Indian Economy - News & Updates - Archive

[Bushroda]

Indian IT outsourcers look ahead
But Nasscom still can't escape the present

By Richard Sykes
Silicon.com, UK
Thursday 14 February 2008

Indian outsourcing industry association Nasscom says it is focusing on the future. But that does not mean it can afford to ignore today's business issues, says Richard Sykes.

The Nasscom Leadership Forum is India's major annual gathering of the IT industry. This is my second visit - in February 2007 I learned that in this context leadership means Indian leadership of the wider world IT industry.

The event opened formally today, with a series of presentations by leading figures from the industry.

Already there is an underlying tension between the longer term, which is the focus of the day, and the shorter term - for a start the impact of a potential US recession that keeps creeping in.

2009 is Nasscom's 20th birthday. The young turks whose vision created Nasscom two decades ago are now the leaders of the businesses they built, including Infosys, TCS and HCL - all now global majors.

Ahead of the Leadership Forum, Nasscom released figures showing an expected 33 per cent growth in IT sector sales for the Indian industry to the end of March, to a total of $52bn - $40bn from exports of software and outsourcing services - and indicated all is on track for Nasscom's 2010 target of $60bn for exports of software and outsourcing services.

By 2010 the IT software and services sector will deliver 10 per cent of India's GDP. But that success emphasises how much of the Indian population still remains at the margin, barely registering on the conventional measures of GDP.

Still, Nandan Nilekani, co-chairman of Infosys, listed the impressive ways that technology has already transformed contemporary India. For example voting in elections is fully electronic throughout the country, financial services and capital markets are of a high quality and there is a nationwide railway reservations system in place that works.

He went on to set out an agenda for the coming decade that included a national facility for registering land, a unified system for identifying each Indian citizen electronically, and distribution channels that would reach every citizen, even in the most remote rural areas.

And APJ Abdul Kalam, the former president of India, set a vision of India's transformation from a global software powerhouse to a global knowledge systems powerhouse, at the heart of a global knowledge network devoted to driving the non-linear economic growth required to end global poverty within a generation.

And yet. A panel of three business leaders, Accenture COO Steve Rohleder, Satyam founder Ramalinga Raju and Cisco chief globalisation officer Wim Elfrink, were far more focused on the issues of today: performance delivery in turbulent markets, tackling issues of talent shortage and development and working with a genuinely global mindset.

The strong positioning of India in the global economy was articulated endlessly - but so was the reality of working with today's very real business challenges.

 

[Bushroda]

A 'Little Japan' on 100 sq km in Gujarat
14 Feb 2008, 0128 hrs IST,Rajiv Shah,TNN

GANDHINAGAR: A 'mini-Japan' may take shape in Gujarat soon. A high-level business delegation from the Japanese External Trade Organisation (JETRO), which visited Gujarat last week, has asked the state government to provide a vast area of 100 square kilometres, where the Japanese could build their own township.

The land has been sought along the ambitious Delhi-Mumbai Industrial Corridor which the Japanese government is helping to build.

"We have given them maps of the areas we can offer, so that they can have a closer look," a senior government official said after a meeting with nearly 40 top business executives who formed part of the delegation looking for opportunities along the DMIC.

The request to provide land for an exclusive Japanese industrial township came from JETRO vice-executive chairman Sunichi Yamamoto. The idea first cropped up during Chief Minister Narendra Modi's visit to Japan in April 2007.

Now, it has been left to the Gujarat Industrial Development Corporation (GIDC) to work out details of the township with JETRO. The Japanese will return soon with a finalised location. Major industries keen to set up their offices in the township include Toshiba, Sumitomo, Chisso, Fujitrans.

The township will be primarily industrial and complete with residential complexes, medical, health and recreation facilities, restaurants, educational institutions. "Japanese companies will set up base here and will build the required infrastructure as per Japanese standards and requirements," the official said.

The official further said there is a tendency among Japanese to live in a cluster and feel at home wherever they are in the world. A similar project had been taken up in Thailand which has proved to be a successful model. The aim would be to give families of Japanese executives and workers a distinct flavour so that they don’t miss the environment back home.

The township will come up in any of the special investment regions' (SIRs) corridors proposed for development in the DMIC - Ahmedabad-Dholera, Ankleshwar-Vadodara, Dahej-Bharuch and Mehsana-Palanpur.

 

[Bushroda]

Tata: Master of the Gentle Approach
The Indian giant has found a way to acquire companies across the globe—and still tread lightly

by Manjeet Kripalani
Businessweek

Tata¹s managers at the Tata Daewoo truck facility in Gunsan, South Korea Sungsu Cho / Atlas Press

Ravi Kant was shocked. As head of commercial vehicles at India's Tata Motors (TTM), Kant had traveled to the Korean port city of Gunsan to examine the failing Daewoo conglomerate's truck division, which was being auctioned. When Kant asked a midlevel Daewoo manager which bidder he preferred, the Korean replied that a European suitor would best secure his company's future. "I realized we had to change our entire strategy," Kant recalls, "and tell the Koreans what Tata was about."

Kant quickly put together a massive public-relations effort: Tata executives were enrolled in Korean language classes, company brochures were translated into Korean, and Tata began making presentations to employees, the local auto association chief, the mayor of Gunsan, officials in Seoul, even Korea's Prime Minister. If Tata were chosen, Kant's team explained, it would preserve jobs, build Daewoo into a major exporter, and blend the outfit seamlessly with the parent company. "Tata had done its homework in everything needed to do business here," says Chae Kwang Ok, chief executive of Tata Daewoo. The Indians won the auction, paying $102 million.
Americans often associate takeovers with layoffs and factory closings. Tata, India's premier industrial group, with an expected $50 billion in sales this year, has a different way to merge—more strategic partner than vulture capitalist.

It has applied this approach to $18 billion in overseas deals since 2000, when it acquired Tetley Tea for $400 million. After buying British and Italian engineering and design houses, tony American hotels, Asian and European steelmakers, and software companies around the globe, Tata now has 333,000 employees worldwide, 26% of them outside India. In the latest move, Tata Chemicals on Jan. 31 bought Wyoming's General Chemical Industrial Products, a leading producer of soda ash. And Tata is the front-runner in the bidding to buy Ford Motor's (F) Jaguar-Rover (F) operations for an estimated $1 billion.

In all its deals, Tata has been careful to signal its respect for workers. While it chooses its targets carefully and doesn't do a lot of bottom-fishing, Tata is nonetheless unusual in that it hasn't laid off any workers or shuttered any facilities following its overseas acquisitions (though it has had layoffs at home in the past decade). "Tata buys companies overseas not to reduce costs but to improve [its own] capabilities," says Arun Maira, Boston Consulting Group's chairman in India. And Tata's Indian background has given it plenty of experience in managing a diverse workforce. Its employees in India come from various castes, religions, and ethnic origins and speak any of dozens of languages or dialects.

With its overseas acquisitions, Tata typically leaves executives in place. Instead of dispatching legions of Indians to the new company, Tata sets up a joint management board, which decides on issues ranging from growth targets to the development of new talent. Working groups find common goals, and managers of the acquired company are asked to help smooth out any cultural differences. This approach takes time, says Philippe Varin, chief executive of Corus, which Tata Steel bought for $12 billion last year. But it allows Tata to stay focused on bigger strategic issues "without sweating the small stuff," Varin says.

At Daewoo, Tata knew not to act like an occupation force. The company formed a joint board of directors, and Daewoo CEO Chae was given the freedom to keep running the business his way. Kant wanted two Tata executives to act as advisers. Chae welcomed them but insisted on incorporating them into his management team, with one caveat for the Indians: They had to shave their mustaches, as Koreans preferred a "clean" look.

The Indians helped devise a strategy to expand Daewoo's product line and boost exports. "It's turned out to be a win-win situation," says Choi Jai Choon, a union leader there. While the company had been largely focused on its domestic market, the new Tata Daewoo accounts for two-thirds of Korea's heavy truck exports, up from 20% three years ago. Sales are expected to hit $670 million for the year ending in March—more than double their level before the takeover. That success, says Kim Ki Chan, an auto industry specialist at the Catholic University of Korea, can be attributed to Tata's capital injection of $176 million, as well as its hands-off approach to the company. "It would have been difficult to find a better suitor than Tata," says Kim.

Tata's unique shareholder structure makes it easier for the group to tread lightly. Since its founding in 1868, Tata has been controlled by charitable trusts. Today, they own 66% of parent Tata Sons' shares and aren't as focused on short-term gains as most investors. The trusts, says R.K. Krishna Kumar, a director with Tata Sons, have long insulated employees "from the greed that is sweeping the corporate world." As the company gets more deeply enmeshed in the global economy, that gentility will be put to the test. Says Harvard Business School professor Tarun Khanna: "There's a different kind of rough-and-tumble to competitive pressures outside of India."

With Moon Ihlwan in Gunsan

 

[Neo]

India aims to sustain 9 percent economic growth​

NEW DELHI: India can sustain economic growth of 9 percent despite a possible global slowdown and keep inflation under control, the prime minister said on Friday, as data showed a marginal slowdown in wholesale price inflation.

Asia’s third-largest economy is estimated to expand 8.7 percent this fiscal year, moderating from 9.6 percent in 2006-07, as authorities keep interest rates firm to stem price pressures.

“An important policy stance we have adopted to ensure that growth is more inclusive has been to keep inflation under check,” Manmohan Singh told a business conference on Friday, adding the economy was likely to expand by close to 9 percent this fiscal.

Inflation has been inching up in recent weeks and has now breached 4 percent, much to the discomfort of the central bank, which wants the rate to head lower.

Data released on Friday showed India’s wholesale price index rose 4.07 percent in the 12 months to Feb. 2, a shade below the previous week’s rise of 4.11 percent. The central bank aims to keep it fewer than 5 percent.

The central bank’s deputy governor, Rakesh Mohan, said on Thursday inflation was still high compared to global levels and needed to be reduced further, but authorities have their work cut out with high food and energy prices exerting pressure. On Thursday, the government raised auto fuel prices by a modest 4 percent, enough analysts said to nudge up inflation and almost certainly rule out a cut in interest rates before the next review in April.

“We are concerned about core inflation, which bounced back above 4 percent after bottoming out over the last few weeks,” said Anubhuti Sahay, economist at Standard Chartered Bank in Mumbai.

“We see inflation inching up over the coming weeks as the oil price increases announced yesterday have a 10 basis-point direct and a 10 basis-point indirect impact on the inflation number.”

Singh said India would ensure the benefits of high growth trickled down to the poor, who must be protected from rising prices.

“Inflation is an iniquitous tax. It hurts the poor more than the rich,” the prime minister said.

He warned, however, there was a distinct possibility of a global economic slowdown as the effects of market turmoil and a downturn in the United States spread.

“We must be aware that we cannot be completely insulated from chilly global winds that may blow in our direction,” Singh said.

IMF chief Dominique Strauss-Kahn said in India this week that emerging economies were not immune to the crisis in financial markets and would feel its impact “sooner rather than later”.

While assuring industrialists of steps to help them offset the impact of slowing world growth, Singh said boosting farming was vital if overall expansion was to remain strong, and the government would rise spending to help farmers.

Daily Times - Leading News Resource of Pakistan

 

[Bushroda]

India, an emerging giant
Thanh Nien Daily, Vietnam
Saturday, February 16, 2008 14:10:37 Vietnam (GMT+07)

Despite a continuing rich-poor gap, India’s economy continues to boom led by large domestic firms.


Preparing for their roles in India’s quest to become a global power? Students at Lotus Valley school in a New Delhi suburb

Thanh Nien set out on a visit to India to find out what makes the South Asian giant tick.

In this effort, Thanh Nien was advised by a Vietnamese IT firm that has extensive ties with Indian partners.

The delegation, also comprising several IT executives, left in late January.

Unlike Thomas L. Friedman, who in his bestselling “The World Is Flat” seeks to find out why Indians are apparently depriving many Americans of their jobs, we were hoping merely to learn from the secrets of India’s success.

Our enthusiasm was, however, tested as soon as we landed in the Indian capital at midnight after a 10-hour journey.

New Delhi Airport turned out to be dilapidated and under renovation.

The cold weather – the temperature was 3 degrees Celsius – and the indifferent attitude of the airport personnel too came as a dampener.

Customs demanded a US$200 duty on a carton of food that only cost $500.

But they hastily let us go after we kicked up a ruckus.

En route to the hotel, we were again thinking about some dizzying statistics Friedman quotes in his book – the number of tax returns the Americans outsourced for processing to India jumped to 400,000 in 2005 from a mere 25,000 in 2003.

Our meeting with the Vietnamese ambassador, Vu Quang Diem, the day we landed too played a part in rejuvenating our eagerness to explore India.

Two Indias

India comprises two distinct parts.

There is the dark side with its rampant corruption and stark poverty; the bright side is the spectacular economic growth rate which has thrown up a 300 million-strong middle-class, despite a plethora of problems.

India’s economic growth rate of 9 percent last year was one of the world’s highest for a major economy.

The World Bank ranks India as one of the world’s 10 leading economies.

The country is also soon forecast to outpace China in terms of GDP growth, and overtake Japan in terms of economic size in 2032 and the US in 2050.

IT-oriented education, high teacher benchmarks

IT spearheads India’s education strategy and is the key to producing hundreds of thousands of “global citizens” every year.

Visiting Lotus Valley school, 20 km south of New Delhi, we realized that student-based teaching methods have played a vital role in developing children’s creativeness.

In addition to IT, the eclectic curriculum also has subjects like painting, music, dancing, yoga, and tennis.

When we expressed our surprise that a Master’s graduate was in charge of the fifth grade – something most Vietnamese postgraduates will sniff at – principal Madhu Chandra said her school only hired postgraduates up.

Such high benchmarks are, however, understandable.

Every year

India produces around three million university graduates, second only to China and the US Besides, 80,000 Indian students are studying in the US compared to only 60,000 from China.

Computer education got a big boost in the country after four formidable names, NIIT, Intel India, Microsoft, and State Bank of India, formed a strategic partnership to assist private sector schools with IT education.

NIIT, a global IT training giant, leads the way with its NIIT K-12 (Kindergarten to 12th standard) program that has content for major subjects like English, math, sciences, and social sciences.

NIIT says it has already developed 4,000 hours of content based on the school curriculum and plans to develop on it by training teachers and then students in IT-assisted education practices.

Vijay K Thadani, co-founder and CEO of NIIT, says, “The solution for software for IT-assisted computer education includes all basic subjects in the curriculum in four areas of computer-aided education - teaching, learning, experimentation, and examination.”

The K-12 program has been exported to China and other Asian countries.

The Home and The World

Ambassador Diem told us that India’s younger generations followed the philosophy espoused by writerpainter-philosopher Rabindranath Tagore in his acclaimed book Ghare-Baire (The Home and the World) and were always willing to share the secrets of success.

Not surprisingly, companies treated our delegation with hospitality and cordiality during the trip.

While visiting NIIT’s headquarters, we were surprised that all top executives came to meet us, receiving the delegation with great friendliness.

We discovered that Indian businesses do not do beer or wine or any other form of entertainment for guests during working hours.

They instead make the most of the time to discuss business.

But what made the biggest impression on us was the relentless quest by Indian firms to forge ahead in the face of massive difficulties.

An Indian IT firm told us that US giants like Microsoft and IBM were unable to conquer the Indian market because of the emergence of strong domestic firms.

In the private sector, a clutch of major companies have emerged to strut their stuff on the world stage.

Infosys, Tata, Birla, Essar, Jindal, Ranbaxy, and JK have all grown to become major investors abroad.

They have invested in the rail sector in Malaysia and explore for oil in Russia and Vietnam.

Recently, the Tata Group made headlines after acquiring the UK-based Corus steel firm at over $12 billion.

The government has set a target of becoming the world’s software hub by 2010 by attracting IT majors to Bangalore and other cities.

Rubbing shoulders with the IT sector are others like the nuclear and biotechnology industries, which too are thriving.

The government subsidizes education and agriculture and offers protection for farmers against cheap imports.

The aviation industry has opened its doors to the private sector, including foreign.

The country has 126 airports, including 11 international.

Private firms are pouring money into building new airports in Bangalore and Hyderabad.

Ambassador Diem attributed India’s achievements to the across-the-board economic reform it had launched in 1991 that envisaged developing an open economy focused mainly on the IT and service sectors.

On the flight back to Vietnam, we kept thinking about Vietnamese businesses who are also keen to make a mark globally.

The question is, is the government truly rolling out the red carpet for them? Lessons drawn from newly-emerged countries like India can be handy in assessing this.

VIETNAM, INDIA DRAW CLOSER

■ India and Vietnam are hopeful of achieving bilateral trade of US$2 billion by 2010, even as New Delhi wishes to join hands with Vietnam in the hydrocarbon and power sectors.

■ During a visit to India last July, Vietnamese Prime Minister Nguyen Tan Dung called for expanding bilateral trade and economic ties, pledging Vietnam would create a conducive investment environment for Indian businesses.

■ He added that Vietnam was seeking to elevate the traditional relationship with India to a comprehensive strategic partnership in science, technology and education.

 

[Spring Onion]

Terrorists manipulating stock markets, suspects BJPAds By Google Press Trust Of India
New Delhi, February 17, 2008
First Published: 18:28 IST(17/2/2008)
Last Updated: 18:31 IST(17/2/2008)


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Viewing the recent fluctuations in the Sensex with concern, BJP suspects that some anti-national elements, including terrorists, may be manipulating the stock markets and wants a probe to ascertain the antecedents of investors.

Party President Rajnath Singh said his concern stems from the fact that up to 40 per cent of investments in the stock markets were by the Foreign Institutional Investors (FIIs) through PN (Participatory Notes) system.

"What kind of money, whose money, what colour is it? There is no information," Singh told PTI in an interview while referring to the recent crash in the stock market leading to losses worth crores of rupees to small investors.

"This has been happening for several years. There should be some system to identify whose money is being invested," he said, favouring a "tough law" to monitor these investments.

His views echo the apprehensions expressed by National Security Advisor M K Narayanan about a year ago that terrorists might be pumping money with a design to manipulate the stock markets.

Senior BJP leader L K Advani had also last week noted that there can be no place for "manipulation, malpractices and misuse" of the system by any of the players of the capital market and demanded that offenders must be punished.

Terrorists manipulating stock markets, suspects BJP- Hindustan Times'

 

[Neo]

India’s IT sector says it can ride out global slowdown​

MUMBAI: India’s top technology and outsourcing body said it is confident it can ride out the challenge of a stronger rupee and a global economic slowdown as it wrapped up its annual meeting here.

India’s flagship outsourcing industry is grappling with a rupee that rose 12 percent last year, lowering the local equivalent of every dollar earned, and a potential recession in its main market, the United States.

“The demand we still feel is strong,” NASSCOM president Som Mittal said Friday in the nation’s financial capital Mumbai, where the three-day meeting drew IT players from India and around the world.

The sector expects to meet or even exceed its software export target of $60 billion and overall software and services revenue goal of $73 to $75 billion by 2010, Mittal said in an interview.

India’s IT sector with its skilled, low-cost work force that has planted the country on the global business map, is keeping its fingers crossed that the international slowdown will turn out to be a blessing.

It is hoping the financial turmoil in the US and elsewhere could drive businesses to farm out more work to cheaper Indian firms even as they pare overall technology budgets.

Mittal said past slowdowns had led companies to outsource more due to cost pressures.

He said the rupee’s rapid appreciation against the dollar and pressure on talent availability, a fierce war for talent has driven up wages and staff turnover, had opt pressure on margins.

However, India’s IT’s sector, which accounts for 5.5 percent of gross domestic product, up from just 1.2 a decade ago, has shown sustained ability to take out costs, Mittal said. And an ageing population in the West is creating new demands for outsourcing services, which will continue to drive demand even in a slowdown, he added. The industry has been seeking to diversify its markets to offset its reliance on the US, which remains the largest outlet for India’s software, sector taking 61 percent of its exports. Europe-bound exports, however, have climbed 55 percent since 2004.

Britain now accounts for 18 percent of India’s software services market and continental Europe takes 12 percent.

The IT sector is also looking at India’s burgeoning domestic market fuelled by economic growth of around nine percent.

Revenues from the domestic IT market, including hardware, are estimated to reach $23.2 billion in the year ending March 31, 2008, up 43 percent from the previous year.

Indian IT and business process outsourcing (BPO) revenues are seen growing by over 33 percent to reach 64 billion dollars in the current financial year.

“We always looked outward — now there are also many domestic opportunities,” said Mittal.

Daily Times - Leading News Resource of Pakistan

 

[Bushroda]

India shows how ICT can help economy
Kumar Parakala
Australian IT, Australia
February 19, 2008

IF Australia is serious about taking advantage of technology to drive economic growth, we need to take a serious look at India, which offers a great model of how the ICT sector can be an economic powerhouse.

India currently boasts the fastest growing technology market in the world, according to a recent study by Gartner. The research firm predicts that India's ICT industry will swell by 25-30 per cent during 2008, thanks to "unabated growth in the IT services market in the export sector coupled with significant IT services growth in the domestic market".

India's position as the leading global business process outsourcer and the strong growth in domestic infrastructure offer significant opportunities for Australian ICT firms interested in developing international relationships.

Last week's NASSCOM India Leadership Forum attracted over a dozen Australian organisations to Mumbai to showcase their offerings and network with potential partners.

I had the privilege of addressing the India and Australia session, which was designed to introduce the Australian delegation and facilitate opportunities for networking and international co-operation.

I believe India has been so successful because of its outward looking, global focus, strategic planning and large-scale collaboration between government and the ICT sector to galvanise the growth of specific industry sectors.

Australian ICT companies wanting to emulate India's success must also start thinking globally when putting together business plans, designing products and services, and looking for business partners, suppliers and clients.

Not just because the opportunities and rewards are great, but also because without taking this step, we risk being left behind.

But it's not just companies that must broaden their outlook.

ICT professionals must take a global approach when it comes to planning their career.

Increasingly, companies operating in the global arena want professionals with international experience, particularly people who are familiar with the markets and cultures with which they want to do business.

There is already a large movement of qualified ICT workers between Australia and India, with the ACS playing a key role in enabling this exchange.

We already count many Indian ICT professionals among our members and this number is increasing at a steady rate as collaboration and trade between India and Australia continues to grow. As globalisation gathers pace and encompasses more and more nations, there is a pressing need for an internationally relevant set of benchmark criteria for trusted technology and trustworthy ICT.

The ACS has accepted this challenge and is working with other international ICT professional associations to establish global professional standards for ICT professionals.

This will result in an accreditation process with recognition of qualifications, professionalism and ethical standards for ICT professionals across the globe.

It is designed to facilitate the mobility of skills, enable professionals to gain international experience, and encourage greater flexibility and diversity in the global ICT workforce.

While this is a lofty goal, it's crucial for the growth and development of our industry.

Global accreditation of ICT professionals will help deliver the professional workforce needed to deliver the productivity and other benefits that India and other countries will be looking for in coming years.

India is already a key partner for Australia, accounting for around 50 per cent of our services exports and delivering more ICT-enabled services than any other nation.

Clearly, this is a partnership that offers enormous benefits for both countries, and one that we are keen to see flourish in coming years.

With the Australian Government's strong commitment to innovation, we are encouraging Indian companies to consider establishing innovation or R&D centres in Australia, which will improve access to in-demand skills and provide employment for Australian professionals.

We are hoping that the Prime Minister Kevin Rudd's upcoming 20/20 vision summit will establish ICT as an integral part of the Government's economic strategy and a key driver of Australia's future prosperity, opening the way for closer alliances and more lucrative opportunities in South-East Asia and further abroad.

Kumar Parakala is ACS national president and global chief operating officer of KPMG's IT advisory practice.

 

[Bushroda]

Railways to earmark Rs9,000 cr
Bracing for the imminent recommendations of the Sixth Pay Commission, the Indian Railways is setting aside Rs9,000 crore

Sangeeta Singh, Utpal Bhaskar and K.P. Narayana Kumar
Livemint

New Delhi: Bracing for the imminent recommendations of the Sixth Pay Commission, the Indian Railways, the largest employer in India, is setting aside a little more than one-third of its annual wage bill of Rs25,000 crore in the 2008-09 Railway Budget.

Officials close to the development, who did not wish to be identified, said the railways is setting aside Rs9,000 crore. This includes payments towards arrears, since the recommendations will come into effect from 1 April 2007. It has made this assessment based on internal calculations that have been put together in consultations with the finance ministry.

This was disclosed by officials, who have viewed internal communication between the railway ministry, finance ministry and the Planning Commission, but did not wish to be identified.

“We can make a clear assessment on the burden only after the pay commission makes an announcement,’ said V.N. Mathur, member (traffic) of the Railway Board, while declining to comment on the specific numbers.

Finance commissioner Sudha Chaube could not be reached for comments.

The Sixth Pay Commission was set up to overhaul the salaries of all government officials and bring them in line with “the demands of the emerging global economic scenario”.

According to the same railway ministry officials, the annual increase in wage bill would be around Rs3,000 crore. The railways has some 1.4 million employees, down from around 1.6 million in the early 1990s.

Last year, the railways’ cash surplus after deducting for costs, including dividends, worked out to Rs16,000 crore.

This year, with freight performance on target, the railways is projecting that the surplus would be higher at Rs21,000 crore in 2008-09.

Therefore officials argue that the railways would be in a position to absorb the additional burden resulting out of the recommendations of the pay commission.

Peeyush Naidu, principal consultant, PricewaterhouseCoopers, said, “Railways has been enjoying a buoyant economy. In future also it will make more money on account of (the proposed) dedicated freight corridor. And income accruals on account of this project will help it offset expenditure arising out of additional wage burden.”

The railways had demanded Rs13,250 crore as gross budgetary support for 2008-09. The likely allocation, however, is going to be Rs7,100 crore, a 3% increase over 2007-08.

A planning commission officer said the “railways can finance it’s needs through more borrowings.”

“The railways does face some strain whenever the pay commission revision happens. But right now the finances of the railways is better off and therefore it is in a better position to absorb the burden,” said Akhileshwar Sahai, president, government and multilateral advisory services, Feedback Ventures.

 

[Bushroda]

India's Fab City investment to top $7 billion as focus moves to solar
Sufia Tippu
EE Times Europe
02/18/2008 9:49 AM EST

BENGALURU, India — The Indian government has approved an additional five companies to take part in projects in Fab City, a proposed semiconductor manufacturing location near Hyderabad. This would take the total investment in Fab City to $7 billion, Minister of State for Commerce, Jairam Ramesh said here Monday (Feb. 18), speaking at the two-day India Semiconductor Association summit.

The focus of the latest investments is on solar energy conversion he said but added that the Indian government has many further projects either with in-principle approval or under considerations which could bring further investments to Fab City.

Fab City, set up in 2006 to encourage the genesis of chip manufacturing in India, is now betting big on photovoltaic products. The five latest projects are all focused on the solar energy business and about half of the proposed projects for Fab City are now in the photovoltaic area.

The five projects are the India-based Titan Energy Systems Ltd. proposing an investment of $50 million in solar photovoltaic cells; NanoTech Silicon India with an investment of $2.1 billion to manufacture thin film solar cell fab; India-based XL Telecom & Energy Ltd., which is investing $76.25 million to set up a unit for solar cells and solar modules; KSK Energy Ventures Ltd. (Hyderabad, India) a venture capital fund that plans to set up a unit for solar photovoltaic panels with an investment of $70.25 million; and the Indian subsidiary of the Canada-based Embedded IT Solutions is planning to set up a PCB manufacturing project with an investment of $5 million.

Two earlier Fab City announcements were the $3 billion SemIndia project to create a world-class wafer fab and the Hyderabad-based Solar Semiconductor Ltd. which said it would be investing $1.1 billion over a 10-year period. The first phase is set to cover manufacture of solar cells and solar panels. The second phase is set to focus on solar thin film technology while the third would scale up manufacturing capacity to one gigawatt per annum.

The Indian government has also given an in-principle approval to five other projects worth a further investment of $7 billion. Yet another five proposals, also worth between $6 billion and $7 billion are under active consideration, Ramesh said during the opening of the ISA summit.

In-principle allotments have been given to five other Indian companies: Chandradeep Solar for an R&D unit, Neotech Solutions, Photon Energy Systems, Surana Ventures and RamTerra Solar Pvt. Ltd. for several photovoltaic modules unit.
Among other companies that are under consideration but which are yet to finalize their location are the Indian consumer electronics giant, Videocon which is looking at an investment of $250 million and Hindustan Semiconductor Manufacturing Company (HSMC), which has partnered with Infineon Technologies AG (Munich, Germany) to set up a semiconductor manufacturing plant.

The proposed investment of $1 billion for the HSMC unit would focus on chipsets for mobile phones, direct to home TV set top boxes, automotive and smart cards, The company has yet to finalize the location where it will build a wafer fab.

Among other companies with an interest in Fab City is Moser Baer, a maker of optical storage devices that has joined forces with Allied Materials Inc. for photovoltaic cells and has set up a manufacturing unit at Sriperumbudur on the outskirts of the southern port city of Chennai. Given the momentum behind semiconductor manufacturing Air Liquide of France has proposed a facility for the supply of gases and chemicals while BOC announced plans to set up a chemical plant in Hyderabad last year.

"Setting up a plant for a wrong reason, say just because the money is available, will not work," said Malcolm Penn, CEO of analysis firm Future Horizons (Sevenoaks, England). He said some of the proposals would work out and some would not. "You have to set up a plant for the right reasons — have a workable business plan in place and check out all the challenges in terms of manpower, infrastructure and the market. It should not be merely a sweatshop  set here today because it is cheaper to do it here and then move on  but a plant fully integrated into your system." he added.

 

[Neo]

India eases tax burden on exporters​

NEW DELHI, Feb 19: India on Tuesday extended tax breaks to exporters to cover the transport and storage of goods, the finance ministry said, in a bid to offset losses incurred due to a rise in the value of the rupee.

The move comes a week ahead of the annual budget and after export growth slowed to 16 per cent in December from a year ago, sharply lower than annual expansion of 27pc in November.

On Tuesday, the finance ministry said it would refund exporters taxes paid on moving goods from inland depots to sea ports and airports, and those incurred in storing goods at warehouses.

Taxes will also be refunded when exporters use courier services to send documents abroad, it said in a statement.—Reuters

India eases tax burden on exporters -DAWN - Business; February 20, 2008

 

[Neo]

India may top in salary hikes this year​

NEW DELHI, Feb 19: India is likely to top salary hikes in Asia for a fifth year in 2008, but companies in India are finding it hard to retain talent, a new survey said on Tuesday.

Indian salaries are expected to rise by an average 15.2 per cent in 2008 after rising 15.1 per cent last year, according to an annual survey conducted by global human resource company Hewitt Associates. Real estate and energy companies were seen offering the biggest hikes of 25 per cent and 17.5 per cent respectively.

China is expected to come in second with projected raises of about 8.5 per cent, followed by the Philippines with 8.3 per cent, the survey said.

However, the high salary growth is fuelled by a talent demand and supply mismatch, it said.

“Employees are increasingly looking for great career opportunities and are actively being pursued by other organisations,” said Sandeep Choudhury, a Hewitt executive. “Organisations are using compensation as a strategic lever.”

But the salary increases in India were expected to stabilise in the 9-10 per cent range by 2012, Hewitt Associates said.

The survey measured actual and projected increases in salaries of individuals in the private sector.

It examined compensation practices in five specific job categories executives, managers, midlevel staff, clerks and manual workers.

The survey covered 2,000 Asian companies, 540 of which are in India. The survey did not provide a margin of error.

The companies surveyed in India included foreign-owned, locally owned and joint venture companies across 19 industries.

The survey also showed that the traditional gap between salary hikes offered by locally owned and multinational companies had closed with Indian private sector companies projected to raise salaries by 15.5 per cent in 2008 compared with 14.9 per cent offered by multinationals, the survey added.

India’s booming economy has averaged nearly 8.5 per cent growth in the past five years, but more than 300 million of its nearly 1.1 billion people still live on less than a dollar a day and nearly twice that number struggle for access to basic facilities such as drinking water, education and health care.

Junior managers and midlevel staff received the biggest pay hikes in 2007, a trend likely to continue in 2008, the survey said.

The survey included companies in Australia, China, Hong Kong, India, Japan, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand.—AP

India may top in salary hikes this year -DAWN - Business; February 20, 2008

 

[Bushroda]

Surging Indian economy puts bat to ball, and hits six after six
Daniel Flitton
The Age, Australia
February 21, 2008

IMAGINE being an umpire on the next cricket tour in India. Think of the intense pressure the moment before raising your finger, hearing the crowd bay in the stands, knowing — perhaps even fearing — there will be a challenge by India's powerful cricket board to any controversial decision.

India is now the superpower of world cricket. In market terms, India has a hat-trick: a huge population of eager supporters, cashed-up corporations to pay out big sponsorship dollars, and a rapidly growing media industry. All this brings enormous influence.

The country's new Twenty20 Premier League has already generated a billion-dollar TV deal and attracted the world's best players — all without a ball being bowled.

It's clear that India can afford to set its own terms and is willing to push other countries around to get its way. This assertive cricket diplomacy points to a wider story about Delhi's approach to international politics and trade, a telling example of a country ginned up and ready to take on the world.

India's economy is surging. Only China is posting a faster growth rate. The odds are shortening in financial circles for bets that India will soon overtake its neighbour.

Regardless, the signs of India's wealth are already obvious. Take the booming high-technology industry — Microsoft has one of its largest factories in Hyderabad — and an expanding middle class that already dwarfs the entire population of the United States. Slow and bumpy train rides once dominated transport across the country, but now people are flying on a clutch of new airlines, with domestic air travel up 25% in a year.

Improvements at home give India a new confidence abroad. Only a few years ago, it would have been hard to imagine India not being dragged into the current woes in rival Pakistan. Yet after 60 years of bitter suspicion, India's attention is elsewhere.

Delhi is determined to be seen as a responsible member of the global community. Even a series of deadly terrorist attacks linked to Pakistani militants in recent years has not swayed India from a policy of restraint.

In international negotiations, Delhi has set out to raise its voice above the din. Until recently, the 151-member World Trade Organisation was directed, almost exclusively, by Europe and North America. But now, India has pushed into the fabled "Green Room", the closed-door meetings held in the back office, where an exclusive group of nations bargain together on the tough issues. Delhi's support is seen as crucial to any future free trade proposal, along with that of the US, European Union and Brazil.

India is also chasing a permanent seat on the United Nations Security Council, a talisman for the world's great powers, and is seeking support, especially in multilateral forums such as the G20 grouping, which is where Australia comes in.

Foreign Minister Stephen Smith has made closer ties with India a priority — a shift begun by the Howard government, but one that he appears especially keen to accelerate.

India is a fast-growing market for Australian goods and services, increasing at more than 30% a year. But there is a political imperative too. India offers Smith the chance to cultivate an important bilateral relationship without constantly checking back with his boss. Kevin Rudd's passion for international relations is well known — and so are his favourites.

Rudd has already described preserving Australia's close ties with the US as core business for the Prime Minister; Indonesia is another special case; while the Mandarin-speaking former diplomat is also expected to keep a careful watch over relations with Beijing.

Not that Rudd will ignore India. Again, there is a political reason at play. Rudd needs to pre-empt any accusations he is too obsessed with China, especially with continued concern over Beijing's human rights record and corrupt business practices.

Earlier this week, Rudd was asked about his plans to visit China. He said he hoped to go in the next few months. But either Rudd was distracted, or he deliberately threw in an otherwise off-topic reference to India. "China, and India, are core parts of Australia's economic future," he said.

It's safe to expect both these Asian giants will continue to be paired up in Labor's future foreign policy declarations.

But the new Government has stumbled in its early bid to build stronger ties with India, tripping up on the difficult question of uranium exports.

Despite Delhi's new-found confidence, the country is still beset by myriad problems. Not least is the need for a reliable energy supply to fuel its economic growth.

Smith decided to reverse a Howard era agreement to export Australian uranium to fire India's nuclear reactors, saying that unless India joins the Non-Proliferation Treaty, which would mean surrendering its prized nuclear weapons, it can forget access to Australian uranium.

But Smith has left himself open to accusations of a double-standard. If the Government truly objected on principle to India accessing uranium, Australia could block international sales by other countries — an option open to Canberra as a member of the Nuclear Suppliers Group, which sets global export controls for nuclear materials.

So far, Smith has left open the question of allowing international exports. But the time could soon come for a decision.

India and Russia are edging closer to a multibillion-dollar nuclear deal. If Australia, as one of the international umpires, judges that one out, India will appeal — and loudly.

Daniel Flitton is diplomatic editor.

 

[Bushroda]

Memo from India - Day 4
Roger Cranville
Pittsburgh Business Times
Tuesday, February 19, 2008 - 9:07 AM EST

A delegation from the Pittsburgh regional business, civic and economic development community has embarked on a weeklong business trade mission to India organized by the Pittsburgh Regional Alliance, an affiliate of the Allegheny Conference on Community Development. While in India, PRA Senior Vice President of Global Marketing Roger Cranville is writing this mission diary for the Pittsburgh Business Times.

This dispatch was filed Friday, Feb. 15

"So," we asked the concierge, "how long to the Bangalore Club?" Just around the corner, he said. Better leave half an hour, we thought. One lasting memory of this (and previous trips) is the traffic. It is without doubt, in urban areas, tumultuous. On to the Bangalore Club to meet up with Feedback Consulting, a market research-based strategy team that works with companies, regions, and countries to provide market data to guide strategic market entry decisions.

We arrived at the club's entrance through its manicured gardens, neatly trimmed foliage and well-lit walls. The club's white, colonial-style buildings seemed like turning the clock back by a century. It is, indeed, a walled estate with many buildings dating back to the colonial era. A tropical garden version of the Duquesne Club, methinks!

By now many of the messages we are hearing are being repeated at most meetings. Feedback's insights into the India of today and the India of the future are no less optimistic than those of Kennametal, iGate, KPMG and Infosys. Like all of our meetings, we were greeted graciously by five senior staff of Feedback. Our host reminded us that India and China are going to be 33 percent of the world's gross domestic product within the next 20 (plus or minus 10) years. Since 1985, Feedback has been engaged 1,800 times in deals amounting to about $5 billion. They project more public private partnerships (PPPs), especially in the massive infrastructure market of the future.

If your company wants to "do India," they recommend the following guidelines:

• you must have top management support;
  
• prepare for a long sales cycle;
  
• price must be market-appropriate;
  
• product or service may need local content; and
  
• in all dealings, use a "trust and verify" model with strategic partners or business deals.

We were reminded that there is a "global war for talent" and a "human capital challenge." I believe they were relating this to India's need, as the country delivers 10 million people per year into the work force. They then mentioned that India's graduates are in demand worldwide, often leaving India and then returning -- with global experience -- some years later to enjoy the fruits of the burgeoning Indian economy. But not all of the jobs being created in India are in the IT and software engineering fields; India needs people across the job spectrum.

Discussions with Feedback ended with a final comment from our hosts, who said that, "the Pittsburgh region must make its case to Indian companies seeking to enter the U.S. market before other U.S. regions; competition is hot. "There are many Indian companies looking at the United States," they said. "Indian companies looking at the U.S. are mostly looking to do business with the U.S. government. Target Indian companies with the Pittsburgh proposition," they recommended.

"How do we find them?" we asked. "Hire Feedback Consulting," was the ready response.

Up to Mumbai in the morning to register for the Nasscom India Leadership Forum 2008 at the Grand (it is!) Hyatt Hotel. Leaving at 7 a.m., one of our delegates was sick and left in wretched condition in Bangalore. The group flew with Kingfisher (same company as the beer brewer) Airlines who, along with Jet Airways, provide absolutely excellent domestic some international air service. Full meals are provided on all flights, and service is exceptional. (It's also exceptional in aspiring China and Vietnam, too!)

The conference (this is the 16th year) overview states the theme clearly: "Thinking Big, Going Global." India is embracing the world, and the world is coming to India. Even as Indian organizations expand their business to all parts of the globe, the largest of international players are establishing an "offshore" presence in India to tap the great outsourcing opportunity. At the same time, the IT-BPO (Business Process Outsourcing) industry has emerged as a strong force and growth catalyst of the global economy.

Sessions at the forum included: India at 60 - Building a knowledge economy for growth; Building ICT trade in Asia Pacific; and Changing Focus - Shifting sights from America to Europe. For more on the conference and published papers and presentations check out nasscom.in.

It's been an incredible trip so far, and hard to believe it is coming to an end. We'll have much to discuss with our partners back home in the weeks, months and - yes, indeed - the years ahead.

 

[Bushroda]

Memo from India - Day 5
Roger Cranville, Pittsburgh Business Times
Pittsburgh Regional Alliance

A delegation from the Pittsburgh regional business, civic and economic development community took part in a weeklong business trade mission to India organized by the Pittsburgh Regional Alliance, an affiliate of the Allegheny Conference on Community Development. While in India, PRA Senior Vice President of Global Marketing Roger Cranville is writing this mission diary for the Pittsburgh Business Times.

This dispatch was filed Saturday, Feb. 16

The conference, based at the Grand Hyatt and not far from the domestic and international airport, is in the middle of a fairly desperate part of Mumbai (formerly Bombay). Slums and makeshift housing abound, buildings are derelict or in an incredible state of disrepair, and people live under road flyovers or beside the road. The people are destitute. Children play cricket and soccer, dogs roam the streets, three-wheel taxis are repaired by turning them over manually, and stores are ramshackle but open an apparent 24/7. I am sure these communities (and they are communities) are not members of the 2 percent that pay income tax. But they probably do contribute to the electrical leakage equation.

The conference continues to fuel insights and aspirations for delegates with three tracks: The Thought Leaders Conclave, The Global CIO Conclave and the Insights Conclave. Sessions include Global Leadership - IT as a competitive advantage; The innovation imperative; innovations for strategic outreach, and managing an increasingly diverse work force. The sessions, the speakers and the delegates are all about India in the future. It's interesting to see the groups from around the world attending the conference, including Pittsburgh, Nova Scotia, London, Egypt and Costa Rica. The sponsors list is a who's who of world corporate players.

Speakers are thought leaders from around the world and fully cognizant of India's future position in the world economic rankings. Toyota, Siemens, Barclays and Sony have provided their brightest and best to join panels or deliberate key topics that affect India and the world. The United States is represented by speakers from Cummins, Allstate Insurance, Wells Fargo, Fidelity and others.

While at the conference, we also met with Edelweiss, India Value Fund, Atherstone and KPMG. The first three are fund managers that invested their time in informing us of what they see as the major opportunities for the Pittsburgh region: infrastructure (no longer a surprise), with real estate development, road and rail development projected to be $110 billion; airports - $17 billion; sea ports - $18 billion; energy - $250 billion; and telecom - $25 billion, all by 2012.

KPMG has developed an India-U.S. corridor in part to respond to the investment needs of Indian client companies investing in the United States and the weak dollar, which is providing increased opportunities for U.S. investment by cash-rich Indian clients. KPMG sees major opportunities from mid-cap Indian companies seeking merger or acquisition opportunities in the United States.

The purpose of our trip was to introduce regional leaders from the Pittsburgh region to India and to explore the immense opportunity that exists here for companies back home. Following a visit to China by regional leaders from Pittsburgh last spring, the Pittsburgh Regional Alliance convened a private sector China Strategy Group. And as this Pittsburgh group in India met to discuss next steps, we concluded that the Pittsburgh region must have an India Strategy that includes business, health care and academia. Just some of the factors to consider as we develop that strategy include:

• valuable partners in India and in the Pittsburgh region (e.g. Feedback and KPMG);
  
• local actions to inform (and in some case change opinions of) Pittsburgh organizations on Opportunity India;
  
• actions to make Pittsburgh more open to diversity and overseas people and investments;
  
• activities in India to promote the Pittsburgh region and its value proposition to potential Indian investors; and
  
• mechanisms that enable more regional business leaders from southwestern Pennsylvania to visit India and do business there.
  
• Participants from this trip plan to meet with the China Strategy Group leadership to discuss synergies.

During the trip, the group has been gripped by a debate on how to engage the region with India and a debate over the U.S. immigration H1b visa cap of 65,000, which is preventing U.S. companies from hiring talent from abroad, thus severely handicapping their global competitiveness.

Global companies need global talent to be competitive. Consider the positive impact of Indians on the information revolution since the early '90s. Indians were involved in 40 percent of the growth experienced in Silicon Valley.

It became very apparent to this group that restricting the amount of highly qualified and talented Indians (or talent from other countries) coming to the United States, when the demand is for far more, is a significant competitive disadvantage. Why 65,000?

A final thought on our India trip and a word to wise business leaders across the Pittsburgh region comes from mission participant Girish Godbole of CEO Ally, which is based in Pittsburgh.

"If India were closer or if a U.S. state showed such economic vitality, we would be looking seriously at how we would engage. Engage in one of the world's greatest economic opportunities now - your competitors are!"