INDIAN ECONOMY-2010 INFRASRUCTURE

The country’s core sector, comprising six key infrastructure industries, accelerated by 5.1 per cent year-on-year in April 2010, compared with 3.7 per cent in April 2009, according to the data released by the Union Ministry of Commerce and Industry. The growth was primarily led by an increase in the production of cement, which stood at 18.87 million tonnes (MT), compared to 17.36 MT during April 2009. Electricity production grew by 6 per cent in April 2010, as against 6.7 per cent in the same month of the previous fiscal. Finished steel production registered a growth of 4.7 per cent during the month, against a decline of 1.3 per cent in the corresponding period of 2009. Among other industries, production of crude petroleum rose by 5.2 per cent, as against minus 3.1 per cent, while production of petro-products registered an increase of 5.3 per cent, as compared to a contraction of 4.5 per cent during April 2009. Infrastructure investment in India is set to grow dramatically. As per Union Minister for Finance, Mr Pranab Mukherjee, India would require to develop a rupee-denominated long-term bond market for funding the infrastructure sector that requires an investment of around US$ 459 to US$ 500 billion by 2012. Further, investment in the infrastructure sector is expected to be around US$ 425.2 billion during the Eleventh Five Year Plan (2007-12), as against US$ 191.3 billion during the Tenth Plan. Meanwhile, private investment into the sector is also projected to increase to US$ 157.3 billion in the Eleventh Plan, as compared to US$ 47.84 billion in the Tenth Plan. This investment is likely to be fulfilled through public-private-partnership (PPP) projects that are based on long-term concessions. Clearance has been given to nine new investment proposals of around US$ 1.05 billion by the State Level Single Window Clearance Authority (SLSWCA). Out of these nine proposals, five were from the cement sector, two for setting up aluminium conductor units, and one each for developing a petroleum coke plant and a maize processing unit. Meanwhile, a committee on infrastructure under Prime Minister Dr Manmohan Singh will conduct quarterly review of development of power, road, ports, civil aviation and railways sectors, announced the Planning Commission of India recently. Further, the cabinet committee on infrastructure (CCI) will handle specific infrastructure cases that may require necessary policy correction or solving issues affecting projects. Notably, truck sales, a key indicator of goods movement, registered a growth of 74 per cent during May 2010, as per the data released by the Indian Foundation for Transport Research and Training (IFTRT). The increase in the demand for cargo transportation from the agricultural and manufacturing sectors was one of the contributing factors in the increase in the truck sales. In order to develop eco-friendly infrastructure for new cities in the Delhi-Mumbai Industrial Corridor (DMIC), Japan-based consultants such as Nikken Sekkei, Mitsubishi and IBM Japan would work along with DMIDC and three state governments. The project, expected to be completed by 2018, as per Mr Anand Sharma, Union Minister for Commerce and Industry is “by far the world’s biggest infrastructure project.” Ports The major ports in India handled 45.8 million tonnes cargo in February 2010, as compared to 45.2 million tonnes in February 2009. The cargo growth during April-February 2010 registered an increase of 5.5 per cent as compared to the corresponding period in the 2009 fiscal, as per data released by the Indian Ports Association (IPA). The annual combined capacity of the major and non-major ports in the country will be 1.5 billion tonnes by 2012, stated by Minister of Shipping, Mr G K Vasan, while speaking at the Logistics Outsourcing Summit organised by the Confederation of Indian Industry (CII). The Union Cabinet has given the approval to the Shipping Ministry for declaring Andaman and Nicobar ports as major port, stated Union Minister of Shipping, Mr G K Vasan. The Cabinet Committee on Infrastructure (CCI) has approved a proposal to develop the fourth container terminal at the Jawaharlal Nehru Port (JNPT), the country's busiest port, at an estimated cost of US$ 1.44 billion. The government also cleared a proposal to build standalone container handling facility at Mumbai port at a cost of US$ 129.6 million. The project would be implemented within two years from the date of the award of the project.

Airports The domestic airlines flew about 4.78 million passengers in May 2010, an increase of almost 22 per cent over the number carried in the same period in the previous year. The Union Minister of State for Civil Aviation, Mr Praful Patel, stated that the country will become the top-five civil aviation markets in the world in the next five years. India is the ninth largest civil aviation market in the world at present. The Airports Authority of India (AAI), the agency responsible for civil aviation infrastructure, is likely to spend over US$ 1.01 billion on the modernisation of non-metro airports in the current year. Aircraft manufacturing companies, Boeing and Airbus, remain upbeat over India's aviation growth potential. Airbus has forecast that India will need 1,032 new aircraft worth US$ 138 billion by 2028, while Boeing has forecast that the country will require 1,000 aircraft worth US$ 100 billion over the next two decades. Mumbai Airport posted its highest ever monthly passenger traffic in its history in December 2009. According to Mumbai International Airport (MIAL), the Chhatrapati Shivaji International Airport (CSIA) saw a record 2.53 million passengers in December 2009. This number is the highest-ever passenger volume handled by the airport in its history, with the previous high standing at 2.38 million passengers in January 2008. The government has mandated MIAL with the task of upgrading and modernising CSIA, which is a joint venture between the Airports Authority of India and the GVK-SA consortium. Railroads During the first month of the 2010-11 fiscal, the Railways reported an increase of 9.69 per cent in its total earnings at US$ 1.62 billion, as compared to US$ 1.5 billion in the same month last fiscal. The Railways garnered US$ 459 million in total passenger earnings in April 2010, compared to US$ 411.6 million in April 2009. According to the Department of Industrial Policy and Promotion (DIPP), the foreign direct investment (FDI) inflow into railways related components has been US$ 109.56 million from April 2000 to March 2010. Roads An in-principal approval for converting 10,000 km of state roads to national highways has been given by the Empowered Group of Ministers (EGoM). It is estimated that around US$ 3.3 billion would be required over the next five years to undertake this project. Further, the Cabinet Committee on Infrastructure (CCI) has approved four highway projects of about US$ 543.8 million on June 10, 2010. These projects would cover states such as Gujarat, West Bengal, Bihar, Uttar Pradesh and Madhya Pradesh. Anil Dhirubhai Ambani Group (ADAG)’s flagship company Reliance Infrastructure Ltd (R-Infra) won a US$ 197.3 million project from the National Highways Authority of India (NHAI). It is the tenth road project it won from the NHAI. Earlier, R-Infra won a US$ 218.3 million road project from the Gujarat government, within a week after winning the US$ 380 million Pune-Satara Road project from the National Highway Authority of India (NHAI). The project is to execute a 71 kilometre four-six lane corridor connecting the ports of Mundra and Kandla in Gujarat. Recently, the elevated expressway between Silk Board junction and Electronic City junction, built for US$ 165.5 million, was opened to public use. A consortium comprising Soma Enterprise Ltd, Nagarjuna Construction Company and Maytas Infra Ltd constructed the 9.985 km long elevated road project. The project, executed through a special purpose vehicle, Bangalore Elevated Tollway Ltd, was built on a build operate transfer basis for the NHAI.

Investments The infrastructure sector seems to have emerged as a favourite for the private equity (PE) in 2010. According to Venture Intelligence data, so far in 2010, there have been 19 deals in this sector at an approximate investment of US$ 1.1 billion, as compared to 14 deals with an investment of US$ 257.5 million during the same period last year. JSW Energy (Bengal) Limited, a special purpose vehicle (SPV) for the Bengal power and coal project, plans to invest around US$ 423.6 million in coal mine development. Sembcorp Utilities, a Singapore-based company, has bought 49 per cent stake in Thermal Powertech Corporation India Ltd, a SPV and subsidiary of Gayatri Projects Ltd, for US$ 235.1 million. An investment of around US$ 425 million has been made by a consortium of investors led by Morgan Stanley Infrastructure Partners along with Goldman Sachs Investment Management, General Atlantic LLC (GA), Everstone Capital, Norwest Venture Partners and others in Asian Genco Pte (AGPL), an infrastructure company. Larsen & Toubro (L&T), the country’s largest engineering company, will invest around US$ 5.46 billion to build its thermal power business in the next five years. L&T Power, the wholly-owned subsidiary of L&T, will have a generation capacity of 5,500 MW, including hydro power, by 2015. Larsen and Toubro Ltd also formed a joint venture with Malaysia-based SapuraCrest Petroleum to install pipelines and construct offshore rigs and platforms in India, the Middle East and South East Asia. Tata Power has lined up investments of US$ 5.19 billion for its upcoming plants in Mundra, Maithon and Jojobera over the next three years. Tata Power and Reliance Power are coming up with UMPPs with a combined generation capacity of close to 16,000 MW. Jindal Steel & Power, which has a production capacity of 1,000 MW, plans to add another 4,380 MW thermal power and 6,100 MW hydro power capacity in the next five years. Government Initiatives The infrastructure finance companies (IFC) are being included in the category of non-banking finance company (NBFC) by the Reserve Bank of India (RBI). The IFCs would require a capital adequacy ratio of 15 per cent and the similar criteria of NBFCs would be applied to IFCs as well. Further, RBI stated that at least 75 per cent of the assets of these institutions should be used in infrastructure and their net owned funds should be US$ 64.6 million or more. While presenting the Union Budget this year, the Finance Minister has announced the allocation of US$ 37.7 billion, around 46 per cent of the total plan outlay of US$ 81 billion for 2010-11 to infrastructure sectors. In the last fiscal, this proportion was about 30 per cent. The Government of India has envisaged capacity addition of 100,000 MW by 2012 to meet its mission of power to all. Recently, a ministerial group discussing large power plants with a capacity to generate 4,000 MW of power has approved, in principle, a proviso requiring such plants that will be awarded in the future to use local power generation equipment. The move is expected to provide a fillip to domestic manufacturing. The decision on so-called ultra mega power plants, or UMPPs, will also benefit domestic power generation equipment manufacturers such as state-owned Bharat Heavy Electricals Ltd (Bhel) and Larsen and Toubro Ltd (L&T), which has a joint venture with Mitsubishi Heavy Industries Ltd (MHI) of Japan. At least three joint ventures, between Toshiba Corp. of Japan and JSW Group; Ansaldo Caldaie SpA of Italy and GB Engineering Enterprises Pvt. Ltd; and Alstom SA of France and Bharat Forge Ltd are looking to start manufacturing power equipment in India. Further, the government is also implementing the National Solar Mission, aimed at setting up 20,000 MW of solar power capacity by 2020. The Asian Development Bank (ADB) has approved a financial assistance for US$ 200 million under the Assam Power Sector Enhancement Investment Programme. The project has some innovative features like franchisee-based distribution, off-grid electrification with renewable energy, reduction in CHG emissions through efficiency gains. The road transport and highways ministry has proposed priority sector status for road development, allowing private highway developers more funds from banks.

INDIAN ECONOMY-2010 INDUSTRY

Manufacturing

India has emerged as one of the world's top ten countries in industrial production as per UNIDO's new report titled 'Yearbook of Industrial Statistics 2010'. India surpassed Canada, Brazil and Mexico in 2009 to reach the 9th position from the 12th position it held in 2008.

The Index of Industrial Production (IIP) quick estimates data for April 2010 shows a growth of 19.4 per cent in the manufacturing sector as compared to April 2009. The cumulative growth during April-March 2009-10 over the corresponding period of 2008-09 is 10.9 per cent, according to data by the Ministry of Statistics and Programme Implementation.

Moreover, as per data released by the Ministry, manufacturing sector posted a 16.3 per cent growth in January-March 2010.

Growth Trends

The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, recorded a 27 month high in May 2010 to 59 from 57.2 in April 2010. A figure above 50 means activity is expanding.

"The Indian economy is hardly pausing for breath," said Frederic Neumann, co-head of Asian Economics Research, HSBC. "Output growth remains at a robust pace and new orders continue to pour in. This is benefiting the job market as more and more firms are hiring," he added.

The new orders index increased to 63.7 in May from 61.9 in April 2010, on the back of strong domestic demand, according to the PMI report. It was the 14th consecutive month when new orders expanded.

Exports from special economic zones (SEZs) grew by over 122 per cent to US$ 49.5 billion in 2009-10 as compared to 2008-09. IT, IT hardware, petroleum, engineering, leather and garments are the leading exports from SEZs.

• BorgWarner Inc, a US based auto component and systems manufacturing company with presence in 18 countries, has established its Indian manufacturing facility at Sipcot industrial park at Sriperambadur near Chennai at a cost of US$ 6.6 million

• US-based electronic manufacturing services company, Sanmina-SCI has opened a new manufacturing facility in March 2010, at Oragadam, Tamil Nadu at an investment of US$ 55.5 million

• Larsen & Toubro (L&T) and Howden Global have signed a US$ 22.2 million joint venture (JV) for setting up an industrial facility to design, engineer, manufacture and supply axial fans and air pre-heaters to Indian thermal power plants ranging between 100 mega watt (MW) to 1200 MW. The manufacturing unit will be setup in Hazira, Gujarat, and its operations are expected to commence in 2011

• Vadodara headquartered Kemrock Industries and Exports Ltd, a leading manufacturer of reinforced polymer (FRP) composites in India, plans to invest US$ 300-400 million over the next four to five years for company's new initiatives

• Surat-based Nakoda Ltd, a fully drawn yarn segment manufacturer has signed an asset purchase agreement with South Korean polyester fibre manufacturing firm, Kyunghan Industry Company Ltd for acquisition of their entire manufacturing facilities at Kyunghan. Nakoda Ltd, will invest US$ 40 million through its subsidiary Indo Korean Petrochem Ltd, for acquisition of the South Korean manufacturing plant

• Indian Immunologicals Ltd (IIL), a subsidiary of National Dairy Development Board, will launch four vaccines in the next one year and will invest US$ 32.18 million to set up a new manufacturing facility in Hyderabad that will produce both animal and human vaccines

• JK Tyre & Industries will invest US$ 198.7 million to set up a new radial tyre manufacturing facility near Chennai that will have a total production capacity of 2.9 million units per annum. The plant will be completed by 2012

India is fast emerging as a global manufacturing hub with a large number of companies shifting their manufacturing base to the country. Moreover, India has the largest number of companies, outside of Japan, that have been recognised for excellence in quality. As many as 21 companies have received the Deming Excellence awards; 153 companies have achieved Total Productive Maintenance (TPM) Excellence Award for their total productivity management practices by the Japan Institute of Plant Maintenance (JIPM) committee. Moreover, according to Mr A Raja, Union Minister for Communication and Information Technology, the government is aiming to make India a global manufacturing hub for telecom by facilitating various policies. • Japanese automobile major, Yamaha, is planning to make India a hub for manufacturing its premium and deluxe bikes for overseas markets. The company's Indian unit supplied 66,904 bikes in fiscal 2010 to Yamaha's global operation compared with 38,639 units in 2008-2009, an increase of 73 per cent. • According to a report by RNCOS, "Global Vaccine Market Forecast to 2012" published in February 2010, the vaccine market in India is forecasted to grow at a CAGR of around 23 per cent from 2009-10 to 2011-12. India has emerged as a new hub for vaccine manufacturers from across the world. • VE Commercial Vehicles (VECV) is investing US$ 61.9 million in its Pithampur plant for the production and final assembly of Volvo's new global medium-duty engine platform. The expanded facility will act as a global manufacturing hub for Volvo group's requirements. • Nokia's manufacturing facility at Sriperumbudur near Chennai crossed production volumes of 350 million handsets in April 2010. Nokia is now exporting to North America, Europe, Middle East, Asia, Australia and New Zealand, according to company statement. Government Initiatives The government has issued the new Consolidated Foreign Direct Investment (FDI) policy document, which has come into effect from April 1, 2010. Moreover, as per a press release by the Ministry of Commerce and Industry, the government is working on launching a National Manufacturing Policy by the end of 2010 and has already circulated a discussion paper, inviting comments from all stakeholders in this regard. According to Mr Anand Sharma, Union Minister for Commerce, the government is also planning to establish National Manufacturing and Investment Zones (NMIZs) to push the manufacturing share in gross domestic price (GDP). The proposed National Manufacturing Policy for these NMIZs would act as the key enablers in driving the growth of the sector in India, as per the press release. Main objectives of NMIZs are: • To promote investments in the manufacturing sector and make the country a hub for both domestic and international markets • To increase the sectoral share of manufacturing in GDP to 25 per cent by 2022 • To double the current employment level in the sector; and • To enhance global competitiveness of the sector

INDIAN ECONOMY-2010 AGRICULTURE

Agriculture is one of the strongholds of the Indian economy and accounts for 14.6 per cent of the country's gross domestic product (GDP) in 2009-10, and 10.23 per cent (provisional) of the total exports. Furthermore, the sector provided employment to 58.2 per cent of the work force.

The Indian Agricultural Scenario

The total geographical area of India is 328.7 million hectares of which 140.3 million hectares is net sown area, while 193.7 million hectares is the gross cropped area, according to the Annual Report 2009-10 of the Ministry of Agriculture.

Production

According to Annual Report 2009-10 of the Ministry of Agriculture, production of foodgrains during 2009-10 is estimated at 216.85 million tonnes (MT) as per 2nd Advance Estimates.

India has become the world's largest producer across a range of commodities due to its favourable agro-climatic conditions and rich natural resource base.

India is the largest producer of coconuts, mangoes, bananas, milk and dairy products, cashew nuts, pulses, ginger, turmeric and black pepper. It is also the second largest producer of rice, wheat, sugar, cotton, fruits and vegetables.

The US Department of Agriculture (USDA) has pegged India's rice output up by 13 per cent at 99 million tonnes in 2010-11.

About 85 per cent of the country's total rice output is grown during the kharif season (between June and September), while the rest of the 15 per cent is cultivated during the rabi season (between November and February).

Further, according to the USDA, India's cotton production may increase by over 6 per cent to a record 25 million bales in 2010-11, provided India receives normal monsoon this year.

Cotton output is pegged at 23.5 million bales (one bale equals 170 kg) in 2009-10 marketing season (August-July).

Exports

According to the government's agri-trade promotion body, Agricultural and Processed Food Products Export Development Authority (APEDA), India's exports of agricultural and floricultural products, fruits and vegetables, animal products and processed food products was worth US$ 8.1 billion in 2008-09, an increase of 13.88 per cent from US$ 7.11 billion in 2007-08.

Exports during April-December 2009-10 were worth US$ 54.16 million.

India's agri-export turnover is expected to double in the next five years according to APEDA. Agri-export turnover is set to rise to nearly US$ 18 billion by 2014.

At present, around 70 per cent of the country's agricultural and processed food exports are to developing countries in the Middle East, Asia, Africa and South America.

Indian seed companies are eyeing the export markets in SAARC (South Asian Association for Regional Cooperation) and African countries with a host of hybrid seeds and best farm practices. While some of the companies like J K Seeds, Namdhari Seeds, Nuziveedu Seeds, Nath Seeds, Rasi and Vibha Seeds have already ventured into the export markets in the region.

Investments

The public and private sector investment in agriculture have been steadily increasing since 2004-05. While public sector investments in agriculture have increased from US$ 3.61 billion in 2004-05 to US$ 5.5 billion in 2008-09, private sector investment has increased from US$ 14 billion in 2004-05 to US$ 25.5 billion in 2008-09, according to the Annual Report 2009-10 of the Ministry of Agriculture.

Indian Farmers Fertiliser Cooperative (IFFCO), the fertiliser producing and distribution cooperative, is planning to set up an institute at its plant in Paradeep in Orissa. In the proposed institute, farmers would be trained on best crop practices of cereals, pulses, oilseeds, vegetable and horticultural crops etc

Government Initiatives

in the Union Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee has made the following announcements for the agriculture sector:

• Provision of US$ 86.9 million to extend the green revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern Uttar Pradesh, West Bengal and Orissa

• Provision of US$ 65.2 million to organise 60,000 pulses and oil-seed villages in rain-fed areas in 2010-11 and to provide an integrated intervention for water harvesting, watershed management and soil health to improve productivity of the dry land farming areas

• Provision of US$ 43.4 million for sustaining the gains already made in the green revolution areas through conservation farming, which involves concurrent attention to soil health, water conservation and preservation of biodiversity

• Banks have been consistently meeting the targets set for agricultural credit flow in the past few years. For the year 2010-11, the agricultural credit flow target has been set at US$ 81.5 billion

• Under the Agricultural Debt Waiver and Debt Relief Scheme (2008), time frame for the repayment of the loan has been extended till June 30, 2010 from six months up to December 31, 2009 in the previous year

• In addition to the 10 mega food park projects already being set up, the government has decided to set up five more such parks

• External commercial borrowings are to be available for cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied products, marine products and meat

A number of other initiatives are already in place for the agriculture sector, which include

• The National Food Security Mission was launched in 2007-08, with an outlay of US$ 1.24 billion during the 11th Five Year Plan (2007–2012). It aims at enhancing the production of rice, wheat and pulses by 10 million tonnes (MT), 8 MT and 2 MT respectively, by the year 2011-12

• The Rashtriya Krishi Vikas Yojna (RKVY) was operationalised with effect from August 2007 with an outlay of US$ 5.3 billion during the 11th Five-Year Plan (2007-12). The RKVY scheme aims at incentivising states to increase outlays for agriculture and allied sectors in order to achieve 4 per cent growth in the sector in the current five-year plan. RKVY has encouraged states to step up allocations to this sector. Allocation to agriculture and allied sectors was 5.11 per cent of total State Plan Expenditure in 2006-07 and this has gone up to 5.84 per cent in 2008-09, according to the Annual Report 2009-10 of the Ministry of Agriculture

• The government has allocated US$ 1.43 billion this fiscal to the states under RKVY, 87 per cent more than in 2009-10 at US$ 763.3 million

• According to the Annual Report 2009-10 of the Ministry of Agriculture, the National Horticulture Mission (NHM) was launched in 2005-06. During 2009-10, 201 new nurseries were set up under NHM

• 100 per cent foreign direct investment (FDI) is allowed under automatic route in Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture, Aquaculture and Cultivation of Vegetables and Mushrooms under controlled conditions and services related to agro and allied sector. Besides the above, FDI is not allowed in any other agricultural sector/activity, according to the Department of Industrial Policy and Promotion’s (DIPP), consolidated FDI Policy

• The Planning Commission is working on an ambitious action plan to boost secondary agriculture, which includes value-addition to farm products, in the 12th Five Year Plan (2012-17). According to K Kasturirangan, Planning Commission Member, the sector was estimated worth over US$ 12.8 billion three years back and now it could be more than US$ 21.3 billion

• The government will provide US$ 6.43 billion in 2010-11 as subsidy to decontrolled fertilisers under the nutrient-based subsidy policy that came into effect from April 1, 2010, according to Mr Srikant Kumar Jena, Minister of State for Chemicals and Fertilisers. Under the new nutrient-based subsidy policy (NBS), the government provides subsidy on decontrolled (whose MRP is not decided by the government) nutrients such as Phosphorus (K) and Potash (S). A budget estimate of US$ 11.9 billion has been set for fertiliser subsidy during the 2010-11

• In April 2010, the Cabinet Committee on Economic Affairs (CCEA) approved US$ 142.5 million for the National Horticulture Board to implement its existing schemes and promote 25,000 integrated commercial horticulture projects in the 11th Plan period ending 2012

INDIAN ECONOMY-2010

1. Indian Economy Overview

   July 2010

   According to the estimates by the Ministry of Statistics and Programme Implementation, the Indian economy has registered a growth of 7.4 per cent in 2009-10, with 8.6 per cent year-on-year (y-o-y) growth in its fourth quarter. The growth is driven by robust performance of the manufacturing sector on the back of government and consumer spending. GDP growth rate of 7.4 per cent in 2009-10 has exceeded the government forecast of 7.2 per cent for the full year. According to government data, the manufacturing sector witnessed a growth of 16.3 per cent in January-March 2010, from a year earlier. Economic activities which showed significant growth rates in 2009-10 over the corresponding period last year were mining and quarrying (10.6 per cent), manufacturing (10.8 per cent), electricity, gas and water supply (6.5 per cent), construction (6.5 per cent), trade, hotels, transport and communications (9.3 per cent), financing, insurance, real estate and business services (9.7 per cent), community, social and personal services (5.6 per cent). The Gross National Income is estimated to rise by 7.3 per cent in 2009-10 as compared to 6.8 per cent in 2008-09. The per capita income is estimated to grow at 5.6 per cent in 2009-10. India’s industrial output grew by 17.6 per cent in April 2010. The manufacturing sector that accounts for 80 per cent of the index of industrial production (IIP) grew 19.4 per cent in April 2010, as against 0.4 per cent a year-ago. Capital goods production grew by 72.8 per cent against a contraction of 5.9 per cent a yearago. Consumer durables output continued to grow at a fast pace of 37 per cent, mirroring higher purchase of goods such as televisions and refrigerators. The Economic scenario The number of registered foreign institutional investors (FIIs) was 1710 as on May 31, 2010 and the total FII inflow in equity during January to May 2010 was US$ 4606.50 million while it was US$ 5931.80 million in debt. Net investment made by FIIs in equity between June 1, 2010 and June 14, 2010 was US$ 530.05 million while it was US$ 875.73 million in debt. As on June 4, 2010, India's foreign exchange reserves totalled US$ 271.09 billion, an increase of US$ 9.88 billion over the same period last year, according to the Reserve Bank of India's (RBI) Weekly Statistical Supplement. Moreover, India received foreign direct investment (FDI) worth US$ 25,888 million during April-March, 2009-10, taking the cumulative amount of FDI inflows during August 1991 - March 2010 to US$ 1, 32,428 million, according to the Department of Industrial Policy and Promotion (DIPP). The services sector comprising financial and non-financial services attracted 21 per cent of the total FDI equity inflow into India, with FDI worth US$ 4,392 million during April-March 2009-10, while construction activities including roadways and highways attracted second largest amount of FDI worth US$ 2,868 million during the same period. Housing and real estate was the third highest sector attracting FDI worth US$ 2,844 million followed by telecommunications which garnered US$ 2,554 million during the financial year 2009-10. Exports from India were worth US$ 16,887 million in April 2010, 36.2 per cent higher than the level in April 2009, which touched US$ 12,397 million, according to the Ministry of Commerce and Industry. India's imports during April 2010 were valued at US$ 27,307 million representing a growth of 43.3 per cent over April 2009. India's logistics sector is witnessing increased activity—the country's major ports handled 560,968 metric tonnes (MT) of cargo during April-March 2009-10, an increase of 5.74 per cent over previous year traffic, according to revised estimates released by the Ministry of Shipping. Foreign tourist arrivals in India during the month of May 2010 were 345,000, an increase of 15.5 per cent over May 2009. Foreign tourist arrivals during January-May 2010 were 2.263 million, an increase of 11.3 per cent over the corresponding period last year. Foreign exchange earnings during May 2010 were US$ 951 million, an increase of 42.2 per cent over May 2009. Foreign exchange earnings during January-May 2010 were US$ 5822 million, an increase of 38.3 per cent over the corresponding period last year, according to data released by the Ministry of Tourism. The total telephone subscriber base in the country reached 638.05 million in April 2010, taking the overall tele-density to 54.10, according to the figures released by the Telecom Regulatory Authority of India (TRAI). Also the wireless subscriber base increased to 601.22 million. According to the latest statistics from the Association of Mutual Funds in India (AMFI), the assets under management (AUM) of mutual funds were worth US$ 170.46 billion in May 2010 as compared to US$ 135.58 billion in May 2009. As per NASSCOM’s Strategic Review 2010, the BPO sector continues to be the fastest growing segment of the industry and is expected to reach US$ 12.4 billion in 2009-10, growing at 6 per cent. According to data released by Society of Indian Automobile Manufacturers (SIAM), the total number of vehicles including passenger cars, commercial vehicles, two wheelers and three wheelers produced in 2009-10 was 14,049,830, as compared to 11,172,275 produced in 2008-09. According to the Gem and Jewellery Export Promotion Council, the exports of gems and jewellery from India including rough diamonds, rose by 57.08 per cent during April-May 2010 to touch US$ 5551.24 million. According to the Ministry of Civil Aviation, domestic airlines carried 211,380 passengers between January-May 2010, an increase of 21.95 per cent over 173,340 passengers carried in the same period last year. The number of corporate merger & acquisitions (M&As) and private equity (PE) transactions, have more than doubled during January-May 2010. 439 M&A and PE deals valuing over US$ 30 billion took place between January-May 2010 as compared to 179 deals worth US$ 8.1 billion in the corresponding period in 2009. The HSBC Markit Business Activity Index, which measures business activity among Indian services companies, based on a survey of 400 firms, rose to 62.1 in April 2010, its highest since July 2008, and compared with 58.1 in March 2010. Agriculture Agriculture is one of the strongholds of the Indian economy and accounted for 15.7 per cent of the country's gross domestic product (GDP) in 2008-09, and 10.23 per cent of the total exports. Moreover, it provided employment to 58.2 per cent of the work force. Production of foodgrains during 2009-10 is estimated at 216.85 million as per second Advance Estimates In the Union Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee made the following announcements for the agriculture sector. US$ 86.89 million is provided to increase the Green Revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern up, West Bengal and Orissa. US$ 65.17 million has been provided to organise 60,000 pulses and oil-seed villages in rain-fed areas in 2010-11 and provide an integrated intervention for water harvesting, watershed management and soil health to improve productivitiy of the dry land farming areas. Banks have been consistently meeting the targets set for agricultural credit flow in the past few years. For the year 2010-11, the target has been set at US$ 81.47 billion. In addition to the 10 mega food park projects already being set up, the government has decided to set up five more such parks. External commercial borrowings are available for cold storage for preservation or storage of agricultural and allied products, marine products and meat. Growth potential story The data centre services market in the country is forecast to grow at a compound annual growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to US$ 2.2 billion by the end of 2011, according to research firm IDC India’s report published in March 2010. The report further stated that the overall India data centre services market in 2009 was estimated at US$ 1.39 billion. According to a report by research and advisory firm Gartner published in March 2010, the domestic BPO market is expected to grow at 25 per cent in 2010 to touch US$ 1.2 billion by 2011. Further, the BPO market in India is estimated to grow 19 per cent through 2013 and grow to US$ 1.8 billion by 2013. According to the report, the domestic India BPO services market grew by 7.3 per cent year-on-year in 2009. The BMI India Retail Report Quarter 3, 2010 released in May 2010, forecasts that total retail sales will grow from US$ 353.0 billion in 2010 to US$ 543.2 billion by 2014. According to a report titled 'India 2020: Seeing, Beyond', published by domestic broking major, Edelweiss Capital in March 2010, stated that India's GDP is set to quadruple over the next ten years and the country is likely to become an over US$ 4 trillion economy by 2020. India will overtake China to become the world's fastest growing economy by 2018, according to the Economist Intelligence Unit (EIU), the research arm of London-based Economist magazine.