Indian Economy Foreign Trade Industrial Services Automotive Information Technology

Summary:

The Indian economy is the fourth largest economy of the world on the basis of Purchasing Power Parity (PPP). It is one of the most attractive destinations for business and investment opportunities due to huge manpower base, diversified natural resources and strong macro-economic fundamentals.

The Indian economy has undergone substantial changes since the introduction of economic reforms in 1991. These reforms were a comprehensive effort consisting of three main components namely, liberalization, privatization and globalization.

The current scenario of Indian economy has been characterized by optimistic growth and strong macro-economic fundamentals, particularly with tangible progress towards fiscal consolidation and a strong balance of payments position. The advance estimates of Gross Domestic Product (GDP) at factor cost for 2006-07 has been placed at 9.2 per cent.

Over 380 million Indians (72 million households) have an annual household income of over $10,000 (in PPP terms). This is expected to increase to 550 million by 2010. The economic reforms since the early nineties have unleashed a new entrepreneurial spirit creating a vibrant economy supported by rising per capita income.

Indeed, the rise of the young Indian urban consumer has been a feature of India's economic transformation over the past decade. In their mid-twenties, members of this segment do not think twice before spending on expensive global brands. They are comfortable buying on credit, have bought a house and a car, something their parents could never have dreamt of doing in their youth. The house is an investment for them and the car an indulgence.

India views Regional Trading Arrangements (RTA's) as 'building blocks' towards the overall objective of trade liberalization. Hence, it is participating in a number of RTA's which include Free Trade Agreements (FTA's); Preferential Trade Agreements (PTA's); Comprehensive Economic Cooperation Agreements (CECA's); etc. These agreements are entered into either bilaterally or in a regional grouping.

The Indian industrial sector majorly consisting of heavy and light engineering, steel, automotive, biotechnology, drugs and pharmaceuticals, food processing, mines and minerals, fertilizers, etc. provide immense potential for developing adequate market infrastructure in the economy.

India has established a strong and diversified manufacturing base for production of a wide variety of basic and capital goods to meet the requirements of various sectors including heavy electrical, power generation and transmission, process equipment, automobiles, ships, aircrafts, mining, chemicals, petroleum etc. The industrial sector recorded a healthy growth of 10.3%

Automotive, being one of the largest industries, facilitates the improvement in various infrastructure facilities like power, rail and road transport. India is the world's second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles as well as largest manufacturer of tractors. It is the fourth largest passenger car market in Asia as well as a home to the largest motor cycle manufacturer.

The growth of Indian middle class, with increasing purchasing power, along with strong macro-economic fundamentals have attracted the major auto manufacturers to Indian market.

Over the years, the engineering industries, both light and heavy engineering, have registered an impressive growth rate and are having a strong base in production of various capital and consumer durable products.

Biotechnology is among the fast growing knowledge-based industrial sectors which has the immense potential to revolutionize agriculture, healthcare, industrial processing and environmental sustainability. Indian biotech segment has been making rapid strides on the global platform. There are large number of therapeutic biotech drugs and vaccines, being currently produced and marketed in the country and helping mankind enormously. The sector registered a revenue of $ 1.07 billion and recorded a 36.55 per cent growth in the year 2005-06.

Drugs and pharmaceutical is another significant industry showing considerable progress over the years. It is one of the largest and most advanced sectors in the world, acting as a source for various drugs, medicines and their intermediates as well as other pharmaceutical formulations. Being the intense knowledge-driven industry, it offers innumerable business opportunities for the investors/ corporates the world over. India has been recognized as one of the leading global players in pharmaceuticals.

The Indian food processing industry is one of the largest in the world in terms of production, consumption, export and growth prospects.

India's telecommunication network is the third largest in the world and the second largest among the emerging economies of Asia. It is also amongst the fastest growing telecom markets in the world. Indian telecom industry manufactures a complete range of telecom equipments using the state of the art technologies designed specifically to match the diverse terrain and climatic conditions.

India is the world's sixth largest energy consumer accounting for about 3.5% of the world's total annual energy consumption.  India is the eighth largest crude steel producing country in the world.

The Indian cement industry is extremely energy intensive and is the third largest user of coal in the country. It is modern and uses latest technology, which is among the best in the world. India is the second largest manufacturer of cement in the world.

In India, services sector, as a whole, contributed as much as 68.6 per cent of the overall average growth in gross domestic product (GDP) between the years 2002-03 and 2006-07.

The Indian software and services (IT services) industry has been moving up the value chain, giving India a formidable brand equity in the global markets.  Business Process Outsourcing (ITES-BPO) sector has emerged as a key driver of growth for the Indian software and services industry.

"Bollywood" is the name for the typical Indian cinema industry. The name Bollywood comes as a reference to Hollywood but with the initial "B" for Bombay (Mumbai), the place in India for cinema productions of the same importance.

The number of movies produced in India is the largest in the world. In 2003, the Indian film industry produced 877 films. Approximately twenty-three million Indians go to see a film every day. According to a survey done by Ernst & Young, more than 70% of the industry believed that the film business is expected to grow by more than 15% in the next five years.

India has a vibrant micro and small enterprise sector that plays an important role in sustaining the economic growth, by contributing around 39 per cent to the manufacturing output and 34 per cent to the exports in 2004-05. It is the second largest employer of human resources after agriculture, providing employment to around 29.5 million people (2005-06) in the rural and urban areas of the country.

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