’s EMERGENCE AS A GLOBAL ECONOMIC POWER and implications for Canada

Peter L. Nesbitt Chief Representative, India Export Development Canada [email protected] 1

Tharoor on “Being Indian”

“What does it mean to be an India? Our nation is such a conglomeration of languages, cultures, ethnicities that it is tempting to dismiss the question as unanswerable. How can one define a country that has 2,000 castes and sub- castes, 22,000 languages and dialects and 300 different ways of cooking the potato?”

Shashi Tharoor April 22, 2007, Times of India

Why India? “Which One?” “The New India” ’s Domestic Terminal MERCHANDISE EXPORTS TO INDIA (2001-2007(E))

Cdn Exports vs. EDC’s Business Volumes (CAD$M)

1650 1800 1528 1600 1400 1200 1,175 1030 1000 811 740 729 667.1 800 655 611 600 376 262 267 400 220 200 0

2001 2002 2003 2004 2005 2006 2007 Let’s Talk Exports Canada's Exports to Asia Pacific (2004 – 2006)

2004 2005 2006 % Change (Ave. Ann)

Exports

Australia 1,463,931 1,471,535 1,659,831 6.7% Bangladesh 105,830 97,973 158,516 24.9% China 6,041,453 6,598,284 7,183,657 9.5% Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0% India 811,355 1,023,963 1,533,656 44.5% Indonesia 646,223 678,416 779,467 10.3% Japan 8,408,416 8,912,029 9,221,037 4.8% Malaysia 393,077 345,705 461,932 8.8% New Zealand 429,354 326,482 351,654 -9.0% Pakistan Exports321,417 to Asia308,493 closing 389,501 10.6% Philippines 399,625in on $30bln 340,515a year 359,469 -5.0% Singapore 538,091 496,729 581,959 4.1% South Korea 2,213,699 2,727,287 3,188,049 22.0% Sri Lanka 44,295 119,834 252,212 234.7% Taiwan 1,175,126 1,266,699 1,308,592 5.7% Thailand 456,856 426,172 491,039 3.7% Vietnam 101,446 188,297 202,886 50.0% Total 24,763,432 26,494,267 29,433,225 9.4% Let’s Talk Exports Canada's Exports to Asia Pacific (2004 – 2006)

2004 2005 2006 % Change (Ave. Ann)

Exports Australia 1,463,931 1,471,535 1,659,831 6.7% Bangladesh 105,830 97,973 158,516 24.9% China 6,041,453 6,598,284 7,183,657 9.5% Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0% India 811,355 1,023,963 1,533,656 44.5% Indonesia 646,223 678,416 779,467 10.3% Japan 8,408,416 8,912,029 9,221,037 4.8% Malaysia 393,077 345,705 461,932 8.8% New Zealand 429,354 326,482 351,654 -9.0% Pakistan 321,417 308,493 389,501 10.6% Philippines 399,625 340,515 359,469 -5.0% Singapore 538,091Exports to Asia496,729 growing at581,959 4.1% South Korea 2,213,699 just over2,727,287 9% a year 3,188,049 22.0% Sri Lanka 44,295 119,834 252,212 234.7% Taiwan 1,175,126 1,266,699 1,308,592 5.7% Thailand 456,856 426,172 491,039 3.7% Vietnam 101,446 188,297 202,886 50.0% Total 24,763,432 26,494,267 29,433,225 9.4% Let’s Talk Exports Canada's Exports to Asia Pacific (2004 – 2006)

2004 2005 2006 % Change (Ave. Ann)

Exports Australia 1,463,931 1,471,535 1,659,831 6.7% Bangladesh 105,830 97,973 158,516 24.9% China 6,041,453 6,598,284 7,183,657 9.5% Hong Kong, SAR 1,213,238 1,165,854 1,309,768 4.0% India 811,355 1,023,963 1,533,656 44.5% Indonesia 646,223 678,416 779,467 10.3% Japan 8,408,416 8,912,029 9,221,037 4.8% Malaysia India393,077 is Canada’s 5th345,705largest 461,932 8.8% New Zealand Export429,354 market in Asia326,482 351,654 -9.0% Pakistan 321,417 308,493 389,501 10.6% Philippines (* Was399,625 7th in 2004) 340,515 359,469 -5.0% Singapore 538,091 496,729 581,959 4.1% South Korea 2,213,699 2,727,287 3,188,049 22.0% Sri Lanka 44,295 119,834 252,212 234.7% Taiwan 1,175,126 1,266,699 1,308,592 5.7% Thailand 456,856 426,172 491,039 3.7% Vietnam 101,446 188,297 202,886 50.0% Total 24,763,432 26,494,267 29,433,225 9.4% Let’s Talk Exports

Percentage of overall Exports to Asia

Percentage of Overall Exports to Asia 2004 2005 2006 % Change China 24.4% 24.9% 24.4% 0.0% India 3.28% 3.86% 5.21% 29.5%

Exports to India (as a percentage of overall exports to Asia) have increased by 30% in 2 years

No change with exports to China Let’s Talk Imports Canada's Imports from Asia Pacific (2004 – 2006)

2004 2005 2006 % Ann Imports Australia 1,771,845 1,746,582 1,594,862 -5.0% Bangladesh 491,004 490,081 543,100 5.3% China 24,099,876 29,477,435 34,485,570 21.5% Hong Kong, SAR 719,286 559,995 513,307 -14.3% India 1,577,129 1,785,747 1,918,586 10.8% Indonesia 931,211 955,012 946,735 0.8% Japan 13,511,164 14,459,515 15,345,921 6.8% Malaysia Imports2,633,547 are 2.5x more 2,607,649 than 2,940,314 5.8% New Zealand Exports –537,881 Trade Deficit 561,683with 492,908 -4.2% Pakistan Asia is approx244,980 CDN $45bln 247,552 276,977 6.5% Philippines 956,215 920,933 990,718 1.8% Singapore 1,189,810 971,819 982,293 -8.7% South Korea 5,825,699 5,356,434 5,763,425 -0.5% Sri Lanka 113,989 109,109 113,339 -0.3% Taiwan 3,930,635 3,894,043 3,877,603 -0.7% Thailand 2,014,539 1,980,485 2,251,359 5.9% Vietnam 449,913 558,311 652,792 22.5% Total 60,998,723 66,682,385 73,689,809 10.4% Let’s Talk Imports Canada's Imports from Asia Pacific (2004 – 2006)

2004 2005 2006 % Ann Imports Australia 1,771,845 1,746,582 1,594,862 -5.0% Bangladesh 491,004 490,081 543,100 5.3% China 24,099,876 29,477,435 34,485,570 21.5% Hong Kong, SAR 719,286 559,995 513,307 -14.3% India 1,577,129 1,785,747 1,918,586 10.8% Indonesia 931,211 955,012 946,735 0.8% Japan 13,511,164 14,459,515 15,345,921 6.8% Malaysia 2,633,547 2,607,649 2,940,314 5.8% New Zealand 537,881 561,683 492,908 -4.2% Pakistan 244,980 247,552 276,977 6.5% Philippines 956,215 920,933 990,718 1.8% Singapore 1,189,810Imports 971,819 growing faster 982,293 at -8.7% South Korea 5,825,699 5,356,434 5,763,425 -0.5% Sri Lanka 113,98910.4% 109,109 vs. Exports 113,339at 9.4% -0.3% Taiwan 3,930,635 3,894,043 3,877,603 -0.7% Thailand 2,014,539 1,980,485 2,251,359 5.9% Vietnam 449,913 558,311 652,792 22.5% Total 60,998,723 66,682,385 73,689,809 10.4% Canadian Companies in India

• BC Instruments • Niko Resources • Bell Helicopters • Nortel Networks • Bombardier • Pratt & Whitney • CAE • Redknee • CGI • Royal Bank of Canda • Fraco Mastclimbers • RV Anderson • GL&V • Samco-Gallium • Hatch Associates • Sandwell Engineering • Husky Injection Molding • Scotiabank • Int’l Road Dynamics • Senes Consulting • Kryton Buildmart • SNC Lavalin • Leggat and Pratt • SunLife • Magic Woods • Teknion Furniture • Magna • Transworld Garnet • McCains Foods • Tundra Semiconductors • Minaean Building Solutions • Wesley Clover India (e.g. Mitel) • Newsco • Woodbridge STRONG ECONOMIC FUNDAMENTALS Growth is driven by domestic demand

Î Population of 1.1 billion (18% of world total) th Î 5 largest economy in the world (PPP basis)

Î GDP Growth Rate: 9.4% (FY07) – ave. 8.6% over last 4years

Î GDP = USD 923bn (FY07)

Î Total Trade / GDP: 32%

Î Moody's Investment Grade Baa1

Î Surging capital flows (tripled between 2002 and 2006 to $23 billion),

Î FDI inflows of $19bln in 2006

Î Strong balance of payments position (over 10 months’ import cover)

Î Declining foreign debt burden (14% of GDP in 2006) INDIA AND THE US ECONOMY

Large foreign exchange reserves + Low level of external debt + Domestic consumption = Limited vulnerability to an external shock INDIA’s Middle Class … Fueling Growth POLITCAL “Complex Yet Manageable”

“The Father of India’s • General elections in 2009 Economic Reforms”

• United Progressive Alliance (UPA), a coalition headed by the Indian National Congress (INC) has been in power since 2004.

• Risks present, but generally not viewed as exceptionally high Prime Minister Man Mohan Singh Supporting Trade & Investment between Canada and India for more than 40 years India’s Corporate Titans

•Confident

Anil and •Cash Rich Vijay Malya Mukesh Kumar M. Birla of of Kingfisher Ambani of the the Birla Group •Going Global Reliance Groups

Naresh Goyal of Jet Airways

Sunil Mittal of the Bharti of Group the Tata Group India’s Automotive Sector

Y IT N U T R PPO O India’s Automotive Sector

● 2nd Largest two-wheeler (growing at 14.2%) ● 4th Largest manufacturer of commercial vehicles (growing at 33%) ● 10 mln vehicles manufactured in 2007 ● Auto Parts - A $15billion industry growing at 15% per year ● Auto exports growing by more than 25% a year GOING GLOBAL

• Mahindra and Mahindra (M&M) in Brazil & Egypt • TVS Motors in Indonesia ? • Maruti Udyog in Indonesia

• Tata Motors in South Korea & South Africa Opportunities in AUTOMOTIVE

$2500.00 Tata Nano On building the Nano…

“Innovate, Innovate, Innovate. Redefine your processes and Drive down costs”

Joe Repovs Chairman, Samco Machinery Opportunities around INNOVATION COST + PROFIT = PRICE

PRICE - PROFIT = COST

INNOVATION Opportunity? “at the Bottom of the Pyramid”

4 Billion People Prof. C. K. Prahalad

“How strategy guru C.K. Prahalad is changing the way CEOs think” Fortune at the Bottom of the Pyramid

“for companies with the resources and persistence to compete at the bottom of the world economic pyramid, the prospective rewards include growth, profits and incalculable contributions to humankind” Prof. C. K. Prahalad Opportunities in TELECOM Explosive Growth in Wireless

Wireless Subscribers in India (Projected)

500 40% penetration 450 400 350 12.5% penetration 300 250

(Million) 200 150 100 50 0

00 01 02 03 04 05 06 07 08 09 10 20 20 20 20 20 20 20 20 20 20 20

India = 233 million wireless subscribers as of 12/2007 (12.5% penetration)

Canada = 16.81 million wireless subscribers in Q3 2006 (52% penetration)

Source: COFI, CWTA, Global Insight THE MAJORS

No. of Subscribers (mlns) * 55mln Reliance Comm * 41mln Vodafone Essar * 39mln BSNL (WLL) 31mln IDEA Cellular 18mln

Opportunities: Application Solutions, 3G, WiMax, Multi-media offerings, network performance improvement solutions * EDC Customers IT AND BPO a $64bln business • Software and Service Exports - $40bln • Challenges…talent, manpower and infrastructure issues • 5% of GDP (as oppossed to 1.2% - 10 years ago) Opportunities in Media & Entertainment The Faces of Bollywood

INFRASTRUCTURE INDIA needs new…

• Airports • Roads • Sea Ports • Improved passenger and cargo rail systems • Public transportation Systems (e.g. MetroRail Systems) • Power • Water & Waste Water Solutions FRACO MASTCLIMBERS Selling equipment to India’s construction firms Bombardier… Moving India International Road Dynamics Water & Waste Water Treatment

Canadian Playe

• GE Zenon • Eco-Tec Ltd • RV Anderson Opportunities in POWER GENERATION INSTALLED CAPACITY

Energy Type MW Percentage Total Thermal 86,975 64.5 Coal 71,932 53.4 Gas 13,841 10.2 Oil 1,201 0.9 Hydro 34,130 24.8 Nuclear 4,120 3.1 Renewable 10,175 7.6 Total 135,401 100% Opportunity in RETAILING Country of Consumers EDC CLIENTS IN INDIA How Can EDC Help Canadian Firms Face the Challenges

1. Accounts Receivable Insurance

Î Protection against the non-payment by international buyers due to commercial or political reasons 2. Bonding Services

Î Wide variety of instruments to support bid bonds, performance bonds and warranty bonds 3. Financing Î Based on corporate risk, sovereign risk and project risk

Î Pre-export financing for exporters 4. Political Risk Insurance (PRI)

Î Coverage against expropriation, inconvertibility and civil disturbance

Î Can be provided to equity investors and/or banks Corporate Mandate

At EDC our mandate to support and develop, directly

or indirectly, Canada’s export trade and Canadian

capacity, to engage in that trade, as well as to

respond to international business opportunities,

guides everything we do. Mandate Test

Q- What is the benefit to Canada in participating in this transaction? The Question of “Work-Life Balance?”

K.V. Kamath, CEO of ICICI Bank , CEO of Bharti Airtel

Our Team in India… THANK YOU

Peter Nesbitt Rajesh Sharma Leena Subramanian Chief Representative Regional Manager Admin Assistant India Mumbai New [email protected] [email protected] [email protected]