India has a very large domestic market, and resilient private consumption is a major driver of economic growth. A vast supply of inexpensive but skilled labour has turned India into the back office of the world. Despite numerous problems, India has generally managed to avoid hard authoritarian rule or military coups, which have happened in many other developing countries, including India’s neighbours, Bangladesh, Myanmar and Pakistan.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 24 of India’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you one step ahead, so you can do business with ease in India.

Country Risk

India Country Risk

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Core Views

  • The Indian government led by the Bharatiya Janata Party has initiated various reforms in its first year in office and it will continue to enact incremental rather than big bang reforms over the coming years. That said, the lack of majority in the Rajya Sabha, India's 245-seat upper house, will remain a hurdle to the implementation of large-scale reforms.

  • We remain broadly constructive on the Indian economy, forecasting real GDP growth to accelerate to 7.6% in FY2015/16 (April-March) from 7.3% in FY2014/15. The government's pro-business initiatives and accommodative monetary policy by the central bank will support a gradual economic growth recovery over the coming quarters.

  • Headline inflation has eased significantly in India on the back of moderation in food prices, which accounts for approximately half of the...

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India Operational Risk Coverage (9)

India Operational Risk

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BMI View: India poses a considerable range of risks to potential investors in terms of both crime and national security. The country is subject to a high level of terrorist threat from both domestic and international terrorist groups and several high profile attacks indicate a lack of effectiveness of the part of government counter-terror organisations. This threat is exacerbated by ongoing border disputes which heighten regional tensions. The crime rate is also high and corruption is a significant issue in the police force. India therefore sits in 33 rdplace out of 38 Asia states on the BMI Crime and Security Risk Index with a score of 24.9 out of 100.

India scores fairly poorly for foreign worker vulnerability, ahead only of Indonesia, Timor-Leste, Papua New Guinea, Pakistan and Afghanistan for this indicator in...

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India Crime & Security

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Despite boasting Asia's third largest economy and second biggest military, India suffers from high levels of crime and security risk and the country poses moderate security risks for foreign business travellers, expatriates, and tourists. The country faces persistent terrorist risks and experiences elevated levels of petty crime and female sexual assault. Furthermore, foreign governments advise their citizens to avoid certain areas due to instability. India is a regional underperformer in the BMI Crime And Security Index, in 24th place out of 29 Asian countries with a score of 25.8 out of 100. Neighbouring states rank as follows: China (17th), Sri Lanka (19th), Nepal (21st) and Pakistan (29th).

India is a relatively safe place for business assets in terms of property crime, with only a small number of investors citing crime and theft as a major impediment to doing business. Pick-pocketing is one of the most commonly...

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India Labour Market

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BMI View: India's labour market offers many potential benefits for prospective investors. As one of the most populated countries in the world the labour market is immense and further benefits from a low minimum wage and relatively few labour market restrictions. There are also, however, considerable risks such as the weak quality of education which suffers from large regional disparities and limited female participation in both education and the labour force. Overall therefore India is a regional underperformer on the BMI Labour Market Risk Index with a score of 47.9 out of 100 placing the country 22nd out 38 Asia region states.

Despite extensive investment in the educational system, India continues to struggle with instilling basic skills in...

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India Logistics

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India, despite its considerable size and population, remains something of a sleeping giant in terms of its international trade potential and the overall value of its supply chain. While India's l economy has become increasingly liberalised over the past few years, the country's trade and logistics sectors remain hamstrung by a combination of mediocre transport infrastructure and high levels of bureaucracy and red tape. A poor utilities framework, both in terms of power generation and the availability and fuel and water are further impediments to an effective supply chain. Despite ongoing challenges, in the past few years there have been signs that the Indian government is beginning to address these inefficiencies and is channelling increased resources into modernising the country's transport and utilities framework. This improvement explains India's position in the top half of BMI's Asia Logistics Risk Index. The country places 14 th...

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India Trade & Investment

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BMI View: India offers enormous potential as an investment destination. The country boasts some of the highest regional export and import growth rates and already has a substantial total trade volume. Barriers to foreign entry, though still significant, are being reduced and the government is keen to attract further foreign investment. There are, however, significant risks to be considered, not the least of which are the high rate of corruption in the country and extensive bureaucratic hurdles which impact upon most businesses sectors. Overall India therefore has a score of 48.5 out of 100 on the BMI Trade and Investment Risk Index. This places the country 18 th out of 38 Asia states and 107 th out of 201 countries on a global basis.

With vast natural resources and a large labour pool, India has developed a strong export sector based on an expanding domestic manufacturing...

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India Industry Coverage (24)

Agribusiness

India Agribusiness

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BMI View: We hold a positive view on India's agribusiness sector, as the country will remain an agricultural powerhouse and is likely to maintain high levels of self-sufficiency for major food crops. Production growth of various commodities will be driven by strong government support and robust demand for manufactured foodstuffs. We see significant growth opportunities in sub-sectors such as dairy, coffee and livestock. However, India will be increasingly vulnerable to exceptional weather phenomena owing to climate change effects and serious water shortages. Moreover, the country will remain prone to erratic government intervention, which seriously hampers its reputation as an in...

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Autos

India Autos

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New vehicle sales have got off to a positive start for FY15/16 (April-March). Over the first quarter of the fiscal year, new passenger car (PC) sales were up by 8.57% y-o-y, at 482,332 units, with commercial vehicle (CV) sales up by 3.55% y-o-y, at 146,159 units, according to figures from the Society of Indian Automobile Manufacturers (SIAM).

However, June itself was something of a disappointment, with new vehicle sales dropping by 0.5% y-o-y, to 217,642 units. This marked the first monthly decline in Indian new vehicle sales since October 2014. Sales of utility vehicles declined 5.9%, while demand for vans fell 7.2%. According to a report in the Economic Times, the temporary closure of car production facilities for maintenance in June contributed to the decline in sales. 'Three major carmakers have shut their factories for annual maintenance that has resulted in this minor fall. The retail sales have been moderate, but the car...

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Commercial Banking

India Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

India Consumer Electronics

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BMI View : India's status as a large emerging market that is making progress on the policy environment for a range of sectors, combined with its late developer status in terms of consumer electronics device adoption rates, means we expect it to be a regional outperformer over the medium term. We expect the market to remain on a strong growth trajectory 2015-2019, with particularly robust demand growth for computer hardware and handsets expected. We forecast the total consumer electronics spend in India will increase by 6.7% in US dollar terms in 2015...

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Defence & Security

India Defence & Security

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BMI View: We believe that India's defence ambitions will continue to face challenges over 2015. That said, the increase of the foreign investment cap to 49% from 26% should boost the defence industrial base.   India's security risk is   medium given India's issues with transborder and domestic terrorist groups and particularly in light of the growing prevalence of international terrorism.  BMI highlights the corruption probe into the VVIP helicopter deal has the potential to complicate further...

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Food & Drink

India Food & Drink

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BMI View: Over the long term, the Indian economy presents one of the best growth stories globally. The Indian population is the second largest in the world and is forecast to continue to grow for decades. Real GDP will also grow at an average of around 6.8% to 2024, with per capita incomes rising at a similar rate. We forecast that inflation will average around 4% over the longer term, which should be a sustainable level for the economy. We maintain a bullish long-term outlook on food consumption within the country, especially as multinationals penetrate the market with greater force and industry regulation becomes more favourable to foreign investors.

Headline Industry Forecasts (local currency)

  • 2015...

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Freight Transport

India Freight Transport

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BMI View: We expect positive growth across the board in India's freight transport sector in 2015 and over the medium term. However, the growth will not be even, with the anticipated expansion in air freight especially to outperform, while road freight - where growth will be tempered in the near term by a gloomy outlook for agricultural produce - will lag.

India's trade will enjoy both real and nominal growth in 2015, driven by an expansion in both imports and exports. In real terms, we forecast an expansion of 8.7% in total trade this year, thanks to a real expansion of 8.0% in imports and 9.3% in exports. Growth in trade will accelerate moderately in 2016, when we forecast growth of 8.8%. In nominal terms, growth will be 7.0% in 2015 and a far more robust 12.0% in 2016. If realised, our forecasts would see USD1,167.7bn in trade this year, and USD1,307.6bn next year. Imports...

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Information Technology

India Information Technology

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BMI View: With the exception of its role as an outsourcing hub, India's IT market development trails far behind fellow Asian giant China on virtually all metrics. However, India's position as a regional laggard, but one with a robust economic outlook and an improving business environment, means its relatively undeveloped status translates into great growth potential over the medium term. This could see it become a regional outperformer, although issues such as inequality, weak...

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Infrastructure

India Infrastructure

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BMI View: We expect a slight pickup in India's construction sector in FY20115/16, after holding a more conservative outlook in FY2014/15 and forecast growth to come in at 5.0%. Growth will be underpinned by positive reform momentum, an improving funding environment and continued focus by the government to develop the country's infrastructure which will help to accelerate infrastructure projects. The country's potential will however, continue to be hindered by a relatively negative business environment.

Key Trends And Developments

  • We remain conservative towards the near-term outlook of...

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Insurance

India Insurance

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BMI View : Over the forecast period, India should remain one of the faster growing of the large national life insurance markets. Thanks to the new Insurance Bill, the maximum stake that a foreign insurer can hold in an insurance JV has been lifted from 26% to 49%. Many companies will have greater access to capital and know-how as a result. The government's successful launch of new and basic social security plans (including life insurance, accident and pension offerings) will boost the public's understanding of the advantages of insurance. In the non-life segment, growth will be boosted by the continuing expansion of health insurance. Micro-insurance should be a significant opportunity for growth from 2020.

The main challenges to India's insurance sector are...

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Medical Devices

India Medical Devices

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BMI Industry View : The Indian medical device market ranks among the world's top 20 but, despite strong growth rates, it remains disproportionately small with per capita spending of less than USD3.0. After registering strong growth between 2010 and 2012, the sharp depreciation of the rupee that took hold from May 2013 has dampened growth in US dollar terms. Much of future increased demand will come from the private sector which is expanding to meet the healthcare needs of India's growing middle-class. The underfunded public sector will struggle...

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Metals

India Metals

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BMI View: India is set to become a major consumer of metals over the coming years as the government makes substantial efforts to improve infrastructure in the country. That said, major roadblocks concerning the availability of raw materials and institutional weaknesses will continue to hinder growth in the metals industry.

In contrast to the dimming outlook in major steel-producing countries, we believe India's steel sector is on track to experience healthy growth over our forecast period to 2018. While steelmakers in countries including China, Japan and South Korea are struggling with overcapacity and sluggish steel demand, the fortunes for Indian steelmakers are much more positive.

We expect India to become a...

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Mining

India Mining

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BMI View: India's inadequate operating environment will continue to hamper growth in the mining sector. Despite positive regulatory reforms, it is unlikely that the domestic coal deficit will be reduced anytime soon. India's new mining ordinance will help bolster iron ore production growth, however, the low ore price environment coupled with higher royalties will dampen the rebound in iron ore production.

While growing domestic demand for commodities will incentivise state-owned miners to expand production, we believe that India's poor operating environment will continue to restrict growth in the mining sector. A spate of bureaucratic and regulatory hurdles will...

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Oil & Gas

India Oil & Gas

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BMI View: Continued regulatory reform is unlocking marginal and stranded resources, offering upside to India's mid-term production outlook. However, pricing remains insufficient to stimulate investment in the country's most prospective offshore and unconventional acreage, undermining a more sustainable growth in output. The outlook on the downstream sector is broadly bullish, supported by ongoing fuel price liberalisation, lower-cost crude feedstock and an expanding market domestically.

Headline Forecasts (India 2013-2019)
2013 2014e 2015f...

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Petrochemicals

India Petrochemicals

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BMI View: The outlook for the Indian petrochemicals industry has improved markedly in recent months due to a combination of President Modi's economic liberalisation, market growth and the positive effect of falling naphtha prices on competitiveness, according to BMI's latest India Petrochemicals Report. The scenario should boost opportunities for investment in new capacity as well as adding value through the production chain.

Q315 should see a surge in polymers capacities, particularly in polyethylene (PE) which could put the market in surplus by the end of the year. India's polyethylene (PE) market is moving into self-sufficiency with a number of plants due to open in Q315; it is poised for a slight surplus in 2015 with new plants coming on-stream in coming months. Project completions include ONGC Petro-additions Ltd's...

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Pharmaceuticals & Healthcare

India Pharmaceuticals & Healthcare

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BMI View: The implementation of universal healthcare in India will remain challenging and we maintain our view that a full nationwide rollout by 2019 is unlikely. This outlook is driven by the low levels of healthcare funding provided by the government as it seeks to reduce budget deficit and prioritise other sectors such as infrastructure. Moreover, we highlight that improvements in healthcare access from the programme will remain weighed on by low levels of medical infrastructure, limiting the commercial opportunities for drugmakers.

Headline Expenditure Projections

Pharmaceuticals: INR1,021bn (USD16.7bn) in 2014 to INR1,154bn (USD18.4bn) by 2015; +13.0% in local currency terms and 11.2% in US dollar terms. Forecast Maintained from previous quarter.

Healthcare: INR5,087bn (USD83bn) in 2014 to INR5,...

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Power

India Power

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BMI View: Our view that power sector reforms would be a top priority for Modi's government is playing out. We are witnessing notable progress in the Indian power market with regards renewable energy expansion, reducing red tape for power projects and improving fuel availability for thermal generation. We believe the government will increasingly turn its attention to reforming the power distribution segment and boosting India's energy independence. Our long-term outlook for the sector is similarly positive as we believe that several fundamental drivers of growth for the sector are beginning to align in India's favour.

We forecast that electricity generation in India will grow by 6.5% in 2015, faster than 5.5% growth that we estimate the sector will have experienced in 2014. Our 2015 forecast can be attributed to the strengthening economic outlook...

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Real Estate

India Real Estate

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BMI View: There is huge long-term potential in India's commercial real estate market as the country builds on its status as a global IT and outsourcing hub and becomes open to more foreign investment, and as the spending power of the expanding middle class continues to grow. The economy is also beginning to rebound, and although in the short term we see no rise in rental rates, risks are to the upside. 

Growth in India's commercial real estate market will be supported by an uptick in economic growth. Data from the first quarter (April-June) of the 2014/2015 financial year indicate that the economy grew by 5.7% year-on-year (y-o-y) in real terms, and we forecast growth of 5.6% in 2014/2015 (April-March), supported by regulatory improvements and an increase in investment as well as strong growth in exports, industrial output and services output. These...

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Renewables

India Renewables

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BMI View: Our view that power sector reforms would be a top priority for Modi's government is playing out and we have witnessed notable progress in India's renewables expansion. Investor interest in the market is high, the project pipeline continues to swell and rising power consumption and off-grid requirements will ensure the demand for renewable energy technologies remains high.

Modi is a strong supporter of renewable energy and the government - through the Ministry of New Renewable Energy - has scaled up India's 2022 renewables targets dramatically since the 2014 election. In particular, the ambition and high degree of government involvement in the solar sector is helping to drive growth and we view the solar segment as a clear outperformer across the power market. Key Trends And Developments

  • The Ministry of New...

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Retail

India Retail

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BMI View: India is more open to FDI due to Modi's belief that foreign investment will help the economy continue its recent strong growth and move to the next level. As a result, less barriers of entry are opposing foreign retailers looking to enter the potential lucrative market of India, as one of the most promising markets in the world. The improving incomes combined with the second largest population in the world, means a potentially huge market for retailers as household spending will reach USD1,881bn by 2019. There are still limitations to the Indian market, as much of the infrastructure remains poor, and the household income per a capita is still small, while most of the country lives in rural areas. Two growing sectors that retailers should consider are clothing and footwear as the young urbanites become more fashion conscious and e-commerce which is growing with greater internet penetration.

...

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Shipping

India Shipping

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BMI View: The primary issue in Indian shipping continues to be the state of the nation's ports. Investment in the 12 major state-run facilities has not kept up with the demand engendered by rapid economic growth experienced in India over the past decade. This is leading to repeated issues of congestion at ports. Investment is now starting to be made, but this may be a case of too little too late. Furthermore, plans to push ahead with the privatisation of the state-run facilities will likely see mass strikes in the sector in 2015. Although we believe the move is necessary in order to compete in the...

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Telecommunications

India Telecommunications

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BMI View: Despite the huge investment opportunities posed by the lack of adequate broadband infrastructure in metropolitan markets and basic services in rural areas, the Indian telecoms market is challenging for new and established players alike. The fluid regulatory regime is open to highly variable interpretation by the government, the regulators and the most influential businesses while the fragmented nature of the mobile and wireline markets - caused by the imposition of a regional licensing scheme - means that investment has largely targeted the most affluent areas of the country and bypassed large numbers of rural consumers. In an effort to justify investment in mobile and broadband infrastructures, operators have resorted to intense price competition to win and retain consumers. This is not sustainable over the long term.

Key Data

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Tourism

India Tourism

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BMI View: The India tourism report looks at a range of key indicators in this established tourism destination in the competitive Asia Pacific region, including forecasts for inbound and outbound travel volumes and the impact of growth on industry value and tourism related expenditure. Overall India offers enormous growth potential, a fact recognised by many leading domestic and global hotel groups which are focused on extensive expansion plans across the country.

India has a strong inbound tourism market, attracting visitors from a diverse range of source markets in Europe, Asia and North America. This has helped it to offset declines from major source markets such as Russia in recent months. A relaxation of visa restrictions, and a new online visa application, are yielding tangible benefits are overall we expect to see visitor numbers increase by 5% to reach 7.4mn this year. There are some...

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Water

India Water

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