India Country Risk Report

Published 22 July 2015 | Quarterly

  • 56 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
India Country Risk Report

Core Views

  • The Indian government led by the Bharatiya Janata Party has initiated various reforms in its first year in office and it will continue to enact incremental rather than big bang reforms over the coming years. That said, the lack of majority in the Rajya Sabha, India's 245-seat upper house, will remain a hurdle to the implementation of large-scale reforms.

  • We remain broadly constructive on the Indian economy, forecasting real GDP growth to accelerate to 7.6% in FY2015/16 (April-March) from 7.3% in FY2014/15. The government's pro-business initiatives and accommodative monetary policy by the central bank will support a gradual economic growth recovery over the coming quarters.

  • Headline inflation has eased significantly in India on the back of moderation in food prices, which accounts for approximately half of the consumer price inflation (CPI) basket. Following three 25 basis point (bps) cuts to its repurchase (repo) rate since January 2015, we expect the Reserve Bank of India (RBI) to ease interest rates by 25bps to 7.00% by the end of March 2016 as it turns its focus towards reigniting credit growth amid a subdued inflationary environment.

  • We expect the Indian government to eventually implement the Goods and Services Tax (GST) system over the coming years, but the proposed implementation date of April 2016 is an optimistic one. Even if the GST Constitution Amendment Bill is passed by the upper house, ratification by at least half of the 29 legislative state assemblies is likely to be a time consuming process.

  • The Indian rupee will remain relatively resilient as we expect the currency to be supported by increased inflows despite reserve accumulation by the RBI. Over the longer-term, the INR will depreciate gradually as the central bank aims to maintain competitiveness amid higher inflation with respect to its trading partners.

Major Forecast Changes

  • We have revised our average INR/USD forecasts to INR63.75/USD and INR64.75/USD in 2015 and...

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Modi's Second Year: Reforms To Face Political Hurdles
8
TABLE: POLITICAL OVERVIEW
8
table: Ongoing Reform Progress
9
table: Legislative Assembly Election Timetable
10
Long-Term Political Outlook
12
Gradual Reform To Prevail Over The Coming Decade
12
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Index
15
Economic Activity
16
GDP Recovery To Remain Gradual
16
table: Agriculture Weakening, Manufacturing & Services Providing Support
16
table: Economic Activity
17
Fiscal Policy
18
GST Reform: In The Right Direction, But Implementation To Remain Far Away
18
table: Fiscal Policy
19
Monetary Policy
20
RBI To Hold Rates Steady, Before Cutting Again
20
table: Monetary Policy
20
Exchange Rate Policy
22
INR: RBI To Keep Rupee Stable
22
table: Current Account
22
Chapter 3: 10-Year Forecast
25
The Indian Economy To 2024
25
Will Indian Growth Live Up To Expectations-
25
table: Long-Term Macroeconomic Forecasts
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
table: Operational Risk
30
Market Size And Utilities
31
table: Asia-Market Size And Utilities Risk
32
International Security Risk
36
table: Asia-Interstate Security Risks
36
Chapter 5: Key Sectors
41
Pharmaceuticals & Healthcare
41
table: Pharmaceutical Sales, Historical Data And Forecasts
42
table: Healthcare Expenditure Trends, Historical Data And Forecasts
43
table: Government Healthcare Expenditure Trends, Historical Data And Forecasts
43
table: Private Healthcare Expenditure Trends, Historical Data And Forecasts
43
Telecommunications
44
table: Telecoms Sector-Historical Data & Forecasts
45
Other Key Sectors
47
table: Oil and Gas Sector Key Indicators
47
table: Defence and Security Sector Key Indicators
47
table: Infrastructure Sector Key Indicators
47
table: Food and Drink Sector Key Indicators
48
table: Autos Sector Key Indicators
48
table: Freight Key Indicators
48
Chapter 6: BMI Global Macro Outlook
49
Global Outlook
49
Event Risk Mounting But Manageable
49
Table: Global Assumptions
49
Table: Developed States, Real GDP GrowtH, %
50
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table: Emerging Markets, Real GDP Growth, %
51

The India Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in India. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of India's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of India's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise India's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in India, including currency volatility, the commodity price boom and protectionist policies.

The India Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the India' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for India through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The India Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for India and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on India, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in India over the next 5-years?

BMI's India country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the India Market - Political Strengths, Weaknesses, Opportunities and Threats facing India.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for India's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of India’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark India's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in India?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks India against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate India’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in India will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in India's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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