International Review: the Republic of India
In the new material of the cycle "International Review" we will talk about the homeland of chess, 4 religions and yoga. About a unique multicultural country with 6 seasons, the most post offices and vegetarians. We are talking here about the Republic of India.
In the country with an area of about 3 million sq. km, there are 1.3 billion people. The official languages are Hindi and English. The country's GDP is over $ 2.6 trillion as estimated by the World Bank. The national currency is the Indian rupee. India is located in South Asia and is the seventh largest in the world in area, the second - in terms of population. The head of state is the President; the executive power is headed by the Prime Minister.
India is on 63rd place in the World Bank’s Doing Business 2020 world rating, improving its position by 14 points over the year. The best situation in the country is with access to electricity (22nd position), obtaining building permits (27), obtaining credit (25), protecting investors (13).
The economy of the republic is quite diverse and is represented by agriculture, the services sector, industry, etc. A significant share of the population is engaged in agriculture. At the same time, services account for 54% of GDP. The agricultural sector accounts for 15%, industry - 31%. Due to the second official language being English, India was able to take a strong position in the global information technology market.
The average annual GDP growth of India since 1997 is about 7%. This was facilitated by measures of economy liberalization, including the privatization of state-owned enterprises, and the control weakening over foreign trade and investment.
Interesting fact. Over five years, India has overtaken 79 countries in the Doing Business rating of the World Bank.
India's economy is driven by young population, high levels of savings and investment, increased integration with the global economy. At the same time, the country experienced several financial crises, the poverty level is high. The women discrimination, ineffective electricity distribution system, undeveloped transport infrastructure, and low level of education, especially of the rural population, still remain in the country.
In 2018, FDI volume in the country amounted to $ 40 billion (the 11th indicator in the world). Investors are attracted by a large domestic market and positive changes in the investment environment. In the rating of Global Competitiveness, the country occupies the 59th position, in the rating of countries' involvement in international trade - 96.
The industry is based on textile, food, chemical and petrochemical, pharmaceutical, mining and engineering industries. The main trading partners of India are China, USA, UAE, Saudi Arabia, Hong Kong, Germany, Switzerland, Indonesia, Korea, Singapore, Malaysia. India exports processed gemstones and finished jewelry, petroleum, textile, chemical and pharmaceutical products, food, transportation equipment, engineering products, ferrous metals. The main importers of Indian products are the United States (16%), the United Arab Emirates (10%), Hong Kong (5%), and China (4%).
The leading items of Indian import are crude oil and petroleum products, precious and semiprecious stones and metals, electronics, machinery and equipment, agricultural and chemical products, plastic and products out of it, ferrous metals.
Interesting fact. India occupies third place in the world in steel production (after China and Japan) and plans to take the second place by 2030.
Chemical industry. This sector forms 14% of Indian export and 18% of the country's industrial production. In terms of volume, India is 6th in the world and 3rd in Asia. It produces basic chemical compounds, petroleum products, fuels and lubricants, fertilizers, plant protection products, paint and varnish products, household chemicals.
Pharmaceutical industry. India accounts for 10% of total global pharmaceutical production, with sales in the local market exceeding $ 30 billion, and export exceeding $ 11 billion. The country has over 12 thousand local and foreign medicine manufacturers.
Engineering. This sector accounts for about 7% of India's GDP. The automotive industry employs about 20 million people. Almost the entire local fleet of motor vehicles and about 90% of the fleet are made in India. There are enterprises producing cars, trucks, two- and three-wheeled vehicles, tractors, as well as components and spare parts. Production accounts for about 5 million vehicles, 3.5 million are exported.
Information Technology. India's share of the global IT solutions market is about 60%. The sector is the locomotive of the national economy, generating over 10% of GDP. The country is one of the world leaders in providing outsourcing services and information solutions. The total revenue of local IT companies exceeded $ 150 billion.
Agriculture. Agriculture plays a significant role in the Indian economy. 54.6% of the population work in the industry, its share in the country's gross value added is 17.4%. The main sectors of Indian agriculture are meat and dairy farming, poultry farming, the cultivation of fruits and vegetables, grains, oilseeds, spices, tea and tobacco leaves, coffee beans, various varieties of nuts (hazelnuts, peanuts, almonds, cashews), sugarcane, seafood production , fishing, etc.
Economic zones. An important role in the development of the Indian economy and attraction of foreign investment is performed by free economic zones (FEZs). The peculiarity of Indian FEZs is that export production does not fall under laws and regulations in force in the internal customs territory of the country. Enterprises located within free economic zones are allowed to freely import equipment and raw materials, free sale and movement of product flows within the free economic zone. The only condition is 100% export of the manufactured products. In some cases, it is allowed to sell part of the products on the domestic market, however, such permission is given when all customs and additional duties are paid without any benefits. The movement of products from FEZ to ports and back is carried out without restrictions. It is allowed to open branches of foreign banks in FEZ that have preferential standards of operating established by the Reserve Bank of India, in turn it facilitates access to foreign financial resources. To simplify the bureaucratic procedures on establishment and development of FEZ, a The One Stop Shop mechanism is used.
COOPERATION BETWEEN BELARUS AND INDIA
Cooperation between Belarus and India is developing in various directions: trade and economic, investment, industrial, scientific. Priority is given to industrial cooperation and the implementation of joint projects in new technologies, pharmaceuticals, and mechanical engineering spheres.
Economic cooperation is reinforced by positive bilateral relations in the political sphere. Meetings are held on an ongoing basis at various management levels. The Belarusian-Indian intergovernmental commission for cooperation in the field of trade, economics, science, technology and culture functions. In 2018, the Belarusian-Indian business forum was held, the result of which was the signing of the Interstate Investment Agreement.
Belarus buys medicine, food, coffee, tea, shoes, etc. from India. In turn, our country exports chemical products, leather, metal products, data storage devices and navigation devices, fiberglass, bearings, electronic integrated circuits, etc. The main Belarusian export position to India is the supply of potassium fertilizers. The supply volumes of nitrogen fertilizers and tractor equipment MTZ are growing.
Interesting fact. The Indian company Bharat Heavy Electric Limited has successfully completed the reconstruction and put into operation a turbine of its own production at a power plant in Grodno.
Direct trade relations are developing. In India, there are trading offices of Belarusian Potassium Company, Beltekh Optronics, Belaz-Enrika Trade and Services, Amkodor-India, Sri Shyam Bearings - dealer of Minsk Bearing Plant. The number of joint investment projects is increasing. In September 2018, Belkommunmash and Axis Mobility agreed to build a joint venture for the production of electric buses.
The most promising areas of cooperation are:
- textile industry;
- oil production;
- sphere of high technologies;
- scientific and technical cooperation.
COOPERATION OF FEZ GRODNOINVEST WITH INDIA
The turnover of FEZ Grodnoinvest residents with India in 2018 amounted to $ 7.4 million, which is 2.7 times more than in 2017. Export amounted to $ 5.9 million (growth rate of 364.5%) , import - $ 1.4 million (growth rate of 125.9%). Belarusian companies export chemical products, fiberboards, spinning textile machines, optical fibers. Inorganic chemistry products, organic dyes, cotton, chemical fibers are imported from India.
Currently, Belarusian companies are offered a unique loan product from the Export-Import Bank of India or another state bank approved by the Government of India for investment projects. The loan is provided in US dollars for up to 15 years, including a grace period of up to 5 years. The interest rate is 6 months + 1.5% (about 3.4% as of November 2019). The condition is the use of at least 75% of the Indian component of the value of the contract.
If you are interested in cooperation with Indian business circles, please contact the Foreign Economic Activity Department of the administration of FEZ Grodnoinvest: tel. +375 (152) 41-23-17 or e-mail: firstname.lastname@example.org, you will be provided with the necessary information and support in establishing business relations.
We also invite you to participate in the Belarusian-Indian Investment Forum, which will be held on December 5-6, 2019 in Chandigarh (The Republic of India). The organizers are the National Agency of Investment and Privatization and the Embassy of the Republic of Belarus in the Republic of India.
Previous publications of the International Review cycle: