Tapping into the globally-competitive Indian manufacturing opportunity - May 2020 - EY
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Tapping into the globally-competitive Indian manufacturing opportunity May 2020
Foreword The current global environment has several uncertainties. Global trade has been impacted by the COVID-19 crisis, with disruptions in supply chains highlighting the risk of being dependent on very few geographies. There is now a widespread emphasis by multinational companies on de-risking their supply chains and they are looking at diversifying to other countries. This report has been prepared to assist multinational companies in getting an understanding of the potential opportunities for them in considering India for manufacturing through collaborations with Indian companies and through contract manufacturing. Broadly, we see India as an attractive destination for MNCs around the world. To become a competitive manufacturing hub, India is expected to leverage its advantages such as, an existing strong manufacturing base, competitive labour and taxation, investor-friendly business regulations and upgradations in infrastructure. Another opportunity for MNCs in India is its large and growing domestic market which can absorb investments. We hope you find this analysis insightful. Sudhir H Kapadia National Tax Leader, EY India
Contents 01 02 03 04 05 India as a Large and Engaging with Sectoral How EY can help competitive growing Governments to opportunities manufacturing consumption get necessary destination market policy support
Executive summary Page 4 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only
India can be a key manufacturing base for corporations relying on global value
chains
Large labour force
► Wages in India 30% of China
One of the world’s fastest growing large economies
► 2.6 million STEM graduates – engineering talent
(grown at over 7% in last few years)
► Labour laws being modified – flexibility for businesses
to hire and fire
Large market – Growing consumption in India Large tracts of land identified by Government – early
► 100% increase in household consumption over last start for manufacturing
Growing economy with stable
ten years Large tracts of land available in private run industrial
► US$ 150 billion of consumption added annually parks
macroeconomic trends
World class ports and airports located on global
Stable external sector – Relatively stable Rupee, Large
Key factor inputs
transport routes. Good hinterland connectivity through
foreign exchange buffer, low crude oil prices
rail and roads.
Politically stable with good political and trade relations Excess electricity generation capacity with
with leading markets around the world such as Japan, Government making efforts to rationalize tariffs i.e.,
US, China etc. reduce tariffs for electricity
Source: MOSPI; IMF 2020 (April) STEM: Scientific, Technology, Engineering and Management
Page 5 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only
Policy announcements announced in May 2020 underscore Indian
Government’s focus on domestic manufacturing and opening new opportunities
Expanding the role for private capital De-controlling agricultural sector
Government has opened commercial coal mining and space sector for Government proposes to remove controls that would allow for a nation
private participation. Further review of strategic sectors to be wide market for agricultural commodities, giving higher farm prices and
undertaken with a potential privatization agenda. greater certainty to private players in sourcing agricultural produce.
An efficient and competitive electricity sector Increased local defence manufacturing and aviation
opportunities
New reforms could potentially reduce power sector losses, bring more
competitive power rates for the industry and increase efficiency and Recent policy changes intend to promote domestic defence
competition in the power distribution segment. manufacturing and encourage MROs, that will boost both defence and
civil aviation volumes.
Opportunities in mining and healthcare sectors Continued commitment to foreign capital
Government will take measures to create investment opportunities for Government’s announcement of increasing FDI limit in defence to 74%
mining by auctioning licenses that would allow to go from exploration to and allowing Indian companies to list overseas underscores India’s deep
mining, Government also proposes to increase public investment in commitment to foreign capital.
health care facilities.
MROs: Manufacture, repair and overhaul
Page 6 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only
India has undertaken several business friendly reforms in recent years
1. Through recent measures India’s taxation has become 2. Simple regulatory environment
globally competitive
► 100% FDI investments in practically all manufacturing
Corporate tax cut to 17%* to 10%** withholding tax for ► Free flow of goods in and out of country: simplified custom
boost investment and dividend, long term capital procedures, major upgradation of port infrastructure
transform India into a gains, royalty and fees for
“manufacturing hub” technical service payments ► World Bank ease of doing business ranking up from 142 in
Corporate tax in India is lower 2014 to 63 currently
than other Asian countries 5%** withholding tax on
interest payment ► Digital compliances for most tax and regulatory processes
► Massive scaled up digital payments infrastructure
Transfer pricing provisions
allow non residents to obtain Implementation of GST has 3. Various structural reforms to make Indian economy
advance pricing brought in supply chain
concluded or are underway
efficiency and improved
agreement or use safe competitiveness of India’s
harbour rules to provide manufacturing sector ► Insolvency and Bankruptcy Code for easier exits
certainty to foreign investors
► Decriminalization of Companies Act, 2013
► Liberalization of regulations in: Agriculture, Power,
Duty exemption on imports of inputs/capital goods in Aviation, Defence, Coal and mining
manufacturing in bonded warehouse ► Government policies likely to favour locally produced goods
Source: World Bank Ease of Doing Business Report 2019, Department for Promotion of Investment and Internal Trade
FDI: Foreign Direct Investment
*Corporate tax for new manufacturing companies; Subject to applicable regulations and rates
GST: Goods and Services tax
** Subject to conditions under Indian tax laws and Double Taxation Avoidance Agreement between India and Japan
Page 7 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only
Various alternatives for leveraging India as a part of the supply chain
Manufacturing
100% owned Contract
through Joint
Manufacturing Manufacturing
Ventures
► FDI norms allow up to 100% ► Manufacturing in practically ► Vibrant private sector in India
equity ownership in any sector can be undertaken ► Number of sectors are well
practically all sectors through JVs developed with a host of well
► Numerous examples of global ► Vibrant and well established established players
corporations running private sector – numerous ► Contract manufacturing used
successful businesses without choices for JVs by a number of companies in
any joint ventures ► History of long running and India
successful joint ventures in
India
Source: EY Analysis JV: Joint Ventures
Page 8 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only
Key sectoral opportunities
Sectors where India is competitive and has a manufacturing and export base
Textiles & Consumer Iron, Steel & Auto
Chemicals Pharmaceuticals components
Apparel Goods industrials
► 6th largest in world ► 4th largest producer ► 4th largest sector of ► 2nd largest producer ► Globally, 3rd largest ► Projected to become
of textiles Indian economy of Crude steel and in volume terms and 3rd largest
► Profitable with high
Coal 10th in value terms manufacturer
rates of return ► 6th largest exporter ► Increasing
globally by 2025.
for apparel globally consumption on the ► 3rd largest finished ► Attractive for
► Growing on the back
back of large middle steel consumer in generic ► India has become a
of demand for end ► Presence of entire
class the world after manufacturing designing and
consumer industries value chain in India
China and USA. manufacturing hub
► Strong presence and
► Large producer of with increasing
► Large resource of capabilities across
Cotton, Jute , presence of global
Iron Ore the value chain
Polyester, etc. OEMs
► Further liberalization ► Low cost of
► Well developed auto-
of the mining sector production
component exports
and coal sector in
► Well versed with
India getting FDA
approvals
Sources: EMIS sectoral reports, IBEF, Invest India, EY sectoral reports, Make in India, India Trade Portal, World Steel Association Report 2019 OEMs: Original Equipment Manufacturers
FDA: Foods and Drugs Administration
Page 9 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only
Key sectoral opportunities
New high growth sectors where export driven world class
manufacturing facilities can be established in India
Smartphones
Defence Battery Medical
and
production manufacturing devices
Electronics
► "Large market with ► Large buyer of ► Strong policy push ► Key focus area in a
~ 1.2 bn telecom defence equipment for Electric Vehicles post COVID World
subscribers (EVs) in India.
► Liberalisation in FDI ► Increased public
► Large talent of norms (74% from ► Strong push to spending on
engineering and 51%) develop local battery healthcare
scientific manpower manufacturing
► Focus on procuring
capability
► Potential to develop domestically
large scale produced equipment
manufacturing to
serve both Indian
and global markets
Sources: TRAI (July-September 2019 report), News Reports
Page 10 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyHow EY can support
Assess Analyze
and and Implement
evaluate advocate
► Market assessment study and ► Detailed SWOT analysis on ► Based on chosen model, execute
evaluation of possible potential incentives and benefits the plan, including transaction
collaborations and determine that could influence decision and advise, structuring the
entry strategy - contract engage with government and arrangement, tax and regulatory
manufacturer/ JV/ subsidiary such stakeholders to determine compliance and approvals,
as, comparative assessment of feasibility negotiations with stakeholders.
India and ASEAN countries ► Assistance in defining and ► Assistance in availing incentives
executing advocacy strategy of under various state government
global group of companies with policies.
Central or state governments. ► Assistance in applying and
► Assistance in finalizing suitable complying with various state
location within India – state, government rules and regulations
region, district, city (NOCs, approvals etc.)
ASEAN: Association of South East Asian Nations
SWOT: Strength, weakness, opportunities and threat analysis
NOCs: No Objection Certificate
Page 11 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyMain report: Why should you invest in India?
01 India as a competitive manufacturing destination
What makes India a manufacturing destination?
Overall economic factors
The Indian economy signifies large growth opportunities and stability due to relative protection from various geopolitical events
(like ongoing trade wars, crude oil shocks), macroeconomic stability, and external sector stability.
One of the world’s fastest growing large economies Aggressive corporate tax cuts and relief on
(grown at over 7% in last few years) dividend distribution tax in last 12 months. India
now a much more attractive and investor-friendly
destination
Attractive FDI destination – 100% FDI automatic route Second largest English-speaking country and
in manufacturing; US$ 473 b Foreign Direct young median age of 28 providing a large pool of
Investment (from FY10), 60% of which was since employable workforce
2014-15
Strong Intellectual Property Rights ecosystem
Large investments in upgrading infrastructure – India
currently implementing a US$1.4 t infrastructure Positive market sentiments and increase in
project pipeline to be completed by 2024-25 disposable income expected to result in 3X rise in
consumption expenditure by 2025
Politically stable with good political and trade Forex stability: large forex buffer, benefits from
relations with leading markets around the world low crude prices, IMF anticipates sharp recovery in
such as Japan, US, China. 2021
Source: MOSPI; IMF 2020 (April)
Page 14 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyWhat makes India a manufacturing destination?
Large number of Indian manufacturers with required competence– contract manufacturers/ collaborators
In these sectors, companies can find potential Indian
Top 10 FDI 6th among the top 1st among collaborators with required competence.
destinations in manufacturing Greenfield FDI
the world countries of the destinations in the
world world Chemical and 4th largest producer
Source: UNCTAD 2019 Plastics industry of chemicals in Asia
Source: Global
Source: UNIDO 2019
Investment Trend
Monitor report Textile and Largest producer of
apparel industry cotton
7th most valued 2nd fastest Most
nation brand in growing major competitive Consumption of
economy in the
the world
world
economy in Consumer goods US$ 150 b added
South Asia each year
Source: Brand Finance
Source: IMF 2019
Source: WEF Global
Electronics Largest incentives
Competitiveness Index program in India to
industry promote manufacturing
US$320 1st choice of tech
Auto components Large 2, 3 and 4
billion MNCs to
set up industry wheeler manufacturer
merchandise R&D centres
outside their home
exports annually 3rd largest supplier of
countries
Pharmaceuticals medicines globally
Source: Ministry of
Source: Zinnov Consulting
Commerce
Sources: EMIS sectoral reports, IBEF, EY sectoral reports, SIAM, EY Analysis, National Account Statistics R&D: Research and Development
Page 15 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyWhat makes India a manufacturing destination?
Availability of skilled labour is India’s competitive advantage
Labour availability and its skillset Labour reforms to provide flexibility in
Share of working age population in total population (%) labour policies and reduce compliance costs
75
► Favourable demographics for India 70
► Government is simplifying labour laws to
compared to other countries reduce compliance costs and has allowed
65
companies across sectors to hire workers
60 for specific duration (fixed term)
► Strong technical and engineering 55 ► 44 labour laws have been merged into 4
capabilities (2.6 million STEM 1990 1994 1998 2002 2006 2010 2014 2018
labour codes namely:
graduates) USA EU China India
65.4 64.6 71.2 66.4 ► The Code on Wages, 2019
► Government recognizes the Source: OECD (2020), Working age population (indicator) ► The Occupational Safety, Health
importance of human resource *Working age population is defined as those aged 15 to 64 and Working Conditions Code, 2019
development
Average wages in Manufacturing Sector (in US$ ‘000) ► The Code on Social Security, 2019
5.7
6.3 6.3 6.6 ► The Industrial Relations Code, 2019
► Under Skill India initiative Indian 5.1
government has collaborated with 4.5 ► More detailed regulations within these
governments across the globe like codes will be prescribed. It is anticipated to
USA, UK, EU, Germany, France, Japan retain India’s social culture while being
2.0
etc. for skill transfer trainings, 1.7 1.7 1.8 1.7 1.8 business friendly
internship programs ► Various relaxations in Labour laws across
2012 2013 2014 2015 2016 2017
states
China India
Source: ASI , China Statistical Yearbook
Source: Ministry of Labour and Employment
Page 16 28 May 2020 Opportunities for Japanese companies from India manufacturing partnership - For Internal use onlyWhat makes India a manufacturing destination?
Business regulatory environment
Free trade Digital compliances
► Good political relationships with major markets around the world ► Digital platform for most compliances like tax filings, applications and
► India has Comprehensive Economic Partnership Agreement and Free payments for licenses and permits, and regulatory filings, creating
Trade Agreements with many countries also providing preferential transparency, simplicity and predictability for businesses
tariffs for trade (often at nil rate of custom duties)
Land on a ‘Plug and Play’ basis Trade related infrastructure
► Department for Promotion of Industry and Internal Trade sets up a ► AEO programme – simplified customs processing
platform to facilitate large investors from the world, providing ► ICEGATE - Single-window digitised system for trade-related procedures
information on 21,000 acres land along Delhi-Mumbai Industrial
corridor available for Industries ► Upgradation of port infrastructure and connectivity: Completed 121 projects
at a cost of US$ 4.2 b and several others are underway
► Proposes to also include land in private sector industrial parks
FDI policy Structural reforms
► 100% FDI permitted under automatic route for manufacturing ► Introduction of Insolvency and Bankruptcy Code, Goods and Services Tax,
companies, though sectors like defence, telecom, media, Companies Act, 2013, Universal Bank accounts, Universal health insurance –
pharmaceuticals and insurance need government approval all foundations of a resilient society
Ease of Doing Business Digital payment systems
► India’s performance improved from 142 (2014) to 63 (2019), ► Digital payments across B2B and B2C due to expansion in opening of universal
progressing on 7/10 parameters bank accounts, creation of cheap and efficient payment systems, and use of
FinTech
► More emphasis on organised and formal economy
Source: DPIIT, New Reports, Ministry of Shipping, Ministry of Commerce and Industry, Department for Promotion of Investment and Internal Trade
World Bank Ease of Doing Business Report 2019, Unified Payment Interface, NPCI AEO: Authorized Economic Operator
ICEGATE: Indian Customs Electronic Commerce/ Electronic Data Interchange (EC/ EDI)
Page 17 28 May 2020 Gateway
Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyWhat makes India a manufacturing destination?
Competitive taxation designed to attract new manufacturing investment
Corporate tax cut to 10%* withholding Transfer pricing Implementation of Duty exemption
boost investment and tax for dividend, long provisions allow non GST has brought in on imports of
transform India into a term capital gains, residents to obtain supply chain inputs/capital goods in
“manufacturing royalty and fees for advance pricing efficiency and manufacturing in
hub” technical service agreement or improved bonded warehouse
payments use safe harbour competitiveness of under Manufacture &
rules to provide India’s manufacturing Other Operations in
5%* withholding tax certainty to foreign sector
Warehouse
on interest payment investors Regulations (MOOWR)
2019
Corporate Tax
Rate (%)
Philippines
Indonesia China
Malaysia 30%
Thailand Vietnam 24% 25% 25%
India Singapore 20% 20%
17%** 17%
Source: EY Worldwide Corporate Tax Guide 2019
* Subject to conditions under Indian tax laws and Double Taxation Avoidance Agreements
**Corporate tax for new manufacturing companies; Subject to applicable regulations and rates
Page 18 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyWhat makes India a manufacturing destination?
Infrastructure upgradation
Physical infrastructure Industrial and dedicated freight
progress in the last decade corridors – a game changer
► National highway roads built: 64,000 kms*
► Electricity generation capacity of 217 GW added, 84%
growth in power generation
May reduce transportation time of
► Moving towards a cleaner fuel: 71% of capacity goods from days to hours
addition in last three years is in renewables
Dedicated Freight Corridors (DFCs)
National Infrastructure Pipeline for next 5 years as backbone to Delhi–Mumbai
Industrial Corridor Project (DMIC)
Roads - 19%
and Amritsar Kolkata Industrial
Corridor (AKIC)
Railways - 13%
Urban and Housing - 16%
Integrating the key and highest
Energy - 24% generating provincial
US$ Agriculture and Rural Sector - 12%
economies/regions across the
1.4 country
trillion Health and Education - 3%
Airports, Ports and Tourism - 3%
New sustainable industrial cities
Industrial Corridors - 3% with world class infrastructure
Digital Infrastructure - 3%
Others - 4% Integrated infrastructure
projects to ease logistics issue
In $ billion
*2009-19, 1US $ = INR 72
Source: Ministry of Finance
Page 19 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only02 Large and growing consumption market
India’s consumption market growth has created several opportunities for
investors in the last decade
Household Fastest growing segments
US$ 150 billion consumption
consumption Transport
added each year
growth in the last Healthcare and Education
decade Equivalent to total consumption of Norway Clothing and Footwear
100%* Consumer durables
Fuelled by:
1 2 3
E-commerce Technology Large investments
12x 90x 44x Corporate capex of over US$1.7 trillion*
Increase in wireless Increase in
Sales growth in the last decade data usage in smartphone sales FDI inflow of US$510 billion** in
last decade in last decade the last decade
2011-19 2014-19 2010-18 2008-18*, at current prices and current $
2009-19**, 1 US$ = INR 72
Sources: IBEF, TRAI, RBI, MoSPI
Page 21 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIndia’s large and growing market gives it an advantage over ASEAN countries
India crossed threshold of per-capita India’s private consumption is Local manufacturing presence would
GDP of US$ 2,000 and growing estimated to grow by US$ 2 trillion of provide much better access to the
towards per-capita GDP of ~US$ which nearly half would be in premium Indian market
4,000-4,500, which would open up and new category consumption.
massive market opportunities.
Growth in consumption in last five years and size of total consumption
10.0% India, 8.8% China, 8.4%
Vietnam, 8.2%
8.0%
consumption in last five
Average growth in
years (2013-18)
6.0% US, 4.1%
Phillippines, 4.4%
4.0% Malaysia, 3.3%
Singapore, 2.7% Indonesia, 2.6% Thailand, 2.6%
2.0% EU, 0.1%
0.0%
-2.0%
Total consumption is reflected in the size of the bubble
Source: World Bank, World Economic Reform
Page 22 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only03 Engaging with Governments to get necessary policy support
Government of India and State governments are keen to attract investments to
create jobs
With large workforce, the Government of India and State Federal and state level incentives for manufacturing in India
Governments are looking to prioritize manufacturing
investments leading to job creation. This implies:
► Country wide infrastructure push leading to visible rise in
infrastructure quality in states. Land related Fiscal incentives
► Major destinations in India attracting FDI provides ► Stamp duty waiver/concessions ► Capital linked – cash back
excellent quality of life. New Delhi and Mumbai feature in ► Other concessions on ► Expenditure linked – exemption /
Global Liveability Index, Delhi with a per capita income of registration charges, property cash back
taxes, conversion charges, etc. ► Sales linked
US$18,600 features in top 10 metros of the world
► Single-window clearance
(Global Metro Monitor)
► Interstate competition on
► Ease of doing business leading to enhanced 1 2
information transparency, reduction in human
interface and legislation backed time bound
►
services
Competitive sector specific policies backed by
umbrella industrial policy in almost all states
Infrastructure
3 4 Capital investment and
employment
primarily providing capital subsidy, tax breaks, etc. ► Electricity duty exemption
► Rebates in tariffs for ► GST linked subsidies -
with higher incentives in backward areas and higher reimbursement/soft loan
electricity/water/gas
incentives on employment generation. ► Subsidies on clean manufacturing ► Subsidies linked to social
security contributions (PF/ESI)
► GIS enabled land bank available with all major states technology, pollution control, etc
► Other subsidies (technology,
but right connect can lead to faster acquisition. transport, Interest etc.)
With proper engagement with the government, multinational ► Special incentive package may
companies can get requisite policy support along the be negotiated for mega projects
necessary lines.
Source: Global Liveability Index, Global Metro Monitor 2018 PF: Provident fund
ESI: Employees State Insurance
Page 24 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use only04 Sectoral opportunity
Chemical and Plastics industry
Chemicals industry: an overview
Indian chemical and petrochemical industry Industry overview
size (US$ b)
► Indian chemicals and petrochemicals (CPC) industry is growing at 2x the global
304 growth rate
► Estimated market size of India US$ 178 b (FY19)
57 163
147 40
~9% ► India is the 4th largest producer in Asia and 6th largest in the world for CPC
+
► India is a strong global dye supplier, accounting for approximately 16% of the world
~13 ~13 production of dye products
%+ %
► US$ 17.4 b in FDI during 2000-2019 (other than fertilisers)
~7 $107b or 65% of
what is consumed in
% India is made in India
Major players
UPL OpenAg BASF SE DOW Inc
Consumption HUNTSMAN
FY 25
Philips Carbon Du Pont
FY 18 Black Limited De Nemours Inc
Sources: Department of Chemicals and Petrochemicals, EMIS Chemical sector report, Invest India, IBEF, EY industry reports
Page 27 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyPlastics industry: an overview
Strong presence across the value chain Industry overview
► India’s plastics industry is one of the largest in the world
Polymer Plastic End-user with an estimated market size of US$25 b
Strong
manufacturers presence across
Recycling the value chain
processors industry
► In FY19, plastics export stood at US$ 11 b of which
exports of raw plastic material stood at US$ 4.5 b
~15 large industrial ~7,500 units ~30,000 units Packaging,
groups ► More than 2,000 exporters across the country
infrastructure,
industrial sectors ► Western region accounts for 47% of the industry
agriculture, textile production
fibers, electronics,
automotive
Strong domestic market potential Major players
► Low per capita consumption of plastics in India at 9.7 kg compared to 27 kg world
average, 45 kg in China and 32 kg in Brazil Time Polylplex
► Growth of end-user industries and low penetration levels especially in agriculture Technoplast Ltd
compared to global averages
► Substitution of traditional materials such as glass, metal etc. in end-user SINTEX Garware Polyester
industries Limted
► Presence of large number of polymer producers, and plastic process machinery
and mould manufacturers in the country
Sources: IBEF, EY Analysis, FICCI
Page 28 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIndia’s competitive advantage in chemical and plastics industry
Being amongst the largest
Stringent environment waste producers in South
India enjoys several norms in other countries East Asia, India provides
advantages over other make India an attractive an opportunity for scaling
countries alternative for chemical and up the recycled waste
plastics products based manufacturing,
including plastics
► Stable and growing economy with increasing per capita income and urbanization
► Significant potential in terms of capacity, infrastructure and skilled manpower
► Established supply chain routes and low cost manufacturing
► Ready access to important raw material resources
► Backed by strong government support- planned investment of US$ 6.2 m and 18 plastic parks
being set up to boost domestic production and achieve environmentally sustainable growth
► High demand from end user industries specially for speciality chemicals
Sources: IBEF, EY Analysis, EMIS Industry report
Page 29 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyBroad overview of potential states in India for the Chemicals sector
Parameter Maharashtra Tamil Nadu Gujarat Andhra Pradesh Telangana
Policy (apart NA NA NA Thrust Sector of Industrial Policies Priority sector - Petroleum,
from industrial) Chemicals & Petro-chemicals of IPR
Major Incentive/ 40-50% gross SGST limited to 100% Soft loans for mega and above 70-100% of Net VAT/SGST for 10 50% of Net VAT/SGST for 7 years 100% of Net VAT/SGST paid for 7-
Subsidy FCI for 7-9 years 100% of Net VAT/SGST for 10-14 years limited to 70-100% of FCI limited to 100% investment in P&M 9 years from commencement of
years limited to 100% investment production limited to 200% cost of
in EFA P&M
Major clusters 13 chemical zones at Ambernath, Petroleum, Chemical & Petrochemi Petroleum, Chemical & Petrochemi Vishakhapatnam, Nakkapalli, Under Implementation - Chemical
Badlapur, Butibori, Dombivali, cal Investment Region cal Investment Region Kakidana Clusters (PCPIR) spread and pharmaceutical cluster in
Kalyan-Bhiwandi, Kurkumbh, Lote, (PCPIR), Cuddalore and Nagapattin (PCPIR), Dahej Vapi, across 603 sq. km – (Stage - Berhampur, Petroleum, Chemicals
Parshuram, Mahad, Patalganga, am - (Proposed) Bharuch, Ankaleshwar, Valsad – Finalization of Master Plan); LPG and Petro-Chemicals Investment
Roha, Taloja, Tarapur, TTC bottling plants in Krishna and Region (PCPIR), Paradeep – with
GIDC: Investment 16,959 crore for Kurnool districts 284 sq. km area (Draft plan
infra. already done approved, EIA completed)
Rs. 1919.13 crore appx.
Investment on infra.
Support National Chemical Laboratory, Central Electro Chemical Research Petroleum, Chemical & Petrochemi Indian Institute of Chemical Institute of Chemical Technology
Infrastructure Pune; Indian Institute of Institute, Karaikudi cal Investment Region Technology, Hyderabad Bhubaneshwar, National Institute
Technology, Bombay; Institute of (PCPIR), Dahej of Science Education and Research
Polymer Industries Park, CIPET: Andhra Pradesh Petroleum,
Chemical Technology, Pune Central Salt & Marine Chemicals (School of Chemical Sciences) –
Institute of Plastics Technology Chemicals & Petrochemicals
Research Institute, Bhavnagar Khurda, Laboratory of Advanced
20 operational CETPs – Combined (IPT), CIPET: School for Advanced Investment Region
Central Institute of Chemical Research in Polymeric Materials,
capacity of 286 MLD Research in Polymers (SARP),
Engineering & Technology (CICET) 6 SEZs - Pharma SEZ, Andhra
Gopalpur has an operational port
4 CHWTPs – Taloja, TTC, 2588 Chemical Manufacturing to come up Pradesh SEZ, Hetero Drugs SEZ,
near Berhampur and a SEZ is
Ranjangaon and Butibori Factories Kakinada SEZ, Parry’s Food
Dahej - 90 MLD effluent disposal proposed here.
Products SEZ
Sewage Treatment Plant at pipeline, 40 MLD CETP, TSDF of
Paradip Port, the largest port on
Hinjewadi with 4 MLD capacity 1.4MMT PCPIR Expressway, SCR Trunk Line
the east coast of India - Region is
Adani Petronet Dahej Port Pvt Ltd – AP PCPIR, Kakinada Deep Water
JNPT – biggest container handling 2.5 km form NH-5A and 3 kms
Port, Visakhapatnam Port,
port in India Six lane Dahej-Bharuch State from SH-12. Proposed airport to be
Gangavaram Port
Highway (SH6) connects the region built within the zone.
to Delhi-Mumbai National Highway
NH-5A connects Paradip to NH16
and National Expressway
(Golden Quadrilateral)
Sources: Government of Maharashtra, Andhra Pradesh, FICII Manufacturing Hubs in India Report 2019, Department of Chemicals and Petrochemicals Annual Report 2019-20
Page 30 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyBroad overview of potential states in India for the Plastics sector
Parameter Assam Karnataka Gujarat Jharkhand Kerala MP Odisha
Policy (apart General Industrial General Industrial Scheme for assistance General Industrial General Industrial General Industrial Policy General Industrial Policy
from Policy Policy for Plastic industry Policy & special Policy
industrial) (Revised) incentive for Deoghar
Plastic Park
Major For units set up in The industrial policy Interest Subsidy @7% For development of Entrepreneur Incentives for Large Scale Subsidy for investment
Incentive/ Plastic Park: encourages plastic per annum Plastic Parks: Support Scheme Industries: in P&M in industries in
Subsidy 100% SGST waste recycling units Reimbursement to the Provides incentives and (ESS) will be IPA @40% to 10% max 270 Cr. Plastics Sector:
reimbursement with an additional extent of 80% of net concessions for Public, introduced for Plastic Investment subsidy for ETP/STP 10% of investment, max
For 15 years, subject investment promotion VAT paid Private, PPP, JV waste Recycling, Bio- @50% max 25 lacs 50 Cr. (depending upon
to maximum subsidy of 5 per cent Industrial Parks Degradable Plastics. Exemption from electricity duty for the size of unit)
(i) 250% of Fixed (max. 10 lacs) 5% of land in 5/7/10 years
capital investment for industrial park to be Interest Subsidy @5% for 5 years
micro enterprises earmarked for plastic for technical textile unit
(ii) 180% of Fixed recycling units. Rebate on new HT connection @INR
capital investment for 1 per unit for 5 years
small enterprises
(iii)150% of Fixed
capital investment for
medium & large
enterprises
Major clusters Tinsukia, Assam Ganjimutt, Mangaluru Sanand, Gujarat Devipur, Deoghar Proposed: Kannur, Tamot, Raisen Siju, Jagatsinghpur
Dahej, Gujarat Kerala Billaua, Gwalior
Proposed:
Narasapura, Kolar,
Bengaluru & Dharwad
Support Abdos Lamitubes (P) Varroc Polymers, Sintex Plastics, Raga Industries, Gopal Ocean Polymers, Uflex, The Supreme Industries, Techno Green PVC Pvt.
Infrastructure Ltd, Avichal Buildcon Shakti Plastics, BASF Satellite polypack, Wim Industries, M.S. Plastic, Mega Polymers, Vectus Industries, Bhawna Ltd., Indian Plastic
Pvt Ltd, BCPL, Essel India, Gurudev Plast, RIL, BASF India, Sunrise Plastic, Shree Consolidated Polymers, Prakash Packaging II, Industries, S K
Propacks Ltd., Veco Plastics Pvt Ltd., Parag Polymers, Plastic, Jharkhand Thermoplastic Charu Agro Plast, Creative Pro Industries, JS Industries,
Enterprises, Plast Microplastics Pvt. Intercontinental Plastics Pvt. Ltd., Products, Southern Pack, Flexi Caps, Friscon Polyfab, Lisa Plastics, Joshna
India, Nanotech Pvt. Ltd., Polymer, Jyoti Plastic Rotoplast Containers, Plastics, Paramount India Nets, Jagannath Plastics, M.D. Polymers
Ltd., Purbanchal Works, Uflex, Cosmo Hindustan Polytex, Plastic Enterprises, Mahishmati Plastics,
Enterprises Films, Time Nilkamal Ltd. SRF Ltd, P.N. Polybag, Flexituff
Technolpast Ventures International Ltd.
Sources: Department of Industries and Commerce Karnataka, Industries Commissionerate Gujarat, Jharkhand Industrial and Investment Promotion Policy, Kerala Industrial and Commercial Policy, Madhya Pradesh Department of
Industrial Policy & Investment Promotion, Industries dept. and New Opportunities Odisha,
Page 31 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyTextile and apparel industry
Indian textile and apparel sector has its presence over the entire value chain and can create
integrated and efficient industrial units
Presence of the Indian textile and apparel sector across the entire value chain
Processed Readymade
Man-made fibre Yarn Fabric
Fabric garment/Apparel
Estimated size of India’s T&A market annually
(in US$ b)*
Key textile and apparel zones in India
37 13% of
21 manufacturing GVA
160 and 2% of GDP
124
103 Largest producer of
cotton in the world
2nd largest exporter
Apparel and Technical textile Total Exports Total industry
and manufacturer
home textile consumption consumption size
consumption Top markets include:
✓ USA Source: World Integrated
Trade Solutions, IBEF, EMIS
*This estimate is based on the value of personal final consumption expenditure (PFCE) of apparel and ✓ Europe Textile sector report, Ministry
home textile in 2017-18 from National Accounts Statistics, assumed growth in last two years as per ✓ Middle East of Textiles, EY Analysis
growth in overall PFCE, estimated consumption of technical textiles based on its production, and
value of exports and imports for 2018-19 as per the Ministry of Textiles.
GVA: Gross Value Addition
Page 33 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIndian textile and apparel industry strengths
1 Growing domestic market with increasing urbanization and demand for branded and high value products
2 Government push to boost domestic production
3 Availability of wide variety of fabrics such as cotton, rayon-based fabrics, yarn dyed woven fabrics and knitted fabrics
One of the leading producers of value added garments such as embroidered garments accompanied by strong pool of merchandising
4 and designing talent
5 Possibility for greater flexibility in production runs
6 Abundance of labour and availability of trained garment technicians
7 Production of textile and apparel products for some of the leading global brands such as Marks and Spencer, H&M and Gap
Source: EY Analysis, IBEF
Page 34 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIncentives for promoting textile manufacturing
Parameter Maharashtra Tamil Nadu Gujarat Andhra Pradesh Telangana
Policy (apart Maharashtra State Textile Integrated Textile Policy of Textile Policy 2019- Textile Policy 2015-2020 Textile Policy 2017-2022
from policy 2018-2023 Tamil Nadu 2019 2023
industrial)
MSME Policy Note 2018- Garment and Apparel
19 Policy 2017-22
Major Subsidy of 9% of project cost Textile park financial Support for establishing Capital subsidy for standalone New unit capital subsidy
Incentive/ (under SITP Scheme) assistance upto 40 per Textile and Apparel Park garment and apparel units. up to 35% with
Subsidy cent upt 50%
Capital subsidy of up to 40% Financial assistance upto 50% Power tariff subsidy for 5
of the capital investment for investment in technology years
100% reimbursement of
stamp duty
Major clusters Baramati Hi-Tech Textile Perudurai Cluster; Baroda Rayon Guntur Textile Park; Textile Park, Siricilla;
Park; Aurangabad Textiles Chinnapalanpakam Cluster; Corporation Textile Park; Tarakeswara Textile Park; Kakatiya Mega Textile
and Apparel Parks Ltd; Kottamavu Cluster; Sanand Textile Park; Brandix India Apparel City; Park; Pochampally
Sangli Garment Cluster; Thirunelveli Cluster; Veraval Textile Park; Hindupur Vyapar Apparel Park Handloom Park; Whitegold
Dhule Textile Cluster; Tiruchirappalli Devarshi Textile Park Ltd. Integrated Spintex Park
Nagpur Textile Cluster
Support State Textile University Centres of Excellences for Dedicated textiles and Integrated Textile Park at Apparel Super Hub at
Infrastructure technical textiles. apparels park under Edlapadu on Guntur-Chennai textile park in Sricilla to
Textile Development Fund
Coastal Economic Zone National Highway house 5,000 state of the
Two apparel parks for
8 Textile Parks with plug and Saurashtra art sewing units
exports, Wind power Chennai-Bengaluru Industrial
play facilities and CETP.
project and Hi-Tech Hosted the Textiles India Corridor (CBIC)
Weaving park is planned 2017 event for sector
Brandix India Apparel City
promotion
(BIAC) - Visakhapatnam
Sources: Policies by Government of Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana, Industries and Mines Department Gujarat, Directorate of Industries Maharashtra, Ministry of Textiles, Centres of Excellence for Technical
Textiles, ASSOCHAM, Synthetic and Rayon Export Promotion Council, News Reports, Press Information Bureau
Page 35 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyAerospace and Defence
Aerospace and defence industry
India plans to spend ~US$ 130 b on military Industry overview
modernization in the next 7-8 years, as
achieving self-reliance in defence production is MSMEs and Tier – II Tier – I OEMs and
a key target for the Government of India start-ups companies companies DPSUs
► Recent policy changes intend to promote domestic
manufacturing viz. FDI limit increased to 74%, ban
Producing major 9 DPSUs, 41
on imports of certain items, indigenization of spares, Innovation hub Sub-systems, ordinance factories
and backbone of assemblies & sub- sub systems for
separate budget for domestic purchases, etc. Indian & global and 6 major Indian
the industry assemblies private OEMs
demand
► In FY19, total domestic defence industry stood at ~$
> 8,000 MSMEs 350-400 companies
11 b; private industry was ~US$ 2.6 b; 50 JVs with
foreign OEMs in multiple defence segments Over 200 partnerships involving Signing of Memorandum of Understanding (MoUs),
Transfer of Technology (ToTs) , Product launches were announced at Defence Expo 2020
>> Industry maturity driving JV opportunities across defence segments
Major foreign private players
2nd ~9% ~US$1 b Honeywell
International BAE Systems
General Electric
Company
largest Share in Defence exports Inc Plc
armed global arms (2019-20)
forces in imports General Raytheon The Boeing
the world Dynamics Technologies Company
Corporation
Sources: Invest India, IBEF, SIPRI, EY industry reports
Page 37 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyPolicy initiatives acting as “Game Changers“ to effect ‘Make in India’
Draft Defence Production Policy 2018
Govt. targets to create dynamic, robust and competitive defence industry by 2025
• Achieve an industry turnover of ~ US$ 25 b
• Attracting investment ~ US$ 10 b
• Achieve an export target ~US$ 5 b
• To become global leader in Cyberspace and AI technologies.
Defence Industrial Corridors
• Govt. to invest ~US$ 500 m for each corridor in Northern and Southern part of country
• Investment in corridors eligible for 2x multiplier for offsets discharge [Draft DPP 2020]
Draft Defence Testing Infrastructure Scheme (DTIS)
• Set-up of ~8 defence testing infrastructure facilities as a common facility centre
• Government to invest up to 75% of project cost as grant-in aid for private sector operations
Draft Defence Procurement Procedure (DPP) 2020
• Increase in “Indigenization content” for each defence contract
• A new category “Buy (Global – Manufacturing in India)” proposed as per which foreign OEM can carry out delivery through its wholly owned subsidiary
• Aero-engines and FAB designated as areas of national importance/ Buyer Nominated Equipment
• Focus on military materials and Artificial Intelligence/ Virtual Reality/ Augmented Reality
• Increased impetus on life cycle costs, performance based logistics & spare parts beyond warranty period
• MRO proposed as an offsets discharge avenue for defence and commercial aerospace
Sources: Ministry of Defence, Press Information Bureau, Janes
Page 38 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyElectronics industry
Electronics industry: leading India into a technology driven future
Production profile of electronics manufacturing sector (US$ b)* New policy initiatives to support electronics manufacturing:
Vertical/Item 2015-16 2016-17 2017-18 2018-19
Financial Assistance Modified Electronics Production-Linked
Consumer of 25% of Capital Manufacturing Incentive (PLI)
Electronics 8 9 11 11 Expenditure on Clusters (EMC 2.0) scheme for Large
Manufacture of Scheme for Scale Electronics
Industrial Electronics 6 9 10 12 Electronic development of Manufacturing with
Computer Hardware Components and infrastructure and incentive of 4% to 6%
3 3 3 3
Semiconductors in amenities in EMCs on incremental sales
Mobile phones 8 3 19 24 India
Strategic Electronics 3 3 3 4
Electronic Investment drivers
components 6 7 8 10
Light Emitting ► Rapid growth and shift in electronics manufacturing over the years
Diodes (LED) 1 1 1 2 ► Industrial electronics are becoming significant along with mobile phones
Products due to increasing income and proliferation of technology in the country
Total 35 45 55 65 ► Availability of skilled manpower at very competitive cost
► Strong government policy push for domestic manufacturing
*Electronics sector comprises electronic manufacturing and electronic components
► ~70-80% of the electronic component market is imports-driven
Production stood at US$ 65 b in FY19, compared to US$ 56 b in FY18
growing at a CAGR of 25% during the last 4 years.
Sources: MEiTY Annual Report 2018-19, Make in India, DGCI&S, News Reports, Invest India
Page 40 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyElectronics industry: case of smartphone manufacturing
1 2 3
Following a phased Currently India assembling
Further policy package smartphones but imports
manufacturing plan and
to promote its components.
special package in 2017,
manufacturing in this Opportunity to further
India is already the 2nd
sector announced attract investments for the
largest smartphone
recently. mobile component part of
manufacturer in the world.
the value chain.
Sources: MEiTY Annual Report, Make in India, News Reports
Page 41 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIncentives for promoting electronics manufacturing
Parameter Maharashtra Karnataka Andhra Pradesh Uttar Pradesh Telangana
Policy (apart Maharashtra Electronics Karnataka Electronics Andhra Pradesh Uttar Pradesh Electronics Policy 2016
from Policy 2016 System Design and Electronic Policy Electronics
industrial) Manufacturing Policy (2017- Manufacturing Policy
22) 2017
Major Fixed Capital Investment Reimbursement of 50% of the 20% Investment 100% State GST 100% Reimbursement of net SGST for
Incentive/ subsidy up to 100% of cost of a prototype. Subsidy for MSME. reimbursement on 5 years.
Subsidy investment. fixed capital
Interest subsidy of up to 6% 25% rebate on land investment for a 100% exemption on Electricity duty for
to startups and MSMEs. cost. period of 10 years. a period of 5 years.
50% cost of filing patents to be
reimbursed.
Major clusters Santacruz Electronic Export Bengaluru; Mysore; Nellore; Chittoor; Noida; Greater Hyderabad EMC; Ranga Reddy EMC;
Processing Zone (SEEPZ); Mangalore; Belgavi; Visakhapatnam; Noida; Gautam Duddada Medak EMC;
Rajiv Gandhi Infotech Park, Shivamogga; Tumakuru; Vijaywada; Sri City; Buddh Nagar; Vishakhapatnam Special Economic
Ph.II, Talegoan and Khed in Dharwad/Hubballi ELCINA Raaga Yamuna Expressway; Zone
Pune Mayuri Electronic Taiwan EMC
Park; Kakinada
Support 3 brownfield Electronics 85+ Chip designing houses Common Electronics Set up a 50-acre Intel design and
Infrastructure Manufacturing Clusters and 3000+ skilled people. Instrumentation Manufacturing engineering centre with an investment
(EMC) at Pune, Aurangabad Facilities in Jalahali, Cluster at Sector of US$100 million.
and Navi Mumbai. Hardware park at Dvenahalli. Mangaluru, and Ecotech VI and VII,
Brownfield ESDM cluster Shivamogga. Greater Noida, Uttar
Eight EMCs are notified in Pradesh.
the State. facilitation centre at Mysuru.
Sources: UP Electronics Policy 2017, Invest Karnataka 2020, Department of Industries Andhra Pradesh, MeiTY, Govt. of Maharashtra, Electronic policies of selected states, UP Development Systems Corporation Ltd.
Page 42 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyAuto components industry
4th Largest automobile market in the world with potential to grow more
Category Domestic sales (mn Car penetration in 2019 4.6 mn vehicle exports volume
units, 2018-19) USA, Mexico, South Africa,
7% of India’s GDP
Bangladesh, Nepal
Two wheelers 21.2 102 per 1,000 people
Passenger vehicles 3.4 28 per 1,000 people US$ 24 b FDI inflows ~5,000 car dealerships across
between 2000-2019 523 cities
Commercial vehicles 1.0
Major players
Toyota Motor Yamaha Motor Honda Motor Co
Corporation Co Ltd. Ltd.
multiple clusters across India
Production concentrated in
Hyundai Motor Suzuki Motor Nissan Motor Co NCR
Company Corporation Ltd.
BMW (Bayerische Motoren Werke) Renault Ahmedabad Indore
Pune
Volkswagen Aktiengesellschaft
Bangalore Availability of
Chennai highly trained
manpower
All figures for 2019
Source: IBEF, SIAM, EMIS India Automotive Sector Report, News Report, IBEF Report February, 2020
Page 44 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIndia has a mature policy framework, focussed on new technologies and
domestic production
► ~US$ 14 b in auto component
1 exports in FY19 to USA,
Turkey, Germany, Brazil,
Over 700 auto Mexico etc.
component ► OEMs make up 85% of totally
players, servicing industry turnover and
replacement market
both local and
contributes 15%
global markets
► India follows the European system ► Import duty structure to incentivise
for regulating the sector domestic manufacturing
► BS-VI emission norms (EURO VI), Focus on Government ► Strong push towards EVs
applicable from April 1, 2020 3 reducing 2
policy support ► Demand side -- Reduced GST
► Push towards using CNG as emission levels rate of 5% against 29% - 50%
alternative fuel on other vehicles
► Supply side – Customs duty
structure that incentivises
local EV and battery
manufacturing
► Ambiguity regarding policy
framework for introduction of
hybrid cars
Source: SIAM, EMIS India Automotive Sector Report, EY 2019 report
Page 45 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyIncentives for promoting auto manufacturing
Parameter Maharashtra Haryana Madhya Pradesh Gujarat Tamil Nadu
Policy (apart Electrical Vehicle and Part of industrial Electric Vehicle (EV) Manufacturing sector Automobile and
from Related Infrastructure investment and business Policy 2019; schemes; EV Policy 2019 Components Policy; EV
industrial) Policy 2018 promotion Policy 2019
Major 100% Fixed Capital Interest Subsidy Scheme 50% of fixed capital Interest Subsidy is provided @ 100% reimbursement of
Incentive/ Investment subsidy. @6% for auto component investments and 25% 7% for MSMEs and 2% for SGST paid on the sale of
Subsidy manufacturers (MSMEs) of the value of the Large Industries. EVs manufacture, sold
20% reserved area for
for 5 years. charging station for and registered for use in
Medium, small and micro Reimbursement of up to 90%
first 300 units. the State.
enterprises (MSMEs) in Reimbursement of 75% of SGST for a period of 10
new industrial estates. SGST paid up to 7 years. 10% of FCI for first two years depending on fixed
units of EV capital investment.
manufacturing.
Major clusters Mumbai, Pune (Chakan), Gurugram, Faridabad, Indore; Pithampur; Ahmedabad, Sanand, Chennai –
Nashik, Aurangabad, Manesar, Rewari, Mandideep; Mehsana Hansalpur, Sriperumbudur,
Nagpur Panchkula Govindpura Vithalpur; Dholera; Rajkot Oragadam, Maraimalai
Vadodara
Support Automotive Research National Automotive Indo-German tool Maruti Suzuki Japan-India National Automobile
Infrastructure Association of India R&D Testing Research R&D room; Institute for Manufacturing Testing and R&D center;
institute; Infrastructure Project (JIM);
MSME Technology Daimler R&D center;
Auto Cluster Development Center; Hyundai Motor Training
Renault and Nissan R&D
and Research Institute. Centre in; 20 Superior
Training Institute in Center;
Technology Centres
Pithampur Auto
Ford Technical Support
Cluster
center.
Sources: Maharashtra EV Policy, Industries and Commerce Department of Haryana, Madhya Pradesh EV Policy, Industries and Mines Dept. Gujarat, Tamil Nadu EV Policy,
Page 46 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyPharmaceuticals
Indian pharma sector: a key sector with potential for growth
International standing Major players
Johnson & Johnson Cadila Eli Lilly and
Growth
► India supplies over 50% of global demand for
Company
various vaccines, 40% of generic demand in Healthcare
the US and 25% of all medicine demand in UK Cipla Limited Limited Pfizer Inc
► Ranks 3rd globally in volume terms Piramal Torrent
Aurobindo Enterprises Pharmaceuticals
► Ranks 10th globally in value terms Pharma Limited Limited
Limited
Size of market: export and Spending
Achieving
domestic the optimal
► Domestic production stood at balance
► Government of India spends 1.6% of its GDP
US$ 38 b in FY19
on healthcare in FY20- leaving much room
► Pharmaceutical exports for growth
stood at US$ 14 b in FY19
► India’s pharmaceutical spending is predicted
(up to Dec 2018)
to grow at 8-11% CAGR during 2019-23 to
reach a size of US$ 28-32 b
Growth drivers
► Rise in public healthcare spending coupled with rising patient awareness
► Expanding insurance coverage across the income pyramid
► Promotion of Domestic Manufacturing of critical Key Starting Materials
(KSM) / Drug Intermediates and Active Pharmaceutical Ingredients (API) in
the country – investing in industrial parks and production linked incentives Sources: Press reports, Make in India, Economic Survey 2019-20,
McKinsey Report:_India_Pharma_2020_Propelling_Access_and_Acceptance_Realising_True_Potential
CAGR: Compound Annual Growth Rate
Page 48 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyPharma: advantage India
India has an excellent proven track record in R&D India has 2nd highest number of FDA approved plants outside USA
ANDA Approvals of Indian Drugs
2%
837 % of API manufacturing
2019 336 13% facilities for all drugs
76 26%
EU US
813
2018 290 13%
77 India China
846 RoW Canada
2017 304
61
'Total US FDA Approvals Final FDA Approvals to Indian Cos 18%
28%
0Tentative Approvals to Indian
500 Cos 1000
India is projected to be a frontrunner in drug discovery outsourcing
2017 2018 2019
40% of total 36% of total 40%, of total
final approvals final approvals final approvals
In the decade 2010-2019; US FDA approved total 5,768 ANDA final
approvals of which Indian pharmaceuticals companies has bagged 2,046
approvals i.e. over 35%.
*ANDA: Abbreviated New Drug Application
Sources: US FDA and drug administration, Press reports
Page 49 28 May 2020 Opportunities for multinational companies from India manufacturing partnerships - For Internal use onlyNew paradigms: medical equipment and devices industry
India ranks in top 20 in the world by market size. Indian medical devices industry is growing at a CAGR of
16% against global growth rate of 4% in the sector
Strong domestic market potential:
The industry is valued at US$ 5 b and contributes only 4-5 % of India’s total healthcare sector of US$ 97 b
The per capita spend on medical devices in India is lowest among BRIC countries at US$ 3 ($ 7 in China, $
26 in Brazil and $ 47 in Russia) and other developed economies like the USA ($ 415)
The industry comprise of 14,000+ different product types with India producing 750-800 products
Availability of trained labour and right governmental policy support
Promotion of Domestic Manufacturing of Medical Devices in the country by investing in medical devices
parks and production linked incentives of 5%
Source: EY Analysis, IBEF BRIC: Brazil, India, Russia , China
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