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it sucks man!!8.8% for 2007-08 sucks!!

india really needs to pump in agriculture!!

Instead of solving the real probem our politician are simply waiving off 15 billion $

its lke giving a beggar 15000 rs for 1 year!!next year again he wll cme 2 beg!!

they are only putting 2.5 billion $ for irrigation!!if they would have invested 15 billion $ in states like bihar,orissa and bengal who faces floods and famine in a single year ,we could have been able to develop the most backward states of our country!!


Half bihar gets flooded from nepal!!it has the best alluvial land bt coz of lack of lrrigation and water management,state has to face floods..and later GOI will have to give funds 4 flood!! what a bunch of foolst poliricians!!Appeasers!!

Orissa:faces worst famine!!they could have spent sme mney on irrigation..its most backward and that supports naxalixm,!

AP:famine+floods!!coastal areas faces floods and interior have the worst famines!!

Dont get excited man. This is election budget, some populist measures was expected.
Though before June 08 all forming debt will be waived off, but it does not mean that all money will be given in financial year 08-9. Rather some government bonds will be given to banks for next three years.
 
Cox & Kings' Bombay delight
James Hall
Telegraph, UK
Last Updated: 12:09am GMT 02/03/2008

Cox & Kings, the upmarket British travel company that was founded in 1758 as a bank for army officers serving in the Raj, will float next month on the Bombay Stock Exchange.

The company's decision to conduct an IPO in India rather than the UK was made following a massive boom in middle class Indians taking foreign holidays. The move also highlights the attractiveness and growth prospects of the Indian economy to UK companies.

To coincide with the IPO, Cox & Kings has signed a ground-breaking public-private partnership (PPP) with Indian Railways, India's state-owned railway, to build a luxury Orient Express-style train that will take tourists to historic sites across India. The train will travel from Mumbai and Rajasthan in the west of India across to Varanasi and Kolkata - formerly Calcutta - in the east. India currently has only two such luxury trains, but they are confined to travel within single states.

Cox & Kings, which sells long-haul luxury tour packages as well as upmarket weekend trips to Europe, plans to raise $130m in the IPO through the issue of new shares. The flotation will give the company a total value of $500m. The proceeds will be used to write off the company's $11m of debt and make acquisitions, including in the UK and the Far East.

The company will also plan to increase its franchised branches in India from 15 to 300 by the end of 2008. The company's head office will transfer from London to India.

Peter Kerkar, chief executive, said that there had been a boom in the number of Indian families taking holidays. "Suddenly people in India are taking more than one holiday a year. It is becoming a lifestyle event, not a luxury one," he said.

Seven years ago, Cox & Kings' UK business shipped 15,000 passengers out of Britain on long-haul holidays while its Indian business sent 4,000 passengers on holidays out of India. Last year these figures had reversed to 16,500 and 287,000 respectively.

Kerkar said that the public-private partnership with Indian Railways would create a train "more luxury" than the Orient Express. "You come on board asking for a glass of champagne and you are given the bottle. It will be that kind of thing," he said.

Earnings before interest, tax, depreciation and amortisation (Ebitda) at Cox & Kings, which is majority-owned by Kerkar's family and other shareholders, including Anthony Good, the founder of PR company Good Relations, are expected to be 738m rupees this year. This is expected to rise to 2.1bn rupees by 2010, according to analysts' forecasts.

In order for the Indian IPO to be made possible, the UK parent company of Cox & Kings reversed into its Indian subsidiary. "The Indian child took over the UK parent," said Kerkar.
 
Chidambaram doesn't see sharp rupee rise in 2008

By Surojit Gupta and Charlotte Cooper

NEW DELHI (Reuters) - The rupee is unlikely to appreciate as sharply this year as last year, when its gains were "extraordinary", and the economy will grow close to 9 percent, the finance minister told Reuters on Sunday.

Palaniappan Chidambaram, speaking in an interview two days after unveiling his 2008/09 budget, said he aimed to contain inflation at about 4 percent but this would depend on how world food and commodity prices panned out in the coming year.

The rupee gained more than 12 percent against the dollar in 2007, largely driven by huge capital inflows, rising interest rates and a weakening dollar, hurting some labour-intensive export sectors and complicating management of monetary policy.

"I don't know whether the rupee will appreciate but even if it does I don't think it will appreciate as sharply as it did in 2007," Chidambaram said at his residence in the capital.

"2007 was an extraordinary appreciation of the rupee."

The partially convertible rupee closed at 40.01/02 per dollar on Friday. It hit a near-decade high of 39.16 last November, driven up by portfolio inflows into the stock market, but last month slipped to a five-month low of 40.25.

The $1-trillion-dollar Indian economy is the third largest in Asia and the fastest growing major one in the world after China. Gross domestic product grew at 9.6 percent in the fiscal year 2006/07 and is on course to slow slightly to an estimated 8.7 percent in the year which ends on March 31.

The pace has been accompanied by rising inflation.

Wholesale price inflation, the most widely watched price measure in India, hit a two-year high of 6.7 percent in early 2007 and is again on the rise, with a mid-February 2008 reading of 4.89 percent, its highest in eight months.

"We would like a real GDP growth of 9-plus, which means we must contain inflation at 4 percent or below. That is the ideal situation," Chidambaram said.

"But the ideal is an aspiration. What we will achieve is, I hope, pretty close to the ideal."

A finance ministry survey published on Thursday has said however that keeping expansion at 9 percent a year would be a challenge due to inflation and infrastructure constraints. It warned raising growth to double digits, which has been a mantra of this government, would be even harder.


FARMERS' DEBT PLAN

Chidambaram announced a controversial plan in the budget to write off $15 billion of small farmers' debts to banks in a move analysts say is aimed at wooing voters ahead of elections due by May 2009.

He has declined to say exactly how the write-off will work and parried the question again on Sunday when asked if he would use some of form of bond issue to fund the waiver.

"Whenever we firm up our plans we will disclose it at the appropriate forum."

Chidambaram, a Harvard-educated lawyer turned politician, has been gradually tidying up India's messy public finances.

By law the government has to bring the federal fiscal deficit down to 3.0 percent of GDP in 2008/09 and Chidambaram has a more aggressive target of 2.5 percent for the coming year from an estimated 3.1 percent for this fiscal year.

But off-budget items, such as oil bonds issued to state-run retail fuel companies, have been creeping up as the price of oil worldwide has soared. India, which puts a ceiling on retail fuel prices, has kept them down by issuing special bonds to partially compensate state oil firms obliged to sell fuel at a discount.

Analysts have flagged the off-budget items as a potential fiscal concern, alongside a potentially substantial increase in salaries for more than 3 million government employees expected after a pay review is submitted at the end of the month.

Chidambaram said off-balance sheet items for 2007/08 totalled about 180-190 billion rupees ($4.5-4.8 billion), which represented about 0.3 percent of GDP.

"Even if you add 3.1 to 0.3 that comes to 3.4. As we incur an off-budget liability we will certainly show it in the documents that are published from time to time," he said.

As for the government workers' pay round, the budget already contained provisions for the ordinary pay round, so he only had to provide for the increment over the normal increase.

"For that I think I will get additional revenues through better tax administration and tax buoyancy" he said.

"Failing which, I have got enough headroom in the fiscal deficit."

$1=40 rupees
 
Virgin Mobile launches in India, targets youth market
International Herald Tribune, France
March 2, 2008

MUMBAI, India: Virgin Mobile launched new services in India Sunday, targeting the youth market in one of the world's fastest growing regions, the company said.

Virgin Group Chairman Richard Branson said the British company would offer music, entertainment and news on India's film industry, sports and stock markets to about 400 million young Indians in the 15 to 30-year-old age group.

The British billionaire said his company would launch Virgin Mobile handset services through Tata Teleservices Ltd, a top Indian mobile operator, in 50 cities initially, expanding to more than 1,000 cities by December.

"India looks very, very promising. We need only a small percentage of the market to do well," Branson told reporters at a news conference.

Branson said the size of India's youth market was staggering.

"It's six times the size of the U.K.'s population and we are bound to have lots of fun here," he said.

Branson did not divulge financial details, but said he hoped to attract a customer base of 5 million subscribers and become profitable within three years, offering special value-added Virgin Mobile branded services and handsets ranging from US$50-US$125 (€42-€104).

India is a key mobile phone market, adding more than 6 million new connections every month with its economy growing at more than 8 percent annually.

Tata's mobile network operates in 5,000 Indian cities and towns.

Tata Teleservices, a subsidiary of one of India's most famous conglomerates, the Tata Group, has operations ranging from software, automobiles, hotels and retail.

Ratan Tata, the group chairman, said his company decided on a franchise operation with Virgin Mobile as part of an initiative to bring freshness and innovation to young subscribers in India.

"Richard is known for his vigor, youthful approach and fresh approach to marketing," Tata said in a televised message.

Branson's other interests in India include Virgin Atlantic Airways Ltd., which operates daily flights connecting London with Mumbai and New Delhi.
 
'Chindia's' industrial power on fast track
Morris Beschloss
• Special to The Desert Sun
• March 2, 2008

It's common knowledge that Chindia (the combination of Asian giants China and India) are the world's fastest growing industrial powers.

Both have distinguished themselves not only as the world's leading converts to industrialization, but have risen to the top of the heap in technological know-how. Their combined engineering graduates eclipse that of the U.S. by a six times multiple.

Comprising more than one-third of the world's population, they have also converted top-heavy agrarian societies into massive consumer sectors. This has been accomplished in a single generation, and it's a process that is only beginning.

But when it comes to a confrontation between these two behemoths, it's no contest. China practically wins it by default.

Sino-Indian trade last year soared 56 percent to $38.7 billion and could come close to doubling by 2010. But such binational trade is heavily tilted in China's favor, with India's deficit of $9.17 billion last year more than twice that of 2004 and 2005.

The big difference between the two potential economic superpowers is commercial and industrial infrastructure.

Also contributing to the gap is the cultural and political makeup of the world's only billion-plus population centers.

Whereas the Chinese have an authoritarian super-structure, it is amazingly capitalistic and singularly reactive to a market-driven economy.

India still suffers from a rigid cultural apartheid, consistent with traditional social brackets reflecting the huge subcontinent's long history.

Despite the 300 years of British occupation, India's major legacy from that period is bureaucratization.

India's President and former Finance Minister Manmohan Singh is most anxious to create greater synergies with his Chinese neighbors.

India's trade deficit growing

Despite Mr. Singh's wishes for a balance of trade, India's deficit with China is about to get far worse.

The Indians, recognizing the deplorable state of their electric power industry, are about to embark on a multi-billion-dollar generator expansion.

In order to make this happen, they must tap into China's equipment and expertise to leapfrog the abysmal lack of power existing throughout the Indian subcontinent, especially as a support for the nation's rapidly developing industrial sector.

The deficit with China has previously been confined to commodities such as electrical components, pipe and machinery parts, but is now transcending into heavy equipment that is bound to add billions onto Indian's runaway deficit.

With India's internal manufacturing growth hamstrung by the political roadblocks put up by the ruling Congress Party, which is part of a socialist parliamentary block, the channel for accelerated internal growth is impeded by internal bickering.

Be that as it may, be assured that "Chindia" will maintain its rapid growth, dwarfing the attempt by any other nation to leapfrog to the top of the world's industrial pinnacle.
 
Indian manufacturing slips in February, but still robust
Reliable Plant, UK

The seasonally adjusted ABN AMRO India Purchasing Managers’ Index (PMI) posted 59.5 in February, edging down from the previous month’s 60.7, but nevertheless remaining at a level indicative of a considerable improvement in manufacturing business conditions.

Commenting on the latest survey findings, Gaurav Kapur, senior economist, ABN AMRO Bank N.V, said: “A dip in the headline PMI reading to 59.5 in February from 60.7 in the previous month suggests that the pace of activity growth in the sector eased. That is consistent with the trend seen over last three months now. That said, a headline reading well above the threshold level of 50 implies that the sector continues to see fairly strong expansion in activity levels. The details of the survey show that the output index registered its lowest reading in last six months. It came down to 62.2 in February. The order book position of the sector remains strong, however. The new orders index printed at 68.4, though lower than previous month, but still a particularly strong reading compared to the most of the survey history. Otherwise, output and input price indices printing at their highest in the last four and six months respectively, points toward strong inflationary pressures in the economy. And, the fact that a larger section of the survey respondents passed on the increase in input prices to their final output price, points towards reasonable degree of pricing power.”

Indian manufacturers expanded production at a marked rate in February, although growth was the weakest for six months. Volumes of total new business increased markedly in February, bolstered by favourable market conditions and increased marketing activities.

Unfinished work continued to accumulate in February, albeit only marginally. Firms linked the increase in backlogs of work to strong sales. Rising production requirements led companies to add to their workforces in February, although employment growth was the weakest for three months. Nevertheless, staffing levels rose modestly.

Higher quantities of purchases led to a further rise in pre-production inventory levels, albeit at a weaker rate than in the previous month. Stocks of finished goods also increased, and at a rate broadly unchanged from January.

Input price inflation accelerated sharply in February and was the strongest for six months. Indian manufacturers raised factory gate prices again in February, with average charge inflation picking up from the previous month.
 
January exports post 20.47% growth
April-Jan trade deficit zooms; oil imports rise 60% in Jan
  • Non-oil imports during January 2008 are estimated at $14.79 billion, showing a growth of 65%.
  • Trade deficit during the first 10 months of current fiscal zoomed to $67.41 billion.


Hindu News Bureau
New Delhi, March 3

Even as exporters complain about the adverse impact of the appreciating rupee and lack of supportive measures in the Union Budget 2008-09, the country’s exports for January 2008 clocked a growth of 20.47 per cent and cumulative export growth during the first 10 months of the fiscal at 21.62 per cent in dollar terms.

But in rupee terms, export growth in January 2008 was seven per cent and cumulatively it was 7.66 per cent which is the real crunch confronting exporters in general and in labour-intensive sectors in particular.

Provisional figures of foreign trade data released by the Department of Commerce shows that the country’s exports, in January 2008 valued at $13.14 billion, was 20.47 per cent higher than the level of $10.9 billion during January 2007.

Cumulatively, value of exports for April 2007 to January 2008 at $124.19 billion was 21.62 per cent higher than $102.11 billion during the corresponding months of the previous fiscal.

Imports

Imports, on the other hand, during January at $22.5 billion were 63.57 per cent higher than the level of such imports valued at $13.75 billion in January 2007. Cumulatively too, India’s imports during the first 10 months of the current fiscal at $191.60 billion showed a growth of 29.63 per cent over the level of $147.81 billion during the corresponding period of the previous fiscal.

Oil imports during January 2008 at $7.7 billion were 60.81 per cent higher than oil imports of $4.79 billion in January 2007. Cumulatively, oil imports during the first 10 months of the current fiscal at $57 billion were 16.49 per cent higher than the oil imports of $48.9 billion in the corresponding period of the previous fiscal.

Non-oil imports during January 2008 were estimated at $14.79 billion, against $8.96 billion in January 2007, showing a hefty growth of 65 per cent. Cumulatively too, non-oil imports during the first 10 months of the current fiscal amounted to $134.58 billion which were 376.13 per cent higher than the level of such imports at $98.86n billion in April-January 2007.

As a result of high export growth and a higher import growth the country’s trade deficit during the first 10 months of the current fiscal zoomed to $67.41 billion which was higher than the deficit of $45.70 billion during April- January 2007.
 
Exploring new mode of cooperation
Ren Yan
People's Daily, China
March 03, 2008

Indian External Affairs Minister Pranab Mjkherjee and his South African counterpart Dr. Nkosazana Damini-Zuma in late February held a two-day seventh session of the South Africa-India Joint Ministerial Meeting in Pretoria. The two sides inked a couple of cooperation memoranda in the fields of agriculture, science and technology, tourism, tariffs and visa granting. Moreover, the two sides decided to institute some new cooperation committees.

In appraising the outcome of the meeting, media reports from both nations note that the two developing nations have stepped up their contact in their socio-economic realm and cite it as a new strategic height for their ties of strategic cooperation.

Strengthening bilateral cooperation to seek the common development represents a starting point to tighten their bilateral relations. India-South African business recorded new highs in recent years. Relevant statistics show their bilateral trade has increased from 26 million US dollars in 1995 to 2.3 billion dollars last year, posing a 90-fold rise in 12 years. As the two major economies, acknowledge scholars or economists in both India and South Africa, they are highly mutually complementary to each other with a wide, promising future. India has invested in such sectors as auto-making, iron and steel, and mining industries in South Africa, whereas the latter input much in India's infrastructure development.

The in-depth growth of economic ties between India and South Africa should be viewed in a much larger backdrop, that is, it constitutes an organic part of the India-Brazil-South Africa strategic partnership. Following announcements made at the United Nations General Assembly in September 2003, the governments of India, Brazil and South Africa decided to forge closer political and economic ties among them.

Back in June 2003, the three major developing nations commenced the India-Brazil-South Africa (IBSA) Dialogue Forum, a trans-regional strategic alliance with an aim of coordinating and adopting their shared stances with regard to the UN Security Council reform and a number of political-economic issues including the multilateral trade talks in the World Trade Organization (WTO).

To date, the forum has been turned into a highly-functional alliance to discuss and pinpoint solutions to common issues negatively affecting the growth of developing nations as well as a vital mechanism to expand the trade and investment between these three nations from a merely lax organ at beginning solely to give heed to macro-political issues.

With rapid advances made in recent years at the spur of the three developing nations, the IBSA Dialogue Forum has become a breach or breakthrough point unit to seek a more involvement with a greater decisive say on the global political and economical development. Indian economy has grown fast with its science and technology reaching the advanced world levels. Brazil is the largest South American nation bestowed with rich natural resources, and South Africa poses the biggest economy on the Africa Continent.

India-Brazil-South Africa Dialogue Forum is, in fact, a crystallization of what we often talk about "south-south cooperation". In other words, the three nations can do a lot together to improve the livelihoods of their people. Some analysts refer to it as a new mode of "south-south-south" cooperation or the "axis" of the south-south cooperation, which is far more viable and influential than groups consisting of more developing nations, such as the group - 77 and the non-alliance movement.

At present, the three nations are mulling the formation of forging the largest free trade zone on earth. The main agenda of the India's External Affairs Minister Pranab Mukherjee's trip to South Africa was focused on first forming the India-South Africa Free Trade Zone. The tentative trade zone under consideration can not only promote the tripartite trade but link it to the regional economic organizations with three nations located in their respective regions. Namely, these organizations refer to the South Asian Association of Regional Cooperation (SAARC), which India belongs to, the South American Common Market that Brazil belongs to, and the South African Development Community with South Africa as a member of it. In view of the present circumstances, the establishment of the mega free trade zone has been restricted to some extent, as the three giant nations are far apart from one another and the transport costs of freight are far too costly.

Meanwhile, the institution of the mega trade zone has been faced with much restriction on imports as these three nations are somehow governed by ideologies with serious trade protection mentalities. On top of this, they have also been confronted with some thorny, headache problems detrimental to cooperation in the political sphere..

Consequently, most cooperation has not won any substantial results; and the tripartite cooperation has covered a lot of fields. If they truly institute a closer alliance, India, Brazil and South Africa should readily give up some of their respective interests and undertake more obligations, and this is of course by no means an easy thing to accomplish.
 
India’s trade deficit widens to $9.36bn

Tuesday, March 04, 2008

NEW DELHI: India’s imports surged 64 per cent to $22.5 billion in January from a year earlier, as state-run oil firms stacked up crude ahead of an increase in local fuel prices and firms shipped in capital goods to raise capacity.

Government data released on Monday showed India’s trade deficit widened in January to $9.36 billion as exports grew by a slower 20.5 per cent to $13.14 billion in the fast-growing economy.

Analysts said the figures suggested it would now be impossible for India to meet its annual export target of $160 billion during the 2007/08 fiscal year. January’s trade deficit was more than three times bigger than that in the same month in 2007.

It was at $67.41 billion during the April-Jan period this fiscal, from $45.7 billion during the same period in 2006/07. “Exports could see some slowdown because of the lower demand from developed markets. Trade deficit could widen to $75 billion this fiscal year,” said T K Bhaumik, chief economist with India’s largest private firm, Reliance Industries Ltd.

Oil imports jumped an annual 61 per cent in January as oil firms imported 2.37 million barrels of oil a day to meet demand from dealers before the government raised retail fuel prices on Feb 14.

“Non-oil imports were higher as there is a rise in investment demand,” said D K Joshi, principal economist with domestic rating agency Crisil. “The current account deficit is widening and this will put a pressure on the rupee to depreciate.”India’s rupee appreciated more than 12 per cent in 2007, squeezing profit margins of exporters and prompting the government to offer relief to some sectors.

India’s trade deficit widens to $9.36bn
 
India introduces its extra-cheap, compact car
James A. McFadden,
The Harvard Crimson
Published On: 03/ 4/2008

The ownership of an automobile in the United States has become nothing short of a divine birthright. It’s a universally accepted fact: Americans love their cars and would sooner sacrifice their firstborn than relinquish their entitlement to the family sedan. And naturally, many have lambasted for years the environmental destruction brought upon by this auto-centric culture.

Yet as the U.S. continues to look for a balance between going green and the American dream, India has found its place amidst the controversy with its new initiative, the Tata Corporation’s Nano, also known as the “world’s cheapest car.”

Rather than criticize the environmental impact of this car, people around the world should praise these Indian innovators for their contribution to a developing economy.

The subcompact vehicle introduced last month costs $2,500 and Tata’s self-proclaimed goal is to make automotive transport accessible to every Indian family, calling it “The People’s Car.”

Proponents laud the Nano as a giant egalitarian step for India that will help to break down class barriers and bring transport to the masses. Such praise has been drowned out, however, by critics who claim that the car will mark the beginning of the environmental apocalypse.

This argument is ridiculous considering that the United States overwhelmingly dominates global vehicle production and accounts for more than 20 percent of global gas consumption, although America accounts for only 4.6 percent of global population.

Not only should India’s government more actively facilitate such accessible transport, but also the rest of the world should applaud Tata’s step in a positive direction.
 
India makes $39.6B in petroleum trade
United Press International
Published: March 4, 2008 at 10:50 AM

NEW DELHI, March 4 (UPI) -- India made $39.6 billion from petroleum products in 2006-07 and spent $48.4 billion on crude oil imports, said the junior petroleum and natural gas minister.

"As (part of) efforts to supplement the consumption of petroleum products, particularly for vehicular application and also to curb emissions, research has been carried out by the Ministry of New and Renewable Energy to explore the possibility of utilizing alternatives for supplementing petrol and diesel," the minister, Dinsha Patel, told Indian Parliament Tuesday.

He said biofuels, namely bioethanol and biodiesel, hydrogen and battery-operated vehicles have been identified as potential future alternatives to supplement petrol and diesel.

He said 5 percent blended ethanol was being used in 20 states.

"But vehicle manufacturers are asking for more time so as to study the effects of ethanol on material compatibility of in use vehicles," Patel said.
 
India's Tata Group Looks To Go Global, One Buy At A Time
Dow Jones Newswire
March 04, 2008: 05:27 AM EST


HONG KONG (Dow Jones) -- Tata is an odd mixture of very large, and very, very little.

India's oldest and best-known industrial house is the biggest software exporter via its Tata Consultancy Services, the largest private-sector steelmaker thanks to Tata Steel and the leading hotelier with its Indian Hotels Co.

Tata Motors (TTM), meanwhile, is turning heads with the Nano, a three-meter long, four-seater minicar that'll have a top speed of 65 miles per hour and sell for about $2,500 when it hits the home market later this year.

But such size belies the conglomerate's global ambitions, with Tata Motors widely expected to soon acquire Ford Motor Co.'s (F) luxury Jaguar and Land Rover brands. The Wall Street Journal reported last week that a deal was imminent.

An acquisition of such scale and prominence would be the latest in a string of global deals, part of the industrial behemoth's strategy to look well beyond its domestic successes.

"They (the Tatas) have become far more outgoing and aggressive in their approach," said Ajit Surana, managing director at brokerage Dimensional Securities in Mumbai.

"Ten years ago, they were seen as a staid, conservative group. That perception has changed completely... If there is a (merger-and-acquisition) deal out there, and if it makes sense, they'll go for it, even pay a premium," added Surana.

The nearly 100 companies to fall under the Tata Group umbrella raked in $28.8 billion in revenue in the financial year ended March 31. Its 27 listed companies, including Tata Motors, Tata Steel (TATIFM) and Tata Consultancy Services (TACSF), had a market value of more than $65 billion.

Outside India, Tata is becoming known for these bold and often surprising acquisitions.

In some cases, the target has well exceeded the suitor in terms of revenue. This was the case with Tata Tea's $540 million acquisition of U.K.-based beverage major Tetley in 2000 and Tata Steel's $11.3 billion takeover of Anglo- Dutch steelmaker Corus Group Plc. last year.

The Tetley acquisition was the largest-ever cross-border takeover by any Indian company in 2000, while the Corus buy is the largest-ever overseas acquisition by an Indian company to date.

The Corus deal gave Tata a meaningful presence outside India. It also stirred up emotions at a national level, as Corus was several times bigger than Tata Steel. That acquisition almost overnight lifted the Indian company nearly 50 places in the rankings, making it the world's sixth-largest steelmaker.

"Their acquisition of Corus last year made every Indian proud and that, in my view, is a very significant milestone in the march of the Indian industry from a closed economy," said Rahul Bajaj, chairman of India's second-largest motorcycle and scooter maker, Bajaj Auto (BJJAF). Bajaj was referring to the economy prior to 1991, when India ended state controls over industry and opened the doors to foreign direct investment.

Turning global

As a result of these cross-border acquisitions, Tata Group will earn nearly 60% of its total revenue from overseas markets during the current financial year ending March 31. That compares with a contribution of less than 10% in the financial year 2000-01.

And for the first time in its 140-year history, India is set to become the second-largest area of geographic importance for Tata, with Europe seizing that No. 1 spot, said Alan Rosling, executive director at the Mumbai-based Tata Group holding company, Tata Sons.

That shift looks set to continue, given the rising exports of its various group companies, new projects being started overseas and the continued pace of acquisitions.

"Exports are the bedrock of our overseas sales, and we are now also investing in greenfield assets," said Rosling, who was member of the policy unit and a special advisor to John Major when he was the British prime minister.

"Many of these overseas expansions are in joint venture with local partners ... mergers and acquisitions have attracted more media interest than (our) organic growth, but M&A is only part of our strategy," added Rosling.

Though Rosling wouldn't detail growth targets, he said projects under way include a ferro-chrome manufacturing plant in South Africa, a steel plant in Vietnam, a joint venture with the South African government for long-distance telephone services and a joint venture to assemble pickup trucks in Thailand.

Meanwhile, Tata Consultancy Services, the group's software major that earns half its total revenue from exports to the U.S., is looking to expand its software-development activities outside India, and has its eye on China, Brazil, Uruguay and Hungary.

Short-term pain; long-term gain?

As the Ford deal reportedly nears, the acquisition spree continues apace.

In February, chemicals and fertilizers company Tata Chemicals acquired New Jersey-based soda ash producer General Chemical Industrial Products for $1 billion. The acquisition will consolidate Tata Chemicals' position as the world's second-largest producer of soda ash, a commodity used to make glass and detergents, while expanding its global footprint.

Tata's aggressive acquisition strategy may deliver the group the desired benefits of scale and reach in the long run, but it also presents short-term challenges. These include integrating operations in different countries and cultures, and managing the high amounts of debt Tata group firms typically raise to fund these deals.

"As long as the group's acquisitions are made a reasonable price and there are new markets which get added, I think it is a positive sign," said I.V. Subramaniam, chief investment officer at Quantum Advisors in Mumbai.

"My worry is less on the financial part and more on the people-management aspect," Subramaniam added, referring to differences in culture and management style that often crop up following an overseas acquisition.

Tata's management skills will likely be put to the test if it successfully completes the Land Rover-Jaguar brand acquisition, given that Tata's low-cost, value-for-money products stand in sharp contrast to products sold under the two luxury, marquee brands.

Subramaniam Ramnath, an analyst with IDFC-SSKI Research in Mumbai, said a successful deal could potentially stretch the Indian company's financial resources and lead to earnings downgrades, unless the move is carefully managed.

Also, there are "no apparent synergies in terms of shared product platforms or distribution networks, given the stark contrast in pricing as well as position of Jaguar-Land Rover and Tata Motors' products," he said.

Ramnath, however, expects "significant cost savings at the two units over a longer term, stemming from higher component sourcing out of (low-cost) India." Even if Tata Motors can manage a small improvement in their profitability, it would translate into significant benefits for the Indian company, given Land Rover-Jaguar's estimated revenue of $13 billion is much larger than Tata Motors' consolidated revenue of $8.2 billion in the previous financial year.

Dimensional's Surana says Tata's bid for Jaguar and Land Rover underscores confidence that it will be able to trim manufacturing costs.

"They are leveraging on the growth that is expected in Asia over the next several years. Most of the sales for these premium cars will take place in India and China," said Surana. "If they can bring down the costs, selling the iconic brands won't be a problem."
 
Low-cost production: World industry’s attention riveted on India
By John Reed
Financial Times, UK
March 4 2008 08:23

In January, while Detroit was lifting the wraps on its latest crop of big pick-up trucks and sports utility vehicles, a chunky, oblong little hatchback premiered on the other side of the world. The Nano, developed by Tata Motors and unveiled in Delhi, stole the Americans’ thunder by dominating much of the debate at north America’s biggest auto show.

Tata’s “one-lakh” or $2,500 car showcased the ability of Tata – and, more broadly, India’s emerging carmakers – to develop, engineer, launch, and sell a car at rock-bottom cost, allowing for entry-level costs affordable to the developing world’s legions of new carbuyers. Tata’s website for the car had 4m hits the day it launched. “The kind of responses we get across the world is quite astounding,” according to Ravi Kant, the carmaker’s managing director. “It has struck a chord with a whole lot of people who couldn’t imagine they would come within reach of a normal car.”

Bosch, the German automotive and industrial group, estimates low-cost vehicles priced at less than €7,000 ($10,600) could reach a 13 per cent share of the world market – or about 10m vehicles – in 2010. Toyota, Renault/Nissan, and other big carmakers are developing cars for the segment. India has riveted the global industry’s attention on the low-cost market recently for three reasons.

First is the Indian market itself, which generates hundreds of thousands of first-time car buyers every year. Carmakers such as Suzuki and General Motors have for years produced cheap and cheerful models for the market, but the growth of India’s economy – and its domestic supplier base – have accelerated the low-cost push. Hyundai uses the country as a base for exports.

Second is the subcontinent’s vaunted strength as a global back office for cut-price, world-class research and development. An engineer whose services might cost $100,000 or more in the US will work for about $40,000 in India. Daimler, GM, and Bosch all have R&D centres in Bangalore.

Third, or so some Indians claim, is a culture of frugality that pervades the national mindset, and lends itself well to the cost-paring trends in the global car business. “In India nothing is ever thrown in the waste basket – everything is recycled,” says Pawan Goenka, head of Mumbai-based Mahindra & Mahindra’s automotive business. “Before the western world understood what recycling was, we were doing it.”

Tata, when designing the Nano, used a “design to cost” approach, challenging its vendors to step up with supplies under pre-set price caps. A more conservative approach to model proliferation also helps the Indians to build cheaper vehicle platforms: Mahindra’s Scorpio SUV is offered in just five options.

“We have kept our systems and processes simple,” says Mr Goenka. “We are not paying a price of complexity.” The company developed its Scorpio for $120m, split evenly between tooling and design, and perhaps a quarter of what an established western carmaker such as Ford would have spent. It now has its sights on the US, where it will begin exporting SUVs and pick-up trucks next year in the $25,000 range, about 10 to 15 per cent below the price of other, similar vehicles.

Mahindra, like India’s other emerging carmakers, also spends less on marketing its cars than its developed-country competitors. Renault spent “four or five times less” on marketing its low-cost Logan in India than it would for a vehicle in a developed market, says Vigneshwaran Chandran, a low-cost cars expert with consultancy Frost & Sullivan.

Much of India’s low-cost production edge comes not from hazy cultural values, but cheap labour – the oldest trump card in the global car industry. “In low-cost assembly, you have much more manual operations,” says Mr Chandran. “This factor never comes up when people talk about low-cost production.”

Mahindra’s Mr Goenka acknowledges India’s low-wage advantage – but notes that it is being eroded. When the company was developing the Scorpio about a decade ago, it enjoyed a cost advantage over western competitors in man-hours that he estimates at about $200m.

Since then, he says, the company’s cost base has risen two or three times. “Our labour costs are lower than in western countries, but there are other countries with lower costs,” he says. “India is not the lowest-cost country any more.”
 
Destination Europe for Indian works
4 Mar, 2008, 0230 hrs IST,Ashoke Nag , TNN

KOLKATA: Indian art is gaining increased acceptability in Europe.Renowned Paris-based Indian painter Sakti Burman sees a buoyant future for Indian art in these regions. Of course, artists who have been living in Paris for long are obviously enjoying greater visibility and a bigger slice of the European market for Indian art. Pricewise, on an average, Indian artists have found a rise of 300-400% in the European circuit over the past 4-5 years.

“Earlier, around 10-15 years back, Indian painters residing in Paris used to be shown from time to time in that city or in some other place in Europe. This applied to a few of us there like Raza, Viswanadhan, Anju Chowdhury, myself and some of the others. Initially, the French audiences became exposed to Indian art in this manner,” Sakti Burman told ET.

But, now, Mr Burman said with the growth of the Indian economy, art has also achieved more prominence in the international world. In step, the visible rise in interest of the Indian public in acquiring art has also encouraged the foreign public to go for this genre of global art.

“One must also add that the Indian art auctions by top auctioneers like Sotheby’s, Christie’s, Bonhams and other houses is also drawing foreigners to give Indian art a serious look. And, Indian artists have been scaling tall prices in these auctions. In the same breath, Indians living abroad have also been concertedly buying Indian artworks. This is also influencing their mainstream counterparts So, it’s a lot of factors put together which are driving the European or foreign viewers to weigh purchasing Indian art,” Mr Burman said.

The prices of high-end artists like Raza or Burman have also climbed significantly in the European market. A Raza, which is selling for 3-4 lakh euros now or a Burman which is going at 50,000 euros were one-tenth that level in the European market even 5-6 years back. Auctioneers in France are also sometimes including Indian artists with legendary international names. Recently, for instance, Sakti Burman was featured in a Paris sale which also fielded artists like Picasso, Jacometti and Calder. Lately, the Unesco also unfurled a show of Burman in Paris.

“Off and on, Europeans of various categories acquire Indian art. This covers the French, Belgian, Germans and the Swiss. Some may be buying for the love of it and others as an investment proposition. There are also 4-5 Indian solo shows every year. Galleries in France also come up with proposals to acquire Indian art. Interestingly, some French collectors and dealers are travelling to India to interact with galleries and artists here and explore buying possibilities. This is just the beginning. If the French and the European economies in general grow, Indian art could gain a stronger foothold in these locales,” Mr Burman said.
 
Indian finance minister urges industry to help curb inflation

Thursday, March 06, 2008

NEW DELHI: Indian Finance Minister Palaniappan Chidambaram on Wednesday urged manufacturers to cut prices so that inflation could be kept in-check.

“The manufacturing sector will have to become more competitive, efficient and hold the price line,” Chidambaram told a gathering of industry leaders. The minister said that manufacturing contributed more than 50 per cent to inflation, which rose to its highest level since June last year at 4.89 per cent for the week ended February 16.

The government has said that curbing prices remains its priority over concerns that money tightening measures by the central bank were slowing the economy. The government last week reported economic growth of 8.4 per cent in the third quarter, the slowest in two years.

But Chidambaram said he remained confident about India’s growth story. “I am extremely bullish about the economy in 2008-09,” the minister said. “I intend to keep a batting average of 8.8 percent plus.”

The government has forecast growth of 8.7 per cent for the year ending March, following 9.6 per cent in the previous year. Chidambaram said that the farm sector, which expanded by 3.2 per cent in the quarter ended December, was slowing growth.

“The sector that is hurting is agriculture. “The government last week announced a massive $15-billion farm loan bailout for 40 million small farmers in a populist budget aimed at gaining support ahead of the 2009 general elections.

Indian finance minister urges industry to help curb inflation
 
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