The India Opportunity & Business Environment 2012: What it is? What are the Challenges? How to Get Involved Rana Sarkar President & CEO

The India Opportunity & Business Environment 2012: What it is? What are the Challenges? How to Get Involved

Rana Sarkar President & CEOCanada-India Business Council

Board of Trade of Metropolitan MontrealOctober 25, 2012

• Who We Are• The India Opportunity in Box• Market Challenges and Solutions• Common Mistakes to Avoid• Steps to Winning in India• New Reforms

Overview

Founded in 1982 the Canada-India Business Council serves over 100 members in Canada and India. The C-IBC is Headquartered in Toronto with operations in Vancouver, New Delhi & Montreal.

• Accelerate Bilateral Trade, Investment and Deal Flow

• Institution-to-Institution Relationship & Network Building

• Raise the “Mindshare” of India in Corporate Canada and Canada in India

• Create Option Value for our members

• Generate unexpected outcomes in future industries

• Convening Key Players Across Borders

• Proprietary Research• Effective Advocacy & Policy

Development

• Network Thickening

• Building Connectivity

• Building Mindshare• Trade Facilitation & Innovation

Mission How We Do It

We’re the National Trade Promotion Organization Dedicated Exclusively to Building the Canada-India Trade Corridor

• Global Economic Re-alignment Makes India Inevitable for Canada

• Relationships between BRICS that will be transformative - Triangles

• 3rd Largest Economy by 2050• Market Access• Bottom Billion Innovation

• Demographics

• Rich before Old

• Urbanization

• 250M moving to cities

• Globalization & Googlization

• Domestic Consumption

• Entry of Bottom Billion

DriversIndia Opportunity

“Asia is returning to its natural “half share” of the world economy” Dominic Barton , Global Managing Partner, McKinsey

Global Wealth 2015

Global GDP 1990 to 2015

India will grow rich before it grows old….

Deprived: Less than $2,250 in annual income

Aspirers: $2,250 to $5,000

Seekers (Middle Class): $5,000 to $12,500

Strivers (Middle Class): $12,500 to $25,000

Globals: > $25,000

Indian aspiring middle classes are growth drivers

Urbanization & new cities of scale are also driving growth

A quarter billon people are moving into cities in the next 18 years

• Indian Reforms Started Almost 30 Years ago - Hour of Necessity

• Accelerated in 1991 Liberalization of the License Raj and Re-opening to the world (on Indian Terms)

• Gains were Consolidated and Sent over the Tipping Point in 2000 - Y2K Dividend - IT leads the way

• Cross Party Consensus - Question is Pace Now

Anatomy of the Growth Story

Economic Crisis is Forcing Reform: Sept 2012

• Relaxation of Restriction on Single Brand Retail (IKEA & WalMart)

• Reducing Fuel Subsidies: It also announced a 14% rise in the price of diesel, which is heavily subsidised in India, and reduced the subsidy on cooking gas cylinders.

• Civil Aviation: foreign carriers allowed to buy a 49% stake in Indian private airlines – opportunity to be part of India's remarkable growth in passenger traffic.

• FDI in all broadcast-carriage services has been raised to 74% from 49% previously – could help fund India's digitization plan.

• Permit foreign investment of up to 49% in power trading exchanges.

• Disinvestment (or privatization) of India’s government corporations has moved into a new progressive phase with a target of over $5 billion.

• India's government has approved the Insurance Amendment Bill, which proposes raising the level of Foreign Investment allowed in the Insurance Sector to 49% (up from current 26%)

• The cabinet also cleared up to 49% Foreign Investment in Pension Companies – a sector previously closed to foreign investment.

Indian Farmers Fertiliser Cooperative (IFFCO) and La Coop fédérée announced a $1.2 Billion investment to establish a urea production nitrogen fertiliser plant in Bécancour. (octobre 2012)

= new partnerships

• US$ 311 B in Reserves• Attracted over 100B in FI • P/E Deals of over 10B in 221

Transactions (ave. deal size up 19m-44m)

• Stable Banking System• 25% Savings Rate• Bad Loans are 2% (vs 20% in China)

Growth Drivers • Domestic Driven Growth

(Consumption is 64% of GDP vs 42% in China)

• “Bottom Billion” Opportunities - Bringing 500m into the Consumptive Economy in 10 Years

• Services and Capital Intensive Industries Lead Growth

• 300M English Speakers by 2015• Exports are only 13% of GDP (vs 40-

130% in other Asia)• Only 20% of Exports are to the US

1. Governance2. Education3. Poverty Amidst Urbanization4. Infrastructure Gap5. Adapting to Climate Change6. Regional Instability7. Black Swans

1. Tipping Point in Growth

2. Demographic Dividend

3. China Example

4. Attitude of New India

5. Democratic Dividend

6. “Syncretic Gradualism” / Diversity

7. Management Talent

Why it’s Likely to Stay on the Rails

Challenges to Growth - What Can Stop the Train?

Brand Canada Confusion - Lack of Visibility

Limited Focus / Little Knowledge / Limited Travel

Overcoming our Federal System

Differences in Cultural Styles

Brand Canada Strategy - New Public Diplomacy – New Strategic Plan

Senior Government / CEO Travel and Forums

Start Where We are Globally Excellent

Focus on Education

Harnessing the Diaspora Dividend and our Weapons of Mass Attraction - Gen 1, 1.5 and beyond

Capturing the Symbolic focus - Tactics Towards Mindshare - Using Events and Popular Culture

What are the Government’s Key Challenges in India?

Steps to Overcoming Them

Common Mistakes to Avoid for Business – more to come from subsequent presentations 1. Don’t Get Distracted by the 100,000 foot view

2. Not Doing Your Homework

1. Wrong Plan, People, Partners and (No) Patience

2. Not Getting Over There: Out of Sight / Out of Mind

3. Not Knowing Your Strengths

3. Unrealistic Time Horizons

4. Getting Overwhelmed

Which Sectors Should We Focus On? Focus on Need & Expertise

Energy & Resources

Infrastructure Clean Tech

Life Sciences

Financial Services

Mining

Automotive

Agriculture

Global Excellence Capability

What to Do:

1. Know Your Strengths

2. Pinpoint Your Targets

3. 4 Ps

1. Plan

2. Partners

3. People

4. Patience

4. Focus on the Needs of the Bottom Billion

5. Use the Networks - DFAIT, EDC, C-IBC, BT Metro Mtl., STEP etc.

6. Go there – Episodic to the Strategic

Persistence is Key: But Smart Engagement Will Be Rewarded

Innovation is the Real Reason We Should Be in India