After all the mind-boggling statistics, the true significance of India’s general election is about voting in a government that can cater to an astonishingly young population — the median age of the total population is a mere 24.1 years. For most of these young Indians, the elections are about jobs and opportunities. Experts reckon a stable government will create two million new jobs. In this expectant environment, some industries are set to see superlative growth. Leaving aside the twin success stories of realty and retail, these may well be the ones to watch.
Textiles
India produces 14 per cent of the world’s textile yarns and fabrics, corresponding to 60 billion square metres every year. The sector contributes 14 per cent to industrial production, 4 per cent to gross domestic product (GDP), and 17 per cent to export earnings. The second-largest provider of employment after agriculture, the industry provides direct employment to more than 35 million Indians.
Outlook: According to the Textile Association of India, textile and apparel exports will reach $80 billion (about Dh293.8 billion) by 2020, while the Apparel Export Promotion Council says garment exports from India will touch $60 billion over the next three years. Raj Manek, Managing Director, Messe Frankfurt Trade Fairs India, stresses the importance of Indian technical textiles: “Not only has it maintained an annual growth of 11 per cent during 2006-2011, but is estimated to expand at a rate of 20 per cent to reach $36 billion by 2016-17.”
Food processing
Canning, packaging and industrial rendering make up the food processing industry. The packaged food industry is the fifth-largest sector in India, currently pegged at $39.7 billion and expected to reach $65.41 billion by 2020. The Ministry of Food Processing Industries has formulated a Vision 2015 Action Plan that includes trebling the size of the industry and increasing India’s share in global food trade from 1.5 per cent to 3 per cent. Food processing constitutes an approximate share of 10 per cent of India’s GDP in the agriculture and manufacturing sectors.
The country’s processed food exports from April to December last year stood at $16.5 million, according to the Agricultural and Processed Food Products Export Development Authority.
Outlook: The Confederation of Indian Industries expects the food processing industry to attract $33 billion in investment in ten years, with the potential of creating employment of nine million person days. “The size of processed food market is currently estimated at $29.4 billion.”
According to the India Brand Equity Foundation (IBEF), the revival of India’s agriculture sector will open up opportunities for players with strong links in the agri-value chain, and the food processing industry is expected to be one of the biggest beneficiaries. “Significant investment opportunities are yet to be tapped in the areas of supply chain management (SCM), cold storages, financing, retailing and exports.”
Aviation
One of the world’s most complex and challenging emerging markets, India has been unable to find enough officials to ensure the safe operation of flights, forcing the Federal Aviation Administration to recently strip it of the top rank safety rating. But India’s aviation industry has continued to boom in the past decade, with new orders of more than $50 billion, market-changing airline partnerships, and major new entrants. The sector is projected to be the third-largest aviation market globally by 2020. Currently catering to 117 million domestic and 43 million international passengers, these figures are set to touch 337 million domestic and 84 million international passengers in the next decade, as per a 2012 study by the Federation of Indian Chambers of Commerce and Industry and KPMG.
India’s aviation industry supports 0.5 per cent of the GDP, and generates about 1.7 million high-productivity jobs, while air transport generates more than $2.2 trillion of GDP and supports 56.6 million jobs. International traffic continues to be a strong and steady performer, with growth for the 12 months ending March 31 expected to reach 12 per cent. By 2015, a double-digit growth of 10-12 per cent is considered normal, but this may exceed 15 per cent if India’s five year/20 aircraft rule is lifted and a number of bilaterals are relaxed, says IBEF.
Outlook: At the end of 2013, Indian carriers had 350 aircraft on order, and Capa’s India Aviation Outlook 2015 says India’s order book will rise to more than 700 aircraft by 2015. Capa also says it expects an airport modernisation push starting this year. Meanwhile, the 12th Five Year plan (2012-17) has allocated $12.1 billion for airports, of which $9.3 billion is expected to come from the private sector.
“The world is focused on Indian aviation — from manufacturers, tourism boards, airlines, global businesses to individual travellers, shippers and businessmen. If we can find common purpose among all stakeholders in Indian aviation, a bright future is at hand,” says Tony Tyler, Director General and CEO of the International Air Transport Association.
Automobiles
India represents one of the world’s largest automobile industries and is a global production hub for high-end vehicles and motorbikes. PwC’s Automobiles: The Economic Outlook and Employment Situation of August 2013, says, “With 6.7 per cent contribution to the GDP, India is currently the sixth-largest passenger car producer in the world with an annual turnover of around $55 billion in 2013, and employs around 18.5 million people — directly and indirectly.”
According to IBEF, passenger vehicles production in India touched 3.23 million units in 2012–13 and is expected to reach ten million units by 2020–21. The industry is estimated to grow at a CAGR of 13 per cent until 2021. Vehicle manufacturing recorded exports worth $9.3 billion in 2013 and is projected to touch $30 billion by 2021, according to the Automotive Component Manufacturers’ Association.
Outlook: The Automotive Mission Plan (AMP) 2006–2016 expects that “India will emerge as the preferred global destination for the design and manufacture of automobiles and auto components, with output reaching a level of $145 billion. This will account for more than 10 per cent of GDP and provide additional employment to 25 million people by 2016.”
India is also expected to emerge as a global centre for producing compact superbikes and sports bikes.
Although India Ratings has maintained a stable to negative outlook on India’s automobile sector for 2014-15, the report emphasises that the financial profile of most industry players is fundamentally strong.
PwC points out the immense differences in the structure of the automotive industry in India and other developed countries: “All industry stakeholders must learn to integrate different approaches in order to build efficient capacity at their plants and improve employee skills. The know-how which exists among a few must be diffused and shared among all so that the entire industry works in the same direction.”
Technology, Media & Telecomms (TMT)
The mixed bag of software, IT services, communications, semiconductors and electronic components is often classified as TMT, and in India, it is booming. The majority of Fortune 500 companies source their IT services from India, which is also the second-largest telecom market in the world in terms of subscribers. The Indian print industry, currently the second largest in the world, is expected to reach $20.9 billion in 2015 to take first place. Many blockbuster Hollywood films have been created on computer screens in India. The Indian media and entertainment (M&E) industry grew at 12 per cent to $15.33 billion in 2013.
Outlook: India is the world’s fastest-growing market for audio visual (AV) equipment, projected to enjoy a CAGR of 25 per cent and reach $5.1 billion by 2015. The Ministry of Information and Broadcasting intends multiplying the current number of 350 broadcasters who account for 780 channels. India’s thriving digital effects industry, which has tripled in size since 2007, is projected to grow into $1.2 billion in the next three years, according to KPMG. “The biggest hope for the future of India’s M&E industry continues to be the digital area,” says IBEF.
Life sciences
Life sciences combine several interdisciplinary fields such as pharmaceuticals, biotechnology, medical care and medical equipment into one gigantic industry. Despite a fragmented market, stiff price competition and price controls, the sector continues to attract investment.
With more than 60,000 generic brands, India accounts for more than 10 per cent of global pharmaceutical production, with sales expected to reach $27 billion in 2016.
The growing Indian health-care industry has a current market size of $50 billion, while medical electronics has maintained an impressive 17 per cent CAGR, and is expected to reach $6.5 billion by 2020, according to Gartner and the IBEF.
Outlook: The Indian biotechnology industry will gain $11.6 billion in revenue by 2017, predicts Bharat Book Bureau’s Global Pharmaceutical & Biotechnology Outlook 2014: India Pharma, from $2.2 billion in 2013. “The growth of this sector is fuelled by growth in contract services, demand for biotech products, and focus on research and development. Opportunities exist in the application of biotechnology in agriculture, horticulture, poultry, dairy farming and fruit and vegetable production.” The bureau’s outlook on the Indian pharmaceuticals market is also optimistic with sustained 15-18 per cent growth.
