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 strength of the electoral win by the opposition Bharatiya Janata Party (BJP) at the lower house (Lok Sabha) elections in India surprised many - the party swept 282 seats of the 543-seat parliament, 10 more seats than it needs for a majority. Prime Minister Narendra Modi led his party to victory with a presidential-style campaign never seen before and overcame questions about his Hindu nationalist background. While we, like many others, hold high expectations for Modi's team to deliver on its promises to clear the road blocks obstructing infrastructure projects, we hold a more downbeat outlook on the prospects for the quick liberalisation of sectors such as mining, oil and gas, and insurance.

  • We maintain our above consensus outlook for India's real GDP growth, expecting the return of investor and business confidence to support an economic growth revival in...

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India Operational Risk Coverage (9)

India Operational Risk

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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 25th place out of 30 Asian countries with a score of 26.0 out of 100. Neighbouring states rank as follows: China (18th), Sri Lanka (20th), Nepal (214th) and Pakistan (28th).

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...

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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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India is the second biggest country in the world in terms of population and so has access to one of the most sizeable labour forces. The talent and skills-level depends on jurisdiction and subject matter. Overall literacy rates are high among the younger generation and 63% among the total workforce. However, major socio-economic inequality hinders employment prospects for those on the lowest end of the scale. Taking these factors into consideration, India scores 51.1 out of 100, ranking 16th out of 30 Asian states, between Indonesia and Cambodia.

BMI underlines the boom in the education sector as a key benefit to investors. Enrolment and graduation rates are growing which boosts the quality of the talent pool, especially in strategic subjects such as maths and engineering. However, we warn that education attainment rates are constrained by poverty, as although attendance is free under law, budgetary restrictions have...

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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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Trade and investment risks are high in India, owing to the country's significant fiscal and trade barriers and the extent of red tape plaguing its bureaucracy. Furthermore, investors are likely to confront weak government policies and widespread corruption, significantly increasing the legal risks and costs involved in operating a business in the country. That said, the country's developed banking system provides good access to international financial markets. For these reasons, the country receives an overall score of 48.6 out of 100 for Trade And Investment risks, putting it in 15th position out of 30 countries in Asia.

The last decade is seen as a something of a golden era for foreign direct investment (FDI) in India. However, significant barriers to foreign investment remain which continue to deter investors. Strict regulations and restrictions to foreign direct investment (FDI) remain in certain key sectors, such as...

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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 international...

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Autos

India Autos

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According to figures from the Society of Indian Automobile Manufacturers (SIAM), domestic auto sales (sum total of passenger vehicle and commercial vehicle sales) rose 11.7% year-on-year (y-o-y) in December 2014 to 260,025 units, in line with the broad recovery in the sector since the arrival of India's new Prime Minister Narendra Modi.

However, this quarter BMI has become slightly more cautious on the near-term outlook for Indian auto sales. This reflects two factors: first, the fact that sales growth has become increasingly volatile over recent months and secondly, the government's decision to rollback excise duty cuts introduced in 2013/14, when the local auto industry was struggling. As such, we have tempered our sales forecasts for FY2014/15 (April-March), now targeting 2.2% growth for the fiscal year.

With economic growth gathering pace on the back of Modi's ongoing...

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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 7.7% 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

Freight Transport

India Freight Transport

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. As a regional laggard, but one with a robust economic outlook and an improving business environment, India's 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 infrastructure and patchy education levels outside major urban areas will...

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Infrastructure

India Infrastructure

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BMI View: We expect a 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 6.0%. 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

  • While we expect that India's challenging business environment to continue hindering the growth potential of the country's construction sector, we believe FY2015/16 will register a pickup in...

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Insurance

India Insurance

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BMI View : Changes underway in India's insurance sector should provide companies with greater access to capital, which should help them to expand their businesses over the medium term. Growth in health insurance will underpin the expansion of the non-life segment and the sector as a whole through the forecast period. Over the long term, India should remain one of the faster growing large insurance markets in the world - particularly if life insurers develop attractive and innovative products for low income households.

The main challenges to India's insurance sector are considerable and include large numbers of households who are too poor to afford insurance and/or who do not understand it; a sometimes idiosyncratic regulatory environment; a lack of capital; the lack of profitability of the non-life segment in...

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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, although the market is still set to remain one of the world's fastest growing over the next five years. 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...

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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 poor operating environment will continue to impede growth in the mining sector. A domestic shortfall in coal production is unlikely to fade away anytime soon. India's new ordinance will help bolster iron ore production growth, however, an environment of low ore prices coupled with higher royalties will dampen the rebound in iron ore production.

While growing domestic demand for commodities will encourage state-owned miners to expand production, we believe India's poor operating environment will continue to restrict growth in the mining sector. A spate of bureaucratic and regulatory hurdles will remain major challenges for miners to grapple with over the coming quarters. For instance, the difficulties in securing environmental clearances and...

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Oil & Gas

India Oil & Gas

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BMI View: The outlook on India's upstream sector remains chequered; continued reform of fiscal, licensing and regulatory terms under the Modi-led government offer substantial upside risk to exploration and production. However, the overhang of convoluted and inefficient bureaucratic procedures, heavy state intervention, unfavourable pricing terms and policy discontinuity continue to weigh on developments in the sector. The outlook for the downstream is more positive, buoyed by strong refining capacity expansion, ongoing domestic fuel price liberalisation, the lower cost of crude feed and strong forecast consumption growth.

Headline Forecasts (India 2013-2019)
2013 ...

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Petrochemicals

India Petrochemicals

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BMI View: The resumption of activity at Haldia Petrochemicals Ltd (HPL)'s complex in West Bengal led to an upward revision in our petrochemicals forecasts this quarter, but the future of the troubled complex - which at its peak represented 13% of the Indian market - still remains in doubt, warns BMI's latest India Petrochemicals Report.

HPL will be joined by the Brahmaputra Cracker and Polymers (BCPL) complex in Dibrugarh district in the north eastern state of Assam with capacities of 220,000tpa of ethylene, 60,000tpa of propylene, 220,000tpa HDPE/LLDPE and 60,000tpa PP, due to come constream by end-Q215. Other new complexes include those developed by ONGC in Gujarat and Karnataka. Dahej will add 1.1mn tpa ethylene and 360,000tpa propylene along with a 340,000tpa...

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Pharmaceuticals & Healthcare

India Pharmaceuticals & Healthcare

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BMI View: India's challenging intellectual property landscape will continue to drive innovative drugmakers to adopt risk mitigation strategies, including forming partnerships with Indian generic pharmaceuticals companies. We highlight that such collaborations will also boost the marketing efforts of multinational pharmaceutical companies as they will be able to leverage upon the considerable marketing resources available to large Indian 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.

Healthcare: INR5,195bn (USD85.1bn) in 2014 to INR5,791bn (USD92.2bn) by 2015; +11.5% in local currency terms and 8.4% in US dollar terms.

...

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Power

India Power

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BMI View: This quarter we have extended our forecasts to 2024. This notwithstanding, we continue to expect growth in the Indian power sector to accelerate in 2015, on the back of positive economic and political momentum. Our Country Risks team believe that the outlook for the Indian economy is positive as the country is expected to sustain robust growth momentum over the coming quarters on the back of resilient investment and strong exports. Meanwhile, the Modi administration has made significant progress in introducing reforms and encouraging growth in the power sector. 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...

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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: A FY2015/16 budget reduction for renewable energy, amid a reiteration of the country's ambitious renewable targets, highlights the government's expectation that the private sector will play a key role in the expansion of the industry. Investor interest will remain high, but we maintain our view that the targets are unlikely to be realised in full given the prevailing challenges in the Indian business environment.

We forecast that non-hydropower renewable capacity in India will grow by nearly 3.5GW in 2015, marking an 11.8% year-on-year (y-o-y) increase in capacity. Growth will primarily come from wind and solar capacity, with most of the projects scheduled to come online in 2015 already underway.

We are maintaining our positive long-term outlook for the Indian non-hydropower renewables sector, and we...

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Retail

India Retail

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BMI View: A large and young population has set the foundations for growth in India's retail sector. Furthermore, the country's economy has proven to be resilient and the new government is slowly improving the regulatory environment. These factors all bode well for both domestic and international retailers who are increasingly seizing opportunities in the country's second and third tier cities where disposable income has slowly increased. Despite this optimism, India remains underdeveloped, the country's retail formats remain outdated and retail space is limited. This has made it difficult for a number of international retailers to enter the market.

India's retail market is undergoing a rapid transformation. Soon...

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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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