Indian Economy - News & Updates - Archive

[Contrarian]

Tatas put Nelito on the block

MUMBAI: There's a little known company in the Tata stable called Nelito Systems. It develops software products and solutions for the banking industry. Sources have it that Nelito is being put on the block and various options are being looked at.

The Tata group holds a majority 50% stake in the company through Nelco. Nelco's claim to fame is that group chairman Ratan Tata cut his teeth as a manager there in the early seventies. Another 48% in Nelito is held by Sunnynook (AG) and the remaining 2% is held by employees.

The reason why Tata group is reviewing Nelito Systems is because it is not seen as fitting strategically with Nelco's current lines of businesses. These include system integration and product management for industrial controls, defence electronics and VSAT (very small aperture terminals) networks. The logical thing to do, say sources, is exit from the company and unlock whatever value exists in it.

Nelco was earlier looking at transferring its stake to TCS, the group's flagship software services company. The arrangement was part of the plan to bring all the group IT companies under the TCS umbrella.

 

[Contrarian]

Jindals take BPOs rural



BANGALORE: In a unique initiative, the $4-billion Jindal Group, with support from the Karnataka government, is working to take BPOs rural.

After a year of testing a rural BPO model near Bellary, the Jindal Group is now planning to set up Dattahallis (data villages) across north Karnataka. This is the first instance in the state where the benefits of a business process outsourcing will penetrate a rural, agrarian economy.

Jindal's plan is eventually to set up rural BPOs in the vicinity of all its steel, aluminium and energy plants in
India. The Group has 12 steel plants.

The Bellary Dattahalli, the brainchild of Sangita Jindal, chairperson of JSW Foundation, will be expanded from 100 to
1,000 seats over the next year.

The facility, near the steel plant, is an all-women business process outsourcing unit that does basic data entry work. Most of the work done is outsourced by Chennai-based Lason India.

The tasks include filling up medical prescriptions/insurance details in a set format and entering details filled by customers in lucky coupons across various stores.
-----------------------

Reeeally good news.

 

[Contrarian]

Kolkata airport revamp gets green signal

NEW DELHI: The much awaited project to modernise Kolkata Airport is finally set to take off. The committee on infrastructure, headed by PM Manmohan Singh, on Wednesday approved the Rs 1,542-crore proposal which will be implemented by the Airports Authority of India (AAI). Aviation minister Praful Patel said the city would get new domestic and international terminals, and the latest communication and navigation systems in next three years.

"The proposal is now being sent to the Centre's Public Investment Board for clearance. Work should begin in two to three months as the first phase of development that will see construction of new terminals has to be over by 2009-10," Patel said. This announcements has put to rest speculation over who — a private player or a subsidiary of AAI — would modernise Kolkata airport.

Of the total project cost, Rs 1,300 crore would be spent on building new terminals. Currently, the domestic and international terminals at NSCB have an annual capacity of four million and a million passengers, respectively. After the bigger terminals are ready, this capacity would shoot to 20 million — 15 million domestic and rest international. An amount of Rs 200 crore would be used for runway expansion, cargo terminal and providing latest communication and navigation services.

Unlike Kolkata, Chennai's wait for a modern airport still continues. The aviation ministry has asked the Tamil Nadu government to clarify its offer of providing more land near the existing airport by May-end. "The offer for land lacks clarity as there's some confusion over the linking area between the existing airport and the land offered. Once this is clarified, we will consult with the state government as to what route the airport development should take,'' Patel said.

The state had earlier spoken in favour of adopting the Delhi, Mumbai model for modernising the airport. But the AAI issued global design bids for the place.

In another move, the ministry has appointed consultants to study the city side development of 35 non-metro airports using the public private partnership route. While these airports would be developed by AAI, the government wants to bid out the city side development at some airports to private developers.

 

[Contrarian]

AT&T to provide ISP services by end of 2007


NEW DELHI: AT&T Global Network Services India — a joint venture between At&T and Mahindra Telecommunications Investment — said it will start offering internet-based services to companies by year-end.

The communication solutions provider, which already has five multi-protocol label switching (MPLS) nodes in India, on Wednesday announced that it will set up two new nodes by the end of this year. The company will also double the capacity at its existing nodes in Bangalore and Mumbai.

"AT&T will invest more than $700 million in 2007 to accelerate the delivery of global IP services and solutions to businesses and MNCs in the key markets worldwide," said AT&T (India) CEO and MD Sanjiv Bhagat.

"AT&T (India) posted 40% growth in revenue last year and we see similar growth rate to continue in the next two years," said VS Gopi Gopinath AT&T Asia Pacific V-P. "Our focus is on large multinationals. We are best at servicing them and hold the highest market share in this particular segment," he added.

AT&T — the first foreign telecom firm to secure ILD, NLD and ISP licences under the government's revised policy on FDI which allows up to 74% foreign ownership — is also in talks for its internet services. The firm at present provides its services to about 300 business customers in India.

 

[Contrarian]

HCL Tech inks pact with Riyadh-based firm

PTI[ THURSDAY, APRIL 19, 2007 10:20:37 PM]

NEW DELHI: IT services provider HCL Technologies today said it has entered into an agreement with Riyadh-based Advanced Electronics company to implement IT projects in Saudi Arabia.

Under the agreement, both the companies would jointly work to implement and execute Integrated IT Solutions and Services for business transformation covering the end-to-end of the IT spectrum including systems integration, IT infrastructure Management and BPO among others, a company statement said here.

HCL also inaugurated its IT Management Centre (IMC) in Riyadh, which would bring company's remote IT management delivery model to the Middle East.
http://economictimes.indiatimes.com...iyadh-based_firm/articleshowcnews/1925679.cms

 

[Bushroda]

India's GDP to grow nine percent in 2007: UN body
Posted April 18th, 2007 by Tarique

New Delhi, April 18 (IANS) India's GDP will continue to grow at nine percent, according to a report of the United Nations Economic and Social Commission (UNECOSOC) released here Wednesday, even as the government is aiming at a 10 percent expansion.

Commerce and Industry Minister Kamal Nath along with the UN Under-Secretary General Kim Hak-Su released the report - Economic and Social Survey of Asia and the Pacific 2007.

"India is expected to grow around nine percent in 2007, under-pinned by a strong performance by the industrial and services sectors," the report said.

The Indian economy consistently maintained its growth momentum in 2005 and 2006, even though sectors such as agriculture continued to slow down, it said.

"Inflation, which continued to grow at over six percent and was led by sugar, petroleum products, chemicals and cement, has been contained to a large extent by the government's anti-inflationary measures," Kim told a press conference here.

The report also lauded India's efforts to bring down fiscal deficit to 3.7 percent of the GDP in 2006 compared to 4.1 percent in 2005.

"India has also been rated as the 18th largest exporter of services in the world, with its share in the world exports rising from 0.6 percent in 1990 to 1.8 percent in 2004," Kim said.

However, the report emphasised on the need to improve rural infrastructure such as roads, electricity, irrigation and telecommunications.

On the issue of gender discrimination and how it adversely affects the economy of the South Asia, Kim said: "The Asia-Pacific region has made good progress in reducing gender discrimination in recent years, but appalling disparities remain."

He said the region losses $42-47 billion per year because of lack of job opportunities for women and another $16-30 billion is lost every year because of gender gaps in education.

 

[Bushroda]

Foreign direct investment in India triples to US$16 billion in fiscal year
The Associated PressPublished: April 19, 2007

NEW DELHI: Foreign direct investment into India nearly tripled to US$16 billion last fiscal year as more overseas investors flocked to the country, a government minister said Thursday.

Indian Commerce and Industry Minister Kamal Nath said foreign direct investment totaled about US$16 billion (€11.8 billion) in the fiscal year ended March 31 compared with US$5.5 billion a year earlier.

The numbers do not include the billions of dollars that have been coming into the stock and bond markets.

The minister attributed the surge to India's economic boom and increasing liberalization of rules relating to foreign investment in recent years.

India began switching from a socialist-style economy in the early 1990s, but foreign companies had been wary about investing here because of a limited domestic market and persisting bureaucratic hurdles.

Foreign direct investment flows now account for 6.8 percent of total investment in the country compared with just 0.5 percent three years ago, Nath said.

 

[Bushroda]

India sets ambitious export target despite appreciating currency
The Associated PressPublished: April 19, 2007

NEW DELHI: India's government set an ambitious US$160 billion target for merchandise exports in the current fiscal year through March 2008, but traders remained concerned that the rupee's sharp appreciation could hurt exports.

Commerce and Industry Minister Kamal Nath said the target, which assumes a 28 percent growth compared to last fiscal year, was based on the performance over the past three years, during which India's exports nearly doubled to US$125 billion (€92 billion).

Nath said the government expects exports to grow at the same pace this year and the year after as well. India's fiscal year runs from April through March.

"In 2008-09, our exports will cross US$200 billion (€147 billion)," Nath said.

Trade groups, however, said it would be difficult to sustain the momentum if the Indian currency continues to strengthen, denting the competitiveness of Indian exports.

The rupee has appreciated nearly 10 percent against the U.S. dollar over the past year and reached a nine-year high of 41.90 per dollar earlier this week.

"We would like to see the rupee depreciate to 43 per dollar and stay stable at that level," said G.K Gupta, president of the Federation of Indian Exporters Organization.

Nath said the government factored in the impact of an appreciating rupee while setting the US$160 billion (€118 billion) export target for the current year.

"If it's wasn't for the rupee, I would have set a higher target," he said.

In the annual trade policy, the minister added 16 countries, including 10 central Asian economies that were formerly with the Soviet Union, to what is a called the "Focus Market" program that now covers 57 countries. Under the program, exporters can claim duty concessions totaling 2.5 percent of the value of exports to these countries.

The policy also expanded another plan, which gives exporters similar benefits for focusing on certain products. In addition, it proposed to encourage export of high-tech products with fiscal incentives.

These measures, Nath said, will help achieve the export target, which is critical to keep the broader economy on a high growth track.

"Exports are no longer a means to generating foreign exchange. Now exports are drivers of (economic) growth and a source of employment," Nath said, unveiling the 2007-08 trade policy.

Until the early 1990s, India had a socialist economy with high barriers to trade. Exports formed a very small share of national income and were seen mostly as a source of foreign exchange required to meet such imports that were necessary for industrialization at home.

Over the past decade, however, exports have grown quickly as the country switched to a more open, market-oriented economy. A third of India's gross domestic product now comes from exports.

Although, exports did well, rising 25 percent last year, latest data showed imports grew faster, leaving the country with a wider trade deficit at about US$57 billion (€42 billion).

Imports in the fiscal year ended March totaled US$181.37 billion (€133 billion), compared with US$124.63 billion (€91.79 billion) in exports.

The numbers do not include export and import of services such software and call center operations.

 

[Bushroda]

India’s steel output set to triple by 2015
Web posted at: 4/19/2007 9:45:7
Source ::: Agencies

NEW DELHI • India said yesterday it has raised its forecast for steel production, which it expects will expand threefold by 2015 as companies raise output to take advantage of surging domestic and overseas demand.

"The government had estimated a production capacity of 65 million tonnes by 2010-2011 but now these estimates have been revised to 80 million tonnes," Steel Secretary R S Pandey said.

"Given a conducive mineral policy framework, this country should be producing 120 million tonnes by 2015-2016 and 180 million tonnes by 2019-2020," Pandey told the Press Trust of India.

India is currently the world's seventh-largest producer with a capacity of 44 million tonnes while China is at the top with a capacity of 418 million tonnes.

India occupied the number eight slot in 2005 and ninth a year before, Pandey said and added: "We are witnessing an era of resurgence in the steel sector".

Indian steel producers are adding capacity to feed demand led by auto makers and construction companies in an economy expanding at an annual pace of nine percent.

South Korean steel-making giant Posco has signed an agreement to set up a $12bn plant in the eastern Indian state of Orissa which will produce 12 million tonnes by 2020.

The world's largest steelmaker, Arcelor Mittal, in December signed an agreement with Orissa to build an $8.7bn production plant in the ore-rich state.

Indian companies are also expanding overseas to increase their size and reach.

India's Essar group on Monday said it had signed an agreement to buy Canadian steelmaker Algoma for $1.58bn and earlier this year Tata Steel acquired Anglo-Dutch firm Corus for $13.7bn.

"Tables have turned and Indian companies are on buying spree abroad and they are acquiring companies of much bigger size than theirs," said Pandey, the senior-most bureaucrat in India's steel ministry.

"We are growing much faster at about 1.5 times what we had anticipated," he said but rejected fears of a glut in the domestic market.

"All investors have done their homework.. demand is really going to shoot up in India," he added.

Meanwhile, shares of Tata Steel fell as much as 6.1 per cent in early trade and finally closed at Rs.511.35, down 3.27 per cent.

The steel major had after market hours on Tuesday announced that it would raise $4.1bn to help fund its acquisition of Corus, of which 12 per cent would come through debt and the rest would be raised from new equity.

Tata Steel, in the midst of raising funds for its $12.9bn takeover of Corus, said it would raise Rs36.55bn in a rights share issue and Rs43.5bn on a rights basis in an offering of convertible preference shares.

"The Tata stock reacted as investors were taken by surprise. They had expected an equity dilution in the range of 40-50 per cent and not nearly 90 per cent. Their guess was a 50:50 debt-equity ratio," said analyst Vishwas Diggikar.

 

[Bushroda]

India emerges as a force in manufacturing exports
New Delhi, April 19, IRNA
India-UN-ESCAP

Apart from the remarkable performance in Information Technology (IT) services, India is rapidly emerging as a force in manufacturing exports, with capital-intensive products featuring prominently", said UN-ESCAP'S survey report.

Addressing UN-ESCAP's annual Economic and Social Survey of Asia and the Pacific 2007 at a global media here Wednesday, India's Minister of Commerce and Industry, Kamal Nath, said he was pleased to note that this year's survey drew particular attention to the ascendancy of India of economic powerhouse.

UN-ESCAP's analysis indicates that India's contribution to global growth has nearly doubled in the last two decades. As a result, India is now the world's fourth largest economy in terms of purchasing power parity.

"Furthermore, the enormous trade potential between India and China is highlighted as one of the key phenomena in coming years.

There has already been a four-fold increase in trade since 2002, and the still comparatively low absolute value promises dramatic room for future increase", he observed.

Kim Hak-Su, the UN Under Secretary-General and Executive Secretary of UN-ESCAP, made a presentation of the Survey and Ms. Shalini Dewan, Director, United Nations Information Centre, also spoke on this occasion.

 

[Contrarian]

Indian company bids for European major
[12 Apr, 2007 l 1218 hrs ISTlIANS]



LONDON: After Tata Steel acquired Corus, the next Indian company to bid for a global major is Ahmedabad-based Suzlon Energy, which has entered a multi-million-euro bidding war to take over German wind turbine maker REpower.

Suzlon Energy is India's biggest builder of wind farms, and is run by billionaire businessman Tusli Tanti. As increasing global energy needs prompt a shift to alternative sources of energy, the company is well placed to drive the global market.

Suzlon Energy made a bid that was well over the one made by French rival Areva, which had started with a euro 105-a-share offer. Suzlon Energy offered euro 126-a-share, which promoted Areva to revise its offer to euro 140-a-share.

Suzlon Energy on Tuesday responded by upping its offer to euro 150-a-share, worth euro 1.2 billion (820 million pounds). The bidding war needs to be seen in the context of the Global Wind Energy Council declaring that the global market grew by 32 percent last year.

Energy industry sources say that growing interest in the international auction is mainly due to the rapid growth in the demand for wind power at a time when there is pressure on various countries to meet carbon emission targets.

Suzlon chairman Tanti said: "Our offer price of euro 150 per REpower share is very attractive for all shareholders. The decision to increase the offer was taken after careful analysis and review of potential synergies that Suzlon can contribute to REpower given our fully integrated business and control over component level technology and its integration with turbine technology."

"We are happy that the management of REpower has supported our industrial plan and strategy. We have already commenced a working relationship in several aspects of the business and are confident of achieving a steady reduction in raw material costs for REpower. We clearly see REpower emerging stronger and Suzlon will be one of the key catalysts in its future development."

Andre Horbach, Group CEO of Suzlon based in the global headquarters in Amsterdam, said: "REpower remains a highly strategic asset from a geographical as well as onshore and offshore product mix point of view."

"The market has never been a concern for the entire industry and this will likely continue for the foreseeable future. Most of the industry faces challenges of a reliable and cost-efficient supply chain and that is where the synergies with our vertically integrated supply chain are compelling."

He added: "De-bottlenecking will lead to higher volumes for REpower at marginal costs, resulting in better operating margins. Together, we can strive for a top three position in all key wind markets."

"Our existing credit facilities and internal accruals are sufficient to fund our obligations under the offer. We have the support of our partner Martifer with whom we have a deferred purchase agreement."

Suzlon made its latest offer after snapping up 7.7 percent of REpower at up to euro 150 a share. It is bidding in partnership with Martifer, part of Portuguese builder Mota-Engil, which owns a quarter of Repower.

http://timesofindia.indiatimes.com/...ds_for_European_major/articleshow/1896715.cms

 

[Contrarian]

Citigroup to move more jobs to India
[11 Apr, 2007 l 1843 hrs ISTlPTI]



NEW YORK: World's largest financial services firm Citigroup Inc on Wednesday said it will eliminate 17,000 jobs or nearly five per cent of its global workforce, even as it plans to move 9,500 positions to India and other low-cost locations.

With an aim to cutting its annual expenses by 4.6 billion dollars in the next three years, the US-based banking giant on Wednesday said that its restructuring plans also include shutting down some offices and relocating employees.

While announcing these large-scale job cuts, Citigroup said that its total headcount would continue to grow in 2007, but the rate of growth, excluding acquisitions, new branches and other investments, would slow significantly.

The company could move a large chunk of its jobs - which could be in the range of 5,00-8,000 - to India, especially for equity research, investment banking and back-office transaction-related activities, sources close to the development said.

The total number of jobs to be eliminated equal more than half of the total number of positions Citigroup added to its workforce in 2006.

More than 9,500 jobs will be moved to lower-cost locations, both domestically and internationally, the company said.

"Ultimately these changes will streamline Citi and make us leaner, more efficient, and better able to take advantage of high revenue opportunities," Citigroup Chairman and CEO Charles Prince said in a statement.

Industry observers said that the job cuts were more aimed at achieving an optimal level of performance, rather than plain cost savings as the company was also aggressively going ahead with acquisition plans.

 

[Neo]

April 20, 2007
India targets big rise in exports

NEW DELHI, April 19: India aims to boost exports by nearly 30 per cent to $160 billion in this financial year despite a surging currency, the government said on Thursday.

India had met its export target of $125 billion for the year to March 31 and set a goal of $160 billion for this fiscal year, commerce minister Kamal Nath said.

The government was aiming for $200 billion in exports for the following year, he said.

The upbeat outlook came despite the Indian rupee's rise of more than five per cent against the dollar since the start of the year on the back of strong foreign investment in India and broad-based pressure on the US currency.

The increase in the rupee's value against the dollar has upset exporters, especially India's flagship outsourcing industry, which makes most of its sales to the United States.

“We have factored in the appreciation of rupee which keeps on fluctuating. We have already requested (the central) Reserve Bank of India to provide concessional loans to exporters,” Nath told a news conference.The rupee reached its highest level in nine years against the dollar this week. It ended Thursday at 42.10 to the greenback.

The minister said the country received foreign direct investment inflows of $16 billion in 2006-07 compared with $5.5 billion in the previous year.

If re-invested earnings were included, FDI inflows would touch $19 billion, he said.

http://www.dawn.com/2007/04/20/ebr19.htm

 

[Neo]

Friday, April 20, 2007

FDI into India nearly tripled to $16 billion last fiscal year

NEW DELHI: Foreign direct investment into India nearly tripled last fiscal year as more overseas investors flocked to the country, India’s commerce minister, Kamal Nath, said Thursday.

Nath said that foreign direct investment rose in the fiscal year ended March 31 to about $16 billion from just $5.5 billion a year earlier. The numbers do not include the billions of dollars that have been coming into the stock and bond markets.

Nath attributed the surge to India’s economic boom and increasing liberalization of rules relating to foreign investment in recent years. India began switching from a socialist-style economy in the early 1990s, but foreign companies had been wary about investing here because of a limited domestic market and bureaucratic hurdles.

That perception seems to be changing. Last year, several top global companies, including IBM, General Motors, Nokia and Suzuki, announced major investments in the country. Foreign direct investment flows now account for 6.8 percent of total investment, compared with just 0.5 percent three years ago, Nath said.

India’s central bank will let Temasek Holdings and Government of Singapore Investment raise their stakes in ICICI Bank to 10 percent each, the Mint daily said, Reuters reported from Mumbai. Temasek holds 7.41 percent equity in ICICI Bank, India’s largest private bank, and GIC holds 2.29 percent, the newspaper said Thursday, citing government officials.

http://www.dailytimes.com.pk/default.asp?page=2007\04\20\story_20-4-2007_pg5_17

 

[Contrarian]

Exim Policy scheme announced to promote high-tech exports

NEW DELHI: The Government on Thursday announced a host of incentives to boost exports from several sectors including a new scheme covering high-technology products, as part of the annual supplement to the Foreign Trade Policy. The measures would help maintain the 25 per cent compounded growth rate in exports witnessed in the past three years, Union Commerce and Industry Minister Kamal Nath said. With exports accounting for one-third of the country's gross domestic product, he said the intention behind the fine-tuning of the trade policy this year was to encourage new areas such as high tech exports and build on healthy growth rates in farm produce. Some popular schemes have been enlarged to accommodate more product lines.

Processed foods

In order to incentivise agro-exports and ensure more inclusive growth, the Vishesh Krishi and Gramin Udyog Yojna is being expanded to include more farm commodities, food preparations, forest produce and furniture.

Under a new scheme, exporters of agro processed food would receive duty credit scrips equal to 10 per cent of the exported value which could be used for importing post-harvest infrastructure such as cold storages and pack houses. The Minister expects the scheme to shift subsistence farmers to producing marketable surpluses by crop diversification.

Another target for ensuring inclusive growth is the handloom, handicrafts, cottage and tiny industries segments. The new initiatives will provide for tools, machinery and equipment for handicrafts, exemption from duty on effluent treatment plants for handloom and handicraft units and extension of the export obligation period for cottage and tiny industrial sector under the export promotion capital goods scheme from eight to 12 years.

The allocation for the focus product scheme is being increased by more than 50 per cent to Rs. 1,000 crore and seven more product lines have been added. The additions are mica, barley, oats, soyabean, cigar/cheroots, bovine fats and copra.

The focus market scheme too has been enlarged to include 16 more nations including 10 Commonwealth of Independent States (CIS) countries. Mr. Kamal Nath said as the popular Duty Entitlement Passbook scheme would end in March next year, all stakeholders have been asked to submit their views on a more WTO compliant alternative by the end of next month.

Duty-free samples

The Minister also announced a new scheme giving duty credit of 10 per cent on incremental export growth for exports of high tech items. The Commerce Ministry is in dialogue with the Ministry of Science and Technology to draw up a list of items, subject to a maximum of Rs. 15 crore per firm.

Amidst applause from exporters, the Commerce Minister increased the duty on import of duty free samples to Rs. 75,000, made exporters eligible for reimbursement of cost of duty on fuel and special additional duty and scrapped the "present restrictive requirement'' of block-wise fulfilment of export obligations to reduce transaction costs. Those 100 per cent export oriented units, which do not avail themselves of direct tax benefit, are allowed to benefit from the Focus Market/Focus Product and Vishesh Krish and Gram Yajana schemes to encourage employment generation.

Developers and co-developers of SEZs will be entitled to all duty exemption and remission schemes.
http://www.hindu.com/2007/04/20/stories/2007042001551500.htm