Industry Analysis Report

2011-05-15T04:59:00.000-07:00

1. Financial Services sector

The financial sector in India includes services like broking firms, investment services, financial consulting, national banks, private banks, mutual funds, car and home loans, equity market and other banking services. Financial services have grown immensely in the last few years.
Finding India as a promising market, foreign institutional investors (FIIs) have purchased stocks and debt securities worth US$ 223.26 billion in the fiscal 2010-11, according to the latest available data with Securities and Exchange Board of India (Sebi).

India's foreign exchange reserves stood at US$ 308.2 billion as on April 8, 2011, according to the data in the weekly statistical supplement released by the Reserve Bank of India.

A). Investment Scenario
Foreign investors see huge long-term growth possibilities that India presents according to Ernst & Young’s 2011 Indian Attractiveness Survey. The growing corporate interest in India is explained not only by the country’s economic growth potential, but also by perceptions about how the country will change as its GDP grows over the next decade.
Seventy-five percent of the global businesses already present in India, and which formed part of the survey, indicated that they would expand their operations. The survey confirms that India is undergoing a transition, both in terms of investor perceptions of its market potential, and in reality.
B). Stock markets
The share of Indian equities in global market is increasing. Market capitalization of India as a proportion of world market cap has risen to a record high. The country's market capitalization as a proportion of the world market cap was 3.34 per cent as on September 22, 2010. India's market-cap as on September 22, 2010 was US$ 1.55 trillion as compared with world market-cap of US$ 46.5 trillion. This was higher than the 3.12 per cent share India enjoyed at the market peak of January 2008.
C). Insurance
India has a flourishing insurance industry, with several national and international players competing and growing at rapid rates.
The insurance industry is expected to continue to outpace the rapid economic growth to reach US$ 350-400 billion in premium income by 2020, making India amongst the top three life insurance markets and top 15 non-life insurance markets by the year, according to an industry report titled ‘India Insurance — Turning 10, Going on 20’. The report stated that the total penetration of insurance (premium as percentage of GDP) has increased from 2.3 per cent in 2001 to 5.2 per cent in 2011. Apart from this, there has been a vast increase in the coverage of insurance. The report added that the number of life policies in force has increased nearly 12 fold over the past decade and health insurance, nearly 25 times.
The total premium of the general insurance industry has seen a growth of 22 per cent to US$ 9.58 billion in 2010-11.

Banking services
Indian banks have compared favourably on growth, asset quality and profitability, according to a report by McKinsey& Company. The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 (till 2010) as compared to a 27 per cent growth in the market index for the same period. Policy makers have made some notable changes in policy and regulation to help strengthen the sector. These changes include strengthening prudential norms, enhancing the payments system and integrating regulations between commercial and co-operative banks.
Bank loans registered a growth of 21.38 per cent in 2010-11, while deposit growth stood at 15.84 per cent, according to data released by the Reserve Bank of India (RBI). Analysts and bankers said a growth rate of 18 per cent in deposits and 20 per cent in credit should be sustainable for banks in 2011-12.

2. Automobile sector

Post liberalization in 1991, Indian automobile sector has been aptly described as the sunrise sector. Owing to its vertical and horizontal integration with other key segments of the economy, the industry is said to be a major growth driver. A steady growth in the sector has attracted heavy investments from various foreign majors through direct investments or private equity.
India continues to consolidate its position on the global front being one of the world’s top 10 auto-producing countries. India, the seventh largest vehicle producing nation in the world, now accounts for 5 per cent of global auto production, up from 1.4 per cent at the beginning of 2000, according to Society of Indian Automobile Manufacturers (SIAM)

Investments:

India has emerged as one of the favourite investment destinations for automotive manufacturers in recent times.

Maruti Suzuki India Ltd (MSIL) has announced an investment of US$ 411.45 million for setting up its third plant at Manesar in order to capitalize on the rapid growth of the Indian auto industry. This new production line–Maruti's sixth overall would have 250,000 units annual capacity.
The auto-maker has also launched its luxury sedan Kizashi in India. The cars would be imposrted from parent company’s Japan facility.
Volvo-Eicher Commercial Vehicles (VECV) has announced an investment of US$ 61.51 million for a new engine plant at its existing facility at Pithampur, Madhya Pradesh. With this, India will now become a global manufacturing hub for Volvo's new medium-duty engine platform, with the only other factory for the engine type being present in Japan.
Tata Motors is in talks with a Canada-based company for its second generation gearless Nano.
Toyoto plans to invest US$ 107 million to make engines and gearboxes for Toyota's new small car, Etios that is expected to be launched by year-end.
India Yamaha Motor Limited is also planning to tap the rural market, which currently accounts for around 15 per cent of its overall sale. The company has launched a new bike YBR 110 that will target the rural markets.
Mercedes Benz has met its single largest order—of 150 cars worth US$ 14.7 million—from the small industrial town of Aurangabad, Maharashtra.
The Renault-Nissan alliance and Bajaj Auto have signed a memorandum of understanding for developing a low-cost car. According to the MoU, the design, engineering, manufacturing and supply base expertise to create the product will be executed by Bajaj with the support of the Renault-Nissan alliance.
Indo-Russian commercial vehicle joint venture (JV) Kamaz Vectra Motors plans to more than double its annual capacity to 12,000 units at its Hosur plant by 2012 to capture the fast-growing market in India.
Ashok Leyland and Japanese car maker Nissan Motor Co Ltd have announced the launch of three light commercial vehicles (LCVs) from 2011 through 2013. The auto makers also confirmed to be in talks to create a small car for the Indian market within the US$ 2,000 - US$ 6,000 price range.
British luxury brand Jaguar Land Rover (JLR) plans to increase presence in India and will tap parent Tata Motors for assistance in areas like logistics and service support.
BMW, the luxury car maker, is planning to infuse US$ 15.76 million in its Indian operations. Andreas Schaaf, President, BMW India, said that the company had invested US$ 24.77 million till September 2010 and this would be increased to US$ 40.53 million by the end of 2012.
Luxury carmaker Mercedes-Benz India will set up a new facility for building of city bus bodies at its Chakan plant in Pune. The new unit will become operational by mid-2011 and will have a capacity of 700 units a year.

Domestic Market/ Sales:

India’s auto market grew at 32.69 per cent in 2010, marginally better than China’s 32.44 per cent, according to SIAM.
According to the data released by SIAM, in December 2010, total sale of vehicles across categories registered a growth of 30.51 per cent to 13,05,872 units, as against 10,00,562 units in the same month of 2009. The industry has been growing at around 30 per cent in the ongoing fiscal.
According to data released by SIAM, the passenger vehicles segment during April-December 2010 grew at 31.83 per cent over same period last year. Passenger cars grew by 32 per cent, utility vehicles grew by 20.82 per cent and multi-purpose vehicles grew by 50.58 per cent during this period.
The overall commercial vehicles segment registered a growth of 34.08 per cent during April-December 2010, as compared to the same period last year. While medium and heavy commercial vehicles registered growth of 42.85 per cent, light commercial vehicles grew at 27.12 per cent.
Two wheelers registered a growth of 28.21 per cent during April-September 2010. Mopeds, scooters and motorcycles grew by 24.47 per cent, 48.90 per cent and 24.62 per cent, respectively.

3. Auto Components

Poised to grow by over four-fold to US$ 113 billion by 2020, the Indian auto component industry is one of the front runners for grabbing the global auto components outsourcing market.
The total passenger car production in the country will jump four times to reach 9 million cars by 2020, according to Automotive Component Manufacturers' Association (ACMA). Although a major chunk of this will come from the fast growing domestic market, exports are likely to form around 35 per cent of the total market by 2020
The potential compound annual growth rate (CAGR) of the auto component industry is estimated to be around 18 per cent in the period 2010-11. Exports from the auto component industry are estimated to be worth US$ 5 billion in 2010-11, according to the ACMA report.
Europe is likely to have accounted for 36.9 per cent of India's auto components exports in 2010-11, followed by Asia with 28.1 per cent and North America with 24 per cent. The industry has witnessed a shift in the composition of exports over the years. Investments in the auto component industry are estimated at US$ 12 billion in 2010-11, according to ACMA.
Destination India
With the finalisation of the Automotive Mission Plan (AMP) India is expected to become a preferred destination for design and manufacture of automobile. The plan envisaged an investment of US$ 40 billion and provided a road map to help transform India into a global automobile player. The AMP proposed a 25-point plan that included making India a manufacturing and export hub for small cars, multiutility vehicles, two and three-wheelers, tractors and components.
Auto component exports are expected to grow to US$ 30 billion by 2020. India’s share in the global auto components market is expected to rise from 0.9 per cent in 2008–09 to 2.5 per cent in 2015.
Investments

Automotive components maker Amtek Auto has formed a joint venture with South Korean automaker Autech Corporation to manufacture vehicles for defence, para-medical,fire fighting and waste management sectors to capitalise on the booming demand for specialised vehicles. The Delhi-based company will set up an assembly facility at Daruhera in Haryana with an initial capacity of 10,000 units per year.

JK Tyre& Industries Ltd has signed a memorandum of understanding (MoU) with the Government of Tamil Nadu for setting up US$ 325.74 million greenfield facility at Sriperumbudur. The facility would generate US$ 43.43 million every year for the exchequer and create 1,000 skilled jobs, said RaghupatiSinghania, Vice Chairman and Managing Director of the company.

German auto component major and industry technology provider Bosch Group has made an upward revision in its Indian investment programme for 2010-2012 on the back of booming domestic auto market. VK Viswanathan, President,Bosch India said the group had decided to increase its investment quantum to US$ 517.5 million from the proposed US$ 450 million. The group will utilise this investment for its six separate entities in India.

Policy Initiatives

The announcement of Union Budget 2011-12 brought cheers to the auto components industries in several ways. Some of the highlights are:

Retained the custom duty rates on auto components.
Retained the excise duty on small cars, two wheelers and three wheelers at 10 per cent
Enhanced and unified the export duty on all types of iron ore to 20 per cent ad valorem. Export duty on iron ore pellets fully exempted.
Full exemption of basic customs duty on stainless steel scrap.
Reduced the basic customs duty on Ferro-nickel from 5 per cent to 2.5 per cent.
A concessional rate of Nil BCD CVD at 5 per cent and full exemption from SAD is being extended to specified parts of the hybrid vehicles, namely, battery pack, battery charger, AC/DC electric motors, and motor controllers.
Full exemption on basic customs duty and 4 per cent excise duty on batteries imported by manufacturers for replacement market.

4. Banking

The banking system remains, as always, the most dominant segment of the financial sector. Indian banks continue to build on their strengths under the regulator's watchful eye and hence, have emerged stronger.

Nationalized banks, as a group, accounted for 51.2 per cent of the aggregate deposits, while State Bank of India (SBI) and its associates accounted for 22.5 per cent, according to Reserve Bank of India's (RBI) 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks: September 2010'. The share of New private sector banks, Old private sector banks, Foreign banks and Regional Rural banks in aggregate deposits was 13.5 per cent, 4.5 per cent, 5.2 per cent and 3.1 per cent respectively

With respect to gross bank credit also, nationalized banks hold the highest share of 50.9 per cent in the total bank credit, with SBI and its associates at 23.1 per cent and New Private sector banks at 13.7 per cent. Foreign banks, Old private sector banks and Regional Rural banks held relatively lower shares in the total bank credit with 5.2 per cent, 4.5 per cent and 2.5 per cent respectively.

Major Developments

Hindustan Unilever Limited (HUL) has tied up with State Bank of India (SBI) to start a pilot project to promote financial inclusion in rural markets in Maharashtra and Karnataka, through HUL's 'Shakti Ammas', a network of self-help groups to open bank accounts for people. Currently, around 100 accounts have been opened with their help and the project will be launched nationally by end of April 2012.
The government has infused US$ 392.25 million into Oriental Bank of Commerce (OBC). This will increase the government’s shareholding in the Delhi-based bank from 51.09 per cent to 58 per cent.
Exim Bank of India has signed two separate line of credit (LOC) agreements with Tanzania and Mozambique so as to further strengthen the financial linkages with the two African countries.

Government Initiatives

The government presented the Banking Laws (Amendment) Bill 2011 in the Lok Sabha. The bill proposed the following amendments among other recommendations in the existing Banking Law.

To raise the voting rights of shareholders of nationalized banks to 10 per cent from the existing 1 per cent. For private sector banks, the voting rights would be proportionate with investors’ shareholding.
To remove the voting right restriction of 10 per cent for private sector banks in the total voting rights of all the shareholders of the banking company.
To give powers to nationalized banks to issue two additional instruments bonus shares and rights issues to be able to get funds from capital market to expand the banking business.
To grant powers to RBI to impose such conditions as it deems necessary while granting such approval for acquisition of 5 per cent or more share capital of a banking company if it considers necessary.
To confer power on the RBI to call for information and returns from associate enterprises of banking companies and also to inspect the same.

5. Cement

India is the second-largest cement producer in the world, with an installed capacity of about 236 million tonnes (MT) in 2009–2010. The sector is expected to add an additional capacity of 92.3 MT by 2013. As a result, the industry will have a total installed capacity of 383.5 MT by March 2013.

During January 2011, the cement production touched 14.52 MT, while the cement dispatches quantity was 14.47 MT during the month. The total cement production for April-January 2010-11 reached 136.51 MT as compared to 130.85 MT over the corresponding period last fiscal. Further, cement dispatches also witnessed an upsurge from 130.09 MT during April-January 2009-10 to 135.56 MT during April-January 2010-11.

New Investments

Birla Corporation, Flagship Company of the M. P. Birla Group, is planning to set up a 1 MT cement plant in Assam at an investment of around Rs.450 crore (US$ 99 million). The company has signed a memorandum of understanding (MoU) with the Assam Mineral Development Corporation to this effect.
Madras Cements Ltd is planning to invest US$ 178.4 million to increase the manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT from 2 MT by April 2011.
Swiss cement company Holcim plans to invest US$ 1 billion in setting up 2-3 greenfield manufacturing plants in the country in the next five years to serve the rising domestic demand. Holcim is present in the country through ACC and Ambuja Cements and holds around 46 per cent stake in each company. While ACC operates 16 cement plants, Ambuja Cements controls five plants in India. The Aditya Birla group is the largest cement-making group by capacity in the country and controls Grasim Industries and Ultratech Cement.

Government Initiatives
The cement industry is pushing for increased use of cement in highway and road construction. The Ministry of Road Transport and Highways has planned to invest US$ 354 billion in road infrastructure by 2012. Housing, infrastructure projects and the nascent trend of concrete roads would continue to accelerate the consumption of cement.
Increased infrastructure spending has been a key focus area. Finance Minister Pranab Mukherjee has proposed to earmark US$ 47 billion for infrastructure development during fiscal 2011-12

6. Food Industry

Propelled by the increasing disposable income, the food sector has been witnessing a marked change in consumption pattern. Currently, India is the world’s second largest producer of food in the world and the food processing industry is the one of the largest industries in India. In terms of production, consumption, export and expected growth, India is ranked fifth in the world.
India’s food industry is valued at US$ 180 billion of which the food processing industry is estimated at US$ 67 billion, according to a report ‘Food Processing and Agri Business’, done by KPMG.
Exports
Exports of agricultural products from India are expected to cross around US$ 22 billion mark by 2014 and account for 5 per cent of the world’s agriculture exports, according to the Agricultural and Processed Food Products Export Development Authority (APEDA).
Exports of floriculture, fresh fruits and vegetables, processed fruits and vegetables, animal products, other processed foods and cereals stood at Rs 17728.71 from September 2010-2011, according to DGCIS annual data published by APEDA
Spices
The export of spices and spice-based value added products during April-February 2010-11 was US$ 1,323.28 compared to the US$ 1,063.44 in the same period last year.
Fishery
Fish production of the country has been growing continuously with improvement in productivity and utilisation of untapped resources. The total fish production is 6.4 million metric tonnes (mmt) of which 3.4 mmt is inland and 3.0 mmt is marine production. The Fishery sector contributes about 1.21 per cent of the total GDP and 5.37 per cent of the GDP from agriculture sector and provides employment to 14 million people.
Food Processing
FDI inflows to Food Processing Industries has set a target of USD 25.07 billion to be achieved by 2015.
Food processing industry is accounts for 32 per cent share in the entire food industry. It comprises of 2 per cent of fruits and vegetables and 15 per cent of processed milk. This industry contributes to 6.3 per cent of the GDP and about 13 per cent to export production. The food processing industry is expected to witness a growth of 10 per cent in the recent years to come.
Beverages
According to a report published by market research firm RNCOS in August 2009, titled "Indian Non-Alcoholic Drinks Forecast to 2012", the Indian non-alcoholic drinks market was estimated at around US$ 4.43 billion in 2008 and is expected to grow at a CAGR of around 15 per cent during 2009-2012.

Healthcare

The Indian healthcare sector is expected reach US$ 280 billion by 2020, according to a report by an industry body. "Healthcare has emerged as one of the most progressive and largest service sectors in India with an expected GDP spend of 8 per cent by 2012 from 5.5 per cent in 2009. It is believed to be the next big thing after IT and predicted to become a US$ 280 billion industry by 2020," the report said.

Major Developments

As per a study by an industry body and Ernst & Young, India would require another 1.75 million beds by the end of 2025. The public sector however is likely to contribute only around 15-20 per cent of the required US$ 86 billion investment. The corporate India is therefore, leveraging on this business potential and various health care brands have started aggressive expansion in the country. Some of the companies that plan to increase their footprints include Anil Ambani’s Reliance Health, the Hindujas, Sahara Group, Emami, Apollo Tyres and the Panacea Group.

Sahara Group is planning several healthcare projects such as a 200-bed multi-specialty tertiary care hospital at Gorakhpur in Uttar Pradesh, a 1,500-bed multi super-specialty, tertiary care hospital at Aamby Valley City and 30-bed multi-speciality secondary care hospitals across all the 217 Sahara City Homes Townships

Health Insurance
The Indian health insurance market has emerged as a new and lucrative growth avenue for both the existing players as well as the new entrants. According to a latest research report "Booming Health Insurance in India" by research firm RNCOS released in April, 2010, the health insurance market represents one the fastest growing and second largest non-life insurance segment in the country. The Indian health insurance market has posted record growth in the last two fiscals (2008-09 and 2009-10). Moreover, as per the report, the health insurance premium is expected to grow at a compound annual growth rate (CAGR) of over 25 per cent for the period spanning from 2009-10 to 2013-14
Investments in Healthcare
As per data released by the Department of Industrial Policy and Promotion (DIPP), the drugs and pharmaceuticals sector has attracted foreign direct investment (FDI) worth US$ 1.87 billion between April 2000 and January 2010, while hospitals and diagnostic centres have received FDI worth US$ 980.38 million in the same period.
GE Healthcare plans to invest US$ 50 million to set up more facilities for developing diagnostic services, including anesthesia, ventilation, computed tomography (CT) systems and molecular imaging.
Mobile Healthcare
Computer-based bio-surveillance projects generating data about diseases and creating databases on healthcare in rural areas are becoming popular in India with various organisations entering into this arena.
The Indian Institute of Chemical Technology (IICT) in Hyderabad has developed a model to forecast possible epidemics of diseases such as malaria and encephalitis in rural Andhra Pradesh.

Information Technology

The Indian information technology (IT) industry has played a key role in putting India on the global map and is now envisioned to become a US$ 225 billion industry by 2020.
According to a research report published by National Association of Software and Service Companies (NASSCOM), ‘IT-BPO Sector in India: Strategic Review 2011,’ the sector is estimated to aggregate revenues of US$ 88.1 billion in FY2011, with the IT software and services sector (excluding hardware) accounting for US$ 76.1 billion of revenues

Outsourcing
India is a preferred destination for companies looking to offshore their IT and back-office functions. It also retains its low-cost advantage and is a financially attractive location when viewed in combination with the business environment it offers and the availability of skilled people.
Some big deals in the outsourcing space include:
Information technology (IT) services and solutions provider Patni Computer Systems has signed a five-year contract worth over US$ 32.09 million with UK-based IT services provider 2e2. Patni will provide a range of support services to 2e2's end-user clients and in-house support services.
Tata Consultancy Services Ltd (TCS) has announced the launch of its first BPO centre in the Philippines. This is also the firm's first BPO centre in the South-East Asian region.
Investments
Between April 2000 and December 2010, the computer software and hardware sector received cumulative foreign direct investment (FDI) of US$ 10,601 million, according to the Department of Industrial Policy and Promotion.
The total investments of EMC Corporation, a leading global player of information infrastructure solutions in India, will touch US$ 2 billion (over US$ 2.01 billion) by 2014.
Syntel, an IT company, plans to invest around US$ 50 million in its global development centre in Chennai.
Russian IT security software provider, Kaspersky Lab, will be investing US$ 2 million in its India operations at Hyderabad during 2011.

Insurance

The US$ 41 billion Indian life insurance industry is considered the fifth largest life insurance market, and is growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance Council.

State-owned Life Insurance Corporation (LIC) of India, the largest and most dominant life insurer crosses has given an exuberant performance in terms of first year premium. As of January 29 2011, LIC received an income of US$ 7.52 billion by successfully selling 2, 52, 44,846 policies. SBI Life has overtaken ICICI Prudential to become the country's largest private insurer in terms of first year premium collection, garnering a new business of US$ 1.04 billion in April-December 2010.

General Insurance
According to data released by IRDA, the general insurance industry recorded 22.76 per cent year-on-year (y-o-y) growth in gross premium underwritten during April–October 2010. The industry collected gross premium of US$ 5.29 billion during April–October 2010 compared with US$ 4.31 billion in the same period last year

Health Insurance
The Indian health insurance market has emerged as a new and lucrative growth avenue for both the existing players as well as the new entrants. According to a latest research report "Booming Health Insurance in India" by research firm RNCOS released in April 2010, all emerging trends including the key factors driving the market growth. Furthermore, the report also identifies what could be the possible growth areas for expansion and gives a detailed overview of the competitive landscape. The Indian health insurance market has continued to post record growth in the last two fiscals (2008-09 and 2009-10). Moreover, as per the RNCOS estimates, the health insurance premium is expected to grow at a compound annual growth rate (CAGR) of over 25 per cent for the period spanning from 2009-10 to 2013-14.

Investments
The Indian insurance unit of Dutch financial services firm ING plans to invest US$ 51 million in 2010/11 to fund expansion in India.
Private life insurer Future Generali India will expand its distribution network by opening around 100 branches in addition to its existing network of 91 branches during 2010. It will also increase the agency force by 21,000 to 65,000 people.
Max Bupa, the health insurance JV between UK's Bupa and the Max Group said on December 7 it would invest over US$ 100.35 million in the next four years to expand its business. Max Bupa Health Insurance Chief Executive Damien Marmion said in the next 3-4 years the equity base of the company should be US$ 156.11 million

Media

The Indian economy grew at a faster pace in 2010 compared to 2009, which translated into more advertising as well consumer spending. This high growth rate will continue to remain in 2011 as well. The Indian advertising industry will grow by 17 per cent in calendar year 2011 and is expected to add about US$ 889 million to the existing ad pie worth US$ 5248 million, according to Pitch Madison Media Advertising Outlook 2011. This robust growth in advertising industry will benefit the M&E industry in 2011 as well.
The entertainment industry in India is estimated at about US$ 9.4 billion in revenues in year 2010, which is expected to grow at a rate of 14.1 per cent to reach revenues of US$ 10.7 billion in 2011.
Television
The television industry is expected to grow by 12.9 per cent cumulatively over 2009-14. The maximum growth is slated to occur in 2010 (15.6 per cent), followed by 2012 (13 per cent), according to a report by PricewaterhouseCoopers (PwC).
The television industry is expected to grow above 20 per cent in 2011. Two important cricket events - World Cup and the Indian Premier League (IPL) - are expected to boost the television advertising revenue. Cricket is expected to earn advertising revenue of US$ 405 million from its television telecast this year, up from US$ 337 million in 2010.
The direct-to-home (DTH) market in India had 23.1 million active subscribers by the end of 2010, as per Media Partners Asia. This amounts to 16 per cent penetration of television homes in India.
Music
The music industry in India has always been dominated by film music, which contributes to 15 per cent of a film’s earning. The industry is expected to grow at a CAGR of 28.6 per cent over 2010-14, reaching US$ 567.6 million in 2014, reports PwC.
With the advent of new technologies such as 2G and 3G, and incresing mobile penetration India’s music industry is scaling on a high note. Handset major Nokia launched its music store in India; Hungama announced the launch of two portals - Hungama.com and Artistaloud and Saregama too launched its music portal.

Radio
The Radio industry is now in the Phase III licensing stage which will take its station numbers to 700 from the current 250.
In 2011, the radio industry is expected clock revenues of US$ 226 million, as per the Pitch Madison Media Advertising Outlook 2011.
Cinema
India is the largest film producing market in the world with over 1,000 films released every year and 3.7 billion tickets sold annually.
The Indian film industry is set to top revenues of US$ 3.3 billion by 2010 as it rides new technologies and a booming economy set to expand at the rate of 18 percent per year. It is also one of the largest employment sectors in the country. The government of India gave the motion picture industry the status of an industry in 2001, making it easier for film producers to obtain institutional financing.
Advertising
The Indian advertising industry will grow at 17 per cent to clock US$ 6136.2 million in 2011, reported by Pitch Madison Media Advertising Outlook 2011.
The print media generated advertising revenue of US$ 2.2 billion, growing at 28 per cent compared to 2010; while television advertising generated US$ 2.34 billion, grabbing the biggest share of 44.5 per cent of the entire advertising pie. The Out Of Home (OOH) advertising medium grew by 27 per cent in 2010, commanding US$ 320 million of the total ad spends. Radio advertising too has grown by 30 per cent to become a US$ 199 million industry.
Theatre
Midvalley Entertainment Ltd., a media and entertainment company, recently raised US 13.4 million through an IPO. The company has plans to invest US$ 3.3 million of the amount in screening agreements with 300 cinema theaters in Tamil Nadu, Andhra Pradesh and Karnataka, while US$ 5.8 million will be invested in the renovation and upgrade of cinema infrastructure with digital equipment and other related assets for select 100 screens in South India.
Multiplex chain Cinemax plans to add 30 digital screens to its existing 105 screens across India in the next six to eight months, most of which will be located in western and southern states. The investments for the 30 screens will be in the tune of US$ 10 million.
PVR Cinemas presently runs about 142 screens at 32 locations across 18 cities in India and plans to open another 80-100 screens in FY 12 in at least 27 cities, at an investment of US$ 22-26 million.
Digital Media
The Information and Broadcasting (I&B) Ministry has accepted a proposal by Telecom Regulatory Authority of India (TRAI) to make broadcasting operations completely digital. The timeline decided for closing the analog cable distribution has been decided for March 2015. A report by ICRA states that the industry requires an investment of US$ 3.37 billion to go for the digital system.

Oil and Gas

Oil accounts for 31 per cent of India’s total energy consumption and there is unlikely to be any significant scaling down of dependence on these fuels in the next five to ten years.

India will account for 10.8 per cent of Asia/Pacific regional oil demand by 2010, while providing 10.2 per cent of supply, as suggested by Business Monitor International in the ‘India Oil and Gas Report’. Currently, of the six core industries identified in India, the oil and gas sector has propelled the growth of Indian economy most and the Government is looking for more investors in the sector. India is currently world’s fifth biggest energy consumer and the need is continuously growing, according to KPMG’s ‘Oil and Natural Gas Overview 2010’,

Production

According to the provisional production data released by the Ministry of Petroleum and Natural Gas, dated January 2011

Crude Oil production from the period April-January 2011 was 31.411 million metric tonne (MMT), as compared to the 28.072 MMT in the past corresponding period.
Natural Gas production during April-January 201 1 was 44030 million cubic metres, as compared to 38490.7 million cubic metres in the corresponding period in 2010.
From April-January 2011, 136.46 MMT of crude oil was refined, compared to 133.26 MMT in the corresponding period in 2010

Consumption

· The consumption of petroleum products during 2009-10 were 138.196 MMT (including sales through private imports) an increase of 3.60 per cent over sales of 133.4 MMT during 2008-09, according to the Ministry of Petroleum.

· India’s current petroleum products consumption rate from April 2010 to February 2011 was 128.827 million tonnes (MT), as per the estimates of the Planning and Analysis Cell (PPAC).

Gas

· The gas transmission domain was dominated by Gas Authority of India Ltd (GAIL) till, in April 2009, the first natural gas production started from Krishna Godavari (KG) basin deepwater block by Reliance Gas Transportation Infrastructure Ltd. Currently, the natural gas production from the KG D6 block is about 60 million standard cubic metres per day (MMSCMD). The natural gas production from the block is expected to be in the range of 80-89 MMSCMD till March 2012.

· Gas production is expected to rise from an estimated 45BCM in 2010 to a possible 95 BCM by 2019.

Investments

Essar Oil has started pumping gas trapped in seams of coal in its Raniganj CBM (coal bed methane) acreage in West Bengal. The acreage is expected to produce gas for 15 years and Essar Oil is investing US$ 300 million for CBM gas production. The company is producing 90,000-100,000 million cubic metres per day of gas and will touch a peak output of over three million cubic metres.
Oil & Natural Gas Corporation (ONGC) plans to invest over US$ 3.82 billion on onshore operations in Gujarat over the next five years. ONGC will also set up a 10 mega watt (MW) solar power project in the state with an investment of US$ 33.73 million. Under the programmme, the company has earmarked over US$ 1.79 billion for revamping its 90 installations, including 200 km-long pipeline network and 65 tanks in the state. It is also commissioning 850 km of new pipelines at an investment of US$ 150 million.

Real Estate

The real estate sector in India is of great importance. According to the report of the Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a big investment opportunity.

According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and real estate sector including cineplex, multiplex, integrated townships and commercial complexes etc, attracted a cumulative foreign direct investment (FDI) worth US$ 9,405 million from April 2000 to January 2011 wherein the sector witnessed FDI amounting US$ 1,048 million during April-January 2010-11.

New Projects

Private equity fund IL&FS Investment Managers (IIML) is estimated to have invested US$ 300 million in real estate and urban infrastructure projects in 2010.
Godrej Group's real estate company, Godrej Properties and Frontier Home Developers, has launched a residential project in Gurgaon with joint venture partner M/s. Frontier Home Developers Pvt. Ltd. This is a debut residential project in the national capital region (NCR) for Godrej Properties
Vision India Real Estate, a closely-held business group in the US, is investing US$ 5 million in Gem Group's upcoming residential project in Chennai. This will be the first joint development project for the US company that is proposing to invest US$ 100 to US$ 200 million over the next three years on projects, especially in the logistics arena.
Realty major Embassy Property Developments has entered into a joint venture with MK Land Holding, a Malaysian company that specializes in pre-fabricated affordable housing, to build projects in the affordable housing segment. The proposed project entails an investment of over US$ 1.2 billion.

Retail

Total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015, according to the Business Monitor International (BMI) India Retail Report for the second-quarter of 2011. Strong underlying economic growth, population expansion, the increasing wealth of individuals and the rapid construction of organised retail infrastructure are key factors behind the forecast growth. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities.

Mass grocery retail (MGR) sales in India are expected to undergo tremendous growth over the forecast period. BMI predicts that sales through MGR outlets will increase by 218 per cent to reach US$ 27.67 billion by 2015.

Foreign direct investment (FDI) inflows between April 2000 and January 2011, in single-brand retail trading, stood at US$ 128.34 million, according to the Department of Industrial Policy and Promotion (DIPP).

Carrefour, the world’s second-largest retailer, has opened its first cash-and-carry store in India in New Delhi. Germany-based wholesale company Metro Cash & Carry (MCC) opened its second wholesale centre at Uppal in Hyderabad, taking to its number to six in the country.
RPG-owned Spencer's Retail plans to set up 15-20 new stores in the country in 2011-12.
Spar Hypermarkets, the global food retailing chain of the Dubai-based Landmark Group, expects to start funding its India expansion beyond 2013 out of its local cash flow in the country. So far, the Landmark Group has invested US$ 51.31 million in setting up five hypermarkets and plans to pump in another US$ 51.31 million into the next phase of expansion.
Bharti Retail, owner of Easy Day store—supermarkets and hypermarts—plans to invest about US$ 2.5 billion over the next five years to add about 10 million sq ft of retail space in the country by then, according to a company spokesperson.

Policy Initiatives
100 per cent FDI is permitted under the automatic route for trading companies for cash & carry trading wholesale trading/ wholesale trading.
FDI up to 51 per cent under the Government route is allowed in retail trade of Single Brand products, according to the Consolidated FDI Policy document. Permitting FDI in multi brand retail is being contemplated by the government under union budget 2011-12. “FDI in multi-brand retail should be opened up as this is a capital intensive sector and the entry of foreign players will lead to greater competition in this critical sector,” said Mr Hari S Bhartia, President, CII and Co-Chairman & Managing Director of Jubilant Bhartiya Group, in the 2011 pre-budget meeting with Mr Pranab Mukherjee, the Finance Minister.

Textiles

The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP) and 17 per cent to the country’s export earnings, according to the Annual Report 2009-10 of the Ministry of Textiles. It provides direct employment to over 35 million people and is the second largest provider of employment after agriculture.

The industry is expected to grow from the present US$ 70 billion to US$ 220 billion by 2020, according to Mr Dayanidhi Maran, Union Minister of Textiles.

Major Developments
The total cloth production has increased by 2.9 per cent during December 2010 as compared to December 2009, according to the Ministry of Textiles. The highest growth was observed in the powerloom sector (3.7 per cent), followed by handloom sector (3.3 per cent). The total cloth production during April-December 2010 has increased by 2.3 per cent compared to the same period of the previous year. The production of spun yarn and cotton yarn increased by 6.0 per cent and 8.6 per cent, respectively during December 2010 as compared to December 2009
India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020, as per a Ministry of Textiles press release dated November 2, 2010.
Technical Textile Segment
According to the Ministry of Textiles, technical textiles are an important part of the textile industry. The Working Group for the Eleventh Five Year Plan (2007-12) has estimated the market size of technical textiles to increase from US$ 5.29 billion in 2006-07 to US$ 10.6 billion in 2011-12, without any regulatory framework and to US$ 15.16 billion with regulatory framework. The Scheme for Growth and Development of Technical Textiles aims to promote indigenous manufacture of technical textile to leverage global opportunities and cater to the domestic demand.
Further, the government is set to launch US$ 44.21 million mission for promotion of technical textiles, while the Finance Ministry has cleared setting up of four new research centres for the industry, which include products like mosquito and fishing nets, shoe laces and medical gloves.

Investments

The textiles industry has attracted FDI worth US$ 934.04 million between April 2000 and January 2011, according to data released by the Department of Industrial Policy and Promotion (DIPP).
As part of its strategy of innovative denim products, Arvind Ltd has tied up with Birla Cellulose to exclusively produce excel denim fabric. The company expects excel denim to do business worth US$ 50 million in the next two years.
Textiles maker and retailer Raymond plans to invest US$ 5.6 million to US$ 6.7 million in 2011-12 to expand its accessories business and add sunglasses to its range, said Gautam Singhania, chairman and managing director of the company.
NSL Textiles has set up a textile processing facility at Chandolu near Guntur, Andhra Pradesh with an investment of US$ 64.23 million.
TT Ltd, an integrated textile and knitwear manufacturing and exporter, plans to invest US$ 33.46 million to enhance its yarn making capacity and retail venture.

Telecommunication

The Indian telecommunications industry is one of the fastest growing in the world. The industry has witnessed consistent growth during the last year on the back of rollout of newer circles by operators, successful auction of third-generation (3G) and broadband wireless access (BWA) spectrum, network rollout in semi-rural areas and increased focus on the value added services (VAS) market.

According to the data released by Telecom Regulatory Authority of India (TRAI), the number of telephone subscribers in the country reached 806.13 million at the end of January 2011 from 787.28 million in December 2010, thereby registering a growth rate of 2.39 per cent. With this the overall tele-density (telephones per 100 people) has touched 67.67. The wireless subscriber base has increased to 771.18 million at the end of January 2011 from 752.19 million in December 2010, registering a growth of 2.52 per cent.

The sector will witness up to US$ 55.95 billion investments and the market will cross the US$ 100 billion mark in 5 years, according to consultancy firm Boston Consulting Group (BCG). BCG India's Partner and Director, Arvind Subramanian said the industry will continue to grow at 12-13 per cent annually

Key Players
With new players coming in, the intensity of competition in the industry has increased, especially over the last four years. The market share of the telecom companies reflects the fragmented nature of the industry, with as many as 15 players. As of September 30, 2010, Bharti Airtel led the market with 20.8 per cent share, Reliance (17.1 per cent), Vodafone (16.8 per cent), BSNL (11.4 per cent), Tata (11.5 per cent), Idea (10.8 per cent), Aircel (6.8 per cent), with the remaining share being held by other smaller operators, according to Telecom Regulatory Authority of India (TRAI) database.
Major Investments
The booming domestic telecom market has been attracting huge amounts of investments which is likely to accelerate with the entry of new players and launch of new services. According to the Department of Industrial Policy and Promotion (DIPP), the telecommunications sector which includes radio paging, mobile services and basic telephone services attracted foreign direct investment (FDI) worth US$ 1.33 billion during April-January 2010-11. The cumulative flow of FDI in the sector during April 2000 and January 2011 is US$ 10.26 billion.
Rural Telephony
Rural base in terms of telecom subscription reached 267.74 million as at the end of January 2011. Tele-density being 32.11, rural India holds 33.21 per cent share in the total telecom subscriber base. The wireless connections have contributed substantially to total rural telephone connections; it stands at 258.93 million in January 2011, increasing 3.2 per cent from 250.89 million in December 2010.
The number of internet users in rural India is estimated to have risen by 30 per cent to 5.4 million in 2010, according to a joint study conducted by the Internet & Mobile Association of India (IAMAI) and market research firm IMRB.
The private sector has contributed crucially to the growth of rural telephony by providing 84.5 per cent of the connections as of November 2010.
Further, the Government, under Bharat Nirman II Programme, has envisaged providing broadband coverage to all 250,000 Gram Panchayats by 2012.

Tourism and hospitality

Hospitality in India is based on the Sanskrit adage ‘Atithi Devo Bhava’ or ‘guest is god’. The concept was adapted by the Ministry of Tourism, Government of India which aims at creating awareness about rich variety of tourism in India.

India is currently ranked 12th in the Asia Pacific region and 68th overall in the list of the world's attractive destinations, according to the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF).

Investment in travel and tourism in India is expected to reach US$ 34.7 billion in 2010 and US$ 109.3 billion by 2020
Contribution to the economy
The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.35 billion from April 2000 to February 2011, according to the Department of Industrial Policy and Promotion (DIPP).
India’s hotel pipeline is the second largest in the Asia-Pacific region according to Jan Smits, Regional Managing Director, InterContinental Hotels Group (IHG) Asia Australasia. He projected the Indian hospitality industry to grow at a rate of 8.8 per cent during 2007-16, making the country as the second-fastest growing tourism market in the world.
The domestic hospitality sector is expected to see investments of over US$ 11 billion by 2012, with 40 international brands making their presence in the country in the next few years.

Foreign Tourist Arrivals

The important highlights regarding foreign tourist arrivals (FTAs) and foreign exchange earnings (FEE) from tourism in India during the month of March 2011 are as follows:

FTAs during the month of March 2011 was 5,07,000 as compared to FTAs of 4,72,000 during the month of March 2010. A growth rate of 7.4 per cent in March 2011 was recorded.
FTAs during the period January-March 2011 were 1.73 million with a growth of 11.1 per cent, as compared to the FTAs of 1.56 million with a growth of 10.6 per cent during January-March 2010.

Medical Tourism
In India, medical tourism is a sunrise sector valued at more than US$ 310 million. Currently, India receives more than 100,000 foreign patients a year. The Confederation of Indian Industry (CII) expects the sector to grow to US$ 2 billion by 2012.
Medical tourism in India has emerged as the fastest growing segment of tourism industry. India’s share in the global medical tourism industry is expected to reach around 3 per cent by the end of 2013, as per a new market research report Booming Medical Tourism in India by RNCOS. The report also highlighted that medical tourism is expected to generate revenue worth US$ 3 billion by 2013, growing at a CAGR of around 26 per cent during 2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 million by 2013.
There are over 3,371 hospitals and around 754,985 registered practitioners catering to the needs of traditional Indian healthcare. Indian hotels are also entering the wellness services market by collaborating with professional organisations in a range of wellness fields and offering spas and ayurvedic massages

Hospitality
The Indian hospitality industry is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism market in the world.
The Indian hotel room market for 10 metros is estimated to expand at a CAGR of 17 per cent to US$ 2.66 billion during 2010-13, according to a study by Knight Frank India. In terms of the number of rooms sought per day, the hospitality sector is estimated to grow at a CAGR of 10.3 per cent.

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