india attractiveness survey 2013 - ernst & young€¦ · · 2015-07-23telephone interviews...

India Attractiveness Survey 2013

MethodologyEY’s 2013 India attractiveness survey is based on ...

1. The real attractiveness of India to foreign investors based on based on the fDi Markets database, which tracks new greenfield and expansion foreign direct investment (FDI) projects but excludes portfolio investments and M&A.

2. The perceived attractiveness of India by foreign investors, based on telephone interviews with 502 international business leaders.

A multi-speed world (GDP growth estimates)India in context

Set for a modest recovery

2012 2013E 2014E 2015E

2.8% 1.6% 2.6% 3.4%

Moving out of recession, but downside risks remain

2012 2013E 2014E 2015E

Eurozone -0.5% -0.5% 0.9% 1.4%

UK 0.2% 1.4% 1.9% 2.0%

Enjoying a short-term rebound

2012 2013E 2014E 2015E

2.0% 1.9% 1.2% 1.1%

Source: EY Rapid-Growth Markets Forecast, October 2013.

Drivers of world economy but external pressures weigh on

growth2012 2013E 2014E 2015E

4.6% 4.3% 4.7% 5.3%

India Geared for the long term

2012 2013E 2014E 2015E

5.1% 4.1% 4.5% 5.9%

Source: World Economic Outlook, International Monetary Fund (IMF), October 2013 Sources: World Economic Outlook, International Monetary

Fund (IMF), October 2013 (for UK); and EY Eurozone Forecast, September 2013 (for Eurozone).

Source: World Economic Outlook, International Monetary Fund (IMF), October 2013. Source: EY Rapid-Growth Markets Forecast,

October 2013.

New directionsThe reality of FDI in India

India’s FDI scenario

4,981 US$326.1b1.4m

2007-2012

Projects Jobs Capital investment

Source: fDI Intelligence


India’s global positioning: fourth most attractive destination for FDI


Source: fDI Intelligence

► India, in fourth position, is ahead of its next competitor, Brazil, by more than 70% in project numbers.

► India recorded similar trends as 2011 in terms of its share of world projects and total investment value.

Where from: India’s FDI investors

Source: FDI intelligence

► During 2007-12, the top five sectors for FDI from Western Europe were industrials, TMT, business services, automotive, and RCP.

5.9%

6.6%

7.7%

8.4%

11.4%

16.6%

21.6%

Infrastructure

Financial services

Consumer goods

Automotive

Business services

Industrials

TMT

India’s top FDI sectorsOpportunities rising in infrastructure

Source: EY’s 2013 India attractiveness survey (Total respondents 502); fDi Intelligence.

Reality Perception

93% project rise in 2012 in financial services from 2011.

3.8%

4.7%

8.4%

8.6%

11.2%

11.3%

29.4%

Business services

Life sciences

Automotive

Retail

Industrials

Infrastructure

TMT

In the next two years…% share of projects 2007-2012

Maintaining confidenceHow India is viewed by foreign investors

India’s competitive advantages: local labor cost, skills and mass domestic market


Please rate the following parameters for investment in India as very, fairly, little or not at all attractive?

24,9%

31,8%

32,7%

34,4%

41,7%

44,4%

45,8%

47,5%

45,8%

41,9%

46,0%

37,4%

37,7%

40,3%

14,5%

13,4%

14,1%

10,6%

12,0%

10,1%

8,0%

2,1%

2,0%

4,5%

2,4%

2,3%

3,3%

2,0%

11,0%

7,0%

6,8%

6,6%

6,6%

4,5%

3,9%

Entrepreneurial culture

Local labor skills

Sound telecommunications infrastructure

Strong business and management education system

Availability of educated workforce

Domestic market

Local labor costs

Very attractive Failry attractive Little attractive Not at all attractive Can't say

EY's 2013 India attractiveness survey Total respondents: 502

Investors immediate plans


People who are already invested in India are positive about the economy“No short-term expansion /overseas investment plans” has been cited as one of the main reason by respondents to not enter/increase existing operations in India

53.2% 31.8% 15,0%IAS 2013

Yes No Can't say

Is your company considering entering/increasing existing operations in India over the next year?


Prospective investment avenues


How are you planning to invest in India?

Source: EY's 2013 India attractiveness survey Total respondents: 267 (group considering entering/expanding existing operations in India over the next year)100% have international presence.

17,4%

0,5%

0,8%

3,1%

4,4%

7,1%

8,8%

57,9%

Can't say

Others

Franchise arrangement

License arrangement with local company

Greenfield investments

Joint venture/ alliance

Acquisition

Expand operations/increase labor force

Source: EY's 2013 India attractiveness survey Total respondents: 267 (group considering entering/expanding existing operations in India over the next year); respondents selected more than one possible answer.100% have international presence

► India’s growing middle class is helping to drive the success of companies that operate in the country.

► According to EY report: ‘Hitting the sweet spot, The growth of the middle class in emerging markets’ India’s global middle class population (people earning between US$10 and US$100 per day) is expected to reach 475 million by 2030, up from 50 million in 2012.

What is the nature of the business activity you are planning in India ?

Attraction of the domestic market


13%

2,1%

1,6%

3,4%

4,4%

5,0%

5.0%

14,8%

30,8%

42,5%

Can't say

Others

Education and training

Warehouse / logistics center

Off shoring/outsourcing

Research center/ design unit

Regional headquarters

Sales and marketing office

Manufacturing for global market

Manufacturing/services for the Indian market

Investors’ emerging market strategies: capital allocation towards India


Emerging market strategy and capital allocationDoes your company have an emerging market strategy?

Yes 62.6% No 25.3% Can't say 12.1%

What is the approximate investment capital allocation for India ?

24,0% 15,0% 10,5% 19.5% 31,0%% of respondents

0-5% 5-10% 10-20% >20% Can't sayEY's 2013 India attractiveness survey Total respondents: 314

Capital allocation range


Financial services 43.9% ||||||||||||||||||||||||||||||||||||||||||| 15.6% ||||||||||||||| 14.2% |||||||||||||| 0% 26.3% ||||||||||||||||||||||||||

Infrastructure 30.3% |||||||||||||||||||||||||||||| 14.1% |||||||||||||| 13.0% |||||||||||| 19.9% ||||||||||||||||||| 22.7% ||||||||||||||||||||||

Retail 29.4% ||||||||||||||||||||||||||||| 24.2% |||||||||||||||||||||||| 22.5% |||||||||||||||||||||| 4.8% |||| 19.1% |||||||||||||||||||

Industrials 28.6% |||||||||||||||||||||||||||| 21.6% ||||||||||||||||||||| 6.5% |||||| 14.2% |||||||||||||| 29.1% ||||||||||||||||||||||||||||

Consumer products 21.5% ||||||||||||||||||||| 13.2% ||||||||||||| 5.0% ||||| 11.3% ||||||||||| 49.0% |||||||||||||||||||||||||||||||||||||||||||||||||IT/ITES 21.4% ||||||||||||||||||||| 10.4% |||||||||| 13.8% ||||||||||||| 7.3% ||||||| 47.1% |||||||||||||||||||||||||||||||||||||||||||||||Business services 2.4% || 0% 0% 56.0% ||||||||||||||||||||||||||||||||||||||||||||||||||||||| 41.6% |||||||||||||||||||||||||||||||||||||||||

Source: EY's 2013 India attractiveness survey (Total respondents 314)

0-5% 5-10% 10-20% >20% Can't say

Sector-wise responses

Capital allocation range

New destinations emerging Next wave of competitors

7.6%0.5%

5.5%0.6%0.7%0.7%0.7%1.0%1.0%1.2%1.3%1.5%2.9%4.0%

70.8%

Can’t say None

OthersMexico

UAEThailand

PolandVietnamMalaysia

PhilippinesIndonesia

South KoreaUSA

BrazilChina

From a general point of view, in your opinion, which country is India’s main competitor in terms of attractiveness ?

Source: EY’s 2013 India attractiveness survey (Total respondents 502).

USA and Brazil have interchanged positions from 2012 India attractiveness survey from 8% and4%, respectively.

India’s new competitors

55% in 2012 India attractiveness survey

US and Brazil relative attractiveness to India has dropped from the 2012 survey.

The path to prosperityIndia’s future attractiveness

Great expectationsIndia in 2020

Responses 2013 survey 2012 survey

Among top three growing economies* 29% |||||||||||||||||||||||||||| 29% |||||||||||||||||||||||||||||

Among top three manufacturing destinations 24% ||||||||||||||||||||||| 25% |||||||||||||||||||||||||

Country with substantially improved infrastructure 18% |||||||||||||||||| 24% ||||||||||||||||||||||||

R&D and innovation hub 15% ||||||||||||||| 19% |||||||||||||||||||

Competing directly with developed economies 15% |||||||||||||| n/a

Among leading three shared services destinations 14% |||||||||||||| 27% |||||||||||||||||||||||||||

With one of the best business education and higher learning systems 11% |||||||||| 20% ||||||||||||||||||||

A regional and global operations hub 9% ||||||||| 19% |||||||||||||||||||

* Last year's response was phrased as "Achieved double-digit growth rates".Sources: EY's 2013 India attractiveness survey (Total respondents 502); EY's 2012 India attractiveness survey (Total respondents 506) - Only 382 had an international presence - Respondents in both the surveys selected more than one possible answer.

How do you see India in 2020?

Beyond the metros India’s emerging cities

Most attractive cities

% share in number ofprojects 2007-2012

(Reality)

% of survey responses

(Perception)

Mumbai 14.8% 51.2%Bengaluru 15.0% 37.8%New Delhi/NCR* 16.1% 37.4%Chennai 10.1% 14.6%Pune 7.8% 13.1%

Source: EY’s 2013 India attractiveness survey (Total respondents 502); fDi Intelligence - Respondents selected more than one possible answer.43.1%

3.0%3.7%4.4%4.7%

5.8%5.9%6.1%6.5%

8.9%20.7%

Can't sayIndoreNashik

AurangabadNagpur

KochiSurat

CoimbatoreChandigarh

JaipurAhmedabad

What are the emerging Indian cities for investment?Emerging cities

Top FDI choices

*NCR for reality and New Delhi for perception.

What it takes to succeed in India

► Take a long term view of the economy and stay committed and secure sponsorships at the senior level

► Keep cost structure competitive and use technology and innovation efficiently

► Intense focus on governance and compliance

► Right balance of localisation and globalisation; understanding of the local culture and market

► Ability to work with volatility

► Stay committed, even through the challenging times

► Consider the many unique opportunities available in each state in line with your business strategies

View points from Global Business Leaders

Contact detailsAsia-Pacific Desk Belgium

Thank you!

Geert GemisOperational Leader, Asia-Pacific Desk BelgiumITS Partner

Tel +32 3 270 14 57Mobile+32 475 58 28 81Email [email protected]

Jos ReniersAsia-Pacific Desk BelgiumITS Director

Tel +32 3 270 1238Mobile+32 476 50 65 79Email [email protected]

mailto:[email protected]

mailto:[email protected]

india attractiveness survey 2013 - ernst & young€¦ · · 2015-07-23telephone interviews...

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