TechTex India

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Emerging India The Next Investment Business
Destination International Conference on Technical
Textiles Nonwovens Organised by IIT Delhi 11-13
November08
RITIKA GUPTA Executive Director Business
Co-ordination House
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Situation Today - Globally

• Economic Crisis, leading to
• Closures
• Decreased production
• Lay offs
• Turbulences in the import export scenario
• Volatility in raw material prices
• Capitalization on self strengths as low prices
  are the key drivers
• Over capacities
• Postponement of expansion plans
• Overall less confidence

Let us remember
NEWTONS THIRD LAW OF MOTION
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The Opposite ReactionWhat, Where, Why ?
What ? Economic boom Where ? Emerging nations
- India Why ? Manufacturers (entire value
chain) will be vying for value addition or more
newer products by default as current setups are
facing problems Consumers - non users will be
turning into users by default as cheap products
due to over capacities and imports are being
dumped into the market.
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What is Going to be the Result ?
Demand will be created at a much faster
pace Supply will be organized at a much faster
pace

• Increase in
• Buy Sell activity
• Tie ups and alliances
• Imports Exports
• Setting up of green field projects
• Shutting down of old and low quality produce set
  ups
• Consumer awareness will grow exponentially

Overall business and investment activity will grow
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Modes of Business Operations
Joint Venture Company or Wholly owned Subsidiary
Acquisition of shares/ business assets
Liaison / Project / Branch office
Venture Capital investments
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Why
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What is India?... Diversity
Geographical
Religions
Languages

• 28 States 7 Union Territories
• Population
• Total 1,137,214,200 (August 2008)
• Growth Rate 1.578 (2008 est.)
• 2nd most populated country in the world

• Hinduism 80.5
• Islam 13.4
• Christianity 2.3
• Sikhism 2

• Hindi Official language of India
• 22 regional languages
• English enjoys the status of the subsidiary
  official language and is extensively used for
  all practical purposes

Secular tolerance
Huge workforce market
No language barrier
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What is India?... Complex Cultural Landscape

• Quintessential features of Indian culture
• One of the most ancient cultures of the world
• Symbolic of Unity in diversity
• Secular tolerance
• Constant strive towards development
• Symbol of non-violence
• Cohesive or coordinating
• Orderliness, Planning and Unity
• Religiousness

Friendly and productive relations with
inhabitants of other parts of the world, are the
signs of the unique concept of Indian Culture and
society the whole world is a family
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What is India?... Vibrant democracy

• The worlds largest and the fastest growing
  democracy in the world
• A remarkable Constitution
• Well-developed democratic institutions
• True participation by the people in social
  governance

The goal of Indian democracy is liberalizing the
economy within an established democratic
orderthe buzzwords are globalization,
liberalization, privatization carbon rationing
that would catapult the growth of the country
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What is India?... The Next Business Destination
Top destination in the AT Kearney Global Retail
Development Index (2007)
Estimated to become the fifth largest consumer
market by 2025
Macro Economic Indicators
Second largest emerging market
Most preferable destination for Manufacturing
Services sector
Rail Network Asias Largest Road Network 2nd
Largest Air Network One of the Largest
in the world
Total value of MA deals increased by more than
151 from 2006 to 2007
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Key Highlights of Indian Economy

Second fastest growing economy with a GDP growth
rate of 8.7 in 2007-08
Major force in terms of forex reserves (over
US300 billion as of March 2008)
Significant rise in foreign investments through
FDI ECB route in 2007-08
4th largest economy in the world in terms of PPP
Amongst the highest rate of returns on
investments India 19.33 China 14.25
The per-capita income has grown at a CAGR of
7.24 from 200203 to 200708
The worlds fastest growing economy after China
A safe place to do business
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India Key Indicators for Growth Competitiveness
Availability of Resources
Demographic Profile

• Abundance of raw material (Cotton PES)
• Huge entrepreneurial talent
• High availability of skilled workforce Over 3
  million scientific and technical manpower
• Low cost labor

• Strategic geographical location
• 1.1 Bn population (Approx. growth 1.5-2)
• Youngest population profile India will have 25
  of its population in 25-30 age group by 2020

Democratic System of Governance
Large Domestic Market

• Strong middle class of gt 300 Mn is the target
  population
• Growing consumerism A/c to Mckinsey India will
  become the fifth largest consumer markets by 2025
• Rising per capita income

• Amongst the most vibrant in the world with a well
  established judicial system
• Liberal foreign investment regime

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The Changing Indian Consumer

• Westernization - Greater exposure to
  international lifestyles
• Living for the Day is the motto More
  expenditure on luxury goods and leisure
• Indian growing middle class more discerning and
  demanding than ever
• Rise of young upwardly moving mobile crowd or
  DINKS (double-income-no-kids) has led to trend
  consciousness - no longer need based shopping
• Increasing number of working women in the total
  work force
• Increase in disposable income
• Greater levels of education and rising standards
  of living
• Widespread urbanisation - willingness to pay more
  for a product that has utility coupled with
  comfort

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India Emerging as a Retail Powerhouse of Asia
Over 12 million outlets in India

• India ranks in the top ten of the worlds most
  favored retail investment destinations
• The overall Indian retail industry contributes
  10 to the GDP thus becoming the fastest growing
  sector in the Indian economy
• Organised retail in India would triple in size
  from US 8.8 Bn to US 27.4 Bn by 2010

Unorganised Retail
Organised Retail lt 3
-
Set to grow at a CAGR of 30 by 2010
Organised Retail expected to cross US 25 bn mark
by 2010
4
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India
Towards increased global integration through
Trade
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India Foreign Trade
Source Federal Ministry of Commerce, India
Indias bilateral trade relations have steadily
strengthened over the past few years and lot of
opportunities exist in the upcoming sectors
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Indias Major Trade Partners
USA
Belgium
UAE
Singapore
China Indias Largest Trading Partner followed
by USA
Japan
Switzerland
Germany
UK
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Bilateral Regional Trade Agreements

• Operational Agreements
• Agreement on South Asian Free Trade Area (SAFTA).
  Operational since January 2006
• Asia Pacific Trade Agreement (APTA) or Bangkok
  Agreement. Operational since September 2006
• Bangladesh- India Amended Trade Agreement.
  Operational since April 2006
• Bhutan-India Agreement on Trade, Commerce and
  Transit. Operational since January 1972 (expired)
  
• India-Maldives Trade Agreement. Operational since
  April 1981
• India-Singapore Comprehensive Economic
  Cooperation Agreement. Operational since August
  2005
• India-Sri Lanka Free Trade Agreement. Operational
  since March 2000
• India-Thailand Free Trade Agreement. Operational
  since September 2004
• Indo-Nepal Treaty of Trade. Operational since
  1992
• Bay of Bengal Initiative for Multi-Sectoral
  Technical and Economic Cooperation (BIMSTEC)
  Free Trade Area

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Bilateral Regional Trade Agreements

• Agreements under negotiation
• India-ASEAN (Association of Southeast Asian
  Nations) FTA
• Chile-India Preferential Trade Agreement
• China-India Regional Trading Arrangement
• Egypt-India Free Trade Agreement
• European Free Trade Area (EFTA)-India Economic
  Partnership Agreement
• European Union (EU)-India Trade and Investment
  Agreement
• Gulf Cooperation Council (GCC)-India Free Trade
  Agreement
• India-Indonesia Comprehensive Economic
  Cooperation Arrangement
• India-Japan (Comprehensive) Economic Partnership
  Agreement
• India-Malaysia Comprehensive Economic Cooperation
  Agreement
• India-Mauritius Comprehensive Economic
  Cooperation and Partnership Agreement
• India-Mercado del Sur (MERCOSUR) Preferential
  Trade Agreement
• India-MERCOSUR-SACU Preferential Trade Agreement
• India-Russia Comprehensive Economic Cooperation
  Agreement
• India-Southern African Customs Union (SACU)
  Comprehensive Free Trade Agreement

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Role of Government
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Economic Liberalization

• Industrial Policy Reforms
• Setting up of Special Economic Zones (SEZs) with
  following incentives
• - Graded Income Tax holiday
  for 15 years
• - Exemption from Excise
  Customs duties
• - Exemption from Central
  Sales Tax
• - Exemption from Service
  Tax
• - Exemption from Local
  Taxes
• - Concessions on stamp duty
  registration
• - Single window clearance
• - Liberalized labor law
• Inertest subsidy (TUFS)
• Central state subsidy
• Scheme for Integrated Textile Parks (SITPs) with
  better infrastructure
• Trade policy Reforms
• Quantitative Restrictions lifted on most items
• Compliance with Trade-Related Aspects of
  Intellectual Property Rights (TRIPS) (since
  2005) This has led to an increase in the number
  of RD centres set up by MNCs in the country.

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Key Sectors Witnessing Growth
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IT ITeS

• Overall India domestic IT Services market crosses
  US 5 Billion in 2007 with Consulting System
  Integration and Outsourcing deals driving growth
• In 2008, IDC expects the IT and ITeS industry to
  grow at 20, with the domestic market growing at
  22.4 compared to the IT and ITeS export market
  growth of 18.9.
• According to IDC the India domestic Managed IT
  Services market is expected to grow at a CAGR of
  24.9 to become a US 2.78 Billion industry by
  2010 , , making it one of the fastest growing
  markets in the Asia/Pacific region.

Telecommunications

• India is the fastest growing telecommunications
  market in the world
• It has the worlds lowest call rates (23 US
  cents) and fastest growing subscriber base -
  with the current subscriber base of over 250
  million expected to cross 500 million by 2010
• Leading global telecom equipment manufacturers,
  such as Nokia, Samsung, Motorola and Sony
  Ericsson, are setting up their bases in the
  country

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Infrastructure Logistics

• The Indian construction industry is forecasted to
  be valued at US102.4bn in 2008 and at
  US243.64bn by 2012, registering an average
  growth of 15.61 over the forecast period (BMI)
  thus contributing 16.98 to Indian GDP by 2012 .
• The Indian logistics industry is at an inflection
  point, and is expected to reach a market size of
  over 125 billion in year 2010
• According to Datamonitor, outsourced logistics,
  at just above one-quarter of the entire 90
  billion Indian logistics market, is slated to
  grow at a compound annual growth rate (CAGR) of
  over 16 from 2007-10

Pharmaceutical Industry

• Among the Asian countries, Indias
  pharmaceuticals industry ranks fourth
• Between 1996 2006, nominal sales of
  pharmaceuticals on the Indian subcontinent were
  up 9 p. a. and thus expanded much faster than
  the global pharmaceutical market as a whole (7
  p.a.)
• Over the last 10 years the export surplus has
  widened from EUR 370 Mn to EUR 2 Bn. At 32 in
  2006, the export ratio was about twice as high as
  in 1996 and will likely rise further in the
  coming years.

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Auto Auto Component

• The size of the auto component industry has grown
  from US6.7 Bn in 2003-04 to US 15 Bn in 2006-07
• Total vehicle production in India in 2006 - 07
  was 11 Mn and the production has been growing at
  a CAGR of 15
• India's auto industry currently accounts for 5
  of the country's GDP. According to the Automotive
  Mission Plan 2016 the auto industry should be a
  US150 Bn segment, making up 10 of India's GDP
  by 2016.

Health Care

• Healthcare, which was a US 30 Bn industry in
  2005, is expected to cross over US60 Bn by 2010
  thus growing at a CAGR of 15
• The medical tourism market in India is worth US
  450 Mn and is expected to become a US 1.5 Bn a
  year business opportunity by 2012 thus giving a
  major boost to the healthcare sector
• 100 FDI is permitted for all health related
  services under the automatic route

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Indian Textile Industry
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Indian Textile Industry - At a Glance
Indian Textile Clothing Industry - 2006(US
52 Billion)
By 2012
Indian Textile Clothing Industry (US 110
Billion)
Exports US 50 Bn
Domestic US 60 Bn

• Textiles and clothing industry contributes about
• 14 to industrial production
• 17 to the countrys export earnings
• 4 of GDP
• One of the largest foreign exchange earner for
  the country
• Second largest employer employing 35 Mn people

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Indian Technical Textile Nonwoven Industry
Nonwoven
Technical Textiles

• At present the total nonwoven production in India
  is 90,000 tonnes and is expected to grow
• to
• 200,000 tonnes by 2010

• Indias share in the global market was around 6
  in 2005 which is expected to be 12 by 2012
• Growing at a CAGR of 10.4

The Indian technical textile and nonwoven
industry is poised for tremendous growthwithin
Asia, India is expected to be one of the largest
producer and consumer of technical textiles and
nonwovens by 2012
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Domestic Scenario
Indian Technical Textile Nonwoven Industry

• India emerging as a powerhouse for production
• No state of the art technology comparable to
  global players
• Production is unorganized fragmented
• Very few large scale manufacturers

• Huge market potential high demand
• Present demand is mostly met through imports
• Varied demand across different application areas
• Product potential seat belts, disposable
  hygiene products, geotextiles, protective
  textiles filtration fabrics

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Products Driving Growth
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Medical TextilesPulsating Growth
2003-04
2007-08
Healthcare Nonwoven Textiles, 17
Market Potential (US mn)
160
140
Wipes, 2
120
100
Nonwoven
80
60
Consumption 2007
40
diapers
20
Healthcare textiles
Surgical dressings
Sutures
Sanitary napkins
Disposable Hygiene Products, 81
0
Medical devices
Products

• Indian consumption for baby segment is huge
  around 250 million pieces/year Adult incontinence
  products poised for growth.
• With the Indian healthcare industry growing at a
  CAGR of 15, market for healthcare textiles is
  poised for rapid growth.

Medical textiles market in India is expected to
almost double to a US 753 Mn industry by 2012
from the current US 405 Mn
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Automotive TextilesDriving Growth
2003-04
2007-08
Market Potential (US mn)
250
200
Nonwoven
150
100
Consumption 2006-07
50
Air bags
Helmets
Seat/Car covers
Head liners
0
Nylon tyre
Seat belts
Source BCH Analysis
Products
Presently worth US 150 Mn Automotive Textiles
are consumed by 1.8 Mn cars which is projected to
become more than double by 2010 US 318 MnThe
total nonwovens consumption in this segment is 45
Due to Indias cost competitiveness, worlds
leading producers of automotive textiles are keen
on establishing manufacturing plants in India
thus making the automotive industry one of
Indias key industries
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GeotextilesRoad to the Future
18311 Tonnes (92 Mn sq. mtrs.)
Woven Geotextiles 29
CAGR 25
Nonwoven
6000 Tonnes (30 Mn sq. mtrs.)
Consumption 2006-07
Nonwoven Geotextiles 71
Source BCH Analysis

• Consumption of geotextiles in roads highways
  85 of the total consumption
• Great stress laid on Infrastructure revamping
  of ports and airports
• Attention has also been diverted to river bank
  protection from erosion protection of
  embankments from floods
• Government of India has allowed 100 FDI under
  the automatic route in order to spur
  investment in the vital infrastructure sector

The market for geotextiles in India is expected
to grow in excess of 25/ year
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Agro TextilesFuture is Green

• Introduction of Corporate farming leading to an
  increase in the use of Technical Textile products
• The use of nonwovens especially spun bonded
  fabric is increasing.
• New products can be introduced insects and bird
  netting, transport and lifting materials,
  textiles in green houses, horticultural textiles

Demand for greater productivity to feed an ever
expanding population is the underlying driving
force behind the growth of agro textiles in India
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Protective TextilesFlaming Growth

• Defense is the largest end user of various
  protective clothing followed by the industrial
  sector (steel, energy) growing rapidly
• Major products include fire retardant textiles,
  ballistic protective clothing and high visibility
  clothing
• India is technically far behind the developed
  nations in providing advanced protective clothing

It is estimated that the Indian protective
textile industry will grow at an annual growth
rate of almost 25 if the regulatory framework is
in place totaling to a value of almost 740US Mn
by 2011-12
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The 2012 scenario for the Indian Technical
Textile and Nonwoven industry looks bright with
exponential growth opportunities ...
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Key Challenges
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Challenges that Companies Must Look In To while
Contemplating Doing Business in India

• Market differences from the West
• Reaching target customers in a cost effective way
• Estimation of business risks correct estimation
  of market and business potential
• Under estimating local or import competition
• Analyse actual demand
• Government regulations
• Partnerships and acquisitions proper due
  diligence
• Infrastructure bottlenecks - Logistics
• Cultural issues

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...This is where BCH plays a role
...How?
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• Threats/Opportunities
• Market Needs
• Industry Capabilities
• Strategies for Growth

GROWTH
Co-ordination

• Global Manufacturers/Traders
• Global Associations
• Government
• Media

• Internal
• External
• Industry
• International

Perception
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To Conclude
? Indias healthy economic outlook
On the threshold of a high growth path
? Indian as an investment destination
Offering High Growth Opportunities
? Business Co-ordination House A
vibrant organization with strong business
prospects
Unique Opportunity to Participate in Indian
Growth Story!
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THANK YOU!
TechTex India
TechTex India