Mega Trends In India

Macro to Micro Implications of Top Mega Trends in India To 2020

Sarwant Singh, Partner Archana Amarnath, Program Manager Visionary Innovation Research Group 2 February 2012

Todays Presenters

Sarwant Singh
Partner Frost & Sullivan

Archana Amarnath
Program Manager Frost & Sullivan

Agenda

Introduction and Definition of Mega Trends

Presentation of Top Mega Trends of the Future

Macro to Micro: How To Apply Mega Trends within Your Organization to Develop Growth Strategies

Three Main Trends in Urbanization: Development of Mega Cities, Mega Regions and Mega Corridors

MEGA CITY
City With A Minimum Population of 8 Million and GDP of $250 Billion in 2025 (13 Mega Cities in 2011 and 25 Mega Cities in 2025) EXAMPLE: Greater Mumbai

MEGA REGIONS
Cities Combining with Suburbs to Form Regions. (Population over 15 Million) EXAMPLE: National Capital Region of Delhi (includes New Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad)

MEGA CORRIDORS
Corridors Connecting Two Major Cities or Mega Regions, 60 km or more apart, and with a combined population of 25 million or more EXAMPLE: Delhi-Mumbai Corridor with a population of 203.57 Million in 2025

Around 38% of the Total Population (534.8 million) in India to Live in Urban Regions in 2025: Cities to Account for 70% of Indias GDP in 2030
Urbanization Rate of Highly Urban States and Mega Cities in India in 2025
Mega Cities in 2025 Emerging Mega Cities (over 4 million population in 2025) Ahmadabad 7.56 million Punjab 52.50% Haryana 46.31% Jaipur 4.29 million Madhya Pradesh 34.80% Maharashtra 61.01% West Bengal 35.13% Delhi 98.8% 28.5 million Kanpur 4.6 million

Key:

Gujarat 53.04% Surat 5.70 million Mumbai 25.8 million Pune 6.79 million Karnataka 49.29%
Note: Mega City is defined as a city with population of over 8 million and GDP of $250 Billion and above Source: Department of Economic Affairs, Ministry of Finance, India and Frost & Sullivan, 2011

Kolkata 20.1 million Urbanization Rate Hyderabad 9.09 million Andhra Pradesh 34.02% Chennai 9.9 million Tamil Nadu 74.78% Highly Urban States Medium Urban States Low Urban States >30% Contribution to Countrys Urban Population in 2025 69%

Bangalore 9.57 million

25-30%

24%

<25%

7%

Mega Connection: India to see 8 Mega Corridors by 2021

Delhi-Chandigarh (NA) Amritsar-Jalandhar (NA) Delhi Mumbai Industrial Corridor (204) Udaipur-Kota (NA) Delhi-Dehradun (NA) Delhi-Jaipur (NA) Delhi-Agra (NA) Delhi-Bareily (NA) Lucknow-Kanpur (NA) Mehsana-Valsa (48) Jamnagar-Bhuj (4) Ahmedabad- Junagarh (6) Bhavnagar-Porbandar (4) Mumbai-Ahmedabad (58) Mumbai-Nagpur (26) Pune-Jalgaon (7.6) Bangalore-Belgaum (38.5) Mangalore-Karwar Mysore-Kolar (8.6) Population greater than 25 million Population less than 25 million Kolkata to Cuttack (NA) Hyderabad- Vijaywada (10.3) Hyderabad-Adilabad (2.8) Hyderabad-Hindupur (29.1) Srikakulum-Nellore (25.3) Chennai-Hosur (30.4) Chennai- Karaikud (4.9) Coimbatore-Krishnagiri (13.4) Tuticorin- Nagercoil (2.8)
Note: Corridors Connecting Two Major Cities or Mega Regions, 60 km or more apart, and with a combined population of 25 million or more The figures in brackets represent population in Million units Source: Population Foundation of India. Planning Commission of India

Guwahati-Jorhat (NA)

Cities, and Not Countries, Will Drive Wealth Creation in the Future
Fast Forward City Facts: Did You Know?..... Cities like Seoul account for 50% of the countrys GDP; Budapest (Hungary) and Brussels (Belgium) each for roughly 45%. Todays cities use 75% of the worlds energy and are responsible for 80% of energy-related carbon impact.

What are the Micro Implications ? High Economic Power With 85% of Scientific and Technology Innovation from These Cities Hub and Spoke Business Model will evolve with Logistics, Healthcare, Retail and many other industries New Mobility Solutions like Bike and car sharing, Integrated Doorto-Door Solutions Transit oriented development and zoning 11 cities in India to have more than 4 million population Huge opportunity for Indian companies to create partnerships with Western/Japanese companies to develop city management capabilities

India to have the Highest Increase in Working Age Population (15-64 years) Globally (2010-2020) at 119 million, and will be a Source of Competitive Advantage
United States United Kingdom Turkey South Africa Saudi Arabia Russian Federation Mexico Korea, Republic of Japan Italy Indonesia India Germany France China Canada Brazil Australia Argentina -10000 1,016 2,143 10000 30000 50000 70000 90000 513 13,096 -2,568 -167 11,945 796 5,737 1,788 4,026 -7,481 9,498 -211 -6,673 -914 18,619 119,143 6,968

Note: The figures here represent only the net increase in working age population. In absolute terms, China will still account for a greater level of population in the 15-64 years age group (988 million) compared to India (923 million) in 2020 Source: United Nations,2011
110000 130000

Population (thousand)

The Middle Bulge: Middle Class Individuals to Account for 62% of Indias Population (864 Million Individuals) in 2020
2010 Income Per Annum 2020

1,219 Million Individuals

0.1 % (1) 0.1 % (1)

1,399 Million Individuals Super Rich Rich Affluent Upper Middle Class Middle Class Lower Middle Class Poor Below Poverty Line
0.4% (5) 1% (10) 3% (45) 7% (95) 19% (269) 36% (500) 6% (85) 28% (390)

> Rs.1,00,00,000 ($220,000) Rs.100,00,000 ($220,000)

Rs.50,00,000 ($110,000)

0.4% (5)
Rs.20,00,000 ($44,000)

1% (12)
Rs. 10,00,000 ($22,000)

13% (157)
Rs. 3,40,000 ($7,500)

30% (359)
Rs. 1,50,000 ($3,200)

Rs. 52,000 ($1,000) <Rs. 52,000 ($1,000)

Poverty Line

18% (228) 37% (456)

Note: Figures in the brackets are million individuals Poverty Line based on planning commission definition of poverty Rs 4,365 per month per household Source: National Council for Applied Economic Research (NCAER), and Frost & Sullivan

Generational Political Shift: India will be in the Cusp of Another GenShift in Politics in 2015
1st Generation 1930-50s 2nd Generation 1960- 1970s 3rd Generation 1980-1990 4th Generation 2015+

LEADERS

?
Secularism Socialist Economic Policies Left Wing Economic Policy Promotion of Agricultural Productivity Nationalization of Banks Economic Liberalization Modernization of Telecom and Space Industry Improved Relations with US, EU Birth of IT/Software Sector (Outsourcing) Platform for Economic Growth One of Fastest Growing Economies Birth of Special Economic Zones Youth Empowerment Transparency in Politics More Privatization Upgrade of Infrastructure Service-Oriented Economy Independent and Modern Thought Process

THOUGHT PROCESS

MILESTONES

Indian Independence (1947) Republic of India (1950)

First Nuclear Test (1974) Green Revolution 20-Point Programme

Potential Super power (GDP >7- 8%),

Next-Gen Politics in India: Younger and Urbanized Intellectual Leaders to be the Future Agents of Change
To Lead Worlds Youngest Population in 2020: India to Have 61% of its population (0.85 billion) less than 35 years (Total Indian population is 1.39 billion in 2020) Educated Abroad: Eg. Rahul Gandhi (Harvard and Cambridge), Amethi Constituency, INC Jyotiraditya Scindia (Harvard and Stanford), Lok Sabha Milind Deora (Boston University), Lok Sabha Sachin Pilot (Wharton Business school), Ajmer Constituency, INC Agatha K. Sangma (Nottingham University),MP

Tech Savvy: Using Internet as a tool to change society. Eg. Facebook

Young Brigade of Indian Politicians

Global Outlook: Exposure to Western Education and understanding of Global Competiveness in International Market Revitalizing Policies and Electoral Make-Up with Modern Thoughts and Pragmatism: Opening up of Sectors such as Automotive, ITeS

Six Degrees Apart: Social Networking Users to Reach 554.72 Million in India in 2020: Facebook to Become Number 1 with 227 Million Users
2010 Total: 1,219 Million Non- Internet Users 1138 Million Users Of Top Social Networking Sites, (India), 2010 and 2020 2020 Total: 1,399 Million NonInternet Users

1 FACEBOOK 227 Million

2 TWITTER 55 Million

706.1 Million 693.4 Million

Internet Users

15 Million 81 Million 4.9 Million

Internet Users

2010

2020

2010 4

2020

24.30 Million

Non Social Networking Users

3 LinkedIn

Non Social Networking Users

138.68 Million

ORKUT Social Networking Users

49 Million 56.7 Million 20 Million Social Networking Users 6 Million

44 Million

554.72 Million

2010

2020

2010

2020

Source: Socialbakers.com, comscore linkedin.com, facebook.com, twitter.in, orkut.com, teck.in, Frost & Sullivan

Connected India: India is Expected to have 1.5 billion Connected Devices in 2020

Total pay-TV subscribers expected to reach 166 million by 2015 and 190 million by 2020

A ten-fold increase in broadband subscribers 10.29 million (2010) 100 million (2014)

The mobile subscriber base 910 million(2014) 4G Rollout Could Start by 2012 Internet users 81 million (2010) 237 million (2015)

100 million 3G broadband subscribers by 2015

Around 1.4 Million Connected Cars in 2020

Source: International Telecommunications Union and Frost & Sullivan Images: Google Images

Indias GDP vs Population Levels: GDP to Reach $4.6 Trillion in 2020; India is Expected to Record a GDP Growth of 10.1% in 2020; Making it One of the Fastest Growing Economies Globally
10.1 %

8.5 %

$4.60 Trillion $2.74 Trillion

6.3 %

$1.63 Trillion
6.0%

$0.81 Trillion $0.48 Trillion $0.37 Trillion $0.32 Trillion

1990
Population (Million) Real GDP (Growth (%)) Per Capita Income ($) 857 6.0 377.51

1995
922 5.2 395.90

2000
1003 6.3 474.92

2005
1080 7.0 748.76

2010
1219 8.5 1,338.7

2015
1318 9.5 2,077.5

2020
1399 10.1 3284.5

Note: GDP at Market Prices Source: IMF, World Bank, economy watch, RBI, ICRIER, Planning Commission, Frost & Sullivan

India Infrastructure Investment Trends (2007-2017)

2007-2012

Infrastructure Investments (India), 2007 - 2017

2012-2017 $1,024 Billion

600 2012-2017
$513 Billion

500
Investment in $ Billion

2007-2012
356.4

400
356.4

178.5

300 200

327.7
15.4 41.0 130.0

7.7 20.5 65.2

153.6

130.0 178.5
153.6

100
77.0

164.1 77.0 65.2 41.0 20.5

15.4 7.7

0 Electricity Roads and Bridges Railways

164.1

Ports

Airports

Others
327.7 164.1

Source: Planning Commission and Frost & Sullivan

Electricity

Roads and Bridges

Railways

Ports

Airports

Others (Telecom, Irrigation, Water Supply and Sanitation, Oil and Gas)

Tenth Five Year Plan (2002-2007) Eleventh Five Year Plan (2007-12) Twelfth Five Year Plan (2012-17)

Infrastructure Investments Under Five Year Plans $ 212 Billion Rs 9,19,225 Crores (5.7 % of GDP) $ 513 Billion Rs 20,54,205 Crores (7.5 % of GDP) $ 1024 Billion Rs 40,99,240 Crores (9.5 % of GDP)

Example of Value for Many Business Model Value for Many Will Replace Value for Money

Aravind Eye Hospital: Conducts 286,000 AssemblyLine type Cataract Operations per year

Tata Nano: The Peoples Car At Low Price (Rs 1 Lakh or 1,600)

EChoupal Initiative by ITC: Leveraging Internet to Empower 4 Million Farmers

Grameen Bank: Microfinance Bank for the 8.34 Million Borrowers in Bangladesh (97% Women)

Ford Business Model

Macro to Micro Analysis

Mega Trend Matrix: Understanding Implications of Key Mega Trends on Indian Economy
High
The Middle Bulge Connectivity Generation Y Future Economic Growth

Degree of Impact on Indian Economy

Increase in Working Age Population She-conomy

Urbanization

Future Infrastructure

Generational Political Shift Beyond Bangalore Innovating to Zero Wealth Watchers Space Jam Top Industries of the Future Health, Wellness and Well Being Click-n-Connect Value for Many Business Model

Future Energy Power Generation E-Mobility

Game On! Sports Industry E-Governance

Low Low

Probability of Success

High

Note: The size of the bubble represents the scale of opportunity within each Mega Trend The Mega Trends have been plotted based on quantitative and qualitative reasoning

From Macro to Micro: How to Take Mega Trends from Information to Strategy Implementation Macro
Mega Trend
Selected Trends that Impact Your Business and Markets

Micro

Analysis of Opportunities and Unmet Needs

Example: Mega City electric cars with small turning radius, autonomous parking in busy cities, Facebook on wheels, seamless switching from home to car

Eg. Urbanization

Sub Trend
A Sub Layer of Trends that Has Wide Ranging Impact

Impact on Future Product/ Technology Impact to Your Industry

Visualising The Roadmap of These Critical Forces Through Scenario Building and Macro Economic Forecasts New Mega City Cars, Car sharing, Connected car Smart city solutions such as networked infrastructure, integrated transport systems

Eg. India to have 4 Mega Regions by 2025 Each with Population Over 15 Million

New Mobility Solutions Hub and Spoke Business model for different industries e.g.. Logistics Specialized Hospitals in City Centers and Walk in Clinics in city suburbs

Mega Trends Research Plan 2011-2012:

Selective List of Studies That Will be Accessible*
* Titles cannot be confirmed and are subject to change or delays.

Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Mega Trend Urbanization New Business Models Mega Trends Healthcare Energy Infrastructure Industry Regional Regional Regional Regional Regional Technology Urbanization Urbanization

Planned Topics Urbanization and Mega Cities and Impact on Industries and Business New Business Models of the Future Worlds Top Mega Trends to 2020 and Impact on Society, Cultures, Business, and Personal Lives 2012 Update Health, Wellness and Well-Being and Impact on Products and Technologies Innovating to Zero Emerging Transportation Corridors of the Future Industries of the Future Mega Trends for Africa Mega Trends for India Mega Trends for Asia Pacific Mega Trends for LATAM Mega Trends for Turkey Top 50 Technologies of the Future: Techvision Tracking of Mobility Trends and Transportation Policies in 23 Global Mega Cities Global Analysis of Smart and Sustainable Cities

Estimated Publishing Date Q1, 2012 Q1, 2012 2012 2012 2012 2012 2012 Q1, 2012 Q1, 2012 Q1, 2012 Q1, 2012 Q2, 2012 2012 2012 2012

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Contact Us

Sarwant Singh Partner & Practice Director, Visionary Innovation Research Group and Automotive & Transportation + 44 207 915 7843 sarwant.singh@frost.com

Archana Amarnath Program Manager Visionary Innovation Research Group + 44 207 915 7893 aamarnath@frost.com

Richard Sear Vice President North and Latin America + 1 210 247 3840 rsear@frost.com

Noel Anderson Vice President Europe and APAC + 44 207 343 8389 noel.anderson@frost.com