Fraport. The Airport Managers. Unternehmensporträt

A Hitchhiker‘s Guide: Doing Business in India
First Italian-Indian Bilateral Dialogue
Milan, Palazzo Clerici, November 29, 2010
Ansgar Sickert
Managing Director
Fraport India
& Council Member of the European Business Group in India
Agenda
1. The European Business Group in India
2. Fraport’s Activities in India
3. Doing Business in India
4. The Challenges: The PESTEL Analytical Framework
5. Conclusions
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The European Business Group in India
• Founded in 1997 at the initiative of European businessmen and the
Delegation of the European Union
• Objective to promote European business interests in India in order to
ensure a level playing field and improved business environment for
European companies
• The EBG is recognised by the GoI and the EU Delegation as the
representative body of European Industry
• Currently three Chapters: Bangalore, Delhi, Mumbai
• EBG is organised through Chapter Councils and National Sector
Committees
• Currently over 150 members representing all major industries
More info: http://www.europeanbusinessgroupindia.com/
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Agenda
1. The European Business Group in India
2. Fraport’s Activities in India
3. Doing Business in India
4. The Challenges: The PESTEL Analytical Framework
5. Conclusions
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Fraport’s Engagement at Delhi Airport
• India’s largest airport by pax
– PAX (2009/10): 25.3 mn
(+8.6%)
– ATM (2009/10): 249,488
(+5.8%)
– Cargo (2009/10): 508,756t
(+15.9%)
• Concession: (since May 2006); 30
years + 30 years option
• Investments: new RWY &
Terminal (approx. €1.5 bn)
• T3 is the world’s 6th largest
terminal building opened on 28th
July 2010
DIAL Ownership Structure:
Fraport
10%
AAI
26%
Malaysian
Airports
10%
GMR
Group
54%
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Agenda
1. The European Business Group in India
2. Fraport’s Activities in India
3. Doing Business in India
4. The Challenges: The PESTEL Analytical Framework
5. Conclusions
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Doing Business In India
Ease of...
Doing Business
Starting a Business
Dealing with Construction Permits
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Closing a Business
Doing Business
2011 rank
134
165
177
94
32
44
164
100
182
134
Doing Business
2010 rank
135
168
176
90
30
41
168
93
182
137
Change
in rank
1
3
1
4
2
3
4
7
0
3
Source: World Bank Ease of Doing Business Index 2011 (out of 183 countries)
http://www.doingbusiness.org/ExploreEconomies/?economyid=89
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Doing Business In India
Comparison with the BRICs
Economy
Singapore
United Kingdom
United States of America
Germany
France
China
Italy
Russian Federation
Brazil
India
Ease of Doing
Business Rank
1
4
5
22
26
79
80
123
127
134
Source: World Bank Ease of Doing Business Index 2011 (out of 183 countries)
http://www.doingbusiness.org/economyrankings/
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Agenda
1. The European Business Group in India
2. Fraport’s Activities in India
3. Doing Business in India
4. The Challenges: The PESTEL Analytical Framework
5. Conclusions
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P 4 Politics, Partners & People
• 28 states & 7 union territories
• 45 number of parties in the Lok Sabha (Lower House of Parliament with 530
seats)
• 33 + 7 + 38 number of ministers / ministers of state
independent charge / min of state
• 3.3 mn km2 / 326 pop. per km2 (Italy 0.3 mn km2
/ 193 pop. per km2)
• 30.5% pop under 15yrs (France 14% of pop. < 15 yrs)
• 50 - 300 mn pop. middle class / income range €1,650 –
€16,500 p.a.
• McKinsey estimate that pop. will increase by 30% btw.
2005 – 2025 but middle class pop. will increase by 1,000%!
• Mobile phone users (564 mn) / 15 mn new subscriptions
every month (Italy total 89 mn)
• Credit card users approx. 50 mn (up from 22 mn in 2007)
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P 4 Politics, Partners & People cont’d
• India is a highly diverse country
• Issues of development, poverty, education
and opportunities especially in the rural
areas and states
• Strong regional identities: Telangana
• Terrorism:
• Naxalite (Maoist) terrorism in areas
covering 40% of India
• Indian Mujahedin
• Cross-border infiltration from Pakistan
& Bangladesh
• Separatist movements in J&K and
Northeast India
Source: Economist
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E 4 Economy, Education cont’d
• Annual inflation: ADB expects 5% in 2010 / 5.5% in 2011
• Salary inflation: Hewitt Associates assume wages will rise by 10.6% in 2010
(6.6% in 2009)
Rank
1
2
3
4
5
6
7
8
9
10
11
12
Country GDP in $bn
Rank Country
GDP in PPP $bn
USA
13,164
1 USA
14,256
Japan
4,368
2 China
8,765
Germany
2,897
3 Japan
4,159
China
2,645
4 India
3,526
UK
2,377
5 Germany
2,806
France
2,248
6 UK
2,139
Italy
1,851
7 Russia
2,110
Canada
1,272
8 France
2,108
Spain
1,225
9 Brazil
2,013
Brazil
1,067
10 Italy
1,740
Russia
987
11 Mexico
1,466
India
912
12 South Korea
1,364
Source: Economist Pocket World in
Figures, 2010
Source: IM F, 2009
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E 4 Economy, Education cont’d
• Goldman Sachs considers lack of quality education
as one of ten factors holding back rapid economic
growth in India
• UN Human Development Index of 169 countries
India HDI 0.519 rank 119 (Italy 0.854 rank 23)
• 35% of the population illiterate
• 50% drop out rate in primary education
• 15% of students reach high school
• Approx 25% of teachers are absent from govt.
schools, of those present only ½ actually teach
• Infosys trains 30,000 graduates from engineering colleges every year as they
don’t meet their standards
• India will have demand of approx. 13.8 mn graduates in period 2009 – 2014 but
will produce only 13.2 mn
• 1.3 mn unskilled and unqualified labourers crowd the economy
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S 4 Social, Science, Sports
• 2010: > 37% of 1.35 bn pop.
considered to be poor (70% of those
in rural areas)
• 29% of India’s population live in
cities
• World’s largest cities:
• 5. Mumbai
• 6. New Delhi
• 8. Kolkata
• Culture: Bollywood 2x size of
Hollywood
• Media: 400 daily papers with a
circulation of 31 mn (2006) – strong
increase in vernaculars
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S 4 Social, Science, Sports cont’d
Designs by Yang Liu
The Boss
Opinion
Contacts
Queuing
Problem Solving
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T 4 Technology
Asia Pacific Region Internet Penetration
Home & Work Locations
Source: comScore World Metrix
Asia Pacific
China
Japan
India
South Korea
Australia
Taiwan
Malaysia
Hong Kong
Singapore
New Zealand
Visitors in millions
Sep-08
Sep-09 % change
396.0
484.2
22
168.3
220.8
31
57.9
68.3
18
30.7
35.8
17
26.7
29.2
10
11.4
12.7
12
10.6
12.1
14
8.7
9.4
8
3.8
3.9
5
2.4
2.7
14
2.3
2.6
15
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T 4 Technology cont’d
•
•
•
•
Expect India to be a major source of new technology & innovation
63 Fortune 500 companies have their R&D facilities in India
¼ of Accenture’s employees are based in India
Indian companies and entrepreneurs are developing novel ideas to serve their market:
cost reduction
through process
improvement &
simplification
use of existing
technologies
in new ways
mass production
in new areas
to reduce costs
•
•
•
•
Tata’s Nano, a USD 2,200 car
Nokia’s robust handsets with come with flashlights
Godrej & Boyce’ battery run USD 70 fridge
Bharti Airtel’s outsourcing of network operations to Ericson, business support to IBM,
and renting (not owning) of transmission towers
• TCS efforts to use mobile phones to connect TV sets to the internet
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E 4 Environment
• India unwilling to commit to legally
binding CO2 reductions
• It is the world’s fourth biggest carbon
emitter with fast growing emissions
• India has serious issues of water
shortage, soil erosion, air, water and
soil pollution
• Delhi’s air pollution levels are 5x over
safe limits
World's 10 most polluted
cities
1 Linfen
China
2 Tianying
China
3 Sukinda
India
4 Vapi
India
5 La Oroya
Peru
6 Dzerzhinsk Russia
7 Norilsk
Russia
8 Chernobyl
Ukraine
9 Sumgayit
Azerbaijan
10 Kabwe
Zambia
Source: The Blacksmith Institute
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L 4 Legal
• Legal system based on English Law (case law)
• Pending Court Cases Supreme Court of India: 54,864 end March 2010
• > three million cases are pending in India's 21 high courts
• 26.3 million cases are pending in subordinate courts across India
• almost a quarter million under-trials languishing in jails across the
country; of these, some 2,069 have been in jail for more than five years,
without their guilt or innocence having been established
• Fast Track Commercial Courts are being
created and attached to High Courts to expedite
high value cases
• Advice: Hire a good Indian Law Firm!
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Agenda
1. The European Business Group in India
2. Fraport’s Activities in India
3. Doing Business in India
4. The Challenges: The PESTEL Analytical Framework
5. Conclusions
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Conclusions
India is a vibrant democracy with a fast growing economy and unlimited
opportunities. Yet in order to realize its full potential India needs to:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
India needs to improve its governance
control inflation
Introduce credible fiscal policy
liberalise financial markets
increase trade with its neighbours
significantly raise its basic educational
standards
and increase the quality and quantity of
its universities
India needs to boost agricultural productivity
improve its infrastructure
and environmental quality
11. Welcome you on your next holiday!
Goldman Sachs Global Economics Paper 169: Ten Things for India
to Achieve its 2050 Potential [of increasing its economy 40x]
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!
Grazie
tanto!
Dhanyavaad!
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