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Are you sure?? Cool man....IT is proving to be more resilient than I expected!

The Nasscom-McKinsey Report 2005 stated that Indian IT export would garner $60 bln by 2010. There is absolutely no reason why IT exports cannot grow by 22% in dollar terms although the cash earnings have taken a beating due to rise in rupee value but that would have no effect on dollar earnings.

Here is the link

NASSCOM-Mckinsey Report 2005

"Our research suggests that the total addressable market for global offshoring is approximately $300 billion, of which $110 billion will be offshored by 2010. India has the potential to capture more than 50 per cent of this opportunity and generate export revenues of approximately $60 billion by growing at 25 per cent year-on-year till 2010."
 
With strong Rupee, exporters see a win-win situation
Tuesday February 12 2008 00:10 IST
K S NARAYANAN

NEW DELHI: Assocham had revealed that strong rupee will bring in rich dividends for India Inc in the long run. In a study titled `Impact of rupee appreciation of India's exports vis-à-vis economy', Assocham pointed out that profit margins would be between 12-15 per cent in the long run as exporters are bringing in new technologies with cheaper imports for expanding their existing capacities.

“The balanced view of rupee getting stronger is that it has already reduced costs of imports and encouraged domestic manufacturing with technological upgradation. As a result, capacity expansions of India Inc are moving on faster speed which will make exports much more competitive for developing economies,” said Assocham President Venugopal N Dhoot.

“The sectors that are likely to gain with rupee becoming stronger include petro and petro products by 77.18 per cent, engineering goods (21.55 pc), gems and jewellery (92.44 pc), drugs and pharmaceuticals (19.41 pc) as these have imported inputs,” Dhoot observed.

Dhoot said the major impact of rupee appreciation so far has been on agro and food processing (11.73 pc), auto and auto components (13.54 pc), leather and leather products (15.66 pc), cotton textiles (3 pc), and apparel sector (10.11 pc).

The other sectors on which rupee appreciation so far had moderate impact included drugs & pharmaceuticals with 91.4 per cent imported inputs and engineering goods that had 21.55 per cent imported inputs.

The Assocham paper holds the view that if companies are able to expand, their capacities in the rupee appreciating scenario, they would in the long run, definitely be in a win-win situation because demand or Indian products in developed countries is not going to slow down. India Inc would be able to export more at very competitive prices as a result of capacity building through technological advancement and increase its margins by 10-15 per cent.
 
Would you buy a $22,000 diesel pickup from India's Mahindra?
Feb 12 12:24 PM
by Rory Jurnecka

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Indian automaker Mahindra & Mahindra Ltd has big plans to break the U.S. market, and plans to introduce a two- and four-door pickup stateside by summer 2009. We've reported on Mahindra's goals before, but recent reports from pickuptruck.com and Automotive News fill in a few details we didn't have previously.

The pickup, dubbed Appalachian and said to be comparable in size to a Toyota Tacoma, will be powered by a Bosch-developed 2.2-liter four-cylinder diesel engine making around 145 horsepower and 300 lb-ft of torque, although final performance numbers have not been released. We're a little concerned about using this engine stateside, as it is based on Bosch diesel technology that is untested in the U.S., and it has yet to pass Bin 5 diesel emissions standards and therefore cannot be sold in eight states (inlcuding California and New York).

Mahindra says the truck will be available in two- or four-wheel drive, come standard with a paddle-shift six-speed automatic transmission, and feature a U.S.-designed interior. Fuel economy is said to be in the 30 to 35 mpg range, while the Appalachian's 7.5-foot cargo box will have a payload capacity of about 1.3 tons (2,600 lbs). It will be based on the Scorpio SUV, a vehicle that currently sells in India and is similar to a Ford Explorer dimension-wise.

Mahindra has also announced that a diesel hybrid powertrain is also slated for the same pickup truck in 2010. Should the truck proceed according to schedule, it could be the first diesel-hybrid pickup to be sold in the U.S. The diesel-hybrid version is likely to cost "several thousand more" than the diesel-only Appalachian. Plans are also underway to bring the Scorpio SUV and potentially a crossover to the global market as well.

Approximately 300 dealers have reportedly been enlisted to sell Mahindra Appalachians if they get to our shores, and an initial production date of March 15, 2009 has reportedly been set -- though with no emissions or crash testing underway, that seems a little optimistic. Final assembly of the Appalachian will be conducted in Ohio to avoid 25-percent federal import tariffs, but despite that cost-saving measure, the base price of the Appalachian will reside around $22,000 according to Global Vehicles, the U.S. importer for Mahindra.

Global says that the Appalachian represents a truck costing twice as much, but that remains to be seen. In any case, will an Indian-built pickup truck ever crack the U.S. market? From where we stand, the Appalachian may offer a multi-thousand dollar savings in the mid-size truck segment, but will serious buyers care? Just how much of a value does Mahindra have to offer the Appalachian at for buyers to care?
 
India Feeling Growing Pains
Oxford Analytica
FORBES, NY
02.12.08, 6:00 AM ET

Indian power producer Reliance Power's $3 billion initial public offering last month was India's largest, but market sentiment has since fallen. The Bombay Stock Exchange closed down around 5% Monday to its lowest level in weeks. Volatile market conditions have coincided with a slowdown in growth, as questions are raised about the effect of global economic problems.

Prior to the annual budget, to be read Feb. 29, the government last week estimated that gross domestic product growth in fiscal 2007-08 (ending in March) will slow to 8.7%. The decline, from 9.6% in 2006-07, was particularly sharp in the second half. Growth was 9.2% in the first quarter and 8.9% in the second.

Credit conditions. The main brunt of the slowdown has been borne by consumer goods manufacturing, where growth has halved to 5.2% in the last few months. Certain industries, especially in durables, have posted negative growth. The consumer-goods manufacturing problems reflect an awkward combination of inflationary and currency pressures, which have led to higher interest rates and weakening international competitiveness.

Despite government efforts to cushion them, food and energy prices have been on an upward spiral. Also, greatly increased foreign currency inflows have threatened to leak into the domestic economy. As a result, the Reserve Bank of India has been steadily tightening credit markets since July, with noticeable effects on interest rates and consumption.

A second difficulty has come from the depreciation of the dollar against the rupee. The latter has risen in value by 14% over the last year, squeezing export earnings. The dollar volume of Indian exports has kept up reasonably well, posting a 16% increase in the third quarter of 2007-08. However, in rupee terms, this represents growth of just 2%.

Slowdown impact. The decline in performance from the consumer goods sector poses problems in two other respects:

--In the last three years, it has played a key role expanding employment and reversing a situation--characteristic of the early phases of "liberalization"--marked by "jobless growth."

--Its expansion has helped boost revenues by promoting collections of indirect taxes.

Brighter spots. Nonetheless, the broad outlook for the economy remains reasonably optimistic:

--The industrial sector provides only 25% of total GDP, and, within it, consumer goods manufacturing is responsible for barely half of output.

--Capital goods and core sector industries have been enjoying a boom led by a rapidly rising rate of investment.

--Since 2003-04, the rate of investment has risen from 28% to 36.3% of GDP--with the development of expansive infrastructure programs in transport, power and telecommunications.

--A number of capital goods industries are expected to post growth rates of 20% in 2007-08--helping sustain the overall industrial growth rate at a respectable 9.7%, compared with 10.9% in 2006-07.
 
Indian industry solid but strong rupee risk for exports - Moody's Economy.com
02.12.08, 5:33 AM ET

MUMBAI (Thomson Financial) - Moody's Economy.com said while a rebound in India's production growth suggests that the industrial sector remains in a solid shape despite recent slowdown in trade, the strong rupee remains a risk to the country's export sector.

The ratings agency said India's industrial output was up 7.6 pct year-on-year in December, following a growth of 5.1 pct in the previous month, adding manufacturing growth in the final month of 2007 came in stronger than what the ratings agency had expected.

Moody's (nyse: MCO - news - people ) Economy.com noted that solid production activity will continue to fuel economic expansion in India. For the nine months to December, India's industrial production rose 9 pct compared to the same period last year.

However, a further slowdown in trade will have a downside impact on the emerging economy's industrial production, the ratings agency cautioned. Weaker US consumption will lead to a fall in external demand for Indian products which will subsequently weigh on manufacturing growth, Moody's Economy.com noted.

If trade between India and China improves, the countries will better withstand a potential US-led global economic downturn, the release added.
 
Real Estate Spearheads Indian Economy
Developments in the Indian real estate sector symbolize the changing face of nation.

George Gonigal
Feb 12, 2008 05:49:51

(PRLog.Org) – Feb 12, 2008 – Developments in the Indian real estate sector symbolize the changing face of nation and it is a reflection of the growth in the Indian economy brought about by high rates of GDP and also by India's integration with the global economy, said Kamal Nath, Union Minister of Commerce and Industry. He was speaking at the "National Convention 'NATCON 2008': Real Estate for All" organised by the Confederation of Real Estate Developer's Association of India (CREDAI). He also stated that in the recent years, services sector, real estate sector in particular, has been the main driving engine of Indian economy's growth.

"With the economy on an upswing, the emphasis and requirement today is on creating international standard infrastructure and residential real estate to sustain the growth rate projected in the 11th Five Year Plan. The real estate sector in India has the capacity to manage growth by itself without straining Government resources," he stated. The Minister further stated that we have already opened construction development sector for FDI and the policy permits wholly owned subsidiary in this sector in India by a foreign company. "Of course, there are conditions regarding minimum area for real estate development and minimum capitalization to be brought in by the foreign investor. A number of global players have entered the Indian market and many more have shown interest. Growth and investment have also created opportunities for investment in real estate sector, he said.

"While the role of the Government is expected to be primarily as a facilitator to the development process, the private sector participation is aimed at bringing technical and managerial expertise in delivering good quality mass housing projects. It is a good sign that many State governments are joining hands with private entrepreneurs in resolving the acute scarcity of residential real estate in urban areas. The private sector and Government has to work in tandem towards a common goal. It is equally important to address the institutional and regulatory aspects as well as strengthen and expand the capacity of financing institutions for further growth of the sector," Nath said.
 
Memo from India
by Roger Cranville, Pittsburgh Regional Alliance
Pittsburgh Business Times
Tuesday, February 12, 2008

A delegation from the Pittsburgh regional business, civic and economic development community has embarked on a weeklong business trade mission to India organized by the Pittsburgh Regional Alliance, an affiliate of the Allegheny Conference on Community Development. While in India, PRA Senior Vice President of Global Marketing Roger Cranville is writing this mission diary for the Pittsburgh Business Times.

This dispatch was filed Monday, February 11, 2008.

Today was the delegation's first day of business. Four hours of meetings were surrounded by five hours of travel to cover about 50 miles. The congestion and chaos on Bangalore's overcrowded roads, which are too narrow for the high volume of bicycle, motorbike, car and truck traffic, is amazing.

Both meetings today confirmed that the infrastructure was creaking under the vibrancy of the economic boom in India. From the layman's point of view, old and young, rich and poor, and others seem to have a sense of urgency about them. The roads and the people are immensely busy. The vibrancy is contagious. More than half - about 60 percent of the 1.1 million Indian population - is under 30. Eight million motorcycles hit the Indian highways each year; 1.7 million of those are Honda Heroes made in India.

From the economist's perspective, there's no wonder it's so vibrant. From 1950 to 1991, the Indian economy grew at 3 percent per year on average. Since then, it has been zooming along at plus 8 percent to 10 percent every year.

In the mid-1990s, Kennametal India Limited (KIL) acquired WIDIA and took advantage of the 1991 foreign investment liberalization in India. Slogan wise, KIL reckons to be "making the tools that shape the world" or "engineering your competitive edge." It's been a good day for slogans!

We received a very warm welcome from KIL's senior management team after the first 100-minute journey of the day. KIL is very successful in India and reaping the benefits of establishing early and riding the crest of the economic boom for their cutting tools. The auto market is strong for KIL and strong for India with a balance of homegrown and foreign auto manufacturers supplying the newly wealthy 300 million Indians (give or take 50 million). India is now the fifth-largest automaker in the world. In India, you start walking, and then you take the bus. Next you ride a bike without an engine, then a bike with an engine. After that, it's a modest car and then a less-modest car. There's not a Hummer in sight and very few gas-guzzlers, too.

KIL is looking forward to a boom in the aeronautics, construction (all that infrastructure) and mining sectors as the economy keeps on roaring. Pollution is nowhere near as bad as in China; legislation, regulation and enforcement are working in India, the largest democracy in the world.

The rule of law has been established over a century or two and India is a relatively safe place to work, live and play, said our KIL host. A publicly traded company in India, KIL has a beautiful campus in Bangalore and nine regional sales offices and service centers across the country, taking good care of clients.

Nearly 1,000 Indian employees contribute to KIL's $87 million in annual revenue, predicted to grow in this fiscal year to around $100 million. With 50 percent of that revenue from automotive alone and new markets for KIL's products also revving up, the atmosphere on the KIL campus is almost as vibrant as the road outside.

Nearly two hours later, after hitting the road, we reach iGate and the iGate campus, with more than 3,000 employees, all of whom look way too young to be driving one of the most successful IT service companies in India. We heard a similarly optimistic view of India from two of iGate's senior executives.

"iGate Global Solutions enables clients to optimize their business through a combination of process investment strategies, technology leverage and business process outsourcing and provisioning," according to iGATE Corporation. The most impressive sight is the hustle and bustle on the university-style campus, of course, which seems to fit with the youthfulness of the iGate staff. And motivation does not seem to be a challenge

We missed by just a few minutes the Monday morning iGate band that played to welcome the new iGate recruits for the week. Veteran employees also enjoy the free music between their stints of software development or maintenance, remote management of IT services, or process outsourcing. Camp(us) iGate is one heck of a place!

An insightful day concluded with the obligatory one-hour journey to cover 10 miles.

Consensus on the day was that India's assets include its highly skilled and professional, English-speaking work force. Smaller companies are flourishing, professional services abound and intellectual property is well protected by the established legal structure.

What's more, India enjoys vibrant capital markets. The country's strengths include its large manufacturing capacity, a market of 300 million (and growing) consumers, and excellent communications and media availability. Among the challenges, India has some concerns that include infrastructure, regional imbalances of wealth, education and healthcare.

So what are the opportunities for Pittsburgh? Well, 300 million consumers for one thing; massive investment in infrastructure; and all the energy, environmental and green building technologies we can muster. And don't forget, India is now in the trillion-dollar GDP club. The pretenders to the U.S. economic prowess of the 1900s are not pretending anymore! Engage or watch?
 
Sistema to invest in India real estate, tech sectors

Wednesday, February 13, 2008

NEW DELHI: Russian services conglomerate Sistema is looking to invest in India’s telecoms, real estate, microelectronics, tourism and mass media sectors, the firm’s chief executive said on Tuesday.

It also plans to invest between $4 billion and $7 billion to expand its Indian telecoms unit Shyam Telelink, and will raise its stake in the firm within two years, Alexander Goncharuk told reporters at a conference in the Indian capital.

Sistema, whose key asset is Russia’s top mobile phone operator Mobile TeleSystems, purchased a 51 per cent stake in Shyam for $58.1 million in 2007. It has an option to raise that to 74 per cent, the maximum allowed under Indian law.

Shyam Telelink currently provided CDMA services in the western Indian state of Rajasthan, and in January received licences to offer services in the remaining 21 zones of the world’s fastest-growing telecoms market.

“India is a strategic market for Sistema. Besides telecoms and real estate, the next direction is high-tech,” Goncharuk said, referring to its microelectronics firm Sitronics. The firm will bring its real-estate business Sistema-Hals to India, and will look at opportunities around the national capital of New Delhi, Goncharuk said.

“We might have partners (for real estate), but we have not decided,” he said, adding that Sistema was open to acquiring firms to grow once it began operations. Goncharuk declined to say when Sistema would introduce to India the rest of its diversified portfolio, including Sitronics, saying the details would be announced later.

To fund its investments worldwide, the firm will borrow $10 billion, Chairman Vladimir Evtushenkov said. “It (the investment) will be in different fields,” he said, but declined to provide a breakdown.

Goncharuk said he was confident Sistema would be able to raise the amount despite turmoil in financial markets. The Sistema group, which has a market capitalisation of about $16 billion, includes Sitronics, Sistema-Hals, Moscow Bank for Reconstruction and Development, former Soviet travel agency Intourist and children’s goods retailer Detsky Mir.

But close to three-quarters of the $9.6 billion of revenue it earned in the first nine months of fiscal 2007 came from its telecoms units, which comprise MTS and fixed-line operators Comstar and MGTS.

Sistema to invest in India real estate, tech sectors
 
India’s industry output falls

1NEW DELHI, Feb 12: India’s industrial output grew by 7.6 per cent in December, far below last year’s double-digit expansion, data showed on Tuesday, as the finance minister called for easier credit to spur the economy.

The industrial growth in Asia’s third-largest economy was up from November’s revised figure of 5.1 per cent but sharply down from the 13.4 per cent expansion logged in December 2006, the official figures showed.Nine interest rate hikes since 2004 to tame inflation have slowed demand for consumer goods and dampened industrial growth.

“There has been a slowing down of credit growth” that has to “some extent affected the flow of credit in the housing and consumer durables sector,” Finance Minister P. Chidambaram said after meeting heads of state-run banks.

Chidambaram said he pressed state-run banks to focus on “credit delivery” to ensure enough loan funds for home-buyers and people who want to purchase consumer goods.

At the same time, he said banks should not ignore “credit quality,” mindful of the subprime debt crisis that has engulfed the United States.

India’s industry output falls -DAWN - Business; February 13, 2008
 
Booming Indian tech sector expects further growth
Tim Ferguson
ZDNet, UK
14 Feb 2008

The Indian technology industry is expected to generate around $64bn (£32bn) in revenues in 2008 — 33 percent growth — making a significant impact on the country's economy.

Services and software exports are expected to contribute around $41bn, with the domestic market generating more than $23bn, according to Indian technology industry body, Nasscom.

The Indian technology industry is aiming to hit total revenues for software and services of $75bn by 2010.

But Nasscom's 2008 Strategic Review shows the growth of the industry has had other benefits besides lining the pockets of India's mega-corporations.

As a proportion of national GDP the Indian technology sector will hit 5.5 percent in 2008, up from just 1.2 percent in 1998. It is also expected to contribute a net value to the economy of up to 3.9 percent.

The Nasscom study found the industry has also fuelled a 36 percent increase in direct exports and boosted direct employment by a compound annual growth rate of 26 percent over the past decade.

And, by the end of the 2008 financial year, almost two million Indian workers will be employed in the technology industry.

The industry has also contributed to an increase in consumer spending — for every rupee earned by the Indian technology-business process outsourcing (BPO) industry, an additional rupee is spent in the economy.

The influence of the sector on other parts of Indian life is also felt through contributions to community initiatives, human-resource development, education, health and empowerment in business.

The technology industry has also fuelled the growth of private-equity and venture-capitalism funding and spurred entrepreneurship.

Som Mittal, Nasscom's president, said the industry is on track to exceed its 2010 targets but still needs to resolve issues around talent, manpower and infrastructure.

Nasscom chairman Lakshmi Narayanan said the increase in revenues "reinforces the confidence of global corporations in India".

Narayanan, also vice-chairman of Cognizant, said the Indian IT-BPO industry is poised for broad-based growth, strengthening its position as "the primary sourcing location" for software, IT infrastructure and business process-related services.
 
Cyprus running the risk of missing out on India’s expected economic boom
By Stefanos Evripidou
Cyprus Mail
15 Feb 2008

A PENDING tax agreement between India and Cyprus could have an adverse affect on the island’s status as an international financial centre, jeopardising the investment of millions of euros in the fast emerging Indian economy, industry sources warned yesterday.

The two countries are currently in the process of signing a new double taxation treaty to replace the old one. As the saying goes, the devil is in the detail, and in this case foreign investors sitting on millions of dollars are keen to hear what the devil has to say.

The treaty has yet to be signed though reports in the Indian press suggest the agreement will favour the Indian tax authorities who wish to see capital gains tax levied against a Cypriot-based company or individual selling its shares in an Indian company.

The Finance Ministry yesterday was quick to point out that nothing had been signed yet.

“The whole agreement is under examination by the Legal Service. We didn’t sign anything yet, which means the 1994 tax agreement is still in place” said a ministry source.

The same official noted that India wanted to renegotiate its double taxation agreements with all countries, not just Cyprus. It is equally important for Cyprus as a financial centre to see what India does with countries competing with Cyprus for foreign investment, like the Netherlands and Mauritius.

Financial analysts warn that the treaty has the potential to derail Cyprus as a launching pad for investment in one of the world’s most booming economies.

“India, China, Russia and Brazil are the four major emerging economies, what we call ‘brick economies’. They are the up and coming superpowers of the world,” said one source in the auditing industry.

According to the financial analyst, Brazil is too far away historically and geographically for Cyprus to have a meaningful input in the country. Russia already plays a great role in the island’s economy through the many Cyprus-based companies investing in the ex-Soviet state, making Cyprus the third biggest investor in Russia. China has yet to attract a lot of foreign direct investment (FDI) as investors are still concerned about its controlled economy.

“The country that’s really hot in international structuring and attracting FDI right now is India. The current tax treaty we have with them is brilliant. Lots of people are saying India can become a second Russia for Cyprus,” he said.

According to another industry source, there is over one billion dollars currently either being invested through Cyprus into India or in the pipeline for investment. This investment could hang in the balance if the terms of the new tax treaty are seen as unfavourable to Cyprus-based investors.

A recent article in Indian paper ‘The Economic Times’ reported that the deal was almost done and that the exemption on capital gains tax would be done away with. The news was met with great concern within the finance industry.

At the same time, a report in the Mauritius L’Express on Tuesday stated that the Indian and Mauritius governments had decided not to amend their current tax treaty for the time being.

“The objective is to be a destination for investment in this emerging economy. People with investments in the pipeline are holding them back right now and waiting. If the Mauritius keeps its old tax treaty, I do not believe our government will accept that we would have to change ours. This would simply mean a shifting of investment into India through Mauritius rather than Cyprus. I believe the authorities will seek to negotiate more on this,” said the source.

The auditing analyst said that the preliminary agreement yet to be signed with India went against the model provisions of the Organisation for Economic Co-operation and Development (OECD).

“The OECD issued a model for double taxation agreements as a starting point. India wants Cyprus to deviate from the model in many areas, making provisions that are negative for Cyprus,” said the source.

“For example, having the right to charge capital gains tax goes against the OECD model. This means all gains in disposable shares can and will be taxed by India. Foreign investors setting up in Cyprus will be taxed when buying and selling shares in India. A lot of money could be channelled through Cyprus for these activities. Companies are already rethinking investments. It’s the potential that we’re missing out on.”

The source referred to other dealings with third countries that resulted in a more negative framework for investment abroad.

“We could have negotiated much better terms in the new tax agreement with Ukraine, like the Netherlands did. And what about being put on the Russian tax black list last year. We got it wrong big time there. If it continues like this, government action will slowly but surely destroy Cyprus as an international financial centre.”
 
India not ready to slow down
Malaysia Sun
Friday 15th February, 2008

Indian Planning Commission Deputy Chairman Montek Singh Ahluwalia, has said that any slowdown in the world economy would not have much impact on India.

At the annual general meeting of the Federation of Indian Chambers of Commerce and Industry, he said that any slowdown in the world economy would not slow the growth rate of India's economy by more than half a percent.

In the worst case, he said, the percentage could be one percent.

With a growth rate of 8-9 percent, Ahluwalia said, the Indian economy was on a stronger footing, but underlined the need of institutional development in the finance and agriculture sectors.

Ahluwalia said that agriculture would have an important role in the country's overall economic growth with the focus on multiple products.

Given the scope for the private sector role in agriculture, Ahluwalia said, the government should actively involve itself in managing perishable agro-products.

He said India should diversify agriculture on a large scale and consider contract farming.
 
Memo from India - Day 3
by Roger Cranville, Pittsburgh Regional Alliance
Pittsburgh Business Times

A delegation from the Pittsburgh regional business, civic and economic development community has embarked on a weeklong business trade mission to India organized by the Pittsburgh Regional Alliance, an affiliate of the Allegheny Conference on Community Development. While in India, PRA Senior Vice President of Global Marketing Roger Cranville is writing this mission diary for the Pittsburgh Business Times.

This dispatch was filed Thursday, Feb. 14

Summarizing the view of the group thus far, the Indian economy is booming (9 percent growth per annum), business is profitable (one person told us today that businesses in India are returning on average 20 percent profit margins), and the infrastructure is creaking. All of this adds up to opportunity, opportunity, and opportunity for companies in the Pittsburgh region.

It is hard to get your arms around what is happening in India -- the growth is so phenomenal you can almost taste and feel it. As someone said today -- "companies must have an India and a China strategy these days or they are going to miss out on a great business opportunity." Indian companies are ready to team up with U.S. companies if it gives them some advantage in the market. And with 350 million "customers," India is a viable and growing market for quality U.S. goods and services.

Bangalore has returned to its normal low humidity and perfect temperature of low- to mid-70s today. The traffic was also kinder than yesterday, helped by the road being finished as we went south, so to speak. Slogans yesterday, statistics today -- lots of statistics. Here are a few to make you think:

_ 260 million mobile phones in India growing by 8 million per month
_ 14 million houses being built by 2010
_ India will be the fourth-largest global economy by 2025
_ 350,000 technical graduates per year
_ 1.6 million jobs in IT/Business Process Outsourcing (BPO)
_ IBM and Accenture are the largest two IT/BPO companies in India
_ IBM makes one new hire every eight minutes in India
_ Per capita income is approximately $850 per year
_ 2 percent of the population pays income tax (34 percent)
_ $450 billion being spent on infrastructure by 2012


The day was spent with KPMG, Infosys (quite a campus experience), a hospital visit, and with Feedback Consulting (a group that knows Pittsburgh and stands by to assist Pittsburgh companies with their India strategies).

KPMG Bangalore fielded a team of three to brief the Pittsburgh group and focused in on our region's opportunity with India. Here are a few highlights:

_ By 2035, demand in India is expected to exceed the United States.
_ New foreign direct investment and homegrown companies are powerful allies expanding the India economy.
_ Special Economic Zone's are fueling growth in telecom, financial services and IT. _ The Indian government plans to spend $250 billion (of the $450 billion infrastructure spend) on energy by 2012.


This represents a good opportunity for the Pittsburgh region. State electricity boards are still wrestling with 32 percent "leakage" or, in other words, illegal tapping of kilowatt hours by those who feel electricity should be free.

_ India is building 10 new cities, where public private partnerships will be core to the final product.
_ A global economic slowdown will have 1-2 percent impact on this economic ship going at full speed ahead.

And five major global risks for India were identified as: Global Weather Change, HIV/TB, contaminated water resources, oil price shocks, and terrorism.

While most of us were at KPMG, Girish Godbole of UBICS Inc. and TiE Pittsburgh (our region's chapter of a global not-for-profit network dedicated to the advancement of entrepreneurship) and John Denny of The Hillman Co. ventured out to explore India's healthcare sector. They visited a new, 1,000-bed private hospital specializing in cardiac care -- Narayana Hrudayalaya (which means House of Heart). The hospital performs 30 open-heart surgeries a day, with an emphasis on children.

The brainstorm of Dr. Devi Shetty, a pioneer in India's thriving telemedicine market, Narayana Hrudayalaya is only one of what will eventually be five specialty hospital campuses dubbed 'Health City' in Bangalore. The campuses will provide up to 5,000 beds. According to Dr. Shetty, "we need to build the healthcare delivery infrastructure first in India, then all else will fall into place." He has already built an eye hospital and will soon complete the cancer hospital.

Of particular interest to Pittsburgh should be Dr. Shetty's next hospital, dedicated to women and children. This 500-bed hospital will be led by Dr. Ashley D'Cruz, with whom Girish and John met during their visit. In a country that has 29 million births a year, a woman and children's hospital is desperately needed.

Committing to a high-growth, long-term investing partnership with India, Pittsburgh hospitals could gain a strong foothold in a large and fast growing market.

Later in the day, the group moved on to campus Infosys, a company that is sustaining 30 percent growth per annum. Future sustained growth is hampered by the availability of talent (Or is it the growing competition for talent?) despite 75 million graduates per year. Touring the campus -- one of 14 that Infosys has in nine Indian cities -- by deluxe, eight-seater golf cart is more like a drive through a futuristic movie set than a modern day workplace.

Like iGate, the band strikes up weekly and these high-energy employees are given every reason to stay put and not go home. The 44 hour minimum work week and all modern conveniences, from shopping to banking, a hotel and entertainment (the convention center is under construction) see to it that going home is almost unnecessary.

It's been an enlightening week so far with so much to take in and so many opportunities to take back home and share with businesses in the Pittsburgh region.

Enough for one day, more to come tomorrow ...
 
A centipede morphs into a fast car
S Gangadharan
Saturday, February 16, 2008 04:46 IST

Thanks to the reforms, the economy continues to grow in leaps and bounds

The Indian economy, which resembled a centipede with arthritis till the advent of reforms — slow-moving, underperforming and swearing by the public sector as the panacea for all the ills plaguing the country — is now a star performer.

Signs of dynamism are everywhere, the essence of which is mirrored in the sustained high rate of economic growth. Indeed, when the advance estimates for 2007-08 indicated a real GDP growth of 8.7%, critics flayed the government for this “poor” showing. So much for a nation that was once derisively condemned to experience what Prof Raj Krishna has called the “Hindu rate of growth.”

Clearly, we have arrived at a stage of development when what is good is not deemed good enough and like Oliver Twist, we want something more.

Under the reforms, a totally radical set of policies was set in motion. The revolution of rising expectations, which four decades of planning had promised but did not quite deliver, now seems to be on track to bettering the lot of the masses, unleashing the springs of enterprise and to greater integration with the rest of the world.

Since the reform era set in motion, after a good 40 years of missed opportunities, the nation’s balance sheet has more credits than debit entries.

There are various strands to this saga of transformation. The first shot was fired at the dawn of the nineties.

The economy was opened up. The public sector was effectively dethroned and the private sector was to be in the vanguard of development. The regime of controls and the plethora of strangulating rules and regulations was progressively loosened. Death knell sounded for licence raj.

Thus, the economic crisis of mid-1991 galvanised the government and the old shibboleths were abandoned in favour of a more free order. The officialdom existed under the new dispensation to provide a facilitating environment and for enactment and enforcement of a broad regulatory framework under which the economy could work and function with a high degree of freedom and initiative. In retrospect, the economic reforms did much to usher in positive changes in the country.

At the financial sector, reforms matched those at the government level. The Reserve Bank of India went about in a no-nonsense fashion to implement the report of the first Narasimham Committee and later its second report. Public sector banks were made to conform to international norms and new banks in the private sector were allowed. Now, we have Universal banks rendering a multiplicity of functions. Indian banking truly underwent a second revolution, the first being when 14 banks were nationalised in 1969.

Indian stock markets were once described as those created by the brokers, for the brokers and of the brokers. This is no longer true. Trading volumes are enormous and online trading has become the norm. At the global level, economy was thrown open to foreign investment and the dominant hold of FERA was loosened so that overseas entities can set up shop here and even the sectors which were exclusively marked for the government were opened for private investment.

True, there are problem areas like the moribund agriculture and the worrying fiscal situation. They need attention if reforms have to make a positive impact on the economy. In both, though, a strategy is in place and one hopes the results would soon ensue.

In Industry, dynamism is the name of the game and competition the buzzword.

Of course, vestiges of control exist in sugar and petroleum, despite the promised transition to a deregulated regime in both.

Reforms have their plusses and minuses, but taking a holistic view, they have been a great success. They have helped shape a new vision of India the journey to which has begun. But, as always, we have miles to go. Every journey begins with the first step, goes a saying. This first step, as we have seen, is not tentative, though there is no denying that an arduous road lies ahead.
 
India's average growth to continue at 9 pc: Ahluwalia

New Delhi (PTI): The Planning Commission on Friday said the country's average growth during the current Eleventh Plan will continue to be around 9 per cent, but made it clear that Indian economy will not remain untouched by the global economic slowdown.

"The Planning Commission's target is average 9 per cent growth during the 11th Plan period. Nothing that has been said so far takes this away from the realm of growth," Commission Deputy Chairman Montek Singh Ahluwalia said during an interactive meeting at FICCI here.

Reacting to an assessment by the International Monetary Fund that the country's growth would hover around 8.2 per cent, he argued that IMF usually links global economy with the domestic one. "I don't think that 9 per cent growth suggested by the Planning Commission is altered."

Ahluwalia reasoned that it would be utterly illogical to believe that Indian economy would remain insular if there was a meltdown in global economy saying "If global economy slowed down, then Indian economy will also slow down."

Delving on the issue of slowdown in interest rate, he said it was the characteristic of a well managed economy that it should coast along at relatively stable interest rate.

"It is not unusual for interest rate to be high in the short term. Our concern is not overnight rate, but what happens at longer term interest rates."

He argued that it was important to develop a healthy financial system. "There is a clear sense of direction that we want development of bonds market on a priority basis," he said adding the Raghuraman Rajan Committee set up to suggest road-map for financial sector reforms is likely to submit its report within the next few months.

Ahluwalia said agriculture sector grew by 4 per cent during the past three years in sharp contrast of less than 2 per cent during the past 7-8 years.
 
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