive outlook about India. The country's largest FDI pledge was won when (POSCO) Pohang Iron & Steel Company (South Korea) confirmed a $12 billion deal to set up a steel plant and in Orissa. The achievement of this deal is great sign of FDI boom applicable in India. The government has established (SEZs) special economic zones to bring about a spirited, export-oriented manufacturing sector.
India has signed an increased economic cooperation agreement with Singapore. This agreement will lead to increased FDI inflows from Singapore. Precisely, the deal allows Temasek Corporation and Government of Singapore Investment Corporation to buy 10 percent more equity in Indian companies than other investors. Temasek Corporation has already acquired a minority stake in ICICI bank and is scouting for acquisition of substantial stakes in promising companies. Several Singapore banks will be granted licenses to set up branches in India over the next four years.
Ever since the government opened up FDI in 1991,the telecom sector has been raking in the foreign moolah. According to the Investindiatelecom, an on-line
agency which tracks developments in the Indian telecom sector, Indian
telecom has grossed actual FDI worth Rs 9,576.40 crore during the period
starting from late 1991 to early 2003 and Rs 9950.90 crore till April, 2004. This is the highest inflow of FDI into the telecom sector in the world. Mauritius comes in second with FDI grossing Rs 6,855.83 crore during the period.

Country wise FDI inflow in TELECOM (AUG91’-FEB03’)
RANK COUNTRY FDI (Rs in crore)
1. INDIA 9576.40
2. MAURITIUS 6855.83
3. UK 866.15
4. USA 487.43
5. NETHERLANDS 306.05
6. THAILAND 221.16
7. SWEDEN 153.19
8. FRANCE 100.93
9. ISRAEL 80.00
10. HONGKONG 74.12
11. MALAYSIA 59.99
12. JAPAN 53.98
13. CANADA 41.16
14. FINLAND 35.58

Financial services investors have promoted India from 4th to 2nd most attractive FDI location. The rise of local players, ICICI Bank and HDFC Bank, along with foreign investors, has helped streamline India's underdeveloped financial sector.
Telecom and utilities investors rank India their 3rd most attractive destination, which could be because of the relaxation of ownership restrictions. In October 2005, the Indian government increased foreign ownership levels to 74 percent from 49 percent, which will spur the booming IT, industry. According to NASSCOM, the Indian IT software and services exports have grown from $5.3 billion in 2000 to $16.5 billion in 2005.
The fact that India has toppled the US to secure second position up from third will further strengthen the interest of global companies in spite of corruption and weak infrastructure .the signs of bringing in foreign money has never looked so good for India. In a report done by A.T.KEARNEY (FDI confidence index), India is ready to take the FDI world by storm. The high confidence that investors have for India speaks volumes about the streamlining of Indian FDI policy.