Indian Economy - News & Updates - Archive

[Neo]

Expatriates’ money gives boost to Indian economy

By Anand Kumar

CONFRONTED by economic crises in the past, the Indian government had to appeal to its citizens living abroad to rush to its rescue by repatriating funds back home. This happened in 1991, when India faced a major economic calamity with foreign exchange reserves down to one billion dollars — barely enough to meet three weeks’ of imports.

India was on the verge of defaulting on its external loans and had to pledge its gold with international banks. The government asked the public sector State Bank of India (SBI), the country’s largest commercial bank, to float the India Development Bonds, which fetched about $1.6 billion.

The crisis also triggered off the economic reforms programme, which 15 years later has ensured sustained high economic growth.

The government leaders also sought help of the NRIs when the next crisis hit the economy, following India’s nuclear explosion in May 1998. Overseas Indians, attracted more by the lucrative returns rather than patriotism, pumped in $4.18 billion that year – in SBI’s Resurgent India Bonds – helping the country tide over the crisis.

Two years later, the NRIs again ploughed in $5.3 billion, subscribing to the Millennium India deposit bonds floated by the SBI. These days, India’s foreign exchange reserves position is extremely healthy – it adds up to $170 billion.

The NRI bank deposits make up about $32 billion of these reserves, but India does not go out of its way to lure overseas Indian deposits, as interest rates have fallen significantly. In fact, the government also allows the NRIs to take away money from India.

Recently, the Reserve Bank of India (RBI), the country’s central bank, allowed the NRIs to repatriate up to one million dollars a year from the sale of properties. Earlier, there was a 10-year lock-in period during which the funds were to be kept within the country.

The move to allow the NRIs to repatriate proceeds from the sale of properties is expected to result in increased inflow of the NRI funds into real estate sector. The 10-year lock-in period had discouraged the NRIs from investing in the sector as there was a fear that their investments would be diluted over a 10-year period because of the depreciation of rupee.

With exit routes opened up, the NRI investments into lucrative property sector are expected to surge. Of the 20 million NRIs living in over a 100 countries across the globe, a majority is unlikely to ever return to India. It is only the five million-odd Indians living in the Gulf who have plans to return home.

The Gulf-based NRIs invest in properties in India that are meant for their own use. But most Indians in North America, Europe and the Asia-Pacific region have no plans to resettle in their country. Still, many of them want to invest in a property that could be rented out, or sold after a few years for a hefty profit.

The NRI remittances into the country continue to be high. Last week, the RBI disclosed that the NRIs remitted $24.6 billion into India, half of which was parked in bank deposits or invested in the stock markets or properties.

According to a recent World Bank report, India, Mexico and China are the largest recipients of remittances from their citizens living abroad. This year, global remittance flows are expected to reach $268 billion, more than double the level of $132 billion in 2000. Developing countries would account for $200 billion of these remittances.

But the authorities in India have been monitoring inflow of the NRI funds, fearing that part of it might be laundered funds, or used for speculative purposes in the capital markets. The RBI is learnt to have discovered that a significant portion of the NRI and portfolio investments into the country emanate from tax havens.

The RBI is also monitoring the flow of funds through foreign direct investment (FDI) route, suspecting that some of it might be the NRI money which ultimately ends up in capital markets. The RBI has been seeking a ban on the use of participatory notes (PNs). Many foreign institutional investors (FIIs) – there are nearly a thousand of them registered with the Securities and Exchange Board of India (SEBI), the capital markets regulator – operate on behalf of clients whose identity remains unknown on the basis of the PNs.

Both the RBI and the SEBI have been asked by the federal government to keep a watch on money coming from tax havens, to prevent money laundering. Intelligence agencies have warned the government in the past that underworld and ill-gotten money that is sent abroad, is laundered and brought in legally through tax havens and the PN route.

The black money that is laundered in this manner then flows into the capital markets, fuelling speculation. Such ‘hot money’ can be pulled out anytime – as happened last week when indices tumbled on the exchanges – hurting genuine investors.

Many FIIs operate out of Mauritius with which India has a double taxation avoidance treaty, to avoid payment of capital gains tax. Mauritius does not impose such a tax, so companies registered there and doing business in India also do not have pay to the tax.

About 85 per cent of foreign fund inflows last year were through the PN route. Authorities have suspected that a significant portion of it could be illegal wealth that was originally taken out of India. The RBI figures for 2004-05 reveal that Mauritius based entities accounted for $820 million of the total foreign direct investments of $2.32 billion. Mauritius has agreed to tighten up the tax residence rules for foreigners.

The 20 million-odd NRIs living around the world are believed to have a total annual income of $250 billion. About 200,000 NRIs living in the US are millionaires, and in Britain, there are several NRI billionaires and millionaires.

And like many expatriates from Asia, they save substantial amounts. Conservative estimates place the global NRI savings at $75 billion a year.

Indian banks, both private and public sector ones, have been eyeing these funds, hoping to get a large chunk of it. The NRI remittance business is one of the most competitive, and even international banks account for a major slice of the flow of funds.

But with interest rates in India having dipped, the NRIs are losing interest in traditional products like fixed deposits and savings accounts. About 15 years ago, banks were offering lucrative returns to the NRIs. In the case of a non-repatriable deposit, it was over 25 per cent per annum, while hard currency deposits fetched nearly 15 per cent.

Banks that are active in the NRI funds are now going all out to woo them with other products, including mutual funds, insurance policies, and capital market products. These three segments of the Indian financial services sector are doing extremely well, with brisk, double-digit growth rates.

Mutual fund assets in India have soared by 60 per cent over the past 12 months. The Association of Mutual Funds in India says assets under management now add up to $76.5 billion. There are 30 mutual funds in India, but 15 other asset management companies have sought approval to float funds.

Similarly, the life insurance industry has seen an amazing 162 per cent growth in premium income. Not surprising then that several other international players, besides a dozen Indian banks, are eager to enter the buoyant sector.

There was just one life insurance company – the government-owned Life Insurance Corporation (LIC) – before the industry was opened up in 2000. Today, there are 16 (including the big daddy of them all, the LIC), yet India remains one of the most under-insured countries in the world.

The overseas Indians today dabble in the stock markets, invest in mutual funds, and even buy insurance policies. Bank deposits may have lost their charm, thanks to lower interest rates, but the booming financial services sector in India continues to offer them ample opportunities to make a killing.

http://www.dawn.com/2006/12/18/ebr8.htm

 

[Neo]

Indian economy grows 9.1pc in half year

NEW DELHI: India’s economy grew 9.1 per cent in the first half of the financial year to September led by strong manufacturing growth, the government said on Tuesday.

“An important and favourable development in recent times is the growing sign of an industrial resurgence, particularly in manufacturing,” junior finance minister SS Palanimanickam told parliament while presenting a mid-year economic review. Industry recorded growth of 10.9 per cent during April to September, while services grew at 10.7 per cent.

The telecommunications sector saw an annual average growth of 27.1 per cent from 2000 to 2005, according to the review figures. Last month, official data showed that the economy grew a higher-than-expected 9.2 per cent in the second quarter to September, prompting the central bank to tighten monetary policy in December.

Prime Minister Manmohan Singh has set a target of nine per cent annual growth. Lifting annual growth to nine per cent from eight per cent over the next five years was “ambitious but feasible”, Singh said on December 9.

http://www.thenews.com.pk/daily_detail.asp?id=36185

 

[Neo]

Thursday, December 21, 2006

US asks India to adopt bold economic reforms

* Lavin calls for opening of India’s retail sector to foreign retailers

WASHINGTON: The United States asked India on Tuesday to adopt sweeping reforms, including lifting ownership caps and reducing high tariff rates, to draw foreign investments and fuel rapid growth in the world’s second most populous nation.

The call came as the two countries braced for a new era of investment and trade ties capped on Monday by US President George W Bush’s signing into law of a landmark bill for Washington to transfer nuclear fuel and technology to India.

Although India in recent years has embraced reforms which have helped fuel the country’s current rapid economic growth, “significant challenges” exist, US Under Secretary of Commerce Franklin Lavin said, suggesting key reforms. He called for the opening of India’s retail sector to foreign multi-brand retailers, saying it would allow Indian consumers access to the “best products at the lowest prices” and improve supply chain efficiencies in the country.

“Despite recent news stories about cracks in the dam on retail access, the fact is that barriers remain,” he said, apparently referring to American retailer Wal-Mart’s penetration of the Indian retail market through a local partnership.

Lavin, in charge of the US Commerce Department’s international trade portfolio, also suggested that India eliminate foreign equity caps in the financial services, banking and insurance sectors. “Right now, investment caps are very low,” he said, citing particularly the 26 percent equity limit in the insurance sector which prohibited foreign firms from participating in the lucrative pensions sector.

Lavin, who just returned after leading the largest US trade mission to India, said that India should realise that long term funding provided by insurance companies could help pay for much-needed infrastructure development. He also urged India to bring down its “high” tariffs and formulate laws that protected patents and copyrights, and sought joint ventures for open access to foreign broadcasting and cable TV.

As India entered its fourth year of booming economic growth, Lavin asked whether the government would continue with long-term reforms. “It will be very easy for anybody in leadership position looking at eight, nine, 10 percent growth numbers to say, ‘we’ve broken the code, we have done it, its not a bad bit of work,” he said.

“Will these reforms continue or will India pull back? I think it’s somewhat an open question what the long term prospects for reforms are. It’s a question that can be answered by the Indian people and government.”

Comparing with business-friendly Singapore, Lavin said India had immense potential to draw investments if it pursued reforms.

Overall, as of 2005, India received 45 billion dollars in foreign direct investment with eight billion dollars from the US compared with Singapore’s 186 billion dollars in foreign direct investment with 48 billion dollars from the US, he said.

Lavin then compared India’s average tariff on industrial goods of 12.5 percent to four percent of the US, saying “India’s tariffs are still high”.

Some 258 American executives from 200 companies participated in the one-week trade mission to six Indian cities. They included 14 US civilian nuclear companies eyeing 100 billion dollars worth of opportunities that could arise from the bilateral civilian nuclear deal.

http://www.dailytimes.com.pk/default.asp?page=2006\12\21\story_21-12-2006_pg7_20

 

[Neo]

India’s economy to boom in ’07 with slow demand

MUMBAI, Dec 23: India's economy will continue to boom in 2007 but analysts say demand will slow as its central bank hikes interest rates to curtail consumer spending and higher prices.

India's one-billion-plus population are buying more cars, phones, homes and goods than ever before and its companies have expanded quickly to meet demand domestically and to tap overseas business through acquisitions.

But the pace of domestic demand has surprised the government and the central bank, which have moved quickly to quell a rise in the general level of prices caused in part by higher food and raw material costs.

“We think that economic growth will slow next fiscal year to 7.8 per cent from an expected 8.2 per cent this year,” said economist Shuchita Mehta at JP Morgan in Mumbai.

“The economy will still show healthy growth, but the Reserve Bank and government cannot allow prices to rise too quickly and will act aggressively to halt inflation.” A recent forecast by brokerage Merrill Lynch in India said wholesale price inflation, the most widely watched measure, will cross six per cent in January from around 5.16pc currently, mainly as goods and food prices rise.

“This is due to inflationary pressures arising from higher prices of manufactured goods in a rapidly expanding economy as well as supply-side constraints on primary articles such as wheat,” Merrill Lynch said.

In November, the government cut gasoline and diesel prices and eased import rules for wheat to slow inflation.

But Finance Minister P. Chidambaram said this week that it was too soon to say whether inflationary expectations have come down and that more action may be needed.

As a result, Merrill Lynch and JP Morgan expect the Reserve Bank to hike its reverse repo rate by a quarter percentage point to 6.25 per cent in its next policy review in January.

In early December the central bank, in a surprise move, hiked the amount of cash banks must set aside as reserve by half a percentage point to 5.50 per cent to reduce the amount of money available for new loans.

Since the start of 2006, the central bank has raised its repo rate, the rate at which it lends to banks, by one percentage point to six percent. The reverse repo rate, or the rate at which it lends to commercial banks, has been raised by 75 basis points to 7.25 percent.

The Indian economy grew 9.1 percent in the first half of the current fiscal year ended September and the central bank warned in October that there were signs of overheating and that basic food prices were rising too quickly.

“India may also be impacted by a slowdown in US growth rates though some of this will be offset if the government follows through with plans to spend more on infrastructure, health and education,” said economist Bidasha Ganguly with BRICS Securities.

Merrill Lynch estimated that Indian companies and the government will spend 109 billion dollars on new infrastructure projects in the three years ending March 2009, which will offset any global economic slowdown or any shortfall in farm output.

“The emphasis on infrastructure is helping to reduce India's dependence on agriculture, which still accounts for a fifth of gross domestic product,”Merrill Lynch said.

But JP Morgan's Mehta said that the government may need to spend more than budgeted because social indicators in India -- health, education and employment -- remain a major concern with nearly 300 million people living on less than a dollar a day.

http://www.dawn.com/2006/12/24/ebr18.htm

 

[Owais]

India to hunt oil at Brahmaputra riverbed

MUMBAI: Oil India Limited (OIL) will launch a major exploration project for oil hunt on the Brahmaputra riverbed early next year.

As part of its hunt for new oilfields after a gradual fall in output, the government owned oil major was preparing to conduct a seismic survey in the Brahmaputra. The oil giant has engaged a Kazakh firm to carry out seismic survey of a 175-kilometer long patch of the Brahmaputra riverbed.

The two companies have inked a memorandum of understanding for 22 million dollar survey.

The move being opposed by environmentalists, and local organisations on the ground that it would have an adverse impact on the ecology and pose a threat to Gangetic dolphins.

 

[Contrarian]

Sensex rises 237 pts on upbeat IT stocks

MUMBAI: Riding the bullish sentiment in software stocks ahead of their quarterly results, the sensex rallied 237 points (1.8%) to end at 13,708. But a major part of the rally came in the later part of the session, amidst low volumes, brokers and dealers pointed out.

This also gives rise to the belief among market players that it was mostly speculators who, in the absence of institutional players during the current holiday season, pulled the index up. This, in effect, could also mean that the rally might not sustain for long.

Even provisional trading figures by foreign institutional investors (FIIs) showed a Rs 210 crore net outflow from
Indian bourses for Tuesday. ''It's also possible that some fund managers bought just to prop up their year-end NAVs,'' said the head of a local brokerage.

For the remaining days of the week, market players expect a volatile market, combined with low volumes because most of the foreign fund managers are not participating in the market in the current holiday season.

Among the sensex gainers, Wipro ended over 4% higher at Rs 597 while TCS ended 3.4% higher at Rs 1,190. As a result, BSE's IT Index ended 2.8% higher. Among the non-IT scrips, Tata Motors, ITC, ONGC, SBI and NTPC ended at least 2% higher to support the day's rally. The day's session also added about Rs 57,000 crore to investors' wealth with BSE's market capitalisation now at Rs 35.5 lakh crore.

There were 1,652 gainers compared to 954 losers. However, the day's turnover, at Rs 3,073 crore, was way off the
current month's average daily turnover of Rs 4,332 crore.

The rally in software counters also lifted stocks from other sectors. While the banking and FMCG indices both ended 1.8% higher, the midcap index ended nearly 1% higher and smallcap index finished 1.25% up on the day.

In forex market, rupee rose to its six-week high against the dollar although there were talks of RBI intervention to stop the appreciation of the local currency. During the day, faced with some unexpected crunch of rupee funds, banks sold dollar for rupee. As a result, the greenback slid to settle at 44.44, weaker by 12 paise from Friday's close at 44.56.

 

[Contrarian]

Airbus in talks with HAL for JV

NEW DELHI: The rush to float new aircraft repair facilities in India is getting thicker. European aircraft maker Airbus Industrie is in talks with state-owned Hindustan Aeronautics Ltd (HAL) to set up a maintenance, repair and overhaul (MRO) facility for aircraft airframes.

And, Airports Authority of India (AAI) has also initiated talks with Indian Airlines for setting up a similar facility in a JV at the existing Hyderabad airport.

"With the number of aircraft flying in the country rising, MROs for both engines and airframes are turning out to be a big business opportunities here. It's a $800 million and growing market, and companies are now rushing in to cash in on this potential demand," a source said.

Sources said Airbus is exploring avenues for an alliance with HAL as part of its couter-trade initiatives for winning the $2.2-billion Indian Airlines aircraft order. Airbus had also been in talks with Indian for a similar venture, and is now also looking at HAL as part of plans to have a more comprehensive alliance in the market. A final decision on the alliance partner will be made early next year.

"The decision to initiate talks with HAL doesn't mean that we have decided to tie-up with them. We have also held discussions with Indian. We hope to put everything together by early next year so as to make a formal announcement," Airbus India president Kiran Rao said.

Sources said even this venture is expected to based in south India with Bangalore being the most likely candidate as the current airport would offer huge tracts of land once commercial flights are shifted to the new airport next yearend.

Prior to this, the Ruias-promoted Essar group had also proposed to set up an aircraft MRO to tap the growing need for
aircraft maintenance and service.

The company has already shortlisted Thiruvananthapuram as the site for the facility, and proposes to establish it along with AAI. With this facility, Essar intends to also tap the demand from nearby markets like Gulf.

 

[Contrarian]

As demand for hotel room soars in India, prices skyrocket

MUMBAI: With its ultrachic restaurant and sweeping views of a 16th-century tomb, the Oberoi in New Delhi is a hotel of choice for the deal makers pouring into India.

But unless you planned your trip months ago, there is little chance of finding a vacancy. The 279 rooms and suites are fully booked almost every night until April at prices that start at $345 a night, breakfast not included.

Demand for hotel rooms is soaring in India as its economy blossoms. Foreigners are flooding in to cut deals, attend conferences or just discover the caves of Ajanta and the sands of Rajasthan. The rise of low-fare airlines is also bringing domestic air travel within reach of more Indians, who, until recently, had little chance of ever boarding a jet.

Yet for all those travelers, India offers 1,10,000 hotel rooms. China has 10 times as many, and the United States 40 times as many.

The New York metropolitan region alone has about as many rooms as all of India. The shortage is pushing peak season rates for basic rooms into stratosphere, by Indian standards, and attracting some of the world's best-known names in hotels Accor, Hilton, Wyndham, Pan Pacific to invest in India.

There's enormous potential here, said Dennis Oldfield, the general manager for the Indian branch of Accor, a French group with 4,100 hotels worldwide. Accor has plans for up to 200 hotels in India within a decade. Microsoft is using its own Live Meeting videoconferencing technology to cut down on business trips, said Ravi Venkatesan, chairman of Microsoft India.

In Bangalore, rooms are so costly that traveling sales people and other professionals often commute by air from as far as Mumbai, 620 miles away. "They are making you fly to Bangalore every day in the morning and fly back every night because its cheaper than paying the hotel bill," said Saurabh Gupta, an analyst in the Indian office of HVS International, a hospitality industry consulting firm.

Infosys has built its own 500-room hotel next to its headquarters in Bangalore. By June, it expects to have 15,000 company-owned rooms across India nearly an eighth as many rooms as the entire country has, and more than any Indian hotel chain.

Putting an employee up for a night at its Bangalore campus hotel costs Infosys $15, and the guest gets three-star treatment that would normally cost $150, by the company's estimate. It's much more efficient in India to do it yourself, said TV Mohandas Pai, HR director at Infosys.

And even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai.

Some executives blame government for sticking to decades-old laws that limit the amount of land for sale and drive up prices. Because of the Indian real estate boom, land is so expensive that the Taj group of hotels, a chain with 7,000 rooms, has found that the reserve price at land auctions makes building a hotel not financially viable, said Ajoy Misra, the group's sales and marketing chief.

Amitabh Kant, a senior official in the tourism ministry, said $6.5 billion was being invested in hotel-building, and 1,40,000 new hotel rooms were expected by 2010. More conservative assessments put the figure at 70,000. Hilton has won approvals for 75 new hotels in India by 2010, Kant said. Ramada Hotels recently announced a partnership with Royal Orchid to build four and five-star properties nationwide.

 

[Contrarian]

Nath upbeat about FDI inflow

NEW DELHI: While the fate of his latest stab at prising open the retail sector for FDI is not known, commerce minster Kamal Nath is quite upbeat about the growing FDI volumes. FDI inflows during October stood at $1.7 billion compared with $0.4 billion in October 2005, marking a 312% rise.

Indeed, FDI inflows have shown consistent growth in the April-Ocotber period of the current fiscal, equity inflows reaching $6.1 billion against $2.6 billion last fiscal. This marks a 134% growth against 60% growth recorded last fiscal.

The ministry is confident that FDI inflows by way of equity during the current fiscal will cross $11 billion, or double the $5.5 billion last year. Once the re-invested earnings of foreign firms already present here are also taken into account, which is a global practice, total FDI inflows in the current fiscal could reach as high as $14 billion against $7.7 billion last year.

 

[Contrarian]

Software testing becomes domain specific

BANGALORE: What began as another way to improve bottomlines has now become a key differenciator for Indian IT firms. Software testing has come of age even as several firms have begun to offer this as their main line of business. Gone are the days when this service offering came bundled along with others. Analysts have already placed their bets on this offering.

If ThinkSoft specialises in testing for banking sector, Sasken and Wirpo rule the roost in telecom. Infact, Wipro was one of the first to go all out and offer this service nearly five years ago. On the other hand, a company like RelQ was founded only to do testing. Today, it is not about giving testing work to a Tier I vendor, instead, domain specialisation within testing is the buzzword.

Going by the increasing amount of work that is coming India's way, it is estimated that the country needs 16,000-18,000 testers. High volumes of work that comes to Bangalore is the reason why some believe that this city alone needs another 8,000-10,000 testers now.

"Today, there are clients who do not prefer to give testing and coding work to same vendor. Testing is about domain specialisation," says Avinash Vashistha, CEO, Tholons, an investment and global services advisory firm.

For the second quarter, testing contributed 6.8% of Infy's revenues, while it already contributes 10% to Wipro's global revenues and is growing at 60-70% year-on-year. With over 5,000 people, Wipro prides itself in being able to test practically anything that is remotely connected to telecom.

"Whether it is the point-of-sale terminals for the retail sector or new software that gets released often in the cell phone industry, we are at a point where we can choose our own framework to apply our testing capability to any vertical," added Suresh Vaswani, president, Wipro Infotech.

iGate Global Solutions recently opened a Centre of Excellence for independent verification and validation within their Whitefield campus in Bangalore. The fact here is that this company chose to talk about testing only after it realised that this service offering had grown in stature within a short time span. This announcement came when the testing facility at iGate was over 300-strong. This company is all set to add nearly $10 million to the topline during this fiscal.

''It is purely for our large enterprise customers and product clients. The cost of fixing problems in software after launch is very high. Therefore customers now prefer end-to-end testing rather than specifics,'' adds Mohan Sekhar, chief delivery officer at iGate.

 

[Contrarian]

It's revival time for Indian cement firms

BANGALORE: After a gap of almost 10 years, Indian cement companies are in acapacity expansion mode. Close to 54 million tonnes of additional capacity is on cards, which translates into an investment of around Rs 21,600 crore.

With rapid rise in real estate activities and more offtake for infrastrcuture projects, cement companies are back to drawing board to chart strategies to hike capacities. Reports show, 37 million tonnes (mt) of clinker capacity is likely to be added in 2007-2010. In terms of cement it will be 54 mt.

Indian companies are now ordering cement equipment after a gap of almost 10 years. Cement capacities all over the world have been built largely by four equipment suppliers — three German and one Chinese. It is learnt that orders from Indian companies are last in the global queue. "We note that at end CY-05, order book of equipment suppliers (globally) was 86 million tonnes with approximately 2.7 years as lead time. Hence, barring a few large cement players, we highlight risks of late commissioning particularly for smaller companies," a Deutsche Bank report said.

This indicates that smaller companies may not be able to cash in on the boom, which is expected to sweep the Indian cement industry over the next two-three years.

"Almost all companies have announced expansion plans. Some of the smaller ones have also been bitten by the cement flavour. It remains to be seen how much of the announced capacity hikes will actually hit the market," officials at India Cements Ltd, (ICL) said. In fact, ICL is taking its capacity from the present 9 mt to 11 mt. "For last two years, we did not expand capacities due to financial constraints, but now we are going all out," an official pointed out.

According to information, close to 5.1 mt will be added by second half of FY-07, while 11.46 mt will be added in FY-08. Around 28.90 mt is likely to be added in FY-09 and 2.87 mt in FY-10. Majority of the new capacities are lined up for North India which is likely to add 25.50 mt. South will increase by 15.73 mt, while East will ads 9.51 mt and West one mt.

"One issue which could make expansion tough is availability of coal. Today, power plants are finding it difficult to get coal, I can't understand how cement companies would get coal linkages. The option of importing is there, but that would mean a cost overrun," industry sources said. Grasim is lining up 12.24 mt capacity, equally split between Kothputali (Rajastan), Aditya (Rajastan) and East India. J P Associates is seen adding 4.55 mt in North India, while Madras Cements will add 1.72 mt each in Jayanthipuram and Alathiyur. Ultratech plans 4.08 mt addition by FY-09.

 

[Neo]

Bharti to invest $7bn in deal with Wal-Mart

NEW DELHI: India’s Bharti Enterprises, which tied up with Wal-Mart to start a nationwide chain of retail stores, said it will invest about $7.0 billion in the project by 2010, a report said.

The group, which owns the country’s top private phone firm, said it will set up 200 large stores and hundreds of smaller ones to cater to the increasingly affluent Indian middle class, estimated to be made up of 300 million people. “Depending on what we do in real estate and logistics, we will invest around seven billion dollars by 2010,” Sunil Mittal, chairman of the group, told the Business Standard newspaper. Mittal told the newspaper that the group’s realty company will identify property for the venture, from which he expected to earn one to two billion dollars in the same period.

Last month the group tied up with Wal-Mart, the world’s largest retailer, to open stores that would be owned by Bharti and run under a Wal-Mart franchise. India does not allow foreign investment in retail except for single-brand stores such as Nokia or Nike.

Other foreign groups such as Wal-Mart have to sign franchise deals with local companies to enter the Indian market. The newspaper report said that the front-end stores would bear the Bharti name, but talks were on to include the Wal-Mart brand as well. Organised retailing makes up only three to five per cent of India’s retail business, with the rest dominated by nearly 15 million traditional mom-and-pop stores.

Earlier this year, India’s biggest private firm Reliance started opening a chain of supermarkets as part of a multi-billion-dollar retail rollout.

The company said it aims to have 4,000 stores by 2011, with an annual sales target of $25 billion. Other major Indian business houses such as the Tata group and the Aditya Birla Group are also moving into the sector, which has annual turnover of about $300 billion. That figure is expected to double by 2015.

http://www.thenews.com.pk/daily_detail.asp?id=37072

 

[Neo]

India’s cotton output seen at record 25m bales

NEW DELHI: India’s cotton output is likely to notch a record 25 million bales in the crop year to September 2007, with growing use of genetically modified cotton, industry officials said on Thursday.

Last season, the output was 24.4 million bales, which was also a record crop.

Industry officials said though the area under cotton cultivation was virtually the same in the last two years at 8.9 million hectares, farmers were able to reap bumper harvests with the use of the new variety of cotton.

Out of 8.9 million hectares, about 30 per cent of the area was under bacillus thuringiensis or Bt Cotton, they said.

“We are not only looking forward to yet another bountiful crop this year, we also expect to replicate last year’s export performance,” Chandrima Chatterjee of the Confederation of Indian Textiles Industry, told Reuters.

India traditionally exports cotton to China and Africa.

The country’s share in global cotton output is 16 per cent despite having 25 per cent of the world’s total area under cotton cultivation, trade officials say.

In the last crop year ended September 2006, exports achieved a record 4.7 million bales.

“We believe production will keep rising over the next couple of years as demand is robust and the use of genetically modified cotton has caught up,” said a senior official of the Cotton Advisory Board, a government association which assists growers and processors.

The official said farmers were buying more and more of genetically modified cotton seeds due to a rise in yields.

“It is generally believed that 15 per cent of the cultivated area is under BT Cotton, we believe it is actually as high as 30 per cent as a lot of use is unaccounted for,” the official said.

Western states of Gujarat and Maharashtra and southern state of Andhra Pradesh account for the bulk of India’s cotton output.

Chatterjee said domestic cotton consumption in the last crop year was 21.7 million bales and was likely to rise 4-5 per cent this year on higher demand from textile mills.

Textiles Minister Shankar Sinh Vaghela early this month said the country’s textiles exports were expected to touch $21-22 billion in the financial year ending March 2007, compared to $17 billion in the previous year.

http://www.thenews.com.pk/daily_detail.asp?id=37186

 

[Contrarian]

Govt mulls another international airport

GANDHINAGAR: The chief ministers office (CMO) is considering having a new privately built and operated international airport, on the lines of Singapore's Changi airport, preferably between Ahmedabad and Dholera.

The project is likely to be a greenfield and may cost around Rs 8,000 crore on 4,000 hectares of land. A senior official said the government has been considering having an international airport within 150 kilometres of Ahmedabad.

Mehmedabad, on Ahmedabad's eastern periphery, and Dholera and Sanand on the west were being considered for the project.

Chief minister Narendra Modi's adviser SK Shelat told ToI, "Of the various proposals being considered, the one near Dholera has an obvious advantage, considering its proximity to the proposed private port nearby."

Sources said the airport could be built on a build-operate-transfer (BOT) basis.

Significantly, though there was some talk about having an international airport between Dholera and Ahmedabad early this year, it could not find favour with the Airport Authority of India (AAI).

The AAI decided, instead, in July 2006 to develop and expand the present airport in Ahmedabad by building a new terminal at the cost of Rs 291 crore, for which Gujarat government agreed to buy 67 acre of land for it. The state even decided to drop its decision to formally approach AAI for a new proposal.

However, the state officials have now come around to the view that the possibility of expanding at the present site is very limited.

The reason is that the area is too congested, with huge slums and small industrial establishments dotting the area around the present airport at Chharanagar and Naroda in Ahmedabad.

"It is next to impossible to free this area for developing a new airport with all the modern facilities required in five to seven years from now," a senior bureaucrat said.

The Gujarat Maritime Board (GMB) is in favour of having an international airport between Ahmedabad and Dholera. GMB CEO HK Dash said, "An airport at new site will boost our proposal to have a new private port at Dholera in Gulf of Khambhat."

The Gujarat Industrial Development Board is soon likely to be asked to prepare a pre-feasibility study for the new proposal to have a privately-driven airport between Ahmedabad and Dholera.

 

[Contrarian]

ONGC set for a mega gas find

NEW DELHI: There's a new-found swagger in the gait of executives working for ONGC.

After years of poor oilhunting record, the company sees its fortunes turning and feels confident of making the "grandmother of all" discoveries which will allow it to supply half the country's gas needs from a single find by 2011-12.

Along with its existing gas fields, this will make ONGC the country's single biggest gas producer.

Executives say by present indications, the company will be able to supply 50 mcmd (million cubic meters per day) of gas, more than half of 90 mcmd present consumption, from the "big one" — identified as UD-1 in block KG/DWN/98/2 acquired from Cairn energy 150 km off the Andhra coast.

Diagonally up and further to the right from this strike, the company made another discovery 33 km from the Orissa coast and found oil in Assam, both of which were first reported by TOI.

"This is nothing. If the indications that we are getting are anything to go by, we are on to something terrific. It will beat every other find so far," one executive said. The reference is to two more blocks that cover the gap between the gas strikes off the Andhra and Orissa coasts.

Geological data show the same kind of gas-bearing formations stretching throughout area. There are bigger possibilities in the present find itself.

Gas is trapped in channels between layers of sand and stone which form a maze one above the other. The big strike has been made at a depth of 5,243 metres below the seabed with an 28-metre-thick gas layer.