Indian Economy - News & Updates - Archive

[Bushroda]

India’s Real Estate Boom is here to stay
PR-GB.com (press release), Bulgaria
Written by george2007
Tuesday, 31 July 2007

Indian real-estate market has never found it so good. Amidst the euphoria in major metros and second and third tier cities where possibly every domestic investor is investing like there is no tomorrow a plethora of foreign investors are also all set to enter the Indian real estate investment space. A conservative estimate by one leading research firm states that over the next eighteen to thirty months venture capital worth $7 billion to $8 billion is expected to flow into the country.

Truly Indian real estate is having a dream run for last five years. Some skeptic minds however, already have started asking the sustainability of the momentum. Global research and consulting firm A. T. Kearney has evolved a global industry curve for the property in India. A. T. Kearney has been analyzing real estate speculation and investment trend across fifty countries globally. The finding was blended with the particular country’s GDP and it was realized that in between the two (real estate investment and GDP of respective country) there exists a strong correlation. ‘Global industry curve,’ thus devised by the consulting firm fits best between the two.

Real Estate in India has always been considered as fragmented and unorganized business sector. Ten years ago, in 1995-1996, investment for the sector in the country was a meager 2% of the total GDP. For China the figure was a healthy 4.8%. However, investment since then in India kept rising steadily and touched 2.4% in 2004. Manufacturing favorite China was still way ahead with a robust 6.5% rate. A. T. Kearney by dint of its ‘global industry curve’ has predicted that by 2010 the rate may go up to 4.2%. This only reinforces the fact provided by UN Economic and Social Commission for Asia and the Pacific (ESCAP) that real estate boom in Asia Pacific region is probably here to stay. India who has been witnessing a steady rise in the global economy for last 15 years thanks to its strong and consistent economic fundamentals delivered some robust result as far as GDP growth is concerned. For last five years, continuously, the country has been achieving GDP growth of 8.5%.

Since liberalization India has attracted huge volumes of FDI inflows. In the last five years alone the FDI inflow stood up to $19 billion. These FDI inflows along with service sector boom have also straight driven the demand for office and business markets and districts. Next coming up are SEZs which will represent the next generation of growth. India with ever growing purchase powered middle-class with high disposable income and easy to available of housing finance holds a great fortune in real estate investment because the residential segment investment in the country represents more than 60-70% of the overall investment in the sector. It constitutes residential, office and commercial premises.

Krish is an eminent analyst of real estate and investment domain. He has many titles under his credit. He is a marketing and management consultant who trains middle, senior executives and real estate agents in India from real estate firms. He has published many articles internationally on the area.

 

[Bushroda]

India's central bank hikes cash ratio, key rates unchanged
Servihoo, Mauritius
[31 Jul 2007]

India's central bank moved to cut money supply but kept short-term borrowing rates unchanged to balance concerns over inflation and a desire to maintain high economic growth.

The Reserve Bank of India said in a quarterly review that while inflation had fallen below its five percent forecast for the year to March 2008 from nearly seven percent earlier this year, commodity and asset price rises remained a concern.

"While inflation has been steady, inflationary pressures remain and are more persistent than before, along with high commodity and asset prices," central bank governor Y.V. Reddy said in a statement.

In an effort to cool demand, the central bank cut the amount of money available for loans by hiking the commercial banks' cash reserve requirements by 50 basis points to seven percent.

Inflation accelerated to 4.41 percent in the week to July 14 from 4.27 percent the previous week.

"This is a surprisingly nervous (policy) in relation to inflation. It is the most hawkish stance the bank has taken relating to financial risks," said Manika Premsingh, economist with brokerage BRICS Securities.

Analysts had expected the central bank to keep its benchmark repo rate at a four-year high of 7.75 percent, which was reached after five hikes between June 2006 and March this year in an effort to tame inflation in the fast-growing economy.

India grew 9.4 percent in the year ended March and the central bank has forecast growth to slow to 8.5 percent this year, a prediction that was reaffirmed on Tuesday.

But despite the forecast of slower growth, the central bank said billions of dollars of foreign investment in the stock market this year had flooded banks with cash that was fuelling a boom in consumer and business spending.

The hike in the cash reserve requirement, due to take effect August 4, was aimed at removing some cash available for loans, the central bank said, adding the policy would continue for the next several months.

"The bank will continue with its policy of active demand management of liquidity," the central bank statement said.

"Banks, financial institutions and corporates are advised to be vigilant and prepared for risk mitigation strategies."

Consumers too have been affected by inflation with the cost of home loans up sharply since a Congress party-led coalition government came to power in May 2004 on a pledge to tame prices and spread the benefits of the economic boom.

But the government has had to grapple with by rising prices for food and other staples that led the central bank to aggressively tighten monetary policy to cool what it termed earlier this year was an "overheated economy."

The 30-share Mumbai stock exchange Sensex index rose 1.9 percent as investors shrugged off the hike in bank reserves and instead focused on strong company earnings, dealers said.

They said the market rose steadily following a short blip intraday on the news, with the Mumbai stock exchange benchmark 30-share Sensex up 290.08 points to 15,550.99 by the close.

The rupee strengthened against the dollar to 40.44 from 40.54 on Monday while it weakened against the euro to 55.42 from 55.30.

A leading business lobby group, the Federation of Indian Chambers of Commerce and Industry, or FICCI, said stable rates would boost growth.

"FICCI has welcomed the overall stance of monetary policy with an emphasis on price stability while ensuring a monetary and interest rate environment that supports exports and investment demand to sustain growth," the group said in a statement.

 

[Bushroda]

Reckitt's India unit sees revenue doubling by 2010
Tue Jul 31, 2007 12:58 PM BST

NEW DELHI, July 31 (Reuters) - The Indian unit of Britain's Reckitt Benckiser Plc (RB.L: Quote, Profile , Research) sees its revenue more than doubling by 2010 as it rolls out a broader range of products in a market where urban incomes are rising fast.

A growing number of young professionals with spare cash in their pockets is likely to fuel demand for goods and services in India, Asia's third-largest economy, analysts say.

"Our vision is to reach 25 billion rupees ($619 million) by 2010," Chander Mohan Sethi, chairman and managing director of Reckitt's India unit, told reporters at a press conference.

Reckitt Benckiser (India), which makes antiseptic Dettol, toilet cleaner Harpic, and pest repellent Mortein, posted revenue of 12 billion rupees in the year to December 2006.

Sethi said sales of Dettol, the company's flagship brand, would touch 10 billion rupees by 2010, from 4 billion rupees now.

"The household penetration for that category is less than five percent today. It can only become bigger and bigger as awareness grows," he said.

Sethi described the Indian market for household and personal care products as nascent but expanding.

He said Reckitt plans to launch new products. Its Finish dishwasher and inhalant decongestant Karvol are among the items not yet retailing in India.

"There are a lot of categories in which we are present worldwide and intention is that India, too, should have those."

Reckitt competes with Hindustan Unilever Ltd. (HLL.BO: Quote, Profile , Research), the Indian unit of Anglo-Dutch consumer goods maker Unilever Plc (ULVR.L: Quote, Profile , Research), Godrej Consumer Products Ltd. (GOCP.BO: Quote, Profile , Research), Procter & Gamble Hygiene and Healthcare Ltd. (PROC.BO: Quote, Profile , Research).

 

[Bushroda]

Steria offers $956m for Xansa31st July 2007
Computer Business Review, UK
By Ed Thomas

French IT services vendor Groupe Steria has tabled a bid for outsourcing firm Xansa, which values the UK-based company at approximately 472m pounds ($956m).

Under the offer, which has been recommended by Xansa's board, Steria will pay 130 pence in cash for each Xansa share. This represents a 61.3% premium on Xansa's average closing price over the month ended July 26. Shares in Xansa soared over 30% in trading on Friday after the company revealed it was in advanced takeover talks.

According to Steria, the merger will create an enlarged company with annual revenue of approximately 1.8bn euros ($2.5bn), putting it "among the top 10 IT services providers in the European and UK markets". Steria also expects the deal to produce pre-tax cost savings of 24m euros ($32.8m) in 2008, rising to 49m euros ($67m) the following year and 53m euros ($72.5m) from 2010 onwards.

Headquartered in Paris, Steria has approximately 10,700 employees operating in 15 countries. In 2006, the company reported total sales of 1.3bn euros ($1.7bn), of which 42% was derived from its domestic market, with 23% coming from the UK, 16% from Germany, and 19% from the rest of Europe, including the Nordics, Spain, Switzerland, and the Benelux region.

One of the main reasons for acquiring Xansa is to gain access to its offshore delivery centers. The company has over 5,000 staff working out of centers in Noida, Chennai, and Pune, while Steria has yet to establish a significant presence in the region. The French company has tended to enter into partnerships with Indian companies, such as application development company PSI Data Systems.

Steria has preferred to take the partnership route due to its traditional focus on consulting, systems integration and infrastructure management projects, which lend themselves less easily to offshore delivery models. However, according to John Torrie, Steria's CEO for Northern Europe, the company is being increasingly drawn into the application management and development space and therefore needs an increased offshore capability.

Steria, which derives approximately 38% of its revenue from the public sector, will also be looking to take advantage of Xansa's growing presence in this space. Xansa's public-sector sales increased by 56% in the 12 months to the end of April 2007 and the company has significant deals with the UK National Health Service, the Home Office, and the Cabinet Office.

Steria has a number of clients in the UK local government space and has recently announced contract wins with Havant and Eastbourne borough councils. In central government, the company provides services to the Belgian finance ministry, the French ministry of economy, finance and industry, and the UK national probation service.

 

[Bushroda]

India's airline industry growing at 12% per year
Malaysia Sun
Tuesday 31st July, 2007

U.S aircraft maker Boeing expects airlines in India to buy more than 900 new planes worth over US$86 billion in the next 20 years.

Boeing has firm orders for more than 140 aircraft worth $20 billion from various Indian airlines, including Jet Airways, Air India and SpiceJet.

Boeing's Indian office estimates the local air travel market will grow at an average 12 per cent per year over the next 20 years, compared to the worldwide average of 4.7 per cent.

From just four airlines three years back, Asia's third-largest economy now has more than 10 carriers.

 

[Bushroda]

Boeing orders in India expected to grow as air travel expands
Chicago Tribune, United States
July 31, 2007

NEW DELHI - Boeing Co. on Monday raised its 20-year sales outlook for India as demand for transporting people grows in the world's second-most populous nation.

India is expected to buy as many as 911 new passenger planes worth $86 billion by 2027, Chicago-based Boeing said. That's 6.4 percent more than the forecast for 856 planes until 2026 made by Boeing in August of last year.

Economic growth and the start of budget carriers have made air travel more affordable in India. Indian carriers ordered more than 450 planes worth $30 billion in the past four years to capitalize on an annual 25 percent growth in air travel.

"There is a direct correlation between gross domestic product growth and the aviation sector," Dinesh Keskar, Boeing's senior vice president of sales for South and Southeast Asia, said in New Delhi. "As more and more people fly, the growth will be phenomenal."

India's economy expanded 9.4 percent in the 12 months ended March 31, the most since 1989, and could grow 8.5 percent in 2007, a pace surpassed only by China among the world's largest economies, according to the Organization for Economic Cooperation and Development.

A 1 percent rise in India's gross domestic product should translate into a 2 percent increase in air traffic, according to a June report by Ernst & Young LLP.

The number of passengers climbed 24 percent, to 73.4 million, in the fiscal year ended March 31, 2006, according to India's civil aviation ministry. It probably grew to 86.8 million, including 60.9 million domestic passengers, in the 12 months ended March 31, 2007, the ministry said.

Seven carriers have started flights in India in the past four years to capitalize on the growth in air traffic. Five others have sought approval to start flights.

Demand for air travel is expected to grow about 20 percent a year in the next four to five years, Keskar said.

Indian carriers will buy 757 of the 911 planes to meet growing demand for air travel and the remainder to replace their current planes, Keskar said.

The forecast for the 911 planes includes demand for 674 single-aisle planes, such as the Boeing 737 and Airbus A320, he said.

There will be demand for as many as 173 twin-aisle planes, such as the Boeing 787 and Airbus A350, Keskar said.

Indian carriers will purchase nine larger airplanes, such as the Boeing 747 and the Airbus A380, in the next 20 years, he said.

 

[Bushroda]

Birthday Bashes That Take the Cake
For Parents in India, a Chance to Display Generosity, Affluence

By Emily Wax
Washington Post Foreign Service
Tuesday, July 31, 2007

NEW DELHI -- Inside the chandeliered party hall of an upscale hotel, with its canopies of balloons and sparkly lights, three video cameramen and two photographers jostled like paparazzi to get a glimpse of the guest of honor.

Waiters in black tie waded through the crowd, serving endless silver trays of chicken tikka kebabs, grilled shrimp and samosas. Several DJs spun fast-tempo Punjabi pop that pulsated from refrigerator-size speakers. There were cocktails for the adults, and for the kids, cotton candy.

This was, after all, a birthday party for a 2-year-old -- little curly-haired Taisa Arora, to be specific. On a recent Saturday night, she wore her Strawberry Shortcake Mary Janes and a princess-like sequined outfit, and yawned as her grandmother cradled her amid the excitement of 125 guests, most arriving after 10 p.m. and only some of them children.

In India, weddings have long been extravagant celebrations of a lifetime, costing families huge sums. But with prosperity growing in urban India, more and more parents are spending exorbitant amounts on children's birthday parties -- sometimes in excess of $4,000 a bash.

"The birthday party is the new wedding in India, and the sky is the limit," said Rakesh Gupta, a party planner who has seen his business double in the past few years. "It's a serious industry now, and people want to spend lavishly and outdo each other. People in India don't like to save. They want to enjoy life and live for today after so many years of poverty and struggle."

For India's wealthier classes, birthday parties are a chance to network with business colleagues and to reunite relatives, bringing together overworked families from cities around the country. Perhaps most important, the parties are a source of pride for Indians looking to demonstrate their new wealth, as parents try to impress one another with opulent soirees.

The Indian economy has enjoyed record growth rates of 8 percent to 9 percent during the past three years, in part because the once-socialist country has opened its markets globally. The country has developed a large service industry, with the technology, pharmaceutical and biotechnology sectors serving international markets. Although India has the largest number of poor people struggling to survive on $1 a day, its middle class has more than tripled in the past two decades, according to the World Bank.

In cities, swanky stores hawk shiny bathroom fixtures and $2,000 Jacuzzis, and television ads show smiling Indian housewives buying new washing machines and moving into condo complexes.

When it comes to birthday parties, the change has been striking. Gone are the days of the quiet birthday visit with grandparents to a Hindu temple and a simple box of Indian sweets. Now there's the frazzled party planner to hire, invitations with calligraphy to buy, elephant and camel rides to plan, a sports or cartoon theme to pick out, and a moon bounce to choose.

Indian banks, which have long offered low-interest loans for weddings, now offer similar deals for birthday parties. And in a country of 1.1 billion people, where 32 percent of the population is younger than 15, party planners say the birthday industry might one day rival the wedding industry, which brings in $11 billion a year.

The parties are often more for the parents than for the children, a way for them to show their generosity -- and that they can afford to treat their friends, relatives and business partners to a lavish night out, in a country where social status is often linked to wealth.

At Taisa's bash, her father, a real estate mogul, shook hands and slapped the backs of relatives and business associates while a moon bounce was set up next to a merry-go-round. A tattoo artist -- the tattoos were temporary -- stood by, and a crew of chefs prepared more than 20 trays of Thai, Indian and Italian fare for a late-night dinner.

"We're proud parents. We want to celebrate in a big way," said Gagan Arora, 27. His wife, Shivali Arora, 24, with a tumble of freshly blow-dried curls and a pearl-stitched pink gown, cooed: "Some families in India have this kind of money now, so why not celebrate?"

During winter months, parties can include rides on elephants, ponies or camels, rock climbing, go-karting and miniature train rides. Puppet shows and magicians are year-round attractions.

Similar to bar mitzvah or bat mitzvah parties in the Jewish faith, Indian birthday parties usually feature elaborate themes -- typically the child's favorite hobby, superhero or cartoon -- emblazoned on napkins and cakes and carved into ice sculptures. (Harry Potter and Spiderman were huge this year, along with Barbie, a regular.)

Parents frequently compare invitations, regarding them as a kind of indicator of how fancy or plain the festivities will be. Also key is the all-important "return gift," or party favor, which tends to add a significant amount to an already steep bill.

"If you have money in this country, anything is possible," said Gupta, the party planner. "It's the best country in the world to be rich. But it's also the worst country in the world to be poor."

Indeed, India is a place of confounding contrasts. According to the United Nations, 42 percent of India's children are malnourished, a higher rate than in most African countries. Children are a fixture on bustling city streets, their hands outstretched for spare rupees.

Not far from the Arora birthday party at the Daffodils Hotel in New Delhi, barefoot girls just a few years older than Taisa performed cartwheels and twisted themselves into pretzel-like shapes as they begged for rupees, often tapping on car windows. "Hungry," they cried.

Indians themselves are not unaware of the contrast.

"In India, it's the fat kid in the city with excess and the skinny kid in the village living on prayers and grain crops, and it's a huge disparity," Anuj Nyyar, 26, who runs a DJ and party planning business for children's birthdays, said with a sigh. "But if anything, these birthday parties will keep getting bigger. People who have made it want to spend, and they are paying through the nose for these parties. Both realities exist in India, and we can't really judge parents for wanting to enjoy their wealth."

Some parents are rejecting the bigger parties as too materialistic and too far from old-fashioned birthday celebrations, and instead host a traditional lunch of kheer or rice porridge and maybe a cake.

"I'm no one to criticize people who can spend that kind of money on their kids. But I just feel it's a bit too much and too early. I don't think it's always the kind of fun a child, under say 8 or 9, is looking for," said Sushma Jain, 28, a primary school teacher in East Delhi, who has a 2-year-old. "If people have the money these days, maybe it's better to save in your child's name for the future."

Such frugality seems to be more the exception than the rule. Some parents say they feel intense party pressure from their children, who talk about whose bash had the best party favors (an iPod Mini per child is seen as the gold standard) and most impressive entertainment (it's not a real party without a merry-go-round). Others say the parties are simply fun and a way to enjoy the fruits of their hard work.

"With economic success has also come shocking lack of time for the urban Indian family to spend together," said Arpana Handa, 32, the sister-in-law of Taisa's mother. "The birthday party is another way of giving us this in our busy, modern lives."

 

[Bushroda]

Tata Motors Profit Rises on Indian Currency's Gain
By Santanu Choudhury and Thomas Kutty Abraham

Praveen Kadle July 31 (Bloomberg) -- Tata Motors Ltd., India's biggest truck maker, reported an unexpected increase in profit in the first quarter, buoyed by a currency gain that overshadowed lower truck and bus sales.

Net income rose 22 percent to 4.67 billion rupees ($116 million) in the three months ended June 30 from 3.82 billion rupees a year earlier, the Mumbai-based company said in a statement today. That topped the 3.5 billion rupees median estimate in a Bloomberg survey of 16 analysts. Tata had a foreign exchange gain of 2.06 billion rupees.

The truckmaker joins Jet Airways (India) Ltd. and Tata Steel Ltd. in reporting a foreign exchange gain after the rupee surged 6.8 percent against the dollar in the quarter, the biggest quarterly gain in 34 years. Reviving sales may hinge on the outlook for borrowing costs after rate increases damped demand from freight operators.

``We are still concerned about higher interest rates and the slowdown in Tata's commercial vehicle sales,'' said Ambrish Mishra, an analyst at Man Financial Sify Securities India Pvt., a Mumbai-based brokerage.

Tata Motors, which today reported its 17th straight gain in quarterly profit, has about 22 billion rupees of dollar- denominated loans, according to data compiled by Bloomberg. The foreign exchange gain in the second quarter compares with a loss of 455.8 million rupees in the year-earlier quarter.

Sales in the quarter rose to 60.57 billion rupees from 57.5 billion rupees.

Rupee Gains

The currency rose to as high as 40.215 against the U.S. dollar on July 24, the strongest since May 1998, making it the best performer this year of the 10-most traded Asian currencies.

Higher loan rates in India, the world's second-fastest growing major economy, have deterred freight operators from buying new trucks and buses, slowing demand at Tata Motors's biggest business.

The company also isn't able to raise prices enough to compensate for higher steel and aluminum costs because of competition from Hyundai Motor Co. and Suzuki Motor Corp. in the passenger car market.

``Most operators who postponed their new purchases are waiting for the interest rates to correct,'' said Huzaifa Suratwala, an analyst at Mumbai-based Networth Stock Broking Ltd. ``The hike in interest rates has increased the cost of ownership for fleet owners.''

India's commercial banks have increased lending rates between 200 and 250 basis points since December. State Bank of India Ltd., the biggest lender, said April 7 it will charge its best borrowers 12.75 percent, the highest since April 1999.

Truck Sales

Tata Motors' local truck and bus sales in the first quarter fell 2.3 percent from a year earlier to 61,633 units. Sales of the pricier and more profitable medium and heavy trucks declined 11 percent to 32,655 units.

Passenger vehicles sales climbed 3.9 percent in the quarter to 51,840. Tata Motors, India's third-largest car and sport- utility vehicle maker, has tied up with Fiat SpA, Italy's largest automaker, to build a factory and sell new models in India.

``The impact of rising interest rates is more in commercial vehicles than cars,'' said Dipak Acharya, who oversees the equivalent of $19 million in stocks at BOB Asset Management in Mumbai. Acharya owns Tata Motors shares.

Shares of Tata Motors fell 1.1 percent to 699.3 rupees on the Bombay Stock Exchange today. The earnings were detailed after trading closed at 3.30 p.m. local time. The stock has declined 22 percent this year, lagging behind the 13 percent gain in the exchange's benchmark Sensitive Index.

Vehicle sales are expected to rise in the coming quarters of the year ending March 31, Praveen Kadle, Tata's finance director, said at a press conference in Mumbai.

 

[Bushroda]

Thailand-India free trade: the impact so far
Bangkok Post, Thailand
AKE-AROON AUANSAKUL

The framework agreement to establish the Thailand-India free trade agreement (Tifta) was signed on Oct 9, 2003. Trade negotiations to move closer to full liberalisation are still continuing and are expected to be concluded by 2010. To accelerate the realisation of benefits, both countries agreed to implement an Early Harvest Scheme (EHS) covering trade in goods for 84 products. The Tifta-EHS covered three-year period between Sept 1, 2004 and Aug 31, 2006 and has now ended.

At this stage, it is interesting to evaluate whether imports of any of the 84 items subject to tariff cuts resulted in trade diversion that may have led to a decline in the country's overall economic efficiency and welfare. This study attempts to empirically evaluate the impacts of post-Tifta-EHS tariff cuts on trade diversion using an econometric technique.

The 84 items (Harmonised System [HS] code six-digit level) under the Tifta-EHS included fruits (fresh mangosteens, mangoes, durian, rambutans, longans); fishery products (salmon, sardines, mackerel); electrical appliances (window/wall air-conditioners, colour TVs, ball-bearings); precious metal and jewellery; polycarbonates, and more. Tariffs on these goods were cut by 50% on Sept 1, 2004, 75% on Sept 1, 2005, and eliminated entirely on Sept 1, 2006.

The results of the study can be summarised as follows:

1. Although India is a relatively small trading partner of Thailand (ranked 18th at $3.4 billion or 1.3% of Thailand's total trade in 2006), it holds immense promise based on its population and strategic location.

2. Thailand incurred trade deficits with India from 2002-04 but had a surplus of around 10 billion baht in 2006. Post-Tifta-EHS evaluation found that total trade for all 84 product items increased by 40%, from 13.08 billion baht to 18. 38 billion baht over the Sept 1, 2004 to Aug 31, 2006 period. Thailand's exports in the categories covered increased by much more than its imports.

3. The Post-Tifta-EHS tariff revenue loss for all 84 product items is estimated around 51 million baht per year which is minimal in comparison to the net gains from the overall trade surplus Thailand recorded.

4. Only six out of the 84 items showed positive net imports from India during the period. Nonetheless, except for aluminium oxide other than artificial corundum, import shares of the other five products from India in the Thai market were averaging less than 10%, indicating that India was not a significant player in the products in question. They are: gearboxes (HS code 870840); semi-finished products of iron or non-alloy steel of rectangular (including square) cross-section, width measuring less than twice the thickness (HS code 720711); aluminum not alloyed (HS code 760110); other precious metal, whether or not plated or clad with precious metal (HS code 711319); and other appliances (HS code 848180)

5. Moreover, only the import shares of four items _ gearboxes, precious metal, aluminium oxide, and other appliances _ trended upward for the 2003-06 period, implying the tariff reductions may have had positive impact on raising imports from India and probably at the expense of Thailand's other trading partners. The Philippines is important trading partner of Thailand for gearboxes while Japan, China and Austria export aluminium oxide.

6. Nonetheless, results of the econometric analysis confirmed that only two of the six import items in question raised their import shares and caused trade diversion. They are the gearboxes and other appliance products. Increases in market shares of gearboxes and other appliance products from India in Thailand were found to have occurred at the expense of decreased market shares of other trading partners. For the gearboxes, the Philippines' export sector would be most affected whereas the Japanese export sector would be most affected for other appliance products exported to Thailand.

The study recommended that although India is currently a small exporter of both products to Thailand, a continuation of zero import tariffs from India could definitely provide incentives and induce larger imports in the future, particularly for gearboxes where import elasticity value with respect to tariff was found to be greater than 1 (relatively elastic).

The increased imports from India could occur at the expense of not only reduced government import tariff revenue collection from Thailand's other trading partners through import substitution effects, but also of reduced exports to Thailand of other trading partners, especially the Philippines. To offset an undesirable consequence, Thailand should promote and support domestic production of both products, particularly by foreign direct investment from India, Japan and other countries.

Thailand is certainly benefiting over India with respect to Tifta-EHS as total exports to India have increased much more than total imports from India. Now that the early-harvest scheme has ended, Thailand should support a continuation and extension and propose to merge it into the broader Thailand-India FTA for the benefits of both countries.

Authorities, however, should be very careful in listing the products to be included in the agreement, by examining the trade diversion impacts on the country's economy, efficiency and welfare.

Ake-Aroon Auansakul is director of the research division at the International Institute for Trade and Development. The opinions expressed here are his own. He can be reached at akearoon@itd.or.th

 

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‘China, India becoming leaders in world economic growth’
Daily Times, Pakistan

MANILA: China and India are becoming the new engines of world economic growth by replacing United States and other developed countries, International Monetary Fund managing director Rodrigo Rato told a business conference in the Philippines.

He said “China overtook the United States this year to become the biggest contributor to world economic growth”.

“For the first time, the largest contribution to global growth will now be made by China,” he added.

“Looking ahead, we expect this pattern of growth to continue ... we expect China and increasingly India — to grow in importance as engines of global growth.” He said China would grow by more than 11 percent and India at around nine percent this year, with almost equal rates in the upcoming years.

“ Apart from US, prospects in Europe and Japan remain good,” Rato added, without giving specific figures.

“The outlook for the global economy is generally good and the economic prospects of most countries in Asia are also good,” he said.

At the same time, Rato warned that the oil market and capital flows can turned out to be critical issues foe these emerging economies.

“Inflows of capital to emerging economies could complicate macro-economic management and expose the countries that receive them to an abrupt reversal of flows when sudden shocks occur,” he added.

 

[Bushroda]

Brocade Opens World-Class R&D Center in Bangalore, India
Center will Spearhead Development of Data Connectivity and Management Solutions for Global Markets
July 31, 2007: 10:30 PM EST
CNN Money

BANGALORE, India, July 31 /PRNewswire-FirstCall/ -- Brocade(R) , the leader in networked storage solutions that help enterprises connect and manage their information, today announced that it has opened a world-class research and development facility in Bangalore. This opening will expand the company's presence in India and accelerate development of enhancements to its data center networking and management solutions for global markets.

"The establishment of the Brocade R&D center in Bangalore reflects our expanding global footprint as we meet the needs of companies and organizations around the world for solutions to meet the challenges of rapidly growing volumes of data," said Mike Klayko, Brocade Chief Executive Officer. "It also marks a significant milestone in the global growth of Brocade."

The Bangalore R&D center, housed in a custom-built facility with state-of-the-art infrastructure and equipment, is Brocade's newest R&D center. Bangalore will be a hub for the development of advanced technologies for data center networking and data management solutions.

The Asia/Pacific region represents tremendous opportunity for storage networking growth, with India and Hong Kong leading the charge. According to Gartner, in 2006, external disk storage grew 38 percent to 202 petabytes in the Asia/Pacific region (excluding Japan). And India saw the second-highest revenue growth for the region with 22.5 percent.

"In Bangalore we are able to find outstanding engineering talent with the right level of experience and expertise to develop our next-generation technologies," said Zahid Hussain, Brocade Vice President of Engineering. "Together with developers at existing Brocade R&D centers located throughout North America, and in Israel and China, the Bangalore team will drive development of new technology solutions designed to enable companies to connect and manage data more efficiently and reliably."

The new R&D center adds to existing Brocade relationships and presence in India. Brocade has a Center of Excellence relationship with the National Informatics Centre and engineering relationships with Wipro and HCL Technologies.

"Brocade has long been an important partner for us and we are excited to be working with a leader in network storage solutions," said S. Muralikrishnan, Vice President, Wipro Technologies. "Setting up an R&D center in Bangalore helps Wipro work more closely with Brocade to develop next-generation storage products."

"HCL congratulates Brocade for their new growth initiative in tapping into the Indian engineering talent as part of their global workforce," said Sandeep Kishore, Senior Vice President and Head of Hi Tech and Manufacturing, HCL Technologies. "Brocade's increased commitment to India will add a new dimension and depth to our relationship, and we wish them even greater successes in the coming years," he added.

About Brocade

Brocade is the leading provider of networked storage solutions that help organizations connect, share, and manage their information. Organizations that use Brocade products and services are better able to optimize their IT infrastructures and ensure compliant data management. For more information, visit the Brocade Web site at www.brocade.com or contact the company at info@brocade.com.

Brocade, the Brocade B-weave logo, Fabric OS, File Lifecycle Manager, MyView, SilkWorm, and StorageX are registered trademarks and the Brocade B-wing symbol, SAN Health, and Tapestry are trademarks of Brocade Communications Systems, Inc., in the United States and/or in other countries. FICON is a registered trademark of IBM Corporation in the U.S. and other countries. All other brands, products, or service names are or may be trademarks or service marks of, and are used to identify, products or services of their respective owners.

 

[Bushroda]

Indian miracle continues
Money Management, Australia

Dubbed the ‘Indian miracle’, significant economic growth within India is offering Australian financial advisers and their clients vast and ranging investment opportunities, according to Dr Anand Sethi, economist and co-author of the acclaimed Doing Business in India.

Dr Sethi said India’s national companies, which are catering to its rapidly growing domestic market, should be a key factor for investors considering adding Indian stocks to their portfolios.

“Sectors like infrastructure, food and fruit processing and financial institutions (including non-banking) are seen as the leading sectors for investing at the moment,” Dr Sethi said.

He added that with India becoming one of the leading emerging economies, emerging sectors including aviation and airports, retail and high-speed rail also provide an attractive option for investors.

However, when speaking about the investment risks present in India, Dr Sethi warned of fallout from India’s troubled political relationships with neighbours Pakistan, Afghanistan and Bangladesh.

Other current risks, according to Dr Sethi, centre on “the escalation in fuel prices in Iraq and Iran, which India depends hugely on, and the shortfall in infrastructure development targets”.

Dr Sethi will be one of the international keynote speakers at the sixth annual PortfolioConstruction Conference on August 15 and 16.

The conference, a two-day program of 31 sessions, aims to present debate on contemporary and emerging portfolio construction issues for professionals involved in the design, building or management of investment portfolios.

 

[Bushroda]

INDIA'S LARGEST SERVICE PROVIDER, AIRTEL, DEPLOYS BUBBLETALK 'VOICE SMS' OVER FIXED LINE
Telephony World (press release)

Service Allows Customers to Send Voice SMS Messages from Fixed Line Phone

New Delhi, 31st July 2007: 'Voice SMS' pioneer, Bubble Motion has been selected by India's Number One Service Provider, Airtel, to deploy 'Voice SMS' over fixed line. This deployment means that Airtel customers will be able to send Voice SMS messages to any mobile - and soon they will also be able to send messages to other Airtel Fixed Line customers.

To use the service, the customer dials * followed by the mobile number of the customer they wish to send the Voice SMS to. The recipient then receives an SMS alert on his mobile phone, notifying them that they have a new Bubble message. The recipient then retrieves the Voice SMS by dialing *0* from their mobile.

Voice SMS is a phenomenon which has gained a great deal of traction in recent months as more and more service providers deploy BubbleTALK services. The ability to include more emotional content in a short message than other messaging services such as IM, SMS and email, has made Voice SMS messaging a popular channel amongst the youth market. Voice SMS has also proven very popular with many groups who find SMS inconvenient, as well as those whose first language is not supported by text entry on a phone keypad.

Sunil Coushik, President and Co-Founder of Bubble Motion said: "Airtel has become the number one service provider in India on the back of service innovations, which have successfully captured the imagination of India's wired and wireless customers. By deploying the best Voice SMS solution on the market, Airtel is staying one step ahead of its competition."

Bubble Motion, a Sequoia Capital India investee, has been winning plaudits recently for its Voice SMS services. BubbleTALK was recently honored as being the Best Consumer Application Award at the Mobile Messaging Awards. The BubbleTALK implementation at Vodafone Egypt was also recently named as being one of the top ten non-voice revenue-generators by telecoms analyst group Analysys.

About Bubble Motion

Bubble Motion is the award-winning pioneer of 'Voice SMS' services for mobile operators. The company allows operators to create a new revenue stream within 3 weeks, using their existing infrastructure with no cannibalization of existing services. This allows operators to create a new core service.

BubbleTALK, the carrier grade intentional voice messaging service provided by Bubble Motion is the worldwide standard for intentional voice messaging or 'voice SMS'. With 8 mobile operator partners, in 6 countries, and local points-of-presence in an additional 31 countries, BubbleTALK is available to over 1 billion people with local-dial access.

 

[Bushroda]

Satyam Signs Two Major IT Contracts with FIFA
31 July, 2007 16:52:06
ARNnet, Australia

International football organisation chooses global consulting and information technology services company to deliver FIFA Extranet, Intranet, and customised Event Management System with Match AG

Sydney, July 31, 2007: Satyam Computer Services, Ltd. (NYSE:SAY), a leading global consulting and information technology services company, announced today that it has signed two multimillion-dollar contracts to support FIFA and its major forthcoming events.

Thanks to the strength of its technical capabilities and flexible approach, Satyam has not only been selected to develop a customised Event Management System for one of the world’s premier sports organisations, but it has also been chosen to build an Extranet and Intranet for FIFA over the next 12 months. Satyam’s partnership will also include full, uninterrupted support for both solutions for FIFA, until the final whistle of each game.

Working primarily from FIFA’s Zurich headquarters, Satyam will provide in-country support for matches. It will also have teams work from offshore locations to enable lower costs and optimised CMM Level 5 quality.

“Clearly, FIFA organises incredibly large-scale, high-profile tournaments. In fact, we host the world’s most widely viewed sporting events, with as many as 28 billion people watching the 2006 Tournament. As such, we cannot afford even a second’s downtime, even during the huge usage spikes throughout games,” said FIFA head of information technology solutions Michael Kelly. “That is why we have chosen the reliability, flexibility, and reusability of Satyam’s applications. This is the start of a long-term relationship that will see Satyam working closely with FIFA over the next few years.”

“We are delighted to have been chosen to deliver such critical applications for FIFA, and are committed to ensuring the success of managing its event logistics and Extranets/Intranet platforms,” said Dr. Keshab Panda, the senior vice president, director, and head of Satyam’s European operations.

About Satyam Computer Services

Satyam (NYSE: SAY), a leading global business and information technology services company, delivers consulting, systems integration, and outsourcing solutions to clients in 20 industries and 57 countries.

Satyam leverages deep industry and functional expertise, leading technology practices, and an advanced, global delivery model to help clients transform their highest-value business processes and improve their business performance. The company’s 42,500* professionals excel in engineering and product development, supply chain management, client relationship management, business process quality, business intelligence, enterprise integration, and infrastructure management, among other key capabilities.

Satyam development and delivery centers in the US, Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China, Malaysia, Singapore, and Australia serve 570* clients, including one-third of the US Fortune 500. For more information, see www.satyam.com.

 

[Bushroda]

Hi-tech borders with neighbours soon
1 Aug, 2007, 0117 hrs IST,Nirmala Ganapathy, TNN

NEW DELHI: Imagine airport-like facilities along the border with Pakistan, Nepal and Bangladesh! Well, that might just become a reality. To facilitate movement of goods and people along border points, the government is actively pushing the idea of integrated check posts with neighbouring countries.

India has already agreed to set up state-of-the-art integrated customs point with Nepal along four major entry points on the border and is now going to propose a similar arrangement to Pakistan.

This matter will be put forward by India during the two-day Indo-Pak commerce secretary-level talks. The idea is to have an integrated customs point at Attari-Wagah and Munnabao-Khokrapar to replace the current antiquated system.

Right now, it takes over 12 hours for passengers travelling through the Attari-Wagah border to complete formalities. It is a similarly long, painstaking effort to transport goods across the border. Goods have to be off-loaded from trucks and then carried by porters to the other side.

Sources said this is a good time to push for upgradation of infrastructure as there is interest on both sides and bilateral trade has been growing rapidly in the last four years. An indication of this is that Pakistan is building a six-lane highway on its side of the border.

The idea is to upgrade infrastructure at check posts to international standards, which includes immigration and security checks at one point of entry on each side of the border.

Rites have already done a detailed project report on this proposal and this will be shared with the Pakistani side. This is among the set of ‘fresh ideas’ that India will propose to Pakistan when commerce secretary G K Pillai and his Pakistani counterpart Syed Asif Shah hold discussions.

The discussions with Nepal on the integrated customs point are in an advanced stage. Both sides have agreed to set up high-tech customs point at four sites - Raxaul-Birganj, Sunauli-Bhairahawa, Nepalgunj-Nepalgunj and Jogbani-Biratnagar.

Sources said the Raxaul-Birganj post will be the first of the block. After six rounds of meetings, it has been decided that India will construct the posts at both sides at a cost of Rs 100 crore within 36 months after the project starts. Sources said land acquisition has been completed on both sides and that the government will soon start the tender process.

According to the agreement between India and Nepal, the construction of the checkpoint will start in a year.