INDIA s EMERGENCE AS A GLOBAL ECONOMIC POWER and implications for Canada Peter L. Nesbitt Chief Representative, India Export Development Canada pnesbitt@edc.ca 1
Tharoor on Being Indian What does it mean to be an India? Our nation is such a conglomeration of languages, cultures, ethnicities that it is tempting to dismiss the question as unanswerable. How can one define a country that has 2,000 castes and subcastes, 22,000 languages and dialects and 300 different ways of cooking the potato? Shashi Tharoor April 22, 2007, Times of India
Why India?
Which One?
The New India Mumbai s Domestic Terminal
MERCHANDISE EXPORTS TO INDIA (2001-2007(E)) 1800 1600 1400 1200 1000 800 600 400 200 0 (CAD$M) Cdn Exports vs. EDC s Business Volumes 1650 1528 1030 1,175 667.1 655 740 811 729 611 376 220 262 267 2001 2002 2003 2004 2005 2006 2007
Let s Talk Exports Canada's Exports to Asia Pacific (2004 2006) 2004 2005 2006 % Change (Ave. Ann) Exports Australia 1,463,931 1,471,535 1,659,831 6.7% Bangladesh 105,830 97,973 158,516 24.9% China 6,041,453 6,598,284 7,183,657 9.5% Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0% India 811,355 1,023,963 1,533,656 44.5% Indonesia 646,223 678,416 779,467 10.3% Japan 8,408,416 8,912,029 9,221,037 4.8% Malaysia 393,077 345,705 461,932 8.8% New Zealand 429,354 326,482 351,654-9.0% Exports to Asia closing in on $30bln a year Pakistan 321,417 308,493 389,501 10.6% Philippines 399,625 340,515 359,469-5.0% Singapore 538,091 496,729 581,959 4.1% South Korea 2,213,699 2,727,287 3,188,049 22.0% Sri Lanka 44,295 119,834 252,212 234.7% Taiwan 1,175,126 1,266,699 1,308,592 5.7% Thailand 456,856 426,172 491,039 3.7% Vietnam 101,446 188,297 202,886 50.0% Total 24,763,432 26,494,267 29,433,225 9.4%
Let s Talk Exports Canada's Exports to Asia Pacific (2004 2006) 2004 2005 2006 % Change (Ave. Ann) Exports Australia 1,463,931 1,471,535 1,659,831 6.7% Bangladesh 105,830 97,973 158,516 24.9% China 6,041,453 6,598,284 7,183,657 9.5% Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0% India 811,355 1,023,963 1,533,656 44.5% Indonesia 646,223 678,416 779,467 10.3% Japan 8,408,416 8,912,029 9,221,037 4.8% Malaysia 393,077 345,705 461,932 8.8% New Zealand 429,354 326,482 351,654-9.0% Pakistan 321,417 308,493 389,501 10.6% Philippines 399,625 340,515 359,469-5.0% Exports to Asia growing at just over 9% a year Singapore 538,091 496,729 581,959 4.1% South Korea 2,213,699 2,727,287 3,188,049 22.0% Sri Lanka 44,295 119,834 252,212 234.7% Taiwan 1,175,126 1,266,699 1,308,592 5.7% Thailand 456,856 426,172 491,039 3.7% Vietnam 101,446 188,297 202,886 50.0% Total 24,763,432 26,494,267 29,433,225 9.4%
Let s Talk Exports Canada's Exports to Asia Pacific (2004 2006) 2004 2005 2006 % Change (Ave. Ann) Exports Australia 1,463,931 1,471,535 1,659,831 6.7% Bangladesh 105,830 97,973 158,516 24.9% China 6,041,453 6,598,284 7,183,657 9.5% Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0% India 811,355 1,023,963 1,533,656 44.5% Indonesia 646,223 678,416 779,467 10.3% Japan 8,408,416 8,912,029 9,221,037 4.8% India is Canada s 5th largest Export market in Asia Malaysia 393,077 345,705 461,932 8.8% New Zealand 429,354 326,482 351,654-9.0% Pakistan 321,417 308,493 389,501 10.6% (* Was 7th in 2004) Philippines 399,625 340,515 359,469-5.0% Singapore 538,091 496,729 581,959 4.1% South Korea 2,213,699 2,727,287 3,188,049 22.0% Sri Lanka 44,295 119,834 252,212 234.7% Taiwan 1,175,126 1,266,699 1,308,592 5.7% Thailand 456,856 426,172 491,039 3.7% Vietnam 101,446 188,297 202,886 50.0% Total 24,763,432 26,494,267 29,433,225 9.4%
Let s Talk Exports Percentage of overall Exports to Asia Percentage of Overall Exports to Asia 2004 2005 2006 % Change China 24.4% 24.9% 24.4% 0.0% India 3.28% 3.86% 5.21% 29.5% Exports to India (as a percentage of overall exports to Asia) have increased by 30% in 2 years No change with exports to China
Let s Talk Imports Canada's Imports from Asia Pacific (2004 2006) 2004 2005 2006 % Ann Imports Australia 1,771,845 1,746,582 1,594,862-5.0% Bangladesh 491,004 490,081 543,100 5.3% China 24,099,876 29,477,435 34,485,570 21.5% Hong Kong, SAR 719,286 559,995 513,307-14.3% India 1,577,129 1,785,747 1,918,586 10.8% Indonesia 931,211 955,012 946,735 0.8% Japan 13,511,164 14,459,515 15,345,921 6.8% Malaysia Imports 2,633,547 are 2.5x more 2,607,649 than 2,940,314 5.8% New Zealand Exports 537,881 Trade Deficit 561,683 with 492,908-4.2% Pakistan 244,980 247,552 276,977 6.5% Asia is approx CDN $45bln Philippines 956,215 920,933 990,718 1.8% Singapore 1,189,810 971,819 982,293-8.7% South Korea 5,825,699 5,356,434 5,763,425-0.5% Sri Lanka 113,989 109,109 113,339-0.3% Taiwan 3,930,635 3,894,043 3,877,603-0.7% Thailand 2,014,539 1,980,485 2,251,359 5.9% Vietnam 449,913 558,311 652,792 22.5% Total 60,998,723 66,682,385 73,689,809 10.4%
Let s Talk Imports Canada's Imports from Asia Pacific (2004 2006) 2004 2005 2006 % Ann Imports Australia 1,771,845 1,746,582 1,594,862-5.0% Bangladesh 491,004 490,081 543,100 5.3% China 24,099,876 29,477,435 34,485,570 21.5% Hong Kong, SAR 719,286 559,995 513,307-14.3% India 1,577,129 1,785,747 1,918,586 10.8% Indonesia 931,211 955,012 946,735 0.8% Japan 13,511,164 14,459,515 15,345,921 6.8% Malaysia 2,633,547 2,607,649 2,940,314 5.8% New Zealand 537,881 561,683 492,908-4.2% Pakistan 244,980 247,552 276,977 6.5% Philippines 956,215 920,933 990,718 1.8% Singapore 1,189,810 971,819 982,293-8.7% Imports growing faster at South Korea 5,825,699 5,356,434 5,763,425-0.5% Sri Lanka 113,989 10.4% 109,109 vs. Exports 113,339 at 9.4% -0.3% Taiwan 3,930,635 3,894,043 3,877,603-0.7% Thailand 2,014,539 1,980,485 2,251,359 5.9% Vietnam 449,913 558,311 652,792 22.5% Total 60,998,723 66,682,385 73,689,809 10.4%
Canadian Companies in India BC Instruments Bell Helicopters Bombardier CAE CGI Fraco Mastclimbers GL&V Hatch Associates Husky Injection Molding Int l Road Dynamics Kryton Buildmart Leggat and Pratt Magic Woods Magna McCains Foods Minaean Building Solutions Newsco Niko Resources Nortel Networks Pratt & Whitney Redknee Royal Bank of Canda RV Anderson Samco-Gallium Sandwell Engineering Scotiabank Senes Consulting SNC Lavalin SunLife Teknion Furniture Transworld Garnet Tundra Semiconductors Wesley Clover India (e.g. Mitel) Woodbridge
STRONG ECONOMIC FUNDAMENTALS Growth is driven by domestic demand Population of 1.1 billion (18% of world total) 5 th largest economy in the world (PPP basis) GDP Growth Rate: 9.4% (FY07) ave. 8.6% over last 4years GDP = USD 923bn (FY07) Total Trade / GDP: 32% Moody's Investment Grade Baa1 Surging capital flows (tripled between 2002 and 2006 to $23 billion), FDI inflows of $19bln in 2006 Strong balance of payments position (over 10 months import cover) Declining foreign debt burden (14% of GDP in 2006)
INDIA AND THE US ECONOMY Large foreign exchange reserves + Low level of external debt + Domestic consumption = Limited vulnerability to an external shock
INDIA s Middle Class Fueling Growth
POLITCAL Complex Yet Manageable General elections in 2009 The Father of India s Economic Reforms United Progressive Alliance (UPA), a coalition headed by the Indian National Congress (INC) has been in power since 2004. Risks present, but generally not viewed as exceptionally high Prime Minister Man Mohan Singh
Supporting Trade & Investment between Canada and India for more than 40 years
India s Corporate Titans Confident Vijay Malya of Kingfisher Anil and Mukesh Ambani of the Reliance Groups Kumar M. Birla of the Birla Group Cash Rich Going Global Naresh Goyal of Jet Airways Sunil Mittal of the Bharti Group Ratan Tata of the Tata Group
India s Automotive Sector OPPORTUNITY
India s Automotive Sector 2 nd Largest two-wheeler (growing at 14.2%) 4 th Largest manufacturer of commercial vehicles (growing at 33%) 10 mln vehicles manufactured in 2007 Auto Parts - A $15billion industry growing at 15% per year Auto exports growing by more than 25% a year
GOING GLOBAL Mahindra and Mahindra (M&M) in Brazil & Egypt TVS Motors in Indonesia? Maruti Udyog in Indonesia Tata Motors in South Korea & South Africa
Opportunities in AUTOMOTIVE $2500.00
Tata Nano
On building the Nano Innovate, Innovate, Innovate. Redefine your processes and Drive down costs Joe Repovs Chairman, Samco Machinery
Opportunities around INNOVATION COST + PROFIT = PRICE PRICE - PROFIT = COST INNOVATION
Opportunity? at the Bottom of the Pyramid Prof. C. K. Prahalad 4 Billion People How strategy guru C.K. Prahalad is changing the way CEOs think
Fortune at the Bottom of the Pyramid for companies with the resources and persistence to compete at the bottom of the world economic pyramid, the prospective rewards include growth, profits and incalculable contributions to humankind Prof. C. K. Prahalad
Opportunities in TELECOM
Explosive Growth in Wireless (Million) 500 450 400 350 300 250 200 150 100 50 0 Wireless Subscribers in India (Projected) 12.5% penetration 40% penetration 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 India = 233 million wireless subscribers as of 12/2007 (12.5% penetration) Canada = 16.81 million wireless subscribers in Q3 2006 (52% penetration) Source: COFI, CWTA, Global Insight
THE MAJORS No. of Subscribers (mlns) Bharti Airtel * Reliance Comm * Vodafone Essar * BSNL (WLL) IDEA Cellular 55mln 41mln 39mln 31mln 18mln Opportunities: Application Solutions, 3G, WiMax, Multi-media offerings, network performance improvement solutions * EDC Customers
IT AND BPO a $64bln business Software and Service Exports - $40bln Challenges talent, manpower and infrastructure issues 5% of GDP (as oppossed to 1.2% - 10 years ago)
Opportunities in Media & Entertainment
The Faces of Bollywood
INFRASTRUCTURE
INDIA needs new Airports Roads Sea Ports Improved passenger and cargo rail systems Public transportation Systems (e.g. MetroRail Systems) Power Water & Waste Water Solutions
FRACO MASTCLIMBERS Selling equipment to India s construction firms
Bombardier Moving India
International Road Dynamics
Water & Waste Water Treatment Canadian Playe GE Zenon Eco-Tec Ltd RV Anderson
Opportunities in POWER GENERATION
INSTALLED CAPACITY Energy Type MW Percentage Total Thermal 86,975 64.5 Coal 71,932 53.4 Gas 13,841 10.2 Oil 1,201 0.9 Hydro 34,130 24.8 Nuclear 4,120 3.1 Renewable 10,175 7.6 Total 135,401 100%
Opportunity in RETAILING Country of Consumers
EDC CLIENTS IN INDIA
How Can EDC Help Canadian Firms Face the Challenges 1. Accounts Receivable Insurance Protection against the non-payment by international buyers due to commercial or political reasons 2. Bonding Services Wide variety of instruments to support bid bonds, performance bonds and warranty bonds 3. Financing Based on corporate risk, sovereign risk and project risk Pre-export financing for exporters 4. Political Risk Insurance (PRI) Coverage against expropriation, inconvertibility and civil disturbance Can be provided to equity investors and/or banks
Corporate Mandate At EDC our mandate to support and develop, directly or indirectly, Canada s export trade and Canadian capacity, to engage in that trade, as well as to respond to international business opportunities, guides everything we do.
Mandate Test Q- What is the benefit to Canada in participating in this transaction?
The Question of Work-Life Balance? K.V. Kamath, CEO of ICICI Bank Sunil Mittal, CEO of Bharti Airtel
Our Team in India THANK YOU Peter Nesbitt Chief Representative India pnesbitt@edc.ca Rajesh Sharma Regional Manager Mumbai rasharma@edc.ca Leena Subramanian Admin Assistant New Delhi lsubramanian@edc.ca