hsbc doing business in india
TRANSCRIPT
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Doing business in India
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Contents
Section 1 India An Overview
Section 2 Trade
Section 3 Doing Business In India
Section 4 HSBC In India
Disclaimer: This presentation pertains to investment issues, fnancial markets
and other related areas and is or inormation purpose only. Investors andinterested parties should seek to get relevant business related inormationdirectly rom the concerned government body
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Section 1 India An Overview
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Population: 1.17 billion (Est. 2009)
Average literacy rate is 65%
Land area: 1.27 million square miles (1/3 o US)
Languages: 18 Languages (English widely used)
About India Snapshot
2005
785877
India GDP (USD Bn)
11151175 1175
1381
16381800
1600
1400
1200
1000
0
200
400
600
800
2006 2007 2008 2009 2010e 2011e
Source: HSBC Research
Did you know India is the worlds
largest democracy
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Investment Climate
Favourable demographics (Rise o the Great Indian Middle Class)
More than 35% o the Indian population is between 15 35 (Working population to rise to 70% by 2030) 2nd astest growing HNWI market (20.5%) with over 100k HNWIs (Merrill Lynch Report)
Access to labour and skills (Cost Advantage)
Over 380 universities, 11,200 colleges and 1,500 research institutions
Worlds largest pool o English speaking scientists & engineers
Labour cost (US$ p.a.) @ 2200, as against 3600 China, 6600 Brazil, 8500 Poland
Less than US$ 7,500 p.a. or a call center agent in India (US$ 19,000 in US, US$ 17,000 in Australia)
Financing (Credit Growth 30%+)
Credit ratings o SMEs introduced
Firms new investments fnanced by commercial bank credit: 27.7% (India) v.s 14.7% (globally)*
Inrastructure
Largest road network in the world (3.85Mn kms)
12 major & 187 minor ports over 7,500 kms o coastline
5th largest installed power capacity o 123GW Privatization o airports, ports, road projects
* World Bank survey
Did you know India is 1 o only 3
counntries to make itsown supercomputers
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Section 2 Trade
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GDP to touch USD 1,600 Bn by 2011 rom USD 785Bn in 2005
(over 100% growth in 6 years)
GDP growth rate in the 7% - 10% range over the last 5 years
Growing trade relations and wider diversifcation across countries
Share o US in total trade down rom 14.1% in 1991 to 11.4% in 2008-09
Share o China up rom 0.9% in 1991 to 5% in 2008-09
ASEAN, WANA and South Asian economies account or 37% o Indianexports and 39% o imports
Foreign trade growing at a rate more than twice the growth rate o GDP
India in the global context
Did you know India is the worlds
12th largest, 2nd astestgrowing economy
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Trade fows India
Source: Ministry o Commerce, Govt. o India (2008-09)
4.6% share in exports and 2.5% share in imports
Amongst top 5 export destinations or India
Rank Imports (Top 10) %Growth %Share
1 China 19.7 10.7
2 UAE 76.5 7.8
3 Saudi Arabia 2.6 6.6
4 USA (11.9) 6.1
5 Iran 13.1 4.1
6 Germany 21.5 3.9
7 Switzerland 21.6 3.9
8 Australia 42 3.6
9 Kuwait 24.5 3.2
14 Singapore (5.7) 2.5
Rank Exports (Top 10) %Growth %Share
1 UAE 56.5 13.2
2 USA 2.0 11.4
3 China (13.9) 5.0
4 Singapore 14.4 4.6
5 Hongkong 5.4 3.6
6 UK (0.8) 3.6
7 Germany 24.7 3.4
8 Netherlands 20.9 3.4
9 Saudi Arabia 37.7 2.8
10 Belgium 6.5 2.4
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Trade fows and FDI India/Singapore
Major items o trade
Exports rom India:
Mineral oils & uels
Jewellery, precious stones
Electrical machinery
Aluminium and products
Imports into India:
Products o mineral oils
Electrical equipment
Organic chemicals
Optical/Medical instruments
FDI rom Singapore to India:
Exports rom India:
FDI rom Singapore to India:
Cumulative FDI : USD 9.5Bn (9% share)
Highest inows rom any country apart rom Mauritius
2006
5.30%
4.80% 4.50%
4.60%
5.43
Exports from India (USD Bn) % Share
6.05 7.38 8.44
6%
5%
4%
3%
2%
1%
0%
9
8
7
6
5
0
1
2
3
4
2007 2008 2009
2006
2.3%
3.0%3.2%
2.5%
3.35
Imports into India (USD Bn) % Share
5.48 8.12 7.65
3.5%
2.5%
3%
2%
1%
0.5%
1.5%
0%
9
8
7
6
5
0
1
2
3
4
2007 2008 2009
Source: Ministry o Commerce, Govt. o India
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Section 3 Doing Business in India
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What can you do in India?
Did you know In area terms, India
is 70% the sizeo Europe
Tap theconsumer base
Tap thecost advantage
Tap thetrade opportunity Access India
Tap industryexpertise
Tap thetalent pool
Tap the nancialopportunity
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How can you access India
Foreign Direct Investment: Automatic Route - Equity limits
Insurance (26%) Airlines (Domestic/cargo)/ Telecom services/Private sector banks (74%) Pharmaceuticals, Non banking fnancial companies, Food processing (100%)
Foreign Direct Investment: With Prior Permission (Foreign Investment Promotion Board)
News & current aairs (26%) Broadcasting - Cable, DTH (49%) Trading (100%)
Development o airports (100%)
Foreign Portolio Investment: Investment in primary and secondary markets Registration with Securities and Exchange Board o India
Own up to 10% o the paid-up capital o an Indian company Foreign Institutional Investors can cumulatively hold up to 24% o paid-up capital o a company
Did you know India is 1 o only 3
countries to make itsown supercomputers
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How can you access India
Indian Company
Joint Venture
Strategic alliances with Indian partners where sectoral caps exist
Advantages:
Established distribution / marketing set up o the Indian partner
Available fnancial resource & contacts o the Indian partners
Wholly Owned Subsidiary Treated as a domestic company (limited liability) or tax purposes
Advantages:
Provides exibility o operations
Did you know 100 o Fortune 500have R&D acilities
in India
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How can you access India
Foreign concern
Liaison Ofces, Representative Ofces
No commercial or industrial activity may be undertaken
Branch Ofces
Manuacturing and Trading companies may open branch ofces
Specifc Central Bank approval required
Indian transer pricing applies
Advantages:
Can acquire immovable property Post-tax profts reely repatriable
Project Ofces
For those that have been awarded an Indian project
Treated as a branch ofce or tax purposes
No prior permission required rom RBI
Did you know India has the worlds
second largest pharmaindustry ater China
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Key success actors or doingbusiness in India
Understanding the diversity o the Indian market
Picking the right locations Inrastructure
Skill Customers
Constant innovation: Investment in R&D Patience: Harvest the opportunities
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Accessing India A case study
Key objective Sustainability
Business model
Access India:
Plotting theroadmap
Inrastructure
Legal rameworkFinancial
investment
Did you know India is the worlds
second largestsmall car market
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Accessing India A case study
Key Objective Source quality raw materials at a low cost
Manuacture at a low cost or existing customers
Export goods to tap consumer base in India
Manuacture in India & tap the Indian consumer base
Business Model JV with Indian company
Setup Indian company
Part outsourced
Franchise model
Legal ramework - Starting business Registrar o Companies (ROC)
MoA & Certifcate o incorporation
PAN & Tax Account number
Mumbai Shops & Establishment Act registration
Registration or VAT, Proession tax, Employee PF
ESIC (medical insurance) registration
Sustainability Capacity expansion: Rapid growth
Tackling diversity: Local markets
Improving cost efciency: High volume - Low value
Investment in R&D: Local innovation
Inrastructure Location: Government policy Property: Lease v/s buying Supply chain & logistics: Trusted partnership Resourcing: Skill matching
Distribution & Marketing: Market knowledge
Financial InvestmentIf government approval required
Approval by Foreign Investment Promotion Board (FIPB)
Post which below procedure applies
If automatic approval
Notiy RBI within 30 days o receipt o inward remittances
File documents within 30 days o issue o shares30days(Mumbai)
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Some attractive sectors
Market sectors with the most upside potential in India in the next three years
Source: Investment Climate in BRIC Nov06: Survey o CFA institute members
Basic Materials
Other
Media & Publishing
Transportation
Oil & gas, energy, utilities
Travel, hotel & tourism
Automotive
Health care, biotech & pharmaceuticals
Agriculture, food processing
Capital goods & industrials
Consumer goods & services & retailing
Real Estate
Construction
Communications, technology & telecoms
Banking, finance & insurance
3%
5%
6%
10%
10%
12%
14%
16%
18%
22%
29%
32%
38%
41%
57%
Did you know India is one o six
countries that launchesits own satellites
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Section 4 HSBC in India
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HSBC in India
Coverage with 50 branches
Presence in 29 cities
Plan or over 30 new branches*
The Leading International Bank in India
*Subject to approvals
Kolkata
iabmuM
Chennai
Coimbatore
New Delhi
Ahmedabad
Vadodara
Chandigarh
Pune
Nagpur
Visakhapatnam
Trivandrum
Kochi
Noida
Gurgaon
Bangalore
Mysore
Jaipur
Ludhiana
Hyderabad
Indore
Patna
Raipur
Nashik
Surat Guwahati
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Trade Services
Export/Import Financing
Documentary Credit
Structured Trade Finance
Instant@dvice
Documentary Collection
9.6% & 9.3% o Indias exports
and imports throughput
Business Finance
Financing o fxed assets andworking capital
Local and oreign currency loans
Channel fnancing
Bill Discounting
Domestic and export actoring
Treasury and Capital Market
Foreign Exchange products
Interest rate products
Customised/ structured solutions
Transaction Banking
Payments & Cash Management
Global e-banking package - HSBCnet
Host to Host solution - HSBC Connect
End-to-end supply-delivery chain solutions
Coverage o 4000 locations - Over 500 top
tier clients
Flexible MIS/Automated ReconciliationServices
A ull servicing oering
Did k
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Our Approach
We understand that no two businesses are the same
We understand that each one o you have your unique operating environment
We ollow the Solutions Approach ater thoroughly understanding your business
We strive to provide a unique solution o a bundle o products and services on thebasis o the lie stage o your business
Did you know India is the largestproducer o milk,2nd largest o ood
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Providing the right solution at eachstage o the business
Current Accounts
Internet Banking
Access to over 23,000 VISA ATMs
Trade Services
Cash Management
Factoring Solutions
Unsecured Business overdrat
Loans against Property
Relationship Manager
Transaction Banking
Forex management / Treasury
Lending lines or Trade /
Working capital Escrow Services
IPO Services
Term Loans
Commodities Financing
Growth unding (PE / Capital Mkts)
Multi currency accounts
Outsourcing (Payroll / Payments)
Seamless cross border banking
Growth unding
(PE / capital markets)
Aquisition Funding /Investment Banking
Risk management
Initial Stage Growth Stage Consolidation
Start up Stable Business Rapid Growth Niche Market Position Market Leader (Global / Local)Time Scale
BankingR
equirements
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A success story
An international IT consulting company, started in 1999, delivering aordable business and technology
solutions. HSBCs total exposure stands at $100M, growing rom $7M our years ago
HSBCFacilities Checking accounts
FX limits
Working Capital
Fex limits
Facilities - $7m
Term loan
PCM and Trade
HSBCnet
Corporate cards (2k)
Cross border
(SGH, UAE, GER, UK)
Derivatives
Collecting bankers
Aquisition unding
Dividend payment
Capex unding ($18m)
Cross border
(Netherlands, AUS, Dubai)
Total Facilities - $60m+
C
orporateEvolves Aggressive growth 2 new centers Acquisition o $10M Goes Public $ 54M
2 new acilities
Acquisition o $6.5M
2004-05
$55m2003-04
$20m
2005-06
$102m
2006-07
$130m
2007-08
$180m
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Key achievements
Best Global Supply Chain Finance Provider 2008
Best Pre-Shipment Financing Solution 2008
Best Internet Trade Finance Bank in Central and Eastern Europe 2008Best Supply Chain Finance Provider in the Middle East 2008
Best Trade Finance Provider in the UK 2006 - 2009
Best Trade Finance Provider in HK 2002 - 2009
Best Trade Finance Provider in Saudi Arabia 2009 (SABB)
Best Overall Bank or Cash Management in Asia 2008
Best Overall Bank or Cash Management in Middle East 2008
Best Bank or Payments & Collections in Asia 2008
Best Bank or Payments & Collections in Middle East 2008
Best Global Trade Finance Bank 2008
Best Islamic Trade Finance Bank 2008
Best Trade Finance Bank in the Middle East and North Arica 2008
Leading Trade Services Bank in Asia-Pacifc 2008
Leading Trade Services Bank in the Middle East and North Arica 2008
Best Online Trade Finance Bank 2007 2008
Best Factoring House 2003-2008
Best Trade Finance Bank in the Middle East & North Arica 2006 - 2008
Best International Trade Bank in China 2008
Best International Trade Bank in Malaysia 2008
Best International Trade Bank in Pakistan 2008
Best Factor provider Poland 2008
Best Factor provider UK 2008
Best Debt House Turkey
Best Domestic Cash Management Bank in India, Indonesia, Malaysia, Brunei,
Taiwan and Sri Lanka, 2008
Overall Customer Satisaction Rated No 1 in Asia, 2008Best Cash Management House in Asia, 2008
Best Bank in Hong Kong 2001-2008
Best Cash Management Bank in Middle East, & Arica 2008
Best Bank in Asia or Cash Management, 2008
Best Trade Finance Bank in Asia 1999 - 2008Best Trade Finance Bank in Hong Kong 2008
Best Trade Finance Bank in Taiwan 2008
Best Trade Finance Bank in Vietnam 2008
Most Innovative Trade Solution 2008
Best Transaction Bank in Asia, 2008
Best Transaction Bank in Hong Kong, 2008
Best Cash Management Hong Kong, 2008
Best Cash Management Bank in Southeast Asia, 2008
Best Bank or Payments and Receivables, 2008
Best Trade Finance Bank in Asia 1997 - 2008
Best Trade Finance Bank in Hong Kong 2008
Best Cash Management Bank in Hong Kong, 2008Best Foreign Commercial Bank in China
Best Foreign Commercial Bank in Vietnam
Best Foreign Commercial Bank in Malaysia
Hong Kong Best Local Cash Management Bank
Indonesia Best Foreign Cash Management Bank
Taiwan - Best Foreign Cash Management Bank
Best Trade Finance Bank 2003 - 2008
Cargonews Asia
The Most Innovative Cash Management Provider in Asia, 2008
Best Trade Bank in Asia 2008 Trade and Foraiting Review