14 february 2008 india international centre annex, delhi

1

““Japan-India Public Private Partnership Seminar”Japan-India Public Private Partnership Seminar” -- Towards New Economic Partnership –-- Towards New Economic Partnership –

Session 3Session 3“Promising India”“Promising India”

14 February 200814 February 2008

India International Centre Annex, DelhiIndia International Centre Annex, Delhi

2India-Japan PPP ForumIndia-Japan PPP Forum

Contents of PresentationContents of Presentation

Issue 1:Issue 1: Economic Growth Potential of India: Economic Growth Potential of India: Present & FuturePresent & Future

Issue 2:Issue 2: Economic Partnership and Economic Partnership and “Complementarity”“Complementarity” of Japan and Indiaof Japan and India

Issue 3:Issue 3: National Development Structure of IndiaNational Development Structure of India

Issue 4:Issue 4: PPP and Directions of Japanese ODA PPP and Directions of Japanese ODA


Issue 1:Issue 1:

Economic Growth Potential of Economic Growth Potential of India: Present & FutureIndia: Present & Future

Issue 1:Issue 1:

Economic Growth Potential of Economic Growth Potential of India: Present & FutureIndia: Present & Future


Regional Economic Linkages:Regional Economic Linkages: The Chain of Sub-regional Economic Circles in AsiaThe Chain of Sub-regional Economic Circles in Asia

INDIAINDIA

JAPANJAPAN

East Asia Economy

The Bengal Bay Economy

ASEAN Economy

India is one of the most potential Asian growth centers.


GDP Growth GDP Growth in Comparison within Comparison with BRICs BRICs

China

Brazil

India

Russia

China

Brazil

India

Russia

Changes in GDP (at Current Prices)


GDP Growth in FutureGDP Growth in Future

1990-2000 2000-2010 2010-2020 2020-2030

World Total 3.23.2 4.34.3 3.73.7 3.23.2

IndiaIndia 5.65.6 7.27.2 7.27.2 5.45.4

USA 3.33.3 2.42.4 2.62.6 2.42.4

Japan 1.31.3 1.71.7 1.01.0 1.11.1

EU 2.42.4 2.32.3 2.12.1 1.91.9

ASEAN 4.54.5 5.35.3 4.94.9 4.64.6

China 10.410.4 9.69.6 4.54.5 3.03.0

Source: IMF

India is projected to achieve a long-term economic growth at higher rates than the world average by IMF.


A Long-term Perspective onA Long-term Perspective onPer Capita GDP in BRICsPer Capita GDP in BRICs

Per Capita GDP, Market Exchange RatesPopulation and Growth Rates Stabilise

0

20

40

60

80

100

120

2008 2016 2024 2032 2040 2048 2056 2064

$US (000s)

China

Russia

USA

India

Brazil

INDIAINDIA

Source: Open Cities (Spring 2008)

An Institute made a super long-An Institute made a super long-term projection of GDP Per term projection of GDP Per Capita of BRICs up to 2064.Capita of BRICs up to 2064.


Energy Resource ExtractionEnergy Resource ExtractionNatural Gas at Eastern Off-shoreNatural 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


Indian Students AbroadIndian Students Abroad

Ranking of Source Markets in Major English-speaking Countries


Summary: Indian Economic OutlookSummary: Indian Economic Outlook

India is one of the most potential Asian growth centers.India is one of the most potential Asian growth centers. High economic growth expanding domestic and High economic growth expanding domestic and

international markets.international markets. GDP growth: 9.4% in 2005~6GDP growth: 9.4% in 2005~6 GDP per capita: US$ 737 in 2006GDP per capita: US$ 737 in 2006

Such a high economic growth momentum is projected to Such a high economic growth momentum is projected to last in the long-term.last in the long-term.

Service sector and ICT business have been long leading Service sector and ICT business have been long leading such a high growth.such a high growth. Supported by higher educated human resourceSupported by higher educated human resource Producing human resource with international manner and Producing human resource with international manner and

technologies in English-speaking countries.technologies in English-speaking countries. Energy resources are sufficiently available to support a Energy resources are sufficiently available to support a

sustainable economic growth.sustainable economic growth. Shifting to Natural GasShifting to Natural Gas


Issue 2:Issue 2:

Economic Partnership and Economic Partnership and Complementarity of India-JapanComplementarity of India-Japan

Issue 2:Issue 2:

Economic Partnership and Economic Partnership and Complementarity of India-JapanComplementarity of India-Japan


Changes in Trading Partners of IndiaChanges in Trading Partners of India

N.B. The Bengal Bay = Sri Lanka, Bangladesh, Myanmar, Thailand, Malaysia, Singapore & Indonesia

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2003 2004 2005 2006 2007

1) Europe

2) The Bengal Bay Economy

3) Other ASEAN Countries

4) WANA (West Asia/North Africa)

5) J apan

6) Korea

7) China (inc.Taiwan)

Mill. US$

Trades with countries facing Trades with countries facing the Bengal Bay are notably the Bengal Bay are notably

increasing at the same rate as increasing at the same rate as that of “China.”that of “China.”

Trades with countries facing Trades with countries facing the Bengal Bay are notably the Bengal Bay are notably

increasing at the same rate as increasing at the same rate as that of “China.”that of “China.”

Import + Export Amount


Shares of Trading PartnersShares of Trading Partners

23.3%

26.8%

10.4%

8.5%

23.4%

9.2%

11.2%

7.1%3.8%

2.3%

1.4%

2.3%

0% 20% 40% 60% 80% 100%

2007

2001

Europe The Bengal Bay Economy Other ASEAN Countries

WANA (West Asia/North Africa) J apan Korea

China (inc.Taiwan)

The share of “Europe” decreased, while the share of “WANA” significantly increased, followed by China and the countries facing the Bengal Bay. Japan’s share is comparatively low.

Import + Export Amount


Sector-wise FDI InflowsSector-wise FDI Inflows((Top 12 from 2000~2007)Top 12 from 2000~2007)

SectorSector Amount in Rupee Amount in Rupee (Million)(Million)

Amount in US$ Amount in US$ (Million)(Million)

% of Total % of Total InflowsInflows

11 Service (Financial & Non-financial)Service (Financial & Non-financial) 378,297378,297 8,5718,571 20.420.4

22 Computer Software & HardwareComputer Software & Hardware 281,621281,621 6,2636,263 15.215.2

33 TelecommunicationsTelecommunications 155,455155,455 3,5393,539 8.48.4

44 Construction ActivitiesConstruction Activities 94,47494,474 2,1712,171 5.15.1

55 Automobile IndustryAutomobile Industry 82,39882,398 1,8301,830 4.54.5

66 Housing & Real EstateHousing & Real Estate 61,53361,533 1,4511,451 3.33.3

77 PowerPower 59,48759,487 1,2851,285 3.23.2

88 Chemicals (other than Fertilizer)Chemicals (other than Fertilizer) 59,47759,477 1,3361,336 3.23.2

99 Metallurgical IndustryMetallurgical Industry 45,71445,714 1,0661,066 2.52.5

1010 Drugs & PharmaceuticalsDrugs & Pharmaceuticals 45,50745,507 1,0091,009 2.52.5

1111 Electrical EquipmentElectrical Equipment 45,42045,420 1,0481,048 2.52.5

1212 Cement and Gypsum ProductsCement and Gypsum Products 41,66641,666 941941 2.32.3

The three share 44% of the total


Top Investing Countries: Top Investing Countries: FDI Equity InflowsFDI Equity Inflows

Cumulative FDI Equity Inflows (US$) between 2000 -2007

39.1%

7.2%4.7%

4.7%

4.0%

1.4%1.3%1.2%

25.5%

2.7%

8.1%

Mauritius

USA

UK

Netherland

Singapore

J apan

Germany

France

Switzerland

Cyprus

Others

Japan is ranked at 6th place, sharing only

4.0%.

Cumulative Cumulative InflowsInflowsTotal: Total:

US$ 47,205 mill.US$ 47,205 mill.


Tourism DevelopmentTourism Development

IndiaIndia World World AverageAverage

Contribution Contribution of Tourism to of Tourism to GDP (2005)GDP (2005)

6.1%6.1% 10.4%10.4%

Employments Employments of Tourism of Tourism (% of TL)(% of TL)

42 million 42 million (8.8%) (8.8%)

(7.6 %)(7.6 %)

Source: “Incredible India” Sep. 2007 Ministry of Tourism

Tourism sector provides a Tourism sector provides a greater amount of greater amount of

employmentsemployments


Tourism PartnersTourism Partners

Source: “Incredible India” Sep. 2007 Ministry of Tourism

Japan is ranked at 7th place with 120 thousand tourist

arrivals


FDI Flows vs. Int’l Tourist ArrivalsFDI Flows vs. Int’l Tourist Arrivals

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2,000 2,500 3,000 3,500 4,000 4,500 5,000

Int'l Tourist Arrival ('000)

FD

I (U

S$ M

illio

n)

20072007

20062006

20052005

2001200120022002

Money (FDI) and human (Tourist) transactions are

mutually correlated. The elasticity in recent

years is extremely high.

Money (FDI) and human (Tourist) transactions are

mutually correlated. The elasticity in recent

years is extremely high.


India-Japan Trading and FDIsIndia-Japan Trading and FDIs Trading:Trading:

The shares of “WANA” , “China” and “the Bengal Bay Economy” are signifiThe shares of “WANA” , “China” and “the Bengal Bay Economy” are significantly increasing, while Japan decreases its comparative share.cantly increasing, while Japan decreases its comparative share.

Trading volume with Japan is increasing at 17.5% p.a., but Japan is still a mTrading volume with Japan is increasing at 17.5% p.a., but Japan is still a minor partner, sharing only 2.3% of the total.inor partner, sharing only 2.3% of the total.

FDIs:FDIs: India is attracting FDIs in three (3) strategic sectors, namely, “Services (finaIndia is attracting FDIs in three (3) strategic sectors, namely, “Services (fina

ncial and non-financial)”, “Computer Software & Hardware” and “Telecommncial and non-financial)”, “Computer Software & Hardware” and “Telecommunication”. These three share 44% of the total FDIs.unication”. These three share 44% of the total FDIs.

FDI inflow form Japan is still weak, compared to USA, UK and Singapore, bFDI inflow form Japan is still weak, compared to USA, UK and Singapore, being ranked at 6eing ranked at 6thth place. place.

TourismTourism A robust growth in Tourism Sector is the result of successful internationaliA robust growth in Tourism Sector is the result of successful internationali

zation in the economy. This is correlated with money flows, namely, touristzation in the economy. This is correlated with money flows, namely, tourists come and/then money comes.s 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.

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.


Issue 3:Issue 3:

National Development National Development Structure of IndiaStructure of India

Issue 3:Issue 3:

National Development National Development Structure of IndiaStructure of India


Regional Economic Linkages: Importance of being linked with Asian economies

INDIAINDIA

JAPANJAPAN

East Asia Economy

The Bengal Bay Economy

ASEAN EconomyTechnology and capital shiftTechnology and capital shift


The Bengal Bay EconomyThe Bengal Bay Economy

INDIA

SRI LANKA

INDONESIA

SINGAPORE

MALAYSIA

THAILAND

MYANMAR

BANGLADESH

The Eastern India is encompassed in The Eastern India is encompassed in the Bengal Bay Economy that stands the Bengal Bay Economy that stands for a sub-regional industrial and for a sub-regional industrial and capital linkage with supply chain.capital linkage with supply chain.

The Eastern India is encompassed in The Eastern India is encompassed in the Bengal Bay Economy that stands the Bengal Bay Economy that stands for a sub-regional industrial and for a sub-regional industrial and capital linkage with supply chain.capital linkage with supply chain.


MumbaiMumbai

KolkataKolkata

ChennaiChennai

BangaloreBangalore

DelhiDelhi

HyderabadHyderabad

National Development StructureNational Development Structure- Golden Quadrangle -- Golden Quadrangle -

The national economic structure The national economic structure shall be formulated with four (4) shall be formulated with four (4) major metropolises and two (2) major metropolises and two (2) strategic growth centers such as strategic growth centers such as Bangalore and Hyderabad…Bangalore and Hyderabad…

The national economic structure The national economic structure shall be formulated with four (4) shall be formulated with four (4) major metropolises and two (2) major metropolises and two (2) strategic growth centers such as strategic growth centers such as Bangalore and Hyderabad…Bangalore and Hyderabad…


MumbaiMumbai

KolkataKolkata

BangaloreBangalore

DelhiDelhi

HyderabadHyderabad

Chennai / EnnoreChennai / Ennore

Connection to Connection to ASEAN Industrial ASEAN Industrial Clusters and East-Clusters and East-Asian CountriesAsian Countries

Co-Developmental Co-Developmental Triangles of Eastern Triangles of Eastern Corridors Corridors

Co-Developmental Triangles of Eastern CorridorsCo-Developmental Triangles of Eastern Corridors&&

Balanced Growth of Indian NationBalanced Growth of Indian Nation


Five (5) IT Centers in IndiaFive (5) IT Centers in IndiaIndia’s IT and BPO exports from STPIs, FY 2004 (US$ billion)India’s IT and BPO exports from STPIs, FY 2004 (US$ billion)

Source: Press articles; web searches; NASSCOM

1.1

MumbaiMumbai1.0

BangaloreBangaloreChennai Chennai

1.7

HyderabadHyderabad

4.1

NCRNCR2.2

IT Industries are likely IT Industries are likely located in Southern three located in Southern three major centers: Bangalore, major centers: Bangalore, Chennai and Hyderabad.Chennai and Hyderabad.

IT Industries are likely IT Industries are likely located in Southern three located in Southern three major centers: Bangalore, major centers: Bangalore, Chennai and Hyderabad.Chennai and Hyderabad.


FDI Equity Inflows in Major CitiesFDI Equity Inflows in Major Cities

RGI’s Regional Office-wise: RGI’s Regional Office-wise:

Apr. 2000 to Oct. 2007 (US$ Billion)Apr. 2000 to Oct. 2007 (US$ Billion)NCRNCR

MumbaiMumbai

BangaloreBangaloreChennai Chennai

HyderabadHyderabad10.8

9.5

0.7

2.9

2.9

2.0

KolkataKolkata

Southern three major Southern three major centers have attracted centers have attracted FDI equivalent to that FDI equivalent to that

into NCR.into NCR.

Southern three major Southern three major centers have attracted centers have attracted FDI equivalent to that FDI equivalent to that

into NCR.into NCR.


International Gateways for Market LinkagesInternational Gateways for Market Linkages

KolkataKolkata

ChennaiChennai

DelhiDelhi

HyderabadHyderabad

BangaloreBangaloreEastern Market Oriented EconomyEastern Market Oriented Economy

Western Market Oriented EconomyWestern Market Oriented Economy

MumbaiMumbai


Growth Parameters – Rating of CitiesGrowth Parameters – Rating of Cities

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

ParameterParameter DelhiDelhi MumbaiMumbai BangaloreBangalore KolkataKolkata Hyderabad Hyderabad

Telecom ConnectivityTelecom Connectivity 44 44 44 44 55

Power SupplyPower Supply 22 44 33 55 44

Airports & HotelsAirports & Hotels 44 55 3.53.5 33 33

Public TransportPublic Transport 1.51.5 33 11 2.52.5 33

RoadsRoads 44 1.51.5 11 11 3.53.5

HousingHousing 44 3.53.5 33 3.53.5 33

Cost of LivingCost of Living 22 11 2.52.5 44 44

Talent PoolTalent Pool 44 44 44 44 44

Total ScoreTotal Score 25.525.5 26.026.0 22.022.0 27.027.0 29.529.5

Road development is Road development is urgenturgent

Road development is Road development is urgenturgent


Strategic Industrial Corridor: Strategic Industrial Corridor: Chennai - BangaloreChennai - Bangalore

ChennaiChennai

From Chennai Port

From Ennore Port

BangaloreBangalore

HyderabadHyderabad

Ennore Port


Spatial Concepts on the National Spatial Concepts on the National Development StructureDevelopment Structure

Sub-regional Economic ChainSub-regional Economic Chain Importance to link India with ASEAN and East Asia Importance to link India with ASEAN and East Asia

EconomiesEconomies

The Bengal Bay EconomyThe Bengal Bay Economy Economic integration with potential marketsEconomic integration with potential markets

Golden Quadrangle StructureGolden Quadrangle Structure Four (4) Major Cities + Two (2) Strategic growth Centers Four (4) Major Cities + Two (2) Strategic growth Centers

The Delhi – Mumbai Industrial CorridorThe Delhi – Mumbai Industrial Corridor The Western Market-oriented GatewayThe Western Market-oriented Gateway

The Chennai – Bangalore Growth CorridorThe Chennai – Bangalore Growth Corridor The Eastern Market-oriented GatewayThe Eastern Market-oriented Gateway


Recommendation:Recommendation: For Balanced Development ScenarioFor Balanced Development Scenario

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

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

Further strengthen the international Further strengthen the international transport gateway functions at Chennai:transport gateway functions at Chennai:

Functionalize and enlarge Chennai and Functionalize and enlarge Chennai and Ennore Ports;Ennore Ports;

Improve the Improve the Logistic and Inter-modal Logistic and Inter-modal SystemsSystems with hinterland economies in with hinterland economies in Bangalore, Hyderabad and rest of Bangalore, Hyderabad and rest of India.India.

Formulate the Formulate the Chennai-Bangalore Chennai-Bangalore CorridorCorridor as a strategic Industrial zone as a strategic Industrial zone with improved roadswith improved roads

Further strengthen the international Further strengthen the international transport gateway functions at Chennai:transport gateway functions at Chennai:

Functionalize and enlarge Chennai and Functionalize and enlarge Chennai and Ennore Ports;Ennore Ports;

Improve the Improve the Logistic and Inter-modal Logistic and Inter-modal SystemsSystems with hinterland economies in with hinterland economies in Bangalore, Hyderabad and rest of Bangalore, Hyderabad and rest of India.India.

Formulate the Formulate the Chennai-Bangalore Chennai-Bangalore CorridorCorridor as a strategic Industrial zone as a strategic Industrial zone with improved roadswith improved roads

Recognize three metropolises as Recognize three metropolises as strategic growth centers :strategic growth centers :Chennai, Chennai, Bangalore and Hyderabad Bangalore and Hyderabad

Recognize three metropolises as Recognize three metropolises as strategic growth centers :strategic growth centers :Chennai, Chennai, Bangalore and Hyderabad Bangalore and Hyderabad

Fully mobilize Public and Fully mobilize Public and Private resources and Private resources and knowledge in both knowledge in both countries, countries, India and India and JapanJapan

Fully mobilize Public and Fully mobilize Public and Private resources and Private resources and knowledge in both knowledge in both countries, countries, India and India and JapanJapan

Needs / Requirements of Needs / Requirements of the Society and Private the Society and Private

SectorSector

Needs / Requirements of Needs / Requirements of the Society and Private the Society and Private

SectorSector


Issue 4:Issue 4:

PPP and PPP and Direction of Japanese ODADirection of Japanese ODA

Issue 4:Issue 4:

PPP and PPP and Direction of Japanese ODADirection of Japanese ODA

33

PPP and Bilateral PartnershipPPP and Bilateral PartnershipHow to promote it ?How to promote it ?

IndiaIndia

PrivatePrivatePublicPublic PartnershipPartnership

Investment, Investment, Technology,Technology,

Human ResourceHuman ResourceCommon Policy Common Policy

Agreement Agreement DeregulationDeregulation

JapanJapan

PrivatePrivatePublicPublic PartnershipPartnership


Outcomes of the India-Japan Joint Study Outcomes of the India-Japan Joint Study Group (June 2006)Group (June 2006)

Bilateral inter-governmental negotiation to develop a Comprehensive Bilateral inter-governmental negotiation to develop a Comprehensive Economic Partnership Agreement (EPA/CEPA), consistent with WTO:Economic Partnership Agreement (EPA/CEPA), consistent with WTO:

Trade in goods and services; measures for trade promotionTrade in goods and services; measures for trade promotion Promotion and liberalization of investment flowsPromotion and liberalization of investment flows A Joint Task Force to be organized with representatives of business community to A Joint Task Force to be organized with representatives of business community to

seek for an agreeable scheme of CEPA.seek for an agreeable scheme of CEPA.

Japanese ODA:Japanese ODA: To support PPP-based projects (economic and social infrastructure), involving the To support PPP-based projects (economic and social infrastructure), involving the

“Viability Gap Funding System”“Viability Gap Funding System” To encourage FDI through improvement of infrastructuresTo encourage FDI through improvement of infrastructures To promote best-practice projects in terms of transfer of management skills and To promote best-practice projects in terms of transfer of management skills and

technology (like Delhi Metro)technology (like Delhi Metro) To expand human exchanges To expand human exchanges To promote projects to bear a synergy of financial and technical cooperation.To promote projects to bear a synergy of financial and technical cooperation.

Special Economic CooperationSpecial Economic Cooperation To promote a synergy between Japanese manufacturing technique and Indian To promote a synergy between Japanese manufacturing technique and Indian

software in ICT, Energy, Logistic and Automobile Sectorssoftware in ICT, Energy, Logistic and Automobile Sectors

35

A Public-Private Partnership ModelA Public-Private Partnership Model

GovernmentPublic Facilities:- Civil Structure-Related Infrastructure

Procurements:- Operation systems;- Software and Know-

how- Maintenance tools- Others

Private Operator(Special-Purpose Company-SPC)-Project Finance-Design-Construction-Operation-Maintenance

Investment

Performance Monitoring

Lease & Maintenance Contract (TAC-TMC)

Service Charges on PFI-contract Basis

Needs of the Society and Business Sector

Facility Development & Procurements

Management Management Unit (PMU)- Government Staff

Advisor (Consultants)

Subsidy or Viability Subsidy or Viability Gap FundGap FundSubsidy or Viability Subsidy or Viability Gap FundGap Fund


A Model of Players’ Demarcations:A Model of Players’ Demarcations:for Development of the Chennai–Bangalore Growth Corridorfor Development of the Chennai–Bangalore Growth Corridor

Public PPP Private

Strengthening of Gateway Functions (Hardware)Strengthening of Gateway Functions (Hardware)

Chennai PortChennai Port Expansion of Expansion of Port Facilities & Port Facilities &

EquipmentEquipment

Operation & Operation & ManagementManagement

Container Container terminalsterminals

Ennore PortEnnore Port

Roads & HighwaysRoads & Highways National and National and Local RoadsLocal Roads ExpresswayExpressway Maintenance & Maintenance &

ManagementManagement

Logistic SystemLogistic System Inter-modal Inter-modal SystemSystem

Inter-modal Inter-modal Logistic CenterLogistic Center Inland DepotInland Depot

Improvement of Social and Managerial Systems (Software)Improvement of Social and Managerial Systems (Software)

Improvement of Custom System Improvement of Custom System (ICEGATE)(ICEGATE)

Legal Legal ArrangementArrangement

System System IntegrationIntegration

BPO; Technical BPO; Technical SupportsSupports

Deregulation & Reform of Legislative Deregulation & Reform of Legislative & Institutional Systems & Institutional Systems Primary TaskPrimary Task -- ConsultationConsultation

Promotion of DFIsPromotion of DFIs Incentives Incentives ProvisionProvision PartnersPartners Projects Projects

FormulationFormulation


Thank you …..Thank you …..

14 february 2008 india international centre annex, delhi

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