Indian Economy - News & Updates - Archive

[Bushroda]

Boeing sees India orders of $86 bln over 20 years
Mon Jul 30, 2007 7:00AM EDT
By Unni Krishnan

NEW DELHI, July 30 (Reuters) - U.S. aircraft maker Boeing (BA.N: Quote, Profile, Research) expects airlines in India to buy more than 900 new planes worth over $86 billion in the next 20 years on the back of strong passenger growth in Asia's third-largest economy.

India's domestic aviation market is forecast to grow at about 20 percent a year over the next five years. From just four airlines three years back, India has more than 10 carriers now. "This demonstrates that Indian airline operators, not foreign carriers, are increasingly connecting India to the world by expanding their regional and global presence," said Dinesh Keskar, Boeing's senior vice president for commercial airplanes. The firm estimates the Indian air travel market will grow at an average 12 percent per year over the next 20 years, compared to the worldwide average of 4.7 percent.

"The Boeing company detailed its current market outlook for India projecting India's need for 911 new commercial airplanes worth more than $86 billion over next 20 years," according to a company statement.

Boeing has firm orders for more than 140 aircraft worth $20 billion from various Indian airlines, including Jet Airways (JET.BO: Quote, Profile, Research), Air India and SpiceJet (SPJT.BO: Quote, Profile, Research).

State-run Air India has already received the first plane of a 68 aircraft order in the form of a long-range Boeing 777-200 that will fly non-stop between Mumbai and New York.

It is likely to buy another 60 new planes by 2011 to expand operations and meet growing demand.

Jet Airways (JET.BO: Quote, Profile, Research), the country's top domestic airline, has also decided to buy three additional Boeing 777-300 aircraft, supplementing an earlier order for 30 new planes.

Boeing delivered 18 aircraft to Indian carriers between January and July this year worth more than $2.3 billion.

Boeing's rival Airbus (EAD.PA: Quote, Profile, Research)(EAD.DE: Quote, Profile, Research) expects Indian firms to place orders for 1,100 passenger and freighter aircraft valued at about $105 billion over 20 years.

Apart from passenger planes, Boeing is also among several global contenders to sell India as many as 126 advanced multi-role fighter jets in a deal that could be worth more than $8 billion.

((Editing by Mark Williams; Reuters Messaging: surojit.gupta.reuters.com@reuters.net, +91-11-4178-1016)) Keywords: BOEING INDIA/ Keywords: BOEING INDIA

 

[Bushroda]

Indian automotive sector gaining global clout
30 July 2007

The bidding war round the corner for Jaguar and Land Rover for an estimated price of $1.5 billion, which features Tata Motors Ltd, India's biggest automobile company, and Mahindra & Mahindra Ltd is symbolic of the evolving Indian businesses making a mark in the global market place, says Bundeep Singh Rangar, chairman, IndusView Advisors, the India-focused cross-border advisory firm.

The acquisition of Land Rover and Jaguar, the UK-based iconic marques owned by Ford Motor Company, the US-based world's third largest automaker (behind GM and Japan's Toyota) has the potential to raise the Indian automotive sector to the highest level to compete with sports Utility Vehicle (SUV) brands like Mitsubishi Pajero; Toyota's Land Cruiser Prado and Highlander; Jeep Wrangler by American automaker Chrysler Group; Hummer from US-based General Motor Corp; among others on the one hand and luxury car manufacturers such as Audi AG, Bayerische Motoren Werke AG (BMW), and Mercedes-Benz of Germany, etc, on the other.

India is on track to become the world's third-biggest car manufacturing country by 2030 leaving behind the UK and Canada as a major car-producing country by 2008. Its car production capacity is expected to surpass 2 million units by 2008 from the current capacity of 1.4 million units. The country offers the benefit of cost-efficient manufacturing, world-class production skills and availability of quality manpower.

The Indian automotive sector, characteristically driven by traditional and conservative business conglomerates is under-going a fundamental shift as companies set out to unlock the benefits of global scale of operations exhibited by the increasing merger & acquisition (M&A) deals in the sector worth more than $515 million from 17 deals so far this year, ie almost equal to the value and volume of deals done by the sector in the whole of last year.

The show of growing ambition by the companies in the sector mirrors the growing aspirational value among consumers in the Indian market – not only to own a car, but also associate with a brand and upgrade to a luxury car, a segment that is growing at 25 per cent annually commanding a share of almost 27 per cent in the current sales.

Such aspirations have seen more than 5,000 luxury cars added to the Indian roads in 2006, up from 3,000 in 2005 and just 1,000 in 2004, according to estimates. It's just a matter of time, before global luxury car brands Volkswagen, Lamborghini, Rolls Royce Phantom, Bentley, Porsche, Aston Martin and Ferrari roll out their India plans in full steam.

The bidding war round the corner for Jaguar and Land Rover, the UK-based iconic marques owned by Ford Motor Company, for an estimated price of $1.5 billion, which features Tata Motors Ltd, India's biggest automobile company, and Mahindra & Mahindra Ltd, tractor & utility vehicle manufacturer, among others is symbolic of the evolving Indian businesses making a mark in the global market place.

Between Tata Motors and Mahindra & Mahindra, whoever walks away with the deal, the moment will be historic as it will mark the automotive sector's entry into the elite billion- dollar acquisitions club.

With the two cult luxury brands in its armory, the winner will see itself take the first steps in to the un-explored premium segment and expanding global market place, with niche patrons apart from a combined workforce of 20,000 and state-of-the-art engineering platforms.

The Indian partner on its part will bring on board the management expertise to save cost and improve production processes by virtue of coming from a country where economies of scale is the foundation of a profitable enterprise.

The other reason why this deal will be significant is that it will further reinforce the prominence of the Indo-UK merger & acquisitions deal activity which has already seen the country's two of the largest deals – the acquisition of Hutchison Essar Ltd India's second largest GSM mobile service provider by the UK's Vodafone Group Plc and the acquisition of the UK's largest steel maker Corus Group Plc by India's Tata Steel Ltd.

India is the second largest job creator in Britain

The investments by India Inc. in Britain during the fiscal year 2006-07 has created 5,130 jobs, second to the US, according to the UK's Department of Trade and Industry. In terms of the number of new projects, India has been ranked third with 69 new projects, after 540 new projects US projects and 95 new French projects.

According to Think London, an agency promoting investment into the city, Indian investment in the UK had gone up 111 per cent to 76 projects, creating almost 4,000 jobs during 2005-06. The Indian investment has contributed $67 million (£33 million) to the London economy in 2006-07.

 

[Bushroda]

NIIT's revenue up 104%
2007-07-30 16:31:12 Source : Moneycontrol.com

For the first quarter ending June 30, 2007, NIIT, Asia's No.1 trainer and leading Global Talent Development Corporation, recorded net revenues of Rs. 225.4 crore, representing a 104% increase over the same period last year.

NIIT Limited and its subsidiaries recorded a consolidated net profit of Rs. 15.4 crore, a growth of 17% over the same period last year compared to Rs 13.2 crore in the corresponding quarter last year. This has resulted in a basic EPS of Rs. 7.0 per share of Rs. 10 each.

The results were taken on record at the meeting of the Board of Directors of NIIT Limited here today.

Commenting on NIIT's Q1 performance, NIIT Chairman Mr. Rajendra S. Pawar said, 'NIIT revenues grew 104%. Growth momentum continues through new businesses, including the recently acquired Element K.'

New businesses, IFBI and Imperia, have increased enrolments in the current cycle by 100% and extended to markets beyond the metros, in Pune and Ahmedabad. Imperia launched 3 new programs: Human Resource Management, Retail Management and Software Development Management from IIMs in Ahmedabad and Calcutta. IFBI extended its portfolio by partnering with three more leading banks.

The company's Individual Learning Business recorded a 30% growth in revenue in Q1 over the same period last year, with career programs growing at 33%. NIIT students' placement in the Top 20 IT companies grew by 95%.

To build talent for the high growth IT infrastructure management space, NIIT extended the new NetworkLABS curriculum to over 40 centres across the country.

Continuing its march in the global arena, NIIT expanded its global network by adding new centres in Vietnam, Indonesia and Nigeria.

With the added strength of Element K, NIIT has bagged a number of orders in the Corporate Learning space contributing to an order in-take of $38.5 M during the quarter.

According to Mr. Vijay K. Thadani, Chief Executive Officer, NIIT, 'With the successful launch of new businesses, NIIT is well positioned to be a major provider of talent to sectors beyond IT. In addition, global partnerships will continue to contribute to NIIT's growth.'

During the quarter, NIIT announced its partnership with technology giant Intel to launch multi-core training curriculum, globally. The curriculum has been developed jointly and will be deployed by NIIT using its global delivery capability for the benefit of the software developer community.

In the School Learning Solutions space, NIIT signed up with 100 new private schools, to offer integrated computer and computer aided education. In addition, NIIT has also added 525 more schools under the Sarva Shiksha Abhiyan initiative of the Government.

Other highlights of Q1 2007:

- Leading IT magazine Dataquest has ranked NIIT No. 1 IT Training Company and in among the Top 50 IT companies in India and the Top 20 Fastest Growing IT companies in the July 2007 issue.

- TrainingOutsourcing.com has ranked NIIT and Element K among the Top 20 in the Training Outsourcing Industry, worldwide.

- NIIT was awarded the 'ICTE Gold Medal 2006-07' by the Ho Chi Minh Computer Association.

- NIIT Hole-in-the-Wall Education Ltd, a joint venture between NIIT and the International Finance Corporation partnered with Jaipur Municipal Corporation to set up 200 Minimally Invasive Education (MIE) Playground Learning Centers (PLCs) to promote computer education among school kids in Jaipur.

- Union Finance Minister P. Chidambaram felicitated the toppers of the first batch of Tax Return Preparers, trained by NIIT.

- NIIT Brand Ambassador Viswanathan Anand is ranked World No. 1 in Chess.

Anand reached out to NIIT students, chess enthusiasts and media, nationally, using NIIT Imperia and the NIIT MindChampions Academy.

 

[Bushroda]

Boeing: India will need 911 aircraft
By OUR SPECIAL CORRESPONDENT

New Delhi, July 30: American aviation giant Boeing has projected a huge $86 billion market for commercial aircraft in India in the next 20 years, stating that India will require as many as 911 new commercial aircraft. This has been stated in the annual Current Market Outlook (CMO) of Boeing for 2007. The figures represent an increase from the CMO in 2006 in which Boeing had projected that India would need 856 planes at a value of more than $72 billion.

Boeing stated that it had bagged orders worth $20.4 billion in India in recent times. According to Boeing, this includes 68 aircraft for Air India, 30 aircraft for Jet Airways, 30 aircraft for SpiceJet and 10 aircraft for Air Sahara (that has now been renamed Jetlite). Boeing also stated that it had bagged orders for three Boeing 737BBJ aircraft from the Indian Air Force.

The company said that it had delivered two 777-200 LRs to Air India and two 777-300 ERs to Jet Airways this month. Air India will be using the Boeing 777-200 LRs to launch direct non-stop flights to the US from August 1. According to Boeing, Jet Airways will utilise the 777-300 ER to start flights to the US.

The Boeing 777-200-LR aircraft, for instance, is being seen by Air India as ideal for long-haul flights with its increased leg-room and space for passengers even in the economy class. The interior of the aircraft is divided into eight first class seats, 35 executive class seats and 195 economy class seats. Of the 23 Boeing 777s that Air India will acquire (in its order for 68 aircraft), eight will be Boeing 777-200 long range aircraft while 15 will be Boeing 777-300 extended range aircraft.

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SpiceJet breaks even with Rs 18.5cr profit
By OUR SPECIAL CORRESPONDENT

New Delhi, July 30: Low-cost carrier SpiceJet announced on Saturday that it had finally "broken even" by making profits in real terms for the first time in the first quarter of this financial year (2007-2008). The airline announced that it had made a net profit of Rs 18.5 crore from April to June 2007, a vast improvement from the same period in 2006 when it had incurred a loss of Rs 3.4 crore.

The airline also announced that its CEO and chairman of board of directors Siddhanta Sharma will now be the executive chairman of the airline.

SpiceJet also stated that it had increased its fleet from six to 12 in the last one year which would go further up to 19 in the coming few months.

The airline has Boeing 737-800s in its fleet which have been taken on lease. Mr Siddhanta Sharma said that the airline would go in for more aircraft to expand its operations. The airline attributed the financial turnaround to "capacity addition and constant focus on cost". Mr Sharma also said the airline was sitting on cash reserves of $40 million, but added that it could also mobilise funds at a later date from the market.

Mr Sharma reiterated that his airline had decided not to join the "consolidation moves" in the aviation market and said that the low cost model of SpiceJet could only be implemented accurately if the airline went it alone instead of entering into a merger.

He, however, predicted that there would be a stabilisation of air ticket fares in India, with consolidation in the aviation market. "Low fares will still be there but one will have to purchase a low fare ticket that much in advance," Mr Sharma said.

 

[Bushroda]

Air India plans new aircraft order
By Santanu Choudhury Bloomberg News
Published: July 30, 2007

NEW DELHI: Air India, which is already buying new planes to spruce up its fleet, plans to order another 60 aircraft to meet rising demand for air travel amid India's rapidly expanding economy.

The carrier, which ordered 68 aircraft from Boeing last year, will prepare a proposal for the new purchases in two weeks, the Indian aviation minister, Praful Patel, said in New Delhi on Saturday. The state-run airline, which is the biggest Indian international carrier, will evaluate aircraft from both Boeing and Airbus, he said.

The company, set to be merged with Indian Airlines, faces growing competition from Jet Airways and Lufthansa.

"Looking at the demand and passenger growth, the number of new orders could be about 60," the chairman of Air India, V. Thulasidas, said Saturday at an event in New Delhi to showcase the new planes bought by the two carriers. "In the next two to three years, we should be replacing all the old aircraft with new ones."

Air India will also consider buying the Airbus A380 superjumbo, Patel said at the event.

"We will revisit the aircraft acquisition process of Air India within a fortnight," Patel said. "After all these new aircraft are inducted and the old ones phased out, Air India will need more aircraft."

Air India may sell shares next year to partly fund the purchase of new planes, Patel said in May. Air India and Indian Airlines were planning to go for separate initial public offerings earlier, but their plans were delayed by the merger.

Purchase of the new aircraft may help Air India to raise its profit, which slid to 149.4 million rupees, or $3.7 million, in the year ended March 31, 2006, from 963.6 million a year earlier.

Air India and Indian Airlines together have more than 110 planes and have ordered an additional 111 from Boeing and Airbus.

Air India ordered 50 Boeing planes for itself and 18 for its low-fare unit, Air India Express, in January 2006, to start flights to the United States and Canada. Indian Airlines ordered 43 planes from Airbus to introduce more services and win domestic market share.

Air India and Indian Airlines have been unable to tap India's expanding civil aviation market because of a shortage of aircraft, Prime Minister Manmohan Singh said at the function.

"With the acquisition of these aircraft, our national carriers will be better placed to take on competition at home and abroad," Singh said.

Air travel in India will grow by an average of 7.7 percent annually through 2025, compared with 7.2 percent growth for China and 4.8 percent globally, according to a December projection by Airbus.

The number of passengers rose 24 percent to 73.4 million in the fiscal year ended March 31, 2006, according to the Civil Aviation Ministry.

The number probably grew to 86.8 million, including 60.9 million domestic passengers, in the 12 months that ended March 31 this year, the ministry said.

 

[Bushroda]

Manufacturing key growth engine, some services moderate: RBI

Mumbai, July 30: Manufacturing sector continues to drive the Indian economy, even though the growth has moderated in the much-hyped mobile telephony and civil aviation sector, the reserve bank said in a report.

The macroeconomic and monetary developments, first quarter review 2007-08, released by the Central Bank here today said manufacturing sector expanded by 12.7 per cent during the April-may period, emerging as a key driver for 11.7 per cent growth in industrial production.

The manufacturing sector's robust performance was largely contributed by machinery and equipment, food products, basic metal and alloy industries and chemicals and chemical products, the RBI said.

Moderation was, however, witnessed in new cell phone connections, tourist arrivals, export cargo handled by civil aviation, air passengers, cement and steel during this fiscal so far, it said.

Bank deposits and non-food credit off take increased and so did exports of BPO and it-enabled services, which helped in sustaining the growth of the sub-sector financing, insurance, real estate and business services, the RBI said.

The higher growth in food products and wood and wood products, could be partly attributed to the base effect, it said, adding that while growth in the mining sector remained subdued, that of the electricity sector was higher than during the year-ago period.

The consumer goods sector saw strong growth in April-may this year on the back of acceleration in the growth of non-durables sub-sector which was due to higher production of food products, cigarettes and non-cotton cloth, the RBI said.

 

[Bushroda]

Indian Airline Makes Its Case as a Premier-Class Contender
By JOE SHARKEY
New York Times
Published: July 31, 2007

BETTER than Singapore, better than Cathay and at least as good as Emirates.” That was how Naresh Goyal stated his goal that the Indian carrier Jet Airways be rated among the top premier-class service in the world in a few years.

I know. Tens of thousands of you, maybe more, are now stuck in overcrowded airports or wedged into cramped seats on delayed planes as the worst summer in domestic air travel history grinds on.

So maybe you’re not in the mood, or in the market, for another look at the phenomenal growth in top-tier international business and first-class air travel. Next week, I’ll return to the world of airline misery where most of us spend our time.

But Mr. Goyal does present an interesting case. Most Americans have never heard of Jet Airways, the airline he founded in India 14 years ago as a domestic carrier and began building into an international player. That will change.

Starting Sunday, Jet Airways introduces its first service in the United States, a daily flight between Newark and Mumbai, India (with a stopover at the airline’s new hub in Brussels). Jet Airways is operating the flight with one of 10 new Boeing 777-300ER aircraft it ordered as part of a $3.7 billion international fleet expansion that will add 20 777s and Airbus A330s to the fleet. The airline also has orders for 10 new Boeing 787s.

In the United States, much of the attention in the premium markets has been on trans-Atlantic service, as airlines like United and American spruce up business-class cabins to try to compete with top-tier carriers like British Airways and Virgin Atlantic, as well as the start-up all business-class airlines like Eos.

Foreign airlines like Singapore Airlines and Cathay Pacific Airways, meanwhile, have set the standards for premium-class travel between the United States and Asia, and have a major chunk of the international premium-class market in India.

Jet Airways made its mark in India’s fiercely competitive domestic market, where most airlines “are doing irrational pricing” and losing money, Mr. Goyal said.

Jet Airways, which is profitable, now flies between 40 cities in India and has expanded to routes between India and London, Sri Lanka, Nepal and Southeast Asia. The airline plans to add service late this year to San Francisco and later to Toronto, Johannesburg and the Persian Gulf — all big premium-class markets.

India’s main carrier, the government-owned Air India, has been reacting to the competitive threat to its long-haul markets. It has expanded its international routes and its fleet with 22 long-haul wide-body aircraft, including 777-200ERs and 747-400s in the last three years, and has ordered 27 Boeing 787s among other new long-haul planes. Air India, which recently upgraded its first-class cabins on long-haul flights, now has 29 flights a week between India and Newark, Kennedy International Airport, Los Angeles and Chicago.

The lure of the Indian market recently prompted Continental Airlines to move up the starting date for its new nonstop service between Newark and Mumbai to Oct. 1 from Oct. 28. Continental has flown between New York and Delhi since 2005.

Continental promotes its BusinessFirst-class service on long-haul routes. But top-tier premium airlines offer more luxurious amenities, including cubicle-like personal spaces and lie-flat beds in business class. Emirates even has first-class cabins with seats enclosed in private compartments with doors.

Mr. Goyal says Jet Airways’ new long-haul first-class service will top that, with sliding double doors, an 83-inch lie-flat bed, storage closets, a 23-inch flat-screen video monitor, and a work table that can also seat two for an intimate dinner.

The money is there, he insists.

“In India, there are about 30 million people who would be called ‘rich rich’ and another 350 million middle class,” Mr. Goyal said. “The economy is growing. Many Indians have the money, and they want quality service when they fly internationally — standards not lower than Singapore and Cathay.”

He said there are 39 million Indian nationals living overseas, many employed in high-paying jobs in banking, technology and medicine. That doesn’t include the growing number of affluent Americans and other foreign business travelers who are now flying regularly between the United States and many cities in India.

Fare discounting for premium-class service has begun to break out among some airlines, chiefly United States carriers, on the lucrative trans-Atlantic market, where walk-up business-class fares are typically $8,000 to $9,000. (Walk-up first-class fares between New York and London on British Air are over $12,000.)

Mr. Goyal insists that Jet Airways will be able to prosper without heavy discounting. “We will be charging fares like British Air, Lufthansa, Emirates, Singapore,” he said. “We will not go into that fare war craziness. We don’t have a Chapter 11 in India.”

 

[Bushroda]

India Inc in the brandscape
31 Jul, 2007, 0224 hrs IST, TNN

The importance of brands in creating value for businesses cannot be over emphasised. Though globally, on an average, intangibles-brands, know-how (R&D, patents et al), contracts and other intangibles (processes, human capital et al)-make up roughly 62% of enterprise value, in India its' 76%, higher than perhaps any other developed or developing market in the world — Switzerland (74%), France (73%), Australia (72%) and USA (71%). No wonder, even while the Indian economy remains significantly under-branded (advertising spends is under 0.4 % of the country's gross domestic product, compared to a global average of around 1 %), across sectors, brands are becoming the most dominant intangible asset. And a company brand — the face of the business for all its stakeholders — is no less important here.

Reliance Industries (RIL), the company that pioneered retail participation in the capital markets under its founder Dhirubhai Ambani, emerges as the India's most valuable brand ($ 5.8-billion) on Brand Finance India's Top 50 Most Valuable (Company) Brands list. With a huge impetus on the direct consumer facing business, Reliance Retail, the brand also garners an A on Brand Rating, which demonstrates the resilience of the brand asset and its strong ability to secure future cash flows for the business.

Public sector petroleum marketing brands — IOC, BPCL and HPCL — under strain due to rising crude prices and high under realisation due to government price controls, will have to exploit the substantial distribution muscle and brand recognition to economic use.

The Tata Group's crown jewel and India's largest software company, Tata Consultancy Services, muscles its way to be among India's top three brands with a valuation of $4.02-billion. It is also one among India's most powerful brands (Brand Rating A+) in terms of its ability to sustain earnings into the future with the least risk. Wipro follows as the second most valuable IT brand ($2.65-billion, ranked sixth in BF Top 50), with Infosys ($1.61-billion), India's third most valuable IT brand, not making the BF Top 10 cut. While Indian IT companies continue to grow rapidly, the first strains in the India cost arbitrage model are beginning to show with relatively high employee attrition. All three brands are at strategy crossroads and will need to work harder on brand differentiation going forward.

Among banks, SBI emerges as the most valuable financial services brand at $3.14-billion. ICICI Bank ($ 2.04-billion) at number nine in the BF Top 50 pecking order emerges as India's second most valuable financial services brand. The debate in the financial service market is rapidly changing with technology implementation and operational efficiency becoming table stakes. To break the current supply side parity, players will have to come up with market expansion strategies which are based on unique consumer value propositions.

At number five on the BF Top 50 list, Tata Motors with a bigger portfolio in passenger and commercial vehicles pips Maruti Sukuki India ($ 1.01-billion, rank 16), Bajaj Auto ($825-million, rank 17) and Hero Honda ($599-million, rank 23) as the country's most valuable auto brand.
Ranbaxy ($763-million, rank 20) is ahead of its peers such as Dr Reddy's ($360-million, rank 29) and Cipla ($185-million, rank 40) in terms of value as well as brand power. With their mainstay generics business getting increasingly crowded and margins under acute pressure, differentiated products under strong brands will be the strategy for the future. To establish a beach head in their global markets, pharma companies will have to be on the lookout for under leveraged brand assets which can be bought or licensed from their owners. Bhrati's Airtel is India's most valuable telecom brand ($ 1.71-billion, rank 11) and powerful brand (A+). The brand has secured leadership in network, innovations, offerings or services and managed to inject some emotional elements in a highly commoditised and crowded market.

 

[Bushroda]

'India After Gandhi': profile of a titan on the rise
An Indian historian examines his country's remarkable transformation into a global power.
By Vikram Johri
from the July 31, 2007 edition

There is a particular peril in compiling a history of contemporary events, and Ramachandra Guha defines it neatly when he says that, "Those who write contemporary history know that they are not addressing a passive reader of the text placed in front of him. The reader is also a citizen, a critical citizen, with his own political and ideological preferences."

And yet, in spite of his own warning, Guha has chosen to write India After Gandhi: The History of the World's Largest Democracy, an opinionated account of what has transpired in his country since World War II.

Contemporary India is not an easy nut to crack. From 1950 up through at least 1980, the country was bogged down by what was disparagingly referred to as "the Hindu rate of growth" (a sluggish 3.5 percent annual increase that some economists blamed on Hindu ideas about fatalism and contentment with one's lot in life.)

But since the late 1980s, the country has undergone a remarkable transformation. In 1991, the Narsimha Rao government launched wide-scale economic reforms that ended the license-quota-permit raj (a complex patronage system set in place in the early years of India's civil service) that had shackled the economy for four decades. Today, India is looked upon as a major global economic player with rising clout in world affairs.

But what brought about this transformation? And how inclusive has it been?

Guha, a noted Indian historian who has covered issues as diverse as environment and cricket in the past, takes a cautious approach in examining this meteoric rise, preferring to focus mostly on the good and the bad in policy that preceded it.

The beginnings of Indian democracy

He is an unmitigated admirer of Jawaharlal Nehru, India's first prime minister and a global statesman. Committed to secularism and equality, Nehru was instrumental in ensuring that every Indian adult, regardless of educational qualification or gender, had the right to vote in India's first parliamentary election in 1952.

Whether such a goal was desirable is almost beside the point. It boggles the mind to think of the scale on which this project was carried out. Even today, India's electoral experiment, conducted entirely on electronic voting machines, can provide lessons in operations and logistics to many other countries (including the US, as evidenced by its 2001 ballot blunder).

Guha writes admiringly of the 1952 exercise, including profiles of various pan-Indian leaders and how they cast their votes.

He also devotes close attention to the framing of the Indian Constitution. Guha delves into the long hours of confabulation that members of the Constituent Assembly indulged in to arrive at a charter that has come to be regarded as among the best and most equitable in the world.

Enamored as Guha is of Nehru, he gives space to the latter's political failures as well, most notably, his blind faith in China's ostensible friendship with India. Nehru was brutally shaken by the Chinese invasion of 1962 and he never truly came to grips with it. He died a broken man in 1964.

Nehru's death left a gaping hole in Indian politics, and it took some years before this could be filled by none other than his daughter, the fiery Indira Gandhi. While Nehru was a sagacious leader, his daughter proved to be one of India's most ruthless and shrewd politicians.

Gandhi was responsible for imposing the dreaded "Emergency" – a state of emergency during which she suspended elections and civil rights for 21 months between 1975 and 1977.

The Emergency was a transparent effort to consolidate Gandhi's position amid perceived threats to her leadership. Thousands of her political rivals were jailed during this time and several democratic conventions were suspended.

Gandhi ruled the Congress with an iron fist and pushed forward the political career of her son Sanjay, who is today remembered for egregious abuses of state power, including forced sterilizations. (Sanjay's political career ended with his death in a plane crash in 1980.)

The legacy of the Nehru-Gandhis

The history of modern India, in many ways, is the history of the Nehru-Gandhi family. It was Indira Gandhi's bloody death in 1984 that caused the political rise of her naive older son, Rajiv. He, in turn, was killed by a Tamil suicide bomber in 1991, and after a self-imposed political exile, his widow, Sonia Gandhi, an Italian-born woman, took control of the Congress party in 1998.

One of the many incidents that marked Rajiv Gandhi's prime ministership was the Shah Bano case, which Guha explains in depth. Shah Bano was a Muslim divorcée who approached the Indian courts hoping to secure alimony from her husband. The case went all the way to India's Supreme Court, which, in 1986, took the side of Shah Bano.

This angered several sections of the Muslim community who urged Rajiv Gandhi to overrule the court order through legislation. Gandhi complied. That launched a divisive phase in Indian politics and led to the rise of Hindu fundamentalist groups, all of which angrily decried Congress's policy of appeasement toward Muslims.

So vituperative have the charges and countercharges been that Indian politics today remain virtually split down the middle over the cause of Hindutva (Hindu nationalism).

This, Guha maintains, is the paradox of India. On the one hand, shiny malls sporting the latest brands jostle for attention. On the other, dehumanizing poverty and social ills are still shockingly evident. While the rise of an enlightened middle class has helped much to raise India's profile, much remains to be done to lift the country from the throes of religious intolerance and casteism.

Overall, Guha is optimistic about India's future. Backed by the rising popularity of native cultural products – including Indian movies and literature – Guha sees India as well on its way to finding its rightful place in the sun.

 

[Bushroda]

Dell starts manufacturing in India
TNN[ TUESDAY, JULY 31, 2007 04:00:21 AM]

CHENNAI: Dell’s first made in India computer rolled out of the conveyor at its newly established assembly line at Sriperumbudur, near Chennai, here on Monday.

The first locally manufactured desktop was handed over to Infosys Technologies, one of Dell’s largest customers in India. The Sriperumbudur facility, in which Dell intends to invest $30 million over the next five years, now has a single assembly line, with a capacity to roll out four lakh units per annum on a single shift basis.

While the company can operate upto three shifts, it also has enough land at its disposal to set up additional lines to achieve its production ramp up schedule to roll out 2.5 million units per annum over the next few years. “We have commenced production today at this facility, which happens to be the third in entire Asia-Pacific region and Japan.

The Sriperumbudur facility is also our third plant to go on stream this year, with two others in Brazil and Poland,” Mr Rajan Anandan, vice president and GM, Dell India told a press conference at the plant. “This facility is very strategic for our operations in India and it will help in reducing the lead time for delivery by 40 per cent – 50 per cent. It will also help in reducing costs and we will pass on the benefits to the customers, as there will be meaningful reduction in prices,” he said.

The first desktop was handed over to Group Captain Deepak Sinha, vice president - CCD and Mr R N Koushik, AVP - CCD, Infosys, in the presence of Mr Kip Thompson, vice president - worldwide facilities and Mr K Y Yong, GM - Manufacturing Operations, both from Dell.

“We have put up the facility in just a short eight months and it is great day for manufacturing and technology in India,” said Mr Thompson, who was earlier instrumental in launching Dell products in the country. Addressing the gathering, Mr Yong said the new facility has come up over 1.1 lakh sq ft of built up area. “We have been allocated 50 acres and we have plenty of space set up addition assembly lines. In addition, 100 acres have been allocated for suppliers and we intend to establish an eco-system comprising many of our 90 vendors present globally,” he said.

While Dell formally selected Chennai, which according to company officials got the nod due to the presence of a sea port and an international airport, in September, 2006, it announced its intent to start operations by July this year.

“When we started operations at Penang in Malaysia and Xiamen in China in 1995 and 1998 respectively, the facilities were of the same size as in Chennai. However, they have since expanded to very large capacities and we expect the same to happen here too,” Mr Yong said. Dell has an overall market share of 6 per cent in India. However, it has established around 30per cent share among large corporates. It has recently entered the banking and financial services segment.

 

[Bushroda]

Jobs for Indians in EU to get easier
1 Aug 2007, 0503 hrs IST,IANS

NEW DELHI: Migration of Indian workers to countries in the European Union (EU) is set to become easier with the government initiating a process to facilitate development of legal migration between India and the EU.

A memorandum of understanding (MoU) between the Ministry of Overseas Indian Affairs (MOIA) and the International Organization of Migration (IOM) was signed here on Tuesday.

The new MoU on Regional Dialogue and Facilitating Managed and Legal Migration between India and the European Union will aim at facilitating development of legal migration, enhancing regional cooperation on legal migration management and enhancing dissemination of information relating to employment opportunities in EU countries.

"India is one of the handful of leading countries in the world when it comes to overseas workers," IOM Director General Brunson McKinley said following the signing of the accord.

"It is one of the reasons for India's dynamism and prosperity."

Stating that the MoU calls for the establishment of a project implementation unit (PIU) in India, McKinley said, "We have been working on this diligently for many, many years. It will go a long way in helping India's migrant workers."

He said that the PIU will take up the following tasks on a priority basis: training sessions for workers and mutual capacity building; setting up of an overseas workers' resource centre in India; and import of Indian professionals to select EU countries like Italy, Spain and Ireland.

The regional dialogue of the IOM involves 11 Asian labour supplying nations - India, China, Bangladesh, Indonesia, Nepal, Sri Lanka, the Philippines, Thailand, Vietnam, Pakistan and Afghanistan - and five destination countries in the EU: Italy, Germany, Britain, Ireland and Spain.

Stating that IOM has signed similar agreements with several other countries, McKinley said, "But this agreement with India is very important for us. After all, very few countries have taken up steps like setting up a separate ministry for ensuring smooth and legal migration of workers."

At present most skilled and semi-skilled workers in India migrate to the Gulf nation. However, this project, McKinley said, would help facilitate diversification of the migration process to the EU, a region where the future is likely to throw up major opportunities in the years to come.

Speaking on the occasion, Minister for Overseas Indian Affairs Vayalar Ravi said that the MoU is in keeping with the MOIA's goals to facilitate legal and smooth migration of Indian workers.

Stating that migrant workers are assets to the countries they belong to, the minister said, "Around $270 billion are sent by way of remittances by migrant workers to their respective countries. Of this, around $200 billion go to developing nations."

He said that migration has given better opportunities for the poor to earn their bread and butter from other places.

"However, we should ensure that they are not treated as second class citizens in the countries they go to. A project like this (with IOM) will ensure that overseas workers are respected wherever they are," he added.

Stating that MOIA was looking to promote organised migration to labour seeking countries in the EU, the minister cited Poland as an example.

"On our invitation, Poland's labour minister came to India and we signed a pact to promote migration of Indian workers to Poland, a country with a booming economy but facing a labour shortage.

"This agreement with IOM will help in this process," he said.

Established in 1951, the Geneva-headquartered IOM is the leading inter-governmental organization in the field of migration and works closely with governmental, inter-governmental and non-governmental partners. As of now, it has got 120 members and 20 observer nations, including India.

 

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India Is Waking Up to Tackling Glut of Cash
By Andy Mukherjee

Yaga Venugopal Reddy, gov of Reserve Bank of India Aug. 1 (Bloomberg) -- The Indian authorities may have finally become serious about mopping up unwarranted liquidity in the banking system.

With yesterday's announcement of a 50-basis-point increase in the ratio of deposits that lenders have to keep with the central bank as unremunerated reserves, the call-money rate may now rise from the 0.17 percent level it fell to last week.

Overnight rates hovering near zero in an economy that's growing at a 9 percent annual pace, and where inflation may be simmering just beneath the surface?

That wasn't just ridiculous; it was plain dangerous.

Had it gone on for some more time, bankers would have judged the excess liquidity to have become permanent.

Part of it would have then been funneled into the overheated property market, jeopardizing the central bank's efforts to slow down mortgage demand.

Banks are itching to cut home-loan rates, which have risen 2 percentage points this year because of monetary tightening. Already, high borrowing costs are pushing up delinquencies in unsecured personal loans that are usually the first ones to witness defaults by households with stretched mortgages.

If banks cut lending rates prematurely, credit growth may pick up speed again. Inflation, which accelerated to a six-week high in the week to July 14, may not be tamed without raising interest rates. Although an eighth quarter-point increase in the policy rate since October 2005 may not derail corporate investment growth, it would still be entirely unnecessary.

The liquidity glut has been caused by foreign inflows that haven't been ``sterilized,'' or absorbed by the central bank.

Insufficient Absorption

U.S. dollars brought into the country by foreign investors and local corporate borrowers have been bought by the central bank to keep the local currency from rising. In the first five months of the year, such purchases amounted to $23.5 billion. But the rupee funds released into the banking system in the process haven't been neutralized by bond sales.

In a July 16 note to investors, Peter Redward and Puay Yeong Goh, economists at Barclays Capital in Singapore, estimated that less than a third of the foreign inflow into India in the second quarter was sterilized.

Since June 8, the figure has plunged to just 9 percent, the Barclays economists said.

Every hedge-fund manager investing in India knows the near- zero rates will have to rise. And they are betting that they will rise through an appreciation of the exchange rate: The central bank will simply have to stop buying dollars, so that it has less domestic money to mop up.

The sloshing liquidity has thus become a lightning rod for currency speculators, who are emboldened by a renewed interest among investors to allocate capital to India funds.

Budget Deficit

More overseas money heading into Indian equities will push the Reserve Bank to choose between keeping the exchange rate steady (by buying dollars), or controlling inflation (by not buying dollars).

The only way the Reserve Bank can control both inflation and the exchange rate for any length of time is if the government is willing to take a hit on its budget. Even on that count, there seems to be a lack of urgency. The Finance Ministry has imposed a limit of 1.1 trillion rupees ($27 billion) on the total stock of bonds and bills the central bank can sell.

This is inadequate and must be increased to at least 1.5 trillion rupees, say Redward and Goh. Since the government will have to pay interest on these bonds, it is hesitant. But without the central bank possessing the ammunition to sterilize every rupee of liquidity released by every dollar purchased, it can never make the currency speculators go away.

Too Many Constraints

The authorities want high growth, low inflation and a stable -- preferably undervalued -- currency. And they don't want to pay for it explicitly.

Into the bargain, what has been allowed to drift is liquidity.

The overnight index swap, which has a floating interest rate tied to call-money levels, fell more than 2 percentage points between April 27 and July 23.

The increase announced yesterday in the cash-reserve ratio will help mop up liquidity in the short term.

It is, however, neither a permanent fix, nor a free lunch: Preemption of bank deposits by the central bank acts as a tax on the banking system and erodes its competitiveness.

No End to Volatility

Overnight adjustment of banking-system liquidity doesn't quite work in India.

When money is loose, just like now, the central bank is loath to drain the lot overnight because of the obligation to pay 6 percent on these funds. So it decided in March to limit its daily borrowings to 30 billion rupees. That ceiling on absorption will now be scrapped, the Reserve Bank said yesterday.

When liquidity in the system becomes tight, a different limitation kicks in: Banks aren't able to borrow from the Reserve Bank even if they are willing to pay the asking rate of 7.75 percent because of a shortage of collateral.

That's because they have to set aside 25 percent of their deposits in ``statutory liquidity,'' or government securities that don't qualify as collateral.

With all these constraints, an end to the volatility in the overnight rates isn't in sight. Excess liquidity may disappear, reappear, or turn into a drought. Banks will simply have to live with not knowing which of the three it might be tomorrow.

 

[Bushroda]

One lakh broadband service centres by March 2008
Special Correspondent

NEW DELHI: Union Minister of Communication and Information Technology A. Raja on Tuesday said that about one lakh broadband enabled service centres will come up in the country by March 2008 at a cost of Rs. 5,400 crore.

One centre will come up for every six villages with all e-governance services. A sum of Rs 1,600 crore will be put up by the Central government and the rest by the private sector under the Public Private Partnership (PPP). The Minister was speaking during the inauguration of the e-India 2007 Conference here.

The Minister said that for the implementation of e-governance, the government on its part is trying to provide basic infrastructure including internet, window facilitation centre and last leg connectivity for implementation of e-governance. However participation of the private sector and citizens is a key for providing totally transparent services to the public. The application of IT to government processes, e-governance in short, could have a profound impact on the efficiency, responsiveness and accountability of government and on the quality of life and productivity of citizens, especially the poor.

Mr. Raja said with Information and Communication at its core, the Department of Information Technology (DIT) has initiated the National e-Governance Plan (NeGP). It is an ambitious programme aimed at improving the quality, accessibility and effectiveness of government services to citizens and businesses with the help of information technology. The Indian economy was growing at a steady rate of 8-9 per cent. For this growth to be sustainable there is a need to increase the efficacy of business processes, especially those directly controlled by the government, he said.

 

[Bushroda]

India to tackle inflation worries
Stewart Douglas
Finance Markets, UK

The Indian Central Bank has today announced measures designed to curb inflation in one of the world’s fastest growing economies.

India has experienced exceptional economic growth over the last few years, prompting fears amongst analysts that inflation may continue to get out of hand and devalue the rupee.

The central bank has increased the cash reserve ration from 6.5% to 7%, attempting to reduce the overall amount of money loaned from banks.

In effect, the reserve rate rises mean that Indian banks are prohibited from lending beyond 93% of their total cash assets, in an attempt to suppress the money supply and prevent inflation from gathering momentum across the economy.

The news comes just twenty-four hours after announcements from Beijing to the same effect, attempting to curb the rising tide of inflation in China that comes with rapid economic expansion.

The Chinese CCR has been raised to 12%, compared to the 7% figure in India, showing the extent to which inflation is posing a threat to the Chinese economy and way of life.

The move is designed to help improve the living standards of Indian citizens, by increasing the value of their economy in a global sense. Whilst economic growth is rampant, inflation can only reduce the living standards of ordinary Indians, and lead to uncompetitiveness on an international scale.

Whilst the cash reserve ratio was increased, interest rates in India remained stable at 7.75%, emphasising that controlling the money supply through the CCR is the favoured inflation-preventing method of the Indian government at this time.

The Indian and Chinese economies are growing at a significantly quicker speed than any others worldwide, as their industry rapidly develops and grows, prompting the need for tight macroeconomic controls to avoid inflation and international economic problems.

 

[Bushroda]

India Invests $1 Billion in Global Trade Deal with Africa
PR-GB.com (press release), Bulgaria
Written by george2007
Tuesday, 31 July 2007

India has recently disclosed its plans to spend around $1 billion in a new global trade deal with Africa. Indian Ambassador Amarendra Khatua said that the agreement would consist of the improvement of the mining and oil facilities in Africa's Ivory Coast during the next 5 years. According to the official, his nation has sought to avail of the vast and abundant oil resources of the region through the Gulf of Guinea. Moreover, the Indian government has also considered about building new mining and energy facilities in the area. The new global trade deal would also serve to further fortify the alliance between India and Africa.

According to analysts, the global trade deal is vital in India's search for more energy resources outside its territory. Currently, the nation has embarked on looking for more energy and raw materials in order to fuel its rapidly growing economy. India is among the Asian countries that have shown a fast and remarkable economic growth during the recent years. As a result of this phenomenon, the energy demand from both industrial and domestic consumers have also risen.

As India's energy resources fall short before the increasing demand, the government continues to seek more foreign supplies through signing global trade deals on energy. In fact, a large percentage of the nation's energy needs is already covered by foreign supplies. It must be noted that the recent floods that submerge the western part of India has also rouse more fears on energy supplies. Continuous and heavy rains during the past weeks had resulted to floods, which destroyed several petrochemical factories and a natural gas plant in the area. The damaged factories of both Oil and Natural Gas Corporation and Reliance Industries may only account for a minor percentage of India's entire production of energy. Still, the closure of these facilities has affected the country's energy sector and has roused concerns on energy shortage.

According to India's Ambassador to the Ivory Coast, both India and China are in need of securing their current and future energy resources due to their rapid economic development. He added that both countries needed to invest more money on global trade deals covering energy supplies. Needless to say, Mr. Khatua said that a civil war, which lasted until 2003, might pose as a hindrance towards India's plans to venture in Africa's mining and oil industries. He added that there were still plenty of things to be negotiated before his nation could proceed with its plans to make a global trade deal with the region. Currently, the Ivory Coast produces above 60,000 barrels of oil a day. Indian Oil and Natural Gas Commission (ONGC) already invested around $12 million in the exploration of an offshore oil resource in the place. Meanwhile, India's economy continues to expand with the increase of foreign investments. More foreign companies have been attracted by the country's improvement and are looking for business opportunities in the region. The government though was warned to increase its investments on infrastructure projects in order to cover the long term needs of its growing economy.