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ACCELERATING ECONOMIC ENGAGEMENT BETWEEN INDIA AND THE NORDIC REGION

India Unlimited : 23rd April 2014, Stockholm

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Key Learnings from the Study

2

Overall economic engagement between India and Nordic region is very low given the size of these economies

There are some specific challenges being faced by Indian entities in the Nordics which need to be addressed

Potential Indian investors also need to take a long term view on the opportunities

Despite challenges with respect to quality of infrastructure and manpower, Nordic investors in India are optimistic about growth prospects.

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The past growth and current levels of trade and investment flows between the two regions is well below the potential

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Merchandise trade of USD 7 bn and Services trade of USD 5.3 bn in 2012 – 4% CAGR over 5 years

Nordic has an overall trade surplus with India which has declined since 2007; Sweden has a significant share

FDI of USD 2 bn from India to Nordic and USD 1 bn from Nordic to India between 2002-11

Level of M&A activity also limited – a few deals in recent years

Trends in Indo-Nordic Trade and

Investment

India and Nordic region comprise < 1% of the imports of respective partner

EU & US dominant trading partners of Nordic – Asia share 9-19% with dominance of China

Significant scope to increase FDI / M&A activity from India to Nordic India can be an attractive investment destination for Nordic region

Indo-Nordic Trade and

Investment Potential

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Specific challenges being faced need to be addressed and Indian entities operating in Nordics need to have a long-term outlook for investment

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Overall lack of awareness of market opportunity and key customers Need for information on specific procedures, compliance norms, etc. Industry specific challenges faced in Textiles and Apparel, API, Pharma,

Industrial Equipment etc.

Issues Raised by

Indian Exporters

Need for Pan-Nordic approach Invest in creating a strong local presence ;Need to manage labor costs

judiciously ;High cost of office operations High personal income taxes and VAT Delays in obtaining Work Permits for Indian employees is a bottleneck Appreciating and adapting to local culture is critical

Learnings from Indian Companies in Nordic Region

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Small and medium Nordic companies seek more customized support and hand-holding and face challenges with the infrastructure in India

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Learnings from Nordic Companies in India

Need for greater focus on market research and understanding

Need for specific support in setting up operations

Key challenges and sources of dissatisfaction - securing land for commercial use, quality of office space, power, skill-levels of workers

Despite the above, Nordic witnessed reasonably good revenue and profit growth and are projecting increased hiring and business in India

Thus the India story continues to be positive from a medium term perspective

India also is competitive as a manufacturing base for Asia

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Key Learnings from the Study

6

~USD 80 bn of merchandise export opportunity have been prioritised across Nordic and Indian markets in specific sectors

Thirteen Priority sectors have been identified for accelerated engagement and can be targeted for investments between India and the Nordic Region due to distinct advantages and presence of a base of companies

The Indo-Nordic Engagement Plan comprises key initiatives to drive trade, investment and cultural linkages - these would be driven by CII in co-ordination with various other stakeholders

Based on the above a significant growth in Indo-Nordic trade and investment flows can be targeted - $ 22 bn of trade and $ 5 bn of cumulative investments by 2017

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CompetitivenessFilter

RelevanceFilter

ValueFilter

USD 80 bn of trade opportunity across India and Nordics in specific sectors has been identified for companies in India and Nordics

1. Textile and Apparel2. Iron and Steel Articles3. Auto Components4. Organic Chemicals5. Plastics6. Pharmaceuticals7. Carpets8. Jewelry9. Leather10. Electrical and Electronic Eqpt.11. Industrial Machinery

India Nordics

1. Transportation2. Industrial machinery3. Electrical equipment4. Medical goods

Nordics India

Priority Products

(Priority II) (Priority I)

RelevanceLo Hi

Lo

Hi

Co

mp

etit

iven

ess

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Manufacturing

Services

Thirteen Priority sectors have been identified for accelerated engagement and investments between India and the Nordic Region

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Short listing of Potential Industry Sectors

Presence of a base of companies in India & Nordics

Presence of a distinct opportunity or clear competitive strength of both India / Nordics

1. Steel2. Pulp and Paper3. API & Pharma4. Medical Technology / Diagnostics 5. Wind Energy6. Hydro Energy7. Biomass Energy8. Auto Components9. Defence / Aerospace10. Food Processing

1. IT/ ITeS2. Pharma / Biotech R&D3. Travel and Tourism

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India has a vast untapped opportunity in biomass based energy whereas Nordics have significant expertise and experience across various applications

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Sector Analysis : Biomass Energy

2700 MW of biomass based power of which Bagasse based cogen is ~ 1500 MW

Energy from urban municipal and industrial waste – key issues regarding feedstock aggregation and quality need to be addressed

Indi

a S

cena

rio

Technology sourcing from Nordic companies for cogen power plants

Technologies for community sized bio-gas power plants (from 250 KW to 5 MW) in India and Waste to Energy projects

Bio-ethanol related technologies for power companies, sugar mills and technology providers

Inve

stm

ent/

Col

lab

orat

ion

Opp

ortu

nitie

s

A base of ~50 medium-sized sugar mills in India. Several companies interested in biogas based power business

Community based biogas plants by private operators and a few PPP based Waste-to-Energy projects being bid out by municipal companies

Nordics has over 700 players across various activities in the value chainTy

pes

of C

ompa

nies

Nordic countries produce ~ 10,000 MW of energy from Biomass. Sweden generates about 3200 MW of biomass based energy (heat, electricity and fuel) and is also a pioneer in biogas for vehicle fuel

Denmark has a strong base of R&D and commercialisation in Biofuels and Bioenergy – for combustion, gasification and bio gasificationN

ordi

c S

cena

rio

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The Indo-Nordic Engagement Plan comprises initiatives to be driven by CII in co-ordination with various stakeholders

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Detailed Export Strategy for Priority Products

Participation in Trade Fairs in Nordics

Evaluation of need for specific financial support

Representation to MOCI for including Nordic countries in FMSMLFPS

DriveIncreasedTrade

Systematic targeting of large Nordic Companies in India

Sector specific investment delegations to Nordic countries

Focus on small/ medium sized companies

Building Linkages with Nordic Funding Agencies

DriveIncreased Investments

Showcasing India‘s rich cultural heritage

Collaboration between Indian and Nordic research institutes

Promoting higher education programs of leading universities of Nordics

Promote the ‘Made in India‘ and ‘Serviced from India‘ label in Nordics

Participating in key Trade Fairs & Exhibitions

Drive Educationaland CulturalLinkages

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Thank You.

For the detailed report please contact Confederation of Indian Industry (CII) or write to:Abhimanyu Royabhimanyu.roy@consultavalon.com

© Avalon Consulting. All Rights Reserved

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© 2014 Avalon Consulting. All Rights Reserved

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