India on the move Abu Dhabi November 15, 2017 KPMG.com/in
Contents 1 India s Economic Growth 2 Flagship Programs and Regulatory Changes 3 Business Reforms 4 India Energy Scenario 5 Government Plans for Oil & Gas Sector
India remains the fastest growing economy in the world GDP (% Growth) 2018 2017 2016 2 3.7 4.9 7.4 2.2 3.6 4.6 6.7 1.7 3.2 4.3 7.1 0 1 2 3 4 5 6 7 8 World AE EM India India is currently a USD 2+ trillion economy Main growth drivers: Strong domestic consumption Ongoing reform process Source: IMF forecasts, World Economic Outlook AE: Advanced Economies EM: Emerging Markets India will be the base to the economic pole of global growth over the coming decade. - Harvard University India to become a the third largest economy (USD 7 trillion) by 2028. - HSBC India remains a bright spot in global landscape. - International Monetary Fund
Indian macroeconomic trends indicate positive environment for growth GDP growth (%) Consumer price index inflation (%) Index of of industrial industrial production production growth (%) growth (%) Household final consumption expenditure per capita (constant prices 2010) Forex reserves Exports FY17: 6.7 FY16: 7.1 FY15: 8.0 FY17: 5.1 FY16:4.9 FY15: 5.9 FY17: 2.7 FY16: 2.0 FY15:2.8 FY16: $1,045 FY15: $973 FY14: $927 FY17: $376 bn FY16: $360 bn FY15: $342 bn FY17: $274 bn FY16: $266 bn FY15: $317 bn 7.5% growth projected in the coming years 5% inflation target for 2016-17 Improved consumer demand and infrastructure spending to facilitate IIP growth Expanding middle class to result in further increase in consumption Forex reserves expected to help in stabilizing fluctuating rupee against USD Policy driven support to boost exports growth Source: IMF, World Bank, MOSPI
Deal value (US$ billion) FDI (USD Bn) Strong growth attracts foreign capital FDI is on the rise on the back of strong economic fundamentals and the ongoing reform process 50 40 30 20 10 0 24 31 * Top 5 FDI source: Mauritius, Singapore, Japan, UK, and Netherlands 8.6 40 44 2013-14 2014-15 2015-16 2016-17 Trends: M&A Deals (2011-16) US$7.2 billion Reliance-BP deal 1.7 3.2 US$12.9 billion Rosneft-Essar deal 0.9 Source: Government of India 2.8 14.2 2011 2012 2013 2014 2015 2016 Source: KPMG India Analysis; Merger Market database; ThomsonOne; News Releases Overall FDI in FY2017 ~ USD 43.5 billion Indian M&A touched a six year high with deal value over USD 56 Billion in 2016 Oil and Gas contributed the most in the M&A activities in 2016 at USD 14.2 Billion The Rosneft Essar deal figured in the Top 10 Global Energy Deal in 2016
Flagship programs and regulatory changes unlock opportunities for the global community Ease of doing business Make in India Enhancing manufacturing through investments, innovation, and infrastructure Digital India 06 01 To enhance business conduciveness, through investor-friendly measures (jumped by 30 ranks to #100 in WB EODB Rankings 2017) 02 Competitive federalism A system to rank states based on implementation status of 405 business reforms launched to enhance business conditions Provides digital infrastructure and governance services to all citizens Start-up India To build a strong eco-system for nurturing innovation and entrepreneurship 05 03 04 Skill India 400 million youth to be skilled by 2022 India's jump of 30 places in the World Bank's Ease of Doing Business report is very rare. In reforms, what pays off is persistence. What we are seeing is extraordinary achievement by India. In the days to come, I have no doubt that it will be a high middle income country, - World Bank CEO, Kristalina Georgieva
Business reforms implementation has gained pace and as a result, change is palpable 1 Goods and Services tax (GST) 2 New intellectual property policy 3 New bankruptcy code 4 Power distribution reform introduced 5 7 9 11 13 Revamped PPP model for road development (Hybrid Annuity Model) Railways regulator (Rail Development Authority) set up Hydrocarbon Exploration Licensing Policy (HELP) Fiscal deficit control under FRBM Act New Real Estate Bill becomes effective 6 8 10 12 14 7-point reform agenda for banks Commercial courts & Amendments to Arbitration Act Inland Waterways Bill passed Steps taken to promote competitive federalism Strategic partnership model for defence manufacturing
India Achieving New Horizons in Energy Sector IEA: India is on its way to becoming a global economic powerhouse, and energy will lie at the heart of this transformation The Hindu: Indian Economy On 'Very Solid Track in mid-term by International Monetary Fund Chief World Bank: World bank chief had called India's jump of 30 places in World Bank's ease of doing business ranking as "very rare" India Today: India, which imports over 80 per cent of its oil needs, wants to cut its reliance on foreign oil by 10 per cent by 2022. In the next 10 years, India will offer projects worth USD 300 billion for investment by Oil Minister Indian O&G Sector in News Hindu Business Line: OPEC expects India s oil demand to increase by over 150 per cent to 10.1 million barrels per day by 2040 from around 4 million barrels per day currently Business Standard: Saudi Aramco sets sight on India's downstream sector, plans mega investment. CEO Amin Nasser says oil consumption in India increased by 8% as compared to a global average of 1.5% Tribune India: Rosneft acquires Essar Oil in largest FDI deal at $12.9 billion Reuters: RIL and BP to invest $6 billion in KG D6 block off east coast Business Standard: RIL BP to invest $1.5 billion to develop six satellite gas fields in the KG Basin
MMTOE MMTOE Indian energy scenario 800 700 600 500 400 300 200 100 Primary Energy Consumption 5.7% growth in 2016 0 1986 1991 1996 2001 2006 2011 2016 2000 Total 0 Future Energy Demand Outlook 724 +121% 1603 2016 2035 Renewables (including biofuels) Hydro Source: BP Oil & Gas Statistics 2017 India and China have accounted for much of the growth in the past decade By 2035, India is likely to be among the fastest growing oil markets, with demand almost doubling to ~10 million barrels per day and gas demand is expected to more than triple over the same period
Indian oil and gas sector at the forefront of attracting Investments PSC regime has seen participation from significant number of private and foreign players Foreign Players Private Players PSU 4 7 24 20 22 Non- 35 Source : Directorate General of Hydrocarbon (DGH) Till now, the upstream sector attracted a total of USD 40 billion investments under PSC regime out of which USD 10.34 billion is Foreign Direct Investment Petroleum and Natural Gas sector contributed to ~ 2.31% of total FDI inflows in FY 2016 Another USD 25.2 Billion of Investment in the pipeline FDPs of USD 13.6 billion are already approved and investment worth USD 11.6 billion have declaration of commerciality
Government of India Future Plans Plans to auction more than 60 discoveries In Discovered Small Fields Bid Round 2017 and more than 60,000 square kms. under first round of OAL Source: DGH ~11000 Kms. of pipelines to be built by 2020 More than 100 City Gas Distribution systems to start operations by 2020 Source: PPAC Source: PPAC Current LNG Regasification capacity is ~25 MMTPA Re-gasification capacity is expected to double in next 3-4 years Source: PPAC The domestic petrochemical industry is in the process of investing over ~US$25 billion to meet the surging demand Source: CPMA India 23.5 MMTPA refining capacity expansion planned in the coming years. In addition, mega refinery of 60 MMTPA capacity is also in pipeline Source: MoPNG Annual Report, 2016
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