India, lying in the Northern Hemisphere, is the seventh largest country in the world covering an area of 32,87,263 sq km. It lies between 8 degree 4' North to 37 degree 6' North latitudes, and 68 degree 7' East to 97 degree 25' East longitudes. It measures about 3,214 km from north to south between the extreme latitudes and about 2,933 km from east to west between the extreme longitudes. It is bounded by the Great Himalayas on the north; by the Bay of Bengal on the east; by the Arabian Sea on the west; and by the Indian Ocean on the south. The mainland comprises four regions, namely, the Great mountain zone, plains of the Ganga and the Indus, the desert region and the Southern peninsula. The total length of the coastline of the mainland, Lakshadweep Islands and Andaman and Nicobar Islands is 7,516.6 km. Besides, India shares a common border with the neighbouring countries like Afghanistan and Pakistan on the north-west; China, Nepal and Bhutan on the north; Myanmar on the east and Bangladesh on the east of West of Bengal. Sri Lanka is also separated from India by a narrow channel of sea formed by the Palk Strait and the Gulf of Mannar.
India's unique and vast geography, endowed with diverse topography, has made it one of the most attractive investment destinations in the world. It is the world's largest democracy with stable policy environment, law and order as well as responsive administrative set up. It has become a global resource for various manufacturing and services industry. It is a land of abundant natural resources like coal, iron ore, manganese ore, mica, bauxite, petroleum, titanium ore, chromite, natural gas, limestone, dolomite, kaolin, gypsum, apatite, phosphorite, steatite, fluorite, etc. Its large area is covered by lush green forests producing wide variety of products of high quality like timber. It is a home to rich and varied vegetations endowed with different climatic conditions. It is rich in flora and fauna.
The diverse economy of India encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries and a multitude of services. With the largest area of arable land, India is one of the world’s biggest food producers. It is the largest producer of milk, sugarcane and tea as well as the second largest producer of rice, fruit and vegetables. India's pool of technical manpower base with an increasing disposable income and its burgeoning market have all combined to enable India emerge as a viable partner to global industry. It is the preferred hotspot for organizations keen to outsource their R & D activities, software development work, customer contact centers or IT enabled business processes. The top sectors attracting highest Foreign Direct Investment (FDI) inflows into the country are:- electrical equipments, services sector (financial and non financial), telecommunications, transportation industry, fuels, chemicals, construction activities, drugs and pharmaceuticals, food processing, cement and gypsum products. Huge investment potential exists in the upcoming Knowledge Process Outsourcing (KPO) sector and the real estate industry.
The Government of India is making all efforts to supplement all such advantages of the country. It has made infrastructure development as one of the key area of focus. Sound and effective connectivity via rail, road, ports and air, between the Indian States and with the rest of the world, is a necessity. Along with this, efficient power supply and excellent telecommunication network plays a very important role in the country's development. Accordingly, the Government has undertaken several policy measures and incentives to attract investors into the country and provide a good quality of life to the people.
Thus, India is one of the few markets in the world which offers high prospects for growth and earning potential in practically all areas of business, particularly in tourism, information technology (IT) and agricultural sector. There exists immense investment opportunities both at the national level and the State level.
National Level Investment
India is one of the largest economies of the world. It is a fast growing free market democracy which has come to the global forefront as a hub for manufacturing and services industry. It is the fourth largest economy in terms of purchasing power parity (PPP) and the tenth most industrialized country in the world. Its diversified natural and human resource base; a vast consumer market; a well connected infrastructural set-up; sound macro-economic foundation; etc places it at a competitive position on the world platform.
Moreover, the process of reforms and the consequent deregulation, liberalisation and globalisation of the economy has unleashed the enormous growth potential of the country. This has made India a preferred destination for domestic and foreign investments. It has become the 2nd most attractive investment destination among the Transnational Corporations (UNCTAD's World Investment Report, 2005) and is among the top three investment 'hot spots' for 2004-07 (UNCTAD Corporate Location, April 2004). As a result, India is attracting increased foreign investment, both through Foreign Institutional Investment (FII) and Foreign Direct Investment (FDI). For instance, the cumulative FDI inflows since August 1991 to September 2006 have amounted to Rs.1,81,566 crore (US$43.29 billion). While, during April-September 2006, total FDI inflows (excluding ‘reinvested earnings’ and ‘other capital components’) stood at Rs.20,155 crore (US$4.38 billion). The sectors attracting high cumulative FDIs have been the electrical equipments followed by services and telecommunications. Similarly, New Delhi, Mumbai, Bangalore and Chennai are the first four spots recognised as destinations for FDI inflows.
In order to encourage flow of investment into the country, the Government of India has set up several investment facilitation agencies, which include:-
- Foreign Investment Promotion Board (FIPB):- set up in the Ministry of Finance, specifically for expediting the approval process for foreign investment proposals. It is the Secretariat for executing the policy of the Government on FDI. All proposals received in the FIPB Secretariat are considered by the Board.
- Foreign Investment Implementation Authority (FIIA):- set up in the Ministry of Commerce and Industry to facilitate quick translation of FDI approval and implementation; to provide a proactive one-stop after-care service to foreign investors by helping them obtain the necessary approvals; sort out operational problems and meet various Government agencies to find solutions to problems. Thus, it assumes the role of understanding and addressing the concerns of investors as well as of the approving authorities; and initiating multi-agency consultation; etc.
- Investment Commission (IC):- set up in the Ministry of Finance, to advise the Government on changes in the policy and procedures that will enhance investment in India; recommend projects and investment proposals that should be fast tracked/mentored and thus promote India as an investment destination.
- Secretariat for Industrial Assistance (SIA):- functioning with the Department of Industrial Policy and Promotion, acts as a gateway to industrial investment in India. It provides a single-window clearance for entrepreneurial assistance and facilitates the processing of investors' applications requiring Government approval.
- India Brand Equity Foundation (IBEF):- collects, collates and disseminates comprehensive information on India. It has been developed as a single-window resource for in-depth information and insight on India. It also produces a wide range of well researched publications focused on India's economic and business advantages.
Through such an institutional set-up, the Government has been undertaking several policy measures and incentives in the various segments of the economy, including the infrastructure sector. This has created an investor friendly climate and unfolded numerous opportunities for investment into the country.
Solar Energy Market Review: Firms can seize burgeoning opportunities
The Indian market for solar energy technologies is poised to take-off and firms have an opportunity to be part of this unprecedented market expansion.
India faces an energy shortage, due in part to the country’s sustained economic growth. In order to meet current demand and to maintain economic growth the country must expand its energy generation capacity. Simultaneously, there is a growing push to develop clean, renewable sources of energy as an alternative to fossil fuels. Both the government of India (GOI) and the private sector are committed to bringing solar resources into the energy mix.
In the efforts to spur the development of this nascent sector, the GOI is poised to launch a series of policies that will kick-start the development of solar energy projects nationwide. The GOI is soon to release its National Solar Mission, which will call for the development of up to 200,000MW of solar energy capacity by 2050. Government funding and incentives will be provided to ensure this goal is met, including establishing feed-in-tariffs, subsidies, granting import duty exemptions for certain items, and mandating renewable energy purchase obligations for solar energy. These actions will help drive down the costs for solar energy, making it competitive with the costs of energy from fossil fuel sources. Grid parity is anticipated by 2020. In addition, the National Solar Mission will target the installation of solar rooftop panels on 10,000 government buildings, as well as installing household rooftop solar units in one million homes by 2020. Simultaneously, three Indian states are getting a head start on their solar efforts and are very close to launching an array of projects as outlined below.
Rajasthan receives the second most powerful solar radiation in the world. State officials are finalizing plans to erect numerous utility-scale projects throughout the state. In support of these goals, the state will formalize the critical policies that are needed to catapult these projects off the drawing board, including: land availability secured by the government, guaranteed assistance with transmission lines and interconnection, power purchase agreements, and single-window clearance for concentrated solar power fields. Projects totaling 56MW have been allocated to different developers, including two separate 5MW projects to U.S. developers. In addition, the Asian Development Bank is funding construction of a 50MW solar project in the state, and this project will be open to competitive bidding. Opportunities for Exports include:
- concentrated solar power technologies
- photovoltaic equipment
- rooftop solar installations household solar photovoltaic equipment.
After Rajasthan, the state of Gujarat receives the second most powerful solar radiation in India. In August 2009 Gujarat state officials approved a range of projects totaling 716MW allocated to thirty-four different project developers, four of which are U.S. firms. Many of the project developers are still in the process of selecting their technical partners, which opens many opportunities for U.S. firms. Gujarat will develop the appropriate power purchase agreements and price guarantees, and will lay power lines from the solar substations to the main grid. Land is already being set aside for these projects. Gujarat will also mandate that ten percent of all power purchased in the state must be from renewable sources. Opportunities for U.S. exports include:
- concentrated solar power technologies
- photovoltaic equipment
- rooftop solar installations
- household solar photovoltaic equipment.
The state of Tamil Nadu leads India's renewable energy efforts, as over thirty percent of the state's energy comes from renewable resources. In various parts of the state streetlights, domestic lanterns, water heating systems, public lighting systems in remote hilly areas, home lighting systems, solar photovoltaic pump sets, sprayers, solar air heaters, cookers and community TV sets, are all solar powered. Tamil Nadu has strong entrepreneurship in the area of renewable energy and with the sources to support ample solar projects there are numerous export opportunities for U.S. firms, including:
- solar street lighting, solar home lighting
- solar water pumping systems
- solar lanterns, solar cookers
- stand alone photovoltaic power installations.
In addition, other states like Karnataka have already established feed-in-tariff plans for solar rooftops, and the state of West Bengal is initiating the country’s first solar housing complex in Kolkata, all of which offers export opportunities for rooftop solar units. In the state of Maharashtra, the government has set a renewable energy purchase target of ten percent and the state has also announced its intent to build a 10MW solar thermal power plant in Nagpur.