Indian Investments Growing in the CEE Region

LONDON - 18 November 2008� Indian companies are more and more interested in Central and Eastern European markets. Poland, the Czech Republic, Slovakia and Hungary, having recently joined the EU, offer Indian firms a stable operating environment in a strategic location, an educated workforce, great cost advantages, and a more secure legal framework.

Quite a few Indian firms have already discovered the Central and Eastern European (CEE) region, and are now successfully operating there. Some of these include Reliance Industries, Tata Group, HCL Technologies, Ranbaxy, KPIT Cummins, Infosys, Satyam, Technocraft Industries, and Sun Pharma. Others, including Wipro, Mahindra & Mahindra, the Aditya Birla Group, Genpact, Torrent Lupin Pharma, Strides Arcolab, SAIL, Apollo Tyres, Cognizant, and IGPL have already decided to establish their businesses sometime in the future or are still evaluating the opportunities.

"Indian companies are seeking new growth opportunities, so this is a good time to adopt a portfolio approach � and to weigh the relative costs and benefits of perhaps less-than-obvious destinations," states Maciej Jeziorski, Research Analyst fromFrost & Sullivan. "In this context, for many companies, and particular industries (e.g. Business Process Outsourcing and certain manufacturing industries), Central and Eastern Europe, with its relatively affluent markets, solid talent pools, and generally low-risk business environment is a strong investment candidate."

Western multinationals have already noticed the sourcing and market potential of the CEE and the European Union is steadily pushing eastward. For many investors the primary reason to locate in the CEE region is the newly granted freedom to move people, capital, goods and services to and from the rest of the European Union.

Indian companies interested in serving the European market have to decide where to operate, whether directly from India, or, instead, closer to the end-market. The region's strategic location is critical in such considerations.

Another benefit from the CEE region is the total cost of employment per worker in the EU's Central and Eastern countries, roughly one-third of that in Western Europe. Although these differences are expected to shrink, for the moment cutting costs with labor is important to many Indian companies.

CEE countries are also experiencing large labour productivity advantages. For instance, the four 'major' CEE countries have been maintaining annual productivity growth rates of 4-6% since 2000. This rate is far quicker than Western Europe.

In terms of their population's education the CEE countries are ahead of the West. On average, the 'New European Union' produces 60 degree-recipients per 1000 inhabitants each year � compared with 51 in the European Union-15. They are also proficient in other European languages besides English, as well as being able to quickly interpret the implicit signals and end-objectives of their clients in other European countries. All of these skills are important for consideration for the near-shoring businesses.

CEE countries also offer moderate and simple taxes. With the exception of Poland and Hungary, most countries in this region have already implemented flat tax rates.

In addition, 'New Europe's' membership with North Atlantic Treaty Organization (NATO) and Organization for Economic Co-operation and Development (OECD) has bolstered levels of political and economic stability in the region's overall business environment. Since the EU enlargement, Foreign Direct Investment (FDI) inflow has and will continue to rise. In 2007, Poland, the Czech Republic, Slovakia and Hungary alone attracted USD 35.5 billion in FDI. In the contact of the global financial slowdown since mid-2007, this is much more significant. Another bonus is that membership to the EU has directed large amounts of intra-European Union funding to the CEE countries, e.g. more than a third of the EU's budget goes towards its Structural and Cohesion Funds.

If you are interested in knowing more about Indian investments in CEE countries, and CEE market please send Joanna Lewandowska � Corporate Communications an email atjoanna.lewandowska@frost.comwith your full contact details. An overview will be sent to you by e-mail.

Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's TEAM Research, Growth Consulting and Growth Team Membership� empower clients to create a growth-focused culture that generates, evaluates and implements effective growth strategies.Frost & Sullivanemploys over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents. For more information aboutFrost & Sullivan'sGrowth Partnerships, visithttp://www.frost.com.

Contact:

Joanna Lewandowska

Corporate Communications � EuropeP: +48 22 390 41 46E:joanna.lewandowska@frost.com

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