accenture india 2012 tough times ahead no room complacency

7/31/2019 Accenture India 2012 Tough Times Ahead No Room Complacency

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India in 2012Tough times ahead: No room for complacency

By Raghav Narsalay, Mamta Kapur, Ryan Coffey, Aarohi Sen

and Smriti Mathur.

January 2012

Institute for

High Performance


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There is little doubt that theIndian economy will face an uphillbattle in 2012. During the second

half of 2011, a variety of factors,including monetary tightening, rupeedepreciation and continued turmoil inthe Eurozone, fuelled anxiety aboutIndias macroeconomic and industrialoutlook for 2012. GDP growthdropped to 6.9 percent in the quarterending in September 2011, registeringthe slowest year-on-year increase inthe past two years.

Policymakers approach of pushingfor growth with less focus on theproductive dynamic has translatedinto increased signs of macro stabilityrisks emerging in the form of higherinflation, fiscal deficit and currentaccount deficit.

Sustaining high growth is likelyto be the overarching concern in2012, although the risk of inflationwill remain, largely because of aweakening rupee. Over the last twoyears, the Reserve Bank of India (RBI),Indias central bank, has aggressivelysought to rein in inflation, raisingthe benchmark rate 13 times sinceMarch 2010. While interest-rate hikeshave not curbed inflation, monetarytightening has hit businesses, slowinginvestments and triggering defermentof corporate capital-expenditure(CapEx) plans. Moreover, higher

interest rates are proving especiallyharmful to growth in sectors likehousing, automotive and consumerdurables, as consumers becomemore cautious about making newpurchases. The negative impact of agradual slowdown in these sectorsis now spreading to other criticalindustries such as steel and cement.

The Indian governments strong fiscalposition, which had enabled it toprime the economy when the global

recession struck in 2008, is nowwavering. Indias fiscal deficit hasrisen sharply, forcing the governmentto borrow at higher-than-ever rates.Moreover, tax revenues are expectedto suffer, given the slowdown in themanufacturing and infrastructureindustries. Budgets for developmentaland income-support programs aimedat helping Indias rural heartlands willlikely take a major hit, compelling

rural consumers to save more andspend less.

The recent depreciation of theIndian rupee will make exports moreattractive. However, new ordersfrom struggling advanced economieshave been subdued and will likelycontinue placing downward pressureon domestic industrial production inearly 2012. Moreover, slowing FDI

and volatility in export revenues willcontinue to exert pressure on theIndian rupee.

Nevertheless, among large economies,Indias potential to bounce backremains undisputed. With a cleardemographic advantage, increasingdisposable income, an expandingmiddle class and large pools ofuntapped demand in rural markets,Indias domestic consumption will

likely fuel the nations economicgrowth for years. Nevertheless, policysupport would help to sustain faithin this growth opportunity. Reformsin key sectors such as retail andinsurance must be implementedquickly to attract investment. As Indiadrafts its next Five Year Plan in 2012,it will have a unique opportunityto outline an agenda for inclusivegrowth and effective governance

that can help rebuild trust among

Introduction

its citizens. For Indian businesses,2012 will be the year to explore newstrategies for boosting efficiency and

stimulating growth. Companies willneed to find fresh ways to cut costs,improve productivity and managerisks to internalize the impact ofinflation, rising interest rate and rupeevolatility. They must also rememberthe demand side too is showing signsof fatigue.

In this report, we present ideasthat can help businesses in India

and elsewhere prepare for thenew realities of Indias changingmacroeconomic and businessenvironment. We recognize that themost successful businesses willinvest in immediate priorities withoutlosing sight of tomorrow. As always,we offer these ideas as starting pointsfor lively dialogue about newbusiness directions.

We invite your commentsand we look forward to theensuing discussions.

Please feel free to contact us at:[email protected] [email protected].


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TheDirectTaxCode(DST)andGoods and Services Tax (GST)are implemented, simplifying the

tax regime and bringing morepredictability into the tax system

Indiasignsafreetradeagreementon services and investment withASEAN, strengthening regionalintegration and promoting greaterphysical connectivity in the region

ThefirstIndo-Russiannuclearpower project is commissioned,

cementing bilateral ties betweenthe two countries

TheworldsfirstMetaUniversityallowing students to take coursesacross different universitiestakesoff in India, promoting multi-disciplinary learning at the highereducation level

TheLokpalanti-corruptionbillisimplemented, bringing politicians

and civil servants under the lens

PakistanoperationalizesMostFavored Nation status for India,opening up new trade opportunities

for the two countries

TheRegulatoryAuthorityforRealEstate comes into existence,improving accountability andtransparency in the sector

This could be the year that


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2012

JanuaryIndia and China hold boundarytalks at the Special Representatives(SR) levelIndia begins its first renewableenergy college

FebruaryElectionsinfiveIndianstates-UttarPradesh,Punjab,Uttarakhand,Manipur and Goa

April

Direct tax code comes into affect Creation of a national informationutility or public distribution systemnetwork (PDSN)

JuneNokia launches a tablet in IndiaTheworldsfirstMetaUniversitytakes off in India

AugustTata Motors introduces Air Car inIndiaData.gov platform, a joint venturebetweentheUSandIndiangovernment gets completed

OctoberPakistangivesMostFavouredNation status to IndiaIndia to host World Steel Conference

DecemberDelivery of Indias aircraft carrier INS

Vikramaditya from RussiaIndias longest tunnel at 11KM,connecting Qazigund with Banihal,gets completed

Ratan Tata retires as Chairman of theTata Group

MarchIndia signs services FTA with ASEANand New ZealandIndia announces new national

water policy

MayCommissioning of the first Indo-Russian nuclear power project, the

Kundankulam reactorMinistry of Environment and Forestsbrings out the E-waste Rules 2011,regarding management and handlingof hazardous substances

JulyDelivery of INS Tarkash, a warshipbought from Russia

SeptemberInstalled capacity of solar power goesup to 700MW in GujaratJapans leading refractory producer,

Krosaki Harima, sets up a refractorymud plant in IndiaDaimler launches its electric vehicle

NovemberPanasonics Jhajjar plant becomesoperationalMichelin starts tyre productionin India

2013

Calendar of events


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Macro trends for 2012

NominalGDP(US$billion) Real GDP growth percentage (year-on-year)

Percentage

(year-on-year)

US$b

illion

Source: International Monetary Fund, September 2011

US$b

illion

FDI outflows FDI inflows

Source:EconomistIntelligenceUnit,December2011

Foreign direct investment (FDI) flowsEconomic growth

Macroeconomicindicators

Target for FY2011-12 Likely Probable Unlikely

Real GDP growth rate 8.2%

Industry growth rate 7.1%

Services growth rate 10%

Domestic savings rate 34%

Exports(US$billion) 330

Imports(US$billion) 484

Inflation rate (wholesale price index-%) 6.5% for FY2011-12

Note:TargetfiguresfromtheReviewoftheEconomy20011/12publishedbytheEconomicAdvisoryCounciltothePrimeMinisterofIndia

Source:EconomistIntelligenceUnit,December2011Source:EconomistIntelligenceUnit,December2011

Industrial production(% change year-on-year)

6.0

8.0

10.0

12.0

14.0

16.0

18.0

0.0

2.0

4.0

2007 2008 2009 2010 2011 2012 2013 2014 20152006

P

ercentage

Percenta

ge

(year-on-year)

US$

billion

0

2

4

6

8

10

12

20072006 2008 2009 2 010 2011 2012 2013 2014 2015 2016

3,000

3,500

0

500

1,000

1,500

2,000

2,500

0.00

70.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

50.0

60.0

10.0

20.0

30.0

40.0

2006

Current account

Current account balance(USdollars)

Current account as a percentage of GDP

2007 2008 2009 2010 2011 2012 2013 2014 20152006

0.0

-1.0

-2.0

-3.0

-4.0

0.0

-20.0

-40.0

-60.0

-80.0

-100.0

-120.0


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A weak fiscal situation could pull down growth

Indias fiscal deficit will continueto constrain the nations economicgrowth in 2012. The gross fiscaldeficit has already touched 74.4percent of the budget estimates in thefirst seven months of the fiscal year2011-2012. The higher deficit hasstemmed mainly from a huge increasein the governments subsidy burden,its lower-than-expected collection

of corporate taxes and its inability tomeet its disinvestment target forthe year.

The government has raised only 70percent of its disinvestment target inthe first eight months of 2011-2012.Given that government expendituresare increasing and revenue streamsare shrinking, meeting the budgetedtarget of 4.6 percent of GDP in 2012

looks unlikely. The rising deficitis stepping up the governmentsborrowing requirements, puttingpressure on market liquidity.The situation is compoundedby a widening current-accountdeficit resulting from a mountingtrade deficit.

The twin deficits (fiscal and current-account deficits) account for close to9 percent of GDP. (Adding the state

governments deficits would take thecombined deficit past the double-digitmark.)Undertheseconditions,thedanger of crowding out of investorsis all too real. Higher governmentborrowing is also putting upwardpressure on sovereign bond yields-increasing the cost of financinggovernment borrowing. In addition,the adverse fiscal situation ishurting the governments ability to

finance its flagship developmentalinitiatives, which pumped up demandin rural areas during the 2008global recession.

To mitigate twin-deficit risks, thegovernment must return to a path offiscal consolidation. This will requirefurther reforms in the tax structure toensure revenue buoyancy. It will alsocall for a sharper focus on the qualityof expenditures, with an emphasison reducing subsidies.

Some major tax reforms are already

in the pipeline for 2012, which ifimplemented as per plan can boostgovernment revenues quickly.These include the introduction ofan integrated Goods and ServicesTax (GST) by Centre and Stategovernments to simplify the taxregime and improve tax compliance.Meanwhile, operationalizing a DirectTaxes Code (DTC) could improve theefficiency of direct tax allocation

and equity.

Business implications:Diversifysourcesforraisingcapital,

as liquidity in domestic market isexpected to remain tight due tohigh government borrowings

Re-evaluateandrationalizesupplychain network to sync with the newGST regime

Identifybusinessopportunitiesin governments efforts to bettersubsidy spend and reduce overallexpenditure level (for example,technology for payment transfers)

Key themes for the year ahead


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Despite continued monetarytightening and 13 interest-rate hikesby the Reserve Bank of India since

March 2010, reigning in inflationcontinues to pose a serious challenge.Headline inflation, which also factorsin manufactured items, besides foodand fuel, has been above 9 percentmark since December 2010. It stoodat 9.11 percent in December 2011and RBI has projected it to fall to 7percent by March 2012. Food inflationnumbers have started showing signsof moderation; the latest data from

the government showed food inflationat 0.42 percent as on December 17,2011, the lowest in almost six years1.

We expect inflation to ease onlygradually in the year ahead asdemand-supply imbalances persist.High inflation has started takingits toll on consumption demand inIndia, with sectors such as consumerdurables, automotive and fast-moving

consumer goods (FMCG) experiencinga growth slowdown. High pricescoupled with high interest rates, onthe back of monetary tightening,are forcing families to cut back onspending, leading to sluggish revenuegrowth across sectors.

High interest rates and a bearishmindset among businesses haveslowed investment in capacity

building. This bodes poorly for Indiasability to address the structuralsupply-side pressures, such asinadequate infrstructure, thatcontribute to high inflation. Thedangerous concoction of slowinggrowth and investment could alsolimit the Indian economys ability togenerate jobs.

Business implications:

Workwithsupplierstoexpand capacity and pluginflationary pressure pointsalong the supply chain

Investindisruptiveinnovationsto develop sustainable andcost-effective solutions forIndias population at the bottom-of-the-pyramid

Identifyareasacrossthesupplychains to profitably engagerural consumers as suppliers,intermediaries and customers

Managing inflation will help India pursue its inclusive-growth agenda


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Measured trade liberalization necessary to stabilize Indias long-term growth agenda

India has taken significant steps todeepen integration with the globaleconomy over the last two decades,

especially in the area of trade. Thecountry has substantially opened itstrade borders through a variety offree trade agreements (FTAs) and nowleads other major Asian economiesin the number of FTAs, with 13such deals in effect and 12 moreunder negotiation with large tradepartnersliketheEuropeanUnionandCanada. As a result, Indias exportsand imports of goods and services

have more than doubled since the1990sfrom 23 percent of GDP to 50percent in 2009-2011. If trade flowsare considered alongside capital flows,the rise in openness (measured ascurrent receipts and payments pluscapital receipts and payments) is evenmore dramaticjumping from around42 percent of GDP in the 1990s to107 percent in the recent period2.

While integration has largelysupported Indian business growththus far, in 2012, the downside risk

of the countrys integration with theglobal trading system will increasinglycome to the fore. FTAs have openednew export markets, but they havesimultaneously exposed Indian firmsto greater import competition. With aprolongedslowdowninEUandUStwoofIndiasmajorexportmarketslikely to cut Indias export growth in2012 (year-on-year export growthalready fell to 11 percent in October

2011, down from 82 percent in July2011), the potential loss of domesticmarket share to import competitionposes an increasingly pressing threatfor Indian business. Manufacturersare particularly vulnerable (year-on-year manufacturing output droppedby 6 percent in October 2011)3. Tradeliberalization deals with lower costregional neighbors continue to resultin rising finished goods imports

that could undermine domestically-based producers competitive edge inkey sectors, including textilesand machinery.

In a year of depressed export growth,amoremeasuredapproachoneguidedbybusinesswillbecritical

to ensuring that further tradeliberalizationincludingongoingFTAnegotiationswiththeEUandChinado not result in import competitionthat substantially threatens Indianbusinesses capacity to tap intodomestic growth.

Business implications:Developadiversifiedgeographic

portfolio that mitigates

economic risks

Utilizefreetradeagreementstoreduce supply chain costs andaccess new markets

Investinenhancingefficiencyofcapital, labour and technology tosuccessfully compete againstcheap imports

Leverageknowledgeofdomesticmarkets to erode the pricecompetitiveness of competitors


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An energy crisis could choke growth

Over the last two decades, growthin domestic energy production hasfailed to keep pace with Indias

exploding energy needs. As a resultof inadequate mining and refinerycapacity, India has yet to unleashthe full potential of its domesticcoalendowmentthethirdlargestintheworldanditsestimatedthat insufficient coal productioncontinued to contribute to a thirdof the countrys total power deficitover the last fiscal year4. But Indiasenergy challenges are not limited to

production shortfalls. Poor distributioninfrastructure also constrains supply-side growth. Not only does India lackthe infrastructural capacity to delivermore energy to meet rising demand,inefficiencies in existing distributioninfrastructure has resulted in anaverage of 30 percent energy lossduringtransmissionanddistributionone of the highest rates in the world5.

The demand-side picture is notmuch better, with Indias industrialsectoroneoftheworldsmostenergy-intensivecontinuingtopush domestic energy consumptionupward (industrial output contributesto 16 percent of Indias GDP whileconsuming 45 percent of commercialenergy). The result is a rapidlyyawning gap between domesticenergy supply and demand that isbeing filled by increasing energyimports (the annual value of oilimports alone is expected to risenearly 18 percent in 2012)6.

In 2012, weakness in the rupee (therupee depreciated almost 20 percentagainsttheUSdollarinthelastfive

months of 2011) will magnify thenegative impact of foreign energydependence on business risk andprofits in India7. Though depressedglobal consumption may lead to aslight moderation of global energyprices, the rupees weakness is likelyto result in a price hike on energyimports and a higher debt serviceburden in rupee terms that wouldsqueeze domestic profit margins

in 20128.

Curbing energy prices and Indiasdependence on energy importsrequires policy support and reformto address the countrys supply-sideenergy shortcomings. To this end,the government needs to acceleratethe overhaul in the countrys energydistribution infrastructure withinvestment in technologies such as

the smart grids while supporting theexpansion of new alternative energysources. The National Solar Mission(which aims to generate 20,000 MWof solar power by 2020) and theNational Mission on Enhanced EnergyEfficiency (which has targeted todeliver annual fuel savings of about23 million tons oil equivalent) offerhope if implementation and fundingimprove in 2012.

Business implications:Investinenergysavingtechnologies

and processes and developalternative sources of energy supply

Diversifysourcesofsupplybyforging strategic alliances and keypartnerships with suppliers and tosecure resource supply in thelong term

Utilizefreetradeagreementsas a platform to cost-effectivelysource clean and smarter

energy technologies

Shapepro-growthapproachesto regulation by working closelywith policymakers


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Indias growing trade with emerging markets

Over the last decade, Indiasdeepening integration into theglobal economy has coincided with astrengthening of trade ties with otheremerging markets. The proportion ofIndias exports to emerging economiesincreased by almost 20 percent, from46 percent in 2000 to 65 percentin 2010, with four of Indias topexport destinations in emerging

markets. Imports from emergingmarkets have grown albeit at a slower

pace, increasing from 51 percentin December 2000 to 59 percentin December 20109. Trade growthbetween India and emerging marketsis only likely to accelerate in 2012.

ThroughinitiativeslikeIndiasLookEast Policy, the Indian governmentcontinues to put in place thestructural support to strengthen trade

ties with Asian, African and SouthAmerican countries. The countrys

30

35

40

45

50

55

60

65

1997 1999 2001

Imports

Exports

2003 2005 2007 2009 20111995

Country Export value CAGR(2000/01-2010/11)

Rank in total trade value2010-2011 (imports + exports)

China 37.07 2

Indonesia 31.57 9

South Korea 24.77 11

Iran 28.23 13

Nigeria 19.31 14

South Africa 29.07 18Malaysia 20.59 19

Brazil 33.16 24

12

tradewithChinawhichgrewatacompound annual growth rate of 37percentbetween2000and2010isonly likely to speed up in 2012 onthebackofarecentUS$16billionbilateral investment and trade deal10.

Source: Haver Analytics; IMF DOTS

Source: Indian Ministry of Commerce; Accenture analysis

Figure 1: Exports/Imports to emerging markets as percent of total

Figure 2: Growth in trade with select emerging markets

Spotlight


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In July 2011, the Indian governmentcontinued to open up new inroadsinto Africa for Indian businessby announcing over 250 trainingpositions for African students andresearchers in sectors where Indianfirms have market leading expertiseincluding rural electrification, smallhydropower, and wind energy11.Emerging markets in South America

are also interested in deepening tieswith India. Recently ambassadors fromfourcountries-Uruguay,Paraguay,MexicoandPeruexpressedinterestin tapping Indian expertise in areasincluding information technology, oiland agriculture through new bilateraltrade pacts12.

The success of Indian companies in2012 will depend more than ever on

their ability to tap into these newopportunities in emerging markets,especially as they look to counterdepressed demand at home andincreased risk in developed markets.Because of their innovative low-cost business models and ability tooperate on razor-thin margins, Indiancompanies are well-placed to takeadvantage of Indias growing tieswith emerging market. For instance,Bharti Airtels, an Indian telecomsprovider,successinAfricaincludingits successful 2010 acquisitionofZainsAfricanoperationshaselevated it to the worlds fifth largestmobile operator by subscribers13.Manufacturers also stand to benefit.Tata chemicals recently launched

efforts to explore marketing the TataSwach, an innovative low-cost waterpurifier developed for Indias ruralconsumers, across Asia, Africa andSouth America.

While there are downsides togrowingemergingmarkettradeforinstance, domestic competition inlow-cost finished good imports or

IndiasballooningUS$20billiontrade deficit with China14thebusiness and economic benefits ofstrengthening emerging market traderemains immense. A recent analysisby Accenture and Oxford Economicsreveals that growing trade withemerging markets has the potential toboostIndiasGDPbyUS$155.8billionby 2020. Though concerns have alsobeen expressed that opening up trade

threatens domestic jobs in India, theeconometric research found that tradewith emerging markets will likely havea positive impact on job creation inIndia, with the potential to create28.2 million jobs in India by 202015.


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Competition intensifiesin the small- andmedium-sized carsegment

Competition continues to heat upin Indias small-and medium-sizedautomotives segment. Premiumforeign-car manufacturers such as

Toyota and Honda, are still playingcatch-up to more established playerslike Maruti and Hyundai, but aregradually gaining a foothold in Indiasmarket. Toyota and Honda plan tocontinue launching new models in2012 and are proving adept at strikingthe right balance between price andperformance demanded by Indiasconsumers. The newest automotiveplayers, like Chevrolet, Nissan and

Renault, also intend to ramp up newmodel launches in 2012.

Electric-vehiclesmarket heats up

Indias central government plans tohave as many as 7 million electricvehicles on Indian roads by 2020.According to a recent report, Indiacould see sales of more than 6-7million such vehicles by 2020, ofwhich almost 5 million would betwo wheelers. Mahindras recentacquisition of Reva and Chevroletslaunch of an electric version of itsBeat model point to strong futuredemand in the electric-car segment.Other players that have alreadydeveloped this technology, such asMaruti, Hyundai and Tata Motors,have been waiting on the sidelines

for clear policy decisions from thegovernment. With the recent launchof the National Mission for Hybridand Electric Vehiclesalong with

excise and customs duty benefitsproposed for hybrid, electric, fuel-celland hydrogen-cell technology-basedvehicles2012 may see this segment

finally gain momentum.

Internationalcarmakers set up shop

An increasing number of new entrantsare planning to set up manufacturingcapabilities in India and are scoutingpotential land acquisitions across

the country. Reports suggest thatRenault is planning another factoryafter its successful launch of its jointproduction facility alliance withNissan in Chennai. Renault may investanotherUS$2billioninbuildingafactory to produce at least 400,000small cars every year. French carmanufacturer PSA Peugeot Citroenhas opted for the state of TamilNaduforitsUS$785million

manufacturing facility. The plant willhave a capacity of 300,000 units ayear and will cater to domestic andinternational demand.

BankingCrisis lurks for public-

sector banksChallenges to loan growth, liquidityand asset quality will intensify inthe medium term for Indias bankingsector. Given their loan profile,margin track record and inferiorasset quality, public-sector banks aremore vulnerable to these challengesthan private banks. Moreover, thegovernment has not kept its promiseto provide fresh equity support to

public-sector banks, and the lackof support is further hindering theiroperations. On the other hand, thesebanks oppose the inflow of private

Automotive equity investment, on the assumptionthat it would erode their controland thus threaten jobs and benefits.

Indias largest bank, the State Bank ofIndia (SBI), may face a financial crisisin the fiscal year 2012-2013 if thecentral government fails to invest inthe companys proposed rights issue.The banks tier-one capital is thelowest among its counterparts.

Banking moves towardfinancial inclusion

According to Indias Ministry ofFinance, the government has alreadyachieved 62 percent of its targetto bring 73,000 villages under thebanking net by March 2012. Thisfinancial-inclusion drive could lead tothe creation of more than 50 millionnew bank accounts in rural areas.The plan is to include all the villageswith populations of more than 2,000

in the banking network by the end of2012. At present, only 38 percent ofthe 85,300 bank branches in India arein rural areas, and only 40 percentof Indians have access to bankingfacilities. The finance minister hasemphasized the need to expand andstrengthen banks branch networksin Indias northeastern states. Out of69 unbanked blocks in the northeastregion, 27 blocks have bankingservices. The remaining 42 unbankedblocks are in the states of ArunachalPradesh, Manipur and Nagaland andare not likely to receive services bythe end of March 2012.

Sector outlook


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Chemicals

Fertilizer input costsrise with new potashdeal

After a three-month standoff, Indianfertilizer companies have agreedto buy potash at an average priceofUS$470aton.TataChemicals,Coromandel International, ZuariIndustries and Indian FarmersFertiliser Cooperative signed importdeals with Canpotex, the NorthAmerican potash cartel, for 670,000tons of potash for the period October2011 through March 2012. Indiais the largest importer of potash,followed by China and Brazil, withimports touching a record 6.4 milliontons in 2010. But while China hasits own mines and has invested inoverseas mines, India is significantly

exposed to global price volatility whenit comes to potash supply, because it

has no domestic reserves.

Regional tradeagreements continueto support strongimport growth

Although the recent depreciation ofthe rupee against the dollarhas made imports costlier, thedemand for chemicals will continue todrive strong import growth for India,thanks to supporting factors such asregional trade agreements (RTAs).An apt example is Indias radial-tiremarket, which imports heavily fromChina, Thailand and South Korea.Both of these export countries are

part of the APAC trade agreement andattract significantly lower customsduties. The import of radial tyres formedium and heavy trucks is reported

to have grown from about 729,000units in FY09 to about 1,607,000 unitsin FY11. On the other hand, import

duties on feedstock and fuelssuch as naptha will continue toencourage imports.

Defense

Defense expenditurewitnesses massive

growthHavingspentclosetoUS$80billionover the last decade on defense, theIndian government has decided tosignificantly ramp up expendituresover the next five years to anexpectedUS$100billion.Mostofthiswill likely be spent on modernizationprograms and procurement of artilleryhowitzers, combat aircrafts, armoredvehicles and upgrades to existinginventory. India will also award the126 multi-role fighter jet contract in2012 after initial screening in 2011,which left only two players in the fray.

Defense collaborationscontinue to rise

Indias status as a stable geopoliticalpower and a major purchaser of

defense equipment will lead tomany new collaborations withother countries in 2012. Oneimportant milestone in such defensecollaborations is the joint militaryexercise to be held between Indiaand China in late 2012. The bilateralmilitary exchanges resumed inApril 2011 after the Indian primeministers visit to China for theBRICS summit. India will also pursue

collaborative defense R&D with theUnitedKingdomsDefenceScienceandTechnologyLaboratory.IndiasDefense Research and Development

Organisation will help facilitateresearch and technology developmentcapabilities through joint projects,

collaborative research and industry

and academia participation.

Defense sees greaterprivate participation

The defense sector in India isexploring opportunities to step up thelevel of private participation. Recently,the Ministry of Defence approved a

proposal to sell 10 percent equity instate-owned Hindustan AeronauticsLtd(HAL)overthenext10years,starting in 2012. With revenues ofaboutUS$2.6billion,HALcountsamong Asias largest aerospace anddefense entities and has not reportedany shortage of funds in recentyears. The decision to divest stakeis therefore considered a positivemove toward privatization. On the

other hand, Tata Power, through itsStrategic Electronics Division, recentlywon the contract to modernize theairfield infrastructure of the Indian AirForce. The program aims to improveairfields ability to handle the fleetof modern combat aircraft to beinducted by the air force and signalsincreasing private participation instrategic defense areas.


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Education

Final decision maycome on foreigninvestment

The Foreign Education Providersbill, intended to allow 100 percentforeign direct investment (FDI) inthe education sector, went throughmany rounds of discussion in 2011and may see the light of day in 2012.The Human Resource DevelopmentMinistry has already gone one stepfurther to encourage FDI by rejectingthe standing committees suggestionthat foreign institutions should

cometoIndiabyinvitationonly.Instead, the ministry believes that itsregulations can ensure the quality ofinstitutions that invest in India. Tobe sure, some foreign institutionsare still waiting for greater clarityon regulations. However, otherslike Educomp Solutions havealready formed joint ventures to test

the market.

Focus sharpens on skilldevelopment

The National Mission on SkillDevelopment, under the chairmanshipof Indias prime minister, has set atarget of developing skills for 500million persons by 2022. Efforts onvarious fronts are being made toachieve this target, starting withthe restructuring of the vocationaleducation scheme. The Ministryof Human Resources has proposedthe National Vocational EducationQualifications Framework (NVEQF),which recently recommendedintroducing vocational educationat the secondary stage. Starting in2012, vocational studies will be acomprehensive course that studentscan pursue along with arts, scienceand commerce courses in senior

secondary classes across all boards.The NVEQF will start from Class IXonward (certification level 1), where

out of 1,000 teaching hours eachyear, 200 hours will be devoted tovocational courses. There will also beseven levels of certification that willend at the university level.

Technology adoption

acceleratesIndias government also recognizesthe immense potential of technologyin education, evidenced by therecent launch of the ultra low-costAakaash tablets exclusively forstudents. Additionally, EducompSolutions, an education-solutionsprovider, has launched its digitalclass transformation system (CTS) in

the state of Gujarat. The CTS couldstrongly supplement traditionalmethods of learning in classroomswith digital instruction, assessmentmaterials and applications. Educompalready caters to around 150 schoolsin Gujarat and 8,000 schools in India.It plans to add 100 more schools in

Gujarat by the close of March 2012.

Fast-MovingConsumer Goods

Margins face pressure

Profit margins of Indias fast-movingconsumer goods (FMCG) companieswill be squeezed in 2012, owing tovolatile commodity prices as wellas a weakening rupee. Some FMCG

companies are considering pricehikes to offset pressure on theirmargins. For instance, GodrejConsumer Products is thinking aboutincreasing prices of some productsin the early months of 2012. Thecompany already raised prices during201116. Dabur India may do the samewith its health and food brands,particularly toothpaste17.

Players enter newproduct segments

Consumer products makers plan toenter alternative product segmentsthat would offer higher profits andovercome pressure on margins. For

instance, Heinz India, the marketleader in ketchup and milk-basedbeverages, plans a foray into cereal.Additionally, sugar confectionerymaker Perfetti Van Melle intendsto launch packaged potato chipsand salty snacks under its StopNot brand18.

Companies look to

expand abroadTo capitalize on the emerging-marketsurge, Indian FMCG companies wantto expand their operations into otherdeveloping economies. For instance,DaburwillinvestuptoUS$39.2million to set up plants in SouthAfrica,KenyaandSriLankaby201219.Moreover, after a two-year acquisitionspree, Marico now seeks acquisitionsin the beauty and wellness segment

in Asian and African countries suchas Thailand, Malaysia, Singapore andKenya20.

New packaging normsemerge

Indias Ministry of Consumer Affairs,Food & Public Distribution issueda notification on 19 consumer

product categories to be sold instandardized package sizes, to go intoeffect starting in July 2012. FMCGcompanies have recently startedreducing package sizes to managedeclining operating margins in aninflationary scenario. If this regulationis implemented, these companies willhave to use standard packaging sizes;some may need to introduce new sizes

in a few product categories21.


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Healthcare

Private players speedup expansion plans

The Indian healthcare sector could

generate more than 40 million newjobsandUS$200billioninincreasedrevenues by 2020, according to thereportIndiasNewOpportunities-2020. Realizing the magnitude ofthis opportunity, private healthcareplayers, domestic and international,are revving up their investmentplans. For example, Fortis Healthcarerecently announced the launch of twomore hospitals, one in Hyderabad andthe other in Agra, taking its hospital

network count to 68. Fortis alsoacquired its sister firm, Singapore-based arm Fortis HealthcareInternationalforUS$665millionas part of its plan to consolidatedomestic and international operations.In addition, it recently acquired a 65percent stake in Hoan My MedicalCorporation. One of Vietnams largestprivate healthcare provider groups,Hoan My has more than 1,100 beds

across six hospitals.

Inward consolidation isset to rise

LifeHealthcareGroup,SouthAfricasthird-largest private hospitals group,will acquire a 26 percent stakein Max Healthcare Institute, foraroundUS$103millionincash.Life

Healthcare will invest by subscribingto new shares of Max Healthcare. Thisconstitutes the largest FDI inflow inthe Indian healthcare sector and willreduce Maxs debt by an estimatedUS$180million.USmedical-devicesmaker Welch Allyn also plans toexpand its presence in India. Offeringa wide range of products includingstethoscopes, ophthalmoscopes,blood-pressure monitors andcardiopulmonary and thermometrydevices, Welch Allyn has drawn up anaggressive five-year strategy that calls

forrevenuesofUS$5millionby2015.

Emphasis increases onlow-cost healthcare

The Indian government plans toincrease spending on low-costhealthcare from 1.3 percent to 2.5percent of GDP during the 12th Five

Year Plan (2012-2017) period. Thisspending will cover the buildingof more healthcare facilities andhospitals as well as the settingup of more medical colleges andnurse training institutes. Vaatsalya,Indias first hospital network focusedexclusively on Indias tier-two and -three towns, recently raised anadditionalUS$10milliontoexpanditsnetwork in 2012. Additionally, FortisHealthcare plans to set up a secondbrand of hospitals aimed at smallertowns and cities, with a target of 25hospitals in three years. The companyis also launching a nationwide Mother& Child program for the poor under

the aegis of the Fortis Foundation.

Information

TechnologyExport revenues drivegrowth

Exporting of software and servicesis expected to grow to the tune of16-18 percent for FY2012, thoughrupee volatility could put pressure onsoftware exports margins. NASSCOMexpects to see exports grow acrossa broad range of offering types.Business process outsourcing (BPO)especially could see a turnaroundin terms of export growth, primarilyowing to the rise in demand foroffshore BPO services in sectors likecustomer management, accounting,banking and finance. HR outsourcingis also rising, apart from billing BPOservices and supply managementBPO. The IT and BPO sectors alone

will create as many as 250,000 jobsin 2012, most of them during Januarythrough March.

Strong domestic growthcontinues

The upbeat domestic IT-BPO spendingtrend will continue in FY2012, as theindustry grows at an anticipated 16percenttoreachUS$20billion.Indias

domestic market for IT will enjoy thefastest growth in the APAC region.We expect domestic IT spending tosignificantly increase in verticals likeautomotive and healthcare. Even theIndian government, with its focuson e-governance and inclusion, willcontinue to invest heavily in IT toachieve its developmental goals.Moreover, the expansion of the ITindustry into tier-two and-three citieswill fuel the creation of new jobs andserve as a source of fresh recruits fromthese communities.


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Infrastructure

Infrastructure projectsface delays

Delays in government and regulatory

decision-making have causedseveral road, railway, port and otherinfrastructure projects to fall behindschedule. According to Standard &Poors report, India needs to reformpolicies concerning project executionand long-term funding to overcomeits infrastructure challenge, whichcould prevent it from achieving itstarget of 9-9.5 percent annual growthduring 2012-2017. The slow paceof reforms and a lack of long-termfunding could hurt profitability anddelay several projects in 201222.

Deterioratinginvestments hurt thesector

The uncertain economic environmentis causing investments to dry up in

the infrastructure sector. Accordingto the ratings agency Fitch,increased borrowing cost is boundto hurt projects structured with thinfinancial margins, because mostinfrastructure projects are funded bybanks. A material reduction in ratesseems unlikely. In addition to thenegative investment environment,the infrastructure sector could bethreatened by a slowdown in GDPgrowth, rising inflation and interestrates, and a depreciating currency23.

Global companies setthe stage for enteringIndias construction-equipment market

IndiasgovernmentanticipatesaUS$1trillion investment in the countrysinfrastructure sector during the 12thPlan period. In response, severalglobal firms are keen to enter theemerging Indian earthmoving-and

construction-equipment marketthrough subsidiaries or joint ventures.Several global players from countriessuch as Japan, Britain, SwedenandUnitedStatesalreadyhaveapresence in India. But the marketsgrowth potential is now attractinginterest from companies in other

countries, most notably China,Finland, Germany, Italy, South Korea,Spain and Turkey24.

The infrastructure debtfund is launched

The Indian government will likelylaunch the nations infrastructuredebt fund in early 2012. The finance

ministry drafted the structure of thefund in June 2011 and plans to usethe fund as the primary instrumentto finance the countrys long-terminvestments in infrastructure25. Thisfund will provide an alternative tobanks for local developers looking toraise long-term, low-cost funding for

infrastructure projects26.

Media andEntertainment

Print media drivegrowth

The Indian media sector is expected togrow briskly in 2012, driven especiallyby robust growth in print media. The

Indian digital printing industry isforecasted to achieve a compoundedannual growth rate (CAGR) of85 percent in 2011-2012, accordingto the All India Federation ofMaster Printers. This increase willlikely derive from growth in thecountrys economy and the rise inadvertising expenditures across

media platforms27.

Foreign media houseslook to expand theirpresence in India

Many overseas media andentertainment houses are lookingto expand their operations in India,

drawn by the healthy growth in thesector. These companies include NBC,Time Warner, Viacom and Sony28.USmediagianttheWaltDisneyCompany is also seeking to expandits presence in India, plans to buy outshares held by public shareholders andoriginalpromotersofUTVSoftwareCommunications and delist thecompany in a deal valued at around

US$392.5million29.

The industry movestoward digitization

The Indian government has introduceda bill to change the Cable TV NetworksRegulation Act in a way that willmake digitization mandatory. Whilethe plan is for complete digitizationof cable television in the four metros

by 2012, the next target will becities with population of more than1 million30. At an expected investmentofuptoUS$7.85billion,digitizationof TV signals will give consumers abroader choice of channels at a lowerprice31.


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Oil and Gas

Depreciating rupeecould spell trouble foroil companies

The rupee, which depreciated 15-20percent in 2011, is expected to exertpressure on oil marketing companies,includingIndianOilCorporation,HPCLandBPCL,byraisingthepriceofoilimports. In addition, these companiesbalance sheets will be negativelyaffected by the weaker rupee, as thefall in the currency will increase their

debt-servicing costs32.

Investment in newexplorations continues

The Indian government will likelyaward oil and gas blocks offered forbidding in the ninth round of the NewExplorationLicensingPolicybyMarch201233. This will enable the awardedcompanies to explore and produce oiland gas in the region. Moreover, India

is expected to secure unconventionalhydrocarbon sources to meet energyneeds by launching its first bid roundfor exploration of shale gas during the

12th Plan period34.

Soaring demandunderscores the needfor alternative supplies

Indias fuel demand could rise 3.8percent in 2012, led by diesel andpetrol, according to the InternationalEnergy Agencys forecast. Demand fordiesel is expected to increase to 1.44millionB/Din2012,increasingby5.5percent over 2011, while demand forpetrol could increase by 6.7 percent(388,000B/D)in201235. In addition,crude shipments from Saudi Arabiato Indian refiners will likely increase

in 2012 with the addition of plantsin India. After a lingering paymentdispute with Iran, Indias second-

largest crude supplier, India is alsolooking at Saudi Arabia for alternate

supplies36.

Deregulation may be inthe offing

The Indian government mayderegulate diesel and liquefiedpetroleumgas(LPG)pricingin2012.The government proposes offeringsubsidized cooking gas only to thepoor. It also plans to discuss withoil companies, industry associationsand other stakeholders the notion ofurging the rich to voluntarily give upsubsidizedLPGcylinders.Theearlierproposal limiting the number of

subsidized cylinders to four per yearwas shelved by the government, whichnow wants to follow the PDS shopsmodel. Through this model, peoplewho could afford to do so stoppedbuying food from PDS shops eventhough they had ration cards37.Underthe current proposal, the ministers,members of Parliament, bureaucratsand senior managers at public-sectorcompanies would be among the firstpeople asked to give up subsidized

LPGvoluntarily38.

Pharmaceuticals

FDI inflows swell

With the Indian governmentremoving caps on greenfield andbrownfield foreign investment in the

pharmaceuticals sector, multinationalplayers likely will ramp up their effortsto acquire domestic pharmaceuticalfirms in 2012. Although the ReserveBank of India recently removedthe automatic approval system inbrownfield investments, this maynot significantly affect internationalplayers expansion plans. Recentacquisitions such as the RanbaxyLaboratoriesbuyoutbyDaiichiSankyo of Japan, Shanta Biotech bySanofi Aventis of France and PiramalHealthCarebyAbbottLaboratories

oftheUnitedStatessignalforeignpharmaceutical firms growing

appetite for Indian pharma.

Stricter quality controlscome into play

The Indian pharmaceutical industrywill soon have to adopt bar-codingsystems to track and trace drugsorigins to align with global measuresagainst counterfeit drugs. Bar codingon primary packaging (bottles, vialsor strips) for exports will begin inJuly 2012. Bar coding for secondarypackaging (such as packets) willbe made mandatory starting inJanuary 2012. Swift adoption of this

new system will be critical to theIndian pharmaceutical industrysexport competitiveness, as countriesincluding Malaysia, China and Turkeyhave already complied with thesenorms. The Planning Commission hasalso recommended strengtheningthe infrastructure and manpower ofthe national drug regulator, CentralDrug Standard Control Organization.It has urged the government to pumpUS$1.2billionintotighteningthedrug regulatory system at both thecentral and state levels during the12th Five Year Plan period. Othersuggestions made by the PlanningCommission include setting up anindependent authority for regulation

and control of all medical devices.

Greater gains emerge

from the patent cliffAs more and more patents expire,Indian drug makers like Ranbaxycould start generating major profitsfrom exporting generics to developedmarkets.DrugssuchasLipitor,ananti-cholesterol pill manufacturedby the worlds largest drug maker,Pfizer, was one of the most profitableproducts for the company and hassalesinexcessofUS$10billiona

year. It lost patent protection inNovember 2011, and Ranbaxy wonapprovalfromtheUSFoodandDrug


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Administration (FDA) to sell a genericversionofLipitorintheUSmarket.Drugs with combined annual sales ofUS$150billioncouldgooff-patentby2015, intensifying competition in thegenerics market and fueling a drop inprices. India has the highest numberof FDA-approved pharmaceutical

manufacturing facilities outsidetheUnitedStates.Thus,Indianpharmaceutical manufacturerscould see a significant boost to theirbottom lines.

Power

A coal shortage

threatens the powersector

Indian power companies could becompelled to cut their productionbecause of a shortage of coal stocksin the country. The shortage willlikely exceed 200 million tons duringthe 12th Five Year Plan period ifurgent measures are not taken tobridge the gap, according to the

Ministry of Coal39. With domesticcoal production struggling to keeppace with the capacity addition in thepower sector, more than 40,000 MWof new generation capacity could getstranded in the coming years for wantof fuel. This constitutes almost 70percent of the power capacity slatedto come between 2012 and 2017 andcould delay new power projects beingestablished across the country40.

Power companieslosses could extend tocustomers

The growing gap between tariffsand the cost of producing electricityis the primary factor behind the

US$13.7billioninlossesthatIndiaspower companies endured in the lastfiscal year41. Moreover, with Indiasdomestic supply of coal expected tobe sluggish, the Ministry of Power isadvising power companies to importcoal to meet their requirements.However, with the cost of importedcoalshootinguptoUS$120aton,power companies must brace forlarger losses, which may translate into

higher customer tariffs42.

Focus continues onalternative powersources

India is keen to take aggressive stepsin the field of renewable energyto meet its increasing demand

for electricity. To that end, thegovernment has set a goal to generate2 GW (2,000 MW) of solar power byMarch 201343. Business conglomerateLarsenandToubro(L&T)planstoenter wind-based power projects.L&Tsinfrastructurefinancedivisionis also exploring opportunities todevelop wind-based power projectsglobally44. In addition, the AsianDevelopment Bank, a multilateralfundingagency,agreedtolendUS$48

million to Reliance Power for its solarenergy plant in Rajasthan, showing itssupport for Indias alternative-powersector. The project also marksReliance Powers entry into thesolar-energy business and thecompanys plans to expand its

renewable-energy portfolio45.

Indian companiescontinue expandingtheir revenue source onforeign soil

A number of Indian companies are

taking up power-sector projectsoutside India. For instance, aconsortium led by Madhucon Projectsis setting up two units of a 150 MWcoal-fired power project in SouthSumatra46. Moreover, NTPC has signedan agreement with the ElectricityGeneration Company of Bangladeshto provide critical services such asmaintenance, recruitment and trainingas well as quality and environment

management for a 240 MW gas-basedSiddhirganj power plant near Dhaka

in Bangladesh47.

Real Estate

The forecast for sectorgrowth is grim

Indias residential and commercial realestate market will remain cautiousin early 2012 because of prevailinguncertainty in the global market andthe likelihood of further interest-ratehikes by RBI, according to real estateconsultantsJonesLangLaSalleintheirreport,IndiaRealEstateForecast2012 Across Asset Classes. Whilethe absorption rate in the residentialsector will likely be low with adecline in new launches, demand forcommercial real estate is expected to

remain stable in 201248.


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Focus sharpens on thegreen-building sector

India is a world leader in the green-building sector, and its position willstrengthen further in 2012. Adding toIndias existing 800 green buildings,

the Indian Green Building Council willfacilitate development of 200 greenbuildings by 2012. The council alsoplans to apply green practices to a 1billion square feet area (up from thecurrent half-a-billion square feet) andtrain 5,000 accredited professionals insuch practices49.

The Real Estate Bill

imposes accountabilityin the sector

The Indian government has draftedthe Real Estate (Regulation andDevelopment) Bill 2011, whichis expected to be tabled in theparliament in 2012. This bill aimsto curb malpractice in the lightlyregulated real estate sector. The newlegislation that will arise from this bill

will push for more accountability andtransparency in the sector50.

Big companies enterlow-cost housingsegment

Tata Group intends to pilot pre-fabricated homes at a unit price ofUS$628forIndiasruralmarketby

the end of 2012 and to gather initialfeedback from consumers to improvethe product51. Meanwhile, Mahindraplans to enter the affordable-homessegment as well, by building housescostinguptoaboutUS$19,600inmetrosandUS$9,800-US$13,700in

tier-two and-three cities52.

Retail

Rural India promisesgrowth in the sector

Indias retail sector counts among the

largest in the world and is a majoremployer domestically. Industry expertsbelieve that Indian retail will be worth

US$521billionby201253. One forcedriving this increase is sales growthin Indias rural areas. Rural consumersare augmenting basics with purchasesof more contemporary products such

as diapers, colognes and chocolates54.This trend presents an opportunity forretailers to experiment with different

products in the rural market andcould stimulate growth in the sectorthroughout India.

Multi-brand retailpushes for higher FDI

The Indian government postponed itsdecision to open up the retail sectorto FDI in 2011. In 2012, industrybodies and companies are expected to

continue pushing the government toallow higher FDI in the sector. Industryfirmly believes that reforms to FDIregulations in the retail sector are vitalfor driving growth in the sector and theIndian economy overall55. Even farmerassociations have been pressuring thegovernment to open the retail sector,on the assumption that doing so could

bring farms greater market access56.

Foreign players increasetheir presence in India

The proposal to allow 100 percentforeign ownership of multi-brandretail in India has been put on hold.Nevertheless, the Indian governmentwill allow 100 percent FDI in single-brand retail. This will pave the way forforeign brands such as Prada, Ikea and

GAP (among many others) to enterIndia because they sell a single brandunder one roof. These brands had not

entered India earlier, owing to policyrestrictions on their ownership andcontrol of their brands57. However,with the new policy regime, theretail sector will expand and Indianconsumers will have more brands tochoose from.

Indian conglomeratesexpand their retailpresence

Reliance Industries will enter thefast-food business with its ownbrand in 2012. The company plansto take on established internationalfast-food brands such as McDonaldsand Dominos as well as local chains

including Jumbo King and SaravanaBhavan. Reliance intends to launchits first stores in Delhi, Mumbai andBangalore in the form of independentoutlets as well as in food courts58.Moreover, Godrej Group has decidedto double the number of stores in itsretail venture, Godrej Natures Basket.India has 16 Natures Basket stores sofar. With average individual spendingon gourmet food more than doubling

over the past three years in India,Godrej aims to scale up its operationswith increased product offerings atits stores59.

India remains thepreferred destinationfor foreign retailers

India has not opened its retail industry

to foreign investors. However, it willlikely remain a preferred destinationfor global retailers eyeing emergingmarkets to offset worsening economicconditions in the developed world.For example, Swiss retail chain DufryInternational and InterGlobe Retail,a sister concern of IndiGo Airlines,have partnered with the Delhi MetroRail Corporation (DMRC) to set upglobally renowned Hudson News

Cafes across 57 metro stations.Hudson News currently operates morethan 500 shops in 10 countries acrossthe globe, and the tie-up with DMRCwould be its first foray in India60.


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Inaddition,US-basedretailgiantWal-Mart is setting up a researchand software development center inBangalore to develop technologies andsolutions for its global e-commercebusiness. Wal-Mart has launched thisventure through its global e-commercedivision,WalmartLabs,whichdevelops

technologies in social and mobilecommerce for global shoppers61.

Telecommunications

Indian telecom sectorgrows

Mobile-device sales in India areexpected to rise over 8.5 percent toreach 231 million units in 2012, upfrom 213 million units in 201162. Inaddition, the data-center co-locationand hosting market in India could beworthaboutUS$609millionin2012, primarily thanks to serviceproviders efforts to expand their data-

center business63.

Telecom companies

take 3G services to thenext level

With the leading mobile-serviceproviders becoming comfortable withoffering 3G services, the sector isexpected to grow, particularly in termsof subscribers64. 3G services in Indiacould reach 50 million subscribersby 2012. In addition, the telecom

ministry has stated that India hascapacity in the spectrum to move tofourth generation (4G) services. Thus,advanced services could be launched in

the country in 201265.

Mobile operators raisecall tariffs

Recent growth in the mobile sector

stemmed from call rates of 30 paiseper minute in India, which countamong the lowest in the world.However, as the sector matures andhits stagnation in Indias urban and

semi-urban sectors, mobile operatorsare considering raising call tariffs.Stagnation in the urban segment isalso pushing operators to move torural areas, which has increased theiroperational costs and put furtherpressure on margins66. The high pricethat mobile operators had to pay for

3G licenses has further pressuredmargins, increasing the likelihood that

operators will raise tariffs.

Telecom industry maywitness consolidation

Because of pressure on margins andstiff competition in the sector, thetelecom industry is pushing for a

liberal merger and acquisition policythat can encourage consolidation.Consequently, sector regulatorsincorporated some guidance on M&Apolicy in the draft of the NationalTelecom Policy (NTP) 2011. Inaddition, recent regulations regardingspectrum management and licensingframeworks stipulate that the marketshare of any entity resulting fromM&A should not be above 35 percentof the total subscriber base67. This isexpected to fuel consolidation in

the industry.

Reforms areimplemented

The proposed NTP 2011 will likelybe implemented in 2012. The policyaims to lay out revised rules that willmake the telecommunications sector

more transparent, relax M&A normsto encourage consolidation and givemore control to the industry regulator,Telecom Regulatory Authority of India(TRAI)68. In addition, state-run telecomoperatorBSNLalsoplanstoleaseoutspare capacity of its 60,000-strongnetwork of towers to private playersas a way to generate revenue fromits infrastructure. This will benefitprivate players seeking to expand their

network,asBSNLhasinfrastructureacross the remotest regions of India69.Moreover, the Telecom Ministryhas suggested the rollout of 4Gtechnology by the end of 2012, which

will make advanced telecom servicesavailable to Indian consumers70.

Indian telecomcompanies expandabroad

Indias second-largest telecom towercompany, Viom Networks, plansto expand its operations globally,particularly in Africa as well asWest and East Asia71. In addition,IMImobile, the Hyderabad-basedmobile data technology company, willlikely expand its African operationsin 201272. After entering Africawith its mobile service, Bharti Airtelhas partnered with Samsung for

exclusive distribution rights for someof Samsungs wireless products in17 African countries for the first sixmonths after their launch73. This willhelp Bharti Airtel broaden itspresence and product offeringsthroughout Africa.


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1.Foodinflationdeclinesto0.42%,BusinessSandard,December30,2011.http://www.business-standard.com/india/news/food-inflation-declines-to-042-/460214/

2. Reserve Bank of India.

3.EconomistIntelligenceUnit.AccessedDecember12, 2011

4. Central Electricity Authority. 2011

5. Accenture. New Waves of Growth. 2011

6.EconomistIntelligenceUnit.AccessedDecember15, 2011.

7.Indiasexternaldebtrises6.6%to$326.6billion, Hindustan Times, December 30, 2011.http://www.hindustantimes.com/business-news/WorldEconomy/India-s-external-debt-rises-6-6-to-326-6-bn/Article1-789176.aspx

8.Weakrupeetohitprofitsofcompanies:Government,Times of India, December 30, 2011.http://timesofindia.indiatimes.com/business/india-business/Weak-rupee-to-hit-profits-of-companies-Government/articleshow/11305486.cms

9. Ministry of Commerce-Government of India.Accessed December 11, 2011

10. Ministry of Commerce-Government of India.Accessed December 11, 2011

11.IndiacallsforcooperationwithAfricainsolarenergy, The Economic Times, July 8, 2011.

12.SouthAmericannationskeenontradepactswithIndia,TheHinduBusinessLine,August6,2011.

13.BhartiAirtelbecomesworldsfifthlargesttelco,sealsZaindeal,Mint,June9,2010.http://www.livemint.com/2010/06/08111538/Bharti-Airtel-becomes-fifth-la.html

14.India-ChinaFTAtalksmaystumbleoverdeficit,Mint, December 15, 2010.

15. Accenture. New Waves of Growth for India. 2011

16.GodrejConsumermullspricehikestooffsetrising input costs, The Economic Times, November15, 2011.

17.Carscostly,soapscostly,chocolatescostly...2012 costly, Daily News & Analysis, December 8,2011.

18.FMCGcompaniessuchasHeinzIndia,Perfetti

Van Melle and Glaxo SmithKline Consumer enteringnew product segments for higher profits, TheEconomic Times, October 3, 2011.

19.Daburplans3plantsabroad,FY12capexatRs200 cr, Business Standard, May 18, 2011.

20.Maricoplanstogrowoverseasbusinessthroughacquisitions,TheHinduBusinessLine,July1,2011.

21.Newpackagingnormtohaveanegativeimpact, Angel Broking, December 12, 2011.

22.InfrastructuretohitIndiagrowth:S&P,TheFinancial Express, November 18, 2011.

23.Negativeinvestmentclimatetohurtinfrasectorin 2012: Fitch, Zee News, December 15, 2011.

24.MoreglobalfirmseyeIndianconstructionequipment market, The Economic Times, November28, 2011.

25.Infrastructuredebtfundlikelywithintwo

months, The Economic Times, December 8, 2011.

26.Govtunveilsstructureforinfrastructuredebtfunds,LiveMint,June25,2011.

27.Printmediaexpectedtogrowat9-10%:AIFMP, The Economic Times, September 21, 2011.

28.DisneylookstoexpandinIndia,TheFinancialTimes, July 26, 2011.

29.DisneyplansUTVSoftwarebuyout,BusinessStandard, July 27, 2011.

30.BillintroducedinLokSabhatomakedigitisation in cable TV mandatory, The EconomicTimes, November 28, 2011.

31.DigitisationofTVsignalstoinvolveinvestmentof up to Rs 40,000 crore, The Economic Times,November 6, 2011.

32.IOC,BPCL,HPCLfacebiggestchallengewith

falling rupee: Moodys, The Economic Times,December 14, 2011.

33.GovtmayawardblocksunderNELPIXbynextMarch, The Economic Times, December 5, 2011.

34.Indiatolaunchshalegasexplorationbidduring12th Plan, The Economic Times, November 22,2011.

35. Oil and Gas Industry, India Brand EquityFoundation, September 2011.

36.SaudiArabiatoraisecrudesalestoIndiain2012, domain-b, November 22, 2011.

37.MinisterofferstopaymarketpriceforLPG,wants well-off to follow suit, The Times of India,December 13, 2011.

38.GovtwantsrichtogiveupsubsidisedLPG,Hindustan Times, December 12, 2011.

39.Indiamayface200mntonnescoalshortage,Deccan Herald, December 14, 2011.

40.Coalshortagemaytrip42,000MWofnewprojects,TheHinduBusinessLine,May4,2011.

41.PowerdiscomssufferRs70,000crloss,wantprice hike, The Financial Express, October 12, 2011.

42.Coalshortagetoupsettargets:PowerMinistry,Indian Express, November 8, 2011.

43.Indiatargets2GWsolarcapacityby2013,domain-b, November 11, 2011.

44.L&Tmullingforayintowind-basedpower,TheEconomic Times, November 28, 2011.

45.AsianDevelopmentBankgrants$48mnloanto Reliance Powers solar project in Rajasthan, TheEconomic Times, December 5, 2011.

46.Madhuconprojectstobuildthermalpowerplant at Indonesia, The Economic Times, December13, 2011.

47.NTPCtooffermaintenanceservicesinBangladesh, The Economic Times, December 13,2011.

48.Residential,commercialrealestatemarketsentimentswillremaincautiousin2012:JLLforecast, The Economic Times, December 1, 2011.

49.200moregreenbuildingsby2012,BusinessStandard, December 29, 2010.

50.Draftbillframedtoregulaterealestatesector,domain-b, November 11, 2011.

51TataGrouptolaunchRs32,000housesforrural

market, The Economic Times, July 15, 2011.

52.Mahindrastoforayintoaffordablehousing,domain-b, October 3, 2011.

53.Indianretailsectortotouch$521bnby2012,Business Standard, July 23, 2009.

54.Ruralconsumersnowbuyingdiapers,saltysnacks, colognes and even contraceptives, TheEconomic Times, December 2, 2011.

55.RecallofretailFDIregressive,disappointing:India Inc, The Economic Times, December 8, 2011.

56.FarmergroupstomeetManmohanSinghto press for FDI in retail, The Economic Times,December 12, 2011.

57.100%FDInodforsinglebrands,HindustanTimes, December 7, 2011.

58.RelianceIndustriestoenterfast-foodbusiness

with its own brand next year, The Economic Times,December 12, 2011.

59.GodrejGroupretailchainNaturesBasketplansbig expansion, domain-b, October 8, 2011.

60.InterGlobeRetail-DMRCtosetupnewscafesatmetro stations, domain-b, November 11, 2011.

61.Wal-Marttosetupe-commerceR&DcentreinBangalore, domain-b, November 10, 2011.

62.Mobilehandsetsalestoreach231millionin2012: Gartner, domain-b, November 22, 2011.

63.Indiadatacentreco-location,hostingmarkettoreach$609.1mnin2012:Gartner,domain-b,November 26, 2011.

64.3GinIndiaprojectedtoreach50millionsubscribers by 2012, Telecom Engine, June 23, 2011.

65.Sibalexpects4Gserviceslaunchby2012,TheTimes of India, November 5, 2011.

66.BhartiAirtelchairmanSunilMittalhintsat higher tariffs, Reliance Communications chiefAnil Ambani calls for regulatory consistency, TheEconomic Times, September 7, 2011.

67.Telecomsector-Onthecuspofconsolidation,TheHinduBusinessLine,November15,2011.

68.HighlightsofdraftNationalTelecomsPolicy2011, The Economic Times, October 10, 2011.

69.BSNLplanstoleaseinfrastructuretoprivate

players: Govt, The Economic Times, December 2,2011.

70.Sibalexpects4Glaunchin2012,domain-b,November 5, 2011.

71.ViomNetworkslooksbeyondIndiaforprofitability, The Economic Times, December 5,2011.

72.IMImobiletoexpanditsAfricaoperations,TheEconomic Times, November 25, 2011.

73.BhartiAirtelsaysinpartnershipwithSamsungin Africa, The Economic Times, December 8, 2011.

References


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