India's Economic Scenario

Add Canada to that list...
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Canada Economy Reels as U.S. Slowdown Cuts Factory Orders, Jobs

http://www.bloomberg.com/apps/news?p...U&refer=canada

The Indian IT and BPO industry is expected to clock $64-billion revenues by the end of fiscal 2008, registering a growth of 33%, the ‘Strategic Review 2008’ by IT industry body Nasscom said.

The software and services exports are expected to grow by 29% to reach $40.8 billion while the domestic market is expected to touch $23.2 billion in FY08. The review also said the industry would also meet its target of $60 billion software exports, and overall software and services revenues of $73-75 billion by 2010. Nasscom added that industry will adopt diversification of services and location of clients to protect itself against a possible US recession.

“The Indian IT industry has been rapidly evolving, the growth is on track to achieve, if not exceed the targets for 2010. The trends indicate that the domestic market is poised for growth with IT spends trending upwards, particularly by the government,” Nasscom president Som Mittal said in a release.

India’s technology industry, spearheaded by the likes of Infosys and Tata Consultancy, are already cutting their dependence on pure software coding work and are increasingly offering infrastructure services, consultancy and other higher value sectors resistant to periodical swings. “The reason for this growth is diversification. It will cushion us against the slowdown,” Nasscom chairman Lakshmi Narayanan said. “We have advised our members so they are not servicing only recession-prone sectors and diversifying into areas like telecom and healthcare, and some members have taken us initiatives on their own.”

Multi-billion dollar losses in the US banking sector as a result of the subprime mortgage collapse have created worries over their impact on IT spending. The economy in the US, which would account for 61% of India’s software exports in this fiscal year, is also showing signs of slowing. However, its share has been gradually falling yielding to higher revenues from the UK and continental Europe, at 18% and 12%, respectively this year. Asia-Pacific and the rest of the world have gone up to 6.4% and 2.1%. The domestic market, too, seems to be coming into its own. Sales of software and services reached an estimated $12 billion.

Indian companies, Mr Narayanan said, are also going beyond the English-speaking markets and tapping the opportunity from other language markets in Europe. Small and medium companies are also growing in these markets, particularly catering to niche service segments, Mr Narayanan, who is also vice-chairman of Cognizant Technology Services, said.

In 2007-08, exposure to financial services is estimated at 40% of the industry’s exports, followed by hi-tech and telecom at 19% and manufacturing at 15%. The fastest growing segment in software and services has been business process outsourcing (BPO), accounting for 27% of exports. “The number of processes being handled by the BPO industry has increased,” Som Mittal said. He expected many small and medium companies to benefit from increased business from the government sector. With this, the industry accounts for 5.5% of the country’s gross domestic product.

The industry body has asked for an extension of the STPI scheme so small and medium size companies and BPO firms, which cannot move into SEZs unlike large firms, are not affected. The move would also benefit growth in smaller cities, according to Nasscom.

India's Production Growth Accelerated in December

Feb. 12 (Bloomberg) -- India's industrial production grew faster than economists estimated in December as record investment in factories, roads and power plants boosted demand for cement and steel.

Production at factories, utilities and mines rose 7.6 percent from a year earlier, after gaining a revised 5.1 percent in November, the statistics office said in New Delhi today. Analysts had forecast a 6.9 percent gain.

Businesses such as General Motors Corp. and ArcelorMittal are building factories in India as they bet rising incomes in the world's second-most populous nation will boost sales. Still, output may slow as nine interest rate increases since 2004 cool demand. Manufacturing is forecast to expand at the slowest pace in four months in January, according to ABN Amro Bank NV.

``The rebound in industrial output in December may be short- lived,'' said N.R. Bhanumurthy, an economist at Institute of Economic Growth in New Delhi. ``There is general weakness in industrial growth because of higher rates and the central bank may have to start cutting them at some point.''

Industrial production grew 9 percent in the nine months ended Dec. 31, less than the 11.2 percent gain in the same period in the previous year, the government said. Manufacturing in December rose 8.4 percent, led by a 16.6 percent increase in the output of capital goods such as plant and machinery.

Prime Minister Manmohan Singh's government is spending 1.34 trillion rupees ($34 billion) in the year ending March 31, a 40 percent increase over the previous year, on roads, ports and power plants.

Companies are also expanding, encouraged by India's economic growth and on optimism rising incomes will stoke higher demand. Automakers including General Motors and Suzuki Motor Corp. are spending more than $6.6 billion to build new factories in the South Asian nation.

ArcelorMittal, the world's largest steelmaker, plans to invest $20 billion in India to set up two steel plants.

``India is an interesting place to be in at this point in time,'' said Sudhir Maheshwari, executive vice president at ArcelorMittal.

Economic expansion in India is the fastest after China among the world's biggest economies. The economy has grown an average 8.8 percent since 2003, the fastest expansion since the country's
independence in 1947.

Full Story : http://www.bloomberg.com/apps/news?p...I0&refer=india

Chinese Ambassador says that India-China bilateral trade is expected to reach about 30 billion dollar by 2008 and about 40 billion dollar by 2010.

India’s overall exports have also been growing at a high rate of more than 20 per cent since 2002-03. During 2005-06, with a growth of over 23 per cent, India’s exports crossed the US$100 billion mark reaching US$125 billion during 2006-07. This financial year India has set an export target of US$160 billion.

Exports from SEZs in India grew by over 52% during 2006-07. And, during the year 2007-08 exports from the SEZs is expected to double. Big multinational companies like the NOKIA, DELL, FOXCONN, ADIDAS etc. have already set up SEZs in India.

European Union happens to be India’s major export destination with over 21% of India’s exports directed to the region. During 2006-07, the European Union received over 26 billion US Dollars worth of exports registering a 15% growth. The major products exported to the European Union are articles of apparel and clothing accessories; natural or cultured pearls, precious or semiprecious stones, precious metals, clad with precious metal and articles thereof, imitation jewellery, coin; mineral fuels, mineral oils and products of their distillation, bituminous substances; mineral waxes; iron and steel; and organic chemicals etc.

The second major region where India’s exports are directed is the West Asian and North African Region covering countries like Oman, Iran, Iraq, Egypt, Tunisia, Morocco etc. During the year 2006-07, this region received over US $ 23 billion export, which was around 18% of India’s total exports. This region, during 2005-06, received around 16% of India’s exports which was around US Dollars 16 billion. The major exports to the region are i) mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes, ii) natural or cultured pearls, precious or semiprecious stones, precious metals, clad with precious metal and articles thereof; imitation jewlry; coin iii) copper and articles thereof iv) articles of iron or steel v) boilers, machinery and mechanical appliances; parts thereof etc.

North America received India’s exports of around 20 billion US Dollars which happened to be around 16% of India’s total exports during the year 2006-07. This was over 8% vis-à-vis 2005-06 exports to the region when it was around US Dollars 18 billion. India’s major export basket to North America consist of i) natural or cultured pearls, precious or semiprecious stones, precious metals, clad with precious metal and articles thereof; imitation jewellery; coin, ii) articles of apparel and clothing accessories, iii) electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts iv) other made up textile articles; sets; worn clothing and worn textile articles; rags etc.

India has identified Latin America as a potential country for its international trade. India’s export to Latin America was, however, merely US$4 billion during the year 2006-07.

India’s export to ASEAN countries is growing rapidly by over 20%. During 2006-07 around 10% of India’s exports were directed to the region. India’s exports to the ASEAN were around US Dollars 13 billion during 2006-07. India’s exports to the region comprise of i) mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes, ii) organic chemicals, iii) residues and waste from the food industries; prepared animal fodder, iv) copper and articles thereof, v) Iron and Steel etc.

Small scale sector today is one of the largest contributors to the foreign exchange reserves of the country and it is shouldering more challenging responsibilities in promoting the overall exports from the country. During 1990-91, the direct export share of SSI in India’s total export was below 30% with a total value of approximately Rs.9442 crore. During 2006-07, the contribution from SME sector was to the tune of Rs.2,05430 crore, recording 26% increase over previous year’s export of Rs.1,64,310.



Exports from Karnataka grew at more than 25% in the last three financial years. Karnataka recorded an export turnover of Rs.1,02,000 crore during 2006-07. According to industry estimates, during 2006-07, export from Costal Karnataka, the region having preponderantly small and medium exporters, was to the tune of Rs.14,500 crore. This figure is expected to be doubled by the year 2010 if proper infrastructure and other facilities are provided to the industries in this area.


Goldman Sachs has predicted that the BRIC (Brazil, Russia, India and China) economies together could be larger than the present G6 economies in US Dollar terms by the year 2050. And, I must say that India is one of the major economies in the BRIC economies. The report also says that while the growth for the BRIC is likely to slow significantly toward the end of the next 30 years, only India will see growth rates significantly above 3% by 2050.

COMPILED FROM : http://fieo.org/
Federation of Indian Export Organizations

mkts tend to b more irrational than v can b solvent.....
just a fornight back , these stories would have been blown out in the blah , blah & suddenly , a serious mindset has emerged as 2 how serious the economies are.....

This thread was started because of the too many bearish comments around in the media and at traderji, time has come for all to be informed at where we stand. The informed will make merry.

In World Bank’s latest report titled “Doing Business 2008”, 178 economies have been compared in terms of ease of doing business on various parameters and India has been placed at 120th position, showing gradual improvement in the ranking from 138 in 2006 to 120 in 2008.

THIS SHOWS LOT NEEDS TO BE DONE

Great work JnJ.
I believe in indian growth and nothing can change in fundamentals in a day or two. But definately we are looking at a slowdown for some time.

And exposed to more risk. Whatever was reflected on stock market a triger can create a cascading effect and atleast upset our system by delaying our speed at which we were growing....

I hope we can achieve the inclusive and sustainable growth for next decade. a year of slow down would be good to relax after long rally

lets see 2009 would be a stop then we start another leap.

jnj,,
Can you please post links to your sources so that we can determine when those estimates were made? Estimates made 3 months back are no longer valid because of the global slowdown.

http://www.ft.com/cms/s/0/dc19c972-d...0779fd2ac.html

"Global spending on IT goods and services is expected to grow to just $1,695bn in 2008, a 6 per cent increase on last year, according to Forrester Research, the market research group. This represents a significant slowdown from 12 per cent growth last year. "

"In Europe, IT spending growth will fall from 15 per cent last year to 5 per cent."

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The growth rate is being halved and someone expects India to grow at 33%? Forrester is an IT forecating speciality company and not some politician who pulls numbers off his hat

Take estimates made by trade groups with a pinch of salt.