Making of manufacturing driven economy

New Government, new directions for a vibrant economy

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Our mandate is to put India on a world map as a Manufacturing hub

Promoting growth of manufacturing industry & facilitating investment Framing Foreign Direct Investment (FDI) Policy, facilitating foreign investment & bilateral/multilateral engagements for industry and investment Administering intellectual property regime consistent with international commitments Facilitating development of industries through up-gradation of industrial infrastructure Responsibility as Administrative Ministry for specific industries allocated to the Department, viz cement, paper, boiler, leather, rubber, light engineering, salt and consumer industries 4

Three pillars for bringing out transformation in manufacturing have been defined

Improving Business Environment • Ease of Doing Business • De-licensing & Deregulation Enabling Manufacturing • Industrial Corridors • Industrial Clusters • Smart Cities • Nurturing Innovation • Skill Development Opening up Foreign Direct Investment in key sectors • Opening of critical sectors like Defense, construction and Railways for FDI 5

Improving Business Environment

Process of applying for Industrial License & Industrial Entrepreneur Memorandum made online on 24X7 basis through eBiz portal Validity of Industrial license extended to three years States asked to introduce self-certification and 3rd Party certification under Boilers Act Major components of Defence products’ list excluded from industrial licensing Dual use items having military as well as civilian applications deregulated Services of all Central Govt. Departments & Ministries will be integrated with the E-Biz - a single window IT platform for services- by 31 Dec. 2014 6

Improving Business Environment

Advisory sent to all Departments/ State Governments to simplify and rationalize regulatory environment: All returns should be filed on-line through a unified form; A check-list of required compliances should be placed on Ministry’s/Department’s web portal; All registers required to be maintained by the business should be replaced with a single electronic register; No inspection should be undertaken without the approval of the Head of the Department; and For all non-risk, non-hazardous businesses a system of self certification should be introduced 7

Enabling manufacturing

Impetus on developing Industrial Corridors and Smart Cities

Delhi-Mumbai Industrial Corridor: work on 5 smart cities in progress: Dholera, Shendra-Bidkin, Greater Noida , Ujjain and Gurgaon

Bengaluru – Mumbai Economic Corridor Chennai-Bengaluru Industrial

Corridor: Master Planning for 3 new Industrial Nodes [Ponneri (TN), Krishnapatnam (AP), Tumkur (Karnataka)] in progress.

A new ‘National Industrial Corridor Development Authority’ being created to coordinate, integrate, monitor and supervise development of all Industrial Corridors.

North-East Corridor Linked to Myanmar & other Industrial Corridors

Chennai-Vizag Industrial Corridor: Feasibility Study commissioned by ADB.

100 days of the New Government • Amritsar-Kolkata Industrial Corridor: DMICDC selected as Nodal Agency for doing Feasibility Study, which is being conducted at fast pace.

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Enabling manufacturing

New Industrial Clusters for promoting advance practices in manufacturing

Approval accorded to 21 Industrial projects under Modified Industrial Infrastructure Upgradation Scheme With an emphasis on Use of recycled water through zero liquid discharging systems Central Effluent Treatment plants Under NMP, one additional National Investment and Manufacturing Zone (NIMZ) at Kalinganagar, Jajpur district in Odisha given in-principle approval, bringing the number to 17 9

Enabling manufacturing

Nurturing Innovation

Approval obtained for strengthening Intellectual Property regime in the country through: Creation of 1033 posts Further upgradation of IT facilities Act recognizing National Institute of Design (NID), Ahmedabad, as an institute of National Importance notified on 8th August 2014. This will enable it to confer degrees, promote research and function as an Apex body in Design Education.

4 NIDs being developed 100 days of the New Government • 10

Enabling manufacturing

Skilling the youth

Impetus given to skill development through Indian Leather Development Programme

Training imparted to 51,216 youth For augmentation of training infrastructure, funds released for establishment of 2 new branches of Footwear Design & Development Institute at Banur (Punjab) and Ankleshwar (Gujarat) 11

Opening up Foreign Direct Investment in key sectors

Policy in Defence sector liberalised and FDI cap raised from 26% to 49%.

100% FDI under automatic route permitted in construction, operation and maintenance in specified Rail Infrastructure projects Easing of norms underway for FDI in the Construction Development sector 12

Our collective efforts have started showing results

India on a growth path

GDP Growth

• • • GDP growth rate improved to 5.7% in the first quarter (April-June) of 2014 compared to 4.7% in first quarter of 2013 Industry GDP growth rate spiked at 4.2% in the first quarter of 2014 compared to -0.4% in the first quarter of 2013.

Industry GDP growth rate also spiked to 3.5% in Q1 of 2014 compared to -1.2% in the corresponding Q1 of 2013

Source: DIPP

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India on a growth path

•

FDI Inflows

M-o-M FDI inflows increased from USD 1.4 bn in June 2013 to USD 1.9 bn in June 2014 recording an increase of 33%.

FDI Inflows

• Foreign Direct Investment inflows have increased 75% in the months of June-July 2014 (combined) over the same time period in the preceding year.

Source: DIPP

33% 75% 14

India on a growth path

•

Industrial Growth

The performance of industrial sector as measured by growth of Index of Industrial Production (IIP), has improved in June 2014 as compared to June 2013 •

Industrial Growth

Performance of Capital goods, which is an indicator of revival of positive investment sentiment has shown considerable improvement in June 2014 as compared to June 2013.

Source: DIPP

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India on a growth path

Trade – Manufacturing (Exports Selected Major Commodities)

• Most of the manufactured products have witnessed a positive growth in exports in July 2014 as compared to July 2013

Source: DIPP

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Improving sentiments

•

Manufacturing Purchasing Managers Index (HSBC)

HSBC PMI which gives an overview of business conditions in manufacturing sector was a 17-month high in July 2014 at 53.0

•

Business Confidence Index (NCAER)

Business Confidence Index rose by 13% in June over April 2014, overshadowing 3.8% increase in April over January, 2014.

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Source: DIPP

India is one of the fastest developing economies in the world and ranks among the most sought after investment destinations

• • • • • • 3 rd largest economy in terms of purchasing power 1 The 9th Global Capital Confidence Barometer, October 2013, has reported India among one of the top five investment destination among emerging and developed markets 2 India accounts for 5.5% of global FDI in terms of value and 6.3% in terms of projects 2 India is the fourth most attractive location for FDI for 2014-2016 as per UNCTAD Report 2014 India ranks 2 Overseas Business Operations in the Medium Term 4 ; nd Most Promising Country for India has been rated as Top Investment Destination for the Long Term 5

Top 10 prospective host economies for 2014-16

1 China 2 USA 3 Indonesia 4 India 5 Brazil 6 Germany 7 UK 8 Thailand 9 Vietnam 10 Russian Federation 0 10 20 30 40 50

Source: UNCTAD, World Investment Report 2014

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Increase in foreign investments and industrial growth during the May July period shows the restored confidence in the economy and the new government

• • • • • • FDI inflows have increased 80% in the months of May-June 2014 (combined) over the same time period in the preceding year M-o-M FDI equity inflows have increased 33% in June 2014 compared to June 2013 Overall Index of Industrial Production (IIP) has grown by 3.4% in June 2014 as compared to 1.8% in June 2013 Growth rate of Capital goods in IIP has shot up from -6.6% in June 2013 to +23% in June 2014 Purchasing Managers Index (PMI) as on 1st August 2014 was at 17-month high Manufactured exports have recorded 6.6% growth in July 2014 as compared to July 2013 2500

M-o-M FDI Equity Inflows (in USD million)

2000 33% 1927 1500 1444 1000 500 0 June 2013 June 2014 1 0 -1 -2 -3 4 3 2

Monthly growth of Manufacturing and overall IIP (%)

3,4 1,8 Manufacturing -1,7 Jun-13 Jun-14 -1,8 IIP 19

Source: DIPP

Strategic opportunities

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The new Government has prepared a five pillar strategy to drive India’s growth, which offer multiple avenues of collaboration and investments

Infrastructure development Manufacturing growth, Employment creation and promoting entrepreneurship Energy sufficiency Skill development Business environment improvement

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Government is focused on improving both the industrial infrastructure as well as the urban infrastructure of the country and has announced several high impact projects in the sector

Industrial infrastructure

1. Industrial corridors • Delhi Mumbai Industrial Corridor (DMIC) • • Chennai Bengaluru Industrial Corridor (CBIC) Vizag Chennai Industrial Corridor (VCIC) as first phase of East Coast Economic Corridor (ECEC) • • Bengaluru Mumbai Economic Corridor (BMEC) Amritsar – Kolkata Industrial Corridor (AKIC) 2. Transport connectivity to North East India

Urban infrastructure

1. Smart Cities 2. Affordable housing 3. Swachha Bharat project 4. Digital India 22

The upcoming industrial corridors provide potential opportunities for investments across different infrastructure sub-sectors

• To promote manufacturing in India, five new Industrial Corridors are being planned.

• Each Industrial Corridor will have at least 6 – 8 key nodes developed on Smart City principles measuring more than 200 sq. Km • DMICDC is these corridors.

the apex authority that is planning East Coast Industrial Corridor 23

DMIC is being developed as a flagship project of partnership & collaboration with Government of Japan and offers several opportunities for investors

Nodes Area (sq km) Ahmedabad Dholera Investment Region Manesar-Bawal Investment Region, Haryana Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan Pithampur-Dhar-Mhow Investment Region, M. P.

Dadri-Noida-Ghaziabad Investment Region, U.P.

Dighi Port Industrial Area, Maharashtra Shendra Bidkin Industrial Park, Maharashtra

920 402 165 372 200 253 84

GoI is developing DMIC as a global manufacturing and investment destination utilizing the 1,483 km-long, high-capacity western Dedicated Railway Freight Corridor (DFC) as the backbone.

Key early bird projects Vikram Udyogpuri, near Ujjain, Madhya Pradesh Integrated Industrial Township at Greater Noida, UP Water Supply Project, Madhya Pradesh Budgetary Support by GoI (Rs mn.)

595 6,172 704

Construction of New Rail Line between Bhimnath and Dholera SIR, Gujarat Logistic Data Bank Model Solar Power Project, Neemrana, Rajasthan

243 372 353 24

CBIC is the second corridor project under Japanese Government partnership; aimed at improving the industrial infrastructure and increasing investments across multiple sectors in the region

Key nodes identified Bidadi Township Area, Ramanagara Vasanthnarasapura area in Tumkur Mulbagal in Kolkar Ponneri Industrial Area Hosur Industrial Area Hindupur Industrial Area Chittoor NIMZ Krishnapatnam Industrial Area State

KAR KAR KAR TN TN AP AP AP The corridor between Chennai – Bengaluru – Chitradurga (around 560 km) would have an Influence Area spread across the states of Karnataka, Andhra Pradesh and Tamil Nadu.

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The Vizag Chennai Industrial Corridor is a part of the East Coast Economic Corridor, aligned to the Golden Quadrilateral and is envisaged to play a key role in India’s Look East Policy

Key attributes of the corridor

1.Visakhapatnam

2. East Godavari 3.West Godavari 4. Krishna 5. Guntur

4 3 5 2 1

6. Prakasam 8. Kadapa 9.Chittoor

6 Successor state of AP* 8 7

7.Nellor

e

9 10

10.Tiruvallur

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11.Chennai

Tamil Nadu NH 5 alignment The corridor between Vizag - Chennai (around 800 km) would have an Influence Area spread across the states of Andhra Pradesh and Tamil Nadu.

• • • •

The Corridor contributes to 5% of national GDP Influence area of the corridor is over 110,000 sq. km which is 3.5% of India’s area Industrialization will be supplemented by natural resources available in the region (natural gas, minerals, agriculture products ).

The major ports are well connected and in close proximity to many of the East Asian economies (~ 80% of AP’s coastline )

In view of the commitment made by the central government under the Andhra Pradesh Reorganisation Act, 2014, in the first phase of the study the ADB will focus on the Vizag-Chennai Section so that a final view on the Vizag-Chennai Industrial Corridor may be taken within the timeline prescribed in the Act and further action taken accordingly.

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GoI has announced 100 Smart City projects across 21 states with a view to provide a fillip to the urban infrastructure in the country GoI has announced 100 Smart City projects across 21 states with a view to provide a fillip to the urban infrastructure in the country

• The Government has allocated Rs. 70.60 billion in the General Budget to develop the 100 Smart Cities in the country.

• To encourage development of smart cities, with respect to FDI in the construction development sector, the condition for built up area reduced from 50,000 sq. m to 20,000 sq. m and minimum capitalisation norms reduced from USD 10 million to USD 5 million, with three years lock-in.

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GoI is also focused around other urban infrastructure aspects of Affordable housing and Sanitation, and has set definitive goals in these areas

• • •

The Government has announced to set up a Mission on Low Cost Affordable Housing anchored in the National Housing Bank (NHB).

A sum of Rs. 4,000 crore for NHB is provided with a view to increase the flow of cheaper credit for affordable housing Projects which commit at least 30% of total project cost for low cost affordable housing to be exempted from the built-up and capitalization conditions Source: GoI General Budget, 2014-15 The Government intends to cover every household by total sanitation by the year 2019, the 150th year of the Birth anniversary of Mahatma Gandhi through Swatchh Bharat Abhiyan.

Source: GoI General Budget, 2014-15

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Government is committed to promote manufacturing and employment. The NMP lays the foundation for larger contribution of manufacturing sector in GDP

• •

Objectives of National Manufacturing Policy (NMP):

• To promote investments in the manufacturing sector and make the India a hub for both domestic and international markets • To increase the sectoral share of manufacturing in GDP to 25% by 2022 (from about 15% presently) To double the current employment level in the manufacturing sector To enhance global competitiveness of India’s manufacturing sector NMP proposes setting up of National Investment and Manufacturing Zones (NIMZs), which would be much larger than SEZs in area (can be viewed as a cluster of smaller industrial areas . SEZs, EoUs etc.)

Sectors of Strategic Importance

Defence Equipment Aerospace Ship-building & Repair Capital Goods & Engineering

Source: NMP 2011

Sectors of Basic Inputs

Steel Mineral Exploration and Development Fertilizer Cement

Sectors for Depth and Value Addition

Automotive Electronics Drugs & Pharma Chemical Petrochemicals Paper

Sectors for Employment Generation

Textlies Food Processing Leather & Leather Goods Gems and Jewellery 29

India has the potential to offer myriad of opportunities for foreign investors across a wide gamut of manufacturing sectors (1)

Auto Auto components Defence Overview Investment opportunities FDI policy

 Likely to become 3 rd largest auto market in the world by 2016, accounting for more than 5% of the global vehicle sales  India’s is 2 nd largest two wheeler manufacturer, largest motor cycle manufacturer and 5 th largest commercial manufacturer vehicle  Expected size by 2016 is USD 145 billion.

 Passenger Vehicles  Two Wheelers  Three Wheelers  Commercial Vehicles  low cost electric vehicles 100% FDI is allowed under the automatic route  Worth USD 39.7 billion in  FY2012–13 India’s exports of auto components increased at a CAGR of 17% during 2008 13; Exports have risen to USD 9.7 billion in 2012-13  3 rd largest armed forces in the world.

 Largest importer of conventional defence equipment  70% of defence requirements are met through imports  Defence budget in 2014-15 is USD 38 billion, expected to reach USD 50 billion by 2018  Engine & Engine Parts  Transmission  Electrical parts automatic route & Steering Parts  Suspension & Breaking Parts 100% FDI is allowed under the  Manufacturing segment technology) of defence equipment  Maintenance, repair and overhaul  Engineering services outsourcing Up to 49% under the government route and beyond 49% through CCS (in case of transfer of 30

Opportunities

Electrical Equipments ESDM Pharmaceutical Overview Investment opportunities FDI policy

 Estimated (FY07–12).

output by approx. USD 100 billion 2022  The market expanded at a CAGR of 10.5 per cent over  Generation Machinery: Boilers, Turbines, Generators  Transmission Machinery 100% FDI is allowed under the automatic route subject to all the applicable regulations and laws.

 Worth USD 68.31 billion in 2012; anticipated to be USD 94.2 billion by 2015; CAGR of 9.88% between 2011 and 2015  Consumer electronics  Strategic electronics  Medical electronics  Avionics  Fabless manufacturing  Automotive electronics  Electronic Manufacturing Services  EMCs 100% FDI through automatic route for ESDM except for defence electronics • • • • • • Accounts for about 2.4 % of the global pharma industry in value terms and 10% in volume terms Expected to grow at 12.1% during 2012–20 Expected to reach USD250 billion by 2020 from the current USD65 billion Active pharmaceutical ingredients (APIs) Contract research and manufacturing services (CRAMS) Formulations • • 100% FDI is allowed under the automatic route for Greenfield projects. For brownfield project investment up to 100% is under the government route. 31

Opportunities

Construction Food Processing Leather Overview Investment opportunities FDI Policy

 Second largest employer and contributor to economic activity, after agriculture sector.

 Accounts for 2 nd highest FDI inflow after the services sector  Worth USD 78.5 billion in FY13; expected to grow to USD 140 billion in FY17.

 Residential, retail, commercial and hospitality sectors  Technologies and solutions for sustainable cities, low cost and affordable housing, Green building solutions, environment friendly building materials  Training and skill development of construction sector workers  Smart cities  Urban water supply; urban sewerage & sewage treatment 100% FDI is allowed under the automatic route subject to conditions.

 Industry size is Rs 845 billion in 2012-13, growing at 8.4% for the last five years ending  2012-13 Value addition of sector as share of GDP manufacturing was 9.8% in 2012-13  Fruits and Vegetables  Fermentation products  Beverages  Dairy  Food additives, nutraceuticals  Confectionary and bakery  Meat & poultry  Fish and sea foods processing  Grain Processing  Food packaging  Food processing equipment  Consumer food 100% FDI through automatic route for most of the food products except for items reserved for MSME.

 Industry size approx. USD 11 billion (exports - USD 6 billion and domestic market - USD 5 billion)  Exports projected to grow at 24% pa in next five years.

Domestic market expected to double in next five years.

 Tanning and finishing of leather products  Manufacturing of leather garments  Manufacturing of leather footwear and footwear parts  Manufacturing of leather goods, such as harness and saddlery.

100% FDI is allowed under the automatic route subject to all the applicable regulations and laws.

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Opportunities

Overview Investment opportunities FDI policy Chemicals Petrochemicals

 Size of the industry (2012 13) is around USD 144  billion India accounts for approximately 16% of the world dyestuff production and of dye intermediated  The polymer demand is expected to grow by 8-10% with a healthy growth in clothing, automobiles, etc.

 Petrochemicals  Specialty chemicals  Agrochemicals  Colorants  Technical training 100% FDI is allowed under the automatic route subject to all the applicable regulations and laws.

Oil & Gas

  4 th largest consumer of crude oil and petroleum products in the world (2013)  Oil imports constitute 80% of India’s total domestic oil consumption (May 2014).

At the end of 2013, India had 215.066 MMTPA of refining capacity, making second-largest crude oil in Asia.

it refiner the of  Underground coal gassification  E&P services and equipments  City gas distribution  Refinery  Technology partnerships in upstream sector FDI is subject to the existing sectoral policy and regulatory framework and varies across the value chain

Textile

• • • • 2 nd largest textile manufacturing capacity globally Sector contributes 14% to industrial production and 4% to GDP and 13% of country’s export earnings Domestic textile and apparel industry is estimated to reach USD 100 bn by 2017 from USD67 bn in 2014.

Exports are expected to increase to USD 65 bn by 2017 from USD 40 bn in 2014 • • • • • Entire value chain of Synthetics Values added and speciality fabrics Technical Textiles Garment Retail Brands • 100% FDI is allowed under the automatic route in textile sector 33

Energy Sufficiency through Thermal Power and Renewable Power is high on Government’s agenda

Fifth largest producer and consumer globally

• With a production of 1,006 TWh, India is the fifth largest producer and consumer of electricity in the world 5000 4000 3000 2000 1000 0

World’s leading electricity producers in 2012 (TWh) Power generation and installed capacity has grown rapidly over the years Strong policy support to further incentivize power sector

• • Over FY07–13, electricity production expanded at a CAGR of 5.5% Installed capacity increased steadily over the years, posting a CAGR of 10.9 per cent in FY09–13 • Policies such as Electricity Act, 2003, National Tariff Policy, 2006, Ultra Mega Power Projects (UMPPs), R-APDRP and fuel supply agreement are aiding growth of the sector

Sources of Power with shares in total installed capacity

12% 2% 18% 68% Thermal Hydro Renewable Nuclear

The energy sector is one of the most developed and organised sectors in India

34 Source: Ministry of Power; Council of Power Utilities; Bureau of Energy Efficiency; India Brand Equity Foundation

The energy sector is full of varied opportunities in the thermal and renewable energy sector

Growing demand

• • • Expansion in industrial activity to boost demand for electricity Growing population and increasing penetration and per-capita usage to provide further impetus Power consumption is estimated to increase from 821.2 TWh in 2013 to an estimated 1433.2 TWh in 2022 • • •

Advantage India

Large capacity additions (189GW) targeted in the 12 th and 13th Five Year Plans Ambitious projects and increasing investments across the value chain Diversification into renewable sources increasing growth avenues

Higher Investments Policy Support

• • FDI inflows touched USD7.8 billion between April 2000-March 2013 Major investments earmarked by public as well as private sector companies across the value chain • • •

Attractive opportunities

Elimination of Licensing for various segments; removal of entry barriers Cost reduction and rationalization of tariffs; development of UMPP Fuel supply agreement of power producers with Coal India 35 Source: Ministry of Power; Ministry of New and Renewable Energy; India Brand Equity Foundation

The new Government has proactively taken multiple steps to bring about process improvements….

Process improvement initiatives

• • • • • • • • • Process of applying for IL/IEM made completely online and 24X7 ESIC/EPFO registration made on-line and real time, need for submission of hard copies removed States advised to introduce self certification and third party inspection for the Boilers Act All security clearances will be given by MHA within 3 months.

Need for affidavit from entrepreneur obviated with issue of ‘Security Manual for Licensed Defence Industry’ Requirement of License on a number of Defence List products removed Validity of Industrial License extended from 2 years to 3 years.

Questionnaires on ‘Enforcing Contract’ and ‘Resolving Insolvency’ filled by Government of first time.

Advisory sent to Ministries/State Governments: • • • • • All returns to be made online Check list of all compliances to be put on web-site All registers to be replaced with one single electronic register No inspection without approval from Head of the Department Self-certification for non-hazardous/non-risk businesses 36

….and labour & sector related initiatives to improve the overall “Ease of doing business” in India

Labour related initiatives

• • • • • • Unified Single Web Portal for Labour Law Compliance Initiated amendment of Factories Act, 1948 to allow for: • • Night shift for women Increased hours of overtime • Compounding of Offences Rationalization of Returns and Register requirements Initiated amendment of Apprentices Act, 1961 to increase the percentage of workforce as apprentice and restrict inspections Single labour law for MSME to be introduced in December, 2014 Evidence based inspections through Central Analysis and Intelligence Unit

Sector specific initiatives

• •

Defence sector

• Raised FDI limit in the Defence sector to 49%

Railways sector

• Allowed 100% FDI in railway infrastructure sector, in areas such as high-speed train systems, sub-urban corridors and dedicated freight line projects implemented in PPP mode 37

eBiz Mission will transform e-governance beyond online transactions to delivering services to investors and businesses

• • • • • • Offers a Single Window for businesses and investors and transparency in processing of requests Entrepreneurs to submit one integrated application for multiple licenses Single consolidated payment for the various licenses required by entrepreneurs Reduction in the number of procedures and correspondingly the cost and time taken for obtaining approvals 24 X 7Facility for Information and Services for businesses Eventually it will offer coverage of Entire Business Life Cycle

Source: DIPP

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Road Ahead

Hon’ble Prime Minister, in his Speech from ramparts of Red Fort on Independence Day on August 15, 2014 has defined future course of action: “….. I want to appeal all the people world over…. ...Come, Make In India. Sell anywhere but manufacture here…...” “We should manufacture goods in such a way that they carry zero defect, that our exported goods are never returned to us. We should manufacture goods with zero effect that they should not have a negative impact on the environment.” 18

Thank you

I invite you to “Make in India”

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