ASIA BUSINESS WEEK DUBLINFourth EU Asia Top Economist Round Table

6 June 2014

Changing Infrastructure in India - Opportunities for India-EU business partnerships

Dennis Gada,

Global Head of Client Services – Financial Services, Infosys

Kindly sponsored by:

Changing Infrastructure in India - Opportunities for India-EU business partnerships

Dennis Gada, Global Head of Client Services – Financial Services6th June 2014

India’s Global Attractiveness & Value Proposition

India’s Global Attractiveness & Value Propositions (1/2)4

India has strong basic fundamentals, including a high rate of savings, a skilled labor force, a dynamic private sector with first-rate mgmt. capabilities and increasing global competitiveness in many areas. India’s burgeoning middle class, growing domestic consumption levels and a skilled workforce help the nation to strengthen its position in the global marketplace

2nd largest emerging country -

demonstrated the ability to grow

rapidly

Positive Long Term Outlook for India: India expected to

be among the world’s top three

growth economies by 2020

Key growth drivers for future : infra

investments domestic

consumption, and a hub for global outsourcing - supported by

growth – oriented govt. policies

Demographics: India offers a young population; more

than 50% of its population is below

the age of 25

By 2015, the Indian economy is

expected to be worth US$2.4 Tn and the country’s

population is set to reach 1.3 bnIndia consistently

rated amongst the top 3 investment

destinations globally by

international bodies, including World Bank and UNCTAD, due to liberal foreign

investment policies

An attractive FDI destination on

account of its solid domestic market,

educated workforce and competitive labor costs. FDI flows into India

grew 17% in 2013 to USD 28 bn

Continues to lead in cost

competitiveness. India stays 7-8X

cheaper than source locations and 30% cheaper than the next nearest low-

cost country

World’s largest supplier of

employable human capital – 5.3 mn graduates in FY

2014, 2nd highest no of English speakers in the world, and a large multicultural

and highly aspirational workforce

Telecom infra is a big plus. The

consumer products, industrials,

technology, media and telecom and

life-sciences sectors, are set to drive

India’s growth over the next 2 years

Source: Web Search, Nasscom, E&Y, indiainbusiness.nic.in, Economic Times, thebricspost.com, Hindu Business Line, www.firstpost.com, Deloitte, www.morningstar.co.uk, www.marketwatch.com

India’s Global Attractiveness & Value Propositions (2/2)5

India has become the epicenter of the global technology industry. 25 years of outsourcing experience has helped the Indian IT industry move from a vendor to a partner role, with expertise in designing best practices across services helping clients effect significant topline growth, business and operational improvements

The Indian IT industry boasts over 3,000 companies in the software

product space with 500 additions to the number every year

With a large, multicultural and highly aspirational workforce of over 3.1

million employees, the industry today is the largest private sector employer

in India

Leadership position in global sourcing arena : Indian IT Services more

business expertise than low cost

NASSCOM expects export revenues to grow by 12-14% in FY2014 and

domestic revenues to grow at a rate of 13-15%

In a year where the global sourcing market grew by USD 11-12 bn, India

accounted for over 90% of the incremental growth, in the process

increasing its market share from 52% in 2012 to 55% in 2013

In FY2014, the Indian IT-BPM industry is estimated to account for revenues

of USD 118 bn, cementing its leadership position in the global

sourcing arena, and highlighting its increasing importance in the domestic

market

Software product firms see accelerating growth. Indian software

product sales double to $2.2 bn in 2013 from USD 1.2 bn in 2008

(NASSCOM)

India’s share of Global In house centers exports is expected to be around $ 17 bn in FY2014. That is

21.5% rise as compared to FY 12. India as a center of choice for several multi-

national companies for setting up their captive units

Source: Web Search, Nasscom, E&Y, indiainbusiness.nic.in, Economic Times, thebricspost.com, Hindu Business Line, www.firstpost.com, Deloitte, www.morningstar.co.uk, www.marketwatch.com

Infrastructure Development : A Top Agenda For India

Infrastructure has been one of the key priority areas for India7

Infrastructure has been one of the key priority areas for the nation and the government has increased infrastructure spend at a rapid pace since the 11th plan. Infrastructure spend is likely to have a positive spiral effect to the GDP growth and is likely to be one of the main lever to unleash India’s economic growth potential

01Imperative for

Inclusive Growth

04

Massive capacity

expansion for all infra

02Massive target

for doubling infra

investment

03Infra

investment in GDP planned

to be increased

Ambitious 12th 5-year plan

envisages infra-funding of US $ 1 Tn

The share of infra investment in GDP is planned to be increased to more than 10% by the end of the 12th plan. This investment can propel India’s economic growth to a higher trajectory

Set a massive target for doubling investment in infra from during the 12th plan period, i.e., 2012–2017

The Indian Govt. realizes the importance of accelerating the investments in infra to boost the country’s economy & as an imperative for Inclusive Growth

Considering India’s growth and govt. initiatives on infrastructure development, all infrastructure sectors including power, roads, railways, ports and airports are also scheduled for massive capacity expansion

01

02

03

04

Source: Web Search, Nasscom, Deloitte – ASSOCHAM Report

The Indian Government has increased infrastructure spend at a rapid pace.. Some key recent initiatives include … (1/2)

8

PRIDe corridor

100 Smart Cities

Chennai-Bengaluru Industrial Corridor

DMIC Corridor

One of the biggest initiatives aiming to develop infra is the creation of the Delhi Mumbai Industrial Corridor (DMIC),which will cover

six states Govt. is building a multimodal, high-axle load dedicated freight

corridor (DFC) between Delhi and Mumbai, covering 1,483 km in length. 24 investment areas — 11 investment regions and 13

industrial areas — are planned across these 6 statesAccess to a range of infra facilities- power/rail connections etc.

The Government also recently announced the Peninsular Region Industrial Development Corridor (PRIDe corridor), which will run through important centers in

South India, namely Andhra Pradesh (AP), Chennai, Bengaluru and Mumbai, with designated hubs

These hubs will have specific zones for sectors such as steel, cement, food processing, information technology, automobile, ready-made garments, petroleum, and chemicals

and petrochemicals

The Indian government would kick-start building 100 smart cities with GIS (Geographic Information Systems)-based town planning, using the latest technology and infrastructure, integrated waste management and advanced transport system

Another corridor — the Chennai-Bengaluru Industrial Corridor — was announced in the 2013–14 Budget

Infrastructure Spend &

Initiatives

Source: Web Search, ndiainbusiness.nic.in, Nasscom, E&Y, Deloitte

The Indian Government has increased infrastructure spend at a rapid pace.. Some key recent initiatives include … (2/2)

9

Manufacturing

Facilities & Power

Projects

Investments for Port

capacity

Cluster Development

s

Rail Infra – A

Priority

Investment in railway infra will be a priority for the new govt., plans to introduce high-speed bullet trains and launch diamond quadrilateral

project of high-speed train networkIndian Railways plans to usher in an era of liquefied natural gas (LNG)

based locomotives, possibly by end 2016. The basics are ready and technology is available

The govt. also plans to Initiate metro rail projects in cities across the country

The Cabinet has approved setting up of two Semiconductor Wafer Fabrication (FAB) manufacturing facilities in India. The proposed FABs will create direct employment of

about 22,000 and indirect employment of about 100,000

Investments for projects worth US$ 1.28 bn cleared in the oil and gas sector

India has awarded 20 projects worth Rs 6,000 crore (US$ 966.18 million), creating 100 million metric tonnes (MMT) of port capacity in the first nine months of 2013–14 -Ministry of ShippingThe govt. plans to expedite freight and industrial corridors to improve the country's infrastructure

The Govt. of India has given an in-principle approval for setting up of the first electronic system design and manufacturing (ESDM) cluster development in Electronics City, Bengaluru. The ESDM project will come up on a 1.16 acre of land at an investment of ~US$ 13.69 mn

Infrastructure Spend &

Initiatives

Source: Web Search, ndiainbusiness.nic.in, Nasscom, E&Y, Deloitte

India as an emerging & promising innovation hub

India set to become world's most promising tech innovation hub11

India has moved from leader to follower position in innovation and is now becoming home to a new breed of startup firms focused on high growth areas such as mobility, e-com and other vertical specific solutions - creating new markets and driving innovation - Nasscom

India trumped Israel, the US & China as the most promising location for tech innovation to flourish – KPMG Global Survey

India trumped other

countries in the

"confidence index"

Uses ten factors--including

talent, infrastructure, and govt.

incentives--to assess a country's

prospects for tech innovation.

India ranked no. 1 with an index

of 72, beating Israel by a point,

and the US's score of 6

India will outpace the US, Israel and China in the next

2-3 years Areas where India is expected to

lead include talent creation, customer-centricism and

increased usage of disruptive technologies

Overall, India took the 3rd spot on the 2013 Global Tech Innovation Index, behind the U.S. and China

India has become the most favored R&D destination In the last couple of decades India has become the most

favored R&D destination of MNCs and is in competition

with other emerging economies in Eastern Europe

and countries like Russia, Brazil for R&D FDI and R&D

outsourcing contracts

Around 750 R&D centers employ > 400,000

professionalsDomestic & MNCs in India focus on driving innovation for global and local markets. Over last two decades there have been around 750 R&D centers established by MNCs in India, employing more

than 400,000 professionalsAlso. Microsoft aims at 100 innovation centres in India

Source: Web Search, zdnet, cxotoday.com, IBEF, Indiainbusiness.nic.in, CNBC, Business Line, Deloitte

India has always leapfrogged ahead in innovation12

E-commerce is leaping - currently $2 bn, constitutes 0.25% of overall retail industry in India. Growth in e-comthus looks immense. Justdial, India's version of Yelp, is a good example

In health care, additional insurance schemes have increased the propensity to spend. New opportunities exist in hospital growth, doctor/nurse training, medical record-keeping and all ancillary businesses

The wireless revolution in India happened before fixed line. Wireless connections bypassed fixed-line connections in 2004, but wireless Internet usage has also passed fixed-line Internet usage in 2012

M-banking in India is exhibiting huge growth and will probably replace credit and debit cards

In Pharma, India is now a serious global player (Sun Pharma & Cipla) In generics, India controls a significant part of the world market. Multinational pharma companies are investing in India, as they find it a cheap place to manufacture, as well as to gain the fringe benefit of the potential huge local-growth opportunity

Source: Web Search, Indiainbusiness.nic.in, CNBC, Business Lin

Building innovation capacity through continued efforts toward building a more innovative India

13

India realizes that innovation is the key to sustained growth and national prosperity. India’s Government is keen to enhance the country’s innovation capacity and has introduced several measures to create a supporting ecosystem

01

02

03

04

Building Innovation Capacity

100 innovation hubs in India to be established throughout the country by 2017 to promote innovation through science and technology

In Jan 2014, The National Innovation Council and the Ministry of Micro, Small and Medium Enterprises (MSME) launched a US$1b India Inclusive Innovation Fund (IIIF) to invest in a new generation of innovative companies

The Science, Technology and Innovation Policy 2013 aims to position India among the top five global scientific powers by 2020. Aims to increase the gross expenditure on scientific research & development to 2% of GDP. Also plans to establish tech business incubators & science-led entrepreneurship institutions

Indian Government has declared 2010 to 2020 the “Decade of Innovation” and set up the National Innovation Council with an initial capacity of 500 crores to develop a culture of inclusive innovation

100 innovation

hubs

India Inclusive

Innovation Fund

Decade of Innovation

Increased spend on Scientific Research

Source: Web Search, IBEF, Business Line, Economic Times

India’s Strength Lies in Frugal Innovation & Innovating for the Global Market14

India’s strength has been argued to lie in frugal innovation Through the redesign of production and development processes or through the remodeling of a product or service, successful frugal innovations not only cost less, but also outperform the alternatives. Indians in local as well as multinational organizations are also developing new and innovative products and services in an increasingly competitive global environment

Government labs driven crowd source drug discovery

Affordable heart surgery (Narayana Hrudalaya &

Dr. Devi Shetty’s breakthrough model)

Palliative care for end of life (Kerela Neighborhood

Network)

Telecom operator Bharti Airtel’s cost-cutting schemes

Efficient cataract surgery (Aravind Eye Care)

Refrigeration without electricity (Mitticool)

Tata Nano for lower middle-class Indian population (Now planning an upscale version

of the car)

Source: Web Search, Deloitte, IBEF, CNBC

India – Ireland Business Relations : Highlights

EU firms keen to invest in India and look to a fresh round of growth16

European firms are keen to invest in India and look forward to a fresh round of growth as the new government has been formed in India. Also confident of early conclusion of the bilateral trade pact that has been in the works for a while…

Proximity to markets

or customers

Domestic market growth

potential

Skilled workforce availability

Why European firms invest in India

1

Tactical greenfield investments, landmark acquisitions and steadfast dedication through uncertain economic cycles - key ingredients of the success enjoyed by European firms in India

2

3

European firms spent USD 198 bn in India during the last 10 years, making them the largest investorsIn the same period, Japanese & US firms channelized USD 138 bn & USD 50.7 bn resp. into their India units

EU firms are optimistic about the next 5 years, encouraging them to adapt their products and services to the mass market and take a long term view of India

Source: Web Search, Zee News, Economic Times

There exists a substantial & growing interest by Irish Firms in the Indian market in diverse areas

17

There are over 30 Irish companies with established offices in India and around 100 companies with substantial and growing interest in Indian market in areas ranging from IT, Engineering, Construction and Real Estate, agri-business, medical devices, pharmaceuticals and renewable and energy efficient equipment

01A bilateral programme of cooperation in Science & Tech was signed in May 2009 - strong mutual interest in collaboration between Indian and Irish research institutions in areas like microelectronics, biotechnology, nano sciences etc.02

03

The fact that Ireland is looking to

emerging economies,

including India, for engagement in bilateral trade offers immense opportunities to

increase bilateral economic and

commercial activities

New partnership agreements to foster Indian-Ireland Academic Links in Civil Engineering in Apr 2012

NIIT and Digital Marketing Institute (Ireland) partner to redefine digital marketing education in India (Dec 2012)

Source: Web Search, www.indianembassy.ie/

A number of new deals, MoUs and investment proposals have been signed by Indian Firms in Ireland

18

In Nov 2013, a number of new deals, MoUs and investment proposals were announced by Irish and Indian companies in the areas of Financial Services, IT, Education, Healthcare etc. Many Indian pharmaceuticals and IT companies are in various stages of negotiations for investment in Ireland

Wockhardt, Ranbaxy and Reliance Life Sciences have acquired pharma

manufacturing units in Ireland

Crompton Greaves has acquired a transformer manufacturing unit and

a substation equipment unit in Ireland

Deepak Fasteners has taken over the Irish unit of the industrial fasteners

brand Unbrako

In May 2010, Hindustan Zinc has purchased Ireland’s biggest zinc mine

Lisheen from the Anglo-American group for $ 30 mn

Source: Web Search, www.indianembassy.ie/

Infosys is hiring MBAs from Trinity College and Queens Belfast.

Mr. Narayana Murthy (Infosys Founder and Chairman) is being

awarded the honorary degree from Queen’s University Belfast

© 2014 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.

Thank You