Economic reforms were originally initiated by Dr.Manmohan Singh (the present Prime Minister of India) in 1991 when he was the country's Finance Minister. India, since then, has been slowly and steadily liberalising and globalising the economy and this has resulted in tremendous growth. It is no wonder that India has registered one of the largest growth in the World with GDP growing at 9.6% during the fiscal year ended 31st March 2007 ( GDP growth for the Fiscal Year April 2005 - March 2006 has been estimated at 9%). India has a sound banking system, a vibrant but tightly regulated capital markets and above all a proper and well defined legal system. These ensure high confidence levels for foreign investors and it is no wonder that several multinational companies have a thriving business in India. The massive investment programme initiated by the Government of India could see investment in excess of US$ 500 billion in several sectors in the next seven years. The demand for various products and services is increasing significantly day by day and with very low current levels of per capita consumption for various products, there is only one way for the Indian economy to go - blistering growth for several decades to come.

The World Investment Report 2005 released by United Nations Conference on Trade and Development (UNCTAD) on 28th September 2005 indicates that India is ranked second most attractive global business location in the World from the point of view of 81 of the world's largest transnational corporations (TNCs). The survey amongst 74 investment experts found India as the third most attractive business location. India's high ranking is noteworthy since this was achieved despite 30% fewer responses than China's. The report points out that "Flow to India should continue to increase, especially in steel, telecommunications, infrastructure and finance."

India has displaced the US as the second-most favoured destination for foreign direct investment in the world after China in the AT Kearney FDI Confidence Index which was released in the second week of December 2005. The US has slipped to the third place, which was occupied by India last year. AT Kearney ’s confidence index is an annual survey of executives of the world’s largest companies. India and China are also at the top with the highest levels of investor optimism. Forty-five per cent investors have said they are more upbeat on China and India , compared with last year, which is nearly twice the number recorded for the next three-most positively viewed markets -- Brazil , Poland and Russia.

According to JP Morgan, listed Indian firms deliver a higher return on equity (ROE) than comparable companies in Hong Kong, Singapore, Korea, Taiwan, Japan, Malaysia or Hong Kong- listed Chinese firms. As the Indian economy is poised for significant growth, this is the right time to enter India and ensure that your business has a rightful place in the growing economy.

This Executive Summary Report is divided into three sections: (i) Basic factors promoting growth, (ii) Investment potential in various sectors and (iii) What global experts say

• India is one of the fastest growing economy in the World with GDP growing at 9.6% in April 2006-March 2007 (GDP growth in Apr 2005-Mar 2006: 9%)
  
• Fourth largest economy (US$ 3 trillion GDP) in terms of Purchasing Power Parity after USA, China and Japan.
  
• Large and growing market of 1 billion people of which 300 million are middle class consumers. India offers a vibrant market of youth with 54% of population below the age of 25 years.
  
• The number of households with "high income" is expected to increase by 60% in the next four years to 44 million households.
  
• India has the largest pool of cost effective and highly skilled workers with low wage levels
  
• India has the second largest pool of scientists, engineers and information technology personnel
  
• India has one of the largest English speaking population in the World
  
• Diversified and large industrial base, which is becoming globally competitive.
  
• India has a sound banking system coupled with well developed and tightly regulated capital market.
  
• India has foreign exchange reserves of US$ 305 billion (as of 1st August 2008)
  
• More confidence in long term stability of Indian economy, political & social system compared to those of China
  
• 100% Foreign Direct Investment is allowed on automatic basis in most of the sectors
  
• Special incentives and tax-breaks are given for certain sectors such as Infrastructure, hydrocarbons, tourism, software export sectors & new industrial undertakings in certain specified areas. Scientific research & agro-processing units also enjoy certain tax incentives

• Several Special Economic Zones (SEZs) are being developed in India to promote exports and units located in these SEZs are entitled to tax breaks and several other incentives
  

With the economy booming and Indian Government vigorously working towards setting up world class infrastructure in addition to actively seeking private/foreign investment in various sectors, investment potential in various sectors during the next seven year span is in excess of US$ 500 billion. The various sectors where foreign investment is actively sought include the following :

• Roads : The Government is focusing on expansion and modernization of roads and has opened this up for private sector participation. 48 new road projects worth US$ 12 billion are under construction. Development and upgradation of roads will require an investment of US$ 24 billion till 2010. Private sector participation in road projects will grow significantly. 100% FDI under the automatic route is permitted for all road development projects
  
• Railways : The railway sector will need an investment of US$ 22 billion for new coaches, tracks, and communications and safety equipment over the next ten years.
  
• Airports : Upgradation and modernization of airports will require US$ 33 billion investment in the next ten years. 100% FDI is permissible for existing airports; FIPB approval required for FDI beyond 74%. 100% FDI under automatic route is permissible for greenfield airports
  
• Ports : There is potential for investment in the expansion and modernization of ports. The Government has taken up the US$ 22 billion project to develop the Port and Shipping sector under Public-Private Partnership. 100 percent FDI is permitted for construction and maintenance of ports. The Government is offering incentives to investors.
  
• Power : The Ministry of Power has formulated a plan which calls for investment of US$ 73 billion in the next four years. However, the Investment Commission of India has estimated potential investment of US$ 200 billion till the year 2012. Opportunities are there for investment in power generation (Thermal, Hydel & nuclear) and distribution and development of non-conventional energy sources. 100% FDI permitted in Power Generation, Transmission & Distribution.
  
• Water Supply & Sanitation : There is potential for investment in urban infrastructure projects. Water supply and sanitation projects alone offer scope for annual investment of US$ 6 billion.
  
• Oil Exploration & Marketing : The entire gamut of exploration, production, refining, distribution and retail marketing in the oil & gas sector presents opportunities for FDI. Potential investment in this sector ti;; 2010 is estimated at US$ 25 billion. 100% FDI is allowed in the exploration of Crude Oil and Natural Gas through the automatic route. 100% FDI is allowed in petroleum refining, petroleum product and gas pipelines and marketing/retail through the automatic route. However, Marketing / retail of petroleum products requires divestment of 26% in favour of the Indian partner / public within 5 years.
  
• Mining : India has an estimated 85 billion tons of mineral reserves remaining to be exploited. Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, cobalt, silver, tin etc. There is also scope for setting up manufacturing units for value added products.
  
• Telecom : The telecom market, which is one of the world's largest and fastest growing, has an investment potential of US$ 20-25 billion over the next five years. 74% to 100% FDI permitted for various telecom services. FIPB approval required for foreign investment exceeding 49% in all telecom services. 100% FDI permitted in telecom equipment manufacturing.
  
• IT & ITES : The IT industry and IT-enabled services, which are rapidly growing offer opportunities for FDI. 100% FDI is permitted in this sector under the automatic route
  
• BPO : India has emerged as an important venue for the services sector including financial accounting, call centers, and business process outsourcing. There is considerable potential for growth in these areas.
  
• Pharmaceuticals & Biotechnology : Biotechnology and Bioinformatics, which are in the Government's priority list for development, offer scope for FDI. There are over 50 R&D labs in the public sector to support growth in these areas. FDI up to 100% is permitted through the automatic route for the manufacture of drugs and pharmaceuticals provided the activity does not attract compulsory licensing or involve the use of recombinant DNA technology and specific cell/tissue targeted formulations
  
• Automobiles : The Indian auto industry with a turnover of US $ 12 billion and the auto parts industry with a turnover of US$ 3 billion offer scope for FDI.
  
• Textile : The Government is encouraging the establishment of world-class integrated textile complexes and processing units.
  
• Food Processing : As there is a rapid increase in demand for processed food (only 2 percent of fruits and vegetables and 15 percent of milk are processed at present), food processing has been declared a priority sector. To meet this rapidly increasing demand for processed food caused by rising urbanization and income levels, the investment required is about US$28 billion.
  
• Healthcare : The Healthcare industry is expected to increase in size from its current US$ 17.2 billion to US$ 40 billion by 2012. 100% FDI is permitted for all health related services under the automatic route
  
• Exports : The Government has recently established Special Economic Zones with the purpose of promoting exports and attracting FDI. These SEZs do not have duty on imports of inputs and they enjoy simplified fiscal and foreign exchange procedures and allow 100% FDI.
  
• Travel & Tourism : The travel and tourism industry which has grown to a size of US$ 32 billion offers scope for investment in hotels, resorts and tourism infrastructure.
  
• Retail : The number of shopping malls is expected to increase from 25 in 2003 to 600 by 2009. The Government is planning to open up the retail sector for substantial Foreign Direct Investment

• Real Estate & Construction : Increasing demand for commercial and office space especially from the rapidly growing Retail, IT/ ITeS and Hospitality sectors and large demand-supply gap in affordable housing have spurred large scale investment in this sector. Investment opportunity of over $50 billion is estimated in the next five years. 100% FDI is allowed in real estate development subject¹ to minimum scale norms of either 25 acres in case of serviced plots or integrated townships; or 50,000 sq. mtrs. of built-up area for construction development projects.

So when there is an immense potential to invest in India and with the economy and the market for various products & services booming, you cannot afford to delay your investment plans in India any longer. If you are still not fully convinced, please see what many global experts have to say on the potential of India.

India's growth potential over the next 10-15 years sets the country at the forefront of the developed and developing world. We expect that, building on the country's favourable demographics and sizeable talent pool, the continuation of the reforms initiated over one decade ago will unleash that potential and bring India to a more advanced stage of development. There will certainly be obstacles along the way, but we believe that the integration of India into the global economy and the ensuing transformation of the country are here to stay.

The present combination of rising consumer spends and a capex cycle on the uptrend makes for an acceleration in economic growth. Increasing momentum and a benign interest rate environment should keep the economy's growth strong in FY06 and beyond.

India is expected to become the fourth largest economy in the world by the year 2025 and the third largest economy by the year 2035 (Global Economics Paper No. 99: Dreaming with BRICs: The path to 2050)

• The rise of China and India as global players is heralding an Asian Century in place of a receding American Century. In the same way that commentators refer to the 1900s as the 'American Century,' the 21st century may be seen as the time when Asia, led by China and India, comes into its own.
  
• A combination of sustained high economic growth, expanding military capabilities, and large populations will be at the root of the expected rapid rise in economic and political power for both countries.
  
• Barring an abrupt reversal of the process of globalization or any major upheavals in these countries, the rise of these new powers (China and India) is a virtual certainty

• India will be central to global economic activity in the first half of this century.
  
• Its economic size and favourable demographic profile give it long-term potential for growth ahead of all the world's major economies in the decades beyond 2010.
  
• But that potential demands significantly increased investment, which cannot be organized from domestic sources alone.
  
• Foreign Direct Investment will be key to growth - and there are enormous investment opportunities in software and IT development and support, Financial Services and Insurance.
  

• India is better placed than China for future growth. Slowly but steadily, India will overtake China.
  
• India has created world-class companies that can compete with the best in the west, often on the cutting edge of software, pharmaceuticals and biotechnology.

• Eye-popping 10.4 % GDP growth in the quarter ending in December has excited hopes that India will become the next China, but expectations need to climb even further. India now looks better than China. India's growth model promises more stable, sustainable expansion and bigger returns for investors than China or other adherents of the East Asian development strategy have delivered. Eventually, India should overtake China in growth and per-capita output.
  
• India's model should prove more sustainable than the typical East Asian strategy adopted by China. India is developing more efficient corporates, healthier banks, more robust service industries and a bigger consumption base. China has won the sprint, India is training for the marathon.
  
• Superior corporate performance explains much of India's recent success. According to JP Morgan, listed Indian firms deliver a higher return on equity (ROE) than comparable companies in Hong Kong, Singapore, Korea, Taiwan, Japan, Malaysia or Hong Kong- listed Chinese firms.

China and India come out on top, followed by the United States, as the countries for which FDI Prospects are the brightest.

• Quite simply, I was blown away by what I saw on my first trip to India, which looks to me to be one of the most compelling macro stories I have seen in a long time.
  
• After decades of stop and go, the critical mass of a new approach to Indian economic development now appears to have been attained.
  
• What impressed me the most about India is a new sense of focus and determination. Unlike China, India has a well-developed banking system, vibrant capital markets and a new generation of indigenous world-class companies.
  
• I have long been a big fan of China's remarkable accomplishments. India's awakening is equally impressive.
  

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