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India-Israel Relations			High Potential Sectors for Investment Infrastructure – Roads India has the second largest road network in the world (3.3 million kilometers). Roads carry about 65% of the freight and 80% of passenger traffic. Highways / Expressways constitute about 66,000 km (2% of all roads) and carry 40% of the road traffic. India’s 11th five year economic plan (2007-2012) aims at drawing US$ 500 billion for infrastructure inputs such as roads and highways, ports, railways, power, and airports. The projected investment in roads (including national highways and rural roads) is US$ 76 billion, of which a large part is expected to come from the private sector. The Indian Government, via the National Highway Development Program (NHDP) is planning more the 200 projects representing around 13,000 km of roads. The average project size is expected to US$ 150 to US$ 200 million. Larger projects are likely to reach the US$ 700 to US$ 800 million range. 100% FDI under the automatic route is permitted for all road development projects. Indian Ports India has 12 major ports and 187 minor ports along 7,517 km long Indian coastline. Of the 12 major ports, 11 ports are run by Port Trusts while the port at Ennore is a corporation under the Central Government. Major ports handle 74% of the total traffic. Two major government projects underway : 1. Project “Sethusamundram”: Dredging of the Palk Strait in Southern India to facilitate maritime trade through it. 2. Project “Sagarmala”: US$22 billion project for the modernisation of major and minor ports. Major ports to operate largely as landlord ports - international port operators have been invited to submit competitive bids for BOT terminals on a revenue-sharing basis. Significant investment in port terminals on BOT basis by foreign players include Maersk (Mumbai), Dubai Ports International (Mumbai, Chennai, Vizag and Kochi), and PSA (Tuticorin, Chennai). 100% FDI under the automatic route is permitted for port development projects. Infrastructure – Power India has the fifth largest electricity generation, coupled with a transmission and distribution network of 6.6 million circuit kilometers (the third largest in the world). Coal fired plants constitute 54% of the installed generation capacity, followed by 25% from hydel power, 10% gas based, 3% from nuclear energy and 8% from renewable sources. It is estimated that India will require an additional 78,000 MW of generation capacity and an additional 60,000 circuit km of transmission network by 2012. This translates to an investment opportunity of about US$ 200 billion. It is estimated that the total demand of electricity in India will cross 950,000 MW by 2030. Large demand-supply gap: All India average energy shortfall of 9% and peak demand shortfall of 14%. Private sector participation possible through JV and 100% equity mode. 100% FDI permitted in Generation, Transmission & Distribution - the Government is keen to draw private investment into the sector. Major local players include: National Thermal Power Corporation, National Hydro Electric Power Corporation, Tata Power, Reliance Energy, and RPG Group – CESC. Alternative Energy and Clean Tech Alternative Energy and Clean Tech is an important area of possible cooperation between India and Israel. India aims at becoming a world leader in solar energy, and the target of adding 20,000 MW of solar energy generation capacity by 2020 has become a high priority. India aims at an installed solar generation capacity of 20,000 MW (20 GW) by 2020, of 100,000 MW (100GW) by 2030 and of 200,000 MW (200 GW) by 2050. It is estimated that 6,000 MW of additional wind power capacity will be installed in India by 2012. Civil Aviation and Airports India has 454 airports and airstrips; of these, 16 are designated international airports. Currently 97 airports are owned and operated by the Airports Authority of India (AAI). The government aims to attract private investment in aviation infrastructure. India is the 9th largest aviation market in the world. According to the Ministry of Civil Aviation, around 29.8 million passengers traveled to/from India during 2008, an increase of 30% on previous year. Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years. Expected to cross 145 million passengers p.a. by 2010. Vision 2020 envisages creating infrastructure to handle 280 million passengers by 2020. Investment opportunities of US$110 billion envisaged up to 2020 with US$80 billion in new aircraft and US$30 billion in development of airport infrastructure. Real Estate Merril Lynch forecasts that the Indian real estate industry will grow to US$ 90 billion by 2015. Demand for housing, retail and commercial space is driving 30% per year growth in real estate. The projected demand for 370 million square feet of commercial space, 20 million new housing units and 100,000 hotel rooms and other amenities by 2020 represents an opportunity worth US$ 50 billion. Foreign direct investment (FDI) into India in the real estate sector for the fiscal year 2008-09 has been US$ 12.62 billion approximately, according to the latest data given by the Department of Policy and Promotion (DIPP). 100% FDI is allowed in real estate development subject to minimum scale norms of either: 25 acres in case of serviced plots or integrated townships; or 50,000 sq. mtrs of built-up area for construction development projects. Initial investment is locked-in for a 3 year period. Top local players in the Real Estate and Construction Industry in India include: Unitech, DLF Ltd, HDIL, and Ansal Properties. Retail Market The Indian retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009. India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. The organised retail sector, which currently accounts for around 5% of the Indian retail market, is all set to witness maximum number of large format malls and branded retail stores in South India, followed by North, West and the East in the next two years. Number of shopping malls is expected to increase at a CAGR of more than 18.9 per cent from 2007 to 2015. Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50 per cent. Top players in the retail industry include: Future Group, Raheja Group, Tata Group, RPG Retail, and the Birla Group. Telecommunications India is the world’s fastest growing telecom market. According to the Telecom Regulatory Authority of India, total telephone subscriber base reached 543.20 million (as of November 30th, 2009). There were 17.65 million new additions to mobile phone connection in the month of November 09 (more than twice the total population of Israel which is 7.44 million!). Overall tele-density reached 46.32% (Nov 09). Broadband subscription reached 7.57 million (Nov 09). The Indian Telecom market offers a huge opportunity to Israeli companies. Major local players include: Bharti Airtel, Reliance Infocomm, Tata Teleservices, BSNL, Vodafone Essar, and IDEA Cellular. 74% to 100% FDI permitted for various telecom services. 100% FDI permitted in telecom equipment manufacturing. IT and IT enabled services The Indian IT and ITeS industry is expected to grow to US$77 billion by end of 2010. Over 25% per year CAGR expected. Exports expected to reach US$60 billion in 2010. The industry has 3 broad categories of companies: 1. Indian IT and ITeS companies ranging from large companies (Tata Consultancy Services, Infosys, Wipro, HCL) to small niche companies. 2. Global IT companies such as IBM, Dell, Microsoft, HP, Accenture, etc. all of whom have set up development centers in India. 3. Captive back office operations of large global corporations like JP Morgan, American Express, GE, HSBC, British Airways, etc. Automobiles India is the second largest two-wheeler market, the 4th largest commercial vehicle market and the 11th largest passenger car market in the world. According to the International Yearbook of Industrial Statistics 2008 released by United Nations Industrial Development Organisation (UNIDO), India ranks 12th in the list of the world’s top 15 automakers. Total number of vehicles sold in India including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers in 2008-09 was 9.72 million as compared to 9.65 million in 2007-08. Export of passenger vehicles increased from 218,401 in 2007-08 to 335,739 units in 2008-09. The Indian auto components industry’s revenues (which nearly double every 4 years) is expected to reach US$ 40 billion by 2014. Agriculture (including Water Technologies) Agriculture in India is a major sector which offers huge opportunities for the foreign investor. India ranks second worldwide in farm output. Agriculture and allied sectors like forestry accounted for 18.5% of the GDP in 2008. India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper. It also has the world's largest cattle population (281 million). It is the second largest producer of wheat, rice, sugar, groundnut and inland fish. It is the third largest producer of tobacco. India accounts for 10% of the world fruit production with first rank in the production of banana and sapota. With a population of over 1.17 billion, India is constantly looking for new and innovative technologies in Irrigation Systems, Greenhouses, Seeds, Dairy Farms, Poultry Farms, Water Technologies, Fertilizers, and Plant Protection in order to better utilize its resources. Healthcare The Indian healthcare sector which employs around 4 million people is a US$ 35 billion industry and is expected to reach over US$ 75 billion by 2012 and US$ 150 billion by 2017. The large domestic market is complemented by the inflow of medical tourists. The Number of medical tourists has increased almost 20 folds from 10,000 in year 2000 to about 180,000-200,000 in year 2006. The industry is fragmented with a large number of independent, privately run hospitals and healthcare centers. Private sector corporate entities like Apollo Hospitals, Wockhardt Hospitals and Fortis Healthcare have aggressive expansion plans. 100% FDI is permitted for all health related services under the automatic route. Medical infrastructure forms the largest portion of the Indian healthcare sector. Beds in excess of 1 million need to be added in order to reach the ratio of 1.85 per thousand at an investment of US$ 78 billion. Clinical trials in India are expected to become a US$ 1 billion industry by 2010. The Indian medical equipment industry is around US$ 2.17 billion and is growing at 15% per year. It is expected to reach around US$ 5 billion by 2012. Pharmaceuticals The Indian Pharmaceutical industry which is estimated at around US$ 9 billion has grown at a CAGR of 75 in Fiscal Year 2007-08. It is ranked 4th in volume terms and 11th in value terms globally. Indian pharmaceuticals companies produce about 20%-22% of the world’s generic drugs in terms of value. According to some estimates, the Indian pharmaceutical industry is expected to reach US$ 30 billion in 2020. The Pharmaceuticals industry in India is fragmented with over 3,000 small/medium sized generic pharma manufacturers. There are about 34 foreign drug companies engaged in the Indian pharmaceutical industry. International pharmaceuticals majors like Pfizer, Johnson & Johnson, Novartis, and Glaxo SmithKline have established presence in India. Major local players include Ranbaxy, Dr. Reddy’s, and Cipla. Biotechnology and Nanotechnology The Indian Biotechnology industry which is estimated at around US$ 2.5 billion includes over 700 companies. Some of these companies already either export to Israel biotechnology related products, utilize Israeli technologies and cooperate with Israeli Biotechnology and Pharmaceutical companies. International majors like Monsanto, Syngenta and Aventis are already in India and are focusing on the Bio-agriculture segment. Major opportunities in the Biotechnology sector in India are in the areas of Bio-informatics, Bio-pharma, Bio-agriculture and Bio-services. Nanotechnology is one of the main new developing areas recognized by the Indian government in past 5 years. The Indian Nanotechnology industry which is still in its infancy is estimated at around US$ 200 million and is estimated to grow at 35% per year. Home Land Security (HLS) After 26/11 (the terror attack in Mumbai in 2008), there is an increased awareness in India about home land security (HLS) needs. India is aware that Israel’s HLS and Security manufacturers have gained expertise and a worldwide reputation for developing leading-edge security solutions. The expertise developed by the Israeli companies based on their experience and know how acquired through decades of combating internal security and terror threats can be replicated for Indian conditions.
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