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INDO â€“ US Trade Bilateral Cooperation

01/31/13

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INDO – US Trade Bilateral Cooperation 

Indo-US political and economic relations strengthened in the recent past.

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Economic cooperation and outlook are very positive 

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Trade performed at the highest level

Military cooperation is at its high 

Number of Joint exercises held between the two countries

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India has world class engineering, R&D capabilities at a scale (and cost) that cannot be replicated (elsewhere in the world) - a senior Boeing official

01/31/13

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INDO – US Trade Bilateral Cooperation at its best! 

India, one of the top 20 merchandise exporters to the USA 

Exports to USA from India at US $ 12.1 billion (during the first 3 quarters of 2003)

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Commodity imports from US to India at US $ 4.5 billion during the above period

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Top 3 export commodities from India to US – Manufactured goods classified by material, miscellaneous manufacturing articles and chemicals & related articles

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Top 3 import commodities to India from US – Machinery & transport equipment, chemicals and related articles and miscellaneous manufactured articles

01/31/13

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INDO – US – Commodity wise Trade Import – Export Composition of India with US in 2002 (in Million USD) 6000

5205

5000 3579

4000 3000 1804 2000 1000

755 832

828 298 165

127

816 362

557

194 394

0 Food & live animals

Crude materials

Chemicals Mfg Goods

Imports into India from US

M/C & Transport equip

Misc mfg Goods

Others

Exports from India to US

Others include Beverages & Tobacco, Mineral fuels, lubricant and related items, Animal & Veg oils, fats & waxes and commodities and transactions

01/31/13

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INDO – US: Current Trade Sectors 

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Computer S/W and services 

Software, Services and ITES, BPO exports from India in 200203 was US$ 10 billion

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80-85% of the Indian ITES-BPO exports are to the US

Computers & Peripherals 

Computer and hardware sales in India in 2001 was US $ 4 billion

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75% of hardware requirements met through imports – likely to increase once India moves to zero duty regime

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Imports from US at $ 550.0 Mn.

Education Services 

US Exports at $ 1.6 Bn in 2003

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Indian students approx 70,000 enroll in US universities every year.

01/31/13

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INDO – US: Current Trade Sectors 

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Telecommunication Equipment 

Subscriber base expected to increase to 120 million by 2008

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An investment of US$ 5.5 billion is expected in the next 3 years

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Demand for telecom cables also likely to increase due to expansion projects by the government

Environmental Technology 

Indian environmental management market size: US $ 3.2 billion

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40% of India’s environmental technology equipment imports are from US

Air Conditioning & Refrigeration Equipment 

Indian market size is estimated at US $ 821 million

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Despite being world’s second largest food producer, India does not have adequate cold chain network •

Offers a good potential for US in this segment

01/31/13

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INDO – US: Current Trade Sectors 

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Airport & Ground Support Equipment System 

International and domestic air passenger traffic to grow by 7% and 12.5% respectively by 2010

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3 international airports are being planned with private sector participation

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US companies have good investment opportunities in aviation & communication equipments

Biotechnology 

Indian market for biotech products: US $ 344 million

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Expected to grow at 35-40% per annum

Medical Equipment 

Indian market size is estimated at US $ 1.85 billion; Imports account for 61%

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Private sector entry into Indian insurance market has opened vast scope for high-end medical facilities and healthcare equipment

01/31/13

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INDO – US Trade – Prospective Sectors 

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Power 

State Electricity Boards have started massive plant renovation and modernization plans

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Annual equipment requirement for the above estimated at US $ 2 billion

Textile Machinery 

Demand for textile machinery is expected to grow rapidly

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Potential sub-sectors include processing industry, knitting machinery, garment machinery, spinning machinery and shuttleless air or water jet looms and shuttle looms.

Auto Components 

Indian Auto components exports to reach US $ 1.1 billion, 38.8% higher than the previous fiscal.

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By 2005, 10 auto components plants would have been relocated to India from US and Europe

Franchising 

Potential markets include healthcare, food and beverages, computers, hotels, entertainment centers and retailing

01/31/13

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INDO – US Trade – Prospective Sectors 

Indian Industry targets to raise exports to US$ 15 billion by 2005 and Foreign Direct Investment (FDI) to US$ 25bn by 2010.

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Indian Industry has identified following sectors for greater Indo-US cooperation: information technology  financial services infrastructure small sector environment energy and telecommunications.

01/31/13

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India: A Robust Economy 

The world’s fastest growing, democratic free market economy & fourth largest in terms of Purchasing Power Parity (PPP)

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GDP growth soared to a record 8.4% in second quarter of 2003 and is forecast at 8.2% for 2003-2004.

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India’s foreign exchange reserves are over US$107 billion

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India attracted US$ 2.22 billion of FDI during April- October 2003. U.S. has approximately 39% share of FDIs in India.

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India received 15% of total FII into global emerging markets. Of 538 FIIs registered in India, 220 are from the US. They have almost 50% share of all FIIs investment in India.

01/31/13

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India: Scripting Future Histories Software & ITES - BPO. 

Exports of software services logged in a 26% growth during 2002-03

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Software Technology Parks of India act as ‘single-window’ in providing services & incubation infrastructure to SMEs.

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3500 firms out of 39 Software Parks export over US$ 8 billion worth of IT products & services.

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It is forecast that by 2008, IT services & back-office work will swell to US$ 57 billion annually

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Eg. Infosys, Wipro, Satyam

Talent pool & professionals  A vast pool of English speaking & skilled manpower, which rates high on qualification, capabilities & work ethics.  Eg. Sabeer Bhatia, Rajat Gupta, Vinod Khosla

01/31/13

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India: Scripting Future Histories 

Textile Industry 

World’s largest exporter of cotton yarn and holds a 25% share in global trade

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The Government’s National Textile Policy aims to increase the value of textile & apparel exports to US$ 50 billion by 2010.

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Eg. Arvind Mills

Pharmaceuticals & Biotechnology 

The Indian pharma industry has the highest number of plants approved by the FDA outside the USA.

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Pharma exports to the US stood at US$ 450 million in 2002-03.

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Eg. Ranbaxy, Wockhardt

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Manufactured goods

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Food & Beverages 

Eg. United Breweries

01/31/13

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Indian Government Initiatives 

Major tariff reductions have been announced by Indian Finance Ministry w.e.f January 9, 2004 

Reduction of peak tariff rates by 5% to 20%

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Elimination of 4% Special Additional Duty (SAD)

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Reduction of customs duties on equipment for projects from 25% to 10%

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Reductions in duties on meters and items related to electricity transmission and distribution

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Sharp reductions on information technology and electronic equipment, including cell phones and computers

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Major reductions in life-saving drugs and equipment, and other medical items

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Reduction or elimination of excises and taxes on air travel, air fuel and related items

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Exemption from custom and excise duties available to drinking water supply projects

Above initiatives are expected to boost the imports from US in the future

01/31/13

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Thank You

01/31/13

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