Indian Economy - News & Updates - Archive

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Tata, Mahindra may bid for Land Rover and Jaguar
FRANCE24, FRANCE
Thursday, July 19, 2007

Indian automakers Tata Motors and the Mahindra group are considering separate bids to buy luxury British car brands Jaguar and Land Rover from US carmaker Ford Motor Corp.

NEW DELHI, July 19, 2007 (AFP) - Indian automakers Tata Motors and the Mahindra group are considering separate bids to buy luxury British car brands Jaguar and Land Rover from struggling US carmaker Ford Motor Corp, according to media reports on Thursday.

Ford announced last month that it was considering selling off the two iconic marques as it restructures its North American operations.

Media reports have pegged the deal as worth around 1.3 billion to 1.5 billion dollars.

Tata Motors, India's biggest automobile company, has appointed advisors to evaluate a bid and signed a confidentiality agreement with Ford to access financial details of the two brands which have a combined British workforce of 19,000, the Business Standard daily quoted unnamed sources as saying.

The move would be in keeping with Tata group's growing appetite for overseas acquisitions.

Earlier this year, Tata Steel bought Anglo-Dutch steelmaker Corus for 13.7 billion dollars, India's biggest ever foreign takeover.

Leading tractor and utility vehicle maker Mahindra and Mahindra, which formed a joint venture this year with France's Renault and Japan's Nissan, had also signed a confidentiality agreement with the US carmaker, the Economic Times reported.

Ford bought Jaguar in 1989 for 2.5 billion dollars and Land Rover from Germany's BMW in 2000 for 2.7 billion dollars.

Spokesmen for Tata and Mahindra declined to comment.

The Economic Times said Mahindra and Mahindra's real interest is in Land Rover, but since the two brands are being offered as a package deal it is looking at a combined bid.

 

[Bushroda]

India to Keep Monetary Policy Tight, Chidambaram Says
BLOOMBERG
By Cherian Thomas and Haslinda Amin

July 19 (Bloomberg) -- India will maintain a ``fairly tight'' monetary policy to curb inflation that may be stoked by rising crude oil prices and consumer demand, Finance Minister Palaniappan Chidambaram said.

``We have to do our best to keep inflation down in a world where fuel prices are flaring up, commodity prices are increasing and demand remains high in China and India,'' Chidambaram, 61, said in an interview yesterday in New Delhi.

Indian bonds fell the most in more than five weeks after Chidambaram's comments. Bond investors in India had previously been expecting interest rates, which have risen since October 2004, to ease after inflation fell to near a 13-month low and record growth in bank loans slowed.

``I would expect the Reserve Bank of India to maintain the status quo,'' said D.H. Pai Panandiker, president at RPG Foundation, an economic policy group in New Delhi. ``The central bank has a difficult task to keep inflation within acceptable limits and at the same time not allow the rupee to appreciate too much and hurt exports.''

The yield on the benchmark 7.49 percent note due April 2017 rose 6 basis points, or 0.06 percentage point, to 7.84 percent as of the 5:30 p.m. close in Mumbai, according to the central bank's trading system. The yield had declined 42 basis points in the month to yesterday, partly on optimism the central bank this month may refrain from raising borrowing costs further.

`Still Concerned'

Chidambaram, whose ruling Congress party faces national elections by May 2009, wants to drive down inflation to as low as 4 percent. India's benchmark wholesale price inflation rate fell by a third to 4.27 percent in the week ended June 30 from a two-year high in January. Rising prices caused the Congress party to lose power this year in two states and fall further behind in the most populous province of Uttar Pradesh.

``I am still concerned about commodity prices, prices of food grains, edible oils and most importantly, I am very concerned about crude oil prices,'' said Chidambaram, who holds a Harvard MBA and is a lawyer by training. ``Inflation is low because we kept a tight control over money supply and we have allowed the rupee to appreciate a bit.''

The Reserve Bank of India, which will release its next monetary policy statement on July 31, increased its key overnight lending rate six times in the past 1 1/2 years and also raised its cash reserve ratio, or the proportion of deposits commercial banks need to maintain with the central bank, three times since December.

Loan Growth

That helped slow the growth in loans to consumers and companies to 23.4 percent in the year to June 29 compared with a 31.8 percent gain in the same period last year, the central bank said July 13.

Still, India has expanded at a record 8.6 percent average pace since 2003, making it the world's second-fastest growing major economy and increasing the consumption of oil. India currently imports almost three-quarters of its oil needs.

Crude oil approached an 11-month high in New York yesterday, after an Energy Department report showed that U.S. gasoline inventories unexpectedly fell last week. The price of oil is up 23 percent this year.

India may increase gasoline and diesel prices because of the rise in oil prices, the Financial Express reported July 2, without saying where it got the information.

``Rising crude oil does not necessarily mean higher local fuel prices,'' said Chidambaram. ``It means our subsidy bill can go up'' as the government prevents higher oil prices from filtering into the economy.

Fuel Subsidy

Indian Oil Corp., the nation's largest refiner, and its state-run counterparts are barred by the government from raising fuel prices in line with crude oil costs to control inflation.

India plans to spend 28.4 billion rupees ($702 million) on compensating the refiners for subsidizing fuel in the year that started April 1, compared with 27.85 billion rupees a year ago, according to budget estimates made in February.

India's other inflation-fighting measures are also adding to the country's subsidy bill, which makes up about a tenth of the federal budget.

The gain in the rupee to a nine-year high has helped reduce imports of oil and other products and contain inflation, but ``it does pose some other problems,'' Chidambaram said yesterday.

``Exporters are complaining,'' he said. ``We have given some incentives to our exporters.''

India this week eased interest rates and increased the tax refund limit for small and medium-sized exporters to cushion them from a 9.5 percent gain in the currency this year. The relief to textile, leather, handicraft and other exporters will cost the federal government 13 billion rupees, the finance ministry said on July 12.

India's currency surged as the central bank slowed dollar purchases on concern rupee funds injected from the exercise will stoke inflation.

 

[Bushroda]

What can Indian Elephant learn from Chinese Dragon
20 Jul, 2007, 0459 hrs IST
Ashok Gulati & Shenggen Fan, TNN

Once again, India (the elephant) will fail to achieve its targeted growth rate in agriculture in 2007-08. The economic advisory council to the Prime Minster in its Economic Outlook for 2007-08 identifies agriculture as a special sector needing attention, as its growth rate is not likely to cross 2.5% against a target of 4%. Comparing with China (the dragon), the report goes on to state that India is not very unfavourably placed either in terms of irrigation, or tractor intensity, or farm size, but still Indian yields for major crops like rice, wheat, groundnut, etc. are almost half of those in China. The council explains this difference in yields primarily through differences in fertiliser consumption.

But if Indian policymakers have to learn anything from China with respect to agriculture, they better go back to 1978, when China started economic reforms. IFPRI’s research in this area (The Dragon and the Elephant edited by Gulati and Fan, 2007, forthcoming, Johns Hopkins University Press) reveals that the initial six years of reforms in China, 1978-84, were the most critical for Chinese agriculture.

The land tenure system was changed from commune-based to household responsibility system and procurement prices for most of the staple crops were revised upwards by as much as about 20%. These two policy changes together created a highly favourable incentive environment in agriculture, leading to increased private investments and higher usage of fertilisers in agriculture. As a result, agricultural GDP grew at 7.1% per annum during 1978-84. And since agriculture prices increased much faster than the overall price index of the economy, agriculture incomes increased even faster than the agricultural GDP, by more than 10% per annum, and poverty in China declined from 33% to 15% in just six years.

This generated a huge demand for goods produced by town and village enterprises (TVEs) in China, thus spurring a next round of rural non-farm growth and employment. These TVEs have been the real catalysts in making China as the manufacturing hub of the world today.

The lesson from China story is clear: that agriculture led reforms can spur growth in rural non-farm sector and the two together can go a long way in cutting down poverty fast. Thus, firing the economic pyramid from the bottom can bring rich dividends (see figure). But in India, growth spurred from IT boom (top of the economic pyramid), and the economic reforms focused more on industry and service sectors than on agriculture. As result, while India’s service sector is doing very well, and manufacturing has picked up momentum during the last five years or so, but agriculture is still limping.

The sceptics of China story often doubt whether there is anything worth while for India to learn as India already has its agriculture in private hands. There are at least three points that one can still learn from China. First, China had heavily invested in rural infrastructure, education and health. Although these investments are not strictly counted as investments in agriculture, yet they laid a basic foundation for agricultural growth.

In 2004, adult literacy rate in India was still as low as 62% while China’s was as high as 92%. Most of villages in China now have access to all weather roads, while India is far, far away from that target. Second, China spends almost 1% of its agriculture GDP on agriculture R&D, while India had its expenditure levels below 0.5% for most of the years, which are lately raised to 0.6% last year. Rural roads, and agriculture R&D, the two together, can be powerful engines of growth in agriculture and associated rural non-farm activities.

Third, it may be noted that in China, for the last 10 years or so, much of the growth in agriculture is coming from the high-value segment (livestock, fruits and vegetables, and fishery), which are growing in the range of 5% to 8% per annum while food grain segment is growing at less than 1% per annum.

China is increasingly importing land demanding commodities like soybeans (imports exceeding 30 million tons) while exporting labour and care intensive commodities (fruits and vegetables). This is all driven by rising incomes, changing consumption patterns, and rational usage of resource endowments. Similar things are likely to happen in India over the next five to ten years. An important lesson to learn here is that high value agriculture needs fast moving infrastructure, and each commodity value chain has its specificity. Both public and private sectors need to invest heavily in logistics and infrastructure, processing and modern retailing. This will unlock huge potential in non-farm employment and promote rural-urban migration.

It may be noted that in China, during 1978-1997, rural non-farm GDP was growing at more than 24% per annum, and rural non-farm employment at almost 10% per annum. More than 180 million of Chinese farmers migrated to urban sectors since the reform in the late 1970s. Despite rapid overall economic growth, rural urban migration and non-farm sector in India is till embryonic.

 

[Bushroda]

Indian consumers top the Nielsen Global Consumer Confidence Index
(19 July 2007 3:20 pm)

MUMBAI:The confidence of Indian consumers in India is high for the fifth consecutive time with 135 points in the global consumer confidence index conducted by the Nielsen Company, twice a year.

The survey which polled internet users across 47 markets from Europe, Asia Pacific, North America and the Middle East conveyed that 93 percent Indians who were polled, consider their job prospects to be excellent or good over the next 12 months.

The high consumer confidence is also reflected in the way consumers view the state of their personal finances in the next 12 months with nine in ten Indians feeling 'excellent' or 'good' about it.

According to the survey, Indians are also quite optimistic and confident about the future of the economy with 61 per cent feeling that it is an 'excellent' or 'good' time to buy things that they want or need.

"Indian consumer confidence is in line with the release of the country's latest GDP figure of 9.4 percent - the highest growth India has posted in eighteen years," said ACNielsen executive director customized research south east Asia Sarang Panchal. "It is no surprise, therefore, to see forty-five percent of Indian consumers surveyed rating their job prospects in the next 12 months as 'excellent," he added Panchal.

India also became the third highest globally after Hong Kong and China in terms of investment in shares and mutual funds with 53 percent of Indians saying that they would invest in shares of stock or mutual funds with their spare cash after covering their essential living expenses. Increasingly Indians love traveling and it finds it's way to the third slot, with 39 percent Indians voting for it as a means of spending their extra money.

37 percent of Indian respondents would spend in Paying off debts/credit card loans whereas 32 percent would spend in buying new clothes. New technology with 29 percent and home improvement and decorative items with 32 percent are some other ways Indian respondents utilize their spare cash. Retirement fund is also something that Indians believe they should invest in, with 21 percent of Indians investing in it.

"With a high propensity to spend among Indian consumers, benefits to different industries become more substantial which in turn supports a continued improvement in the economy and consumer sentiment," said Panchal. "With four percent of the Indian respondents admitting to not having any spare cash after their necessary purchase for discretionary spending, it is among the lowest in the world."

However there are still some areas of concern for consumers like the country's economy, with 46 percent citing this as their biggest and second biggest concern followed by health which had 31 percent Indians responding to it.

The other concerns were job security getting 19 percent responses, political stability with 16 percent and terrorism getting 16 percent.

Global warming has fast become an alarming environmental hazard and 19 percent of Indians expressed their concern about it. "The level of concern about global warming is now on par with people's concern about personal things like job security," continued Panchal. "It's time for both the government and people to take their own responsibilities to slow down the worsening situation, if not improving."

The release concluded that Indian consumers are optimistic in contrast with the world's most pessimistic consumers who hail from Portugal, Korea, Japan and Hungary, who are pessimistic about the job market, state of their personal finances or readiness to spend.

 

[Bushroda]

‘Labour-based units key to double-digit growth’
ECONOMY BUREAU
Posted online: Friday, July 20, 2007 at 0012 hours IST

NEW DELHI, JUL 19: The government should bring in policies that promote labour-intensive manufacturing in order to generate and sustain double-digit growth in national income, Arvind Panagariya, Professor of Economics and Jagdish Bhagwati Professor of Indian Political Economy at Columbia University, said at a CII seminar here on Thursday.

He said while China has done a great deal in promoting labour-intensive industry, India has lagged behind on that front. Promoting the labour-intensive industry can have a big multiplier effect on the entire economy, he said, adding that India should exploit its competitive advantage of having huge labour force. ‘

While appreciating the growth that the IT and software industry has witnessed recently, he said these capital-intensive sectors can generate limited employment.

India needs to focus on developing labour-intensive industries, such as steel, coal and cement, to fasten the rate of growth, he said. Panagariya, whose book India: An Emerging Giant is being published in December 2007, said that at this point the country should not bother too much about inequalities as it can take the focus away from reforms.

“When we focus on inequality, we go after guys who actually create wealth…thereby hampering the overall growth,” he said.

“We should focus on poverty alleviation and not too much on inequalities,” he added. Putting forth a case for hastening reforms, he said growth has been ultimately linked to reforms.

 

[Bushroda]

Growth and development of indian textile industry
Fashion2Fibre

INTRODUCTION

The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a pivotal role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the country’s export earnings. It provides direct employment to about 35 million people, which includes a substantial number of SC/ST, and women. The Textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this sector has a direct bearing on the improvement of the economy of the country.

ORGANISED COTTON/ MAN-MADE FIBRE TEXTILE INDUSTRY

The Cotton/ Man-made fibre textiles industry is the largest organized industry in the country in terms of employment (nearly 1 million workers) and number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes & chemicals. As on 31.10.2006, there were 1818 cotton/man-made fibre textile mills (non-SSI) in the country.

Over the years, production of cloth in the organized mill sector has been stagnating. It has declined from 1714 mn. sq. mtrs. in 1999-2000 to about 1434 mn. sq. mtrs. in 2003-04. However, since then, it is showing a constant increasing trend; 1526 mn. sq. mtrs. in 2004-05, 1656 mn. sq. mtrs. in 2005-06. In 2006-07, it is anticipated at 1900 mn. sq. mtrs. The total production of cloth by all sectors i.e. mill, powerlooms, handlooms, hosiery and khadi, wool and silk, has shown an up-ward trend in recent years. During 2006-07, the total production of cloth is anticipated to touch 49, 542 mn. sq. mtrs., compared to 52,000 mn. sq. mtrs. in 2005-06. The satisfactory performance of cloth production has resulted in favorable per capita domestic availability of cloth in the country. During 2004-05, the per capita availability of cloth was 32.63 sq. mtrs., and it is expected to increase to 43.33 Sq. mtrs. during 2006-07.

TECHNOLOGY UPGRADATION

The Indian Textiles Industry has suffered from severe technology obsolescence and lack of economies of scale, which, in turn, had diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base and skilled human resources. While the relatively high cost of state-of-the-art technology and structural anomalies in the industry have been major contributory factors, perhaps the single most important factor inhibiting technology up gradation has been the high cost of capital, especially for an industry that is squeezed for margins. Given the significance of this industry to the overall health of the Indian economy, its employment potential and the huge backlog of technology up gradation, it has been felt that in order to sustain and improve its competitiveness and overall long term viability, it is essential that the textiles industry has access to timely and adequate capital, at internationally comparable rates of interest in order to upgrade the level of its technology.

The Technology Up gradation Fund Scheme (TUFS), the flagship scheme of Ministry of Textiles was launched on 01.04.1999. Initially proposed for a period of five years, the scheme has now been extended till 31.03.2007, and is designed to ensure the availability of bank finance at rates comparable to global rates. Under this, the Government reimburses 5% of the interest charged by Banks and Financial Institutions, thereby ensuring credit availability for the up gradation of technology to industry at global rates.

The Government has strengthened and augmented the Technology Up gradation Fund Scheme (TUFS). The allocation for the subsidy component of TUFS was enhanced from Rs.249.00 crores in 2004-05 to Rs. 485.00 crores in 2005-06, registering an increase of 95%. This has been further increased to Rs.835 crores in 2006-07, an increase of 91% over 2005-06. Till 31.10.2006, the Scheme has attracted 6142 applications, involving an investment of Rs 53,003.00 crores. Out of this 5882 applications with a project cost of Rs. 47,580 crore have been sanctioned. As such, this Scheme has created such a great momentum that has resulted into an investment of around Rs. 50,000 crore from the textile industry only under this Scheme. Owing to TUFS only the textile sector is still in an upbeat mood to modernize itself so that it may take on the global competition with confidence.

TEXTILES EXPORTS

Textiles exports form 17% of the country’s total export earnings and India’s share in the global textile market and apparel market is 4% and 2.8%, respectively. The Textiles exports basket consists of Ready-made garments, Cotton textiles, Textiles made from man-made fibre, Wool and Woolen goods, Silk, Handicrafts, Coir, and Jute.

POST-MULTI FIBRE ARRANGEMENT SCENARIO

In the post-Multi Fibre Arrangement (MFA) era w.e.f. January 1, 2005, the textiles exports are up by 25% in 2005-06 over 2004-05 The share of textiles exports in USA imports have increase from 4% to 5% in calendar year 2005 as compared to that achieved in calendar year 2004.The share of textiles exports in extra- EU imports increased from 6% to 7% in calendar year 2005, growing at 18% year-on-year basis as compared to 5.6% growth in extra-EU imports. The country in calendar year 2005 was the third largest supplier of textiles to USA and EU. During 2005-06, India’s total apparels exports were US$ 8.63 billions, registering a year-on-year increase of 31%. The country enjoys a higher realization in US markets for apparels of US$ 3.9/ sq. mtrs. as compared to US$ 2.8/sq. Mtrs. for China. The realization has increased in the past two years compare to decline for China.

As per Industry estimates, the investment has picked up in the past two years increasing from Rs. 7349.00 crores in 2004-05 to Rs. 15,032.00 crores in 2005-06. It is estimated that the total investment in the textiles and clothing industry between financial years 2003-06 was around Rs. 42,978.00 crores. To sustain the above growth, the industry would need an investment of Rs. 1,94,000.00 crores (US$ 43 billion) between the financial years 2007-2012, and the industry will potentially generate additional employment for 14 million people, of which 4.4 million would be in apparel sector.

The Government has launched the Scheme for Integrated Textiles Parks (SITP) in August 2005, to strengthen infrastructural facilities in potential growth areas by merging the existing two schemes viz. “Apparel Parks for Exports Scheme (APES)” and “Textile Centres Infrastructure Development Scheme (TCIDS)”. Under the scheme, twenty-six Integrated Textile Parks/projects have been approved with an estimated project cost of Rs. 2411.20 crore, of which Government of India assistance under the scheme would be Rs. 862.55 crore. The estimated investment in these parks would be Rs. 13,445 crore and estimated annual production would be Rs. 19,200 crore. Estimated employment generation would be more than 5 lakh. The projects are expected to be completed by March 2008. Twenty six parks have been sanctioned at Gujarat (6 Nos.), Andhra Pradesh (4 Nos.), Maharashtra (6 Nos.), Tamil Nadu (5 Nos.), Rajasthan (2 Nos.) and one each in Karnataka, Uttar Pradesh, and West Bengal.

JUTE & JUTE TEXTILES INDUSTRY

The Jute industry occupies an important place in the national economy. It is one of the major industries in the eastern region, particularly in West Bengal. Jute, the golden fibre, meets all the standards for ‘safe’ packaging in view of its inherent advantages of being a natural, renewable, biodegradable and eco-friendly product.

Globally, India is the largest producer and second largest exporter of jute goods and this sector support livelihood of about 40 lakh farm families, and provides direct and indirect employment to 4 lakh workers. There are 78 Jute mills in the country, of these 61 are in West Bengal, 3 each in Bihar and Uttar Pradesh, 7 in Andhra Pradesh and one each in Assam, Orissa, Tripura and Madhya Pradesh. Annually, the export of Jute Products amounts to Rs. 1000.00 crores. The production of raw jute varies between 90-100 lakh bales (180 kg.each), and the domestic consumption of jute goods is in the range of 13.5- 14.5 lakh MT. The ratio of domestic consumption to exports is 80:20. The production of jute is concentrated in 36 districts of West Bengal, Orissa, Bihar, Assam, Meghalaya, Tripura and Andhra Pradesh. In 2005-06 jute season (July-June), the production of raw jute was 85 lakh bales and in 2006-07 jute season, it is estimated at 105 lakh bales.

The UPA Government announced the first ever National Jute Policy on April 15, 2005, with the objective of achieving a Compounded Annual Growth Rate (CAGR) of 15% per annum; improving the quality of jute fibre; ensuring value addition through diversified jute products; ensuring remunerative prices to jute farmers and enhancing the yield per hectare.

As envisaged in the National Jute Policy 2005, CCEA has approved in its meeting on 2.6.2006 the Jute Technology Mission to be implemented during 2006-07 to 2010-11 at an estimated cost of Rs. 355.55 crores, and establish a National Jute Board at Kolkata by merging the Jute Manufactures Development Council (JMDC) and the National Centre for Jute Diversification (NCJD). Steps have also been initiated to set up a National Institute of Natural Fibres and a National Jute and Jute Geo- Textiles Museum. The Minimum Support Price (MSP) for raw jute has been increased to Rs. 1000.00 per quintal in 2006-07, up from Rs. 910.00 per quintal in 2005-06, with a view to protects the jute farmers from seasonal uncertainties, and helps to prevent distress sales by farmers.

COTTON & COTTON TEXTILES INDUSTRY

Cotton is one of the principal crops of the country and is the major raw material for the domestic textile industry. It provides sustenance to millions of farmers and contributes significantly to the country’s export earnings. The country has the distinction of growing all the four cultivated species of cotton viz. Gossypium arboretum, G. herbaceum (called Desi/ Asian cotton), G. hirsutum (American upland types), and G. barbadense (Egyptian type), as also hybrid cottons.

The ratio of the use of Cotton to Man-made fibres and filament yarns by the domestic textiles industry is 56:44. India is the third largest producer of cotton (4.13 mn. metric tonnes), accounting for 16 % of global production, and the cultivated area in the country is the largest in the world (between 88-90 lakhs hectares). The states of Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Karnataka and Tamil Nadu accounts for 99% of cotton cultivation in the country. Due to focused support to Cotton growers by the Government, cotton production reached a record high of 243 lakh bales (170 kg. each) in the 2004-05 cotton season (October-September), and is expected to remain the same during 2005-06, despite a reduction in the area under cultivation. The productivity has increased from 399 Kg./hectare in (2003-04) to 463 kg./hectare (in 2004-05), and it is expected to reach 468 kg./ hectare in 2005-06.

Seeing the importance of cotton in the textiles economy, the Technology Mission on Cotton (TMC) was launched on 21.02.2000, to raise productivity, improve the quality, and reducing the cost of production of cotton. The mission will continue till 31.03.2007. The Mission consists of four Mini Missions, of which, the Ministry of Textiles is implementing Mini-Missions III & IV, which involve the development of marketing infrastructure, and the modernization / up gradation of ginning and pressing factories. Under Mini Mission III, there it is proposed to develop 250 market yards. Against this, upto 31.10.2006, 219 market yards have been sanctioned and 106 have been completed. Similarly, under Mini Mission IV, against a target of modernization of 1000 ginning & pressing factories, 821 have been sanctioned, and 493 have been completed.

HANDLOOMS

Handlooms represent the rich and diverse cultural heritage of the country. Their cultural importance pertains to ensuring the preservation of heritage, traditional skills and talent. Their economic importance lies in their high employment potential, low capital investment, high value addition, and potential for export/ foreign exchange earnings. The handlooms provide employment to more than 6.5 million persons, second largest after the agriculture.The production of cloth by the handloom sector during 2004-05 was 5722 mn. Sq. mtrs. and, in 2005-06, it is estimated at 6188 mn. Sq. mtrs. The Government launched “Handloom Mark” on June 28, 2006, for the brand promotion of handloom products. Some of the important schemes being implemented in the sector are: (i) Deen Dayal Hathkargha Protsahan Yojana (DDHY) (ii) Marketing Promotion, (iii) Handloom Export Scheme (iv) Workshed-cum-Housing Scheme, and (v) Weavers Welfare Scheme.

During the tenure of UPA Government, besides the ongoing Schemes, several initiatives have been taken in the handlooms sector which includes launching of (i) Integrated Handloom Cluster Development Schemes (ii) Health Insurance Scheme (iii) Mahatma Gandhi Bunkar Bima Yojana (iv) Handloom Mark Scheme (v) Technology Up gradation Funds Schemes for Handloom Sector and (vi) 10% Rebate Scheme on sale of handloom fabrics. Besides, 273 New Yarn Depots, covering approximately all handloom clusters, have been set up. The platforms in the form of exhibitions/marketing events, wherein weavers can showcase their products for public have been doubled and to improve the credit worthiness of weavers, the Ministry of Textiles have taken up the matter with the Ministry of Finance to provide credit at lowers rate as well as writing off the old debts of the weavers.

Under the Integrated Handloom Cluster Development Scheme, in the first phase, 20 handloom clusters have been set up at an estimated cost of Rs. 40.00 crores at Chirala and Madhavaram (Andhra Pradesh), Bijoinagar (Assam), Bhagalpur (Bihar), Kullu (Himachal Pradesh), Gadag (Karnataka), Thiruvananthapuram (Kerala), Gwalior/Chanderi (Madhya Pradesh), Imphal (Manipur), Bargarh and Sonepur (Orissa), Kurinjipadi, Trichy and Tiruvannamalai (Tamilnadu), Mubarakpur, Varanasi and Barabanki (Uttar Pradesh), Burdwan and Nadia (West Bengal). In 2006-07, 100 additional clusters have been taken up for development.

DECENTRALISED POWERLOOMS SECTOR

The decentralized power looms sector plays a pivotal role in meeting the clothing needs of the country. The power looms industry produces a wide variety of cloth, both greys as well as processed. The production of cloth and the generation of employment have been rapidly increasing in the power looms sector. In 2005-06, it contributed 62% of the total cloth produced in the country (30,254 mn. Sq. mtrs.), and provided employment to about 4.86 million persons, which is approximately 60% of total employment in textiles sector. There are 19.23 lakh Power looms in the country, distributed over approximately 4.30 lakh units. The major powerloom clusters are at Erode, Salem, Madurai, Ichalkarnji, Solapur, Bhiwandi, Malegaon, Burhanpur, Bhilwara, Kishangarh, Ludhiana and Amritsar.

WOOL & WOOLEN TEXTILES INDUSTRY

The woollen textiles industry is a rural based and export oriented industry in which the organized sector, the decentralized sector, and the rural sector complement each other. This industry is employment oriented, providing employment to 27 lakh workers in a wide spectrum of activities. The country is the 7th largest producer of wool, contributing 1.8% to total world production. The anticipated production of indigenous raw wool is estimated at 55.10 mn.kg. (2004-05). Out of the total production of raw wool, only 5% is of apparel grade and 85% is carpet grade and 10% is coarse grade. Since our domestic produce is not adequate, the industry is dependent on imported raw material. Wool is the only natural fibre in which the country is deficient.

A small quantity of specialty fibre is obtained from pashmina goats and angora rabbits. There are about 718 woollen units in the country, the majority of which are in the small scale sector. The Government is implementing the Integrated Wool Improvement Programme (IWIP) for the growth and development of the wool and woolen industry in the country. There are two components in the programme, viz., (i), improvement in wool fibre and (ii), quality processing of wool. The programme is being administered by the Central Wool Development Board (CWDB), Jodhpur, through State Governments organization/ NGOs, and will continue till 31.03.2007.

HANDICRAFTS

The Sector provides employment to an estimated 63.81 lakhs artisans, of which 47.42% are female; 24.73% belong to Scheduled Castes, and 12.38% to Scheduled Tribes.

The Working Group on Textiles and Jute for the 10th Plan had projected a growth of employment in the Handicrafts sector @ 3 per cent annually during 10th Five Year Plan period. Thus, it is presumed that 9.29 lakhs more artisans will be employed during the period and by the end of Tenth Plan, total employment provided by the handicrafts sector would be 67.70 lakhs. The production during Tenth Plan increased from Rs. 19,564.52 crores in the year 2002-03 to Rs. 32,108.10 crores in the year 2005-06. Exports, which stood at Rs. 10,933.67 crores in the year 2002-03, increased to Rs.17,276. 71 Crores in the year 2005-06, thus showing a growth of 58.02 per cent during the period registering an annual average growth rate of around 19 per cent. The employment increased from 60.16 lakhs in 2002-03 to 65.72 lakhs in 2005-06 at an estimated annual growth rate of about 3 per cent. The plan expenditure during the period also witnessed a steady growth as is indicated from an expenditure of Rs. 71.65 crores in 2002-03 to Rs. 97.24 crores in 2005-06, with the budget outlay for the year 2006-07 fixed at Rs. 110.00 crores including North-Eastern Region, out of which, upto 1st December2006, Rs. 40.14 crores have been sanctioned.

During 2005-06, the export of handicrafts including Hand Knotted carpets were s. 17,276.71 crore (3006.90 US $ Million) registering an increase of 10.63% in rupee terms and 19.28 percent in dollar terms compared to the corresponding period of 2004-05. The main items, which exhibited increased in exports during 2005-06 areZari and Zari Goods (37.57%), art metalware (8.86%), wood wares (18.29 %) and embroidered and crocheted goods (12.18 %). The export target for 2006-07 has been fixed at Rs. 19,500 crore. During 2006-07 (April – November, 2006), handicrafts exports including carpets, exhibited a growth of 16.70 % in rupee terms and 14.06 % in dollar terms as compared to the corresponding period of 2005-06. The export of handicrafts including carpet during 2006-07 (April – November, 2006), were Rs. 11,250.12 crore.Some of the important schemes implemented for the holistic growth of the handicrafts sector are :- (i) Baba Saheb Ambedkar Hastshilp Vikas Yojana (AHVY); (ii) Design & Technical Upgradation Scheme; (iii) Marketing & Support Services Scheme; (iv) Export Promotion Scheme; (v) Bima Yojana for Handicraft Artisans; (vi) Special Handicrafts Training Programme (SHTP).

In addition to the ongoing schemes, during 2005-06, the Government launched the Credit Guarantee Scheme; the Scheme for setting up of Facility Centre and Electronic- Kiosks; and the Gandhi Shilp Haats Scheme, wherein everyday a marketing platform is provided to handicraft artisans in some part of the country. The Shilp Guru Award is given as a part of recognition to the living legends of creativity for their excellence and contribution. On 9th September, 2006, the Vice President, Shri Bhairov Singh Shekhawat gave away Awards to 29 Ship Gurus selected for the years 2003, 2004 and 2005. Besides, the Indian Exposition Mart, Greater Noida and the Rajiv Gandhi Handicrafts Bhawan, New Delhi, have been set up to, inter alia, provide marketing outlets to artisans as well as state agencies.

SERICULTURE & SILK TEXTILES INDUSTRY

Sericulture is an agro-based industry and is suitable for countries like India, which have a large agriculture base. Being a rural and labour intensive industry, it offers relatively high returns on modest investment. Sericulture activities are generally environment friendly.

India is endowed with all four varieties of silk: Mulberry, Eri, Tasar, and Muga. The silk sector is spread almost all over the country, including remote areas of the North East. Globally, India is the Second largest producer of Silk and contributes about 18% to the total raw silk production. During 2005-06, the production of raw silk was 17,305 mt. against a demand of around 26,000 mt. The sector employs about 6 million people, mainly in rural areas. This sector accounted for the export of Rs. 3158.16 crores in 2005-2006, and the export basket consists of Natural Silk Yarn, Fabrics, Made-ups, Readymade Garments, Silk Carpets, and Silk waste. The total silk production during 2004-05 was 16,500 mt. and exports were Rs. 2,879.56 crores. During 2006-07 (upto September 2006), Bivoltine Silk production reached 501 M.Ts, showing an increase of 35.8 % (369 M.Ts) compared to the production during the same period of the year 2005-06.

During the year 2006-07, up to September, the total Provisional production of all varieties of silk is 9768 M.Ts, showing an increase of 12.1 % as compared to the actual production during the same period of the year 2005-06, i.e., 8714 M.Ts. Provisional production of Mulberry Raw Silk is 8878 M.Ts. in 2006-07 upto Septmebr, showing an increase of about 12.1 % when compared to the same period of the previous year i.e. 7919 M.Ts.. The provisional Silk export earnings up to Agusut 2006is Rs. 1372.68 crores 299 .19 Mn. US $) indicating an increase of 10.2 % over the performance of the same period of the year 2005-06, which was Rs. 1245.96 crores (285.84 Mn. US $).- The Government has launched the Silk Mark Scheme for the brand promotion of Silk, and the Central Silk Board (Amendment) Act, 2006, for regulating the quality of Silk-worm seeds, came into force w.e.f. September 14, 2006.

CENTRAL COTAGE INDUSTRY CORPORATION OF INDIA LTD

The Central Cottage Industries Corporation of India Ltd. (CCIC) is mainly engaged in the marketing of quality handlooms and handicrafts, and develops their market in India and abroad. The Corporation operates through its five showrooms situated in Delhi, Kolkata, Mumbai, Bangalore, and Chennai and has franchisee outlets at Jaipur and Gurgaon. It is expected that CCIC will achieve a record turnover and profit of Rs. 110.00 crores and Rs. 10.25 crores, respectively, during 2006-07.

NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT)

The National Institute of Fashion Technology was set up in 1986 as an autonomous Society in collaboration with the Fashion Institute of Technology (FIT), to prepare and train professionals to meet the requirements of the textile industry. The Institute has pioneered the evolution of fashion business education across the country through its network of seven centres at New Delhi, Bangalore, Chennai, Gandhinagar, Hyderabad, Kolkata, and Mumbai. NIFT, besides conducting regular professional undergraduate and postgraduate programmes in Design, Management and Technology, also offers short duration part-time courses under its Continuing Education Programme.

The National Institute of Fashion Technology Act, 2006 came into force w.e.f. July 14, 2006. This Act provides statutory status to the Institute and formally recognizes its leadership in the fashion technology sector, and empowers NIFT to award degrees to its students. NIFT is the first institute in the world to award Degrees in fashion education.

CONCLUSION

Today, Indian industry is extremely fragmented. India will gain market shares in the European Union, the United States and Canada to a significant extent, but the expected surge in market share may be less than anticipated, as proximity to major markets assumes increasing economic significance and tariffs are increasingly restraining trade due to the fact that products cross borders several times. Furthermore, other developing countries are catching up with China in terms of unit labour costs in the textile and clothing sector and China has of yet not shown competitive strength in the design and fashion segments of the markets.

 

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From The Spinning Wheel To Fiber Optics
Robyn Meredith 07.20.07, 6:00 AM ET
FORBES, NY

Before our eyes, two giant nations--India and China--are simultaneously embracing both capitalism and globalization. The world economy is being transformed as a result, as Forbes Senior Editor Robyn Meredith explains in her new book, The Elephant and the Dragon: The Rise of India and China and What it Means to All of Us ($26, W.W. Norton, 2007) . Each weekday through July 31, Forbes.com will post a new excerpt from the book.

Desperation brought economic change to India as swiftly as it had come to China--but more than one decade later, and of an entirely different form. In 1991, India was flat broke. One hundred and ten million people had been thrown into poverty in just the previous two years. The government's finances had collapsed. India faced a crisis.

The nation's troubles weren't just economic, either. Rajiv Gandhi was running for prime minister. His family name has been as interwoven with 20th-century Indian politics--and just as star-crossed--as the Kennedy name has been in America.

With the nation's finances already in tatters, its politics hit bottom too: During a campaign stop on May 21, 1991, Rajiv Gandhi was assassinated. Out of the ashes of the ensuing nationwide emergency, India finally embarked on the economic reforms that would reconnect it so powerfully with the rest of the world. To understand today's India, one must look back.

While it was Communism that crippled China, it was the reaction to Colonialism that proved India's great handicap. India has been haunted by two lingering ghosts of the post-colonial period--Mahatma Gandhi's anti-industrialization tenets and Jawaharlal Nehru's socialism--which together caused India to withdraw from the world economy after winning its freedom from Britain 60 years ago.

Gandhi and Nehru intended to help India's poor by pushing the nation toward self-sufficiency, but their philosophies wound up keeping Indians poor instead of lifting them out of poverty.

To Narayana Murthy, the Bill Gates of India, the historic economic reforms begun in July 1991 meant that India had stopped walling itself off from the world. Murthy is the lead founder of tech powerhouse Infosys (nasdaq: INFY - news - people ), which at the time, had 176 employees. (Today, it has more than 70,000.)

Murthy watched in wonder as his government finally abolished the "license raj" responsible for delays and corruption, lowered import duties, made the currency partially convertible, changed the rules for issuing stock, opened state-owned industries to private investors and adopted many other economic reforms, abandoning India's isolationist approach.

The changes of 1991 led to an economic boom not just for Infosys, but for the nation. Yet the reform process that began with such a bang sputtered after only a few years. In the years that followed, Indian industrialist Ratan Tata and other members of India's global business elite watched China race ahead of India, growing more and more frustrated that India had halted its own economic rise, forcing much of its own population to remain poor while Chinese were climbing out of dire poverty.

"For a long while, there was denial, there were excuses. Suddenly, there was an awakening," Tata said. Finally, Indian politicians began to turn to China for inspiration.

China is still far ahead, but India is finally on its tail. Both are rushing headlong into the modern world as Chinese and Indians are increasingly making what Westerners buy, answering American customer service phone calls or themselves buying Western-branded goods. Globalization has clearly benefited both India and China greatly, lifting 200 million Indians and Chinese out of poverty during the 1990s and catapulting tens of millions more far ahead into middle class life.

Still, progress on India's development projects is on-again, off-again. "India will never be a tiger. It is an elephant that has begun to lumber and move ahead," says Times of India columnist Gurcharan Das. "It will never have speed, but it will always have stamina."

Murthy's partner, Infosys Chief Executive Nandan Nilekani, says, "Indian people will now feel disenchanted if growth rates fall below 6%." He declares that India's reforms are irreversible.

 

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Export growth: New economics
Surjit S Bhalla / New Delhi July 21, 2007

IT DOESN`T MATTER

The recent forecast by the EAC implies a sharp acceleration in export growth, despite a large 10 per cent appreciation of the rupee. This is new economics.

It is clear that I don’t want to be smoking what the economic czars of the UPA government have been indulging in for the last several months. Some weeds can lead to inexplicable mistakes, and in an increasingly competitive world, that is unaffordable. The background of an inherited robust domestic economy and unprecedented worldwide growth has most likely dulled the economic senses of the UPA. They feel they can afford to experiment with the Indian economy, and have it grow considerably below its potential with the logic that hey, we are still growing above 6 per cent, so why are you complaining?

The technocratic Economic Advisory Council (EAC) of the Prime Minister of India has just made a forecast for Indian export growth over the next year: Exports would grow to $147 billion from $124 billion in 2006-07, an 18 per cent rise. On the face of it, this forecast is unexceptionable. Indian exports have been growing at 20 per cent plus for the last several years and in the fiscal year just ended, the increase was 25 per cent.

However, over the last six months the seasonally adjusted (seasonal factors from RBI Bulletin, November 2006) export growth has been a full 10 percentage points lower at 15 per cent.

This figure is close to the 18 per cent growth forecast made by the EAC, so what is the problem? Just that in April-May the rupee appreciated by 10 per cent, and exports occur with a lag (the gap between contract and delivery is often a few months). Thus, the December 2006-May 2007 figures represent export growth before the 10 per cent rupee appreciation. And even this growth of 15 per cent is well below the bold EAC forecast! And if the rupee appreciation is sustained, export growth in 2007-08 is likely to be at least 25 per cent below trend. Unless something was exceptionally, and temporarily, the problem with our exports in the last six months (unlikely; our exports should have shown an acceleration especially with world GDP accelerating to new highs above 5 per cent per annum, and exports above 20 per cent), it is likely that Indian export growth will average around10-12 per cent in 2007-08. The slowdown in recent export growth, and the seasonal factors, etc. are well-known to the EAC, so why a forecast that is likely to have an error of around 50 per cent (12 vs. 18 per cent)?

A similar large error was recently made by the authorities with respect to inflation, so at least the trend is continuing! In mid-2006, international oil prices rose, and were soon followed by a rise in international (and domestic) wheat prices. Both rose by upwards of 20 per cent. This supply shock meant that overall inflation temporarily exceeded the comfort zone of 5.5 per cent. So what could the government have done—nothing, as it successfully did in the 1998 food (onion) price inflation episode. Supply shocks have a tendency to work themselves out. Just look at the following supply shock—oil prices have quadrupled in the last four years, yet world inflation has stayed shockingly stable. Contrast that with the 1973 oil quadrupling, when the world was not prepared and ended up with stagflation. Alone among mature economies, India responded to the 2006 supply shock as if nothing had changed in the last 35 years, and if everything had changed since the last analogous supply (food) shock in 1998.

The government (the RBI or Ministry of Finance?) messed up in its analysis of inflation. Its first response to slaying the non-existent excess inflation dragon was to jack up interest rates. This was a gift to foreign investors (including Indian NRIs), who now had a higher yield on Indian investments; and was a gift to foreign banks, who could now lend more money to Indian firms through the ECB window. This led to, uh-oh, large inflows of dollars, which put pressure on the Indian rupee. And the government allowed the rupee to appreciate in order to fight inflation. The circle goes on.

Now the government says that the rupee appreciation does not matter—indeed, according to the EAC logic, new economics is being invented. The demand curve, erroneously thought to be downward-sloping (as prices go up, less is demanded) is actually upwardly-sloping—costlier Indian exports, costlier by around 10 per cent, will actually lead to an acceleration in the rate of growth of exports. So let me see: a 10 per cent appreciation in the rupee leads to an acceleration in export growth by 3 percentage points, so a 20 per cent appreciation should lead to an acceleration of 6 percentage points. So, the EAC forecast for 2007-08 might well be: rupee at 36 and export growth at 21 per cent. We can extend this logic, but… .

The real world of course is different. In the world of downwardly-sloping demand curves, a sustained appreciation of 10 per cent in the exchange rate is likely to lead to a decline in GDP growth of at least two percentage points*. Given India’s excess productivity growth of around 3 per cent, the net effect of the rupee appreciation would be somewhat less than 2, likely around 1.5 per cent. Thus, we should expect GDP growth next year to be about 1-1.5 percentage point lower than the 9.5 per cent growth just experienced. A rather large cost to the experimentation with the invention of new laws of economics.

The 18 per cent export growth seems an impossible belief, even by “India Shining” standards. So why did the EAC make such a forecast? Politics? But how—what election are the technocrats running for? Wishful thinking? But what does that achieve? Something that they are smoking? Likely, and you don’t want to smoke the same.

 

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What makes an Indian CEO great?
By: Malini Goyal

Understanding CEOs and what makes them tick is a subject of intense interest in mature economies like the US. But it is now beginning to find takers in India. What makes an Indian CEO great?

In what ways are they different from their global counterparts? Do CEOs of PSUs require distinctly different skills vis-??-vis private sector CEO to survive. As the Indian economy integrates with the global world, how are those traits in successful CEOs evolving?

In a maiden attempt to understand Indian CEOs, a London-based consultancy Hay-Group partnered with BPCL to research and publish a book "The Indian CEO", released by prime minister Manmohan Singh on Wednesday.

The research for the book was conducted over ?? months and indepth interaction with over ?? top-notch CEOs from private and public sector in India to flesh out a few patterns.

Here are four interesting traits that emerge from the book:

Cerebral & competitive

Thrust on education, strong focus on quantitative skills and aggressive competition all their lives – from school-college admission , jobs, and others – make them good leaders with strong cognitive powers, strategic & analytical skills.

The Indian CEOs compare very well with the best of CEOs across the world, says GM of HayGroup (Malaysia) Tharuma Rajah.

Indian managers are very quick to adapt. Perhaps the constraints in infrastructure and the flip-flop in regulatory environment in India pushes managers to be smart adapters.

If you can’t change the situation, change your strategy – and good CEOs seem to do this very well. Not surprisingly, Indian managers have emerged as the single largest talent pool being tapped by MNCs for their global operations , Tharuma says.

More rounded perspective

"For the western CEOs, a straight line is the shortest distance . For Indian CEOs, it?s a circle," says director of HayGroup London Gaurav Lahiri.

It?s got to do with Indian philosophy which takes a far more holistic approach to life.

As a result, compared to their counterparts in other countries , Indian leaders show an unusually consistent and pervasive concern for the good of their country along with a related focus on providing goods and services which benefit everyone and on addressing the practical needs of the lower half of the economic pyramid or on enhancing India?s pride and stature vis-??-vis global community.

Weak emotional quotient

Interestingly, research for the book revealed that Indian CEOs lack skills in tuning into people. Often their focus on entrepreneurship and strategy neglects the task of energizing their teams.

There is a lack of attention to others, especially as individuals – one on one. Their interpersonal skills, empathy and good judgement of people are poor. "India is weak in team sports," says Rajah.

And even in ones like cricket, its individuals who rule rather than the team. Almost half of the CEO participants in the research provided a full story of their difficulties with governments and reglators.

 

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CNBC Awaaz launches 'Pehla Kadam'
Friday - Jul 20, 2007

CNBC Awaaz, the Hindi consumer news channel, has launched 'Pehla Kadam', an organized investor education initiative for the Indian investors raring to venture into investing with the stock market. The show has been developed in association with NDSL and NSE. Finance Minister, P. Chidambaram launched the learners' kit at an evening dedicated to the new informed investing India.

While, the Indian economy growing at 9.2% GDP, the number of people investing money in stock market is still restricted. About 8 lakh Demat accounts were opened over the last one year and the uncertainty in the stock market restricts the investors to invest in the share market, the show promises to take into account these challenges by answering various aspects such as financial planning and risk management.

Haresh Chawla, CEO, TV18 group said, "CNBC Awaaz has created an impact as a consumer and business channel in the market, in its two years of existence. With our initiatives for our investors, we now have 60% of the market share in the Hindi business news genre."

"Through our Pehla Kadam initiative, we intend to reach prospective investors across India, who are reluctant about investing in stock markets largely due to lack of knowledge and understanding of the market and fear of risk. As a consumer focused channel, we have taken this initiative to empowering our viewers with information which will help them make intelligent and informed decisions." adds Chawla.

 

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Giving life to insurance!
20 Jul, 2007, 0006 hrs IST, TNN

The report that new mortality tables for the life insurance industry would be available within the next six months is welcome. Not only for the obvious advantage that it should bring down insurance premia and hence make insurance affordable for a much larger section of the population.

But for another more indirect reason: higher insurance penetration means more long-term funds will be available to finance our infrastructure needs.

One of the biggest obstacles to infrastructure development has been the lack of adequate long-term funds. The quantum of funds needed for infrastructure in the next five years has been estimated at $450 billion, much of which will have to come from domestic sources. Unfortunately, the two main domestic sources of long-term funds — pension and insurance funds — are both relatively under-developed.

Pension funds are virtually non-existent and though insurance penetration has improved after the opening up of the sector to private players, it is still nowhere near what it is in comparable markets elsewhere. While low income levels and lack of awareness are partly responsible, high premia levels also play a part. India is a notoriously price-sensitive market where every rupee counts.

The insurance industry has only to look to the telecom market to see what can be done if prices become more affordable. If people are willing to buy mobile phones, that by no stretch of the imagination can be regarded as critical for family security, imagine how much more willing they would be to buy life insurance. Especially in a country that has no safety net to offer! Provided, and this is the key, players in the life insurance business get their pricing right.

This is where the new mortality tables come in. By enabling life insurance companies to price risk more accurately taking into account the increase in the average life expectancy of the average Indian — up four and six years for men and women respectively since 1991 — the introduction of the new tables should lead to a fall in premia.

And as with any market, where a fall in price expands the market, a fall in premia will lead to a rise in insurance penetration. With hugely positive implications for the economy as a whole.

 

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Report: Tata Motors to Invest in Thailand
FORBES, NY
07.19.07, 1:42 AM ET

BANGKOK, Thailand - Indian automaker Tata Motors Ltd. is investing 1.3 billion Thai baht (US$43 million; euro31 million) to build 35,000 one-ton pickup trucks a year in Thailand, a local newspaper reported Thursday.

The pickup plant, 70 percent owned by Tata Motors (nyse: TTM - news - people ) and 30 percent owned by local Thonburi Automotive Assembly Plant Co., was among nine approved projects worth 35 billion baht (US$1.2 billion; euro870 million), according to Board of Investment Secretary-General Satit Chanjavanakul, the Bangkok Post said.

The investment board granted the plant investment incentives Wednesday, the paper said.

About 80 percent of the output will be sold in the local market, with an estimated price for each pickup between 400,000-500,000 baht (US$13,350-US$16,675; euro9,700-euro12,100), the Post said. Current prices for pickups in the market range from 600,000 to 1 million baht, the paper said.

Thailand's vehicle market is dominated by pickup trucks, which account for about three-quarters of the autos made here.

It will be the first time the Thonburi plant has been used to make pickup trucks. Until now, the plant made various Mercedes-Benz models.

Other major pickup makers in Thailand include Toyota Motor Corp. (nyse: TM - news - people ), Isuzu Motors Ltd. (other-otc: ISUZY.PK - news - people ) and Mitsubishi Motors (other-otc: MMTOF.PK - news - people ) Corp.

 

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India banks' profits to surge, asset quality watched
Fri Jul 20, 2007 2:21PM IST
Himangshu Watts

MUMBAI (Reuters) - India's top banks, State Bank of India and ICICI Bank, are expected to report quarterly net profit rose strongly as a booming economy drives demand for loans.

Analysts are upbeat about India's banking sector, but there are concerns about loan defaults after interest rates were raised five times between June 2006 and March this year.

"Asset quality trends will be the key to watch for in these results, especially for private banks, as with rising interest rates, the asset quality cycle may also be reversing," CLSA said in a report.

India's economy, Asia's third largest, is likely to grow by 9 percent in the fiscal year ended March 31, a report by the prime minister's Economic Advisory Council said this week. It has grown at an average rate of 8.6 percent in the past four years.

ICICI Bank is expected to report on Saturday that net profit rose 24.6 percent to 7.7 billion rupees, according to a Reuters poll of 10 brokerages.

Analysts are confident on the prospects for the bank, which raised an Indian record $4.9 billion in share sales last month.

"This would lower the return ratios in the short term, but would provide enough capital to grow at more than 30 percent for three to four years," Prabhudas Lilladher said in a report.

Brokerage Motilal Oswal said ICICI Bank's fee income was likely to grow 45 percent, driven by strong performance in insurance, credit cards and international business Shares in ICICI, valued at $26 billion, have doubled in the past year.

"No other bank gives exposure to successful businesses in insurance, investment banking, retail assets and international banking -- all in a single package," Macquarie Research said in a report.

Government-run State Bank of India, which is considering raising up to $12 billion to fund growth, is forecast to report that net profit rose 32 percent to 10.5 billion rupees in the April-June quarter. It reports on July 28.

"We expect margins to improve in Q1 FY08 on account of improvement in yield on advances due to successive prime lending rate hikes by the bank," Motilal Oswal said in a report.

SBI shares have risen 125 percent in the past year, and analysts expect the bank's growth momentum to be sustained.

"We think the bank is well positioned for strong 40 percent credit growth over the next three years. It now has strong presence in multiple asset domains, and is rolling those out to new geographies," Macquarie said.

Shares of State Bank of India rose 54 percent during the June quarter, outperforming a 22.4 percent rise in the banking index and the Mumbai market's benchmark index, which rose 12.1 percent. Shares in ICICI Bank rose 12 percent in the quarter.

 

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India says WTO's new proposal could revive stalled trade talks
International Herald Tribune
July 20, 2007

NEW DELHI: The World Trade Organization's latest proposal on cuts in import tariffs and farm subsidies could help revive negotiations on a new global trade pact, India said Friday.

The latest negotiating drafts from the WTO offered a good reason to resume the deadlocked talks, although New Delhi has concerns over some of the content, said Indian Commerce and Industry Minister Kamal Nath.

"It is not a text of convergence. (But) this text is a good basis for intensive negotiations," Nath told reporters. "We hope that in September negotiations start."

The Doha trade talks, named after Qatar's capital where they were launched in 2001, aim to add billions of dollars to the world economy and help poorer countries benefit from new trade flows. Negotiations have been deadlocked because of wrangling between rich and poor countries over eliminating barriers to farm trade and, more recently, manufacturing trade.

The WTO draft agreements released Tuesday require the United States to reduce its trade-distorting farm subsidies to a level between US$13 billion and US$16.4 billion (€9.4 billion and €11.9 billion). In return, major developing countries such as Brazil, China and India will have to give greater cuts in industrial tariffs.

Diplomats from member countries of the world trade body will start discussing the proposal next week, though negotiators appear to have given up hopes of reaching a final accord by year-end.

India has concerns over the proposals relating to industrial tariffs, but that would not come in the way of restarting the talks, Nath said.

"It is a package ... at least, now, there are certain parameters," he said. "So we can move forward."

Nath also came out in support of China, which has objected to a proposal in the WTO draft that gives Beijing only a two-year grace period before it is required to cut industrial tariffs. China, which joined the WTO in 2001, wants a 10-year grace period.

"Newly acceded members should get some concession," Nath said. "China has already contributed its part (to trade liberalization)."

 

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Lockheed eyes India for cheaper commercial products
20 Jul, 2007, 1626 hrs IST, PTI

BANGALORE: US defence contractor Lockheed Martin Corporation is looking at the possibility of making some new commercial products in India for the global market to cut development time and cost, a company official said on Friday.

Royce Caplinger, Managing Director, India, Lockheed Martin, said research and development in the US for new products took a longer time and a lot of money.

"Increasingly in the global economy where we live, you don't have the luxury of taking 20 years to bring a product to marketplace", he said adding the products needed to be made at a cheaper cost.

"We are hoping that India will be one of the places we can do that", he told a press conference here.

Caplinger, however, declined to give the nature of products to be made in India but indicated that it would not be for defence sector, saying "defence is a different beast".

"We are approaching India on a very broad front", he said. "We are looking at business opportunity... What's the thing we can do in India..that we can take to the global marketplace".

The $39.6 billion company was looking to make products in India that would be cheaper and better to compete in the global marketplace, he said.

Senior Vice-President and Chief Technology Officer of Lockheed Ray O Johnson said the company would explore possibilities of setting up an R&D centre in India to leverage the engineering talent pool.