Agriculture in India

Agriculture in India is one of the most important sectors of its economy. It is the means of livelihood of
almost two thirds of the work force in the country and according to the economic data for the financial year
2006-07, agriculture accounts for !" of India#s $%&. A'out () " of India#s geographical area is used for
agricultural activity. *hough the share of Indian agriculture in the $%& has steadily declined, it is still the
single largest contri'utor to the $%& and plays a vital role in the overall socio-economic development of
India.
+ne of the 'iggest success stories of independent India is the rapid strides made in the field of agriculture.
,rom a nation dependent on food imports to feed its population, India today is not only self-sufficient in grain
production 'ut also has su'stantial reserves. %ependence of India on agricultural imports and the crises of
food shortage encountered in -60s convinced planners that India#s growing population, as well as concerns
a'out national independence, security, and political sta'ility, re.uired self-sufficiency in food production.
*his perception led to a program of agricultural improvement called the $reen /evolution. It involved
'ringing additional area under cultivation, e0tension of irrigation facilities, the use of improved high-yielding
variety of seeds, 'etter techni.ues evolved through agricultural research, water management, and plant
protection through 1udicious use of fertilisers, pesticides and cropping practices. All these measures had a
salutary effect and the production of wheat and rice witnessed .uantum leap.
*o carry improved technologies to farmers and to replicate the success achieved in the production of wheat
and rice a 2ational &ulse %evelopment &rogramme, covering ) states, was launched in -!6. 3imilarly, a
*echnology 4ission on +ilseeds was launched in -!6 to increase production of oilseeds in the country and
attain self-sufficiency. &ulses were 'rought under the *echnology 4ission in --0. After the setting up of the
*echnology 4ission, there has 'een consistent improvement in the production of oilseeds. A new seeds
policy has 'een adopted to provide access to high-.uality seeds and plant material for vegeta'les, fruit,
flowers, oilseeds and pulses, without in any way compromising .uarantine conditions. *o give fillip to the
agriculture and make it more profita'le, 4inistry of ,ood &rocessing Industries was set up in 5uly -!!.
$overnment has also taken initiatives to encourage private sector investment in the food processing
industry.
6owever, there are still a host of issues that need to 'e addressed regarding Indian agriculture. Indian
agriculture is heavily dependent on monsoons. *he monsoons play a critical role in determining whether the
harvest will 'e rich, average, or poor. *he structural weaknesses of the agriculture sector are reflected in the
low level of pu'lic investment, e0haustion of the yield potential of new high yielding varieties of wheat and
rice, un'alanced fertili7er use, low seeds replacement rate, an inade.uate incentive system and post
harvest value addition.
*here is an urgent need for second green revolution in Indian agriculture and taking it to a higher tra1ectory
of ( per cent annual growth. ,ollowing steps need to 'e taken to achieve this o'1ective8
%ou'ling the rate of growth of irrigated area9
/eclaiming degraded land and focusing on soil .uality9
Improving water management, rain water harvesting and watershed development9
:ridging the knowledge gap through effective e0tension services9
%iversifying into high value outputs, fruits, vegeta'les, flowers, her's and spices, medicinal plants,
'am'oo, 'io-diesel, 'ut with ade.uate measures to ensure food security9
&roviding easy access to credit at afforda'le rates.
Automobile Industry in India
Automo'ile Industry in India has witnessed a tremendous growth in recent years and is all set to carry on the
momentum in the foreseea'le future. Indian automo'ile industry has come a long way since the first car ran
on the streets of :om'ay in !-!. *oday, automo'ile sector in India is one of the key sectors of the
economy in terms of the employment. %irectly and indirectly it employs more than 0 million people and if
we add the num'er of people employed in the auto-component and auto ancillary industry then the num'er
goes even higher.
*he automo'ile industry comprises of heavy vehicles ;trucks, 'uses, tempos, tractors<9 passenger cars9 and
two-wheelers. 6eavy vehicles section is dominated 'y *ata-*elco, Ashok =eyland, >icher 4otors, 4ahindra
and 4ahindra, and :a1a1. *he ma1or car manufacturers in India are 6industan 4otors, 4aruti ?dyog, ,iat
India &rivate =td., ,ord India =td., $eneral 4otors India &vt. =td., 6onda 3iel @ars India =td., 6yundai
4otors India =td., and 3koda India &rivate =td., *oyota 4otors, *ata 4otors etc. *he dominant players in the
two-wheeler sector are 6ero 6onda, :a1a1, *A3, 6onda 4otorcycle B 3cooter India ;&vt.< =td., Camaha etc.
In the initial years after independence Indian automo'ile industry was plagued 'y unfavoura'le government
policies. All it had to offer in the passenger car segment was a -(0s 4orris model called the Am'assador
and a -60s 3u7uki-derived model called the 4aruti !00. *he automo'ile sector in India underwent a
metamorphosis as a result of the li'erali7ation policies initiated in the --. 4easures such as rela0ation of
the foreign e0change and e.uity regulations, reduction of tariffs on imports, and refining the 'anking policies
played a vital role in turning around the Indian automo'ile industry. ?ntil the mid --0s, the Indian auto
sector consisted of 1ust a handful of local companies. 6owever, after the sector opened to foreign direct
investment in --6, glo'al ma1ors moved in. Automo'ile industry in India also received an unintended 'oost
from stringent government auto emission regulations over the past few years. *his ensured that vehicles
produced in India conformed to the standards of the developed world.
Indian automo'ile industry has matured in last few years and offers differentiated products for different
segments of the society. It is currently making inroads into the rural middle class market after its inroads into
the ur'an markets and rural rich. In the recent years Indian automo'ile sector has witnessed a slew of
investments. India is on every ma1or glo'al automo'ile player#s radar. Indian automo'ile industry is also fast
'ecoming an outsourcing hu' for automo'ile companies worldwide, as indicated 'y the 7ooming automo'ile
e0ports from the country. *oday, 6yundai, 6onda, *oyota, $4, ,ord and 4itsu'ishi have set up their
manufacturing 'ases in India. %ue to rapid economic growth and higher disposa'le income it is 'elieved that
the success story of the Indian automo'ile industry is not going to end soon.
3ome of the ma1or characteristics of Indian automo'ile sector are8
3econd largest two-wheeler market in the world.
,ourth largest commercial vehicle market in the world.
th largest passenger car market in the world
>0pected to 'ecome the world#s third largest automo'ile market 'y 20)0, 'ehind only @hina and
the ?3.
Aviation Industry in India
Aviation Industry in India is one of the fastest growing aviation industries in the world. Dith the li'erali7ation
of the Indian aviation sector, aviation industry in India has undergone a rapid transformation. ,rom 'eing
primarily a government-owned industry, the Indian aviation industry is now dominated 'y privately owned full
service airlines and low cost carriers. &rivate airlines account for around 7E" share of the domestic aviation
market. >arlier air travel was a privilege only a few could afford, 'ut today air travel has 'ecome much
cheaper and can 'e afforded 'y a large num'er of people.
*he origin of Indian civil aviation industry can 'e traced 'ack to -2, when the first air flight 'etween
Farachi and %elhi was started 'y the Indian 3tate Air 3ervices in colla'oration with the ?F 'ased Imperial
Airways. It was an e0tension of =ondon-Farachi flight of the Imperial Airways. In -)2, 5/% *ata founded
*ata Airline, the first Indian airline. At the time of independence, nine air transport companies were carrying
'oth air cargo and passengers. *hese were *ata Airlines, Indian 2ational Airways, Air service of India,
%eccan Airways, Am'ica Airways, :harat Airways, +rient Airways and 4istry Airways. After partition +rient
Airways shifted to &akistan.
In early -(!, $overnment of India esta'lished a 1oint sector company, Air India International =td in
colla'oration with Air India ;earlier *ata Airline< with a capital of /s 2 crore and a fleet of three =ockheed
constellation aircraft. *he inaugural flight of Air India International =td took off on 5une !, -(! on the
4um'ai-=ondon air route. *he $overnment nationali7ed nine airline companies vide the Air @orporations
Act, -E). Accordingly it esta'lished the Indian Airlines @orporation ;IA@< to cater to domestic air travel
passengers and Air India International ;AI< for international air travel passengers. *he assets of the e0isting
airline companies were transferred to these two corporations. *his Act ensured that IA@ and AI had a
monopoly over the Indian skies. A third government-owned airline, Aayudoot, which provided feeder
services 'etween smaller cities, was merged with IA@ in --(. *hese government-owned airlines dominated
Indian aviation industry till the mid---0s.
In April --0, the $overnment adopted open-sky policy and allowed air ta0i- operators to operate flights
from any airport, 'oth on a charter and a non charter 'asis and to decide their own flight schedules, cargo
and passenger fares. In --(, the Indian $overnment, as part of its open sky policy, ended the monopoly of
IA and AI in the air transport services 'y repealing the Air @orporations Act of -E) and replacing it with the
Air @orporations ;*ransfer of ?ndertaking and /epeal< Act, --(. &rivate operators were allowed to provide
air transport services. ,oreign direct investment ;,%I< of up to (- percent e.uity stake and 2/I ;2on
/esident Indian< investment of up to 00 percent e.uity stake were permitted through the automatic ,%I
route in the domestic air transport services sector. 6owever, no foreign airline could directly or indirectly hold
e.uity in a domestic airline company.
:y --E, several private airlines had ventured into the aviation 'usiness and accounted for more than 0
percent of the domestic air traffic. *hese included 5et Airways 3ahara, 2>&@ Airlines, >ast Dest Airlines,
4odi=uft Airlines, 5agsons Airlines, @ontinental Aviation, and %amania Airways. :ut only 5et Airways and
3ahara managed to survive the competition. 4eanwhile, Indian Airlines, which had dominated the Indian air
travel industry, 'egan to lose market share to 5et Airways and 3ahara. *oday, Indian aviation industry is
dominated 'y private airlines and these include low cost carriers such as %eccan Airlines, $oAir, 3pice5et
etc, who have made air travel afforda'le.
Airline industry in India is plagued with several pro'lems. *hese include high aviation tur'ine fuel ;A*,<
prices, rising la'or costs and shortage of skilled la'or, rapid fleet e0pansion, and intense price competition
among the players. :ut one of the ma1or challenges facing Indian aviation industry is infrastructure
constraint. Airport infrastructure needs to 'e upgraded rapidly if Indian aviation industry has to continue its
success story. 3ome steps have 'een taken in this direction. *wo of India#s largest airports-4um'ai and
2ew %elhi-were privati7ed recently. *wo greenfield airports are coming up at :angalore and 6ydera'ad in
southern India. Investments are pouring into almost all aspects of the industry, including aircraft
maintenance, pilot training and air cargo services. *he future prospects of Indian aviation sector look 'right.
BPO Industry in India
:usiness &rocess +utsourcing ;:&+< is one of the fastest growing segments of the Information *echnology
>na'led 3ervices ;I*>3< industry in India. :usiness &rocess +utsourcing refers to the delegation of one or
more I*-intensive 'usiness processes to an e0ternal provider that in turn owns, administers and manages
the selected process 'ased on defined and measura'le performance criteria.
*he trend to outsource work is on rise in today#s competitive environment. *here are num'er of reasons
'ehind the increasing trend of outsourcing. ,irstly, companies want to focus on mission-critical issues and
are not interested in frittering away time and energy on non-core functions. 3econdly, as 'usinesses grow
e0ponentially, the companies do not have resources have resources to cope with the growth and as a result
they outsource part of their 'usiness processes. *hirdly, companies may not have the 'est talent and skills
to do the 1o' themselves. =astly, converging technologies of telecommunication, information technology and
media have redefined the way we do 'usiness and have made outsourcing possi'le.
*here are a num'er of advantages of outsourcing. 4a1or among them are8 ;< /educe overheads and free
up resources, ;2< Improves >fficiency, ;)< +ffloads non-core functions, ;(< $ives access to speciali7ed skills,
;E< 3aves on manpower and training costs, ;6< /educes operating costs, ;7< >nhances tactical and strategic
advantages, ;!< 3preads risks, ;-< &rovides the 'est .uality services, products and people, and ;0< 6elps
to focus scarce resources on time-critical pro1ects.
3ome of typical services and processes that are outsourced include8 *echnical 3upport 3ervices,
*elemarketing 3ervices, Insurance &rocessing, %ata >ntry 3ervices G %ata &rocessing 3ervices, %ata
@onversion 3ervices, :ook Feeping and Accounting 3ervices et al.
*he Indian :&+ industry is constantly growing and a lot of ,ortune E00 companies are outsourcing services
to India. *here are several reasons for India#s emergence as one of leading outsourcing destinations. India
is very rich in educated and talented human resource. India is one of the pioneers in software development.
India has a mature industrial set up with world class systems. India has e0cellent technical facilities and
infrastructure for setting up call centers. *ime 7one difference 'etween India and America has also worked
to the advantage of Indian :&+ industry. India has an !-2 hour time 7one difference with respect to the ?3
and other developed markets. 4ost of the Indian call centers servicing American customers have timings
'etween E8)0 p.m. to -8)0 a.m. *his time 7one difference allows Indian companies :&+s to service
American clients 'y working in the nights. =ast, 'ut not the least, India has a huge pool of >nglish speaking
workforce that provides e0cellent voice 'ased services at e0tremely competitive costs resulting in huge
savings for companies. 3ome of the leading :&+ companies in India are8 $> @apital, @onvergys, Dipro
3pectramind, D23, %ell, %aksh e-3ervices, I@I@I +ne3ource, and 4phasi3.
3ome of the pro'lems afflicting Indian :&+ industry are high attrition rate, and 'acklash in developed
countries against perceived 1o' losses due to outsourcing to India. *o tackle the pro'lem of attrition
companies are adopting measures such as good rewards, 'onding programme, fle0i'le working hours and
stronger career path. As regards 'acklash against outsourcing, the 'acklash is mainly political. *here is
compelling economic logic for companies to outsource to India and also Indian :&+ companies have taken
initiatives allay fears of 1o' loss.
Cement Industry in India
@ement Industry in India is on a roll at the moment. %riven 'y a 'ooming real estate sector, glo'al demand
and increased activity in infrastructure development such as state and national highways, the cement
industry has witnessed tremendous growth. &roduction capacity has gone up and top cement companies of
the world are vying to enter the Indian market, there'y sparking off a spate of mergers and ac.uisitions.
Indian cement industry is currently ranked second in the world.
*he origins of Indian cement industry can 'e traced 'ack to -( when the first unit was set-up at
&or'andar with a capacity of 000 tonnes. *oday cement industry comprises of 2E large cement plants and
more than )00 mini cement plants. *he @ement @orporation of India, which is a @entral &u'lic 3ector
?ndertaking, has 0 units. *here are 0 large cement plants owned 'y various 3tate $overnments. @ement
industry in India has also made tremendous strides in technological upgradation and assimilation of latest
technology. &resently, -) per cent of the total capacity in the industry is 'ased on modern and environment-
friendly dry process technology. *he induction of advanced technology has helped the industry immensely to
conserve energy and fuel and to save materials su'stantially. Indian cement industry has also ac.uired
technical capa'ility to produce different types of cement like +rdinary &ortland @ement ;+&@<, &ortland
&o77olana @ement ;&&@<, &ortland :last ,urnace 3lag @ement ;&:,3<, +il Dell @ement, /apid 6ardening
&ortland @ement, 3ulphate /esisting &ortland @ement, Dhite @ement etc. 3ome of the ma1or clusters of
cement industry in India are8 3atna ;4adhya &radesh<, @handrapur ;4aharashtra<, $ul'arga ;Farnataka<,
Cerranguntla ;Andhra &radesh<, 2algonda ;Andhra &radesh<, :ilaspur ;@hattisgarh<, and @handoria
;/a1asthan<.
@ement industry in India is currently going through a consolidation phase. 3ome e0amples of consolidation
in the Indian cement industry are8 $u1arat Am'u1a taking a stake of ( per cent in A@@, and taking over %=,
@ements and 4odi @ement9 A@@ taking over I%@+=9 India @ement taking over /aasi @ement and 3ri
Aishnu @ement9 and $rasim#s ac.uisition of the cement 'usiness of =B*, Indian /ayon#s cement division,
and 3ri %igvi1ay @ements. ,oreign cement companies are also picking up stakes in large Indian cement
companies. 3wiss cement ma1or 6olcim has picked up (.! per cent of the promoters# stake in $u1arat
Am'u1a @ements ;$A@=<. 6olcim#s ac.uisition has led to the emergence of two ma1or groups in the Indian
cement industry, the 6olcim-A@@-$u1arat Am'u1a @ements com'ine and the Aditya :irla group through
$rasim Industries and ?ltratech @ement. =afarge, the ,rench cement ma1or has ac.uired the cement plants
of /aymond and *isco. Italy 'ased Italcementi has ac.uired a stake in the F.F. :irla promoted Huari
Industries# cement plant in Andhra &radesh, and $erman cement company 6eidel'erg @ement has entered
into an e.ual 1oint-venture agreement with 3 & =ohia $roup controlled Indo-/ama @ement.
Issues concerning Cement Industry
6igh *ransportation @ost is affecting the competitiveness of the cement industry. ,reight accounts
for 7" of the production cost. /oad is the preferred mode for transportation for distances less
than 2E0km. 6owever, industry is heavily dependant on roads for longer distances too as the
railway infrastructure is not ade.uate.
@ement industry is highly capital intensive industry and nearly EE-60" of the inputs are controlled
'y the government.
*here is regional im'alance in the distri'ution of cement industry. =imestone availa'ility in pockets
has led to uneven capacity additions.
@oal availa'ility and .uality is also affecting the production.
Outlook
+utlook for the cement industry looks .uite 'right. $iven the sustained growth in the real estate sector, the
government#s emphasis on infrastructure and increased glo'al demand, it looks as if the 1uggernaut of
cement industry would continue to roll on the path of growth.
Fashion Industry in India
,ashion Industry in India is in nascent stage at the moment and has great potential to make its mark on the
world stage. Indian fashion has thousands of years of tradition 'ehind it. India has a rich and varied te0tile
heritage. >ach region of India has its own uni.ue native costume and traditional attire. ,ashion Industry in
India is growing at a rapid pace with international events such as the India ,ashion Deek gaining popularity
and annual shows 'y fashion designers 'eing held in the ma1or cities of India.
Indian fashion industry got a 'ig 'oost 'y the victories of a num'er of Indian 'eauty .ueens in International
events such as the 4iss Dorld and 4iss ?niverse. @ontests such as these made Indian models recogni7ed
worldwide. Indian fashion designers such as /itu Fumar, /itu :eri, /ohit :al, /ina %haka, *arun *ahiliani,
55 Aalaya and 4anish 4alhotra have also made their mark in the glo'al fashion arena.
Apart from the rich tradition the strength of the Indian fashion industry also rests on strong raw material
availa'ility. India is the third largest producer of cotton, the second largest producer of silk and the fifth
largest producer of man-made fi'res in the world. India also possesses large num'er of skilled human
resources and has among the lowest la'our costs in the world.
Dith the end of .uota regime on 5anuary , 200E the prospects for Indian fashion industry look up'eat. India
is among the largest e0porters of te0tile garments and fa'rics. *he .uota regime restricted free e0port of
materials and garments from the developing countries, giving an edge to developed ones. *he regime
resulted in unfair trade practices, such as hoarding of licenses for .uotas and their eventual sale in the 'lack
market, and the shipping of low .uality goods to meet contract demands. *here was little incentive for the
manufacturers to upgrade and improve either their products or manufacturing a'ilities. *he end of the .uota
regime heralds the prospects of e0ponential growth for the fashion industries of countries like India that had
faced .uota restrictions earlier.
Indian fashion industry needs to take following steps to fulfill its growth potential8
Indian fashion industry needs to create glo'al image. *here are various agencies that can assist in
the 'rand'uilding e0ercise. *he Apparel >0port &romotion @ouncil ;A>&@<, other te0tile promotion
councils, and industry associations such as @onfederation of Indian Industries can market Indian
fashion glo'ally.
=arge te0tiles players must develop linkages with small medium enterprise ;34>< clusters. 3uch
networks would 'e a win-win for te0tile players that can concentrate on demand creation and
'randing as well as for clusters that can focus on .uality production.
Indian fashion industry has to forge designer-corporate links as is the norm in glo'al fashion
industry.
*here is a large part of the novice designer community, possi'ly more talented, which remains
o'scure. 6ence there is an urgent need to give e0posure to young and 'udding designers.
If we are a'le to take the a'ove mentioned issues to their logical conclusion then there is no reason why
Indian fashion industry cannot achieve its tremendous potential.
Foreign Direct Investment in India
,oreign %irect Investment ;,%I< in India in growing rapidly. ,oreign direct investment is an integral part of an
open and effective international economic system and a ma1or catalyst to development. ,%I is highly
'eneficial for a country like India. >mpirical studies suggest that ,%I triggers technology spillovers, assists
human capital formation, contri'utes to international trade integration, helps create a more competitive
'usiness environment and enhances enterprise development. All these factors contri'ute to higher
economic growth and conse.uently aid in alleviating poverty. Apart from 'estowing economic 'enefits ,%I
may also help improve environmental and social conditions 'y transferring IcleanerI technologies and
leading to more socially responsi'le corporate policies.
Foreign Direct Investment in India is permitted as under the following forms of investments
*hrough financial colla'orations.
*hrough 1oint ventures and technical colla'orations.
*hrough capital markets via >uro issues.
*hrough private placements or preferential allotments.
FDI is not permitted in the following industrial sectors
Arms and ammunition.
Atomic >nergy.
/ailway *ransport.
@oal and lignite.
4ining of iron, manganese, chrome, gypsum, sulphur, gold, diamonds, copper, 7inc.
Foreign direct investments in India are approved through two routes
!" Automatic approval by #BI *he /eserve :ank of India accords automatic approval within a period of
two weeks ;provided certain parameters are met< to all proposals involving8
,oreign e.uity up to E0" in ) categories relating to mining activities.
,oreign e.uity up to E" in (! specified industries.
,oreign e.uity up to 7(" in - categories.
Investments in high-priority industries or for trading companies primarily engaged in e0porting are given
almost automatic approval 'y the /:I.
FDI in India on automatic route is not allowed in the following sectors
&roposals that re.uire an industrial licence and cases where foreign investment is more than 2("
in the e.uity capital of units manufacturing items reserved for the small scale industries.
&roposals in which the foreign colla'orator has a previous ventureGtie-up in India.
&roposals relating to ac.uisition of shares in an e0isting Indian company in favour of a
,oreignG2on-/esident Indian ;2/I<G+verseas @orporate :ody ;+@:< investor9 and
&roposals falling outside notified sectoral policyGcaps or under sectors in which ,%I is not permitted
andGor whenever any investor chooses to make an application to the ,oreign Investment &romotion
:oard and not to avail of the automatic route.
$" FIPB #oute ,oreign Investment &romotion :oard ;,I&:< is a competent 'ody to consider and
recommend foreign direct investment, which do not come under the automatic route. 2ormal processing
time of an ,%I proposal in ,I&: is ( to 6 weeks. ,I&: is located in the %epartment of >conomic Affairs,
4inistry of ,inance. Its constitution is as follows8
3ecretary, %epartment of >conomic Affairs ;@hairman<
3ecretary, %epartment of Industrial &olicy B &romotion ;4em'er<
3ecretary, %epartment of @ommerce ;4em'er<
3ecretary, ;>conomic /elation<, 4inistry of >0ternal Affairs ;4em'er<
,I&: can co-opt 3ecretaries to the $ovt. of India and other top officials of financial institutions, 'anks and
professional e0perts of industry and commerce, as and when necessary.
Foreign Investment Implementation Authority %FIIA&
$overnment has set up ,oreign Investment Implementation Authority ;,IIA< to facilitate .uick translation of
,oreign %irect Investment ;,%I< approvals into implementation 'y providing a pro-active one stop after care
service to foreign investors, help them o'tain necessary approvals and 'y sorting their operational pro'lems.
,IIA is assisted 'y ,ast *rack @ommittee ;,*@<, which have 'een esta'lished in )0 4inistriesG%epartments
of $overnment of India for monitoring and resolution of difficulties for sector specific pro1ects.
'ote *he a'ove information was last updated on 2-07-2007
(otel Industry in India
6otel Industry in India has witnessed tremendous 'oom in recent years. 6otel Industry is ine0trica'ly linked
to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel
industry. *he thriving economy and increased 'usiness opportunities in India have acted as a 'oon for
Indian hotel industry. *he arrival of low cost airlines and the associated price wars have given domestic
tourists a host of options. *he #Incredi'le India# destination campaign and the recently launched #Atithi %evo
:havah# ;A%:< campaign have also helped in the growth of domestic and international tourism and
conse.uently the hotel industry.
In recent years government has taken several steps to 'oost travel B tourism which have 'enefited hotel
industry in India. *hese include the a'olishment of the inland air travel ta0 of E"9 reduction in e0cise duty
on aviation tur'ine fuel to !"9 and removal of a num'er of restrictions on out'ound chartered flights,
including those relating to fre.uency and si7e of aircraft. *he government#s recent decision to treat
convention centres as part of core infrastructure, allowing the government to provide critical funding for the
large capital investment that may 'e re.uired has also fuelled the demand for hotel rooms.
*he opening up of the aviation industry in India has e0citing opportunities for hotel industry as it relies on
airlines to transport !0" of international arrivals. *he government#s decision to su'stantially upgrade 2!
regional airports in smaller towns and privati7ation B e0pansion of %elhi and 4um'ai airport will improve the
'usiness prospects of hotel industry in India. 3u'stantial investments in tourism infrastructure are essential
for Indian hotel industry to achieve its potential. *he upgrading of national highways connecting various
parts of India has opened new avenues for the development of 'udget hotels in India. *aking advantage of
this opportunity *ata group and another hotel chain called #6omotel# have entered this 'usiness segment.
According to a report, 6otel Industry in India currently has supply of 0,000 rooms and there is a shortage
of E0,000 rooms fueling hotel room rates across India. According to estimates demand is going to e0ceed
supply 'y at least 00" over the ne0t 2 years. ,ive-star hotels in metro cities allot same room, more than
once a day to different guests, receiving almost 2(-hour rates from 'oth guests against 6-! hours usage.
Dith demand-supply disparity, hotel rates in India are likely to rise 'y 2E" annually and occupancy 'y !0",
over the ne0t two years. *his will affect the competitiveness of India as a cost-effective tourist destination.
*o overcome, this shortage Indian hotel industry is adding a'out 60,000 .uality rooms, currently in different
stages of planning and development, which should 'e ready 'y 202. 6otel Industry in India is also set to
get a fillip with %elhi hosting 200 @ommonwealth $ames. $overnment has approved )00 hotel pro1ects,
nearly half of which are in the lu0ury range. *he future scenario of Indian hotel industry looks e0tremely rosy.
It is e0pected that the 'udget and mid-market hotel segment will witness huge growth and e0pansion while
the lu0ury segment will continue to perform e0tremely well over the ne0t few years.
'ote *he a'ove information was last updated on 2-07-2007
India )DP
India#s $%& recently crossed the trillion-dollar mark for the first time and with this India has 1oined the elite
clu' of 2 countries with a trillion dollar economy. @ountries that have 'reached trillion-dollar $%& level in
the past are he ?3, 5apan, $ermany, @hina, ?F, ,rance, Italy, 3pain, @anada, :ra7il and /ussia.
*he $%& or $ross %omestic &roduct is the primary indicator used to gauge the health of a country#s
economy. *he $%& of a country is defined as the market value of all final goods and services produced
within a country in a given period of time. It is also considered the sum of value added at every stage of
production of all final goods and services produced within a country in a given period of time. $%& is a
num'er that e0presses the worth of the output of a country in local currency. $%& tries to capture all final
goods and services that are produced within the political and geographical frontiers of the country, there'y
assuring that the final monetary value of everything that is created in a country is represented in the $%&.
$%& is calculated for a specific period of time, usually a year or a .uarter of a year.
According to the data released for the year 2006-2007, India#s $%& grew at an impressive -.2 per cent. *he
share of different sectors of the economy in India#s $%& is as follows8 Agriculture - !.E per cent, Industry -
26.( per cent, and 3ervices - EE. per cent. *he fact that the service sector now accounts for more than half
the $%& is a milestone in India#s economic history and takes it closer to the fundamentals of a developed
economy. At the time of independence agriculture occupied the ma1or share of $%& while the contri'ution of
services was relatively very less.
*he government has set a target of an average annual $%& growth of - per cent for the >leventh ,ive Cear
&lan. *he target looks achieva'le as all the macroeconomic fundamentals are strong and the impressive
growth rate of Indian $%& looks all set to continue.
'ote *he a'ove information was last updated on 2-07-2007
Inflation in India
Inflation in India is at an accepta'le level and remains much lower than in many other developing countries.
:ut off late prices of essential commodities such as food grain, edi'le oil, vegeta'les etc have risen sharply
and in the process driving up the inflation rate.
Inflation is defined as a sustained increase in the general level of prices for goods and services. It is
measured as an annual percentage increase. As inflation rises, the value of currency goes down. *hus the
purchasing power of the currency, i.e. the goods and services that can 'e 'ought in a unit of currency, too
goes down.
4easuring inflation is a difficult task. *o do so a num'er of goods that are representative of the economy are
put together into what is referred as a Imarket 'asket.I *he cost of this 'asket is then compared over time.
*his results in a price inde0, which is the cost of the market 'asket today as a percentage of the cost of that
identical 'asket in the starting year. In India two types of inde08 @onsumer &rice Inde0 ;@&I< and Dholesale
&rice Inde0 ;D&I< are used to monitor inflation. +ff the two, Dholesale &rice Inde0 ;D&I< is the most widely
used price inde0 in India. It is used to measure the change in the average price level of goods traded in
wholesale market and is availa'le on a weekly 'asis with the shortest possi'le time lag only two weeks.
*he current rise in inflation has its roots in supply-side factors. *here was shortfall in domestic production
vis-a-vis domestic demand and hardening of international prices, prices of primary commodities, mainly food
items. Dheat, pulses, edi'le oils, fruits and vegeta'les, and condiments and spices have 'een the ma1or
contri'utors to the higher inflation rate of primary articles. *he inflation was also accompanied 'y 'uoyant
growth of money and credit. Dhile the $%& growth 7oomed to -.0 per cent per annum, the 'road money
;4)< grew 'y more than 20 per cent. %emand for nearly everything from housing to fast moving consumer
goods is outpacing supply in part 'ecause white-collar salaries are rising faster in India than anywhere else
in Asia. +ne of the daunting tasks 'efore the government is to reconcile the twin needs of facilitating credit
for growth on the one hand and containing li.uidity to tame inflation on the other.
Insurance *ector in India
Insurance sector in India is one of the 'ooming sectors of the economy and is growing at the rate of E-20
per cent annum. *ogether with 'anking services, it contri'utes to a'out 7 per cent to the country#s $%&.
Insurance is a federal su'1ect in India and Insurance industry in India is governed 'y Insurance Act, -)!,
the =ife Insurance @orporation Act, -E6 and $eneral Insurance :usiness ;2ationalisation< Act, -72,
Insurance /egulatory and %evelopment Authority ;I/%A< Act, --- and other related Acts.
*he origin of life insurance in India can 'e traced 'ack to !! with the esta'lishment of the +riental =ife
Insurance @ompany in @alcutta. It was conceived as a means to provide for >nglish Didows. In those days
a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered
riskier for coverage. *he :om'ay 4utual =ife Insurance 3ociety that started its 'usiness in !70 was the
first company to charge same premium for 'oth Indian and non-Indian lives. In -2, insurance regulation
formally 'egan with the passing of =ife Insurance @ompanies Act and the &rovident ,und Act.
:y -)!, there were 76 insurance companies in India. :ut a num'er of frauds during -20s and -)0s
tainted the image of insurance industry in India. In -)!, the first comprehensive legislation regarding
insurance was introduced with the passing of Insurance Act of -)! that provided strict 3tate @ontrol over
insurance 'usiness.
Insurance sector in India grew at a faster pace after independence. In -E6, $overnment of India 'rought
together 2(E Indian and foreign insurers and provident societies under one nationalised monopoly
corporation and formed =ife Insurance @orporation ;=I@< 'y an Act of &arliament, vi7. =I@ Act, -E6, with a
capital contri'ution of /s.E crore.
*he ;non-life< insurance 'usinessGgeneral insurance remained with the private sector till -72. *here were
07 private companies involved in the 'usiness of general operations and their operations were restricted to
organised trade and industry in large cities. *he $eneral Insurance :usiness ;2ationalisation< Act, -72
nationalised the general insurance 'usiness in India with effect from 5anuary , -7). *he 07 private
insurance companies were amalgamated and grouped into four companies8 2ational Insurance @ompany,
2ew India Assurance @ompany, +riental Insurance @ompany and ?nited India Insurance @ompany. *hese
were su'sidiaries of the $eneral Insurance @ompany ;$I@<.
In --), the first step towards insurance sector reforms was initiated with the formation of 4alhotra
@ommittee, headed 'y former ,inance 3ecretary and /:I $overnor /.2. 4alhotra. *he committee was
formed to evaluate the Indian insurance industry and recommend its future direction with the o'1ective of
complementing the reforms initiated in the financial sector.
+ey #ecommendations of ,alhotra Committee
*tructure
$overnment stake in the insurance @ompanies to 'e 'rought down to E0".
$overnment should take over the holdings of $I@ and its su'sidiaries so that these su'sidiaries
can act as independent corporations.
All the insurance companies should 'e given greater freedom to operate.
Competition
&rivate @ompanies with a minimum paid up capital of /s.'illion should 'e allowed to enter the
industry.
2o @ompany should deal in 'oth =ife and $eneral Insurance through a single >ntity.
,oreign companies may 'e allowed to enter the industry in colla'oration with the domestic
companies.
&ostal =ife Insurance should 'e allowed to operate in the rural market.
+nly one 3tate =evel =ife Insurance @ompany should 'e allowed to operate in each state.
#egulatory Body
*he Insurance Act should 'e changed.
An Insurance /egulatory 'ody should 'e set up.
@ontroller of Insurance should 'e made independent.
Investments
4andatory Investments of =I@ =ife ,und in government securities to 'e reduced from 7E" to E0".
$I@ and its su'sidiaries are not to hold more than E" in any company.
Customer *ervice
=I@ should pay interest on delays in payments 'eyond )0 days
Insurance companies must 'e encouraged to set up unit linked pension plans.
@omputerisation of operations and updating of technology to 'e carried out in the insurance
industry.
4alhotra @ommittee also proposed setting up an independent regulatory 'ody - *he Insurance /egulatory
and %evelopment Authority ;I/%A< to provide greater autonomy to insurance companies in order to improve
their performance and ena'le them to act as independent companies with economic motives.
Insurance sector in India was li'erali7ed in 4arch 2000 with the passage of the Insurance /egulatory and
%evelopment Authority ;I/%A< :ill, lifting all entry restrictions for private players and allowing foreign players
to enter the market with some limits on direct foreign ownership. *here is a 26 percent e.uity cap for foreign
partners in an insurance company. *here is a proposal to increase this limit to (- percent. *he opening up of
the insurance sector has led to rapid growth of the sector. &resently, there are 6 life insurance companies
and E non-life insurance companies in the market. *he potential for growth of insurance industry in India is
immense as nearly !0 per cent of Indian population is without life insurance cover while health insurance
and non-life insurance continues to 'e well 'elow international standards.
'ote *he a'ove information was last updated on 2-07-2007
I- Industry in India
Information *echnology ;I*< industry in India is one of the fastest growing industries. Indian I* industry has
'uilt up valua'le 'rand e.uity for itself in the glo'al markets. I* industry in India comprises of software
industry and information technology ena'led services ;I*>3<, which also includes 'usiness process
outsourcing ;:&+< industry. India is considered as a pioneer in software development and a favorite
destination for I*-ena'led services.
*he origin of I* industry in India can 'e traced to -7(, when the mainframe manufacturer, :urroughs,
asked its India sales agent, *ata @onsultancy 3ervices ;*@3<, to e0port programmers for installing system
software for a ?.3. client. *he I* industry originated under unfavora'le conditions. =ocal markets were
a'sent and government policy toward private enterprise was hostile. *he industry was 'egun 'y :om'ay-
'ased conglomerates which entered the 'usiness 'y supplying programmers to glo'al I* firms located
overseas.
%uring that time Indian economy was state-controlled and the state remained hostile to the software industry
through the -70s. Import tariffs were high ;)E" on hardware and 00" on software< and software was
not considered an IindustryI, so that e0porters were ineligi'le for 'ank finance. $overnment policy towards
I* sector changed when /a1iv $andhi 'ecame &rime 4inister in -!(. 6is 2ew @omputer &olicy ;2@&-
-!(< consisted of a package of reduced import tariffs on hardware and software ;reduced to 60"<,
recognition of software e0ports as a Idelicensed industryI, i.e., henceforth eligi'le for 'ank finance and freed
from license-permit ra1, permission for foreign firms to set up wholly-owned, e0port-dedicated units and a
pro1ect to set up a chain of software parks that would offer infrastructure at 'elow-market costs. *hese
policies laid the foundation for the development of a world-class I* industry in India.
*oday, Indian I* companies such as *ata @onsultancy 3ervices ;*@3<, Dipro, Infosys, 6@= et al are
renowned in the glo'al market for their I* prowess. 3ome of the ma1or factors which played a key role in
India#s emergence as key glo'al I* player are8
Indian .ducation *ystem
*he Indian education system places strong emphasis on mathematics and science, resulting in a large
num'er of science and engineering graduates. 4astery over .uantitative concepts coupled with >nglish
proficiency has resulted in a skill set that has ena'led India to reap the 'enefits of the current international
demand for I*.
(igh /uality (uman #esource
Indian programmers are known for their strong technical and analytical skills and their willingness to
accommodate clients. India also has one of the largest pools of >nglish-speaking professionals.
Competitive Costs
*he cost of software development and other services in India is very competitive as compared to the Dest.
Infrastructure *cenario
Indian I* industry has also gained immensely from the availa'ility of a ro'ust infrastructure ;telecom, power
and roads< in the country.
In the last few years Indian I* industry has seen tremendous growth. %estinations such as :angalore,
6ydera'ad and $urgaon have evolved into glo'al I* hu's. 3everal I* parks have come up at :angalore,
6ydera'ad, @hennai, &une, $urgaon etc. *hese parks offer 3ilicon Aalley type infrastructure. In the light of
all the factors that have added to the strength of Indian I* industry, it seems that Indian success story is all
set to continue.
.ntertainment Industry in India
>ntertainment Industry in India comprises of ,ilm Industry and *elevision Industry. *he Indian entertainment
industry is among the fastest growing sectors in the country. In the past two decades entertainment industry
in India has witnessed e0plosive growth. In television alone, from a single state owned television network,
%oordarshan in --, today there are over )00 national, regional and local channels 'eing 'eamed across
the country. Indian film industry is the largest film industry in the world, producing on an average, close to a
thousand films a year in all languages. In terms of film production India e0ceeds 6ollywood#s production
volume 'y over three times. 3ome of the fastest growing segments in the Indian entertainment industry
include music, ca'le and satellite television, animation and ,4.
According to an estimate 'y ,I@@I and >rnst and Coung Indian entertainment industry would worth more
than /s. (00,000 million in 200!. 3everal positive developments like the accordance of the #industry# status
to the film industry, satellite channel penetration, the retail 'oom in the channels for music sales ;4usic
Dorld B &lanet 4<, the use of digital technology in all spheres of entertainment and the growth of
multiple0es have contri'uted to the growth of this sector.
>ntertainment industry in India is presently in a consolidation phase as 'oundary lines 'etween films, music
and television are fast disappearing. 3kills and resources are 'eing pooled e0tensively. :esides adaptation
to high-end digital technology, the entertainment industry is also witnessing rapid development of state-of-
the-art studios and post production facilities.
In terms of employment, an estimated 6 million people earn their livelihood from the entertainment industry
and this num'er is all set to grow. >ntertainment industry in India is pro1ected to 'e one of the ma1or
economic driving forces of the country. In India, television is the ma1or segment of entertainment industry.
&resently, India has the third largest television market in the world 'ehind only china and the ?3A. *oday,
television reaches a'out hundred million Indian households. India has the world#s 'iggest movie industry in
terms of the num'er of movies produced. &resently, the technology of film-making in India is perhaps the
'est among all developing countries. Indian film industry is now increasingly getting professional and a lot of
production houses such as Cash /a1 &roductions, %harma &roductions, 4ukta Arts etc. are now working on
corporate lines.
*he popularity of Indian entertainment industry goes well 'eyond the geographical frontiers of the country.
Indian television channels and films are viewed and en1oyed across the entire 3outh Asia. Across the 4iddle
>ast, parts of 3outh >ast Asia and Africa, large e0patriate populations ensure that Indian *A channels and
films are a regular part of their entertainment 'ou.uet. In ?F and 2orth America ;?3A and @anada<, Indian
*A channels and films are increasingly finding a foothold 'eyond the e0patriate pockets as the audience
there has started to en1oy and identify with the contemporary Indian culture. Juite a few of Indian filmstars
are also getting good offers from 6ollywood.
*he future prospects of Indian entertainment industry look to 'e e0tremely good. As India#s profile rises on
the glo'al stage outside interest in India#s culture and entertainment industry is also 'ound to grow.
'ote *he a'ove information was last updated on 2-07-2007
Oil 0 )as Industry in India
*he origin of oil B gas industry in India can 'e traced 'ack to !67 when oil was struck at 4akum near
4argherita in Assam. At the time of Independence in -(7, the +il B $as industry was controlled 'y
international companies. India#s domestic oil production was 1ust 2E0,000 tonnes per annum and the entire
production was from one state - Assam.
*he foundation of the +il B $as Industry in India was laid 'y the Industrial &olicy /esolution, -E(, when the
government announced that petroleum would 'e the core sector industry. In pursuance of the Industrial
&olicy /esolution, -E(, $overnment-owned 2ational +il @ompanies +2$@ ;+il B 2atural $as
@ommission<, I+@ ;Indian +il @orporation<, and +I= ;+il India =td.< were formed. +2$@ was formed as a
%irectorate in -EE, and 'ecame a @ommission in -E6. In -E!, Indian /efineries =td, a government
company was set up. In -E-, for marketing of petroleum products, the government set up another company
called Indian /efineries =td. In -6(, Indian /efineries =td was merged with Indian +il @ompany =td. to form
Indian +il @orporation =td.
%uring -60s, a num'er of oil and gas-'earing structures were discovered 'y +2$@ in $u1arat and Assam.
%iscovery of oil in significant .uantities in :om'ay 6igh in ,e'ruary, -7( opened up new avenues of oil
e0ploration in offshore areas. %uring -70s and till mid -!0s e0ploratory efforts 'y +2$@ and +I= India
yielded discoveries of oil and gas in a num'er of structures in :assein, *apti, Frishna-$odavari-@auvery
'asins, @achar ;Assam<, 2agaland, and *ripura. In -!(-!E, India achieved a self-sufficiency level of 70" in
petroleum products.
In -!(, $as Authority of India =td. ;$AI=< was set up to look after transportation, processing and marketing
of natural gas and natural gas li.uids. $AI= has 'een instrumental in the laying of a 700 km-long gas
pipeline ;6:5 pipeline< from 6a7ira in $u1arat to 5agdishpur in ?ttar &radesh, passing through /a1asthan
and 4adhya &radesh.
After Independence, India also made significant additions to its refining capacity. In the first decade after
independence, three coastal refineries were esta'lished 'y multinational oil companies operating in India at
that time. *hese included refineries 'y :urma 3hell, and >sso 3tanvac at 4um'ai, and 'y @alte0 at
Aisakhapatnam. *oday, there are a total of ! refineries in the country comprising 7 in the &u'lic 3ector,
one in the private sector. *he 7 &u'lic sector refineries are located at $uwahati, :arauni, Foyali, 6aldia,
4athura, %ig'oi, &anipat, Aishakapatnam, @hennai, 2agapatinam, Fochi, :ongaigaon, 2umaligarh,
4angalore, *atipaka, and two refineries in 4um'ai. *he private sector refinery 'uilt 'y /eliance &etroleum
=td is in 5amnagar. It is the 'iggest oil refinery in Asia.
:y the end of -!0s, the petroleum sector was in the doldrums. +il production had 'egun to decline
whereas there was a steady increase in consumption and domestic oil production was a'le to meet only
a'out )E" of the domestic re.uirement. *he situation was further compounded 'y the resource crunch in
early --0s. *he $overnment had no money for the development of some of the then newly discovered
fields ;$andhar, 6eera &hase-II and III, 2eelam, /avva, &anna, 4ukta, *apti, =akwa &hase-II, $eleki,
:om'ay 6igh ,inal %evelopment schemes etc. *his forced the $overnment to go for the petroleum sector
reforms which had 'ecome inevita'le if India had to attract funds and technology from a'road into the
petroleum sector.
*he government in order to increase e0ploration activity, approved the 2ew >0ploration =icensing &olicy
;2>=&< in 4arch --7 to ensure level playing field in the upstream sector 'etween private and pu'lic sector
companies in all fiscal, financial and contractual matters. *his ensured there was no mandatory state
participation through +2$@G+I= nor there was any carried interest of the government.
*o meet its growing petroleum demand, India is investing heavily in oil fields a'road. India#s state-owned oil
firms already have stakes in oil and gas fields in /ussia, 3udan, Ira., =i'ya, >gypt, Jatar, Ivory @oast,
Australia, Aietnam and 4yanmar. +il and $as Industry has a vital role to play in India#s energy security and
if India has to sustain its high economic growth rate.
'ote *he a'ove information was last updated on 2-07-2007
Paper Industry in India
&aper industry in India is the Eth largest paper industry in the world. It provides employment to nearly .E
million people and contri'utes /s 2E 'illion to the government#s kitty. *he government regards the paper
industry as one of the )E high priority industries of the country.
&aper industry is primarily dependent upon forest-'ased raw materials. *he first paper mill in India was set
up at 3reerampur, Dest :engal, in the year !2. It was 'ased on grasses and 1ute as raw material. =arge
scale mechani7ed technology of papermaking was introduced in India in early -0E. 3ince then the raw
material for the paper industry underwent a num'er of changes and over a period of time, 'esides wood and
'am'oo, other non-conventional raw materials have 'een developed for use in the papermaking. *he Indian
pulp and paper industry at present is very well developed and esta'lished. 2ow, the paper industry is
categori7ed as forest-'ased, agro-'ased and others ;waste paper, secondary fi're, 'ast fi'ers and market
pulp<.
In -E, there were 7 paper mills, and today there are a'out EE units engaged in the manufacture of
paper and paper'oards and newsprint in India. *he pulp B paper industries in India have 'een categori7ed
into large-scale and small-scale. *hose paper industries, which have capacity a'ove 2(,000 tonnes per
annum are designated as large-scale paper industries. India is self-sufficient in manufacture of most
varieties of paper and paper'oards. Import is confined only to certain specialty papers. *o meet part of its
raw material needs the industry has to rely on imported wood pulp and waste paper.
Indian paper industry has 'een de-licensed under the Industries ;%evelopment B /egulation< Act, -E with
effect from 7th 5uly, --7. *he interested entrepreneurs are now re.uired to file an Industrial
>ntrepreneurs# 4emorandum ;I>4< with the 3ecretariat for Industrial Assistance ;3IA< for setting up a new
paper unit or su'stantial e0pansion of the e0isting unit in permissi'le locations. ,oreign %irect Investment
;,%I< up to 00" is allowed on automatic route on all activities e0cept those re.uiring industrial licenses
where prior governmental approval is re.uired.
$rowth of paper industry in India has 'een constrained due to high cost of production caused 'y inade.uate
availa'ility and high cost of raw materials, power cost and concentration of mills in one particular area.
$overnment has taken several policy measures to remove the 'ottlenecks of availa'ility of raw materials
and infrastructure development. ,or e0ample, to overcome short supply of raw materials, duty on pulp and
waste paper and wood logsGchips has 'een reduced.
,ollowing measures need to 'e taken to make Indian paper industry more competitive8
Improvements of key ports, roads and railways and communication facilities.
/evision of forest policy is re.uired for wood 'ased paper industry so that plantation can 'e raised
'y industry, cooperatives of farmers, and state government. %egraded forest land should 'e made
availa'le to the industry for raising plantations.
Import duty on waste paper should 'e reduced.
%uty free imports of new B second hand machineryGe.uipment should 'e allowed for technology up
gradation.
Outlook
+utlook for paper industry in India looks e0tremely positive as the demand for upstream market of paper
products, like, tissue paper, tea 'ags, filter paper, light weight online coated paper, medical grade coated
paper, etc., is growing up.
'ote *he a'ove information was last updated on 2-07-2007
*ervice *ector in India
3ervice 3ector in India today accounts for more than half of India#s $%&. According to data for the financial
year 2006-2007, the share of services, industry, and agriculture in India#s $%& is EE. per cent, 26.( per
cent, and !.E per cent respectively. *he fact that the service sector now accounts for more than half the
$%& marks a watershed in the evolution of the Indian economy and takes it closer to the fundamentals of a
developed economy.
3ervices or the Itertiary sectorI of the economy covers a wide gamut of activities like trading, 'anking B
finance, infotainment, real estate, transportation, security, management B technical consultancy among
several others. *he various sectors that com'ine together to constitute service industry in India are8
*rade
6otels and /estaurants
/ailways
+ther *ransport B 3torage
@ommunication ;&ost, *elecom<
:anking
Insurance
%wellings, /eal >state
:usiness 3ervices
&u'lic Administration9 %efence
&ersonal 3ervices
@ommunity 3ervices
+ther 3ervices
*here was marked acceleration in services sector growth in the eighties and nineties, especially in the
nineties. Dhile the share of services in India#s $%& increased 'y 2 per cent points in the E0 years 'etween
-E0 and 2000, nearly (0 per cent of that increase was concentrated in the nineties. Dhile almost all service
sectors participated in this 'oom, growth was fastest in communications, 'anking, hotels and restaurants,
community services, trade and 'usiness services. +ne of the reasons for the sudden growth in the services
sector in India in the nineties was the li'eralisation in the regulatory framework that gave rise to innovation
and higher e0ports from the services sector.
*he 'oom in the services sector has 'een relatively I1o'lessI. *he rise in services share in $%& has not
accompanied 'y proportionate increase in the sector#s share of national employment. 3ome economists
have also cautioned that service sector growth must 'e supported 'y proportionate growth of the industrial
sector, otherwise the service sector grown will not 'e sustaina'le. In the current economic scenario it looks
that the 'oom in the services sector is here to stay as India is fast emerging as glo'al services hu'.
'ote *he a'ove information was last updated on 2-07-2007
-ourism Industry in India
*ourism industry in India is on a great 'oom at the moment. India has tremendous potential to 'ecome a
ma1or glo'al tourist destination and Indian tourism industry is e0ploiting this potential to the hilt. *ravel and
tourism industry is the second highest foreign e0change earner for India, and the government has given
travel B tourism organi7ations e0port house status.
*he 'uoyancy in the Indian tourism industry can 'e attri'uted to several factors. ,irstly, the tremendous
growth of Indian economy has resulted in more disposa'le income in the hands of middle class, there'y
prompting increasingly large num'er of people to spend money on vacations a'road or at home. 3econdly,
India is a 'ooming I* hu' and more and more people are coming to India on 'usiness trips. *hirdly,
aggressive advertising campaign IIncredi'le IndiaI 'y *ourism 4inistry has played a ma1or role in changing
the image of India from that of the land of snake charmers to a hot and happening place and has sparked
renewed interest among foreign travelers.
*ravel B tourism industry#s contri'ution to Indian industry is immense. *ourism is one of the main foreign
e0change earners and contri'utes to the economy indirectly through its linkages with other sectors like
horticulture, agriculture, poultry, handicrafts and construction. *ourism industry also provides employment to
millions of people in India 'oth directly and indirectly through its linkage with other sectors of the economy.
According to an estimate total direct employment in the tourism sector is around 20 million.
*ravel B tourism industry in India is marked 'y considera'le government presence. >ach state has a tourism
corporation, which runs a chain of hotelsG rest houses and operates package tours, while the central
government runs the India *ourism %evelopment @orporation.
In the year 2002, the $overnment of India announced a 2ew *ourism &olicy to give 'oost to the tourism
sector. *he policy is 'uilt around the 7-3 4antra of 3waagat ;welcome<, 3oochanaa ;information<, 3uvidhaa
;facilitation<, 3urakshaa ;security<, 3ahyog ;cooperation<, 3anrachnaa ;infrastructure< and 3afaai
;cleanliness<.
*ome of the salient features of the -ourism Policy are
*he policy proposes the inclusion of tourism in the concurrent list of the @onstitution to ena'le 'oth
the central and state governments to participate in the development of the sector.
2o approval re.uired for foreign e.uity of up to E per cent in tourism pro1ects. 2/I investment up
to 00" allowed.
Automatic approval for *echnology agreements in the hotel industry, su'1ect to the fulfillment of
certain specified parameters.
@oncession rates on customs duty of 2E" for goods that are re.uired for initial setting up, or for
su'stantial e0pansion of hotels.
E0" of profits derived 'y hotels, travel agents and tour operators in foreign e0change are e0empt
from income ta0. *he remaining profits are also e0empt if reinvested in a tourism related pro1ect.
Apart from this, government has taken several other measures for the promotion of tourism. A multi-pronged
approach has 'een adopted, which includes new mechanism for speedy implementation of tourism pro1ects,
development of integrated tourism circuits and rural destinations, special capacity 'uilding in the
unorgani7ed hospitality sector and new marketing strategy.
*he outlook for travel industry in India looks e0tremely 'right. India as a tourism destination is the toast of
the world at the moment. @onde 2ast ranked India amongst the top 0 tourist destinations. 5:I@ ranked her
as the fifth most attractive investment destination. :esides, India is pro'a'ly the only country that offers
various categories of tourism. *hese include history tourism, adventure tourism, medical tourism ;ayurveda
and other forms of Indian medications<, eco tourism, cultural tourism, rural tourism, religiousGpilgrimage
tourism, spiritual tourism, and 'each tourism etc.
'ote *he a'ove information was last updated on 2-07-2007