India’s Potential and Growth Story

Introduction

Macro Economy of IndiaIndia’s macroeconomic performance

India is the second fastest growing economy in the world (please insert growth rate here. What is the
source?). In the year 2007, when India’sn GDP touched the USDa 1one trillion mark, it joined an elite
group of just 12 countries to have reached this milestone. occupied a sparkling position in the elite group
of 12 countries. India’sThis highly diversified economy has shown witnessed remarkable resilience since
with the introduction of the 1991 reforms, which opened the economy to participate more freely in
international trade and investment. The Indian economy has not suffered significantly during global
economic crises, such as the did not suffer much due to the occurrence of the events like Asian currency
crisis of 1998, the dotcom bust of 2001 and rising oil prices in the recent past. Despite these road bumps
in the global economy, India and was able to record an average annual GDP growth of over 6.5% in the
past decade. Going forward, the country is targeting an average GDP growth rate of over 8% per annum.
In fact, the prime minister has exhorted India to target an economic growth rate of 10%. This robust
growth is fully in congruence with ourthe macroeconomic stability. Our growth has been marked by and
its notable progress in the field of information technology, high end services and knowledge process
services. It has consistently showed a growth rate of 8%- 9% before the global financial crisis. Huge
inflow of foreign funds, growing reserves in the foreign exchange sector, IT and real estate boom, and a
thriving capital market has remained a key feature of Indian economy.

The strength of the Indian economy can also be judged from the fact that the global financial crisis had
minimal impact on the overall economy. The economy was still able to attain GDP growth rates at of 7.3%
in 2008 while other advanced economies like US had a growth of 0.431%. During the year 2009-10, the
Indian economy registered a growth of 7.4 per cent according to the estimates by the Ministry of Statistics
and Programme Implementation. This It was primarily due to a surge in the manufacturing, mining and
agriculture sectors. The manufacturing sector, which accounts for 80 per cent of the index of industrial
production (IIP), grew 19.4 per cent in April 2010, as against 0.4 per cent in April 2009. 2 The service
sector which accounts for more than half the GDP has remained the backbone of Indian economy.

Foreign investments have been growing at a sharp brisk pacerate in India. The total foreign investments
were USD 66.5 billion in 2009-10, more than 3 times the level in 2008-09, when it was as compared to
USD 21.3 billion during 2008-09. This has also led to increase in the foreign exchange reserves from
USD 251.7 billion in April 2009 to USD 279.6 billion in April 2010.3 Increasingly, Iinvestors in advanced
economies have shifted from mature European markets towards the more emerging Asian markets

Despite the fact that many sectors have allowed 100% FDI, India still needs to tap its full potential as a
destination for foreign investment. The government expects to bring more economic and investment
reforms to provide more opportunitiesy to foreign investors. It was during this year that the complete
liberalization of pricing and payment of technology transfer fee, trademark, brand name and royalty took
place. And now these payments are even allowed under automatic route.

India is in the midst of major social transformation where the economy is showing signs of returning
shows positive signal to return to the 9.0 % growth trajectory. Its vibrant and innovative private sector
1
IMF World Economic Outlook report, April 2010
2
The Hindu (Date? Title of article?)
3
FICCI , May 2010 (What is the report name?)
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opens up multiple plethora of investment opportunities for the foreign investors. As per the estimates of
Asian Development Bank, India is projected to grow at 8.2% in 2010-11 and 8.7% in 2011-12. The
Finance Ministry has projected the growth rate of 8.5% and 9% for 2010-11 and 2011-12, respectively.
India is also expected to become the third largest economy in the world by purchasing power parity by
2012. 4

The development of SEZs and the growth of the manufacturing sector are also likely to become the key
drivers for the Indian economy. We believe that it is possible to move soon In fact the Government is
hoping to do even better and move up to a double digit growth rate in the near future subsequent years by
framing appropriate right policies and programs which promote the inclusive and sustainable growth.

An Industrial Revolution

India's manufacturing sector expanded at its fastest rate in more than two years in June 2010. India’s
economic growth is again led by the manufacturing sector. Despite the strong performance and inflation
near 10 percent, many economists and traders expect worries about the euro zone debt crisis.

The Index of Industrial Production (IIP) has shown a growth in the first quarter of 2010.

Manufacturing sector alone has shown a growth of 17.9 % in the first quarter of 2010 as against 1% in the
first quarter of 2009. Manufacturing in India accounts for the 80% of the Index of Industrial Production5.

The Ccapital goods sector has seen a growth of 15% for the first quarter of 2010. This is in sharp contrast
to the sector’s performance in the previous three quarters of 2009 when the growth rate averaged less
than 3%6.

Rise of Exports and Imports

India has demonstrated a strong performance in its external trade ’s export and import has shown a
strong growth in the past 9 months, after recovering from the worst of the global economic downturn.
India’s imports rose to 43 percent in April 2010 from a year earlier to $27.3 billion. Other non-oil imports
grew by 34 percent in April to $19.2 billion. India's exports dropped 4.7 percent in the fiscal year 2009/10
as the global slowdown dampened demand. Asia's third-largest economy is targeting close to 15 percent
export growth this year7.

India emerged as one of the world's top ten countries in industrial production as per UNIDO's new report
titled 'Yearbook of Industrial Statistics 2010'. In fact, we even feel proud to say that India surpassed
Canada, Brazil and Mexico in 2009 to reach the 9th position from the 12th position it held in 20088.

4
PWC report (What is the title? Please specify)
5
News One India (Date? Title?)
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Economic Times (Date? Title?)
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Economic Times (Date? Title?)
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www.unidos.com
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"The Indian economy is hardly pausing for breath. Output growth remains at a robust pace and new
orders continue to pour in. This is benefiting the job market as more and more firms are hiring” said
Frederic Neumann, co-head of Asian Economics Research, HSBC.

Exports from special economic zones (SEZs) grew by over 122 per cent to US$ 49.5 billion in 2009-10 as
compared to 2008-09. IT, IT hardware, petroleum, engineering, leather and garments are the leading
exports from SEZs.

India is fast emerging as a global manufacturing hub with a large number of companies shifting their
manufacturing base to the country. Moreover, India has the largest number of companies, outside of
Japan, that have been recognised for excellence in quality. As many as 21 companies have received the
Deming Excellence awards; 153 companies have achieved Total Productive Maintenance (TPM)
Excellence Award for their total productivity management practices by the Japan Institute of Plant
Maintenance (JIPM) committee.

Government Initiatives

The government has issued the new Consolidated Foreign Direct Investment (FDI) policy document,
which has come into effect from April 1, 2010.

Moreover, as per a press release by the Ministry of Commerce and Industry, the government is working
on launching a National Manufacturing Policy by the end of 2010 and has already circulated a discussion
paper, inviting comments from all stakeholders in this regard.

The Ggovernment is also planning to establish National Manufacturing and Investment Zones (NMIZs) to
enhance the share of push the manufacturing share in gross domestic price (GDP). The proposed
National Manufacturing Policy for these NMIZs would act as the key enablers in driving the growth of the
sector in India, as per the press release.

The Mmain objectives of NMIZs are:

• To promote investments in the manufacturing sector and make the country a hub for both
domestic and international markets
• To increase the sectoral share of manufacturing in GDP to 25 per cent by 2022
• To double the current employment level in the sector; and
• To enhance global competitiveness of the sector

Auto Industry

In the Indian economy, the automotive industry has plays a very important role. Automobile industryIt has
linkages with several key segments of the economy; it has a strong multiplier effect and is capable of
being the driver of economic growth. In any economy a good transportation system plays a very important
role for economic and industrial development, as it creates multiple positive spin-offs.

Being one of the largest industries in India, the auto industry employs around 13 million people in direct
and indirect jobs. By an estimate, the Indian automobile industry will create another five million direct and
indirect jobs by 2012. This is in line with the Automotive Mission Plan to take the employment level to

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around 25 million by 2016. The Aautomobile industry has witnessed the impressive growth in the last two
decades and has been able to restructure itself with the changing global needs9.

Drivers pushing India’s Automobile sector include:

• Rising industrial and agricultural output

• Rising per capita income
• Favourable demographic distribution with rising working population and middle class
Urbanisation
• Increasing disposable incomes in rural agri-sector
• Availability of a variety of vehicle models meeting diverse needs and preferences
• Greater affordability of vehicles
• Easy finance schemes
• Favourable government policies
• Robust production

Key characteristics of India’s auto industry India's Position in World's Production

• Well-developed, globally competitive auto ancillary industry

• Established automobile testing and R&D centers
• Among one of the lowest cost producers of steel in the world
• World's second largest manufacturer of two wheelers
• Fifth largest manufacturer of commercial vehicles
• Largest manufacturers of tractors in the world
• Fourth largest passenger car market in Asia
• India is the second largest two-wheeler market in the world
• 11th largest passenger car market in the world
• Expected to be the seventh largest auto industry by 2016

In India no industrial licence is required for setting up of any unit for manufacture of automobiles except
in some special cases. The norms for Foreign Investment and import of technology have also been
progressively liberalized over the years for manufacture of vehicles including passenger cars in order to
make this sector globally competitive. At present 100% Foreign Direct Investment (FDI) is permissible
under automatic route in this sector, including the passenger car segment. The import of
technology/technological upgradation on the royalty payment of 5% without any duration limit and lump
sum payment of USD 2 million is also allowed under the automatic route in this sector. With the gradual
liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has
grown progressively10.

Automotive Mission Plan 2016

The objective of the Automotive Mission Plan 2016 is Tto accelerate and sustain growth in the automotive
sector and to steer, co-ordinate and synergisees the efforts of all stakeholders. Automotive Mission Plan
(AMP) 2006-2016 has been prepared in order to make India a global automotive hub.
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SIAM (Anything more specific? A report? Webstie URL?
10
Department of Heavy Industries (provide URL)
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The Automotive Mission Plan (AMP) 2006-2016, aims at doubling the contribution of automotive sector in
GDP by taking the turnover to USD 145 billion and providing additional employment to 25 million people
by 2016 with special emphasis on export of small cars, MUVs, two and three wheelers and auto
components11.

The reason for the rapid growth of the automobile industry can be ascribed to is the growth of the Indian
middle class. In the past few years, with the growth of Indian economy and the with the entryance of
foreign companies in India, the employment has gone up and the spending power of Indians has
increased, which attracted the global auto majors to the Indian market. India provides trained manpower
at competitive costs making India a favoured global manufacturing hub.

In recent times, India has emerged as one of the favourite investment destinations for automotive
manufacturers. Some key developments include:

• Japan-based Denso Corp and Subros Ltd formed a joint venture is formed to manufacture
products for domestic market.
• Ceat acquired 100 percent stake in its Sri Lankan investment arm ACHL.
• South Korea-based Kia Motors plans to venture into Indian passenger car market
• Mercedes-Benz is planning to make the India its R&D hub
• Tata Motors planning to raise USD 1.02 billion to fund its growth plans

Road Ahead:

By the year 20102 the market for electric vehicles, particularly two-wheelers or e-bikes, is expected to
grow as the government is planning to provide incentives for manufacturing and buying these scooters.

Pune-based Automotive Research Association of India (ARAI) and DSM of the Netherlands have entered
into an alliance to develop new lighter materials that could substitute metals in the automotive industry,
and help auto components shed weight12.

Oil & Gas

The oil and gas industry is critical to India’s growth as it helps fulfil the demand for energy that is needed
to drive growth. It is the most important of all the industries. This industry stops and the entire economy
will stop. Oil and gas industry has been refueling the growth the Indian economy.
Production

Provisional data released by the Ministry of Petroleum & Natural Gas, dated June 28, 2010,

• During April-May 2010, crude oil production went up to 5.82 MMT, a 5.5 per cent increase over
the corresponding period in 2009
• During April-May 2010, 26.89 MMT of crude oil was refined, an increase of 8 per cent over the
corresponding period in 2009

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Automotive Component Manufactures Association of India
12
www.ibef.org
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 • During April-May 2010, the actual natural gas production was 9.1 BCM, an increase of 43.5 per
cent over the corresponding period in 200913

Consumption

The sales/consumption of petroleum products during 2008-09 were 133.4 MMT (including sales through
private imports), an increase of 3.45 per cent over sales of 128.95 MMT during 2007-08, according to the
Ministry of Petroleum14.

The sale of oil products in the country rose 3.8 per cent in April 2010 to 12.13 million tonne year-on-year.

Government Initiatives

• For exploration of oil and natural gas fields, FDI up to 100 per cent under the automatic route is
permitted.
• Government’s Vision-2015 approved in 2009, for the oil sector which will focus on expanding the
marketing network as well as quality of the products and services to customers covering four
broad areas of LPG (liquefied petroleum gas), kerosene, auto fuels and compressed natural
gas/piped natural gas.
• According to a press release by the Ministry of Petroleum and Natural Gas inIn 2009, the
government also announced a seven-year tax holiday for companies involved in commercial
production of gas under NELP VIII & Coal Bed Methane (CBM) IV.

Investments and Acquisitions

• India auction of oil, gas blocks fetch USD 1.1 billion (The country, which imports almost 75
percent of its crude needs, had put 70 blocks for offer in its eighth round of New Exploration
Licensing Policy (NELP).

• RIL Buys 45 percent in US Shale Gas JV for USD 1.36 billion. Under the agreement the company
will make a cash payment of USD 263 million for a 45 percent stake in US firm Pioneer's Eagle
Ford shale acreage in South Texas. The company will also contribute USD 1.05 billion towards
drilling costs over four years. The acquisition is part of RIL's bid to tap the growing market for
non-conventional energy.

• RIL signs gas supply accord with RNRL which subject to approval from Government, will provide
RNRL access to much needed fuel for its power projects.

• GAIL to invest USD 2141 million in pipeline. State promoted Gas Authority of India Limited (GAIL)
plans to invest USD 2141 million to have major presence in South India with a 2,000 km gas
pipeline.

Telecom

13
Ministry of Petroleum
14
www.ibef.org
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Indian telecom industry has seen many fold growth in the past 5 years. Telecommunications industry is
one of the fastest growing in the world. Number of telephone subscribers in India is 653.92 million as on
May 31, 2010, an increase of 2.49 per cent from 638.05 million in April 201015.

Major Investments

India’s telecom sector has been attracting foreign companies to invest in. According to the Department of
Industrial Policy and Promotion (DIPP), in the year 2009-10 telecom industry has attracted FDI’s worth t
US$ 2,554 million. The cumulative flow of FDI in the sector during April 2000 and March 2010 is US$
8,930.61 million.

Going ahead we are expecting to witness an investment of around US$ 40 billion, as per the Telecom
Equipment and Services Export Promotion Council. With the development of 3G, expansion of the current
networks and widening of Broadband Wireless Access (BSA) network, the investment in the sector is
likely to increase from the US$ 20 billion witnessed last year.

As per an industry report the telecom industry witnessed merger and acquisition (M&A) deals worth US$
22.73 billion during April-June 2010, which represented 67.19 per cent of the total valuation of the deals
across all the sectors during the period analysed.

Going Global

In March 2010, Bharti Airtel bought the African operations of Kuwait-based Zain Telecom for US$ 10.7
billion, driving the Indian player into the league of top ten telecom players globally.

The sector had seen M&A deals of around US$ 439.4 million during April-June 2009. The biggest M&A
deal in the sector was made by Anil Ambani's Reliance Communication Ltd that merged GTL
infrastructure Ltd, its telecom tower business, for US$ 11 billion. Other major M&A deals included
acquiring of Kuwait-based Zain telecom's African business for US$ 10.7 billion by Bharti Airtel and
acquisition of Infotel broadband for US$ 1032.26 million by Reliance Industries.

Norway-based telecom operator Telenor has bought a further 7 per cent in Unitech Wireless for a little
over US$ 431.3 million. Telenor now has 67.25 per cent hold of the company. Telenor has now completed
its four-stage stake buy and has invested a total of US$ 1.32 billion in Unitech Wireless as agreed on with
the latter last year.

The government has approved the foreign direct investment (FDI) proposal of the Federal Agency for
State Property Management of the Russian Federation to buy 20 per cent stake in telecom service
provider Sistema-Shyam for US$ 660.1 million.

3G Services

The Department of Telecom (DOT) has taken the pioneering decision of launching of 3G services by
BSNL and MTNL and initiation of process for auction of spectrum for 3G services to private operators.
Allocation of spectrum for third-generation (3G) and broadband wireless access (BWA) services was
done through a controlled simultaneous, ascending e-auction process.

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TRAI
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Manufacturing

According to a report by technology researcher Gartner Inc, India ranks fourth in manufacturing telecom
equipment in the Asia-Pacific (Apac) region. The country has a 5.7 per cent share of the region's total
telecom equipment production revenue of US$ 180 billion in 200916.

Rural Telephony

In India rural telephony has increased for 1.2 per cent in March 2002 to 15.1 per cent in March 2009 and
further to 21.2 per cent at the end of December 2009.

Rural telephone connections have gone up from 12.3 million in March 2004 to 123.5 million in March
2009 and further to 174.6 million in December 2009. The private sector has contributed significantly to the
growth of rural telephony by providing 81.5 per cent of the rural phones as on December 31, 2009.

Policy Initiatives

The Indian Government has taken several initiatives to boost the telecom industry, including:.

• In the area of telecom equipment manufacturing and provision of IT-enabled services, 100 per
cent FDI is permitted
• No cap on the number of access providers in any service area. In 2008, 122 new Unified Access
Service (UAS) licences were granted to 17 companies in 22 services areas of the country
• Revised subscriber based criteria for allocation of Global System of Mobile Communication
(GSM) and Code Division Multiple Access (CDMA) spectra were issued in January 2008
• To provide infrastructure support for mobile services a scheme has been launched to provide
support for setting up and managing 7,436 infrastructure sites spread over 500 districts in 27
states. As on December 31, 2009, about 6,956 towers had been set up under the scheme.

The Road Ahead

According to a report published by Gartner Inc in June 2009, the total mobile services revenue in India is
projected to grow at a compound annual growth rate (CAGR) of 12.5 per cent from 2009-2013 to exceed
US$ 30 billion. The India mobile subscriber base is set to exceed 771 million connections by 2013,
growing at a CAGR of 14.3 per cent in the same period from 452 million in 2009. This growth is poised to
continue through the forecast period, and India is expected to remain the world's second largest wireless
market after China in terms of mobile connections.

"The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at
double-digit rates for next three years as operators focus on rural parts of the country," said Madhusudan
Gupta, senior research analyst at Gartner. "Growth will also be triggered by increased adoption of value-
added services, which are relevant to both rural and urban markets."

Mobile market penetration is projected to increase from 38.7 per cent in 2009 to 63.5 per cent in 2013,
according to Gartner.

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Gartner Research Report (title, date)??
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India in Space

India has made remarkable growth in space industry

ISRO (Indian Space Research Organisation) started its operations in 1960 under the guidance of Dr.
Vikram Sarabhai. ISRO till date has launched 57 satellites (2 satellites will be launched on Aug, 12,
2010). ISRO has established two major space systems, INSAT for communication, television
broadcasting and meteorological services, and Indian Remote Sensing Satellites (IRS) system for
resources monitoring and management. ISRO has developed two satellite launch vehicles, PSLV and
GSLV, to place INSAT and IRS satellites in the required orbits17.

Almost a year ago India and the US signed what is known asa Technology Safeguards Agreement (TSA),
to strengthen the relationship between the two countries in the area of space technology.

The future of technology lies in small satellites. Globally, the commercial satellite launch business is
estimated at around $2.5 billion and growing rapidly over the next couple of years. In October 2008 too,
India launched its Chandrayan-1 with payloads from different countries. It is obvious that ISRO is making
great strides in the space business, seriously looking at launching satellites from other countries, opening
a new source of income for the country in the international space market.

Space analysts feel that India will become a major player in the emerging small satellite manufacturing
industry. ISRO has estimated a market potential of 50 satellites over the next decade, worth around $1.5
billion. Small satellites are being continuously launched by ISRO both for India as well as for overseas
clients in the last few years. During the last few years ISRO has built its reputation as a reliable satellite
launch agency. During the last three years, ISRO has earned more than Rs 100 crore by undertaking
commercial satellite launches. Till date, it has launched more than 20 satellites—mostly small satellites—
for other countries and currently has orders for approximately ten more such launches18.

The ten foreign satellites that ISRO will launch come from Algeria, Singapore, Japan, Canada,
Netherlands, and two from Indonesia.

The India China relationship

These two ancient civilizations - China and India accounts for more than 40% of the total world
population. In the current Of this wave of globalization, China and India are the new economic
powerhouses. They play a significant role in the global arena because of their vast pool of talented
people, abundant resources and huge domestic markets. The rapid growth of both the economies is
grabbing center stage globally.has attracted the world’s attention towards them especially in the past
decade. For both the economies, the bilateral relations are the top most priority in their foreign policies.
Both the nations accorded most favored nation (MFN) status to each other in the year 1984. Further,
under the Bangkok agreement, both the countries provide tariff preference to each other. This robust
growth in the bilateral trade and economic cooperation is all possible because of the concerted efforts of
our honorable leaders.

High level exchanges

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ISRO
18
India Today
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India and China have maintained a healthy momentum in high level exchanges which includes frequent
visits by the Foreign ministers, Presidents and Prime Ministers. The Indian Prime minster visit to China in
2003 and 2008 and Chinese Premier and President Visit to India in 2005 and 2006 have set the stage for
both the nations to convert this century into Asian Century. In November 2006, the two countries
developed a multiten --pronged strategy to strengthen their relationship. its relation. The Indian Prime
Minister Dr Manmohan SinghM and Premier Wen Jiabao signed a joint document on “A Shared Vision for
the 21st Century between the Republic of India and the People’s Republic of China” in 2008 which
signifies that Sino-Indian ties have gone beyond the bilateral context and acquired a global character.
There exists congruence of interest between the two countries and both are willing to work together on
regional and international issues related to the diversification of global energy mix, climate change, arms
control and disarmament, non-traditional security threats, counter-terrorism, WTO, human rights and
South-South Co-operation.

Economic and Trade Relations

India and China possess the world’s largest bilateral trading relationship which acts as a stabilizing force
in Indian-Chinese relations. The trade targets set up by both the ministers in 2005 to touch bilateral USD
20 bn and USD 30 bn by 2008 and 2010 respectively have been met much ahead of the deadline. In few
years, China has emerged as the largest trading partner of India and India occupied the 10 th position in
the list of trading partners of China. As per the statistics of Directorate General of Foreign Trade (DGFT),
the trade between cChina and India has increased reached from USD2.3 bn in 2001-02 to USD 37. 9 bn
in 2007-08, registering a CAGR of 53.58%. Around three fourth of Indian exports to China comprises of
commodities and raw materials like iron ore. The delegations are seeking access for Indian
pharmaceuticals companies, engineering goods, IT-enabled services and agricultural products to the
huge Chinese market. Indian IT can help Chinese companies to go global where as Indian
pharmaceuticals will help the Chinese health care system to meet the increasing requirements. The main
Chinese exports to India are electric machinery, cheap electronic items, garments, and toys because of
its low manufacturing costs. India is looking forward to build its partnership with China in order to
construct world class infrastructure. It is seeking help in its road and rail projects.

(Refer Annexure 1 for more details)

The numerous meetings are being held between the nations to take its business and trade relations to the
next higher level. The 8th Ministerial level meeting of the India-China Joint Economic Group was held in
Beijing on 19th January, 2010 in which a MoU was signed on Expansion of Trade and Economic
Cooperation. On April 7, 2010, India and China signed an agreement to establish a hotline between the
Prime Ministers of the two countries.

This year we are celebrating 60 years of the establishment of diplomatic relations. Hence the Indian
embassy has made plans to organize various business events in the main cities of China. On 9th April,
2010, the first business event took place in Xian organized by CII and CCPIT Shaanxi where Chinese
companies were encouraged to leverage on the competitive advantages of Indian companies in sectors
like IT, Pharmaceuticals and specialized engineering. Around 100 participants from both Chinese and
Indian companies participated for the business networking session.

Many Chinese and Indian companies across sectors have established their offices in each other
countries. Recently, Shandong Electric Power Construction Corporation, a unit of the State Grid Corp,
inked $1.5 billion deal to build and operate three 660-MW generators in Orissa. The leading Chinese
player in construction machinery industry i.e. SANY group has set up its manufacturing facility in Pune.
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However special focus on the trade and investment of knowledge based services is still required and the
increasing bilateral investments can make substantive difference in their relationship.

Defence Cooperation

The close ties are even maintained in the field of defence. It is worthy to note that efforts to build trust and
confidence between the militaries of both the nations are proceeding satisfactorily. There are regular joint
military exercises in order to combat terrorism; the last being held in 2009. In the beginning of this year,
the third defence dialogue was also conducted in China. Frequent visits by high level delegations of the
Navy and Air force often take place between the nations.

Cooperation in other areas

The two countries are co-operating each other in various areas like finance, agriculture, water resources,
energy, environment, and tourism and information technology by signing mutual agreements and MOUs.
They both extend hands assistance to each other when the cooperation is required on the global issues
such as world trade negotiations, climate change and energy security. This was demonstrated can be
proved by the fact thatwhen both the Prime Ministers held bilateral consultations with respect to the
Copenhagen summit to ensure that the goal of developing countries are met while dealing with
challenges of climate change. Regular exchange programmes are conducted for students, youths and
Ministry of External Affairs. To promote greater awareness of each others’ culture, the two countries are
organizing a ‘Festival of India’ in China and a ‘Festival of China’ in India in 2010 as well.

Thus with regular conferences , meetings, agreements and high level exchanges both the countries are
making continuous attempts to reignite their diplomatic and economic ties, thereby maintaining a healthy
relationship for their economies to flourish.

Expo Shanghai 2010

The 2010 World Exposition in Shanghai will be the first registered one in a developing country. “Expo
Shanghai 2010,” which will last 184 days will provide China an opportunity to show off its remarkable
economic growth. The Expo's theme of "Better City, Better Life" gives a platform for a vast range of
interpretations by the 189 countries and 57 international organizations which are participating. The expo
will also give foreign nations and companies an opportunity to build up business partnerships with China
and Chinese companies. This is the fifteenth in an ongoing series that will look at the upcoming expo,
from country pavilions to trade development.

India’s Pavilion at the 2010 World Expo in Shanghai, with its theme of “Cities of Harmony”, by extension
also projects an international message of global unity, especially relevant to India as the country
experiences the natural growing pains of greater influence in Asia and abroad.

Hidden behind its veneer of an ancient temple are the tools of a technologically advanced sustainable
future. The pavilion is designed to be a “zero-chemicals zone,” meaning it produces safe runoff containing
no effluents.

The dome links Indian and Chinese cultures through its Buddhist foundation, but also major religions as a
recurring architectural theme in Islamic, Hindu, Christian, and Sikh architecture, effectively symbolizing
the harmony of all diverse religions and cultures.

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Indian officials stress that India’s participation in the Shanghai Expo a total cost of US$50 million is purely
rooted in a desire to broaden cultural and economic exchange.

Our Indeed, cultural ties, between two of the world’s oldest civilizations date back thousands of years to at
least the second century B.C., indicating a long history of shared relations and cooperation. and they
peacefully coexisted for most of that time.

In the past 10 years, thriving bilateral trade has been the driving force improving relations as India and
China cooperate on key issues like climate change and global trade. Total China-India trade grew 34
percent in 2008 to US$51.8 billion before falling 16.54 percent during the impact period of global financial
crisis in 2009. Despite the drop, China remains India’s largest trading partner and a key economic ally.19

As the world’s two fastest growing economies extend their geopolitical power, the competition for more
commodities and markets is certain to create diplomatic rowschallenges. To overcome greater conflict,
the two countries will have to continue to concentrate on the greater mutual interests that bind them
together in the face of difference and diverse thought. By unifying on these issues, diversity can live in
harmony.

India’s Potential and Growth Story

India’s is becoming the destination of choice for investors through its competitiveness from a natural and
human resources standpoint. India is a fast-growing economy with a vibrant and robust financial system.
As a democratic nation, India makes sure a stable policy environment and its independent institutions
guarantee the rule of law.

India is in the global arena for increased foreign investment - both through the Equity markets - termed
Foreign Institutional Investment (FII) and Foreign Direct Investment (FDI). While its size and growth
potential make India attractive as a market, the most gripping compelling reason for investors to be in
India is that it provides a high return on investment.

Over 300 million Indians (63 million households) are expected to have a household income of over
US$6,000 by 2015 (over US$30,000 in PPP* terms). India is experiencing a rapid growth in consumer
spending. The economic reforms since the early nineties have unleashed a new entrepreneurial spirit
creating a vibrant economy supported by rising per capita income.20

Increased availability and use of consumer finance and credit cards and, rapidly growing disposable
incomes are enhancing harmonize the enthusiasm of the average Indian to adopt the latest adapt to and
learn global trends. This has led to the creation of a swiftly growing consumer base and one of the world’s
largest markets for manufactured goods and services.

Growth in key sectors like infrastructure, services and manufacturing continues at about 10-12% per
annum. Driven by the demands of a humongous large population the market, for basic goods such as
groceries and textiles is already huge. Other products markets are equally enormous and growing quickly.
For instance as per Investment Commission of India:

• Over 225 million telephone subscribers, growing at over approximately 75 million per annum.
• Over 8 million TV sets and 4 million refrigerators are sold annually and expected to growth at
20% p.a.
19
http://www.china-briefing.com/news/2010/04/30/shanghai-expo-2010-the-indian-
pavilion.html
20
http://www.investmentcommission.in
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 • Total production of vehicles has crossed 11 million in 2006-07, up from 8.6 million in 2004-05. In
1998-99, this was only 4.2 million.

Further, India has been ranked 1st by AT Kearney in a Global Retail Development Index of 30 developing
countries and is seen as a potential gold mine.

India’s healthy and vibrant financial sector- India’s financial sector has been one of the fastest growing
and soundly insulated sectors in the economy. It has also observed increased private sector activity
including an explosion of foreign banks, insurance companies, mutual funds, and venture capital and
investment institutions. One of the highlights of India’s financial sector is that it has the largest number of
listed companies across 23 Stock Exchanges and the third largest investor base in the world.

India’s Demographic Advantage - India’s human capital is hallmarked by an unmatched resource of an

educated, hard-working, skilled and ambitious workforce.

One of the factors making that enhance India’s attractiveness as an investment destination, can be
attributed to thisis its workforce which is the world’s youngest. India is projected to stay the youngest with
its working-age population estimated to rise to 70% of the total demographic by 2030 - the largest among
in the world of the BRIC (Brazil, Russia, India and China) countries. India will see 70 million new entrants
to its workforce over the next 5 years.

English is the language of business in India and the large English-speaking workforce is a benefit to
investors and employers. In fact, the number of Indians who know English is more than the population of
the USA. India’s diverse cultural heritage puts its citizens at ease with people from other cultures and vice
versa.21 The poorer Indian states will start catching up with the richer ones. This will take India's GDP
growth to 10% by 2020.22

Tourism in India

As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, India is
ranked 11th in the Asia Pacific region and 62ndoverall, moving up three places on the list of the world's
attractive destinations. India is a state known for its generous hospitable conduct to all visitors, regardless
of where they come from. Its visitor-friendly traditions, varied life styles and cultural heritage and colourful
fairs and festivals hoeld abiding attractions for allthe tourists. The other attractions include beautiful
beaches, forests and wild life and landscapes for eco-tourism, snow, river and mountain peaks for
adventure tourism, technological parks and science museums for science tourism; centers of pilgrimage
for spiritual tourism; heritage trains and hotels for heritage tourism. Yoga, ayurveda and natural health
resorts also attract tourists.

The Indian handicrafts above all, jewellery, carpets, leather goods, ivory and brass work are the main
shopping items of foreign tourists.

Initiatives by the government support tourism in turbulent times- During 2009, the government, together
with Ministry of Tourism assumed numerous programs to help the country’s ailing tourism industry. To
counterbalance the stress of the economic downturn, the Reserve Bank of India reduced interest rates
and cash reserve ratios considerably and also launched stimulus packages to sustain growth. Marketing
efforts to promote the India brand to international markets also increased during 2009, with the year being

21
http://www.investmentcommission.in
22
Report Of The High Level Strategic Group (Consulting Partner The Boston Consulting
Group), India’s New Opportunity – 2020
13
designated “Visit India” year. Furthermore, with tourist security a major concern, the government made
security checks in the country even more stringent, and formulated policies to ensure the safety of tourists
in India.

The Road Ahead for Tourism

According to the Travel & Tourism Competitiveness Report 2009 brought out by the World Economic
Forum, the contribution of travel and tourism to gross domestic product (GDP) is expected to be at US$
187.3 billion by 2019. The report also states that real GDP growth for travel and tourism economy is
expected to achieve an average of 7.7 per cent per annum over the next 10 years.

Further according to the Tourism Satellite Accounting (TSA) research, released by WTTC and its strategic
partner Oxford Economics in March 2009, the demand for travel and tourism in India is expected to grow
by 8.2 per cent between 2010 and 2019 and will place India at the third position in the world.

Commonwealth Games at the top of the agenda

The government is highly focused on making the 2010 Commonwealth Games, which are being held in
Delhi, a huge success. It has made efforts to boost tourism in the country and formulated specific policies
to aid developments related to the Commonwealth Games. The games are expected to give a boost to
Indian tourism, resulting in strong value and volume growth. Though the development process is running
behind schedule, the government is optimistic that all the deadlines for the games will be met, and that
the city will be equipped with world class facilities.

The New Terminal 3 at Delhi Airport- Putting India on Runway to Future

On 3 July, 2010 Honourable Prime Minister Mr. Manmohan Singh dedicated to the nation an ultra-modern
airport terminal at the Indira Gandhi International airport in Delhi, built by the GMR-led consortium Delhi
International Airport (DIAL) in a record 37 months. Commonwealth Games to be held in the Capital in
October, tThe Terminal 3 or T3, is a swanky steel-and-glass structure, and is the world’s sixth-largest
terminal built at a cost of Rs 9,000 crore.

T3 will be one of the few green airports in the world, having eco-friendly features like energy-efficient
buildings, high-performance air-conditioning, and use of municipal waste to generate electricity, rain water
harvesting, waste-water treatment and reuse of treated water.

This airport terminal establishes new global standards. It also exemplifies our country’s resolve to bridge
fast the infrastructure deficit.

India’s Inclusive Growth

‘Inclusive Growth’ is both the title and the overarching goal of the Eleventh Five Year Plan of India. India
already is one of the largest economies in the world with a high GDP growth rate and is poised to
overtake the world’s largest economies in the next 25-30 years. However, there are many more still to
participate in the country’s growth. 23 Be it agriculture, finance or education it is important to seek
solutions for a social change and engage all the growth factors to increase social inclusion.

The key component of government’s ‘strategy of inclusive growth’ is inclusive governance as the means
of empowering the disadvantaged, with the aim of enabling them to overcome their poverty.

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Commonwealth Journal of Local Governance Issue 2: January 2009
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For inclusive growth it is imperative that both public and private sectors come forward and contribute. It
would not be incorrect to say that public-private-partnerships are the future. There have been efforts in
various areas both by public and private sector players, for instance in area of Digital inclusion, setting up
of Kiosks in rural areas for farmers which contain PCs that help deliver information and connectivity to
villages where Microsoft India has been a major contributor.

In area of Financial inclusion, Reserve Bank of India has taken several measures for promoting financial
inclusion such as advising banks to open ‘no frills’ accounts, introduction of Business Correspondent (BC)
/Business Facilitator (BF) model, promotion of financial literacy, and adoption of Information and
Communication Technology solutions for achieving greater outreach.

To successfully address the challenge of achieving inclusive growth, will require mobilization of all
possible stakeholders. The players to be included in this enormous task – and who need to be included in
all major national programmes – are national governments, local governments, international
organizations, domestic enterprises, multinational corporations, entrepreneurs, NGOs, academia and the
media.

Conclusion

India’s economy is at the fulcrum of an ever increasing growth curve. With both the industry and the
services sector growing at a rapid speed than ever before, other indicators like the capital markets,
foreign exchange reserves, foreign trade and FDI – too underline India’s growth story. In the times to
come India will be emerge as a more integrated economy with the global economy and will be a major
player in terms of trade, technology and investment, rising levels of education, employment and income
which will help stabilize its internal security and social environment. Last but not the least, with its young
population there will be no looking back for India.

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Annexure 1

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