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“Japan-India Public Private Partnership Seminar”-- Towards New Economic Partnership –Session 3“Promising India”

14 February 2008

India International Centre Annex, Delhi


Contents of Presentation

Issue 1:Economic Growth Potential of India: Present & Future

Issue 2:Economic Partnership and “Complementarity”of Japan and India

Issue 3:National Development Structure of India

Issue 4:PPP and Directions of Japanese ODA

India-Japan PPP Forum


Issue 1:Economic Growth Potential of India: Present & Future

India-Japan PPP Forum


India is one of the most potential Asian growth centers.

Regional Economic Linkages:

The Chain of Sub-regional Economic Circles in Asia

JAPAN

East Asia Economy

INDIA

ASEAN Economy

The Bengal Bay Economy

India-Japan PPP Forum


Changes in GDP (at Current Prices)

China

Brazil

China

India

Russia

Brazil

India

Russia

GDP Growth in Comparison with BRICs

India-Japan PPP Forum


GDP Growth in Future

Source: IMF

India is projected to achieve a long-term economic growth at higher rates than the world average by IMF.

India-Japan PPP Forum


A Long-term Perspective onPer Capita GDP in BRICs

An Institute made a super long-term projection of GDP Per Capita of BRICs up to 2064.

INDIA

Source:

Open Cities

(Spring 2008)

India-Japan PPP Forum


Energy Resource ExtractionNatural Gas at Eastern Off-shore

  • Dhirubhai NG Field

  • NG Deposit: 35 tcf = sufficient enough to substitute the imported volume

  • Production: to be commenced from 2008

India-Japan PPP Forum


Indian Students Abroad

Ranking of Source Markets in Major English-speaking Countries

India-Japan PPP Forum


Summary: Indian Economic Outlook

  • India is one of the most potential Asian growth centers.

  • High economic growth expanding domestic and international markets.

    • GDP growth: 9.4% in 2005~6

    • GDP per capita: US$ 737 in 2006

  • Such a high economic growth momentum is projected to last in the long-term.

  • Service sector and ICT business have been long leading such a high growth.

    • Supported by higher educated human resource

    • Producing human resource with international manner and technologies in English-speaking countries.

  • Energy resources are sufficiently available to support a sustainable economic growth.

    • Shifting to Natural Gas

India-Japan PPP Forum


Issue 2:Economic Partnership and Complementarity of India-Japan

India-Japan PPP Forum


Changes in Trading Partners of India

Import + Export Amount

Trades with countries facing the Bengal Bay are notably increasing at the same rate as that of “China.”

N.B. The Bengal Bay = Sri Lanka, Bangladesh, Myanmar, Thailand, Malaysia, Singapore & Indonesia

India-Japan PPP Forum


Shares of Trading Partners

Import + Export Amount

The share of “Europe” decreased, while the share of “WANA” significantly increased, followed by China and the countries facing the Bengal Bay. Japan’s share is comparatively low.

India-Japan PPP Forum


The three share 44% of the total

Sector-wise FDI Inflows(Top 12 from 2000~2007)

India-Japan PPP Forum


Top Investing Countries: FDI Equity Inflows

Cumulative FDI Equity Inflows (US$) between 2000 -2007

Cumulative Inflows

Total:

US$ 47,205 mill.

Japan is ranked at 6th place, sharing only 4.0%.

India-Japan PPP Forum


Tourism Development

Tourism sector provides a greater amount of employments

Source: “Incredible India” Sep. 2007 Ministry of Tourism

India-Japan PPP Forum


Japan is ranked at 7th place with 120 thousand tourist arrivals

Tourism Partners

Source: “Incredible India” Sep. 2007 Ministry of Tourism

India-Japan PPP Forum


2007

2002

2005

2001

2006

FDI Flows vs. Int’l Tourist Arrivals

Money (FDI) and human (Tourist) transactions are mutually correlated.

The elasticity in recent years is extremely high.

India-Japan PPP Forum


India-Japan Trading and FDIs

  • Trading:

    • The shares of “WANA” , “China” and “the Bengal Bay Economy” are significantly increasing, while Japan decreases its comparative share.

    • Trading volume with Japan is increasing at 17.5% p.a., but Japan is still a minor partner, sharing only 2.3% of the total.

  • FDIs:

    • India is attracting FDIs in three (3) strategic sectors, namely, “Services (financial and non-financial)”, “Computer Software & Hardware” and “Telecommunication”. These three share 44% of the total FDIs.

    • FDI inflow form Japan is still weak, compared to USA, UK and Singapore, being ranked at 6th place.

  • Tourism

    • A robust growth in Tourism Sector is the result of successful internationalization in the economy. This is correlated with money flows, namely, tourists come and/then money comes.

A substantial potential for further expansion of Trade/FDI between India and Japan exists, noting the complementarityof Japanese endowments in ICT sector, automobile and other high value-added industries.

India-Japan PPP Forum


Issue 3:National Development Structure of India

India-Japan PPP Forum


Regional Economic Linkages:

Importance of being linked with Asian economies

East Asia Economy

JAPAN

INDIA

ASEAN Economy

Technology and capital shift

The Bengal Bay Economy

India-Japan PPP Forum


BANGLADESH

MYANMAR

INDIA

THAILAND

SRI LANKA

MALAYSIA

SINGAPORE

INDONESIA

The Bengal Bay Economy

The Eastern India is encompassed in the Bengal Bay Economy that stands for a sub-regional industrial and capital linkage with supply chain.

India-Japan PPP Forum


National Development Structure- Golden Quadrangle -

Delhi

Kolkata

Mumbai

Hyderabad

Chennai

Bangalore

The national economic structure shall be formulated with four (4) major metropolises and two (2) strategic growth centers such as Bangalore and Hyderabad…

India-Japan PPP Forum


Co-Developmental Triangles of Eastern Corridors&Balanced Growth of Indian Nation

Delhi

Kolkata

Co-Developmental Triangles of Eastern Corridors

Mumbai

Hyderabad

Chennai / Ennore

Connection to ASEAN Industrial Clusters and East-Asian Countries

Bangalore

India-Japan PPP Forum


NCR

2.2

4.1

Five (5) IT Centers in India

India’s IT and BPO exports from STPIs, FY 2004 (US$ billion)

IT Industries are likely located in Southern three major centers: Bangalore, Chennai and Hyderabad.

Mumbai

Hyderabad

Bangalore

Chennai

Source: Press articles; web searches; NASSCOM

India-Japan PPP Forum


NCR

9.5

Kolkata

0.7

Mumbai

10.8

Hyderabad

2.9

2.9

2.0

Bangalore

Chennai

FDI Equity Inflows in Major Cities

RGI’s Regional Office-wise:

Apr. 2000 to Oct. 2007 (US$ Billion)

Southern three major centers have attracted FDI equivalent to that into NCR.

India-Japan PPP Forum


International Gateways for Market Linkages

Delhi

Western Market Oriented Economy

Kolkata

Hyderabad

Mumbai

Eastern Market Oriented Economy

Bangalore

Chennai

India-Japan PPP Forum


Road development is urgent

Growth Parameters – Rating of Cities

(Source: The Times of India, Dt.3rd August, 04, Page10.)

  • Ranking for 5 to 1 indicate vary good to very poor

  • Cost of living indicates low to high from 5 to 1

  • Rating in the form of 4/3 indicate preference for the first figure, in this case 4

India-Japan PPP Forum


Hyderabad

From Ennore Port

Bangalore

From Chennai Port

Chennai

Ennore Port

Strategic Industrial Corridor: Chennai - Bangalore

India-Japan PPP Forum


Spatial Concepts on the National Development Structure

  • Sub-regional Economic Chain

    • Importance to link India with ASEAN and East Asia Economies

  • The Bengal Bay Economy

    • Economic integration with potential markets

  • Golden Quadrangle Structure

    • Four (4) Major Cities + Two (2) Strategic growth Centers

  • The Delhi – Mumbai Industrial Corridor

    • The Western Market-oriented Gateway

  • The Chennai – Bangalore Growth Corridor

    • The Eastern Market-oriented Gateway

India-Japan PPP Forum


Recommendation:For Balanced Development Scenario

Recognize three metropolises as strategic growth centers :Chennai, Bangalore and Hyderabad

The southern and eastern part of India be a strategic development region towards the balanced national economy

Needs / Requirements of the Society and Private Sector

Further strengthen the international transport gateway functions at Chennai:

  • Functionalize and enlarge Chennai and Ennore Ports;

  • Improve the Logistic and Inter-modal Systems with hinterland economies in Bangalore, Hyderabad and rest of India.

  • Formulate the Chennai-Bangalore Corridor as a strategic Industrial zone with improved roads

Fully mobilize Public and Private resources and knowledge in both countries, India and Japan

India-Japan PPP Forum


Issue 4:PPP and Direction of Japanese ODA

India-Japan PPP Forum


Investment, Technology,

Human Resource

Common Policy Agreement

Deregulation

PPP and Bilateral PartnershipHow to promote it ?

India

Partnership

Public

Private

Japan

Partnership

Public

Private


Outcomes of the India-Japan Joint Study Group (June 2006)

  • Bilateral inter-governmental negotiation to develop a Comprehensive Economic Partnership Agreement (EPA/CEPA), consistent with WTO:

    • Trade in goods and services; measures for trade promotion

    • Promotion and liberalization of investment flows

    • A Joint Task Force to be organized with representatives of business community to seek for an agreeable scheme of CEPA.

  • Japanese ODA:

    • To support PPP-based projects (economic and social infrastructure), involving the “Viability Gap Funding System”

    • To encourage FDI through improvement of infrastructures

    • To promote best-practice projects in terms of transfer of management skills and technology (like Delhi Metro)

    • To expand human exchanges

    • To promote projects to bear a synergy of financial and technical cooperation.

  • Special Economic Cooperation

    • To promote a synergy between Japanese manufacturing technique and Indian software in ICT, Energy, Logistic and Automobile Sectors

India-Japan PPP Forum


Needs of the Society and Business Sector

Facility Development & Procurements

A Public-Private Partnership Model

Lease & Maintenance Contract (TAC-TMC)

  • Public Facilities:

  • - Civil Structure

  • Related Infrastructure

Government

Private Operator

(Special-Purpose Company-SPC)

-Project Finance

-Design

-Construction

-Operation

-Maintenance

Subsidy or Viability Gap Fund

Performance Monitoring

Management Unit (PMU)

- Government Staff

Management

  • Procurements:

  • Operation systems;

  • Software and Know-how

  • Maintenance tools

  • Others

Advisor (Consultants)

Investment

Service Charges

on PFI-contract Basis


A Model of Players’ Demarcations:for Development of the Chennai–Bangalore Growth Corridor

India-Japan PPP Forum


  • Thank you …..

India-Japan PPP Forum


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