Indian Economy - News & Updates - Archive

[Bushroda]

For India's 'Brand Freaks,' Gucci Trumps Gandhi

"I'll spend my whole salary for a really swank brand" and eat rice cakes the rest of the month, says Anuga Shah, 26, shopping in a boutique.

By Emily Wax
Washington Post Foreign Service
Monday, February 11, 2008

AHMADABAD, India -- Amid buttery leather handbags and $200 torn jeans, Anuga Shah and her friends were shopping in this boomtown's newest mall recently, proudly humming that they were "spendy."

"This week, it's all about Tommy," Shah, 26, cooed as she petted hooded sweaters inside a glitzy Tommy Hilfiger boutique. "In India today, we love to be branded. I'll spend my whole salary for a really swank brand and eat idli [steamed rice cakes] for the rest of the month."

This country's growing middle and upper-middle classes have recently given rise to self-described "brand freaks," who crave the latest luxury goods. In this city -- where the father of the nation, Mohandas Gandhi, once located his austere ashram and rejected foreign textiles -- it's Chanel, not homespun cloth, that generates excitement these days.

India's elite have long enjoyed luxury goods imported from the West. In recent months, though, Indians who can't afford $600 sunglasses -- but who still have some disposable income -- have been splurging. Designers including Prada, Jimmy Choo, Gucci and Louis Vuitton, as well as brands such as Rolls-Royce and Mont Blanc, have either set up shop or beefed up operations here.

Last month marked the opening of two of the country's highest-end malls. At New Delhi's Select City Walk, women nearly caused a stampede as they crowded into a MAC cosmetics store, many of them in search of a popular brand of eye shadow. Women said they were thrilled that their husbands didn't have to go abroad to shop for them anymore.

"This year, India really unleashed the brand beast," said Saloni Nangia, associate vice president of Technopak, an India-based marketing research firm that estimates the middle and upper-middle classes at 8 million to 9 million people and growing, albeit in a country whose population is 1.1 billion.

"It used to be just five-star hotels that had the high-end shops," Nangia said. "But now India is actually getting upgraded with both premium brands and very high-end luxury. The right real estate is here now and the brand-freaks market is only going to get bigger."

In the fall, Vogue magazine, the bible of high-end fashion, launched its thick Indian edition, the most glamorous in a long line of magazines from Elle to Marie Claire that now have editions here. A recent article in Vogue headlined "The rise of ME culture" chronicled how much the Indian paradigm has changed, with women finding more disposable income and freedom to spend on their own needs rather than on the traditional extended family.

"This is the year of the Indian woman as a confident brand-buyer not abroad, but finally at home," said Bandana Tewari, fashion features editor at Vogue's Indian edition. "I find it refreshing that we have choices and a better lifestyle riding the optimism of the economy."

In a country with a rich tradition of textiles, Indian haute couture is flourishing, too.

"India still loves its colorful silk saris. We haven't gone to wearing black and white like the rest of Asia," Tewari said. "We refuse to change our intrinsic personality. We are remembering that India has always had superbly expensive jewelry, and insanely luxurious hand-woven seven-yard saris that are 800 years old. It's a good reminder to us that it shouldn't just be about importing. We were sprinkling very expensive saffron on our dessert before we got caviar."

Such enthusiasm is not shared by everyone. For many, the rising popularity of Western brands has served only to highlight the stark gulf between the rich and poor in a country where the majority of people still live in abject poverty. Along a main highway here, Tag Heuer billboards jockey for space with towering posters of Mont Blanc pens; below, barefoot children in ragged clothes tap on car windows, begging bowls in hand.

Meanwhile, a new Gucci store in New Delhi sells fancy dog bowls, as well as dog beds priced from $300 to $500 -- all in a country that has more stray dogs roaming the streets than almost any other in the world, according to animal rights activists.

"We are changing a lot and too quickly as a nation," lamented Vijay Bhai, 81, the caretaker of Gandhi ashram here, who likes to joke that he represents India's endearingly cranky and thrifty grandfather. "Everyone should remember that some jobs are good when the malls go up. But we shouldn't forget the poor and what's important in Indian life. Gandhi was a humble man who wore a loincloth when he went to shatter the British Empire, not some glitzy brand-name clothes."

Bhai and others at Gandhi's quiet ashram marked the 60th anniversary of Gandhi's death last month, but there was little fanfare. They said they worried that the country was abandoning Gandhi's visions.

"If Gandhi were alive today, he would be shocked at how materialistic India is," Bhai said.

He said he had written school principals to encourage them to bring their classes to the ashram and view the simple cases that hold Gandhi's sparse possessions: a bowl and a few spoons, his famous circular glasses, a few books -- all symbols of his austere lifestyle and respect for the poor.

Some of those walking the grassy paths of the ashram said the emergence of the middle class is something that Gandhi might have appreciated, because more people are being lifted out of poverty. It's a matter of development, they contended.

"You can't go for a job interview with a global company in loincloth," said Rutaunshi Patel, 23, who is finishing her master's degree in English literature and was visiting the ashram with a friend. "You have to try to find a balance. In the new India, of course, that's hard."

Gandhi has not been completely forgotten. A group of friends in their 20s visiting the ashram mentioned a recent Bollywood comedy about a gangster who adopts Gandhian ways. The show has been among the most popular DVDs here.

Ritu Shah, 24, who was among those touring the ashram, said she recently told her parents that she wanted to visit there on her birthday.

"They said, 'Why? Don't you want to go shopping?' " she said with a laugh as she lugged a designer handbag through the ashram's museum. "I said, 'No, no more shopping. I want to see what Gandhi was all about.' "

 

[Bushroda]

Integrate rural economy with the national one: Sunil Mittal
11 Feb, 2008, 0343 hrs IST,Sunil Mittal,

Through the past four years, India’s Gross Domestic Product (GDP) has grown at a phenomenal rate of 8.6%. The momentum has continued through the current fiscal as well.

The challenge today, however, lies as much in sustaining this momentum as ensuring an inclusive pattern of growth. I expect two distinct thrust areas in the coming Budget: a focus on social and physical infrastructure, and initiatives to integrate the rural economy with the national economy.

Since shortage of skilled manpower constitutes a serious long-term challenge to the economy today, Indian industry would expect a concerted effort from the finance minister on the education and skill development platform.

In line with the 11th Plan Approach paper, which prescribes allocation towards education be raised from the current 2.9% to 6% of GDP, I expect enhanced allocation towards creation of a robust education and skill development infrastructure in the country.

We look forward to initiatives towards development of an institutional framework to devise and implement national, sectoral strategies to develop and improve the skills of Indian workforce. Such a move would help us graduate from a labour to a knowledge arbitrage economy.

Given that over-stretched physical infrastructure is going to be a major concern area, Indian industry would expect significant initiatives in the area of resource mobilisation for infrastructure projects.

The country has by and large developed a consensus around accelerated inclusion of the rural economy in the wider growth process.

We expect added thrust on two critical components of the rural economy: strengthening of irrigation infrastructure and a larger role for the private sector to improve agricultural productivity and rural income. The government needs to attract more private companies towards agricultural R&D through appropriate tax and financial incentives.

On the tax front, Indian industry would expect some reduction in overall tax burden and removal of tax-related anomalies to stimulate manufacturing.

In the service sector, telecom would expect dilution in the overall incidence of various levies, which cumulatively stand at a staggering 30% of operator revenues. Such an initiative would help operators penetrate further into the rural hinterland and enable telecom to play a key role in the integration of the rural to the national economy.

On the whole, Corporate India expects a Budget that not only drives economic growth but ushers in the key instruments for equitable growth.

(The author is chairman & group CEO, Bharti Enterprises; and president, CII)

 

[Flintlock]

I gotta admit, India is starting to make me jealous

Itni jaldi nahin yaar...

 

[Bushroda]

Mad Mumbai money
Big bank from Toronto makes a pit stop at Abbotsford's University College of the Fraser Valley before making the giant leap overseas

Joanne Lee-Young,
Vancouver Sun, Canada
Published: Monday, February 11, 2008

Canada's largest bank has landed in India, bucking a homebody reputation for mostly sticking close to North America.

Last week, RBC Royal Bank announced that its new Mumbai office will help Canadian companies do more business in India by offering capital market products, trade financing and private banking services.

But this far-reaching leap by the bank from Toronto to Mumbai is one that makes an interesting first pit stop in Abbotsford, of all places.

The surrounding area is not only home to one of the largest Indo-Canadian populations, but also to one D.J. Sandhu, a professor at the University College of the Fraser Valley and a part-time business consultant.

Last year, UCFV and its unique Centre for Indo-Canadian Studies appointed Sandhu to a research chair position, tasking him to supply "effective, appropriate and practical research to local businesses, helping them to capitalize on opportunities between British Columbia and India."

Since then, he has become a full-fledged road warrior, flying to India about every six to eight weeks and basically spending about half his time there. Last week, he returned to Vancouver after a longer-than-usual stint of three months in Delhi, Bangalore, Mumbai and Chandigarh.

RBC, for one, is keen to back Sandhu he as logs these kilometres. The bank is planning to officially announce its sponsorship of Sandhu's chair at UCFV, a move that is part of its Mumbai strategy and an understanding that Indo-Canadians in B.C. (and in Ontario) are increasingly eager and well-positioned to take part in the booming Indian economy.

In opening the Mumbai office, Toronto-based RBC president and CEO Gordon Nixon noted that people from India comprise the second-highest Asian immigrant population in Canada after China.

"Indo-Canadians have made and continue to make a huge contribution to the fabric of Canadian life. Their presence and cosmopolitan imprint on our cities, especially Toronto and Vancouver, have been profound. They form an important, indeed critical link between India and Canada," he said in a statement.

Sandhu said that "based on commonly cited statistics, the estimated number of people of Indian origin living in foreign countries is close to 25 million. And those 25 million are remitting or investing back to India some $26 billion US a year."

In B.C., that diaspora market is definitely watching India more closely than ever. "They are looking at the enormous gains," said Hemendra Vora, a Vancouver-based investment adviser with Keybase Financial Group who caters mainly to Indo-Canadian clientele.

For them, India is at once a tantalizing and yet inhospitable business environment, as it is for all foreign investors, regardless of family or cultural ties.

Now, Sandhu said, "if you have a legitimate Canadian bank providing a channel, the pipeline can grow even in a market with so many uncertainties."

Sandhu describes the RBC interest as one of "trying to link communities from here to there. If someone here wants to build a hotel there, they can talk to any bank, but if they know RBC from home, it makes it easier for them."

"For example, there is a B.C. mining company that is first in line to mine for diamonds in south India. Now, if that mining group needs financial backing, they could look to RBC," said Sandhu.

Sandhu declined to name any of these deals that he is brewing, but, of course, his job will be to feed RBC with as many such leads as possible.

Meanwhile, as RBC ramps up its India products and services, it will find both a competitor and perhaps a partner in Hari Panday, president and CEO of ICICI Bank Canada.

ICICI is a well-established Indian bank that has been eking out a footprint in Canada for the past few years. Currently, it runs seven branches, including a downtown Vancouver location. "Our diasporic business is very active. There is a very steady flow of newcomers from India to Canada, plus a number of Canadian corporates and individuals who travel often there for business or pleasure," said Panday.

"The European banks and insurance companies, the Australian, the American banks are all in India with very stabilized platforms where they are doing significant transactions," said Panday. "We are delighted about RBC. It's finally a large Canadian endorsement of what is happening in the Indian economy at large."

Else, Panday said that as another example of the rising interest in India (and what RBC might offer in the future), ICICI Canada recently launched two India-focused private equity funds aimed at pension funds and high net worth individuals in Canada.

So far, individual investors in these funds have mostly been from Ontario, but "we are getting more queries from B.C. I am meeting with fund managers in B.C. and from there, we will get to the high net worth individuals."

Panday explained that "we are based in Toronto, but we are planning to place a manager in Vancouver who would constantly feed information [about the funds] to increasingly interested circles in B.C."

The Road to Mumbai

India is the second-fastest growing major economy in the world. Much of that growth is happening in Mumbai, India's financial and high-tech powerhouse. As a result, Mumbai is attracting more than just Canada's biggest bank. Scotiabank, the second-largest Canadian bank, earlier opened offices there. U.S. beer giant Anheuser-Busch chose Mumbai as the Indian launch site for its Budweiser brand last year, and even aging heavy metal icons Iron Maiden have found a market in the former Bombay, starting their world tour there earlier this month.

 

[Bushroda]

Software and services export to cross $40bn: NASSCOM
UNI
Monday, February 11, 2008

MUMBAI: The melting US economy and the appreciating rupee is in no way stopping the growth of the Indian IT industry poised to a 33 per cent growth in fiscal 2008 and bang on target to emerge a 75 billion US dollar sector by 2010, NASSCOM announced on Monday.

Releasing the strategic review for 2008 at a press conference here, NASSCOM Chairman Lakshmi Narayanan said ''Despite heavy winds, we continue to do very well and are meeting year after year, stretched growth targets.''

NASSCOM said software and services export would cross $40 billion in fiscal 2008 with the domestic market estimated at $23 billion.

''Positive market indications and strong records strongly support the optimism of the industry in achieving its aspired target of $60 billion in software and services exports and USD 73-75 billion in overall software and services revenue by fiscal 2010. Direct employment was expected to reach two million,'' Mr Lakshmi Narayanan said.

He said, ''The robust growth of the Indian IT BPO industry by over 33 per cent in the current fiscal reinforces the confidence of global corporations in India. As we move, 2010 trend indicates that the industry is firmly poised for broad growth across industry and service lines. It strengthen India's leadership position as the primary sourcing location for software IT experimentation and business process related services'', he added.

The new NASSCOM President Som Mittal said the Indian IT industry has been rapidly evolving and growth was on track to achieve, if not exceed the targets for 2010. ''The trends are interesting and findings indicate that domestic market is poised for growth with IT spends trending upwards, particularly by the government'' he added.

 

[Bushroda]

Indian Cities Compete
Oxford Analytica
FORBES, NY
02.06.08, 6:00 AM ET

IBM announced that it has launched an outsourcing center in Noida.

The location is one of several smaller cities that are increasingly attracting the business process outsourcing sector as it comes under pressure from rising costs in established centers such as Bangalore.

Despite predictions of a slowdown in growth, the business process outsourcing industry (BPO) is expanding rapidly:

--Exports reached $8.4 billion in fiscal year 2006-07 (ending March), up 35% from the previous year.

--The National Association of Software and Service Companies (NASSCOM) expects exports to reach $10.5 billion to $11.0 billion this year.

--The sector employed 553,000 people last year, up from 415,000 the previous year.

However, the sector faces competition from countries in South-east Asia and Latin America, and the appreciating rupee has made exports less competitive. In addition, the continued growth of the software industry--with which the BPO sector competes for facilities and inputs--has strained infrastructure and made real estate and labor costs soar. Critically, the competition for skilled labor has resulted in the highest attrition levels in Asia, estimated by NASSCOM at 30% a year.

On the move. As a result, BPO companies are beginning to establish operations in smaller cities and to be less reliant on the "Tier I" cities of Bangalore, Mumbai, Delhi, Hyderabad and Chennai. Over the last few months, industry heavyweights such as MphasiS, Satyam, Wipro (nyse: WIT - news - people ), Tata Consultancy Services (other-otc: TACSF.PK - news - people ) and Infosys have set up BPO facilities in relatively unknown "Tier II" cities such as:

--Mangalore and Trivandrum in the south;

--Chandigarh in the north; and

--Vishakapatnam in the east.

Many of these investors are also setting up multiple facilities in smaller locations. For example, Wipro, which has more than 50,000 employees, is setting up facilities in Kochi and Trivandrum in Kerala, Coimbatore and Trichy in Tamil Nadu, as well as others further north. This movement is not limited to local operations. International investors are also setting up facilities outside Tier I locations:

--Honeywell (nyse: HON - news - people ) set up operations in Madurai, Tamil Nadu.

--General Electric (nyse: GE - news - people ) has facilities in Jaipur, Rajasthan.

--IBM (nyse: IBM - news - people ) and Dell (nasdaq: DELL - news - people ) have set up operations in Coimbatore in Tamil Nadu.

--U.S. retail company Target (nyse: TGT - news - people ) is setting up in Mysore, 150 kilometers from Bangalore.

Cost advantages. Tier I cities will continue to be prime locations for BPO operations due to the presence of well-developed labor markets, established lobby groups and developed supporting industries. They will remain particularly attractive to first-time investors in India seeking to minimize risk. However, alternative locations offer distinct advantages:

--Prices. Relatively untapped real estate markets mean lower costs and less waiting time for permits. Many smaller cities have good local colleges, meaning that graduates are cheaper, easier to find and--due to the proximity of their families-- easier to retain. The Associated Chambers of Commerce and Industry estimates that Tier II cities offer an average cost advantage of 15% over Tier I cities.

--Support. The move to spread the software and BPO industries around the country has central and state government support. Software Technology Parks of India, the agency that offers export-oriented firms dedicated infrastructure and facilities, is setting up parks in second-tier cities. Recent liberalization measures will also permit the establishment of smaller information technology parks appropriate to smaller cities.

--Incentives. States that have yet to enjoy the benefits of these new industries are eager to attract investors. Those such as Karnataka, Maharashtra and Andhra Pradesh that have established industries are keen to decongest their cities and spread growth to secondary centers.

To read an extended version of this article, log on to Oxford Analytica's Web site.

Oxford Analytica is an independent strategic-consulting firm drawing on a network of more than 1,000 scholar experts at Oxford and other leading universities and research institutions around the world.

 

[Bushroda]

India's Reliance Power sinks on debut
By Joe Leahy in Mumbai
Financial Times, UK
11/2/2008 11:00 London Time

India's Reliance Power, which staged the country's biggest initial public offering last month, fell as much as 21 per cent on its trading debut on Monday, on weakness in the broader market amid concerns over the global economy.

Shares of Reliance Power, whose $3bn listing was sold out within a minute of opening in mid-January, closed 17 per cent lower at Rs372.30 per share on Monday compared with an IPO price of Rs450. Earlier they fell as low as Rs355.30 after touching an opening high of Rs530.

R Venkataram, executive director with Mumbai-based brokerage India Infoline, said the near-term picture for Indian stocks was clouded by uncertainty over the global economy and the release of the national budget later this month.

"The market is looking like it will be weak for some time. Investors will wait for cues from the budget. Then March is the end of the financial year, when we will get to see corporate earnings," Mr Venkataram said.

Bombay's benchmark Sensex Index closed down 4.78 per cent to 16,630.91 points, extending a near 16 per cent fall from record highs in mid-January.

A plunge in the index since Reliance Power listed has stalled India's once-thriving market for IPOs. Last week two high-profile offerings were scrapped because of a lack of demand.

Critics said the IPO of Reliance Power, which is backed by billionaire industrialist Anil Ambani, was heavily over-valued even before the recent falls in the market.

It was priced at a premium despite having no operating assets and little prospect of generating substantial cashflow for a number of years.

"I think it was grossly over-valued so I don't think anyone should be surprised it has fallen today," said one analyst in Mumbai who declined to be identified.

However, supporters of the company argued that the IPO was a rare chance to gain exposure to India's growing infrastructure sector, with Reliance Power planning to build a national network of power stations.

The offering attracted record demand, with investors placing bids for 73 times the number of shares on offer, and institutional investors in particular swarming to the stock.

Some analysts had speculated there would be some support for the IPO from the banks that arranged the deal.

But India Infoline, in an investor note, said: "With the Reliance Power issue getting a record oversubscription, Anil Ambani is [under] no obligation to please anyone today."

It said Mr Ambani expected investors to put their money into the stock for the long-term and weather short-term market weakness.

 

[Bushroda]

Mahindra Appalachian diesel pickup arrives in US next year, diesel hybrid version by 2010
by John Neff
Posted Feb 11th 2008 7:02AM



Indian automaker Mahindra & Mahindra Ltd. will shake up the U.S. truck market next year when it introduces a new midsize pickup called the Appalachian sporting a 2.2L four-cylinder diesel engine producing around 150 horsepower and 300 pound feet of torque. Speaking with Mike Levine from Pickuptruck.com, John Perez, the CEO of Atlanta-based importer Global Vehicles U.S.A. that's aiding Mahindra's entry into the U.S. market, revealed that the truck will deliver 30 to 35 miles per gallon and cost in the mid-$20,000 range. It will be paired with a six-speed automatic that's controlled via a floor-mounted shifter or paddle shifters(!), have a class-leading payload of 2,600 lbs. and feature a 60,000-mile, four year bumper-to-bumper warranty.

If that's not enough to strike fear in domestic and import truck makers alike, Mahindra has also revealed plans to sell a diesel hybrid version of its pickup by 2010. If it happens, the diesel hybrid Appalachian will be, as far as we know, the only diesel hybrid on sale in the U.S. market and achieve fuel economy figures even higher than its diesel-only counterpart. Imagine a midsize pickup in the low-$30,000 price range capable of 40+ mpg.

The Appalachian has yet to go through U.S. certification for emissions and safety, but the company is spending $80 million to ensure its truck passes with no issues. After that, production will begin in India on March 15, 2009, but the trucks will finish assembly at a plant in Ohio to avoid high import taxes. After that, customers can visit a 300-strong dealer network with 24 standalone dealerships, one of which is already under construction.

 

[Neo]

Multi-billion dollar telecom deals​

THERE’S been frenzied growth in India’s telecommunications sector in recent years, as millions of Indians — including the less affluent and the poor — discover the joys of connecting to their relatives and friends through mobile phones.

Not surprising then that international telecoms giants and private equity funds are also discovering the joys of connecting to a nation that has emerged as the world’s fastest growing telecommunications market. Many of them have been announcing multi-billion-dollar deals in recent weeks, acquiring stakes in companies.

Every month, eight million new cell phone subscribers sign up for services. There are about 250 million cell phone users in India at present. This is expected to double to 500 million in just over two years. By 2012, one in every second Indian will be sporting a mobile phone, as the cell phone market is expected to expand to 600 million subscribers.

The sector got a boost recently with the government granting licences to over half a dozen players to operate services in multiple circles. They include two existing telecom giants, Reliance and Tatas, both of whom have been granted GSM (global system for mobile phone) licences. The two companies have been operating the CDMA (Code division multiple access) network, and are now planning to unfold their GSM systems across the country.

The entry of new players will mean a further fall in telecom tariffs. Some analysts expect a 25 per cent cut in tariffs, as the new players come out with attractive packages to lure customers. The savage price war that is expected over the coming months will also witness a major shake-up in the industry, and many of the new entrants are likely to be taken over by the bigger fish.

According to industry estimates, the next two years will see investments of about $25 billion, as telecom service providers rush to capture a large chunk of the market, comprising 250 million to 350 million new subscribers. This will be the single largest investment in the telecommunications sector anywhere in the world.

The new players who have been awarded licences recently are expected to invest about $15 billion, while the existing half a dozen operators – with nationwide services – are likely to plough in another $12 billion.

The telecommunications firms will be raising funds through borrowings, equity (by going in for public offers) and tapping private equity players. With interest rates in the US heading southwards, many funds are eager to invest in the Indian telecommunication sector, where returns have been substantial.

* * * * *

THE past few days have seen several major deals being announced between Indian telecom majors and global financiers. Last week, Kohlberg Kravis Roberts & Co (KKR), a leading private equity fund, paid $250 million for a 2.5 per cent stake in Bharti Infratel, a subsidiary of one of the largest private Indian telecom player, Bharti Airtel.

A few days earlier Morgan Stanley picked up a stake in independent telecom infrastructure firm TowerVision for about $300 million. TowerVision plans to utilise the funds to raise the number of telecom towers in its portfolio to 6,000 over the next one year. The company was promoted by British and Israeli partners.

The Anil Dhirubhai Ambani Group (ADAG), which owns Reliance Communications, also announced plans to launch an initial public offer (IPO), hoping to raise about $1.5 billion by selling a 10 per cent stake in its subsidiary, Reliance Infratel. Reliance Communications will offer nearly 90 million shares in its subsidiary to investors.

ADAG is on a fund-raising spree to finance the ambitious projects that it plans to take on hand. It recently floated Reliance Power, attracting investments worth a whopping $200 billion. The group also plans to float Reliance Entertainment, the media and entertainment unit, shortly.

The Reliance Power scrip will be listing on the Bombay Stock Exchange today. Though a new company – with virtually no assets on its books – it managed to break all previous records and create stock market history by attracting over five million bids from investors. The issue attracted over $3 billion in the very first minute that it opened. The company will also be having over four million shareholders on listing, again a record in the Indian capital markets.

Reliance Communications also plans to invest about $2 billion in its telecom infrastructure subsidiary, besides another $1.3 billion for the nationwide roll-out of its GSM network. Reliance Infratel will have about 60,000 telecom towers by next March, more than doubling its present strength of 25,000 towers.

Earlier, the company had sold a five per cent stake in Reliance Infratel for nearly $350 million to international investors including HSBC Principal Investments, George Soros’ Quantum Fund, Fortress Capital and the Galleon group among others.

The booming telecommunications infrastructure sector has attracted other international lenders, besides KKR. In December, Bharti Airtel had sold a nine per cent stake in Bharti Infratel for a billion dollars to over half a dozen international investors, including Singapore’s Temasek, Goldman Sachs, Citigroup, the Investment Corporation of Dubai, Macquarie and AIF Capital. On the basis of these deals, Bharti Infratel’s enterprise value has been placed at over $10 billion. The company owns 20,000 mobile towers and has a 42 per cent stake in Indus Towers, a joint venture with international telecom major Vodafone and India’s Idea Cellular.

* * * * *

INDIA’S mobile tower business is expected to witness remarkable growth, as several new players enter the fray, and existing companies expand their services to semi-urban and rural areas.

There are about 125,000 mobile towers in India today. This is expected to touch nearly 300,000 in a little over two years, as the number of mobile phone subscribers doubles to 500 million.

While in the past most of the mobile phone service providers installed their own towers, there is an increasing trend today of several firms sharing the infrastructure. It costs an average of about Rs2.5 million to set up a mobile phone tower. A cell phone company with an all-India licence would need about 10,000 towers, which would cost about Rs25 billion.

Many companies are now establishing towers that they share with multiple service providers. Both Bharti Airtel and Reliance Communications — who have spun out their subsidiaries – provide a common platform to others, including rivals. Average rents works out to about Rs25,000 a month for a tower.

The lucrative telecom towers business has also attracted many international players. American Tower Corporation, a US-based firm, is making a foray into India. TowerVision is owned by Ashmore Investment of the UK, and has won contracts from players like Spice Communications, to build and lease about 1,000 towers.

Another US-based investor, Q Investment, is backing Xcel Telecom with $500 million in funding; the company plans to install about 2,000 towers, besides acquiring smaller players. Europe’s Rambolls Telecom Towers has also a significant presence in India. Smaller players include Aster Tower, which has obtained funding of about $35 million from US-based funds.

GTL, an Indian telecom major, has also got international funding of over $250 million from private equity investors. GTL last week entered into an alliance with Ericsson, which has outsourced its network infrastructure services in the UK to the Indian firm.

A special purpose vehicle – GTL M&A Services – has been set up to provide services in the UK. According to Manoj Tirodkar, chairman and managing director, GTL, the company will provide passive site maintenance, engineering and remote management services to network operators and service providers in the UK. Ericsson will look after sales and marketing.

Tirodkar believes other international majors will also consider outsourcing such services to Indian companies. “We see a trend as other operators are also looking for cost arbitrage and economies of scale,” he notes.

With the Indian telecommunication sector on a roll, domestic firms are now looking at offering their services to countries around the world.

Multi-billion dollar telecom deals -DAWN - Business; February 11, 2008

 

[Bushroda]

Indian software industry forecast to grow 33 percent; Europe to offset any US slowdown
The Age, Australia
February 11, 2008 - 11:16PM

India's software service and outsourcing industries are likely to grow 33 percent in fiscal year 2008, with new business in Europe to offset any slowdown in the U.S. economy, according to a new study released Monday.

Diversifying the services beyond the American market would help the industry earn total revenue of US$64 billion (euro53 billion) from April 2007 to March 2008, said Som Mittal, president of the National Association of Software and Services Companies, or NASSCOM, while releasing the study.

NASSCOM is the trade body of technology companies operating in India.

The United States remains the Indian software industry's biggest market with a share of 61 percent, said the "Strategic Review 2008" by NASSCOM.

Exports to Europe, however, have grown more than 55 percent since 2004, it said. The United Kingdom now accounts for 18 percent of India's software services and continental Europe for 12 percent, it said.

The study also said that exports of software and services are likely to cross US$40.8 billion (euro33 billion) for the fiscal year ending March 31, while domestic revenues will touch US$23.2 billion (euro19 billion).

"We are expanding our base and this shows in the diversification of industry from English-speaking countries to Europe and other nations," said Mittal. "The industry is managing to grow and diversify geographically."

The NASSCOM study said companies that earlier provided services to traditionally recession prone industries such as banking and telecommunication are expanding to sectors such as retail, health care and entertainment, which are less likely to be hit in a slowdown.

 

[Bushroda]

Could the India growth train be slowing?
By Heather Timmons
International Herald Tribune
February 11, 2008


Anil Ambani at a ceremony Monday for the listing of Reliance Power shares on the Bombay Stock Exchange. The stock tumbled in its debut.

NEW DELHI: Could the fast-moving India growth train finally be slowing?

The country's largest public offering, Reliance Power, had a dismal first trading day of trading Monday, with its shares falling 17 percent below its price at offer last month when investors bought all available stock in less than a minute.

Meanwhile, the Bombay Stock Exchange's Sensex closed down 4.78 percent Monday, the worst major performer in depressed Asian markets.

Reliance Power's disappointing market debut followed a steady drip of slower growth projections, higher than expected inflation figures and falling export data released in recent days. Several initial public offerings have been pulled in India in the past few weeks as once-resilient investors rethink their commitment to India's volatile stock markets.

In a sign that consumer spending may need a lift, the country's largest bank, State Bank of India, cut its main lending rate a quarter of a point Monday, following recent moves by other big local banks.

"People are becoming more realistic" about India's growth prospects, said Gurunath Mudlapur, managing director of Atherstone Institute of Research in Mumbai.

The rise of the rupee is slowing exports, some foreign investment is draining out of the stock markets and consumer confidence in India, which tops sentiment in most of the rest of the world, is being shaken by fears of a global downturn. India's economy has been the second-fastest growing major economy in the world, after China.

Slower growth projections that are a disappointment in India still far outstrip expectations for most economies in the developed world.

Thanks to a heavy reliance on the domestic market, India's economy will probably not slow significantly unless a United States recession is lengthy and severe, most analysts and economists say.

But an era of breakneck growth may be over.

"Momentum is still fairly strong, but there is some slowdown from elevated levels", said Vikas Agarwal, an analyst with JPMorgan in Mumbai. The bank is predicting a moderation in growth, "not falling off the cliff," Agarwal said.

India's gross domestic product growth will slow this fiscal year for the first time in three years, the government said on Feb. 7. GDP growth for the fiscal year ending March 31 will be 8.7 percent, down from 9.6 percent a year ago.

JPMorgan is predicting even more of a slowdown, and has pegged India's GDP growth at 8.6 percent in the current fiscal year, falling to 7.5 percent in the following one.

Meanwhile, recent price data show that India policy makers need to watch inflation as well. Wholesale prices rose more than expected in figures released Feb. 8, to 4.11 percent, as demand for staples like produce and spices rose.

"Right now inflation is creeping up," leaving India's central bank in a bind, said Chakri Lokapriya, head of Indian equities at BNP Asset Management U.K.

The central bank would "rather sacrifice growth than have inflation, so that they can sustain longer growth over time," he said.

Merrill Lynch told investors Monday to "expect monetary easing in India" this year, predicting that the Reserve Bank of India would cut its key lending rate by 50 basis points.

Economists predict that industrial production numbers, due out on Tuesday, will show a drop because consumer demand is slowing thanks to high prices and high loan rates.

"Consumers are becoming more discerning" about buying highly valued real estate, taking out auto loans and snapping up new home products, Mudlapur said.

Reliance Power ended the day at 372.50 rupees a share, after pricing last month at 450 rupees. The company, which is half owned by the billionaire Anil Ambani's Reliance Energy, plans to open power stations throughout India.

"A number of local brokers had a lot of expectations for the stock," said BNP's Lokapriya. "It priced at time when the market was stronger, worldwide, but now sentiment is dour," he said.

Last week the real estate company Emaar MGF Land and Wockhardt Hospitals withdrew initial public offerings from the Indian exchanges after tepid response from investors.

Turmoil in global markets is partially to blame, said Lokaypria, who notes that Indian stocks trade at much lower price to earnings ratios than their Chinese counterparts.

It's a case of "really bad timing," he said.

 

[Bushroda]

Indo-UK bilateral trade may reach $60 bn by 2020
11 Feb, 2008, 2001 hrs IST, PTI

KOLKATA: The bilateral trade between India and UK might reach a staggering figure of $60 billion by 2020, British High Commissioner in India Sir Richard Stagg said on Monday.

"There has been considerable degree of progress in bilateral trade between the two countries which will grow in the next 12 years," he said.

He said that in the recent past, the Indian economy grew a considerable degree and UK would like to establish a strong business relation.

"Great Britain is likely to invest in certain priority areas like automotive industry, service sector, banking, insurance, retail, agriculture and logistics," Stagg said.

These were growing sectors and Britain would like to invest in them because these areas were not explored properly and have great business potentiality, Stagg added.

He said, "We would like India to invest in fields like information technology, automotive and energy."

 

[Bushroda]

Indian IT services sector strengthens
By Joe Leahy in Mumbai
Financial Times, UK
February 12 2008

India's computer services sector defied growing cost pressures at home and a slower US economy to increase full-year revenues by an estimated 33 per cent, the industry's representative body said yesterday.

The National Association of Software Services Companies said total IT sector revenue, excluding hardware, would be $52bn for the year to March, of which $40.3bn would be from outsourcing services to other countries.

"While we are optimistic for the future, we need to be vigilant about how things are progressing," said Som Mittal, Nasscom president.

India's IT outsourcing sector, one of the pillars of its recent economic boom, is coming under increasing pressure from domestic wage inflation, higher real estate costs and a stronger rupee.

The industry, which provides services from managing a client's computer systems to processing a foreign bank's mortgage applications, is bracing for a slowdown in its main customer base, the US financial sector.

But Mr Mittal said India's outsourcing industry was holding up well and was on track to meet its forecasts of $60bn in software and services export revenue by 2010.

 

[Flintlock]

Indian IT services sector strengthens
By Joe Leahy in Mumbai
Financial Times, UK
February 12 2008

India's computer services sector defied growing cost pressures at home and a slower US economy to increase full-year revenues by an estimated 33 per cent, the industry's representative body said yesterday.

The National Association of Software Services Companies said total IT sector revenue, excluding hardware, would be $52bn for the year to March, of which $40.3bn would be from outsourcing services to other countries.

"While we are optimistic for the future, we need to be vigilant about how things are progressing," said Som Mittal, Nasscom president.

India's IT outsourcing sector, one of the pillars of its recent economic boom, is coming under increasing pressure from domestic wage inflation, higher real estate costs and a stronger rupee.

The industry, which provides services from managing a client's computer systems to processing a foreign bank's mortgage applications, is bracing for a slowdown in its main customer base, the US financial sector.

But Mr Mittal said India's outsourcing industry was holding up well and was on track to meet its forecasts of $60bn in software and services export revenue by 2010.

Are you sure?? Cool man....IT is proving to be more resilient than I expected!

 

[Bushroda]

India's new status symbol: a nation hits the bottle
As India's economy grows, the middle class is hunting for the latest ways to flaunt its affluence. Andrew Buncombe reports from Delhi on the growing popularity of the grape in a nation more famous for its tea


A guest sips wine at the Chateau Indage Chantilli wine festival in Mumbai in 2005

Andrew Buncombe
Independent, UK
Tuesday, 12 February 2008

By the flickering light of the restaurant's candles, suspicious particles seemed to be floating in the wine the waiter had just poured. It was hardly an auspicious start to the evening.

But in an instant came the explanation. There was nothing wrong with the wine; these were pure flakes of 24-carat gold added to the Californian chardonnay by the manufacturer simply for additional "wow factor". And it worked. The group of well-dressed men and women laughed and smiled and lifted their glasses towards the light, better to see the wine sparkle.

In India, wine is being drunk as never before. This year, as for the past half-dozen years, sales are expected to increase by at least 35 per cent and perhaps even more. Partly fuelled by India's newly buoyant consumerism and partly by the increasing numbers of people travelling abroad for business or holidays, wine has rapidly become the latest symbol of affluence and supposed sophistication for the country's newly wealthy middle-classes. Like carrying the right handbag or driving an elegant car, nothing says "I've arrived" better than to be seen swirling a glass of wine.

Of course, there are plenty of people who actually enjoy the stuff. Across the country, wine clubs are being set up, tastings are being organised by some of the world's leading producers and India's own wine industry is starting to make a handful of vintages that can compete with international competition. In the past decade, the number of Indian vineyards has grown from no more than half a dozen to about 50, concentrated mainly in the Nashik region of Maharastra, 120 miles from Mumbai.

"The wine market is booming," said Kapil Grover, owner of Grover Vineyards, one India's oldest and most respected producers, whose French-imported vines grow at elevation at Nandi Hills near Bangalore in southern India. "I'm 52 and think we're going to see 30 to 35 per cent growth for the rest of my lifetime."

In India, the history of wine can be traced to the culture's oldest religious writings. The Yarjuveda – one of the four Indian Vedas or "knowledges" written in Sanskrit and believed to date from several centuries BC – tells how the Hindu gods Indra and Varuna drank a mixture of wine and herbs known as Somrasa. One line of the Yarjuveda reads: "Oh plants, it was Indra and Varuna who first drank the Somrasa. Having gratified him, now I partake of the oblational food with Somrasa." Yet despite the support of the gods, those promoting the spread of a genuine wine culture in India today face many hurdles. In a country where an estimated 77 per cent of India's population of 1.15 billion people survive on perhaps as little as 25p a day and where the gap between the rich and poor is increasing, the market for wine operates at the top of the economic pyramid.

High taxes mean the cheapest bottle of ordinary or indifferent Indian wine costs 400 rupees (£5). An imported bottle is considerably more. A poor labourer wishing for an instant anaesthetic to the rigours of his daily life can buy a small bottle of industrially made rum or whisky for a handful of coins. And he doesn't have to worry about flakes of gold.

That well-heeled group enjoying the so-called "gold wine" on a recent evening at a peaceful restaurant in the south of Delhi were typical of the people behind the surge in the growth of wine sales and for whom importers are furiously stepping up efforts to market their products. Middle-aged professionals at the higher levels of their jobs, many had first tasted wine when travelling abroad. Returning to India they had joined the Delhi Wine Circle to learn more about this discovery.

"We like to travel," said Shravani Dang, head of corporate communications for a leading Indian industrial conglomerate and a member of the circle for the past three years. "We were in Rome and we learnt a bit about wine. It's good to learn things such as pairing food and wines," "We had drunk wine before ... a few years ago we had a case of South American wine and we had a cheese and wine party. Nobody knew anything about it. People would ask, 'When are you bringing out the real drinks?'"

Another member, a woman who described herself as "mid-level management professional" in her 30s but declined to give her name, said she had been in the club for two years. She enjoyed trying the different wines and meeting people who furnished interesting conversation. "I joined because it seemed like the club had interesting events," she said.

Anil and Reena Khana, said they had joined the club after their children sent them to France to celebrate their 30th wedding anniversary. They had found themselves touring the vineyards of Bordeaux and were instantly hooked. When they returned to India they signed up. "We wanted to learn more about wine and different wines. We just started to learn," said Mr Khana, a friendly business manager for a large Indian group. "It's really like a hobby."

The evening's dinner and tasting had started with the gold wines from the 100 Acres label in the Napa Valley, a chardonnay and viognier blend and a rosé, and rapidly progressed to several wines from the Australian producer Buller. There were two different chardonnays, a shiraz, a merlot and finally a 2005 cabernet merlot blend.

Members munched their way through mozzarella salad, a vegetable risotto, a series of main courses which included the rare delight – in Hindu-majority India – of seared beef tenderloin, and finished off with an apple tart. The evening concluded with a mulled red wine that did not appear to be the toast of the night.

Even among the country's wealthy set, wine still encounters opposition from those who prefer India's drink of choice - Scotch whisky. Tusha Gupta, an interior designer, said it was taking time to break down prejudice against wine. "You go to a party and people still don't like to have wine," she said. "People believe it's women who will have a glass. They'll have a cocktail or a whisky."

Indeed, despite the headline figure of 35 per cent year on year growth, India's wine consumption remains tiny. The country's sales of about 1.2 million cases of wine equates to just a teaspoon per person. At the other end of the scale, the thirsty French drink 55 litres per person every year. But a more telling comparison may be with China, so often listed with India as a superpower of the future. There the annual per capita consumption of wine is a glass. In terms of sales, China may also be ahead of its rival and neighbour.

Robert Joseph, the British wine writer and founder of the International Wine Challenge, said to be the world's biggest competition, said India was not progressing as quickly as some people might like to think. He said: "I've been running wine competitions in the emerging markets – Singapore, China, Japan, Thailand, Russia, Vietnam, etc – since 1997. Over that time, I've been watching India with great interest, and a certain degree of impatience. Compared to China, the development of a wine-drinking culture has been slow and India remains way behind in consumption."

Mr Joseph said improvements in India's wine production had also been made in the past five years, largely as a result of efforts by the Grover and Sula vineyards. But Indian wine producers retained a reverence to French labels when the new techniques they ought to be utilising were being developed by New World producers, in particular the Australians.

"Grover and Sula ... have produced world-class wines," he added. "But the best of these wineries' efforts are the exceptions to the rule. No other Indian winery is yet making wine that would stand comparison with successful efforts from Europe or the New World, though many Indian examples are far better than plenty of unsuccessful efforts from Europe."

But those in the trade in India are adamant that the tide is turning. Three years ago, publisher Reva Singh started a wine newsletter that was sent out to a small group of subscribers. Now Sommelier India, the country's only magazine devoted to wine, is a grown-up, bi-monthly glossy on sale at selected stores. Subscriptions for the magazine, which contains news and features on both Indian and imported wine, she says, are up by 25 per cent on last year. "Things are changing. People are becoming increasingly sophisticated with wine and want to learn more about it. When we started, people perceived drinking wine as being trendy. Many men preferred to drink Scotch. Now it has got to where people are asking questions."

Another optimist is Subash Arora, the irrepressibly enthusiastic president of the Delhi Wine Circle and publisher of an online newsletter. He is responsible for the 20 or so wine dinners and tastings held by the club every year. Mr Arora is more than aware of the challenge he faces. He knows the sale of whisky and beer outstrip that of wine more than a hundred-fold; he knows too that wine is a product only a tiny fraction of Indians could ever hope to afford.

And yet he is convinced that the momentum is on his side. At the recent tasting in Delhi, as people began to wander away, Mr Arora lingered to explain more about his enthusiasm. Standing with a half-glass of ruby-coloured Australian wine, he said: "This is more than just my hobby, it's my passion."