sector


Agriculture

Agriculture is a critical sector of the Indian economy, with India holding the second largest agricultural land in the world. Its economic contribution to India’s GDP has fallen with the country’s broad-based growth, but still remains a key sector for many reasons. In terms of demographics, agriculture is the broadest sector and plays an important role in the overall socio-economic make up of India. About 52% India’s work force is engaged in agriculture. India is the world’s largest producer of spices, pulses, and milk, and has the world’s largest cattle herd (buffaloes), as well as the largest area under wheat, rice and cotton. The GDP of agriculture and allied sectors reached USD 151.8 billion in FY12. India is one of the largest manufacturers of various farm equipments such as harvesters, tillers and tractors, manufacturing one-third of tractors around the world. The centre’s total outlay for the agriculture sector in 2015-16 was Rs.28,050 crores. Conducive policy environment is a key driver for growth in the agriculture sector. Institutional credit to the sector has been on a rise, having increased at a CAGR of 17.4% during FY07 – 12. As a result, farmers are able to avail crop loans at an interest of 7%. India’s consumption expenditure is likely to reach USD3.6 trillion by 2020, which shall remain one of the key drivers of growth for the sector. The total requirement of manpower for the Agriculture sector in 2022 is estimated to be 2156 lacs, of this 1733 lacs are expected to be skilled.

Auto and Auto Components

The Indian auto industry is one of the largest in the world with an annual production of 23.37 million vehicles in FY 2014-15, following a growth of 8.68 per cent over the last year. The vehicle export market is worth Rs 2.5 lakh crore. The Indian Automotive Industry is a significant contributor to the Indian economy, contributing nearly 5% to the country’s GDP and about 17-18% to the kitty of indirect taxes to the Government, while investment outlay stood over Rs. 83,500 crore in 2008-09. According to SIAM annual convention report, 19.1 million people are employed directly or indirectly in this sector. The global car penetration is about 160 cars per thousand of population. This is around 10 times that of India’s car penetration. India and other BRIC nations would emerge as major manufacturing hubs due to the availability of cheap labour and other favourable investing environment

BFSI (Banking, Financial Services, and Insurance)

The banking sector was estimated at USD1.8 trillion in terms of banking assets in FY13 and has evolved significantly over the years, acting as an engine to India’s growth story. The banking business (Credit plus Deposits) to GDP ratio has more than doubled to 120 per cent in 2013 from 54 percent in 1991 when India’s major economic reforms were initiated. There are 89 scheduled commercial banks in India, including 43 foreign banks. India is among the top insurance markets in the world; it is ranked tenth among 147 countries in the life insurance business, with a share of 2.03 percent during FY13, and nineteenth in the non-life insurance business, with a share of 0.66 per cent. The industry comprises of 24 life insurance players, 28 non-life insurance players and 1 public re-insurance player. In addition, India continues to maintain a leadership position in the global sourcing arena. The Indian technology sector is on track to achieve revenue of USD118 billion in 2014, up from a mere USD8 billion at the turn of the century. India also continues to be the preferred choice from a Shared Services and BPO destination standpoint for global operations. The present dispensation has committed its might behind JAM project, which has multiplied the penetration of the Indian Banking Sector. The rise of payment banks is slowly unravelling newer paradigms for this sector. Banking credit is expected to grow at a CAGR of 17 percent during 2012–13 and 2016–17. The sector currently employs over 2.55 million employees and is slated to employ more than 4.2 million employees by 2022. This implies creation of 1.6 million jobs in the BFSI sector of which 0.65 million would be added b/w 2013-17 and about 1.01 million b/w 2017-22.

Construction

Construction sector is the largest contributor to central exchequer. It is the second largest employer in the country after Agriculture. It contributes creates more than 45 million jobs either directly or indirectly among various classes of individuals in the country. Capital investments in the sector is anticipated to rise from USD 651 billion in 2012-13 to USD 1181 billion in 2019-20. Its contribution to Indian GDP was weighed at more 8%. The sector grew at a CAGR of 9.42% between 2003-04 and 2012-13. It primarily can be sub-classified into two sub sectors building construction and infrastructure. The key driving force being rising rate of urbanization, which is expected to increase from 31% to 51% by 2050. In order to achieve the vision of 'Housing for All', India needs 90 million houses, which means a whopping $2 trillion investment in real estate, another $ 2 trillion in urban infrastructure (roads, sewerage, water etc.) and commercial real estate development. The sector is expected to attract FDI of USD 180 billion by 2020. These growth ambitions would translate to incremental human resource requirement pegged at 13.98 million and 31.13 million for the periods 2013-2017 and 2013-2022 respectively.

Renewable Energy

India’s electricity, gas and water supply sector is expected to grow at 8% y-o-y for the next few years. A quarter of Indian population lives without access to power, and the government has planned an investment of Rs.1.4 lakh crores to arrest this problem. As India faces rising fuel demand, threats to energy security, and the impacts of climate change, renewable energy offers a critical solution. Innovative clean energy solutions, including large solar parks and rooftop solar panels in dense urban areas, can help solve these daunting challenges, while increasing energy access, creating jobs, and reducing toxic pollution. To put this plan to action the present dispensation has increased its capacity addition targets by 5 times to 175,000GW by 2022. By the Government of India’s own estimates, a $100 billion investment is needed to foster growth of solar and wind energy markets. To further its commitment towards renewable energy government has quadrupled the coal cess to Rs.200/tonnes. The solar market in particular is expected to grow at an impressive CAGR of 45% per annum until 2022.

IT/ITES

The Indian IT & ITeS drives the services sector and is pivotal for the Indian economy in its current and future outlook. The Indian IT-ITeS sector is primarily classified into four broad categories: IT Services, ITeS, engineering design and products development (ER&D) and software products. The sub-classification of ER&D and software products is primarily to distinguish the pure-play service section and job roles. The sector’s GDP contribution has increased from 1.2% in 1998 to 6.4 percent in 2008 to circa 8.0% in 2013 driven by significant exports to western countries. In 2012, the Indian IT & ITeS sector crossed the US$100 billion milestone; it grew by almost 1,000 times in the last two decades on the basis of cost arbitration, skill availability and government support. The sector is estimated to grow at an 11.5 percent CAGR over 2008-2013 to reach US$108.4 billion. The sector has provided new job opportunities and at present employs about 3 million directly and 9.5 million indirectly. Exports contribute about 78 percent of the total employment in the sector. The Central government has pioneered the ambitious 'Digital India' programme, which aims to connect all gram panchayats by broadband Internet, promote e-governance and transform India into a connected knowledge economy. The IT & ITeS industry is expected to reach US$300 billion by 2020 driven by rising demand in domestic market, along with increasing IT Services exports. The CAGR for 2013-2020 is estimated to be 16%. The disruptive technologies are redefining the IT/ITeS space and the reinforced start-up ecosystem would be key contributor to not only GDP but creation of newer jobs. The sector is expected to employ about 5.1 million professionals directly by FY 2022.

Logistics

The annual logistics cost in India is valued at Rs. 6,750 billion (US$ 135 billion) and it is growing at 8-10% annually. Logistics by value accounts for around 13% of the GDP of India, which is much higher than that in the US (9%), Europe (10%) and Japan (11%). The transportation and logistics sector in India accounts for almost 3 times and 1.7 times the cost share compared to that of the US and Chinese market respectively. Its penetration in the logistics sector increased from 12 percent in 2010 to 18 percent in 2012, highlighting significant growth opportunities. The Transport and Logistics sector is expected to register growth at 1–1.5 times the GDP, with EXIM expected to grow at 10 percent.

Organized Retail