Mumbai is the glamour of Bollywood cinema, cricket on the maidans (open grassed areas), bhelpuri (a spicy sweet Mumbai snack) on the beach of Chowpatty, outstanding colonial architecture and red double-decker buses
Today Mumbai
• Covers an area of about 437.71 Sq.Km.
• Merger of 7 islands in city area and 4 islands in suburbs.
• Houses about 11.9 Million people (Census 2001)
• Population density of about 27,209 people per Sq.Km. (Census 2001)
Though once dominated by the cotton textile industry, Mumbai's economic base is now diversified and the Mumbai Metropolitan Region accounts for about US$ 15 billion out of Mahrashtra’s economy (NSDP) of about USD 37 billion. Textiles still remain important, but the city's industries include IT, Telecommunications, petrochemicals, automobile manufacturing, metals, electronics, engineering, food processing. Approximately 40% of the capital investment in Large and Medium industries in Maharashtra are cornered by Mumbai. More specialized economic activities are diamond cutting, computers, and movie making (in sheer numbers, Mumbai, or "Bollywood," produces more movies than any other city in the world, including Hollywood).
Mumbai, formerly known as Bombay, is the financial capital of India, contributing greatly to the Indian economy. The city accounts for over 10% of factory employment, 40% of income tax collections, 60% of customs duty collections, 20% of central excise tax collections, 40% of foreign trade and INR 40,000 crore (US $1 billion) in corporate taxes. Some of the key sectors contributing to the city’s economy are:
Financial & Commercial Centre - Mumbai, which has a stated aspiration of becoming a world-class city in the next 10-15 years, has already been ranked tenth among the world's biggest centres of commerce in terms of the financial flow volumes by a survey compiled by MasterCard Worldwide. Mumbai alone hosts two of the largest of the 131 approved SEZs in Maharashtra with a total area of 14, 000 hectares. Post the launch of Gulf Finance House promoted over US$10 billion Mumbai Economic Development Zone the city now also boasts of hosting the state and country’s only Economic Development Zone. Additionally, Maharashtra’s pro-investor and pro-industry policies coupled with its strategic position within key business and industry sectors in the country, has also made the state of Maharashtra and Mumbai the largest recipient of Foreign Direct Investment (FDI) into the country.
Mumbai today also boasts of
• Largest City Rail & Road Networks
• Amongst the largest trading ports (JNPT & MPT combined) in the country. In fact JNPT has been acknowledged as the busiest port in the country
• The country’s largest planned retail outlay and India's biggest networks in the food, clothing and hospitality industry initiatives
• Headquarters of a number of Indian financial institutions such as the Bombay Stock Exchange, Reserve Bank of India, National Stock Exchange, the Mint
• Headquarters of numerous Indian companies such as the Tata Group, Essel Group, Vedanta Resources and Reliance
Gems & Jewellery – Mumbai’s contribution towards Gems & Jewellery has risen from INR 50 billion in 1990 – 91 to INR 450 billion in 2003-04. Additionally SEEPZ (a Special Economic Zone located in Mumbai) alone handled import of INR 20 billion (2003-04) of rough diamonds, gold bars, stones, C&P diamonds, silver bars and platinum.
Leather: Mumbai, with its comfortable raw material base, skilled labour and already well established leather/leather goods industry, is and will continue to be a major centre for leather and leather products in Western India
IT & ITES: Mumbai is at the forefront of Maharashtra’s IT/ITES thrust that has now spread to other major cities in the state such as Pune etc. The city also boasts of some of the finest educational institutions in the country ensuring a steady supply of trained technical manpower for the IT/ITES industry. The state accounts for more than 30% of India’s software exports, 35% of the country’s PC’s and 32% of internet subscribers
Textiles: The largest contributor to Mumbai’s economy in the past the textile sector, which also currently accounts for 27% of India’s total exports, in the city still continues to play an important role
Entertainment Sector – The acknowledged centre of Indian film industry, especially ‘Bollywood’, Mumbai, which also hosts the head offices of various media groups such as ZEE TV, Times Group, Sony, UTV, Rediff, etc. is also one of the largest centers for Print, Television, Radio and other media related industries. The city also boasts of one of the largest number of committed retail space and is well poised to emerge as the retail capital of the country.
Furthermore, guided by the vision of transforming Mumbai into a world-class city the government has already initiated a slew of mega development projects. Besides the state urban development department and the civic body, agencies such as the Maharashtra State Road Development Corporation, Mumbai Metropolitan Region Development Authority, JNPT and state pollution control board are involved in implementation of the projects which include
• Bandra-Worli sea link
• Sewri-Nhava sea link
• Mithi river project
• Eastern freeway (through JNPT)
• Brimstowad
• Mumbai urban transport and integrated development projects
• Dharavi redevelopment, the largest such programme in the world
• Jawaharlal Nehru National Urban Renewal Mission schemes
• New Mumbai International Airport
In addition to the government projects the private-sector is also leading an array of mega development projects currently under way in Mumbai including
• Maha Mumbai SEZ & Navi Mumbai SEZ with a combined development value in excess of INR 140 billion
• GFH Mumbai Economic development Zone
• Badra - Kurla Convention Centre
• Versova – Ghatkopar Metro Project
• Re-development of the current Chatrapati Shivaji International Airport
Mumbai is also home to the Bhabha Atomic Research Center, and most of India's specialized, technical industries, having a modern industrial infrastructure and vast, skilled human resources. Rising venture capital firms, start-ups and established brands work in aerospace, optical engineering, medical research, information technology, computers and electronic equipment of all varieties, ship-building and salvaging, renewable energy and power.
Last but not the least Mumbai also houses the Western fleet of the Indian Navy, which is key to India's maritime security.
Monday, September 8, 2008
Sunday, September 7, 2008
The India Growth Story: White Elephant to Dancing Elephant
“India is a developed country as far as intellectual capital is concerned”
Jack Welch, former chief of General Electric, the world’s second largest company, made this remark at the beginning of the new millennium when he was still at the helm of General Electric.
‘India will emerge as the third largest economy in two decades and the world’s second largest economy by 2050, behind China but exceeding the US’
As per projections made by the world’s top investment bank Goldman Sachs in their 2001 research paper entitled “Dreaming with BRICs: the Path to 2050.”
Now, as India enters its 62nd year of independence, the country is well on the path to leveraging its vast intellectual capital and transforming itself into a global knowledge economy powerhouse - having already clocked $1 trillion in gross domestic product (GDP) during 2006-07.
India has overshot all expectations to clock several consecutive years of high-speed growth. It has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth has been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market. There are other facets of India as well that speak volumes about its resurgence as a growing and emerging economy between 1990 and now.
· GDP grew from Rs.5,150 billion to Rs.42,830 billion ($1.7 trillion)
· Per capita income almost doubled from US$ 390 to US$ 740. It is further expected to increase to US$ 2000 by 2016-17 and US$ 4000 by 2025
· Foreign exchange reserves jumped from barely US$1 billion to US$ 310 billion
· Inflows from foreign funds rose from US$ 1 million to over US$ 60 billion
· Foreign direct investment shot up from US$ 97 million to US$ 25 billion
· Indian companies, such as Tata’s, ADAG, RIL, Birla’s, Suzlon, Wipro, TCS, Infosys, Bharat Forge, Sterlite (Vedanta), ONGC Videsh, Ranbaxy, etc., have rapidly enhanced their global footprint with some very high profile acquisitions including Corus & JLR by Tata Group last year itself
o The country’s outward foreign direct investments rose by 29.6 per cent to $17.4 billion in 2007-08
· Exports jumped from US$ 18.1 billion to US$ 155 billion
· India has also overtaken the United States, with as many as 286 million subscribers, and ranks just below China, in terms of telephone subscriptions. India expects to easily achieve the target of 500 million by 2010
· With 33.7 percent average annual growth in knowledge-intensive software and services industry over the last few years, its revenues have gone from a mere US$ 12.4 billion in 2002-03 to US$ 52 billion in 2007-08
· Food grain output rose from 176 million tonnes to a record 230 million tonnes
Furthermore, India has also scored very well on other key socio-economic fronts. It has successfully
- Maintained electoral democracy
- Banished the spectre of famines
- Reduced absolute poverty by more than half
- Dramatically improved literacy
- Vastly improved health conditions
- Emerged as a global player in information technology, business process outsourcing, telecommunications, and pharmaceuticals
- Now emerged as the world’s fourth largest economy in purchasing power parity terms
On the back of 9.6 per cent growth April-December 2006-07, GDP grew by 8.9 per cent during April-December 2007-08 indicating that the growth process however continues apace, in spite of the rapidly changing domestic and international economic landscape triggered by an anticipated slowdown in the American economy and spiraling oil-prices, far out-stripping many of India’s Western counterparts on multiple fronts.
- Food grain output grew by 4.6 per cent in 2007-08, nearly four times the average annual growth of 1.2 per cent between 1990 and 2007
- Overall industrial production grew by 8.3 per cent during 2007-08. Significantly, manufacturing sector grew at the rate of 8.7 per cent
- Services grew by 10.4 per cent in April-December 2007, on the back of 11.4 per cent during the corresponding period in 2006-07
- Manufacturing grew by 8.7 per cent during April-February 2007-08, on the back of 12.5 per cent growth during 2006-07
- Core infrastructure sector continued its growth rate recording 5.6 per cent growth in 2007-08
- While exports grew by 23.02 per cent during 2007-08, imports increased by 27.01 per cent in the same period
- Money Supply (M3) has grown by a robust 20.7 per cent growth (year-on-year) as of end-March 2008, compared to 21.5 per cent last year
- Fiscal and revenue deficit decreased by 13.5 per cent and 33.3 per cent, respectively, during April-February 2007-08 over corresponding period last year
Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 per cent, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world. And with its manufacturing and service sectors on a searing growth path, Lehman Brothers Asia estimates India to grow by as much as 10 per cent every year in the next decade. Expected Trade deals with the Gulf Co-operation Council (a grouping of six Middle Eastern states), the Association of South-East Asian Nations (ASEAN) and the EU, will only help further strengthen this possibility.
Thus, one can safely state that where till the beginning of this decade India was considered nothing more than an ageing White Elephant, in the global economic context, it has successfully emerged as a metamorphical equivalent of a Crouching Elephant. But, for India to further transform itself into a nimble footed highly agile and fast Dancing Elephant, and as has been rightly pointed out by Cheryl Grey in her article titled ‘Brazil, Russia, India and China: Forces to Be Reckoned With’, the biggest challenge that India faces is on the basic infrastructure problems, such as poor roads and unreliable power supplies.
However, the outlook for infrastructure investment in India is very positive. Population growth, urbanisation and the demands of an increasingly consumer-driven society have placed pressure on existing infrastructure in a range of sectors, including electricity generation, telecommunications, airports, water and sanitation. Though India already boasts of the largest and most profitable railway network in the world, one of the largest road networks in the world, has a power generation capacity of 144,564.97 MW and is the second fastest growing mobile phone network in the world, a lot more would be required to maintain targeted growth. For example, as per the government’s own power mission India would require its installed generation capacity to touch 200,000 MW by 2012, as power requirement is expected to double by 2020 to 400,000MW.
The Indian Federal & State governments have actively initiated privatisation of infrastructure assets or have sought private sector financing of new infrastructure projects with the goal of reducing debt, allowing market forces to determine the most efficient means of infrastructure financing, improving efficiency and providing more visible benefits to communities. They have actively initiated and overseen the process of creation of highly attractive Infrastructure asset classed and opportunities right from the early Export Processing Zones (EPZ) and Industrial Clusters which later evolved into Integrated Townships, STPIs, SEZ’s etc. On the policy front the government has also incentivized the private sector significantly with an aim of enhancing their participation in meeting the infrastructure needs of the country, eg. SEZ Policy, Special Township Policy, Tourism Policy, Industrial Policy, SITP, FDI Policy and now the EDZ policy of which the GFH India project will be the first example.
Furthermore, it has been estimated that India will require at least 3-4 per cent equivalent of GDP spending on infrastructure to maintain an 8-10 growth rate, with almost $500 billion of this investment coming from private sector equity investment in infrastructure development over the next five years.
The Infrastructure Investment Opportunity in India has never been better.
Jack Welch, former chief of General Electric, the world’s second largest company, made this remark at the beginning of the new millennium when he was still at the helm of General Electric.
‘India will emerge as the third largest economy in two decades and the world’s second largest economy by 2050, behind China but exceeding the US’
As per projections made by the world’s top investment bank Goldman Sachs in their 2001 research paper entitled “Dreaming with BRICs: the Path to 2050.”
Now, as India enters its 62nd year of independence, the country is well on the path to leveraging its vast intellectual capital and transforming itself into a global knowledge economy powerhouse - having already clocked $1 trillion in gross domestic product (GDP) during 2006-07.
India has overshot all expectations to clock several consecutive years of high-speed growth. It has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth has been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market. There are other facets of India as well that speak volumes about its resurgence as a growing and emerging economy between 1990 and now.
· GDP grew from Rs.5,150 billion to Rs.42,830 billion ($1.7 trillion)
· Per capita income almost doubled from US$ 390 to US$ 740. It is further expected to increase to US$ 2000 by 2016-17 and US$ 4000 by 2025
· Foreign exchange reserves jumped from barely US$1 billion to US$ 310 billion
· Inflows from foreign funds rose from US$ 1 million to over US$ 60 billion
· Foreign direct investment shot up from US$ 97 million to US$ 25 billion
· Indian companies, such as Tata’s, ADAG, RIL, Birla’s, Suzlon, Wipro, TCS, Infosys, Bharat Forge, Sterlite (Vedanta), ONGC Videsh, Ranbaxy, etc., have rapidly enhanced their global footprint with some very high profile acquisitions including Corus & JLR by Tata Group last year itself
o The country’s outward foreign direct investments rose by 29.6 per cent to $17.4 billion in 2007-08
· Exports jumped from US$ 18.1 billion to US$ 155 billion
· India has also overtaken the United States, with as many as 286 million subscribers, and ranks just below China, in terms of telephone subscriptions. India expects to easily achieve the target of 500 million by 2010
· With 33.7 percent average annual growth in knowledge-intensive software and services industry over the last few years, its revenues have gone from a mere US$ 12.4 billion in 2002-03 to US$ 52 billion in 2007-08
· Food grain output rose from 176 million tonnes to a record 230 million tonnes
Furthermore, India has also scored very well on other key socio-economic fronts. It has successfully
- Maintained electoral democracy
- Banished the spectre of famines
- Reduced absolute poverty by more than half
- Dramatically improved literacy
- Vastly improved health conditions
- Emerged as a global player in information technology, business process outsourcing, telecommunications, and pharmaceuticals
- Now emerged as the world’s fourth largest economy in purchasing power parity terms
On the back of 9.6 per cent growth April-December 2006-07, GDP grew by 8.9 per cent during April-December 2007-08 indicating that the growth process however continues apace, in spite of the rapidly changing domestic and international economic landscape triggered by an anticipated slowdown in the American economy and spiraling oil-prices, far out-stripping many of India’s Western counterparts on multiple fronts.
- Food grain output grew by 4.6 per cent in 2007-08, nearly four times the average annual growth of 1.2 per cent between 1990 and 2007
- Overall industrial production grew by 8.3 per cent during 2007-08. Significantly, manufacturing sector grew at the rate of 8.7 per cent
- Services grew by 10.4 per cent in April-December 2007, on the back of 11.4 per cent during the corresponding period in 2006-07
- Manufacturing grew by 8.7 per cent during April-February 2007-08, on the back of 12.5 per cent growth during 2006-07
- Core infrastructure sector continued its growth rate recording 5.6 per cent growth in 2007-08
- While exports grew by 23.02 per cent during 2007-08, imports increased by 27.01 per cent in the same period
- Money Supply (M3) has grown by a robust 20.7 per cent growth (year-on-year) as of end-March 2008, compared to 21.5 per cent last year
- Fiscal and revenue deficit decreased by 13.5 per cent and 33.3 per cent, respectively, during April-February 2007-08 over corresponding period last year
Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 per cent, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world. And with its manufacturing and service sectors on a searing growth path, Lehman Brothers Asia estimates India to grow by as much as 10 per cent every year in the next decade. Expected Trade deals with the Gulf Co-operation Council (a grouping of six Middle Eastern states), the Association of South-East Asian Nations (ASEAN) and the EU, will only help further strengthen this possibility.
Thus, one can safely state that where till the beginning of this decade India was considered nothing more than an ageing White Elephant, in the global economic context, it has successfully emerged as a metamorphical equivalent of a Crouching Elephant. But, for India to further transform itself into a nimble footed highly agile and fast Dancing Elephant, and as has been rightly pointed out by Cheryl Grey in her article titled ‘Brazil, Russia, India and China: Forces to Be Reckoned With’, the biggest challenge that India faces is on the basic infrastructure problems, such as poor roads and unreliable power supplies.
However, the outlook for infrastructure investment in India is very positive. Population growth, urbanisation and the demands of an increasingly consumer-driven society have placed pressure on existing infrastructure in a range of sectors, including electricity generation, telecommunications, airports, water and sanitation. Though India already boasts of the largest and most profitable railway network in the world, one of the largest road networks in the world, has a power generation capacity of 144,564.97 MW and is the second fastest growing mobile phone network in the world, a lot more would be required to maintain targeted growth. For example, as per the government’s own power mission India would require its installed generation capacity to touch 200,000 MW by 2012, as power requirement is expected to double by 2020 to 400,000MW.
The Indian Federal & State governments have actively initiated privatisation of infrastructure assets or have sought private sector financing of new infrastructure projects with the goal of reducing debt, allowing market forces to determine the most efficient means of infrastructure financing, improving efficiency and providing more visible benefits to communities. They have actively initiated and overseen the process of creation of highly attractive Infrastructure asset classed and opportunities right from the early Export Processing Zones (EPZ) and Industrial Clusters which later evolved into Integrated Townships, STPIs, SEZ’s etc. On the policy front the government has also incentivized the private sector significantly with an aim of enhancing their participation in meeting the infrastructure needs of the country, eg. SEZ Policy, Special Township Policy, Tourism Policy, Industrial Policy, SITP, FDI Policy and now the EDZ policy of which the GFH India project will be the first example.
Furthermore, it has been estimated that India will require at least 3-4 per cent equivalent of GDP spending on infrastructure to maintain an 8-10 growth rate, with almost $500 billion of this investment coming from private sector equity investment in infrastructure development over the next five years.
The Infrastructure Investment Opportunity in India has never been better.
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