Indian Economy - News & Updates - Archive

[Malang]

India to Have 500 Million Mobiles by 2010

Nokia India expects that the country will have 500 million mobile phone users by 2010 - with 60 million of them having mobile video capability and 100 million using mobile music services. Speaking at the Goafest conclave, vice-president and managing director Nokia India, D Shivakumar, also said that half the subscribers would be accessing the internet via their mobile phone.

He said, “Mobile phones are not just about voice anymore. Services delivered through mobiles would open up a big opportunity for the advertisers in India with a huge untapped potential.”

He broke the market down into three core sections. The top end of the market will be limited to some 50 million customers with mid-range but value oriented customers making up some 150 million subscribers. The third tier, he said is unique to India and would be dominated by low cost basic handsets with minimal functionality.

India to Have 500 Million Mobiles by 2010

 

[Malang]

48 Indian companies in Forbes 2,000 List

NEW YORK: After billionaire businessmen, it is the turn of companies from India to shine on Forbes radar with as many as 48 firms making it to a list of the world's biggest companies compiled by the US magazine.

Led by India's most valued firm Reliance Industries and PSU major ONGC, all these 48 Indian firms named in the 'Global 2000 List' have a billion-dollar size, both in terms of turnover and market value.

The rankings, topped by British banking behemoth HSBC, has been compiled on the basis of a composite score of sales, profit, assets and market capitalisation.

HSBC is followed by industrial conglomerate General Electric, Bank of America, JPMorgan Chase and ExxonMobil, all four from the US, in the top five positions.

Two Indian firms, Mukesh Ambani-promoted RIL and ONGC are among the top 200 companies at 193rd and 198th ranks.

Earlier in March, Forbes had released its list of world's richest billionaires that included 53 Indian businessmen, with four of them, Lakshmi Mittal, Mukesh Ambani, Anil Ambani and KP Singh, figuring among the world's ten wealthiest.

RIL and ONGC are followed by two PSU majors State Bank of India (219th) and Indian Oil (303rd), the country's biggest private sector lender ICICI Bank (374th) and state-run power generation major NTPC (411th).

The Indian presence is almost evenly divided among the private and state-run companies.

While none of the Indian companies have managed to find a place among top 100, it has two firms run by people of Indian origin. Vikram Pandit-run banking giant Citigroup and Lakshmi Mittal-headed steel behemoth ArcelorMittal are at 24th and 38th positions respectively. Indra Nooyi-run beverage major PepsiCo has been ranked at 131st position.

Other Indian companies on the list include SAIL (647th) and Tata Steel (738th), telecom giants Bharti Airtel (826th) and Reliance Communications (846th), software major TCS (927), housing finance giant HDFC (949th), engineering heavyweight Larsen and Toubro (961st) and state-run oil firm BPCL (967th).

While Mukesh Ambani-led RIL has topped the list of Indian companies, there are also three firms belonging to the group led by his estranged younger brother Anil Ambani, Reliance Comm, Reliance Power (1,597th) and Reliance Capital (1919th).

According to Forbes, the Global 2000 companies have a combined revenue of $30 trillion, $2.4 trillion of profit, $119 trillion in assets and $39 trillion in market capitalisation. Besides, these companies employ 72 million people across the world.

While the list is still dominated by the US companies, the number of American firms has dropped by 61 from previous year and 153 from 2004. "In contrast, China, India and Brazil are rapidly adding companies to the list. India, for example, has 48 companies this year versus 27 in 2004," report said.

In terms of sectors, banking has the largest presence with 315 firms in the global list. Even among the Indian companies, one-third or 16 of them belong to this sector.

Other Indian companies include BHEL (1012), Infosys (1040), HDFC Bank (1093), Wipro (1102), Tata Motors (1111), HPCL (1112), NMDC (1134), ITC (1159), PNB (1166), DLF (1185), Hindalco (1205), GAIL (1249), Canara Bank (1305), Axis Bank (1361), Bank of India (1375), PGCIL (1413), Bank of Baroda (1477), Nalco (1478) and Unitech (1484).

The list also has Grasim (1527), Indian Overseas Bank (1737), IDBI (1744), PFC (1753), Union Bank of India (1759), Satyam (1763), Central Bank of India (1803), Syndicate Bank (1833), M&M (1919), Uco Bank (1935), Oriental Bank (1952), Suzlon Energy (1954) and Allahabad Bank (1996th).

RIL, ONGC in Forbes' top global firms list- Corporate Trends-News By Company-News-The Economic Times

 

[Bushroda]

India Industrial Production Grows Most in Four Months
By Kartik Goyal

April 11 (Bloomberg) -- India's industrial production grew at the fastest pace in four months in February as record investment in power plants and factories boosted demand for electricity and cement.

Production at factories, utilities and mines rose 8.6 percent from a year earlier after gaining a revised 5.8 percent in January, the statistics office said in New Delhi today. Economists were expecting a 7.5 percent increase.

Billionaire Chairman Anil Ambani's Reliance Power Ltd. is spending $28 billion over the next five years to build 13 generating plants in the world's second-fastest expanding major economy. Growth may weaken in coming months as the highest borrowing costs since 2002 damp consumer spending.

"We are seeing a slowdown in sales of consumer goods due to higher interest rates and inflation,'' said Venugopal Dhoot, chairman of Videocon Group, India's largest consumer-electronics maker. "Higher rates make it difficult for consumers to afford monthly installments.''

Manufacturing, which accounts for about 80 percent of India's industrial production, gained 8.6 percent in February from a year ago, according to today's report. Electricity output rose 9.8 percent, the most in 17 months. Mining grew 7.5 percent.

Reserve Bank of India Governor Yaga Venugopal Reddy has raised the central bank's key policy rates nine times since October 2004 and increased the cash reserve ratio five times since December 2006 to check prices.

Higher Inflation

India's inflation accelerated to 7.41 percent in the week ended March 29, the quickest in more than three years. Higher prices may prompt Reddy to again raise the cash reserve ratio, or the proportion of deposits that commercial banks must place with the central bank.

The Reserve Bank kept the key repurchase rate unchanged at 7.75 percent at the last monetary policy announcement on Jan. 29. The next statement is scheduled for April 29.

"We expect a 50-basis-point hike in the cash reserve ratio before or at the April 29 policy'' meeting, said Rajeev Malik, senior economist at JPMorgan Chase & Co. in Singapore. "The central bank will prefer tightening money over raising policy rates and rupee appreciation.''

India may settle for less growth in its fight against inflation, Finance Minister Palaniappan Chidambaram said March 28. He expects Asia's third-largest economy to expand about 8 percent in the fiscal year that commenced on April 1, the slowest since 2005. Growth has averaged 8.7 percent since 2003, the quickest after China among major economies.

Global Slowdown

Concern over the impact of a slowdown in global demand on the Indian economy has contributed to this year's 22 percent decline in the Bombay Stock Exchange's benchmark Sensitive Index. The gauge rose 0.8 percent or 112.54 points to 15,807.64 at the 3:30 p.m. close in Mumbai.

Other Asian economies are also suffering from weaker demand for their products. China's output grew 15.4 percent in January and February, the slowest pace in more than a year. South Korea's production growth eased to 10.1 percent in February from 11.3 percent in the previous month. Singapore's output rose 10 percent, slower than 12.8 percent in January.

 

[Bushroda]

Govt sets $200 billion export target
12 Apr 2008, 0001 hrs IST,Prabhakar Sinha,TNN

NEW DELHI: Government on Friday announced an array of incentives in its annual review of the Foreign Trade Policy to achieve an export target of $200 billion in 2008-09 as against $155 billion in 2007-08. However, keeping in the mind the worrying factor of rising inflation, it has removed incentives on exports of cement and steel to boost supply of these commodities in the domestic market.

In the last four years since 2003-04, India's export increased by 2.5 times to $ 155 billion in 2007-08 from $63 billion, registering an annual compounded growth of 23%. However, the country missed the target of $160 billion in 2007-08 due to a sharp 12% appreciation in rupee in this period.

Encouraged by good performance of industry, commerce and industry minister Kamal Nath fixed an ambitious target of 5% share of world trade by 2020 as against 1.5% in 2008-09. Considering global trade is increasing, Nath said, India needs to increase its exports eight-fold in absolute terms to meet this target. In other words, exports should touch $1.25 trillion by 2020. an average growth rate of 25%. The target looks difficult but not impossible to achieve, Nath added.

In 2008-09, Nath said country's total merchandise trade — exports plus imports — will be almost $ 400 billion. If the trade in services is added to this, India's commercial engagement with the world would be around $525 billion. India's total trade in goods and services is now equivalent to almost 50% of its GDP. Nath said during the last four years, increased trade activity has created 1.36 crore new jobs.

To achieve $200 billion target, Nath announced a number of steps like extension of I-T benefit to the firms operating as export oriented units (EoUs) for one more year up to 2009-10, continuation of Duty Entitlement Passbook Scheme till May 2009 and reduction of import duty on capital goods under EPCG scheme to 3% from 5%, a move to promote the industry whose growth slowed down to 8.7% during first 11 months of 2007-08 from 11.2% a year-ago.

Nath also announced the extension of availability of cheap loan at 6% to sectors like textiles and garments and SMEs, which are affected by rupee appreciation. This will cost government Rs 1,050 crore in 2008-09 as against Rs 600 crore in 2007-08. Benefits under the other schemes will cost Rs 1,000 crore. The minister also announced the formation of the Export Promotion Forum for telecom sector. He said the exports from the sector are likely to touch Rs 4,000 crore in 2008-09.

 

[Bushroda]

India plugs in
Matt Walker
Business Spectator, Australia

Several years ago, Asia gained a reputation as global broadband’s petri dish, a bounded environment where operators were testing a variety of technologies, business models, and network architectures to see how the market would grow and evolve.

Now India is verging towards this status for the emerging world’s telecom industry. India’s carriers are adopting new operating models, sharing network resources, and leapfrogging technology in pursuit of results rather than industrial policy, and the country is emerging as an anchor of global networks.

Improved profitability at India’s increasingly ambitious private telcos, combined with the economy’s continued resilience, further support this notion.

Revenues, capex, and income jump in 2007

India’s big four private telcos continue to dominate. For 2007, total company (wireline and wireless) revenues for Reliance, Bharti, Idea, and Spice amounted to $12.05 billion, up 50 per cent from 2006.

Capex jumped 63 per cent in the same period to $7.31 billion, pushing capital intensity further (and unsustainably) skyward to 61 per cent.

Net income growth, though, exceeded revenues, resulting in an average net margin for the year of 25.0 per cent, up from 20.8 per cent a year earlier.

Operating cash flow, defined here as revenues less opex less capex, was negative due to the high capex burden of build-outs: it sank from -$1.3 billion to -$2.31 billion.

Looking beyond India’s big four private telcos and to South Asia as a whole (adding in MTNL, VSNL, Tata Teleservices Maharashtra, Sri Lanka Telecom, and PTCL of Pakistan), 2007 results were broadly consistent with those of the big four.

Group revenues grew 34 per cent to $16.03 billion, net income grew 44 per cent (i.e. a bit faster than revenues) to $3.10 billion, capex grew 49 per cent to $8.24 billion, and operating cash flow dropped from -$1.00 billion to -$2.10 billion.

Results for the subset and the group are consistent largely because India’s top four private telcos dominate the data set, accounting for 75 per cent of 2007 South Asia revenues and 89 per cent of capex.

Capex strategy

Looking at India, the picture is of large, ambitious carriers spending ahead of demand in hopes that revenue growth and operational efficiencies will allow them to meet their future debt burdens with ease.

We have seen this before many times, most similarly in China during the first half of this decade. There, though, competition – despite the outside impression of vigor and chaos – is heavily controlled by the state, and key carriers are national in scope and centrally managed.

India is much more of a free-for-all, with private carriers, state-owned, and formerly state-owned (e.g. VSNL) carriers competing under a patchwork of licensing and competitive regimes across the country. (Details can be found at the Telecom Regulatory Authority of India (TRAI) website; its quarterly Performance Indicators reports are especially useful.)

If anything, the contrast with China may make investors jittery about India’s relative unpredictability. Much of India’s current capex relates to carriers’ race to blanket the countryside with cellular base stations. Given the size of the country and the large, scattered rural element, this is a huge task. On the plus side, though, this is a job which is about to be eased due to pending regulatory allowance of inter-operator sharing of the active elements of mobile networks: antennas, feeder cables, nodes, radio access network, and transmission.

Leasing/sharing of passive infrastructure is already widespread: one carrier, Spice, booked 30 per cent of its 2007 revenues on passive infrastructure leasing/rentals. High capex also stems, though, from the global network expansion of Reliance (via its ‘Fibre Linkup Around the Globe’ subsidiary, or ‘Flag’); capex incurred by India’s other global giant, Tata/VSNL, is not counted here since Tata does not publish the data, but it is similarly high.

Some of these build-outs are huge: Reliance’s four-stage FLAG Next Generation Network (NGN) will cost $1.5 billion to complete. If you can make money here, you can make it anywhere.

We all know India’s mobile sector has boomed over the last few years, with multibillion-dollar contracts almost becoming the norm.

For vendors, though, unless they have immense scale in wireless infrastructure – able to match the sub-$100/line prices demanded by the market (in GSM, anyway) – India is sometimes viewed as a toss-up, a “take it or leave it” proposition.

This is a mistake. Vendors can’t afford to ignore India. The attraction is not simply in getting some small slice of carrier capex. It is true that India’s share of global telecom capex is under 5 per cent, Indian carriers are even more price-sensitive than others around Asia, and entry barriers can be high.

However, India is in many ways a window to the vast untapped developing world. Those who thought China would provide this lesson should think again: China is a world unto itself, with a whole different set of rules and its own telecom infrastructure industry.

For those who think they’ve missed the boat in India, consider that 3G is not there yet, and the internet barely exists. The question of how to spread internet connectivity to the masses, given the country’s low income and PC penetration levels, is still unsolved.

Nokia espouses its multimedia computers (i.e. the N-series mobile handsets) as a possible solution, but they’re too expensive and limited. Whether we like it or not, computer monitors remain an essential part of the internet experience.

Low-cost computers such as the ‘One Laptop Per Child’ (OLPC)-designed hardware, along with Intel’s Classmate PC, could help to bridge gaps and bring new revenues to operators able to think innovatively about services. But with fewer than 40 million fixed lines (a number that’s shrinking each quarter) and a 2010 target to reach 10 million broadband subscribers, there is still much work to do in terms of connectivity, devices, and services.

A major challenge is lowering the cost of building wireless infrastructure in suburban and rural areas. NSN’s Village Connection (VC) program, which envisions using individual households to host miniaturized base stations and giving household owners a share of usage revenues, is one small step among many others being taken. The point is not whether NSN’s VC program will work, as it very well may not, but the fact that innovation is needed from both a technology and business model perspective to economically serve India’s population, and the next billion after that.

Petri dish?

Because of its scale, openness, policy flexibility, and relatively small technology industry (thus avoiding the marriage between telecom and industrial policy seen in China), India is becoming a vital testing ground for how some telecom technologies and business models can perform in the developing world.

Factors in support of an Indian role as a petri dish include the following:

• WiMax

Very soon there will be multiple nationwide fixed WiMax rollouts aimed at bridging the copper gap, offering in many cases wireless DSL (equivalent) service.

Among private players, Tata/ VSNL is most aggressive on this front, but BSNL has allocated up to $750 million for a build-out that includes a franchise option to accelerate deployment.

Perhaps more than any other large market worldwide, India is well positioned to exploit the benefits of WiMax as an access technology. Given that many developing markets in Africa, Indonesia, CALA, and elsewhere lack strong copper infrastructure, India will be an important testing ground for the technology and its support infrastructure.

For instance, many optical vendors (ZTE, ECI, Nortel, etc.) are positioning themselves to play into WiMax backhaul markets in India.

• Leapfrogging

Other than WiMax, there are a fair number of cases across the technology spectrum where Indian carriers are positioned to be on the leading edge of new deployment. The baseline reality of low average return per user (ARPU) cannot be ignored, but Indian carriers are nonetheless often more flexible and innovative about technology deployment than others. For instance, PBT (‘provider backbone transport’ ethernet enhancement) is of high interest in India, and 40G network technology is also being considered.

• Infrastructure sharing

As noted above, Indian carriers, with regulators’ facilitation, are about to engage in an infrastructure-sharing experiment unlike any tried to date elsewhere on a large scale.

This sharing is both the only way to meet government rollout targets, and potentially a much more efficient way to run the networks, allowing carriers to focus on the user interface and all that it entails (billing, services, portals, etc.).

Prior to this, private telcos had already been actively pursuing alternative internal operating models, with Bharti leveraging IBM and Wipro for services, and Tata securing its TCS sister company’s assistance with activities usually done with direct staff. In a sense, Indian carriers have the opportunity to redefine what it means – from an operational perspective – to be a telco, and bring this experience elsewhere around the developing world.

• Global connectivity

Reliance/Flag and Tata/VSNL have vast undersea cable assets and are building a strong case to compete directly with AT&T, Verizon Business, and BT on the global enterprise/ISP/wholesale services front.

The fact that both have a large domestic market, highly valued by overseas enterprises for things like business process outsourcing services, is a big plus to them.

Reliance’s purchase of Yipes and Tata’s rumored rollout of national Ethernet services in India further both their cases to compete in the big leagues. As these carriers become larger players globally, vendors will benefit from having close relations with them.

• Macroeconomic climate

India’s economy is less centrally managed than China’s, yet as of late it is performing similarly. Real economic growth is in the neighborhood of 8-10 per cent, with the Finance Minister projecting 8.8 per cent for the fiscal year ending March 2009.

• Venture capital

Roughly $1 billion of international venture capital flowed into India last year. Beneficiaries include some telecom equipment/design firms such as Tejas and Telsima, but fortunately for foreign vendors, most of the funds targeted the services sector, with a heavy lingering slant towards outsourcing.

Matt Walker is a senior analyst with Telecommunications and software consulting firm Ovum

 

[Bushroda]

The Global 2000
Indian Summer
Tim Kelly
FORBES, NY
04.21.08

For Japanese outfits like Seiko, it is better late than never to capitalize on a huge new consumer market.

Atsushi Kaneko climbs the stairs to his second-floor office in the bustling southern Indian metropolis of Bangalore. Tilting his head at the elevator doors below, he pauses. The 50-year-old boss of Japanese watchmaker Seiko's new Indian unit is, he reveals, scared of using it since the landlord pasted a notice at the entrance limiting the number of passengers to four instead of the six it's supposed to be able to carry. "I asked why, but got no straight answer," he explains, continuing up the stairs.

Dispatched to India last year by Seiko Holdings to set up the local sales company to hawk watches to the burgeoning middle class, Kaneko is discovering India's hazards. Japan's auto executives were swift to tap its economy; others, however, wary of risks apart from the elevators, steered clear.

The sustained nature of this boom is now easing those jitters, and a Japanese scramble to set up shop is on. Many of the new arrivals are finding that rivals from Europe, America and elsewhere got there before them.

"There is a queue of foreign companies waiting to enter India, so the Japanese have to be aggressive; less analysis, just get on with it," advises Kushal Pal Singh, who as the billionaire head of one of India's biggest property developers, DLF, is one of the subcontinent's leading businessmen.

India is on a shopping spree, with consumer spending forecast to quadruple to $1.8 trillion by 2025. In the first half of the most recent business year TV sales jumped 15%, and in the first quarter sales of PCs rocketed 47%, according to IBEF, an Indian government research unit. A quarter of a billion Indians already own mobile phones, and 5 million new owners join them every month.

In 2005--06, the latest figures, India's imports from South Korea--an economy a fifth as big as Japan's--stood at $43 billion, exceeding the $36 billion from Japanese factories. Samsung and LG dominate sales of LCD televisions with a combined market share of 65%. Sony (nyse: SNE - news - people ) trails with 14%. "We brought our LCD TVs into India earlier than our competitors," Samsung spokeswoman Eunhee Lee explains. Last year sales volume almost quadrupled to 170,000 sets.

Back in Bangalore Kaneko is upbeat. "Had we come six months later, it may have been too late," he concedes. But he sees a growth path. Standing in his way is Switzerland's Swatch Group and its stable of luxury watch brands, including Omega, Tissot, Hamilton and Longines.

So far sales are only a blip for the $2 billion-in-revenue watchmaker and its sister company and movement supplier Seiko Epson with $12 billion in sales. Kaneko measures success by how many inches of watch-store display space he steals from Swatch. After all, he says, letting Seiko in means "they have to kick somebody out." Store owners have told the Japanese manager the Swiss have warned them of a pullout if they give shelf space to the Japanese timepieces. Though empty so far, the threat has nonetheless "slowed down our entry into the market a little," admits Kaneko.

Finishing his meeting with public relations officials hired to spread Seiko's name in India, Kaneko and his sales and marketing head, Niladri Mazumder, pile into the company's chauffeured Toyota (nyse: TM - news - people ) van and head out into the mayhem of Bangalore's midafternoon traffic to meet watch-storekeepers at malls thronged with weekday shoppers. Owners who free up the best display space get more than a pat on the back, the Japanese manager explains--they get a discount from the usual wholesale price. Kaneko also lavishes trophies on the bestselling stores and is mulling taking some of the owners on a trip to Japan. Those tactics have so far got Seiko into 81 outlets in India, way ahead of expectations, Kaneko boasts.

A rapid rollout of mall shopping space in the country has helped to entice consumer product lines like Seiko. But geopolitics also played a role. In 2005 Tokyo's interest surged as a worsening in Japan-China relations inspired then prime minister Junichiro Koizumi to begin wooing India with promises of money to build roads and rail lines, including billions of dollars to construct a freight corridor linking Delhi in the north to Mumbai, 720 miles south. A year later direct investment from Japan had doubled to $515 million. India is also the biggest recipient of Japanese development aid, including $100 million in low-interest loans to improve distribution in Bangalore.

The timing was a nice coincidence. Samir Sathe, founding director of Mumbai's Universal Consulting, which helps foreign companies enter India, says the luxury-product market was already expanding by 20% a year as Seiko finally entered the fray.

In the 1970s, he explains, when few Indians had the cash to buy luxury brands, owning a Seiko watch, either bought on a foreign trip or sent by overseas relatives, was all the rage. "When I was a kid, it was a big thing if your dad had one," he says. His father still owns the Seiko watch he bought back then. But the company then dropped the ball.

"The rise of India took Japan by surprise," says Kazumasa Kuboki, who runs the Bangalore branch of the Japan External Trade Organization (Jetro). Seiko is now one of 90 Japanese firms to make it to Bangalore, with Toyota--which has a plant there--the biggest. Already the best land for factories and offices is gone, and any new entrants will probably have to look 60 miles outside the city for a plant site, Kuboki says.

Meager domestic investment in roads means traffic in the metropolis of 6 million is gridlocked. The cacophony of honks and beeps from auto-rickshaws, cars, trucks and scooters vying for space is an unbroken accompaniment to life in the city. A metro line to ease the congestion won't be finished for six years. In the meantime, as families give up perching on scooters in favor of the comfort of cars, including Tata Motors (nyse: TTM - news - people )' new low-cost offering, the road mayhem will worsen.

But it isn't just traffic that might slow some of Seiko's deliveries. Bureaucracy and corruption, or both, remain a hang-up. Customs officials who check shipments of watches from Japan recently asked for "speed money," Kaneko observes. He didn't pay.

Life for the 330 Japanese living in Bangalore can be lonely. Though two Japanese restaurants serve the small community, none of the city's big markets sells the Japanese staples of sticky rice, soybean paste or fish stock, says Jetro's Kuboki. There are no direct flights back to Japan and no full-time Japanese schools for expats' children. Many, like Kaneko, leave their families in Japan.

Then there are the everyday hazards.

Over lunch Kaneko and his fast-talking sales manager Mazumder, a native of Kolkata, chat about the building's new elevator rules, after walking up two floors to an Italian eatery. Pointing to the road below, Mazumder tells the boss he chances the lift because he might just as easily be killed crossing the street. "Why take the extra risk?" Kaneko responds. Mazumder pauses. When doing business in India, he advises, "You have to jump into the water to see where the sharks are."

 

[Bushroda]

A clean, green rail Metro... Melbourne? Sorry, try Delhi
Matt Wade
The Age, Australia
March 29, 2008

Shiny, punctual and praised by all, Delhi's new Metro system has revolutionised transport for the Indian capital's soaring population.
Photo: Matt Wade

AS MELBOURNE tinkers with its largely pre-World War II public transport system and puts up with congested roads, commuters in the Indian capital, New Delhi, are revelling in a state-of-the-art Metro.

Although India's average income is only about one tenth Australia's, its rapidly growing cities are pouring money into new rail networks.

Delhi had no metropolitan rail system before part of its new Metro was opened in 2002. Now, authorities expect that, by 2020, it will be bigger than London's underground.

The rail system has changed the lives of commuters such as Vimal Chandra, a 55-year-old public servant. Mr Chandra used to spend 2½ hours on crowded buses getting to work. That has been cut to just over an hour.

"If you have ever used Delhi buses, you know how good the Metro is," he said. "It has made a big difference to the city and, at my age, it has come as a great relief."

Trains arrive every four minutes during peak times. The clean, air-conditioned carriages are a major attraction given Delhi's extreme summer heat. Every passenger is searched before entering a station and security staff patrol platforms and carriages.

Accounting student Sunil Kumar Maurya, 22, said it had become Delhi's "lifeline". "It costs more than the bus, but it has halved my commuting time. This city could not survive without it now."

At least nine Indian cities are building or planning rail metros including the booming IT centres of Bengaluru (formerly Bangalore) and Hyderabad.

The contrast with Australia's big cities is stark.

"Since the Second World War there has been very little expansion of urban public transport systems in Australia and the quality has declined," said Graham Currie, Professor of Public Transport at Monash University's Institute of Transport Studies.

"The answer for both Australian cities and Indian cities is to invest in mass transit systems."

And there are striking differences between Delhi's Metro and the fashions shaping the development of public transport in Australia. The Delhi Metro is not privately owned and funded like many public transport projects proposed in Australia. Delhi Metro Rail Corporation, the company building and operating the system, is a joint-venture by the Indian Government and the Delhi State Government.

Unlike Australia's Federal Government, which has left urban transport to the states, India's national Government has taken a big role in Delhi's rail project.

Delhi's population has ballooned from 5.7 million in 1981 to around 17 million and is projected to reach 19 million by 2011. Its roads are crammed with more than 5 million vehicles — more than in Mumbai, Kolkata and Chennai combined.

The Delhi Metro will be completed over the next 20 years. The first phase was finished in late 2005, ahead of schedule and below budget at a cost of $2.5 billion. It has three interconnecting lines, serviced by 59 stations, 13 of which are underground.

One line runs under old Delhi, which has buildings from the 17th century Mughal empire. At a station near Delhi's famous Red Fort, passengers emerge from spacious underground platforms into alleys crammed with small traders that are a hallmark of the old city.

This second phase is scheduled to open before Delhi hosts the 2010 Commonwealth Games.

"By 2010 the Delhi Metro will already rank among the largest metros in the world," said a spokesman for Delhi Metro Rail Corporation, Anuj Dayal.

The system turned an operational profit from the first day. What's more, the Delhi Metro's exceptional green credentials were underscored in January when it became the world's first rail project to be registered by the United Nations under the Clean Development Mechanism.

As a result, the Metro can claim carbon credits worth more than $3 million a year for the next 10 years, thanks to an energy saving mechanism in the braking system of its rolling stock. The company is also seeking carbon credits for reducing emissions by shifting commuters from buses and cars to rail.

"The 650,000 passengers we carry each day means 40,000 less vehicles on Delhi roads," Mr Dayal said.

The unassuming 72-year-old railway engineer who heads Delhi Metro, Elattuvalapil Sreedharan, has become a national hero. He was recently named Indian of the Year by the CNN-IBN news channel for achieving "the near-impossible, for breaking through bureaucratic red tape and defying the naysayers of modern infrastructure-building".

Indeed, it's hard to find anyone who has a bad word to say about it.

 

[Bushroda]

India's African inroads
Nic Dawes
Mail & Guardian Online, South Africa
10 April 2008

"We are not the Chinese." This was the message from India this week as Indian Prime Minister Manmohan Singh's government used the first India-Africa Forum Summit in Delhi to redefine the way in which its role in Africa is viewed.

The government went out of its way to pre-empt suggestions that the relatively low-key summit was an attempt to catch up, following last year's China-Africa jamboree in Shanghai, but it was even more concerned to distinguish India's conduct in Africa from what is seen as a rapacious approach by Chinese companies to minerals exploitation.

Minister of State for External Affairs Anand Sharma, one of the prime movers behind the summit, said of India's relationship with the African continent: "It is time tested, it is distinct, it cannot be compared to any other country."

Sceptics, he insisted, were not aware of the deep ties established by Mahatma Gandhi and India's first post-independence leader, Jawaralal Nehru, who both believed India's and Africa's freedoms were deeply entwined.

Speaking to a group of African journalists, Minister of State for Commerce Jairam Ramesh was more blunt: "The first principle of India's involvement in Africa [is] unlike that of China. China says go out and exploit the natural resources, our strategy is to go out there and add value."

Indian companies working on infrastructure projects in Africa, he said, would not bring the labour force with them, as the Chinese prefer to. Instead, Indian engineering teams will employ and train local staff.

But clearly, access to resources is a crucial policy concern for India, which requires massive quantities of raw materials to fuel its burgeoning economy. The distinction it is trying to draw with China concerns how it goes about securing that access.

Ramesh travelled ahead of the summit to Namibia and Angola where he worked on a package of deals to acquire direct access to west coast oilfields and rough diamonds.

India's vast diamond-processing industry consumes about $10-billion in rough stones annually, adding about $4-billion in value, according to commerce ministry figures.

Ramesh believes direct access to those rough stones will more readily be made available if India takes account of African desires to establish local cutting industries. He punted plans to help set up processing centres and train local workers.

"Nine out of 10 diamonds mined in Africa come to India for cutting and polishing ... how do we help these countries to move up the value chain?" he asked. "The Africanisation of the diamond industry is not a threat to India but a great opportunity."

Similarly in Angola, where state-owned ONGC-Videsh wants a slice of lucrative offshore oilfields, India is proposing to take a stake in the 200 000-barrel-a-day Lobito refinery, to set up a petrochemicals research and training facility and, perhaps, to build a 300MW gas-fired power station.

This combination of infrastructure investment, education and hard-nosed business is seen by Indian officials as a model for sustainable long-term engagement, which, they argue, will enable them to do business in Africa despite the fact that they lack both the resources and the centrally coordinated strategy that has driven the rapid expansion of Chinese activity on the continent.

The most substantial announcements at the summit, however, concerned trade and development finance. Singh announced a preferential trade scheme for the world's 50 least-developed countries, 34 of which are in Africa.

The scheme will eliminate duties and quotas on a wide range of primary commodities and finished goods, including cotton, cocoa, aluminium ores, copper ores, cashew nuts, cane sugar, clothing, fish fillets and gem diamonds, improving access to India's still-protected markets for the poorest countries, but also helping reduce input costs for Indian manufacturers -- a crucial domestic issue as inflation brings increasing pressure on India's ruling coalition.

African leaders pressed for the preferences to be expanded to the whole of Africa, Tanzanian president and African Union chairperson Jakaya Kikwete told the summit, but it seems further trade liberalisation will be slow and probably bilateral.

India will, however, double the lines of credit it offers African countries to fund investment with an Indian component to $5,4-billion, offer $500-million in aid grants and increase its array of educational scholarships and technical training programmes for African students.

The summit agreed on a broad cooperation framework in agriculture, trade, education, governance, the reform of global institutions and infrastructure, which is due for review at the second summit, planned to take place in Africa in 2011.

Nic Dawes travelled to Delhi as a guest of the Indian government

 

[Bushroda]

India's formula for success
By Gary Meenaghan
Emirates Business 24/7, United Arab Emirates
Thursday, April 10 , 2008



Formula One’s Force India may have yet to score any championship points this season, but when it comes to driving motor sports forward in the Subcontinent the competition’s newest team is firmly on track with its business plan – a strategy that is sure to put India in pole position to benefit from the lucrative F1 industry.

India’s economy is already making more noise than the rickety auto-rickshaws that speed down its busy streets, but with a population of 1.2 billion and an expected economic growth rate of 8.5 per cent, it is little wonder F1 Chief Bernie Ecclestone is looking to take his Grand Prix circus to New Delhi.

One person ahead of the pack is Dr Vijay Mallya (pictured above), the Indian business tycoon who paid £70.5 million (Dh528.7m) for Spyker F1 in October 2007, expeditiously re-branded them Force India and generated overnight awareness in his home country.

“In India, we are now seeing companies who are interested in sponsoring Formula One,” he says. “Already there have been several approaches from people who want to buy shares in the team.”

Mallya is no stranger to leading from the front. Aside from his days driving Formula One cars for kicks, the CEO of Kingfisher Airlines also owns Kolkata’s East Bengal football club and recently paid $111.6m (Dh409.5m) to acquire Bangalore Royal Challengers, one of the eight franchises in the inaugural Indian Premier League.

Marketing his cricket side in a country of cricket-lovers is unlikely to keep the flamboyant 52-year-old awake at night (leave that to the extravagant parties aboard his yacht, Indian Empress), but garnering interest in Formula One, a sport so far widely ignored by the majority of the Indian population, is sure to prove a far harder task.

Mallya, however, is confident that Force India can promote the sport adequately and, in time, create a fan base other countries can only dream of.

“Cricket is cricket in India, but I think the popularity of Formula One is on the rise,” says Mallya. “The two sports are not mutually exclusive, they complement each other and there is a huge potential audience out there for F1.

“We have such a huge population that even if we identify 300 million people out of 1.2 billion who might be potential followers of Formula One; that is the size of Europe. That is big enough.”

So far, so good it would seem. Having invested $120m into the team during the close season, Mallya has witnessed more than 14,000 people register as members on the team’s website in the past four months. Last year, in a similar scheme, Mallya’s Kingfisher group, then-sponsors of Toyota, managed to entice just 80 registrants during the entire year.

But nobody is under any illusions. F1 favourites Ferrari and McLaren can boast of several hundred thousand registered members – Colin Kolles, however, team principal of Force India and the man in charge of producing success on the track, says such is to be expected from teams with rich histories.

“We are a small team trying to fight with the big teams and do the
best we can,” he says.

“You must be realistic; McLaren are 40 years old… during the past four years our objectives have been to basically rescue and stablilise the company, then develop. Now the team is stabilised, it is just the process of taking off,” he says.

“Taking off” has gone according to plan thus far. Mallya demanded the team evolve from back of the grid also-rans to midfield contenders and during the first three Grands Prix of this year lead driver Giancarlo Fisichella has finished 12th on two occasions.

But, it appears, the problem for Force India is that the Indians cannot feel the force. They cannot relate: Fisichella is Italian and the team’s second driver, Adrian Sutil, was born in Starnberg, Germany.

All parties – owners, team principles and drivers alike – recognise that a team titled Force India, marketed towards the Indian population and vying for a fan base in the Subcontinent would heavily benefit from having an Indian Formula One driver.

Enter 24-year-old Karun Chandhok.

Chandhok was born in Madras, is personal friends with Mallya and Ecclestone and currently competes in the GP2 Series, one level below F1.

Having successfully raced in the Indian National Championship and Formula Asia series, he moved to England in 2002 to compete in F3. Within six years, he was enrolled in the Red Bull Junior Development Programme and 11 months later was sharing a track with Michael Schumacher, Kimi Raikkonen and Fernando Alonso as he was invited to close season testing in Spain. He drove for the Red Bull’s F1 outfit.

“I was surprised how close a GP2 car is to a Formula One car,” he says about his testing experience. “It was not like I got in and was like, ‘Wow, this is scary’. Do not get me wrong, it is everything you dream of. It is everything I dreamt of and fully lived up to its expectations, but at the same time it was not something I did and thought, ‘I am out of control here’. That is when I thought, ‘God willing, if I get to Formula One one day, I think I can do a good job’.”

His nationality and ties to Mallya have naturally sparked rumours he will defect from Red Bull and race for Force India next year.

Kolles says his team keep a keen eye on the driver and Fisichella says he has a “good chance” of joining Force India.

But Chandhok himself is adamant he will not make his F1 fantasy a reality until he is ready – and insists patriotism will play no part in his decision.

“I do not want to be in F1 just to be in F1,” he says. “I do not want to be a one-year wonder. I do not want to do a year at Force India, everyone gets their marketing kicks out of me then I disappear.

“As a driver, I want to do as best as I can in races and if that means I have to drive for whoever, then I will do that. It would be nice if Force India can get competitive enough to get in that position soon, but I have to separate the emotional and the practical sides.”

Chandhok is an articulate young man with a maturity that belies his tender years. When asked how important it is for Force India to have a native driver he smiles wryly and responds with confidence: “I am sure their marketing department would love it.

“It is not rocket science is it? For BMW to have a German driver makes sense, for Toyota or Honda to have a Japanese driver makes sense, for McLaren to have Lewis [Hamilton] makes sense. But it is two very different things to be beneficial and to be essential,” adds Chandhok, who takes to the track at Dubai Autodrome this weekend in the GP2 Asia series. “I do not think because they are called Force India they have to have an Indian driver. I think by being called Force India, what they should be able to do is to generate Indian sponsors, Indian commercial interests, and by having an Indian driver that should help them do that.

“India is no longer a poor country. There is now a middle-class demographic of 400 million to 500 million who can afford to pay money to go watch a Formula One race. There is money there now and that is why it makes commercial sense to get into India.

“An Indian Grand Prix makes sense and, for me, it would be a dream come true to be on the grid in 2010. Whether that will be in the colours of Force India remains to be seen, but either way, come 2010, India look destined to be in the Formula One fast lane.”

Mallya certainly believes so. “We will be on the podium by then for sure,” says the 962nd richest man in the world. Would you be willing to bet against him?

The ever-changing face of an f1 team

1991 Businessman Eddie Jordan creates Jordan Grand Prix and signs Andrea de Cesaris and Bertrand Gachot as the team’s drivers. Gachot is sent to prison mid-season and is – initially at least – replaced by Michael Schumacher.

2005 After years of financial instability, Jordan are sold to Midland Group for $60m (Dh220.2m). India’s first Formula One driver Narain Karthikeyan is named as the team’s lead driver.

2006 Less than two years after his purchase, Canadian businessman and CEO of Midland F1 Racing, Alex Shnaider, sells to Spyker for $106.6m.

2007 Spyker F1 team compete in 17 races and fail to score any points. At the season’s end they sell up to Vijay Mallya for $139m. The business tycoon renames the team Force India.

PROFILE: Karun Chandhok

2000 Races in the Indian National Championship. Starts all 10 races in pole and wins seven of them. The result is that he not only wins the INC title, but breaks the record for most wins in a season.

2001 Competes in Formula Asia, winning the first five races of the season on his way to the title. Tests in F3.

2002 Moves to Brackley, near Silverstone, and competes in F3, finishing sixth. Works as an instructor at Silverstone so he does not have to “eat beans on toast come the end of each month”.

2005 Takes part in the World Series and represents India in the A1GP, but leaves after two races. “It got too political,” he says.

2007 Wins his first GP2 race at Spa-Francorchamps. Tests for Red Bull F1 Racing in Barcelona.

2008 Decides to continue in GP2, racing for iSports International. Takes part in the Grand Racing at Dubai Autodrome today and tomorrow.

 

[Bushroda]

Indian door open to Aussie firms
Christian Kerr
The Australian, Australia
April 11, 2008

INDIA is being touted as the new land of opportunity for Australian infrastructure and resource companies, with business opportunities worth more than $50 billion available in the next 12 months.

"The Australian Government is committed to raising the trade and economic relationship with India to a new level," Trade Minister Simon Crean said yesterday, launching a new Austrade report on business opportunities in India.

"Australian business has the expertise and capacity to pursue the tremendous opportunities that India presents in the infrastructure and resources sectors."

Mr Crean said trade between Australia and India had been growing by more than 30 per cent per year, and India was now Australia's fastest-growing export market.

India has experienced rapid growth, averaging 7.6 per cent over the past five years and 9.4 per cent in 2006-07.

Indian gross domestic product is projected to grow at 8.7 per cent in 2007-08, a growth rate that makes India the world's second-fastest-growing economy.

"The Indian Government has identified that, to sustain a growth rate of 8 to 9 per cent over the long term, significant infrastructure development is required," Mr Crean said.

"Investments in the order of $US500 billion ($536.6 billion) are expected to take place in coming years for developing ports, airports, roads, railways and real estate."

The report, prepared for Austrade by KPMG India, says the Indian Government is creating an infrastructure policy framework increasingly conducive to private investment, with several opportunities for public-private partnerships.

The paper says the minerals sector will experience significant growth, driven by overall industrial growth.

"The size of the metals and mining sector in India has more than doubled to $US45 billion in 2007 from $US20.3 billion in 2001 and a similar pattern is expected to be maintained in the years to come.

"This will demand increased efforts and investments in exploration and extraction activities," the report finds.

But KPMG has warned that Australian companies must act swiftly.

"Some of the larger Australian companies are working in India and some are in the process of entry, but others need to move fast to compete with companies from the UK, USA and Spain which have expertise in this area and are very keen to participate in the Indian market," said Kumar Parakala, KPMG Australia's India business practice national leader.

Australian infrastructure and resources companies already working in India include Leighton, Hydro Tasmania, BHP Billiton, Rio Tinto, Thiess and BlueScope.

 

[Bushroda]

Chavez promises oilfields to India

Caracas (PTI): Venezuelan President Hugo Chavez on Wednesday promised to give India more oilfields in its heavy-oil belt, touted to hold the world's largest fossil fuel reserves, as he seeks to tap the world's second fastest growing economy to diversify energy trade beyond US.

The 53-year-old leader, who proudly calls Venezuelans as Indians, indicated that the Latin America's only OPEC member- nation may set up a refinery-cum-petrochemical complex in India to process its crude oil.

Receiving India's Petroleum Minister Murli Deora at his Presidential Palace Hugo Rafael Chavez Frias expressed intention to supply one million barrels per day of oil to India in the near future. He readily agreed to Deora's request for giving India's flagship ONGC Videsh Ltd a stake in one of the four oilfields in the Carabobo and a piece in the Junin Norte Block in the Orinoco heavy-oil basin.

"The political answer is yes," he said, responding to Deora's request. "Now technical team (of Venezuelan national oil company PdVSA) will deal with technical aspects and I am certain even technical aspects will be positive," he told visiting Indian journalists after a 75-minute meeting with the Indian oil minister, the first to visit his country.

The Junin area is believed to hold some 500 billion barrels of inplace oil reserves, of which Junin Norte may have about 7-8 billion barrels. The Carabobo heavy-oil field also in the Orinoco region may hold 213 billion barrels. About 10 to 20 per cent of these reserves can be recovered.

These would be in addition to the 40 per cent share OVL has in the San Cristobal oilfield for which an agreement was signed on Tuesday. OVL and its 60 per cent partner Petroleos de Venezuela S.A (PdVSA) plan to produce 40,000 barrels per day of oil from the field over an 8-year plateau period after investing over 446 million dollars.

 

[lexislichan]

india economy is good.i wish that indian government also behave well abt 2008 beijing olympic torch relay in india.we chinese want peace and cooperation.

 

[Neo]

India bans cement exports, restriction on steel likely ​

To import more cement from Pakistan​

Sunday, April 13, 2008

NEW DELHI: India has banned export of cement from Friday and was considering a similar move for steel, the trade minister confirmed on Saturday, as the government aims to calm inflation that leaped to a three year high level.

“We have issued a notification last night banning export of cement,” Kamal Nath told reporters after a business conference.

India’s cabinet ministers, scheduled to meet next week, will also debate on a proposal to ban steel exports, he said.

Nath had already said on Friday that the government would ban cement exports and also withdraw export incentives for steel and cement products.

India’s headline inflation raced to an annual 7.41 percent in late March, its highest since November 2004, due to higher prices of food and metals, government data showed on Friday.

Over the last few weeks, the government has cut duties on edible oils, banned export of non-basmati rice and withdrew export incentives for cement and steel to increase local supplies and tame inflation.

Policymakers also contemplate an upward pressure on cement prices, as demand outpaces supply in Asia’s third largest economy that is scaling up its creaky infrastructure at a cost of $500 billion to sustain an average annual growth of 9 per cent until 2012.

More cement imports from Pakistan: Trade Secretary G K Pillai said the country was aiming at doubling cement imports from neighbouring Pakistan to 4,000 tonnes a day, and the latest ban on exports could help meet the demand-supply gap.

“When there is a shortage, why allow exports? We are going to double imports from May.”

India allowed duty-free import of cement from Pakistan in 2007, as domestic firms like Grasim Industries Ltd, UltraTech Cement, ACC Ltd and Ambuja Cements Ltd are running almost at near full capacity and cannot match the growing demand in near future.

Indian firms plan to add another 100 million tonnes in capacity by 2010 at a cost of 400 billion rupees. “This would ease the pressure on prices,” Pillai added.

India’s cement output grew by 7.5 percent from a year earlier to 151.24 million tonnes during April-February in the 2007/08, of which exports were at 3.33 million tonnes, according to industry body Cement Association of India.

India bans cement exports, restriction on steel likely

 

[Neo]

India says to take tough steps to tame inflation ​

Thursday, April 17, 2008

NEW DELHI: India on Wednesday warned of tough action against hoarders to tackle inflation, which has hit a three-year high thanks in part to fast-rising food prices, and said the central bank would take monetary steps soon.

Finance Minister Palaniappan Chidambaram said India was not totally insulated from turmoil in global markets, and added that a surge in food and oil prices was impacting Asia’s third-largest economy.

India’s headline inflation surged to 7.41 per cent in late March, its highest level since November 2004, following a jump in food and metals prices.

“We can intervene through fiscal steps, monetary steps and supply-side measures (to check rising prices),” Chidambaram told lawmakers in parliament.

“We will not hesitate to take tough administrative measures,” he added, urging state governments to impose stock limits on food items to check hoarding.

The government has already cut duties on edible oils, banned the export of non-basmati rice and withdrawn export incentives for cement and steel to increase local supplies and ease price pressures.

While federal and state governments could take more fiscal and administrative measures, Chidambaram said that the Reserve Bank of India would take appropriate monetary measures soon.

On Tuesday, central bank Governor Y V Reddy said in New York the level of inflation was “unacceptable” and was higher than the bank’s “tolerance limit”.

“While this situation requires constant monitoring, any action, any time that is required will have to be taken,” Reddy said.

The bank aimed to contain inflation at near 5 per cent in the 2007/08 fiscal year that ended in March, and analysts now say the RBI may raise the cash reserve ratio (CRR) of banks in its policy review on April 29.

India says to take tough steps to tame inflation

 

[Bushroda]

The boom is over in Detroit. But now India has its own motor city

The car industry in the region around Pune, Maharashtra, is growing apace as manufacturers see the potential for the Indian market to overtake China.

By Richard Orange
The Independent, UK
Sunday, 20 April 2008

The tiny Mahadev Temple is beginning to look out of place on its hill above the village of Chakan, 30km from the Indian city of Pune. Just a few years ago, its squat bulbous cupola looked down over an empty plateau of farm and grazing land. Now, more than 2,500 workers swarm over the 2.3sq km of land beneath it. By early next year, the steel and concrete hangars rising from the scrub will have become a Volkswagen plant able to churn out more than 110,000 cars a year.

To the other side is another sprawling 4sq km plot tipped to house a factory for the ultra-low-cost car planned by Indian motorcycle giant Bajaj and France's Renault. And just 10km away in Talegaon, General Motors is putting the finishing touches to a factory which will produce 120,000 cars a year. The Mahadev Temple is now the centrepiece of one of the world's most rapidly industrialising regions.

Dr Thomas Dalhem, who is in charge of setting up the plant for Volkswagen, says: "They speak about the Detroit of India, but I don't like it. If you think back to when the car industry in the US was booming, then you can compare it to Detroit."

The plants announced so far add up to investments of more than £2.5bn. Once they are up and running, this part of Maharashtra alone will be making 1.8 million cars a year – more than Britain.

And these are just the biggest international projects. Next door to Bajaj and Renault, Daimler has an assembly plant for Mercedes. Indian jeep maker Mahindra & Mahindra is planning a £500m plant in the village. The UK's JCB has built a heavy machinery factory in Talegaon.

"We were not ready for this kind of boom," says Chetan Patil, the marketing manager for the Maharashtra Industrial Development Corporation (MIDC). "We lost 1,900 acres of land in two years to these car makers."

The region will employ 25,000 people in car making in two years, he says. That still leaves it far from the 129,000 workers employed by the car industry in Detroit – the historic centre of US car manufacturing (down from 316,300 in 1999).

But it is catching up fast: Every one of the 112 plots MIDC has created here has already been bought and the corporation is now trying to buy 12,500 acres for further expansion. Patil says he is in discussions with four or five other major international companies seeking land for new factories.

In 1998, when Sandesh Tamhane, one of the Bajaj plant's senior managers, first arrived here, there was nothing. "When we came here in 1998, not a single plant was here," he remembers. "The condition of the road was horrible."

Bajaj's 800 staff now produce 1.3 million of its Pulsar, Avenger and Discover motorcycle brands every year. And 35 of the company's suppliers have set up factories in the area.

"This plant was basically created to change the culture at Bajaj Auto. In the 1980s, people weren't conscious about quality: whatever you produced, it used to get sold."

The Chakan plant today is a collection of scrupulously clean white buildings surrounded by lush gardens and fountains, highly automated and steeped in Japanese lean production techniques.

Every other month, Sueo Yamaguchi from the Japanese Institute of Plant Management visits the Bajaj site to assess its progress. "The way one used to work 20 years back and the way we work today has drastically changed," Tamhane says. "Maybe in five to 10 years we will be at par with anywhere abroad."

The acquisition of Jaguar and Land Rover by India's Tata Motors last month has raised the status of Indian car making. And in January, the launch of its £1,300 Tata Nano brought Indian engineers a new reputation for imaginative, frugal design.

The change is already apparent in the settlements nearby. Traditional Maharashtrian village houses are giving way to garishly painted concrete villas.

But Ganesh Yelwande, a local farmer, complains that he has gained little. "People don't like selling to the government, but people are under pressure. They were giving a very low rate for the land. The mediator is getting the benefit."

Even Yelwande admits, though, that new training institutes and schools have come to the region.

And Dalhem sees development every time he drives to work. "What will happen for sure – if you drive between Chakan and Pune you can see it – this will all be fully developed. Everywhere I see new signs saying, 'Here's your chance. Buy a new apartment here.' All of our staff will move here. Schools and supermarkets will come up."

The immediate draw of India for the international car makers is the potential size of its market. Both Volkswagen and GM expect India to overtake China as the world's fastest-growing car market. Sales of passenger cars increased 12.17 per cent to 1.5 million in the year to March 2008. Volkswagen expects India to overtake the UK as the sixth largest world car market by 2010.

Following the Nano, Volkswagen, Renault-Bajaj, GM, Honda and Toyota are all planning to launch small cars suited to Indian consumers' buying ability. Before the Nano, Maruti Suzuki's Maruti 800 had dominated the Indian market for cheap cars for over 20 years.

Pune is well located between the major metropolises of Delhi, Mumbai, Bangalore and Chennai (Madras). It also has around 500,000 students, giving it a vast pool of educated labour. Tamhane says the labour shortages that had started to happen in Chakan are now lessening as new engineering colleges open.

Every year, Bajaj takes on 120 new employees, most with engineering diplomas, to top up its 850-strong workforce, paying as little as £150 a month. "We don't want to retain people," Tamhane explains. "We want them to leave after five to six years. Here we think enthusiasm is more valuable than experience."

The cost of building a factory here is also cheaper than it would be almost anywhere else in the world. Volkswagen is spending £470m setting up its new plant. Much of the machinery is still imported: Dalhem has three ships waiting at Mumbai loaded with equipment and he just received the first shipment of containers on site – treatment baths for the paint shop from Germany's Dürr.

But huge savings are made on manpower – workers on construction sites in India are paid about £1.30 a day. As a result, major car makers are considering using their India plants for export, both for finished cars and components.

GM has said it wants to make India an export hub for small and mid-sized cars destined to be sold in other emerging markets. Hyundai plans to make India the sole production centre for its new I20 model, even though it will not be sold domestically.

The Pune region is well-positioned for exporters – linked by the the six-lane Mumbai-Pune Expressway to the Jawaharlal Nehru Port, one of India's largest and most efficient.