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[Neo]

Indian PM seeks farm sector boost

About 7% of government spending goes on food subsidies.

Prime Minister Manmohan Singh has said India must boost its agriculture for the sake of its economy - and hundreds of millions of poor farmers.
Mr Singh told senior officials that urgent changes in the farm sector were essential in order to curb inflation and to sustain high economic growth.

The prolonged slowdown in agriculture had to be reversed so farmers could share the benefits of growth, he said.

Poor, rural populations have been feeling left out of India's boom.

The BBC's Damian Grammaticus in Delhi say's Mr Singh's government has done badly in recent state elections, which many blame on the fact that the poorest Indians living outside main cities believe they have yet to share in the country's economic success.

'Rural distress'

India's farm sector grew by 2.3% on average over the past three years, against a target of 4%.

Reversing the prolonged slowdown in this sector is essential for our goal of inclusive growth.

Prime Minister Manmohan Singh

"The rates of growth of agriculture in the last decade have been poor and are a major cause of rural distress," Mr Singh said.

Policy changes were urgently needed if the country's economic growth were to benefit not just those who live in cities but hundreds of millions of poor farmers too, he said.

"Reversing the prolonged slowdown in this sector is essential for our goal of inclusive growth, for ensuring that growth benefits all sections of society and all regions of the country."

Mr Singh said India had to increase production of rice, wheat, pulses and edible oils.

The government planned schemes which would boost output of such basic food items within three years, he said.

The government had had to import a number of food items to ensure adequate availability, he added.

Suicides

Experts say that India needs to double its farm output to achieve near double digit economic growth in the next few years.

While the country's economy has been registering 8% plus growth, the farm sector, on which the majority of its 1.1bn people live, has seen declining production and profits.

Thousands of farmers have taken their lives in India's south and west after they failed to repay high-interest farm loans.

Our correspondent says that if Mr Singh's targets are to be met, India will have to invest heavily in better water management, more seeds, fertilisers and pesticides - as well as in giving farmers access to cheap credit.

Mr Singh said the federal government would make available more than $6bn over the next four years to boost farm output.

http://news.bbc.co.uk/2/hi/south_asia/6699737.stm

 

[Bushroda]

Booming Chennai: India's Shenzhen
By Chris Devonshire-Ellis
2007-5-30
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The free trade zones that China so cleverly used to kick start the entire reconstruction of the country have now arrived in India.

With low tax rates and high investment into their local infrastructure, they remain a proven way in which a large country can suddenly offer world class facilities - for the world's multinationals - without breaking the bank in doing so, and without disenfranchising much of the rural population.

Indeed, Shenzhen, one of China's first Special Economic Zones, was restricted for many years to non-Shenzhen residents - with a de facto border control where even foreign passports had to be shown in order to get in.

India hasn't gone quite that far - it never had the hukou system that China has.

Yet here (in India) too, land use and the dispossession of this by local governments from the farmers has its problems. All developing countries have their human issues, it appears.

The comparisons don't just stop there though. Mumbai has all the brash, somewhat quixotic atmosphere that Shanghai does, neither city owing their existence to entirely indigenous developments.

Yet it's back to modern days where one really sees the comparisons.

Chennai, on the southeast coast of India, just north of Sri Lanka, is an ancient port city, previously known as Madras.

Yet its gleaming steel and concrete buildings, its huge gantry cranes, and the hustle and bustle of its booming port seem similar to Shenzhen, on China's south coast.

The free trade zones in both cities seem to echo each other.

Nokia placed a US$2 billion facility in Chennai, and Microsoft in Shenzhen.

IT pours through Chennai's ports from Bangalore and Hyderabad. The same happens in Shenzhen as Guangdong Province gears up for IT, with microchips and processors manufactured in Dongguan and Guangzhou, in Guangdong Province.

For every Chinese city there seems to be an Indian counterpart - globalization and the development of consumerism across Asia dictating that for demand, even China's massive trade surpluses are actually not yet enough to meet the need.

And the free trade zones - the modern equivalent of trading posts on the silk road - are pointing the way in both countries.

 

[Bushroda]

Foreign interns can’t have enough of the Indian summer

They say it gives them a balanced and realistic view of the role India and its firms will play in the hi-tech world
Jeetha D’Silva

Mumbai: Harry Robertson, a computer science student, had a good idea of how he wanted to spend the summer after completing his engineering degree from Ecole Polytechnique, a French university. Harry was keen to use this time to improve his programming skills and get some real research experience in information technology before he goes to Stanford University for his Master’s. The best place to get that kind of experience, according to him, was in India.

Harry is one of a growing breed of students from top schools around the world who have signed up to intern at businesses across India this summer. They are everywhere: Infosys Technologies Ltd, Tata Consultancy Services Ltd (TCS), Tata Sons, Helion Ventures Partners, Christian Medical College (CMC), Vellore, and many more firms in services and manufacturing sectors.

Currently, an intern with Infosys, Harry came to India because he prefers “to embrace than ignore a country which produces half a million engineering graduates per year and is reshaping the global IT landscape”. He has been working at Infosys’ R&D unit, SETLabs, in Bangalore. “I was greatly impressed with how much greenfield research is done here, and I’ve been immersed in a pretty innovative project,” he says.

TCS receives many applications for internships from students of leading schools across the world. “The booming Indian economy, global exposure at TCS and excellent learning opportunity are some of the key reasons behind the growing number of foreign students seeking internship at TCS,” says K. Kesavasamy, head, Global Academic Interface Programme at TCS.

The company has interns from La Rochelle Business School (France), Bocconi University (Italy), University College, Dublin (UK), Nanyang University (Singapore) and University of Washington (US), among others. The number of interns at TCS has doubled in the last couple of years, according to Kesavasamy.

Venture capital firms, auto companies, even health-care institutions are attracting students from overseas for short internship stints.

According to Satish Pradhan, executive vice-president, Group HR at Tata Sons, internships provide students a good platform to assess growth opportunities in growth markets. “This exposure helps them decide if they could pursue opportunities in these emerging markets or whether they should stick to businesses closer home,” he says.

Tata Sons started accepting interns from B-schools such as Harvard Business School and Wharton School at the University of Pennsylvania a few years ago. Today, the company has about 50 interns from across the world in its corporate centre alone. “This is in addition to those that individual Tata companies take on by themselves,” says Pradhan.

Helion Ventures Partners, an India-focused venture fund, has been receiving internship applications from students at Ivy League B-schools even though the firm is less than a year old. According to Kanwaljit Singh, managing director—investment advisor, Helion, “Students want to get some hands-on experience in the venture capital space in India. They see a lot of value in this experience,” he says. Helion will have two students from top B-schools interning with it over the next few months.

Even the health-care space is witnessing the same trend. Medical students, especially from Europe and Russia, have been flocking to CMC, Vellore. “With more foreign patients coming to India, the country is being seen as among the best in the world in terms of medical skills,” says Dr George M. Chandy, director at CMC Vellore.

According to Ameet Nivsarkar, vice-president, Nasscom, the interest in working in India, particularly in the IT sector, has been growing.

Sanjay Purohit, associate vice-president and head, corporate planning at Infosys, agrees. “As one of the few fast-growing trillion dollar economies, the buoyancy in Indian economy is attracting the best to experience globalization first-hand,” he says.

Infosys’ campus at Bangalore plays host to almost 125 summer interns from institutions across the world. Last year, the company received 12,000 applications, a huge increase from the 300 applications it received when it started taking interns from overseas schools in 1999. Currently, Infosys recruits interns from 83 schools worldwide; most of the schools are in North America, the company’s biggest market.

It’s not just students that gain from the experience; companies that host them also benefit. “The internship programme helps showcase the organization as an employer of choice among the global student fraternity,” says Kesavasamy of TCS.

Mid-way through his internship at Infosys, Harry says his stint in Bangalore is giving him a balanced and realistic view of the role India and its companies will play in the future in the hi-tech world. “Even if I work in the West for a US or European firm later, my path will certainly cross with India’s again, and this experience will be useful,” he adds.

 

[Bushroda]

India Economy Probably Expanded at Fastest Pace in Three Years
By Cherian Thomas

May 30 (Bloomberg) -- India's economy probably expanded last quarter at the fastest pace in more than three years as sales at Honda Motor Co., Hutchison Essar Ltd. and other companies surged on rising consumer demand.

South Asia's largest economy grew 9.5 percent in the three months to March 31 from a year earlier, up from 8.6 percent in the previous quarter, according to the median forecast of 12 analysts in a Bloomberg News survey. The Central Statistical Organisation report is due tomorrow at noon in New Delhi.

Factories in India are increasing output at the quickest clip in a decade as workers take advantage of the biggest pay increases in Asia to order and purchase new homes, cars and mobile phones. Growth may start to slow after the central bank raised interest rates to a five-year high to curb inflation.

``The economy is powered by strong gains in industry and services,'' said Rajeev Malik, an economist at JPMorgan Chase & Co. in Singapore. ``Economic activity will moderate because of aggressive monetary tightening, and slower exports owing to a sharp appreciation of the currency.''

India's $854 billion economy has expanded at an average quarterly pace of 8.8 percent in the past two years, compared with 5.7 percent in the 1990s, on record credit growth. That's stoked demand for manufactured products and farm goods and pushed inflation to a two-year high in January.

Interest Rates

The Reserve Bank of India raised its key rate seven times in the past 1 1/2 years to tame loan growth. In response, State Bank of India, the nation's biggest commercial bank, now charges its best borrowers 12.75 percent, the highest since April 1999. That's discouraging borrowers and has helped ease inflation to an eight-month low of 5.27 percent in the second week of May.

The yield on the benchmark 10-year government bonds declined 8 basis points this month as nine of 11 economists surveyed by Bloomberg last month said the central bank's overnight policy rate may be ``close'' to a peak or have already reached that level.

``The way interest rates have risen has been a cause of worry,'' said Anil Dua, vice president, marketing and sales at Hero Honda Motors Ltd., India's biggest motorcycle maker, which posted a 27 percent decline in profit last quarter. ``The long term outlook for sales is good as disposable incomes are rising and infrastructure in the country is improving.''

Industrial production, which accounts for a quarter of the economy, may also slow because of weak exports after the rupee rose to a nine-year high. The central bank has slowed dollar purchases on concern that rupee funds injected from intervention will stoke inflation.

Industrial Production

Exports, which account for two-fifths of India's industrial output, rose 8.8 percent in March, a third of the pace of the past year. The rupee has gained 8.5 percent against the U.S. dollar since Jan. 1.

The Organization for Economic Cooperation and Development last week forecast India's growth will slow to 8.5 percent in 2007 from 9 percent in the previous year as rising interest rates puts the brake on consumer spending. Still, the pace is lower than only China among the world's largest economies. OECD estimates China to expand 10.4 percent this year.

Indian wages may rise an average 14.5 percent in 2007, the largest salary increase among Asian countries for a second year in a row, Hewitt Associates Inc. said in March.

Services such as telecommunications, banking and hotels, which make up 55 percent of India's economy and are its fastest growing segment, will continue to support growth, said Robert Prior-Wandesforde, economist at HSBC Holdings Plc in Singapore.

Mobile Phones

India is the world's fastest-growing wireless market as only 16 percent of the nation's 1.1 billion people own mobile phones. Half the population has no access to finance from a bank or a money lender, while only seven of 1,000 people own a car in India compared to 500 of 1,000 in Western Europe.

Hutchison Essar, the company that Vodafone completed purchase last month for $10.7 billion, and other Indian mobile- phone operators jointly added 4.13 million users in April, the Cellular Operators Association of India said May 11.

ICICI Bank, India's most valuable financial services company, this month sought approval to sell 175 billion rupees ($4.3 billion) of shares to local and overseas investors, the nation's biggest offering, to meet growing credit demand. It's loans to companies and consumers increased by a third in the year to March 31.

Honda Siel Cars India Ltd., a unit of Japan's second- biggest carmaker, plans to start making its first small car model in India in 2009 with an investment of 30 billion rupees to enter a segment that comprises three-quarters of all cars sold in the South Asian country. Honda's sales in India have increased 33 percent since January.

`Bright' Outlook

India's Sensitive index, which has gained 33 percent in the past year, is 1 percentage point shy of a record. India yesterday became the third emerging market after China and Russia to have a stock market in excess of $1 trillion in value.

``India's longer-term outlook is bright,'' said Keith Gyles, international economist at Capital Economics Ltd. in London. ``There is plenty of scope for catch-up growth as workers shift out of the relatively slow-growing agriculture sector into the more productive service and manufacturing sectors.''

India's agriculture, which accounts for a fifth of the economy and provides livelihood to more than three-fifths of the country's population, probably grew 2.7 percent in the year ended March 31, the government estimated in February, the slowest pace in two years.

Prime Minister Manmohan Singh's government plans to attract $320 billion in roads, power, ports and other infrastructure by 2012 to attract global manufacturers, create jobs and accelerate growth to as much as 10 percent in the next five years.

http://imageshack.us

 

[Bushroda]

Rs.250 bn package for agriculture revamp

Prime Minister Manmohan Singh Tuesday announced a Rs.250 billion package for agriculture that aims to boost the growth rate of the sector and put Indian economy on the path to a 10 percent growth.

Prime Minister Manmohan Singh Tuesday announced a Rs.250 billion package for agriculture that aims to boost the growth rate of the sector and put Indian economy on the path to a 10 percent growth.

In his closing remarks at the 53rd meeting of the National Development Council (NDC) attended by chief ministers, Manmhan Singh said the agriculture plan for states should be comprehensive with both immediate and medium-term objectives of four to five years.

He said the Planning Commission and the ministry of agriculture will finalise the details of this scheme in two months and hoped the states would make full use of this opportunity.

This package came as a follow-up to the resolution adopted by the NDC, which said: 'Agricultural development strategies must be reoriented to meet the needs of the farmers.'

The prime minister said the central government will be initiating steps to launch a Food Security Mission in the coming months to reduce dependence on import of basic food items that will help the country increase the production of wheat, lentils and edible oils.

The proposed scheme aims at producing an additional 8 million tonnes of wheat, 10 million tonnes of rice and 2 million tonnes of pulses over the next four years, using 2006-07 as the base year.

With most chief ministers stressing on irrigation and the need for more funding, Manmohan Singh said the Planning Commission will certainly look into this and finalise an approach for utilizing the irrigation potential effectively and efficiently.

Expressing grave concern over the tardy growth of the farm sector, he also called for overcoming the 'technology fatigue'.

'One feature that stands out is the lack of any breakthroughs in agricultural production technology in recent years. There is a technology fatigue which we need to address,' he said in his opening remarks at the meet.

Unless the farm sector grows at desired levels, the 10 percent economic growth targeted for the 11th plan (2007-08 to 2012-13) would remain elusive, he said.

The prime minister said steps should also be taken to make farming a viable proposition, adding that the same cannot be achieved unless there is a shift away from small and marginal farming.

The prime minister said the state governments also needed to specifically focus on reducing what he called was a yield-gap in farm output since there still existed the potential to increase productivity by 40-100 percent.

'Bridging these gaps requires localised and state-specific strategies based on local agro-climatic conditions and constraints,' he said, adding this issue was all the more important since the scope for expanding crop area was limited.

The prime minister said the mantra for his government was inclusive growth and to ensure that growth benefits all sections of society and helps in reducing rural distress and poverty.

The meeting of NDC was specifically called to address issues concerning the farm and allied sectors. It comes after a similar meeting of the Planning Commission he chaired earlier this month.

The meeting also focused on the need for special efforts to complete all projects taken up under the Accelerated Irrigation Benefits Programmes without time and cost overrun and prioritise irrigation projects.

 

[Bushroda]

Come, gentle Bollywood fans, and fall on Slough’s town centre

Jeremy Page in Delhi
To the citizens of Slough it is simply a mundane shopping centre, but to visitors from India Queensmere could soon become a place of pilgrimage. For it is one of the more unlikely locations to feature on a new map showing where Bollywood movies were filmed.

The map — which marks obscure locations such as a Surrey football ground, Stansted airport and a pub in Harefield — is to be distributed next week in the latest effort to attract more Indian tourists to Britain.

“If you must, you can even reenact elaborate song and dance scenes from your favourite films right on the spot where they were shot,” reads the blurb alongside the map, available on visitbritain.co.in. It is being produced to coincide with the International Indian Film Academy Awards ceremony, the Bollywood Oscars, which starts in Yorkshire on June 7.

About 3,000 copies of the map will be handed to film stars, directors, producers and fans at the four-day ceremony, which is being held in Britain because of the importance of the British market for Bollywood. VisitBritain will also distribute more than 50,000 copies in India.

VisitBritain first produced a Bollywood map of Britain in 2001, but it contained only a handful of sites, such as the Blackpool seafront, which featured in the 1994 film Bhaji on the Beach. The new map includes sites from 30 films, including Molesey Football Club’s ground in Surrey, where parts of the 2002 hit Bend it Like Beckham were filmed, and Slough’s Queensmere centre, where some of the 2001 Bollywood film Yaadein was set.

The map is part of a new drive by VisitBritain to attract more Indian tourists, especially to areas beyond the traditional tourist hubs of London and Edinburgh. It illustrates the enormous influence of the Indian film industry, which produces an average 800 movies each year and has developed a taste for foreign settings since India’s economy began opening to the world in 1991.

It also reflects the growing spending power of the new Indian middle class, which the McKinsey consultancy predicts will turn the country into the world’s fifth-biggest consumer market by 2025.

VisitBritain’s own research shows that the number of Indian visitors to Britain hit 400,000 last year, an increase of about 16 per cent over the previous year, and that they spent more money per head than their Japanese counterparts in London last year.

Mr Bawa said that he expected the number of Indian visitors to continue growing at current rates for the next two to three years, fuelled principally by the growth of the middle class and by cheaper and easier air travel.

Location, location, location

— The King’s Arms pub in Harefield, West London, as well as the Queensmere shopping centre, Slough, and Thorpe Park theme park are used in Yaadein

— Bicester Village shopping centre in Oxfordshire provided the backdrop for Kabhi Khushi Kabhie Gham in 2001

— Molesey Football Club in Surrey and the Contessa lingerie shop in Twickenham, West London, appeared in Bend it Like Beckham

— More impressive, but a bit more remote, is Dolbadarn Castle in Wales, which featured in the 2004 film Kyun! Ho Gaya Na

 

[Bushroda]

May 28, 2007 2:05:00 PM MST
Indian prime minister sets 2012 as deadline to end power shortage in the country (India-Power-Economy)

NEW DELHI (AP) _ India must build hundreds of new power plants over the next five years to end the massive electricity shortages that threaten the country‘s rapid economic growth, Prime Minister Manmohan Singh said Monday.

India‘s economy has expanded more than 8.5 per cent annually over the past four years, but a widening gap between the demand and supply of electricity threatens to derail that growth.

During peak hours, demand outstrips supply by as much as 25 per cent in some parts of the country, causing frequent outages and forcing shutdowns at factories and businesses.

By 2012, India will need to generate at least 200,000 megawatts of power to eliminate any shortage, Singh said. Currently, the country has a total capacity of 130,000 megawatts.

Singh promised to reward states that accelerate work on new power generation facilities by waiving some federal loans.

“Electricity is vital for sustained economic growth,‘‘ Singh told a conference of elected leaders. “If we expect our economy to keep growing at 9-10 per cent annually, we need a commensurate growth in power supply.‘‘

Singh called the targets ambitious, but said the goals could be reached.

The power sector in the country is mostly run by India‘s state governments, which have been slow in adding new capacities due to a lack of funds. Although the sector was opened to private capital more than a decade ago, few companies have invested in building new plants because of regulatory bottlenecks.

Apart from adding new plants, the state governments have to take measures to prevent high losses during transmission and distribution, which also include theft of electricity.

“No meaningful development of the power sector would be feasible with these levels of losses,‘‘ Singh said. “We need to come heavily down on it as it is seriously affecting the financial viability of the (power) sector.‘‘

Most of India‘s electricity is currently generated by coal-fired power plants, but the country also has some hydroelectric and nuclear generating capacity.

Singh did not say how authorities plan to deal with the environmental impact of the additional power plants.

INDEX: BUSINESS ECONOMY UTILITIES INTERNATIONAL CP Command News is one of many services from The Canadian Press, Canada’s No. 1 Source for News.

 

[Bushroda]

The Father Of Indian Outsourcing
Ruth David, FORBES
05.29.07, 12:00 PM ET

Mumbai, India - In the days leading up to India's '90s outsourcing boom, one of its pioneers remembers starting presentations to prospective American clients by telling them, "You probably think I travel to the office on a bullock cart."

At a time when India is firmly established on the global map, that line seems outdated, slightly offensive even. But Raman Roy, CEO of outsourcing firm Quatrro, says he often had to pinpoint India on a world map to global clients, who'd heard little of its business potential before the outsourcing industry changed the country's global standing.

The numbers tell the story. The software and services sector employs 1.6 million people, is hungrily looking for more to join the ranks, saw growth rates of above 30% for the last five years and exported products worth about $24 billion last year, a fifth of India's total exports.

Roy, who set up outsourcing centers in India for both American Express (nyse: AXP - news - people ) and General Electric (nyse: GE - news - people ) in the late 1990s, says the robust growth of software and services firms has brought about tremendous changes since. "People now know about India; the industry has gained acceptability," says 49-year-old Roy, who also founded the outsourcing firm Spectramind Services that was acquired by Wipro (nyse: WIT - news - people ) in 2002.

In a conversation with Forbes.com, Roy, who's often called the "father of the Indian BPO [business process outsourcing industry]" talks about the growth of his business baby, the biggest challenge to software services firms and how an industry has changed the way Indians live.

Forbes.com: You've been in this industry since its inception. What's changed?

Roy: There's an acceptance of India globally now. In the late '90s my favorite line at the beginning of a presentation was, "You probably think I come to the office on a bullock cart." People now know about India. There was a time when I sold it by pointing out the country on a world map, showing prospective clients pictures of popular historical monuments.

In the U.S., we were considered dangerous when software and services was a 300,000-strong industry because people saw what a potential threat we could be. Some of those fears have materialized in terms of the growth of Indian firms. But with our companies rapidly expanding abroad, now there's also a realization that outsourcing doesn't hurt the economy.

Indian businesses are far more self-confident today, so there's the ability to experiment and move up the value chain. And they're willing to make large investments globally.

What's different on the domestic front?

When I was setting up the first call center for American Express and went to the government to take bandwidth for operating it, policymakers thought I was into espionage because no one had ever asked for that much bandwidth earlier.

When it came to call centers, we used dedicated lines we bought from service providers. And to route calls from abroad to India, we needed to put international links into public service phone numbers. That was illegal in India. Convincing the government that changing regulations like that one would not hurt its revenues took a lot of running around.

For the same call center, I went to meet bureaucrats after they sat on our application for months. A government official said he could approve a call center, but could not approve a center to handle "incoming and outgoing calls." So we had to print definitions of a call center from the Internet and take them to him to show him that's what a call center did.

There were laws that forbade employing women in jobs after 10 p.m. In each state that we planned on setting up call centers in, we had to persuade its government to change that law.

After the initial hiccups, the government seems to have left your sector alone, and the backlash abroad is a tale of the past. What are the industry's challenges now?

The biggest challenge is the lack of talented manpower. High attrition rates [an average of 12 % to 15%] are the first signs of what will become a big issue. The top five companies spend a combined $1 billion per annum just on new hire training. Unless we upgrade our educational and training systems, we won’t be able to meet the opportunities the industry is creating.

The lack of proper infrastructure is also a problem that we're facing across industries.

The U.S. still accounts for an overwhelming portion of the revenues of India's top outsourcers. How much is that likely to change in the next couple of years?

The U.S. accounts for 75% to 80% of revenues, but if you look at global statistics, about 56% of outsourcing comes from that country. So it is the largest market. Though Indian firms are now seeing plenty of opportunities in Europe as they shift toward services of a higher order.

The first phase was just arbitrage and substitution. But increasingly countries like China are turning to Indian outsourcers because they can't find people domestically. The impact beyond the U.S. is growing as firms move to meet different outsourcing needs--in industries like health care, law and education. Growth depends on our ability to scale up effectively.

Indian software firms are not really known for innovation. Has it suffered because of the focus on services? Is there a move to change that now?

We're still evolving, but as Indian firms move up the services ladder innovation is becoming a requirement. Few companies have a nascent culture of innovation. Is the industry realizing that? Yes. Has it become a trend? No yet, but we're in the early stages of it.

You've started outsourcing units from scratch four times already, and all of them have been successes. What did you do right?

We listened to customers, and that's easy to talk about, but tough to do. We kept changing our models based on exactly what our customers wanted. In the early stages, getting the government to give us a hearing and change laws so we could operate was a big challenge, but now the shoe is on the other foot. If we raise issues, policymakers listen.

We also focused on our employees. In the initial period of call centers, mothers, grandmothers, uncles, aunts would come to meet me looking for assurances that it was OK for their daughters to leave the house at night to come to work. They were worried about what the neighbors would think. I met all these people and talked their concerns through. Today, there are too many young women working to worry about neighbors any longer.

There was no spending power among the college graduates earlier [software firms hire about 70% of their employees straight out of college]. Now when you walk into malls these are the people spending all the money. Tech industry employees don't utilize their money for conspicuous consumption, BPO employees do. I'm not siding with either side, but we've made a fundamental change in spending habits, consumption, the way these people live.

On the global front, where is India's competition coming from?

A few years ago, countries like China, Philippines and Mexico were among the few on the outsourcing radar. Today, there are over a dozen attractive destinations--from Sri Lanka to Malaysia to a host of Eastern European nations. But I don't think there's a big threat, because the outsourcing pie is large and only growing.

Right now, more than half of what is outsourced comes to India. When outsourcing is spoken about, India is spoken about in the same breath. The big challenge is for us to continue to evolve as customers' needs change. We need to now focus on innovation. But the future's looking bright. It's an exciting time to be an Indian in India.

 

[Bushroda]

FDI expected to touch $30 billion in 2007-08: Kamal Nath
29 May 2007

Mumbai: Foreign direct investment (FDI) into the country is expected to touch $30 billion in the fiscal year ending March 2008, commerce minister Kamal Nath said.

"While FDI equity flows were $5.5 billion in 2005-06, it increased almost three times to $15.7 billion in 2006-07. We have set a target of $30 billion in 2007-08," he told a business conference, adding, "The liberal FDI policy pursued by us is aimed at garnering greater foreign investment."

The minister said the Indian economy grew 9.2 per cent in the last fiscal ended March 31, 2007 in line with the government's forecast.

"During 2006-07, the GDP growth was 9.2 per cent, with industry registering a growth of 11.3 per cent," he said.

"To achieve a growth rate of 9 per cent per annum over the next five years starting 2007-08, we need an investment rate of 35.1 per cent of GDP," he said.

 

[Bushroda]

Indian travel websites take off
By Raja M

MUMBAI - India's travel websites are energetically powering the country's varied and growing online business, with a market leader, MakeMyTrip.com, being voted by global innovation tracker Red Herring as one of Asia's fastest-growing technology startups.

Like many others in this burgeoning travel-marketing tribe cashing in on India's tourism and Internet boom, MakeMyTrip.com offers corporate business travel, air tickets, hotel bookings, car rentals and bargain-basement vacation packages.

Dhruv Shringi, co-founder of another industry leader, Yatra.com, estimates that online travel business in India currently generates about 8% of the total market. "We expect the market to grow to over US$2 billion by 2008 and continue to grow at over 20% until 2010," Shringi told Asia Times Online.

Tourism is one of the Indian economy's top earners, with prospects looking brighter all the time. The latest Conde Nast Readers' Travel Awards, a survey by the London-based global travel journal Conde Nast, ranked India as the fourth-most-favored country for vacations, above Switzerland and South Africa. India has the world's fastest-growing tourist economy, with the industry growing at an explosive 13% annually over the past four years.

According to the Tourism Ministry, foreign arrivals in India increased by 15% between 2005 and 2006, with more than 50% being foreign business travelers. The domestic-traveler segment is also expected to grow by about 15% this decade.

Alongside the tourism boom, India's Internet population is rapidly growing. The Internet and Mobile Association of India announced that one out of every 10 urban Indians now has access to the Internet, with the user base having doubled since 2004. India clocked 50 million Internet users this March.

Inevitably, the two rapid-growth sectors of the economy are strongly connected. According to global market analyst Euromonitor International, India will be Asia's fastest-growing market for online travel by 2010. Other top markets include Hong Kong, mainland China, Malaysia, Vietnam and Indonesia.

Euromonitor believes that India's ballooning urban population and Internet growth over the next five years will make the country a lucrative market for online travel retailers.

Euromonitor forecasts double-digit growth in urban Indian households between 2006 and 2010, giving India "a great potential for online businesses and, as a result, great potential for online travel retail".

A sign of these good times is the success of market leader MakeMyTrip.com, which was established in 2000 primarily to serve non-resident Indians heading home from the United States. The site has a 4% share of the non-resident Indian travel market, which is estimated to be worth $1 billion, a 40% share of the online travel market, and reports a turnover of $130 million.

MakeMyTrip claims a whopping 200% growth from the last fiscal year, and reports having clocked 1 million clients so far in 2007. It expects to double transactions this fiscal year and aims to achieve a turnover of $245 million in the near future.

"I think the Indian websites are more comprehensive and offer more advanced options compared to some of their Asian counterparts," said Dhruv Shringi of Yatra.com. He added that ticket sales of domestic flights garner the most business. Yatra.com offers travel information across 5,000 Indian cities and small rural areas, and its investors include one of India's top media companies, TV 18.

Another online travel retailer, TripMela.com, announced a partnership with TravelLab, a top European search portal, for a travel metasearch tool focusing on the Indian travel market. This will offer access to online air ticketing and travel bookings through travel agencies. TripMela.com describes itself as "India's online publisher of airfare specials, hotel deals, and great travel packages specially tailored for Indian travelers".

With about a dozen big players and the number increasing, the online travel customer gets unprecedented bargains. TravelGuru.com sells "sunny getaways" for prices starting at Rs350 ($8.60), a cruise aboard a luxury houseboat in Kerala starting at $1, and hill-station vacations at $6.

The team behind Travel Guru reflects the operational needs of online travel websites. Chief executive officer Ashwin Damera, a Harvard management graduate, worked earlier with Citibank; co-founder Ganesh Rengaswamy worked with software giant Infosys; and others in the team include a hotelier, travel-agency operators and consultants.

Non-resident Indians are also getting their slice of the pie, with sites such as TripYogi.com, which was founded by two Indian entrepreneurs in California and offers a simple, uncluttered homepage focusing on airlines and hotel deals.

Such telecommunications-oriented travel marketing could be enhanced by mobile-phone services now offering travel-ticketing options.

Vinton G Cerf, a founding father of the Internet and currently vice president of Google, has said the rapidly growing mobile-phone user base in developing countries such as India and China, and not personal computers, will power the growth of the World Wide Web.

 

[Bushroda]

DGCX to launch world's first Indian Rupee futures contract on June 7

The Dubai Gold and Commodities Exchange (DGCX) today announced that it will launch its Indian Rupee FX contract on Thursday, June 7th

This will be the first time in the world that an Indian rupee currency contract will be traded on an organized exchange.

'The DGCX Indian Rupee contract will for the first time in history enable individuals and companies to have the opportunity to hedge and trade their Indian Rupee risk on transparent and equal basis that an exchange provides', said Colin Griffith, DGCX Chairman. 'To date, the only market available to hedge Rupee risk is the non-deliverable forward ('NDF') inter-bank market but that is not accessible to everyone. However the recent strengthening of the Rupee (it has risen over 15% against the dollar in under a year) has necessitated the need for an efficient and easily accessible to all, risk management tool which is exactly what this DGCX contract will provide. As the Indian economy continues to grow at record pace; so will the need for this contract' added Mr. Griffith.

'The Indian Rupee contract demonstrates again that DGCX is at the forefront of innovation both in the region and globally', Mr. Griffith continued. 'DGCX was the first derivatives exchange to go live in the Middle East and this addition to our list of contracts has attracted interest from major financial institutions and corporates across the world who are looking to hedge their Rupee risk'.

Each DGCX Indian Rupee contract represents two million Rupees. Prices will be quoted in US Cents per 100 Indian Rupees, with a minimum price fluctuation of 0.000001 US Dollars per Rupee ($2 per contract). At any point in time DGCX will list the current and next two calendar months, plus the next three calendar quarterly months.

DGCX will hold a mock trading session for all its members before the launch on the 2nd June.

DGCX currently lists Gold, Silver, Fuel Oil and three currency pairs; Euro/US Dollar, GB Pound Sterling/US Dollar and Japanese Yen/US Dollar and recently announced the launch of its Steel contract in June.

 

[Bushroda]

India's Market cap crosses trillion-dollar mark

The Sensex is valued at 23 times reported earnings, the highest in Asia after China and Japan
By Pooja Thakur/Bloomberg

Mumbai: India became the third emerging stock market after China and Russia to surpass $1 trillion (Rs40 trillion) in value, helped by the fastest economic growth in 60 years, a strengthening currency and overseas investment.

The rupee, Asia’s best performer this year, advanced to a nine-year high on Tuesday, 28 May 2007, helping push the market’s value to $1 trillion. It closed on Wednesday at Rs 40.87.

The country’s economic growth, averaging 8.6% in the past four years, helped spur earnings growth of as much as 35% for the year ended 31 March, according to Ratnesh Kumar, Citigroup Inc.’s Mumbai-based research head. Overseas funds are also supporting the stock market after buying a net $3.76 billion of equities this year, capital market regulator the Securities and Exchange Board of India (Sebi) said 28 May.

“Profit growth at Indian companies has been phenomenal,” said Ashish Goyal, who helps manage about $20 billion in Asian stocks at Prudential Asset Management (HK) Ltd. “You can’t ignore a market that delivers such fantastic earnings.”

The Sensex has jumped 34% in the past year and the rupee has strengthened 12%.
The Sensex is valued at 23 times reported earnings, the highest in Asia after China and Japan. That’s more than the benchmark’s five-year average of about 17 times profit.
A combined $10 billion of new share sales planned by ICICI Bank Ltd, Tata Steel Ltd and DLF Ltd will help boost the country’s stock market value further.

ICICI Bank, India’s largest lender by market value, is raising $5 billion in the country’s biggest share sale. Tata Steel chairman Ratan Tata is selling stock to help fund his $12 billion purchase of London-based Corus Group Plc., creating the world’s sixth-largest steel maker. DLF, a New Delhi-based property developer, plans to sell at least $2.1 billion of shares.

The offers are dwarfed by Commercial Bank of China Ltd’s $22 billion stock sale, the world’s largest initial public offering, and OAO Rosneft’s $10.6 billion sale in Russia. China’s market value has doubled in the past year to $2.47 trillion. Russia’s market value dipped below $1 trillion in May to $949 billion on 29 May.

Reliance Industries Ltd, India’s largest stock, is ranked 137th globally, compared with seventh and 12th for the biggest companies in China and Russia.

Long way to go

“Even as we reach $1 trillion, the size of our companies is still small in comparison to global peers,” said Rajiv Anand, who manages $3.5 billion in assets at Standard Chartered Mutual Fund in Mumbai. “We have a long way to go to achieve scale.”

Rising earnings are leading some Indian companies to expand overseas. Sun Pharmaceutical Industries Ltd, which is headed by billionaire Dilip Shanghvi, on 21 May agreed to spend $454 million in cash to buy an unprofitable Israeli rival and repay its creditors. Shares of Sun, India’s biggest drug maker, have soared six-fold in the past four years.

Record profit at billionaire Kumar Mangalam Birla’s Hindalco Industries Ltd, India’s biggest aluminium producer, helped the company pay more than $3.4 billion to acquire Novelis Inc. of Atlanta. Birla was ranked 86th on Forbes’ list of the world’s richest people in 2006, after his wealth almost doubled in a year.

Founders of companies included in the Bombay Stock Exchange’s BSE 200 Index own about 73% of the benchmark’s combined market value, according to data on the exchange’s website. Overseas investors own about 21% and local mutual funds 3.7%, according to the exchange.

Bharti Airtel Ltd, the best-performing stock in the Sensex in the past five years, has jumped 30 times in value. India’s largest mobile-phone company posted a 12th straight quarter of record profit as it added new customers in the world’s fastest-growing wireless market.

Reliance climbed tenfold in the past five years even as the company was split last year to settle a dispute between the Ambani brothers.

Finance minister P. Chidambaram said in March the nation’s gross domestic product is likely to surpass $1 trillion next year, making it the third Asian economy to do so.

“Reaching $1 trillion is a sentiment booster,” said Chakri Lokapriya, who manages $425 million of stocks in India, Brazil, Russia and China at BNP Paribas Asset Management UK Ltd. “It validates the India story of robust growth.”

 

[Bushroda]

Stage Set For Biggest Indian IPO
Ruth David, FORBES NY
05.30.07, 3:50 AM ET

MUMBAI - Real estate developer DLF on Tuesday kicked off the sales effort for an initial public offering to raise $2.4 billion, the largest yet in India, but one that comes at a time when investors are treading cautiously in the property sector amid fears of a bubble and tighter regulations.

New Delhi-based DLF is selling 175 million shares at a price band of 500 rupees ($12.33) to 550 rupees ($13.56) per share. The issue opens for subscription on June 11. The company plans to invest a third of the proceeds from its IPO in buying new land.

The floatation is expected to amount to 10.27% of its post-issue capital.

DLF, which is controlled by billionaire Kushal Pal Singh, has over 220 million square feet of existing developments and 574 million square feet of planned projects across the country.

“We aim to build up land reserves at competitive prices at strategic locations in the country, to gain from them during the upside in the economy,” DLF Vice Chairman Rajiv Singh told reporters here. He expects real estate prices to remain steady, despite fears of a bubble.

Management said it expects to earn margins of about 50% on its projects.

Real estate prices in the cities have skyrocketed in the last two years as home owners and business developers have grabbed choice swathes of land to build swanky new offices, malls and residential buildings. But in the last few months, a rapid rise in interest rates has dampened demand for new homes, raising hopes that prices will fall in the near term.

DLF first announced plans for an IPO last summer, but its plans were shelved after objections from minority shareholders resulted in regulatory objections.

DLF plans to diversify into insurance by year-end and has tied up with U.S.-based Prudential. It will also go into developing infrastructure and special economic zones, which use government financial incentives to attract local and foreign investors.

The company hopes to find buyers for the share issue abroad, including in Dubai, the U.S., U.K. and Singapore. India’s Kotak Mahindra, Lehman Brothers (nyse: LEH - news - people ) and Merrill Lynch (nyse: MER - news - people ) are among the banks reaching out to investors for the issue.

 

[Bushroda]

Indian stocks pass $1 trillion mark
Harry Wilson
30 May 2007

India has become the third of the so-called "Bric" countries to have a total stock market capitalisation in excess of $1 trillion (€743bn), after soaring valuations and an increase in the rupee to dollar exchange rate took it beyond the milestone for the first time.

The Bric countries, which comprise Brazil, Russia, India and China, were first named in a Goldman Sachs economics paper which deemd the four countries as the most likely to become the world's dominant economies by 2050.

India's achievement follows that of China and Russia, which both have total listed market values of over $1 trillion. Russia breached the mark last December, while China passed the milestone several years ago.

Brazil is now the only Bric nation not to have a combined stock market value of more than $1 trillion.

The growth in size of India’s market comes as Indian financial group ICICI prepares to sell shares worth $5bn in the largest equity offering in the country’s history and property group DLF plans the largest initial public offering.

However, Indian equity issues volumes are slower than last year, with less than $3bn raised so far this year compared to $6bn for the same period last year, according to Bloomberg data.

 

[Bushroda]

A first class move by Jet Airways
May 2007

Jet Airways is this month adding a First Class cabin on the Mumbai-London route, as well as introducing new Business and Economy Class seating. It coincides with the delivery of the first of 20 new wide-bodied aircraft, part of an ambitious US$3.7 billion expansion programme aimed at establishing the privately owned Indian carrier as a ‘top five’ global airline.

There will be eight of the new First Class suites on each Boeing 777 to be delivered, providing more than 26ft2 of space and featuring dual sliding doors to create a feeling of privacy. The seat within will extend to 83 inches, making it, the airline claims, the world's longest fully flat bed.

Each suite will include a 23-inch monitor, a personal wardrobe and office facilities. Says Naresh Goyal, Jet’s chairman: “The seats are at the cutting-edge of airline design technology and promise to surpass the very best of the British and international competition for comfort, luxury and style. We have spent more than two years designing the product and are confident in saying that the flying experience on Jet Airways will be the very best in the air.”

The new cabins will feature on the airline’s 27 weekly flights between London Heathrow and cities in India (Mumbai, Delhi, Amritsar and Ahmedabad) over the next two years as nine more 777s and 10 Airbus A330-200s are delivered.

“We have seen impressive growth in the UK marketplace in the last two years and believe that with our new aircraft, highly competitive products, unrivalled levels of customer service and attractive pricing, we will become the number one airline of choice for visitors to India.”

In addition to the wide-bodied aircraft order, the airline holds options to buy more of each type and has recently agreed to purchase 10 Boeing 787 Dreamliners, with deliveries from 2011.