CHANGING DIMENSIONS

OF BUSINESS
ENVIRONMENT IN INDIA
BY:
ANSHUL,
ARUSHI,
ASHISH
 INTRODUCTION
• Overview of the economic environment of India
• An account of the Social initiatives taken up by the
government
• The emerging new dimensions in the business
environment of our country
• The following sectors covered to capture the
changing business environment:
– Information technology
– Telecom
– Automobile
FINANCIAL DEPRESSION & ITS IMPACT

• Began in 2007 in industrialized nations

• Led to significant slowdown in GDP growth

during 2008-09

• Fiscal expansion in 2009-10 by policy makers

• Economy showed good growth in 2009-

10,despite crisis.
 2009-10 STORY
• 7.9% growth in last two quarters with 7.2%
overall growth
• Industry and service sector particularly grow by
8.2 and 8.7%
• Agriculture output decline by 0.2%
• Manufacturing growth rate almost double after
continuous decline since last eight quarters
• Recovery in growth rate of fixed capital formation
 Cont..

• Decline in growth rate of government and

private final consumption, but rise in private
investment demand.

• Rise in merchandise export growth, after

decline of twelve continuous months
KEY INDICATORS OF ECONOMY
SECTORIAL INVESTMENT GROWTH RATE AT
2004-05 PRICES
CONT…
 BEHAVIOR OF PRICES AND INFLATION

2009-10 2008-09
Overall 7.3
Food- 19.8 8.6
inflation
( 25.4)
Non 2.4 6.7
food(53)

• Concentrated inflation in 2009

Food items Fuel and power Manufactured and
commodity primary non-food
67% 12% 21%
 FOOD INFLATION
• Supply side bottlenecks
• Hype leads to hoarding. This is indicated b
shortfall in availability/production ratio

Jan Jan Jan Feb Feb Feb

13,2011 20,2011 27,2011 3,2011 10,2011 17,2011
16.91% 15.52 15.57 17.05 13.07 11.05
 IMPLICIT DEFLATOR
• Ratio of GDP at current price to GDP at constant price
• Covers service sector which contributes 57%
2005-06 2006-07 2007-08 2008-09 2009-10
Implicit 4.7 5.6 5.3 7.2 3.6
deflator

• Implicit deflator for consumer inflation is ratio of PFCE at

current price to PFCE at constant prices

2005-06 2006-07 2007-08 2008-09 2009-10

Consumer 2.9 5.9 4 7 6.4
Implicit
deflator
CONT…
 UPDATES FOR 2010-11
• GDP growth at 9.2 % against 7.2 last year
• Industrial sector growth at 9.4 as compared to 9.2 last
year
• According to CII survey, 50 ( out f 127 ) sectors grew
by 39% entering excellent growth category as
compared to 29 last year
• Service sector to grow by 10% as compared to 8.8%
last year led by trade and transport segment
• Agriculture and allied to grow by 5.7% as compared
to -0.2 last year
 GDP GROWTH
• Change in base year to 2004-05 by CSO

• Overall GDP growth same but some sectorial changes

• GDP growth at 7.2%, downside risk contained by

likelihood of better rabi crop, policy stimulus

• GDP growth at market price of 2004-05 during 2008-09

and 2009-10 considerably low than at factor cost due
to the role of fiscal stimulus
 GLOBAL RECOVERY
• According to IMF, decline in world output by 3.2% in 2009 to be followed by
growth of 2.1% in 2010

• Developing economies to register growth of 6.1% in 2010 after modest growth

of 2.1% in 2009

• Concern that the growth may loose momentum once the stimulus is
withdrawn

• Developed economies face problems of high unemployment, growing fiscal

deficit and tight credit availability

• Developing economies face challenge to contain monetary growth, inflation,

and exchange rate uncertainty during to increased capital flows
BROAD BASED RECOVERY
 SECTOR WISE GROWTH

Agriculture and Industry Service

allied
2004-05 18.9 28 53.2
2009-10 14.6 28 57.2
OVERALL QUARTERLY TREND
SECTORIAL QUARTERLY TREND IN GDP
PER CAPITA GROWTH
Demand side growth of GDP, growth contribution and
relative share at 2004-05 market price(per cent)
Private final consumption (Annual growth and
share at 2004-05 prices)
Growth in major industrial groups
in 2009-10

STRONG GROWTH Automobiles, rubber and plastic products,

wool and silk textiles, wood products,
chemicals and miscellaneous
manufacturing
MODEST GROWTH Nonmetallic mineral products;
NO GROWTH Paper, leather,
food and jute textiles

SLUMP Beverages and Tobacco products

Manufacturing companies growth
• Improvement in cost structure
• Growth in production of capital goods
• Favorable base effect and mild inflation
helped in recovery
• Declining trend in man-days lost due to
strikes and lockouts
 SAVINGS
• In 2009-10 GDS at current prices at 18,11,583 crores , about
32.5% of GDP down from 36.4% in previous year
• Fall in public savings from 5% to 1.4%
 BOP DEVELOPMENTS
•Exports from India have increased by 26.8 per cent year-on-year (y-o-y) to
touch US$ 18.9 billion in November 2010, urging the Government to exude
confidence that overall shipments in 2010-11 may touch US$ 215 billion.
• For the April-November 2010 period, exports have grown by 26.7 per cent to
US$ 140.3 billion, while imports totaled up to US$ 222 billion, expanding 24 per
cent
•The net foreign fund investment crossed the US$ 100 billion mark on November
8 2010, since the liberalization policy was implemented in 1992.
•FIIs have made investments worth US$ 4.11 billion in equities and poured US$
667.71 million into the debt market.
•Data sourced from SEBI shows that the number of registered FIIs stood at 1,738
and number of registered sub-accounts rose to 5,592 as of November 10, 2010.
•Portfolio investments comprising FII,GDR,ADR witnessed large inflows of $17
billion during I quarter of 2009 as compared to net outflow of $ 5 billion during
same period in 2008
 FDI
• Growth
April 2000 – April - Oct 2009 2008
Dec 2010 2010
$179.45 $12.39 billion $ 21 billion $14.1 billion
billion

• FDI in various sectors(Apr-Oct 2010)

Service sector Telecommuni Metallurgical Power sector
cation industries
$2163 million $1062 million $920 million $729 million
 FOREIGN EXCHANGE RESERVE
• Increase by $31.5 billion to $283.5 billion in
end December 2009. In this $11.2 billion was
on Bop basis, while $20.3 was due to
devaluation of dollar

• As on December 17, 2010, India's foreign

exchange reserves totaled US$ 294.60 billion,
an increase of US$ 11.13 billion over the same
period last year, according to the Reserve Bank
of India's (RBI) Weekly Statistical Supplement.
 MONETARY POLICY
• After outbreak of recession RBI has followed
an accommodative monetary policy
Early Recovery of growth momentum
Meet Unprecedented borrowing requirements of
government
• Transmission of monetary policy measures
continue to be sluggish an differential across
various segments of financial markets.
• Lending rates decline but not enough
 BANK CREDIT
• Demand remained muted during 2009-10
April-June, 2009 July-September Till jan-2010
negative 0 to 1.8 8.7

• Decline in credit-deposit ratio

• Sectorial deployment of gross bank credit
Retail – no growth
Agriculture – same
Industry. Personal loans and Services decelerated
DEPLOYMENT OF BANK CREDIT BY
VARIOUS SECTORS
• Negative growth in personal loans particularly
in
Advances against fixed deposits
Credit cards outstanding
Consumer durables
• Significant increase in non-bank credit by
50000 crores during april-nov,2009
 FISCAL POLICY DEVELOPMENTS
• Fiscal expansion in the form of tax relief to
boost demand and increase public
expenditure
• Increase
2007-08 in fiscal deficit from
2008-09 2009-10
2.6 5.9 6.8

• Fiscal stimulus amounted to 3.3 % of GDP in

2008-09 and 3.9% in 2009-10
 CONT…
• Borrowing limit of state government enhanced by 100
basis points
• Central plan expenditure
• Composition of fiscal stimulus
 Reduction in indirect taxes
 Increase in public expenditure on programs like NREGA and rural
infrastructure
• Implementation of sixth pay commission and debt-relief to
farmers
• GDP growth rate and rise in private consumption demand
 INFRASTRUCTURE
• India’s spending accounts for just 4% of GDP
• India will be a high growth economy over the next decade
• For growth rates to be sustainable, commensurate
development in infrastructure is imperative
• Today, India’s infrastructure capacity is woefully
inadequate
• Need of the hour: significant private-sector participation
• Government expects an increase in the share of private
sector investment from 19% in 10th plan to around 30% in
11th plan
• Over the next 5 years, the government’s investment target
is $1.5 trillion
 INFRASTRUCTURE contd...
• Have a practical and flexible public private participation framework
• Much can be achieved through a right combination of political will
and reforms for land acquisition and environment clearances
• Total investment envisaged under National Highway Development
Programme is $59 billion
• Roads are accounted to for 15% of India’s infrastructure investment
in the XI plan
• Govt plans to spend $63 billion in railways in the Plan
• Union Govt has undertaken a capacity expansion plan for ports with
an outlay of Rs 55,800 crore till 2014 through its National Maritime
Development Programme
FOCUS ON CAPACITY ADDITIONS
• Power sector emerged as a major focus area for the
Govt: expected to account for 40% of the $500billion
stated to be needed for investment in infrastructure
during 2007-12
• Nuclear power segment is witnessing a lot of interest
from public and private companies in India and abroad
• Renewable energy is expected to get a major push in
light of the concerns over climate change
• Recent initiatives – trading through energy certificates,
mandatory purchase of a certain percentage of power
from renewable sources
• Fuel availability and quality is an issue to be addressed
 ENERGY SECURITY
• India is endowed with great natural wealth of hydro power
sources, fossil fuels, wind energy potential and minerals
• There is an enormous hydropower potential of about
155,000 MW of which only 37,000 MW has been tapped
• Plants set up over 50,000 MW of nuclear power capacity
comprising over 50 reactors in the next two decades open
up huge opportunities for the Indian industries
• Consequent to NSG clearance, India signed bilateral
agreements on nuclear cooperation with France, the US,
Russian federation, Kazakhastan, Namibia, Mongolia,
Argentina & Canada
 OIL AND PETROLEUM SECTOR
• Around 75% of the total oil consumption in India being met
through imports
• Dependence on imports for petroleum continues to be high
(acc to eco survey)
• Increasing economic growth will cause energy demand to
grow exponentially
• Government is encouraging national oil companies to
aggressively pursue equity oil and gas opportunities
overseas
• Total installed capacity of refineries increased to 177.97mt
annually as on April 2009
NEW DIMENSIONS FOR OIL & GAS
 ENVIRONMENT – THE NEW
DIMENSION (CASE-I)
• MOEF grants clearance to SAIL for mining iron ore from
Chiria reserves in Jharkhand with specific conditions.
• Conditions stipulated by the Ministry include that
– Only mining and primary and secondary crushing would take
place in the forest area,
– Mining in the diverted area will be done in phases
– SAIL will earmark at least 2% of net profit for corporate
social responsibility in Chiria region
– There should be zero discharge into Koena river
– Steps should be taken to ensure that the river does not get
polluted
– Forest roads should not be used by SAIL during night time
 ENVIRONMENT – THE NEW
DIMENSION (CASE-II)
• Permission to set up $12billion integrated steel plant
in India, by POSCO was long due
• MOEF finally granted permission to POSCO to set up
the steel plant in India
• The Union environment and forests ministry has,
however, granted conditional clearance to the
project, which involves setting up a steel plant, a
captive power plant, and a captive port.
• It has imposed 28 additional conditions while giving
environmental clearance
 ENVIRONMENT – THE NEW
DIMENSION (CASE-III)
• Mettur-based Madras Aluminium Company (MALCO) of the
Vedanta Group accused of indulging in “blatant violations”
of all laws at the eco-sensitive Shevaroyan Hills
• The study pointed out that the land being mined was once
an ideal grass land.
• It has led to the change in the rainfall pattern as the
Shevaroyan Hills were a natural catchment and water
retention area during South West Monsoon.
• The mining was so intense that the height of the hills was
even reduced by about 100 feet
• Huge craters and lack of the mandatory green belt around
the core area have not been reclaimed and developed.
 SOCIAL SECTOR INITIATIVES
• The National Rural Employment Guarantee Scheme (NREGS):

– launched in February 2006 in 200 most backward districts in the first

phase
– was expanded to 330 districts during 2007-08.
– the coverage was extended to all rural districts of the country in
2008-09.
– at present, 619 districts are covered under the NREGS.
– during the year 2008-09, more than 4.51 crore households were
provided employment under the scheme.
– during the year 2009-10, 4.34 crore households have been provided
employment under the scheme.
– out of the 182.88 crore person days created under the scheme
during this period, 29 per cent and 22 per cent were in favour of SC
and ST population respectively and 50 per cent in favour of women.
 Swarnjayanti Gram Swarozgar Yojana
(SGSY):

– launched in April 1999 after restructuring of the

Integrated Rural Development Programme (IRDP) and
allied programmes.
– it is a self-employment programme for the rural poor.
– the objective is to bring the assisted swarozgaris above
the poverty line by providing them income-generating
assets through bank credit and Government subsidy.
– the scheme is being implemented on a cost-sharing basis
between the Centre and States of 75:25
– up to December 2009, 36.78 lakh self help groups (SHGs)
had been formed and 132.81 lakh swarozgaris have been
assisted with a total investment of Rs 30,896.08 crore
Swarna Jayanti Shahari Rozgar Yojana
(SJSRY):

– the Government has recently revamped the

SJSRY with effect from April 1, 2009
– the scheme provides gainful employment to the
urban unemployed and underemployed poor, by
encouraging the setting up of self-employment
ventures by the urban poor
– also provides wage employment and utilizes their
labour for construction of socially and
economically useful public assets
RURAL MARKETS OFFER PROMISE
• The year 2009 was all about recovery and revival from the
recession that struck the Indian economy in the year 2008
• However, the FMCG wasn’t impacted as badly as certain
other sectors did
• Partly, it was also because of the their focus toward the
rural markets as potential markets
• Increasing rural demand helped the FMCG industry grow
at an estimated 17-18% despite the economic uncertainty
• 53% of FMCG market is in rural and 59% of the consumer
durables market is in the rural region
• Rural India has become the growth driver
 CORPORATE SOCIAL RESPONSIBILITY
• CSR is the deliberate inclusion of public interest into corporate
decision-making

• A company’s sense of responsibility towards the community and

environment (both ecological and social) in which it operates.

• Companies express this citizenship

– through their waste and pollution reduction processes
– by contributing to educational and social programs

• The goal of CSR is to embrace responsibility for the company's

actions and encourage a positive impact through its activities on the
environment, consumers, employees, communities, stakeholders and
all other members of the public sphere.
 CORPORATE SOCIAL RESPONSIBILITY
• ACC has embarked wholeheartedly on a new
path of promoting the use of Alternate Fuel
and Raw Materials (AFR).
• The aim is to pursue conservation of the
earth’s mineral resources through waste
management solutions.
• ACC pioneered the utilization of blast furnace
slag, a toxic waste from steel plants, and
deployed it into the cement manufacturing
process to convert it to make Portland Slag
Cement (PSC).
• It also uses the Hazardous waste generated
by the surrounding industries as an alternate
fuel
• The biomass from the near by region has also
been used as a replacement for the coal used
in their kiln
 SERVICE SECTOR
• It comprises the sub-sectors trade, hotels, transport
and communications; financing, tourism, insurance,
real estate etc
• As against a growth of 9.8 per cent in 2008-09 it
grew at 8.7 per cent in 2009-10.
• While there has been a significant dip in the growth
of community social and personal services in 2009-
10, the other sub-sectors have either retained their
growth momentum or improved upon it.
 TRAVEL AND TOURISM
• The World Tourism Organization acknowledges
that tourism is the fastest growing economic
sector, bringing foreign exchange earnings to
countries and creating jobs
• Indian tourism industry is experiencing a period
of strong growth, driven by
– burgeoning Indian middle class
– Growth in high spending foreign tourists
– Coordinated government campaigns to promote
‘Incredible India’
EMERGING DIMENSIONS OF TOURISM
TOURIS
M
MICE
TOURISM

SPIRITUAL ECO
TOURISM TOURISM

RURAL MEDICAL
TOURISM TOURISM
ADVENTURO
US TOURISM
INDIAN IT
SECTOR
 •The Indian Information Technology sector can be classified into the following
broad categories - IT Services, Engineering Services, ITES-BPO Services and E
Business.

•IT Services can further be categorized into Information Services (IS) outsourcing,
packaged software support and installation, systems integration, processing
services, hardware support and installation and IT training and education.

•The rapid growth in the sector is a consequence of access to trained English

speaking professionals, cost competitiveness and quality telecommunications
Infrastructure, 24 x 7 services to their global customers.

•world leaders including General Electric, British Airways, American Express,

and Citibank, have outsourced call centre operations to India.
The following are some of the strengths of the Indian IT sector:

· Highly skilled human resource;

· Low wage structure;
· Quality of work;
· Initiatives taken by the Government (setting up Hi-Tech Parks and
implementation of e-governance projects).
· Many global players have set-up operations in India like
Microsoft, Oracle, Adobe, etc.

· Following Quality Standards such as ISO 9000, SEI CMM etc.;

· English-speaking professionals;
· Cost competitiveness;
· Quality telecommunications infrastructure.
 Government Initiatives:
•The Foreign Trade Policy 2004 - 2009 permits import of all kinds of computers
(except second hand computers) in India without any licenses.

•The Software Technology Parks of India (STPI) have been set up by the Ministry
of Information Technology, Government of India and the International
Technology Park in a joint project by the State Government.

•An industrial park, known as Electronic City was set up in 1991 taking more
than a hundred electronic industries including Motorola, Infosys, Siemens, ITI,
and Wipro, in an area of around 330 acres.

•Recognizing the potential of this sector, the government has provided many
incentives including a tax holiday up to 2010 and competitive duty structures.
•In addition to the central government incentives, respective state
governments have also developed attractive incentive packages to target
investors.

•The government is also actively trying to reduce international

communication cost. The telecommunications ministry has already started
phased liberalization programme.

•Financial institutions and venture capitalists in the country are willing to

provide funds at competitive rates for expansion in ITes businesses.

•All these factors collectively create a number of opportunities in the IT

sector.
 Information Technology:
•The Information Technology (IT) sector in India is amongst the fastest growing
in the country and the world. It is expected that by the year 2012, IT software
and services industry will account for 8 per cent of India’s GDP and 39 per cent
of total exports.

•The Indian domestic IT market grew by 29% in the financial year 2009-10 to
report revenues of Rs 308, 810 crore.

•The revenue of the information technology sector has grown from 1.2 per
cent of the gross domestic product (GDP) in FY 1998 to an estimated 5.5 per
cent in FY 2009.
IT / ITes Export Trends:

•Exports contribute nearly 65% of the Indian IT sector revenue.

•The United States and Britain are the biggest markets for India's
booming software exports, accounting for about 80 percent of the
country's $12-billionexports per year.

•ITeS/BPO exports grew by over 32 per cent from the previous year
collecting revenues of US$ 10.9 billion in FY 2009.
Key Players:
The following are India’s Tier 1 companies in the IT sector:
· Tata Consultancy Services Ltd.
· Wipro Technologies Ltd.
· Infosys Technologies Ltd.
· Satyam Computer Services Ltd.

The other key players include the following:

· IBM
· HCL
· Patni
· Polaris
· Cisco
· KPIT Cummins
· Kanbay
· accenture
·Cognizant
· Mphasis
•Karnataka dominates other Indian states in terms of attractiveness
as an IT destination with the city of Bangalore being at the topmost.

• All the big banners like HSBC, Dell, Microsoft, GE, Hewlett Packard,
and several Indian multi national firms like Infosys Technologies,
Wipro who have set up their offices in the city.

• The state of Andhra Pradesh, backed by the emergence of the city of

Hyderabad as a major IT hub, ranks as the second IT hub of India.

• This is followed by the state of Tamil Nadu and Maharashtra.

•The city of Chennai in Tamil Nadu is emerging as a global capital for

business process outsourcing (BPO) and is propelling Tamil Nadu to
the number one position in IT exports.
Growth of the Indian IT Sector:
• The Indian IT-BPO sector is estimated to reach a target of US$ 60 billion in
exports and US$ 78-80 billion in overall software and services revenues by
2012.

• India's information and communication technology market is estimated n

to grow20.3 per cent annually to reach US$ 24.3 billion by 2011.

•The Indian IT and ITeS market is estimated to grow at the rate of over 16
per cent to become a US$ 132 billion industry.

• significantly, the domestic market alone is expected to become over US$

50 billion. Simultaneously, the IT and ITeS exports are estimated to more
than double to US$ 78.62 billion by 2012.
•The domestic BPO segment is growing annually at a rate of nearly 35 - 40 %.

•The revenues generated by the BPO's are almost $1.18 million and the domestic
market is expected to reach $13 billion by the end of the financial year 2011.

• If it continues to grow by the current rate then by the end of the financial year
2012 then IT and IT enabled services will reach nearly US$330 million.

•The electronics hardware is growing at over 30% and is expected to grow rapidly
in the coming years and is estimated to be US$64 billion by 2012.

•According to a recent World Bank study, India is the preferred location for software
vendors for its quality and cost.

• India has strong UNIX base which provides opportunity for the development of
products for internet based applications.
INDIAN TELECOM SECTOR
•The first wind of reforms in telecommunications sector began to flow in 1980s when
the private sector was allowed in telecommunications equipment manufacturing.

• In 1985, Department of Telecommunications (DOT) was established. It was an

exclusive provider of domestic and long- distance service.

•In 1986, two wholly government-owned companies were created: the Videsh Sanchar
Nigam Limited (VSNL) for international telecommunications and Mahanagar
Telephone Nigam Limed (MTNL) for service in metropolitan areas.

•Cellular services can be further divided into two categories: Global system for mobile
communications (GSM) and Code Division Multiple Access (CDMA).

• The GSM sector is dominated by Airtel, Vodafone, Idea Cellular, while the CDMA
sector is dominated by Reliance and Tata Indicom.
Operator No. of Market share (%)
subscribers(million)
Bharti airtel 93.923 24
Reliance 72.999 18.5
Vodafone Essar 68.769 17.6
BSNL 52 13.3
Idea Cellular 38.9 9.9
Tata Teleservices 35.12 9.0
Aircel 18.4 4.7
MTNL 4.4 1.1
Spice communications 4.13 1.1
Others 3.15 .8

Total 391.761 100

 Recent Development
•The Indian telecom sector is characterized by stiff competition among 10
national level players and two government owned firms.

•In spite of a difficult pricing environment, Indian telecom sector is attractive. The
key reason is vast population of India of over 1 billion which makes it as one of
the biggest telecom market in the world.

•After USA and Chine, India is third biggest telecom market in the world.

•The year 2009, saw the Indian telecom sector add 170 million phone connections
to take the total subscriber base to 550 million.

• The year 2009 saw telecom players shift from per minute billing to per second
billing.
•Additionally, with 3G auctions held on feb13,2010 is expected to set in
motion the quick adoption of 3G enabled handsets.

•The month of April 2009 saw India wireless subscriber base that currently
stands at 250.93j million surpassing that of the US to become the second
wireless network in the world.

•The mobile telecom market is forecast to grow at compound annual

growth rate of around 15 percent between 2009-10 and 2013-14.
Service Rural Urban Total Rural Urban Total
provider subscriber subscriber (%) (%) (%)
Airtel 33.78 71.42 105.2 25 22 23
BSNL 29.64 53.52 83.16 22 16 18
Reliance 16.35 64.39 80.75 12 20 17
Vodafone 24.83 51.62 76.45 18 16 16
Idea 19.8 27.29 47.09 15 8 10
Tata 2.96 35.12 38.08 2 11 8
Aircel 8.82 12.98 21.8 6 4 5
MTNL - 8.16 8.16 0 2 2
BPL 2.31 2.31 0 1 1
Sistema .07 1.23 1.3 0 0 0
HFCL 0 .54 .54 0 0 0
Total 136.26 328.58 464.84 100 100 100
Service GSM CDMA Market Market
provider share share
(GSM)% (CDMA)%
Bharti 102.37 NA 31 NA
Vodafone 76.45 NA 23 NA
BSNL 49.1 5.27 15 5
Idea 47.08 NA 14 NA
Reliance 25.42 54.19 8 55
Aircel 21.8 NA 7 NA
MTNL 4.3 .31 1 0
BPL 2.3 NA 1 NA
Tata NA 37.12 NA 38
Sistel NA 1.19 NA 1
HFCL NA .38 NA 0

Total 328.82 98.46 100 100

 Manufacturing
•Latest figures from the Department of Telecom (DOT) indicate that
revenue from the telecom manufacturing sector is set to cross the US% 7.5
billion mark in fiscal 2009-10. The Indian telecom equipment
manufacturing sector is set to become one of the largest globally by 2011.

•India is estimated to record hightest growth in the Asia-Pacific region with

a handset production of more than 51 million.

• Nokia reached production volume of 125 million in over two years of

operations at its manufacturing unit in Tamil Nadu.

•TRAI estimates that the country will need about 350000 telecom towers
by 2010, as against 125000 in 2001.

•This has in turn attracted many leading global telecom equipment

manufacturers to set up their base in India.
 Telecom Equipment Manufacturers

•Nokia Siemens Networks (NSN) is shifting its global services business

unit headquarters from Munich to India.

•Nokia set up its manufacturing plant in Chennai.

•Samsung has set up its GSM mobile manufacturing base in Manesar.

•Motorola has established a manufacturing plant in Sriperumbedur.

•Sony Ericsson has set up GSM Radio base station manufacturing facility
in Jaipur and R&D centre in Chennai.

•LG Electronics set up plant of manufacturing GSM mobile phones near

Pune.
INDIAN AUTOMOBILE
SECTOR
 INTRODUCTION
• India continues to consolidate its position on the global front
being one of the world’s top 10 auto-producing countries.

• India, the seventh largest vehicle producing nation in the

world.

• According to a study by global consultancy firm Ernst & Young,

the Indian market will clock the fastest compound annual
growth rate between 2009 and 2020, more than double that of
China and the triad of North America, Europe and Japan.

• India's CAGR between 2009 and 2020 is expected to be 14 per

cent compared with China's 6 per cent.
 AUTOMOBILE

PASSENGER COMMERCIAL
2 WHEELER 3 WHEELER
VEHICLE VEHICLE

I.C.V. M.C.V. H.C.V.

MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS

 Others, 5.73

The Key Players… Honda, 5.33

Tata Motors,
Others, 5.8% 17.19
Maruti, 50.37
Yamaha, Honda
3.8% Motors, 8.5%

TVS Motors, Hyundai, 19.17

17.7%

Hero Honda,
39.8%

Bajaj Auto,
24.4% Passenger vehicle
Two wheeler

Commercial TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force
vehicles motors, Eicher Motors
Passenger TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra &
vehicle Mahindra, Daimler Chrysler, Hindustan Motors
Two Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic
Motors
Three Wheeler Bajaj Auto, Piaggio India
 The automobile industry in India 
9th largest automobile industry .
2nd largest two-wheeler market,
11th largest Passenger Cars producers.
4th largest in Heavy Trucks.

2nd largest tractor manufacturer.

annual production of over 2.3 million units.
The monthly sales of passenger cars in India exceed
100,000 units. 
 TWO WHEELER

MOTORCYCLE SCOOTERS - SCOOTERETTES

 Indian 2-Wheeler Market

Motorcycle 50% 30% 13% 4% 1% 2% <1% - <1%

- 15% 28% - 2% 46% 9% <1% -

- - 82% - - - 8% 10% -

India is now the second largest two-

wheeler market in the world
Passenger Vehicle Market

Multi Purpose Vehicle

Passenger cars
 Indian Passenger Vehicle Market

Passenger
Cars 52% 17% 19% - 1% 5% 2% 2% 2% 1% - <1% <1%
Utility
Vehicles 2% 18% 1% 42% 21% 1% 10% 1% <1% - 4% - <1%
Multi
Purpose 100% - - - - - - - - - - - <1%
Vehicles

4th largest Passenger Vehicle

Market in Asia
Light Commercial Vehicle
Heavy Commercial Vehicle

Commercial
Vehicle
Market
Medium Commercial Vehicle
 Indian Commercial Vehicle Market

Medium &
Heavy CV - 64% 24% - 8% - 3% - <1% <1%
Trucks
Buses – L, M
& HCV 40% 30% 7% 5% 10% 6% 1% 1% -
Light & Small
Comm Veh – 59% <1% 32% 4% 3% 3% <1% - -
Trucks

TATA Motors dominates over 60% of the Indian

Commercial Vehicle Market. It is also the World’s fifth
largest Medium & Heavy commercial vehicle
manufacturer.
 Three wheelers

Utility Vehicles
 Indian 3-Wheeler Market

Sub Segments
Scooters
India

60%
68% 24% 2% 1% 3% 3%
Passenger

40%
23% 40% 12% 13% 7% 6%
Goods

India is the largest three-wheeler

market in the world
 Future prospect of Indian Automotive
Sector
• Maruti Suzuki India Ltd (MSIL) has announced an investment of US$
411.45 million for setting up its third plant at Manesar in order to
capitalise on the rapid growth of the Indian auto industry.

• This new production line–Maruti's sixth overall would have 250,000 units
annual capacity.

• Volvo-Eicher Commercial Vehicles (VECV) has announced an investment

of US$ 61.51 million for a new engine plant at its existing facility at
Pithampur, Madhya Pradesh.

• With this, India will now become a global manufacturing hub for Volvo's
new medium-duty engine platform, with the only other factory for the
engine type being present in Japan.
•Mercedes Benz has met its single largest order—of 150 cars worth US$
14.7 million—from the small industrial town of Aurangabad,
Maharashtra.

•Indo-Russian commercial vehicle joint venture (JV) Kamaz Vectra Motors

plans to more than double its annual capacity to 12,000 units at its Hosur
plant by 2012 to capture the fast-growing market in India.

•Ashok Leyland and Japanese car maker Nissan Motor Co Ltd have
announced the launch of three light commercial vehicles (LCVs) from 2011
through 2013. The auto makers also confirmed to be in talks to create a
small car for the Indian market within the US$ 2,000 - US$ 6,000 price
range.
•Tata Motors is in talks with a Canada-based company for its second
generation gearless Nano.

•India Yamaha Motor Limited is also planning to tap the rural market,
which currently accounts for around 15 per cent of its overall sale. The
company has launched a new bike YBR 110 that will target the rural
markets.

•Mahindra & Mahindra has revealed its plans to launch 8-10 new
products, including a premium sports utility vehicle, across various
segments by March 2012.
•BMW, the luxury car maker, is planning to infuse US$ 15.76 million in
its Indian operations.

• Andreas Schaaf, President, BMW India, said that the company had
invested US$ 24.77 million till September 2010 and this would be
increased to US$ 40.53 million by the end of 2012.

•Luxury carmaker Mercedes-Benz India will set up a new facility for

building of city bus bodies at its Chakan plant in Pune. The new unit
will become operational by mid-2011 and will have a capacity of 700
units a year.

•Mercedes Benz has also re-introduced its super premium sedan

Maybach in India in 2011.
 Technological Environment
With the entry of global companies into the Indian
market, advanced technologies ,both in product and
production processes have developed.

With the development or evolution of alternate fuels,

hybrid cars have made entry into the market.

Major global players like audi, BMW,Hyundai etc have

setup their manufacturing units in India.

Government initiatives regarding tax rebates has led to

global players setting up their R&D centres in India.
 Impact of Global Recession on Indian Car Industry

India is one of the few countries where car sales have

been increasing in the course of the worldwide
economic downturn.

Passenger car sales rose 31% to 115,067 units in July

from 87,901 units a year ago.

The effect of inflation has taken the rise in the price rate
of the cars by 3-4% which in turn suffices the need to
meet the rise in price of the raw materials to build a car.
Some other Problems with Automobile Sector

• Effect of Rising Fuel Prices on Car Sales.

• The cars today are run on petrol, diesel

and gas. The price hike of all the three has
led to a serious problem. The rise in the
price of the fuel has depreciated the sales
of cars by 8%.
References
Business standard
www.bseindia.com
www.moneycontrol.com
www.rediff.com
www.indiatelecom.org
www.trai.gov.in
www.telecomindia.com
www.dot.gov.in
www.india-telecoms.com
 References
• Ministry of Heavy Industries & Public Enterprises (Department
of Heavy Inuustries), Government of India
• BUSINESS STANDARD
• CSO
• IBEF
• RBI
• SURVEY OF INDIAN INDUSTRY
• ECONOMIC SURVEY
2009 - 10