Indian Economy - News & Updates - Archive

[Bushroda]

India potential underlined
SouthAsian Focus, Canada
Wednesday July 11 2007
Staff Report

While India's investment into Canada totalling around $2 billion over the last couple of years is a good start, it is nowhere near the potential represented by both countries, James Flaherty, Minister of Finance, said at the Canada India Day gala held in Vaughan over the weekend.

A number of leading community representatives including R.L. Narayan, Indian High Commissioner, attended the event held to celebrate Canada Day.

Flaherty recognized India's rapid economic growth-- the country has been charting a stable 8 per cent GDP annual expansion and is poised to become the world's fifth largest economy in a decade, overtaking in the process Italy, France and the United Kingdom-- but said in order to sustain the growth India will require a predictable long-term supply of natural resources and energy. He pointed out Canada is an emerging energy superpower with the largest established petroleum reserves on the planet after Saudi Arabia.

He noted India is the second largest source of new Canadians with more than 700,000 people of Indian heritage calling Canada home. "Indo-Canadians have shared their culture, values, skills and expertise, and continue to do so."

Flaherty praised the role of cultural organizations such as Panorama India, through which Indo-Canadians have also shared their spirit of generosity and giving.

The minister presented plaques to various businesses for their community initiatives, including to Jeff Lal of Jaipur Development, and Nina Jain of Scotiabank.

Panorama India provides a platform for all Indian cultural associations, groups, and individuals to exhibit and showcase their arts and culture and to foster a better relationship between India and Canada.

The Canada Day celebration, now called Canada-India Day Gala Dinner, is a fund-raising event. The funds raised enables the organization hold various other events to showcase India's art, culture and heritage.

 

[alamgir]

The myth of the NEW Indiaindia is a roaring capitalist success story.” So says the latest issue of Foreign Affairs; and last week many leading business executives and politicians in India celebrated as Lakshmi Mittal finally succeeded in his hostile takeover of the Luxembourgian steel company Arcelor. India’s leading business newspaper, The Economic Times, summed up the general euphoria over the event in its regular feature, ‘The Global Indian Takeover’: “For India, it is a harbinger of things to come — economic superstardom.”

This sounds persuasive as long as you don’t know that Mr Mittal, who lives in Britain, announced his first investment in India only last year. He is as much an Indian success story as Sergey Brin, the Russian-born co-founder of Google, is proof of Russia’s imminent economic superstardom.

In recent weeks, India seemed an unlikely capitalist success story as communist parties decisively won elections to state legislatures, and the stock market, which had enjoyed record growth in the last two years, fell nearly 20%in two weeks, wiping out $2.4 billion in investor wealth in four days. This week India’s Prime Minister, Manmohan Singh, made it clear that only a small minority of Indians will enjoy “Western standards of living and high consumption.”

There is, however, no denying many Indians their conviction that the 21st century will be the Indian Century just as the 20th was American. The exuberant self-confidence of a tiny Indian elite now increasingly infects the news media and foreign policy establishment in the US.

Encouraged by a powerful lobby of rich Indian-Americans who seek to expand their political influence within both their home and adopted countries, President Bush recently agreed to assist India’s nuclear programme, even at the risk of undermining his efforts to check the nuclear ambitions of Iran. As if on cue, special reports and covers hailing the rise of India in Time, Foreign Affairs and The Economist have appeared in the last month.

It was not so long ago that India appeared in the American press as a poor, backward nation, saddled with an inefficient

bureaucracy and, though officially nonaligned, friendly to the Soviet Union. Suddenly the country seems to be not only a “roaring capitalist success story” but also, according to Foreign Affairs, an “emerging strategic partner” of the US. To what extent is this wishful thinking rather than an accurate estimate of India’s strengths?

Looking for new friends and partners in a rapidly changing world, the Bush administration clearly hopes that India, a fellow democracy, will be a reliable counterweight against China as well as Iran. But trade and cooperation between India and China is growing; and, though grateful for American generosity on the nuclear issue, India is too dependent on Iran for oil to wholeheartedly support the United States in its efforts to prevent the Islamic Republic from acquiring a nuclear weapon. The world, more interdependent now than during the cold war, may no longer be divided up into strategic blocs and alliances.

Since the early 1990s, when the Indian economy was liberalised, India has emerged as the world leader in information technology and business outsourcing, with an average growth of about 6 per cent a year. Growing foreign investment and easy credit have fuelled a consumer revolution in urban areas. With their Starbucks-style coffee bars, Blackberry-wielding young professionals, and shopping malls selling luxury brand names, large parts of Indian cities strive to resemble Manhattan.

But the increasingly common, business-centric view of India suppresses more facts than it reveals. Recent accounts of the alleged rise of India barely mention the fact that the country’s $728 per capita gross domestic product is just slightly higher than that of sub-Saharan Africa and that, as the 2005 United Nations Human Development Report puts it, even if it sustains its current high growth rates, India will not catch up with high-income countries until 2106.

Nor is India rising very fast on the report’s Human Development index, where it ranks 127, just two rungs above Myanmar and more than 70 below Cuba and Mexico. Despite a recent reduction in poverty levels, nearly 380 million Indians still live on less than a dollar a day.

Malnutrition affects half of all children in India, and there is little sign that they are being helped by the country’s market reforms, which have focused on creating private wealth rather than expanding access to health care and education. Despite the country’s growing economy, 2.5 million Indian children die annually, accounting for one out of every five child deaths worldwide; and facilities for primary education have collapsed in large parts of the country (the official literacy rate of 61 percent includes many who can barely write their names). In the countryside, where 70 percent of India’s population lives, the government has reported that about 100,000 farmers committed suicide between 1993 and 2003.Feeding on the resentment of those left behind by the urban-oriented economic growth, communist insurgencies have erupted in some of the most populous and poorest parts of north and central India. The Indian government no longer effectively controls many of the districts where communists battle landlords and police, imposing a harsh form of justice on a largely hapless rural population.

The potential for conflict — among castes as well as classes — also grows in urban areas, where India’s cruel social and economic disparities are as evident as its new prosperity. The main reason for this is that India’s economic growth has been largely jobless. Only 1.3 million out of a working population of 400 million are employed in the information technology and business processing industries that make up the so-called new economy.No labour-intensive manufacturing boom of the kind that powered the economic growth of almost every developed and developing country in the world has yet occurred in India. Unlike China, India still imports more than it exports. This means that as 70 million more people enter the work force in the next five years, most of them without the skills required for the new economy, unemployment and inequality could provoke even more social instability than they have already.

For decades now, India’s underprivileged have used elections to register their protests against joblessness, inequality and corruption. In the 2004 general elections, they voted out a central government that claimed that India was “shining,” bewildering not only most foreign journalists but also those in India who had predicted an easy victory for the ruling coalition.

Many serious problems confront India. They are unlikely to be solved as long as the wealthy, both inside and outside the country, choose to believe their own complacent myths.

www.india-news.in

 

[Contrarian]

I have read this article, its old, why are u posting it now alagmir, i think it has been posted before.

Plus now its incorrect as well, there has been a manufacturing boom in India as well, therefore it is giving rise to a labour intensive growth pattern.

 

[Bushroda]

Alamgir, If you are posting something I request you to post the link to the article as well rather than just the top URL of the website.

 

[Bushroda]

In the fast lane

In spite of several roadblocks, Hertz India is on the fast lane to position itself as a 'Total Mobility Solution Provider' in business and leisure travel across the country. Rajiv K Vij, CEO, gets behind the wheel to share his thoughts with Praveen K Singh.

At a time when intra city travel has become an ingredient of professional necessity as well as a statement of leisure lifestyle, the business of car rentals has gained enormous significance in the hospitality segment. The market for car rentals is growing at a rapid pace, driven by the booming hotel and travel sectors. One of the prominent players in this segment is Hertz India. Rajiv K Vij, CEO of the company says, "India has around 2,00,000 cars registered as taxis in India, and the organised sector generates a market share of 10 per cent in value terms."

Vij is enthused by the fact that the car rental industry in India is expected to register a growth of 20 per cent year-on-year for the next three to five years. His aim is to make Hertz India the first brand choice for vehicle rentals and total mobility solutions.

Development in India

Car rental is a fairly nascent business in India. The success achieved so far is backed by the present needs. Hence, the possibilities for its success become far more apparent. Vij says, "Car rental industry in India is dominated by chauffeur drive options and as a matter of fact - can be largely defined as taxi - 'metered' for city operation and 'non-metered' for inter-city operations." He further explains that globally, there are four distinct services offered by the car rental industry for business/leisure travellers: Self-drive dominated by brands like Hertz, Avis, Budget, etc.; Radio Taxi's for city travel needs including for travellers staying in hotels, serviced apartments, etc.; limousine services offering high-end cars for dignitaries, occasional usage and entertainment; and finally, corporate fleets - companies offering cars to their employees.

In this respect, car sharing is another concept that is gaining worldwide acceptance. "It is expected that over the next few years, the Indian market will see a transition from its current state to comparable developed markets of the world, especially the metros," says Vij. I believe that the potential for growth is very high in self-drive, corporate fleets and radio taxi options, each of which will service different market segments by offering economy, standard and premium services to penetrate the market deeply, he adds.

"Currently south, north and west regions of the country are bigger markets than the east. High-end car rental services/self drive and corporate fleets have more potential in urban centres and regions with high concentration of business establishments and major tourist locations," he feels.

On the horizon

The open economy has just spurred the growth of opportunities. The market for the car rental is large enough to accommodate various new players. Vij opines that funds and brands will only help in improving overall infrastructure and quality of services, which in turn will pull in more customers as well as improve domestic travel quality. With globalisation of the Indian economy and more Indians travelling overseas on business and leisure, this segment of the travel industry is heading upwards. Also, the understanding of the value of brands in terms of quality and reliability of service is being better appreciated today. "The appreciation factor is playing an important role in the growth of this sector. Along with better infrastructure in place over time, possibilities for the sector to grow further can only increase," he says.

As such there is a visible shift by both the corporate and the leisure segment in using branded services. This is more prevalent in companies who are looking at a consistency standard in their products/services, remarks Vij.

Customers will demand ‘self-drive cars' like their international counterparts, predicts Vij. He says, " In future, upon reaching a city one can expect to get an SMS with the car number, the chauffeur's name and his mobile number. Long term rentals for expatriates is another trend, which is sure to get a boost. Expats coming for short durations would be happy to cut down the complications associated with ownership. through other options available to him." There is also a large market potential for off road adventure tours using SUVs which are now available in the country. Car rentals in future would be more organised, predicts Vij.

Vij believes…

The international scenario in the car rental business is also changing very rapidly. Overseas, driving holidays is catching up big time with the Indian traveller increasingly realising the fun of travelling by road. "Although it is a challenge to drive in Europe/US where road and traffic conditions are very different, most people who try this once always come back for more. This has heralded a new beginning for the car rental industry in India ," believes Vij.

The Indian market is however nascent and fragmented. "The state of the infrastructure of airports, highways, road signages, etc is a major challenge faced by this industry. Recognition of the industry as a critical component to tourism and formation of a study group by the government to address our core problems is the need of the hour," suggests Vij.

 

[Bushroda]

India's Rupee Rises on Optimism Global Funds Buying More Stocks
By Anoop Agrawal

July 9 (Bloomberg) -- India's rupee rose to the highest since May 1998 after overseas funds bought more shares and bonds in a nation where the economy is growing at a pace second only to China among the world's largest economies.

Global funds bought stocks for five days through July 5, the longest run in more than a month, according to the stock market regulator. That helped the benchmark stock index rise to a record today. The rupee rose also as companies borrow more overseas to benefit from lower U.S. dollar interest rates.

``I am bullish on the rupee,'' said Vikas Babu, a currency trader with state-owned Andhra Bank Ltd. in Mumbai. ``The capital flows are robust as there is a deep interest in Indian assets. That trend is unlikely to reverse immediately.''

The rupee rose to 40.425 against the dollar as of the 5 p.m. close in Mumbai, from 40.455 on July 6, according to data compiled by Bloomberg. That the strongest since May 13, 1998.

ICICI Bank Ltd., India's largest lender by market-value, plans to borrow a record $1.5 billion to fund growth in demand for credit. The amount is almost twice the syndicated borrowings of Indian banks this year and a little lower than the $1.86 billion of loans the bank took in 2006.

India's economy expanded 9.4 percent in the fiscal year ended March 31, the best since 1989. The International Monetary Fund expects India to overtake South Korea this year as Asia's third-biggest economy, behind Japan and China.

Direct Investments

Lenders, including HDFC Bank, UTI Bank, and State Bank of India, are planning share sales to meet rising demand for loans. Infrastructure Development Finance Co. raised $519 million selling shares last week to fund public works.

Foreign direct investment rose 78 percent in the year through March to $8.44 billion, the central bank said June 29.

Overseas borrowings by Indian firms rose almost sixfold to $16.1 billion in the fiscal year through March 31, making 36 percent of capital flows into the country, the central bank said on June 29.

Capital flows into Asia's fourth-largest economy helped push up the rupee 9.6 percent this year. Infosys Technologies Ltd., India's second-largest computer-services provider, may miss its local-currency sales forecast because of the stronger rupee, which lowers the value of overseas revenue, Credit Suisse said last week.

The rupee pared gains on speculation the central bank will sell the currency through state-owned banks to halt a slowdown in the growth of exports.

Growth in overseas shipments slowed to 12.7 percent in the five months through May, compared with around 19 percent a year earlier, the Ministry of Commerce and Industry said July 2. Exports account for about 12 percent of the $854 billion economy.

``There is speculation of the central bank helping the dollar,'' said Agam Gupta, head of trading at Standard Chartered Plc in Mumbai. ``The rupee may decline this week.''

The currency may fall to 40.50 this week, Gupta said.

The central bank's foreign-exchange reserves rose $36.2 billion in the first half, compared with $25.7 billion for the six-month period last year. That suggests the central bank bought more foreign currency.

 

[Bushroda]

Jet to fly Mumbai-Newark from August 5
Suman Guha Mozumder in New York
July 12, 2007

Jet Airways, India's largest private airlines, on Wednesday announced its daily transatlantic service between Mumbai and New York, beginning August 5.

Jet Airways [Get Quote] officials, including chairman Naresh Goel, said flights will operate between New York's Liberty International Airport, which is actually located in New Jersey, and Mumbai International Airport on new Boeing 777-300ER wide-bodied jets.

Flights depart New York at 8:25 pm and arrive in Mumbai at 11:30 pm the following day. Return flights will leave Mumbai at 2:10 am and arrive in New York at 11:55 am the same day.

"Just as Jet Airways created unprecedented standards of efficiency and service on flights in India, we are proud to be launching transatlantic service, and bringing the spirit of the New India, into one of the world's most important cities," Goel said in a brief speech at the gala announcement luncheon at the Waldorf Astoria Hotel.

"The burgeoning economy of 'New India' offers American business leaders myriad opportunities, which is why the time is right for us to start flying from new York," he said.

The announcement came a day after Air India, India's national carrier, announced non-stop daily flights between Mumbai and JFK airport in New York beginning August 1.

"Our goals is to be recognised as one of the world's top five airlines by 2010 and having built our reputation in India and six other international destinations, we are confident that the US market is ready to recognise Jet Airways as one of the most exciting and outstanding pioneers of aviation in the world today," he said.

Goel said that with the forging of closer relations between the US and India, two of the world's largest democracies, airline passenger traffic is increasing to and fro almost regularly. "We see that the US is going to be our biggest market," Goel said.

Jet, which is building a major hub in Brussels for all its flights connecting India and the US, will also commence service between Delhi and Toronto beginning September 5. In addition to flights to Brussels from Mumbai and Delhi, direct flights between Brussels and Chennai, Bangalore and Ahmedabad will eventually enable travelers to connect seamlessly from five Indian gateways to six North American airports, including Chicago, Los Angeles and San Francisco.

Jet did not say how early the flights will take off.

Asked as to how he would compete with Air India which claims to have the emotional loyalty of a large number of members of Indian corporate world, Goel parried a direct reply.

"It is a huge market and as far as Air India is concerned its market share is about 14 or 15 percent. Naturally, the rest of the market is for other carriers. So, it is only fair that customers get a better service on this route," Goel told rediff.com. "We are striving not to be inferior to Singapore Airlines or Cathay for that matter," he said.

 

[Bull]

Nor is India rising very fast on the report’s Human Development index, where it ranks 127, just two rungs above Myanmar and more than 70 below Cuba and Mexico. Despite a recent reduction in poverty levels, nearly 380 million Indians still live on less than a dollar a day.

I too dont subscribe to the views of India being a 'economic superpower' or si it anywhere close to becoming a meaningfull one.

but due to sheer size of the popluace it can be bigger than US even with 380 million people living under abject poverty. Thats the truth.

Poverty levels were at 70% during 1950's now it is at 35%. Thats a whopping 50% reduction, commendable and laudable.

Malnutrition affects half of all children in India, and there is little sign that they are being helped by the country’s market reforms, which have focused on creating private wealth rather than expanding access to health care and education. Despite the country’s growing economy, 2.5 million Indian children die annually, accounting for one out of every five child deaths worldwide; and facilities for primary education have collapsed in large parts of the country (the official literacy rate of 61 percent includes many who can barely write their names). In the countryside, where 70 percent of India’s population lives, the government has reported that about 100,000 farmers committed suicide between 1993 and 2003.

Well whatvere is said here are the present facts, how can you say thats proof of ni improvement when no past data is presented. You have to state or atleast go thru previous data to figure out where the progress is made.

 

[Bushroda]

IBEF Research: India in the fast lane
Source : Moneycontrol.com
2007-07-12

The India growth story is no longer just the preserve of columns in daily newspapers and speeches of political leaders and civil servants. The number of growing job opportunities in big and small cities, the construction work on the roads, ports and at airports, the healthy balance sheets of companies and the heightened growth in consumerism — all go on to prove that this growth story has begun to change lives of millions across the length and breadth of India.

Statistics only reinforce the all-pervading India growth story. During the past three years, India has grown at an average growth rate of 8.6%, the fastest since Independence. Its global competitiveness ranking has improved from 57 in 2001 to 45 in 2005 and 43 in 2006. According to the latest Global Competitiveness Report, India has the highest rank amongst the BRIC economies, with China at 54, Russia at 62 and Brazil at 66.

India’s economy is at the fulcrum of an ever-increasing growth curve. While both the industry and the services sector are growing in doubt-digits, other indicators – such as the capital markets, foreign exchange reserves, foreign trade and (outward and inward) FDI – too reinforce India’s growth story. Today, India’s foreign exchange reserves are at over $200 billion. The Sensex has topped the majestic 14,000 mark and FDI inflows for 2006-07 are estimated at $19 billion (up from $7 billion during 2005-06). During 2006-07, exports rose 23.9 per cent to $124.63 billion, while imports jumped 29.3 per cent to $181.4 billion.

In services, India has emerged as the world’s 10th largest services exporter. The country has transformed itself from a low-cost outsourcing hub for back-end jobs to a knowledge hub to the world and an emerging R&D powerhouse. Over 100 Fortune 500 companies have set up R&D centres in India.

In 2006-07, the industrial sector grew by an impressive 11.3 per cent. The upbeat Indian industry has outmatched China with as many as eight domestic firms making it to Standard & Poor’s list of challengers to leading global blue-chip companies. S&P recently included eight Indian companies in its annual, ‘Global challengers List’ of 300 firms, as against four from China.

The private sector in India has played a key role in India’s growth. From operating in a protected environment, India’s dynamic entrepreneurs have moved towards attaining world standards of quality and efficiency at competitive costs. Today, India’s private sector contributes nearly 75 per cent of India’s GDP.

Indian companies have also displayed a voracious appetite for doing business overseas. Since 2000, India Inc has made over 300 acquisitions overseas. Big ticket acquisitions like the recent £595 million acquisition of Whyte & Mackay by Vijay Mallya’s UB group, Tata Steel’s acquisition of Anglo-Dutch steelmaker Corus Group Plc for $11 billion and AV Birla group’s acquisition of Atlanta-based aluminium major Novelis for $6 billion, go on to prove that corporate India is today a force to reckon with. Numerous Indian companies, such as Ranbaxy, Dr Reddy’s, Wockhardt, Moser Baer, Bharat Forge, Infosys, Tata Motors, TCS, L&T, Wipro and Satyam, have made a mark overseas.

At the helm of the India growth story is its ever-increasing middle-class, estimated to grow from 50 million today to 583 million by 2025. India is today the fourth largest economy in the world in terms of purchasing power parity (PPP) and is expected to rank third by 2010, just behind the US and China. A recent research report by McKinsey Global Institute points out that the Indian middle class will reshape global markets. “Households that can afford discretionary consumption will grow from 8 million today to 94 million by 2025,” the report says

India’s per capita GDP is growing at the rate of 6-7 per cent per annum. India’s overwhelming youth population – 70 per cent of India is below the age of 35 years – is playing a vital role in its growth. Rising incomes have led to higher consumer spending and rising consumer confidence. As a result, sectors like consumer durables; retail and IT have been growing at rates of over 20 per cent.

Industries like aviation, retail and telecom are growing like never before. India is adding 5-7 million mobile connections each month. India’s civil aviation passenger growth stands at 20 per cent - among the highest in the world. Airlines are expanding like never before - ten Indian carriers have placed orders for 400 aircraft worth $15 billion. The number of passengers who will be airborne by 2020 is a whopping 400 million. Similarly, organised retail industry too is growing at a healthy rate of over 35 per cent.

Once considered a bane, India’s core sector (roads, power, ports, airports etc) is today being viewed as a $340 billion opportunity over the next 10 years. The government’s measures to improve the country’s infrastructure are moving at a fast pace. Forty-eight new road projects worth $12 billion are under construction. And an additional $24 billion worth of investments are being undertaken to develop and upgrade roads till 2008. The government has announced an ambitious plan to add around 1,00,000 MW of additional generation capacity by the year 2012 with an investment target of $73 billion. Railways, airports, ports, water supply, all these are in for huge investments to cater to India’s ever-increasing needs.

Growth is not surpassing villages. During 2000-2005, penetration of colour TVs in rural areas has raised by 200 per cent, followed by motorcycles at 77 per cent, refrigerators at 31 per cent, tractors by 28 per cent and bicycles by 17 per cent. Rural India today is consuming more shampoos, packaged oils and biscuits, more soft drinks, branded utensil cleaners and toothpastes and toothpowders today than ever before. The government is working towards improving the productivity of the agricultural sector. Prime Minister Dr Manmohan Singh recently announced that $120 billion would now be spent on a four-year project ending in 2009 to connect 66,000 villages by road. Rural road connectivity will lead to rural development. It will make villages accessible to economic and social services. And as the India growth story also becomes the story of rural India, the prowess of the nation will become truly insurmountable.

 

[Bushroda]

Exporters gain if India-EU FTA becomes reality

London, July 12: Indian exporters will be able to increase their exports to the 27-nation European Union (EU) by just under 20 percent, if the negotiations for a Free Trade Agreement (FTA) between India and the EU is successfully concluded, according to a media report today.

India's Commerce Secretary G K Pillai and the EU's David o'Sullivan launched these negotiations in Brussels on June 28, Inepnext said here.

The next round is expected to take place in 2-3 months' time in New Delhi and will be ready for signature two years, it said.

The stakes are high for both sides. The FTA is expected "to promote trade between India and the EU by removing barriers to trade in goods and services and investment across all sectors of the economy," according to the brief statement issued by the two sides on June 28.

This agenda is favoured by Prime Minister Manmohan Singh and his EU counterparts. At 2005 summit meeting they set up a high level trade group to look into the possibility of launching negotiations for trade and investment agreement.

However, the 2-day meeting in Brussels seems to have made little headway and this despite the admission, by the two sides, that "there has been significant preparatory work."

The high level trade group, made up of senior Indian and EU officials, has in fact been preparing the ground for these negotiations since October, 2005.

Its report, covering such key issues as trade in goods and services, investment, technical and sanitary barriers to trade, intellectual property rights and government procurement, is in the hands of the Indian and EU negotiators.

The EU's preparations have not been limited to its projected FTA with India; the fact is that the EU plans to conclude FTA’s with not only India but also the Association of South-East Asian Nations (ASEAN) and South Korea.

These agreements could boost EU exports to India by just under 57 percent, to Asean by some 25 percent and to South Korea by 48 percent, according to studies carried out by two independent think-tanks on behalf of the European Commission.

The biggest gains for India would include a 46 percent increase (worth 3.6 billion euro) in its exports to the EU of textiles and clothing.

Business services from Asean to the EU would rise by 80 percent (worth 14 billion euro) and of vehicles from Korea by 40 percent (worth 5 billion euro).

An EU-Asean agreement would see some trade diversion from China and India, and the Gulf States could see some trade diversion effects by an EU-India FTA, according to the two think-tanks.

The 27 EU governments adopted the European Commission's recommendations to open FTA negotiations with both Asian and Latin American countries in late April.

The aim, they declared, should be "a new generation of WTO-compatible FTA that extend beyond present agreements."

These FTA’s, the EU governments pointed out, "should be ambitious and comprehensive and comprise far-reaching liberalization of trade in goods and services, and investments," with "special attention given to the elimination of non-tariff barriers."

The new FTA agreements, they pointed out, would help EU industries compete more effectively against their global competitors on these three important markets.

This is because each FTA agreement would be so crafted as to promote trade between the two parties to the agreement. Thus the EU-India agreement could provide tariff cuts for products of specific export interest to each side.

These reduced tariffs would not be available to exporters from other countries, because the agreement would contain rules of origin that they would be unable to meet.

Tariff cuts made within the framework of the Doha Development Round would have to be extended to all WTO countries, however, under the Most-Favoured-Nation (MFN) rule.

The negotiations for an EU-India FTA could prove even more difficult to bring to a successful conclusion than the Doha Development negotiations.

The EU will be pressing for substantial tariff cuts, on the grounds that India, as well as Asean and South Korea, "combine high levels of protection with large market potential."

What is more, the EU wants the FTA’s to focus on areas not currently covered by WTO rules, such as investment, trade in certain services and the removal of non-tariff barriers and technical barriers to trade.

 

[Bushroda]

Foreign hotel chains queue up for India
Mohini Varma
Tuesday, July 10, 2007 (Pune):

Foreign hotel chains are making a beeline for India, Radisson's parent US based Carlson Hotels has now got the taste of solid growth and is spending Rs 600 crore to expand.

The hotel chain wants to increase its properties from 34 to 64 properties. These will be across categories like top end with Radisson, business hotels with Park Plaza and budget hotels with Country Inns.

Starwood hotels and resorts which has over 21 operating properties in India including the Le Meridians and Sheratons is also planning to launch its trendy-funky brand of 'W' hotels in Mumbai.

The boom in the tourism Industry has established an unprecedented demand for quality accommodation, room rates have gone up by 18-22 per cent in the past year.

Thats why international and domestic players are fast scaling up operations in India and now the Carlson group is scaling up both in the luxury as well as the budget segments.

Budget segment

New York based Berggruen has invested Rs 400 crore to expand in cities like Kerala, Goa and Karnataka. Tata's Ginger is spending between Rs 200-240 crore to capture the tier II towns.

Whitbread with Emaar and Accor are putting up low-price hotel chains. And Carlson's Park Inns will also see an investment of Rs 200-300 crore.

With the demand for the budget segment growing three times faster than the luxury segment, competition in this space is likely to hot up further.

India is estimated to need up to 80,000 economy-style rooms by 2010, some of which is driven by the commonwealth games, but for these hotel chains all such expansion surely make for profitable seasons ahead.

 

[Bushroda]

A 24-hour ‘Real Estate’ channel on air soon

A 24-hour TV channel dedicated to real estate goes on air this month in India, a hot property market where buying a new home is considered a hallmark of success among the youthful middle-class. About 90 per cent of all property investment in the country is in houses, while an economy growing at 8 to 9 per cent a year has spurred demand for shopping malls and offices as well. The owners of ‘Real Estate TV’ say their station will be the first of its kind in south and southeast Asia, a one-stop shop for everything related to the property business and some 250 related industries, such as cement and steel. “It will provide comprehensive, latest and authentic updates on all aspects of real estate, including infrastructure,” said Manoj Namburu, chairman of the Alliance Group which owns it. “Apart from property information, analysis and advice, we will have various shows on lifestyle, heritage homes and interior decor among other things,” said Krishnan Sriram, the channel’s corporate communications chief.

The channel can also be seen in the Middle East, targeting the large Indian expatriate community in the Gulf. Real Estate TV will also air game shows and even soap operas with a real estate theme, as well as a reality show on the red tape and corruption that faces home-buyers. India’s property boom gathered pace after the government eased rules on foreign investment in the construction industry in 2005 to help revamp the country’s crumbling infrastructure and fill an estimated shortfall of 20 million homes.

 

[alamgir]

I have read this article, its old, why are u posting it now alagmir, i think it has been posted before.

Plus now its incorrect as well, there has been a manufacturing boom in India as well, therefore it is giving rise to a labour intensive growth pattern.

sorry have not seen it, and manufacturing boom in india as you describe above but some indian not agree with you as in this article................................................................................................Laveesh BhandariPosted online: Saturday, February 17, 2007 The problem is not ‘job-less’ growth; it is the quality of India’s demographic dividend

The latest unemployment figures from the NSSO — preliminary estimates of the NSS draft were reported by this newspaper on Friday — are not surprising to those who have been following the numbers. Urban unemployment is up marginally to 7.4 per cent in 2004-5 from 7.3 per cent in 1999-2000 and 6.8 per cent in 1993-94. Smaller cities have a much larger unemployment rate, and women suffer higher unemployment rates than men. The difference between larger and smaller cities is quite significant — 6.1 per cent in the larger (Class 1) cities to 8.7 per cent in Class 3 cities. What is more pertinent is that unemployment rates are rising in smaller cities and falling somewhat in the larger cities.

Will this trend continue? With high economic growth, unemployment will increase but at a lower rate. However, with sustained high growth and with better education and training, unemployment rates will fall. On the one hand the demographic dividend is yielding fruit and large numbers are entering the labour force. On the other, greater economic growth is generating a greater demand for human resources. One would therefore expect that this greater demand for human capital will be met in a country such as India. But that is not necessarily the case.

On the one hand a large number of youth are not finding the jobs that they would like — and employers are complaining everywhere about a dearth of adequately trained manpower.

The problem, of course, is a mismatch in the quality of the human capital. A large number of India’s youth are under-educated, under-trained and under-prepared for the skills required in today’s economy. They look for jobs, but do not have the human capital or the skills required for the jobs that are available. As a consequence, the few who have the required skill set are being offered stratospheric salaries.

There are a few other dimensions to the problem. The first is geographic. In many areas this increase in the labour force is being compensated by out-migration. In some others it is being accelerated due to in-migration. It is well-known that the larger cities and larger economic concentrations have been growing far more rapidly than those more in the interiors in the last few years. As a consequence cities such as Delhi have been attracting large number of young migrants, many of whom are unable to get jobs. Other cities such as Kolkata are only now seeing rapid economic growth and therefore the fall in unemployment rates is quite significant.

The second aspect of unemployment is its concentration in the 15-25 age group. Depending upon the estimate, between 70 to 90 per cent of the unemployment is in this age group. The youth can afford to wait if they do not find a job to their liking. The responsibilities are lesser and the ‘cost’ of waiting not that high. And the bulk of the unemployment is a result of this ongoing search for the right job rather than taking up any job that is available. As a consequence we find that a far greater proportion of the better educated are employed. This is an important aspect of unemployment in India. A large part of the unemployment is actually a result of the mismatch between expectations of the employee and the employer.

There are various ways by which this mismatch can be corrected. The first is related to better quality of ‘matching’ services. The current employment exchange system is quite defunct and needs to be shut down or completely overhauled. Skill and training mechanisms need to be strengthened by bringing in employers in overseeing such institutions if not running them altogether. There are many models currently being debated, but as is often the case in India, few have been taken up even on a pilot basis.

But such skill and vocational courses are not the only solution. The core issue has to do with a school and higher educational system that is low on quality and content and has little relationship with the requirements of the employment market. Indian youths are getting educated in large numbers but what many are learning has little value.

Some have argued that reforms have led to ‘job-less’ growth. The argument goes that rapid economic growth in India has been unable to generate opportunities for the poor and underprivileged. And as a consequence unemployment has been rising as well.

Consider some of the most rapidly rising professions of the 1990s. As per analysis conducted on NSSO 1993-94 and 1999-2000 data, among the major occupations the most rapidly growing ones were wholesale and retail trade, agents, bricklayers and construction workers, nursing and health technicians, hotels and restaurant keepers, transport equipment operators, cooks and waiters, dhobis, drycleaners, caretakers, sweepers, etc. Most of these professions are not those normally associated with the more privileged section of the population. And most of the reforms in the 1990s would not have directly impacted their sectors. But the impact of greater incomes generated opportunities for all across the economy. In other words, the problem is not so much that opportunities are not being generated — had that been the case unemployment would have been far higher than the 7.4 per cent. Neither is it an issue of opportunities for the privileged versus those for the underprivileged. The critical issue is that of the so-called demographic dividend.

The majority of the country’s population is currently classified as youth, adolescent or child. A very large group enters the working age group every year. The numbers are staggering. As of 2001 there were 354 million in the 5-19 year age group. That means that somewhere in the region of 170 to 200 million will want a job over the next 15 years; or in the region of 12 to 15 million every year.

In the net analysis, therefore, we need to aim for greater growth that needs to be sustained. And we need to match that with a comprehensive approach towards universal education and training.

The writer is director, Indicus Analytics


www.indianexpress.com/story/23482.html-37k

 

[joey]

The potential for conflict — among castes as well as classes — also grows in urban areas, where India’s cruel social and economic disparities are as evident as its new prosperity. The main reason for this is that India’s economic growth has been largely jobless. Only 1.3 million out of a working population of 400 million are employed in the information technology and business processing industries that make up the so-called new economy.No labour-intensive manufacturing boom of the kind that powered the economic growth of almost every developed and developing country in the world has yet occurred in India. Unlike China, India still imports more than it exports.

Wrong...and grossly.

For decades now, India’s underprivileged have used elections to register their protests against joblessness, inequality and corruption. In the 2004 general elections, they voted out a central government that claimed that India was “shining,” bewildering not only most foreign journalists but also those in India who had predicted an easy victory for the ruling coalition.

Wrong again, the author does not knows Indian politics.
In some states poor are being kept poor so that they can increase vote bank - Communist states.

 

[joey]

There are problems, and lots of it, But I'm optimistic due to its my country and I'm determined to do something for it.

Lets move on alamgir We need to see how sustainable things are for more 5 years to confirm anything.