JapanIndia Public Private Partnership Seminar Towards New Economic Partnership Session 3 Promising I

1
Japan-India Public Private Partnership Seminar
-- Towards New Economic Partnership Session
3Promising India

• 14 February 2008
• India International Centre Annex, Delhi

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Contents of Presentation

• Issue 1 Economic Growth Potential of India
  Present Future
• Issue 2 Economic Partnership and
  Complementarity of Japan and India
• Issue 3 National Development Structure of India
• Issue 4 PPP and Directions of Japanese ODA

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Issue 1Economic Growth Potential of India
Present Future
4
Regional Economic Linkages The Chain of
Sub-regional Economic Circles in Asia
JAPAN
East Asia Economy
INDIA
ASEAN Economy
The Bengal Bay Economy
5
GDP Growth in Comparison with BRICs
6
GDP Growth in Future
Source IMF
India is projected to achieve a long-term
economic growth at higher rates than the world
average by IMF.
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A Long-term Perspective onPer Capita GDP in BRICs
An Institute made a super long-term projection of
GDP Per Capita of BRICs up to 2064.
INDIA
Source Open Cities (Spring 2008)
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Energy Resource ExtractionNatural Gas at Eastern
Off-shore

• Dhirubhai NG Field
• NG Deposit 35 tcf sufficient enough to
  substitute the imported volume
• Production to be commenced from 2008

9
Indian Students Abroad
Ranking of Source Markets in Major
English-speaking Countries
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Summary Indian Economic Outlook

• India is one of the most potential Asian growth
  centers.
• High economic growth expanding domestic and
  international markets.
• GDP growth 9.4 in 20056
• GDP per capita US 737 in 2006
• Such a high economic growth momentum is projected
  to last in the long-term.
• Service sector and ICT business have been long
  leading such a high growth.
• Supported by higher educated human resource
• Producing human resource with international
  manner and technologies in English-speaking
  countries.
• Energy resources are sufficiently available to
  support a sustainable economic growth.
• Shifting to Natural Gas

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Issue 2Economic Partnership and
Complementarity of India-Japan
12
Changes in Trading Partners of India
Import Export Amount
Trades with countries facing the Bengal Bay are
notably increasing at the same rate as that of
China.
N.B. The Bengal Bay Sri Lanka, Bangladesh,
Myanmar, Thailand, Malaysia, Singapore Indonesia
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Shares of Trading Partners
Import Export Amount
The share of Europe decreased, while the share
of WANA significantly increased, followed by
China and the countries facing the Bengal Bay.
Japans share is comparatively low.
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Sector-wise FDI Inflows(Top 12 from 20002007)
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Top Investing Countries FDI Equity Inflows
Cumulative FDI Equity Inflows (US) between 2000
-2007
Cumulative Inflows Total US 47,205 mill.
Japan is ranked at 6th place, sharing only 4.0.
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Tourism Development
Tourism sector provides a greater amount of
employments
Source Incredible India Sep. 2007 Ministry of
Tourism
17
Tourism Partners
Source Incredible India Sep. 2007 Ministry of
Tourism
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FDI Flows vs. Intl Tourist Arrivals
Money (FDI) and human (Tourist) transactions are
mutually correlated. The elasticity in recent
years is extremely high.
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India-Japan Trading and FDIs

• Trading
• The shares of WANA , China and the Bengal
  Bay Economy are significantly increasing, while
  Japan decreases its comparative share.
• Trading volume with Japan is increasing at 17.5
  p.a., but Japan is still a minor partner, sharing
  only 2.3 of the total.
• FDIs
• India is attracting FDIs in three (3) strategic
  sectors, namely, Services (financial and
  non-financial), Computer Software Hardware
  and Telecommunication. These three share 44 of
  the total FDIs.
• FDI inflow form Japan is still weak, compared to
  USA, UK and Singapore, being ranked at 6th place.
• Tourism
• A robust growth in Tourism Sector is the result
  of successful internationalization in the
  economy. This is correlated with money flows,
  namely, tourists come and/then money comes.

A substantial potential for further expansion of
Trade/FDI between India and Japan exists, noting
the complementarity of Japanese endowments in ICT
sector, automobile and other high value-added
industries.
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Issue 3National Development Structure of India
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Regional Economic Linkages Importance of being
linked with Asian economies
East Asia Economy
JAPAN
INDIA
ASEAN Economy
Technology and capital shift
The Bengal Bay Economy
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The Bengal Bay Economy
The Eastern India is encompassed in the Bengal
Bay Economy that stands for a sub-regional
industrial and capital linkage with supply chain.
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National Development Structure- Golden
Quadrangle -
The national economic structure shall be
formulated with four (4) major metropolises and
two (2) strategic growth centers such as
Bangalore and Hyderabad
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Co-Developmental Triangles of Eastern
CorridorsBalanced Growth of Indian Nation
Delhi
Kolkata
Co-Developmental Triangles of Eastern Corridors
Mumbai
Hyderabad
Chennai / Ennore
Connection to ASEAN Industrial Clusters and
East-Asian Countries
Bangalore
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Five (5) IT Centers in India
Indias IT and BPO exports from STPIs, FY 2004
(US billion)
IT Industries are likely located in Southern
three major centers Bangalore, Chennai and
Hyderabad.
Mumbai
Hyderabad
Bangalore
Chennai
Source Press articles web searches NASSCOM
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FDI Equity Inflows in Major Cities
RGIs Regional Office-wise Apr. 2000 to Oct.
2007 (US Billion)
Southern three major centers have attracted FDI
equivalent to that into NCR.
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International Gateways for Market Linkages
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Growth Parameters Rating of Cities

• (Source The Times of India, Dt.3rd August, 04,
  Page10.)
• Ranking for 5 to 1 indicate vary good to very
  poor
• Cost of living indicates low to high from 5 to 1
• Rating in the form of 4/3 indicate preference for
  the first figure, in this case 4

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Strategic Industrial Corridor Chennai - Bangalore
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Spatial Concepts on the National Development
Structure

• Sub-regional Economic Chain
• Importance to link India with ASEAN and East Asia
  Economies
• The Bengal Bay Economy
• Economic integration with potential markets
• Golden Quadrangle Structure
• Four (4) Major Cities Two (2) Strategic growth
  Centers
• The Delhi Mumbai Industrial Corridor
• The Western Market-oriented Gateway
• The Chennai Bangalore Growth Corridor
• The Eastern Market-oriented Gateway

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Recommendation For Balanced Development
Scenario

• The southern and eastern part of India be a
  strategic development region towards the balanced
  national economy

Recognize three metropolises as strategic growth
centers Chennai, Bangalore and Hyderabad
Needs / Requirements of the Society and Private
Sector

• Further strengthen the international transport
  gateway functions at Chennai
• Functionalize and enlarge Chennai and Ennore
  Ports
• Improve the Logistic and Inter-modal Systems
  with hinterland economies in Bangalore, Hyderabad
  and rest of India.
• Formulate the Chennai-Bangalore Corridor as a
  strategic Industrial zone with improved roads

Fully mobilize Public and Private resources and
knowledge in both countries, India and Japan
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Issue 4PPP and Direction of Japanese ODA
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PPP and Bilateral PartnershipHow to promote it ?
India
Partnership
Private
Public
Japan
Partnership
Private
Public
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Outcomes of the India-Japan Joint Study Group
(June 2006)

• Bilateral inter-governmental negotiation to
  develop a Comprehensive Economic Partnership
  Agreement (EPA/CEPA), consistent with WTO
• Trade in goods and services measures for trade
  promotion
• Promotion and liberalization of investment flows
• A Joint Task Force to be organized with
  representatives of business community to seek for
  an agreeable scheme of CEPA.
• Japanese ODA
• To support PPP-based projects (economic and
  social infrastructure), involving the Viability
  Gap Funding System
• To encourage FDI through improvement of
  infrastructures
• To promote best-practice projects in terms of
  transfer of management skills and technology
  (like Delhi Metro)
• To expand human exchanges
• To promote projects to bear a synergy of
  financial and technical cooperation.
• Special Economic Cooperation
• To promote a synergy between Japanese
  manufacturing technique and Indian software in
  ICT, Energy, Logistic and Automobile Sectors

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A Public-Private Partnership Model
Facility Development Procurements
Lease Maintenance Contract (TAC-TMC)

• Public Facilities
• - Civil Structure
• Related Infrastructure

Government
Private Operator (Special-Purpose
Company-SPC) -Project Finance -Design -Constructio
n -Operation -Maintenance
Subsidy or Viability Gap Fund
Performance Monitoring
Management Unit (PMU) - Government Staff
Management

• Procurements
• Operation systems
• Software and Know-how
• Maintenance tools
• Others

Advisor (Consultants)
Investment
Service Charges on PFI-contract Basis
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A Model of Players Demarcationsfor Development
of the ChennaiBangalore Growth Corridor
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• Thank you ..