© confederation of indian industry 1 cii’s agenda – 2010-11 and beyond……

© Confederation of Indian Industry1

CII’s Agenda – 2010-11 CII’s Agenda – 2010-11 and beyond……and beyond……

CII’s Agenda – 2010-11 CII’s Agenda – 2010-11 and beyond……and beyond……

© Confederation of Indian Industry

2008-09 2009-10 2010-11 E

Agriculture 1.6 -0.2 2.0 – 3.5

Industry 3.9 8.2 8.5 – 9.0

Services 9.8 8.7 9.3 – 9.5

GDP 6.7 7.2 8.0 – 8.5

CII Estimates GDP Growth at 8.0 – 8.5% in 2010-11CII Estimates GDP Growth at 8.0 – 8.5% in 2010-11

• Rainfall during 2009 was significantly deficient at 23% led to decline in agricultural production

• A recovery in agriculture likely in the coming year leading to upside in GDP growth; Industry and services to remain strong as capacity expansions take place to take advantage of rising demand

Source: CSO, CII Research

• India has weathered the global economic crisis better than other countries – EIU.• India considered an emerging economic superpower and part of G20.

2


India’s economic outlook remains very robust…India’s economic outlook remains very robust…

“India has the potential to grow fastest over the next 30-50 yrs…if development proceeds successfully”

0

1

1

2

$2T

2009

$1.2T

2015(estimate)

$1.8T

India real GDP (at 2009 prices)

GDP expected to grow at ~ 8% to reach ~$2T by 2016

0

10

20

30

40

$50T

China

44

US

35

India

28

2050 GDP

103 1Currentrank

India projected to be #3 largest economy by 2050

Calendar year; Exchange rate: INR50= USD1Source: Euromonitor; EIU; Goldman Sachs (BRIC report)

8% CAGR

*

3


However we face Significant Challenges However we face Significant Challenges

• Global developments: Developments in EU-Greece highlight the fact that global conditions will remain volatile for some time; excessive dependence on foreign capital inflows is not recommended for India

• Exchange rate: Currency fluctuations being driven by external conditions will have an impact on the real sector; important role for RBI in preventing excessive volatility

• Trade prospects: Improving with stabilisation in the global economy but growth in developed economies will remain weak in the near term; need to diversify markets

• Inflation: urgent need to get inflation under control; monetary policy cannot be the only instrument when the drivers food, fuel and commodities.

4


However we face many significant challengesHowever we face many significant challenges

Source: 1(% of total population) Expert Group on Methodology for Estimation of Poverty - chaired by Prof. Suresh D. Tendulkar, 2010 2 2005 PPP adjusted figure based on “World Bank poverty estimate for developing world” (2008);

*China and Brazil >90% (% of pop. aged 15+)- Euromonitor^ Transparency International- India scored 3.4/10 where highest was 9.4 (New Zealand)

• High Poverty rates:- Unacceptable poverty (37%1)- 456M2 people live on <$1.25/day

• Low literacy rates ~70% of population- among

the lowest in the emerging markets*

• Corruption & red-tapism Ranked #84 out of 180

countries on corruption index

• High Poverty rates:- Unacceptable poverty (37%1)- 456M2 people live on <$1.25/day

• Low literacy rates ~70% of population- among

the lowest in the emerging markets*

• Corruption & red-tapism Ranked #84 out of 180

countries on corruption index

Current

• Widening “job gap” in next 5 years:

17M job gap- ~94M new people will seek

jobs but only 77M new jobs will be created

• Widening “job gap” in next 5 years:

17M job gap- ~94M new people will seek

jobs but only 77M new jobs will be created

Future

5


Two biggest sources of employment in our economy are Two biggest sources of employment in our economy are agriculture & private sectoragriculture & private sector

Note: *Excludes unorganized workers in the organized sector; ^consists of those in the working age group (15-59) actively seeking employment;1 includes community, social and personal services; 2 includes mining and quarrying; transport, storage and communication; finance, insurance, real estate; electricity , water etcSource: Registrar General of India; NSSO; Indiastat; Labour Bureau of India

0

20

40

60

80

100%

Urban(29%)

Rural(71%)

402Others

Construction

Manufacturing

Trade, hotel,restaurant

Agriculture

402

Public

Private

201

Employment by location & sector (M); FY 2007

Services

6


-25

0

25

50

75

100

125

Expected increase in number of jobsby sector (M); FY 2007-12

FY 2007-12

58

FY 2007- 17

120

-4

Going forward, the private sector will need to be the Going forward, the private sector will need to be the primary driver of creating new jobsprimary driver of creating new jobs

Note: Excludes unorganized workers in the organized sector; ^consists of those in the working age group (15-59) actively seeking employment; * includes community, social and personal services; ^ includes mining and quarrying; transport, storage and communication; finance, insurance, real estate; electricity , water etcSource: Registrar General of India; NSSO; Indiastat; Labour Bureau of India

Private sector growth needs to increase from projected 9.5% growth to ~12%+ annually to close job gap

Private sector growth needs to increase from projected 9.5% growth to ~12%+ annually to close job gap

Finance, insurance, realestate and business services,

Trade, hotel, restaurant

Manufacturing

Community, social and personalservices

Construction

Transport, storage andcommunication

Agriculture

Mining & quarrying

Elec. gas & water supply

7


Four key enablers for faster sustainable growth – over Four key enablers for faster sustainable growth – over the medium termthe medium term

CII Theme 2010-11: Business for livelihoodCII Theme 2010-11: Business for livelihood“Businesses are part of civil society”

“Creating jobs is the best CSR activity”

Create jobs & livelihoodsSustainable enterprise

Education

Innovation

Qualified talentpool

Effective business practices

Employability

Entrepreneur-ship

3

4

1

2

8


How do we achieve this vision?How do we achieve this vision?

We need to aim for sustained 10% GDP growthWe need to aim for sustained 10% GDP growth

9


Vision 2010-11Vision 2010-11

Agriculture Manufacturing Services Infrastructure

Soci

al a

nd C

orpo

rate

im

pera

tives

Business for livelihood(Education & Employability, Innovation & Entrepreneurship)

• Art, sports & literature

• Healthcare

• Inclusive society & affirmative action

• Economic policy, reforms, governance & implementation

• Energy, water & climate change

• Urbanization & future cities

• Education & skills

• Corporate governance

• Entrepreneurship, innovation & competitiveness

• Trade & globalization

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Ten Point Agenda for 10% GrowthTen Point Agenda for 10% Growth

1. Agriculture needs to grow at a sustained rate of 4%

2. Manufacturing needs to register 11-12% long term average growth

3. Service sector needs to remain robust and a growth driver

4. Physical Infrastructure needs to be of global standards

5. Education would have to be the centre of reforms

6. Skill development would need a massive step up

7. Labour environment and rules need to be conducive to employment creation

8. Delivery mechanisms of Government need to be streamlined

9. Need New Urban Centres to come up as growth poles

10. The financial sector reforms need to be fast tracked to enable financing of a high

growth, large economy – particularly focusing on long term funding instruments

and Financial Inclusion

Aim is to Achieve a Sustainable and Inclusive 10% Growth by 2014Aim is to Achieve a Sustainable and Inclusive 10% Growth by 2014

11


1. Achieving 4% Sustained Agriculture Growth1. Achieving 4% Sustained Agriculture Growth

To do:To do:• Raise farm productivity by improving quality of inputs• Better Supply Chain Management• Improving Market linkages• Optimal and Sustainable use of available land• Right Pricing of Power and Water

CII initiatives•Special Task Forces constituted to address issues related to agriculture

•Special Task Force on Monsoons

CII initiatives•Special Task Forces constituted to address issues related to agriculture

•Special Task Force on Monsoons

Virtual stagnation in Agriculture due toVirtual stagnation in Agriculture due to• Poor infrastructure• Collapse of Agricultural Extension System• Decline in public investment in agriculture/ irrigation• Fragmentation of land holdings

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2. Achieving 11-12% Long Term Manufacturing Growth2. Achieving 11-12% Long Term Manufacturing Growth

• Need an Enabling Manufacturing Policy to include– Simpler clearances and approval mechanism– Encouragement to Green Manufacturing Technologies– Appropriate Infrastructure– Flexible labour rules without diluting social security

net– Easier exit policy

• Friendly tax system – GST and a well considered DTC• FTAs and CECA/CEPAs to be entered into with care and

consideration• Government support needed for Technology infusion,

development and upgradation in select sectors• Land Acquisition and R&R Laws to be in keeping with

requirement of industrialization

• CII working with DIPP on New Manufacturing Policy• 2010-11 would see a huge thrust to the Cluster programme of CII

• CII would release a white paper on Land Acquisition and R&R • CII would set up a VLFM Institute

• CII working with DIPP on New Manufacturing Policy• 2010-11 would see a huge thrust to the Cluster programme of CII

• CII would release a white paper on Land Acquisition and R&R • CII would set up a VLFM Institute

Proposed NMIZ Policy addresses these issues, therefore, needs quick enactment

• Every additional 1% growth in manufacturing creates 20-30 million additional jobs

• Need to develop strengths in labour-intensive sectors such as textiles, consumer electronics, furniture and industrial machinery

13


3. Taking Services to the Next Level3. Taking Services to the Next Level

• CII Initiatives in the services sector include– Developing PPP model in healthcare space with Planning Commission– Policy dialogue with Planning Commission for a comprehensive retail policy– Dialogue with the Ministry of Tourism for upgrading skills of the manpower

required in the Tourism & Hospitality Sector for the Commonwealth games. – CII to facilitate Policy dialogues on Roadmap for accelerating growth of

broadband in India to reach 695 million users by 2014– Facilitating policy dialogues for Broadcast Regulation and Distribution platforms

Key policy changes required in services sector include‾ Enhanced FDI participation in select areas of services‾ Set up a National Services Competitiveness Council‾ Iron out Centre-state issues in the services sector‾ Improve the viability of the informal sector in services‾ Rationalise taxation issues in the sector

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4. Creating world class infrastructure4. Creating world class infrastructure

• Roads and highways: Improve dispute resolution mechanism for road development

• Power sector: Push distribution reforms in the power sector through privatisation of large discoms, reduction in AT&C losses and peak load management

• Civil Aviation: Timely policy intervention for settling the issues regarding airport infrastructure; provision of space for establishment of MRO facilities; and, rationalization of high sales tax on ATF

• Ports & Shipping: Corporatise major ports and improve port evacuation facilities for improving port connectivity

• A CII-MoRTH Joint Task Force created to identify issues of concern in the roads sector and suggest solutions

• CII National Committee on Civil Aviation consulting with Airports Economic Regulatory Authority

• A CII-MoRTH Joint Task Force created to identify issues of concern in the roads sector and suggest solutions

• CII National Committee on Civil Aviation consulting with Airports Economic Regulatory Authority

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Education Education (primary and secondary) (primary and secondary) delivery system needs delivery system needs significant improvementsignificant improvement

High drop out rates throughout schoolingHigh drop out rates throughout schooling

• Teacher to student ratio of 1:60 at primary level

• Only half of 5th standard students can read 2nd standard text in 2008

• Only 28% across grades could do simple division sums in 2008

Poor quality of delivery – stagnation/decline in learning & comprehension Poor quality of delivery – stagnation/decline in learning & comprehension

Source: Annual report, Department of School Education & Literacy; Forbes India Budget 2010 analysis; Annual Status of Education Report (Rural) 2008

0

20

40

60

80

100%

Initialenrolment

100

ClassI -V

-26

ClassVI -VI I

-24

ClassIX-X

-1238

Highschool

16


Education Education (tertiary): (tertiary): Gross enrolment rates are very low Gross enrolment rates are very low vs. other countriesvs. other countries

GER in tertiary institutions is considerably lesser than other countriesGER in tertiary institutions is considerably lesser than other countries

Gross Enrolment Ratio= (number of students enrolled in a level of education regardless of age)/ (population of official school age for that level)Source: UIS data center; UNESCO Institute for Statistics; Department of Higher Education; Lit search

0

20

40

60

80

100%

Gross enrolment ratio in tertiary education (2007)

USA

82

Norway

76

UK

59

Brazil

30

China

23

India(2006)

12

Govt of India aspires to achieve 30% enrolment in tertiary education by 2020Govt of India aspires to achieve 30% enrolment in tertiary education by 2020

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5. Education – The Big Agenda5. Education – The Big Agenda

ObjectiveObjectiveTo create the intellectual infrastructure and knowledge workers needed to sustain high growth trajectory in a competitive global environment

CII Policy InitiativesCII Policy Initiatives- Policy Advocacy to make teaching an attractive professional proposition by

addressing remuneration issues. Retaining talent in the teaching profession- Developing practical modules to encourage private investment in the education

sector- Support for foreign universities coming to India (Foreign Educational Institution-Entry

and Regulation Bill 2010)- Public-Private-Partnership in developing industry oriented curriculum and

developing industry role in accreditation and rating of institutions

CII, in partnership with GoI will establish 30 Industry-Academia Innovation Centres across the country – one in each state

CII, in partnership with GoI will establish 30 Industry-Academia Innovation Centres across the country – one in each state

18


Improving employability is an urgent needImproving employability is an urgent need

Source: International Labor Organization; World Bank – Human Development Report, 2006; CLSA, March 2008; Credit Suisse, December 2007; 11th plan document; Planning Commission - t ask force on employment opportunities, 20011 India Labour Report 2007 (http://www.teamlease.com/images/news_image/coverage2009/dec09/Addressing_22dec09_All.jpg) 2 http://www.bpowatchindia.com/bpo_news/infosys_spends_rs750_crore_on_training_workforce/august-11-2008/infosys_spends_rs750_crore_on_training_workforce.html

0

20

40

60

80

100%

5

28

6875 78 80

96

Proportion of vocationallytrained labour force (Aged 20-24 yrs)

IndiaMexico

UKGermany

CanadaJ apan

Korea

Inadequate vocational training…Inadequate vocational training…

• ~53% of employed youth suffer from skill deprivation1

• Barely 10-15% non-engineering graduates are employable1

• Only ~25% engineering graduates1 considered directly employable; e.g., Infosys’ annual training budget is ~Rs 750 Cr2

……leads to an employability crisisleads to an employability crisis

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6. Stepping up Skill Development6. Stepping up Skill Development

ObjectiveObjectiveTo make India the skills capital of the world. Develop the skills needed to support the rapid expansion of manufacturing and services, and develop a more productive and sophisticated agriculture sector

CII Policy InitiativesCII Policy Initiatives- CII is working with Universities to develop vocational training centers. There is already

a CII-Delhi University Vocational training program- Setting up of new skills centres : Gurgaon with ITE Singapore and Balasore with

IndiaCan - CII has build sector specific Skills Councils for Agriculture , Hospitality, and Automobile

in partnership with the EU. Other such councils are on the anvil- CII is partnering with Ministry of Rural Development to develop vocational training in

rural areas based on local demand for skills and provide placement services for the trained workers

Launch of 10 new CII Skill Development CentresLaunch of 10 new CII Skill Development Centres

20


7. Conducive Labour Policy to Create Employment7. Conducive Labour Policy to Create Employment

ObjectiveTo bring together industry, governments, and labor rights groups and create a policy environment that supports employment generation, inclusiveness and productivity enhancement. To develop best practices in labor management and standards that meets global benchmarks

CII Policy Initiatives- CII is working closely with government for the simplification and rationalization of labor laws- CII is developing best practices and practical modules for contract labor keeping in mind the

objectives of livelihood sustainability- CII is working with industry and other stakeholders on occupational safety and is an active

participant in the National Safety Council- CII is closely involved in the policy formulation process with the Central Apprenticeship

Council and the Central Board for Workers Education

CII to release White Paper on Labour RegulationsCII to release White Paper on Labour Regulations

21


8. Improving Government Delivery Systems8. Improving Government Delivery Systems

• Quick implementation of Unique Identification Scheme• Move to a system of cash transfers or coupons compared to present system

of subsidy in specific items• Significant improvement possible in case of targeting food subsidies by

moving to food coupons that can be redeemed against food supplies in any retail outlet

• Greater devolution of power to local governance bodies such as Panchayats in rural areas and municipalities in urban areas

• Willingness of government bodies to work with private sector for ensuring better delivery: PPPs in education and health services are promising

• Set up regular monitoring/ assessment system using special groups comprising experts, government officials and industry, in areas where large outlays are made by government

CII Task Force on Technology for Inclusive Development

CII-State Government Monitoring and Implementation Task Forces

National Sectoral Task Forces (Government / CII) on monitoring and implementation

CII Task Force on Technology for Inclusive Development

CII-State Government Monitoring and Implementation Task Forces

National Sectoral Task Forces (Government / CII) on monitoring and implementation

22


9. New Urban Centres as Growth Poles9. New Urban Centres as Growth Poles

• To overcome these problems, need to give increased power to ULBs through ensuring their financial independence and viability

• Need to implement 74th Constitutional amendment• Enhance execution capabilities by devolution of operational and financial power to

local bodies• Encourage PPPs to create ‘Enabling Environment’ at State Level

• CII to facilitate dialogue on Real Estate Regulation Bill

• CII report on “Intelligent Urbanisation – A Roadmap for India” throws light on how technology has a role in meeting India’s urbanisation goals

• CII to facilitate dialogue on Real Estate Regulation Bill

• CII report on “Intelligent Urbanisation – A Roadmap for India” throws light on how technology has a role in meeting India’s urbanisation goals

• Structural challenges driven by nature of urbanization in India i.e. unprecedented scale, high density cities and predominantly Brownfield

• Policy limitations – private participation and Urban Local Bodies functioning with poor execution capabilities

• Administrative problems – Municipalities are overburdened resulting in poor levels of service delivery

23


10. Financing High Growth10. Financing High Growth

• Develop Rupee denominated corporate debt market for raising long-term capital

• Increase access to international debt markets

• Expansion in capital base of banking system

• Greater FDI needed in Insurance and Banking

• Resources currently locked up in financing government debt needs to be freed

CII is creating New Task Forces on:

-Financial Stability & Development; and

-Financial Inclusion

CII is creating New Task Forces on:

-Financial Stability & Development; and

-Financial Inclusion

24


Small /micro entrepreneurs account for ~50% of jobs, but Small /micro entrepreneurs account for ~50% of jobs, but multiple issues hamper growthmultiple issues hamper growth

Note: Self employed people may or may not be “entrepreneurs”, and may or may not be skilled

0

20

40

60

80

100%

People employed(FY07)

Ag

ricu

ltu

re

402

By type

Self

em

plo

yed

Re

gu

lar

/ca

sua

lw

ork

ers

201

Private>10

Pri

va

te<

10

Public

201

Total employed

By ownership

Self/small scale employment accounts for large portion of workforce

• Little or no education, and no vocational training

• Access to credit

• Lack of social security

• Self-employment for minority communities (inclusive growth)

• Corruption, especially at grassroots

Multiple issues to consider

Non-agri employed

25


InnovationInnovation

Need to develop India specific Innovation Ecosystem Model for meeting challenges

unique to India’s context

A Public funded – privately managed endowment needs to be created, which would

address the early stage finance requirement of innovation

Favourable Policies and Incentives to increase Industry’s investment in Innovation

(R&D/Design/IPR) from current level of 0.2% of GDP to 1% of GDP in next five years

through Industry-Academia/R&D institutions-Government Partnership

CII, in partnership with Ministry of Science and Technology, will establish “Global Innovation and Technology Alliance (GITA)” to implement Government’s Technology and Innovation Initiatives –

national and international

CII, in partnership with Ministry of Science and Technology, will establish “Global Innovation and Technology Alliance (GITA)” to implement Government’s Technology and Innovation Initiatives –

national and international

26


Inclusiveness and Affirmative ActionInclusiveness and Affirmative Action

Indian Industry shares the nation’s resolve to address the deprivation

suffered by the SC/ST communities and commits to stepping up its

Affirmative Action agenda in the years to come to ensure that India

becomes a land of equal opportunity

CII has developed a voluntary Code of Conduct for members to implement

positive discrimination

CII would take the success stories among its members in the area of

affirmative action across the country to encourage similar initiatives in

other firms.

CII has created a Affirmative Action Fund with industry contributions to finance

affirmative action activities in the private sector

CII has created a Affirmative Action Fund with industry contributions to finance

affirmative action activities in the private sector

27


Corporate GovernanceCorporate Governance

Key Issues

• Inadequate number of qualified / competent independent directors• Unutilized whistle blowing mechanisms

Focus Areas for CII

• Directors Training & Orientation • Directors’ Liability Issues• Effective whistle blowing methods

28

Proactive advocacy for adoption of CII Voluntary Recommendations on

Corporate Governance

Proactive advocacy for adoption of CII Voluntary Recommendations on

Corporate Governance


Trade and GlobalizationTrade and Globalization

CII Goals

Double India’s goods and services exports by 2014 from current levels, double India’s

share in world exports by 2020

Substantially expand industry linkages in global production chain and access global

market through strategic acquisitions and joint ventures abroad

CII Policy

Develop a dedicated commercial intelligence mechanism for Indian industry

Focus on capacity building on quality accreditation, export cycle management and

logistics to make Indian industry more competitive

Engage with government to ensure trade agreements have positive outcomes for industry

and are equipped to deal with industry concerns on emerging trade issues like non-tariff

barriers, labor and environmental standards

Focus on sector specific export competitiveness strategies

29


• 30 Overseas Business Delegations to key countries (China, Japan, S Korea, UK, USA, Germany, France)

• 15 Planned meetings with Heads of State (South Africa, Russia, France, UK, Japan, S Korea, Canada)

• CEOs Forums with countries of strategic interest (14 new Countries identified – focus on emerging economies)

• Regional Conclaves in emerging markets of LAC, Africa, CIS• Strategic dialogues – Track – II with China• Business Summits – ASEAN, EU, IBSA, Pakistan

Global EngagementGlobal Engagement

30

© confederation of indian industry 1 cii’s agenda – 2010-11 and beyond……

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