As indicated in the focus published by Intesa Sanpaolo, on a global level, India holds an interesting position for the export of some traditional product categories, such as the processing of precious stones and metals, textiles and clothing and vehicles. In the last few years the Indian production structure saw intense development, supported by both world and domestic demand, thanks to the improvement in the disposable income of the population. In this context, from being a country substantially linked to traditional processes, Indian industry has moved towards a more complete range of processes, which ranges from chemistry to iron and steel, from mechanics to the most sophisticated technology. Furthermore, the availability of skilled labor, with knowledge of the English language and at low cost, has encouraged the de-localization in the country of part of the production process by foreign companies. Thus, the most important sectors of Indian manufacturing are represented by metalworking (15%), chemicals and derivatives (13,3%), textiles and clothing (13%), machines and machinery, both mechanical and electrical (10,1, 11,7%), food and tobacco (7,8%), means of transport (XNUMX%).
Looking sector by sector, steel and metallurgy are mainly based on the working of iron and steel. The privatization process of the sector, accelerated in the five-year period 2006-11, made it possible to reduce the public incidence from 36,5% in 2006 to around 25% in 2011. The production of cast iron is also important, which has also grown considerably after the liberalization process, so much so that it is currently about 90% of pig iron production takes place in private industries. The steel sector alone contributes 2% of GDP and, according to government sources, it should be able to raise investments of almost 175 billion dollars by 2020. The chemicals and derivatives sector has become one of the most diversified and important sectors of the Indian secondary, contributing about 3% of the GDP, undergoing an important evolution and passing from a simple producer of basic chemical products to more advanced and innovative compounds, such as pharmaceuticals and biotechnologies, also thanks to investments aimed at research. Textiles and clothing are part of the history of Indian industry, although this sector too has undergone a significant transformation in recent years, switching from a local to an open reference context, becoming an important element in the international supply chain. The main textile sectors are those related to the processing and production of yarns and fabrics, such as cotton, wool, silk, jute, viscose, acrylic yarns, as well as the creation of clothing. Machinery, both mechanical and electrical, affects not only light but also heavy industry and make it possible to supply not only the secondary sector, but also to build many infrastructures, providing the capital goods necessary to carry out their activity. Without forgetting numerous specific machines intended for particular sectors, such as textiles, cement, food, rubber, mining, stone processing, metallurgy and iron and steel. The food industry appears to be one of the sectors offering the greatest room for growth in the coming years, thanks not only to the internal demographic expansion, to the vast agricultural endowment, but also to the government stimuli implemented in recent years. They have, in fact, been introduced either tax breaks for the production, marketing and export of agri-food products, which government agencies aimed at guaranteeing international standards of hygiene and food safety (the main ones are APEDA – Agricultural Processed Food Products Export Development Authority and MPEDA – Marine Products Export Development Authority). The connection with agriculture, increasingly diversified, mechanized and efficient, makes it possible to enhance the value of products, reduce waste, create employment and increase diffusion on international markets. The automotive and transportation industry assumes not only a notable importance in the national context, but allows the country to place itself among the first world producers, both of cars and commercial, industrial, special vehicles, intended for particular transport, agricultural, two, four or more wheels. India is, in fact, the second world producer of two-wheeled vehicles, the fifth of commercial vehicles, the first of tractors, in ninth of cars. The low cost of steel production, investment in research, demographic and economic growth offer a constantly growing internal market, which undoubtedly still has ample room for development. Finally, it should be noted the importance offilm industry, the largest in the world with three film cities and more than 25 film studios, which makes thousands of films a year mostly aimed solely at the local market.
The stock of FDI in India in 2011 was equal, according to UNCTAD, to about 202 billion, just over 10% of the GDP produced in the year. This percentage is lower than in Brazil (28%) and Russia (25%), but it is similar compared to China (10%). Out of the world total, India covered only 2011% of all invested FDI in 1, where the excessive bureaucracy and the overlapping of competences between the various local and central governments continue to weigh, as well as the industrial structure of the country itself, made up mainly of SMEs. They remain numerous sectors reserved for state competence (energy) or which have limitations (in the financial and insurance services sector, foreign shareholdings have a ceiling of 26% of the share capital). The Government has stated that it intends open up the important infrastructure sector to FDI, according to the Private-Public Partnership formula and with Build-Operate-Transfer (BOT)1 transactions, as well as with direct concessions.
Mauritius is apparently the main investor: in reality these are investment flows from other countries, transiting through this region for tax reasons. Thanks to bilateral agreements between India and Mauritius indeed, there are Tax benefits for companies headquartered in the Indian Ocean Island Territory to invest in India. Singapore, the United Kingdom and Japan follow in order of importance in the ranking of the largest countries of origin for FDI. Italy does not appear to have a relevant position from the statistics, with a share of the total invested in the period of around 0,6%. In the product destination of FDI, there is a clear prevalence of the services sector (with a 19% share of the flows entering from April 2000 to February 2013), followed by construction (12%), telecommunications (7%), computers and machinery for offices (6%) and pharmaceuticals (5%). They have also been established since 2005 Special Zones, aimed at encouraging foreign investment through the development of particular industrial sectors and promoting exports. About 400 are currently operational: some of them they can concern several production phases or several sectors, complementary or even non-complementary to each other.
According to the Italian Ministry of Foreign Affairs they were present, at the end of 2011, in total about 330 Italian companies. Most of it is in manufacturing, particularly in the automotive sector (16%), machinery (15%) and textiles and clothing (12%). Services represent about 20% of the total, and mainly concern transport, consultancy, financial services. Also around 12% are the presences in the engineering, infrastructure and construction sector. The main geographical areas where Italian companies settle in India appear to be the industrial centers of Delhi-Gurgaon-Noida and Mumbai-Pune, followed by the cities of Chennai, Bangalore and Calcutta. According to MEA forecasts, Gujarat will become an important new pole of attraction for productive investments, domestic and foreign, thanks to the investment facilitation policy and the good state of infrastructure.
The MAE identifies some important product sectors for which there is ample room for growth both from a commercial and investment point of view in India. In addition to the traditional sectors of Italian exports, the sectors of agro-food, defense (especially as regards the navy, aeronautics and applied electronics), vehicle components, IT, fashion are highlighted and design, of jewellery. The development of the food industry it would allow not only the on-site transformation of a vast number of agricultural products, but also the preservation and canning, currently still lacking especially as regards refrigeration. Without forgetting the related activities dictated by the sale or on-site production of machinery suitable for improving the production process. The automotive components, fashion and design sectors can take advantage of specialized English-speaking workforce at extremely competitive costs, with a long historical tradition for some particular processes of textile, jewellery, leather, furniture. The contribution of Italian industry in these fields is not limited to the supply of precision machinery and tools and expertise in style but can concern theintegration with companies of very high levels of finishing and manufacturing, giving rise to particular districts for specific products. About this ICE has set up an office in New Delhi for constant monitoring of public tenders and new projects, given the infrastructure development program undertaken by the Indian government, concerning road and motorway works, port and airport structures, development and modernization of the railway and energy networks, urban planning and management of waste and water, both drinking and wastewater. Emphasizing once again how the similar production structure, represented by SMEs, and the need to improve local infrastructural efficiency offer Italian companies the strategic opportunity to implement those network able to strengthen its competitiveness and international position. And thus triggering, at the same time, a virtuous mechanism within the country capable of supplying much-needed food economic and social development.
