A New World of Opportunity

7th CII-EXIM Bank Conclave on
India Africa Project Partnership

“Creating Possibilities: Delivering Values”
27-29 March 2011 | New Delhi, India
A new world of opportunity

India Africa partnership potential
An Ernst & Young report
Partner country Guest country
Mozambique Togo Government of India Confederation of Indian Industry

Contents
Overview 04
Agriculture 08
Education 14
Food processing 20
Infrastructure 28
Life sciences 36
Mining 42
Technology 50
Telecommunications 56
Power and power equipment 62
Overview
5
Overview
A new world of Africa

opportunity A land of opportunity and
India African partnership, a challenge
potential model of south-south Macroeconomic reforms initiated during the mid-1990s have
helped Africa leave behind its challenging past. Today, the region’s
cooperation returns on investment ranks above average globally. While many

countries continue to utilize their natural resources for economic
Historically, India and Africa have been close allies in their growth, the African continent is also home to countries that have
struggle for independence, human rights and democracy. Both highly diversified economies with significant manufacturing and
the regions have similar aspirations and face the same kinds of services industries. The region is expected to reap substantial
challenges as well as several commonalities — this can serve as demographic dividends, which could help its workforce overtake
a driver for mutual benefit and growth. In fact, the prospect of that of India or China by 2040. With an expected demographic
sustained economic growth in India and Africa has opened up dividend, sustained growth in the region has the potential to
several avenues for cooperation and dialog. Both the regions have create a noteworthy domestic market for the consumption of
conditions and market segments that require the development goods and services.
of low-cost, high-efficiency business models, which can be easily The 1999 declaration that called for the establishment of the
replicated. Moreover, both India and Africa are expected to be African Union (AU) was a major regional milestone in Africa’s
endowed with a large demographic dividend in future, which, in progress toward sustainable growth and development. Since
turn, is likely to drive domestic consumption. This is expected its inception, the AU has been focused on the integration of the
to simultaneously give rise to investments across the broad continent while addressing diverse social, economic and political
economic spectrum, thereby presenting ample opportunities for challenges. This resolve was further reflected in the establishment
collaboration among various stakeholders. In fact, the India-Africa of the New Partnership for Africa’s Development (NEPAD) in
partnership has the potential of becoming a defining collaboration 2001 as an AU initiative to address critical challenges such as
of the twenty-first century and of emerging as a global model for poverty and development through a focus on agriculture, climate
strengthening south-south cooperation. change, infrastructure, human development and a host of other
related cross-cutting issues. The NEPAD has been instrumental in
India launching programs such as the Comprehensive Africa Agriculture

Development Program (CAADP) and the Second Decade of
Education for Africa (2006–2015), which have generated visible
ground-level changes.
Resurgent India: rapid growth However, much remains to be done as the region continues to
after liberalization face myriad challenges. Agriculture is the most critical sector
in Africa, as it contributes approximately 25% of the GDP and
Since the liberalization of the economy in 1991, India has employs 70% of its workforce. However, as a result of fragmented
witnessed sustained growth, driven by advances in various holdings and low access to agricultural input, the sector remains
key industries. The country has emerged as a global leader beset by low productivity. Education, another critical sector,
in industries such as life sciences, telecommunications and suffers from inadequate infrastructure and low enrolment at the
information technology. Moreover, the Government of India (GoI) secondary and tertiary levels. In health care, both communicable
is lining up investments in crucial sectors such as infrastructure to and non-communicable diseases continue to plague the region.
further improve the business environment. The industrial sector, which remains focused on export- oriented,
low value-add products, requires significant investment and
technology for improvement.
6 A new world of opportunity India Africa partnership potential

Partnership potential
Opportunities for collaboration
across spheres
In light of the competitive strengths and weaknesses of both India
and Africa, the opportunities for collaboration are plenty. Frugal
innovations and low-cost products and services developed in
either region can be easily replicated across the region. A case
for greater collaborative product
research and development in
Figure 1. India-Africa: Conﬂuence of needs and competencies
agriculture, life sciences and food
processing also exists. • Across sectors: Frugal
innovations and low-cost products;
India’s strengths in education,
collaborative product R&D
agriculture, life sciences and • Education: ICT applications and
telecom also call for greater capacity building
collaboration between the • Agriculture: Technological
regions to create innovative cooperation
business models keeping in • Life sciences: Low-cost generics
mind local realities. This • Telecommunications: Factory
report captures the minute model
opportunity for collaboration
in nine key sectors.
Indian sectors Highlights

Agriculture • India has the world’s second-largest arable land and stands second globally in terms of the number of people engaged in
agriculture. It is one of the leading global producers of pulses, rice, sugarcane and wheat.
Education • India has the world’s largest open and distance education system and has wide-ranging experience in implementing ICT to
disseminate knowledge.
Food processing • The sector contributes 10.7%–12% to India’s GDP and constitutes nearly 19% of the domestic industry. Processed food
exports constitute nearly 5% of the country’s total exports.
Infrastructure • India has the world’s second-largest rail and road network along with a diverse port and airport network. The GoI aims to
increase investment in infrastructure to 9% of the national GDP by 2014.
Life sciences • India ranks fourth in terms of the production of generics and seventeenth in terms of the export value of bulk actives and
dosage forms.
Mining • Mining is a key sector, contributing approximately 2% to India’s GDP.
Technology • India is a global leader in the outsourcing market, with a 55% share in 2010. The industry’s contribution to India’s GDP stood
at 6.1% in FY10 with a 26% share in the country’s exports.
Telecommunications • India is the world’s second-largest telecom market, with a total subscriber base of 764.8 million and overall teledensity of
64.3%. The wireless telecom market grew by almost 100 times to 729.57 million in November 2010.
Power and power • India has the world’s fifth-largest generation capacity and the third-largest transmission and distribution network globally.
equipment
African sectors Highlights
Agriculture • Africa has approximately 783 million hectares of arable land (27% of the world total).
Education • Up from 57% in 1999 to 62% in 2008, Africa’s adult literacy rate has witnessed remarkable growth.
Food processing • The sector benefits from its proximity to European and North American markets, along with renewed government focus on
developing the domestic food processing sector.
Mining • The continent has a large share of global mineral resources (bauxite – 40%; platinum – 88%; chromium – 84%; cobalt – 49%).
Telecom • As a result of liberalization, wireless subscribers have seen rapid growth.
7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 7

Agriculture
9
Agriculture
India
Driven by the green revolution India’s ranking in global production
Agriculture is the mainstay of the Indian economy, contributing Commodity Global rank Production
approximately 15% to the national GDP in 2009–10 while (2009–10, mt)
providing employment to approximately 58% of the workforce1.
Pulses 1 14.6
As of 2008, India was ranked second (behind China) in the world
in terms of the number of people engaged in agriculture and Cottonseed 2 23.9
allied activities2. Moreover, India has the second-largest arable
Rice 2 89.1
area (169.5 million hectares) in the world, second only to the
US. The GoI focuses on the sector through its Five Year Plans, Sugarcane 2 277.8
with a public sector outlay of US$29.6 billion in the Eleventh Five
Year Plan (2007–12). Wheat 2 80.7
Sources: Food and Agriculture Organization (FAO); RBI
During the 1960s, the GoI spurred a green revolution by
introducing high-yielding varieties of wheat and by reorganizing
agricultural research in India with a focus on the indigenization India’s key agricultural performance indicators
of seeds3. The GoI also established the Agricultural Prices
Country/ Agricultural Nutrient Irrigated
Commission and the Food Corporation of India. The sector
region tractors consumption land (as a
witnessed the introduction of input such as fertilizers, pesticides
in use (kg plant % of total
and mechanized farming to increase agricultural productivity.
(thousands) nutrient/ agricultural
As a result, food grain production quadrupled between 1950
hectare) land)
and 2000, eliminating the scourge of famine and laying the
foundation for India’s economic growth. During FY10, the India 3,149 121.4 33.8
production of food grains was estimated at nearly 216.9
World 29,230 103.1 18.5
(mt)4. The country has also become one of the world’s leading
producers of several commodities. Source: Department of Agriculture & Cooperation, GoI
Another growth driver has been the availability of institutional

Figure 2. Production of foodgrains in India (million tonnes) credit in the Indian agricultural sector, which is disbursed
216.9 through a network of commercial banks, regional rural banks and
196.8
176.4 cooperatives. In FY09, a total disbursement of INR3.01 trillion
129.6 was made through the institutional framework5. Agriculture in
108.4
82.0 India also plays a key role in earning valuable foreign exchange.
With agri-exports contributing 10.6% of national exports and
agri-imports contributing 4.4% of imports in FY10, India is a net
1960-61 1970-71 1980-81 1990-91 2000-01 2009-10 exporter of agricultural produce6.
Source: Reserve Bank of India (RBI) (2009–10 data based on

second advanced estimates)
1 Department of Agriculture & Cooperation, GoI 2009-10 annual report

2 “India’s position in World Agriculture in 2008,” Department of Agriculture &
Cooperation, GoI
3 “The Green Revolution,” India Today website, www.india-today.com/itoday/ 5 Department of Agriculture & Cooperation, Government of India 2009-10
millennium/100people/revolution.html, accessed 28 January 2011 annual report
4 Department of Agriculture & Cooperation, Government of India 2009-10 6 “India’s imports and Exports of Agricultural Commodities,” Department of
annual report Agriculture & Cooperation, Government of India

Africa
Challenges and potential Although certain country-specific turnaround stories do exist in
Africa (Malawi, which transformed from a food-deficit country to
Agriculture accounts for more than 25% of the GDP in most a food-exporting country; Rwanda, which witnessed remarkable
African countries and employs more than 70% of the workforce7. agricultural growth rates), the region, as a whole, is in need of
Africa has approximately 783 million hectares of arable land techniques, technologies and investments to improve access to
(27% of the world total), which is adequate to effectively feed irrigation and overall productivity9. Agricultural production in
its population. However, the output is highly concentrated, with the region is highly fragmented, with more than 85% of farms
Egypt and Nigeria accounting for approximately one-third of total occupying less than two hectares10. The system also requires
agricultural output and the top 10 countries in the continent reliable access to financing along with input such as high-quality
producing nearly 75%. Africa is the only region in the world where seeds, fertilizers and water.
agricultural productivity has not grown noticeably. In fact, the
The African agricultural sector has substantial potential to
Green Revolution, which enhanced agricultural growth in many
improve local economies and leave a lasting impact on the
Asian countries, is yet to take place in Africa8.
livelihood of its large populace. Increased agricultural output and
Figure 3. Agricultural productivity (tons per hectare) income also has a multiplier effect on the economy because of
its links with markets for the output of the manufacturing and
8 services sector.
6
4 Reinvigorating African
2
0
agriculture
1961 2007 African nations are aware of the importance of agriculture as
a stepping stone to creating an economic model of sustainable
USA China India Africa development. The CAADP, launched under the NEPAD, is aimed
Source: The Bill and Melinda Gates Foundation (2009) at helping African nations move along the path of high economic
growth through agriculture-led development.
Africa’s key agricultural performance indicators The CAADP outlines a vision for agricultural reforms while
aiming for average annual agricultural growth of 6% by 201511.
Region Cereal Fertilizer Irrigation Tractors Bodies such as the Forum for Agricultural Research in Africa
yield use (% of arable (per 1000 ha) and the Alliance for Green Revolution in Africa are also working
(kg/ha) (kg/ha) land) toward enabling agricultural development in the region. In
Africa 1,040 13 5 28 2008, the African Agricultural Technology Foundation and the
International Maize and Wheat Improvement Center launched the
Average 3,348 208 38 241 Water Efficient Maize for Africa (WEMA) program with a leading
of nine multinational company to develop local drought-tolerant varieties
select of maize12.
countries
Source: World Bank (nine countries include Bangladesh, Brazil, China, India,
Pakistan, Philippines, Republic of Korea, Thailand, Vietnam; Africa figures
are less Egypt and Mauritius)
9 “Raising Agricultural Productivity in Africa,” Africa Progress Panel website,

www.africaprogresspanel.org/files/3812/8352/7667/Raising%20
agricultural%20productivity%20in%20Africa--FORWEB.pdf, accessed 28
January 2011
10 World Census of Agriculture, Food and Agriculture Organization of the United
7 “Challenges to Agricultural Development in Africa,” UN Economic Commission Nations
for Africa website, www.uneca.org/era2009/chap4.pdf, accessed 28 January 11 “About us,” CAADP website, www.nepad-caadp.net/about-caadp.php, accessed
2011 28 January 2011
8 “Raising Agricultural Productivity in Africa,” Africa Progress Panel website, 12 “Agricultural Technologies for Climate Change Mitigation and Adaptation
www.africaprogresspanel.org/files/3812/8352/7667/Raising%20 in Developing Countries,” International Centre for Trade and Sustainable
agricultural%20productivity%20in%20Africa--FORWEB.pdf, accessed 28 Development website, http://ictsd.org/i/publications/77118, accessed 28
January 2011 January 2011

Agriculture
Utilizing synergies for 2. Investment in agri value-added
products by Indian companies
agricultural development
In recent times, Indian companies have also started investing
Agriculture has been at the forefront of the recent transition in agri value-added products. An India-based business house
in India-Africa relations. Various African nations perceive the leased a 50-acre model dairy farm in Uganda in 200617. An Indian
success of the Green Revolution in India a role model. Moreover, company specializing in textiles recently opened a spinning mill
India remains focused on capacity building, human resource in Burkina Faso18. Such investments are expected to generate
development and the transfer of skills as a key ingredient of its local employment as well as create opportunities for local skill
policy. Some of the key areas of India-Africa traction in agriculture development.
are as follows:
3. Agricultural technology cooperation19
1. Commercial farming by Indian
With a focus on developing agricultural technologies for
companies in Africa13 smallholder farmers in Sub-Saharan Africa, Hyderabad-based
Approximately 80 Indian companies have collectively invested International Crops Research Institute for Semi-Arid Tropics
US$2.3 billion in Ethiopia, Kenya, Madagascar, Senegal and (ICRISAT) has signed a memorandum of understanding (MoU) with
Mozambique14. Some African countries are offering land on lease the European Market Research Center (EMRC). This is likely to
for 99 years to overseas farmers, and several farmers from facilitate ICRISAT’s participation in two key Africa business forums
Punjab in India have already migrated to these countries and organized by the EMRC. In November 2009, ICRISAT launched
begun farming15. Close to 70 Indian companies are also in the a US$18-million project for smallholder farmers in dry land
process of entering the farming sector in the region16. A leading areas to increase food security. ICRISAT-led project, Harnessing
integrated tea company based in India acquired Uganda-based Opportunities for Productivity Enhancement (HOPE) of Sorghum
Rwenzori Tea Investments for US$25 million in December 2009. and Millets is also underway in 10 Sub-Saharan countries and 4
Indian states20.
Leveraging Africa’s potential to become a world leader

With limited scope for expanding the rose cultivation business in India, a Bengaluru-based company set up greenhouses on 25 acres
of land in Ethiopia in 2004 for rose cultivation. The company was able to utilize its African operations strategically to improve the
export of roses to Europe and has now emerged as one of the largest producers of cut roses in the world. The company is now
exploring the option of growing crops such as maize and vegetable crops in the continent. The INR5.5-billion company has 672
acres of land under floriculture in Africa, along with a land bank of 311,000 hectares in Ethiopia.
13 Karuturi Global 2010 annual report 17 “RJ Corp charts mega plans to venture into virgin Africa,” The Economic
14 “Indian farming companies buying in Africa,” The Economic Times website, Times, http://economictimes.indiatimes.com/news/news-by-industry/
http://economictimes.indiatimes.com/Corporate-Trends/Indian-farming- cons-products/food/rj-corp-charts-mega-plans-to-venture-into-virgin-africa/
companies-buying-land-in-Africa/articleshow/4713183.cms, accessed 28 articleshow/5414639.cms, accessed 28 January 2011
January 2011 18 “Indian business groups are investing heavily in Africa,” Cote d’Ivoire – Diaspora
15 “African nations offering land for free to Indian farmers,” The Economic Times website, www.ivoirediaspo.net/?s=Indian+business+groups+are+investing+he
website, http://economictimes.indiatimes.com/news/economy/agriculture/ avily+in+Africa&x=5&y=11, accessed 27 January 2011
African-nations-offering-land-for-free-to-Indian-farmers/articleshow/6293149. 19 Case study – “India-UK fund to boost agro-innovation in Africa and Asia,”
cms, accessed 28 January 2011 SciDev Net website, www.scidev.net/en/climate-change-and-energy/climate-
16 “Indian companies get into commercial farming in Africa,” The Economic change-in-africa/news/india-uk-fund-to-boost-agro-innovation-in-africa-and-
Times website, http://economictimes.indiatimes.com/news/news-by-company/ asia.html, accessed 27 January 2011
corporate-trends/indian-companies-get-into-commercial-farming-in-africa/ 20 “Africa and India in agri-cooperation,” African Business, 1 May 2010, via Dow
articleshow/6042491.cms, accessed 27 January 2011 Jones Factiva, © 2010 African Business

Indian scientists at Karnal-based Directorate of Wheat Research
have located the genetic sources that cause the proliferation of
the stem rust-forming Ug99 fungus, which is spreading across
Asia and Africa21. The development of a remedy for the fungus
can be shared to benefit African countries.
Boosting agricultural innovation in Africa

The GoI and the Government of the UK have jointly launched a US$32-million program for food security to boost agricultural
innovation in Africa. The Sustainable Crop Production Research for International Development (SCPRID) will enable scientists to
research on topics ranging from pests to climate change across five key crops (cassava, maize, rice, sorghum and wheat) to boost
sustainable crop yields.
4. Indian private investment toward farm

mechanization in Africa
A leading farm equipment company in India plans to set up a
tractor plant in South Africa, to utilize it as a gateway to the
rest of Africa. Another Indian company, which has competence
in pumps, has been supplying pumps for use in agriculture and
other industries in many African countries, including South Africa,
Nigeria, Namibia and Zambia22.
5. Agriculture-related government aid

In September 2010, the GoI announced a line of credit (LoC)
worth US$500 million dollars to Mozambique, intended to finance
infrastructure, agriculture and energy projects23. The GoI has
also identified agriculture as an area of future cooperation with
Malawi. India’s EXIM Bank has also funded Cameroon’s first
tractor- assembly plant, which has a capacity of 8–12 tractors per
day and the capability to produce other agricultural machines.
21 “India develops antidote to deadly global wheat fungus,” Hindustan Times, 19

July 2010, via Dow Jones Factiva, © 2010 HT Media Limited
22 “African Agriculture: An abiding investment venue for India,” Microfinance
Africa website, http://microfinanceafrica.net/microfinance-around-the-world/
african-agriculture-an-abiding-investment-venue-for-india/, accessed 27
January 2011
23 “India offers 500 million dollar line of credit,” All Africa, 30 September 2010,
via Dow Jones Factiva, © 2010 All Africa

Education
15
Education
India
A catalyst for economic growth The Indian competitive
Knowledge-related industries have been at the forefront of India’s
economic resurgence following the liberalization of its economy
advantage
in 1991. In fact, riding on the back of its strong education The education system in India has several value propositions
capabilities, India has emerged as the world’s largest exporter that can serve as useful models for replication across emerging
of services since 2005. Since independence, the country has countries in the world. Some of the key advantages of the Indian
undertaken significant expansion of its education system to education sector include:
strengthen its reach. Valued at US$50 billion in 2008, the Indian
education industry is expected to grow at a CAGR of 12% to reach 1. Wide-ranging experience in the
US$80 billion by 201224.
utilization of ICT26
The GoI continues to undertake significant initiatives to help
India has undertaken various initiatives to utilize ICT to strengthen
India capture its potential demographic dividend and remove
the dissemination of knowledge. Gyan Darshan, a bouquet of
regional, social and gender imbalances. In 2009, the GoI passed
television channels that broadcasts education programs, has
the landmark Right of Children to Free and Compulsory Education
been operational since 2000. It is complemented by Gyan Vani,
(RTE) Act, which legally allows entitles children in the age group
a bouquet of FM channels, which broadcasts programs of IGNOU
of 6–14 years to education. The GoI is also preparing a policy
and IITs. Under the National Programme for Technology Enhanced
framework to allow public-private partnership (PPP) in school
Learning (NPTEL), a joint initiative of the Indian Institutes of
education, along with promoting ICT in secondary schools and
Technology (IITs) and the Indian Institute of Science (IISc), digital
distance schooling. Further, the GoI plans to reinvigorate the
course content for 129 engineering and science courses has been
higher education sub-segment through the establishment of
developed and uploaded on YouTube. Efforts are also underway
14 “Innovation Universities” along with the National Education
to develop and scale up the “Sakshat” web portal to cater to the
Finance Corporation25.
learning needs of the entire community. The country now has
competence in almost all major aspects of ICT-related media.
Expansion in education since independence
2. One of the world’s largest open and
Statistic 1950-51 2007-08
distance education systems
Literacy rate 18.3% 64.8% (2000–01)
India has a diversified open and distance education system. The
Schools 0.23 million 1.38 million National Institute of Open Schooling, established in 1979, has 1.5
Colleges 578 25,951 million students enrolled at the secondary and senior secondary
(31.12.2009) levels, making it the largest such system in the world27. In the
higher education segment, the Indira Gandhi National Open
Gross enrolment ratio 32.1% 100.5% University (IGNOU), established in 1985, is the world’s largest
(GER) in elementary distance education university28 with more than 3 million students
education pursuing 338 study programs through approximately 3,500
Public expenditure as a 1.5% 3.7% courses. IGNOU has also been enhancing its reach beyond India’s
% of GDP borders in Asia and Africa.
Source: Ministry of HRD, GoI
26 Making the Indian higher education system future ready, Ernst & Young, 2009
27 “Profile,” National Institute of Open Schooling website, www.nios.ac.in/profile.
htm, accessed 4 February 2011
28 ‘UNESCO’s Director-General visits largest university in the world,’ UNESCO
24 “K12 Education Market - India,” ResearchonIndia.com, April 2010, via ISI press release, www.unesco.org/new/en/education/worldwide/single-view/
Emerging Markets news/unescos_director_general_visits_largest_university_in_the_world-5/, 4
25 Ministry of Human Resource and Development, GoI 2010 annual report February 2011

3. High-quality centers of education However, GERs for secondary education remain considerably low,
varying from 8% in Somalia to 110% in Seychelles. Participation
India is home to some of the world’s leading educational in tertiary education, too, is very low, with GERs of less than 10%
institutions. The Indian Institutes of Management (IIMs) and in most countries (notable exceptions being Mauritius at 26% and
IITs are recognized around the world for their high-quality Cape Verde at 12%).
management and engineering education, respectively. In fact,
the contribution of the IITs to development of the US has been The generation of new knowledge, the development of better
specifically noted in a resolution passed by the US Congress29. technologies and the promotion of innovation are essential for
India also boasts leading research institutions such as Jawahar Lal achieving food security, diversifying manufactured products,
Nehru University for social sciences, Tata Institute of Fundamental reducing poverty and protecting the environment in Africa.
Research, and the Indian Institute of Science for mathematics and However, the education system in the continent continues to face
science. various challenges31:
• There is a need to adapt Africa’s higher education system to

4. Upcoming education multimedia the Bachelors-Masters-doctorate triumvirate
industry • Infrastructure is inadequate (laboratories are poorly
India has a rapidly growing and diversifying education multimedia equipped, and curriculum is inadequate)
industry providing wide-ranging course content, especially at • Programs are under-financed and not well-aligned to
the school and vocational levels. The diverse market landscape industry needs
comprises companies that offer retail and corporate training
services in IT, banking and BPO, along with multimedia course • Low GERs characterize the secondary and higher education
content providers at the school level. system in the continent
Awareness around the importance of education has becoming
Africa progressively more widespread in Africa in recent times.

Strategies for education development, including the First Decade
of Education for Africa (1997–2006) and the NEPAD Strategic
Framework (2003–2005) have been consistently outlined.
Significant growth, persisting Moreover, it is increasingly evident that the western model of
education cannot be easily replicated in Africa. Rather, durable
challenges30 and time-tested technologies must be utilized in Africa, as nearly
70% of its population resides in rural areas and are faced with
Sub-Saharan Africa has made remarkable progress in education lack of access to advanced technologies32. With the objective
since 2000. The region’s adult literacy rate increased from 57% of reinvigorating education in Africa, the Second Decade of
in 1999 to 62% in 2008. The main revolution has been in primary Education for Africa (2006–2015)33 has also been launched. It
enrolment, and the expected tenure of schooling doubled from 4.4 is here that the India-Africa collaboration in education can help
years in 1970 to 8.4 years in 2008. In 2008, GERs for primary increase access to quality education and alleviate the continent’s
education in the region varied from 52% in Eritrea to 158% in long-term hurdles to progress.
Sierra Leone. The Gender Parity Index (GPI) for primary education
increased from 0.85 to 0.91, reflecting encouraging growth in the
participation of girls in education.
31 “UNESCO Science Report 2010 – The current status of science around the
world,” UNESDOC Database, UNESCO website, http://unesdoc.unesco.org/
images/0018/001899/189958e.pdf, accessed 4 February 2011
32 “UNESCO Opinion Article – ‘The Challenges of Communication and Education
29 “Bill Text – 109th Congress,” Library of Congress website, http://thomas.loc. in Africa’,” UNESCO website, www.unesco.org/education/educprog/lwf/doc/
gov/cgi-bin/query/z?c109:hres00227.eh:, accessed 4 February 2011 portfolio/opinion6.htm, accessed 4 February 2011
30 “Global Education Digest 2010 – Comparing education statistics around the 33 “Launch of the Second Decade of Education for Africa Action Plan,”
world,” UNESCO Institute of Statistics website, www.uis.unesco.org/template/ Association of African Universities press release, www2.aau.org/announce/
pdf/ged/2010/GED_2010_EN.pdf, accessed 4 February 2011 detail.htm?ai=39, 4 February 2011

Education
A key to improving
Developing innovative
collaboration
Education and research lie at the heart of the India-Africa
mobile solutions
relationship, with a focus on capacity building. Many leading A leading Indian IT firm recently announced the initiation of
political figures, including the current President of Malawi, have work on an open standard mobile learning platform, aimed
been educated in India. Under the Africa-India Framework for at bridging the skill gap in emerging markets. While the initial
Cooperation signed at the India-Africa Forum Summit in 2008, tests are expected to focus on India’s students and workers,
various areas of cooperation were identified. These included the project will ultimately be extended to other countries
sharing initiatives such as the Mid-day Meal Scheme, cooperation in Asia and Africa. This new product is expected to provide
in capacity building and equipping scientific laboratories. personalized education and assessment programs to low-
income, rural or underserved segments.
1. Use of ICT to increase the reach and
quality of education34 2. Building Africa’s education
India has been at the forefront of ICT utilization to enhance the capabilities36,37,38
spread of education facilities across Africa. The ambitious Pan-
African e-network plans to provide reasonable education and Under the joint plan of the India-Africa Forum Summit’s framework
health care services to Africa from India through broadcast via for cooperation, both the regions have outlined capability building
satellite and fiber link. The first phase of the project, launched in education as a key priority. Leveraging its higher education
in 2009 and encompassing 11 countries has been completed, capabilities, India is currently working with African nations to
and the second phase was launched in 2010. In fact, through the establish 19 training institutes in Africa within the next two years.
network, IGNOU has been able to reach students in as many as 13 These will include a diamond-training institute in Botswana, an
countries, including Ethiopia, Malawi, Kenya and Ghana35. institute for administration, planning and education in Burundi in
Central Africa, an institute for foreign trade in Uganda, and an IT
institute in Ghana.
Innovation in ICT: Pan- India is also expected to support these projects during the
African e-network first three years of their establishment. India’s National Small
Industries Corporation (NSIC) will help establish vocational training
The US$125-million Pan-African e-network is the biggest centers in Egypt, Libya, Ethiopia, Rwanda, Burkina Faso, Gambia,
project ever undertaken in the continent and aims to Burundi, Gabon, Mozambique and Zimbabwe. India’s Building
provide services to 53 African countries for a period of five Materials & Technology Promotion Council (BMTPC) will also help
years. Over this five-year period, the project aims to cover set up Human Settlement Institutes in Kenya, Togo, Mauritania,
10,000 students in Africa, providing them with support from Zambia and the Democratic Republic of Congo.
leading Indian universities across various disciplines. Close
to 34 learning centers (LCs) have been set up in Africa and
teaching centers at five universities have been established
in India under the project. Three tele-education learning
university centers have also been established in Africa
(Kwame and Nkrumah University of Science and Technology,
Ghana; Makerere University, Uganda; Yaounde University,
Cameroon). The Pan-African e-network project was awarded
The Hermes Prize in Innovation 2010 for its contribution to
sustainable development.
36 “India-Africa: New ties to strengthen higher education,” University
World News website, www.universityworldnews.com/article.
34 Pan African e-Network website, www.panafricanenetwork.com, accessed 4 php?story=2010112711302143, accessed 4 February 2011
February 2011; 37 “Aegis plans to take education initiative to South Africa,” Aegis website,
“McGraw-Hill, Wipro to develop mobile learning platform,” DMAsia, 28 January www.aegiscomgroup.com/article.aspx?cont_id=5dSN4ku6y88=, accessed 7
2011, via Dow Jones Factiva, © 2011, Digitalmediaasia.com and DME Ltd. February 2011
35 “IGNOU begins tele-education in Africa,” Times of India website, http:// 38 “NIIT organizes 11th IT Scholarship in Nigeria,” NIIT press release, http://niit.
timesofindia.indiatimes.com/tech/careers/education/IGNOU-begins-telecom/newsandevents/Lists/NIIT%20News/disformCustomv3.aspx?List=a325a1
education-in-Africa/articleshow/6531765.cms, accessed 4 February 2011 cf%2Da064%2D4573%2Db17a%2D3ce893a0d178&ID=237, 7 February 2011

Boosting African IT capabilities
One of India’s leading IT services firm with a presence in nine African nations — South Africa, Nigeria, Senegal, Ghana, Botswana,
Senegal, Libya, Sudan and Zimbabwe — has been rewarding meritorious students in Africa by providing scholarships. In fact, its IT
scholarship test in Nigeria in 2010 attracted more than 200,000 students. The firm has focused on developing Africa’s skilled ICT
manpower for more than a decade and has trained thousands of students.
Enhancing service sector-focused education in Africa

An India-based BPO firm plans to open a center in South Africa in the next 6–12 months. The facility will be focused on training
students on managing customer experience.
3. Leveraging education facilities in India

African students typically prefer India over the US and Europe
for its viable fee structure and relatively low living expenses.
India has also been providing scholarships to African students
for many decades through the Indian Technical and Economic
Cooperation (ITEC) program and the Special Commonwealth
Assistance for Africa Programme (SCAAP)39. The Indian Council
for Cultural Relations also provides deserving African students
with scholarships to study in India. More than 10,000 students
from Africa are currently pursuing education in India through ITEC
scholarships40.
Providing growth
opportunities for African
students
India has launched special scholarships for African students
in the field of agriculture to provide support to the Nyerere
Programme of the AU. Under the program, 25 seats are
offered to students for pursuing a doctoral degree with the
GoI. The program, which provides each student with a stipend
of INR15,000 per month, offers 50 students the opportunity
to pursue Masters’ degree programs in India, with a stipend of
INR12,000 per month from the GoI.
39 Ministry of External Affairs, Government of India website, www.itec.mea.gov.

in/, accessed 4 February 2011
40 “Africa-India capacity building scholarships 2010,” Scholarship Positions
website, http://scholarship-positions.com/africa-india-capacity-building-
scholarships-2010/2010/01/21/, accessed 7 February 2011

Food processing
21
Food processing
India
Poised for rapid growth Primary products dominate the
Positioned as a major segment in India’s food industry value chain,
food processing involves the processing of raw material and the
Indian food processing market
production of other value-added products. India’s food processing The Indian food processing industry is classified into two broad
industry is estimated at INR3.4 trillion (US$70 billion) and is segments — primary food and value-added food. The primary
expected to witness a CAGR of 12% between 2009 and 201241. category constitutes nearly 80% of the processed food market and
is mainly dominated by unorganized players producing primary
Figure 4. Indian food processing industry value 2009-2012 food products such as packed milk, unbranded edible oil, milled
INR billion rice, tea, coffee, pulses and sugar. The value-added segment
accounts for the remaining 20% of the market and includes
6,000 industry players engaged in the manufacture of fresh, prepared
4,784
5,000 4,186 and packaged food products such as processed fruits and
3,680 vegetables, dairy products and bakery products.
4,000 3,430
3,000 Figure 5. Processing food categories (2009-10)

CAGR 12%
2,000 Fruits and Others
vegetables 8%
1,000 Sugar and 4%
sugar-based products
0 4% Dairy
30%
2009 2010 2011 2012 Spices
Source: Agriculture and Food Industry – India (Part VI),” Netscribes India Pvt. Ltd.,
5%
January 2011, via ISI Emerging Markets Alcoholic
Data includes forecasts for future years beverages
7%
Pulses
The food processing industry contributes nearly 10.7%–12% 7%
to India’s GDP and constitutes close to 19% of the domestic Edible oil Grain-based products
industry42. Currently, India processes only 10% of food produced 9% 26%
in the country, indicating the low level of penetration and scope
Source: SSKI Securities
for future expansion. The GoI plans to increase this to 20% by
2015. Given India’s sustained economic growth and steady
urbanization, the contribution of processed foods to the overall
food economy is poised to improve rapidly in future. The primary
growth drivers of the food processing industry include strong
domestic demand and a high degree of investments in the food
Government incentives boosting
processing and retail industries.
export competitiveness
Processed food exports from India have been on a distinct incline
over the past few years. The export of processed foods in the first
nine months of 2009 were valued at INR77.22 billion (US$1.67
billion), an increase of 19% from INR64.76 billion (US$1.39 billion)
in the previous corresponding period43. Processed food exports
from India constitute nearly 5% of the country’s total exports.
Despite India having a substantial agricultural production base, its
41 “Agriculture and Food Industry – India (Part VI),” Netscribes India Pvt. Ltd.,
January 2011, via ISI Emerging Markets
42 “Indian Agro Processed Food Industry,” Cygnus Business Consulting &
Research, October 2010, via ISI Emerging Markets 43 “Food and Beverage industry,” ISI Analytics, 2H10, via ISI Emerging Markets

share in the export of processed foods in global trade is only 1.5%. free. The GoI plans to open 30 mega food parks by the end of the
However, the GoI has been taking favorable measures such as Eleventh Five Year Plan. Further, it has envisaged an investment
providing financial assistance to boost the export competitiveness of US$21.9 billion in the food processing industry over the next
of the food processing industry. The GoI’s national policy aims to five years, from large multinational companies looking to enter
increase the contribution of food processing exports to 10% by India as well as from financial institutions that are bullish on the
2011 and to 25% by 202544. growth of the processed food industry. The Ministry of Food
Processing Industries undertook Vision 2015, which entails46:
The Indian competitive • Three-fold growth in the size of the processed food sector
advantage • Increase in the level of processing of perishables from

6% to 20%
India’s food processing industry continues to be extremely
• Increase in value addition from 20% to 35%
attractive due to the country’s abundance of natural resources,
an extensive workforce and a large population to sustain industrial • Increase in share in the global food trade from 1.5% to 3%
development. The Ministry of Food Processing Industries supports
the industry; it has also outlined a series of initiatives aimed at 3. Proximity to importing countries
improving the output of the country’s food-processing industry.
The Middle East and Southeast Asia are major export destinations
These initiatives focus on addressing concerns related to the
for Indian agri-commodities. While most of India’s food exports
discrepancy in output between the agricultural sector and the
are to the US and Europe, an improvement in the world economic
food-processing industry.
environment and favorable government initiatives are expected to
1. Abundant resources and labor strengthen exports in future.
advantages 4. Presence of global players

India is the largest producer of several agricultural products The Indian food processing industry is highly competitive with
such as milk, fruits and vegetables. With the world’s second- several domestic and multinational players vying for a market
largest arable area, India is one of the world’s key food-producing share. The growth of the food processing industry in the country
countries, second only to China. It is also positioned among the is linked to growth in the retail industry — according to the
world’s leading producers of milk. Globally, India is the second- Ministry of Food Processing, nearly 14% of the food processing
largest and third-largest producer of vegetables (100 MT) and industry growth that comes for the food processing industry is
fruits (50 MT), respectively. The country accounts for close to directly linked to retail. The food processing industry attracted
8.4% of the world’s fruits and vegetables output45. US$143.80 million in FDI in 2007–08, compared with US$5.70
million in 2006–0747.
The Indian food processing sector employs nearly 13 million
workers directly and 35 million workers indirectly. A large pool of
low-cost labor drives down the cost of production by nearly 40% in
India as compared to developed countries.
2. Favorable government policies

The GoI is committed to promoting the country’s food processing
industry through policies that favor agro-based industries. The
GoI has formulated a new trade policy that includes the food
processing industry in the list of priority sectors that qualify
for bank loans. In addition, it has announced a series of new
initiatives, including a separate policy at the state level and
enhanced focus on contract farming and making the sector tax-
44 “Indian Agro Processed Food Industry,” Cygnus Business Consulting & 46 “Indian Agro Processed Food Industry,” Cygnus Business Consulting &
Research, October 2010, via ISI Emerging Markets Research, October 2010, via ISI Emerging Markets
45 “Agriculture and Food Industry – India (Part VI),” Netscribes India Pvt. Ltd., 47 “Indian Agro Processed Food Industry,” Cygnus Business Consulting &
January 2011, via ISI Emerging Markets Research, October 2010, via ISI Emerging Markets

Food processing
Africa
Unexplored opportunity Being a resource-rich continent, Africa will continue to benefit
from the rising global demand for oil, natural gas, minerals, food,
The African continent is largely focused on agriculture and land and other natural resources. The demand for raw material
allied activities. The food processing industry in Africa has been from the world’s emerging economies accounts for half of
underdeveloped due to several factors such as civil wars that Africa’s total trade. The continent’s economic potential extends
have persisted for more than 20 years and previous colonial well beyond the export of commodities. African countries enjoy
ownership, which hampered the development of secondary the advantages of low-cost labor and their proximity to both
industries such as food processing. The level of development of European and North American markets. African governments are
the food processing industry also varies between regions within encouraging economic partnerships with other countries, in which
the continent. South Africa has the most developed food industry, buyers provide upfront payments, infrastructure investments,
including subsidiaries of multinational oil and fat producers as management skills and technology. FDI in Africa increased from
well as small food companies. In Central Africa, the food industry US$9 billion in 2000 to US$62 billion in 2008.
primarily consists of agricultural exports (coffee and cocoa). West
Africa is witnessing renewed focus on developing the domestic
African countries have a reasonably developed food industry,
food processing sector amid growing concerns of food
with most of their exports, including coffee and cocoa, being used
security. The continent is now attracting investments from
for processing and refining, in European countries.
domestic players and government organizations to boost the
competitiveness of the sector.
Rich agricultural resources,
immense potential Investments in developing
the food processing sector
The African continent has great potential for food production
and processing, given the right capital investment and technical
know-how. The CAADP launched under the NEPAD works to
• The Common Market for Eastern and Southern Africa
help African nations move on a path of higher economic growth
(COMESA) launched the Buy Africa Build Africa (BABA)
through agriculture-led development. The CAADP program
initiative in 2009, aimed at raising the profile of regional
has outlined a vision for agricultural reforms while aiming for
products globally. BABA is aimed at knowledge sharing in
average annual agricultural growth of 6% by 201548. This growth
food processing and packaging technologies49.
is also expected to increase the demand for secondary industries
such as grain refining and food processing. Africa’s consumer- • In 2009, the Federal Government introduced the National
facing sectors (consumer goods, telecom and banking, among Food Security Programme in Nigeria to focus on both
others) present an attractive opportunity, attributed to their upstream and downstream activities such as production,
average growth rate that is two to three times faster than the storage, processing and the marketing of crops, livestock
growth recorded in Organization for Economic Co-operation and and fisheries50.
Development (OECD) countries.
• A KES1-billion food processing plant was commissioned
at Makerere University’s Faculty of Food Science and
Technology in Uganda in 2009. The fruit and vegetable
processing plant, scheduled to operate on a pilot basis,
will help the department produce fruit juice and other
foodstuffs for sale as well as train students to become
entrepreneurs and agro-processors51.
• Britania Allied Industries, a consortium of food processing

firms, plans to invest KES11 billion for the construction of
a fruit juice-processing plant in Namanve, Uganda.
49 “Buy build Africa’ drive coming,” ISI Emerging Markets Africawire, 28 May
2009, via Dow Jones Factiva, © 2009 Internet Securities, Inc.
48 “Supporting African Minister’s of Public Administration Programmes,” NEPAD 50 “Programme on Food Processing, Storage, Marketing Out,” All Africa, 16
website, www.nepad.org/economicandcorporategovernance/supporting- March 2009, via Dow Jones Factiva, © 2009 All Africa
african-minister%E2%80%99s-public-administration-programmes, accessed 2 51 “Food Processing Plant Launched,” All Africa, 26 August 2009, via Dow
February 2011 Jones Factiva, © 2009 All Africa

A collaborative opportunity 1. Product R&D
The food processing industry is one of the five prime sectors Collaborative R&D in food processing technology can be a
critical for strengthening India-Africa trade relations, in addition significant area of cooperation between Indian and African
to other sectors such as water management, education, countries, as the level of food processing in India is far more
pharmaceuticals, health care, and IT. As a result, Indian consumer evolved than in Africa. The well-established R&D and technical
products companies are increasingly investing in assets in African knowledge of Indian research institutions such as the Central
countries to expand their businesses in new growth markets Food Technological Research Institute (CFTRI), Central Institute
of Fisheries, National Dairy Research Institute (NDRI), National
According to Thomson Reuters, in 2010, India was the most Research and Development Centre (NRDC) can provide effective
acquisitive company in Sub-Saharan Africa, accounting for support for developing the food processing sector in both these
one-third of the total value of deals in the region. In the last five regions. For instance, the Council of Scientific and Industrial
years, several Indian companies have invested around US$16 Research (CSIR), one of the 40 national research institutes set
billion across a range of businesses in Africa in pharmaceuticals, up by the GoI, has been revolutionary in product development,
automobiles, IT, power, mining, consumer goods and telecom52. ranging from food preservatives to ready-to-eat foods. Indian
scientific and agricultural research institutions have assisted
around 5,000 entrepreneurs for developing their business ideas
across African countries53. A large and growing ethnic population
in India as well as African countries also provides a mutually
beneficial opportunity for R&D in the development of the ethnic
food market.
Indian companies increase investments in the

African continent
• Food processing: A leading Indian company with businesses spanning across sectors signed a pact with the Rwanda
Development Board (RDB) to invest US$250 million for a knowledge hub and an integrated food park in the East African
country. Another diversified Indian conglomerate with a presence in the food service sector plans to further expand its
operations in the food and beverage sector in Africa. The company already has a presence in the dairy business in Uganda and
Kenya and considers Africa a “high-potential” market with estimated revenues of US$180–200 million in 2010.
• Other consumer product sectors: Several other companies in the FMCG industry have been expanding their businesses in the
African continent. For example, a leading Indian FMCG company with a legacy of 125 years is one of the most active Indian
processed goods companies in Africa. The company acquired a US-based personal care products manufacturer and its two
African units for US$100 million. The company continues to explore profitable assets in the range of US$10–US$50 million
across regions, including South Africa, Nigeria, Kenya, Ghana, Mozambique and Tanzania. Another leading player established
in the mid-1970s won its board approval in October 2010 to invest US$1 billion in assets in India and overseas. The company
is considering deals in markets such as South Africa, Kenya and Nigeria. Other leading consumer products players are also
considering the acquisition of assets in North Africa and South Africa.
53 “African Agriculture: an abiding investment venue for India,” Microfinance

52 “Indian Companies Push into Africa,” Thai News Service, 1 November 2010, via Africa website, www.microfinanceafrica.net/tag/indian-investors-africas-food-
Dow Jones Factiva, © 2010 Thai News Service sufficiency/, accessed 17 February 2011

Food processing
2. Investment in food processing 5. Growing consumer markets

technology Africa’s economic growth is opening up new business
opportunities for several Indian companies. Consumer spending
Indian food companies can collaborate with African companies
in the continent is estimated to nearly double to US$1.4 trillion
that continue to lack sufficient investments in technologies used
by 2020, with the number of households in Africa possessing
in the food processing and packaging industry. As a positive
discretionary income increasing by 50% to 128 million during this
development, African governments are encouraging economic
period56. The increasing purchasing power of African consumers is
partnerships that help build infrastructure and facilitate
becoming relevant to Indian companies seeking potential growth
technology transfer and the sharing of management skills to
opportunities in emerging markets. Simultaneously, a number of
strengthen their industry base.
African countries are relying more and more on Indian demand
for their products. Indian investments also help generate local
3. Contract farming employment and develop local labor skills in Africa.
Significant opportunity exists for contract farming agreements
between food processing and agricultural companies in India and 6. Import-oriented manufactured goods
Africa, respectively, particularly amid growing concerns around
future food security in both the regions. While Africa is rich in
industry
agricultural commodities, Indian companies have the scale and Africa presents a very attractive opportunity for increasing
domain knowledge to enhance the value of agricultural supplies, collaboration in the food processing industry. African countries
resulting in the growth of food processing industries in both largely export agricultural products and import manufactured
regions. With nearly 700 million hectares of potential farmland goods, thereby limiting the supply of processed goods in the
and low-cost labor, Africa has been attracting foreign investors region. “Transition economies” such as Ghana and Kenya are
seeking to enhance food security. Close to 70 Indian companies now increasingly manufacturing goods such as processed foods,
are already in the process of entering the farming sector in the apparel and cosmetics. However, costly trade policies, including
continent. African countries that offer significant opportunities for tariffs, product standards and custom duties, inhibit Africa’s
contract farming include Ethiopia, Malawi, Kenya, Uganda, Liberia, regional trade.
Ghana, Congo and Rwanda.54
4. Favorable demographics
Indian and African markets enjoy similarities in their consumer
markets, which are marked by evolving consumption patterns, an
emerging middle class population and consumer preference for
affordability. Indian processed goods players can collaborate with
African companies and use their experience to develop and sell
products in the continent. A large proportion of Africans of Indian
origin in eastern and southern Africa gives Indian companies
an advantage over its global competitors. Consumer products
companies are well-positioned to benefit from the African market
due to the increasing number of households, rising spending
power and a sizeable population of Africans of Indian origin in
eastern and southern Africa.55
54 Indian companies enter the commercial farming space in Africa,” The Economic
Times website, http://articles.economictimes.indiatimes.com/2010-06-13/
news/27629818_1_land-lease-commercial-farming-agriculture, accessed 1
February 2011
55 “Indian firms ride Africa growth story to climb higher,” Business Standard 56 “Indian firms ride Africa growth story to climb higher,” Business Standard
website, www.business-standard.com/india/news/indian-firms-ride-africa- website, www.business standard.com/india/news/indian-firms-ride-africa-
growth-story-to-climb-higher/123616/on, accessed 1 February 2011 growth-story-to-climb-higher/123616/on, accessed 1 February 2011

Infrastructure
29
Infrastructure
India
A platform for change — sector 2. Railways
highlights57 The Indian Railways (IR) is the world’s second-largest rail network,
with centralized management and a total network of more than
With the GoI’s thrust on infrastructure spending rising and private- 63,000 km spread across 7,000 stations.59 The IR is also the
sector participation improving, the infrastructure sector in India world’s largest passenger carrier, transport approximately 20% of
has progressed at a considerable pace over the past few years. India’s passenger traffic. In contrast, the freight segment accounts
In FY10, the total investment in the India’s infrastructure was for around 70% of the revenues and carries approximately 20% of
estimated to be approximately 7.5% of the country’s GDP. The GoI national freight traffic.60
plans to increase this to 9% of India’s GDP by 2014. In India, rail projects have typically been part of the public
Figure 6. Infrastructure investment sector domain. However, based on the success of PPP in other
infrastructure sectors such as highways, the IR has begun to
INR billion % take measures to explore the PPP route. In the areas of wagon
5,000 7.5 8 manufacturing, the modernization of railway stations, and the
5.6 development of industrial corridors, freight terminals, multimodal
4,000 5.1 4.9 6
4.5 5.9 logistics parks and real estate, there are several upcoming
5.5 opportunities for private-sector participation.
3,000 4.7 4
4.4
2,000 2 3. Ports
1,000 0 India has 12 major and around 200 non-major ports, accounting
for 95% of the country’s trade in terms of volume and
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
approximately 70% in terms of value. With an extensive coastline

of 7,517 km, Indian ports offer significant scope for international
infrastructure investments % of GDP maritime transport, both for passenger and cargo handling.61
Source: Planning Commission, RBI
The GoI has taken various initiatives to encourage private-sector
participation in port-development activities and operations.
Roads and highways, railways, and ports and airports are the key The National Maritime Development Programme (NMDP) is the
sub-segments of India’s infrastructure sector. GoI’s most ambitious endeavor. The NMDP aims to increase
private investment and improve service quality in the maritime
1. Roads and highways sector. Further, special emphasis has been laid on increasing the
container capacity of ports, which currently stands at 599 mt and
With its roads spanning 3.3 million km, India is the world’s second- is expected to reach 927 mt by 2015.62
largest country in terms of road length. Roads, being the most
oft-used route for transportation, accounts for 86% of passenger
traffic and around 53% of freight traffic. The National Highways
constitute only 2% of the country’s total road length. Interestingly,
however, 40% of total road traffic in India flows through the
National Highways.58
As road connectivity constitutes an integral part of economic and

social development, the GoI has undertaken several initiatives,
including the launch of the National Highway Development
Programme (NHDP) and the Pradhan Mantri Gram Sadak Yojana
(PMGSY), to improve and maintain the country’s road network.
In addition, the GoI has announced policy measures to create
substantial opportunities for private investors and widen the
scope of PPP on road projects.
59 “Evolution,” Ministry of Railways website, www.indianrailways.gov.in/
indianrailways/evolution/evolution.jsp, accessed 3 February 2011
60 Sector focus – Railways, India Infrastructure, April 2009, p.30–54
61 Progress on the ground – Favourable policies create growth environment, India
57 Planning Commission Infrastructure, August 2010, p.90
58 CRISIL Research 62 CRISIL Research

4. Airports During the Eleventh Five Year Plan, the total investment for India’s
infrastructure sector is projected at US$514 billion, as against
India has 454 airports and airstrips, of which the Airport US$218 billion in the Tenth Plan.
Authority of India (AAI) owns and operates 97 airports, while the
Department of Defense owns 138, and state governments own The majority of planned investments are expected to be absorbed
158, and private owners maintain and own 61.63 in areas such as roads, power, irrigation and water supply, which
is expected to result in diverse construction opportunities across
With increasing traffic requirements resulting from rapid growth infrastructure segments.
in passenger and freight traffic movement, the GoI has adopted
several measures to upgrade and modernize airports, including The infrastructure sector accounts for around 54% of construction
the provision of 100% tax exemption on airport projects for 10 activity in the country, and the industrial segment contributes
years. According to the Centre for Asia Pacific Aviation (CAPA), 36%, while residential and commercial activities account for the
Indian airports are estimated to handle more than 100 million rest. Growth in infrastructure investments has also increased
passengers, including 60 million domestic passengers and around construction activity in the country. Employing approximately
3.4 mt of cargo per annum, by 2020. 33 million people, the Indian construction sector ranks second,
behind agriculture, in terms of the economic activity it contributes
to the country.64
Small enterprises dominate the construction industry, accounting

for 96% of the market share, followed by medium enterprises
holding a 3% share, while large enterprises hold the rest. India
is currently home to approximately 300,000 construction
companies. Gammon India Limited (GIL), Hindustan Construction
Company (HCC), IVRCL Infrastructure and Projects Limited,
Larsen & Toubro Limited (L&T), Nagarjuna Construction
Company (NCC), Punj Lloyd Limited, Patel Engineering Limited,
Simplex Infrastructure Limited and Unitech Limited are some
of the major players.
Figure 7. Segment-wise infrastructure spending during Tenth and Eleventh plan (INR billion)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Roads and bridges
Electriciy
Telecom
Railways
Irrigation
Water supply
Ports
Airports
Storage
Oil and gas pipelines
10th plan 11th plan

Source: Planning Commission
63 “Conference on building infrastructure: challenges and opportunities,” Airport

infrastructure, Ministry of Civil Aviation, 7 October 2006 64 Sector focus – Construction, India Infrastructure, January 2011, p.36–58

Infrastructure
Africa
The indian competitive Building the future
advantage Most African countries normally have inadequate infrastructure
facilities and require significant government and private-
sector participation for sustained growth. The development of
1. Favorable government regulation infrastructure is a major challenge.
In the past few years, the GoI has strengthened its focus on
African governments are now increasingly focusing on developing
infrastructure development. It has initiated policy reforms and
infrastructure, with around 40% of the continent’s infrastructure
undertaken various measures to encourage private-sector
spending being government-funded. Efforts in recent years have
participation in infrastructure development. Such measures have
started paying off and have resulted in improved productivity in
also increased foreign investment in the sector. An increase
most African countries. However, many African governments may
in PPP and the GoI’s introduction of independent regulatory
find it difficult to plug the existing deficit. According to industry
institutions has increased the scope for large projects in the
estimates, close to US$90 billion is required annually for 10 years
infrastructure sector.
to bring Africa’s infrastructure at par with international standards.
2. Workforce edge Due to a shortage of services, infrastructure costs in Africa are
significantly high. Transportation costs in the continent are almost
India has a diverse young and skilled workforce. Infrastructure
double the world average. Every year, infrastructure deficit is
and construction companies regularly provide training to their
estimated to cost Africa 1% of GDP per capita.
employees on operating procedures and policies that help
them hone their project-management skills. For example, L&T Further, air safety and security concerns have served as obstacles
provides professional skills training to its employees through its to the growth of the transportation sector in many African
Construction Skills and Training Institute and vocational training countries. For instance, in 2006, the European Union announced
centers. an aircraft “black list,” prohibiting 74 African airlines from
landing at European airports, as they were considered unsafe by
3. Secure management systems to international standards.
mitigate risk This creates an opportunity for African countries to collaborate
with India for infrastructure development.
Indian construction companies adopt risk-management practices
and safety-management systems for all their manufacturing
locations. Such well-balanced set ups not only improve the Government incentives —
working condition of the employees, but also increase their
productivity. For instance, Nagarjuna Construction Company widening the scope of PPP
(NCC) has adopted several sophisticated project-management
Given the current scenario of Africa’s infrastructure sector, the
tools to mitigate project-related risks.
governments of many countries in the continent have initiated
plans to strengthen private investments in the sector.
4. Innovation and technology
For instance, in 2007, Nigeria launched Africa Finance
development hubs Corporation (AFC), a private sector-led investment bank and
In order to achieve efficiency in project execution, Indian development finance institution. AFC’s objective is to promote
construction companies offer technology and innovation centers private-sector investment in power, transport and telecom
that focus on continuous development. L&T has established infrastructure projects and help increase the number of PPPs to
technology-development centers in Powai, Mumbai for new- bridge the infrastructure gap.
product development in defense, nuclear equipment and
Further, Nigeria has a housing deficit of 16 million, and the
electronic systems.
country’s Federal Housing Authority (FHA) is considering building
relationships not only with developers but also with bankers,
multilateral funding agencies and capital market operators for
effective housing development.

Africa infrastructure deficit
Normalized units African low-Income Others low-income African middle-income Others middle-income
countries countries countries countries
Paved-road density 34 134 284 461
Total road density 150 29 381 106
Main line density 9 38 142 252
Mobile density 48 55 277 557
Internet density 2 29 8 235
Generation density 39 326 293 648
Electricity coverage 14 41 37 88
Improved water 61 72 82 91
Improved sanitation 34 53 53 82
Source: “African acceleration,” Societe Generale, October 2010, via Thomson Reuters
Overall infrastructure spending needs for Africa (US$ billion)
Infrastructure sector Capital expenditure Operational and maintenance Total spending

ICT 7.0 2.0 9.0
Irrigation 2.9 0.6 3.4
Power 26.7 14.1 40.8
Transport 8.8 9.4 18.2
Water/Sewerage 14.9 7.0 21.9
Total 60.3 33.1 93.4
Source: Standard Bank website
Africa’s high cost of infrastructure
Infrastructure sector Unit Sub Saharan Africa Other developing regions
Power tariffs US$ per kwh 0.02-0.46 0.05-0.10
Water tariffs US$ per cubic metre 0.86-6.56 0.03-0.60
Road freight tariffs US$ per tonne-km 0.04-0.14 0.01-0.04
Mobile telephony US$ per basket per month 2.60-21.00 9.90
International telephony US$ per 3-minute call to the US 0.44-12.50 2.00
Internet dial-up services US$ per month 6.70-148.00 11.00


Infrastructure
Bridging the gap The majority of African projects that Indian companies execute
are financed through EXIM Bank, which extends LoCs to African
Although India’s own infrastructure requirements are in deficit, it governments or regional institutions. On 1 September 2010,
is estimated that Indian infrastructure deals in Africa were valued around 65% of the bank’s total operative LoCs were in Africa and
at an average of US$500 million annually between 2003 and valued at US$2.8 billion. Approximately 50% of these LoCs to
200765. In the last decade, many Indian companies have executed Africa had a direct infrastructure focus.
projects in the continent.
Thrust for Indian companies
The IR supplies coaches to As such, infrastructure-related investments have played only
an auxiliary role in India’s ongoing focus on Africa. However,
African countries65 increased infrastructure participation is necessary for both the

regions, as India depends heavily on Africa for mineral resources
The IR, the Indian state-owned railway enterprise, has one such as coal, oil and gas. To gain access and develop these
of the world’s largest and most profitable networks in the resources, proper infrastructure has become a necessity. Africa’s
world. The IR transports more than 20 million passengers infrastructure deficit could make it difficult for Indian companies
per day in India and posts revenues of almost US$20 billion. to access African resources in a cost-efficient manner. The
It has strong resources to help low-income African countries unavailability of important resources may affect India’s economic
develop railway networks. growth in the long term. Thus, it is necessary for India to invest
in African infrastructure sector to safeguard its own economic
The IR has already stepped into Africa by supplying growth.
locomotives to Mozambique, Tanzania, Mali and Senegal, and
coaches to Angola. Furthermore, the IR can share its low-cost For Africa, it is a win-win proposition, as collaboration with India
model with African countries with fewer financial resources to will help the continent secure funds to develop infrastructure in
develop railway infrastructure economically. the continent. Growth in the infrastructure sector is expected to
directly spur economic growth, employment and foreign capital
inflow. In addition, other industries in the continent such as
construction, cement, steel, mining, agriculture, shipping and
transport stand to benefit and fuel Africa’s economic growth.
Recent examples of large Indian companies leveraging

opportunities in Africa’s infrastructure sector
Tanzania: A leading construction company has secured two turnkey contracts worth US$100 million.
Mozambique: The work involved is the supply of transmission line towers for the Boane Salamanga Project.
Sudan: One of the opportunities being explored includes managing the 127-km-long, two-lane road from Haiya to Atbara.
Mauritius: Several projects are underway in the country. These include the construction of a water-treatment plant with a capacity
of 10.8 million liters per day, the construction of an International convention center, the construction of a 70-meter high tower,
utility buildings, and site development works for the business parks of Mauritius Limited. One more Indian company will develop an
integrated township valued at US$1 billion.
Kenya: The construction of a pure soda ash plant is underway.
South Africa: Recent industry opportunities include the laying of power transmission lines, sub-stations, rural electrifications,
power distribution and industrial electrification.
Egypt: A leading Indian construction company has signed an MoU with local companies to develop large road projects.
Eritrea: A mid-sized Indian construction company executed a river water-supply project in 2001.
65 “New partnerships poised to grow Africa’s commercial infrastructure,”

Standard Bank website, http://ws9.standardbank.co.za/sbrp/search.do,
accessed 24 February 2011

Indian Ex-Im Bank’s operative LoCs to Africa for infrastructure projects (1 September 2010)
Country US$ million Purpose

Angola 40 Railway rehabilitation
Mauritius 10 Construction of Baie du Tombeau sewerage project
Cote d’lvoire 27 Renewal of the urban transport system in Abidjan and for various agriculture projects
Mali 27 Rural electrification and setting up of agro machinery and tractor assembly plant
Ghana 27 Rural electrification, agriculture, communication and transportation projects
Chad 50 Setting up of a cotton yarn plant, steel billet plant and rolling mill, plant for assembly of
agricultural equipment and bicycle plant
Burkina Faso 31 Agricultural projects and construction of national post office
Sudan 350 Project for setting up 4 x 125 MW Kosti Combined Cycle Power Plant
Sudan 42 SINGA-GEDARIF transmission and sub-station Project
Ethiopia 65 Energy transmission and distribution
EBID 250 Public sector projects
Mozambique 20 Gaza electrification project
Mali 30 Electricity transmission and distribution projects from Cote d’Ivoire to Mali
Sudan 52 Singa-Gadarif transmission line extension to Galabat
Rwanda 20 Power projects
Gabon 14 Housing projects
Gambia 10 Construction of National Assembly Building Complex
Senegal 25 Rural electrification project and fishing industry development project
Niger 20 Rehabilitation of six power stations, purchase of three power transformers, rehabilitation and
erection of power lines throughout Niger
Mozambique 25 Construction of an IT park
Burkina Faso 25 Rural electrification
Mozambique 30 Rural electrification in Gaza, Zambezia and Nampula provinces
Zambia 50 Itezhi-Tezhi hydropower project
Sierra Leone 30 Rehabilitation of existing facilities and addition of new infrastructure to supply potable water
Mozambique 25 Rural electrification project of Cabo Delgado, Manica and Niassa provinces
DRC 42 Execution of the Kakobola hydroelectric power project

Life sciences
37
Life sciences
India
The growth story continues The Indian competitive
With a diverse population of more than one billion, India offers
a vast and varied business landscape conducive to growth.
advantage
Consequently, the last two decades have been witness to an
Indian life sciences industry that has evolved tremendously, with
1. A key manufacturer and supplier of
the pharmaceutical, biotechnology and health care domains low-cost generic drugs
contributing significantly to sector development and growth.
Figure 8. Global opportunity in biosimilars (US$ billion)
A large population, evolving patient demographics, increasing
150 115
health care expenditure, growing urbanization, rising life
expectancy, and active private-sector participation have 100 76
augmented the growth of the country’s health care sector in
recent times. Despite the global economic slowdown, the health 50
care delivery market clocked 3.1 billion treatments in FY10 in
0
terms of volume, amounting to US$37 billion in terms of value66.
In addition, the diagnostics and pathology market grew by 2008 2015
almost 16% in 2009 at US$383 million and is further expected to Source: Teva Pharma website
continue to grow at 15%–20% in the coming decade as well. Data includes forecasts for future years
India has one of the fastest-growing pharmaceutical sectors in the

India is home to several domestic players that have gained
world, with a market size that has significantly grown in the past
traction in the global generics industry. Several developed as well
few years. It is the third-largest volume market in the world and
as developing countries are becoming progressively inclined to opt
fourteenth in terms of value, thereby accounting for nearly 10% of
for inexpensive generic drugs over patented drugs to downsize
the world’s production in volume and 1.5% in value67. Moreover, it
their overall health care expenditure.
is the fourth largest producer of generics and ranks seventeenth
in the export value of bulk actives and dosage forms67. Since The emergence of similar biological medicinal products
the introduction of the patent regime in 2005, pharmaceutical (biosimilars) in clinical practice has opened up new avenues for
MNCs perceive India as a key destination for driving their growth pharmaceutical/biopharmaceutical companies to further enhance
momentum. their business operations.
Market size and growth of Indian pharmaceutical industry (US$ billion)
Category 2002–03 2007–08 2009–10 2015–16

Domestic formulations 4.3 8.4 10.2 21.5
Formulation exports 1.4 4.0 8.6 12.6
Bulk drug exports 1.2 4.2 7.5 12.6
Sources: “Indian Pharmaceutical industry report,” OPPI-Yes Bank; The Times of India; ISI Emerging Market
Data includes forecasts for future years
66 “Healthcare delivery in India outlook,” Industry profile, December 2010, CRIS

INFAC
67 Department of Pharmaceuticals 2009–10 annual report

2. A competitive edge in manufacturing Figure 10. Growth prospects of the Indian medical tourism
industry (US$ million)
and clinical research 1,980
2000
Figure 9. Historical market size of the Indian clinical
research market (US$ million)
1000
400 360 312.5
211
124 0
200
2008 2015
0
Source: The Economic Times website
2005 2007 2009
Source: The glorious metamorphosis, Ernst & Young, 2009
India has been a leading performer in custom manufacturing

Africa
outsourcing (CMO) and clinical research outsourcing. The
CMO market recorded approximately 43% growth between
2007 and 2010, around thrice that of the global market rate, Key issues and development
due to a vertically integrated model that supports both active
pharmaceutical ingredients (APIs) and formulations. On the needs in African health care
other hand, the Indian clinical trials market has been growing Despite improvements in recent times, the health care industry
much more rapidly than that in the developed markets of the US in almost all African nations remains largely untapped and
and the EU, as well as other emerging economies such as Brazil, underdeveloped, with lack of access to primary health care
Russia and Central Europe. According to Express Pharma, India is being the fundamental hurdle. Furthermore, the current state
projected to conduct 15% of all global clinical trials by 201168. of the industry can be attributed to the high proportion of
Moreover, India lags just behind the US in terms of the number of the continent’s population living in rural areas, low per capita
US Food and Drug Administration (FDA)-approved manufacturing spending on health care, and a low number of physicians and
plants, thereby further strengthening its manufacturing medical professionals per 1,000 inhabitants. As a consequence,
capabilities. As on November 2010, India had more than 175 US various health care issues such as the continued prevalence of
FDA-approved plants with exceptional capabilities to manufacture HIV/AIDS, malaria and tuberculosis, high infant mortality, and
high-quality products. high death rates among women during pregnancy and childbirth
continue to plague the continent. Apart from infectious diseases,
3. A potential medical tourism hub non-communicable diseases such as diabetes and hypertension
have become prevalent in most parts of Africa. The costs of
The Indian medical tourism industry is poised to grow at 30% non-communicable diseases on health care systems continue
annually, primarily driven by world-class health care services to undermine the emerging economies of African nations and
offered at a fraction of the overall cost in western countries. also hamper the progress that has so far been achieved in the
According to one of India’s leading industry bodies, the cost of continent. Henceforth, significant opportunities exist for the
surgery in India is nearly one-tenth of the cost in the US and supply of a wide range of low-cost medicines, hospital equipment,
Europe69. Approximately 180,000 patients visited India’s medical instrumentation, machinery and allied medical products, and for
centers in 2008–09. The boom in the medical tourism industry is greater collaboration in the field of medicine.
expected to complement the growth of the domestic health care
delivery market.
68 “India: Preferred destination for outsourcing clinical trials,” Express Pharma

website, www.expresspharmaonline.com/20101015/cphiworldwidespecial01.
shtml, accessed 15 October 2010
69 “Indian medical tourism to touch Rs 9,500 cr by 2015: ASSOCHAM,”
The Economic Times website, http://economictimes.indiatimes.com/
articleshow/3943608.cms, accessed 6 January 2009

Life sciences
Developing synergies to 3. Establishment of successful
telemedicine network
address health care issues in
Africa’s high rural population and scarcity of quality hospitals
Africa serve as key drivers for deploying telemedicine and mobile health
in the continent. This is an area where most opportunities can
Despite growing consumer demand, the health care sector in most be found without waiting for political-economic challenges to be
African countries has not been a major beneficiary of positive addressed. Industry analysts believe that a model combining local
investment trends as compared to other sectors. Yet, remarkable health officers, telemedicine, and mobile clinics could help African
opportunities lie in wait amid the challenges that face health care countries leverage their existing health systems to scale up
provision in the region. Irrespective of challenging statistics, the access to primary health care quickly and cost-effectively. Several
sector has experienced notable expansion in recent times as domestic players have set up their telemedicine networks in India,
governments, faced with the rising demand for improved services, and this business model can be replicated in Africa.
embrace prudent strategies to meet health service delivery goals.
Africa and India have maintained strong trade relations in the
past, and the continent can further leverage India’s experience
and know-how for upgrading and streamlining its health care
Telemedicine —
systems, thereby increasing access to quality and affordable
health care for its people.
reaching out
India, in a joint venture (JV) with the AU, has initiated the
1. Supply of low-cost generics and Pan-African E-network Project, wherein African medical
personnel can seek medical consultation from Indian medical
biogeneric drugs specialists in various disciplines. The second phase of this
High out-of pocket expenditure in the African health care project was initiated in August 2010, wherein telemedicine
sector makes generic drugs through the local manufacture of consultations are regularly being conducted from super-
pharmaceuticals the most viable option. Africa can leverage specialty hospitals in India to African countries. Furthermore,
the rich experience of Indian companies as successful providers 11 Indian super-specialty hospitals have initiated regular
of low-cost generic drugs in variously natured and challenging continued medical education (CME) sessions since 22 April
markets to supply low-cost medicines to its citizens. The presence 2009, and to date, around 654 CME sessions have been
of Indian pharmaceutical players in the African market dates conducted through this network.
back to the 1970s. Since then, several other local players have Source: Pan-African e-Network website
expanded their business operations in the continent. In addition,
these Indian players have taken several initiatives to overcome
the barrier of easy access to affordable medicines in the country. 4. Potential to supply health care talent
In 2001, a leading Indian pharmaceutical company offered
an AIDS drug to African countries at US$300, while the same A large number of students with advanced degrees in chemistry,
preparation in the US cost US$12,000. Furthermore, Indian biology and pharmaceutical science graduate from Indian
players with substantial presence in the biosimilars space can help universities annually, reflecting the abundant pool of talent
African nations fight non-communicable diseases prevalent in the available to Indian companies. The unavailability of skilled human
continent. resources is a significant barrier to the growth of health care
provision in Africa. As such, African governments can seek the
2. Enhanced cooperation to combat help of Indian hospital and pharmaceutical players and leverage
their tremendous talent pool to provide technical training to
communicable diseases local health officers in Africa, thereby improving their technical
Over the years, India has gained substantial domain knowledge capabilities. By applying these practices and employing groups of
in the development and production of vaccines to treat infectious local health officers, African countries could address the majority
diseases such as HIV/AIDS, tuberculosis, influenza and kala- of clinical conditions they face and simultaneously provide
azar. Several leading Indian pharmaceutical and biotechnology sufficient patient-trained medical personnel interactions.
companies have a rich portfolio of vaccines that can cater to any
shortages in the African market.

Making early inroads
A leading Indian pharmaceutical company entered the African market in 1978 with the establishment of a manufacturing facility in
Lagos, Nigeria through a JV. This company’s operations extend to around 49 countries, while its generics business is spread across
8 geographic segments, including India, North America, Latin America, Europe, the CIS countries, Africa, the Asia-Pacific region,
the Middle East and Sri Lanka.
With its operational headquarters in Pretoria, South Africa, the company has 10 representative offices overseeing its operations in
43 African countries. The company reported sales worth US$35 million in the region in the July–September 2010 quarter.
The company is mainly active in Nigeria and Cameroon, with its Côte d’Ivoire office catering to other West African countries such as
Benin, Togo, Burkina, Mali, Niger and Ghana. In January 2008, the company established a new representative office in Senegal to
further develop its business in West African countries such as Guinea, Gambia and Mauritania.
The company entered Africa with a customized business model aimed at meeting the country’s need for affordable health care
for a wider section of the population. Historically, large multinational pharmaceutical players that generally sold their products at
high prices due to a monopolistic environment dominated the African market. This company was among the first few players to
reduce the prices of the basic first-line anti-retroviral regimen from US$10,000 per year to less than US$100 a year. The company
followed the strategy of complementing its inherent competencies through various alliances in the African market to establish a
local presence. Inorganic growth initiatives such as the acquisition of brands, manufacturing capabilities and a sales force in the
region have helped the company build a strong presence in this market.
Much of the company’s success in Africa can be attributed to its therapeutic diversification and simultaneous focus on local disease
demographics. A high-quality product mix encompassing a wide range of therapeutic categories at competitive prices has helped
the company emerge as a leader in these markets. In addition, the company has been able to achieve swift registrations for its
products due to its sound understanding of the market on account of its historical presence.
The company has successfully created strong brand value in Africa, and it is now reaching further into these markets, which holds
significant potential due to the sizeable unaddressed need for affordable health care in the continent.
5. Leveraging India’s
emergence in medical Extending collaboration
tourism Africa-India Framework for Cooperation: Africa’s Heads of State and
Government and Heads of Delegation, along with the Prime Minister of India,
The dearth of quality and affordable health established the Africa-India Framework for Cooperation in April 2008 to
care services in Africa makes India a preferred cooperate on several aspects of the healthcare sector, including:
destination among African citizens for medical
tourism. African citizens can leverage the • Exchanging information and technical knowledge on traditional systems of
knowledge and advanced medical facilities of medicine
Indian hospitals to access affordable health • Providing training to health care professionals and physicians
care services. The volume of international
patients visiting India for medical treatment • Increasing access to adequate medical services and expanding
from several African nations — particularly telemedicine infrastructure and technology such as medical diagnostic and
Nigeria — is growing rapidly, and the Indian other services
High Commission issued nearly 10,000 visas to • Enhancing cooperation in controlling HIV/AIDS, tuberculosis, malaria and
patients in Nigeria visiting Indian hospitals for other communicable diseases
medical treatment70.
• Combating the proliferation and dumping of counterfeit medicines
6. Government collaborations MoU between GoI and Rwanda: The Governments of India and Rwanda signed
to augment health care an MoU on cooperation in health care and medicine on 12 November 2010.
According to the MoU, both the countries will jointly work toward several
services in Africa domains such as medical research, pharmaceutical drugs and products, hospital
Over the past few years, India and Africa have management, health tourism, telemedicine and human-resource training.
initiated several collaborations to give impetus PPP model: Several African governments are adopting the PPP route to
to the African health care industry. improve health care infrastructure and to enhance access to quality health
care services in the respective countries. In one such deal, the Government of
Nigeria collaborated with a leading Indian hospital chain to set up a new hospital
70 “India, Mauritius: Indian hospitals promote medical and to modernize the country’s health care infrastructure. This hospital chain
tourism services across Africa,” International has struck similar deals with other African nations such as Ghana, Tanzania,
Medical Travel Journal website, www.imtj.com/
news/?EntryId82=178710, accessed 18 February
Uganda, Malta and Libya.
2011

Mining
43
Mining
India
Forging ahead Figure 13. Share of states in the value of mineral production
2009–10 (estimated)
The Indian mining sector is a key contributor to the growth of
Offshore areas, 17.98% Andhra Pradesh, 12.24%
the country’s economy, accounting for approximately 2% of the
country’s GDP in FY10. During this period, the total value of
minerals (excluding atomic minerals) produced was estimated at Jharkhand, 8.79%
INR1.28 trillion. India produces 86 minerals, including 4 fuels,
10 metallic, 46 nonmetallic, 3 atomic and 23 minor minerals71.
Others, 17.08% Chattisgarh, 9.18%
The country has abundant reserves of key minerals such as iron
ore, bauxite, dolomite, gypsum, limestone and mica, as well as
adequate reserves of chromite, manganese, zinc and graphite. Gujarat, 4.87% Orissa, 11.85%
In fact, India is a leading producer of key minerals such as iron
ore and bauxite. Between FY06 and FY10, the production of Karnataka, 3.29% Tamil Nadu, 3.42%
minerals (in value) in India grew at a CAGR of 9.1%. Fuel minerals Maharashtra, 7.05% Rajasthan, 4.26%
contributed approximately 62.2% of this growth72. Source: Ministry of Mines 2009-10 annual report
Figure 11. Value of minerals in India (INR billion)

1,500 1,279.2
The Indian competitive
1,198.0 1,222.8
1,000 903.2
1,044.9 advantage
500
1. Abundant mineral reserves
India has abundant reserves of key minerals such as iron ore, zinc
0 and bauxite and has the potential to emerge as a powerhouse for
FY06 FY07 FY08 FY09 FY10 the supply of these minerals in the global arena. Apart from being
Source: Ministry of Mines 2009–10 annual report the fourth-largest producer of iron ore with annual production of
more than 200 mt, India has the finest zinc mines and silver ore
Figure 12. Types of minerals (FY10) in the world in the state of Rajasthan. Meanwhile, Orissa contains
large bauxite reserves that can be exploited for producing
Nonmetallic minerals
16.2% (207 bn)
aluminum. India also holds around one-sixth of the world’s
Fuel minerals titanium reserves73.
62.2% (796 bn)
Metallic minerals 2. Low cost of production

21.6% (276 bn)
India is blessed with sufficient reserves of thermal coal used to
produce power to meet the country’s growing power requirement.
This has facilitated mining and metal players in efficiently
managing their cost of production and emerging as one of
Source: Ministry of Mines 2009–10 annual report
the lowest-cost producers of various metals such as steel and
aluminum.
Mineral production in India is primarily concentrated in the four 3. Significant domestic demand
states of Andhra Pradesh, Chhattisgarh, Jharkhand and Orissa,
Robust demand in the Indian mining sector is expected to
which collectively contributed more than 40% of national mineral
continue, driven by growth in key end-consumer sectors such as
production by value in FY10. The number of mines that reported
automobiles, construction, infrastructure and power.
mineral production in the same period were 2,729, with Andhra
Pradesh accounting for the maximum number of mines (404),
followed by Gujarat (398).
71 Ministry of Mines 2009–10 annual report,

72 The Sun rises in the east, Ernst & Young, 2010 73 The Sun rises in the east, Ernst & Young,2010

Africa
An opportunity waiting to be Bauxite production by African countries (mt)
unlocked Year 1995 2000 2005 2008
Guinea 15.80 15.70 14.60 17.20

Gifted with natural resources, Africa has mineable reserves of
more than 60 metal and mineral products. Mining investment Sierra Leone - - - 0.95
in Africa in 2010 was estimated at around US$14 billion
Ghana 0.51 0.50 0.73 0.74
in comparison with US$7 billion in 200674. Much of these
investments were in West, South and Central Africa. Among Mozambique 0.011 0.008 0.010 0.005
the western nations of the continent, Ghana, Mali, Guinea and
Burkina Faso have attracted the majority of investments. Gold Tanzania - 0.002 0.005
and diamond are the key commodities mined in Africa currently, Total 16.32 16.21 15.33 18.90
and other minerals and metals include manganese, copper,
nickel, lead, zinc and limestone. The Birimian greenstone belt in Source: “This is Africa” J.P.Morgan CAZENOVE, 22 November 2010,
via Thomson Research
West Africa — including Sadiola, Yatela, Morila and Syama in Mali,
Siguiri in Guinea, and Obuasi, Bogusu, Prestea, Bibiani in Ghana New opportunities are also emerging in the iron ore sector. It is
— has some of the largest gold deposits in the world. However, estimated that at a capital cost of more than US$50 billion, mining
exploration and mine development in Africa has so far been mainly projects worth 500 mtpa have been planned in Africa over the
focused on gold and diamond. Lack of investments and private next eight years75.
participation has left most of the region’s other reserves largely
unexploited, which indicates potential investment opportunities. Iron-ore production by African countries (mt)
Year 1995 2000 2005 2008

Resources in Africa
South Africa 19.80 21.57 24.9 30.8
West Africa Resource Share of the
world’s resources Mauritania 7.00 7.50 7.0 7.1
Bauxite 40% Algeria 1.10 0.82 0.8 1.0
Uranium 5% Egypt 1.12 1.90 0.9 1.0
Iron ore 4% Tunisia 0.11 0.098 0.1 0.1
Central and Platinum 88% Zimbabwe 0.16 0.22 0.2 0.02

South Africa
Chromium 84% Nigeria 0.062 0.009 0.02 0.02
Diamonds 60% Morocco 0.032 0.004 0.004 0.005
Cobalt 49% Source: “This is Africa” J.P.Morgan CAZENOVE, 22 November 2010,

Gold 40%
Uranium 13%
Copper 5%
Source: “This is Africa” J.P.Morgan CAZENOVE, 22 November 2010,
75 “Africa Iron Ore Projects: Potential for New Supply” RBC Capital Markets, 4
74 Mining and Metals in West Africa, 26 November 2009, via GRAD February 2011, via Thomson Research

Mining
The last few years have witnessed a significant rise in African iron taken in the region. Economic Community of West African States
ore transactions. Mining majors such as Rio Tinto and Xstrata are (ECOWAS) has reported that by the end of 2012, a common
expanding their positions in the region, while comparatively small mining code will be implemented to harness and harmonize
players are seeking financing and off-take agreements to develop mineral resources for the growth and development of the
their projects. Some of the key deals of 2010 are listed in the sub-region.
table below.
In order to gain a first-mover advantage, China has been
In Africa, mining activity is currently limited to extraction and continuously increasing its presence in various sectors in Africa
other upstream activities, with little focus on beneficiation. and invested around US$2.5 billion per annum between 2006
Therefore, the various governments of Africa are attempting to and 2008. India, too, has invested US$ 0.332 billion annually
push the industry toward value addition and greater beneficiation. in the same period. However, the country needs to increase its
To develop the mining industry further, initiatives are being investments to secure raw-material resources in the region76.
Major transactions in African iron ore in 2010
Date Target project Acquirer Key asset Contained Target Year of Capex
Fe (Mt) production inception (US$
rate (Mtpa) million)
Mar-10 Simandou ( Rio Tinto) Chinalco Simandou, 1,487 70 _ 5,400

Guinea
May-10 Core Mining Severstal Avima, _ 40 2017 _

Rep. of Congo
Jun-10 DMC Mining Cape Lambert Mayoko, 18 11 2014 486

Rep. of Congo
Jul-10 African Minerals Shandong Iron Tonkolili, 3,045 70 2015 5,000

and Steel Sierra Leone
Aug-10 Kalia China Inter. Kalia, Guinea 643 50 2018 4,456

Fund
Nov-10 Sphere Minerals Xstrata Askaf/Guelb, 1,303 43 _ 2,190

Mauritania
Source: “Africa Iron Ore Projects: Potential for New Supply” RBC Capital Markets, 4 February 2011 via Thomson Research
Figure 14. Average FDI in Africa by emerging markets per annum (2006–08) (US$ million)
3,000
2,528 2,609
2,500
2,000
1,500
1,000
611
500 332
14 35 44 45 48
0
Brazil Turkey Chile Korea Taiwan India Malaysia China South
Africa
Source: “This is Africa” J.P.Morgan CAZENOVE, 22 November 2010, via Thomson Research
76 “This is Africa” JPMorgan CAZENOVE, 22 November 2010, via Thomson

Research

A win-win collaboration
Over the past few years, Indian companies have been Indian companies
exploring opportunities in Africa and are continuously
securing raw-material assets in the region. exploring Africa
Through a JV with a leading Indian steel company, a global mining
To date, most companies in Africa have been engaged in
company has acquired the full ownership of the US$1-billion
mining activities, but the growing economies of Africa now
Benga Power Plant (BPP) in Mozambique. The plant is set to come
present an opportunity for final value-added products for
online in 2013 or 2014 with an initial capacity of 500–600 MW, to
local markets. Indian companies can look forward to investing
be subsequently expanded to 2,000 MW. The Benga coal project,
in the complete mining and metals value chain in Africa.
which is scheduled to produce its first batch of coal in the third
India has been among the most low-cost producers in the
quarter of 2011, will supply the fuel for the power station. The
metals and mining sector, and the same low-cost model can
plant will help the steel major meet its future needs of power in
be replicated in Africa to develop the sector in the region.
metal and mining operations in Africa77.
Africa has large reserves of various minerals, including
gold, diamond, chromium, cobalt, bauxite and iron. Indian • An Indian consortium compromising five state-run companies
companies can leverage their potential in these sectors even has bid for a Mozambique-focused coal mining company. If
in the African market. the company is able to secure the bid, it will help India reduce
its coking coal imports and also lower the cost of production
As previously mentioned, the mining sector in Africa has
for Indian steel majors78.
been underdeveloped so far due to lack of investment and
the unavailability of quality infrastructure. For instance, • An Indian polyester company has secured a coal block in
in the case of bauxite — for which Africa holds 40% of the Mozambique with estimated coal reserves of 150 mt. Another
world’s resources — there has almost been no growth in unit is also expected to be set up for coal exploration in other
the production of the mineral between 1995 and 2008. blocks, with estimated reserves of
Meanwhile, with regard to iron ore, of which Africa has 300 mt79.
around 4% the world’s resources, production increased from
• India’s largest iron ore-mining company has formed a 50:50
29.4 mt in 1995 to 40 mt in 2008, a CAGR of 2.4%. Thus,
JV with a South African company to explore the acquisition
India has the opportunity to secure and develop this raw
of coal, iron-ore and manganese mines in South Africa. Both
material in Africa, which will not only cater to the growing
the companies are investing around INR50 billion each in
domestic demand of steel and aluminum in the country, but
the initial stages of the JV, with a provision to increase their
will also help India secure raw material for future expansion
shares based on requirements. The Indian partner, being
plans in the African continent itself.
the largest Indian iron ore company in the country, has the
required knowledge and technology to explore and produce
iron ore. This JV is expected to help both the Indian steel
industry and the African metals
and mining industry to fulfill their requirements in the
long run80.
• Similarly, many other metal and mining majors have acquired

assets in Africa and are continuously investing more funds in
the region for growth.
77 “Riversdale’s Benga joint venture to secure 100% of Benga Power Plant,”

Platts International Coal Report, 10 January 2010, via Dow Jones Factiva, ©
2011 McGraw-Hill, Inc.
78 “ICVL weighs countering Rio’s $3.9-bn Riversdale bid,” domain-b, 24 January
2011, via Dow Jones Factiva, © 2011 The Information Company Pvt. Ltd.
79 “Jindal Poly Films Unit Gets Coal Block in Mozambique,” Dow Jones
International News, 7January 2011 via Dow Jones Factiva, © 2011 Dow Jones
& Company, Inc.
80 “NMDC-KKM in JV scouting South African mines,” NBM & CW, 4 September
2010 via Dow Jones Factiva, © 2010 NBM Media

Mining
Indian metals and mining companies have the required

experience, know-how and technology to further explore bauxite
and iron-ore mining in these countries. Beyond mergers and
acquisitions, Indian companies can enter collaborations and JVs
with local mining companies to study, explore and develop mining
resources on a sharing basis. Moreover, in other minerals and
metals such as aluminum and copper, many opportunities remain
untapped. The production of finished products in Africa will not
only make the mining business more profitable, but will also
facilitate Indian companies in increasing their customer base. India
should look forward to augmenting its investment in the mining
and metals sector, as economic growth in African countries is
expected to be strong in future. Since the demand for metals is
directly correlated to a country’s economy, it is expected to rise
in tandem with these countries’ economic growth. Moreover, the
development of infrastructure is expected to drive the demand for
metals in the region in future.
Figure 15. Opportunities in Sub-Saharan Africa

(US$114 billion)
Mining
21%
Non-transport
public sector
50% Non-mining
private sector
20%
Transport
9%
Source: “This is Africa” J.P.Morgan CAZENOVE, 22 November 2010,
via Thompson Research
Africa possesses significant mineral wealth that is yet to be fully

utilized. Various governments in the region have recognized
the pivotal role that the metals and mining sector plays in the
growth of the economy, providing employment to thousands
of skilled and unskilled workers and actively contributing to the
development of the region. These governments are implementing
measures to encourage investors in the sector and to cooperate
with each other to facilitate growth. However, challenges such as
poor infrastructure, inadequate power supply, political instability,
environmental concerns, poor logistics, currency risks, and
corruption, taxation and regulation need to be addressed for the
sustainable growth of the African continent’s mining industry.

Technology
51
Technology
India
A key growth driver 19.2% over FY10. Its export revenues totaled US$59.4 billion,
registering an increase of 18.5% year-on-year (y-o-y). The
The Indian Information technology (IT)81 sector has been a key industry’s domestic revenues amounted to US$28.8 billion,
growth driver for the country over the past decade. Year after increasing by 21% y-o-y.
year, the industry has crossed new milestones in terms of revenue
The software and services sector (excluding hardware) posted
and employment generation and value creation, and is increasing
revenues of US$76.1 billion in FY11. Of this, IT services
its share in India’s GDP. The availability of quality talent, strong
accounted for 57%, business process outsourcing (BPO) 24% and
technology infrastructure, a favorable legal regime and an overall
engineering services/product development for the remaining 19%.
environment conducive to business are the pillars of the country’s
IT industry. The sector’s contribution to India’s GDP increased from 1.2%
in FY98 to 6.4% in FY11. The industry’s proportion of exports
The industry has adopted several measures to mitigate the
from India in FY11 totaled 26%. It added 240,000 new jobs in
impact of the recent economic recession, including new pricing
FY11, taking the total number of employees to 2.5 million. It also
models, better utilization of manpower, reduced attrition and
generated around 8.3 million indirect jobs.
strengthened client relationships. The industry has also taken
steps to diversify from the US and Europe, which are its core India continues to be a leader in the global outsourcing market,
markets, and has increased its focus on the Asia-Pacific region with a 55% market share in 2010, as compared to 51% in 2009.
and the rest of the world (RoW) to reduce risks. The revenues of the IT industry (including hardware) have grown
at 16.5% between FY07 and FY11. NASSCOM projects that the
The beginning of 2010 signaled the revival of outsourcing
industry will grow at a CAGR of around 11% from FY11 to reach
activities in major markets as well as emerging markets. A steady
US$225 billion by FY20.
improvement in the global economic scenario has led to an
increase in the number of deals and in clients making decisions The availability of abundant talent, the presence of foreign
more quickly. In future, global economic revival is expected to IT services providers, strong fundamentals, an enabling
drive the revenues of Indian IT companies. environment, significant domestic demand and cost and time-zone
advantages are some of the inherent strengths and, therefore,
According to National Association of Software and Services
drivers of, the Indian IT industry.
Companies (NASSCOM) estimates, the Indian IT industry
registered revenues of US$88.1 billion in FY11, growing at
Figure 16. Indian IT industry revenues and revenue break-up by sub-sectors
Hardware
250.0 225.0 14%
IT industry revenues
200.0
(in US$ billion)
11% Software products and IT Services

150.0 engineering services 50%
16.5% 17%
100.0 73.1 88.1
62.9 69.4
47.9
50.0
BPO/ITeS
0.0
19%
FY07 FY08 FY09 FY10 FY11 FY20
Source: "The IT-BPO sector in India," NASSCOM Strategic Review 2011

“IT-BPO industry- how to reach 225 bn by 2020,” Economic Times website, http://economictimes.indiatimes.com/tech/ites/it-bpo-
industry-how-to-reach-225-bn-by-2020/articleshow/7448662.cms, accessed 17 February 2011
81 “The IT-BPO Sector in India - Strategic Review 2011,” NASSCOM website,

www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=60515, accessed
27 February 2011; “Indian IT Sector Scores 10-in-10,” NASSCOM press
release, www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=50833,
12 February 2007; “Review of ITeS industry,” CRISIL Research, October
2009;“Namaskar Africa 2010,” Ernst & Young, January 2010; “The IT-BPO
Sector in India - Strategic Review 2010,” NASSCOM website, www.nasscom.in/
Nasscom/templates/NormalPage.aspx?id=60515, accessed 31 January 2011;
“IT-BPO industry- how to reach 225 bn by 2020,” The Economic Times website,
http://economictimes.indiatimes.com/tech/ites/it-bpo-industry-how-to-reach-
225-bn-by-2020/articleshow/7448662.cms, accessed 17 February 2011

Africa
Role of ICT in African Online access can also provide farmers with information on
reasonable farming practices, thereby enabling them to enhance
development82 the quality of their crops. Using the kiosks, farmers can place
online orders for agricultural input, including for seeds and
Information and communication technology (ICT) plays a crucial fertilizers. They can also obtain weather-related information
role in various aspects of commerce, governance, education, that may help them make informed decisions. The adoption of
health and civic activities in developed countries. ICT could be such practices can help increase farmers’ income by indirectly
instrumental in sustaining growth in Africa by offering prospects facilitating an increase in crop yield, an improvement in output
for rapid economic, political and social development. The use quality and a decline in transaction costs.
of ICT increases efficiency and productivity across sectors, cuts
This ICT based business model can strengthen the competitiveness
costs and improves the quality as well as the speed of basic
of African agriculture as a result of increased output, as well as
infrastructure and services. It also provides access to new markets
boost income and investment levels in the sector.
and generates employment opportunities. ICT has the potential
for deep geographic penetration, especially in rural areas,
providing services to underserviced sections of society.
2. ICT in governance
African countries are diverse in terms of culture, language,
Specific areas where ICT can geography and economic status of. In several of the continent’s
countries, the percentage of the population living below minimal
facilitate African development social-economic standards is large. However, the effective
implementation of economic development programs aimed
at economically weaker sections of society continues to be a
1. ICT in agriculture challenge.
ICT can play a prominent role in the development of Africa’s
In this context, e-Governance employs ICT as a tool to improve
agriculture sector. The concept of e-agriculture can be
governance. Measures include providing online information on
implemented by networking and connecting all villages across
regulatory services, general holidays, public hearing schedules
the continent through the establishment of internet kiosks. This
and notifications. It also involves lodging tax returns, applying for
can prove to be an effective source of up-to-date marketing and
services and grants, paying electricity, water and telephone bills,
agricultural information for African farmers.
and polling, voting and campaigning through the internet.
This initiative has several advantages for farmers. It could help
The advantages of e-Governance are many. It allows for in-depth
them rise above their dependence on middlemen to judge crop
citizen participation in governance through interaction with
quality and settle prices. Using an internet-based platform,
politicians and public servants, and making their voices heard. It
farmers can obtain real-time information despite their physical
also enhances the accessibility of public services, facilitates access
distance from the markets. As such, access to these kiosks
to the most current information without having to spend time,
would allow farmers to discover appropriate prices for the crops
energy and money, and increases government transparency and
they produce, depending on quality. This could help eliminate
accountability.
middlemen’s profits. Further, by using the knowledge obtained
from this initiative, farmers can also customize their produce The use of ICT in governance can, therefore, prove to be a
according to different consumer segments. strategic tool to improve the quality of services provided and to
create economic and social development opportunities.
82 “Namaskar Africa 2010,” Ernst & Young, January 2010; “Business initiatives
focusing on ICT development in Africa based on the NEPAD objectives,” South
African Journal of Information Management website, www.sajim.co.za/index.
php/SAJIM/article/view/377, accessed 31 January 2011

Technology
3. ICT in health care 4. ICT in education83

As a result of lack of adequate health care infrastructure and Developing countries in Africa face the challenge of expanding
proper medical facilities outside urban areas, Africa faces the educational opportunities to low-income groups, ethnic minorities,
challenges of high child mortality rates and a high number girls and women, low-skilled workers and people with disabilities.
of overall deaths caused by diseases such as malaria and ICT can prove to be powerful tools for educational change and
tuberculosis. In this regard, ICT can help build an innovative reform in African countries. They can be helpful in increasing
model for providing health care services in the continent. An access to, and improving the efficiency and effectiveness of,
inclusive system can be developed by using ICT, through which education at all levels. It is important for Africa’s development
high-quality health care facilities can be provided in a low-resource that more than 600,000 schools and higher education
environment. institutions across the continent are networked through complete
connectivity to the internet.
An ICT based health care platform is likely to be an effective
response system in enabling telemedicine in Africa. Telemedicine ICT can help provide long-distance education through online
hardware, cameras and software will feature medical records of learning. This involves the use of an information network —
patients and also offer digitized prescriptions. Data centers will be internet, intranet or extranet — to deliver online lectures and
deployed to manage and maintain records of storage and backup, make all course material available online. This type of setup
and a retrieval mechanism will be provided at each super-specialty eliminates the need for instructors and students to be at the same
hospital for medical facilities. physical location. Students at multiple locations can receive a
lecture delivered from an instructor at another location. This also
The use of technology can substantially reduce the cost of
facilitates asynchronous learning, i.e., there can be a time delay
telemedicine and make such services affordable for the rural
between the delivery of lectures and their reception by students.
population. Using telemedicine services, villagers have access to
health care professionals so they can receive the right treatment. ICT based platforms also facilitate the professional development
They can interact directly with specialist doctors through video of faculty in Africa by providing online access to highly effective
conferences. teacher-training courses. By making available a wealth of updated
learning material online, ICT also eliminates the need for physical
ICT based health care services can be used to educate people on
libraries at educational institutes.
potential health problems, broadcast preventive health measures
and remedies for localized ailments, and resolve health care-
related queries on a 24-hour basis.
83 “ICT in Education,” Victoria L. Tinio, UNDP Asia-Pacific Development

Information Programme (APDIP) website, www.apdip.net/publications/
iespprimers/eprimer-edu.pdf, accessed 31 January 2011

Indian IT playing a role in In tele-education, seven studios offering post-production
services will be set up in India. Teachers will use collaborative
Africa84 tools to interact live with students; 53 learning centers will be

used as virtual classrooms for the remote centers and may also
In the last decade, several Indian IT majors have established be network-enabled for further expansion into other parts of
operations in Africa and are executing several projects for the the country. Expansion of the network to other locations by
development of the continent. It is relatively easy for Indian adding more VSAT terminals, as well as broadband and wireless
IT companies to implement projects in Africa, as they already connectivity, is expected to be implemented through additional
have the domain knowledge and experience of a challenging and elements and bandwidth.
complex market.
Indian IT companies have also helped modernize banks in Africa,
A leading Indian IT player is currently implementing IT which were earlier largely legacy-driven. The deployment of
infrastructure in a pan-Africa project that aims to connect 53 core banking technologies in African banks has increased their
African countries as a single network, providing electronic and efficiency. In addition, Indian IT players export their hardware
knowledge connectivity. The project is expected to be highly products to the country. These companies are also investing in
beneficial for African countries in their developmental efforts. This developing the skills and capabilities of IT professionals in Africa.
project will be mainly related to telemedicine and tele-education. Indian IT companies are increasingly making contributions to
African economies through the deployment of ICT based services.
In tele-medicine, this project will connect 17 super-specialty
hospitals, offering specialist medical advice and support to 53
remote patient locations, which will serve as specialized hubs
for treating patients. Each remote hospital will be equipped with
medical equipment such as ECG, x-ray and ultra-scan machines.
The network will also be employed to equip hospitals with the
capability to conduct continuing medical education (CME), as well
as training for nurses, paramedical personnel and other health
workers in 53 remote locations.
84 “Namaskar Africa 2010,” Ernst & Young, January 2010

Telecommunications
57
Telecommunications
India
Ringing in change tenfold in just four years from 7.6 million88 subscribers in
December 2001 to 75.9 million in December 2005; and seven-
The telecom sector has played a pivotal role in the socio-economic fold over the next four years from 75.9 million subscribers in
development of India. In fact, the Indian telecom sector is one of December 2005 to 525.9 million in December 2009. In the near
the key architects of the accelerated growth and progress of other future, the country is likely to see the uptake of 3G services,
different segments of the Indian economy. After Independence, enabling subscribers to benefit from data and application services.
the country’s tele-density stood at 0.02%85, but the initiation of
the LPG policy in the early 1990s had a significant impact on the 2. Liberal foreign investment regime
telecom sector. India is the second-largest telecom market in the
During the last decade, India has witnessed a considerable rise
world in terms of its number of subscribers. In November 2010,
in Foreign Direct Investment (FDI). The telecom sector is among
the country’s subscriber base reached 764.886 million and its
the leading segments attracting FDI in India, accounting for
overall tele-density stood at 64.3%. India’s wireless subscriber
more than 8% of cumulative FDI equity inflow between FY00 and
base accounts for more than 95% of its subscribers, and its urban
FY10. A liberal foreign investment climate has paved the way for
tele-density and rural tele-density at the end of September 2010
attracting FDI in the telecom sector. Increased levels of FDI have
amounted to 137.3%87 and 28.4%, respectively.
also been helpful in intensifying competition and strengthening
market reach. It has also opened up opportunities for telecom
The Indian competitive manufacturing and other related business areas in the sector.
advantage 3. Defined regulatory framework

The following key factors are driving the success of the Indian The Indian telecom sector has undergone a number of regulatory
telecom sector: changes that have helped create an enabling environment. Key
stakeholders, as part of the regulatory environment in the telecom
1. One of the biggest telecom markets in ecosystem, include the Ministry of Communications & Information
Technology, the Department of Telecomm (DoT), the TRAI, the
the world Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and
India has emerged as one of the fastest-growing telecom the Telecom Commission.
markets in the world in terms of its number of subscribers, and is
second only to China. The Indian telecom market has witnessed
remarkable growth in terms of subscriber growth, which grew
Figure 17. Subscriber base and tele-density (wireless and wire line)
Total subscribers (million)
800 64.3% 70%

700 52.7% 60%
Tele -density (%)
600 50%
500 37.0%
40%
400 26.2% 764.8
300 621.3 30%
18.2%
200 9.0% 12.9% 429.7 20%
300.5 10%
100 140.3 205.9
0 98.4 0%
FY05 FY06 FY07 FY08 FY09 FY10 Nov-10
Total subscribers Tele-density

Source: Telecom Regulatory Authority of India (TRAI)
85 Pradip Baijal and Rekha Jain, “Rural Telecom and IT,” Indian Institute
of Technology Kanpur website, www.iitk.ac.in/3inetwork/html/reports/
IIR2007/04-Rural Telecom.pdf, accessed 4 February 2011
86 “TRAI Press Release No. 5/2011,” TRAI website, www.trai.gov.in/Default.asp,
accessed 4 February 2011
87 “TRAI: The Indian Telecom Services Performance Indicators ( July – September 88 “TRAI: Spectrum Management and Licensing Framework,” TRAI website, www.
2010),” TRAI website, www.trai.gov.in/Default.asp, accessed 4 February 2011 trai.gov.in/Default.asp, accessed 3 February 2011

Africa
4. Lowest telecom tariffs On the rise
India’s telecom tariffs are among the lowest in the world, at In 1993, a handful of African countries deployed wireless networks.
US$0.01 (INR0.30)89. Continuous innovation and fine-tuning of However, by early 2007, around 150 networks were operating
costs by telecom operators have led to the emergence of the low- across the continent. Wireless subscribers in Africa have grown
cost telecom model. rapidly in the recent past as a result of liberalization in the sector
and strong economic activity. Mobile phones outnumber the wire
5. Low handset prices line network, primarily due to the high cost of wire line connections
The Indian mobile device market is driven by low tariffs and and the monopolistic business model associated with wire line
dominated by low-cost devices, which accounted for 80%90 networks. Between 2004 and 2008, mobile subscriptions in Africa
of overall handset sales in 2010. Unlike in many developed grew at a CAGR of 46.5%92, outpacing other developing markets.
countries, in India, mobile handsets are not sold along with the Mobile subscriptions exceed 400 million in the continent93, driven by
subscriber identity module (SIM) card. Mobile handset vendors additions in Nigeria, South Africa, Egypt, Algeria and Kenya.
distribute and sell SIM cards separately, which significantly There is broad variation in mobile penetration among African
reduces working capital and other inventory-carrying costs. countries due to differences in the economic development,
Furthermore, the mobile handset segment has around 3091 competition and liberalization of their telecom sectors. However,
handset manufacturers, with numerous homegrown players, mobile penetration is expected to improve significantly in the near
resulting in a highly competitive marketplace. future, largely due to mobile services becoming more affordable,
liberalization in the sector and the issuing of new licenses. These
factors are critical for the economic development of Africa and
are expected to boost the GDP and per capita income of African
countries.
Mobile services in Africa are also expected to become more

affordable with improvements in network infrastructure, increased
competition, the innovative practices of several operators in terms
of airtime, and the emergence of low-cost mobile handsets. Mobile
networks in the continent have also begun to play an increasingly
prominent role in internet service provision, following the launch of
3G services in a number of markets, creating a new revenue stream
in an environment that faces the challenge of low average revenue
per user (ARPU).
Figure 18. Mobile subscriber base and tele-density
62.7% 65.9%
800 70%
Mobile subscribers (million)
58.5%
700 52.6% 60%
Tele-density (%)
600 45.6% 50%

500 37.4%
28.5% 40%
400
21.6% 657.2 707.2 30%
300 527.1 584.9
200 446.2 20%
364.3
100 202.0 274.6 10%
0 0%
2006 2007 2008 2009 2010 2011 2012 2013
Mobile subscribers Mobile penetration

Source: International Telecommunication Union (ITU); African Alliance
89 Rashmi Pratap, ET Bureau, “Reason behind India’s lowest telecom tariffs in the
world,” The Economic Times, 25 October 2009
90 “Gartner Says Indian Mobile Handset Sales To Reach 138.6 million in 2010,”
Gartner website, www.gartner.com/it/page.jsp?id=1412313, accessed 30
November 2010 92 “Waves of Growth,” African Alliance, 13 November 2009, via Thomson Research
91 Priyanka Joshi, “Small handset makers making big strides,” Business Standard, 93 “Africa’s path to growth: Sector by sector,” McKinsey Quarterly,
15 April 2010, via Dow Jones Factiva June 2010, p. 17

Telecommunications
Connecting for success 2. Replication of the minute factory
Although India and Africa vary immensely in many respects, model
they are also very similar in terms of current total populations If India’s experience and know-how in the telecom sector is utilized
and aggregate, or average wealth, as well as their colonial past. amid Africa’s vast telecom landscape, it is expected to result in the
Telecommunications is an area of similarity among India and the accelerated development of the continent’s telecom market. The
African continent, as it has recently helped millions of Africans “minute factory” model treats airtime as a perishable commodity
and Indians gain first access to voice and data communications, and attempts to increase network utilization to the maximum
creating remarkable socioeconomic impact across both the possible extent. Telecom networks are treated as factories
geographies. However, both Africa and India face immense generating minutes, and the throughput is increased by improving
challenges in developing their telecom services, especially for the consumption of minutes. This model fuels subscriber growth
the benefit of the rural population. These barriers are largely and results in gradual tariff cuts and a rapid rise in the number of
a result of low income levels and inadequate infrastructure. total minutes. A leading Indian operator, with operations in Africa,
However, despite these barriers, Indian telecom operators plans to replicate the minute factory model in Africa.
have pioneered operational procedures in a bid to provide
affordable services to millions of subscribers. The similarity 3. Pan-Africa Network (PAN)95
between the two geographies, backed by the capabilities of the
Indian telecom sector, which may be replicated in the African Africa faces several challenges in building its telecom
continent, is likely to enhance the quality of lives and the wealth infrastructure, including a non-existent or low-capacity national
of both the economies. and international communication backbone. The PAN program
is aimed at strengthening connectivity among African countries
1. Leveraging India’s low-cost telecom and complements India’s foreign policy goals. India has already
awarded a grant of US$105 million under this assignment. It will
model put in place a network of videoconference facilities connecting all
The capability of Indian operators to sustain EBITDA margins 53 heads of state governments in Africa. It aims to strengthen
of 40%94 at tariffs as low as US$0.01 per minute is termed e-Governance, e-Commerce, infotainment, resource mapping
as a unique Indian telecom model. The model is based on and meteorological services across the continent. PAN provides
outsourcing non-core activities such as IT and network an opportunity to bridge the digital divide that exists between
operations as well as infrastructure sharing. Network was rural and urban areas. Through PAN, visual classroom and video
considered a core function for any operator; however, in the resource centers are expected to be established in African villages
quest of reducing costs, Indian operators have outsourced their for the propagation of knowledge to a large number of people,
networks to companies that know how to manage networks. with the objective of generating socio-economic transformation.
Multiyear-managed network deals that guarantee continued
business to network companies at a low cost have been struck. 4. Optic fiber cable network96
The capability of Indian telecom operators in running the low- The optic fiber cable network linking southern and eastern Africa
cost telecom model is expected to find use in providing low-cost to global telecommunications networks via India and Europe has
telecom services across the continent and in reducing the been laid and is expected to lower the cost of telecommunications
digital divide. in Africa. The 17,000-km cable has the capacity of transmitting
1.28 terabytes of data per second. It is widely being perceived as
a catalyst that governments and corporate organizations can use
as a platform to compete globally and drive economic growth.
95 “Partnering a new transformation,” Africa Quarterly, November 2008-January

2009, p. 24
94 “How can carriers make 40% EBIDTA margin at 2 cents/min tariff?,” www. 96 “Southern, eastern Africa get hooked to India,” Africa Quarterly, February-April
telecomcircle.com/2009/02/carriers-ebidta/, accessed 25 October 2010 2009, p.10

5. India’s assistance in capacity
development97
India’s Ministry of External Affairs provides assistance for long-
term telecom development projects through its Aid to Africa
program. EXIM Bank of India has extended an LoC of US$250
million to the ECOWAS for investment and development. This will
support projects throughout the 15-member ECOWAS region,
promoting regional integration and creating opportunities for
Indian companies to participate in energy, telecom, railways and
other sectors in the region.
A leading Indian telecom

operator enters the
African market
An Indian operator has made its mark on the African map.
In 2010, it acquired a leading African operator for a total
enterprise value of US$10.7 billion and became the world’s
fifth-largest integrated operator. It has operations in 16
African countries, including Niger, Zambia, Malawi, Gabon,
Chad, Burkino Faso, DRC, Congo Brazzaville, Sierra Leone,
Tanzania, Madagascar, Nigeria, Uganda, Ghana and Kenya.
Given the low wireless penetration and low usage in terms

of minutes that prevail in African markets, Indian operators
have a significant opportunity to grow in the region. The
operator expects to gain by means of infrastructure sharing
and the replication of the low-cost model in the continent.
The operator plans to collaborate with other tier-II telecom

operators in Africa to share each other’s radio access
networks. This is expected to enable it to expand its
network more rapidly and lower its capital expenditure and
operational expenditure. Such a model will also be highly
beneficial for Africa to help it reduce the digital divide and
accelerate the penetration of telecom services in the region.
97 “India as a catalyst of development,” Africa Quarterly, November 2009–

January 2010, p.31

Power and power
equipment
63
Power and power equipment
India
Powering on
India has the world’s fifth-largest generation capacity and the
third-largest transmission and distribution network globally.
India’s power-generation capacity has been increasing steadily
in the last few years. Total generation capacity stood at 167
gigawatts (GW) as of November 2010, and rising electricity
capacity is leading to increased electricity generation. The number
of units generated increased steadily from 558.3 billion units (BU)
in FY04 to 771.6 BU in FY10.
Figure 19. Rising installed capacity (GW) Figure 20. Contribution of various fuel sources to total
generation capacity
180 167
159 Nuclear
160 RES*
140 132
120 113
Hydro
Thermal
100
FY04 FY07 FY10 2010*
Source: Ministry of Power
* As of November 2010 Source: Ministry of Power
* Renewable energy sources comprise small hydro (SHP), biomass and wind power
India has added substantial capacity to its transmission lines

and sub-stations in the last two decades. The total lengths of
transmission lines and sub-stations with capacities of 220 kV and
400 kV in the country currently stand at just more than 225,000
circuit kilometers (ckm) and 305,000 megavolt amperes (MVA),
respectively.
Growth in transmission capacity
Indicators FY92 FY97 FY02 FY07 FY10
Transmission lines
220 kV (ckm) 59,631 79,600 96,993 114,629 128,099
400 kV (ckm) 19,824 36,142 49,378 75,722 97,353
Sub-stations
220 kV (MVA) 53,742 84,177 116,363 156,497 189,125
400 kV (MVA) 21,580 40,865 60,380 92,942 116,427

Source: Central Electricity Authority (CEA)

Renewable energy
According to Ernst &Young’s Renewable Energy Country
Attractiveness Indices, India maintains a global ranking within the
top three or four on overall renewable energy appeal. The indices
rank countries based on regulatory environment, fiscal support,
unexploited resources, suitability to different technologies and
other factors determining renewable energy growth in a country.
Ranking Country All renewable Wind index Solar index Biomass index
1 China 71 76 60 58
2 US 66 66 72 61
3 Germany 63 66 54 63
4 India 63 64 67 58
Source: Ernst & Young analysis
The growing demand for energy, technological advancement, Figure 21. Growing clean energy capacity
depleting fossil-fuel reserves and concerns around global warming
Share in India's total power capacity

are driving the development and use of renewable sources for 18 16.8 12%
15.5
power generation. Both the Centre and the States provide various 16
10%
Installed capacity (GW)
incentives for the development of renewable energy through tax 14 13.2

rebates/holidays, duty cuts, interest and capital subsidy and soft 11.1
12 8%
loans. Domestic renewable energy (RE) generation capacity stood
10 7.8
at 17 GW, increasing at a CAGR of 26% between 2006 and 2010. 6.2 6%
8
Wind power accounted for approximately 70%, SHP accounted
for 16% and biomass and cogeneration cumulatively accounted 6 4%
for 13% of the RE installed capacity. Solar power plants, biomass 4
2%
gasifiers and waste energy projects accounted for the rest. In 2
addition, the share of RE in India’s total generation capacity 0 0%
increased from 5% in FY06 to 10% in 2010. The development FY06 FY07 FY08 FY09 FY10 2010*
of the green energy sector in India is also giving impetus to the
Source: Ministry of Power and Ministry of New and Renewable Energy
country’s power equipment-manufacturing sector. Further, the *Note: Generation capacity as on 30 June 2010.
low-manufacturing costs of Indian players and the increased
strictness in climate-change norms, particularly in developed
countries, are driving their export incomes. Figure 22. Break-up of RE capacity (2010*)
The country has an installed capacity of approximately 15 MW Biomass Solar and others
(both grid and distributed) of solar energy. By global standards, Cogenration-bagasse
this capacity is very low. This situation is expected to change
considerably going forward, as the GoI in collaboration with
various state governments launched the Jawaharlal Nehru SHP
National Solar Mission (JNNSM) in January 2010 with the Wind
objective of achieving 20 GW of solar power capacity by 2022.
Source: Ministry of Power and Ministry of New and Renewable Energy

*Note: Generation capacity as on 30 June 2010.

Power and power equipment
Power equipment The Indian competitive

Power-generation equipment can be classified into two main
components — boiler turbine generator (BTG) and the balance of
advantage
plant (BoP). The BTG component constitutes boilers and turbine
generators, while the BOP component primarily includes coal- and
1. Highly developed and mature industry
ash-handling plants, condensers, cooling towers and boiler feed India has one of the largest power generation, transmission and
pumps. The BTG component accounts for 65% of total plant costs, distribution capacities in the world, reflecting the technical and
while BOP accounts for the remaining 35%. BTG costs are evenly project execution capabilities of domestic companies. The country
split between boiler and turbine generators. also has ambitious capacity expansions currently under execution.
Indian power-equipment manufacturers have established
Between FY08 and FY10, the value of boilers produced in the
themselves as producers of high-quality products at low costs.
country grew at a robust CAGR of 25% to reach an estimated
This, coupled with large manufacturing capacities, has allowed
INR129 billion in FY10. The value of turbines produced increased
them to become successful and highly competitive as exporters of
rapidly at a CAGR of 24% during the same period to reach an
power equipment to countries across the globe.
estimated INR54 billion in FY10. The power sector has been a
major growth engine for the industry in recent times. The addition
of power generation capacity in the country has led to increased
2. A leader in alternate energy
demand for boilers and turbines. A shift in focus toward captive India has rapidly developed capabilities to design, install and
power is also driving demand. By FY12, the production values operate alternate energy generation projects. India has the fifth-
of boilers and turbines are expected to reach INR192 billion and largest wind power-generation capacity in the world. Some Indian
INR94 billion, respectively. companies have become global players in the wind and solar
power-equipment industries, with sound technological capabilities
The transformer and switchgear industry in India is a fully
and rising exports.
developed and mature industry, producing and supplying a wide
range of products required by the industrial and power sectors.
The production of transformers has been steadily increasing,
growing at a CAGR of 14% between FY08 and FY10 to reach an
estimated 176,427 MVA in FY10. The growth has been mainly
driven by an increase in demand due to the ongoing expansion of
India’s transmission and distribution networks.
Power equipment market
Indicators FY08 FY09 FY10 FY11 FY12
Generation equipment
Boilers (INR billion) 82 102 129 158 192
Turbines (INR billion) 35 42 54 73 94
Transmission and distribution equipment
Transformers (MVA) 134,802 153,373 176,427 229,489 331,064
Switchgears (million units) 295 193 213 265 307

Source: Industry Analysis Service, Centre for Monitoring Indian Economy98 (CMIE)
98 “Indian Industry: A Monthly Review,” Industry Analysis Service, January 2011,

Centre for Monitoring Indian Economy

Africa
Immense potential 2. Rural electrification
The power sector across the majority of African countries is Africa requires power technologies and equipment suitable for
highly underdeveloped and is an area that both the GoI and rural areas, where population density is low and, therefore,
private sector have neglected the most. Currently, only 20% investment in robust electricity transmission infrastructure
of Africa’s population of 1 billion has access to electricity, is not feasible. Alternatives include off-grid small-scale and
while penetration in rural areas is even lower at around 2%99 affordable generators and low-cost solar energy panels. India
The low population density in the region makes it unfeasible has a strong and matured power back-up industry. Its exports
to connect remote locations to the grid, leaving the majority of generators and inverters have been growing considerably
of areas without access to electricity. Even areas with access due to the ability of leading domestic manufacturers to produce
to electricity receive intermittent power supply, regularly quality and innovative products at par with international
interrupted by outages. standards. In addition, Africa can learn from India’s flagship
rural electrification program, the Rajiv Gandhi Grameen
Vidyutikaran Yojna (RGGVY), which aims to electrify 0.1 million
villages and provide free electricity connections to around 18
million households below the poverty line by March 2012. As
of January 2011, the electrification of 77% and the intensive
India and Africa: getting electrification of 49% of villages have been successfully
undertaken.100
connected 3. Renewable energy

The development of Africa will require the fundamentals of
Africa has significant potential for hydro, wind and solar
economic development to be put in place. Power — the right
energy, which are yet to be exploited. Renewable energy may
amount at the right place and at the right time — is a critical
be the answer to many of Africa’s power woes. It can become
requirement for the development of the nation/region. India
a sustainable source of energy for regions that are a challenge
has also experienced similar scenarios with lack of adequate
in terms of connectivity to the grid. Solar energy is one of the
electricity infrastructure and supply in the past. As a result of
most promising energy sources for Africa. The region receives
favorable regulatory policies, India has built significant capacity
abundant sunlight and has available vast tracts of vacant land
across the power value chain over the years. This experience
on which to set up solar power farms. While the establishment
can be productively channelized to electrify Africa’s rural and
of solar power projects currently entails significant capital
urban areas.
outlay, new technologies are expected to drive these costs down
in future. India already has a large and proven manufacturing
1. Modernization and capacity base for renewable energy equipment. The country exports
augmentation equipment pertaining to renewable energy worldwide.
Power infrastructure in African countries is in dire need of

upgrades and expansion. Indian companies can help African
nations to not only establish new electricity infrastructure,
but also upgrade or expand existing ones. The continent also
needs an effective exchange of power and inter-regional
transmission networks between the countries. Over the years,
India has built a vast transmission and distribution network
spread across the length and breadth of the country to facilitate
power transmission from generation stations to consumers
located at great distances. This experience can benefit Africa in
transmitting power from a surplus region to a deficit one.
100 “RGGVY at a glance,” RGGVY website, http://rggvy.gov.in/rggvy/rggvyportal/

99 Namaskar Africa 2010, Ernst & Young plgsheet_frame3.jsp, accessed 9 February 2011

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7th CII-EXIM Bank Conclave on

India Africa Project Partnership

A new world of opportunity

Partner country Guest country

Mozambique Togo Government of India Confederation of Indian Industry

A new world of Africa

cooperation returns on investment ranks above average globally. While many

India launching programs such as the Comprehensive Africa Agriculture

6 A new world of opportunity India Africa partnership potential

Indian sectors Highlights

African sectors Highlights

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 7

Another growth driver has been the availability of institutional

Source: Reserve Bank of India (RBI) (2009–10 data based on

1 Department of Agriculture & Cooperation, GoI 2009-10 annual report

10 A new world of opportunity India Africa partnership potential

9 “Raising Agricultural Productivity in Africa,” Africa Progress Panel website,

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 11

Leveraging Africa’s potential to become a world leader

12 A new world of opportunity India Africa partnership potential

Boosting agricultural innovation in Africa

4. Indian private investment toward farm

5. Agriculture-related government aid

21 “India develops antidote to deadly global wheat fungus,” Hindustan Times, 19

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 13

Source: Ministry of HRD, GoI

16 A new world of opportunity India Africa partnership potential

• There is a need to adapt Africa’s higher education system to

Awareness around the importance of education has becoming

Africa progressively more widespread in Africa in recent times.

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 17

18 A new world of opportunity India Africa partnership potential

Enhancing service sector-focused education in Africa

3. Leveraging education facilities in India

39 Ministry of External Affairs, Government of India website, www.itec.mea.gov.

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 19

3,000 Figure 5. Processing food categories (2009-10)

22 A new world of opportunity India Africa partnership potential

advantage • Increase in the level of processing of perishables from

advantages 4. Presence of global players

2. Favorable government policies

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 23

• Britania Allied Industries, a consortium of food processing

24 A new world of opportunity India Africa partnership potential

Indian companies increase investments in the

53 “African Agriculture: an abiding investment venue for India,” Microfinance

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 25

2. Investment in food processing 5. Growing consumer markets

26 A new world of opportunity India Africa partnership potential

approximately 70% in terms of value. With an extensive coastline

As road connectivity constitutes an integral part of economic and

30 A new world of opportunity India Africa partnership potential

Small enterprises dominate the construction industry, accounting

Oil and gas pipelines

10th plan 11th plan

63 “Conference on building infrastructure: challenges and opportunities,” Airport

7th CII-EXIM Bank Conclave on India Africa Project Partnership 2011 31

32 A new world of opportunity India Africa partnership potential

Overall infrastructure spending needs for Africa (US$ billion)

Infrastructure sector Capital expenditure Operational and maintenance Total spending

Source: Standard Bank website

Africa’s high cost of infrastructure

Infrastructure sector Unit Sub Saharan Africa Other developing regions