Country Profile India

Real Estate Overview

Property Market Direction/Trend Analysis Unlike many others, primary demand rather than individual trading is now drawing much attention to the Indian real estate market. Evidence of this can be seen since the easing of government restrictions in 2005, resulting in a 30 percent per annum growth. Overseas capital flowing into Indian real estate in 2007 grew 45 percent from US$1.2 billion in 2006. Moodys Investor Services forecasts Indian real estate to grow by another third by 2010 and increase in value from US $12 billion in 2007 to US $50 billion by 2030. This will be fuelled both by internal demand and by foreign direct investment. General Electric Real Estate alone is set to invest US $500 million up to 2010. Previously, regulation and bureaucracy were so user-unfriendly, along with shortage of credit that the Indian real estate market was to all intent and purpose inaccessible to investors up to the late 1990's. Now, Indias financial capital Mumbai is among the ten most promising Asia Pacific cities according to Price Waterhouse Coopers and US-based research organization, Urban Land Institute. New Delhi and Bangalore also feature in the top-20. The key drivers of Indias real estate boom are:

Belated policy interventions including relaxing FDI ceiling. Free flow of cross-border capital. Entry of large international players and non-resident Indian investments. Stock market boom giving consumers more spending power. Improvement in infrastructure has made city dwellers more content to purchase homes in suburbs.

Since the new FDI legislation was introduced, Dubai-based Emmar Properties - the largest listed real estate developer in the world joined with Delhi-based MGF Developments to announce Indias largest FDI in the realty sector amounting to over US$ 500 million in projects having capital outlay of US$ 4 billion during 2007. There are downside risks; particularly land reforms being hampered by communist parties in certain states; still inadequate infrastructure and absence of substantial tax incentives for real estate development. However, the favourable fundamentals mitigate these concerns. Changing landscape The newly released Federation of Indian Chambers of Commerce and Industries-Ernst and Young Indian Real Estate Report 2007 (FICCI-E&Y) has identified several Indian cities as growth engines; Surat, Chandigarh, Nagpur, Vadodara, Visakhapatnam and Jaipur. Delhi and Mumbai rank first and second respectively, followed by Bangalore, Chennai, Hyderabad, Kolkata, and then Pune and Ahmedabad. The ratings are based on city prosperity, urban governance, business environment, quality of life and infrastructure. The FICCI-E&Y report also carries a survey from leading investors. All respondents believe that more than US $5 billion will be deployed into Indian real estate over the next three years with around 20 per cent believing that the deployment would be more than US $20 billion. As per this report, Panaji, Chandigarh, Pune and Ahmedabad compete with the top six cities in terms of Quality of Life. Residential

Updated: Sep 2009

Bangalore Bangalores population is characterised by doubleincome, no-kids families, resulting in high disposable incomes. This situation, coupled with tax incentives on housing loans in the past, fuels growth in the housing sector. The city has also been steadily attracting a substantial number of IT/ITES workers from other parts of the country, resulting in even more housing demand. Capital values in prime areas appreciated by 45-55% in 2006 and 2007. However, after the international financial downturn, capital values began to decrease and, as of mid-2009, had come down by 20-25% compared to mid-2009. Rental rates are also down by around 25-35% for prime residential properties.

The outlook for the residential sector in Bangalore is positive, as demand is expected to remain strong. The market is primarily end-user driven rather than investor driven. Sales prices for high-end properties are expected to rise in the short to medium term, and mid-end property prices are expected to stabilise. Chennai According to the 2001 census, Chennai had a population of 4.34m, an increase of 13% from 1991. Currently, the population of the Chennai urban area is estimated at approximately 7.04m. High-end apartments account for approximately 40% of the current stock, and the remaining 60% is primarily made up of mid-end properties. The preferred apartment size has shifted from two-bedroom apartments of approximately 75-80 sq m to threebedroom apartments of approximately 110-130 sq m in the mid-end category. Occupancy levels in the city have been high as the residential market segment is largely end-user driven. From 2005 to 2007, Chennais residential market saw a compound annual growth rate of 26-27% for mid-end apartments and 3032% for high-end apartments. From mid-2008 to mid-2009, capital values for prime properties decreased by 5-7% and by 5-15% for mid-end properties due to the global downturn. Despite a market correction on prices, the rental market stayed fairly stable with average rents increased by 10-15% for high-end apartments and mid-end apartments. Chennai lacks organised high-end villa developments due to limited land availability in the main city and spiraling land prices, which have made developers risk averse. Consequently, the city is dominated by unorganized, limited supply. However, in recent years some developers have acquired land banks for large integrated villa projects in anticipation of demand from top-level IT executives, business people and NRIs, among others. The majority of the pipeline supply launched in the past two-to-three years is concentrated in the south and west zones, while the traditional hubs for residential activity, such as the central and east zones, have witnessed comparatively limited activity. In the south zone, apartments are located along IT corridors such as Shollinganallur, Navalur, Padur and Maraimalai Nagar. Largescale apartment developments catering to IT/ITES workers have also been coming up along the NH-45 corridor, which is home to a variety of SEZs. Development activities in the residential markets are expected to continue within these zones in the next few years, along with increasing mid-end apartment development in the north. Delhi - National Capital Region The residential market in the NCR has seen substantial appreciation in capital values in the past year. Factors such as the nonavailability of land within Delhi, proximity to Delhi, a large supply of office space and planned developments have led to Gurgaon and Noida emerging as the most sought after destinations. Projects that are currently under construction are being booked at a swift rate, with buyers also reserving apartments in recently launched projects. Most of the projects that are currently under construction have an absorption rate of close to 75-80%, which highlights the strong demand situation. Capital values witnessed a substantial appreciation, ranging from 45-55%, in the two years leading up to mid-2008. This increase was due to sustained strong demand for residential apartments and the increasing cost of land acquisition. However, sentiment turned negative when the global downturn hit, and capital values decreased by around 12-20% depending upon location and type of property. After seeing some correction in the last two quarters of 2008 and first quarter of 2009, values seem to have stabilised and are expected to remain stable in the short to medium term due to substantial end-user demand, especially for mid-end properties. Similarly, rental values, which had been going up in tandem with the increasing capital values in the years prior to the recession, have also seen a similar correction and stabilisation. The outlook for the residential sector in Delhi is positive as demand is expected to remain strong. The market is primarily enduser driven rather than investor driven. Also, new infrastructure developments, such as the Delhi Metro Rail connection to Gurgaon, Faridabad and Noida, will improve accessibility for buyers. Sales prices are also expected to jump in the medium term, though this escalation may not be as substantial as that of the previous three years. Mumbai The residential market in Mumbai has seen a chronic shortage of apartments in recent years. Prior to the recession, projects usually sold out before they were completed, with buyers reserving apartments in under-construction developments and even in recently launched projects. The high-end apartment market, which witnessed growth of 30% in capital values in 2007, stabilised in the first half of 2008 and then decreased by 10-30% during the year to mid-2009. The mid-end market has seen capital values decrease at similar rates in recent months, despite growth of 40% in 2007. The highest decreases have been noted in peripheral areas in the north and north-east. According to market sources, recently demand has picked up again and prices are expected to remain stable in the short to medium term. During the period 2005-07, sales prices in Central Mumbai increased dramatically, and they have not fallen off much due to the global recession since then, as this micro-market is increasingly becoming the dominant high-end residential district in the city. Proximity to up-market residential locations, such as South Mumbai and the CBD, also keeps prices high in this micro-market.

Similarly, rents went up until 2008, stabilised in the first half of the year and then began decreasing as the impact of the global recession became more pronounced. Rents decreased by around 15-30% across all segments and locations in year to mid-2009. The focus of residential supply growth in the city has until recently been concentrated in Central Mumbai and the Eastern Suburbs and Western Suburbs. However, the micro-markets of Thane, Navi Mumbai and the extended Western Suburbs are expected to see substantial new supply in the short to medium term on account of better availability of land. New clusters of residential apartments are expected to emerge in these areas and cater to the continued strong demand. The outlook for residential apartments in Mumbai is positive, as demand remains strong. The market is primarily end-user driven rather than investor driven and with the limited availability of land for further developments in the city, it is expected that demand for residential accommodation will continue to remain high in the short to medium term. As a result this sector is expected to continue to reflect low vacancy rates, with prices remaining stable in the short to medium term. Pune Punes population had reached approximately 4.5m by the end of 2005, up 20% from 2001 levels, according to government data. The residential market in Pune has witnessed rapid development in the form of residential apartments, integrated townships and high-end projects. Current supply is estimated to be around 88,000 units. The preferred apartment configurations in the city are two and three-bedroom units, which accounted for approximately 87% of the total supply between 2002 and 2008, and approximately 95% of all supply that is currently under construction. The preferred size of a typical two-bedroom unit is between 90115 sq m and for a three-bedroom unit it is 120-140 sq m. Recent trends in both categories have highlighted a gradual shift in buyer preferences for larger apartments. In 2007 capital values in the high-end segment witnessed an appreciation of 50-52% and mid-end apartments witnessed appreciation of 25-30%, primarily due to limited supply and increased demand. Demand levels have dropped over the 12 months to mid-2009 due to the global recession. Current capital values have come down by 15-20% for high-end apartments and by 1525% for mid-end apartments. Similarly, rents have decreased by 25-30% for high-end apartments and by 20-35% for mid-end apartments. The micro-markets of Wakad, Chinchwad, Kondhwa, Kharadi and Hadapsar are where most of the new township and apartment complexes are currently being built. Some major developers have created significant land banks in these areas, which they propose to develop for integrated townships under the Special Townships Act. In fact, seven of the eight townships sanctioned by the state government of Maharashtra are located in and around Pune. Punes economy has traditionally been driven by industrial activity, including the automobile and engineering industries, though the IT/ITES sector has also been contributing for the past eight years. The city has also been a renowned educational destination, catering to students from all over India and abroad in addition to being a pensioners paradise. These factors have resulted in the existence of a sizable middle class, which fuels demand for affordable housing that is expected to continue despite the recession. Residential

Updated: Dec 2007

According to the governments 10th Five-Year Plan, which ends in 2007, the country is facing a housing shortage of 22.4 million units. The plan estimates the countrys housing requirement at 4.5 million units per year. The government, which aims to provide housing for everyone by 2012, said this would require an investment of close to US $800 billion in the real-estate sector by that year, principally through developing new townships. The secondary residential property market in India has traditionally been very limited. Changing regulation, a newly economically empowered middle class and increasing demand have revolutionized the investment landscape. Now inexpensive home loans are available and local banks offer attractive mortgage rates. Demand hugely exceeds supply - and the divide is growing by up to 34 percent a year. The most lucrative investments in the residential sector are serviced apartments or fully-furnished houses due to the premium that can be charged on rents from international corporations needing to house executives on medium term assignments. Leisure

Updated: Sep 2009

Bangalore The Bangalore hospitality market is mainly driven by business travellers, who comprise 80% of the market. The city accounts for 51% of foreign business travellers visiting India annually. Most of the business travellers visiting the city do so because of the IT/ITES industries. Bangalore has little exposure to the leisure market and the meetings, incentives, conferences and exhibitions market.

The city has 2212 five-star rooms. While occupancy rates have been steady at 74% from 2005-07, which is a good sign of a mature market, the global recession caused them to dip by around 8% due to businesses curtailing travel. The average room rate (ARR), which peaked at $290 in 2007, has also fallen off to around $275. With over 3359 rooms in the five-star category under construction, the citys room inventory is expected to more than double by the end of 2010. The new supply is expected to be evenly distributed, with a focus on the CBD area as well as on the north, near the international airport. Some local hoteliers worry that the new supply will bring down the current ARR further, and will also affect the occupancy rates negatively. The business segment is expected to continue to be the major demand driver for the hospitality market. Despite the upcoming supply boost, Bangalore will still lag behind Delhi and Mumbai with respect to the size of the hospitality market. Chennai Chennai has an inventory of around 1829 rooms in the five-star category including 25 rooms in the heritage category. The city is a commercial destination, so business travellers make up around 88% of hotel clientele, of which about 60% are foreign visitors. There have not been significant additions to room supply in the past three years. Demand for hotel rooms has been steadily increasing in recent years with the average occupancy rate growing from 61% in 2003 to a peak of around 79% in 2006. A complementary rise in average room rates (ARRs), from $117 in 2005 to $179 in 2007, resulted in a slight decline in the occupancy rate in 2007, to 77%. This was further compounded by the onset of the recession, and occupancy and ARRs fell to around 67% and $170, respectively, at the end of 2008. Chennai attracts negligible leisure traffic, so this segment does not contribute significantly to room demand. Room revenues account for around 60% of total net revenues, and the meetings, incentives, conferences and exhibitions segment contributes around 30%. By 2011-12, around 10 new hotels with approximately 1924 rooms in the premium category will be launched in Chennai. Chennais hotel industry is expected to see steady growth in the medium- to long-term future, driven by expansion of the IT/ITES, biotechnology, automotive and telecoms sectors. The additional supply is expected to have an effect on occupancy rates and ARRs. Delhi - National Capital Region High demand for five-star hotel properties located in the NCR has been attributed to the increasing number of business travelers visiting the city. This demand is evident from the sustained occupancy levels of around 74-75% for the period 2005-08. A lack of additional supply to cater to the enhanced demand has led to a positive effect in terms of average room rates (ARRs). For the year 2007-08, ARRs at five-star hotels were around $225, 36% up on 2006-07, when ARRs were around $166. However, due to the economic recession and the terrorist attacks in Mumbai, hotels in the NCR have suffered and ARRs are expected to have come down since then. The estimated supply of five-star hotel rooms was around 7000 for the year 2007-08. An additional 3500 rooms in the five-star category are expected to be available by 2011. Around 80% of this new supply will be located in Gurgaon, Noida and Greater Noida on account of the relative unavailability of land for development in Delhi. The supply of new hotel properties in the NCR could marginally influence ARRs. In the long run, adequate infrastructure development will help ensure a healthy hospitality industry. In addition to its importance as the political capital and commercial hub of northern India, the upcoming Commonwealth Games are also expected to ensure that the NCR remains a robust market. Mumbai The citys hotel industry is divided into two districts North Mumbai and South Mumbai. While the hotels in North Mumbai mainly cater to corporate travellers (88-90%) and airline crews (8-10%), hotels in South Mumbai have a mix of leisure (20%) and business (80%) travellers. Mumbai has a total existing supply of 6336 hotel rooms in the five-star and five-star luxury segment, of which 4321 rooms are located in North Mumbai and 2015 in South Mumbai. In 2007-08 only 288 new hotel rooms were added to Mumbais five-star supply, as most new hotels are still under construction. Strong demand from business travelers ensured that occupancy levels were sustained at around 74-75% for the years 2005-08. The global recession resulted in occupancy levels dropping by around 12% during May-September 2008, and even further since November due to terrorist attacks at two of the most famous hotels in the city. Lack of additional supply to cater to the enhanced demand has led to a positive effect on average room rates (ARRs). For the year 2007-08, the ARR at five-star hotels was $225, 27% up on 2006-07, when the ARR was $175. Further, the city witnessed a compound annual growth rate of around 21% from 2002-03 to 2007-08. When the downturn hit, ARRs declined by 5-10% in South Mumbai and 10-15% in North Mumbai.

Overall, the medium to long-term forecast is strong, as there are several demand generators that are likely to boost demand for quality, branded guestrooms across Mumbai. Various infrastructure projects like the Bandra-Worli sea link, the metro development, the Nhava-Seva sea link and the development of the new airport at Navi Mumbai are expected to enhance connectivity, resulting in increased hotel demand in contiguous micro-markets. An additional supply of approximately 6000 rooms in the five-star category is expected to be available by 2011. Around 80% of this new supply will be located in North Mumbai on account of the relative unavailability of land for development in South Mumbai. Pune The presence of strong commercial and industrial companies within the IT, biotechnology and automobile sectors has contributed collectively to create demand for quality accommodation for business travellers, who account for nearly 80% of the clientele at Punes hotels. The city currently has only 667 five-star rooms, though this is set to change with the addition of over 1800 luxury rooms by 2011-12. Over the past five-to-six years, average occupancy rates at Punes luxury hotels have increased from approximately 74% in 2002-03 to 92% in 2007-08. This increase in occupancy is largely attributable to the emergence of Pune as a preferred IT/ITES destination. Average room rates (ARRs) at luxury hotel properties in Pune have steadily increasing during the same period. This can be attributed to a steady increase in demand coupled with a dearth of new hotels. Local hospitality operators have repeatedly increased rack rates because of the existing demand/supply mismatch. This trend is increasingly evident, with luxury properties reporting an ARR of about $190, up 37% from 200506. Additionally, the sector witnessed a compound annual growth rate of approximately 23% from 2002 to mid-2008. The limited supply of rooms in the five-star category meant that the impact of the global recession on the hospitality sector in Pune was limited. Occupancies had decreased by 8-10% at the end of 2008. The outbreak of the H1N1 virus (swine flu) in August 2009 had a serious short-term impact as well. Occupancies across all levels are estimated to have fallen by 40-50%. The relatively large supply of new hotel properties in the future could adversely affect demand at individual hotels and result in a correction of the ARRs and occupancy rates. Leisure

Updated: Dec 2007

The Indian leisure market is growing rapidly fuelled by internal demand as Indians gain more purchasing power. US-based real estate developer Royal Indian Raj International Corporation (RIRIC) has announced that it will invest US $6 billion dollars in India over the next 7 years to develop hotels and residential resorts. Office

Updated: Sep 2009

Bangalore Bangalore widely known as Indias Silicon Valley has seen increased activity by technology companies, which accounted for as much as 80-85% of the recent jump in office space take-up. Since the global downturn began in late 2008, there has been a slowdown in demand for investment-grade office space, which has resulted in increasing vacancies and reductions in rentals and capital values across the CBD and off-CBD micro-markets. The total office supply in 2008 was over 600,000 sq m. Absorption rates have slowed since 2006 due to an excess availability of ready-to-occupy office space carried over from previous years. Vacancy levels are set to increase further in the next two-to-three years as an estimated future supply of over 2.8m sq m becomes available. Significant supply was also recorded in peripheral locations on account of improved support infrastructure and the limited availability of land parcels in the CBD and off-CBD micromarkets. Both rental values and capital values showed a decrease of around 12-15% in CBD areas and of around 20-25% in the peripheral areas. Local experts expect rents to stabilise at current levels in the short to medium term. Chennai As in other Indian cities, the IT/ITES sector has been the main demand driver in Chennais office segment. The IT corridor project on the OMR has been attracting considerable interest since its inception, which has resulted in substantial capital and rent appreciation in the region in a relatively short span of time. Apart from IT, telecoms and the banking, financial services and insurance (BFSI) sector are the other key industries that are generating demand for office space in Chennai. The current global recession has had an adverse effect on the Chennai office market. Significant supply an estimated 2.34m sq m was added during 2005-08 when vacancies were low, but more recently demand has decreased, with major companies stalling expansion plans. Current estimates of vacancies are 18-19% in non-CBD areas. Future non-SEZ supply for the next three years is estimated to be nearly 2m sq m. However, given that the current situation is expected to be prolonged for the short to medium term, developers will probably choose to delay their projects. Upcoming supply

will be concentrated primarily around the southern and western zones. The IT corridor on the OMR is expected to continue to be the front-runner in new office space supply, as it includes many SEZ projects. Other key locations, such as Poonamallee High Road, Ambattur and Guindy, which were formerly important industrial estates, are also expected to add to the office supply in the future. CBD and off-CBD locations have witnessed an increase of 25-30% in office rents in 2007 and in the first half of 2008. Subsequently, as firms were forced to tone down their demand and look at cost-cutting measures to combat the loss of income due to the financial downturn, rents are estimated to have come down by 30-50% depending upon the location and type of office space. This situation is expected to continue for some time, as supply is expected to have exceeded demand. Delhi - National Capital Region Delhis CBD and secondary business district (SBD) have seen a churning of tenants, as some are relocating to more costeffective locations in satellite towns, such as Gurgaon and Noida, and others are shifting due to more availability and attractive rental property. Consequently, vacancy levels have been rising and rents are at their lowest level in two years. After witnessing sluggish demand in the last two quarters of 2008 and the first quarter of 2009, demand is picking up again, especially from non-IT businesses. The total current stock of office space is estimated at around 5.6m sq m, of which 27% is in Delhi, 22% is in Noida and the rest is in Gurgaon and neighbouring areas. Around 1.09m sq m was added in 2008, of which around 54% was absorbed. A further 3.81m sq m is expected to be added by the end of 2011. Current vacancy levels are estimated to be around 7-8% in the CBD and SBD, 12-14% in Gurgaon and 25-30% in Noida. While all major sub-markets saw substantial increases in rental values up to the middle of 2008, in the fourth quarter of the year there was only a marginal rise in rents, in the range of 5-11%, thus demonstrating some signs of stabilisation. Connaught Place in Delhi remained the most expensive office location, with average rents as high as $891/sq m while, Noida continued to be an attractive alternative location due to the availability low rents, of around $153/sq m. Supply of office space is expected to continue outstripping demand in the short to medium term due to the impact of the global recession on the IT/ITES, manufacturing and financial sectors. Absorption and rent levels are expected to remain under pressure during this period. The development of a number of SEZs should make surplus office space available at competitive rates in the future. It is expected that the focus of office activities may shift from Gurgaon to Noida and Greater Noida due to the availability of better infrastructure and quality of construction. Mumbai Within the last decade, between 52-54% of the total office space in Mumbai has been utilised by IT/ITES and business-process outsourcing operations. Almost all of these operations are located in North Mumbai, whereas most of the non-IT office space is located in South Mumbai, Central Mumbai and the Bandra-Kurla Complex. The global recession had a knock-on effect on businesses in Mumbai, which forced many of them to re-think their expansion and location strategies and also cut down on their occupancy costs. As a result demand in the last two quarters of 2008 and the first quarter of 2009 has been slow, and while vacancies increased, capital values and rents decreased dramatically. Limited demand for office space coupled with further additions to supply resulted in increasing vacancy rates to about 17-18% currently. Approximately 670,000 sq m of investment-grade office space was added to Mumbais stock in 2008. By the end of 2011, approximately 2.4m sq m of office space is expected to be added. However, given the current economic situation, a substantial portion of the future supply may be staggered, as developers want to avoid any negative impact on values through excessive oversupplying. Demand may be concentrated in the peripheral markets of Thane and Navi Mumbai, as rents in these areas are perceived to offer good value due to availability of land and a number of large developments are in the pipeline. Rents have dropped by around 35-45% across the board since their peak in the second quarter of 2008. The worst hit areas have been the CBD, Central Mumbai, the Bandra-Kurla Complex and the extended business district of Andheri-Kurla. From a peak of around $1185/sq m for prime properties, rents have decreased to $790/sq m in the CBD. The peripheral business districts, such as Malad, Powai, Vashi and Thane, have suffered less, comparatively, with rents dropping by around 15-20% as they were priced competitively to cater to demand from IT/ITES companies. Business sentiment has improved overall and there has also been some positive movement in demand. This trend is expected to continue, though rents may still be under some pressure in the short to medium term as supply still exceeds demand and further additions are under construction Pune The main demand drivers for office space in Pune are IT/ITES firms and banking, financial services and insurance companies. Currently more than 90% of the office space in the city is used by the IT/ITES industry. Most of the space is located in large IT developments along the three main transportation corridors in the city the Rajiv Gandhi IT & Biotech Park sits on the MumbaiBangalore Bypass, Eon is on the Pune-Ahmednagar Highway and Magarpatta Cybercity is on the Pune-Solapur Highway. These peripheral areas cumulatively account for over 71% of the total existing office space supply in Pune.

The total supply of office space in Pune by the end of 2008 was around 2m sq m. In addition to the various projects that are currently undergoing development or are planned, eight IT/ITES SEZs have been notified in Pune, and a further 10 SEZs are at varying stages of approval. Taking into consideration the current commercial projects announced by developers, Pune is expected to witness an additional supply of approximately 2.56m sq m by end of 2012. Current vacancy rates are at 15% in the CBD and 20% in off-CBD locations. Rents witnessed an average growth rate of approximately 6-7% in the first two quarters of 2007. Both rents and capital values have decreased by around 35-40% in the CBD during the past twelve months. These corrections have resulted in reports of some companies choosing to purchase rather than lease office space. Besides Hinjewadi and Hadapsar, micro-markets such as Airport Road, Viman Nagar and Kharadi are likely to emerge as prominent office destinations in the coming years due to the availability of developable land coupled with infrastructure initiatives. A number of developers have acquired land banks in the region, which are likely to add to the commercial supply. Absorption levels are expected to remain low in the short to medium term, thus negatively affecting overall real estate sentiment and values. Office

Updated: Dec 2007

There is a spill over of demand for commercial office space as new businesses around the country take off. Logistics and warehousing infrastructure are the main growth areas of the office sub-sector. Retail and Commercial

Updated: Sep 2009

Bangalore As stated earlier, the city has the third-highest number of HNWIs in India, which translates into excellent opportunities for the retail sector. By the end of 2007, the total completed supply of mall space in Bangalore was approximately 200,000 sq m. The largest clusters of prime mall space are located in South and Central Bangalore, and account for 38% and 31% of the total mall supply, respectively. Vacancy levels in operational mall formats have been relatively low since 2006, at about 2-3%. Average rents in investment-grade malls jumped by 25-30% annually from 2005 to mid-2008, primarily because of limited supply introduced during this period and improvements in terms of tenant profiles, mall management and facilities offered. However, the global recession has had an impact on the spending habits of the population, which has, in turn, affected the bottom lines of retailers and the demand for retail space. Rents for prime malls have come down by 10-20% in the last twelve months, depending on location, while rents for prime high-street locations have decreased by around 25-50%. Since the geographic spread of retail activity has exhibited a high correlation with the office market in Bangalore, the future growth of the retail sector in the city is expected to be concentrated in the south-east and east zones as well as the fastdeveloping north zone (due to a new international airport). Supply of investment-grade mall space is expected to jump in the next two-to-three years, with over 275,000 sq m of mall space under construction and over 835,000 sq m in the planning stages. This will lead to an increase in the total mall space to over 1.16m sq m. Chennai Organised retail activity in the city is relatively new, and is primarily restricted to the CBD and locations such as Anna Salai, Dr. Radhakrishnan Salai and Nungambakkam High Road. The total completed supply of prime retail space in Chennai was approximately 909,000 sq m in 2008. Typically, retail in Chennai has meant department stores of around 18582322 sq m selling unbranded merchandise catering to the requirements of the immediate local population. However, retail formats are evolving in terms of quality of space and scale within the city the market is moving towards sizes of 9000-74,000 sq m, for example. The supply of organised retail space has been lagging far behind demand in the city due to local developers, who prefer to build residential and IT/ITES projects. Absorption levels have slowed, causing rents to dip significantly. The average rent for nonanchor ground floor space in malls has decreased from $355/sq m per year in 2007 to $263/sq m per year currently. Similarly, high-street retail spaces have also shown a decline of 25-35% from a year ago, depending on location. Supply of investment-grade retail space is expected to jump in the next two years, with approximately 892,000 sq m of mall space to be developed in the southern parts of the city. Delhi - National Capital Region In recent years, increasing retail activity was witnessed in Gurgaon, Noida, Faridabad and Ghaziabad due to residential pockets coming up at these locations. The supply of investment-grade retail space across the NCR is expected to witness a significant increase by the end of 2010. This new supply is expected to increase the current stock of 2.2m sq m by about 1.3m sq m.

Average rent levels across various micro-markets in the NCR have been growing at a significant rate in the two-to-three years leading up to mid-2008, posting a year-on-year rent escalation of 20-25%. However, since the onset of the global downturn, footfalls have been sluggish and sales volumes have stagnated, resulting in retailers closing down less profitable outlets. Retailers have also been pressing for rent decreases and are increasingly showing a preference for revenue sharing with minimum guarantees. Hence, rents for prime retail space in malls have decreased by 30-40% across the NCR over the past 12 months, while at high street locations they have come down by 30-55%. In the next two-to-three years a substantial amount of new supply is expected to come on-line, though given the present economic situation there is a possibility that a substantial proportion of this may be delayed by developers to prevent any adverse impact. Any further shocks to the economy, such as a prolonging of the recession or poor agricultural output due to a poor monsoon season, may affect customer sentiment and result in losses for the retail sector. In their absence, it is expected that medium to long-term prospects for the sector are good. Mumbai In recent years, increased retail activity has been seen in the Western and Eastern Suburbs, as well as the satellite towns of Thane and Navi Mumbai due to the number of new residential pockets in these locations. Around 845,000 sq m of investmentgrade retail space was added to the citys supply in 2008. The supply of investment-grade retail space across the Greater Mumbai region is expected to increase significantly by the end of 2012, bumping current stock by about 1.26m sq m. Average rents in various micro-markets grew at a significant rate in the two-to-three years leading up to mid-2008, witnessing a year-on-year rental escalation of 15-20%. However, after the onset of the global recession, footfall has been sluggish and sales volumes have stagnated, resulting in retailers closing down less profitable outlets. Consequently, rents on prime retail space in malls have decreased by 30-40% across the city from their peak rates 12 months ago, and by even more in areas such as Goregaon. For high street locations, they have come down by 25-65%. Peripheral locations such as Thane and Navi Mumbai are likely to emerge as new residential and commercial centres, due to the limited availability of land in the city for future developments, which has fueled demand for quality retail space in these locations. In the medium term, a climb in vacancy levels is expected in the Eastern Suburbs and Thane, with new supply in these areas potentially moving the local markets towards oversupply. Given the present economic scenario, there is a strong possibility that a substantial proportion of future supply may be delayed by developers to prevent any adverse impact. There are reports that plans for two malls have already been shelved. Any further shocks to the economy, such as a prolonging of the recession or poor agricultural output due to a poor monsoon season, may affect customer sentiment and result in losses for the Pune Historically, Punes retail activity has been in the high-street format. Organised retail activity was first witnessed in 2005, which saw the development of 29,730 sq m of retail mall space located in close proximity to the CBD. Malls in Pune have evolved from typical sizes, ranging from 1400-2800 sq m, catering to a local population, to sizes ranging from 9300-23000 sq m that cater to a larger population base. The evolution in retail formats is expected to continue in terms of quality of retail space and scale, especially in peripheral city suburbs due to the availability of developable space. The current stock of organised retail space is estimated to be just over 136,000 sq m. Prior to the onset of the global recession, plans were announced to increase the organised retail space supply exponentially by over 1.6m sq m by the end of 2012. However, the subsequent knock-on effects on the IT/ITES and manufacturing industries have weakened retailer sentiment. Up to mid-2008 vacancies in malls were negligible (<1%). However, they have now increased to around 15% due to some retailers closing shop. Average rents for malls in the CBD increased by 50% in 2007 as the quality of supply introduced resulted in an improved tenant profile. Currently, rents are down by 25-45% from their peak last year. As stated earlier, though there were plans to introduce a substantial supply of mall space in the next two years, a number of projects may be delayed or scrapped altogether due to the current uncertainty over future prospects in the sector. Sentiment is still negative and it is expected that rents may continue to slide in the short term. Retail and Commercial

Updated: Dec 2007

The retail segment in India is highly concentrated in the main cities. Delhi has 41 percent of the share in real estate retail; Mumbai 20 percent, whereas Bangalore and other southern cities have 5 percent. The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets and predicted 20 per cent growth rate for the organised retail segment by 2010. Quality supply is putting pressure on rentals. Mall growth is a principal growth engine and is expected to expand to more outlying areas. A report on real estate trends by Merrill Lynch said that the number of malls in Mumbai, Bangalore, New Delhi, Hyderabad

and Pune are expected to grow from 40 to approximately 250 by 2010. Quoting a survey by Knight Frank India, there was approximately 12.40 million square feet of mall space available in the aforementioned cities in terms of total area. As competition in the market intensifies, builders are going out of their way to innovate. Specialized malls have become the order of the day. Gurgaon, a suburb in New Delhi, will soon have an auto mall, while Bangalore is about to open an exclusive furniture mall. Gurgaon is set to open the largest mall in the world. Known as the Mall of India, the US $89.78/sq ft sprawling property is being developed by DLF Universal. Indian Mutual Funds A 2007 report by real estate services firm Cushman & Wakefield says US $30 billion is believed to have been invested in the Indian property market through foreign funds and institutions. New funds worth as much as US $4 billion are being planned by heavyweights such as J.P. Morgan Chase, Knight Frank, Deutsche and Warburg Pincus. ICICI Venture Funds Management Co. Ltd, Indias largest venture capital company, is planning to invest US $2 billion into the countrys largest realty fund. The fund is set to raise the money in India and abroad. The Indian central bank restricts bank lending to real estate due to its potentially speculative nature. Therefore, funds have stepped in to fill the financing gap and bring in institutional money. Funds of global investment banks are investing in Indian property as the economy grows rapidly. For example, Morgan Stanley Real Estate announced that it has invested around US $68 million in Mantri Developers Private Ltd, a private Bangalore-based real estate developer. Unlike the stock market, the mutual fund industry has very low retail participation, partly due to the large minimum ticket entry levels. Recent project innovations and increasing investment funds render equity-oriented mutual fund property attractive. Select View of Funds Housing Development Finance India Real Estate Fund.

Launched in association with State Bank of India. HDFC holds close to 80% and SBI the remaining stake while the fund is managed by HDFC Venture Capital Ltd. One of the largest Indian mortgage companies raised US $800 million in August 2007 from overseas investors for a real estate fund to tap into the nation's surging demand for homes and offices. Seeking a 20 percent return for the nine-year fund. Seven year closed-ended real estate venture fund. Mandate to make investments in retail, hotels, healthcare, and education.

Sun Apollo Real Estate Fund

Headquartered in New York, with offices in London, Atlanta and Los Angeles. Size US $630 million.

Kotak Realty Fund

One of the first private equity funds with a focus on real estate and real estate intensive businesses. Operates as a venture capital fund. Established May 2005

AnandRathi Real Estate Opportunities Fund (AR REOF)

Pan India presence as well as an international presence through offices in Dubai and Bangkok. Citigroup Venture Capital International joined the group as a financial partner. Closed-ended fund for domestic and overseas investors. Focuses on growing markets such as Pune, Bangalore, Chennai, Hyderabad. Strategy is acquiring secured rental income producing real estate assets.

IL&FS Realty Fund

Private equity fund. Seeks gross investment-level leveraged annual internal rate of return in excess of 25%. Targets a cash-on-cash stabilised yield on equity exceeding 8% per annum.

ICICI Ventures


Tax

Commercial, residential, retail both in developed and developing projects. Target IRR 20-25% per annum over seven years.

A new provision has been appended to the Income Tax Act in India to allow the authorities to impose a higher rate of tax on anyone caught inaccurately declaring the value of their India property assets and transactions. New Projects Royal Garden City and Financial Harbour Project Royal Garden Villas Cost $ US 2 billion Size 17 acres Location 25km away from the brand new Bangalore International Airport Description / purpose Luxury residential Developer / management Royal Indian Raj International Corporation Completion 2017 Details Royal Garden City in New Delhi with Royal Garden City in Kolkata to follow New township on former Hindustan Motor Plant Project Hindustan Motor Plant Cost US $1.25 billion Size 20m sq ft Location Kolkata Description / purpose Township with residential, retail and commercial opportunities Developer / management JV between Starwood Capital and Walton Street Capital together with India Shiram properties Completion 2015 Details One of the largest private equity deals in the country Land previously occupied by a Hindustan Motors plant

Nitesh Development Project Nitesh Development Cost Rs 642 crore Size 1 million sq. foot, 9 acre plot Location Boat Club area, Chennai Description / purpose Former Church property Developer / management Nitesh Estates, the real estate arm of Bangalore-based Nitesh Group Completion Mixed use Details The transaction is one of largest ever in South India Red Fort Cap Project Red Fort Capital Cost US$250 million Size Rs 1,100 per sq. ft. over 25 acre of land Location Bangalore Description / purpose Township commercial and residential Developer / management Red Fort Capital and Prestige group Completion Not announced Details 1,000 units of low cost mass housing La Calypso Hotels Project Cost La Calypso Hotels Rs 350 core

Size Seven hotels Location Mumbai, New Delhi, Gurgaon, Bangalore, and Hyderabad Description / purpose Leisure Developer / management La Calypso Completion 2009 Details Develop and manage seven 5-star hotels in Mumbai, New Delhi, Gurgaon, Bangalore, and Hyderabad Delhi Low Cost Housing Initiative Project Delhi Government Low Price Housing Initiative Cost Rs 1 lakh Size 28 sq. m. Location Delhi Description / purpose Subsidized housing Developer / management Delhi Government Completion 2010 Details 50,000 such flats have been planned for Khanjawala, Bawana, Samapur and Neb Sarai New township in Gurgaon Project Gurgaon Township Cost Rs 2,500 Size 200 acres of land Location Gurgaon Description / purpose Township Developer / management QVC Realty Completion 2012 Details Still in design stage expected to be launched early 2008

Background
Introduction
India gained independence in 1947, after two centuries of British colonial rule. Partition at the same time created the state of Pakistan, with which India has fought three wars, two of which over the disputed territory of Kashmir. India is the secondmost populous country in the world, after China, with nearly 1.1bn people in 2006. India is tenth industrialised country in the world and became the sixth country in the world capable of launching satellites when it launched its first satellite in 1980. Since then India has invested heavily in the peaceful uses of space and has a welldiversified and growing civilian space programme. Some of the regional bodies of which India is a member are Association of Southeast Asian Nations (ASEAN), South Asian Free Trade Area (SAFTA) and South Asian Association for Regional Cooperation (SAARC). Economic reforms that commenced in 1991 have had farreaching consequences on Indias growth. Since the reform process began, India has delicensed most industries, has deregulated industries earlier monopolised by the public sector, has liberalised foreign trade through a steady reduction of tariffs and has been freeing up foreign investment in most of the industries. As a result of these initiatives, India today has a strong and fast growing economy. According to the Goldman Sachs BRICs report, India is forecast to become the third largest economy in the world, after China and US, by the year 2050. Working Week Days Normally, working days in India are from Monday to Friday, though some organisations and establishments work on Saturdays as well. Time Difference GMT + 05:30

Location:
Lying entirely in the northern hemisphere, the mainland measures about 3,214 km from north to south between the extreme latitudes and about 2,933 km from east to west between the extreme longitudes. Bounded by the Great Himalayas in the north, it stretches southwards and at the Tropic of Cancer, tapers off into the Indian Ocean between the Bay of Bengal on the east and the Arabian Sea on the west. India, with an area of 3.3 million sq. km, is a subcontinent. The peninsula is separated from mainland Asia by the Himalayas. The country is surrounded by the Bay of Bengal in the east, the Arabian Sea in the west and the Indian Ocean to the south. The Himalayas form the highest mountain range in the world, extending 2,500 km over northern India. Bounded by the Indus river in the west and the Brahmaputra in the east, the three parallel ranges, the Himadri, Himachal and Shivaliks have deep canyons gorged by the rivers flowing into the Gangetic plain.

Capital:
New Delhi 28 40 North, 77 13 East

Second Largest City:

Mumbai ? 18 58 North, 72 49 East

Third Largest City:

Kolkata ? 22 34 North, 88 22 East

Land Size:
3.3 Million sq km

Bordering Countries:
India shares its borders with Afghanistan and Pakistan to the northwest; China, Bhutan and Nepal to the north; Myanmar to the east; and Bangladesh to the east of West Bengal. Sri Lanka is separated from India by a narrow channel of sea, formed by Palk Strait and the Gulf of Mannar.

Coastline:
The total length of the coastline of the mainland, Lakshadweep Islands, and the Andaman and Nicobar Islands along the Bay of Bengal and the Arabian Sea is 7,516.6 km.

Climate:
Climate in India varies significantly from the permanently snowcapped Himalayas in the north to the tropics in the south. The Himalayan range in the north acts as the perfect meteorological barrier for the whole country. Despite the country's size and its varied relief, the seasonal rhythm of the monsoon is apparent throughout. Although much of northern India lies beyond the tropical zone, the entire country has a tropical climate marked by relatively high temperatures and dry winters. The climate of India can broadly be classified as a tropical monsoon one. But in spite of much of the northern part of India lying beyond the tropical zone, the entire country has a tropical climate marked by relatively high temperatures and dry winters. There are four seasons (i) winter (DecemberFebruary), (ii) summer (MarchJune), (iii) southwest monsoon season (June September), and (iv) post monsoon season (October November).

Natural Resources:
Coal, iron ore, manganese ore, mica, bauxite, petroleum, titanium ore, chromite, natural gas, magnesite, limestone, arable land, dolomite, barytes, kaolin, gypsum, apatite, phosphorite, steatite, fluorite, etc.

Natural Hazards:
Monsoon floods, flash floods, earthquakes, droughts, and landslides.

Environment - Current Issues:

Air pollution control, energy conservation, solid waste management, oil and gas conservation, forest conservation. Over the years, the area under forest cover has decreased steadily, as forests have been cleared for agriculture, industry, housing, and other development activities like the construction of roads, railways, and hydroelectric plants.

Environment - Policies And International Agreement:

India is a signatory to the following treaties:

Basel Convention on the Control of Transboundary Movements of Hazardous Substances Biological and Toxin Weapons Convention Cartagena Protocol on bio safety Chemical Weapons Convention Conference on Disarmament Convention on Biological Diversity Convention on International Trade in Endangered Species of Wild Flora and Fauna

Convention on Migratory Species Convention on the Physical Protection of Nuclear Material Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques Convention on Wetlands of International Importance Especially as Waterfowl Habitat Geneva Protocol to LRTAP concerning the control of emissions of volatile organic compounds or their transboundary fluxes (VOCs Protocol) Helsinki Protocol to LRTAP on the reduction of sulphur emissions of nitrogen oxides or their transboundary fluxes (Nox Protocol) International Atomic Energy Association Safeguards Agreement International Convention for the Regulation of Whaling International Plant Protection Convention International Tropical Timber Agreement 1983 International Tropical Timber Agreement 1994 Kyoto Protocol to the United Nations Framework Convention on Climate Change Montreal Protocol on Substances that Deplete the Ozone layer Nuclear Safety Convention Partial Test Ban Treaty Protocol of 1978 Relating to the International Convention for the Prevention of Pollution from Ships Protocol on Environmental Protection to the Antarctic Treaty Rio Declaration on environment and development United Nations Convention on the Law of the Sea United Nations Convention to Combat Desertification United Nations Framework Convention on Climate Change Vienna Convention for the Protection of the Ozone Layer

Members Of The Following Associations and Affiliations:

Asian Development Bank (ADB) Association of Southeast Asian Nations (ASEAN) (dialogue partner) Bank of International Settlement (BIS) Colombo Plan (CP) Commonwealth of Nations European Council for Nuclear Research (CERN) Food and Agriculture Organisation (FAO) G15 G24 G8+5 Group of Four (G4) International Atomic Energy Agency (IAEA) International Bank for Reconstruction and Development (IBRD) International Chamber of Commerce (ICC) International Civil Aviation Organisation (ICAO) International Confederation of Free Trade Unions (ICFTU) International Criminal Court (ICCt) International Criminal Police Organisation (Interpol) International Development Association (IDA) International Fund for Agricultural Development (IFAD) International Federation of Red Cross and Red Crescent Societies (IFRCS) International Hydrographic Organisation (IHO) International Labour Organisation (ILO) International Maritime Organisation (IMO) International Monetary Fund (IMF) International Olympic Committee (IOC) International Organisation for Standardisation (ISO) International Red Cross and Red Crescent Movement (ICRM) International Telecommunication Union (ITU) NonAligned Movement (NAM) Permanent Court of Arbitration (PCA) Pacific Islands Forum (PIF) Shanghai Cooperation Organisation (SCO) South Asia Cooperative Environment Programme (SACEP)

South Asian Association for Regional Cooperation (SAARC) South Asian Free Trade Area (SAFTA) United Nations (UN) United Nations Conference on Trade and Development (UNCTAD) United Nations Educational Scientific and Cultural Organisation (UNESCO) United Nations High Commissioner for Refugees (UNHCR) United Nations Human Rights Council (UNHRC) United Nations Industrial Development Organisation (UNIDO) United Nations Interim Force in Lebanon (UNIFIL) United Nations Mission in Ethiopia and Eritrea (UNMEE) United Nations Mission In Sudan (UNMIS) United Nations Monitoring Verification and Inspection Commission (UNMOVIC) United Nations Operation in Burundi (ONUB) United Nations Operation in Cte d'Ivoire (UNOCI) United Nations Organisation Mission in the Democratic Republic of the Congo (MONUC) United Nations World Tourism Organisation (UNWTO) Universal Postal Union (UPU) World Confederation of Labour (WCL) World Customs Organisation (WCO) World Federation of Trade Unions (WFTU) World Health Organisation (WHO) World Meteorological Organisation (WMO) World Trade Organisation (WTO) The African Development Bank (AfDB) Organisation for the Prohibition of Chemical Weapons (OPCW) World Intellectual Property Organisation (WIPO)

Economic
Economic Overview
Updated: Sep 2009
Over the past five years, India has averaged a healthy growth rate of 8.75% on the back of rising middle-class spending and a good monsoon season. The growth in exports especially of services, telecommunications technology and manufactured goods is considered to be a driving force behind Indias recent expansion. Growth in the IT/services sector has been by far the most significant in terms of maintaining a national expansion rate of 8%. Today India is considered one of the largest outsourcing/software services providers in the world, and Indian IT firms, such as Wipro, Infosys and Satyam, regularly top industry rankings. According to the latest figures from the Electronics and Computer Software Export Promotion Council (ESC) an autonomous body under the Ministry of Communications and IT, India's electronics and computer software and services exports totaled $46.75bn in the financial year that ended on March 31, 2008. This represents over 27% growth compared to 2006-07, when total exports stood at $36.65bn. North America takes 58.71% of Indias electronics and computer-related exports, while EU countries take 26.83. Electronics and computer software and services exports account for 17.61% of overall Indian exports and contribute more than 7.5% to India's GDP. Computer software and services alone contribute some 5.5% to GDP. A slowdown in the American and European economies has translated into a slowdown for the overall growth of the Indian economy. With the rupee strengthening against the dollar for almost over a year now, many small exporters are already reviewing their growth plans. The IMF forecast that Indias GDP growth would slow to 6.25% in 2008-09 and to 5.25% in 2009-10. A similar announcement by the Asian Development Bank (ADB) forecast 5% growth in 2009, compared to 7.1% in 2008. However the ADB is optimistic about the Indian economy in the long term and expects solid growth in 2010. Low local interest rates, which have encouraged private investment in the manufacturing sector, for example, are considered to be a key factor behind the projected recovery. Due largely to the stimulus packages announced by the government between December 2008 and February 2009, the ADB forecasts India's GDP growth to hit 6.5% in 2010. The bank also foresees lower inflation rates, due to the countrys strong agricultural output, lower taxes on goods and declining domestic demand. In line with the anticipated recovery of the domestic market and international commodity prices, ADB forecasts inflation of 3.5% in 2009 and 4% in 2010.

Updated: Dec 2007

The Indian economy is the fourth largest economy of the world on the basis of Purchasing Power Parity (PPP). It is one of the most attractive destinations for business and investment opportunities due to huge manpower base, diversified natural resources and strong macro-economic fundamentals. Also, the process of economic reforms initiated since 1991 has been providing an investor-friendly environment through a liberalised policy framework spanning the whole economy.

According to the annual Economic Survey results presented by the Finance Minster, Indian economy slowed down in FY2007 and is estimated to have registered a growth rate of 8.7% in 2007. The economy had registered a growth rate of 9.4% in last fiscal year. The manufacturing sector is expected to have slowed down from a 12% growth rate in the last fiscal year to 9% this year. The government further estimates that the agriculture sector has also slowed down. The Economic Survey estimated the inflation at 4.4% for FY2007. The Ministry of Finance believes that maintaining a growth rate of 9% will be a challenge, and achieving a double digit growth rate seems a bigger challenge as of now. However, the government is confident that the economy will be able to achieve a growth rate of 9% in FY2008. The Asian Development bank (ADB), in its Asian Development outlook, 2008, forecasts that the economy will slowdown in FY2008. ADB has an opinion that as RBI tightens its monetary policy and as the Government takes measures to control rising inflation ahead of parliamentary elections, the economic growth in FY2008 will moderate at 8%. ADB further forecasts that the growth rate will rebound to 8.5% in FY2009. Inflation: The Indian economy ended FY2007 with an estimated annual rate of inflation of 4.4%However, since the beginning of 2008, inflationary pressure has been increasing consistently. The Inflation rate almost doubled between January and March 2008, rising from 3.79% for the week ending January 5, to 7% for the week ending March 22. The Government has taken multiple measures like scrapping import duty on crude edible oils and banning export of non-basmati rice and pulses to check spiralling prices, the impact is yet to be seen. The Asian Development bank opinion is that since global circumstances are fuelling inflation,and the Governments ability to control inflation is limited.

Currency: Labour Force Split: GDP: GDP Per Capita: Industrial Productio n Growth Rate:

Indian National Rupee (INR) Employment by Sector (as % of working age population): Agriculture: 5%, Industry: 26%, Services: 69%

US$ 1089.9 Billion (2007 ? IMF Estimate) US$ 5,963

8.6% (February 2008) (Includes Mining, Manufacturing and Electricity)

Adult (15+ unemployment rate) Total 5% (2004)

Unemployment Rate:

Males 5% (2004) Females 5% (2004)

Personal Debt:

58.8 % of GDP (2007 Estimate)

Imports US$ 181.37 billion (2006 2007) Imports US$ 140.24 billion (2005 2006) Exports US$ 126.33 Billion (2006 2007) Exports US$ 103.09 Billion (2005 2006) Growth of major export products 2005-06 Products (US$ Million) 16,377.4 10,213.8 390.9 358.8 1,405.2 125.9 656.9 300.6 585.8 477.9 1,101.1 481.9 359.0 1,589.2 135.0 621.2 1,625.3 6,163.6 3,801.1 17.4 2,345.1 72,562.8 2,697.7 14,769.5 21,718.8 16,402.1 15,529.1 462.0 11,639.6 2,510.7 103,090.5 2006-07 (US$ Million) 19,547.8 12,514.6 432.3 435.1 1,555.0 8.0 1,348.5 371.7 553.8 690.1 1,216.1 664.3 401.5 1,743.6 703.8 716.0 1,674.7 7,033.1 3,891.7 16.9 3,124.6 82,817.8 2933.1 16,727.1 29,079.1 17,009.7 15,585.7 371.7 18551.9 5,413.7 126,331.1

Primary Products Agriculture & allied products 1. Tea 2. Coffee 3. Rice 4. Wheat 5. Cotton 6. Tobacco 7. Cashew 8. Spices 9. Oil meals 10. Fruits and Vegetables 11. Processed fruits, juices, miscellaneous processed items 12. Marine products 13. Sugar and Mollases 14. Meat and meat preparations 15. Others Ores & minerals 1. Iron ore 2. Mica 3. Others Manufactured goods 1. Leather & mfrs. 2. Chemicals & related 3. Engineering goods 4. Textiles 5. Gems & jewellery 6. Handicrafts Petroleum products Others Total exports

Imports - US$ 190.56 Billion (2006 - 2007)

Imports, Exports and Commodit ies:

Imports -

US$ 149.16 Billion (2005 - 2006)

Growth of imports of important commodities

2005-06 Products ( Million US$) 61,086.1

2006-07 (Million US$) 83,342.9

Bulk imports

Airline Operators connecting to major cities in the world Air India International Flights Asia: Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Osaka, Singapore, Tokyo, Seoul Africa: Dar-es-Salaam, Nairobi Europe: Frankfurt, London, Paris, Birmingham Middle East: Abu Dhabi, Al Ain, Bahrain, Dammam, Doha, Dubai, Jeddah, Muscat, Riyadh, Kuwait North America: Los Angles, Chicago, New York, Toronto

Jet Airways International Flights Kathmandu (Nepal), Bangkok, Brussels, Colombo, Kuala Lumpur, London, New York, Singapore, Toronto Beside the abovementioned flights, the carriers offer flights to all the major cities in the world through code sharing agreements with international carriers. Hotels and Tourism

Leisure and tourism:

Annual number of Foreign Tourists 5 Million (2007) Hotel Numbers At the end of 2007, there were 1437 hotels with 84327 rooms on the approved list of Ministry of Tourism, Government of India. The break-up is as under: Hotel Category No. of Hotels No. of Rooms 5-Star Deluxe 100 21100 5-Star 85 10311 4-Star 116 7986 3-Star 482 22028 2-Star 204 6184 1-Star 54 2871 Heritage 78 2333 3-Star Apartment Hotel 2 110 4-Star Apartment Hotel 1 44 5-Star Apartment Hotel 1 100 5-Star Deluxe Apartment Hotel 2 259 5-Star Timeshare Resort 1 62 Guest House 1 40 Silver Incredible India Bed & Breakfast Establishment 81 216 Gold Incredible India Bed & Breakfast Establishment 51 180 To be Classified 178 10503 Total 1437 84327

Government Debt:

US$ 201.45 billion (December 2007) External Debt only

Demography
Population:
1,169 Million

Male - 51.75% Female - 48.25% (Census of India projected population for 2007)

Population - Capital City:

New Delhi - 15.33 Million (2005)

Population - Second Largest City:

Mumbai - 13,922,125 (2008)

Population - Third Largest City:

Bangalore - 5,310,318 (2008)

Age Structure:
Age 0-14 - 32% of population Age 15-64 - 63% of population Age 65+ - 5% of population

Sex ratio:
107 (Number of Males per 100 Females)

Population Growth Rate:

1.46 % per Annum

Life Expectancy:
Males - 62 years Females - 64 years

Health Care System:

The health sector in India is characterised by: (i) a government sector that provides publicly financed and managed curative and preventive health services from primary to tertiary level, throughout the country and free of cost to the consumer and (ii) a feelevying private sector that plays a dominant role in the provision of individual curative care through ambulatory services. Nationwide health care utilisation rates show that private health services are directed mainly at providing primary health care and financed from private resources, which could place a disproportionate burden on the poor. India heath sector provides world class treatments at very competitive costs. This has given a big boost to health tourism in India. According to a study by McKinsey and the Confederation of Indian Industry (CII), medical tourism in India could become a US$1 billion business by 2012. India have a lot of hospitals offering world class treatments in nearly every medical sector such as cardiology and cardiothoracic surgery, joint replacement, orthopaedic surgery, gastroenterology, ophthalmology, transplants and urology. The provision of health care by the public sector is a responsibility shared by state, central and local governments, although it is effectively a state responsibility in terms of service delivery. State and local governments incur about three-quarters and the centre about one-quarter of public spending on health. The responsibility for health is at three levels. First, health is primarily a state responsibility. Second, the centre is responsible for health services in union territories without a legislature and is also responsible for developing and monitoring national standards and regulations, linking the states with funding agencies, and sponsoring numerous schemes for implementation by state governments. Third, both the centre and the states have a joint responsibility for programmes listed under the concurrent list. Goals and strategies for the public sector in health care are established through a consultative process involving all levels of government through the Central Council for Health and Family Welfare. A huge campaign to eradicate poliomyelitis through pulse polio immunisation (PPI) was initiated in 1995 and is still on. The traditional system of medicine is now playing a more significant role due to escalating costs of health care. State health systems/projects have been formulated to improve efficiency in the allocation and use of health resources through policy and institutional development. Specific efforts have been made to consolidate and strengthen the PHC infrastructure, under the minimum needs programme, by providing enhanced assistance to regions with severe health problems, supporting voluntary

organisations, improving IEC activities, etc. In March 1995 a separate Department of Indian System of Medicine and Homeopathy (ISM & H) was created within the Ministry of Health and Family Welfare. The biggest health challenges faced by India are HIV/AIDS, Cardiovascular diseases, Diabetes, Cancer, Mental Health Disorders etc. The Indian National AIDS Control (NACO) along with UNAIDS and WHO estimated that in 2006 some 2.5 million people were infected with AIDS and HIC prevalence among adults was around 0.36%. In India, which has the largest number of individuals with diabetes, more than 150,000 cardiovascular deaths are due to diabetes.

Literacy Rates:
Adult Literacy Rate (Age 15 and over) (%) Total - 61% (2004) Male - 73% (2004) Female - 48% (2004)

Language:
Hindi, spoken by about 45 per cent of the population is the national language.

Other Languages:
English, Assamese, Bengali, Bodo, Dogri, Gujarati, Hindi, Kannada, Kashmiri, Konkani, Maithali, Malayalam, Manipuri, Marathi, Nepali, Oriya, Punjabi, Sanskrit, Santhali, Sindhi, Tamil, Telugu, and Urdu.

Ethnicity and Split:

Indo-Aryan - 72%, Dravidian - 25 %, Mongoloid and Other - 3%

Religion:
(Percentage of Total population) Hindus - 80.5% Muslims - 13.4% Christians - 2.3% Sikhs - 1.9% Buddhists - 0.8% Jains - 0.4% Others - 0.7% Census of India (2001)

Political System:
India is a "Sovereign, Socialist, Secular, Democratic Republic" with a parliamentary system of government. India comprises of 29 states and six union territories. The president is the Head of Republic, but the real powers are vested in the prime minister, who is the elected representative of the people. Dr. Pratibha Patil is currently the president of India and Dr. Manmohan Singh is the prime minister. The Union executive consists of the president, the vice-president, and the Council of Ministers with the prime minister as the head to aid and advice the president.

Legislature The Legislative Arm of the Union, called Parliament, consists of the president, Rajya Sabha and Lok Sabha. All legislation requires consent of both Houses of Parliament. Rajya Sabha (Upper House) The Rajya Sabha consists of 245 members. Of these, 233 represent states and union territories and 12 members are nominated by the president. Elections to the Rajya Sabha are indirect; members are elected by the elected members of Legislative Assemblies of the concerned states. The Rajya Sabha is not subject to dissolution, one third of its members retire every second year. Lok Sabha (Lower House) The Lok Sabha is composed of representatives of the people chosen by direct election on the basis of universal adult suffrage. As of today, the Lok Sabha consists of 545 members with two members nominated by the president to represent the Anglo-Indian Community. Unless dissolved under unusual circumstances, the term of the Lok Sabha is five years. State Governments and Union Territories The system of government in states closely resembles that of the Union. Union Territories are administered by the president through an Administrator appointed by him. Legislative Relations between the Union and States Under the Constitution, Parliament has the power to make laws for the whole of or any part of the territory of India. The State Legislatures have the power to make laws for the States. The subjects on which legislation can be enacted are specified in the Seventh Schedule of the Constitution. Parliament has the exclusive right to legislate in respect of items appearing in List I, called the Union List. This list includes areas such as defence, foreign affairs, currency, income tax, excise duty, railways, shipping, posts and telegraphs, etc. State Legislatures have the exclusive power to make laws in relation to items appearing in List II called the State List. This includes items like public order, police, public health, communications, agriculture, lotteries, taxes on entertainment and wealth, sales tax, octroi etc. Both Parliament and the State Legislatures have the power to legislate in items appearing in List III of the Constitution which is known as Concurrent List. This list includes items like electricity, newspapers, criminal law, marriage and divorce, stamp duties, trade unions, price controls etc. Political Parties India has numerous political parties at national, regional and local level. Major national parties are Congress (I), the Bhartiya Janta Party (BJP), the Communist Party of India (CPI), the Communist party of India Marxist (CPM) and the Janta Dal (JD). General Elections Last general elections in India were held in April/May 2004 when the ruling United Progressive Alliance led by congress was elected to power. The next elections are scheduled at the end of 2009. President: Dr. Pratibha Patil Prime Minister: Dr. Manmohan Singh

Country Media List:

Print Media:

Deccan Herald Private, English-language daily The Hindu Private, English-language daily The Hindustan Times Private, English-language daily The Pioneer Private, English-language daily The Indian Express Private, English-language daily The Statesman Private, English-language daily The Times of India Private, English-language daily The Asian Age Private, English-language daily India Today Private weekly in both English and Hindi Outlook Private weekly in both English and Hindi

Broadcast Media:

Doordarshan Government-run broadcaster Zee Group Private, Hindi language broadcaster Star Network Private, English and Hindi language broadcaster

Sony Entertainment TV Private, Hindi language broadcaster India Today Group Private, English and Hindi language broadcaster New Delhi Television (NDTV) Private, English and Hindi language broadcaster Sun Network Private broadcaster (vernacular languages) All India Radio Government-run, radio broadcaster

Lifestyles Assessments:
Number of Personal computers - 22.1 Million (2007) Number of Financial Cards in Issue: 102.59 Million (May 2007) Number of Debit Cards in Issue: 78.46 Million (May 2007) Number of Credit Cards in Issue: 24.13 Million (May 2007) Total Number of Registered Motor Vehicles in use (Non-Commercial Only) 65.3 Million (2004)

Internet Connectivity:
Internet Users 60 Million (2007 Estimates) Internet Penetration 5.3% (2007 Estimates) Internet Subscribers 10.36 Million December 2007 Average Age Range of Internet Users Age 12-17 - 14% Age 18-23 - 23% Age 23-35 - 27% Broadband Subscribers 3.13 Million December 2007 Broadband Penetration Below 1% Broadband Costs (approximate) Starting from $4.50 per month

Consumer Trends:
Consumer expenditure on food (US$ million) 174,073.3 (2007) New registrations of passenger cars ('000) - 1,171.20 (2007) Per-capita consumption of food, beverages, and tobacco* - US$146.7# (2005)

* Approximately 90% of spend on the broad category food, beverages, and tobacco is on food.
#converted from INR to US$ with average exchange rate for 2005 taken as 1 US$ = 44 INR

Big Mac index:

US$ 1.34*

Higher Education:
Government Universities

AligarhMuslim University Assam University Babasaheb Bhimrao Ambedkar University Banaras Hindu University Central Institute of English and Foreign Languages (CIEFL) Hyderabad Indian Institutes of Information Technology and Management (IIITs) Indian Institute of Management (IIM) Ahmedabad Indian Institute of Management (IIM) Bangalore Indian Institute of Management (IIM) Indore Indian Institute of Management (IIM) Kolkata Indian Institute of Management (IIM) Kozhikode Indian Institute of Management (IIM) Lucknow Indian Institute of Science Bangalore Indian Institute of Technology (IIT) Chennai Indian Institute of Technology (IIT) Delhi Indian Institute of Technology (IIT) Guwahati Indian Institute of Technology (IIT) Kanpur Indian Institute of Technology (IIT) Kharagpur Indian Institute of Technology (IIT) Mumbai Indian Institute of Technology (IIT) Roorkee Indira Gandhi National Open University (IGNOU) Jamia Millia Islamia JawaharlalNehru University (JNU) - New Delhi Maulana Azad National Urdu University Mizoram University Nagaland University National Institute of Industrial Engineering (NITIE) Mumbai National Institutes of Technology (NITs) North Eastern Hill University Pondicherry University School of Planning & Architecture - New Delhi University of Allahabad University of Delhi University of Hyderabad Visva Bharati

Private Universities

Amity University Apeejay Aptech Birla Institute of Technology and Science ICFAI University Manipal Academy of Higher Education NIIT Rai University Symbiosis Society

International Relations
Introduction
Indias Ministry of External Affairs is the governmental body that is officially responsible for making and implementing foreign policy. Indias relations with all major nations traditionally have been based on principles of nonalignment and Indias own economic development. The overlapping domestic and external dimensions of Indias economic development continue to illustrate that many matters related to Indias ongoing formation as a nation, have international security implications. Attempts to promote economic growth have pushed India from its previous emphasis on domestic self-sufficiency to a major promoter of free trade and economic liberalisation. Nonalignment, however, has been seriously tested as a viable basis for foreign policy with the

erosion of U.S. and Soviet tensions and with Indias interest in playing an influential role in regional and world politics. The demise of Indias long-term ally the Soviet Union cost India precious military and financial aid as well as international leverage. Some analysts argue that Indias demonstration of nuclear capabilities in 1998 was driven as much by domestic desires to protect Indian influence and prestige internationally as by regional security concerns. Post-Cold War shifts in military power and concerns with terrorism have led India to create stronger bilateral relations with China, Israel, the United States, and other nations. The Ministry of External Affairs has generally been most concerned with relations with neighbouring Nepal, Sri Lanka, and particularly Pakistan on issues concerning unresolved borders, natural resource distribution, immigration, and insurgent activity. India has often tried to use treaties, alliances, and economic coercion to counter actions by neighbours that India regards as security threats, although China and Pakistan have generally thwarted such attempts. Indias security concerns have been most pronounced with Pakistan, as exemplified by the two countries newfound nuclear rivalry, the 1999 Kargil War in Jammu and Kashmir, and the 2001 terrorist attack on Indias parliament, which Pakistan is suspected of supporting. In spite of these difficulties, tensions between India and Pakistan have periodically thawed, and in late 2004 the two countries demonstrated surprising public interest in resolving their enduring dispute over Jammu and Kashmir. India - China Relations Necessitated by economic concerns on both sides, relations between India and China have improved over the last few years. China became Indias largest trade partner in 2007. India has been very cautious in its reactions to the March 2008 antiGovernment riots in the Tibetan capital Lhasa, while many other countries have criticised China for its human rights violations. Indias foreign policy on Tibet maintains that Tibet is an integral part of China and therefore it is an internal matter. However, India continues to give asylum to the Tibetan spiritual leader, the Dalai Lama.The Dalai Lama runs his government from exile and it is estimated that India is home to 100,000 Tibetan refugees. India - Pakistan Relations Relations between India and Pakistan have not deteriorated or improved in the last six months. The new Government in Pakistan has hinted at re-looking at countrys 60 years old policy of 'no investment' from India. However, Indias opinion on Pakistan's sponsored terrorism remains unchanged. According to the National Security Advisor, the Government has seen no change in the Pakistan Intelligence Agency, ISI an its attitude to mentor terrorist groups.

Internal Stability:
Indias top security concerns are mostly internal. Indeed, much of the national security apparatus is directed to maintaining territorial integrity as dozens of groups push for varying degrees of political or social autonomy, sometimes violently. India treats separatism with extreme concern given the possibility that successful separatism may establish a precedent that other groups might seek to follow. Internal threats can be categorised as religiously oriented conflict or ethnic violence, usually with separatist objectives. The 10-year Khalistani separatist conflict in Punjab terminated in 1994, but separatist violence periodically escalates in Indian-controlled Jammu and Kashmir. Numerous separatist insurgent groups are active in the northeast, and India has periodically expanded its military efforts in Assam against groups such as the United Liberation Front of Assam (ULFA), National Democratic Front of Bodoland (NDFB), and Bodo Security Force (BSF). Other rebel groups in Assam observe cease-fire agreements with the government. The decades-long separatist conflict in Nagaland continues with the National Socialist Council of Nagaland-Khapland (NSCN-K), although peace talks have occurred with another faction, the NSCN-IM (Isaac Muivah), after the government lifted its previous ban on the organisation. In Tripura, various insurgents continue to target Bengali immigrants and Indian security forces. Religiously oriented violence has occurred, principally among Hindus and Muslims and most notably in Ayodyha (in Uttar Pradesh) and urban areas of Gujarat and Maharashtra.

Insurgent Groups:
The most prominent terrorist groups are violent extremists operating in Jammu and Kashmir; Maoists operating in the "Naxalite belt" in eastern, southern and central India; and ethno-linguistic nationalists in India's north eastern states. Terrorist groups continue their attacks in Jammu and Kashmir against Indian and Kashmiri politicians, civilians in public areas, and security forces. India is also inflicted with Naxalite (a Maoist agrarian peasant movement) terrorism, which covers a broad region of eastern, central, and southern India. The United Liberation Front of Assam (ULFA), an ethnic separatist group, has been active in the Northeastern Indian state conducting multiple terrorist attacks against civilians and security forces.

Major Security Threats:

Major security threats for India lie not so much from neighbouring nations but from the menace of home grown and cross-border terrorism. India has had a spate of terrorist attacks in the past decade including the attack on the Indian Parliament, multiple bomb blasts in Mumbai suburban trains etc. India has consistently held Pakistan responsible for these attacks and for the crossborder terrorism in Jammu and Kashmir. Both nations have been at the brink of war with their armies deployed at the border after the attack on Indian Parliament.

Transnational Issues:
India has had a long standing dispute with Pakistan over Kashmir; the part of Kashmir beyond Line of Control is under the control of Pakistan and is called Azad Kashmir. On the eastern part of Kashmir as well, India has a dispute with China over the China administered Kashmir (Aksai Chin). However recent discussions and confidence-building measures with Pakistan are beginning to defuse tensions.

Some of the boundary with China like the state of Arunachal Pradesh has been in news in recent times due to Chinas claims on the territory. India however maintains that it is an integral part of the nation. Both sides have committed to begin resolution with discussions on the least disputed Middle Sector. Discussions with Bangladesh remain stalled to delimit a small section of river boundary, to exchange 162 miniscule enclaves in both countries, to allocate divided villages, and to stop illegal cross-border trade, migration, and violence. Bangladesh protests India's attempts to fence off high-traffic sections of the porous boundary. India seeks cooperation from Bhutan and Burma to keep out Indian Nagaland insurgents; joint border commission continues to work on small disputed sections of boundary with Nepal; India has instituted a stricter border regime to restrict transit of Maoist insurgents and illegal cross-border activities from Nepal.

Legal
Legal system:
India is a 'Sovereign Democratic Republic', containing a federal system with Parliamentary form of Government in the Union and the States and having an independent judiciary. The legal system is derived from English common law and based on the 1950 constitution. Judges decide cases, and there is no trial by jury. Defendants can choose counsel independent of the government, and the government provides free legal counsel for defendants unable to afford such. In non-criminal matters, the government does not interfere with the personal status laws of Muslims and other communities on matters dealing with family law, inheritance, divorce, and discrimination against women. At the apex of the entire judicial system, exists the Supreme Court of India below which are the High Courts in each State or group of States. Below the High Courts lies a hierarchy of Subordinate Courts. Panchayat Courts also function in some States under various names like Nyaya Panchayat, Panchayat Adalat, Gram Kachheri, etc. to decide civil and criminal disputes of petty and local nature. District Courts The District Courts of India are presided over by a judge. They administer justice in India at a district level. These courts are under administrative and judicial control of the High Court of the State to which the district concerned belongs. The highest court in each district is that of the District and Sessions Judge. This is the principal court of civil jurisdiction. This is also a court of Sessions. Sessions-triable cases are tried by the Sessions Court. It has the power to impose any sentence including capital punishment. There are many other courts subordinate to the court of District and Sessions Judge. There is a three tier system of courts. On the civil side, at the lowest level is the court of Civil Judge (Junior Division). On criminal side the lowest court is that of the Judicial Magistrate. Civil Judge (Junior Division) decides civil cases of small pecuniary stake. Judicial Magistrates decide criminal cases which are punishable with imprisonment of up to five years. High Courts The High Court stands at the head of a State's judicial administration. There are 21 High Courts in the country, three having jurisdiction over more than one State. Each High Court comprises of a Chief Justice and such other judges as the president may, from time to time, appoint. The Chief Justice of a High Court is appointed by the president in consultation with the Chief Justice of India and the Governor of the State. Each High Court has power to issue to any person within its jurisdiction directions, orders, or writs including writs which are in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for enforcement of Fundamental Rights and for any other purpose. This power may also be exercised by any High Court exercising jurisdiction in relation to territories within which the cause of action, wholly or in part, arises for exercise of such power, notwithstanding that the seat of such Government or authority or residence of such person is not within those territories. Each High Court has powers of superintendence over all Courts within its jurisdiction. It can call for returns from such Courts, make and issue general rules and prescribe forms to regulate their practice and proceedings and determine the manner and form in which book entries and accounts shall be kept. Supreme Court Supreme Courts exclusive original jurisdiction extends to any dispute between the Government of India and one or more States or between the Government of India and any State or States on one side and one or more States on the other or between two or more States, if and insofar as the dispute involves any question (whether of law or of fact) on which the existence or extent of a legal right depends. In addition, Article 32 of the Constitution gives an extensive original jurisdiction to the Supreme Court in regard to enforcement of Fundamental Rights. It is empowered to issue directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari to enforce them. The Supreme Court has been conferred with power to direct transfer of any civil or criminal case from one State High Court to another State High Court or from a Court subordinate to another State High Court. The Supreme Court, if satisfied that cases involving the same or substantially the same questions of law are pending before it and one or more High Courts or before two or more High Courts and that such questions are substantial questions of general importance, may withdraw a case or cases pending before the High Court or High Courts and dispose of all such cases itself. Under the Arbitration and Conciliation Act, 1996, International Commercial Arbitration can also be initiated in the Supreme Court. The appellate jurisdiction of the Supreme Court can be invoked by a certificate granted by the High Court concerned under Article 132(1), 133(1) or 134 of the Constitution in respect of any judgement, decree or final order of a High Court in both civil and criminal cases, involving substantial questions of law as to the interpretation of the Constitution. Appeals also lie to the Supreme Court in civil matters if the High Court concerned certifies : (a) that the case involves a substantial question of law of general

importance, and (b) that, in the opinion of the High Court, the said question needs to be decided by the Supreme Court. In criminal cases, an appeal lies to the Supreme Court if the High Court (a) has on appeal reversed an order of acquittal of an accused person and sentenced him to death or to imprisonment for life or for a period of not less than 10 years, or (b) has withdrawn for trial before itself any case from any Court subordinate to its authority and has in such trial convicted the accused and sentenced him to death or to imprisonment for life or for a period of not less than 10 years, or (c) certified that the case is a fit one for appeal to the Supreme Court. Parliament is authorised to confer on the Supreme Court any further powers to entertain and hear appeals from any judgement, final order or sentence in a criminal proceeding of a High Court.

Tax Regimes:
The authority to levy taxes in India is divided between the central and the state governments. The Central government levies direct taxes such as personal income tax, wealth tax, corporate tax and indirect taxes such as customs duty, excise duty, central sales tax and service tax. The states are empowered to levy professional tax and state sales tax apart from various other local taxes such as entry tax, octroi and Value Added Tax (VAT). Most Indian states have adopted VAT from April 1, 2005. Corporations resident in India (whether owned by residents or non-residents) are taxed on their worldwide income arising from all sources. Non-resident corporations are essentially taxed on the income earned from a business connection in India or from other Indian sources. A corporation is deemed to be resident in India if it is incorporated in India or if its control and management is situated entirely in India. If a tax treaty exists between India and the country in which the taxpayer is resident, the provisions of the treaty or the act, whichever are more beneficial, will apply to the tax-payer. Domestic corporations are subject to tax at a basic rate of 30% enhanced by a 10% surcharge if the total income exceeds INR 1 Million. Personal Income Tax According to the new personal income tax slabs, there is no income tax payable for total annual income up to INR 150,000 (180,000 in case of women and INR 225,000 for individuals of age 65 and above). Total annual Income from INR 150,001 to INR 300,000 is taxed at 10%, INR 300,001 to INR 500,000 at 20% and INR 500,001 and above at a rate of 30%.

Foreign Company Taxes:

Corporate income Tax in India comprises of income from business or property, capital gains realised on any disposition of the corporations capital assets and residual income arising from non-business activities. Foreign corporations are subject to a basic tax rate of 40% enhanced by a 2.5% surcharge if total income exceeds INR 10 Million. Further the tax payable by all the corporations is enhanced by an educational cess (tax on tax) at the rate of 3% on the tax payable, inclusive of surcharge. Educational cess is the tax the government levies, on various taxes paid by the taxpayers, in order to fund primary education in India. Corporations are subject to wealth tax at the rate of 1%, if the net wealth exceeds US$ 33,000 (INR 1.5 Million).

Employment Law:
India is a member of International Labour Organisation (ILO) and complies with the conventions that it ratifies. India has enacted comprehensive legislations to provide a good working environment for the labour and to protect their interests. The key labour and employment laws applicable to employers and employees are:

Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPFMPA) Factories Act, 1948 Industrial Disputes Act, 1947 (IDA) Industrial Employment (Standing Orders) Act, 1946 (IEA) Maternity Benefit Act, 1961 (MBA) Minimum Wages Act, 1948 (MWA) Payment of Bonus Act, 1965 (PBA) Payment of Gratuity Act, 1972 (PGA) Payment of Wages Act, 1936 (PWA) Workmens Compensation Act, 1923 (WCA)

Health And Safety In The Workplace

Two most important laws that are related to health and safety of workers in the construction industry are:

1. 2.

Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 Workmens Compensation Act, 1923 and Workmens Compensation Rules, 1934

Foreign Direct Investment Laws:

Sector/Activity: Construction, Development Projects, including housing, commercial premises, resorts, educational institutions, recreational facilities, city and regional level infrastructure, townships. FDI Cap/Equity: 100% Entry Route: Automatic Other Conditions: Subject to conditions notified vide Press Note 2 (2005 series) including:

Minimum capitalisation of US$ 10 Million for wholly owned subsidiaries and US$ 5 Million for joint venture. The funds would have to be brought within six months of commencement of business of the company. Minimum area to be developed under each project 10 hectares in case of development of serviced housing plots; and build-up area of 50,000 sq. mts. In case of construction development project.

Relevant Press Notes: Press Note 2 / 2005 and Press Note 2 / 2006 Press Note No. 2 (2005) Subject: Guidelines for FDI in development of Townships, Housing, Built-up infrastructure, and Construction-development projects With a view to catalysing investment in townships, housing, built-up infrastructure and construction development projects as an instrument to generate economic activity, create new employment opportunities and add to the available housing stock and builtup infrastructure, the Government has decided to allow FDI up to 100% under the automatic route in townships, housing, built-up infrastructure and construction development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), subject to the following guidelines: a. i. ii. iii. b. Minimum area to be developed under each project would be as under: In case of development of serviced housing plots, a minimum land area of 10 hectares In case of construction-development projects, a minimum built-up area of 50,000 sq.mts In case of a combination project, anyone of the above two conditions would suffice The investment would further be subject to the following conditions:

i. Minimum capitalisation of US$10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company. ii. Original investment cannot be repatriated before a period of three years from completion of minimum capitalisation. However, the investor may be permitted to exit earlier with prior approval of the Government through the FIPB. c. At least 50% of the project must be developed within a period of five years from the date of obtaining all statutory clearances. The investor would not be permitted to sell undeveloped plots. For the purpose of these guidelines, undeveloped plots will mean where roads, water supply, street lighting, drainage, sewerage, and other conveniences, as applicable under prescribed regulations, have not been made available. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the concerned local body/service agency before he would be allowed to dispose of serviced housing plots. d. The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government/Municipal/ Local Body concerned. e. The investor shall be responsible for obtaining all necessary approvals, including those of the building/layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules/bye-Iaws/regulations of the State Government! Municipal/Local Body concerned.

f. The State Government / Municipal / Local Body concerned, which approves the building / development plans, would monitor compliance of the above conditions by the developer. 2. Para (iv) of Press Note 4 (2001 Series), issued by the Government on 21.5.2001, and Press Note 3 (2002 Series), issued on 4.1.2002, stand superseded. Press Note No. 2 (2006 Series) Subject: Clarification regarding Foreign Direct Investment (FDI) in townships, housing, built-up infrastructure and constructiondevelopment projects. 1. The Government, vide Press Note 2 (2005 Series) dated 2.3.2005, had notified the policy for Foreign Direct Investment (FDI) in townships, housing, built-up infrastructure and construction development projects. The Government has received few requests from investors seeking clarifications on applicability of these policy guidelines to some other sectors such as Special Economic Zones, Hotels, Hospitals, etc. 2. The matter has been considered in the light of the policy prevailing prior to issue of the subject Press Note. FDI up to 100% was already allowed under the automatic route in the Hotel and tourism sector, vide Press Note 4 (2001 Series) and in the Hospital sector, vide Press Note 2 (2000 Series). Special Economic Zones are separately regulated under the Special Economic Zone Act, 2005. 3. It is clarified that the provisions of Press Note 2 (2005 Series) shall not apply to Special Economic Zones; neither shall it apply to establishment and operation of hotels and hospitals which shall continue to be governed by Press Note 4 (2001 Series) and Press Note 2 (2000 Series) respectively.

Building Regulations:
The National Building Code of India 2005, laid down by the Bureau of Indian Standards, gives a unified description of the building regulations for use by government departments, municipal bodies and other construction agencies throughout the country. The Code mainly contains administrative regulations, development control rules and general building requirements; fire safety requirements; stipulations regarding materials, structural design and construction (including safety); and building and plumbing services. The Code was first published in 1970 at the instance of Planning Commission and then revised in 1983. Thereafter three major amendments were issued, two in 1987 and the third in 1997. Considering a series of further developments in the field of building construction including the lessons learnt in the aftermath of number of natural calamities like devastating earthquakes and super cyclones witnessed by the country, a Project for comprehensive revision of NBC was taken up under the aegis of National Building Code Sectional Committee, CED 46 of BIS and its 18 expert Panels; involving as many as 400 experts. As a culmination of the Project, the revised NBC was brought out as National Building Code of India 2005 (NBC 2005).

Infrastructure
Road:
Total Road Network 3.34 Million km National Highways 65,569 km State Highways 130,000 km Major District Roads, Rural Roads and Urban Roads 3.14 Million km

Rail / Train Networks:

Total Trains Network 63,327 (km) (2006-07)

Broad Gauge (1676 mm) 49,820 km Metre Gauge (1000 mm) 10,621 km Narrow Gauge (762 mm and 610 mm) 2,886 km

Railway Operations Passenger Business 6,219 (Million Passengers) (2006-07) Freight Operations 727.75 (Million Tonnes) (2006-07)

Air and Sea Ports:

International Airports: Ahmedabad Amritsar Bangalore Chennai Dabolim Guwahati Hyderabad Kochi Kolkata Mumbai Nagpur New Delhi Srinagar Thiruvananthapuram Major Seaports: Chennai Ennore Haldia

Kandla Kochi Kolkata Marmagao Mumbai New Mangalore Paradeep Tuticorin Vishakhapatnam

Apart from the major ports, India has 187 minor and intermediate ports. About 95% by volume and 70% by value of the countrys trade is carried on through maritime transport. India has about 7516.6 km of main coastline serviced by 12 major ports and about 187 nonmajor ports are under the purview of the Central Government while nonmajor ports (popularly termed as minor/intermediate ports) come under the jurisdiction of the respective State Governments. The capacity of Indian Ports increased from 20 million tonnes (MT) of cargo handling in 1951 to 397.50 MT as on 31 March 2005. At the beginning of the Tenth Plan, the capacity of Major Ports was about 344 MT. It is proposed to be increased to 470 MT by the end of the Tenth. Since 200102, the aggregate capacity in the major ports is in excess of the traffic handled. Consequently, capacity is no longer a constraint in major ports. As a result, there has been a substantial improvement in their efficiency as borne out by the reduction in waiting time for the ships. The number of cargo vessels handled at major ports is about 16,500 per annum. The aggregate cargo handled at major ports during 200506 was approximately 382.33 million tonnes. Container traffic handled at ports is fast increasing. About 75 per cent of the cargo handled normally at these ports is for overseas trade, of which around 42 per cent constitute exports.

Waterways:
According to official sources, India has approximately 14,500 kilometres of inland waterways which comprise of the rivers, canals, backwaters, creeks, etc. More than 3,600 kilometres are navigable by large vessels, although only about 2,000 kilometres are used. For purposes of navigational development and conservation, three inland waterways have been declared national waterways: the AllahabadHaldia portion of the GangaBhagirathiHooghly rivers (1,620 kilometres), the SadiyaDhubri section of the Brahmaputra River (891 kilometres), and a combination of western canals (205 kilometres).

Utilities:
Improved Drinking Water Coverage1 (%) - Urban - 95 (2004) Improved Drinking Water Coverage (%) - Rural - 83 (2004)

Improved Sanitation Coverage2 (%) - Urban - 59 (2004) Improved Sanitation Coverage (%) - Rural - 22 (2004)
1

UN Definition Improved drinking water technologies are those more likely to provide safe drinking water than those characterised as unimproved. Improved drinking water sources comprise: household connections, public standpipes, boreholes, protected dug wells, protected springs and rainwater collection. Unimproved drinking water sources include: unprotected wells, unprotected springs, rivers or ponds, vendorprovided water, bottled water and tanker truck water. Bottled water is not considered improved due to limitations in the potential quantity, not quality, of the water.

UN Definition Improved sanitation facilities are those more likely to ensure privacy and hygienic use. Improved sanitation facilities comprise: connections to a public sewer, connections to a septic system, pourflush latrines, simple pit latrines and ventilated improved pit latrines. Public or shared latrines, open pit latrines and bucket latrines are considered to be unimproved sanitation facilities. Cable TV households 61 Million (March 2006)

Telecommunications:
Fixed Line Phones 39.25 Million December 2007 Cell phones 233.62 Million December 2007 Fixed Line Operators

Bharat Sanchar Nigam Limited (BSNL) Public Mahanagar Telephone Nigam Limited Public Bharti Airtel Limited Private Reliance Private Tata / Hughes Private HFCL Private Shyam Private

Mobile Operators

Bharti Airtel Private Bharat Sanchar Nigam Limited (BSNL) Reliance Private Tata / Hughes Private Idea Cellular Private Aircel Private Mahanagar Telephone Nigam Limited Public Spice Telecom Private BPL Group Private HFCL Private Shyam Private Vodafone - Private Vodafone - Private Vodafone - Private Vodafone - Private