Indian Economy - News & Updates - Archive

[Bushroda]

Tata offers free IT services to lure banks
Rhys Blakely in Bombay
The Times, UK
April 23, 2008

India's largest IT outsourcing company is to give away services as it fights to import more jobs to the subcontinent and to persuade its most important clients - the West's beleaguered banks - to sign new contracts.

Shares in Tata Consultancy Services (TCS) fell by more than 10 per cent in Bombay yesterday - a record one-day fall for the stock - after India's largest private sector employer missed earnings targets and reported its first quarter-on-quarter decline in earnings in three years as a result of the slowdown in the United States.

In response, TCS, which relies on the financial sector for more than 40per cent of sales, said that it would bear the cost of “transition work” on several big outsourcing contracts.

Transition charges, which previously would have been paid by clients, cover preparations made before jobs are transferred to India from the City and Wall Street.

The move is designed to buttress future earnings, TCS executives said, but the company is likely to forgo tens of millions of dollars in revenue in the short term.

A big contract, such as the ten-year $1.2billion (£602million) deal that TCS agreed recently with Nielsen, the data provider, may require more than 100 staff carrying out transition work for up to six months at a cost of up to $25million, analysts said.

A TCS spokesman said: “This is an investment that will be recouped as contracts proceed.”

The company announced plans to win more contracts in emerging markets to reduce its exposure to the ailing US economy, the source of about half its revenues.

Outsourcers are seeking the attention of Western banking executives shell-shocked by meltdown in their sector.

Indian executives say that banks are delaying spending decisions, often after the exit of senior bankers in the wake of the sub-prime debacle.

TCS's spokesman said: “Banks have been too involved in their own problems so far to look at new contracts.”

Even before the global credit crunch, India's IT sector was under pressure from wage inflation and the rupee's sharp rise against the dollar.

 

[Bushroda]

Chip design services to grow at 22%
BS Reporter / Chennai/ Bangalore April 23, 2008

The Indian semiconductor design services industry is projected to grow at a compounded annual growth rate (CAGR) of 21.7 per cent, to $10.96 billion by 2010, from the present level of $6 billion. The industry is expected to clock a revenue of $ 7.3 billion by 2008-end.

These projections are part of the report `Indian Semiconductor and Embedded Design Service industry (2007-08)’ — compiled by the India Semiconductor Association (ISA) and International Data Corporation (IDC).

The key factors that position India as a favoured destination for semiconductor and embedded designs are the growing expertise and capabilities in end-to-end design, intellectual property (IP) development, a strong pool of engineers, emergence of outsourced third party design services companies and cost-effective products.

The report — which maps the market for very large scale system integration (VLSI), hardware/board design and embedded software industry and the market dynamics between the members of the eco-system — has presented a tremendous growth potential to the Indian semiconductor industry.

While ISA president Poornima Shenoy said the Indian industry growth is three times more than the global growth rate of around 7 per cent, IDC (India) country manager Kapil Dev Singh said the industry’s structure was changing as the proximity between the third party service providers and original equipment manufacturers (OEMs) for end-to-end product designs was increasing in the country. Companies are moving up the value chain from mere project execution to end-to-end development of products, the latter said.

On the workforce, the report projected an increase in jobs from 129,900 in 2007 to 218,800 in 2010, a CAGR increase of 18.8 per cent. At present, the bulk of the jobs are in the embedded software (82 per cent) followed by VLSI design (11 per cent) and hardware/board (7 per cent).

A large chunk of the industry product design space is occupied by general consumer electronics and the wireless handset area (mobile technology).

In the VLSI design projects executed in 2007, 14 per cent was portable wireless products, 33 per cent pertained to consumers and 31 per cent was telecom networking products.

Though the spectre of a slowing economy is high, the industry is quite optimistic of overcoming hurdles.

“In another couple of years, lot of designs will shift from the present 90 nanometre and 65 nanometre to 45 nanometres. Secondly, the growing domestic market would boost the industry as the consumption of electronic products in the country is estimated to increase,” the report said.

The industry has sought government help in scaling up business. ISA chairman S Janakiraman appealed to the government to extend the Software Technology Park of India (STPI) scheme which is supposed to end in March 2009.

“The industry is still nascent. Start-ups and early stage companies need a different hand-holding, tremendous support is needed from the government for nurturing technology output by smaller companies,” he said. The industry will have to constantly evolve, upgrade and innovate while keeping the costs down in order to stay cost competitive in the global market, he added.

--------------------------------------------------------------------------------
SEMICONDUCTOR DESIGN

• Total design services market is $6 billion
• Revenue contribution from embedded software market is $4.9 bn (81 per cent), hardware/board design services market is $386.1 mn (6 per cent) and VLSI $766.2 mn (13 per cent)
• People employed numbers 129,000. Of this, bulk of the jobs is in embedded software (82 per cent), VLSI (11 per cent) and hardware/board design (7 per cent)
• Per engineering man-month rates are estimated at $4,562 (VLSI), $3,415 (hardware/board design) and $3,854 (embedded software)

 

[Bushroda]

Indian R&D to lead IBM's charge into mobile market
by Stuart Corner
ITwire, Australia
Tuesday, 22 April 2008

!In the world of mobile software and services IBM hasn't figured prominently. That is about to change with the announcement of a major research program that IBM says will enable users to do on a mobile "everything you can with a PC and much more."

The initiative was announced in India at a commemoration marking the 10th anniversary of IBM's Indian R&D labs. It will be lead by India but eight global labs in six countries will participate in a series of projects that will include:
- The Spoken Web - Voice-enabled mobile commerce;
- Instant Translation - Real-time communication between multiple languages through mobile devices;
- SoulPad - Enabling "any portable device to carry computing applications in your pocket";
- Social networking on-the-go;
- Good Samaritan - Mobile healthcare information made available in any emergency situation.

According to IBM the new program marks a significant expansion in the role of its Indian lab which has to date been focussed on the local market. "For the past 10 years, IBM's India Research Lab has worked with local clients and partners to shape India's innovation landscape, helping transform it into a significant contributor to the world economy. Now, the India research team will serve as IBM's catalyst for delivering new mobile web solutions to emerging markets around the world.... IBM is making major investments in mobile software and hardware platforms and has opened several worldwide telecom solutions labs focused on research and development."

India is an appropriate location for such research: mobile phone penetration is increasing rapidly among a largely literate population and recent research commissioned by Nokia shows mobile services as having a hugely transformative effect on India's economy.

Mobile devices far outstrip PCs in emerging economies such as India and are likely to become the main means of Internet access for much of the population. According to IBM, "much of the world's population is looking to mobile devices to tap into online resources to fulfil basic economic needs - in banking, e-commerce, education, transportation and government...Compared to PCs, the primary access mechanism to the world wide web, mobile phones have made a phenomenal penetration into this population segment. Low cost of ownership, the simple user interface consisting of a small keyboard, limited menu and voice-based access contribute to the success of mobile phones with the less literate. However, apart from basic voice communication, these people are not being able to exploit the benefits of information and services available to web users."

IBM's Institute for Business Value predicts the number of mobile Web users will grow by 191 percent from 2006 to 2011 to reach one billion. "This proliferation of mobile devices and mobile Web users signals an incredibly lucrative growth opportunity for businesses," it says.

The study commissioned by Nokia in late 2006 and undertaken by The Centre for Knowledge Societies (CKS) showed that mobile communication was revolutionising economic and social life in rural India, spawning a wave of local entrepreneurs and creating greater access to social services.

It identified seven major service sectors including transport, finance and healthcare that could be radically transformed through mobile technologies. and called on national and international governments, the mobile industry and NGOs to work together to support the development of these services by increasing access to, and use of, mobile communications in rural communities.

According to Nokia, the research was based on detailed ethnography and participant observation among communities living in three rural areas - Badaun in Uttar Pradesh, Satara in Maharashtra and Chittradurga in Karnataka - and one urban area, Bengalooru.

Researchers meet with small business owners, farmers, home owners and others to understand how mobile communication had already transformed their daily lives and the further potential of mobile communications to enhance livelihoods.

The report includes 16 case studies of individuals interviewed for the report including small business people, entrepreneurs, home owners, farmers and many others. These case studies explored how mobile phone ownership had impacted their lives and businesses.

 

[Neo]

India estimates record wheat output in 2008​

NEW DELHI: India expects this year’s output of wheat and rice to each be about two million tonnes above previous estimates, reducing prospects of costly wheat imports and easing fears shortages could push inflation higher.

Agriculture Secretary PK Mishra forecast wheat output in 2008 would be 76.78 million tonnes, against 74.81 million tonnes estimated earlier and 75.81 million tonnes harvested in 2007.

The government also revised upwards the estimate for rice output in 2007/08 to 95.68 million tonnes from 94.08 million tonnes. “This will be a record (wheat) production. Well-distributed rains, distribution of better seeds under national food security mission and good temperatures have contributed to this,” Mishra said. India harvested a record 76.37 million tonnes of wheat in 2000. The country imported 1.8 million tonnes of wheat in 2007, down from 5.5 million tonnes the previous year when a poor crop forced it to go to international markets for the first time in six years. India grows only one wheat crop in a year. Sowing begins in October and the crop is ready for harvest by March-April. reuters

Daily Times - Leading News Resource of Pakistan

 

[Neo]

India needs to catch China but gap is growing: FM​

NEW DELHI: India needs to catch up economically with China but the gap now is growing rather than shrinking, Indian Finance Minister P. Chidambaram said in an interview published Tuesday.

“We want to catch up with China but that requires greater political consensus on the needed (economic) reforms,” he told the Wall Street Journal.

India is governed by an unruly minority Congress party-led coalition propped up in parliament by communist parties which strongly oppose liberalisation that economists say would boost growth.

China’s one-party government can be quicker in spurring growth, Chidambaram said, adding “the distance between India and China is in fact increasing, not reducing because China’s growth rate is faster.”

“They are in the position to take some decisions which we are not,” he said. “We have to follow a process that is more consultative, more deliberative and more amenable to judicial scrutiny.”

The divergence between the Indian and Chinese growth rates was an area of concern, he said.

China reported first-quarter economic growth of 10.6 percent while Chidambaram said “anything between eight percent and nine percent growth” in this fiscal year ending March 31, 2009, would be “welcome and acceptable” for India.

Some economists forecast India’s economy, after averaging growth close to nine percent for five years, may slow to about seven percent this year, partly because of the global economic slowdown and aggressive monetary tightening measures to control high domestic inflation. Chidambaram said it was too early to make a specific forecast because much depended on the looming monsoon season and the subsequent harvest.

But he added, “We must aim at nine percent, as I will, and we must be happy if it’s between eight percent and nine percent.”

India’s GDP rose by 9.6 percent in the year ended March 31, 2007, and is estimated by the government to have grown by around 8.7 percent in the most recent financial year.

Chidambaram also said soaring prices of rice and other basic foods “is a matter of concern in a developing country and in a country where a large number of people are poor and the bulk of household expenditure is for food.” afp

Daily Times - Leading News Resource of Pakistan

 

[Bushroda]

Never mind the quantity, India shows, it is the quality of ideas that matters
Stephen Manallack
The Age, Australia
April 24, 2008

AS WE look at the sheer volume of ideas in the 2020 Summit, perhaps we should consider that the Indian Government has supported an economic miracle simply by adopting two ideas — building the world's cheapest telecoms sector and backing public-private partnerships (PPPs) in aviation.

After the summit, can we, like India, identify the two or three big drivers of change and clear their path?

India took a big decision on telecommunications — realising that it could not afford the infrastructure for land lines — opting for the lowest-cost mobile telephones combined with the fastest internet in the world. In an instant, India was open for business.

The effect has already been huge, with about 8 million new mobiles sold each month, and with 300 million users.

Facing the need to help business travel and trade (and facing a growing host of overseas visitors), India realised that it could not afford to own and run its own infrastructure, so it turned to public-private partnerships (PPPs). The modernisation of the Delhi and Mumbai airports plus the new Hyderabad and Bengalooru airports are prime examples. India's first PPP airport was Cochin in the southern state of Kerala, and this has made profits since opening in 1999, with profits today at 35%.

In the past year 96 million passengers flew in India — just four years ago the number was only 48 million. By 2010 there will be 145 million passenger flights a year.

Both of these were big ideas — telecoms allowed India to leap across 50 years and become a leader in the field, while aviation meant a diverse and disorganised country could come together.

Foreign investors are racing into India, with the smart money moving into new areas. Early investors went for the technology sector, but new money is also going into real estate, infrastructure, media and health care.

This is where the 2020 Summit missed one big idea — while we trade with most of the world, could we benefit from a special focus on all aspects of our relationship with India? A bank of friendship already exists and it is time to build new forms of regular business leadership dialogue — perhaps, Indians being even more sports mad than we are, held in conjunction with major sporting events.

As India has shown, building the future can come down to two or three core ideas, and one of those could be to tie our future much more closely to South Asia.

Stephen Manallack is director of the India Australia Financial Forum and secretary of the Australia India Business Council (Vic).

 

[Contrarian]

Editorial: Three cheers for UMPPs
Business Standard / New Delhi April 28, 2008

The funding commitments which have been secured for the Rs 17,000 crore ($4.2 billion) "ultra mega" power project (or UMPP) at Mundra in Gujarat should silence the critics of the UMPP policy.

When the idea was floated a couple of years ago, there were doubts about the ability and willingness of companies to come forward and build such large (4,000 Mw) project. And even if there were some brave companies who were to step forth, they were expected to have trouble finding financiers.

Well, not only has there has been a long list of bidders for these projects, now the first such project to get off the block — backed by Tata Power — has also managed to secure long-tenor funding of up to 20 years despite the sub-prime crisis.

A host of public sector banks, led by the State Bank of India, have committed Rs 5,550 crore to the project. The exclusion of the private sector banks can be explained by their aversion to such long-tenor funding as well as their higher cost of funds vis-à-vis the public sector banks. About half of the non-rupee funding of $1.8 billion has been sourced from the International Finance Corporation and the Asian Development Bank for a 20-year period.

There is also a funding commitment from the Export-Import Bank of Korea and the Korea Export Insurance Corporation, which can be linked to the fact that a Korean firm, Doosan Heavy Industries, has bagged the order for project equipment (boilers). Then there is the equity contribution of Rs 4,250 crore by the promoters of the project, which is to be based on imported coal.

Equipment has already started arriving at the site and commissioning of the first unit of 800 Mw is expected in September 2011, while the whole 4,000 Mw is expected to come on stream by end-2012, more than a year ahead of the committed schedule.

In one wide sweep thus, the country will be adding more capacity than the city state of Delhi typically has access to.

There are two key lessons that need to be drawn from this successful "ultra mega" experience. First, it helps to think big. The larger the project, the lower is the effort per Mw required to push it through. It is therefore better to work on a 4,000 Mw project rather than a 500 mw one, especially when the same 50-odd clearances will be needed for either project. In any case, with a huge demand-supply gap to be plugged in all key infrastructure sectors, no one can afford the indulgence of managing by tweaking policy at the corners. Instead, bold steps are required. Secondly, the government needs to work on "pre-cooking" more infrastructure projects, so that some basic work on greenfield projects is done before they are offered to private investors.

The UMPPs, for instance, were housed in shell companies floated under the public sector umbrella. These special purpose vehicles piloted the preliminary work on clearances and supply linkages, and also signed provisional power purchase agreements with the buyers of power. This pre-cooking effort needs to be expanded in the power sector, as well as in other infrastructure sectors, so that a shelf of bankable projects is ready for picking. Otherwise, the $500 billion investment that is required to fix the country's infrastructure gap over the next five years may never materialise.

Business Standard

 

[Flintlock]

India unveils policy on new airport projects
April 25th, 2008 - 7:26 am ICT by admin - Email This Post Email This Post


New Delhi, April 24 (IANS) In an effort to promote new airports in the country, the Indian government Thursday did away with the compulsory approval clause for all new projects that come up beyond a 150-km radius of existing ventures. However, a meeting of the union cabinet also decided that no greenfield airport will be allowed within an aerial distance of 150-km from an existing civilian airport, Information and Broadcasting Minister P.R. Dasmunsi told reporters.

“In case a greenfield airport is proposed to be set up within 150 km of an existing civilian airport, the impact on the existing airport will be examined,” he added.

Dasmunsi said such projects would be decided by the government on a case-to-case basis. The new guidelines, the minster said, would be kept in view by the Director General of Civil Aviation (DGCA) while granting a license to operate a greenfield airport.

The policy, however, requires promoters of airports to get approval from all the government agencies that take care of various aspects such as air traffic management, security, customs and immigration.

“These agencies would notify their respective guidelines,” an official of the civil aviation ministry said, adding promoters would have to enter into a pact with them regarding the rights and obligations of each party.

The new airports policy was necessitated by the recent strikes by the employees of the existing airports in Bangalore and Hyderabad. They protested the closure of the two airports to make way for the two greenfield projects nearby.

The new policy is also expected to influence a decision on Uttar Pradesh Chief Minister Mayawati’s request for an early clearance for an airport hub at Jewar, within 150 km of the Indira Gandhi International Airport in the capital.

Called the Taj International Airport and Aviation Hub, the $1.25 billion project is proposed by infrastructure major GMR on an area of 1,000 hectares in Gautam Buddh Nagar, some 70 km from Delhi airport.

Officials said the new policy makes room for interested parties, including the state governments, to make recommendations in case some new airport projects within 150 km of existing ones are awaiting approvals.

“Airports for cargo or non-scheduled flights or heliports need not be submitted for approval of the civil aviation ministry and these cases may be considered and decided at the level of the directorate,” said the official.

 

[Flintlock]

In India, Infrastructure Falls Short as Economy Moves Forward
By Anjana Pasricha
New Delhi
01 May 2008


India is building new roads, airports and power plants to cater to the needs of an economy that is growing at a rapid pace. But, as Anjana Pasricha reports from New Delhi, infrastructure continues to be woefully inadequate.

Sunway City Berhad Managing Director, Property Development Division, Ngiam Siew Siong poses with the model of the township during a press conference in Hyderabad, India, 25 April 2008
Sunway City Berhad Managing Director, Property Development Division, Ngiam Siew Siong poses with the model of the township during a press conference in Hyderabad, 25 April 2008
Later this month, a gleaming, new airport will open in India's famous information technology hub, Bangalore, meeting a long-standing demand of the I.T. industry.

However, access roads to the new airport -- 36 kilometers north of the city center -- have not been widened to ease chronic traffic snarls. As a result, people fear the commute to the airport could take up to three hours -- longer than a short-haul flight.

Inadequate transport networks in bursting cities is just one of the problems confronting a country where all infrastructure is in short supply -- whether it is reliable power, highways, ports or world-class airports.

Bidisha Ganguly, a consultant at the Confederation of Indian Industry, says these shortages have intensified amid the recent economic boom.

"India has been growing at a very fast rate," Ganguly said. "So, as a result, all infrastructure is strained, so there are huge gaps and bottlenecks everywhere. We don't build infrastructure ahead of demand. We typically build it once the bottlenecks are there and fairly apparent."

The bottlenecks are becoming severe. Vehicles choke already crowded roads as car sales go up. Average loading and unloading time at busy sea ports is 85 hours -- 10 times longer than at Singapore or Hong Kong. Airports and ports often run short of warehouse space. It takes manufacturers days to transport goods from one part of the country to the other -- partly because trucks are barred from congested cities during the day for fear they might bring traffic to a standstill.

Lack of adequate power is perhaps the most severe problem. Most industries and offices rely on massive power generators because electricity is often shut off for hours at a stretch, even in prime business and industrial areas.

The head of the Indian Council of International Economic Relations, Rajiv Kumar, says lack of adequate infrastructure holds back growth and discourages investors -- both domestic and foreign.

"The industry has to provide all the infrastructure needs, itself, rather than these be available to it as it is in all other countries routinely as a part of the delivery of public services," Kumar said. "That means that even for those who can afford to do this, the costs become very high. But for a large number of medium and small enterprises it just means that they simply have to forego investment opportunities. So, infrastructure deficit in my view is probably costing India up to two percent growth in GDP (gross domestic product)."

The government acknowledges the country is grappling with a huge infrastructure deficit. It estimates India needs to invest $500 billion, in the next five years, to build roads, seaports, airports, high-speed expressways and power plants. The government is calling on the private sector to share the task.

Some of that investment is already in the pipeline. A project to link the country's four major cities with wide roads is to be completed this year. Modern airports are being built in several cities, under a new model under which private groups will build facilities, collect tolls and eventually hand the project back to the government.

The government says the results of all these investments will be visible in five to 10 years. But many fear it may be longer, because many infrastructure projects often get delayed.

Ganguly says India needs to speed up the pace at which projects are implemented.

"The feeling is that much more should be done," Ganguly said. "While the government has a broad plan, there are problems in implementation, getting clearances. Bureaucratic delays are there and it is not a straightforward issue, where you can just go and build a port or a airport."

But many acknowledge that it is not always easy to fast track projects in a democracy where issues like land acquisition are sensitive and time consuming.

Critics often compare India to the other Asian giant, China, which has built world-class infrastructure in record time. But others point out that although the Chinese central government's nod is enough to get a project off the ground, the task is far more difficult in India, where consensus is needed before any project can go ahead.

 

[Flintlock]

India needs second 'green revolution', top farm scientist says

1 day ago

NEW DELHI (AFP) — India needs to produce a second "Green Revolution" to boost food supplies or the nation's 1.1 billion people will face huge social turmoil, the country's top farm scientist warned.

The government has identified agriculture as a key area for economic reform and called for changes to boost output of such staples as wheat, rice, lentils and vegetables and bring down soaring food prices.

But so far there has been "no sign of major steps to make that happen," said Monkombu Sambasivan Swaminathan, architect of the "Green Revolution" of the 1960s, which quadrupled food production and made India self-sufficient.

"What we need is political action -- we need politicians to 'walk the talk'," Swaminathan, 82, told AFP.

"If we don't succeed, we will face tremendous social problems," he said.

Swaminathan, a plant geneticist whose ideas helped transform India from a starving nation into a food exporter, runs the Chennai-based M.S. Swaminathan Research Foundation, which looks for ways to create new farm technologies.

Policymakers globally now are grappling with how to tackle fast-rising food prices and dwindling stocks, with food riots erupting in some countries.

Under the "Green Revolution" -- seen as one of the world's most successful agricultural turnarounds -- planting of high-yield varieties of wheat and rice resulted in a sharp output rise.

But India's agriculture has been in decline in recent years and growing at a far slower pace than the overall economy. In 2006, it was forced to import grain for the first time in years, ringing alarm bells about food security.

The country has updated its services and manufacturing sectors, which account for around 60 percent of economic output. But some two-thirds of its population still live off agriculture, which has growth of about three percent.

That is less than half the eight percent minimum overall economic expansion forecast by the government for the financial year to March 2009.

Swaminathan won his doctorate in genetics from Britain's Cambridge University but turned down a US professorship when he realised he had studied to "produce enough food" in post-independence India and "serve the nation."

Memories were still fresh of the Great Bengal Famine, the world's worst recorded food disaster, which occurred in 1943, when Britain governed India and an estimated four million people died of hunger.

Now a burgeoning population, a growing middle class with more purchasing power, and erratic weather are among factors creating food scarcity, thus pushing prices up and requiring a new agricultural leap forward, he said.

"We need to take advantage of the existing technology bank. There's a large amount of technology out there not being used -- in efficient water use, efficient fertiliser use, in extension of farmer-to-farmer knowledge," he said.

For instance, nearly 70 per cent of India's farmers still depend on rain because of a lack of proper irrigation.

"Storage of food supplies is (still) a big issue," he said in an interview, with many crops being devoured by rats before humans can eat them.

Analysts also say farming in India is not just about producing food but also about livelihoods. Thousands of debt-burdened small farmers have committed suicide after their crops failed.

Swaminathan said India faced a much tougher challenge in producing a second "Green Revolution" than it did in the 1960s, when too many hungry bellies forced it to live a "ship-to-mouth" existence, depending on US foodgrain imports to stave off famine.

"Politics are much more complicated these days," he said, referring to the unruly national coalition governments that are often at odds with state administrations.

"The prime minister, who was then Indira Gandhi, had authority over the entire country" to make sure decisions were implemented, he said.

Gandhi gave Swaminathan free rein to implement a new agricultural programme, believing it vital for India to be able to feed itself.

"I've been trying for a pan-political approach to produce a second Green Revolution -- after all we all have to eat first," he said, adding he was optimistic India could achieve the goal.

"We've got all the main ingredients -- a vast agricultural research network of colleges and universities," he said.

"Crisis is a mother of invention. We faced a crisis in the 1960s and we succeeded. We need a symphony of farmers, scientists and policymakers to make it happen again this time."

 

[Flintlock]

Advani calls for rejuvenated focus on rural economy
From ANI

New Delhi, Apr.30: Leader of Opposition in the Lok Sabha and senior BJP leader L.K.Advani has called for a rejuvenated focus on rural India, and has said there is a need to ensure redirection of investment into agriculture and rural economy, especially in irrigation, water management, soil enrichment and rural infrastructure.

Speaking at the session on "Building People: Making Growth Inclusive and Sustainable" at CII National Conference and Annual Session - 2008 here today, Advani said for inclusive growth there is simply no substitute to massive re-industrialisation and rejuvenation of India's countryside.

Advani also talked about enhancing the employability of India's youth and said mere increase in degree holders will not meet the needs of double digit growth, quoting former RBI Governor Bimal Jalan's study that found that earnings of 20 richest Indians exceeds those of 30 crore Indians and said lopsided however high is never sustainable.

Offering three broad ideas to India Incorporated, he said good governance is the most important requirement for achieving inclusive growth and added that good governance will not only boost GDP but also make sure that money is well spent and reach intended beneficiaries.

Secondly he said some of the poorest states in the country suffer from threats to internal security such as terrorism and naxalism.

Finally he said with foreign exchange reserves now amounting close to US$ 300 billion there is no problem on resource front in achieving double digit GDP growth.

Advani quoted The Economists editorial of early 1990's titled 'India, The Caged Tiger' and said India was uncaged during the six year rule of NDA. He also talked of having the equivalent of golden quadrilateral in education and health.

On corruption, he said it is one of the biggest obstacles to inclusive and sustainable growth, and added that corruption leads to maligned growth and also to moral degradation. Further he said corruption is undermining India's development drive and its international reputation.

Talking about India - US nuclear agreement he said India's national security and international profile was strengthened after the nuclear tests at Pokhran in 1998 and emphasised that his party will not allow any bilateral treaty to neutralise this historic achievement.

Earlier, Sunil Bharti Mittal, President CII, praised Advani for his leadership and called him the tallest leader of all time.

K.V Kamath, Vice President CII, accepted Advani's manifesto to India Incorporated and expressed his willingness to implement them over next one year during his tenure as President of CII.

 

[Flintlock]

'SEZs will drive India's infrastructure'
15 Apr, 2008, 1134 hrs IST, IANS


NEW DELHI: The merits or otherwise of special economic zones (SEZs) are under a raging debate in India but the realty industry is upbeat about the prospect of such zones and says it will drive infrastructure development in the country.

"Establishing world-class industrial infrastructure is an expensive proposition. Encouraging special economic zones is the best solution to create these pockets of growth," says Rohtash Goel, chairperson of realty major Omaxe.

"To meet the demand for housing infrastructure, the government must also create special residential zones," says Goel, referring to the tax and duty sops given to SEZs in the country.

The incentives make development of SEZs a highly profitable proposition. Little wonder many developers are setting up projects under the special scheme not just in metropolitan cities but also in smaller towns.

Figures, in fact, suggest that 214 SEZs have so far been notified. In addition, formal and in-principle approvals have been given to 439 and 138 such zones, respectively.

According to Subir V. Gokarn, executive director and chief economist of credit rating agency CRISIL, "By offering incentives to developers, the government is attracting much required investment."

He feels this eased the financial burden for an important task that has traditionally been the responsibility of state governments - a view that finds support among realty developers.

"It was the government's incentives to developers that established the twin cities of Noida and Greater Noida as a symbol of industrial and realty growth in less than a decade," says Arvind Mohan, the general manager of Ansal API.

SN Sharma, the director for SEZs with another realty major, Parsvnath, has a similar view.

"Special economic zones are essential for rapid economic growth as it insulates industry from restrictive local laws, red tape and an army of various government inspectors."

According to industry chamber Confederation of Indian Industry (CII), SEZs have facilitated a rise of 200 percent in exports and attracted investment of $17.66 billion.

Exports from 214 of such special zones are likely to cross $25 billion by 2008-09, with 10,000 additional jobs, the industry lobby said in a study.

But the model adopted for SEZs in India has generated protests in areas where farmland was being acquired, which led those being displaced to feel that they were being deprived of their source of livelihood rather cheap.

"I would say the fears expressed by farmers are largely based on lack of proper information about the compensatory benefits given to them," says Sharma. "They are getting a hefty amount. Many farmers in Gurgaon or Noida are millionaires."

Mohan feels those raising objections must look at the larger picture. "Since 70 per cent of India's available land is farmland, industrial projects may have to involve some parts of it."

Adding another dimension to the story, Sharma says the land acquired for these SEZs is just 0.12 perc ent of the available farmland and that some amount of realignment of land use pattern has to be accepted in India.

"For this, what is required is strong political will," says Gokran. "The government should lay down better policies so that the people whose land are acquired are properly relocated and get employment from these zones."

 

[Neo]

India’s trade deficit widens on soaring crude prices ​

Friday, May 02, 2008

NEW DELHI: India’s trade deficit widened by more than 35 per cent in the last financial year, hit by soaring global crude prices and an expensive rupee, official data showed on Thursday.

The trade deficit climbed by 35.5 per cent to 80.4 billion dollars in the financial year to March 31, 2008, the data showed. Policymakers said they were worried by the widening trade gap.“We are not comfortable at all (with the trade deficit figures). We hope to boost our exports more. But at the moment with the high oil import prices, we have to live with it,” India’s Commerce Secretary Gopal K Pillai said.

Exports, which account for about 15 per cent of the country’s gross domestic product, grew by 23 per cent to 155.5 billion dollars in the 12 months to March. The figure was just shy of the government’s full-year target of 160 billion dollars, as a stronger rupee hurt India’s competitiveness.

Imports for the 2007-08 fiscal year climbed by 27 per cent in the full year to 235.9 billion on the back of strong domestic demand driven by robust economic growth and soaring oil prices. A breakdown of the figures showed that non-oil imports; a measure of economic activity, climbed by 23.36 per cent to 158.88 billion dollars in

2007-08 from a year earlier. Oil imports climbed 35 per cent to 77.03 billion dollars. India imports 70 per cent of its crude oil needs. In March, imports rose 35.2 per cent to 23.2 billion dollars while exports rose 27 per cent to 16.3 billion dollars.

India’s trade deficit widens on soaring crude prices

 

[Neo]

India’s exports grow but miss target, bumpy road ahead​

NEW DELHI: India’s exports grew by 23 percent to $155.5 billion in the fiscal year ended March, missing an annual target, and analysts said shipments would face headwinds in the current year due to a possible global slowdown.

Data released by the government on Thursday showed exports grew a robust 26.6 percent in March to $16.28 billion, up from February’s $14.24 billion, but it was not enough for India to attain the annual target of $160 billion.

Firm oil prices and robust domestic demand boosted imports by 27 percent to $235.91 billion in 2007/08, and widened the trade deficit for the fiscal year by 35.5 percent to $80.4 billion, from $59.32 billion the year before.

“This trend shows that the rupee appreciation has not really affected the export performance and missing the target is a minor blip which one can ignore,” said T.K. Bhaumik, chief economist at Reliance Industries Ltd.

“But 2008-09 would be the most difficult year for India’s exports because of the global slowdown and exports will have to face the challenge of falling global demand.”

Bhaumik said the trade gap could widen to $100 billion in 2008/09 but that should not be a cause for worry as India had comfortable foreign exchange reserves. Exports accounts for nearly 15 percent of India’s gross domestic product.

The World Trade Organisation said last week global trade growth would slow to a six-year low in 2008 although financial market turbulence and slowdowns in some developed economies have so far had little effect.

Last year, the Indian government raised tax refund rates and offered interest subsidies on bank loans to ease the pain of exporters hit by a rise of 12 percent in the value of the local currency against the dollar.

Imports rose 35.24 percent to $23.17 billion in March while non-oil imports, a key gauge of domestic economic activity, was up 18.7 percent to $14.5 billion. Non-oil imports in 2007/08 was 23.4 percent to $158.9 billion while oil imports during the fiscal year was up 35.3 percent at $77 billion from a year ago.

In a bid to reach a $200 billion export target for 2008/09, the government has announced tax refunds and interest subsidies for many exports would continue for another year, and there would be new incentives to promote exports of vegetables, sports goods, toys and computer hardware. India hopes to grab a five percent share of global trade by 2020.

Daily Times - Leading News Resource of Pakistan

 

[Flintlock]

India Gets $24.57 Billion of Overseas Investment (Update1)

By Kartik Goyal

May 2 (Bloomberg) -- India got a record $24.57 billion of foreign direct investment in the fiscal year to March 31, helped by government policies that allowed foreign companies higher stakes in local units.

India received $15.7 billion of overseas investment in the year-ago period, Trade Minister Kamal Nath told reporters in New Delhi today. India is aiming for $35 billion of overseas investment in the current fiscal year.

Companies including Vodafone Group Plc and Toyota Motor Corp. have been raising investments in India to benefit from rising incomes, boosted by the fastest pace of economic growth after China, and the easing of rules to allow overseas companies in more industries.

Prime Minister Manmohan Singh is seeking to attract more foreign investment to sustain economic growth of more than 9 percent. The country is simplifying investment rules to attract more money to improve roads, airports and ports and spend more on other infrastructure projects.

Nath expects the investment momentum to remain strong. India has already received $9 billion of overseas investment commitments for the current fiscal year, he said.

The South Asian nation is also aiming to close the gap with China, which began opening its economy in 1978, 13 years before India. China had $74.7 billion of foreign investment in 2007.

India in January this year eased some limits on overseas investment in industries such as civil aviation, mining and petroleum to draw more foreign companies to the South Asian nation.