Indian Economy - News & Updates - Archive

[Bushroda]

Healthcare gaining momentum

Coimbatore, July 21: With Indian health industry expected to grow at an exponential rate in the near future, there was the need to address facilities in non-metropolitan cities with regard to infrastructure, state-of-the-art technologies and services, industry analysts said.

According to Dilip Sawhney, Vice-president, GE Healthcare, the healthcare industry was booming following the growth in middle class economy and its expenses for medical care.

Swati Chaturvedi, senior industry analyst, Frost and Sullivan, a global growth consulting company said that despite the growth, the emerging healthcare segments faced some major hurdles in availability of equipment, services and trained manpower, reimbursement patterns and upgradation of technology at affordable prices.

Various stakeholders in the non-metropolitan cities like Kochi, Salem, Vijayawada, Jalandhar, Sanghli and Satara to overcome these hurdles in order to provide easy and affordable medical service to the masses, she told reporters, on the sidelines of a one-day summit 'Penetration of Quality Health in the Value Segment' here.

Anand Rangachary, Managing Director of Frost and Sullivan, said that increased focus of multinational companies on the Indian market to leverage its potential to develop as a cost-effective design and manufacturing hub was a critical factor which would define the growth expected in the coming years.

Another critical factor was the increased Government efforts and public-private initiatives in developing healthcare facilities, he said.

The company had conducted a pilot study in cities like Kochi, Salem, Vijayawada, Jalandhar, Sangli and Satara to understand key challenges faced by hospitals and bring forth the issues to relevant stakeholders in the indsutry, Anand said. The study revealed some of the key growth barriers such as low penetration of health insurance, lack of efficient after- sales service and non-availability of trained para-medical staff and technicians, he said.

Sawhney said there should be a collaborative approach and understanding between the doctors in the rural and semi-urban areas and big hospitals in the metros and two-tier cities so that patients could get better treatment.

GE was launching newer products suitable to the Indian market, he said adding the medical and health care industry was plagued by lack of skilled manpower, particularly in rural areas.

 

[Bushroda]

Starbucks puts India on back burner
Channel News Asia, Singapore
Posted: 22 July 2007 0249 hrs

NEW DELHI : Starbucks, the world's largest coffee shop chain, has said it is postponing its plans to enter India but remains "committed" to opening up in the country.

Seattle-based Starbucks said in May it aimed to open the first of 100 planned outlets in New Delhi or Mumbai by the end of 2007.

But the company has formally withdrawn its application to operate through its wholly owned subsidiary, Starbucks Coffee International, the statement issued late Friday by the company's US headquarters said.

"Starbucks is reviewing all its options and evaluating how we can proceed related to our entry into one of the fastest growing economies in the world," said the statement, quoted by Press Trust of India.

The company gave no reason for its decision.

It said it remained excited about the "great opportunities that India presents" and was committed to opening in India, but gave no timeframe.

"It is premature for us to announce any new dates," Starbucks said.

The company in May submitted a fresh application to India's Foreign Investment Promotion Board for clearance after an earlier request to forge a joint partnership was turned down.

The first application was refused because of concerns about its proposed ownership structure, which was to be split among Starbucks, Indian retailer Kishore Biyani and VP Sharma, Starbucks' business partner in Indonesia.

The joint venture structure was not in line with Indian rules that allow up to 51 percent foreign investment in single-brand retail outlets. The combined stakes of Starbucks and Sharma would have breached the foreign direct investment (FDI) limit.

The decision by Starbucks came nearly a month after the government after the Indian government asked it to revise its entry proposal for a second time.

Starbucks had initially sought to enter India through the franchisee route but was told by the Indian government to consider the FDI route instead.

Local coffee chains have mushroomed in tea-drinking India in the past few years as spending increases because of a booming economy.

The decision came among uncertainty about the government's FDI policy.

Earlier this year, the world's second largest retail company, Carrefour of France, said it was putting its India plans on hold until "policy issues on FDI in retail are made clear."

In June, British supermarket giant Tesco said it would wait for changes in FDI regulations to enter India.

 

[Bushroda]

PC Sales Up 26 Per Cent: MAIT
EFY News Network

PC sales are projected to touch 8 million units in fiscal 2007-08, given the strong macroeconomic conditions and buoyant buying sentiment in the market, led by demand from various industry verticals.

Thursday, July 19, 2007: The total PC sales between April 2006 and March 2007, with desktop computer and notebooks taken together, were 6.34 million (63.4 lakh) units, registering a growth of 26 per cent over the previous year. The buoyant mood in IT consumption was led by significant growth in notebook sales, which grew by 97 per cent, while purchases of desktop units grew by 19 per cent, as per the findings of the survey released by MAIT for fiscal 2006-07.

Demand was highest from the telecom, banking and financial service sectors, education and BPO/IT-enabled services, and rose also on account of e-governance initiatives of the union and state governments. Further, significant consumption in the SMEs contributed to the industry growth and consumption in the home market remained buoyant. The southward trend in pricing continued during the year due to technology reasons.

Commenting on the need for a strong domestic IT market to strengthen India's hardware manufacturing industry, Vinnie Mehta, executive director, MAIT, said, "Domestic demand is likely to gain further momentum in 2007, which has been declared the 'Year of Broadband'. The industry is eagerly awaiting the long overdue policy for the manufacture of IT and electronics products. This could play a critical role not only in boosting highly capital-intensive activities like the manufacture of semiconductors, LCDs, storage devices and other related products, but also in expanding the consumption of IT goods and services in the country."

Emphasising the need for robust infrastructure to boost manufacturing, Mukul Singhal, president, MAIT, added "Clearly, apart from a stable policy regime, a strong infrastructure base is the need of the hour. We need reliable power, and a logistics and transportation infrastructure that can make India a viable manufacturing destination, ensuring timely delivery of goods produced. For our electronics industry to take its contribution to the Indian Economy to the next level, and for these firms to be globally competitive, it is imperative to create competitive infrastructure."

 

[Bushroda]

Indian diaspora - the bridge that links India to the world
Written by
Aroonim Bhuyan

"When I meet heads of state and government and business leaders in distant lands, they tell me very proudly that the Indian community is a great asset, that people of Indian origin are highly creative, productive, enterprising, peace-loving and devoted to their families, their communities and their neighbourhoods."

Prime Minister Manmohan Singh said this while inaugurating the Pravasi Bharatiya Divas (PBD) 2007, the annual conclave of the 25 million-strong Indian diaspora spread across 130 countries, at New Delhi's Vigyan Bhavan convention centre Jan 7, putting in perspective the reputation the Indian communities overseas enjoy. And with it, the importance the Indian diaspora holds for India in the global context today.

"We are one family. The whole world is our home. That is why I have often said that while the sun has set on many great empires of the world in the past, the sun will never set on the world of the Indian diaspora! From Fiji in the East, to Los Angeles in the West, from Cape Town in the South to Toronto in the North, the people of Indian origin are the world's most globalised community," the prime minister said.

It is not just the moolah, the remittances, that count, say Indian officials who power the Ministry of Overseas Indian Affairs (MOIA), the nodal ministry that interfaces with non-resident Indians (NRIs) and persons of Indian origin (PIOs). There is knowledge and experience to be shared, ideas to be explored and successful models in multiple fields to be replicated.

As the prime minister said, "Invest not just financially, but intellectually, socially, culturally, and, above all, emotionally."

The Indian diaspora, once considered as the manifestation of 'brain drain', is now looked on as a major catalyst and enabler that can spur the country's growth rate, much like the overseas Chinese have turned out to be for China's phenomenal growth.

And that is because overseas Indians have made significant achievements in all fields, be it politics, education, industry, sports, arts, science technology or philanthropy.

Last year alone, overseas Indians were in news all across the world -- from New Zealand where Sir Anand Satyanand became the first person of Asian ethnicity to be appointed governor-general of that country, to Britain where L.N. Mittal came to head the world's largest steel entity, Arcelor-Mittal, to the US where Sunita Williams became the second woman of Indian origin to go to space.

The year 2006 also saw writer Kiran Desai becoming the youngest woman to win the prestigious Booker Prize and Indian American Indra Nooyi being appointed the chief executive of global beverage giant PepsiCo.

Prior to blasting off to space, Williams, whose father hails from the western Indian state of Gujarat, said, "I am half Indian and, I am sure a group of Indian people are looking forward to seeing a second Indian, a person of Indian origin, flying into space."

She was only partially correct. It was not just a group of Indians that had looked forward to her flight to space. It was the whole of India that was connecting emotionally with one of its "achievers" overseas.

The brightest side of this new sunshine story of India and its growing links with its diaspora is that overseas Indians are acknowledging with pride their Indian origins.

At his swearing-in ceremony in New Zealand's capital Wellington, Sir Anand said, "I acknowledge also my Indian origin, with four grandparents who migrated from that country to Fiji."

Another positive aspect of this new phenomenon is that many overseas Indians are returning to India, to actually take part in its growth process.

One very good example is Vikram Akula, founder of SKS Microfinance, an organisation that offers micro loans and insurance to poor women in impoverished areas of India.

"We need to look at getting microfinance in every village and every slum in the country," Akula, who holds a BA from Tufts University, an MA from Yale University and a PhD from the University of Chicago, told CNN.

Similarly, the American Association of Physicians of Indian Origin (AAPI), one of the most influential professional bodies in the US, has started two pilot projects in Bihar and Andhra Pradesh to improve primary healthcare in the two states.

It is not that one needs to come back to India to contribute to its growth story. After all, the Indian diaspora is being seen as the bridge and enabler that links India to the rest of the world.

Nothing manifests this better than the recent civilian nuclear energy deal between India and the US.

After Manmohan Singh and US President George W. Bush agreed on the deal, the Indian American community, regarded as the most educated and affluent of all immigrant communities in that country, lobbied hard for the US Congress to pass the bill that gave accent to the deal.

"I thank the overseas Indian community and its leaders who played a very significant role in highlighting the importance of this initiative in the US and elsewhere," Prime Minister Singh said at PBD 2007, acknowledging the Indian American lobbyists' hard work.

Another heartening aspect of this new phenomenon is that overseas Indians living in different countries are drawing upon their common Indian roots to seek each other's help.

After Trinidad & Tobago, home to around 520,000 Indian origin people, put up a rather creditable performance in its football World Cup finals debut last year, the Indian diaspora in that country sought the help of Indian origin footballer Vikash Dhorasoo to promote football among the youth there.

After all, it was at the same World Cup finals that Dhorasoo, whose ancestors had migrated from Andhra Pradesh to Mauritius, became the first Indian origin player to play in a World Cup finals match when he took the field for France in a group match against Switzerland.

If India hopes to keep using the bridge that the diaspora is, it has to maintain it too, see to it that no cracks develop, and ensure that the bridge stands on a string foundation. It was precisely with the mandate of looking after the welfare of overseas Indians that the Indian government had created the MOIA in September 2004.

Since then, the ministry has been taking several initiatives to keep India's ties with its diaspora strong.

A very important development has been the proposed PIO university.

"It is a wrong notion that all overseas Indians are rich," Minister for Overseas Indian Affairs Vayalar Ravi said in the course of an interaction with reporters in New Delhi. "They want quality and affordable education and we will provide this to them through the PIO university. The fees (for various courses) will not be high."

Another key initiative by the government has been to push for labour welfare pacts with countries, particularly in the Gulf, which have a large number of overseas Indian workers, and who contribute substantially to the country's economy by way of remittances. More than $23 billion flowed in to India as remittances last year, which was the highest for any country.

In fact, it won't be wrong to say that MOIA and its mandate will have to play a key role in India's growth story.

India and the Indian diaspora - two shining stories. Two stories linked by the common bonds of history, heritage and culture. India sees this combination as an essential component in establishing itself as a global power, sooner than later.

As Singapore's Deputy Prime Minister S. Jayakumar, himself of Indian origin, said about the Indian diaspora at PBD 2007: "They are not merely cultural ambassadors for India abroad; they are also ambassadors of the 'abroad' to India and can help interpret and explain international conditions to India and so contribute to its transformation."

 

[Bushroda]

Shakers: Business personalities in the news
International Herald Tribune

Developer in India plans $25,000 homes

Unitech, the Indian development firm controlled by Ramesh Chandra, is considering building homes that will sell for as little as 1 million rupees, or about $25,000, as economic growth lifts more of the people in India out of poverty.

"As people come above the poverty line, there will be a requirement for mass housing," Chandra said Wednesday. "They will not be able to afford 4 million-rupee houses, their demand will be mainly for 1 million-rupee or 1.5 million-rupee houses. And for that, the demand will be phenomenal."

At least 291 million Indians will increase their annual household income to at least 90,000 rupees, or $5.40 a day, by 2025, McKinsey estimated in May.

DLF and Unitech, which are among the biggest Indian developers, are benefiting as the country's economy expands at an average of 8.6 percent a year.

The developers may need to turn to the mass market if a glut develops in the luxury market now favored by many builders, said Suhas Naik, a fund manager at IL&FS in Mumbai.

India will need as many as 10 million new housing units a year by 2030, according to the Asian Development Bank.

 

[Bushroda]

Rural India driving high-end cars sales
22 Jul, 2007, 0430 hrs IST,John Sarkar & Raja Awasthi, TNN

NEW DELHI: If C K Prahalad had been an automobile marketer, which places he would have zeroed on? You are right if you thought villages. In fact, premium carmakers are making a beeline to rural hinterland.

In the north, sales of high-end cars are picking up in places such as Karnal, Hoshiarpur, Bhatinda and Patiala, and in the south, the backwaters of Kerala and rural areas of Karnataka is turning out to be an attractive destination for manufacturers.

Companies such as Honda, Hindustan Motors, GM and Ford are are bullish about these rural hotspots and are expanding their presence in these areas by increasing the number of dealerships and marketing activities. This apart, the trend also reveals that among the number of vehicles sold, SUVs garner a considerable chunk of the market.

According to Taipan Traders, authorised dealer of Mercedes Benz from Karnal up to northern territory, MD Manjit Singh Bala, there has been a jump of 35 to 50% in sales of high-end cars and SUVs in the last two years. “While driving on our type of roads, the brand name and safety put the Merc above the rest. We are getting around 60 queries daily.

Another reason for this is that with the real estate boom in the country which is fetching handsome prices for land, farmers in many areas have shown interest in buying big cars or SUVs,” adds Mr Bala.

Even the Honda CR-V is basking in all the rural attention it is getting. “Apart from our main markets in metros, we believe that there is strong growth potential in the tier II cities and towns. We are increasingly focusing on these cities and setting up new dealerships there,” a Honda Siel spokesperson told SundayET.

“Three factors have lead to growth in sales of SUV in rural India. Real estate, communication and boom in the economy. With the rise in income level people now are looking at the best at whatever price. We are dealing with Honda cars in the entire north India from last 10 years. The CR-V new model has seen a growth in sales by 100% in cities and more than 100% in rural belt. Besides this the frequent visit by the NRIs has also made a huge difference,” said Lally Motors, authorised dealer for Honda Siel in the north, MD Sarav Deep Lally.

In fact, carmakers believe that the NRI population in rural places are boosting sales, which is a logical enough reason. “A large amount of Gulf money flows into some states like Kerala. Brand aspiration coupled with high peer pressure that pushes people to go in for these expensive vehicles, despite infrastructure being almost non-existent. We have witnessed our sales growing by leaps and bounds in rural areas of Punjab and Kerala,” said a spokesperson for Hindustan Motors (HM), which markets top-notch SUVs such as the Mitsubishi Pajero and Montero.

Even General Motors is looking aggressively at the rural market. “We do a lot of road shows in these areas. And in the north, we have covered the region well with a vast number of dealerships too. So whenever someone from any rural district wants to pick up a car, it’s easy for him,” said GM Veep Corporate Affairs P Balendran.

So, with rural income burgeoning, it’s easy for carmakers too. Right Mr Prahalad?

 

[Bushroda]

A new era in first class travel

The Indian airline Jet Airways wants to become a top-five carrier; so it’s just launched the world’s most extravagant first class

Matt Rudd
TIMES ONLINE

As of last weekend, I wish I’d gone into organised crime when I left school. It never occurred to me as a good career option – making people sleep with the fishes and so forth – but now it does. Because I’d have loads of (laundered) cash and I would be able to fly first class all the time.

Having loads of (laundered) cash hadn’t been an issue before. I had accepted life down the back, with the occasional upgrade to business. Besides, first class had never been sufficiently better than business to justify a life of lucrative but morally reprehensible crime. In fact, a friend of a friend of a friend who has gone into crime actively opts for business class on British Airways because he doesn’t like the smothering you get in first.

Last weekend was different. I experienced a first-class epiphany on a Jet Airways flight from India. Jet is the first airline in the world to introduce “private cabins”. I’m using quotes because, strictly speaking, they’re not private. The sliding plantation-style doors and surrounding walls go up only about 4ft, meaning the cabin crew can peek over the top if they want. But for privacy in the skies, these “cabins” are unrivalled.

I boarded from a steamy monsoon morning in Mumbai, ushered from check-in to seat as if I were concluding a state visit. Economy passengers were physically manhandled out of the way to make my progress swifter, which I loved. Then I took my seat (1A, since you didn’t want to know) and began wondering whether you could still get into organised crime in your mid-thirties. Because there’s no doubt I’ve left it too late to become Justin Timberlake.

I noticed the differences in quick succession. First, the stewardesses are more beautiful in first, which is sexist of me to notice, but surely not a coincidence. Second, you get foie-gras canapés with your drink, not pretzels. Third, the chair has a custom eight-point massage system. And fourth, Al Gore’s excellent An Inconvenient Truth – about how all our carbon consumption is destroying the planet – is one of the films available on my 23in recessed LCD television screen. So, three good things and one stark reminder of how awful it is to take such an obscenely large portion of a Boeing 777 all the way back from India.

Still, lunch was amazing. Everything is served on full-size crockery, with full-size cutlery, in full-size portions on a full-size table à deux. It’s like having a meal in your own private restaurant. After a delicious soup, I had sowewaali macchi tikka, murgh parchcha kebab and dum ka jhinga achari – aka salmon medallions, chicken and curried sea prawns. I could have followed with the rosemary-pesto rack of lamb, but I went for a chicken and cashew curry. It arrived warm rather than hot, which was annoying. If I’d been an organised criminal, I would have complained.

I drank, in the following order, the Krug Grande Cuvée (because it’s much more distinctive than the Dom Pérignon 1999), a top Chassagne-Montrachet and a big, juicy Saint-Julien. Then, because I was really getting into the conspicuous-consumption thing, I tried two of the three ancient malts in the single-malt library.

BECAUSE the doors don’t go all the way to the top, this is not the place to join the mile-high club with grace. Although the bed is big enough for coitus noncontortus, a (beautiful) hostess could peek over at any time – which would be off-putting, unless you’re into exhibitionism. I’m assuming you’re not, so it’s still the toilet or a private jet for you.

For me, none of this was an issue – I’d left my amour at home – so I made do with the next best thing instead. I put on my beautifully tailored complimentary pyjamas, asked my waitress – sorry, stewardess – to convert my presidential seat into a bed (complete with above-and-below quilts and not one but two man-size pillows) and went to sleep.

It was the sleep of babies. Rich babies with enormous silver spoons in their mouths, heavily dosed on Calpol, but babies all the same. I’m 6ft 4in. My legs don’t fold into a 31in seat pitch, so I never sleep in economy. Flat beds in business are, of course, better, but they don’t allow me to fold up into the foetal position I’ve preferred ever since I found a scorpion at the bottom of my sleeping bag one morning in the Kalahari.

On Jet’s 83in-long flat bed, I could do what I damn well wanted. Or what I didn’t want. I mean, who would pay £4,000plus to sleep? I wanted to drink Krug from Mikasa crystal for the whole eight hours. And watch guilt-inducing films using my Bose noise-reduction headphones. And make phone calls to buy and sell whole companies. And watch the world fly by through one of my four, yes, four, windows. I didn’t want to sleep, but I couldn’t help myself. I barely had time to change (in the outsize washroom), powder my nose (with my bag of Bulgari toiletries) and settle back into my seat for a refreshing fruit platter before we were touching down at Heathrow.

And for all those of you who have found it irritating to read about what goes on in front of the many curtains that separate first class from economy, you’ll be delighted to hear that all the VIP pampering that accompanied my flight was undone by the time I’d fought my way through gridlock Heathrow to the Piccadilly Line. And they didn’t let me nick the Bose headphones, either.

IS IT WORTH £4,360? Well, no, of course not. Unless £4,360 is no object, and then, yes, of course it is. It’s not like flying at all. It’s like hanging around in your own bedroom watching films, stuffing your face and not achieving very much at all. Which is the best thing in the world. Anyway, BA charges £3,665 for a first-class ticket to Mumbai, and it doesn’t have “private cabins”.

With the redesign of all three classes on Jet Airways, its chairman announced his intention to make the airline one of the top five in the world in the next 10 years. There’s no reason why it shouldn’t be there already. The ergonomic economy seats feel far more spacious and comfortable than BA’s; business class is on a par with the others; and those eight “cabins” up there in first class, as I so selflessly established, are in a league of their own.

Now, if you’ll excuse me, I have to have a little word with a shopkeeper. He’s late with his protection money.

 

[Bushroda]

Speed dating for entrepreneurs
22 Jul 2007, 0012 hrs IST,Sujata Dutta Sachdeva,TNN

They meet for a short while, interact, and if they like what they see, decide to forge a relationship. No, this is not about speed-dating couples, but yes, the concept is the same. Young innovators look for experts to validate their innovations and also the right investors to kick-start their start-ups.

Much like a speed dating event, these entrepreneurs meet on a pre-fixed date and venue. It's an informal get-together, like an unconference. An innovator gets six minutes to showcase his idea. But he must have a working prototype to press his case. The audience gives instant feedback, and if they are lucky, they even get a virtual capitalist or angel investor to fund their dream project.

Such events are the latest trend among tech start-ups in India. While TiE's annual summit brings together entrepreneurs and investors, IITs mentor students who want to be entrepreneurs. But these are more formal platforms. There's a smaller and more informal event involving venture capitalists and start-ups. The first such event, Proto.in, was held in Chennai this February. Attended by nearly 140 people, it was a runaway success.

The second such event is taking place in IIT-Chennai on Sunday. And this time, 25 entrepreneurs, handpicked from over 100 applicants, will showcase their prototypes. Watching them make their pitch will be a handful of VCs and angel investors. Twelve Malaysian start-ups are also participating. Similar to Barcamps and Mobile Monday unconferences, where geeks brainstorm, discuss the latest advances in technology and look for solutions, Proto is a platform for tech start-ups to pitch their innovation to experts, investors, and other like-minded people. "It aims at creating an ecosystem for technology start-ups that will redefine the image of India in the global economy, from being a mere outsourcing destination to that of a source of global technology innovation," says Ravi Shankar, one of the brains behind the event. The mantra is: 'create, contribute, collaborate'.

Aloke Bajpai, who co-founded iXiGO.com with IITian Rajnish Kumar, Jens Schuetter of Amadeus Europe and Dharmendra Yashovardhan of INSEAD, was one of the many who attended the February Proto. "It was a mindboggling experience," he says. They showcased a Net-and mobile-based travel search engine that provides consumers an unbiased fare search and trip planning platform for the first time. "We have moved beyond the prototype stage and are looking for initial validation of our ideas from fellow technologists, and VCs. The boost in our credibility, post-Proto, made our task of hiring talent a lot easier," says Bajpai.

Similarly, Lakshmi Narasimhan and Satish presented SpotEazy - a buzz aggregating technology which can crawl and mine the web for opinions, identify sentiments and combine them into a buzz score. The duo have applied this to consumer electronics to provide automated product recommendations that can guide people in making purchase decisions. "We weren't looking for VC funding. We had a prototype of our idea and wanted to bounce this off a group of tech enthusiasts and keen followers of start-ups," says Narasimhan. And he is happy with the feedback he got.

Like start-ups, VCs too find the platform a great meeting ground. Rajesh Vakil of Siemens Venture Fund says he was attracted by the idea of meeting so many start-ups and the opportunity to touch and feel the product. "The event has a single-minded agenda, where start-ups pitch and others listen. From an investor's perspective, this is ideal, as you get to see many companies in the shortest possible time," he says. Mukul Singhal of Canaan Partners, another VC with investment interest in technology and healthcare sectors, was there in search of technology start-ups. "We get a lot of deals through our network but events like these give us a platform to meet new entrepreneurs in an informal setting," says Singhal.

No wonder, most of them will make the trip again on Sunday. After all, six firms attracted investors in the last event. "In the black and red world of profits and losses, innovation is not easily captured in a spreadsheet or adequately described in a presentation slide. Yet we know innovators when we see them," says Rohit Agarwal, CEO, TechTribe Networks, in 'How Innovators Connect'.

Unfortunately, the going is not always easy. "An innovator might have cool technology but what's more important is that the product must have a market and should be mature enough to succeed in the market. This is where most Indian start-ups find it difficult," says Vijay Anand of TeNet, one of the organisers of Proto. Also, most start-ups complain they barely get a chance to articulate their problems and find it difficult to attract clients, talent, partners and investors. So a platform like this helps in bringing together experts, VCs and market analysts who can help the start-up with their feedback that can make all the difference.

 

[Bushroda]

A young Parisian’s dream project
Marie-Beatrice Gauthiez

He seeks to help underprivileged youth find new opportunities on Chennai’s food scene

CHENNAI: A year ago Alexis de Ducla, a young Frenchman from Paris, helped start La Boulangerie in Anna Nagar West, Chennai. It is a non-governmental organisation that offers training in pastry production and bakery management to young people from an economically disadvantaged background from the deprived areas of the city and beyond.

Every day a team of 24 hard-working young people knead, mix and cook croissants, breads, madeleines and other delicacies here. The crispy breads and the fine tarts go to restaurants such as the Park, Amethyst, Chamiers, and to shops like “La Maison des Gourmets,” the Auroville Boutique and Amma Nana.

They undergo a two-year training course meant to give them a strong base in running a bakery. To be able to join, there is no need for them to have any set qualifications. Mr. Alexis and his partner, Antoine Soive, motivate the apprentices who are hired according to their level of poverty, thirst for knowledge and resolve to succeed.

The goal

The goal is to train them, lift them out of poverty and push them towards good jobs: one of the trainees recently joined the Park as an intern.

It represents a real opportunity for many of them. But it is not always easy. “After my first day at the bakery, I left. I was frightened by the French team and by the organisation. But I finally came back,” says Peter, one of the trainees. He comes from Dindigul. Ravi, the experienced executive master, says that “life in Chennai and their backgrounds don’t make their apprenticeship easy, but despite that they are doing a good job.”

From business school

Educated at ESSEC, a French business school, Mr. de Ducla is not just another idealistic social worker. His ideas are down-to-earth and he tries to apply them to help people while also making a profit out of the operation. “I am not here to change India but to play a role on a realistic scale,” he says. He seeks to identify himself with those he seeks to help.

Alexis was motivated to take up the project some six years ago after meeting Father Ceyrac, a Jesuit missionary who has been working to support children and people in distress in India for the past 60 years. At that time, Mr. de Ducla had no interest in India. He had skipped a lecture that Fr. Ceyrac gave in his school. But as fate would have it, after the lecture Fr. Ceyrac met Mr. de Ducla at a café and they started to talk. Before leaving, he told the young man: “Help me… Come to India.” Two weeks later, an association named Collectif India was created.

Over a six-year period, Mr. de Ducla visited India several times. He involved himself in many projects, including one in Madurai, but La Boulangerie is the one that best reflects its vision. For him, “savage capitalism” has wrought enough damage, and the answer should be ‘shared capitalism’ from which everyone – rich and poor – can profit. Mr. de Ducla decided to settle down in Chennai because Tamil Nadu was his favourite region in India and because the city was booming. It had many hotels but lacked a qualified workforce in certain fields of food science.

Mr. de Ducla talks about La Boulangerie as a test, an example that shows the big firms that this sort of project is viable and that helping the poor is not antithetical to making a profit.

Acknowledging that profit and interest are the driving forces of the economy, he says humanitarian and social organisations should not shy away from these. He suggests that instead they should adopt a realistic framework that values entrepreneurship.

What motivates him to pursue such an enterprise? “I want to have a coherent life,” responds Mr. de Ducla. “It seems awkward to me to be working on the one hand for a big group like Nike that will exploit workers and on the other hand to create a humanitarian association. Humanitarian work and business should be one.”

He now plans to open a café on the tranquil terrace of the bakery on 15th Main Road in Anna Nagar West, where customers will enjoy croissants, cakes and sandwiches. Then he would wish to open a second café.

 

[Bushroda]

The greenest skyscraper in India?
World Architecture News

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FXFOWLE Architects' India Tower in Mumbai is under construction

Construction has started on India Tower, a new 60-storey (301 meters) world-class Park Hyatt hotel, retail, and residential tower located in South Mumbai, India. The developer is committed to making India Tower a United States Green Building Council (USGBC) LEED Gold-rated project. Construction is expected to be completed in 2010. India Tower is located in the prestigious South Mumbai coastal area fondly referred to as the Queens Necklace. The tower’s rotated form emerges in response to the 3-acre site (1.2-hectares), the building’s functional requirements, and its mixed-use program that changes with each rotation of the tower. This circulation pattern separates retail, a custom-designed residential-style Park Hyatt hotel and serviced apartments, and long-lease and duplex penthouse condominium apartments. The design concept for India Tower was informed by Mumbai’s climate, the site, and the desire to create distinctive indoor and outdoor spaces with optimum views, inspirational settings, and personalized contemporary accommodations for all users. Designed to have the least possible impact on the environment, the tower will integrate current innovative sustainable systems and technologies throughout the building – solar shading, natural ventilation, daylighting, rainwater harvesting, and green interior finishes and materials – to make it one of the greenest skyscrapers in India. India Tower’s 3-story podium will include restaurants and cafés, luxury-brand retail stores, a health/fitness club with a swimming pool, and a nightclub/lounge. When arriving at India Tower, Park Hyatt guests will be directed to the Sky Lobby (levels 30-35) to check-in, then descend to levels 14 through 28 to their hotel residences. India Tower’s long-lease apartments will be located on levels 38 through 50, and will feature stylish and spacious two-story living spaces that have been specially designed to take full advantage of the expansive views from this height. Levels 52 to 59 of the tower will house one-of-a-kind duplex penthouse condominium apartments with unparalleled panoramic views.

 

[Bushroda]

Tata's Rs.100,000 car: boon or bane for India?
Posted July 22nd, 2007 by Tarique
By Bhamy V. Shenoy, IANS

It looks as though Tata's Rs.100,000 car will be a reality next year. It is now being praised all over the world as India's shining moment ushering in a new automobile era. When seen in the background of India's energy crisis, it shows India's total lack of preparedness and long-term planning failure.

On the part of Tatas, they have acted in a responsive and responsible way to deal with market realities. India's consumers are demanding better and more comfortable private vehicles at affordable cost with greater safety than two wheelers. But who is responsible for such a market? Why is the government least concerned about the detrimental impact this project will have? The Integrated Energy Policy report of 2006 brought out by the Planning Commission has clearly shown India's precarious energy supply/demand scenario.

A well known American magazine Forbes has described Tata's car as "People's Car" and compared it to Ford's Model T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of wheels within reach of millions of customers. It was this development that resulted in the US getting addicted to petrol. Will this be a happy development for India?

When the US, Europe and other developed countries were getting addicted to petrol, there was no fear of the world running out of petrol. The US has spent billions on developing its super efficient expressways and highways. Still some of them become virtual parking lots during busy hours. One of the biggest worries while planning to reach any place on time is traffic jams despite having personal cars. The development of private auto culture resulted in the slow deterioration of the once efficient US railway system.

Europe also followed in the footsteps of the US. But the EU countries did not allow their railways to deteriorate. Japan continued to develop its railway system and has now super fast trains. This has helped both the EU and Japan to stabilize their petroleum demand as their economy expanded since the first oil shock in 1973. The US is finding it difficult to get over its oil addiction. China has also decided to follow the US model. Its petroleum demand is growing rapidly as it switches from cycles to four wheelers in the name of development.

Unfortunately, India without strategic thinking is following the wrong examples instead of setting its own example to the rest of the world. In 1971 we had just 0.54 million two-wheelers and an equal number of four-wheelers. By the end of 2001, our two-wheeler population had exploded to more than 41 million and car population to only about eight million. Currently India has eight cars per 1,000 population. This is something we should be proud of and not quote the US or European statistics. In the case of the US it is more than 770 and for Europe it is more than 500.

In the 1980s and 90s, as Indians started to move from public transportation to private transportation mode using two wheelers, road congestion started to worsen while India's petrol demand started to increase rapidly. Now with Tata's Rs.100,000 car, which is likely to be followed by those of other manufacturers, families with two--wheelers will graduate to four-wheelers as happened in China from cycles to cars.

It took 30 years for the car population to increase 10-fold when cars were expensive. But with a lower car price and higher disposable income, this may happen quicker. In less than 15 years such a phenomenal growth took place in the case of two-wheelers.

No doubt the development of the automobile industry will have a multiplier effect and India's gross national product (GNP) will increase. But this GNP growth will also make life intolerable in urban areas where traffic congestion has already reached a critical level. Just one look at Bangalore is enough to convince any one.

We should learn from the example of city-state of Singapore that has succeeded in implementing draconian steps to reduce the automobile population. It has very high duty on cars and also it imposes high tolls for some of the congested roads during busy time. At the same time it has improved public transportation to reduce the need of having a private vehicle.

But in India, we do not have an integrated policy to take a look at different parameters affecting petroleum consumption despite having an integrated energy policy. These factors are: possible explosion in car ownerships when Tata and others introduce the Rs.100,000 cars, privatising public transportation to reduce cost and improve efficiency, massive investment in railways to improve the infrastructure, restructuring railway organizations to increase productivity and adapting minimum mileage standards for automobiles.

There is no need for the government to interfere with the market as they did during the licence-quota-permit raj to prevent Indians from getting addicted to petrol. But by adapting proper policy measures regarding the above-mentioned subject, the government can indeed reduce petrol and diesel demand so that India's energy security is not compromised. This is easier said than done. There will be resistance from the private automobile industry to impose high duties on cars.

Labour Unions will be unhappy at the prospect of privatisation of public transportation and also the political class which has learnt the fine art of monetising their influence. When Railway Minister Lalu Prasad is praised though wrongly for the 'efficient' operations of railways, there is no compelling force to bring about the needed massive reform in managing Indian railways. It is still not too late. If we act now, we can avoid being addicted to petrol and avoid the difficult and more expensive steps later.

 

[Bushroda]

India's Booming Markets Attract New Investors
HULIQ, NC
Submitted by Dinka on Sun, 2007-07-22 12:43.

India's booming stock markets are attracting many new investors in the country as they continue to reach new highs. But many first-time investors have yet to learn that what goes up may also go down.

Twenty-six-year old Monica Gupta began working three years ago in a consultancy company. She puts more than half her savings in stocks and mutual funds.

"I have got great returns on my investments. It's so much better than putting money in a bank," Gupta said.

Like Gupta, many young professionals are investing heavily in the stock market.

Prithvi Haldea heads New Delhi's Prime Database, which tracks trends in the markets. He says many first-time investors have been encouraged by countless stories of people who have doubled or tripled their investments, as the Mumbai stock exchange's Sensex index soared from four thousand points in 2003 to more than 15 thousand points this month.

"The young generation has tasted blood in the sense that they have huge earnings, and whatever investment they have made, they have been able to in a large number of cases, turn them into profits," Haldea said. "The numbers that are growing in terms of investor base, basically it is coming from this young generation."

Young professionals are not the only ones attracted by the buoyant stock markets. Many others in the expanding middle class have diverted savings to stocks and mutual funds as confidence grows in the future of corporate India.

As a result, household savings invested in equities and mutual funds have risen to about five per cent compared to just one per cent four years ago.

Market analysts however point out that this is still low compared to developed economies. They say many people are still hesitant to tie their fortunes to the stock markets as debate rages about the sustainability of their massive rise in recent years.

Prithvi Haldea is among those who believe that share prices have risen too high, too fast. He says the economy is on a roll and many companies are doing well but advises caution.

"Our market is slightly skewed in the sense that we lack both the width as well as the depth," Haldea said. "The number of companies that are listed of good quality, that number is still very small, and the floating stock that is available is very, very small, so any buying interest from large buyers basically shoots up the prices dramatically."

Other market watchers simply point to the statistics - Indian stocks offered an average annual return of 38 per cent in the last five years - and say the risk is worth it.

 

[Bushroda]

UTI Bank Raises $1.05 Billion Selling Shares to Institutions
BLOOMBERG
By Sumit Sharma

July 22 (Bloomberg) -- UTI Bank Ltd., an Indian lender whose market value has more than doubled in the past year, raised $1.05 billion selling shares to local and overseas institutions, the bank said in a e-mailed statement.

The bank sold shares at a price of $15.4 apiece. That's at a 1.7 percent discount to the local share price of 649 rupees on the Bombay Stock Exchange on June 20.

``Banks are the best play on an economy and investors are optimistic on India's growth outlook,'' said Navneet Munot, who helps manage $5 billion at Birla Sun Life Asset Management in Mumbai. ``Also valuations of Indian banks seem more attractive than those of banks from China.''

UTI Bank follows ICICI Bank Ltd. and HDFC Bank Ltd. in selling shares to garner more funds to meet growing demand for credit from companies and individuals in an economy that's growing its fastest in six decades. The bank also needs additional funds to bolster capital adequacy as loans grow.

The Mumbai-based bank approved a plan last week to sell 42.4 million shares to institutions and 31.9 million shares to promoters at a minimum of 575.75 rupees a share. Citigroup Inc. and Goldman Sachs Group Inc. are helping sell the shares.

Share sales by State Bank of India, the nation's biggest, Central Bank of India and Syndicate Bank among others, could boost funds raised this fiscal year to as much as $10 billion. State Bank of India, which may raise up to $1.5 billion selling shares, has not decided on the timing of the sale.

UTI Bank's shares rose more than two and a half times over the past 12 months from 252.9 rupees on July 19 2006. The bank traded 0.1 percent lower at 649 rupees on Friday at close on the Bombay Stock Exchange.

In London, its depositary receipts traded 2.81 percent higher at 15.70 pounds at close on June 20. The bank's GDRs have risen 58 percent since Jan. 1.

Overseas Investors

UTI Bank, which began operations in 1994, is 27 percent owned by state-controlled mutual fund UTI-I. State-run Life Insurance Corp. owns 10 percent and General Insurance Corp. of India and four other companies have 5.3 percent, according to the bank's Web site. Overseas investors own 40 percent of its shares. Indian funds and public owns about 17 percent.

The bank sold 14.13 million shares in the London listed global depositary receipts. In addition the bank fixed a price of 620 rupees apiece for shares to be sold to local and overseas institutions, to be listed in India. The bank will raise 17.52 billion rupees ($435 million) with this placement.

Promoters UTI-1 and Life Insurance Corp. were allotted 25.62 million shares, the statement said. The share price for the founders will be the same as the purchase price for overseas and institutional investors, he said.

Funding Growth

UTI Bank, India's fifth biggest by market value, gave 60 percent more loans to 413 billion rupees in the three months ended June 30. Profit grew 45 percent to 1.75 billion rupees, it said on July 12.

India requires $475 billion over the next five years for its roads, electricity plants and airports to keep pace with the rate of economic growth, Finance Minister P. Chidambaram said in June. The economy grew an average 8.6 percent in the past four years and the government wants to increase that to 10 percent by 2012.

Banks in India will need 500 billion rupees of additional funds to bolster capital as lending grows, according to estimates by Banking Secretary Vinod Rai.

 

[Bushroda]

Wealth, power shifting to East
SHARON MARRIS
Taranaki Daily News, New Zealand
23 July 2007


A man is climbing a steep cliff when he falls.

Falling hundreds of metres every second, he manages to grab a small branch. Hanging from the branch, the man suddenly finds a new appreciation for religion. He looks up at the clear, blue sky and shouts: "Is anyone there?" There is a booming voice in reply. "It is I. What do you want?" Still holding on to the branch but becoming more desperate by the second, the man shouts back. "What should I do?" The reply is not what he wants to hear: "Jump". The man looks down at the rocks below ...

The story is being told by American economist Clyde Prestowitz to a gala dinner of about 500 people at the Action Asia Business Summit in Auckland. Outside there is a stall selling the book he has written about his subject: Three Billion New Capitalists: The Great shift of wealth and power to the East.

Mr Prestowitz is the president of Washington DC's Economic Strategy Institute, a think-tank specialising in international trade policy and how world economies adapt to change. He was formerly counsellor to the secretary of commerce in the Reagan administration, leading trade negotiations with Japan, China, Latin America and Europe.

Mr Prestowitz got the inspiration for the book from his son, a software worker who was eyeing the snow removal business in the US. His son asked if he would like to be a co-investor, prompting the question: why snow removal?

"He gave a big sigh and said: `Dad you just don't understand - software can be moved to India but snow can't'."

So Mr Prestowitz travelled to India for the first time in 25 years and was blown away.

Indian software companies such as Infosys have massive hi-tech complexes near the IT city of Bangalore which are like stepping into the 22nd century, he says. Back home, Mr Prestowitz, a self-confessed technology illiterate, is struggling with his computer and calls the Intel helpdesk. On the other end of the line is a young man with an Indian accent. When he asks the man his name, he is told it is Sam. "Na, it's not Sam," he says. "What's your name really?" The man's name is Rajiv and he is in New Delhi.

Mr Prestowitz's points are sprinkled with vignettes such as these, episodes of life showing him that the wealth is shifting to Asia and some of the power is there already.

"The West has always been the world's biggest economy and the dollar has been the world's currency for as long as we can remember," he says. "We're accustomed to living in a world where most of the rich live in the West just as we've always taken it for granted that the sun will come up."

According to Mr Prestowitz, Americans will this year spend six per cent or seven per cent more than they earn.

"I think you're familiar with this phenomenon in New Zealand," he says, meaning the regular scoldings we get from politicians and Reserve Bank Governor Alan Bollard for our high-spending and low-savings rate. "In a low-savings, high-spending economy, you're mortgaging your future and that doesn't sound to me like good policy.

"Economies such as Japan are saving and producing but many western economies are consuming and borrowing.

"The purpose of the United States in the world economy has been to consume and we're good at it but I don't believe this can go on."

For this to continue would mean other countries continuing to lend money to the US and the West, an assumption Mr Prestowitz describes as heroic. For the US trade deficit, which stood at $60.04 billion for May, to be cut in half, the US dollar would face a devaluation of 70 per cent, he says.

"That's a very different world economy we'd be talking about but of course, it's possible I'm wrong - it has happened once or twice in my life."

The time is ripe for change.

"The US accounts for only five per cent of the world's population but for 30 per cent of the world's GDP and there's something unbalanced about that," he says. "It is right and desirable that Asia should have economic production in keeping with its proportion of the world population."

So should New Zealand be afraid of this change?

"The thing to be afraid of would be the failure of these two great countries," he says. "It's of tremendous importance to us that they should continue on that ride."

Mr Prestowitz likes to talk about countries such as Finland, Sweden and Singapore, which have made economic development and technology priorities - placing them above defence.

"For these countries, economic development is national security," he says.

Korea decided almost 20 years ago that it was going to become a world player in the telecommunications market.

The US, Mr Prestowitz says, spent those years fighting over unbundling, using deregulation to promote competition instead of developing infrastructure. The worry for New Zealand is that it is only at the unbundling stage.

Education, tourism and agriculture are its great strengths, but Mr Prestowitz warns against relying on them. "They are not industries where you get high-productivity gains. It's productivity gains that will determine your standard of living."

New Zealand and other countries in the West need to think outside the box, Mr Prestowitz says. And on that subject, as for the man still hanging from the branch, he looks up at the sky again with another question. "Is anyone else up there?"

 

[Bushroda]

Spatial balance of economic development unclear
D. Murali, C. Ramesh

July 22: The boom in the Indian economy, while distributed across sectors such as IT, auto and manufacturing, is leading to concerns of geographic concentration of economic activity and its consequences for economic development.

Prof Munisamy Gopinath, who teaches applied econometrics and international trade at Oregon State University, US says that though the country is on a high-growth path, the spatial balance of economic development, particularly the improvement of rural citizens’ welfare, is less clear at this time.

Speaking to Business Line on a range of issues, from States competing with each other to attract industry to IT growth resulting in higher real estate costs, he said that the (tax) giveaway competition among States limited in scope, as larger States with well-established industrial and tax base hold a distinct advantage over others.

“But States at the losing end need not be discouraged because there is little systematic evidence that such instruments attract firms. In addition, it is not clear that the costs of these instruments outweigh their benefits.”

He pointed out that the types of jobs created by these instruments and the share of those jobs filled by in-State workers is limited.

“Additionally, inputs required for these companies may be sourced outside of the State, raising questions on the extent of backward/forward linkages generated by these instruments.”

According to Prof Gopinath, if two States are identical in demand patterns, infrastructure and human capital availability, such giveaways would help break a tie.

“Unfortunately, these economic fundamentals exhibit substantial spatial variation, with urban or city centres accounting for the bulk of economic activity.”

Raising the question of why States must go to great lengths to attract an individual firm, he said that other strategies to attract a host of firms are always available.

“For instance, a State Government’s investments in infrastructure would help lower business costs and possibly attract more than one firm. Simultaneously, investments in locational amenities (like water availability, air quality and sanitation) would attract educated folks, creating a large, skilled labour pool, which again would be attractive to a host of firms.”

However, he added that there are limits to city size and growth.

On how States can tackle the problems like rising rentals, higher traffic and worsening air quality, which accompany development, he said that regulations to improve market-based outcomes should be the priority if the prices/rental rates of land are outcomes of well-functioning land, labour and credit markets, which account for current and future growth potentials.

“With regard to externalities like traffic problems and deteriorating air/water quality, the public sector has to play the primary role.”

Suggesting that a combination of tax and other regulatory instruments can effectively address these issues, he said that pollution abatement requires investments from public and private sectors.

“However, the giveaways could come back to limit public policies if State Governments’ spending heavily relies on corporate taxes. The foregone resources and the limited ability of these Governments to tax new companies would make investments in public goods follow rather than lead economic growth.”

According to him, when markets do not function well and externalities are not alleviated, the benefits of locating in urban centres would be outweighed by costs.

“Deconcentration of urban centres will occur, as has in the case of Seoul. Again, the public sector’s role would be to encourage such deconcentration without hurting existing centres and by investing in the development of targeted areas.”

Increasing literacy rates and unwillingness to engage in traditional professions like agriculture are driving large-scale migration from rural to urban centres.

Informing that in the economic development process, agriculture is expected to release labour for industrial and eventually, service sectors, Prof Gopinath said that the process does not have to occur at the expense of either rural or urban sectors.

“For instance, agricultural productivity increases when transferred in the form of lower food prices could release consumers’ income to demand manufactured goods and services.”

And the demand-driven increases in industrial capacity and distribution networks could then absorb the labour released by agriculture.

He added that the food processing and packaging industry could uniquely contribute to the transition process by providing quality jobs right next to rural areas, while helping improve agricultural productivity.

“Migration in response to labour market signals is important in the growth process. However, investments in infrastructure and locational amenities would ensure that citizens do not pay for economic development by compromising the quality of life.”

Globalisation is changing the way economies are structured and business is done; every country faces adjustment problems, there are few exceptions.

However, the key issue is how to enhance competitiveness and how to help segments that could be adversely affected by global competition, he said.

“It is not clear whether trade and/or commercial policies could slow globalisation, when transport, information and communication costs have rapidly declined in the past two decades.”

In the Indian context, rural areas appear to be facing the greatest difficulty in adjusting to global competition, the reasons being absence or limited availability of safety nets and adjustment tools to tide over uncertainties of the marketplace.

“Without spatially conscious policies, globalisation’s flip side could be regional imbalances in economic development along with deterioration in the provision and quality of urban public goods. Hopefully, the high-growth environment will generate adequate resources to address these issues through public and private sectors.”

Prof. Gopinath has been with Oregon State University for a decade now. His research areas include trade and economic development with emphasis on agriculture and food industries. He holds a PhD in Applied Economics from the University of Minnesota.