India Economy Thread [Archive]

Jai

February 28th, 2004, 09:15 PM

FOREIGN AFFAIRS By THOMAS L. FRIEDMAN

BANGALORE, India - I’ve been in India for only a few days and I am already thinking about reincarnation. In my next life, I want to be a demagogue.

Yes, I want to be able to huff and puff about complex issues -- like outsourcing of jobs to India -- without any reference to reality. Unfortunately, in this life, I’m stuck in the body of a reporter/columnist. So when I came to the 24/7 Customer call center in Bangalore to observe hundreds of Indian young people doing service jobs via long distance -- answering the phones for US firms, providing technical support for US computer giants or selling credit cards for global banks -- I was prepared to denounce the whole thing. “How can it be good for America to have all these Indians doing our white-collar jobs?” I asked 24/7’s founder, S. Nagarajan.

Well, he answered patiently, “look around this office.” All the computers are from Compaq. The basic software is from Microsoft. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke, because when it comes to drinking water in India, people want a trusted brand. On top of all this, says Nagarajan, 90 percent of the shares in 24/7 are owned by US investors. This explains why, although the US has lost some service jobs to India, total exports from US companies to India have grown from $2.5 billion in 1990 to $4.1 billion in 2002. What goes around comes around, and also benefits Americans.

Consider one of the newest products to be outsourced to India: animation. Yes, a lot of your Saturday morning cartoons are drawn by Indian animators like JadooWorks, founded three years ago here in Bangalore. India, though, did not take these basic animation jobs from Americans. For 20 years they had been outsourced by US movie companies, first to Japan and then to the Philippines, Korea, Hong Kong and Taiwan. The sophisticated, and more lucrative, preproduction, finishing and marketing of the animated films, though, always remained in America. Indian animation companies took the business away from the other Asians by proving to be more adept at both the hand-drawing of characters and the digital painting of each frame by computer -- at a lower price.

Indian artists had two advantages, explained Ashish Kulkarni, COO of JadooWorks. “They spoke English, so they could take instruction from the American directors easily, and they were comfortable doing coloring digitally.” India has an abundance of traditional artists, who were able to make the transition easily to computerized digital painting. Most of these artists are the children of Hindu temple sculptors and painters.

Explained Kulkarni: “We train them to transform their traditional skills to animation in a digital format.” But to keep up their traditional Indian painting skills, JadooWorks has a room set aside -- because the two skills reinforce each other. In short, thanks to globalization, a whole new generation of Indian traditional artists can keep up their craft rather than drive taxis to earn a living.

But here’s where the story really gets interesting. JadooWorks has decided to produce its own animated epic of the life of Krishna. To write the script, though, it wanted the best storyteller it could find and ended up outsourcing the project to an Emmy Award-winning US animation writer, Jeffrey Scott -- for an Indian epic!

“We are also doing all the voices with American actors in Los Angeles,” says Kulkarni. “And the music is being written in London. JadooWorks also creates computer games for the global market but outsources all the design concepts to US and British game designers. All the computers and animation software at JadooWorks have also been imported from America (H.P. and IBM) or Canada, and half the staff walk around in American-branded clothing.”

“It’s unfair that you want all your products marketed globally,” argues Kulkarni, “but you don’t want any jobs to go.”

He’s right. Which is why we must design the right public policies to keep America competitive in an increasingly networked world, where every company -- Indian or American -- will seek to assemble the best skills from around the globe. And we must cushion those Americans hurt by the outsourcing of their jobs. But let’s not be stupid and just start throwing up protectionist walls, in reaction to what seems to be happening on the surface. Because beneath the surface, what’s going around is also coming around. Even an Indian cartoon company isn’t just taking American jobs, it’s also making them.

Jai

February 28th, 2004, 09:16 PM

http://www.themoscowtimes.com/stories/2004/02/26/049.html

Thursday, Feb. 26, 2004. Page 8

Realtors, Retailers Eye India for Profit

By Rina Chandran
Reuters MUMBAI, India -- Where once small, local grocery stores served Mumbai consumers, the skyline now glitters with modern shopping malls and sprawling hypermarkets catering to an increasingly affluent middle class.

Sensing profit potential, global retailers led by Marks & Spencer Group and Dairy Farm International Holdings are setting up shop in the face of protectionist regulations that limit foreign investment.

The barriers are meant to give homegrown firms a head start, but it is only a matter of time before giants such as retailing juggernaut Wal-Mart Stores Inc., move in. The large-store retail sector, which accounts for only 2 percent of India's consumer spending, has an estimated turnover of $4.2 billion and has a growth rate that has more than doubled to 8.5 percent per year over the past few years, property consultant Knight Frank says.

"It is a result of consumerism and Westernization, so consumers are spending more, aspiring for better lifestyles and demanding a better shopping ambience," said Tariq Vaidya, Knight Frank's head of research for the Asia-Pacific region.

The large-store sector is expected to grow to 20 percent of the retail market by the end of the decade. Total retail space is forecast to reach about 2 million square meters next year from the present 8 million, and the number of malls is set to quadruple to 200.

"Supply creates its own demand: If there are places where they can shop in a good ambience, have a wide choice and not have to pay a price penalty, consumers will come," said Raghu Pillai, head of the retail division of Indian conglomerate RPG Group.

RPG, in a joint venture with Dairy Farm, is launching a 5,110 square meter Giant hypermarket in suburban Mumbai this weekend, and expects to have 15 more Giants open by the end of 2005.

Though foreign retailers cannot yet own stores in India, they can hold franchise agreements, as does Britain's Marks & Spencer Group, or operate cash-and-carry wholesale stores and joint ventures.

Germany's Metro, the world's fifth-largest retailer, has a wholesale store in Bangalore and is adding one more, while South Africa's Shoprite Holdings is slated to open its first wholesale store in Mumbai.

Top Indian retailer Pantaloon Retail India, the Tata Group-owned Trent, Shopper's Stop, RPG and other domestic retailers have aggressive expansion plans.

Wal-Mart, France's Carrefour and Britain's Tesco are said to be biding their time until foreign direct investment is permitted.

Still, significant obstacles await foreign retailers. Hugely inefficient supply chains, complicated regulations, and costly and complex real estate purchasing processes currently plague large-store retail in India.

A report from investment bank Merrill Lynch on the Indian economy says household consumption is set to double to $500 billion by the year 2008, growing more than 15 percent per year.

With the gross domestic product of Asia's third-largest economy expected to expand 8.1 percent in the year to March, retailers are understandably upbeat.

Germany's Metro, selling 17,500 items ranging from soap to computers, expects turnover of up to $45 million from its store.

The RPG Group launched a 11,148 square meter Giant hypermarket in Hyderabad in 2001 and is now launching a store in Mumbai.

At a cost of 100 million rupees ($2.2 million) per store, not including land and building costs, Giant is looking for turnover of 1 billion rupees per store within three years of its launch.

Jai

February 28th, 2004, 09:35 PM

http://www.faz.com/IN/INtemplates/eFAZ/docmain.asp?rub=%7BB1311FCC-FBFB-11D2-B228-00105A9CAF88%7D&doc=%7B7695BFE9-3DD0-4094-9677-17C9C63E749C%7D

Bavarian Premier Edmund Stoiber and business delegation impressed with country's economic advance

By Jochen Buchsteiner
Frankfurter Allgemeine Zeitung

NEW DELHI. When Edmund Stoiber mentioned “Autzoerzink,“ his hosts were delighted. Not by the amusing way the Bavarian premier pronounced “outsourcing,“ as though he were chatting with friends back in Munich, but by the assertive, positive tone he put on the word.

There may be a growing anxiety in the United States and some other advanced countries about the prospect of millions of middle-class jobs being transferred to India, but Indian officials and business leaders heard no protectionist musings from Stoiber. Indeed, he sounded optimistic about the trend. Outsourcing, said Stoiber, “is a natural ingredient of globalization.“

Claiming to reflect thinking not just in his state but across Germany and the rest of the European Union, Stoiber said the way forward was not to worry about existing jobs going to lower-wage countries but to grasp the increased potential for more business and better jobs that globalization presents.

“You can't hope to sell Airbus planes to India and at the same time limit the outsourcing of services,“ he told journalists in New Delhi.

It was as an apostle of free trade that Stoiber moved across the subcontinent, visiting Bangalore, Agra and New Delhi before wrapping up his five-day trip in Bombay last Friday. His large and unusually high-powered delegation included board members from Bavaria-based corporate giants Allianz and Siemens as well as representatives of other major German companies.

Indians have not been accustomed to getting this much attention from Germany in recent years: Chancellor Gerhard Schröder has been to India only once since coming to power in 1998, and that was during a stopover en route to China.

President Johannes Rau was here for a more extended visit last March, but the diplomatic thaw with Pakistan had not yet started, and when not emphasizing the need for the two countries to reduce tensions, Rau seemed less focused on India as a rising economic star than on its old image of a country bedeviled by widespread poverty and religious divides.

Stoiber expressed no such concerns. Using the analogy that former Chancellor Helmut Kohl once employed in China, he talked instead about “the growth train in India“ and the need for German business “to jump on it.“

The Germans have done some jumping already, though it is a matter of opinion whether there has been enough. More than 200 companies from Bavaria alone have joint ventures in India, according to the German Embassy in New Delhi.

When a young employee at a Siemens office in Bangalore - the Indian information technology capital where Stoiber tellingly made his first stop, and where Bavaria opened its own liaison office in 2001 - asked what could be done to rid Germans of the old stereotype of India as a country “full of water buffaloes and snakes,“ Stoiber replied that the “German elite“ has long known better.

Then he added a comment that appeared to astonish his audience. “In 15 years,“ he predicted, “India, China, America and Europe will be economically at about the same level.“
A short time before, he had toured the headquarters of the Indian software firm Infosys, where the conference room boasts the world's biggest video screen and above it hang eight clocks showing the time in important cities around the world. The German delegation could not help noticing that none of them was set to German time. Infosys managers, alternating their sales pitches between perfect English and faultless German, told the visitors they should transfer more jobs to Bangalore.

“You'll get the same performance for less money or better performance for the same money,“ was the message.
There was relief in the German delegation to learn that the Indians appeared unaware of last week's collapse of the project to install an electronic toll system for trucks on Germany's autobahns. After all, the software is reportedly the biggest problem, and this is an area where the Indians are increasingly confident. Their software industry may still be relatively small - its overall 2003 exports of about $10 billion were equal to only two-thirds of the sales chalked up last year by German office software developer SAP - but it is growing fast. SAP's Bangalore operation intends to double its staff over the next 12 months.

The next night, overlooking nighttime New Delhi from his hotel room, Stoiber pondered the competitive challenge that the children and grandchildren of “the dynamic and performance-oriented middle classes“ of India and China will pose to his children and grandchildren.

And then he thought back to Indian Prime Minister Atal Behari Vajpayee's visit to Munich last year.

As Stoiber recalled it, the prime minister gave him a little demonstration, holding his left hand at chest level and the right at waist level, moving first the left - “Here you are up here“ - and then the right - “and here we are down here.“ Then Vajpayee held the left steady and raised the right to eye level.

“In 20 years we'll be up here,“ Stoiber quoted the Indian leader as saying, “and you won't have moved.“

Stoiber also recounted to his guests how the Indian ambassador to Germany told him before he left for India that, over the long term, Europe will have “no chance“ against Asia. There was no undertone of amusement or irony; to a bystander, it seemed that the Bavarian premier made the point matter of factly.
Feb. 27

huaiwei

February 28th, 2004, 09:44 PM

Hey...we seem to have another ethnic Indian in our midst? Welcome to the Asian forums!! :wave: ;)

Jai

February 28th, 2004, 09:54 PM

http://users1.wsj.com/WebIntegration/WebIntegrationServlet?call=L_L&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2F0%2C%2CSB107714681116133212%2C00.html

Investors Find the 'Other' Billion-Person Nation

It's India, and Portfolio Managers Say It Might Outshine China;
Foreign Investing Is Opening Up

By CRAIG KARMIN
Staff Reporter of THE WALL STREET JOURNAL

At a time when China commands more attention from investors than any other emerging market, many U.S. fund managers are starting to take a closer look at the other billion-person nation: India.

India has received only a fraction of the money that corporations have invested in China, but portfolio managers say India is in a number of ways the more attractive stock-market investment.

The South Asian giant has spawned a greater number of companies that can compete on a global scale and whose management style more closely resembles their U.S. competitors. That list includes Indian software firms such as Infosys Technologies and Wipro and pharmaceutical companies such as Dr. Reddy's Laboratories, all of which trade in New York. Investors also credit India with having better corporate disclosure, stronger property rights, and a more investor-friendly legal system than China.

India is about a dozen years behind China in liberalizing its economy, lowering tariffs, and opening up industry to foreign investors. But it is beginning to close that gap. Just recently, in fact, the government raised the ceiling on foreign investment in private banks and abolished foreign limits on private oil exploration and marketing companies.

New Delhi is forecasting Indian economic growth of about 8% for the fiscal year ending next month -- on par with China's official growth forecast for 2004 -- and it has emerged as the world leader for outsourcing and call centers.

Some economists say India may be entering a period of rapid growth reminiscent of China's powerful economic expansion of the 1990s, enabling India to evolve over the next few years from a fringe to a more mainstream emerging market. Investors have been encouraged to see the government running on a market-reform platform ahead of the April parliamentary elections and anticipate an acceleration in reform measures after the elections.

"India looks like it is at the beginning of a multiyear upswing," says Mark Madden, who manages the Pioneer Emerging Markets Fund and counts India as one of his three top country picks this year, along with Brazil and Turkey.

Foreigners invested a record $7 billion in Indian stocks last year, which helped the rupee appreciate 5% against the U.S. dollar in 2003 as the Bombay Sensex Index jumped 82% in dollar terms. (So far this year, the Sensex is up 3.2%.) Foreign fund mangers raised their stakes in India's 10 biggest companies by 7.3 percentage points to 35.2% of shares outstanding, according to Morgan Stanley.

Some large global funds with limited emerging-market investments are taking a fresh look. "A lot of our guys [have been] getting excited about what was going on in India," says Shigeki Makino, senior global portfolio manager for Putnam Investments.

His fund last year bought shares of Reliant, a conglomerate with telecom and petrochemical businesses, marking the fund's first Indian purchase in years. He cited the stock as a way to play the country's economic growth and a cheap valuation relative to global peers, though he adds that most Indian stocks have too small a market capitalization for large global funds that like to take big positions.

And even if the optimistic forecasts come true, India still poses plenty of risks. While there has been a recent thaw in tension between India and Pakistan, any future conflict could weigh on the market.

In the U.S., a political backlash against the outsourcing of jobs to India has been gaining momentum. Recently, the Senate passed an amendment restricting companies from using offshore workers for government-contract work. State legislators in New Jersey and Indiana have passed similar measures, sparking an angry response from New Delhi and raising concerns about a potential trade war. Both the Democrats and Republicans are already making this a campaign issue.

Populist Opposition

In India, the ruling coalition could face increasing populist opposition to market overhauls if the economic gains aren't seen as equitably distributed and India's widespread poverty doesn't ease. Also, poor infrastructure -- from roads and highways to ports and power supply -- must be improved to cut transportation costs and boost gross domestic product.

Even if India's economy does achieve a higher level of sustained economic growth, that alone doesn't make it a wise investment. "Investors commonly fall into the trap of equating fast economic growth with strong stock-market performances," says Andrew Milligan, head of global strategy for Standard Life Investments in Edinburgh, Scotland. "That need not be the case."

Look no farther than China: Despite persistent annual economic growth of 7% to 10% over the past decade, the stock market has seen no gains over that period and lots of volatility. In fact, the Morgan Stanley Capital International China Index tumbled 75% from its inception in 1993 through the end of 2003.

Yet some investors maintain that there are compelling reasons to expect something better from India, even if the stock market stumbles in the near term following last year's big gains.

Most of the Chinese companies that went public in the 1990s were bloated state-owned enterprises. They were selected not because they were the most profitable, or attractive, candidates but because they had political connections or Beijing wanted to use the stock market to help bail them out. They remain majority state-owned.

In India, by contrast, about 60% of publicly traded companies have no state ownership, says Arindam Bhattacharjee, a portfolio manager at Emerging Markets Management in Arlington, Va.

That percentage is poised to rise as privatization and restructuring gather steam. For instance, Maruti Udyog, India's largest auto maker, started in 1977 as a joint venture between the government and Japan's Suzuki Motor. But the government has been selling down its stake as part of a plan for the auto maker to be wholly owned by Suzuki and shareholders. Maruti said it sold a record 49,140 cars in January, a 30% year-over-year increase, and the shares have more than tripled in price since the initial public offering of stock last summer.

Not Cheap?

After last year's rally, some say that Indian stocks no longer look cheap. Mr. Madden at Pioneer points out, however, that some of the most expensive have the best growth rates. Infosys, for example, trades at 23.4 times its estimated earnings for the fiscal year ending in March 2005, but earnings per share are projected to grow 26% for that period.

Still, he favors banks that are positioned to benefit from India's economic growth. In recent years, they have been freed from government instructions to lend to the agricultural sector at limited rates and are turning their focus to the more profitable consumer-loan market. He likes Punjab National Bank, which trades at less than seven times estimated earnings for the fiscal year ending in March 2005 and has projected earnings growth of 16% for that period.

Mr. Bhattacharjee notes that unlike China, where few companies have much presence overseas, several Indian companies rely on exports for the bulk of their revenue. Bharat Forge, an auto-components maker, counts on exports for 60% of its sales, with about half of that foreign revenue coming from the U.S. The generic drug maker Ranbaxy gets about 50% of revenue abroad, mostly from U.S. sales.

chewys

March 1st, 2004, 01:16 AM

We are hearing a lot of news on this 'shining India', and claims that it would outshine China and rest of the world.

Could anyone display photos or panoramos of Indian cities like Delhi, Calcutta, Mumbai, Madras etc. It would be interesting to see the progress being made there.

Also, comparisons could be made between the following cities:

Beijing vs Delhi
Shanghai vs Mumbai
Guanzhou vs Calcutta
Shenzhen vs Bangalore
Chongqing vs --
Tianjin vs --
Dalian vs --
etc
We coud do this in another thread. Any takers ?

drwho

March 1st, 2004, 01:47 AM

Originally posted by chewys
We are hearing a lot of news on this 'shining India', and claims that it would outshine China and rest of the world.

Could anyone display photos or panoramos of Indian cities like Delhi, Calcutta, Mumbai, Madras etc. It would be interesting to see the progress being made there.

Also, comparisons could be made between the following cities:

Beijing vs Delhi
Shanghai vs Mumbai
Guanzhou vs Calcutta
Shenzhen vs Bangalore
Chongqing vs --
Tianjin vs --
Dalian vs --
etc
We coud do this in another thread. Any takers ?

Hi Chewys & welcome

It is impossible to compare Shenzhen-Skyline vs Bangalore-skyline when it comes to infrastructure and economy.
Shenzhen skyline is HUGE. No way India can compete with Shenzhen skyline. Not yet.

India made market reforms in 1991 and China in 1979 and 2003 is the first time that India has 8% growth.

Maybe we can compare Shenzhen vs X-India city ..lets say 10 years from now? but right now it is to early.
:) ;) :happy: ;)

I (or Jai) will post some pics of Mumbai-panorama soon.

Until then please check this thread of skyscrapers in Gurgaon and Mumbai.

http://www.skyscrapercity.com/showthread.php?s=&threadid=86320

Mumbai is the city which has the most skyscraper-activity in India.
:)

Jai

March 1st, 2004, 02:59 AM

I would also humbly make the argument that comparing skylines as a measure of development is somewhat disingenuous, and especially so in comparison to Chinese cities.

For one, there are fundamental differences in Indian v. Chinese civic planning. The most major one being that, unlike China, there is no restriction of peoples' ability to freely live and travel through the Indian city, so the great mass of humanity that is found outside the city is also found inside. This in turn necessitates different priorities of development; and added to the efficiency of the Indian democratic, judiciary-dominated bureaucracy versus that of the Chinese authoritarian -- it is no exaggeration that it is quite a bit harder to displace masses of people and coordinate large scale development in India, for better or worse (...though I would personally argue that true organic, grounded development that takes into account the rights and needs of the individual is very much for the better. But that is the difference between the Indian versus Chinese perspective.)

Another is that, unlike China, Indian cities do not get a significantly superior amount of federal/state resources as Chinese cities do, and are instead allocated funds more representative to population size. Further, building codes on height and placement are very strict due to the threat of Pakistani terrorism, a threat that China does not face. This allows China to build very tall skyscrapers, while Indian ones are far more modest. Many a plan for skyscrapers has been killed in the bud by (rightfully) paranoid officials.

Because of these numerous other differences, it really is like comparing apples and oranges. Now don't get me wrong, India is truly "shining" in the construction of buildings and the like, relatively speaking, but a better method of comparison between Indian and Chinese development is that of infrastructure.

For a running discussion and collection of news, I highly reccomend that whoever's interested check out the following threads (off-site):

Indian Roads Thread (http://www.bharat-rakshak.com/ubb/ultimatebb.php?ubb=get_topic;f=2;t=002399)

Infrastructure News & Discussion (http://www.bharat-rakshak.com/ubb/ultimatebb.php?ubb=get_topic;f=2;t=002392)

A great resource for photos of Indian roads-related projects, check out:
Suraj's Indian Roads and Buildings Gallery (http://surajsphotos.fotopic.net/)

No doubt that in the next 5 years, the number of digital cameras will (continue) to grow exponentially, a phenomenon that happened in China several years ago. When that happens, and internet connectivity continues to shoot through the roof, you'll see more and more photos of Indian development and architecture that long-ignored India deserves.

Regards,
Jai

null

March 1st, 2004, 03:58 AM

there is no restriction of peoples' ability to freely live and travel through the Indian city

so China has the restriction?

muchbetter

March 1st, 2004, 04:37 AM

Originally posted by Jai

Mr. Bhattacharjee notes that unlike China, where few companies have much presence overseas, several Indian companies rely on exports for the bulk of their revenue. Bharat Forge, an auto-components maker, counts on exports for 60% of its sales, with about half of that foreign revenue coming from the U.S. The generic drug maker Ranbaxy gets about 50% of revenue abroad, mostly from U.S. sales.

How much do that auto-components maker and generic drug maker earn abroad?

Here are two chinese companies which not only earn from export ,but also have branches on other countries.

"Established in 1988, Huawei Technologies ,Shenzhen, China , is a high-tech enterprise which specializes in research and development (R&D), production and marketing of communications equipment, providing customized network solutions for telecom carriers in optical, fixed, mobile and data communications networks. Huawei's customers include China Telecom, China Mobile, China Unicom, China Netcom as well as Thai AIS, South Korea Telecom, SingTel, Hutchison Global Crossing, PCCW, Telemar (Brazil), etc.
Since Huawei stepped out its first footprint in the international market in 1996, the company has experienced a lot of hardness to get overseas carriers' recognition. It is its persistency and its willingness to provide quicker and more suitable solutions that helps Huawei overcome various difficulties. In the last two years, Huawei has made much progress. As a matter of fact, Huawei has established branches in more than 40 countries including UK, Russia, Brazil and Singapore. To date, Huawei's products have been deployed in over 40 countries and regions, including France, UK, Germany, Spain, Brazil, Saudi Arabia, Egypt, South Korea, Singapore, Thailand, Peru, South Africa and Hong Kong. In 2002, Huawei's overseas sales reached US$550 million, and in 2003, it further increased by 90% to reach US$1.05 billion, making it 27% of the company's US$3.83 billion total sales last year. "

Anothing chinese company-----------Haier Group in Qingdao, China.
http://www.haiereurope.com/
http://www.haieramerica.com/
http://www.haiermideast.com/
http://www.haierspain.com/
Haier was incorporated in 1984 and initially produced household refrigerators. Over the past 19 years, the company has grown and prospered and is now a transnational organization widely recognized by the world community. Haier now manufactures a wide range of household electrical appliances in 96 categories with 15,100 specifications and exports products to more than 160 countries. In 2003, Haier¡¯s global sales hit RMB80 billion and Haier brand topped all Chinese trademarks at a nationwide survey. On January 31, 2004, Haier was named one of the world's 100 most recognizable brands in a global name brand list edited by the World Brand Laboratory, one of the world brand evaluation organizations. As the only Chinese brand on the list, Haier was ranked 95th after such household names as Coca-Cola, McDonald's and Nokia, which were the top three.

Haier¡¯s international promotion framework encompasses global networks for design, production, distribution and after-sales services. Haier has established 18 design institutes, 10 industrial complexes, 22 overseas production factories and 58,800 sales agents worldwide. Haier¡¯s current domestic market share for refrigerators, freezers, air-conditioners and washing machines is around 30%. Haier products are marketed in 12 out of 15 European chain supermarkets and 10 America¡¯s. Haier design, production and sales facilities in the United States and some European countries are staffed by local employees. All Haier overseas factories are in operation."

Jai

March 1st, 2004, 04:54 AM

Neon,

I'm not sure of the details, and perhaps the Chinese members can elaborate, but the PRC has instituted a population-registration system known as "hukou." People who have the "urban hukou" permission, usually the educated and the middle/upper classes, only have permission to live in the Cities. Workers and rural Chinese, usually the poorer sections of society, have "rural hukou" status, and are not allowed to live in the cities.

It is mainly because of the stringency of the system that denies city entry to the unwashed masses, and the unequal resources spent developing China's model cities, that critics say that China's cities are not representative of the entire population. Strangely enough, this caveat to Chinese city development is not something that is often talked discussed, and as such few people know about it.

A good introduction to the hukou system can be found in a lengthy paper by Kam Wing Chan and Li Zhang Department of Geography University of Washington, entitled "Hukou System and Rural-Urban Migration in China: Processes and Changes" (http://csde.washington.edu/pubs/wps/98-13.pdf) (.PDF file, so right-click and save-as the link), but it was written several years ago, and from what I understand, there has been some reform and opening up of the system since then.

This article (http://app1.chinadaily.com.cn/star/2003/0612/fo5-1.html) from the Shanghai Star from 2003 is an interesting read. I'll quote it in full below:

Stemming the human tide
Shanghai Star. 2003-06-12

(By Xing Bao)

A JOKE popular with Chinese compares hukou, the household registration system, to the human appendix - useless most of the time, but acutely painful when inflamed.

Launched in 1958, China's hukou system classes people as rural or urban residents and requires them to live and work in their places of permanent residence.

The policy was strictly observed in past years until about a decade ago, when - with food security ensured - the country loosened its restrictions and allowed some peasants to seek jobs in cities. In earlier years they could be arrested for doing this.

In the past decade, an estimated 100 million rural residents have migrated into cities to work, but because of their rural hukou, they have been denied equal access to jobs, welfare and legal protection.

Finding it hard to find decent jobs, many migrant workers did whatever they could to survive, usually heavy, dirty and badly paid jobs urbanites refused to do.

They have had to pay excessive fees for social services. And police can still summarily expel from cities those migrants without residence documents, the so called "floating population".

"Such categorization of people causes discrimination. It results in people being born with different status," said Feng Lanrui from the Chinese Academy of Social Sciences.

Full urban resident status means not only a better living standard, but also privileges such as government subsidies for those below the poverty line, a better educational environment, superior employment opportunities and social insurance. The farmers have only themselves to depend on.

Children in the countryside have to study hard to squeeze themselves into colleges which can help them gain an urban hukou, which is something city dwellers are born with.

Painstaking efforts

Calls to eradicate the hukou system, which has restricted labour mobility and caused inequality among compatriots, have been frequently heard in recent years. Yet the operation to remove this 50-year-old system won't be as easy as an appendectomy.

Some reforms have been vigorously conducted in many parts of China.

The crucibles of hukou reform during this period have been the small urban centres, towns and small cities, which are also part of the country's urbanization strategy.

Last year China mandated that all urban areas at and below the small city-level (or having a population of less than 100,000) should grant urban hukous to rural residents with a fixed job and home in the city.

"This is unprecedented in China," Feng said.

"On the surface, the reforms simply change identification documents for a population of migrants who have already established themselves in China's urban centres. In a deeper sense, however, this change puts the social standing of qualified migrants on a par with urban residents and provides them with full access to the advantages of city living."

However, in the eyes of some experts, the current reforms are to some degree not so well conceived.

"They ignore the fact that the jobs available in small urban centres are insufficient. Most rural migrant workers have to travel to large cities in search of jobs," said Zhang Henian, a professor of demography with the Shanghai Social Sciences Academy.

An alternative approach, he argued, would be, first, to cease classifying hukous as urban and rural and, second, to allow Chinese to reside where they wish.

Cities would then grow "organically" as in other countries, dictated by the availability of work, housing and social services. [Jai's note: This is what I mean by organic city development in India]

Irrational fear

The main obstacles in the way of more liberal hukou reforms, according to many experts, is the fear among city leaders that their cities lack the capacity to support large inflows of rural migrants.

However, in Feng's eyes, the current overcrowding in cities is actually caused by the current rigid hukou system.

"Those who should leave are not allowed to leave, while those who can establish themselves in the city are kept out," Feng said.

The hukou system not only keeps rural people out of the city, it also restricts city residents who want to move to other cities.

Yet population mobility is an unavoidable accompaniment to economic development. The United States, Australia and China's Hong Kong have the world's largest floating populations. Far from seeing this population as a burden such regions benefit greatly from it as a source of prosperity.

Statistics show that in Shanghai and Beijing, 20 per cent of GDP is contributed by migrant workers.

As for the possibility of "blind floating" or chaotically drifting people, he argued that cities should allow higher living costs and taxes to sift out those without compelling economic purpose from residing in the major urban centres. Those unable to afford the expense of urban life would have to move out.

Admittedly, in the past 50 years, the hukou system has greatly helped in ensuring the country's social stability and maintaining order in cities by restraining the influx from countryside, preventing it from overwhelming urban employment, housing and social services.

However, is it right to sacrifice some people's opportunities in the name of social order?

There is no doubt every country needs order. But the problem is how to guarantee such order - whether by constantly working to meet people's demands, or by tolerating oppressive controls, according to Feng.
----=--==--=---=---=--==--=----

The reason China's gleaming major cities seem so first-world, is that they are... at the expense of locking the great majority of China's third-world population outside the city walls. While Chinese growth and development is impressive, and worthy of pride, it is a fact that they are not representative of China.

This is just another example of the two paths India and China are taking towards development. India is taking the bottom-up approach while China is taking the top-down. It remains to be seen whether one system is ultimately a better developmental generator than the other, but even then, I, personally, would prefer the system that grants freedom, even at the cost of economic growth. Many mainland-Chinese I have talked to balk at the idea, and prefer growth at the expense of personal freedom. Much has been written about the individualistic nature of Indian civilizational ethos, versus the collectivist of Chinese for the reasons behind the two systems; and, to some extent, I would say that this is true. But I consider it to be more of a social/political difference rather than cultural.

However, I (because of "individualistic Indian civilizational ethos?" *shrug*) am not wont to claim that one system is best for everyone on Earth. If the Chinese feel happy under such a system, more power to them; however, I would never want such a system for India.

My knowledge of this is entirely superficial, though. Could the Chinese forum members here educate us as to the details and the extent of the hukou system? How exactly is it implemented; do you have to carry identity/residence cards with you at all times? Do the authorities routinely check for them?

How exactly does one get granted an urban hoku? Is a college degree enough/the only way, or are there others?

Do you expect the PRC to open up restrictions anytime soon?

Regards,
Jai

Jai

March 1st, 2004, 05:09 AM

Originally posted by muchbetter

How much do that auto-components maker and generic drug maker earn abroad?

Honestly, I have no idea. My familiarity with the economics of it all is just as an observer of the news.

I do know that India's automobile manufacturers have recently started moving onto the world market in a big way. For example, Tata's Indica is sold in Europe by Rover, and Mahindra and Mahindra's agricultural equipment accounts for a very sizable portion of its sales; in some parts of Oklahoma and Arkansas (US States), they've cornered the local market. Foreign automobile manufactures are investing heavily in Indian auto manufacturers, and there is much talk of a new wave of engineering outsourcing to Indian companies.

I do know that Dr. Reddy's Pharmecuicals is one of the worlds leading, if not the leading, manufacturers of cheap, generic varieties of expensive drugs. Much of the affordable AIDS and Polio vaccines that are used in Africa and Asia are exported by them. Various Indian outsourcing firms have now started developing the idea of "medical outsourcing", in which doctors sitting in their offices in India via computer and satellite will be able to diagnose and treat illnesses in Belgium or New York. This sector in particular is expected to be the next outsourcing boom, and will significantly lower health care costs; particularly in an America which faces a Medicare crisis around the corner; and also will allow poorer nations/people access to the best doctors and treatments that they would ordinarily would not have had access to.

There is another off-site thread that my be of interest to anyone interested in India's automobile industry: Indian Autos Thread (http://www.bharat-rakshak.com/ubb/ultimatebb.php?ubb=get_topic;f=2;t=002403)

Best Regards,
Jai

chewys

March 1st, 2004, 05:30 AM

China has the Hukou system to prevent the rural masses from overwhelming the city housing and infrastructure. There is controlled migration from rural areas to cities and smaller cities all across China.

Over the last decade at least 100 millions have moved from country sides to cities, and this trend would grow in the future.
The plan is to have about 50 % of Chinenese to live in urban area in the next 30 years or so.

However, when we look at city population sizes, Shanghai and Beijing are among the most populous cities of the world and not much different from Delhi and Mumbai. So I do think the excuse given is rather disingenious.

Jai

March 1st, 2004, 06:17 AM

What excuse am I giving?

Without the hukou system Beijing or Shanghai would look a heck of a lot more like Mumbai or Delhi. Added to this that the 2 former cities have a 10+ year head-start on, a more generous building code, and the benefit of a command-based development scheme compared to the latter 2, I really don't see how any sort of genuine conclusion can be made on such a comparison?

I'm not trying to pass judgment or argue the merits/demerits of such a system (though I guess my position is rather clear), but I honestly don't think a comparison can in any way be accurate. That being said, India still has a lot of work to do before such a comparison can really be made.

The thing is, unlike in the last 50 years, the generation of Indians today exude a collective self-confidence that is amazing. There is almost a zeal to try to drive India forward. One of my professors compared it to Japanese society post WW2, except that in India unlike post-war Japan, the mantra is 'success of the individual is success of the country.' The reason this newfangled exuberance is so talked about is because it represents a sea- no ocean-change from the previous mindest.

Thus, I hope and remain confident that these obstacles toward growth will pragmatically be cleared.

chewys

March 1st, 2004, 07:15 AM

You don't get it, don't you.
It's not only Shanghai and Beijing, but literally hundred of Chinese cities that have become well developed in the last 10 years or so.

The Hukou system would only prevent people from sleeping on the street pavement and creation of slums in city area, but in no way would it be remotely connected with the phenomenal growth and amazing urban development across scores of cities in China.
Chinese cities are still expanding, with workers filling in from the country sides. Many new satelites towns are aslo being created at outskirts of Beijing, Shanghai and other major cities, to house expanding workers and reduce congestion in established cities.

The infrastructure development across China is also phenomenal. China started building expressways in the last 20 years, and now has the second longest expressways network in the world after US. Go to the infrastructure section, you can view majestic bridges and spanking metros being built al over China.

In East Asian cities, the are also height limits since the cities are rather compact and some are within earthquake zone. Seoul is less than 100 km from North Koran border and yet there there are many high rise buildngs there. Singapore has a rather strict limit on height control due to airline flight path, and yet it could still built high rises. I don't really understand the excuse for India.

I have searched the internet looking for India's infrastructure and cities development, and the feeling is that India has a long way to go in this respect, despite all the glowing from the media. I may be wrong though and I hope so.

huaiwei

March 1st, 2004, 09:48 AM

Originally posted by muchbetter

"Established in 1988, Huawei Technologies ,Shenzhen, China , is a high-tech enterprise which specializes in research and development (R&D), production and marketing of communications equipment, providing customized network solutions for telecom carriers in optical, fixed, mobile and data communications networks. Huawei's customers include China Telecom, China Mobile, China Unicom, China Netcom as well as Thai AIS, South Korea Telecom, SingTel, Hutchison Global Crossing, PCCW, Telemar (Brazil), etc. No wonder so many of you love to misspell my name!! :D

drwho

March 1st, 2004, 10:10 AM

Originally posted by huaiwei
No wonder so many of you love to misspell my name!! :D

haha i had the same thought :)
:D :happy: ;)

drwho

March 1st, 2004, 10:19 AM

Originally posted by huaiwei
No wonder so many of you love to misspell my name!! :D

haha i had the same thought :)
:D :happy: ;)

drwho

March 1st, 2004, 10:34 AM

Originally posted by huaiwei
No wonder so many of you love to misspell my name!! :D

haha i had the same thought :)
:D :happy: ;)

drwho

March 1st, 2004, 10:35 AM

oops sorry for tripple-posting :/

drwho

March 1st, 2004, 02:07 PM

Well drawing a comparison between India and China is very hard.
The reason is Culture,Social,Policy/politics and economic policy.

My theory is this (me and Jai may have diffrent opinion about it) That if you look at the economic history of India you will find alot of protectionist measures.
For 50 years since the independence of India ,India have not been so focused on market friendly measures.

During the protectionist era, India was more focused on "Swadeshi" self-sufficient economic policy and implemented protectionist measures to reduce foreign competition on trade and investment.

The government also imposed strict controls on exports.

According to IMF,India's share of world trade falls from 2.5 %(1947-1951) to 0.4 percent (1980-1984).

Government-owned industries face little competition or pressure to maintain efficiency. As a result, Indian exports compete on the basis of price rather than quality.

1979 when China made market reforms,India still went on with its protectionist measures.

it was not untill 1991 when India had a financial meltdown and Narishma Rao (Congress-gov) carried out markets reforms that India now sees the effect of.

I think that the skyscraper-boom in China is because of the 1979 market reform and a successful city planing. (muchbetter,neon,chewys may correct me if i am wrong on this part) :)

India has just started to get a infrastructure boom and like the guys on the board says,India has a very long way to go.

But is India shining?

my answer is yes ,when it comes to economic growth it does.2003 was the first time India made an impressive 8% growth and we now have the economic model for future growth.

But there is alot of work to do.

-Socioeconomy
-infrastructure
-education
-carring out market reforms (cutting gov-spending to meet the fiscal debt)
-100% FDI -reform in infrastructure is important

Dont forget that it is election year in India so there will be alot of "India Shining"-comments from politicians:)

Modern skyscrapers has just started to pop up in India.

:)

Bond James Bond

March 6th, 2004, 09:12 AM

I, too, have starting following India's economic development with interest. Here's an article from today's NY Times:

March 5, 2004
India Hopes Sale of Assets Raises $3.5 Billion
By SARITHA RAI

BANGALORE, India, March 4 - A public offering of a 10 percent stake in the Oil and Natural Gas Corporation, the country's biggest stock sale ever, will open Friday, the last of six equity sales by the Indian government.

The offerings are coinciding with an upbeat economy and successes of the government in selling stakes in companies like Maruti Udyog, the country's largest automaker. They are attracting foreign investors and thousands of Indian retail investors, including many novices.

"These are many good stories all delivered on a plate to investors," said Naina Lal Kidwai, vice chairman and managing director of HSBC Securities and Capital Markets (India), lead manager in two of the offerings.

When fully sold, the government's offer of about 140 million shares in Oil and Natural Gas should raise at least 97.2 billion rupees ($2.14 billion).

The government hopes to raise about $3.5 billion through the six asset sales. That would enable it to make substantial reductions in its deficit, which has widened in recent weeks as the government has cut taxes and duties for the middle class and farmers ahead of federal elections set for April and May.

Oil and Natural Gas, known as ONGC, is the country's largest crude oil producer and a leading player in an economy that is expected to grow more than 8 percent this year. It is India's most profitable company, with the largest market capitalization, and is 84.1 percent government-owned. In the 12 months ended in February, its shares nearly doubled, outperforming the soaring Bombay stock exchange index, which rose just over 70 percent in the period.

Among those enthused by this offering and the others is Kishore Desai, 65, a Bombay accountant who said he had never owned a single stock but was now entering the equity market in "a big way" by applying for every one of the government's stake offers.

"The economy looks stable," Mr. Desai said, "and investing in the stocks of state-owned companies does not appear such a gamble."

Besides the ONGC shares, the government's offerings of the last three weeks include 10 percent of the Gas Authority of India, the country's biggest gas transporter, which was 67.3 percent government-owned, as well as 20 percent of the Dredging Corporation of India, which deepens waterways for ships. The government is also selling its residual stakes in the Indian Petrochemicals Corporation, which is controlled by Reliance Industries; the Tata-controlled CMC Ltd., a software services company; and the IBP Company, a petroleum products marketing concern controlled by the Indian Oil Corporation.

Four offerings have already closed and were all oversubscribed, with investors bidding for 11 times the number of shares on offer for CMC. Dredging was oversubscribed 6.5 times, Indian Petrochemicals nearly five times and IBP more than twice.

The Gas Authority offering, which closes Friday, was oversubscribed four times by Thursday evening. "By redistributing public wealth to the public, the government will aid in adding depth to the markets and increase investor confidence," said Prithvi Haldea, managing director of the Delhi-based capital markets research firm Prime Database.

The government's offerings so close to the recently scheduled federal elections are also being seen as a test of the administration's privatization efforts and, consequently, a measure of its success in bridging the fiscal deficit.

"If any of these issues go wrong, they could lose the elections on this count alone," said Brian Brown, the managing director of Citigroup Global Markets, based in Bombay.

Foreign investors have been largely responsible for driving up India's market indexes, pumping in more than $7 billion in 2003 and increasing the total market capitalization by 73 percent. They have been attracted by the country's economic growth as well as the offerings themselves.

"Foreign investors are seeing India as a strong investment destination because of these high-quality companies," said Ms. Kidwai of HSBC Securities. She said institutional investors, including overseas ones, had outbid retail investors many times over for about half the shares set aside for them.

Apart from the government's offerings, several private biotechnology, retail and media companies are expected to offer their shares to the public for the first time this year. According to Prime Database, more than over 600 billion rupees ($13.23 billion) of issues, including from such companies as India's largest software services maker Tata Consultancy Services, are in the pipeline.

Newer foreign investors are expected to view the coming public offers, especially the sale of government holdings in India's biggest crude oil producer and gas transporter, as an opportunity to get a taste of the Indian equity markets, and more than a dozen are expected to buy in big. "India is the last of the big markets which is still comparatively a virgin territory for foreign investment into the equity markets," said U. R. Bhat, head of equities of J. P. Morgan India.

Moreover, Mr. Brown of Citigroup said, "Many first-time foreign investors will see large companies such as Oil and Natural Gas as safe bets, and this will be a driver for future inflows."

Retail investors are just as eager to participate. To invest in the current government offerings as well as some coming from the private sector, more than 100,000 have set up depository share accounts in the last few weeks, bringing the total of such accounts to nearly one million in the last year. The government requires investors to have such depository accounts to invest in the state offerings, as do some companies.

As a lure for the offerings, the government has given pricing concessions. For instance, Indian Petrochemicals, which opened at a floor price of 170 rupees ($3.75) a share, was offered to the retail public at a 5 percent discount over that price.

Some investment experts warned that the market could overheat. "With such incentives, retail investors are beginning to think that the stock market boom is a party that will never end," said Sandeep Ghate, investment banker and director at the Bombay-based Securex Capital Markets India Ltd. The stock market has already lost some steam with the glut of supply and a tinge of uncertainty over the outcome of the coming elections.

Still, Mr. Ghate said he was advising friends and acquaintances to jump in. "With interest rates dropping to 5 percent lows," he said, "the Indian middle class has no other reasonable investment avenues."

Many critics view the discounts as a populist gimmick, coming so close to the elections, though other people say they make sense since taxpayer money originally created the six companies. In fact, some say, the government's rush to put so many company stakes on quick offer is reckless privatization, an attempt to increase revenues without tackling the problem of the fiscal deficit.

That does not bother people like Nikhil Narsinghani, 20, a management student at Christ College in Bangalore, who is trying his luck with two of the new government offerings.

"If it is a government company, it will give good returns," said Mr. Narsinghani, one of the thousands of Indians who invested and booked handsome profits in last year's offering of Maruti Udyog. Now, he said, a third of his 60 classmates are looking to repeat that feat in the offerings of government-owned companies.

huaiwei

March 6th, 2004, 10:52 PM

India's red hot with unit trust investors

S'poreans are plonking millions of dollars into Indian funds, which have posted knock-out gains of as much as 115%

By Leong Chan Teik

RETIREE John Tai, 61, loves his golfing sessions. Then there is also ballroom dancing, which he is learning with his wife, a retired teacher. In between such leisurely pursuits, he devotes time to an activity that would make most people yawn - reading up on stocks and economies.

Mr Tai, who retired from the oil industry last year, is a seasoned investor, having bought and sold Singapore stocks for most of his working life. Last year was a great year for his investments, and he was inspired to scout around for a place to park some more of his money.

Thailand? The economy was sizzling and, well, he already had some money in a unit trust invested there. And no, he did not want to over-invest in the country. Same, too, for South Korea and the Asia-Pacific region.

China? It was tempting to park more money there. Then another country, also with a billion-plus people, caught his attention - India. The more he read, the more he realised that its economy was likely to be as rip-roaring as China's. He just had to be in on it. 'My gut feel was there's a lot of room for India to grow,' he says.

One day last October, he drove from his Seletar Hills home to the city office of finatiQ, a distributor of unit trusts. He handed over more than $50,000 to buy into the HSBC Indian Growth Fund. 'Within two months, it rose by 38 per cent,' recalls Mr Tai with delight.

Encouraged by the result, last month he put down more than $50,000 into another unit trust - the OCBC Savers India Fund. To date, his investment in the HSBC fund is up by about 35 per cent but his OCBC fund is down slightly after the Indian stock market dipped.

No worries: Mr Tai reckons the future for India - and by extension his investments - is sunny. He is among a growing number of Singaporeans who have been pouring money into unit trusts that invest in India.

As a reflection of that, the size of the HSBC fund has swelled from $7.6 million as at the end of January last year to $51.2 million a year later.

Similarly:

OCBC Savers India Fund: Up from $3.1 million at $35.4 million; and First State Regional India Fund: Up from $12 million at $34 million.

These increases in fund sizes are largely due to inflows of investors' money and partly due to an expansion in the value of the investments. These funds have posted knock-out gains for investors: 115.2 per cent, 82.5 per cent and 70.8 per cent respectively, in the 12 months ended Feb 13 this year.

The rise was fuelled by a record inflow of US$7 billion (S$11.9 billion) from foreign investors into Indian stocks last year - 10 times more than in 2002. 'India looks like it is at the beginning of a multi-year upswing,' Mr Mark Madden, who manages the US-based Pioneer Emerging Markets Fund, told The Asian Wall Street Journal last week.

For good reason: India has said it is expecting economic growth of 8 per cent for the year ending next month - the highest after China among the world's major economies. The Indian economy is riding several trends as massive as its Ganges River.

The biggest of these is the boom in outsourcing of jobs - especially those related to information technology (IT) - to India by companies ranging from American Express of the United States to Telstra of Australia. As a result, Indian IT giant Infosys, for example, added 2,689 new employees - its largest quarterly recruitment ever - in the last quarter.

Then there is the boom in India's pharmaceutical sector, which exported US$2.5 billion worth of drugs last year.

Mr Adrian Lim, who manages the recently launched Aberdeen India Opportunities Fund, says that on recent trips to Indian cities such as New Delhi and Mumbai, he sees financial evidence of companies becoming more lean and efficient.

There are also emerging tangible signs here and there that suggest more prosperous times. 'Some banks are investing in shiny new headquarter buildings to upgrade their image,' he tells The Sunday Times. 'On the road, you see more new cars, more new bikes, more new highways.'

By the way, Hero Honda, the largest manufacturer of motorbikes in the world, is hitting new highs in production every quarter. Adds Mr Lim: 'And there is an ever increasing number of gourmet coffee outlets.'

Indians have been told they never had it so good. 'We are announcing the arrival on the world stage of an India that will be an economic powerhouse,' Prime Minister Atal Vajpayee declared recently. But after last year's sterling performance, whether Indian stocks can rise higher and soon is anything but certain. Stocks are stocks and, well, you can't be sure.

Mr Vipul Mehta, who manages the OCBC Savers India Fund, says attractive stocks still abound. A broad group of Indian companies is growing their earnings by between 15 per cent and 20 per cent a year. 'But more than just strong earnings growth, Indian companies in general also stand out in Asia for their high return-on-equity,' he says. 'Indian companies are enjoying the highest cash flows and the lowest debt levels in history.'

If that continues to be true, Mr Tai the retiree should have added reason to be dancing.

Bond James Bond

March 7th, 2004, 10:48 AM

^I was wondering the other day if India had a decent venture capital sector. I've read that India graduates like, zillions of scientists and engineers from colleges each year, many with advanced degrees, so it occured to me that it might be a good idea to scour all those people for good ideas in biotech and stuff like that. The mention of the pharmecutical industry in your article reminded me of that.

Anyway, here's a typical example of the zillions of articles you find these days on whining, spoiled Americans complaining about a bunch of Indians taking their jobs, and how the Indians are perplexed at it all . . .

NY Times
March 7, 2004
India Takes Economic Spotlight, and Critics Are Unkind
By AMY WALDMAN

BOMBAY, March 2 — India has finally arrived on the global economic scene. Unfortunately, like a debutante suddenly told she is wearing the wrong dress, it is not exactly the triumph India imagined.

In recent weeks, the outsourcing of white-collar service jobs to places like this financial capital on the Arabian Sea has become the focus of the American presidential campaign, the brunt of jokes on late-night shows, the subject of angry Web sites, and the target of legislation in more than 20 states and Washington.

Long caricatured in many American minds as home only to snake charmers and poor people, India is now being caricatured as a nation of predatory brains set on stealing American jobs.

The strong reaction to the shifting of jobs is spawning frustration in India, a country the United States was cheering not so long ago as it began to open a largely socialist, closed economy and enter the global arena. It is also surfacing as a potential irritant in relations between the countries. Indians say they are doing exactly what the United States wanted, and bridle at the new criticism as a double standard.

"The U.S. is propagating capitalism — we don't really understand why they are so scared," said Ravi Shankar, 36, an employee of Tata Consultancy Services, India's largest technology services company. "If you're going to talk about competition, you should have no fear — may the best man win."

But now India's pride has become America's pain. Over the last decade, riding technology advances, India's engineers and English-speaking college graduates have been taking on more work — from credit-card complaints to software programming to research for American companies half a world away.

The uproar over outsourcing shows no signs of abating, because outsourcing itself is only likely to grow. India's success has both contributed to and coincided with stagnating employment in the United States. Both countries face elections this year. As a result, an issue that would largely be confined to corporate America has become politicized and emotional. "India has joined the ranks of other big job thieves — Japan, China and Mexico," the Indian magazine Outlook wrote this week, citing a "barely concealed racism" in Internet debates. Senator John Kerry, the likely Democratic nominee for president, has called chief executives who shift work abroad "Benedict Arnolds."

"Whenever such issues are taken up in competitive politics, the economy suffers," said Arun Shourie, India's minister for disinvestment, communications and information technology. He has spent the last two years fighting to privatize India's bloated state-owned enterprises, facing fierce political opposition along the way.

Indeed, the furor in the United States is highlighting India's own ambivalence toward the economic reforms that began here in the early 1990's. The competitiveness of India's new industries stands in sharp contrast to the high tariffs and red tape that still shelter many other parts of the economy.

American officials have repeatedly expressed frustration at the relatively low level of American imports to India. While total exports from American companies to India grew to $4.1 billion in 2002 from $2.5 billion in 1990, the United States still has a trade deficit of about $9 billion with India. On a visit to New Delhi in February, United States Trade Representative Robert B. Zoellick cited India's high tariffs — like a 38 percent applied agriculture tariff, which is three times as much as America's. "We want to keep our markets open," he said, "but to do so we need to be able to open markets abroad."

His comments were interpreted here as evidence that the Bush administration would seek to use the reaction toward India as a lever to pry open wider India's economy.

Mr. Shourie said that when India finally opened its agriculture markets, it would affect "millions of people" — far more than are being affected by India's success in information technology. "If the United States feels we must understand their political compulsions," he asked, "why is it that American politicians or trade negotiators sitting at the table would not understand our political difficulties?"

He worries, he said, that the reaction in the United States will strengthen the opponents of India's own economic reforms. "It gives a very strong handle to persons in India who oppose opening up," he said.

Indians say that the beneficiaries of outsourcing are far fewer than Americans realize. Well under a million people work in information technology services. Most of India's population of more than a billion, still largely rural, has never heard of outsourcing or benefited from it. Unemployment in India — far higher than in the United States — is at its highest level in decades, many economists say. Officially pegged at 7 percent, with more than 40 million registered job seekers last year, the real unemployment rate is probably three times that, economists say.

Vivek Paul, vice chairman of the Bangalore-based Wipro Technologies, calls it "perceptual amplification."

"If three million jobs have been lost in the U.S., and 100,000 jobs created in India, every one of those three million thinks, `That's my job,' " he said.

The danger is that anger in the United States will affect relations with India that otherwise have only deepened in recent decades. There are nearly two million Indian-Americans in the United States today — with the highest income of any ethnic group — and India is the second largest country for legal migration to the United States, after Mexico.

The United States now has more foreign students from India — more than 70,000 — than from any other country, and the information technology industry itself seems to represent a sort of synergy, with many Indians working in Silicon Valley, and innovation flowing both ways.

That spirit is showing strains. While Indian officials have decided that their best strategy is to let American corporations fight the political battle in the United States, they cannot resist the occasional rhetorical flare-up. "Those who lecture about free trade," Mr. Shourie said, "should practice it."

But not everyone here cheers India's new identity as what Babu P. Ramesh, writing in the Economic and Political Weekly, called "one of the prominent electronic housekeepers to the world." Indians say they face the same forces churning the American job market. As the use of information technology increases here, so, too, will the labor displacement that America has experienced. And over time, many of the jobs that have come to India could move on. As new competition emerges from other countries, Mr. Paul of Wipro said, "we'll have to swallow the same medicine of globalization."

huaiwei

March 7th, 2004, 10:48 PM

Perhaps the blame game is going to continue on for some time, and the target increases as well. ;)

Countries seek share of India's outsourcing boom

From South Africa to China, the race is on to build up call-centre capacity and back-office processing units

JOHANNESBURG - India may still be the world outsourcing king but a growing host of countries aims to knock it off its throne. From South Africa to Russia to Hungary to China, ambitious nations and companies are rushing to build call-centre capacity and back-office processing units to claim their share of America's rich outsourcing pie.

So, even as US presidential candidates and labour unions bemoan the loss of jobs, there is growing global ability to attract American work, said a report in The Christian Science Monitor. 'This Kerry thing bothers us not one tiny jot,' said South African IT manager Ian McLuckie, referring to Senator John Kerry, who has been sparring with Democratic presidential rival John Edwards - and President George W. Bush - over how to respond to the trend.

'Americans can fight this trend with customs fees or export duties or whatever,' Mr McLuckie told The Monitor, 'but after a while, economics will prevail' - and jobs will continue to emigrate to cheaper places. Mr McLuckie leads a technology team at the headquarters of EDS Africa, a division of the Texas-based global outsourcing firm EDS.

Last year, US firms struck US$119 billion (S$203.5 billion) worth of million-dollar-plus outsourcing deals - up 44 per cent from 2002, according to Gartner, a research firm. This year, 30 per cent more US firms would be outsourcing than last year, it said.

India's challengers, it said, included South Africa, Canada, China, Hungary, the Philippines, Poland and Russia. A second tier includes Belarus, Costa Rica, Egypt, Estonia and Venezuela. Among the promising rookies are Ghana, Mauritius, Morocco, Nepal, Senegal and Vietnam.

South African officials see the outsourcing trend as a desperately needed economic boon. They envision up to 100,000 new call-centre jobs by 2007. Like outsourcing seekers worldwide, South Africans tout their country's strengths:

- Cultural ties with the US and Europe, including the South African accent, which often sounds vaguely British to American ears
- A shared time zone with Europe, eliminating the need for the more expensive all-night call centres that are common in India
- A strong reservoir of business skills from its mature insurance and banking sectors
- Falling phone rates due to a big new fibre-optic cable running up Africa's coast and connecting the continent with Europe.

Currently, just 5 per cent of Mr McLuckie's business is overseas outsourcing work. In two years, it will be 50 per cent, he said. His IT group employs 450 people, with 100 to 150 more recruitments projected for next year.

Rookie programmers at EDS Africa make roughly US$18,400 a year and must pay all benefits, including health insurance, themselves. A US worker might get $50,000, excluding benefits. But given South Africa's 40 per cent unemployment, these jobs are bonanzas.

However, South Africa cannot achieve its goal without competing with India. The South Asian giant has roughly 70 to 80 per cent of outsourcing jobs, said Mr Richard Matlas, a Gartner research director. 'But as their wages start to go up, you'll see shifts to other countries.'

huaiwei

March 7th, 2004, 11:24 PM

More to outsourcing than just economics

By THOMAS L. FRIEDMAN
THE NEW YORK TIMES

BANGALORE (India) - Indians are so hospitable. I got an ovation the other day from a roomful of Indian 20-year-olds just for reading perfectly the following paragraph: 'A bottle of bottled water held 30 little turtles. It didn't matter that each turtle had to rattle a metal ladle in order to get a little bit of noodles, a total turtle delicacy. The problem was that there were many turtle battles for less than oodles of noodles.'

I was sitting in on an 'accent neutralisation' class at the Indian call centre 24/7 Customer. The instructor was teaching the would-be Indian call-centre operators to suppress their native Indian accents and speak with a Canadian one - she teaches British and American accents as well, but these youths will be serving the Canadian market.

Since I'm originally from Minnesota, near Canada, and still speak like someone out of the movie Fargo, I gave these young Indians an authentic rendition of 30 Little Turtles, which is designed to teach them the proper Canadian pronunciations. Hence the rousing applause.

Watching these incredibly enthusiastic young Indians preparing for their call-centre jobs - earnestly trying to soften their t's and roll their r's - is an uplifting experience, especially when you hear from their friends already working in these jobs how they have transformed their lives.

Most of them still live at home and turn over part of their salaries to their parents, so the whole family benefits.

Many have credit cards and have become real consumers, including of American goods, for the first time. All of them seem to have gained self-confidence and self-worth.

A lot of these Indian young men and women have college degrees, but would never get a local job that starts at US$200 (S$342) to US$300 a month were it not for the call centres. Some do 'outbound' calls, selling things from credit cards to phone services to Americans and Europeans. Others deal with 'inbound' calls - everything from tracing lost luggage for American airline passengers to solving computer problems for customers in the United States. The calls are transferred by satellite or fibre-optic cable.

I was most taken by a young Indian engineer doing tech support for a US software giant, who spoke with pride about how cool it is to tell his friends that he just spent the day helping Americans navigate their software.

A majority of these call-centre workers are young women, who not only have been liberated by earning a decent local wage (and therefore have more choice in whom they marry), but are using the job to get MBAs and other degrees on the side.

I gathered a group together, and here's what they sound like:

Mr M. Dinesh, who does tech support, says his day is made when some American calls in with a problem and is actually happy to hear an Indian voice: 'They say you people are really good at what you do. I am glad I reached an Indian.'

Mr Kiran Menon, when asked who his role model was, shot back: 'Bill Gates - I dream of starting my own company and making it that big.'

I asked Ms C.M. Meghna what she got most out of the work: 'Self-confidence,' she said, 'a lot of self-confidence, when people come to you with a problem and you can solve it - and having a lot of independence.' Because the call-centre teams work through India's night - which corresponds to America's day - 'your biological clock goes haywire', she added. 'Besides that, it's great.'

There is nothing more positive than the self-confidence, dignity and optimism that comes from a society knowing it is producing wealth by tapping its own brains - men's and women's - as opposed to one just tapping its own oil, let alone one that is so lost it can find dignity only through suicide and 'martyrdom'.

Indeed, listening to these Indian young people, I had a deja vu. Five months ago, I was in Ramallah, in the West Bank, talking to three young Palestinian men, also in their 20s, one of whom was studying engineering. Their hero was President Yasser Arafat. They talked about having no hope, no jobs and no dignity, and they each nodded when one of them said they were all 'suicide bombers in waiting'.

What am I saying here? That it's more important for Indians to have jobs than Americans? Never. I am saying that there is more to outsourcing than just economics.

There's also geopolitics. It is inevitable in a networked world that our economy is going to shed certain low-wage, low-prestige jobs. To the extent that they go to places like India or Pakistan - where they are viewed as high-wage, high-prestige jobs - we make not only a more prosperous world, but a safer world for our own 20-year-olds.

drwho

March 8th, 2004, 12:19 AM

Thursday March 4, 1:52 PM

India outsourcing surge hits rich Asia's property
By Umesh Desai and Dominic Whiting

BOMBAY/BANGKOK, March 4 (Reuters) - A building boom is sweeping India as global firms hive off jobs to Bangalore, Bombay and Delhi for cheap labour and rents, spelling gloom for Asia's traditional business centres Singapore, Hong Kong and Tokyo.

Good English and even a gift at learning accents have made Indians popular for manning call centres serving Britain, the United States and Australia.

Banking giant HSBC Holdings , for example, said late last year it would close call centres in Britain employing 4,000 people and add to its operations in India.

But now companies are also latching onto India's high education standards, looking to "offshore" a raft of jobs, such as claims processing, logistics, marketing and procurement from more expensive Asian cities.

The latest trend is for investment banks to shift parts of their research arms to India. Morgan Stanley and JP Morgan Chase and Co are planning to hire dozens of analysts in Bombay this year.

Analysts in India earn $15,000 a year while a typical Hong Kong salary is $90,000. The average annual rent for a 100-person office in India is $100,000, a fifth of the cost in Singapore.

The upshot is the suburbs of India's biggest cities have become huge, dusty building sites, while landlords in Singapore, Hong Kong and Tokyo fret over price cuts to keep tenants.

After years of decline, property markets in the three cities are only just emerging on hopes of a resurgent global economy.

"You'll find buildings will hollow out in the next few years unless owners are imaginative in finding new occupiers," said Timothy Bellman, head of Asia-Pacific strategy for property consultants Jones Lang Lasalle.

CUT PROPERTY COSTS

A recent Jones Lang Lasalle survey showed 60 percent of property executives in Asia had been told to cut costs by more than five percent. One in 10 had to cut by more than 20 percent.

The survey showed firms were likely to cut space by an average seven percent in Hong Kong, by three percent in Tokyo and by one percent in Singapore and Melbourne.

Meanwhile, office demand would grow six percent in Bombay and New Delhi, 10 percent in Shanghai and eight percent in Beijing.

Bellman said it was not all doom and gloom for Asia's developed cities, because the cost gains from moving operations to cheaper centres could be put to good economic use.

Singapore is trying to encourage a biotechnology industry, and Hong Kong is starting to revel in its role as a financial services provider for China.

"For all the back-office jobs being lost, other jobs are increasing," Bellman said. "It's not an easy judgement."

For India, the influx of jobs due to "business process outsourcing" (BPO) is a shot in the arm for a property sector that had been languishing.

In 2004, 11 million square feet (1.022 million sq metres) of office space is expected to be taken up in India's five biggest cities, nearly twice 2002's 6.4 million.

"Two years ago the market was in the doldrums because of the India-Pakistan tensions and a global recession was not allowing multinationals to grow in emerging markets," said Chanakya Chakravarti, executive director at property services firm Cushman & Wakefield India.

"The BPO boom in the past two to three years has led to a resurgence in the Indian property market across segments."

Call centres and other information technology firms accounted for 82 percent of the total office space let in New Delhi and its surrounding areas in the first half of 2003. They took up 51 percent in Bombay and 81 percent in Bangalore.

The $3.6 billion industry is seen rocketing to $13.8 billion by 2007, with the number of jobs quadrupling to one million.

Larsen & Toubro , Unitech Ltd , K.Raheja Developers Ltd, Hiranandani Construction Pvt Ltd, DLF Universal Ltd, RMZ Corporation Ltd, Prestige Estates Projects Pvte Ltd and Arihant Foundations and Housing Ltd are some of the leading construction firms involved in developing Indian properties.

drwho

March 8th, 2004, 01:45 AM

Originally posted by huaiwei
[B]Perhaps the blame game is going to continue on for some time, and the target increases as well. ;)

hehe count on it lah. We will hear alot of "Asia is taking our jobs away"-slogans in the up comming US-election. ;)

Bond James Bond

March 8th, 2004, 07:32 AM

Haha, this was funny:

"'A bottle of bottled water held 30 little turtles. It didn't matter that each turtle had to rattle a metal ladle in order to get a little bit of noodles, a total turtle delicacy. The problem was that there were many turtle battles for less than oodles of noodles.'"

:D

As for outsourcing, the stupid thing about the whole arugment is this: What . . . on . . . earth can a government do to stop a company from hiring someone in another country???

ABSOLUTELY NOTHING!!!!

There are no physical goods crossing international boundaries, so there is nothing to impose a tariff on. I mean, what are they gonna do - create a $1/email charge for all emails originating from India???

LOL, I don't think that would work.

Unionizing American techies won't work - all that will do will be to make American techies even more expensive which will no doubt ensure that American companies hire even more people in India and elsewhere.

Basically, there's nothing anyone can do, and all the political blatherings are nothing but a bunch of hot air.

I say just let in the Indians get rich off of this. Hell, they need jobs and economic development more than Americans (and I'm an American!!).

Bond James Bond

March 8th, 2004, 07:40 AM

BTW, about the call center jobs:

I've done them myself and I can't stand them (well, a couple were OK I suppose). They are low-end jobs that people only do because they are desperate for work, or they're taken by punk rockers to support their drug habits. And they don't pay all that well anyway. IMO it is no great loss to have a lot of those go to India. Nobody here really wants to do those jobs anyway.

True, some of them are "higher-end" call center jobs like Microsoft help lines, but most techies don't want those, either. Quite literally, some people have gone through 4 years of computer science classes in college only to find out they have to spend their first few years answering dumb questions about how to get Outlook Express to work. If the folks in India want to do those, let them.

drwho

March 8th, 2004, 12:38 PM

Originally posted by Bond James Bond
BTW, about the call center jobs:

I've done them myself and I can't stand them (well, a couple were OK I suppose). They are low-end jobs that people only do because they are desperate for work, or they're taken by punk rockers to support their drug habits. And they don't pay all that well anyway. IMO it is no great loss to have a lot of those go to India. Nobody here really wants to do those jobs anyway.

True, some of them are "higher-end" call center jobs like Microsoft help lines, but most techies don't want those, either. Quite literally, some people have gone through 4 years of computer science classes in college only to find out they have to spend their first few years answering dumb questions about how to get Outlook Express to work. If the folks in India want to do those, let them.

true true :);)

drwho

March 8th, 2004, 10:53 PM

Indian inflation exceeds targets

India's inflation rate has soared to almost 6% this year, exceeding the government's annual target of 4.5%, officials say.

"The 4 to 4.5% forecast will be exceeded. But there is nothing to lose sleep over," senior finance ministry official Ashok Lahiri told reporters.

Inflation is a key concern of Indians who go to the polls next month.

The government recently predicted that India's economy will grow by more than 8% in 2003/04.

Government measures

Mr Lahiri said he did not expect higher inflation figures to result in interest rate rises and that the price of food, including that of sugar, would actually fall.

This is the first time officials have admitted inflation targets for the year ending in March would be missed.

But analysts have long maintained the central bank's inflation forecast was optimistic as prices of most goods continue to rise amid economic growth.

"The government knew it would not meet the estimate but it did not want to fuel inflationary expectations by stating it earlier," said Saumitra Chaudhuri, economic adviser at domestic credit rating agency ICRA.

The government has taken several steps in recent weeks to reduce price increases, including cutting import duties on steel and releasing sugar for free sale.

Jai

March 11th, 2004, 03:39 PM

Sorry, I've been out of town for a while (to Mexico! Beautiful country.) Posting on the fly, will reply to discussion later

Japan to shift aid focus from China to India (http://www.atimes.com/atimes/Japan/FC11Dh01.html)

Japan to shift aid focus from China to India
By Purnendra Jain, Asia Times

ADELAIDE - Japan is set to make a historic economic and political policy decision, shifting its foreign aid focus away from China - and to India.

For many years China has been the top recipient of Japan's Official Development Assistance (ODA) that symbolized Japan's economic commitment and political and diplomatic closeness to its powerful Asian neighbor. As recently as 2000, China received some 214 billion yen (US$2 billion) in loans as part of Japan's ODA, while India remained on the periphery of Japan's foreign-aid program; at that time Tokyo had just resumed its yen loans to New Delhi, which had been suspended to demonstrate strong disapproval of India's nuclear tests in 1998.

But this equation is changing fast. If proposed changes in Japan's ODA budget allocations are approved at the political level, China is certain to slip into the No 2 position and India will emerge as the leading recipient of Japan's ODA loans in 2004. China is likely to receive only 100 billion yen in 2004, about 20 billion less than last year - the total loan will be less than half the amount Beijing received in 2000. This is a steep decline. On the other hand, India is certain to receive an amount similar to what it received last year, or even a little more, which will be in excess of 111 billion yen.

An announcement is expected by the end of the month.

Why this shift?
Criticism of Japan's aid policy as being devoid of a philosophy, the misappropriation of aid money in recipient countries, and political scandals within Japan forced policymakers to address these issues through policy change. Moreover, cuts in the ODA budget every year since 2000 - the total budget in fiscal 2002 was $9.1 billion - have also prompted Japan to review its aid policy and set new priorities both in aid-funded projects and country focus. To this end, the government has established several commissions and advisory panels consisting of politicians, officials, business leaders and academics that have proposed numerous recommendations. A better balance between China and India is one of the aims of Japan's new direction in its aid policy.

The shift is no doubt an important milestone in Japan's foreign-aid policy. India was the first recipient of Japan's yen loans when this policy was implemented in 1958. But slowly, India's position declined over the years and countries such as Indonesia and China became the leading recipients of Japan's ODA in Asia. Cold War conditions saw Japan's and India's strategic interests drift apart, and led to a consequent fall-off in economic and diplomatic relations between Tokyo and New Delhi. On the other hand, China continued to rise in prominence in Japan's overall economic, diplomatic and strategic considerations after Beijing and Tokyo signed a treaty of friendship and cooperation in 1978.

With India's recent sustained economic growth, its technical preeminence globally, especially in the information-technology sector, and its diplomatic activism, particularly as a key player in the Group of 20 developing countries, and its push to secure a place as a permanent member of the United National Security Council in recent years, many countries are forced to sit up and take notice of India. Japan is no exception. One way to win back India's heart, hurt deeply in 1998 by Japan's policy response after the nuclear tests, is via its aid policy. Policymakers in Tokyo are convinced it's high time to strengthen diplomatic ties with India.

While China will undoubtedly feel a little disappointed with the continuous decline in Japan's flow of yen loans for infrastructure and other national projects and, more important, because of its status change from No 1 to No 2, Beijing is aware that it commands an overwhelming position in the minds of Tokyo's policymakers. China is a key player in Japan's recent economic recovery, and it is unlikely that Tokyo will intentionally make any policy that would upset the Chinese leadership.

Indeed, Beijing should take this development as a compliment. Japan's aid reductions to China are based on the assessment that China no longer requires Japan's financial assistance as much as it once did. In Japan's analytical framework, China's economy has matured and the country is now able to fund many of its infrastructure projects without support from Japan. Of course, China is not the first country to have seen this transition. There are other cases in Asia, such as South Korea and Singapore, which initially received development aid from Japan but with the growth in their economies they no longer required Japan's aid. Indeed, some of them are now members of the Organization for Economic Cooperation and Development and aid donors in their own right.

The ODA priority shift from China to India does not reflect Japan's policy shift in other areas. Japanese investment in China continues to rise and two-way trade is increasing, reaching a level last year never seen before. India still languishes both in trade and investment areas. It will be decades before the level of Japanese investment and trade with India is as high as with China. Indeed it may not reach that level at all.

The subnational factor
It is not just the national government and business leaders who regard China as a key and influential player for many years to come, Japan's subnational governments and local leaders have also realized the importance of China for their industries and future economic well-being.

In recent years, a large number of Japanese prefectural and city governments have opened their offices in Chinese provinces and cities. Their numbers are ever rising and some Japanese local governments are even closing their offices in countries such as Singapore and Thailand and relocating them to Chinese cities and provinces.

More than just in the area of economic linkages, subnational governments of Japan and China are forging strong ties in educational, cultural and scientific fields through sister-city agreements, whose numbers are increasing by the year.

While currently there are some 256 official sister-city agreements between Japanese and Chinese subnational governments, there is only one between India and Japan, formed as far back as in 1965. The first sister-city link between a Japanese and a Chinese subnational government was formed as late as 1973, and that number has now gone above 250. The Council of Local Authorities for International Relations - a national body in charge of promoting international linkages at the grassroots level - has offices in Beijing and Singapore, but none in South Asia. India appears nowhere on its radar screen.

Moreover, there are close to 40 offices of Japan's local governments in different locations in China, seeking business for their local companies, facilitating investment and coordinating cooperative projects. But there are no such activities in India.

The national government's ODA program should not be regarded as the only indicator of government aid and assistance in a bilateral relationship. Japan's subnational governments now offer a range of assistance to their Chinese counterparts, what can be easily regarded as a "local ODA" program. Japan's local governments have knowledge and expertise in areas such as city planning, transportation, the curbing of industrial pollution, environment management, garbage disposal, sewage and water supply, all of which can be highly useful to Chinese localities. Japan's localities are willing to transfer these skills and know-how, and their Chinese counterparts are embracing them. The Indian side neither courts such assistance nor do Japanese local officials have any such proposal for Indian cities.

A strong bilateral relationship in the future will not just be based on how much money a country doles out to another, but long-lasting friendly relations even in times of stresses and strains will be those whose foundations are based on solid ties at the grassroots and popular level. On this measure, China by far leads others in Asia in its relations with Japan.

While India may take some comfort in becoming the No 1 destination of Japanese yen loans, this does not necessarily signal a close and intimate relationship between the two.

But change, even if small and symbolic, does matter in international relations.

Purnendra Jain is a professor in the Center for Asian Studies at Australia's Adelaide University and president of the Japanese Studies Association of Australia.

drwho

March 11th, 2004, 05:44 PM

S&P sees foreign investments in India picking up

Thursday March 11, 5:21 PM

BOMBAY (Reuters) - Foreign direct investment (FDI) in India's booming economy is set to pick up as investors chase business opportunities stemming from a large middle-class and its rising purchasing power, Standard and Poor's said on Thursday.

But senior analysts at the global credit rating agency warned that the country needed to tackle its high fiscal deficit and remove impediments to sustained growth, such as inadequate infrastructure and frustrating labour laws.

"The tide of the incoming FDI in India is slow... In the near future, incoming investment should start increasing," Surinder Kathpalia, managing director, credit market service at Standard & Poor's in Hong Kong, said in a teleconference.

India attracted foreign direct investments of a little under $3 billion between January and November of 2003, compared with China's $53.5 billion for the full-year.

But the rating agency saw significant promise in the country, with a middle-class estimated at between 300 and 600 million people, and their purchasing power on the rise.

Still, S&P Director Sharad Jain said the impediments to growth included poor infrastructure, frustrating labour laws that made it costly to cut back on staff and a continued reliance on timely rainfalls for a large part of the economy.

Kathpalia also noted India's federal and state government deficits accounted for a massive tenth of gross domestic product.

"India is enjoying relatively high growth. Interest rates are coming down. Whether the government will take this opportunity to further consolidate its fiscal position is one of the issues which we'd like to see," he said.

The federal government expects its deficit to fall to 4.8 percent of GDP in the current year to March and 4.4 percent in the next year from five to six percent in the past few years.

Buoyant tax revenues and proceeds from stake sales in state-run companies have filled government coffers this year.

http://in.news.yahoo.com/040311/137/2by42.html

huaiwei

March 12th, 2004, 04:48 PM

After IT, India is set to grab US textile jobs

by SIDDHARTH SRIVASTAVA
FOR THE STRAITS TIMES

NEW DELHI - Indian industry is bracing itself for the next wave of outsourcing from the United States. For a change, this has nothing to do with business processing, information technology or call centres.

This time it's manufacturing textiles and garments. This shift will also be at the cost of jobs, mainly in the US and European Union. There are also fears here that outsourcing textiles is the next political hot potato that might hit the US in an election year, resulting in non-tariff barriers to entry.

Textiles and garments have been one of India's biggest export items, raking in US$14 billion (S$24.2 billion) last year compared to software's US$10 billion. Now, the sector is likely to witness a complete change. On Jan 1 next year, the 10-year-old Agreement on Textiles and Clothing (ATC) will come to an end, as per World Trade Organisation norms. A new regime will begin and quotas that determined how much countries could sell to each other will no longer exist. Until now, the quotas prevented low-cost countries like India, China, Pakistan and Indonesia from increasing their exports to lucrative markets such as the US and EU.

India is hoping to be a major beneficiary of the change. Industry consultant KSA Technopak estimates that Indian textile exports could jump from US$14 billion to US$50 billion by 2010. High-cost destinations such as Mexico and Caribbean and Central American countries are likely to lose out. Meanwhile, global textile trade is expected to increase from US$400 billion to US$700 billion by 2010. India's new textile policy has set a target of textile and apparel exports of US$50 billion by then, from the present level of US$14 billion, which in terms of world share could mean a rise of 2 percentage points to 5.6 per cent. (Note that India's much-vaunted IT sector accounts for just 0.5 per cent of world share).

The impact in the US could be significant. A study by the American Textile Manufacturing Institute says the looming shift to low-cost destinations could shut down 1,300 plants, abolishing more than 630,000 jobs. When the two largest US home-based textile companies, Pillowtex and Westpoint Stevans, shut shop and filed for bankruptcy last year, substantial manufacturing capacity fled to India.

In India, US firms are already pitching for new business. Wal-Mart, JC Penney, Target, Federated Group, Russell Corporation, and Sears Roebuck are among major US companies entering into new textile-outsourcing deals. Business Today reported that Wal-Mart last month placed orders worth US$500 million; JC Penney, US$300 million and French retail giant Carrefour, US$100 million. JC Penney has reportedly sourced US$700-800 million worth of apparel from India over the next few years.

All Indian textile majors, including Raymond, Zodiac, Welspun and Arvind - and even some medium and small companies - are expanding capacity. In Bangalore, Arvind Mills has doubled its garment capacity, and Raymond is setting up a plant to make suits and trousers. Zodiac Clothing has recently expanded its shirt manufacturing capacity from five million to six million shirts a year.

Currently, India is focused more on low-value fabric exports than high-value clothing exports, because of quota restrictions and government policies. The key lies in moving up the value chain by increasing garment exports, removing technological obsolescence and improving quality. It is expected that the removal of quotas will provide the necessary fillip to building scale, upgrading resources and productivity.

India enjoys several advantages over other countries, with similar conditions and lower costs existing only in China. There is vertical integration of the complete production process - from growing of raw material cotton to in-betweens such as yarn, fabrics and garments. India is the world's third largest producer of cotton, with the highest area under cotton cultivation in the world. It is the second-largest textile producer, with a rooted tradition in textile production.

Combined with cheap labour and skilled manpower at low cost, most competitors around the world - the exception being China - do not hold too much of a threat. However, to India's advantage, indications are that several buyers from the US and EU want to develop India as an alternative source to China, to prevent the growth of a monopolistic player. China will also continue to attract quota restrictions until 2008 because of its late entry into the WTO. Hence, analysts believe that after the beginning of next year, there will be disproportionate gain in market share for Indian exports.

However, the main fear is of fall-out in the US consequent to the outsourcing of textile jobs. Two years ago, cheap steel imports resulted in Washington imposing a controversial anti-dumping duty. If the textile industry becomes a political issue, there is a likelihood of non-quantitative barriers. Unlike the software industry, India's textile sector is largely disorganised and may be open to attacks on issues such as poor wages and working conditions and child labour and environmental concerns. But, if matters are handled delicately, it is quite likely that after software, textiles will be the next big outsourcing story, with billion-dollar deals the order of the day.

The writer is a New Delhi-based journalist.

drwho

March 12th, 2004, 06:09 PM

huaiwei> heh the next WTO-round will be a tough one i guess with all outsourcing to Asia :) :)

Asia vs USA-E.U

:) ;)

Bond James Bond

March 13th, 2004, 01:04 AM

Originally posted by huaiwei

After IT, India is set to grab US textile jobs

by SIDDHARTH SRIVASTAVA
FOR THE STRAITS TIMES

NEW DELHI - Indian industry is bracing itself for the next wave of outsourcing from the United States. For a change, this has nothing to do with business processing, information technology or call centres.

This time it's manufacturing textiles and garments. This shift will also be at the cost of jobs, mainly in the US and European Union. There are also fears here that outsourcing textiles is the next
. . .

The impact in the US could be significant. A study by the American Textile Manufacturing Institute says the looming shift to low-cost destinations could shut down 1,300 plants, abolishing more than 630,000 jobs. When the two largest US home-based textile companies, Pillowtex and Westpoint Stevans, shut shop and filed for bankruptcy last year, substantial manufacturing capacity fled to India.

In India, US firms are already pitching for new business. Wal-Mart, JC Penney, Target, Federated Group, Russell Corporation, and Sears Roebuck are among major US companies entering into new textile-outsourcing deals. Business Today reported that Wal-Mart last month placed orders worth US$500 million; JC Penney, US$300 million and French retail giant Carrefour, US$100 million. JC Penney has reportedly sourced US$700-800 million worth of apparel from India over the next few years.
. . .

Combined with cheap labour and skilled manpower at low cost, most competitors around the world - the exception being China - do not hold too much of a threat. However, to India's advantage, indications are that several buyers from the US and EU want to develop India as an alternative source to China, to prevent the growth of a monopolistic player. China will also continue to attract quota restrictions until 2008 because of its late entry into the WTO. Hence, analysts believe that after the beginning of next year, there will be disproportionate gain in market share for Indian exports.

However, the main fear is of fall-out in the US consequent to the outsourcing of textile jobs. Two years ago, cheap steel imports resulted in Washington imposing a controversial anti-dumping duty. If the textile industry becomes a political issue, there is a likelihood of non-quantitative barriers. Unlike the software industry, India's textile sector is largely disorganised and may be open to attacks on issues such as poor wages and working conditions and child labour and environmental concerns. But, if matters are handled delicately, it is quite likely that after software, textiles will be the next big outsourcing story, with billion-dollar deals the order of the day.

The writer is a New Delhi-based journalist.

Y'know, regardless of the "outsourcing" issues, I wonder sometimes about China's, India's and just about every other developing nation's exporting plans as a way to develop their nation. It seems everyone is targeting the US (mostly) as their export market (hence, the talk in this article about US fears of taking away textile jobs). Yes, the US has almost 300 million people, and yes, we have a lot of money to spend. But we are not a bottomless pit - we cannot absorb an infinite amount of textiles no matter how cheap you make them. And yes, there's also the EU, but the same applies to them.

In other words, when I read stuff like this, visions of a vast glut of textiles on the world market start going through my head. To some extent I've found the high-tech outsourcing phenomenon to be interesting, simply because it's been a different way for a poor nation to develop itself. But textiles is such a standard and common thing for a developing nation to do, when I read about China and India and Bangladesh and Ghana and . . . trying to develop textile manufacturing, all I can think of is a world awash in piles of blue jeans that no one wants to buy.

Perhaps it's just not made the press much and so I haven't been reading anything on it, but it would seem a wise idea for China, India, et al to focus at least as much on developing their own internal markets as on developing export markets.

Whatever . . .

Bond James Bond

March 13th, 2004, 01:12 AM

Also, here's an interesting perspective that *does* regard the outsourcing and US/EU job loss stuff . . .

If you guys want to continue to have the US and EU as your primary export markets, you have to tread a very fine line: In order for the US and EU to be able to buy your stuff in large quantities, the US and EU have to remain wealthy. But we can only remain wealthy if we're able to retain sufficient numbers of our own high-tech, textile, manufacturing and other jobs. Otherwise, we'll turn into the proverbial nation where the only thing everyone does is to wash each other's laundry (which creates no wealth at all, so we'll become poor).

In other words, you're gonna have to take away some of our jobs to develop your own countries, but you can't take away too many of them - and that's for your own good!!

That also, again, would be another reason why it's important for you to develop your own internal markets instead of just focusing on exports to the rich nations.

drwho

March 13th, 2004, 01:40 AM

Actually ,only a fraction of the high tech jobs moves to India and China but that is not the worring part.

I am more worried that the world economy is flying on one engine,in other words US buys asian goods and Asia buys US-bonds just to keep the dollar up.
With euro growth at almost nill and US runs record trade deficit who knows where this will end?

The world need more economic engines.

drwho

March 13th, 2004, 02:33 AM

Originally posted by Jai
[B]Sorry, I've been out of town for a while (to Mexico! Beautiful country.) Posting on the fly, will reply to discussion later

ok, hope you have a good time in Mexico take care!:)

huaiwei

March 17th, 2004, 11:14 PM

India's new expats: Highly qualified and worldly-wise

By ALVIN PANG
FOR THE STRAITS TIMES

BANGALORE-BORN Aditya Afzulpurkar has this to say to Singaporeans: Get real. The 26-year-old senior consultant is full of praise for our clean, well-oiled system and 'blend of both Asian and Western working styles' - our knack for delivering professionalism, quality and efficiency with a personal touch.

And finding that independent thinking and risk-taking are appreciated far more here than back in India, he moved here to work full-time recently. He feels more readily at home here, compared to his stint in Canada.

But he is also surprised to find many Singaporeans 'detached' from the harsh realities of the world. He cites with some incredulity a taxi driver's complaints about a 'catastrophic' 4 per cent unemployment rate - a paltry concern in light of the dire conditions in much of the Indian sub-continent, where many still live in poverty without the social security, infrastructure and opportunities we take for granted.

For years, the stereotype of the Indian information technology worker in Singapore was of an unassuming, slightly awkward but courteous young man with a barely intelligible accent: somewhat out of sync with the relentless corporate pace in Singapore and often in need of supervision. But he was also noted for his unstinting diligence, technical proficiency and a knack for getting the job done with little fuss, in contrast to his local colleagues, who could get cocky over their skills.

IT manager Luke Goh credits his former Chennai-born colleague Raghu for 'persisting when the typical Singaporean would have walked away', despite cultural, social and technical difficulties, in order to secure projects that have allowed the company to establish itself abroad.

A veteran of the early days of India's IT industry, Mr Goh still remembers the 'unbelievable' conditions his team had to overcome when setting up a factory in Bangalore a decade ago. These days, Indian IT professionals wear their origins and credentials with much pride. Many of the early pioneers have left Singapore, returning to promising careers in an India in the midst of a breathless economic renaissance, even as our own economy lurches slowly towards recovery.

Mr Afzulpurkar is typical of a savvy new wave of Indian expatriates coming to our shores; a far cry from the humble programmers and low-level software developers ubiquitous here during the dot.com boom days. Articulate, confident and offering a far more sophisticated range of high-end services than their predecessors, the new generation of young Indian professionals arrive armed with postgraduate degrees from some of India's best engineering schools, whose reputations now rival those of elite colleges in the United States.

Many have also worked internationally before coming to Singapore. Their purpose here? To learn our best tricks. Mr Ramkumar Balagopal, 28, a business development executive at IT services giant Cognizant, is a prime example. A native of Chennai in southern India, he holds an MBA from the Indian Institute of Management, and has worked in India and the US.

How does he think Singapore stacks up globally as a place to work? Plus points go to our advanced infrastructure, central location in Asia, collaborative work culture and a genuinely global workforce. 'Singaporeans are very open to people from other countries coming in and working here,' he observes. In his view, the large number here of 'expats and locals with real cross-cultural work experience' is an invaluable pool of knowledge and experience.

His decidedly cosmopolitan outlook is characteristic of the new Indian expatriate - in stark contrast to the wave of protectionist sentiment sweeping the US as white-collar jobs flow out towards emerging centres like India. Indeed, there is much to admire in this fresh crop of young Indian pioneers: a healthy appetite for cultural difference, variety, learning and change; a tolerance for risk and imperfect conditions; and retaining a certain down-to-earth pragmatism and quiet gumption - traits our local professionals have come to appreciate in their Indian counterparts over the years.

India's explosive growth is an ever-present lure for these ambitious young expatriates. But their time abroad in more mature economies such as Singapore is seen as well spent - a chance to broaden their experience before heading home to make bigger things happen.

Their advice to anyone venturing into India: be patient with the infrastructure, which is still catching up. But prospects are excellent, particularly with the free-trade agreement between India and Singapore expected to come through by the end of this year.

The Singaporean model is still one that commands respect in India, and will stand our ventures in good stead. While we still have that edge, perhaps it is high time our own young men strike out abroad and get down and dirty with the real world.

The writer works in the communication, design and IT sectors.

drwho

March 17th, 2004, 11:40 PM

huaiwei> nice article! :)

remember when we talked about the lack economic reform process and the state owned enterprises in India? :)

Well i found this article on Economist.com . It is a interview with Arun Shourie,The privatisation minister of India. One of my favoirte politicians who is very marketliberal.

:happy: ;)

http://www.economist.com/people/displayStory.cfm?story_id=2498792

The best thing from the article :

"Mr Shourie likes to cite a study of the Kuomintang's China in 1936: “administration degenerates into mere correspondence.” In India, he says, every file probably needs the signature of 20 senior civil servants, any one of whom can stop its progress. Take his struggle to sell a government-owned hotel chain. He found that not one of the 30-odd hotels in the group had the title deed to its lands. Demerging the company to sell the properties individually needed the consent of all the employees, who held 0.5% of the equity. Securing a list of its debts took six months. One Delhi hotel was embroiled in a 15-year lawsuit with another arm of government about its ground rent. Mr Shourie recalls his exasperated plea to his civil servants: “It must be written in some bloody document.”"

huaiwei

March 18th, 2004, 12:29 AM

Hehe...when the article talks about Indian expats, the first person I think of is you! :D

Do you feel you are able to relate to the article, even thou it is from a Singapore perspective?

And the article you just quoted is......how shd I put it....mind boggling?!?! :eek: ;)

drwho

March 18th, 2004, 02:04 AM

Originally posted by huaiwei
Hehe...when the article talks about Indian expats, the first person I think of is you! :D

Do you feel you are able to relate to the article, even thou it is from a Singapore perspective?

And the article you just quoted is......how shd I put it....mind boggling?!?! :eek: ;)

hehe well maybe i feel connected to the issue of the article. I think it is a good thing with Indian or Chinese expats living in countries that has a higher wealth and living standards.
One is that expats are now investing in their home countries weither it is in stocks, or opening a firm or as a tourist.
Two is the culture and social exchange.

So there is a economic and cultural gain for both countries :)

But i dont know if i will move back to India in the near 10 years but i would right now move to Singapore! ;) ;)

drwho

March 18th, 2004, 06:11 AM

Now it is our turn to be a steel importer :guns1:

India may turn steel importer by March 2005
Reuters
Mumbai, March 17

India's rapidly expanding economy will drive up demand for steel and turn the country into an importer of the commodity by March 2005, a top industry official said on Wednesday.

India, Asia's third largest economy, is likely to consume about eight to 10 per cent more steel in the fiscal year ending March 2005, riding a boom in automobile and housing sector, Indian Steel Alliance (ISA) chairman Jamshed Jiji Irani told Reuters in an interview.

"As a result of the strong economic growth, demand has gone up and I think very soon the country will be facing a shortage," he said.

India's economy is forecast to grow by more than eight per cent in the current year ending March, after expanding by four per cent a year earlier. Consensus estimates for growth in the 2004-2005 fiscal year are expected only after the monsoon forecast which is due in April-May.

ISA represents state-run Steel Authority of India, the industry leader, Tata Iron and Steel Co (TISCO), the second-biggest producer, Essar Steel Ltd, Jindal Vijaynagar Steel Ltd and Ispat Industries Ltd.

"If steel demand keeps on increasing, as it has been for the past year, may be by the end March 2005, there will be a shortage," the 67 year-old Irani said.

That would mark a turnaround from the current situation in which India is exporting steel. During April-December, India exported 3.5 million tonne of finished steel, up 29 per cent from a year earlier. That was about 26 per cent of the total saleable steel produced in India during the period.

Many Indian steel producers have announced plans to increase capacity to meet an expected rise in demand.

"But that is not going to come next year... it will take two or three years," Irani, who was the managing director of TISCO for nearly a decade, said.

TISCO has said it plans to raise its annual capacity to about 15 million tonne by 2010 from four million tonne.

But rising demand may not necessarily be good news for steel producers, as ISA had recently agreed on a 13-14.8 per cent cut in steel prices, following protests from end users such as the automobile and construction industries.

The steel industry has been on a roll over the past year, as surging demand from China drove up global prices which, in turn, boosted domestic prices.

But rising steel prices have stoked fears of inflation and the Government announced tax cuts to help producers to help maintain prices ahead of general elections in April-May.

Prices of hot rolled coils, the benchmark material in steel, have rallied about 20 per cent in the past 12 months and Irani said the increase was mainly on account of ballooning raw material prices and partly because of the China effect.

"Raw material prices have gone up by 200-400 per cent in the past year. And that has had an impact on the cost of making steel in India," Irani said.

http://www.hindustantimes.com/news/181_622779,0002.htm

Jai

March 20th, 2004, 08:39 AM

Originally posted by huaiwei

Hey...we seem to have another ethnic Indian in our midst? Welcome to the Asian forums!! :wave: ;) Hi huaiwei!

Sorry, I completely missed your post from way back. Thanks for the welcome :)

Originally posted by drwho

ok, hope you have a good time in Mexico take care! Hehe. For spring break flew down to Mexcio with my friend who just got his jet pilots license :D

I found out that Mexicans love bollywood and especially Shah Rukh Khan, and that I love Tequilla and especially Jose Cuervo
:cheers:

Here's a good article about the outsourcing fuss:

Globalization and the Knowledge Industry (http://in.rediff.com/news/2004/mar/16kak.htm)

By Subhash Kak
March 16, 2004

Although outsourcing of backoffice jobs has become controversial in the current presidential campaign in the US, it is really a non-issue. The number of jobs that India has gained in the last year is only about 100,000, out of the loss of nearly 3 million during the Bush administration. The much greater loss of jobs is in manufacturing, to China and Mexico.

India is only picking up low-margin jobs that, one way or the other, are bound to leave America as its economy adjusts to the latest pressures of globalization. The expectation is that the higher end service and manufacturing jobs will remain in America, because of its domination of knowledge production in sciences and humanistic narratives, such as history, art, and the social sciences.

America sees itself as the city, with countries such as China and India that do labour intensive jobs as provinces. The city has special skills and services that are a magnet for the wealth being generated in the provinces. These magnets are knowledge, financial and entertainment industries, and a superb infrastructure. Since America already has an annual trade deficit of $500 billion, its higher standard of living is already maintained by the capital and goods inflows from the rest of the world.

This current phase of globalization has some parallels with the earlier globalization unleashed by the industrial revolution of the early 19th century, and the spread of colonialism. But ultimately, more than the knowledge of science and technology, the British Raj was based on its superiority of organization and control of the public discourse and education. The East India Company used several stratagems to annex Indian territories, such as the doctrine of lapse for rulers who died without male heirs. The idea of British superiority, drummed into the students at school, was used to keep out Indians from the superior positions in law, medicine, science, and administration until 1910.

British ideas formed the core of the divide and rule policies that frustrated Indian freedom fighters. Many of these constructs persist even after more than fifty years of independence, suggesting that Western hegemony in the social sciences will last a long time.

The fundamental shortcoming of India's centralized system of education compared to the non-centralized Western one explains the persistence of old attitudes. If we consider the representations of Indian culture as a struggle between the hegemonic West with its imperialist moorings and India, with its lived experience that is at odds with the Western narratives, the upper hand remains with the West.

A tightly controlled centralized system is like a blind elephant, since the persons at the top cannot have the resources to process all the information being generated. (As an aside, such information overload is the reason that the Soviet Union collapsed because no economist, howsoever competent and patriotic, could have the capacity to deal with the massive information of the marketplace to set rational prices for the goods produced in the government factories.) If there is a lesson here, it is that fully autonomous and even private universities must emerge to provide the necessary churning that leads to reform.

Academic institutional power is now used by the Western academy to foster its constructs of India. Just a few US-based journals control intellectual output in Indian studies, directly or indirectly, promoting ideas that support Western interests. Indian academic scholars, wishing to partake of Western material comforts, are part of the bandwagon of this critique.

It is amusing, but not surprising, that the fiercest opposition to reform in education comes from the academy in India. Indian curriculum remains Westcentric. Take, for example, Ayurveda, for which last fall the US National Center for Complementary and Alternative Medicine decided to establish an Ayurvedic Center of Collaborative Research to study medicine as it is practiced in India. It is hard to imagine that the Indian medical establishment would approve of such a Centre in a mainstream medical college. Or consider the long battle that had to be fought for years to establish a Sanskrit department at the JNU, or how there is no required teaching of the history of Indian science and technology at the IITs, or the history of Indian business at the IIMs.

In a new stage in the economy of the knowledge industry, there is now a direct recruitment by Western universities of scholars of Indian origin who have internalized Western constructs. In this sense, it may not be a loss. On the other hand, the graduate of the India university who stayed back to teach in India may not have known Indian texts in original (since he does not know Indian languages), and he may have simply adopted Western theories, but by living in India there was always the possibility of absorbing Indian culture by osmosis, perhaps from the office clerk or the barber. The Indian professor in the West will not have the opportunity for this learning of India by living it.

It is natural for cultures to be hegemonic, the process of domination being a side-effect of the economy of knowledge production and dissemination. If large cultural areas maintain their identity, there is bound to be a region of overlap and accommodation. With India's rise, its ideas are becoming increasing popular the world over. Unbridled consumerism has led to a moral crisis and, with the hollowness of the material life exposed, there is a great desire to be connected to spirituality.

For example, in the US, almost every YMCA teaches yoga, although it is a different story that some Churches are speaking of Christian yoga, without mentioning the origins of this tradition. This yearning for wisdom was expressed by Zimmer over fifty years ago when he said, 'We of the Occident are about to arrive at a crossroads that was reached by the thinkers of India some seven hundred years before Christ. This is the real reason, why we become both vexed and stimulated, uneasy and yet interested, when confronted with the concepts and images of Indian wisdom.'

Meanwhile, we need urgent reform in the system of school and college administration, and curriculum reform, so that classics of Indian literature, science, and the arts are integrated into the experience at school and college without loss of material on other cultures and history. This should be done with a commitment to the highest standards of scholarship, requiring the establishment of independent, autonomous institutions that do not merely look back at the past, but see it for what it is, a living system of traditions.

It is sad that Indian traditions tend to be supported in India only after becoming popular in the West. To deal with the challenges of the future in these uncertain times, we need to be fortified by the story of our past and our culture. That strength is necessary to discover creativity and art that will set us free.

drwho

March 20th, 2004, 02:08 PM

Originally posted by Jai
Hi huaiwei!

Sorry, I completely missed your post from way back. Thanks for the welcome :)

Hehe. For spring break flew down to Mexcio with my friend who just got his jet pilots license :D

I found out that Mexicans love bollywood and especially [b]Shah Rukh Khan, and that I love Tequilla and especially Jose Cuervo
:cheers:

now thats cool! post some pictures from the trip!:)
Mexico is a beautiful country!..Bollywood in Mexico..cool!:)

btw check out the new 3d-renderings of skyscrapers in Mumbai.

http://www.skyscrapercity.com/showthread.php?s=&threadid=81802&perpage=20&pagenumber=3

:)

btw really awesome pictures you posted in Mumbai-thread! :)

Arkhagello

March 20th, 2004, 08:26 PM

Viva la India!!!

Welcome to Mexico Jai, hope you get an unforgetable time :) :wave:

drwho

March 21st, 2004, 02:48 AM

Not many people know that India is the largest importer of gold :)

Indian exchange to expand, add more commodities

By Naveen Thukral

BOMBAY (Reuters) - India's leading commodity bourse, the National Commodity and Derivatives Exchange Ltd (NCDEX), plans to expand and start futures trading in more commodities by April, a top official said on Saturday.

"Volumes are going to multiply because new commodities will increase membership," NCDEX chief business officer Narendra Gupta told Reuters on the sidelines of a sugar seminar.

The NCDEX, which is mainly owned by ICICI Bank Ltd and the government's National Stock Exchange Ltd, trades in cotton, soybean, mustard, palm oil, gold and silver.

The bourse plans to start trading in sugar, pepper, jute, rubber and wheat by the end of March. The exchange, which started operations in December, has daily trading volumes of about 500 million rupees ($11 million).

Around 200 kgs of gold, 9,000 kgs of silver and 1,000 tonnes of soyoil are traded on the exchange every day.

India, with a population of more than a billion, is the world's largest importer of gold and edible oils and the third largest producer of cotton. Indians buy gold worth $8.5 billion and edible oils worth $9.0 billion each year.

The exchange has an online trading network with a membership of 460 individuals and companies.

Around 200 members from 110 centres trade regularly on the exchange. Gupta expects total membership to rise to 500 by the end of the next financial year. India's financial year runs from April to March.

FUTURE IN SUGAR

Gupta said sugar trading would pick up only when the government liberalises the sector fully.

"There is huge scope in sugar futures in India, but de-control has to happen to make it a success."

India fixes sugarcane prices and allocates a sugar quota for the domestic market. The government is targeting a relaxation of the rules further by October 2005, but traders say the target date is expected to be advanced by a year.

India recently allowed futures trading in most commodities, including bullion, grains and metals.

Futures trading was earlier allowed only in about three dozen commodities, including some oilseeds and oils, several fibres, turmeric and sugar.

Commodities futures trading in India dates back to 1875, but the government banned futures trading in 1975, saying excessive speculation had driven prices up.

Almost 20 commodity futures exchanges operate in India, but most trade in single commodities and cater to members within a limited region.

The NCDEX is seeking the government's view on allowing foreign traders to take part in domestic commodities trading.

"Right now there is no ban, but we are asking the government is set guidelines so that foreign traders can become our members," he said.

($1 = 45.17 rupees)

http://in.news.yahoo.com/040320/137/2c3vr.html

drwho

March 21st, 2004, 06:18 AM

Korea Telecom plans India hub
MANOJ GAIROLA

TIMES NEWS NETWORK[ SATURDAY, MARCH 20, 2004 12:28:33 AM ]

NEW DELHI : Ten billion dollar Korea Telecom, integrated service provider in Korea , is planning to set up its base in India . It is looking at tie ups and acquisitions in India .

"We have not yet finalised our strategy. My priority would be to work with an operator," said Ken Lee, president and CEO of Korea Telecom, in India to participate in Convergence India telecom event.

Korea Telecom is an integrated operator. It is offering both fixed line and mobile telecom services in Korea . It had a revenue of $9.6 billion as of December 2003. Only 2% of its revenue was from overseas markets.

Rest 98% comes from Korea . Mr Lee has identified India as an important market.

"The telecom market in India is growing at a very fast pace. This makes it very attractive," said Mr Lee. Korea Telecom can offer its expertise in billing system, marketing telecom services and strategy planning to the Indian companies.

It may also plan acquisition of equity in existing operators, said Mr Lee. The company is looking at both the mobile and fixed line operators. However, it would not go for large scale equity acquisition in Indian market.

"We have decided not to go for big equity buying in overseas markets," said Mr Lee. Broadband services are very popular in Korea . Korea Telecom accounts for about 50% market share among 12 million broadband internet subscribers.

Within 18 months of launching its broadband business, Korea Telecom secured more than 1.5 million subscribers.

By march 2002, it had four million subscribers. "One of the reasons for the success of broadband in Korea is that 50% of Koreans live in apartments and therefore the services are cost effective," said Mr Lee.

http://economictimes.indiatimes.com/articleshow/570282.cms

drwho

March 21st, 2004, 06:22 AM

ZTE China to set up manufacturing facility

PTI[ FRIDAY, MARCH 19, 2004 01:48:48 PM ]

NEW DELHI: Charting out an aggressive strategy for India, Chinese telecommunication equipment company ZTE Corporation on Friday said it expects to set up a Research and Development centre in Bangalore by the year end, and has also decided to establish a manufacturing unit in the country.

"We wish to set up a Research and Development unit in India. The proposal is being worked out, and we hope to have the centre before the end of this year," Ye Wei Min, vice president of ZTE Corporation said here.

Min said that the new unit would be based in Bangalore but did not divulge the investment plans. He said that the company has also decided to set up a manufacturing unit in the country.

"May be it will be a joint venture or we will undertake it independently. Broadly, the facility would be focused on optical communications equipment and GSM and CDMA network equipment. But the specific product manufacturing will depend on the demand from the Indian market," Min said.

Eventually, the unit could also become a manufacturing base for South Asian market, he said. ZTE currently develops and manufactures telecom equipment for fixed, mobile data and optical network, intelligent networks and next generation networks as well as mobile phones. Min said that the company currently has 10 manufacturing units, and several of these are located in China.

"In India, we are still choosing a location for the manufacturing unit," Min pointed out. At present, the company has two local office in the country, in New Delhi and Mumbai.

"The research and development centre will serve the customers for their special needs for India," he said.

http://economictimes.indiatimes.com/articleshow/569586.cms

huaiwei

March 21st, 2004, 11:28 PM

The secret of India's success

BY THOMAS L. FRIEDMAN
THE NEW YORK TIMES

BANGALORE (India) - Nine years ago, as Japan was beating America's brains out in the car industry, I wrote a column about playing a computer geography game with my daughter, then nine years old. I was trying to help her with a clue that clearly pointed to Detroit, so I asked her: 'Where are cars made?' And she answered: 'Japan.' Ouch.

Well, I was reminded of that story while visiting an Indian software design firm, Global Edge, in Bangalore.

The company's marketing manager, Mr Rajesh Rao, told me he had just made a cold call to the vice-president for engineering of a United States company, trying to drum up business. As soon as Mr Rao introduced himself as calling from an Indian software firm, the US executive said to him, 'Namaste' - a common Hindi greeting.

Said Mr Rao: 'A few years ago, nobody in the US wanted to talk to us. Now, they are eager.' And a few even know how to say 'Hi' in proper Hindi fashion. So now I wonder: If I have a granddaughter one day, and I tell her I'm going to India, will she say, 'Grandpa, is that where software comes from?'

Driving around Bangalore, you might think so. The Pizza Hut billboard shows a steaming pizza under the headline 'Gigabites of Taste!' Some traffic signs are sponsored by Texas Instruments. And when you tee off on the first hole at Bangalore's KGA golf course, your playing partner points at two new glass-and-steel buildings in the distance and says: 'Aim at either Microsoft or IBM.'

How did India, in 15 years, go from being a synonym for massive poverty to the brainy country that is going to take all our best jobs? Answer: good timing, hard work, talent and luck.

The good timing starts with India's decision in 1991 to shrug off decades of socialism and move towards a free-market economy with a focus on foreign trade. This made it possible for Indians who wanted to succeed at innovation to stay at home, not go to the West. This, in turn, enabled India to harvest a lot of its natural assets for the age of globalisation.

One such asset was Indian culture's strong emphasis on education and the widely held belief here that the greatest thing any son or daughter could do was to become a doctor or an engineer, which created a huge pool of potential software technicians.

Second, by accident of history and the British occupation of India, most of those engineers were educated in English and could communicate easily with Silicon Valley.

India was also neatly on the other side of the world from America, so US designers could work during the day and e-mail their output to their Indian sub-contractors in the evening. The Indians would then work on it for all of their day and e-mail it back. Presto: the 24-hour workday.

Also, this was the age of globalisation, and the countries that succeed best at globalisation are those that are best at 'glocalisation' - taking the best global innovations, styles and practices and melding them with their own culture, so they don't feel overwhelmed. India has been naturally glocalising for thousands of years.

Then add some luck. The dot.com bubble led to a huge over-investment in undersea fibre-optic cables, which made it dirt-cheap to transfer data, projects or phone calls to far-flung places like India, where Indian techies could work on them for much lower wages than US workers.

Finally, there was Y2K. So many companies feared that their computers would melt down because of the Year 2000 glitch they needed software programmers to go through and recode them. Who had large numbers of programmers to do that cheaply? India. That was how a lot of Indian software firms got their first outsourced jobs.

So, if you are worried about outsourcing, I've got good news and bad news. The good news is that a unique techno-cultural-economic perfect storm came together in the early 1990s to make India a formidable competitor and partner for certain US jobs - and there are not a lot of other Indias out there. The bad news, from a competition point of view, is that there are 555 million Indians under the age of 25, and a lot of them want a piece of 'The Great Indian Dream', which is a lot like the American version.

As one Indian executive put it to me: The Americans' self-image that this tech thing was their private preserve is over. This is a 'wake-up call' for US workers to redouble their efforts at education and research. If they do that, he said, it will spur 'a whole new cycle of innovation, and we'll both win. If we each pull down our shutters, we will both lose'.

drwho

March 24th, 2004, 05:57 PM

India, China to explore FTA, greater economic ties
Press Trust of India
New Delhi, March 24

Buoyed by a 54 per cent growth in trade at $7.6 billion, India and China have decided to work out five-year programme to enhance economic cooperation including a free-trade agreement (FTA).

The Sino-Indian Joint Study Group on trade and economic cooperation, which met in Beijing during March 22-23, discussed various measures to increase trade and the possibility of signing free trade agreement and another Comprehensive Economic Cooperation Agreement.

The Indian delegation, headed by Reserve Bank Deputy Governor Rakesh Mohan, also expressed confidence of working closely with its Chinese counterparts and submit a report to Government by December-end, an official release said.

The two sides will work out a clear time table and a specific five-year programme for economic cooperation.

http://www.hindustantimes.com/news/181_637687,0002.htm

drwho

March 27th, 2004, 07:31 AM

PC sales surge in India
Correspondents in New Delhi
MARCH 26, 2004

SALES of personal computers in India jumped 87 per cent in the third quarter of the fiscal year ending in March, putting the industry on track to achieve its year's target of three million computers.

The Manufacturers Association of Information Technology (MAIT) said that around 800,000 personal computers were sold in the period from October to December due to a rise in demand from various industry sectors.

"With increased sales throughout the year and also, traditionally, the last quarter accounting for maximum sales, the industry is expected to comfortably cross the three million mark in PC sales," the industry body said.

MAIT said that the most computers were bought by the telecom, banking, financial services and insurance industries, and added that there was a sharp increase in demand from individual buyers due to a price drop.

"However, consumption in the government was subdued, which is expected to gain momentum in the next quarter," it added.

India's IT hardware industry is aiming to replicate the success of its booming software industry and has seen a surge in sales in the past year as tax breaks have helped in lowering the price of computers.

http://australianit.news.com.au/articles/0,7204,9080841%5E15322%5E%5Enbv%5E,00.html

Jai

April 5th, 2004, 03:01 AM

Global: India’s Awakening (http://www.morganstanley.com/GEFdata/digests/20040402-fri.html)
By Stephen Roach (New York)

Morgan Stanley
Apr 02, 2004

First impressions are superficial almost by definition. But more often than not, they end up pointing you in the right direction. Quite simply, I was blown away by what I saw on my first trip to India. It’s a land of great contrasts, to be sure -- strength in human capital and technology coexisting with backward infrastructure and heart-wrenching poverty. But there is no doubt in my mind that the balance has shifted. After decades of stop and go, the critical mass of a new approach to Indian economic development now appears to have been attained. If I’m right, not only would that have enormous implications for the world’s second most populous nation, but it could have profound implications for the Asian and broader global economy.

I just spent four days in India at the end of a two-week tour in Asia that also included China, Korea, and Japan. I visited with government officials in New Delhi, software companies in Bangalore, and investors, as well as technology, pharmaceutical, and industrial companies in Mumbai. I also met with several rapidly growing Indian subsidiaries of US multinationals. In addition, I took a long and arduous side-trip to Agra, where I was stunned by the sheer majesty of the Taj Mahal. I asked many questions, gave a few speeches, took copious notes, and recorded hundreds of digitized snapshots that have quickly become boring to my family and friends. There’s a fair amount of sensory overload in trying to sort through all the images, conversations, and insights that get filed away in a trip like this. But this visit to India was the missing piece in my Asian education. Up until now, it’s been a China-centric journey -- some 25 trips since 1997. But I have long suspected that there’s far more to Asia’s remarkable story. India convinced me that my instincts were right.

It’s tempting to make the China-India comparison -- trying to figure out which of these two Asian giants has the better approach to economic development. I see no reason to frame this in such black and white terms. In fact, I am inclined to argue that it’s not China or India but, in fact, China and India. Each of these two nations has a distinctly different recipe for economic development -- recipes that are complements rather than substitutes as they fit into the broad mosaic of globalization. To be sure, China has come first in the sequencing, but this breakthrough has served India well. As the rest of the world has finally come to accept the China miracle, that realization has opened the door for acceptance of the India miracle. As one Indian leader put it to me, “It’s the flying-geese pattern of Asian development.”

As China is to manufacturing, India is to services. That’s an over-simplification but it is the key conclusion that I take away from this journey. Manufacturing prowess is typically the yardstick that is used to measure the prosperity of emerging nations. As seen from that standpoint, there’s no comparison. China has plowed its huge reservoir of domestic saving -- about 40% of GDP -- into some of the best infrastructure you will see anywhere in the world. And it has been brilliant in attracting massive inflows of foreign direct investment as the means to acquire technology, managerial expertise, and factories on a scale and scope that is hard to believe. China has, in fact, leapt to the fore as the largest recipient of FDI in the world -- some US$53 billion per year in 2002-03.

India suffers in comparison basically from having none of the above. That’s an exaggeration but not all that wide of the mark. India has a 24% national saving rate, a little more than half that of China. As a result, it has far less in the way of internally-generated funds available to plow back into infrastructure. And it doesn’t take much traveling around in India to experience first-hand the serious deficiencies of its infrastructure. The India Infrastructure Report 2004, put out by the 3iNetwork of India’s best and brightest engaged in this field, says it all, “…even relative to our income, our failure in water, roads, sanitation, schooling, and electricity is woeful.” Nor can India hold a candle to China on FDI. China’s inflows in 2003 were more than ten times the US$4 billion that went into India.

But that’s not the lens through which India should be viewed, in my opinion. India’s strength is elsewhere -- namely, in an extraordinary stock of human capital. And it has deployed that strength into the creation of world class IT-enabled service companies such as Infosys and Wipro and the service subsidiaries of large conglomerates such as Reliance and Tata. I spent time with each of these companies and was staggered by what they had accomplished in the relatively short time span of the past 10-20 years. The push into IT-enabled services sidesteps what I believe are India’s greatest impediments on the road to development -- its infrastructure and FDI deficiencies. Self-sufficient in electrical power -- all big companies have back-up generating capacity -- the only infrastructure requirement in services is telecom. And, here, the Indian government has gotten out the way -- focusing on telecom deregulation and facilitating connectivity both in domestic markets and to overseas destinations.

The results speak for themselves: By year-end 2003, growth in Indian services was nearing a 10% annual rate, well in excess of the 6% growth in industrial production. For the first time ever, services exceeded 50% of Indian GDP in FY03 -- at 50.5% this portion is up about ten percentage points from the share in 1991 but still well below the 65% average shares in more developed economies. While the combined sum of IT services and IT-enabled services (ITES) is growing very rapidly, it currently accounts for only 2.0% of Indian GDP as of March 2004; the export portion of ITES is estimated at US$3.6 billion in 2003-04 -- more than double the level of 2001-02, according to NASSCOM, India’s IT trade association. The US is a destination for about two-thirds of such exports. One of India’s leading IT companies has a row of flagpoles lining the entrance to its state-of-the art headquarters complex. Each day, national flags are raised for foreign visitors. They tell me the American flag is flying nearly every day.

India’s software and IT-enabled services industry currently employs about 785,000 workers -- this is up by nearly 60% from the headcount of 500,000 two years ago and projected to increase by around 50% by year-end 2005. Nor are there any serious worries about hiring constraints. Nearly 290,000 engineers alone graduated from India’s high-quality universities in 2002. As one IT executive put it to me, “Hiring from campus is a cinch. For new grads, our industry is a godsend.” Despite this rapid growth, the level of activity in this dynamic new industry is still low and hardly justifies the outcries of America’s anti-offshoring fanatics. But as I argued recently, the trend is emblematic of powerful change at the margin -- suggestive of new and lasting competitive pressures that are likely to bear down on America’s legions of long-sheltered knowledge workers for the foreseeable future (see my March 30 dispatch, “Offshoring -- Myth and Reality”). It’s called globalization, and that’s exactly the way it’s supposed to work.

It is important to stress that contrary to widespread impressions there is far more to India’s success in services than an attractive cost arbitrage in low-valued processing tasks. Yes, the cost saving is enormous -- like-quality Indian talent goes for about 15% to 20% of the Western norm. But the strength of India’s IT-enabled services model is not about the inroads it has made in attracting easily commoditized data processing and call-center operations. The successful IT-enabled service companies have been quick to move up the value chain into a wide range of BPO (Business Process Outsourcing) activities including purchasing and order functionality, procurement, accounting, insurance management, e-based corporate learning management, human resource and benefits management, and a vast array of internal corporate control functions. More recently, India’s BPO efforts have moved into medical, actuarial and legal functions. And then there’s India’s natural strength in a broad array of IT applications -- from software programming and multi-media platforms to systems support and network management.

The list goes on and on. But for Indian IT companies, the real breakthroughs come from the development of customized integrated systems solutions. The BPO business is basically the “Trojan Horse” -- driven initially by the cost arbitrage that makes outsourcing extremely attractive as a means to enhance corporate efficiency in high-cost countries. But India’s IT-enabled service companies have been quick to take this opportunity to the next level -- going beyond the functional “silo approach” that has long plagued corporate structures and exploiting the synergies that can be realized through collaborative solutions that span previously segmented functions. And they attack these integrated systems problems with seamless global networks that pass the management and control functions around the world every 24 hours. This revolutionizes the high-cost “cluster model” of the global services company made famous by Harvard’s Michael Porter (see The Competitive Advantage of Nations, Free Press, 1998). Porter argued that since services had to be delivered on site, in person, well-supported subsidiaries of global service firms had to be located in close proximity to major customer bases. India’s IT-enabled services model turns this concept inside out. These are real companies, with powerful new strategies and execution models that go well beyond the arbitrage play.

As logical as India’s service-based development model seems to me, I was surprised to find some pushback from the Indian leadership. The country is enormously proud of its accomplishments over the past 12 years in IT-enabled services -- and justifiably so. But it still believes that manufacturing ultimately holds the key to prosperity. Repeatedly, I heard the argument that manufacturing is critical to resolving India’s long-term unemployment problems. I find this response puzzling. Over the past 50 years, technological change has spurred capital-labor substitution and turned manufacturing into an increasingly labor-saving activity. Services, by contrast, are far more labor intensive, especially in the knowledge-based production activities of the Information Age. For a huge country like India, a services-driven development model seems tailor made both to its greatest strengths (human capital) and its greatest needs (employment and coping with poverty). And the new IT-enabled tradability of services is the icing on the cake. Many moons ago in grad school, I was very impressed by the elegance of India’s manufacturing-based development models. For lots of reasons they never really delivered. India’s new services-based approach is an exciting alternative, but it runs very much against the grain of these powerful legacy effects. Sometimes, old dreams just don’t fade.

What impressed me the most about India is a new sense of focus and determination. Plagued by decades of false starts and government missteps, this Asian giant has now, in the words of one of India’s leading corporate executives, finally absorbed the “fixed costs of democracy.” Reforms began in earnest in the early 1990s and momentum has built steadily in the years since. India still suffers by comparison with China. But unlike China, India has a well developed banking system, vibrant capital markets, and a new generation of indigenous world-class companies. China has an outward-looking development model with the hope that the benefits will spread inward into home markets. India has much more of a home-grown development model that is now gaining global reach. Both approaches have their virtues and shortcomings. And yet the most fascinating thing is that they both may work. I have long been a big fan of China’s remarkable accomplishments. India’s awakening is equally impressive

Bond James Bond

April 5th, 2004, 07:28 AM

This is almost old news by now, but . . .

NY Times
April 1, 2004
India's Economy Soared by 10% in Last Quarter of 2003
By SARITHA RAI

BANGALORE, India, March 31 - India's economy soared 10.4 percent in the final quarter of 2003, making it one of the fastest growing in the world, even ahead of China.

The last quarter's rise, up from an 8.4 percent pace in the previous quarter, was driven mainly by an expansion of nearly 17 percent in farm output. Last season, the country benefited from the heaviest monsoon rains in over a decade. Farming accounts for a quarter of India's economy.

The Center for Monitoring of the Indian Economy, based in Mumbai, said in its monthly review released Wednesday that overall gross domestic product, earlier forecast at around 8 percent, would probably be above 9 percent in the government's fiscal year ending this month.

But the jump, which makes India the fastest-growing Asian economy, is unlikely to continue.

"I would not get too excited about the double digits because there is a big skew in farm output this year which is unlikely to repeat," said Jyotivardhan Jaipuria, head of research at DSP Merrill Lynch.

Mr. Jaipuria said, however, that manufacturing and services would grow at a stronger pace in coming quarters.

"This indicates the underlying strength in the economy and reinforces the theme that India is growing nearly as fast as China," he said, adding that "unlike China, India's growth phase is just beginning and can be sustained at close to double-digit rates."

The bright news on the economy will no doubt help the ruling coalition, led by Prime Minister Atal Bihari Vajpayee, ahead of federal elections planned for April and May. The ruling coalition has been trying to claim all the credit for India's recent sparkling economic performance, and the coming elections, unlike any before, will be fought over economic development.

The Bharatiya Janata Party, which dominates the ruling coalition, is running on the slogan "electricity, roads and drinking water." The party has promised to make the country an economic superpower by 2010. It has said it will develop power and telecommunications infrastructure and support the country's software industry.

The Congress Party, the main opposition, has said that it will make economic development in the villages the focus of its government if elected.

But both parties have stressed that they will focus on rural India. Nearly three-fourths of India's one billion people live in villages, and have been largely passed by in the country's boom.

The strong growth rate and aggressive privatization initiatives, including several sales of large stakes in state companies, have buoyed the general mood, but mostly in India's cities and towns.

The benchmark Mumbai stock market index rose by 1.3 percent to 5,590.60 points on Wednesday after the growth number was released. The rupee touched a four-year high and closed at 44.13 against the dollar.

With the economy moving at a blistering pace, foreign investors put some $7 billion into Indian stocks in 2003, and investors remain bullish this year.

The double-digit growth rate is exceptional and a welcome break from a long spell of slow growth in India, said T. K. Bhaumik, an economist and senior policy adviser to the Confederation of Indian Industry, the country's leading industry trade group.

"The growth rate creates a kind of mood, a confidence particularly amongst those who deliver the growth," Mr. Bhaumik said. "So, it is not just a figure, but something that has a tremendous impact on businesses."

Mr. Bhaumik said that the farm sector would not sustain its 17 percent growth rates because the monsoon is not expected to be as drenching this year.

"But industry is recovering and poised to grow at over 8 percent rates and the service sector is growing at 9 percent rates, and both these are very sustainable," he said.

Bond James Bond

April 5th, 2004, 07:39 AM

From Jai's article:

"As logical as India’s service-based development model seems to me, I was surprised to find some pushback from the Indian leadership. The country is enormously proud of its accomplishments over the past 12 years in IT-enabled services -- and justifiably so. But it still believes that manufacturing ultimately holds the key to prosperity. Repeatedly, I heard the argument that manufacturing is critical to resolving India’s long-term unemployment problems. I find this response puzzling."

I actually sorta agree with the Indian officials: Even many lower-skilled service jobs still require some amount of education - and as the author noted earlier in the article, India's education system still doesn't reach a lot of people. If you want to employ a lot of these little-educated or not-educated people, you're gonna have to get them jobs in textile mills or other labor-intensive, manufacturing operations. People like that just aren't going to be good call-center reps - at the very least you need to be able to read and use a computer, which most of the illiterate ppl there dont. So yes, I do think a good deal of manufacturing will be neccessary. Probably in the longer run they can focus more or even exclusively on services. But not yet.

drwho

April 5th, 2004, 04:55 PM

Indian expats remits record $18 billion in 2003
Indo-Asian News Service
New Delhi, April 5

Riding on the back of a "feel-good" factor in the Indian economy, overseas Indians remitted a record $18 billion back home in 2003, making the country the largest receipt of private transfers globally.

According to the balance of payments figures released by the Reserve Bank of India (RBI), workers' remittances to India rose to a staggering $18.2 billion in the last calendar year, posting a growth of as much as 30 per cent over 2002.

The October-December quarter witnessed maximum transfer of money by overseas Indians with the figure touching $5.2 billion, up from $5 billion logged in the July-September period, the RBI data showed.

In the January-March quarter of 2003, total remittances amounted to $3.8 billion and it was followed by $4.2 billion worth of private transfers in the quarter ended June 30, 2003.

Remittances, or money sent home by emigrant Indians, are pushing India to the top slot among all developing countries -- accounting for about five times the country's foreign direct investments (FDI) per year.

They are also sharply higher than India's famed software earnings. Hardworking youngsters in the Middle East, Britain, Canada and the US have changed many a lives in India.

India has become the largest recipient of private transfers in the developing world with $14.8 billion in 2002-03. Its share in the global flow is at around three per cent.

According to the World Bank, such money transfers not only shore up the nation's foreign exchange reserves but also have a positive influence on the global economy.

And helped by the growing remittances, India's foreign exchanges reserves have crossed the $110 billion mark with the inflow of $319 million during the week ended March 26.

An estimated 20 million Indians live abroad, spread across continents, with strong concentrations in North America, Europe, Africa, the Gulf, Southeast Asia and Australasia.

http://www.hindustantimes.com/news/181_661652,0002.htm

drwho

April 7th, 2004, 12:17 AM

Evergreen group to set up shop in India

Raja Simhan T.E.

Chennai , April 6

INDIA'S steady growth in container traffic is attracting large container shipping lines to set up shop in the country, rather than operate through agencies.

Taiwan's Evergreen Group, the latest to have its own presence in India, has formed its wholly owned subsidiary and absorbed employees from its Indian agent, Greenways Shipping Agencies, to establish offices in Mumbai, New Delhi and Nhava Sheva. However, it is not known whether Evergreen has also taken over assets and liabilities of Greenways in these locations.

According to a source here, Evergreen's Indian operations started on April 1. Evergreen will not severe its relationship with Greenways entirely. It will have a sub-agency agreement with Greenways to maintain complete coverage of India. "We are waiting for more details on Evergreen's plans for other cities," he said.

Greenways has been Evergreen's agent since August 1986. It has offices across the country, including Chennai, Kochi, Thiruvananthapuram, Hyderabad, Bangalore, Ahmedabad, Kandla and Kolkata, the source said.

"The decision to have its own agency network was in recognition of the growing potential of the Indian market and its strategic location in the centre of the South-Asian region. India's requirements are growing so quickly and substantial investment is needed in new offices and new information technology systems that are essential if we are to be highly competitive in the global market place," a senior Evergreen official was quoted in a statement.

"India is already a country of more than one billion people and forecasters suggest it may have a greater population than China by 2050. Clearly the level of investment needed to service this size of market is too much to expect from a privately owned liner agency company," the official said.

Evergreen Marine, part of Evergreen Group, has a fleet of about 100 container carriers that serves over 240 locations in 80 countries. Its operations include several east-west routes between Asia and North America.

For the fiscal year ending March 2004, India's container traffic was close to four million TEUs (twenty-foot equivalent units) as against 3.40 million TEUs in the previous year, said a source.

It may be recalled that in 2002, Mitsui OSK Lines, another major international shipping firm, started its own operations in India. Some of the other major shipping lines having a direct presence in the country include Maersk-Sealand and APL.

Bond James Bond

April 7th, 2004, 07:48 AM

Thiruvananthapuram???

God, ppl in India must have well-exercized tongues!!!

drwho

April 7th, 2004, 06:14 PM

Thiruvananthapuram???

God, ppl in India must have well-exercized tongues!!!

dont worry..even i cant pronounce it ;) :)

drwho

April 7th, 2004, 06:16 PM

Germans Flock With Buying Houses

http://www.financialexpress.com/grfx/newspic/2004/germans.jpg
KUMARKAUSHALAM

Perception of Indian product quality in the eyes of Germans has improved in recent years with a clutch of companies from Europe’s largest economy setting up their buying houses in India.

These include Otto AGN, Karstadt, Quelle, Neckermann, HDM, and Metro.

In fact a group of 14 German students from retailing and fashion design industry aged between 20 and 24 years is in India to understand the process and culture of outsourcing: What’s available in India, how are things made and procured, and most importantly, how to do business dealings with people from other cultural backgrounds.

Pearl Academy of Fashion’s design director, Ms Cora Gottman, a German, points out that the quality perception about products procured from India has improved tremendously in recent years. “As compared to China, India’s strength is in the fact that it can offer a consignment with smaller quantities which allows for flexibility. Also, Indian silk is different from China’s and it has edge in cotton and cotton blends; and in terms of skill, in handicrafts and embroidery,” adds Ms Gottman.

Interestingly, an interaction with the visiting students clearly brings out the increasing resentment against outsourcing by developed countries to nations where wages are low. They too are disturbed at the migration of manufacturing jobs to other countries.

“The job situation is not that good in Germany. The manufacturing (apparel) is going to countries with lower wages — like Poland, Turkey, Hungary, Czech Republic and Romania,” says Franka Sanktjohanser, who has come to India along with her 13 classmates as a part of five-week inter-cultural student exchange programme between Pearl Academy and Stuttgart-based retailing institute LDT Nagold.

Adds another student Christopher Fabry, “It can’t be a good trend. Unemployment is growing as jobs are transported by manufacturing nomads. How can you create domestic consumers, if there are not enough wage-earners left in Germany due to closure of factories?”

Lower wages is just a part of the argument. The touring Germans feel that the cheaper imports are simply no substitute to erstwhile German-made quality.

Says Magdalena Springwald, ‘‘Quality has come down in recent years. Better quality at lesser prices is just not possible.’’

The visiting folks have already been to the textile and apparel-making houses at Faridabad and Gurgaon. And also, taken a measure of Delhi’s various retailing formats.

“Anokhi (apparel house) and Barista (coffee outlet chain) are good. Is Barista an Indian chain,” asks Eva Bienzeisler.

The German students are enjoying every bit of finding a way through the Indian heat and dust as they combine business-related tours with some ‘smart shopping.’

Says Anna Hoch: ‘‘A new trend has emerged in Germany where the rich people who traditionally buy only from upmarket stores are now going to discount and low-cost stores as well occasionally. They call it smart shopping.’’

muchbetter

April 8th, 2004, 06:02 PM

Interesting, i prefer smart shopping.

Jai

April 12th, 2004, 02:08 AM

Forex reserves surge ahead to $112 bn (http://economictimes.indiatimes.com/articleshow/609549.cms)

PTI[ SATURDAY, APRIL 10, 2004 02:30:09 PM ]
MUMBAI: India 's foreign exchange reserves surged ahead in the first week of the new fiscal following fresh accretion of over US dollar one billion to move past the record levels of $112 billion during the week ending April two, 2004 .

Market purchases by the RBI, revaluation of the US dollar vis-a-vis other currencies, export remittances and fresh inflows led to inflows of $1,068 million enabling forex reserves to climb to $1,12,680 million, according to Reserve Bank of India 's weekly statistical bulletin released here today.

Foreign currency assets also swelled by $1,050 million to touch $1,07,175 million during this period, it said.

Gold reserves rose by $8 million taking the total to $4,198 million while special drawing rights remained static at $two million.

India 's Reserve Tranche Position (RTP) with the International Monetary Fund (IMF) rose by $10 million to $1,315 million, the central bank said adding, RTP has been included in the reserves from the week ended April two in keeping with the international best practice.

The loans and advances to Central government were at a nil balance while that to state governments decreased by Rs 1,510 crore at Rs 3,068 crore, RBI added.

Jai

April 12th, 2004, 02:11 AM

From an op-ed piece in Pakistani newspaper Dawn (http://www.dawn.com/2004/04/10/op.htm#1)

India's IT exports in 2002 were about $10 billion compared to $1.5 billion from China. What is even more significant, 40 per cent of Chinese IT exports involve Indian companies based in China.

:eek: Is that for real? Is there any way of verifying this?

drwho

April 12th, 2004, 02:18 AM

40%!!!omg..that is something that i have to ask Muchbetter if he knows:)

drwho

April 12th, 2004, 02:23 AM

112bn!!! i wonder if we will pass Hongkong forex-reserves :)

drwho

April 12th, 2004, 02:25 AM

btw..check out this Forex-index..we are ranked on the 6th place to hold forex reserves in Asia :)

source:
http://www.forbes.com/business/newswire/2004/04/08/rtr1326887.html

Brasil Guy

April 12th, 2004, 02:38 AM

drwho

April 12th, 2004, 06:12 AM

Bond James Bond

April 12th, 2004, 08:42 AM

$ bln $ bln change
Japan 826.6 Mar 31 673.5 +22.7
China* 415.7 Jan 31 403.3 +3.1
Taiwan 226.5 Mar 31 206.6 +9.6
South Korea 163.6 Mar 31 155.4 +5.3
Hong Kong 123.8 Mar 31 118.4 +5.4
India 110.3 Mar 26 100.6 +9.6
Singapore 102.7 Mar 31 96.3 +6.6
Malaysia 51.3 Mar 15 44.9 +14.3
Thailand 42.4 Mar 26 42.1 +0.7
Indonesia 37.4 Mar 31 36.3 +3.0
Philippines 16.3 Mar 31 16.8 -3.0
Pakistan 12.6 Mar 27 12.0 +5.0
Bangladesh 2.7 Mar 31 2.6 +3.8
Total 2,131.9 1,908.8 +11.7
*In late December, China used $45 billion of foreign exchange
reserves -- about 10 percent of its holdings at that time -- to
bail out two banks. Those funds are not included in this
figure.

Bond James Bond

April 12th, 2004, 08:44 AM

^BTW I wish they would give me some of that money. :(

drwho

April 12th, 2004, 11:41 PM

^BTW I wish they would give me some of that money. :(

well we can always hack ourselfs into the IMF banking system ;) :)

drwho

April 13th, 2004, 03:47 PM

Intel to expand Bangalore centre

New Delhi: Global microprocessor giant Intel is planning to expand its Bangalore development centre to work on more next generation products.

"We are on an expansion spree. The first building of our new campus with a capacity of 1,000 people is almost ready and will be operational in the next six months, and construction has started for the second building in the same campus, Mr R K Amar Babu, Director, sales and marketing, South Asia, Intel, told newspersons here.

He did not give figures or time-frame for headcount expansion.

The centre, which is the largest non-manufacturing centre outside US for Intel, has currently 1,800 people working on Central Processing Unit (CPU), chipset, software driver, communication silicon development and electronic business software development.

As the centre is working on core areas, Intel is keen on expanding it in view of the available talent, he said.

All the future technologies are being done here. Next generation processors, server related processors, chipsets for desktops and mobile computers, communication silicon products are being done out of Bangalore from R&D and product engineering side while from software side, factory automation software, e-business software for Intel are also being done, Mr Kumar said.

Intel's Bangalore development centre, the largest non- manufacturing facility outside the US, is currently developing a chipset to supplement audio capabilities of digital home products and it will be out in the second half of the year, Mr Jayant Murthy, Director (Marketing), South Asia, Intel, said.

The centre, which has currently 1,800 people from five in 1999, is working on CPU design, chipset software driver, communication silicon development electronic business solution development, he said. - PTI

http://www.thehindubusinessline.com/businessline/blnus/15131701.htm

Jai

April 15th, 2004, 03:18 AM

The Untold Story: India’s Forex Reserves Match Its External Debt (http://www.financialexpress.com/fe_full_story.php?content_id=56852)

NEW DELHI, APRIL 11: For the first time in India’s history, foreign exchange reserves will equal its external debt, moving past $112 billion. Compare this to 1991 when the country had to sell its gold reserves as forex reserves dipped to alarming levels.

The fact that the level of the reserves roughly equals the external debt was emphasised by RBI governor Y V Reddy at a meeting in New Delhi recently.

...

While the forex reserves witnessed wide fluctuations, the country’s external debt continued to grow at a steady pace. The gap between reserves and outstanding external debt (see graph) widened during the crisis period and narrowed later.

The forex reserves position changed after 1997. The real acceleration in accumulation of reserves was witnessed in 2002 and 2003

http://www.financialexpress.com/grfx/newspic/2004/foerx1204.jpg

^ while the data can be interpreted as "debt growing at a steady pace", it really hasn't grown that much in 10 years. When you factor into account how much the Indian economy has grown, external debt seems to account for a smaller %age of gdp each year?

-Jai

Jai

April 15th, 2004, 03:20 AM

Meanwhile... Monsoon to be normal, on schedule (http://in.rediff.com/money/2004/apr/13rains.htm)

Normal monsoons will arrive over India on schedule in June, a state-run research body has predicted, providing hope that the agricultural-dependent economy will sustain its bullish growth

...

And in that vein:

Boom time ahead for India Inc (http://inhome.rediff.com/money/2004/apr/10india1.htm)

Mumbai | April 10, 2004 11:09 IST

Corporate bottom lines are expected to rise in the next few quarters as rural demand surges on the back of a good monsoon and rising commodity prices.

The improvement in the world economy, which has led to higher export growth during the last fiscal, and the increase in outsourcing of business processes to India -- both in the manufacturing and the service sectors -- will also contribute to this surge.

...

Jai

April 15th, 2004, 03:24 AM

India’s Integration With Global Economy Improves (http://www.financialexpress.com/fe_full_story.php?content_id=56740)

India’s Integration With Global Economy Improves

SANJAY SARDANA

NEW DELHI, APRIL 9: Contrary to the general perception overseas that India has not opened up enough, the country has become a more open economy and outgrown the US and Japan (the two largest economies in the world) in terms of its share of external trade in merchandise and services of gross domestic product (GDP) over the last decade.

India’s share has doubled to 30.3 per cent in 2002, against 22.8 per cent of the US and 23.1 per cent of Japan during the last 10 years. However, the country’s share of external trade is only next to China, whose external trade to GDP stood at 55.5 per cent in 2002.

“Although we have not reached the limit, but we are definitely on the right path. India has certainly an enviable record in opening up the economy that very few would have envisaged at the start of the big ticket reforms in 1991,” he added.

...

FICCI recently presented these figures to a few Congressmen who were in India recently, and they were surprised to see these facts, Mr Modi said.

...

Further, India’s global ranking in terms of the size of the economy as measured on a purchasing power parity basis has improved substantially by rising to 4th position from 8th during the last decade as compared to the two rung improvement during a decade ago.

Jai

April 15th, 2004, 03:31 AM

India in the next few years will have a place in the top 5 economies of the world along with Russia, Brazil, China and of course USA.
I like something in India a lot, althought it has one of the poorest populations in the world, it has the most developed software industry in the world. Although there are lots of riches, and lots and lots of poor people, violence rates are minimal. I like those contrasts.

That sums India up perfectly, land of contrasts. It was the first thing I noticed when I first when to india several years ago.

Actually, I really want to go to Brazil someday. Not only are the women hot, but its such a beautiful country... beautiful beaches, beautiful women, beautiful cities. And did I mention the women are hot? :drunk:

My girlfriend is Brazillian (hope she doesn't read the above paragraph), originally from Rio, but she lived in the states since she was like 4. She says in many ways, its just like India, but with less people.

I've noticed with happiness the manifold increase in trade and cultural contacts between the 2 nations -- from defense to IT to mangoes. I hope it grows with both the economies :grouphug:

-Jai

Jai

April 15th, 2004, 04:24 AM

Man... I'm floored by the press that the Indian economy's getting all of a sudden. I guess for a country so large, it is inevitable, but its still :eek2: for me.

From the WSJ [subscriber only, whole article posted below]

Much of the case for India rests on China's fading allure (http://www.sulekha.com/redirectNh.asp?fromwhere=&cid=331830)

Himalayan Divide

Much of the case for India rests on China's fading allure
By LESLIE P. NORTON

INDIA OR CHINA? That question is gripping many emerging-markets investors lately, as China, fearful that its economy could be overheating, tries to slow its breakneck growth and India's, in contrast, gains steam. In the fourth quarter, growth clocked in at a China-like 10%. And last year, India funds were spectacular performers.

India Fund, the closed-end fund traded on the New York Stock Exchange, jumped 138%, versus a 33% gain in the Sensex, an index of the Mumbai Stock Exchange's 30 biggest stocks. Eaton Vance Greater India, an open-end mutual fund, logged a staggering 114% advance.

Yet this year, the gains have stalled. The Sensex is down 4.3%. Some funds have fared better. India Fund is up 4.4%, while the Eaton Vance fund is flat. Meanwhile, Morgan Stanley India Investments is down 4.5%.

What happened? In the next few weeks, India faces a parliamentary election, and the political risk that crept into Asia in a year punctuated by elections has skulked into India, too. Meanwhile, an election campaign in the U.S. has triggered a political outcry about job losses, not least to India's cyber-savvy back-office industry. Then, too, India's stunning advance suddenly invited a flood of paper. Notwithstanding a host of fledgling India funds eager to buy, the market sank under billions of dollars of privatizations and new stock offerings.

Zaheer Sitabkhan, Lloyd George Securities

Such threats haven't disappeared, but there's reason to believe that India will bounce back smartly. India and Pakistan are now talking, to resolve long-standing disputes. The coalition led by the Hindu nationalist Bharatiya Janata Party, or BJP, and Prime Minister Atal Bihari Vajpayee, is expected to skate to easy victory. "The market could do 15% to 30% this year. It's very hard to see anything that doesn't do well," says Jon Thorn, the chief of India Capital Fund, a hedge fund that jumped 130% in 2003.

Others may disagree with Thorn's short-term optimism, but they are sufficiently intrigued by the long-term investment case that they're taking a look. One is Gilman Gunn, the head of international investments for Evergreen mutual funds in Boston, who oversees $3.5 billion in foreign stocks. The portfolio manager traveled to India for the first time this year. Gunn has visited China countless times and his colleagues have visited India. "I've wanted to go to India for a while, but I've just been focusing more on China and other parts of Asia," he says.

Another is Stephen Roach, Morgan Stanley's chief economist. In a report last week, Roach gushed to clients, "I've just spent four days in India....Quite simply, I was blown away by what I saw on my first trip."

India's growth takes advantage of what Roach calls its "greatest strength: high-quality, low-cost human capital." That lets India sidestep lousy infrastructure and lackadaisical investment by foreigners. Led by software-service providers such as Infosys Technologies, Satyam Computer Services and Wipro, India has supplied engineers and other workers to automate and perform a host of back-office functions for AT&T Wireless and other companies. Many U.S. companies trying to squeeze costs put call centers in Hyderabad and other cities; Indian engineers are designing chips for U.S. manufacturers, while Indian accountants are preparing a blizzard of U.S. tax returns. U.S.-traded Ranbaxy and Dr. Reddy's are taking aim at the U.S. generic-drug market.

Just last week, IBM disclosed that it is purchasing Daksh eServices, India's third-largest computer-service and call-center outsourcing concern. Big Blue didn't announce how much it is paying, but The Wall Street Journal said a person familiar with the deal put the price at $100 million to $150 million or more.

Mark Madden, Pioneer Mutual Funds

The outsourcing approach isn't riskless. Last month, for example, Capital One Financial fired Wipro for pushing its credit cards too aggressively, a move that sent shivers through India's outsourcing industry. Yet the case for outsourcing remains intact. India's engineers, after all, are paid about a fifth of what their U.S. counterparts receive.

Thus, for the first time ever, services exceeded 50% of India's economy last year. Information-technology services, just 2% of the economy, grew 100%-plus over the past two years. The real payback, says Roach, comes from a rapid move up the value chain -- from processing and call centers to higher value-added services. Last week, for example, Infosys set up a business-consulting unit in Texas that will counter the backlash to offshoring and help it compete more effectively with big rivals such as Accenture.

Politicians might think manufacturing is the key to economic development, but in India, it's services that provide jobs. That offsets the capricious effects of the monsoon, so key to India's farming sector, which accounts for a fifth of the nation's economy but two thirds of its jobs. Last year, a good monsoon boosted India's growth rate. Yet monsoons are notoriously erratic.

For global investors, much of the case for India rests on China's waning charms. India's population is a whopping one billion-plus. And unlike China, India's demographics promise growth: More than half its population is under the age of 25. China's growth story is based on foreign direct investment and expectations that an enormous consumer base will materialize. In India, high wages from service jobs have already boosted consumer spending. That, bulls are betting, will lay the ground for an industrial recovery.

Rukhshad Shroff, J.P. Morgan Fleming Asset Management

Meanwhile, China has grown swiftly as a result of the Asian financial crisis. Today, worried about overheating, it's trying to brake growth, with enormous implications for global inflation or deflation. Its banking system is overburdened by bad loans, and credit growth has stoked China's economy. Yet India's recovery began less than two years ago, its banking system is in decent shape and its capital market is far more vibrant.

"A lot of capital has been deployed in China that will never earn a good return, and in two to three years, we'll start to see the problems," says Mark Madden, head of emerging-markets investing for Pioneer Mutual Funds. "We're in the early stages of the next up cycle for India and at the peak or topping in China," Madden adds. "Assuming we go through the election and we have a decent monsoon, this market could go significantly higher this year."

If companies deliver their promises, valuations are enticing. Indian stocks now trade at 13.5 times forward earnings, even as the projected profit growth surges towards 20%. That's roughly in line with their 10-year average. Yet prospects are far brighter than in the past.

"Today, earnings are growing at 20%, return on equity at 30%, and the 10-year yield is 5%," notes Rukhshad Shroff, the India specialist for J.P. Morgan Fleming Asset Management in Hong Kong, who oversees three India funds traded in Hong Kong, London and Luxembourg. After last year's gains, "we're at the point where significant mispricing of Indian equities is behind us. But companies are growing the top line, deleveraging, and [have a] better quality of earnings. India is firing on several cylinders."

The biggest issue facing investors and the BJP is the dollar's decline. A dollar now fetches 43.43 Indian rupees, versus 48 not so long ago. Unlike China's yuan, India's currency is largely convertible. That means the average information-technology company, which gets two-thirds of its sales in dollars, is taking a big haircut. Yet volumes are continuing to rise and many companies are hedging their dollar sales.

Jon Thorn of India Capital maintains that money will return to the secondary market now that the government has completed its privatization program for the fiscal year ended March 31, which culminated in the $2.3 billion offering of Oil & Natural Gas Corp., an exploration and production company.

"We were out of the secondary market in February and we're now fully invested," Thorn allows. Assuming that Vajpayee returns to power, the government will push ahead with a new round of reforms, including more sales of state-owned assets and tariff cuts. Capital equipment is heavily taxed at the moment, with tariffs as high as 30%. Madden of Pioneer Funds sees that falling to at least 15%, and perhaps vanishing altogether. That will boost manufacturing and could boost annual economic growth to the 6% to 9% range.

We asked Lipper to look at the open-end funds with more than 10% of assets in India. There are seven:

One is Madden's $300 million Pioneer Emerging Markets Fund, whose 10% in India is double the exposure of the fund's benchmark. Another is $1.6 billion Oppenheimer Developing Markets, with about a fifth of its assets in the subcontinent. The fund with the biggest exposure, however, is Eaton Vance Greater India, with $65 million in assets.

It's steered by Zaheer Sitabkhan, a well-regarded investor for Hong Kong-based Lloyd George Securities, who is optimistic on India. Sitabhkhan also runs Eaton Vance Asian Smaller Companies, which has 40% of its assets committed to India.

There are also three India closed-end funds. Punita Kumar-Sinha of Oppenheimer Asset Management runs the $550 million India Fund as well as Asia Tigers, another closed-end traded in New York, from a Boston base. India Fund, at 27.70 last week, was changing hands at a 14% premium to net asset value.

Punita Kumar-Sinha, Oppenheimer Capital

Kumar-Sinha is a graduate of the prestigious India Institute of Technology; she also has a doctorate in finance from Wharton and has worked at the World Bank and the International Finance Corp.

India Fund owns more mid-caps than other India portfolios by design; Kumar-Sinha believes that India's market cap will grow swiftly and turn its small companies into big-caps in short order. After the first quarter's decline, she says, "valuations have again become a little more attractive. There's no doubt in my mind that India is an attractive destination over the very long term."

India Fund's largest holding is Reliance Holdings, which accounts for 15% of the Indian market and as an oil and gas producer is "a good proxy for the Indian economy." And as India's consumers spend heavily, Kumar-Sinha is betting on banks, which are seeing credit growth advance. Her best picks: giant State Bank of India, Oriental Bank of Commerce and Jammu & Kashmir Bank.

Ruchir Sharma, the co-chief of emerging markets for Morgan Stanley Investment Management in New York, steers Morgan Stanley India Investment, a $360 million closed-end fund. Morgan Stanley India, at 26.70 last week, trades at a 12.9% premium. The Morgan Stanley Fund has low turnover of 30% to 40%.

Ruchir Sharma, Morgan Stanley Asset Management

Sharma, who frequently pens newspaper editorials, is optimistic about a host of Indian companies. One is State Bank of India, India's largest national bank, which is benefiting from a boom in retail lending and consumer finance and from declining rates. Sharma picked up State Bank at 0.6 times book value. Today it trades at book, but Sharma says "the valuation is still compelling." The reason? He sees earnings growing 20% a year over the next two to three years.

Meanwhile, Sharma is bullish on India's power sector, benefiting from deregulation as India gets serious about reversing its power deficit. Bharat Heavy Electricals is Sharma's second-largest holding, and he also likes Siemens (India) and ABB Ltd. Another big holding: Hero Honda, India's largest motorbike manufacturer, which Sharma lauds for "being very conscious about shareholder returns."

The last fund, Saffron Fund, is currently being liquidated, but was managed until last year by J.P. Morgan. Shroff of J.P. Morgan is fond of infrastructure investments such as cement and power companies.

His best pick: Shipping Corp. of India, a state-controlled shipper that he expects to be privatized in coming months. He's also fond of Sesa Goa, an iron and coke exporter benefiting from the insatiable appetite for commodities of one of India's neighbors: China.

drwho

April 19th, 2004, 10:49 PM

India to be 2nd hottest FDI spot: UN survey

BS Markets Bureau in Mumbai | April 16, 2004 10:08 IST

India is set to be world's second hottest destination for foreign direct investment after China in the next four years, according to a UN-sponsored survey.

The United States has fallen to the third spot, while Thailand ranks fourth, followed by Poland and the Czech Republic (with equal points), Mexico and Malaysia (equal points) and the United Kingdom, Singapore and South Korea (ranked equal).

These results are based on a joint survey conducted by the UNCTAD in Geneva and by Corporate Location Magazine in London.

More than four out of five international location experts from around the world believe that FDI inflows are about to take off again, following three years of continuous decline in global FDI.

The survey, which polled 87 investment analysts worldwide, gave no figures for investment flows, but said volumes were seen improving after three poor years between 2001 and 2003.

For India and China, major FDIs are expected in the manufacturing sector. Prospects for motor vehicles and other transport equipment, machinery and equipment, chemicals and, to a lesser extent, electrical and electronic products, publishing and media service are brighter.

In the services sector, banking and insurance, business services, tourism, transport, computer-related services, retail and wholesale trade will take the lead in attracting FDI in the years to come, experts said in response to the survey questions.

Asia-Pacific garners the most optimism of all regions in terms of its future FDI prospects.

For both the short and medium term, 88 per cent of the respondents said they expected further improvement in those prospects, with the remaining 12 per cent anticipating that they will remain the same.

Not a single respondent predicted any downturn in the region's prospects.

According to an earlier UNCTAD report, FDI was $653 billion in 2003, unchanged over the previous year, and under half the record $1.4 trillion in 2000 when cross-border mergers and acquisitions were booming.

The survey findings predict that the most likely options for business expansion overseas are evenly divided between mergers and acquisitions (41 per cent) and greenfield investments (37 per cent). Other modes of international business expansion such as licensing and strategic alliances were mentioned by only 22 per cent of the respondents.

Despite the fact that the outsourcing of white collar jobs has become a major issue in many countries and dominates international business headlines, the respondents still see the bulk of relocation occurring in lower value-added corporate functions.

Processing activities, logistics and supply functions are the most frequently mentioned corporate functions likely to relocate abroad.

http://inhome.rediff.com/money/2004/apr/16fdi.htm

Jai

April 20th, 2004, 04:49 PM

Tax collection up 18% in FY04 (http://economictimes.indiatimes.com/articleshow/627413.cms)

PTI[ TUESDAY, APRIL 20, 2004 01:55:24 PM ]
NEW DELHI: Tax collections grew by 18 per cent at Rs 2,52,162 crore, crossing the budget target and pushing up the Tax-GDP ratio to 9.1 per cent, during 2003-04.

While direct tax collections surged by 27 per cent and for the first time crossed Rs 1,00,000 crore, indirect tax mop up was higher by 12.3 per cent at Rs 1,47,48 crore in 2003-04, according to provisional figures till April 17.

"Notwithstanding the benefits given to industry, we have achieved higher collection in taxes," Finance Secretary D C Gupta told reporters.

The revenue collection has crossed the budget target after a gap of four years. The Centre had earlier collected more revenue than it targeted in 1994-95, 1995-96 and 1999-2000.

This is also for the first time in recent years that the Centre is slated to attain the estimated figure, which has been revised upwards.

The overall revenue collection, which was 0.4 per cent lower than the revised estimate of Rs 2,52,900 crore, is expected to be breached, as the government expects Rs 1,000 crore from Tax Deducted at Source (TDS) and another Rs 500 crore from indirect taxes in the coming days, Revenue Secretary Vineeta Rai said.

Jai

April 20th, 2004, 04:54 PM

Exports grew by 42% in Mar (http://in.rediff.com/money/2004/apr/17export.htm)

April 17, 2004 15:04 IST
Last Updated: April 17, 2004 15:30 IST

Despite the appreciating rupee, India's exports clocked a whopping 41.88 per cent growth in March 2004, pushing up the overall growth to 17.26 per cent in 2003-04.

For the first time, the exports crossed the $60 billion to end 2003-04 at $61.8 billion, even as trade deficit widened during the fiscal, virtually doubling to $13.36 billion against $7.44 billion in the previous year.

Exports during March 2004 grew by 41.88 per cent to $7.3 billion as against $5.15 billion while the cumulative exports in 2003-04 stood at $61.8 billion surpassing the annual target of 12 per cent by over five per cent.

In rupee terms, exports in March stood at Rs 32,901.57 crore (Rs 32,902 billion), which is 34.07 per cent higher than the value of exports during March, 2003.

Exports during the financial year 2003-04 are valued at $61.84 billion against $52.74 billion in the previous fiscal, a growth of 17.26 per cent.

In rupee terms exports stood at Rs 2,83,604.52 crore (Rs 2,836.04 billion) in 2003-04, which is 11.6 per cent higher than the value of exports in 2002-03.

India's imports in the period under review stood at $75.2 billion, representing an increase of 24.96 per cent as against $60.188 billion in 2002-03.

In rupee terms, the imports increased to Rs 3,46,474.45 crore (Rs 3,464.74. billion) from Rs 2,91,132.93 crore (Rs 2,911.32 billion), showing a growth of 19.01 per cent during the period.

Oil imports during 2003-04 grew by 14.29 per cent to $20.17 billion against $17.64 billion in the previous fiscal.

Jai

April 20th, 2004, 04:59 PM

Harvard Business School's recent conference on India: 2004
HBS Working Knowlege -- India: A Matter of Self-Confidence (http://www.hbsworkingknowledge.hbs.edu/specialReport.jhtml?id=4070&t=special_reports_india2004)

"India’s ongoing transformation from developing nation to economic powerhouse was the topic for discussion at the first India Business Conference, sponsored by Harvard Business School’s South Asian Business Association on April 4. The daylong event featured speakers and panel discussions on a range of issues. Our report looks at panel discussions on the future of India, capital markets, the retail industry, and VC and private equity funding."

---=-==-=---

The site has excellent articles on:
India 2020: Emerging or Surging? (http://www.hbsworkingknowledge.hbs.edu/pubitem.jhtml?id=4071&sid=-1&t=special_reports_india2004)
India has high hopes of raising annual GDP and lowering poverty. But it must overcome potential political instability, debt, and infrastructure shortages, for starters.

Ground-Floor Opportunities for Retail in India (http://www.hbsworkingknowledge.hbs.edu/pubitem.jhtml?id=4072&sid=-1&t=special_reports_india2004)
India is overcoming tradition and poverty to create opportunities for retailers ready to take a chance on a new playing field.

What's New in India's VC and Private Equity Markets? (http://www.hbsworkingknowledge.hbs.edu/pubitem.jhtml?id=4073&sid=-1&t=special_reports_india2004)
Last year, venture capital investment in India rose 31 percent to $774 million and is set to top $1 billion in 2004. What are the ins and outs of this fast-growing market?

The Indian Stock Market Rally: No Bubble Here (http://www.hbsworkingknowledge.hbs.edu/pubitem.jhtml?id=4074&sid=-1&t=special_reports_india2004)
The spirit of India should be judged through its capital markets, said Naina Lal Kidwai, an investment banker and native of India who was a keynote speaker at the first HBS India Business Conference.

drwho

April 22nd, 2004, 01:03 AM

jai> yeap..now India makes alot of noise in financial newspapers :) ;)

Jai

April 22nd, 2004, 02:30 AM

drwho,

Well, the rise of India its a historical inevitability :)

Fiscal deficit seen less than 4.8% of GDP in 2003-04 (http://www.hindustantimes.com/news/181_697456,0002.htm)
The Finance Ministry on Tuesday said fiscal deficit could be lower than the estimated 4.8 per cent of GDP after a buoyant revenue collection and a prudent expenditure control during 2003-04.

"We are on the mark as far as revenue is concerned. Expenditure is also within the budgeted figure. The fiscal deficit can be lower than 4.8 per cent of GDP," Finance Secretary D C Gupta told reporters.

This will be for the first time after 1991-92 that the fiscal deficit will be lower than the budget estimate.

In 1991-92, the fiscal deficit was at Rs 36,325 crore, which was lower than the budget estimate of Rs 37,727 crore.

"I will not be surprised if the GDP estimate of about Rs 27,50,000 crore is exceeded," Chief economic advisor Ashok Lahiri said indicating a higher than 8.1 per cent GDP growth in 2003-04.

Jai

April 22nd, 2004, 02:34 AM

Wealthy expat Indians turn homewards to invest (http://www.reuters.com/locales/newsArticle.jsp;:4085db87:216e2d53f26e77f9?type=businessNews&locale=en_IN&storyID=4886596)

21 Apr 2004 01:47

By Muralikumar Anantharaman

SINGAPORE (Reuters) - For Singapore restaurateur Surya Jhunjhnuwala, investing in India makes sound business sense, a view sharply at odds with those of his uncles who ran the family business in the 1980s.

Jhunjhnuwala and his younger brother run a hotels and real estate empire that spans Singapore, Hong Kong and Australia with assets of more than $100 million.

"My uncles would look at preserving the wealth more than making it work harder," said Jhunjhnuwala, 43.

"But we are constantly evaluating opportunities around the world and India is a prime country we are looking at investing into," he said.

Bankers say that's a route affluent people of Indian origin are increasingly taking as they tap into one of the fastest growing economies in the world.

Overseas Indians generate about $100 billion annually and pump back about $30 billion each year into India, where the boom is creating a need for a range of advisory services, says Dutch group ABN AMRO.

"India is not only an emotional chord now, it's a compelling economic chord for non-residents," said Raj Sriram, head of South Asian business for British private bank Coutts in the Asia-Pacific region.

The Indian economy is on a high, estimated to have grown by 8.1 percent in the year to March 2004, boosted by a rebound in the farm sector and solid growth in manufacturing and services.

Markets have been opened up to locals and foreigners and archaic investment and business laws in force until the early 1990s have been mostly done away with.

THIRD BIGGEST EXPAT GROUP

Citigroup says there are 150,000 Indian millionaires overseas with a total investable surplus of $360 billion. The 15 million non-resident Indians form the third largest expatriate segment worldwide, after the Chinese and the Irish, it says.

Banks are beefing up operations to tap this community.

Coutts has hired 14 private bankers for its South Asian business in the past three years and says it aims to add more.

The private banking arm of Citigroup, which targets overseas Indians with net worth of at least $10 million, said it plans to boost the number of its bankers for this group by 30 percent this year -- after a similar increase last year.

ABN AMRO last month launched in Singapore single-window wealth management services for Indians who have at least $100,000 in investable assets.

Indian diamond merchants, textiles and electronics traders have lived overseas for decades, but a boom in technology services since the mid-1990s drew on the country's huge reserves of skilled manpower to swell those numbers with professionals in fields such as information technology, medicine and finance.

"The Indian and South Asian professionals in markets like Singapore or Hong Kong today are quite a few in number and many of them would easily qualify for liquid investable assets of at least a million dollars or more," said Sriram.

LEVERAGE NEED

Increasingly people want to see their money put to work for them.

"Gone are the days when all non-resident Indian clients wanted was a safe place to keep their money," said Samir Sayeed, head of Citigroup Private Bank's global India business.

"Today they want two things -- better performance in their investments through more sophisticated financial tools and ideas to leverage the assets in their business from time to time for better returns."

Sanjiv Duggal, who manages an India fund at HSBC Asset Management, said an appreciating rupee, commodity price movements and the monsoon would also determine how well the Indian stock market performed.

"The opinion polls suggest that the existing government will get voted back in power," Duggal told a recent news conference, referring to the result of national elections that will run in phases through April and May.

"There's a 20 percent chance in our view that you get a change in government. And if you did get a change in government, that'll be a big disappointment for the market, and you can see the market maybe correct in the short term."

For his part, Jhunjhnuwala has a stake in an Indian paints firm and now wants to tap into the hospitality area.

"There's definite improvement in the general sentiments of everybody in India," he said. "For the foreseeable future, we see India to be continuing on the same path of expansion."

drwho

April 23rd, 2004, 09:09 PM

jai> yeap NRIs are a important group. 30 bn US$!! i wonder how much it will be ..lets say 2007..50bn US$ ? :)

drwho

April 23rd, 2004, 09:12 PM

I hope Trai can speed up the process.

Recommendations on broadband speed next week: Baijal

BANGALORE: The Telecom Regulatory Authority of India (TRAI) today said it would come out with recommendations on broadband speed for service providers next week.

"The first step would be a speed of 256 kbps and it will keep increasing. The recommendations would be out by next Tuesday or Wednesday", TRAI Chairman Mr Pradip Baijal said in his keynote speech at the National conference on broadband technologies and its applications, organised by MAIT, here.

In India, broadband penetration was abysmally low at two connections per 10,000 and TRAI was aiming to replicate the telecom revolution in this space, he said.

"With an extremely low penetration, no one would invest in creating content and business on broadband. Unless the vicious circle is broken, we will never create `broadband India', which we must if we have to accelerate GDP growth and make our economy, and particularly our service sector, more competitive", Mr Baijal said.

He said high costs of broadband rates were a major entry barrier for customers, citing that in Korea, charge per 100 Kbps of bandwidth is 25 cents per month, whereas in India, the consumer pays 60 times more ($15) per month for the same speed.

"Korean GDP per capita is $10,000 against India's $500. Thus, on an affordability basis, the Indian consumer pays 1,200 times more. We must ensure that the charges are drastically reduced - if they are not, the vicious circle will never be broken", Mr Baijal said. - PTI

http://www.thehindubusinessline.com/businessline/blnus/15231506.htm

drwho

April 27th, 2004, 01:08 PM

India among top 3 markets for telecom company,part I

PTI[ SUNDAY, APRIL 25, 2004 10:57:37 AM ]

NEW DELHI : India is one of the top three markets for the telecom company, a senior official from Motorola in Asia Pacific region, said in New Delhi .

" China is our top market in the A-Pac region followed by Japan . India is placed after that," Amit Sharma, Motorola vice president and cluster president for India , Thailand , Indonesia , Vietnam and Philipines, said in New Delhi .

Sharma claimed the company was moving closer to number two position in the mobile handset segment while on the infrastructure side, it is closer to any of its competitors.

The company is already number two in its position on certain segment of mobile handsets.

"Last three months have been excellent for us. In fact the year gone by (2003-04) was fabulous. If we are not the market leader in the telecom infrastructure segment, we are on par with Ericcson on that. And on the handset front although India had been a Nokia-dominated market, the last three months, due to a slew of new launches, our marketshare has picked up," he said.

drwho

April 27th, 2004, 01:10 PM

India among top 3 markets for telecom company,part 2

"During the last three months, on the back of strong sales, we are moving closer to number two position if not actually number two now", Sharma added.

He said broadband is a promising future growth area for Motorola in India . Broadband over cable is seen as a service on demand.

"Globally we are leaders in that field. India has 55 million cable homes, who are using analog devices. If they move to digital, it becomes a great opportunity for us. We are already developing products and doing pilots with some customers," he said.

He said the company will introduce 3G handsets in India as soon as operators are ready with their network.

http://economictimes.indiatimes.com/articleshow/msid-638009,curpg-2.cms

drwho

April 27th, 2004, 07:41 PM

Pre-paid mobiles boost Bharti profits by 81%
By Ray Marcelo in New Delhi
Published: April 25 2004 22:24 | Last Updated: April 25 2004 22:24

Bharti Televentures, India's number two mobile phone company, exceeded expectations and declared a full-year net profit, helped by surging sales of budget pre-paid mobile phone subscriptions.

Bharti, 28 per cent owned by Singapore's SingTel, on Friday announced a net profit of Rs5.8bn ($131m) under Indian accounting standards, up 81 per cent in the year to March. Its customer base doubled to 6.5m users - about 79 per cent of whom used pre-paid phone cards.

The company has set a target of growing its customer base to 25m by 2006 in a market that is expected to reach 100m users by that time. India's mobile phone market, one of the world's fastest growing, has been driven by low-cost call rates and pre-paid phone cards that can be "re-charged" for little more than $1.

Sales rose 64 per cent in the year to more than $1bn, under Indian accounting standards.

Sunil Mittal, Bharti's chairman and managing director, said growth in India's telecoms industry was "a given", and attributed the company's performance to management's re-focus on customer service. He said Bharti's recent move to outsource its technology needs to IBM would help it cope with its expansion drive.

"There are nine companies that have more than 25m customers in the world. Each one is highly respected. We have 24 months to get to that level," Mr Mittal said.

New Delhi-based Bharti said intense competition between wireless telephone operators had reduced average revenues per user (Arpu) in the past year. For its pre-paid subscribers, Bharti's Arpu fell from Rs349 to Rs337, while among more lucrative post-paid users, Arpu dropped from Rs1,326 to Rs1,128.

Telecoms analysts forecast that India's mobile phone subscribers, which doubled in a year to 33.5m users in March, would exceed the number of fixed-line users later this year. Such rapid growth is forecast to dilute the industry's Arpu to below Rs500, but most analysts expect companies can still be profitable, helped by a wave of consolidation sweeping the industry.

Bharti is among several large Indian telecoms companies poised to swallow smaller regional competitors, following new rules that allow mergers and acquisitions across India's 23 geographic telecoms "circles" that correspond to state boundaries.

Bharti, which offers GSM mobile, fixed-line, and data-based telecommunications services across 15 circles, recently bought Hexacom, a carrier in western India, for Rs4.3bn. Bharti has spent at least $2.8bn in rolling out its telecoms networks, and plans to spend up to $750m to March 2005 in further capital expenditure to consolidate its national footprint.

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1079420593482&p=1012571727192

drwho

April 28th, 2004, 02:08 PM

Indian GDP growth seen at 7.4 pct in FY 2004 - ADB

NEW DELHI (Reuters) - India, one of the fastest growing world economies, is expected to maintain its strong growth in the medium term but there are still serious challenges facing the economy, the Asian Development Bank said on Wednesday.

The Manila-based ADB said in its annual forecast of Asian economic trends the Indian economy was estimated to grow 7.4 percent in 2003/04 and 7.6 percent in 2004/05 boosted by the services and industry sectors, and normal monsoon rains.

It said the key farm sector was expected to grow by 3.0 percent, services 8.0 percent and industry 10.2 percent in the fiscal year 2003/04.

The government expects the economy to expand by more than 8.0 percent in the fiscal year ended March 2004 boosted by the best monsoon rains in a decade which stoked a consumer spending boom.

Foreign funds have poured in significant amounts of money because of the economic upturn, pushing the Bombay stock market up more than 70 percent in 2003.

"With help from the booming service sector, the country's current high growth momentum is likely to be maintained through fiscal year 2004/2005," the ADB said in its outlook.

The ADB, however, cautioned the large fiscal deficit, the short-term and reversible nature of foreign exchange inflows, poor quality of infrastructure and slow employment growth were cause for concern.

The government had forecast the deficit would fall to 4.8 percent of gross domestic product (GDP) in the fiscal year to March 2004 and 4.4 percent next year, from between five to six percent in each of the past five years.

But taking into account borrowings by state governments the deficit is around 10 percent of GDP, leaving little money for health, education or infrastructure improvements in the world's second most populous country.

"Poor performance in human development indicators and growing inter-regional disparities are also major concerns," said the ADB.

It also cited inadequate power supply as a serious obstacle to sustained high growth for the Indian economy and said 2004 would be an important year for India's economic future.

"If the new government which takes over in May 2004 fails to come to grips with the fiscal deficit and other urgent reform issues, this will erode business confidence and undermine investment," said the ADB report.

The world's largest democracy is currently in the middle of a general election, with a question mark over whether the ruling Bharatiya Janata Party and its allies will retain their overall majority in parliament.

http://in.news.yahoo.com/040428/137/2csv1.html

Jai

April 28th, 2004, 04:13 PM

A slew of economic news this last week....

INDIA: The Place to Be Right Now (http://www.thestreet.com/p/_tsc/rmoney/jaysomaney/10156277.html)

There's a lot of buzz about India, and everyone seems to be latching onto its story lately. Even CNBC sent one of its anchors there to see things firsthand. While India's story started a long time ago, expect that buzz to reach a fever pitch over the next couple of years.

India has long been associated with the day of the raj, and to most investors, it's akin to China 20 years ago -- a country where investments are fraught with risk. Market pundits like Jim Rogers take the sensationalist view, citing massive bureaucracy and rampant infrastructure and corruption issues as all reasons to avoid investing in India. I think they are flat-out wrong. While problems do exist, India is a great place to be if you're a longer-term investor.

Why? Well, the opportunity lies in the sheer number of people there. With about 1.2 billion people, India is second to China in terms of population, as China has about 200 million more residents. However, English speakers make up about 80% of India's population, vs. barely 30% of China's.

If you're looking for the next Microsoft (MSFT:Nasdaq - commentary - research) or Cisco (CSCO:Nasdaq - commentary - research), you might find it in India. For example, last summer I spent four weeks in India, and I was amazed at how the place had changed. I visit there almost every 15 months, but my last trip was eye-opening. Cell phones have nearly replaced wireline access, and online access numbers are exploding. The cell-phone market is growing almost 100% year over year. There were about 30 million wireless subscribers last year, and estimates are for wireless subs to reach as high as 60 million this year.

The Indian economy is expected to grow by about 8% this fiscal year. The conservative forward five-year growth rate is a bit above 6% per year. Growth rate for China is also along those lines, but its growth is mainly coming from an industrial and manufacturing base. Indian growth is based predominantly on technology and services.

With those growth estimates, I consider the only risk to investing in India to be political: a hard-core, fundamentalist, protectionist/isolationist party gaining power. However, that's as likely as Ross Perot becoming the next U.S. president. Every country has left-wing parties -- and India does, too -- but with the seeds of change already beginning to sprout into little trees, it would be impossible for a left-wing group to come into power.

As more and more U.S. companies outsource labor to India, there's tremendous backlash here at the moment, especially with this being an election year. But after all is said and done, it's just political noise. Companies will move toward lowering costs. If U.S. companies resist due to political backlash, they will be made economically unviable in the global marketplace. Just as we lost hundreds of thousands of manufacturing jobs to China a couple of decades ago and were able to adjust rather well to that sea change, so will we adjust the shift of jobs to countries like India this time around as well.

The Indian tech industry is seeing growth rates that are not being seen anywhere else in the world, and every techland company has its eyes on India. Ignoring Indian stocks as an attractive investment opportunity can be very hazardous to an investor's portfolio. You are already seeing a lot more exposure in media and print about India and its opportunities. Once the institutions really catch on to the India investment story, that buzz is going to reach fever pitch, in my humble opinion.

Jai

April 28th, 2004, 04:19 PM

Businessweek India has a cover story on India's exploding wireless market

Turbo charged (http://www.businessworldindia.com/may0304/coverstory01.asp). Excerpts:

Of course, what is playing out in India is just one exciting chapter in the global wireless revolution - a revolution that has ensured that mobile phones are the most widespread communication devices on earth. There are 1.3 billion mobile subscribers around the globe today, and this number is expected to rise to 2 billion by 2007. By that year, India is expected to have 207 million mobile subscribers - or just over 10% of the total global subscriber base. And it will probably also have the lowest rates for cellular telephony anywhere in the world.

In a space of a decade, the Indian telecom sector has moved from the boondocks to become a global growth story on steroids. This year is expected to be the seminal year in the country's telecommunications history. By September 2004, the number of cellular connections is expected to overtake the 42.5 million fixed line connections, says international research firm Gartner.

...

http://www.businessworldindia.com/may0304/images/images_03May04/coverstory/homeground.gif

...

But how does the Indian telecom story compare with that of the other amazing Asian growth story, China? India's initial pace of growth has, in fact, been spectacular. In 1996, nine years after China opened up to wireless telecom, it had 6.8 million subscribers. After nine years, India had 28.2 million subscribers. Says Vince Mazzola, president and CEO of Lucent Technologies India: "China has reached a high level of tele-density and the wireless spending is relatively flat." While China has already surpassed 250 million mobile subscribers, the rate of growth has slowed down over the past six months. Chinese equipment providers like ZTE and Huawei are now competing in the Indian market, and very aggressively at that. ZTE bid $45 per line for BSNL's 750,000-line CDMA contract last year.

However, it is not as if India will become a more important market than China. That is still a few years away - Mazzola figures it will take at least five years. China's spending on telecom last year was $25 billion and the mobile market is still adding 5 million new subscribers every month. The telecom spend in the Indian market is going to touch $ 3.1 billion this year, although by the end of the year, India is likely to overtake Korea and Malaysia. Where it might surpass China is in the sophistication of the services it offers. Already, some of the cutting edge data technologies that the world has to offer are being tested out by Indian operators: Qualcomm's Push to Talk technology by Tata Teleservices, live video downloads on GPRS by Hutchison and the EVDO wireless broadband from Lucent Technologies is being tested by Reliance Infocomm. Innovation in the wireless world will continue to come from the vendors, but increasingly, India features among the first ports of call for rolling out new technological solutions.

Arguably, for the first time in its history, India will be at the leading edge of a global phenomenon. Yet, as this survey will argue, the players in this market won't be partying all the time. That's because the level of competition is likely to be among the highest in the world, especially since the pace of consolidation from now onwards will be rather slow and measured. So what will determine the market structure? And who will set the rules of the game? As India evolves as a wireless society, what will be the fate of the fixed line voice model? In a country of over 1 billion people spread over 6.4 lakh villages, has the time come to write the fixed line's epitaph? Come, grab a ringside seat, as India's telecom future is about to be rewritten.

Jai

April 28th, 2004, 04:26 PM

India rising: Local first outpace Chinese peers in productivity (http://economictimes.indiatimes.com/articleshow/631379.cms)

Top Countries for Foreign Students and Top State That Host Them [US Universities] (http://ap.tbo.com/ap/breaking/MGA7C15EKTD.html)
India's #1 at 74,603 students, #2 China at 64,757, #3 South Korea at 51,519

India signs accord on Asian highway network (http://www.newindpress.com/NewsItems.asp?ID=IEH20040427144120&Page=H&Title=Top+Stories&Topic=0&)

Over 30 Gulf-based Garment Makers To Shift Bases To Hyderabad (http://www.financialexpress.com/fe_full_story.php?content_id=52813)

Jai

April 28th, 2004, 04:31 PM

Never mind China, watch India (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1083063011610&call_pageid=968256290204&col=968350116795)

Democracy can so be imposed by an occupying power. The British did it in India. It's pretty rough and ready and there was a period when it was suspended by martial law. But it's worked pretty well.

The press is free. The debates in the Lok Sabba, or Parliament, are raucous. Governments defeated at the polls actually give up power.

More creatively still, Indian-style democracy — now midway through an election that will take a total of five weeks to complete — has served to tame a radical ethnic party and turn it into a representative of all the people.

The incumbent Bharatiya Janata party, or Hindu nationalist party, shocked observers five years ago when it defeated the long-entrenched, secular, Congress Party. Today, its leader Atal Behari Vajpayee, who is highly regarded throughout the country (as well as in India's old enemy, Pakistan) is generally expected to win re-election as prime minister.

For a long time after independence in 1948, India didn't have that much to brag about but for its democracy, except for its military strength and later for its nuclear weapons. In 1991, China edged ahead of India in living standards, and ever since it has forged further ahead with the world's fastest growth rate.

No longer. Late last year, the investment firm Goldman Sachs came out with a global economic forecast.

Growth in the six largest industrial economies, such as the U.S., Japan and Germany, would soon slow to a crawl, it predicted. In the now booming developing economies of China and Brazil, and also of Russia, growth would slow down considerably.

The exception, according to Goldman Sachs, would be India. Each year for the next half-century it would roar along at a growth of 6 per cent.

India has always had the potential for this kind of growth. A huge — now 1 billion strong — domestic market. Lots of English speakers. Lots of university graduates. Highly talented individuals — think of all those writers, from Salman Rushdie to Indo-Canadians like Rohinton Mistry.

But there was also protectionism, and so an intense regulation of the economy. Also, an infamously inefficient bureaucracy and an immense amount of corruption. All this kept India bound down like a giant enmeshed in bindings it had wrapped around itself.

Two things have changed: India has opened itself up to the world. It's signed on to the World Trade Organization. Next year, for example, it will, for the first time, recognize foreign patents, which is going to have a transformational effect on its pharmaceuticals industry.

The other change agent could be described as the Indian version of China's secret economic ingredient.

One reason China moved so fast once it opened itself up was because it had the advantage of all those highly successful Chinese businessmen in North America and Europe — no less so in Taiwan and in much of southeast Asia — whom its own businessmen could use as role models. As they now are doing.

India's equivalent has been the incredible success story of Indian immigrants in the U.S. high-tech industry. In Silicon Valley, 40 per cent of information technology corporate start-ups have been by Indo-Americans.

Of these entrepreneurs, an extraordinary 200,000 are now millionaires, or about one in 10 of all Indian immigrants to the U.S.
Quite a few of them have gone back to India, where they not only started up local industries but brought with them the vital assets of know-how and contacts, and, of course, investment funds.

Now, "outsourced" American jobs are following them. The consulting firm Forrester Research has forecast that 3.3 million American high-tech jobs will move abroad by 2015, with 70 per cent moving to India.

India still has lots of aches and pains. It's hobbled by a huge bureaucracy and protectionism still abounds. It attracts comparatively little foreign investment (far less than China). But at last it is actually moving: Some 150 million Indians have now joined the global middle class.

And it's also moving in foreign affairs. As is well enough known, a recent Indian initiative has significantly cooled the temperature between itself and Pakistan.

Less attention has been paid — because it isn't dramatic — to the improvement in U.S.-India relations. For once, Washington has performed with diplomatic skill: Vajpayee now describes the two as "natural allies." For the first time ever, American and Indian troops have conducted joint exercises, in Alaska.

China fascinates everyone. A lot more people should keep their eye on India.

Jai

April 28th, 2004, 04:38 PM

An article Mr. India2050 should read :| ...

India: Asia's rising star (http://newstodaynet.com/guest/2604gu1.htm)

It is fashionable among India's certified liberals to laugh at the progress made by the country in several fields, especially in the last five years. 'India Shining?' they ask in a tone indicating disbelief, 'what's shining about India?' The disbelief is deliberately cultivated. It is expected to be taken as a sign of extreme sophistication. We have a set of people in this country who want to believe that India has been and will continue to live, in the gutter; the thought of India shining seems repugnant to them. But that is not how a man of the status of Lord Swaraj Paul sees India. Speaking of 'India; Clearing the Path for Global Greatness' in April 2003 in New Delhi, he said: 'When I think of India, I do not simply see this country becoming developed. I see her joining the ranks of great nations.... India has shown how prepared she is to bear these international responsibilities'. The fact of the Indian Prime Minister being invited to the St Petersburg tricentenary in Moscow and later to the G-8 Summit in early 2003 when he shared the dais with the US and Russian Presidents to express global concerns said it all. If that doesn't convince our intellectual liberals, perhaps one should recommend them to read D C Nath's impressive compilation of India's achievements noted in his brilliant and well-researched work Intelligence Imperative for India. Consider the following:

* India is among the three countries of the world that have built supercomputers on their own. The other two are the US and Japan. India went into building its own super-computer after it was denied access to one on silly grounds.

* India is among six countries that launch satellites. The INSAT system is also among the world's largest domestic satellite communication systems.

* India is now ranked second to the US in terms of distribution of certified professionals in nine major categories, including computer software, finance and healthcare.

* India's pharmaceutical industry is the fourth largest in terms of volume and 13th in value. In 1971 the share of Multinational Corporations in the Indian pharmaceutical market was 75 per cent. Today it is 35 per cent.

* Fifteen of the world's major automobile manufacturers are now obtaining components form Indian firms which only shows how much quality-conscious we are.

* So highly-respected is India's standing in quality control that one lakh Indica cars manufactured by Tatas are to be marketed in Europe by the UK-based Rover under its brand name.

* Bharat Forge has the world's largest single-location forging facility. Its client include Toyota, Honda, Volvo, Cummins and Daimler Chrysler.

* Maruti has been the preferred supplier of small cars under the Suzuki brand for Europe. Suzuki has now decided to make India its manufacturing export and research base outside Japan.

* Hindustan Inks has the world's largest single-stream, fully integrated ink plant. It has a manufacturing plant and 100 per cent subsidiary in the US.

* Aston Martin, one of the world's most expensive car brands, has contracted prototyping its latest luxury exports car to an India-based designer.

* Asian Paints has production facilities in 22 countries spread across five continents.

* In the two months of June and July 2003, there has been an increase of mobile phones by almost 1.5 million a month in India.

* India is now the seventh largest exporter of foodgrains in the world.

* The turnaround time in our ports used to be eight to 10 days. It is now 41/2 days.

* The percentage of people living below the poverty line has come down from 36 to 27 per cent and it is continuing to fall still further.

To bring home the point that India not only can meet world standards but also can do practically anything at very reasonable costs, Nath adds:

* Indian IT firms provide world-class services at one tenth of what the same services would cost in the US. Is it any wonder, then, that so many American firms want to outsource their work?

* In spite of high power costs and high interest rates, the capital costs of setting up plants in India to produce a simple item like toothpaste for Levers worldwide were just 35 per cent of what its sister companies in the US and Europe would have to spend.

* A by-pass surgery in India would cost between Rs 40,000 and Rs.50,000. It costs anything around Rs 6 lakh in the US. Is it any wonder, then, that so many foreigners are coming to India for surgery and hospitalisation?

Writes Nath after mentioning all the above details: 'There are, thus, hard facts to support the vision for India we have in mind and there are advantages and opportunities we can avail of to fulfil our glorious destiny in the coming decades'.

'India Shining' then, is not just a slogan manufactured by the BJP-led NDA. It is a fact of life of which all Indians can and should be justly proud. Importantly, all this has been achieved in a comparatively short time. Indian engineers, scientists and technologists are moving ahead in the fast lane and making their mark. This may have created jealousy in Western circles but they should remember the times when they were literally looting the developing countries with their high-priced items. Like an Indian firm manufacturing AIDS medicine at a fraction of the price of comparable products in the West, India is competing with the best in the world in all spheres. India Shining? Yes.

Jai

April 29th, 2004, 08:09 PM

U.S. Chamber of Commerce Pres. & CEO Thomas Donohue reports on his recent trip to India

rtsp://video.c-span.org/15days/e042604_donohue.rm

:cheers:

Jai

April 29th, 2004, 08:13 PM

few weeks ago, the CMIE was forecasting a 6.3% rate this year, now the ADB chimes in with 7.4 in 04 and 7.6% in 05

India’s medium-term growth prospect buoyant: report (http://www.navhindtimes.com/stories.php?part=news&Story_ID=042928)

IANS New Delhi April 28: An upswing in India’s business cycle is expected to push up the country’s growth rate to 7.4 per cent this year and 7.6 per cent in 2005, despite the uncertainties of an election year, an Asian Development Bank (ADB) report said here Wednesday.

“India is riding on an underlying long-term growth path. It is on a rising phase of business cycle and its services sector is booming,” said Mr Sudipto Mundle, India chief economist for ADB.

“These are expected to accelerate its economic growth through 2004 and 2005, making India one of the fastest growing economies in the region,” he added during a presentation on the bank’s Asian Outlook 2004 report.

“We don’t think elections will make a huge difference to the growth rate. India has reached a level of political maturity. There is after all a consensus on the reforms programme.”

Among other countries in the subcontinent, the annual publication projected the growth rates for Bangladesh, Pakistan and Sri Lanka this year at 5.7 per cent, 5.5 per cent and 5 per cent respectively

Jai

April 29th, 2004, 08:16 PM

The toronto star explains Why it's time to invest in India (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1082890864482&call_pageid=968350072197&col=968705923364)

U.S. mutual fund a way to buy into burgeoning economic powerhouse

PAT MCKEOUGH

For many years I advised against investing outside of North America even though it was in style among brokers and investment advisors. I felt the risk of investing in these markets overshadowed any long-term growth potential they might have had.

After the collapse of the Asian and Russian stock markets, foreign investing went out of style and has yet to regain its appeal. However, I'm starting to see more value in it.

Japan is finally coming out of its post-1990 slump. Russia has introduced the flat tax and other free-market reforms that will spur growth. India has widespread literacy and democratic traditions that are lacking in many developing countries, and it is finally settling its perennial feud with Pakistan, its neighbour and fellow nuclear power.

India has been in the news lately, mostly because of the outsourcing of jobs, mainly from the U.S., to Indian firms. This includes jobs for computer programmers, engineers, accountants and financial analysts, as well as thousands of less-skilled workers who answer phones at call centres and help desks.

That outsourcing is just part of the rapid growth lately of the Indian economy.

The growth is expected to continue, at a rate of around 7 per cent this year. India has a huge population of 1.05 billion people. It still has a lot of problems to overcome, but it has a stable democracy, an enormous English speaking population, and an education system that each year generates more than a million college graduates.

India's economy is benefiting from rising exports and global services such as outsourcing. It's also responding to rising demand from consumers within the country. For example, call centre workers earn up to $5,000 U.S. a year, in a country where per capita income is under $500. That kind of wealth fuels earnings at Indian firms selling into the domestic market.

India's ruling coalition government, led by the Bharatiya Janata Party, dissolved parliament in February ahead of general elections to be held in April and May. The coalition is expected to retain power, given the strong performance of the economy, the success of peace negotiations with Pakistan and a bumper crop for farmers (who make up 70 per cent of the population).

India still needs a lot of reforms in the key areas of trade, labour, industry and agriculture. It needs to lower import tariffs, privatize more industries and eliminate policies that preserve industries for small size enterprises, making it difficult to form larger and more efficient companies.

India is a large importer of oil, and would be hurt if oil prices were to rise. India still needs to modernize its transportation system, its communications and electrical infrastructure, and its inefficient bureaucracy. As well, a U.S. political backlash against outsourcing of jobs to India could spark trade restrictions or penalties for U.S. firms.

However, despite those obstacles, India is positioned to meet economic growth forecasts of up to 8.5 per cent a year for 2005 through 2007. That growth would push stock prices higher.

India and China now appear to be pursuing mutually beneficial trade exchanges and policies, downplaying their traditional territorial disputes. More crucially, breakthrough peace talks with neighbouring Pakistan will provide a big boost to political and economic stability. The two nuclear powers almost went to war last year.

This new relationship could be as important as, say, the peace that brought prosperity to historical enemies France and Germany after centuries of conflict and two world wars. Then too, many people in India now hold silver and gold as a store of value. As India's middle class grows, and gains confidence in the economy, more people may shift their investments from precious metals to stocks.

Finally, while India faces competition from other emerging economies such as China, it has the educated and English-speaking workforce that can let it benefit from today's advanced technology, such as the Internet and low-cost long-distance communications, to provide high-value services globally from a low-cost home base.

[snip]

Jai

April 29th, 2004, 08:18 PM

Massive surge estimated in forex reserves (http://www.hindu.com/thehindu/holnus/001200404291610.htm?headline=Massive~surge~estimated~in~forex~reserves)

New Delhi, Apr 29. (UNI): India's foreign exchange reserves are expected to touch $150 billion by the end of 2004, according to a study.

Forex reserves, which stand at $116 billion currently, will balloon to $150 billion going by the current rate of inflow, according to National Council of Applied Economic Research (NCAER).

Forex reserves crossed the $100-billion mark at the beginning of 2004-05 because of net increase in service exports, remittances in to the country, portfolio investments and deposits by Non-Resident Indian (NRI) deposits.

Despite a $15-billion deficit on the trade account during April-December 2003, India's current account enjoyed a surplus of $3.2 billion.

The current surplus was made possible by a huge net surplus of $8.8 billion on trade in services and about $14.5 billion on private services.

Although current account was in deficit during the first quarter of 2003-04, it was in high surplus during the following two quarters.

In a related note...
India corners 45% of FII flows into Asia in a week (http://www.thehindubusinessline.com/2004/04/29/stories/2004042902480100.htm)

INDIA attracted nearly 45 per cent of all foreign fund flows into Asia, excluding Japan, during the week up to April 21.

Jai

April 29th, 2004, 08:21 PM

IT’s R&D Outsourcing Blitz Now (http://www.financialexpress.com/fe_full_story.php?content_id=57870)

NEW DELHI: Research and development (R&D) outsourcing market for IT in India is estimated to grow to $9.1 billion by 2010 :eek: from $1.3 billion in 2003, according to research agency Frost & Sullivan. The R&D outsourcing market for IT in India is forecasted to grow from the present size of $1.3 billion in 2003 to $9.1 billion in 2010 at a compounded annual growth rate (CAGR) of 32.05 per cent, Frost & Sullivan, which undertook the study for the department of IT, said in its report.

The R&D outsourcing market for telecom in India is slated to grow from $0.7 billion in 2003 to $4.1 billion in 2010 at a CAGR of 28.73 per cent.

[snip]

Jai

April 29th, 2004, 08:29 PM

Rail budget to set out funds for bullet train (http://us.rediff.com/money/2004/apr/19rail.htm)

Sidhartha in Barh | April 19, 2004 07:35 IST

The Centre is planning to earmark funds in the railway budget for India's first bullet train to ply between Mumbai and Ahmedabad. The project is estimated to cost about Rs 22,000-25,000 crore (Rs 220-250 billion).

Rites had been given the mandate to conduct a preliminary feasibility study for the project, Railway Minister Nitish Kumar said.

"We may make an initial allocation for the bullet train project in the rail budget to be announced after a new government is formed," he told Business Standard.

In its vision document, the National Democratic Alliance has identified the bullet train project as a priority if it forms the government at the Centre. Kumar also said the government might not resort to a fare increase despite an expected rise in diesel prices following the elections.

"The railway finances are in a comfortable state and at this point of time we may not need to raise passenger or cargo traffic rates," the railway minister added.

Kumar said the 230 projects identified in the interim rail budget and estimated to cost Rs 20,000 crore, would be completed through budgetary support as well as market borrowing.

The railway ministry had originally proposed to create a special corridor between Delhi and Mumbai for the bullet train. Kumar said the Mumbai-Ahmedabad sector was found to be the most conducive for the corridor.

He said while a number of international agencies had shown interest in conducting the feasibility study, it was thought that they might influence the design and the technical aspects of the project.

"We, therefore, decided to give the mandate to Rites and once a report has been prepared we will seek the support of external agencies," the minister said.

Bond James Bond

April 29th, 2004, 09:51 PM

^Ah, well I hope they put LOTS of capacity on that bullet train. Everytime I see a picture of a railroad in India, there's always so many people on it they're practically falling off it. :D

drwho

April 29th, 2004, 10:19 PM

^Ah, well I hope they put LOTS of capacity on that bullet train. Everytime I see a picture of a railroad in India, there's always so many people on it they're practically falling off it. :D

yeap..to many people.. :)

bond btw: the commodity-prices are going down now ..oil-prices remains a issue but metal-index is falling:)

drwho

April 29th, 2004, 11:13 PM

India's gold production up in fiscal 2003/04

www.chinaview.cn 2004-04-27 23:30:08

NEW DELHI, April 27 (Xinhuanet) -- India produced 10,198 kilograms of gold during the fiscal year 2003-04, up 20.76 percent from 8,445 kilograms produced in the last fiscal year, said a statement Tuesday.

The statement, issued by Press Information Bureau of India, said the volume beat the targeted production of 8,274 kilograms.

Out of the total, Hutti Gold Mines Limited (HGML) produced 3,096 kilograms, Hindustan Copper Limited (HCL) 195 kilograms and Hindustan Aluminium Company Limited (HINDALCO) 6,907 kilograms.

However, after closure of the Bharat Gold Mines Limited (BGML) in 2001, HGML is the only one processing gold from ore stage. Public HCL and private HINDALCO process gold as a by-product while processing copper.

In March alone, these companies produced 1,173 kilograms of gold against a target of 943 kilograms. Enditem

http://news.xinhuanet.com/english/2004-04/27/content_1443665.htm

Bond James Bond

May 2nd, 2004, 06:00 AM

NY Times
May 2, 2004
As a Center for Outsourcing, India Could Be Losing Its Edge
By NOAM SCHEIBER

In early April, Infosys Technologies, an Indian outsourcing firm, had a party to celebrate reaching $1 billion in annual revenue. It gathered nearly 10,000 employees under a vast tent near its campus in Bangalore and plied them with food and live entertainment.

The company also distributed some $23 million in bonuses. "And we're doing a lot of other things to retain employees," said Stephen R. Pratt, chief executive of Infosys's consulting arm in the United States.

Infosys is hardly the only Indian company making a serious effort to attract and keep employees. Over all, according to a recent survey by Hewitt Associates, the international consulting group, wages in the country's major outsourcing sectors have been rising by close to 15 percent per year.

The reason is increasing competition for labor, thanks in large part to a rush by American companies to outsource work offshore. In fact, the competition has grown so fierce that the typical Indian operation in business processing - things like call centers and payroll, accounting and human resources functions - can expect to lose 15 to 20 percent of its work force each year, compared with single-digit losses in the late 1990's.

The surge in offshore outsourcing has, of course, attracted the attention of American politicians worried about the loss of jobs at home. On Friday, the presidential campaign of John Kerry announced its "Jobs First" tour and said, "While the president and his economic advisers have insisted that outsourcing benefits America, a record number of U.S. workers have lost their jobs to countries overseas." But, as the data from India show, the offshore outsourcing phenomenon may to some extent be self-correcting. Though outsourcing is surely here to stay, rising wages and rapid turnover in Indian hubs may put a dent in the cost savings that American firms enjoy when they ship work abroad.

The stiffest competition for offshore labor tends to occur in India's so-called first-tier cities: Bangalore, Mumbai (formerly called Bombay), New Delhi and Hyderabad. "You said it - Bangalore is a hothouse right now," said Jaithirth Rao, chairman and chief executive of the midsize outsourcing firm MphasiS, which has operations in the city. In certain sectors of the outsourcing market, attrition rates are 50 to 75 percent, according to Sunil Mehta, vice president of the National Association of Software and Service Companies, or Nasscom, an industry trade group in India.

The situation is particularly acute for managers in the business-processing sector. A typical outsourcing contract sends workers from an Indian company "onshore" - that is, to the American company's headquarters - while the outsourcing project is getting off the ground. The problem is that the onshore experience becomes a credential that is extremely valuable in the United States or the Indian labor market.

"Many don't want to go back offshore," said William S. McCarter, chief operating officer and executive vice president of ePolicy Solutions, a company based in Torrance, Calif., that focuses on Web-based technology services. "Or if they do go back offshore, they have a marketable skill to churn in the Indian market."

The situation became so dire last spring that, according to a report in India in The Business Standard, the top outsourcing firms in business processing reached an informal agreement not to poach employees from one another. Other retention measures included inserting clauses in employment contracts to require each new worker to observe a three-month cooling-off period after the hiring date before accepting another job offer. But wage increases have, not surprisingly, been the most common method of attracting and retaining employees.

The Indian outsourcing firm Wipro is a typical case. It gave its 24,000 employees in India an average raise of 10 percent last October; the increases were as high as 15 percent for managers. So far these costs have largely come out of the company's bottom line - denting its operating margin by 1 to 1.5 percentage points a quarter - rather than showing up as higher prices. (The leading Indian outsourcing companies have operating margins of 20 to 25 percent.) But a portion of Wipro's higher costs have been passed along to customers. "Certain customers got a price increase" last quarter, said Sridhar Ramasubbu, a company spokesman.

Indian executives like Mr. Rao of MphasiS, who also is chairman of Nasscom for 2004-2005, argue that the labor shortage, especially for middle managers, will be temporary. Local universities have already begun expanding the enrollment in two- and four-year business programs, he said. But there are reasons to believe that India's labor shortage will be more stubborn. A recent Nasscom report projected that if India continued to produce college graduates at the current rate, demand would exceed supply by 20 percent in the main outsourcing markets by 2008.

"Candidly, we see a labor problem in India right now," said Dan Zadorozny, the vice president for applications delivery at Electronic Data Systems, a global outsourcing firm that is based in the United States but has operations in India.

Even with wages rising 15 percent per year, the cost of a computer programmer or a middle manager in India remains a small fraction of the cost for a similar employee in the United States. A programmer with three to five years' experience makes about $25,000 in India, but about $75,000 in the United States. But the wage savings from offshore outsourcing have never translated directly into overall savings - typically an outsourcing contract between an American company and an Indian vendor saves less than half as much as the wage differences would imply.

ACCORDING to Praba Manivasager, chief executive of Renodis Global Outsourcing Solutions, a company based in Minneapolis that advises clients on outsourcing projects, the reason is twofold. The first has to do with the costs of the transition from doing work in-house to offshore, a process that usually lasts one to two years. During the transition, employees of vendors based in India must work in the United States. The second has to do with the cost of maintaining the outsourcing relationship. Personnel from the American company must make frequent trips to India, and the vendor needs some continued onshore presence.

"The vendor says, 'We'll save 40 to 60 percent; we'll give you such a great rate - $22 or whatever,' '' Mr. Manivasager said, referring to hourly wages. "But if the onshore rate is $50 to $55, and you have half the people onshore, the savings aren't going to be what are advertised."

It is not as if offshore outsourcing is going away. Indian outsourcing companies may simply shift their operations to cities like Nasik and Ponticherry, where wage inflation is still relatively mild. Others may outsource work offshore themselves, to China, Southeast Asia and Eastern Europe. Still, most experts say India is years ahead of countries like China in terms of its workers' facility with English, its telecommunications, the sophistication of its legal system and the stability of its political system.

Another possibility is that American companies may turn increasingly to global firms based in the United States - like I.B.M. Business Consulting Services, E.D.S. and Hewlett-Packard - to do their outsourcing work. The advantage of these firms is that they have locations in dozens of countries around the world - E.D.S. has a presence in 57 - so they can constantly shift work to the most efficient destination.

Such a trend may, in the end, bring a measure of relief to American workers. Of E.D.S.'s 36,000 global employees, more than 29,000 are based in the United States. Wipro, by contrast, bases 24,000 of its 28,000 employees in India. (The difference is that E.D.S. uses American workers for the onshore component of its contracts; Wipro uses Indian workers, dispatching them to the United States when necessary.)

If the increasing competitiveness of the Indian labor market begins to benefit companies like E.D.S. and I.B.M., outsourcing may one day no longer be a dirty word in a presidential election.

india2050

May 5th, 2004, 04:34 PM

GDP - real growth rate : 4.3%
GDP - per capita: $2,600 (2002 est.) (PPP)

AIM MEDC GDP PER CAPTA: $ 25,500 (united Kingdom)

$2,600 - $25,500 = $22,900

To work out the econmy in 10 years:

2,600 * 1.04 ^10 = $3,848 (2014 if growth rate is at 4%)

in 50 years:

2,600 * 1.04 ^ 50 = $18,477 (still not a MEDC in 2054 if our growth rate is 4%)

----
Now the above are correct if the growth rate is 4% for 50 years in a row.
------------------------------------------------------------------------

if how ever our growth rate is 6%:
---------------------------------

2,600 * 1.06 ^ 50 = $ 47,892 ( we are medc if we have 6% growth rate)

2,600 * 1.06 ^ 10 = $4,656

if we had 8% growth rate:
-------------------------

2,600 * 1.08 ^ 50 = $121,944 ( LOL not even GOLDMAN shacs excrate 8% growth for 50 years)

2,600 * 1.08 ^ 10 = $5,613

huaiwei

May 5th, 2004, 10:12 PM

A return to the Hindu rate of growth?

PRANAY GUPTE
FOR THE STRAITS TIMES

NEW DELHI - It was one of those tony Delhi dinners where the purveyors and observers of power gather, a small gathering organised around a couple of political and economic stars. The lighting was seductively low, the sitar music soothing, the food first class, and the conversation lively.

'So, professor,' said Mr Miki Daulet Singh, a top business executive, to the well-known economist, 'what's it going to be this year - a return to the Hindu rate of growth?'

The reference was to the growth rate of this predominantly Hindu nation hovering around 3.5 per cent since its independence from the British in 1947. That rate, kept low by socialist policies that discouraged private investment, accelerated only after those policies were abandoned in favour of economic liberalisation.

'No,' said the economist, Dr Arvind Virmani, 'more likely the Bharatiya rate of growth. That's to say, around 6.1 per cent annually.'

NEW UNCERTAINTIES

THE exchange captured the essence of an ongoing debate, and its subtext of anxieties, over the ideal rate of growth for a country in which half of the 1.1 billion people earn less than US$1 (S$1.70) a day. Concerns are mounting in the light of new uncertainties over the composition of India's next government.

That government is still widely expected to be formed by the 22-party ruling coalition known as the National Democratic Alliance (NDA). Its main element, the Bharatiya Janata Party (BJP), has freed the economy from many bureaucratic constraints such as rigid licensing requirements for industry, opened the door to more foreign investment, and spurred exports so that India's foreign- exchange holdings are now at a record US$110 billion, the sixth highest in the world.

But the BJP may have to backpedal on some of its economic liberalisation, which is invariably portrayed by its socialist rivals - including the powerful Congress Party of Mrs Sonia Gandhi - as an instrument of Western ideology unsuitable for eradicating mass poverty in India.

While it would be absurd to suggest that unnamed foreign powers influence the administration of Prime Minister Atal Behari Vajpayee, the argument resonates well in many rural areas where the government's economic liberalisation programmes haven't created jobs or improved the standard of living.

That the BJP's economic performance hasn't quite dazzled India's masses was evident this week. Exit polls in key constituencies indicated that the NDA may fall short of the 272 seats it would need to hold a majority in the Lok Sabha, the lower house of parliament. When the election results are formally announced on May 13, Mr Vajpayee may have to seek partnerships with small parties to form a government.

Forming a government under such circumstances would mean making compromises on economic liberalisation, the anchor theme of the BJP's re-election manifesto.

Dr Virmani, director and chief executive of the influential Indian Council for Research on International Economic Relations in New Delhi, thinks that the BJP and earlier administrations have long temporised on economic liberalisation anyway.

'The credibility of economic reforms is always an issue to be examined,' the Harvard-educated Dr Virmani said. There are too many competing interests.

POOR GOVERNANCE

BUT there are also economists who aver that India's economy has already 'taken off', and therefore there's no need for further liberalisation. More reforms, in this view, would overheat the economy and generate intolerable inflation (currently at a still manageable 3 to 4 per cent).

That is why economists like Dr Virmani are increasingly sceptical that India's growth rate will reach the 8 to 10 per cent that's being bruited about in many quarters, both domestically and overseas.

The economy has averaged about 6.1 per cent annually since the early 1990s, when a Congress administration led by Mr P.V. Narasimha Rao began instituting economic reforms. Indeed, Dr Virmani himself was a member of the National Planning Commission in 1999 when its forecast of an annual growth rate of 7.3 per cent was made for India.

In June 2001, India's 10th Five-Year Plan formally set that growth rate as an annual target; economic cheerleaders even urged the government to push the figure to 8 per cent to enlarge the country's gross domestic product (GDP) beyond the current US$550 billion.

'There are some who talk of a growth rate of 12 per cent per annum, which is nonsense,' Dr Virmani said. 'Politically motivated targets are one thing, realistically achievable targets are another.'

Besides the political constraints on an incipient Vajpayee government, what would come in the way of accelerating India's growth rate?

Dr Virmani says that economic reforms in agriculture - the largest sector of the economy - manufacturing and mining still haven't been completed to make these sectors more dynamic.

'There's also been a slow but poisonous deterioration in governance,' he said. 'The consequent impact on the delivery of public goods - roads, communications infrastructure - is troubling.'

Corruption at the local level has frequently meant that government funds designated for 'public goods' were diverted into other areas. Deteriorating governance has also meant an unravelling of law and order in states such as Bihar and Uttar Pradesh, he said, with local police often working in tandem with lawless elements.

Dr Virmani contends that it isn't enough for a government to simply keep spending more on providing social services. It's the widening of the availability of public goods, coupled with better public accountability of those public goods, that will generate faster economic growth.

'It's safe to assume we will have no trouble maintaining a 6.1 per cent annual rate of growth,' Dr Virmani said. 'But more than that? It's not realistic at the moment.'

The writer is a veteran commentator on international affairs.

Bond James Bond

May 7th, 2004, 12:56 AM

NY Times
May 6, 2004
Low-Tech or High, Jobs Are Scarce in India's Boom
By AMY WALDMAN

HYDERABAD, India - Two years ago, with the employment market in his drought-stricken rural district as dry as the earth, Bhaliya made his way to this high-tech capital in southern India and found salvation in a low-tech straw broom.

He became a city street sweeper, earning 1,800 rupees a month, or roughly $40. The pay was so low, and his 1,000 rupee-rent for one room in this inflationary city so high, that his wife became a sweeper too, leaving three toddlers in neighbors' care.

Each day since, they have bent to clear errant flotsam from the curbs, and straightened to see the immaculate imagery of the new India: hundreds of billboards advertising cars, mobile phones and Louis Phillipe shirts.

The temptations are forever out of reach, yet Mr. Bhaliya, 25, counts himself lucky. "We have to work to live," he said, knowing better than to ask for more.

India's economy is spawning a growing middle class, a host of world-class companies, a booming stock market and a new image for this nation of more than one billion people.

But those very reforms and conditions are also reducing the prospects of some of its citizens. India may be "shining," in the description of a controversial and expensive government publicity campaign, but it is also struggling to generate jobs.

That employment problem could prove to be the Achilles' heel of the ruling National Democratic Alliance, led by the Bharatiya Janata Party, which is seeking re-election on the strength of an economy that grew at a breathless 10.4 percent in the first quarter of this year. Three weeks of voting in this vast country conclude on May 10.

The public sector, once a stalwart of security, has lost some 4.5 million jobs in the past six years. In this state, Andhra Pradesh, government recruitment has been frozen, and the government has cottoned to private sector practicalities. Street sweeping, once a government job that paid triple what it does now and came with medical care, a pension, annual leave and job security, has been outsourced to private contractors, who offer none of that.

The streets of Hyderabad have never been cleaner, the city's budget never leaner, and for workers, the insecurity and indigence never greater. On a Friday afternoon, Mr. Bhaliya, who uses only one name, was working two hours past his shift's end - for no overtime pay - to ensure the chief minister a dustfree view when he drove past.

With greater efficiencies, global competition, cheap capital and new technology, private companies are doing more with fewer employees.

For many Indians, then, the dismantling of a quasi-socialist economy that began in 1991, and the growing globalization of the past five years, have meant only the trickle-down of raised expectations and lowered opportunity. As both economic and population growth outpace employment growth, economists say, the country's official unemployment figure of about 8 percent masks a far higher real rate.

This southern state and its chief minister, N. Chandrababu Naidu, capture the challenge facing India as a whole. The lack of work here is bad among educated urbanites, and worse in rural areas, where two-thirds of the work force lives and depends on nature's bounty. Severe drought - and a lack of irrigation and power to ease it - have prompted migration and farmers' suicides, and helped sustain a tenacious left-wing insurgency that nearly succeeded in killing Mr. Naidu last October.

Over time, predicts S. P. Gupta, a member of India's planning commission who specializes in employment, the social consequences of jobless growth will become more severe, whether in mass migration, or in riots like those that broke out last fall when 600,000 people applied for fewer than 3,000 low-level railway jobs.

Mr. Naidu, who is seeking re-election as chief minister and parliamentary seats for his party, has gained a global reputation for his assiduous courtship of multinational technology companies, and for government reforms that have increased efficiency and reduced the state's deficit.

Regularly promoted as a model for other states and even the national government, he is largely banking his state's future on processing jobs - notably back-office work for the West. But it is not clear that Mr. Naidu's vision of a high-tech paradise can uplift this state's 75 million people, or indeed India itself.

Employment from outsourcing jobs from the United States, Mr. Gupta noted, is "big for the upper middle class, but for the country as a whole very small."

There is little Mr. Naidu has not done to lure high-tech companies here, from offering virtually free land to declaring information technology an "essential service," meaning employees cannot strike.

For Microsoft, which wanted a rectangular plot, he reconfigured a nearby business school and expedited the building of roads. For Computer Associates, which wanted a piece of land reserved for the financial district, he ordered the financial district shifted.

Even as a lack of water has devastated farmers across the state, Mr. Naidu has ensured Vanenburg IT Park, the idyllic 20-acre campus where Deloitte India and others sit, enough water for meticulously landscaped grounds year-round.

Even as Mr. Naidu has demanded that consumers and farmers pay more for inconsistent power, he has offered 25 percent power discounts to companies locating here.

In part, Mr. Naidu's blandishments reflect the dynamics of the global rush to India. As more cities, from Bangalore to Chennai (formerly Madras), compete for information technology companies, the companies have the leverage.

But it is not clear how much his state is getting in return when it comes to jobs. While nearly 60,000 jobs in information technology have been created here, many have gone to young Indians from across the country, despite this state's 350,000 English-speaking graduates.

Shankar Rao, who runs a placement agency, Our Consultancy, said software workers and especially engineers in the state were having trouble finding work. It is "very, very difficult" to place engineers, Mr. Rao said. "I think no country has as many engineering colleges as this state."

Since taking office, Mr. Naidu has increased the number of engineering colleges from 32 to around 230, and the number of graduates from 8,000 each year to 75,000. By the end of 2002, the state had around 2.6 million educated unemployed residents.

Production jobs, meanwhile, have waned. The sweepers' supervisor, Rama Rao, lost two factory jobs when the factories, one making cigarettes, one home appliances, closed. Now earning 2,500 rupees a month - roughly $57 - no matter how many hours or days he works, he mourned the "time to time" jobs when hours were set.

But even his sweeping job could be swept from under him. Rajiv Babu, the city's deputy executive engineer for solid waste management, said he regularly got offers from both foreign and Indian companies to mechanize the sweeping.

For now, it was still cheaper to use manual labor, although he noted, "As an engineer, I would love to mechanize the whole thing and forget about it."

In some sectors, that has already happened. Outside Mr. Babu's window, a new road overpass was being built. Such projects, he estimated, now require 60 percent less labor than they did a few years ago, thanks to ready-mix cement.

He had heard of suicides among workers who once mixed concrete, but he said he had no choice: the ready-mix was both cheaper and better quality.

Jai

May 7th, 2004, 04:07 PM

South Asia

Hello, hello ... India calling (http://www.atimes.com/atimes/South_Asia/FE01Df03.html)
By Indrajit Basu

KOLKATA - While the Global System for Mobile telecommunications (GSM) celebrates over 1 billion connected customers worldwide (achieved in February) in just 12 years against 12 decades of fixed lines, with China and Europe taking credit for most of the growth, the fact is that India, unexpectedly, is emerging as one of the fastest-growing mobile markets in the world today.

"Undoubtedly, most of mobile telephony's growth has occurred in China," said a recent Deutsche Bank white paper on wireless telephony called "Brilliant Past Bright Future", "but India represents one of the most exciting growth opportunities for mobile." The paper adds, that with its billion plus people, India is the second most populous country on the planet, but has just 33 million wireless/mobile telephone subscribers. It is expected that the subscriber base will grow to 290 million by the end 2008 and 500 million by 2010. "This makes India one of the fastest-growing markets of this decade," Deutsche Bank said.

Indeed, in the space of less than a decade, with the introduction of wireless telephony in 1995 when the first mobile phone call was made at a princely cost (by Indian standards, because fixed line telephony tariffs were charged at Rs 1 per 5 minutes) of Rs 16.80 per minute (40 cents US), India's emergence as a global growth story on steroids is noteworthy. Perhaps no single telecommunication technology has had as profound an impact on the Indian society as the "wonder" technology called wireless telephony. Take for instance Basheer, one of 100,000 fishermen of modest means in the southern state of Kerala, who uses the mobile phone daily to strike the best deal once the catch is in his boat and well before it reaches shore. "Not just that, we feel more secure in the sea and we can communicate immediately for assistance in rough weather," Basheer says.

Many farmers in the Indian state of Punjab, too, depend solely on mobile telephony to sell their harvest in far off commodity exchanges called mandis right from their farms instead of browsing through newspapers or visiting the mandis first to track rates. And Jiva Institute, a Delhi-based organization for social development, uses the mobile phone exclusively for its TeleDoc, which helps in providing medical attention to remote Indian villages with no easy access to treatment, by transmitting diagnostic data to an information technology-enabled central clinic and then prescribing medication and treatment.

India is not just the fastest-growing market, but also the most competitive, and hence the cheapest. Intense competition in the telecom sector over the past two years has led to a crash in prices for everything from handsets to talk time. Talk time tariffs for instance have come down by 74 percent over the past two years, and handset prices, which were sold at a premium of as high as 40 percent over international prices even until a year back, are now at par. "The telecom service sector has shown unprecedented growth during 2003-04, mainly driven by intense competition and aggressive pricing," says the Telecom Regulatory Authority of India chairman, Pradip Baijal.

And by virtue of its size, growth rate and competitiveness, the country is setting the benchmark for the global telecom industry as well. The recent deal between India's newest and fastest growing wireless telephony company, Reliance Infocomm, and United States-based Lucent Technologies, is a good example of how India is setting the benchmark for lowest equipment prices in the world.

Industry sources say that Reliance Infocomm's negotiating capabilities managed to bring down the equipment cost of infrastructure to under US$40 per subscriber from $100 two years back. Equipment rates for Reliance in fact have slipped even further to come down to $25 per subscriber - once again, among the lowest in the world.

In another landmark agreement, Sweden's equipment vendor Ericsson agreed to a revenue-sharing deal with the Indian mobile telecomm operator company Bharti Televentures that will allow Ericsson to earn a percentage of revenues every time a subscriber downloads video or plays a Java game. This kind of cooperation is quite unusual in the global wireless world, say global vendors, admitting that participating in the Indian market has forced them to radically reduce costs in their own companies.

But how does the Indian telecom story compare with that of China, the other amazing Asian growth story? Although China continues to lead globally in terms of telecom spending and new customers, India's initial pace of growth has been more impressive. In 1996, nine years after China opened up to wireless telecom, it had 6.8 million subscribers. After nine years, India had over 30 million subscribers and was adding 1.5 million more every month, says Vince Mazzola, president and chief executive officer of Lucent Technologies India. "China has reached a high level of teledensity and the wireless spending is relatively flat. While China has already surpassed 250 million mobile subscribers, the rate of growth has slowed down over the past six months."

However, it is not as if India will become a more important market than China, just yet. China's spending on telecom last year was $25 billion and the mobile market is still adding 5 million new subscribers every month. Telecom spending in the Indian market is going to touch $3.1 billion this year, although by the end of the year, India is likely to overtake Korea and Malaysia. Mazzola figures it will take at least five years for India to catch up with China, but where India may surpass China is in the sophistication of the telecom services. Already, some of the cutting edge data technologies that the world has to offer are being tested by Indian operators: Qualcomm's Push to Talk technology by Tata Teleservices, live video downloads on GPRS by Hutchison and the EVDO wireless broadband from Lucent Technologies by Reliance Infocomm are some of these instances. "Innovation in the wireless world will continue to come from the vendors, but increasingly, India features among the first ports of call for rolling out new technological solutions," says Mazzola.

Nevertheless, despite the scorching growth prospects that India offers, the road ahead for wireless telephony players in the country may not be without hurdles. That's because once the government raises the bar on foreign investment to 74 percent, a move that is expected to come through after the ongoing general elections, the level of competition is likely to be among the highest in the world.

Interest among foreign operators is already evident. According to global consultancy firm McKinsey's, virtually every week the consultancy firm gets a call from a major operator evincing their interest in India. Moreover, recent reports suggest that Singapore Technology Telemedia and Temasek Holdings (a Singapore-based investment company), as well as Telekom Malaysia, have shown keen interest in acquiring the 33 percent stake in India's mobile telecom provider Idea, of which AT&T wishes to sell out. Vodafone, the leading European wireless player, too, is reportedly scouting around in the country for opportunities "to play the game".

Jai

May 7th, 2004, 04:11 PM

Made in India, the Ideal `Cocktail' for AIDS (http://www.nytimes.com/2004/05/04/health/policy/04AIDS.html)
By DONALD G. McNEIL Jr.

Published: May 4, 2004

S three-year study of AIDS drugs has identified what the research leaders believe is the ideal triple-therapy cocktail for new patients.

The successful cocktail, known colloquially as "two nukes plus a non-nuke," is the same one that the World Health Organization has been recommending in poor countries since 2002. It is also the same combination that Indian suppliers of generic drugs have been putting in three-in-one pills since 2001.

Another drug cocktail examined in the study — a "three-nuke combination" — did so poorly that patients were taken off it. The failed cocktail is the only one made as a three-in-one pill by any Western pharmaceutical company.

The study, its authors said, suggests that patients who have never been on AIDS drugs should be started on a combination of two nucleoside reverse transcriptase inhibitors ("nukes") and a non-nucleoside reverse transcriptase inhibitor ("non-nuke").

Currently, American and European doctors prescribe many different mixes of the 20 drugs approved for fighting AIDS infections, and shift the mixes as patients develop resistance or side effects.

The study of 1,147 patients, published in the April 29 issue of the New England Journal of Medicine, looked for an ideal regimen for new patients that avoided protease inhibitors. Those drugs are effective and often prescribed by Western doctors, but they can damage the liver or shift body fat into unsightly humps.

The study was begun before any drugs in the two newest classes of AIDS drugs, fusion inhibitors and integrase inhibitors, were approved.

AIDS experts said a second conclusion from the study was that the three-in-one pills offered by generic drug makers from India were better for new patients than any of those sold or planned by Western drug companies.

The study "reinforces the point" that the type of cocktail recommended for poor countries by the World Health Organization is right for rich countries as well, said the study's lead author, Dr. Roy M. Gulick, director of the H.I.V. clinical trials unit at Weill Cornell Medical College in New York City.

The latest guidelines from the National Institutes of Health for American doctors recommend starting new patients either on the same two-nukes-plus-a-non-nuke regimen that the W.H.O. recommends, or a two-nukes-plus-a-protease-inhibitor regimen.

Most of the Weill Cornell study's 1,147 patients were nonwhite and 19 percent were women, Dr. Gulick said, so the study's conclusions should be applicable worldwide.

The AIDS expert who led the committee that formulated the W.H.O. guidelines, Dr. Scott Hammer, chief of the division of infectious diseases at Columbia Presbyterian Medical Center, said the W.H.O. made its 2002 recommendation because the combination worked well and the drugs were generally cheap.

Besides their toxicity problems, he said, protease inhibitors were expensive because only companies that held patents on the drugs made them, and some of the medications required refrigeration, which is impossible to guarantee in, for example, rural Africa.

In the new study, the cocktail that worked best was a mix of the "nukes," AZT and lamivudine plus the "non-nuke" efavirenz. After 32 weeks on the cocktail, 89 percent of the patients had almost undetectable levels of virus in their blood.

The cocktail that did less well was a mixture of AZT and lamivudine plus abacavir. After 32 weeks, only 79 percent of the patients had low levels of virus.

That cocktail is sold by GlaxoSmithKline as a three-in-one pill under the name Trizivir.

However, because it is "clearly inferior" at suppressing the virus, it is "no longer recommended for first-line use" said Dr. David Bangsberg, a professor of medicine at the University of California at San Francisco who monitors treatment around the world.

Most of the study was paid for and monitored by the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health.

Glaxo provided its drugs and paid part of the analysis costs, said Mary Faye Dark, a Glaxo spokeswoman.

"We aren't surprised that Trizivir alone didn't do as well," Ms. Dark said. The decision to take the study's patients off it was made in February 2003.

But she said the cocktail still worked in many patients and should play a role in AIDS therapy, especially for maintaining patients whose viral loads have first been lowered by other regimens.

Most three-in-one pills now made by Indian generics makers contain AZT, lamivudine and nevirapine.

Nevirapine is in the same "non-nuke" class as efavirenz and a recent study in Lancet, the British medical journal, found them to be equivalent. Nevirapine is a well-established drug, but it causes a serious rash in some patients, so generics makers are moving toward making compounds with efavirenz as well.

The N.I.H. guidelines prefer efavirenz because it causes fewer rashes, but accept nevirapine as a substitute.

Both the "nukes" and "non-nukes" block reverse transcriptase, an enzyme that allows the RNA in an AIDS virus particle to replicate itself inside the DNA of a healthy T cell, a trigger cell for the body's immune system. Unable to replicate, the virus cannot spread to other T cells and destroy the immune system.

Jai

May 7th, 2004, 04:13 PM

By Indrajit Basu

KOLKATA - Amid the anti-outsourcing brouhaha that is currently rocking the Unites States, there is at least one aspect of the controversial phenomenon that the Americans can't complain about. For this, unlike most other forms of outsourcing, doesn't just involve the mundane issues of cost-saving and the moving away of jobs, but with more profound ones like well-being and health.

Driven by the need to invent new drugs at much lower costs against the backdrop of the billions of dollars of wasted research of the past years that has ended up in what is called an "innovation deficit", US-based multinational drug companies like Eli Lilly, Pfizer, Aventis, Novo Nordisk, GlaxoSmithKline and Merck are increasingly turning to India to leverage their drug development activities, as well as to invent new drugs. And aided with an efficient drug regulatory system, an experienced drug industry, a vast talent pool and an obviously much lower cost of research, India is suddenly emerging as the destination of choice in Asia for drug-related research.

In fact, although the US-based drug industry is one of the biggest and most lucrative in the world, it is ailing. Having spent billions of dollars since 1991 chasing new blockbuster drugs, the drug companies are suddenly staring at the fact that the pipeline of new drugs, on which their future health depends, has been drying up for some time. For instance, global research funding has doubled to over US$200 billion since 1991, but the number of new drugs emerging each year has fallen by less than half. Last year, the US Food and Drug Administration (FDA) approved only 21 "new molecular entities" - industry jargon for new drugs - down from 53 in 1996.

Clearly, the more they spend on research and development the less the drug giants seem to have to show for it. But more importantly, the cost of new drug development is turning out to be too enormous to bear for these drug companies especially after having spent huge sums of money during the 1990s that yielded little results. Boston's Tufts Center for the Study of Drug Development, the leading research center of new drug regulation economics, calculates that total pre- and post-approval research averages $900 million per drug. But the time required for the trials process - which may take 10 years - is a greater cost factor and an impediment to releasing beneficial new drugs.

The costs are especially challenging to smaller drug and device companies that are often started by doctors and scientists turned entrepreneurs. Some of the promising startups, which have created what might be highly beneficial new drugs, are also strangled by the amount of money and time needed to pass FDA-certified trials, as well as the FDA approval process itself. In September last year, for example, a Santa Monica, US-based company, Balance Pharmaceuticals, which had been working on a promising drug for use against both breast cancer and fibroids for 11 years, simply ran out of money and was unable to raise the $50 million necessary to finish clinical trials. A classic startup founded by scientists from the University of Southern California medical school, the company fatally underestimated the amount of time and money that clinical trials and FDA approval would take.

"The cost of drug development needs urgent attention, which is why cost-effectively developed drugs in lower-cost countries like India are gaining a significant advantage over those that do not," says Kiran Mazumdar-Shaw, founder of the Bangalore-based famous biotechnology drug maker and R&D company Biocon.

Indeed, with a widespread base of highly trained scientists, doctors, technicians, support workers, and in some areas, robust IT systems, the cost of testing drugs is significantly lower in India. "Generally, developing drugs in Indian laboratories is 70 to 80 percent cheaper than in the US," says A Lal, chairman of Dr Lal Path Labs. And a recent study by Rabo India Finance, a subsidiary of Rabobank, Netherlands, estimated that cost savings could be even higher for the more expensive research, which can cost $100 million or more and take several years to complete in the US.

Cost saving is not India's only advantage, though. Genetically and culturally, India is perhaps the most diverse country on the face of the earth, says biologist Madhav Gadgil of Bangalore's Indian Institute of Science. "Genetic diversity is an important asset for developing and testing new drugs because people with different genetic make-ups may respond to drugs in different ways."

Smelling a "lucrative opportunity" from this apathy of the multinationals to spend on research, Indian drug companies too have jumped on the R&D bandwagon. "With the continued reduction in the selling price of drugs in the regulated markets, the manufacturers operating in these markets have to bring down their costs. We have to strengthen our facilities to take advantage of this," says Ajay Piramal, chairman and managing director of Nicholas Piramal. Over the past year, his drug company, along with a few more, has tripled its R&D expenditures, while the next two years could see spending double again from the current level, say industry sources.

Nevertheless, research on newer drugs in the country is still restricted to "vanilla" drugs like vaccines and drugs for ailments like heart disease, which unlike cancer and Alzheimer's, are less complex to handle. "So far Indian R&D has responded with research on smaller drugs and work on flashy blockbuster drugs like Prozac or Viagra is a distant dream," says an official of Rabo India. Besides, there is another significant issue that comes in the way of expansion of drug research in India: the country's weak and uneven track record in the protection of intellectual property and patents - which is already making some drug companies wary of India.

"Still, it is in this arena where India, with its vast capabilities, can now show competence at nearly a third of the costs compared to the West," says an official from Pfizer India's research lab. "There is also a growing recognition for India as a center contributing world-class quality data acceptable by major regulatory agencies around the world including the US FDA," said Dr R S Nadig, medical director, Eli Lilly India, "and that augurs well for the country."

Jai

May 7th, 2004, 04:18 PM

Slowly but steadily, India will overtake China (http://www.iht.com/articles/518600.html)
Jonathan Power IHT
Thursday, May 06, 2004

An economy awakes

LONDON India is now in the middle of what many Chinese would give their right arm for - a general election. Yet China is the power that gets all the attention.

When President Richard Nixon first went to China it was widely assumed that he was ignoring India and courting China because China had nuclear weapons and could help balance the Soviet Union. But since 1998 India has possessed nuclear weapons and can balance China.

While Washington is slowly waking up to the fact that the tortoise soon might overtake the hare, the investors and the press continue in their old ways. Last year the inflow of foreign capital into China was two and a half times that into India. The press barely covers the Indian election while every day there is a story out of Beijing.

This skewed appreciation has been going on since the time of Mao. China basked in accolades in the 1960s and 70s, while India was mocked for its "Hindu growth rate." China's people were fed, housed, clean and tidy, while India's were ragged, hungry and sinking into a trough of despondency - "a wounded civilization," in the words of the novelist V.S. Naipaul.

With the 1981 famine we could see, to use George Watson's phrase, that "the intellectuals were duped." China had to beg around the world for grain while India had managed to survive the savage drought of 1979 without having to import a sack.

Now with Mao long dead and the capitalist reforms of Deng Xiaoping well into their stride, the story is being repeated but in a more complex way. To many, China's economic progress has been nothing less than spectacular. But inflationary pressures, bad bank loans, a rapidly increasing maldistribution of income and crime all threaten its economic stability.

India, meanwhile, has been gradually but with increasing speed loosening up its old Fabian socialist system. After a major economic crisis in 1991, Finance Minister Manmohan Singh introduced major promarket reforms and fiscal expansion and India's economy has never looked back.

India's annual growth has been averaging 5 percent - and is now 8 percent, thanks to a good monsoon. Singh, who has become Sonia Gandhi's principal economic adviser, believes that with more reforms than the present government has so far countenanced, an average annual growth rate of 6.5 percent is sustainable - which is what he privately thinks China's overhyped growth rate actually is.

India is better placed than China for future growth. Its capital markets operate with greater efficiency. They are also much more transparent. Companies can raise the money they need. India's legal system, while too slow, is much more advanced and is able to settle sophisticated and complex cases. Its banking system has relatively few nonperforming assets.

India's democracy and news media are alive and vital, which provides a safety valve for the incoherent changes that modern economic growth brings. India has religious riots, secessionist movements, urban squalor and bitter rural poverty. But the voters know they can throw the rascals out, and regularly do.

Moreover, the massive flows of foreign investment into China are a two-edged sword. It has become a substitute for domestic entrepreneurship. Few of the Chinese goods we buy are in fact made by indigenous companies. And the few that exist are besieged by regulatory constraints and find it hard to raise domestic capital. China's state-owned enterprises remain massive but bloated and possess a frightening number of nonperforming loans from China's vulnerable banking system.

India, by contrast, has created world-class companies that can compete with the best in the West, often on the cutting edge of software, pharmaceuticals and biotechnology.

India's trump cards are its use of English, its emphasis on mathematics in its schools and the talents of its diaspora. For decades China has benefited from the wealth and the investment potential of its diaspora and the economic energy of Hong Kong and Taiwan. After years of ignoring its émigrés, India is now welcoming them back - and they have much more "intellectual capital" to offer than China's, much of it coming from Silicon Valley, where the Indian contribution has shone.

Watch the tortoise continue its course as the hare starts to lose its breath.

Jonathan Power is a commentator on foreign affairs.

RajKhalsa

May 7th, 2004, 04:40 PM

India is narrowing growth gap with China: CBC survey link (http://www.thehindubusinessline.com/2004/05/02/stories/2004050201210500.htm)

Mohan Padmanabhan

Kolkata , May 1

REVIEWING commonwealth countries' performance in mobilising investment over the past two years, the Commonwealth Business Council (CBC), in its Business Environment Survey 2003 (covering 31 countries), has pointed out that India was continuing to grow strongly, and "is narrowing the growth gap with China."

It has, however, pointed out that Indian capital markets are perceived as opaque and risky to enter without `influential friends'.

The key action points for India to attract investment and provide a favourable environment for business, according to the survey, are: a) infrastructure, which requires wholesale upgrading, b) tackling corruption, which requires systemic redress, and c) problems of obstruction need to be addressed regarding direct contact with government agencies and/or personnel.

"India offers private business a number of advantages, at least in certain regional contexts (the West and the South)."

In the area of business infrastructure, it is pointed out that in spite of a decade of reform, the regulation of capital markets remains weak, especially at the interface between the public and private sectors.

"The labour force is divided between a small highly skilled segment of tertiary-educated scientists and technicians and a mass of unskilled, largely illiterate workers. The availability of semi-skilled labour is often poor."

As per the survey analysis, many markets in India are open, the framework of government and financial institutions broadly predictable and labour is both available and responsible. However, there are problems in the provision of infrastructure and implementation of public policy. It is stated that with the possible exception of railways, infrastructure was poor by international standards. There has been some improvement in roads and telecommunications, but electricity, where output growth averaged only 3.5 per cent over the last 10 years, has proved an intractable problem, says the survey.

The survey findings on the economic and social policy front indicate that tax rates in India were relatively high by international standards. It is pointed out that there were innumerable special exemptions and loopholes, which recent attempts to modernise the system have failed to close.

"At 12.8 per cent, India's ratio of revenue receipts to GDP is among the lowest in the world. The States have also played an increasingly independent role in the collection of local taxes."

It is also pointed out that attempts to regulate States' powers under a new VAT system have been stalled owing to political resistance and bureaucratic lethargy. Attempts to cut the level of public subsidies (at 14 per cent of GDP) and promote privatisation have had limited success, says the survey.

According to the survey, not all countries have benefited or been affected equally by fluctuations in investment flows. "While FDI held up comparatively well in smaller markets over the past two years, their share and absolute amounts of investment remain small".

China, says the survey, continues to attract the lion's share of new investment and presents stiff competition to many emerging markets in terms of its attractive domestic market potential and low manufacturing costs.

The survey has concluded that the top three perceived barriers to investment, as ranked by private sector respondents in both developed and developing countries were: corruption, policy instability and inadequate infrastructure.

According to Dr Mohan Kaul, Director General of CBC, the results of the survey clearly demonstrate that for the private sector, these three areas continue to be a cause for concern in a number of Commonwealth countries.

Pointing out that experience and best practice was now emerging in developing countries, the CBC survey says, "there is increasing recognition that business and government are partners in the process of economic development".

Bond James Bond

May 8th, 2004, 12:48 AM

Re: India overtaking China:

I was looking at this website here:
http://www.iiasa.ac.at/Research/LUC/ChinaFood/data/pop/pop_2_old.htm

It was rather depressing for China's longer-term (like, in the 2nd half of this century). Here was the depressing part:
"The most dramatic change, however, will be the massive increase in elderly Chinese: their number will grow by 117 million between 1995 and 2010 and by another 185 million between 2010 and 2025. If this UN projections are correct (and there is no indication that they are wrong), then China will experience a massive aging of the population. Between 1995 and 2050 the number of elderly (50 plus) will increase by 362 million - while at the same time the number of Chinese below the age of 50 will decline by more than 65 million."

Not that I have anything against old people ;) but clearly India's population in the latter half of the century will be considerable younger than China's, which will be good for their labor force. Of course they do have to create the jobs for them in the first place ;).

india2050

May 8th, 2004, 09:12 PM

Bond the bad part to this tail is that we will be old aswell, i am 17 in 2050 i will 57, i am guess u are 24 in 2050 you will be 74 :wallbash:

http://www.tunisiadaily.com/answers/images/regpop.gif

China -- Population Projections :
http://www.tunisiadaily.com/answers/images/chinapop.gif
China's birthrate has already declined past 2.1 children per woman, the "replacement rate" at which populations begins to stabilize. So while its population may still grow somewhat, it is not expected to grow a lot and could plausibly, under the low projection, end up at about the 1995 level of 1.2 billion 50 years from now.

India -- Population Projections
http://www.tunisiadaily.com/answers/images/indiapop.gif
India's fertility rate is nearly 4 children per woman, so the region's population, now 930 million, is expected to reach 1.5 billion and could be as high as 1.9 billion in the year 2050. India is thus likely to pass China and become the most populous country in the world.

Bond James Bond

May 9th, 2004, 08:38 AM

^No I meant that China's population on average will be old. Since they've had low birthrates for about 20 years, that means they've been having fewer babies than replacement (as you pointed out) which means that the population is gradually ageing. by 2050 it will be fairly old, on average.

India's fertility rate, according to the most recent data I've seen, is 3.0 kids/woman. It's good that it's going down because too much population growth (or, more correctly, too rapid population growth) can be a hindrance. Too little can also be a hindrance. Somewhere in-between (say, about 2-2.5 kids/woman) is "just right." So assuming that India's fertility rate goes down to that "just right" range within the next 1-2 decades, they'll be in really good shape demographically compared to China in about 50-70 years.

Jai

May 13th, 2004, 12:58 AM

India becomes 3rd largest computer mkt (http://sify.com/finance/fullstory.php?id=13472522)

Tuesday, 11 May , 2004, 14:14

India has overtaken Australia as the third largest computer market, in terms of sales, during the January-March quarter behind leader China and second-placed South Korea, according to technology research house Gartner.

Computer sales in the Asia-Pacific region, excluding Japan, totalled 8.09 million dollar in the March quarter, up 16 per cent on the year on the back of stronger consumer confidence, it said adding that on a three-month basis, sales were up two per cent from the December quarter.

The first quarter ''is typically a seasonally weaker quarter due to the Chinese New Year holidays celebrated in many Asian countries, where a decline in sequential growth rate is expected,'' Gartner stated.

However, market confidence was stronger as compared to the same quarter last year while India, South Korea and the Philippines exhibited strong quarterly growth rates derived primarily from strong purchases from the professional sector.

Mobile computers, made up mainly of laptops, showed the biggest sales increment on a percentage basis as consumers bought 42 per cent more in the March quarter compared with a year ago.

Sales of desktop computers, which make up 81 per cent of the total computer market, grew an annual 11 per cent in the three months to March.

stq

May 13th, 2004, 10:09 PM

ever consider the possibility that all this is part of the self-congratulatory government propaganda about how “India is shining” ?

now the election is over and the ruling party lost, this might well end.

Jai

May 13th, 2004, 10:37 PM

Most of the articles I posted dealt more with facts instead of projections, and came from non-Indian sources.

The "India Shining" slogan is an election campaign. That India is booming, isn't.

Jai

May 13th, 2004, 11:45 PM

finance.yahoo.co.in: the To-do list

FACTBOX - Major economic reforms pending in India

NEW DELHI (Reuters) - Indian financial markets have been rattled since exit and opinion polls predicted the world's largest democracy may be heading for a hung parliament, sowing doubts about the pace of economic reform.

Markets fear an unstable coalition might soft-pedal on the next stage of reforms that Asia's third-largest economy desperately needs as it strives to emerge as a major global player.

The following are details of pending reforms that economists and the government say are necessary to sustain economic growth of eight to 10 percent annually for several years and to wipe out poverty from the world's second-most populous nation.

* PRIVATISATION - Strategic stake sales in two cash-rich oil refiners, Hindustan Petroleum Corp and Bharat Petroleum Corp, are stuck in court. The planned sale of a 34 percent stake in HPCL to a strategic buyer and a 35 percent stake in BPCL would cut the government to minority holdings in both.

The sale of a 61 percent stake in National Aluminium Corp, India's second-largest aluminium maker, was postponed due to the election. The sale, which would cut the state holding to just over a quarter, has been pending for two years, along with stake sales in about 15 other government firms.

* BANKING - Legislation to allow the government to sell down its stakes in state-run banks to 33 percent has awaited parliamentary approval for two years. Current government holdings in state banks range from 51 percent to total ownership.

* INTEREST RATES - The government wants to cut interest rates it pays on popular small savings schemes to market rates to reduce the government's interest burden. Savers currently get up to 9.5 percent and the aim is to align them to government securities, which currently pay 4.5 to 6.0 percent.

* FOREIGN INVESTMENT - Plans to increase foreign investment limits in key sectors such as telecoms to 74 percent from 49 percent are in the pipeline. The foreign ownership limit in the insurance sector would rise to 49 percent from 26 percent and the government also plans to allow foreign investment in the retail sector.

* LABOUR - Legislation to liberalise labour laws have been pending in parliament for two years. The aim is to make it easier for firms to hire and fire employees and to restructure in tough times.

* FISCAL - The government plans to cut its fiscal deficit from the current 4.8 percent of GDP, partly by increasing its tax take to 11 or 12 percent from nine percent. It plans to simplify tariffs from a current average of nearly 30 percent, computerise the tax system and push for fiscal reforms in state governments.

* PENSIONS - The government plans to cut pension costs by requiring people to part-fund their pension, instead of relying on the current fully funded scheme.

* VALUE-ADDED TAX - The introduction of VAT was postponed because of the election. It is expected to be introduced by the end of 2004 only if there is a strong federal government.

* FARM SECTOR - The government wants to double farm incomes by 2010. Initiatives include doubling the rate of growth of public and private investment in agriculture, launching fresh irrigation projects and developing wasteland for productive use.

* AVIATION - Liberalisation is expected, including allowing private airlines to fly foreign routes. Also expected is a change to allow foreign airlines to own up to about 49 percent of domestic airlines.

* INFRASTRUCTURE - A programme to develop and modernise ports, shipping, shipyards and inland navigation is expected to be launched by 2005. The port development project is estimated to cost $22 billion. Also on the drawing board are a 540 billion rupee ($12.10 billion) national highways programme and a mammoth $122 billion project to link rivers to irrigate dry areas and build hydro power stations.

* POWER SECTOR - To privatise transmission and distribution to attract investment to eliminate power shortages by 2012.

Bond James Bond

May 25th, 2004, 06:35 AM

No one's posted in this thread for a couple weeks. :D

The Financial Times
By Diana Farrell and Adil Zainulbhai

Published: May 24, 2004

The Congress party's surprise election victory in India this month was greeted with dismay by investors. Stock markets plunged because of fears that Congress's communist allies would oblige it to scale back the country's economic reform programme. Since then they have rallied, reassured by the reformist credentials of Manmohan Singh, the new prime minister, and Palaniappan Chidambaram, the finance minister he appointed on Sunday.

Mr Singh and his ministers must not waver on reform if they are to retain investor confidence. That does not mean ignoring India's voters, who have sent a clear message about the need for economic growth that benefits all sections of society. But they must be careful how they interpret that message.

The experience of India and its Asian neighbours shows that continuing rural poverty stems not from too much economic reform but from too little. Since liberalisation began in 1991, annual growth in gross domestic product has been twice as high as it was previously, with the result that poverty rates have fallen by nearly a third in both rural and urban areas. The celebrated software and outsourcing industries are only the most conspicuous evidence that reforms work.

The economic challenge facing the new ruling coalition is to extend the success of the information technology and outsourcing industries into the broader economy. This will require opening more sectors - including some in which the government plays a significant role - to foreign direct investment and global competition.

Although India has broadly cut import duties and increased foreign ownership limits over the past 10 years, large parts of the economy remain sheltered by high tariffs and restrictions on foreign investment. FDI amounts to just 0.7 per cent of GDP, compared with 4.2 per cent in China and 3.2 per cent in Brazil. Imports total less than $70bn, a fraction of China's $413bn.

Research by the McKinsey Global Institute indicates that the FDI that has found its way to India has had an overwhelmingly positive impact. The introduction of foreign competition in information technology, business process outsourcing and carmaking has prompted Indian companies to boost productivity, and some have become formidable global competitors. Consumers have benefited from lower prices, higher quality and greater choice. Domestic demand has soared and thousands of new jobs have been created in these industries.

How can these successes be replicated across the economy? First, tariffs should be lowered to an average of 10 per cent, matching India's neighbours in the Association of South East Asian Nations. Tariffs on many goods still in effect prohibit imports and protect inefficient companies from foreign competition. To lessen the shock the government might first lower duties on capital goods and inputs and then, over several years, lower tariffs on finished goods.

Foreign ownership restrictions should be lifted too. Without FDI it is doubtful that India's outsourcing industry would have taken off. Yet foreign ownership is prohibited altogether in industries such as retailing, agriculture and property, and is limited to minority stakes in many others such as banking, insurance and telecommunications.

India's leaders should also reconsider the expensive - but often ineffective - incentives it offers foreign companies to attract investment. The government often gives away large sums of money for the sake of investments that would have been made anyway. For instance, it waives the 35 per cent tax on corporate profits for foreign companies that move business process operations to India despite the fact that it would almost certainly attract these same investments even if they were taxed. State governments often end up in unproductive bidding wars, vying to give away tax holidays, import duty exemptions and subsidised land and power. Yet foreign executives place little value on these incentives. Most would rather the government devoted its resources to upgrading the country's poor infrastructure.

They would also like to see reforms to India's labour laws. It is no coincidence that software and outsourcing companies are exempt from labour regulations such as those regarding hours and overtime. Many executives say that without these exemptions it would be almost impossible to perform back office operations in India. The government should therefore consider making labour laws more flexible in order to attract foreign investment in labour- intensive industries.

Some might argue that the reforms proposed here are antithetical to long-held social objectives. But the evidence shows the opposite is true: regulations on foreign investment, trade and labour have slowed economic growth and lowered living standards. A decade ago India's income per capita was nearly the same as China's; today China's is almost twice as high.

India's economy has made real progress, but further liberalisation is needed. The country now has 40m people looking for work and another 35m will join the labour force over the next three years. Creating jobs for them will require more dynamic and competitive industries across the economy. Opening up to foreign competition, not hiding from it, is the answer.

Bond James Bond

June 4th, 2004, 06:55 AM

NY Times
A Giant So Big It's a Proxy for India's Economy
By SARITHA RAI

Published: June 4, 2004

MUMBAI, India - In the tumult of putting a new government in place in India, the stock of Reliance Industries was a good gauge of expectations about the prospects for continued economic liberalization.

It registered each low and high point in the political process. It plunged at the incumbent prime minister's surprising loss and chugged upward as fears of a sharp leftward swing abated and a new prime minister, Manmohan Singh, an economist who began the liberalization of India's economy, was named.

Reliance Industries, the country's largest private-sector business enterprise, is just one - albeit the biggest - piece of India's largest conglomerate, the Reliance group of companies. The group, a behemoth with interests in many businesses like energy and telecommunications, is in many ways the face of India's industrial renaissance.

Its sales equal 3.5 percent of the country's gross domestic product, more than the combined global sales of all of India's outsourcing companies. Its $3.6 billion worth of exports are 6.1 percent of India's total. It helps fill government coffers, contributing 9.4 percent of India's so-called indirect tax revenues, from things like sales taxes, customs and duties.

Foreign investors bullish on India's economy and its recent double-digit growth rates are even more enthusiastic about Reliance Industries, with its huge, ultra-modern projects. In 2003, they bought $900 million worth of its shares, an amount that constituted 13 percent of the total foreign inflows into Indian equity.

"Reliance is a great indicator of India's corporate growth, the bullishness of its reforms and the robustness of its consumer market," said Rahul Singh, an analyst at the Mumbai-based equity research firm SSKI Securities.

Reliance Industries, an integrated giant with numerous products, including oil and textiles, has big American customers - it sells ingredients to detergent makers like Unilever, and the plastic resin for Coca-Cola and Pepsi bottles, for instance.

Its business muscle is the envy of competitors as well as a magnet for complaints of abuse of power. It is 34 percent owned by the Ambani family, mainly by Anil D. and Mukesh D. Ambani, who have been running the show since the death of their father, the group's founder, in 2002.

In an interview in the group's elegant corporate headquarters here, Anil Ambani, the vice chairman of Reliance Industries, spoke proudly of his heritage. "We are rooted in India, but have set our sights on becoming a world-beating company," he said.

That is no mere pipe dream. The Reliance group - five listed companies and an undisclosed number of unlisted ones, with complex ownership structures and with interests that also include energy distribution, mobile and broadband services, insurance and financial services - reported net profits of $2.8 billion for its fiscal year ended in March. Sales were $22.6 billion, more than Coca-Cola or Halliburton reported for 2003.

The group has grown aggressively in India, a country where per capita consumption of gas, electricity and polyester fiber, three of the group's main offerings, is among the world's lowest. Exports are 20 percent of the group's total revenues, so there is room to grow, there, too. A recent acquisition of a British company is a signal that the group is venturing farther overseas.

Reliance is frequently compared to General Electric for its ambition and drive. And the Ambanis are likened to the Rockefellers for their political and financial influence.

"If most Indian business houses have corporate lobbies, theirs is the strongest," Mr. Singh, the analyst, said. "If other Indian business groups fund political parties, Reliance holds the most powerful of strings."

"Think Big" is the group's unofficial motto, and expansions, these days largely by acquisitions, are often aimed at controlling all aspects of a business.

Reliance Industries, which accounts for 30 percent of the total profits of India's private sector, runs the world's third-largest refinery, in Jamnagar, in the western state of Gujarat. The $6 billion refinery accounts for around 28 percent of India's refining capacity.

Reliance Energy struck the world's largest gas find of 2002, and the country's biggest in three decades, in the Krishna-Godavari basin in eastern India. In January, it announced plans to build the world's biggest gas-fired power plant, in northern India, with a $2.2 billion investment.

And when the power distribution systems in India's two biggest cities, New Delhi and Mumbai, were privatized in 2003, Reliance Energy became the largest electricity distributor in both cities.

Reliance Infocomm, despite being a late entrant into the country's booming mobile phone market, is already the market leader a year after the introduction of its cheap wireless service.

In the 13 years since India's economic reforms process began, the Reliance group has grown at a healthy clip, and many stockholders are said to have built homes and paid for their children's education through profits from shares in the Reliance companies that trade.

Tens of thousands of investors joined many of the group's 90,000 employees in 2002 at a memorial service for its founder, Dhirubhai Ambani, hailed as the first son of capitalist India. His rise from gas station attendant to creator, in 1958, of what became the country's biggest industrial conglomerate, is the stuff of legend here.

Like the country's other prominent business families, including the Tatas and the Birlas, Dhirubhai Ambani started with a textile business. "But unlike the other groups," Anil Ambani said, "we neither had the strength of capital nor strength of lineage."

In 1977, when his father floated a public stock offering in what was then Reliance Textile Industries to finance his expansion plans, thousands of investors bought in, setting off an equity market boom among India's middle class. There were so many investors that shareholder meetings were held in a soccer stadium.

The Reliance group companies now have more than 3.5 million shareholders, and the Ambani brothers have a combined personal wealth estimated at $6 billion.

Reliance's initial growth came in prereform India, in the era of the License Raj, as India's infamous, monopoly-perpetuating system of granting licenses and privileges was called, and it was slow going.

But while the fortunes of most of India's old business dynasties fell by the wayside when the economy opened up, Reliance flourished. And it holds its own against India's new-economy stars.

The Ambani brothers now overseeing the vast Reliance empire seem to be good foils for each other. Anil, 44, Reliance Industries' vice chairman, is an outgoing man, a financial whiz married to a former Bollywood movie star. Mukesh, 47, the company's chairman, is a quiet man, an engineer who is a stickler for detail.

Though both received M.B.A.'s from American business schools - Anil from Wharton, Mukesh from Stanford - people at the company said their survival skills were honed in the "Dhirubhai Ambani school." They inherited their father's tenacity, his intuition in consolidating businesses, even his ability to work India's convoluted bureaucratic system to their advantage.

They also inherited their father's drive to become the biggest, or nearly, in whatever business they were in, often to the derision of others along the way.

For instance, when Reliance announced plans in the mid-1990's to build its petrochemical refinery in a barren stretch of India's west coast, competitors predicted it would be the group's downfall.

One Reliance veteran, Yogesh Desai, the president for corporate development, recounted how Mukesh Ambani, who had taken over the daily operations of the company, met the challenge. "The approach was: 'There's no road? Let's build a road. There's no power? Let's build a power station. There's no port? Let's build a port.' "

Now, thousands of acres of once-arid land support thriving mango orchards. There is a bustling township with a school, a hospital, even a hotel. Nearby villages have schools, hospitals and drinking water, courtesy of Reliance. And the huge Jamnagar refinery is among the world's most efficient.

The group has also made a big foray in the country's booming telecommunications sector. With an ambitious $4 billion plan to make the mobile phone ubiquitous, even among the poor, in India, the world's second-most populous country, Reliance Infocomm introduced a rock-bottom-priced wireless service in 2002.

Initial glitches predictably appeared. So did the doomsayers.

But Reliance said it was determined to leverage the cost advantages of Qualcomm's code division multiple access, or C.D.M.A., technology, widely used in the United States. "Our strategy is to make money on scale, not from skimming the market," Anil Ambani said.

From a subscriber base of 500,000 in 2002, Reliance had 7.8 million mobile customers by the end of March, more than 20 percent of the total market, leapfrogging the previous leader, Bharti Tele-Ventures. Its countrywide fiber optic system, scheduled to be completed in 2005, will further broaden the service's reach.

In January, Reliance Infocomm acquired its first non-Indian operation, the London-based FLAG Telecom, a bandwidth supplier with underseas cable connecting Asia, Europe, the Middle East and the United States, in a $211 million deal.

Though the group has remained vibrant in the post-founder era, there have been murmurs that differences between the Ambani brothers fueled by such things as Anil's conspicuous absence from the rollout of Reliance Infocomm, his brother's pet project, will eventually affect the group.

For now, there is no obvious friction. Their families share a 100,000-square-foot luxury building in Mumbai's upscale Cuffe Parade neighborhood, complete with multiple servants' quarters and a temple, though Mukesh Ambani is planning to move out as soon as his mansion in the Altamount Road neighborhood is built.

Reliance's competitors declined to comment for this article.

Reliance has come in for criticism for its recent back-door entry into the booming wireless market. While global system mobile communications companies with international investors like AT&T and Singapore Telecommunications bid for cellular licenses that have averaged hundreds of millions of dollars each in public auctions, Reliance received limited-mobility rights along with fixed-line licenses sold by the government at a fraction of the cost.

By interconnecting different circles of limited-mobility services, Reliance has assembled a nationwide network comparable to that of the G.S.M. operators' systems.

Cellular operators accused Reliance of breaching regulations on limited-mobility phones. But Reliance turned the commercial dispute into a technological one, settled out of court, and became the prime beneficiary of a changed regulatory regime.

"Reliance managed a de facto national license for a bargain price," said Mahesh Uppal, director of Telecommunications and Computer Information Systems, a consultancy based in New Delhi. "It is a company of amazing dimensions; it works on all different planes."

Even some of the company's staunchest critics find much to admire.

India's former privatization minister, Arun Shourie, who as a journalist crusaded against Reliance in the 1980's, said he did "a 180 degree turn." In a speech on the first anniversary of Dhirubhai Ambani's death, Mr. Shourie said, "Dhirubhais are to be thanked not once, but twice over."

"First, they set up world-class companies and facilities in spite of those regulations," he said, "and, second, by exceeding the limits and restrictions, they created the case for scrapping those regulations. They made a case for reforms."

RajKhalsa

June 4th, 2004, 11:08 PM

I saw the Discovery Spotlight presentation Thomas L. Friedman Reporting: The Other Side of Outsourcing (http://dsc.discovery.com/anthology/spotlight/spotlight.html?through=campaign|spotlight|yahoo) on the Discovery Channel last night.

Summary
-------
Call centers:
a) Very image intensive view of the call center phenomena. Image intensive = lots of footage of high tech call centers, "John"s and "Sarah"s chattering on the phone, sweeping shots of Bangalore highrises and enough PYTs to make Rudra Singha drown in his own drool.
* Interview with senior personnel at call center
* Visit to accent neutralization class, Friedman himself tries it out.
* Interview with 3-4 female call center employees
- Questions about economic changes.
- Questions about social changes - working late, families, cultural changes etc.
* Vists to home of employee, meeting with family, visit to apartment of another employee, who shared it with some colleagues, more socio-economic questions
* Visit to swank malls, lots of footage of girls wading through jeans, showes and perfumes.
* Lots of positive vibes about opportunities, money, career etc.

Other IT (mainstream, cartoons etc)
* More of the above, but most interviews with guys, based on them being more numerous in the area I guess.
* Lots of footage on cartoon development, of Infy's buildings and interior, American company names flashing all over with predictable monotony.
* Interviews with gungho young men who predict India will conquer the world. Friedman's questions about 'what is the message for USA/west' is answered with 'we understand its difficult, but you still aint seen nuthin yet'
* Interviews with Azim Premji and Infy's Nandan Nilekani
* Short aside into how 2002 Indo-Pak standoff nearly messed up business, with Premji/Nilekani exhorting how they cannot globalize and still have to put up with local disturbances. Perhaps an avoidable matter, but a negative had to be shown.

Socio-Economic issues
* Interviews with some artists, religious persons about changes in society. No bile-spitting Purefool types, as far as I saw.
* Generally tasteful footage of local cultural symbolism, temples etc. No gratuitious closeup shots of emaciated cows etc.
* Some discussion on the stark economic disparity just around Bangalore, though the unfortunate kids in the slum are described as children of migrant labourers who are shown building yet another glass/steel tower. I thought it looked balanced. The negative imagery is described in a way that tries to balance it with the growing change and opportunities.
* Visit to village school, with some gratuitous mention of 'untouchables who are outside the caste system and pollute the air for others'.
* Interview with IT person who runs a school for kids in the village. Lots of footage of little kids at PCs. Friedman challenges a 7-8yr old girl to a typing contest and loses.

Generally a very nice show.

RajKhalsa

June 4th, 2004, 11:14 PM

businessworldindia has a big story on gloablising indian companies and a ranking of the top100. you can also find 41 of the 51 $1bil+ indian cos listed there.

http://www.businessworldindia.com/june0704/coverstory01.asp

RajKhalsa

June 4th, 2004, 11:20 PM

A very insightful article on the effectsof democracy on India's economy

Taxed By Democracy? (http://www.techcentralstation.com/060204B.html)

http://www.techcentralstation.com/images/060204B_large.jpg

The Economist calls it the greatest show on earth. With over 650 million eligible voters and thousands of candidates, elections in the world's biggest democracy are staggering in their scale. India is rightly praised for staging them in what is basically a free, fair and nonviolent manner.

This year, the surprise defeat of the ruling coalition, which defied pollsters and media pundits, is being celebrated as a triumph for democracy. Yet, when the curtain fell on May 13, Indian voters did more than show that they have the power to do the unexpected. They also left their country, and the world, with profound and troubling questions about the relationship between democracy and economic development.

Much of the post-election analysis praises voters for not being taken in by the hype surrounding the 'India Shining' campaign, a 'feel good' marketing blitz launched by the ruling NDA in order to counter the usual anti-incumbency factor. Yet the 'hype' was grounded in reality, not mere rhetoric. India is emerging as a key player in the global economy, life is improving for an ever growing middle class, the vibrant IT sector, which survived the Internet bust, is in the midst of an outsourcing boom, the overall economy grew at above 10% in the last quarter, outpacing China for the first time in at least 20 years. Its growth for the last fiscal year was 8.5% making India one of fastest growing countries in the world.

Secularists, meanwhile, are delighting in what they perceive as a vote against the Hindu right. The defeat of the BJP, they believe, speaks of a country-wide rejection of an ugly nationalism that manifested itself in the destruction of the temple at Ayodhya, changes to history textbooks, and the terrible riots in Gujarat. Yet one of the most encouraging aspects of this year's elections was the extent to which the BJP had already marginalized the Hindu right, choosing to focus instead on economic prosperity, stable government and peace with Pakistan.

India's jittery post-election markets have provided a different analysis. Despite denial among reformers, it is hard to interpret the result as anything other than a popular revolt against globalization and economic liberalization, delighting left-leaning Indian columnists and politicians. Nowhere is this more obvious than in the devastating defeat of Chandrababu Naidu in the Southern state of Andhra Pradesh.

Naidu's loss matters because -- incredible as it may seem -- he is one of the very few democratic politicians in the world to run on a platform unapologetically focused on economic growth.

It is often said that India pays a price for its political freedom. Inside the country this is known as a 'democracy tax', a term which is used to explain India's failure to compete with China, in everything from health and literacy to trade and poverty rates. For nine years Naidu seemed to counter this unpalatable idea that a commitment to rapid economic development depends on authoritarian rule.

Under Naidu's leadership, Andhra Pradesh was the first state to directly negotiate a World Bank loan and was leading the way in privatization. His government focused especially on massive urban renewal for the state capital, Hyderabad, reinvigorating the city both economically and aesthetically. With its clean streets, well managed parks and glossy buildings, 'today' writes the Asian Wall Street Journal, 'Hyderabad looks like what India aspires to be.' Confident of his record, Naidu's campaign slogan was simple: 'vote for development'.

Naidu's strategy, during his time in power, was to stimulate the economy by concentrating on certain high growth sectors. In particular he relied on an obsessive commitment to IT. Nicknamed 'the laptop minister', Naidu famously converted all of his ideas into power point presentations, and insisted on regular video conferencing with all his staff. His government pioneered a host of 'e- government' initiatives and implemented IT-friendly policies aimed at encouraging both software development and outsourcing. The goal was to replicate Bangalore's success. In this Naidu scored an early and impressive coup when, in 1998, he managed to convince Microsoft to set up a vast research center in the State. Since then Hyderabad's software export industry has grown at an average annual rate of more than 140 %.

At the center of this vision is Cyberabad, a high tech suburb, where giant mirrored buildings with names like Cyber Towers, Cyber Gateway, and -- most recently Cyber Pearl -- house all the major players in the IT industry, both domestic and foreign, including Microsoft, Infosys, GE, Satyam, Oracle, and Dell. These mega-complexes are complemented by a variety of private companies, educational establishments, exhibition halls and entertainment centers that are springing up in the area. Hotels, apartments and recreation areas are under construction and projects in the pipeline include a hardware park, a biotechnology park and an international airport. By the time of the elections Cyderabad was one of the most important IT hubs in the country.

The ambition, scale and speed of Hyderabad's development reminds one of the science-fiction landscapes of Hong Kong or Shanghai. It is when witnessing the vast transformations in Andhra Pradesh that one feels most confident of India's ability to keep pace with the giant dragon next door.

Yet, if Hyderabad shares China's promise it also faces many of the same problems. The most important of which is the fact that in the process of liberalization and opening up, the losers blame government policies while the winners congratulate themselves.

In China, this divide between those who have benefited from reforms and those who still have not is evident in the sharp contrast between the vibrant coastal cities and the relative stagnation of the rural west. In Andhra Pradesh it was this same divide that brought the government down. While an urban middle class enjoyed the pleasures of a flourishing city, outside the capital farmers suffered from a severe drought, many committed suicide and many more embraced the opposition's promise of free electricity and a revival of the subsidies culture that Naidu's development plan had sought to destroy.

Everyone agrees on the importance of spreading the benefits of globalization as widely as possible, and the governments of both India and China could do more to help the rural poor, through land and agriculture reform, consolidation of property rights and increased urbanization. Yet it is also the case that development and absolute equality do not go hand in hand. As Deng Xiaoping, China's great liberalizer, said: though the goal is 'prosperity for all' this will only occur if some are allowed 'to get rich first.'

India and China are both trying to encourage an exhilarating pace of change in certain sectors of their economies while not leaving others too far behind. Yet, the cruel fact is, that China seems able to negotiate this difficult balance with more flexibility and with a longer term approach because its leadership is shielded from elections.

In his book The Future of Freedom Fareed Zakaria argues that democracy should not be naively confused with the liberal institutions that underpin social and economic freedom. While most dictators, he writes, have 'ravaged their countries for personal gain' it remains true that:

"…over the past fifty years almost every success story in the developing world has taken place under a liberal authoritarian regime. Whether in Taiwan, South Korea, Singapore, Chile, Indonesia, or even China, governments that were able to make shrewd choices for the long term were rewarded with strong economic growth and rising levels of literacy , life expectancy, and education. It is difficult to think of a Third World democracy that has achieved sustained growth rates like those of the countries listed above. Those that have gone down the path of reforms are quickly stymied by the need to maintain subsidies for politically powerful groups. India has been unable to engage in sustained reform largely because its politicians will not inflict any pain -- however temporarily -- on their constituents. As a result, for all its democratic glories, the country has slipped further and further behind on almost every measure of human development ... "

All this is not to suggest that India should embrace authoritarianism. As authors Daniel Yergin and Joseph Stanislaw write "India's commitment to democracy stands as one of the great achievements of the second half of the twentieth century." The ability to oust its leaders has no doubt saved the country from long periods of war, famine and tyranny. India has not suffered from anything like China's 'Great Leap Forward' or 'Cultural Revolution.' Indians already enjoy a vibrant free press, and we have yet to see how Beijing will manage the inevitable transition to greater political freedom.

Moreover, the story of this year's election is far from over. Perhaps a Congress-led government will sustain and even strengthen reforms. This seems more likely after (the somewhat undemocratic) decision to pass the leadership from Sonia Gandhi to Manmohan Singh -- one of the original architects of economic liberalization in India.

Alternatively, the pace of reforms could slow, hobbled by political infighting and irresponsible populism. If this should happen those of us who believe that the strength of globalization in the 21st century depends on the rise of India will be hoping that Chandrababu Naidu, or someone much like him, will be waiting in the wings -- and that next time they will win.

The author is an independent scholar working in the areas of digital culture and globalization, focusing particularly on Asia's giants India and China. She recently completed a book entitled "India and the IT Revolution: Networks of Global Culture" which will be published by Palgrave Macmillan in the Fall/Winter of 2004.

Bond James Bond

June 5th, 2004, 07:18 AM

^Interesting article.

However, one exception to the "liberal authoritarian regime" thing has been Japan. Since WWII (and even since before the turn of the century, actually, except for a period in the 30's-40's when the military ruled) they've been a democracy. And during that time they went from a poor nation to a rich nation.

However, in a sense, even that democracy has sorta been a "liberal authoritarian regime" because one party - the liberal democrats - have dominated politics there. But at least that was the voter's choice, not forced on them like the other examples.

Maybe there will be enough sense of a need for reform in India that whoever happens to have power will do enough to make progress. Also, since India's already "got things rolling" I think there will probably be enough momentum that economic development will take on a life of its own, no matter what the politicians do.

Bond James Bond

June 5th, 2004, 07:20 AM

Oh yeah - also, Chile and South Korea had authoritarian governments for a while, but then democracy took over and reforms and economic liberalization continued anyway. So, it's not as if the voters in poor countries *always* reject economic liberalization.

Jai

June 20th, 2004, 02:36 AM

Sorry, its been a while since this thread was updated. (I've been out of town)

There's an obvious political bias to the following article, but it is an excellent introduction to the grassroots-level technology-based rural education, equalization and development initiatives by private companies and public groups in India.

There is one major fubar statistic in the article, though. It refers to "India's 700 million impoverished villagers..." Whether knowingly or not, the author is has taken India's total rural population and thrown them all in the ranks of poor. The actual poverty figure is 250 mil spread over both urban and rural.

Businessweek: The Digital Village (http://www.businessweek.com/premium/content/04_26/b3889003.htm) [reg'n rqd]
Fighting poverty with technology in India

http://www.businessweek.com/magazine/content/04_26/art04_26/0426_covac.gif

Among the grand gothic columns of Bangalore's colonial-era urban administration office, a couple dozen village dwellers neatly dressed in cotton shirts, sarongs, and turbans wait their turn at what looks like an automatic teller machine. But this machine isn't dispensing cash. Instead, farmers from nearby villages can use the terminal to see computerized copies of the deeds to the tiny patches of wheat, rice, and vegetables they till for a living. Once they've checked their information, they can get a printed copy of their records at a neighboring window for just 30 cents.

That's a big change. Until the records were computerized, the deeds were controlled by powerful village accountants. These men routinely charged poor farmers anywhere from $2 to $22 for a copy -- which they typically need two or three times a year when they ask banks for loans to pay for fertilizer, seeds, and crop insurance. Worse, some accountants would even collude with upper-caste landlords to steal the land by writing over the original names and then tricking illiterate, lower-caste farmers into signing away their property by putting their thumbprints on the deeds.

Five years ago, the Karnataka state government launched a program to computerize the land records of 6.7 million farmers in 30,000 villages. Two years later, all 20 million deeds had been digitized and filed along with information such as the land's productive capacity and any loans that use the property as collateral. Today, the information is available in Kannada, the local language, through 200 government-owned computer kiosks in administrative offices across the state. Muniratnama, a cheerful 45-year-old farmer, traveled 15 kilometers from her village to Bangalore for a copy of her land record so she could get a loan to replant her 1.6 hectares. The new system, she says, is far better than the old way. "The village accountant was corrupt," she says with disgust. "He'd delay making any changes, and he made mistakes, too."

Computerizing land records may not seem like much of an achievement; most developed countries did it years ago. But in rural India, where the majority of people are semi-literate and live in remote communities unconnected by road or phone, it's almost a revolution. "With equal access to information, a lower-caste person now has the same privileges as an upper-caste person," says Rajiv Chawla, who oversaw the $3.7 million program, called Bhoomi -- which means "land" in both Hindi and Kannada. In Karnataka alone, for instance, deed fraud once cost poor farmers $20 million a year; today, the problem has been virtually wiped out, according to the World Bank. With all the information digitized, land reform -- which had slowed because limited access to records made it hard to prove ownership -- could now be restarted. And the data can be mined for commercial information: A tractor maker, aiming to better target its marketing efforts, recently asked for the names of communities where most farms are larger than four hectares. Soon, says Chawla, the government will begin charging for that sort of information. Even now, though, the Bhoomi program earns $2.6 million a year from the 30 cents fees.

Such initiatives add up to a digital turning point for India. For the past decade, the country's high-tech sector has boomed, with outsourcing companies and software shops popping up like mushrooms in tech capitals such as Bangalore and Hyderabad. But that growth has largely left India's 700 million impoverished villagers, slum dwellers, and tenant farmers just as poor as their forefathers were for centuries. Jobs are scarce, cash is scarcer, and simply getting water is an immense daily challenge. This huge gulf between India's thriving elite and its vast hinterland is one reason the ruling Bharatiya Janata Party lost the general election this spring. The victorious Congress Party has pledged to deliver prosperity to the masses -- a stupendously difficult task in India. Although the BJP planned to shell out $3 billion over the next three years to computerize government services across the nation, it will now fall to Congress to implement the plan and see that it improves the lives of ordinary Indians. "The government's challenge is to leverage India's technological and manpower potential to solve our problems of poverty and actually deliver services to the masses," says R. Chandrashekar, who oversees e-governance programs at India's Information Technology Ministry.

In the fight against poverty, the policymakers of Congress may find natural allies among the more altruistic of India's digital generation. Even before the BJP lost the election, many of the educated elite responsible for the success of India's tech and software houses -- or who have helped U.S. multinationals prosper -- decided to turn their energies to helping India's poor. Nasscom, the trade group for India's software houses, estimates that there are hundreds of such programs across India, many of them private initiatives, connected by a common theme: to find cheap, digital solutions to the problems pressing on the poor. They range from a "smart chip" payment card for the working poor to a diagnostic kit for isolated health clinics to a successful e-commerce initiative that lets farmers buy supplies and get market information online. "it can act as a bridge between the rapidly growing new India and the lagging old India," says Nasscom President Kiran Karnik. "We have to figure a way to take these sparks and turn them into a prairie fire."

For a decade, such efforts were merely experiments -- small-scale, splintered acts of charity and attempts at business creation. And many have been hindered by government inertia or regulation. But some have become successful and are starting to look like valid business opportunities. Now, the entrepreneurs are starting to discover one another: India has this year been host to three conferences on the use of technology for development in rural societies. So far, most of these ventures have been funded with entrepreneurs' savings because venture capitalists see few prospects of early returns. With the number of success stories growing, though, Nasscom and the World Bank are planning a fund of up to $1 billion to support promising ideas. And other developing nations such as South Africa, Brazil, and Sri Lanka are closely watching India's progress to see whether the projects can be successfully replicated. "India could lead the world in creating the grassroots social experiments that could teach both India and other nations how to use technology for the common good," says Kenneth Keniston, a professor at the Massachusetts Institute of Technology who follows such experiments globally.

Stretching Resources
Many of these efforts are driven by the urge to profit: If a fraction of India's poor logged in or dialed up just once a day -- and paid a minuscule fee to a service provider for the privilege -- then the sheer mass could create a viable business. "If you can conceptualize the world's 4 billion poor as a market, rather than as a burden, they must be considered the biggest source of growth left in the world," says C.K. Prahalad, a leading management theorist who studies developing markets. Other pioneers are purely altruistic -- they want to break India's millennia-long curse of poverty.

It's an awesome curse, and at first look, it's hard to see how digital technology cooked up by some entrepreneurial do-gooders can relieve hunger or thirst or guarantee a better crop. No laptop, however cheap or durable, can compensate for India's lack of a nationwide power grid, or a comprehensive network of highways. But digital technology can deliver information -- information the rural poor desperately need -- about crop conditions, fertilizer prices, health care, and more. Reliable information can help India's poor stretch their resources -- to plant the right crops, deal with bureaucrats more effectively, operate on a level playing field with customers and merchants. The digital revolution in India is largely an information revolution.

Computer kiosks are at the center of all this. These are typically in the front room of an entrepreneur's home, with one or two pcs linked to the Internet via a satellite, phone, or wireless link. The country already has some 7,000 such kiosks, and more than 100 new ones pop up each week. By 2007 there could be as many as 300,000, estimates Nasscom. The giant Indian Tobacco Co. has taken the lead in this movement: The company has funded more than 4,000 kiosks so far, giving them to farmers in a bid to boost sales of everything from seeds to soap via its Web site, e-Choupal. But new players are emerging, offering eager entrepreneurs a chance to open kiosks as a business. N-Logue Communications, for instance, has adopted something of a franchise model. The company arranges a low-interest loan of $1,000 to buy a computer and install a wireless link to the Internet. Then it teaches the kiosk owner its possibilities: Net-based education, computer training for local children, videoconferencing, photo work, and more.

These kiosks often become the hub of village activity. Take the one operated by Mahesh Patel, a soybean and cotton farmer from Korgala, a speck of a village in the central state of Madhya Pradesh. Although the only place Patel had ever seen a computer was in Bollywood blockbusters screened at the cinema in a nearby town, he jumped at the chance when Indian Tobacco offered him the Korgala kiosk three years ago. Since he gets a small cut of every sale ITC makes via his computer, Patel's monthly income has jumped to $380 from $220 before he got the kiosk. His three-room home is now often crowded with villagers: Early in the morning, Patel and fellow farmers gather to check soy oil prices in Kuala Lumpur and Chicago via the machine's satellite Internet connection before looking into the going rate on local markets. In the afternoon, village children hone their computer skills on the machine. And since the e-Choupal site offers all kinds of goods for sale, Patel's house has become a virtual village store. "I'm just a farmer, but I get a lot of respect in my village now," he says.

Today, entrepreneurs in India are looking to capitalize on the kiosk boom. Many are working on projects that could make kiosks more useful to villagers, or extend their reach to more isolated locales. "India is no longer just a laboratory for these experiments," says Allen Hammond, vice-president for innovation at the World Resources Institute in Washington. "It's out of the pilot stage and ready to scale up."

Some believe kiosks can help ordinary Indians get better access to health care. Already, a handful of rural clinics have satellite video and data links to city hospitals. But Sameer Sawarkar believes the kiosks can serve as part-time clinics as well. The 31-year-old engineering grad from the Indian Institute of Science in Bangalore remembered the lack of medical care in his home village. So in 2002 the former Motorola Inc. (MOT ) researcher joined some friends to develop a portable $200 diagnostic kit the size of a boombox that can check blood pressure, temperature, and pulse, take an electrocardiogram, and work as an electronic stethoscope. The machine can be plugged into kiosk computers to transfer diagnostic information to a city hospital. Sawarkar now has a deal with N-Logue to install them in some of its locations.

Handhelds and Wi-Fi
Others believe that handheld computers offer a way to extend the benefits of technology beyond the reach of typical desktops, or even laptops. Microsoft, for instance, is exploring the possibility of a $150 handheld device for the Bhoomi land records program, and the government of Andhra Pradesh has bought palmtops from Casio for school officials to keep attendance records. A high-profile Indian initiative is the Simputer, a simple, robust handheld computer that even illiterate farmers can use to pay bills, send e-mail, and keep records of their business using symbols or any of the 17 official Indian languages. It even has education programs in five languages and can turn text into speech. The device was developed under a public license not unlike the Linux operating system it uses. The professors at Bangalore's Indian Institute of Science who came up with the idea have posted the machine's plans on the Internet for anyone to use, and charge only $25,000 for a manufacturing license in India. One company, Bangalore-based Pico Peta, is selling the machines for $200 to $450. Simputers haven't exactly been jumping off the shelves. Since 2002, the Karnataka government has given Simputers to 200 village accountants and farmers to maintain its Bhoomi land record program. About 25 governments around the world have shown interest in the machines, and inside India Pico Peta has sold 200 more since March. But the promoters are optimistic, keeping their eye on a potential order for 9,000 more handhelds from the Karnataka government, as well as the possibility of sales to other Indian states, which must have their land records computerized by 2006. "When we developed the Simputer, our aim was to bridge the digital divide," says Vinay Deshpande, a co-creator of the device. "Other [Western] companies did it for commercial purposes."

Anurag Gupta, meanwhile, has developed a payment card that can plug into either a handheld or a kiosk -- and make it easier for the poor to establish a credit history. Today, it can be tough for many Indians to get loans because they use cash to buy virtually everything, and few have bank accounts. Under Gupta's plan, poor Indians could establish a bank account linked to the card, which contains a smart chip with personal information. Gupta hopes to install card readers in public phone booths and distribute the readers to kiosk owners, who would accept the card as a form of payment for computer time. Cardholders could also use it to pay bills or buy goods online. Banks could then monitor the user's spending patterns and decide whether he or she is a good credit risk. Gupta, a slight, intense man who studied architecture, has been working on the idea for four years. It will finally launch commercially under the name "Zero" on July 7 in Andhra Pradesh with the backing of ICICI Bank. Says Gupta: "It's been a long slog, but we've finally got the support that'll bring success."

At the same time, Praveen Bhagwat wants to extend the reach of kiosks with Wi-Fi. Bhagwat, a former wireless researcher for IBM and Bell Laboratories in the U.S., returned to his native India to adapt the wireless standard for rural use. By rewriting some software and redesigning antennae, he made a system that could send signals some 23 kilometers rather than the 100 meters typical for standard Wi-Fi -- meaning that it could provide Internet and phone service to several adjoining villages or a large town. "It's just not economic for large companies to do this. They wouldn't make any money on it," says 35-year-old Bhagwat. "We have to do it for ourselves."

Unfortunately, innovators often spend more time struggling against India's bureaucracy than they do coming up with products. Bhagwat, for instance, needed just a month to create his first Wi-Fi system. But then it took nine months to get permission to build six 12-meter towers between the city of Kanpur and neighboring Lucknow, and he still hasn't gotten a permit to extend the system. And P.G. Ponappa, N-Logue's chief executive, says getting permission to put government services such as income and birth certificates online routinely takes a year. The government's "intentions are good, but they're just too slow," he says.

Can these projects transform India? Not by themselves. But if, bit by bit, they can make India's poor a little healthier, a little richer, and a little more literate, the cumulative effect on the country's fortunes could be enormous. The poor are eager for a wave of digital change. Young people across the country -- even in many villages -- are familiar with computers and keen to learn how to use them. These days, education and computers are primary items in every rural family's budget. In the poor, dusty village of Shahpur in Uttar Pradesh, for instance, impoverished farmers save their rupees to send their children to school in the neighboring town of Barabanki. There they can study English and computers, which are considered key to prosperity. Among India's poor, there's no shortage of ambition to learn them both. And no shortage of ideas on how to harness technology to give the poor a fighting chance to improve themselves.

By Manjeet Kripalani

Jai

June 20th, 2004, 02:44 AM

Financial Sense Online Editorials: Bombay Dreams (http://www.financialsense.com/editorials/daily/2004/0614.html)
by James Boric
Contributor, The Daily Reckoning
June 14, 2004

The Daily Reckoning PRESENTS
Wow...it sure is quiet here in the DR HQ. That's because two of The Daily Reckoning's most animated characters have gone to far-off lands in search of profit opportunities. You knew about Dan Denning and his tour of China and Japan, now James Boric has flown to India.

Tomorrow, I will catch a plane to London and then fly straight on to Bombay.

For nine days, I will be meeting with some of the most powerful businessmen in all of India. I want to confirm my suspicion that, over the next 15 years, India will emerge as the next Asian Superpower.

On paper it seems like a no-brainer.

With a population over 1 billion, a huge growing, well-educated middle class, a stronger stock market, an improving education system and a democratic government, the foundation is set for some serious growth. Now I want to see it for myself. And I couldn't have planned a better time to visit this rapidly growing Asian country - from both a financial and a political perspective.

Let's start with a little politics.

If you have been following the news at all in the past three weeks, you must have heard something about the recent Indian elections. What a fiasco.

In a major upset, India's Congress party (led by Italian-born Sonia Gandhi) defeated the incumbent Bharatiya Janata Party - which is credited for drastically improving India's financial and economic situation. This shocked the financial community.

Foreign money managers immediately pulled millions of dollars out of the Indian market. They feared the new government (the Congress Party and its leftist alliances) would oppose the privatization of major Indian businesses - - effectively ending much of the economic progress made in the past and putting a damper on economic growth in the future. As a result...

The Sensex (the major Indian stock index) fell as much as 17%. Trading had to be stopped several times during the day on May 17. And when it was all said and done with, the index ended the day down 11%. It was the single biggest drop in India's history.

It was all doom and gloom - until a sudden announcement was made...

Sonia Ghandi declined the opportunity to serve as India's prime minister. Instead she (and the Congress party) appointed Manmohan Singh - India's former finance minister - to take the helm. He accepted. And the market rebounded. After all, the financial world in India loves Singh.

Singh was one of the central figures in modernizing the Indian economy in the last 15 years - lobbying for state-run businesses to privatize, improving India's central bank situation, opening the country up for foreign investment and encouraging free trade with outside countries. And with him leading the new Indian government, I expect the economy will continue to grow.

It seems the financial world agrees with me.

Since May 22 (the day Singh was officially appointed India's new prime minister), the Sensex has recouped almost all its losses - a good sign for investors. And although you can count on the market to be bumpy in the short term, the long-term prospects remain very bullish for India. In fact, Goldman Sachs is predicting India's economy will overtake the UK's by 2035, and by 2050 it will be the third-largest economy in the world - behind only the United States and China.

We'll see if they are right. But the foundation is laid for rapid growth in India.

For the first time ever, India is no longer a debtor country. It has forex reserves in excess of $116 billion. It expects to double its college graduates in the next six years. Its currency has been upgraded to "investment grade" by Moody's, for the first time ever. Major Western companies like Microsoft, IBM and GE are all opening offices in India's main cities. And technology (phones, computers and Internet access) is starting to make its way into India's towns.

This is an exciting time for India - and for long-term investors willing to put money in Indian stocks. And when India does emerge into a legitimate superpower (eventually growing into the third-largest economy in the world), I expect a surge in one industry in particular...

When a country emerges from Third World to superpower, one of the first industries to rise is telecom. And the boom is already taking place in India...

- The number of cellular subscribers has just about doubled every year since 1999 - rising from 1.6 million to 10.5 million now.

- The number of phone lines has increased fivefold since 1996.

- Internet connections have skyrocketed from 1.04 million in 2000 to 4 million in 2003

- 84% of all Indian towns are wired for phones and Internet access. Yet only five of every 100 people have them. In other words, the room for growth is enormous.

Couple that with the fact that India has now opened the telecom industry up to competition, and the stage is set for explosive growth in the future.

Of course, there are no guarantees you will make money - especially in the short term. Anytime you own stock in an emerging country like India, you have to be prepared to lose. But the rewards if you are right can be huge. In fact...

The best-performing foreign markets ALWAYS beat out the U.S. markets - ALWAYS. For instance...

In 1987 Japan's market rose 43.2% compared to the United States' 3.91% rise. In 1989, Austrian investors could have made 104.8% profits. U.S. investors only made 31%. And in 1998, Finland's market rose 122.6%. Again, the mighty United States lagged behind - only rising 31.72%.

And if you want a more recent example, look at China. The USX China Index rose 104% last year. That's impressive. The Dow Jones only rose 25%. And I believe you will have the same kind of opportunity with India in the next few years - that's why I'm headed there now.

I will be staying at the Taj Mahal Hotel in Bombay for nine days. During my time there I am penciled in to meet with several of the top executives in the country - including people from Morgan Stanley, McKinsey, HDFC Bank, ABN AMRO Bank and ASK Raymond James.

I will also be meeting up with wily traveler Dan Denning - who has already been in Asia for the last three weeks. Together, I expect we will cover a lot of ground, meet a ton of great people and have some fun in the process.

Of course, I will let you know what I discover. I will write to you from Bombay, and you can expect to read about my adventures in The Daily Reckoning.

Regards,

James Boric
for The Daily Reckoning

© 2004 James Boric

Jai

June 20th, 2004, 03:18 AM

Very interesting, the part about China. If they go through with it, they'd be following Japan and Taiwan in heavily allocating investment from China to India, at the expense of future investment in China.

Brussels calls for wholesale changes in EU approach to India (http://www.eubusiness.com/afp/040616104155.k6qkpp4y)
16 June 2004

The European Union's executive arm tabled Wednesday new ideas designed to transform the 25-nation bloc's approach to India to recognise the country's growing economic and strategic might.

The European Commission said it saw no reason why its new proposals, which have been months in the drafting, would be undermined by the electoral shock that last month returned the Congress party to power in India.

"Following the recent elections, I look forward to working with the new Indian government to deepen our relationship," EU External Relations Commission Chris Patten said in a statement.

Patten said he hoped that EU governments would respond positively to the proposals, the commission's first on India since 1996, which in part are designed to redress the bloc's focus on China as the key powerbroker in Asia.

If adopted by the 25 member states, the proposals would guide the EU's new approach at a summit with Indian leaders scheduled to take place in the Dutch capital The Hague in October.

Not least, the commission wants the EU to acknowledge India's significance in an era when the country is a major player in information technology and is host to more and more Western companies outsourcing jobs to a cheaper market.

"We have been seen by the Indians as an economic fortress, and vice versa. These perceptions are wrong, on both sides," a senior commission official said on condition of anonymity.

"We in the EU must recognise the big changes that are afoot in India," the official said, expressing confidence that the left-leaning coalition led by Congress would continue its predecessor's policies of economic reform.

The EU and India can also overcome their differences on reform to global trading rules at the World Trade Organisation, the official said.

"Agriculture will be a big, big concern for the new government in India. We share concerns for our own farmers, so these are issues that can be discussed."

On the political and security front, the commission document says the EU and India share the same outlook on the primacy of the United Nations and both have a wealth of experience in international peacekeeping operations.

The two sides can also work hand in hand in preventing conflict, it says, noting India as the leading player in South Asia can play a pivotal role in stabilising Afghanistan, Nepal and Sri Lanka.

The EU would support peace efforts between India and its nuclear-armed rival Pakistan through the South Asian Association for Regional Cooperation (SAARC). The EU plans to unveil a new approach to SAARC as a whole later this year.

And although neither India nor Pakistan has signed the nuclear non-proliferation treaty, the EU would continue to work to persuade both countries to prevent exports of sensitive materials.

The commission also called for enhanced cultural ties with India -- for instance by bringing the leading lights of Bollywood and European cinema together at joint promotional events.

And it called for scholarship programmes to encourage more Indian students to come to European universities rather than those in the United States.

"We feel that India is looking at Europe with new eyes, after being mesmerised for a long time by the US," the commission official said. "We feel there is a change in mood, from both the old and new governments of India."

Jai

June 20th, 2004, 03:37 AM

India gains on China among multinationals (http://www.iht.com/bin/print.php?file=524664.html)
Keith Bradsher NYT
Saturday, June 12, 2004

SHENZHEN, China When Crystal Chen, a mechanical engineer, started designing microwave oven doors for Whirlpool three years ago in this gleaming Chinese metropolis, one of her biggest surprises was the size of the ovens.

Built to be installed over ranges in spacious American kitchens, the ovens were twice the size of the countertop microwaves sold for Chinese kitchens. And as she has kept working on them, the Whirlpool models, nearly all them made to be exported to the United States and Europe, have grown even larger, approaching three times the size of a typical Chinese microwave.

By contrast, at a Whirlpool complex more than 2,500 miles away in Thirubhuvanai, on the southeastern tip of India, the washing machines built in a hot, low-technology factory there are products the Indian workers easily recognize. Unlike the microwave ovens in Shenzhen, these washing machines are very much designed for local use, not for export.

They have rat guards to protect laundry and hoses. They have extra-strong parts to survive being bumped around in trucks on India's potholed roads. And they are built with heavy-duty wiring to cope with the powerful ebbs and surges in India's electrical grid.

The difference is telling. Whirlpool's emphasis on using China to make goods for export while locating in India to enter the local market there reflects a broader trend that is becoming apparent for many household appliances, from television sets to refrigerators. And it highlights a division that could spread in the coming years to other industries.

For all the dreams of selling goods into a fast-growing market of 1.3 billion Chinese, the reality is often very different. While China still holds considerable allure, many multinationals have struggled to find profits selling here.

Companies setting up shop in China face domestic manufacturers that consistently undercut them by building factories practically for free, borrowing the money cheaply from state-owned Chinese banks and using various strategies to avoid repayment. To make matters worse, many department stores are still owned by municipal or provincial governments that give floor space to local products and resist selling foreign brands. The result has been a struggle among manufacturers to see who can discount their wares more deeply - a struggle with little appeal for multinationals that need to make real profits.

"We're not interested in chasing a price-driven strategy," said Garrick D'Silva, regional vice president for Asia at Whirlpool.

India's economy has been growing nearly as quickly as China's in the past two years. By dismantling many barriers to foreign investment, the government in New Delhi has also made the country an increasingly attractive market for globalizing companies.

Marketing is easy through thousands of privately owned retailers, from department stores to corner shops. Risk-averse banks in India charge such steep interest rates to local manufacturers, and so strongly insist on repayment, that some economists worry they may even be slowing growth unnecessarily.

India's steep tariffs, although starting to decline now, long insulated its markets from international competition and still keep prices somewhat higher for many manufactured goods.

And because India did not follow China's draconian "one child" policy, United Nations demographers forecast that India's population will surpass China's as soon as 2040.

With all those advantages, Whirlpool - while still strongly interested in tapping the Chinese market - has found greater opportunity to lock in profits and expand its market share in India than in China, D'Silva said.

LG Electronics of South Korea, Whirlpool's archrival in Asia for many kinds of household appliances, shares that view. "We couldn't make a profit in China," chiefly because of the free loans available to local competitors, said Kim Kwang Ro, the managing director of LG Electronics India. "The main focus of expansion for LG is India, not China."

China's effort in the past month to brake its economy, in response to rising inflation and growing problem bank loans, is also starting to take the edge off some companies' interest. China's political prospects remain murky.

By contrast, India has just gone through a peaceful change of democratic government that produced a mere two-day drop in the stock market followed by an immediate recovery in share prices and corporate confidence.

"The Chinese economy is looking rather unstable," Kim said. "Meanwhile, in India, the political, economic situation is becoming more stable."

Many companies, of course, remain bullish on the Chinese market. Automakers are racing to build more assembly plants in China but have moved more cautiously in India, where incomes are still somewhat lower and roads are in much worse repair. Anheuser-Busch just defeated SABMiller in a costly battle to take over a low-margin beer business in China's northeastern corner.

Moreover, for all their differences, both India and China share a growing popularity as a place for multinationals with high labor costs to set up shop.

Like many of its counterparts, Whirlpool is moving quickly to tap Asia's huge supply of well-trained engineers. Its employment of engineers and technicians in India and China has grown to 240 from zero five years ago, with plans for 700 by 2007, or more than a quarter of the company's engineering work force.

"We're shifting quite a bit of our technology capacity to these countries from the higher-cost parts of the world, part of it from the United States and Europe," D'Silva said.

The New York Times

Jai

June 20th, 2004, 04:39 AM

Why MNCs prefer India to China (http://economictimes.indiatimes.com/articleshow/739025.cms)
ECONOMICTIMES.COM[ TUESDAY, JUNE 15, 2004 01:06:08 AM ]

The recent G-8 meet both started and concluded with calls by G-8 leaders asking both India and China to be included in the grouping for the most developed countries of the world. Despite their shortcomings, both India and China appear to have arrived in the global economic scene.

For long, India was considered to be lagging behind China. But now, as the dust settles down, India is beginning to look the better off compared to China and more lucrative for the multinationals to come calling .

In the FDI stake, China is still ahead of India but India is catching up slowly and for the MNCs, India is beginning to matter more than China .

Boston Consulting Group’s Janmejaya Sinha, after researching the performance of the MNCs in India, discovered that:

* The average return on capital employed for MNCs is 19 per cent, compared to 11 per cent for Indian companies.

* The average return on sales for MNCs is seven per cent, compared to just four per cent for Indian companies.

* About half the MNCs earn higher returns in India than their global average.

In banking, the bigger foreign banks, Citibank, Standard Chartered, ABN Amro and Bank of America (except HSBC) are all more profitable in India than their global average .

Market No. 1?

Why banking alone? Look at automobiles, mobile handsets, colour televisions, air conditioners, footwear… India is now among the fastest growing markets in the world. For MNCs operating here, this has turned India into a critical market for their global growth platforms.

The growth rate (which has been 20 per cent-plus month-on-month right through fiscal 2003) put India among the top growth markets for MNCs like Suzuki, Hyundai, Honda and Toyota, alongside the 1.9-million unit Chinese market which is almost double the Indian vehicle population.

India’s cellular growth is currently four times faster than China’s. In percentage terms, India is the fastest growing market in Asia, followed by Indonesia and the Philippines.

The domestic colour TV market, for instance, has grown 50 per cent in just three years from five million units in 2000. The growth rate on average has been in the region of 10-15 per cent against five to 10 per cent in China and three to five per cent in Europe and North America..

The size of the market for air-conditioners has more than doubled in the last four years from just 3.5 lakh units and given the direction of the market, it looks set to continue with double digit growth rates for the next decade.

All these translate into better balance sheets for MNCs and a greater sensitivity to things Indian.

Why India is overtaking China

India is better placed for future growth. Its capital markets operate with greater efficiency than do China's. They are also much more transparent. Companies can raise the money they need. India's legal system whilst over slow is much more advanced and is able to settle sophisticated and complex cases. Its banking system has relatively few non-performing assets. Its democracy and media are alive and vital which provides a safety valve for the incoherent changes that modern day economic growth brings. India has religious riots, secessionist movements, urban squalor and bitter rural poverty. But the voters know they can throw the rascals out, and regularly do.
-Jonathan Power

Here’s why India is preferred to China by MNCs

Reason No. 1

When it comes to MNCs setting up manufacturing bases in India and China, one of the biggest differences lies in the fact that while the Indian centre manufactures for the Indian market, the Chinese centre is geared for the American market.

It is simply too difficult for multinationals to sell and make profit in the Chinese market.

They simply can’t compete with the state-backed Chinese manufacturers, who often compete with each other, selling at deep discount.

Reason No. 2

India appeals to Whirlpool because it is easier to enforce contracts there than in China. A Whirlpool executive said that the company had a contract in 2002 with a Shenzhen company to supply many of the components for a new toaster oven, only to have the supplier raise the price sharply. Whirlpool switched production to India.

Reason No. 3

India's economy has been growing nearly as quickly as China's in recent years. By dismantling barriers to foreign investment, the Indian government has made the country an increasingly attractive market for MNCs. Marketing is also easy through thousands of privately owned retailers, from department stores to corner shops.

Reason No.4

China’s political prospects look uncertain compared to India’s stable political and economic outlook.

Reason No. 5

India's combination of duties on imports and complex regulations on manufacturing start-ups has tended to benefit companies with factories in the country.

So long, India has been the proverbial tortoise to China’s hare when it came to economic growth. Maybe, now the tortoise is all set to overtake the hare.

Jai

June 25th, 2004, 05:43 PM

EU bullish on Indian Growth (http://inhome.rediff.com/money/2004/jun/24eu.htm)

The European Union on Thursday said India will surpass 7.0 per cent growth this year and the new United Progressive Alliance government is expected to continue with reforms, including reduction in fiscal deficit.

The ADB pegs growth at 7.4% in 2004, 7.6% in 2005

http://www.indiainfoline.com/news/news.asp?dat=42008

Jai

June 25th, 2004, 05:56 PM

The latest issue of Business 2.0 has a cover story on India. Only the 1st page is online, but I'll post whole article below:

India: The New Land of Opportunity (http://www.business2.com/b2/web/articles/0,17863,650408,00.html )

http://www.business2.com/b2/images/mag/b2_2004jul_106x140.gif

It's a global economy -- so quit whining about outsourcing. India's booming middle class has $420 billion to spend. Here's how to grab your share.
By Om Malik, July 2004 Issue

On a typical afternoon, 26-year-old Shruti Sharma heads with friends to Gurgaon, a New Delhi suburb that's also a shopper's paradise. The malls here are vertical versions of their U.S. counterparts: five-story high-tech bazaars with multiplex cinemas, ice cream parlors, escalators, parking lots, even Muzak (smarmy versions of Bollywood disco hits). Outside it's so hot the asphalt is melting -- talk about Indian summer -- but inside, shoppers stroll in air-conditioned bliss past a Pizza Hut, a Subway, a Benetton, and a TGI Friday's. Sharma volunteers that her favorite brands are, in no particular order, Nike (NKE), Nokia (NOK), McDonald's (MCD), and Levi's. "Buying habits are changing," she says with a shy smile. "Nothing less than a brand name like Nike or Adidas will do."

I'm not sure what's more amazing: Gurgaon or Sharma. When I was growing up not far from here, Gurgaon was little more than a tiny town built on a fly-blown cow pasture where my friends and I would go to buy cheap Kingfisher beer. In the past three years, it's sprouted six malls -- with five more under construction -- and a skyline of shiny new office buildings and call centers. Filling these new structures are people like Sharma, who answers phones in a South Delhi industrial park for a U.S. Internet service provider. She earns more than $9,000 a year, 19 times the average Indian wage.

To some in America, which I now call home, that makes her a job stealer. But in India, people like her are becoming so common that local newspapers have begun referring to them as "zippies" -- young Indians who walk with a zip in their stride, oozing with attitude, ambition, and money. Zippies represent India's burgeoning middle class, which, by the way, outnumbers the entire U.S. population.

Instead of a threat, the zippies signify an unprecedented opportunity for American business. India is undergoing an economic boom the likes of which the world sees perhaps twice a century. In places like Gurgaon's Mall Mile, you can feel the explosion of commerce. Malls have sprung up in Bangalore, Calcutta, Mumbai, and scores of smaller cities. Thanks to low interest rates, deregulation, and an influx of 785,000 new jobs at call centers and programming houses, Indian consumers are buying up everything from imported computers and software to cell phones and clothes. According to some estimates, 487 million middle-class Indians will spend an additional $420 billion during the next four years.

There are other tantalizing hints that India will become even more attractive as an emerging market for U.S. businesses. The new prime minister, Manmohan Singh, is an Oxford-educated former finance minister whose 1990s fiscal reforms are credited with setting India on its remarkable trajectory. Indeed, India's economy is projected to grow 7.2 percent this year. Next January the World Trade Organization will eliminate trade restriction on industries such as textiles and pharmaceuticals, which should boost exports in these sectors and put even more disposable income in Indians' pockets. In turn, that will open the door wider to more imports from the United States.

Of course, nothing in business, especially global business, is without risk. A big wild card is India's notoriously unstable government. The communists and socialists who helped forge Prime Minister Singh's new ruling alliance could easily derail progress. They promote a populist agenda that includes using the country's precious resources to subsidize power and fuel for farmers and the poor. Investment banker friends of mine joke about India's "democracy discount," imposed by foreign investors afraid to do business in a country that has elected 10 new governments in the last 20 years.

Nevertheless, Rakesh Jhunjhunwala, a 44-year-old investor who's been called India's Warren Buffett, sees the nation's economic engine only getting stronger. Once an accountant who made just $100 a month, he's now India's largest private investor, with an estimated net worth of $250 million. Like the Sage of Omaha, he takes the long view and bets on fundamentals.

At the wood-paneled bar of Mumbai's white-shoe Cricket Club of India, Jhunjhunwala imparts the key to understanding India's future. "This is much like America in the 1950s," he says, his back to a veranda that looks out on the lush outfield, a reminder of India's colonial past. "It's a bottom-up kind of growth driven not by temporary circumstances." While he believes outsourcing is helping, he cites a more important demographic shift, in which spenders are replacing savers. By 2006, India's 20- to 34-year-old population will swell to 280 million. These zippies-to-be will marry, start families, and buy homes, appliances, automobiles, and consumer products. For India, Jhunjhunwala forecasts "long-term consumerism."

How Do You Capitalize?
But clearly the opportunity is already here. And plenty of big-name companies, from America and elsewhere, have started moving in. U.S. exports to India surged to $5 billion in 2003 from $4 billion a year earlier. Fiber-optic equipment maker Corning, ailing in the United States, has sold an estimated $50 million worth of cable to Indian telecom operators. Likewise, South Korean carmaker Hyundai has captured nearly 20 percent of India's auto market. Indians have bought $2 billion worth of cell phones and networking gear from Nokia alone. It doesn't hurt that Indians are exposed to global marketing messages through CNBC, HBO, and MTV. "The Indian middle class is easier to target because people understand English and have a Western orientation," says Rory Cowan, president of Lionbridge Technologies, which sells database translation software throughout Asia. "In China it's a longer slog."

Still, it's one thing to salivate over half a billion Indian mall rats, and another to start selling to them. Foreign companies that have made the attempt complain of ridiculously low margins, slow implementation of business-friendly laws, and bewildering cultural diversity: The residents of India's 28 states and seven union territories speak 17 major languages and practice seven religions. Such frustrations led scores of multinationals to pull out of India in the 1990s, according to Ingrid Belton, director of trade policy at the U.S. Chamber of Commerce's U.S.-India Business Council. "Those companies were the pioneers," she says, "and the pioneers tend to take the arrows."

Belton says India isn't yet an easy place to do business, "but it's better." And now that there's so much money to be made there, executives I interview in America routinely prod me for the key to cracking the Indian market. Having grown up in India and followed its rise for the past two decades, I usually tell them they need to think locally, offer value, and be patient. That last one is key: You can make an elephant dance. But it takes time to learn the right tune.

A BEGINNER'S GUIDE TO INDIAN MARKETING
Cultural barriers, poor infrastructure, and government restrictions make even one of the world's fastest-growing economies a challenge. Here are the lessons of foreign pioneers that have positioned their companies to cash in on India's remarkable progress. -- BRIDGET FINN

·SCALE DOWN
Americans snap up supersize containers at Costco, but Indians save cash by buying smaller quantities. Revlon reduced the size of its nail polish bottles and saw sales volume increase.

· PRICE FOR MASS APPEAL
The average income for a middle-class Indian worker is just $1,200 a year. Phone equipment maker UTStarcom found that spending constraints trickle down: It had to design cheaper network switches to sell to local phone companies.

· TAILOR PRODUCTS TO INDIAN TASTES
In most countries, Subway carries only one or two local-cuisine menu items, but in India, the franchise offers separate vegetarian counters and a specialized "Indian Delights" menu. It's opened 27 new stores since December 2001.

· LOCALIZE YOUR MESSAGE
In the 1990s, Pepsi ran the same commercials in India that it aired elsewhere. But the brand didn't take off until it tapped local talent like Shahrukh Khan, India's biggest box-office star, and Sachin Tendulkar, a hugely popular cricket batsman.

· FIND A GOOD PARTNER
India's fragmented distribution channels present a challenge to foreign companies. Tap into booming local chains like Foodworld, Pantaloon, and Shopper's Stop, which offer access to India's middle class.
Ambani's Law

Perhaps no one understood the dynamics of Indian marketing better than the late Dhirubhai Ambani, a self-made billionaire who started out as a gas station attendant in the 1950s. Expanding first to textile production, then to oil refineries, Ambani and his family built a business empire that today accounts for more than 3 percent of India's gross domestic product. Ten years ago, when India began deregulating communications, U.S. telecom executives approached Ambani to form a mobile-phone company.

Ambani refused, saying (according to Indian business folklore), "When it's possible to offer calls that cost about the same as a postcard, then we can think about setting up a mobile-phone business." At the time, postcards in India cost a penny, and per-minute phone charges averaged about 50 cents, among the highest in the world.

I like to call his philosophy Ambani's Law of Indian Marketing. If Ambani had coined such a law, it would have stated that you don't make money in India until your product or service makes sense for the masses, the hundreds of millions of people who earn as little as $3 a day. In 2002, Ambani's son Mukesh finally launched a phone company, Mumbai-based Reliance Infocomm. Reliance charges less than 2 cents a minute. (Postcards, meanwhile, are getting more expensive: They now cost 1.5 cents.) Reliance has already captured 22 percent of the Indian mobile-phone market -- 7.5 million users -- and is profitable despite an average customer phone bill of about $11 per month.

Value Sells
You're missing the point if you believe that Ambani's Law simply equates cheapness with mass markets; if that were true, Chinese companies would be cleaning up in India. They aren't. Rather, the secret is a blend of price, utility, and cachet.

Cell phones are the perfect example; in fact, nothing symbolizes India's newfound consumerism better. As I walk through my old stomping grounds in a decidedly dowdy district of New Delhi, I notice that the paan walaas -- street vendors who sell cigarettes, chewing gum, and betel nuts -- now also hawk prepaid phone cards. Twenty years ago, when my parents got their first landline, friends came over to celebrate as if the whole neighborhood had won the lottery. Now I can't pray in temple without hearing beeps between chants.

Yet with cell phones, brand names matter. Otherwise, everyone in India would carry a $50 model from Chinese manufacturer Ningbo Bird or inexpensive offerings from the likes of Philips and Alcatel (ALA). But they've all lost out to higher-priced handsets from Nokia and Samsung. In fact, Samsung, the fastest-growing cell-phone maker, is on track to garner nearly 29 percent of India's handset sales, roughly 5 million units by the end of 2004. It positions its color-screen camera phones as lifestyle items. (In April, Samsung sponsored a cell-phone fashion show, with stylish models walking down runways making mock calls.) "Price is not the only criterion in the Indian market," agrees Kunal Ahooja, vice president for Samsung's telecom business in India. The proof: Samsung charges $80 to $550 per phone -- up to twice as much as other brands.

India is filled with examples of foreign products that sell because they deliver value over outright cheapness. Hyundai has recently become the No. 2 car seller in India, thanks to its $7,000 Santro, which is gaining on the national favorite, the $5,700 model 800 from Maruti Suzuki. Both cars are made in India by foreign companies, but the Santro commands a higher price because air-conditioning comes standard and the car is considered more fuel efficient and better made. (Ford (F) and General Motors (GM) are still marginal players, offering models starting at about $9,000.) South Korean consumer-products giant LG has trumped Whirlpool and China's Haier by making slightly more expensive refrigerators and air conditioners that are more resistant to the dust, extreme heat, and frequent power surges common in India's vast rural territory. Like compatriot Samsung, LG has gone from zero to roughly $1 billion in sales in India in less than 10 years. "The Koreans understand Indians' need for 'value-for-money' products," says R. Amarnath, head of research for ICICI Securities.

That said, any business wishing to truly thrive here has to do so on volume -- making a small amount of profit on mass unit sales. On a per capita basis, Indians simply can't pay very much for the stuff they buy -- yet.

Levi Strauss entered India in 1995 with a number of exclusive stores and premium-priced jeans, but the brand was not well-known to the Indian consumer. It cracked the zippie code by introducing lower-priced lines like Red Tabs, which go for about $25. Last year, sales grew by 20 percent over 2002. In 1996, McDonald's opened its first Indian outlet in New Delhi with a menu built around the $2 Maharaja Mac -- a mutton burger designed for India's Hindu majority that doesn't eat beef. Yet sales only took off with the introduction of cheaper options like the McAloo Tikki (a potato-based patty) and McCurry Pan (chicken and vegetables baked onto a spiced bread), which go for about a dollar. The fast-food giant now has more than 50 restaurants in India.

The Lesson of the Shampoo Packet
How do you cut unit costs without sacrificing quality? Think outside the box -- and in the tiny tube. While Americans buy half-gallon bottles of Pantene from Sam's Club, 70 percent of Indian shampoo is sold in 5-milliliter packets costing less than a nickel.

Likewise, Indian consumers buy 70 percent of cell-phone airtime through prepaid cards in increments as low as a few dollars. And a majority of the nearly 10 million DVD players purchased in India this year will be $45 do-it-yourself assembly kits sold at places like Old Delhi's Lajpat Rai Market, a centuries-old bazaar where rickshas and mangy dogs compete for space with salesmen spouting microcontroller specs. Buyers are really distributors: They purchase the kits for $45, assemble the players, and resell them in their own neighborhoods for a profit of about $11.

Some U.S. companies have already adopted "shampoo thinking." After introducing 300-ml bottles priced at 24 cents, Coca-Cola is finding it more profitable to shift production to 200-ml bottles sold for less than half that. Colgate toothpaste also comes in tiny packets.

Even tech companies are doing it. In 2001, Alameda, Calif., telecom equipment maker UTStarcom opened an office in New Delhi, betting that India's consumer boom would translate into greater demand for network gear. The move was prescient: India's "teledensity" -- phones per million people -- has jumped from 44,000 in 2000 to 77,000 today. Still, selling to Indian phone companies turned out to be more difficult than expected for Ruchir Godura, UTStarcom's India manager. He recalls the first time he walked into a potential customer's office: "The guy said, 'A dollar may be equal to 47 rupees on currency markets, but to us it's worth only 10.'" In other words, after converting UTStarcom's American prices at the going exchange rate, Godura was asked to divide by five.

Godura knew he couldn't do that and make money. One of UTStarcom's main offerings is a specialized telecom switch called a digital loop carrier (DLC), which lets phone companies deliver voice and Internet services to subscribers. The box was a hit in China, in part because it could handle as many as 480 customers. But for India's local carriers, it was overkill: Anxious to conserve cash, they only wanted to expand their networks in 100-user increments. To make matters worse, Godura found that customers preferred well-known European brands. "It seemed we couldn't sell anything in this country," he says.

UTStarcom went back to the drawing board, spending nearly a year designing a scaled-down DLC. It was just like selling good shampoo in tiny bottles: Starcom's box was small, scalable, and cheap enough for local markets. Today the company counts all major Indian phone companies as customers, and its 2004 sales in India are likely to top $50 million. Godura's advice to others tackling India: "First, figure out what your customer can charge his customers and still be profitable. If you can work within that, you can make money."

Find the Emerging Market
Look hard enough, and there exist enough profitable niches in India for virtually any American company -- even one that makes software. In 1987, San Jose-based Cadence Design Systems, which sells applications used to design microchips, established a research and development branch in New Delhi to gain access to India's affordable but sophisticated programming talent. Cadence's sales in India were so meager that the company farmed them out to a local distributor.

But in 1996, Saugat Sen, Cadence's engineering director in India, predicted that the outsourcing trend would bring chip-design work to high-tech meccas like Bangalore and Hyderabad. So Cadence converted its Indian outpost into a freestanding subsidiary with sales capability. The company acted just in time: With Analog Devices (ADI), Intel (INTC), and Texas Instruments (TXN) opening research facilities in India, Sen estimates that 10 percent of all chip-design software users reside here. And as young Indians abandon the old quest for "babudom" -- cushy jobs in the government bureaucracy -- to set up entrepreneurial ventures designing cutting-edge Bluetooth and other wireless chips, there's a long list of customers willing to pay hundreds of thousands of dollars for Cadence's high-end software. "As long as we offer value for money, people will buy it," Sen says. He estimates that within three years, as much as 15 percent of the world's chip design will happen in India, boosting demand for workstations and other development tools.

All the economic activity in my homeland makes me a little wistful. These zippies strut around with a confidence -- yes, a zip -- I never had growing up. When I was their age, I wanted to be a journalist, so I left India for the United States. Today, with 100 TV channels -- 14 of which offer news -- and 39,000 newspapers, a reporter can find fame, even a little fortune, at home.

One of the last people I meet in India is my old friend J.J. Valaya, a fashion designer I once wrote about for an Indian newspaper. Seven years ago, when I last visited here, he drooled over the Armani jeans, Oliver Peoples eyeglasses, and Apple (AAPL) PowerBook I brought from the United States. This time, as he welcomes me into his spacious Gurgaon office (not far from Mall Mile), he shuts down his Apple eMac, puts his Sony Ericsson P800 smartphone on vibration mode, and tells me about the new Hugo Boss and Tommy Hilfiger boutiques. Freakin' Tommy Hilfiger is selling in India!

However, there are still some things my old friend can't get his hands on. As I sit down, I pull out a silvery treasure smaller than a pack of cigarettes and finger its touch-sensitive dial. Apple sells iPods in India, but not yet the iPod mini. My friend sits silently, but his eyes speak volumes.

Note to Steve Jobs, and everyone else: The elephant is putting on its tutu.

Bond James Bond

June 26th, 2004, 07:24 AM

Hey, before the weekend is out, grab a copy of Friday's Wall Street Journal. It's got an article on agriculture in India. The main emphasis is, India grows enough food for itself, but people are still going hungry because they can't *afford* the food and because of poor distribution and stuff like that. Interesting read.

Canada_yeah

June 27th, 2004, 01:15 PM

2e755a20.jpg

kshatriya

June 27th, 2004, 04:36 PM

2e755a20.jpg
You should include the entire url....:p

IJKT123

June 27th, 2004, 05:59 PM

RajKhalsa

June 27th, 2004, 06:33 PM

World Bank doubles loans to India (http://news.bbc.co.uk/2/hi/business/3841079.stm)
The World Bank is to double its loans to India to nearly $3bn (£1.6bn) a year in order to develop infrastructure projects and better aid the poor.
Its additional funding will go towards schemes including irrigation, power, water supply and road development.

It also aims to increase access to education and healthcare, and generally improve the lives of the rural poor.

Extra focus will be put on four of the most impoverished states - Bihar, Uttar Pradesh and Orissa.

These lag behind the rest of India in all social sectors.

The World Bank will lend India $2.15bn annually, in addition to $750m a year from the International Development Association, a World Bank arm created in 1960 to help support the world's poorest nations.

No electricity

World Bank assistance to India totally around $1.5bn last year.

World Bank vice president for South Asia, Praful Patel, said: "We will proactively seek to work with more states, with special attention on the states with the greatest number of poor persons"

The World Bank said one thing it would not be doing is provide budgetary support for free electricity for farmers, something announced by the new Congress government in the southern state of Andhra Pradesh.

"We don't think free power for agriculture is a good idea, not least for the environment," said Mr Patel.

Some farmers have pumped excess water when they had free electricity, depleting supplies.

Bond James Bond

July 1st, 2004, 09:15 PM

NY Times
July 1, 2004
India Sets a Fast Pace, Expanding 8.2% in Year
By SARITHA RAI

BANGALORE, India, June 30 - India's economy continued to be one of the fastest growing in the world, swelling 8.2 percent in the year ended in March, the country's most rapid pace of growth in a decade and a half.

"The economy grew a shade lower than our expectations, but still outperformed every economy other than China's," said Mahesh Vyas, chief executive of the Center for Monitoring Indian Economy, an independent research group based in Mumbai.

In the most recent quarter, the economy slowed to a pace of 8.2 percent in a year-over-year comparison from the 10.5 percent rate posted in the previous quarter.

Mr. Vyas and other experts said they expected the rapid growth to continue this year, aided by the booming services and industrial sectors.

"But the farm sector growth will not be as spectacular as the year just gone by," Mr. Vyas said. Last year, India's agricultural sector boomed, benefiting from bountiful rain. This year, the rainfall is forecast to be normal. Still, analysts expect farm incomes to grow after two years of good rainfall, strengthening demand for goods.

In the most recent quarter, farm output soared 10.5 percent compared with the period a year ago. Agriculture accounts for nearly a fourth of economic output, but sustains nearly three quarters of India's population of more than one billion.

With higher farm incomes supporting consumer spending, India's central bank is likely to feel pressure to raise its benchmark interest rate after cutting it two percentage points over the last couple of years.

Manufacturing output rose 7.6 percent in the quarter ended in March, while services grew 7.9 percent.

The finance minister, Palaniappan Chidambaram, is scheduled to present the country's budget to Parliament on July 8.

Economists are concerned that the ruling coalition led by the Congress Party and backed by parties leaning to the left will increase rural spending and bloat a budget deficit that is already 4.6 percent of gross domestic product. Led by Prime Minister Manmohan Singh, the government came to power on the campaign promise that it would spend more on rural infrastructure, health care, education and agriculture.

Though a heavy monsoon helped crops in much of the country, in the southern state of Andhra Pradesh drought that has lasted four years has led to suicides among debt-burdened farmers. The new government has pledged to focus on rural reform.

muchbetter

July 7th, 2004, 10:24 PM

Made in India vs. Made in China
By KEITH BRADSHER
Published: June 12, 2004

The New York Times
Workers assemble a washing machine at the Whirlpool factory in the Pondicherry region of southern India. In part, India appeals to Whirlpool because it is easier to enforce contracts there than in China.

HENZHEN, China - When Crystal Chen, a 28-year-old mechanical engineer, started designing microwave oven doors for Whirlpool in 2001 in this gleaming Chinese metropolis, one of her biggest surprises was the size of the ovens.

Built to be installed over ranges in spacious American kitchens, the ovens were twice the size of the countertop microwaves sold for Chinese kitchens. And as she has kept working on them, the Whirlpool models, nearly all of them made to be exported to the United States and Europe, have grown even larger, approaching three times the size of a typical Chinese microwave.

By contrast, at a Whirlpool complex more than 2,500 miles away in Thirubhuvanai, on the southeastern tip of India, the washing machines built in a hot low-tech factory are products the Indian workers easily recognize. Unlike the microwave ovens in Shenzhen, these washing machines are very much designed for local use, not for export.

They have rat guards to keep vermin from nibbling laundry or hoses. They have extra-strong parts to survive being bumped around in trucks on India's potholed roads. And they are built with heavy-duty wiring to cope with the powerful ebbs and surges in India's electrical grid.

The difference is telling. Whirlpool's emphasis on using China to make goods for export while locating in India to enter the local market reflects a broader trend that is becoming apparent for many household appliances, from television sets to refrigerators. And it highlights a division that could spread in the coming years to other industries.

For all the dreams of selling goods into a fast-growing market of 1.3 billion Chinese, the reality is often very different. While China still holds considerable allure, many multinationals have struggled to earn profits selling here.

Companies setting up shop in China face domestic manufacturers that consistently undercut them by building factories at practically no cost, borrowing the money cheaply from state-owned Chinese banks and using various strategies to avoid repayment. To make matters worse, many department stores are still owned by municipal or provincial governments that give floor space to local products and resist selling foreign brands.

A result has been a struggle among manufacturers to see who can discount wares more deeply - a struggle with little appeal for multinationals that need to make real profits.

"We're not interested in chasing a price-driven strategy," said Garrick D'Silva, the regional vice president for Asia at Whirlpool.

India's economy has been growing nearly as quickly as China's in recent years. By dismantling many barriers to foreign investment, the government in New Delhi has also made the country an increasingly attractive market for globalizing companies.

Marketing is easy through thousands of privately owned retailers, from department stores to corner shops. Risk-averse banks in India charge such steep interest rates to local manufacturers, and so strongly insist on repayment, that some economists worry they may even be slowing growth unnecessarily.

India's steep tariffs, although starting to decline, long insulated its markets from international competition and still keep prices somewhat higher for many manufactured goods.

And because India did not follow China's draconian "one child" policy, United Nations demographers forecast that India's population will surpass China's as soon as 2040.

With all those factors, Whirlpool - while still strongly interested in tapping the Chinese market - has found greater opportunity to lock in profits and expand its market share in India than in China, Mr. D'Silva said.

LG Electronics of Korea, Whirlpool's rival in Asia for many kinds of household appliances, shares that view.

"We couldn't make a profit in China," chiefly because of the free loans available to local competitors, said Kim Kwang Ro, the managing director of LG Electronics India. "The main focus of expansion for LG is India, not China."

China's effort recently to brake its economy, in response to rising inflation and a growing problem of nonperforming bank loans, is also starting to take the edge off some companies' interest. China's political prospects remain murky.

By contrast, India has just gone through a peaceful change of democratic government that produced a mere two-day drop in the stock market followed by an immediate recovery in share prices and corporate confidence.

"The Chinese economy is looking rather unstable,'' Mr. Kim said. "Meanwhile, in India, the political, economic situation is becoming more stable."

Despite rising costs for steel and many other commodities that go into factory goods, prices for manufactured products are still falling in China because companies keep building more and more facilities to take advantage of the nation's extraordinary investment boom. Refrigerator prices, for example, fell 2.2 percent in China in the 12 months through April 2004. In India, they rose 3.5 percent.

India's combination of duties on imports and complex regulations on manufacturing start-ups has tended to benefit companies with factories in the country. "The harder the obstacles, the bigger the advantage for the inside firm," Mr. Kim said.

Many companies, of course, remain bullish on the Chinese market. Automakers are racing each other to build more assembly plants in China, but have moved more cautiously in India, where incomes are still somewhat lower and roads are in much worse repair. Anheuser-Busch just beat out SABMiller in a costly battle to take over a low-margin beer business in China's northeastern corner.

Moreover, for all their differences, India and China share a growing popularity as places for companies from the United States and other countries with high labor costs to set up shop.

Like many of its counterparts, Whirlpool is moving quickly to tap Asia's huge supply of well-trained engineers. Its employment of engineers and technicians in India and China has grown from zero in 1999 to 240 currently, with plans for 700 by 2007, or more than a quarter of the company's engineering work force.

"We're shifting quite a bit of our technology capacity to these countries from the higher-cost parts of the world, part of it from the United States and Europe," Mr. D'Silva said.

Like many companies, Whirlpool insists that it has been able to manage this without significant layoffs among its engineers and technicians in the United States. But it acknowledges that it has not been increasing the size of its American staff, either.

As it has expanded abroad, the company has increased the number of different models of everything from big Whirlpool refrigerators to KitchenAid coffee grinders. It has cut the time it takes to develop new models of the larger appliances to 12 to 14 months, from 30 to 36 months a few years ago.

Engineers in the United States now work in the day on new designs, using computer-aided design software, then send the project around the world in the evening so that engineers in India and China, earning less than $1,000 a month, can continue the work during their normal daytime hours.

The high cost of the necessary computer software is an important reason for the 24-hour programming, which allows different technical centers to take turns using a limited number of software licenses, said Herbert Fu, the company's product development director here in Shenzhen.

As the sun sets each evening in the United States and computer-design work is transferred across the Pacific, engineers in India and China operate very differently. The Chinese engineers tend to continue working on the same projects as their American colleagues: designing or improving products for the American market. The Indian engineers, who occupy a warren of cubicles upstairs from the factory in Thirubhuvanai, devote a lot more of their effort to revising designs for sale in the local market.

As with many outsourcing issues, the expansion of Whirlpool's engineering activities in Asia has been much more complicated than a simple transfer of American jobs.

The main job losses, in fact, have been in Sweden rather than the United States. Whirlpool cut employment in half at a microwave oven factory there in 2003, to 305 jobs, while expanding research and development here and increasing its output at a factory up the Pearl River in Shunde.

While the share of Whirlpool's work force overseas will continue to grow in the coming years, the increase will come from expanding the company's total employment; the overall number of jobs in the United States is not expected to decline, according to Stephen J. Duthie, a company spokesman.

In India, Whirlpool has catered to customers like Rupam Shekhar, a New Delhi housewife whose husband has a small export business selling bed linens and curtains. They live with their two children in a walk-up apartment on the outskirts of New Delhi.

The Whirlpool refrigerator they own is quite different from those sold to Americans. Milk in India is seldom pasteurized, for example, so consumers boil it in a very tall steel urn on a stove. Whirlpool made it possible to fold away part of the top shelf in the refrigerator, so that the urn, known as a patila, could rest on the shelf below.

At the same time, Whirlpool also uses a much smaller percentage of the refrigerator's space for the freezer than in other markets. Research showed that two-thirds of India's people are vegetarians who have little use for a freezer - except for storing a little ice cream and a few ice cubes.

Few Indian kitchens have room for refrigerators, and the appliances are also something of a status symbol: the cost is equal to nearly two months' salary for an engineer. So they are commonly displayed in living rooms or dining rooms. In response, Whirlpool now sells refrigerators in bright colors and curvy doors and sides.

Mrs. Shekhar, more traditional in her tastes, has bought a plain white Whirlpool refrigerator and put it in the bedroom, next to a small shrine to Hindu deities. She used to have to boil milk and chill it a pint at a time for her son and daughter.

"Now, I can boil it all," she said, showing off the inside full of steel pots and fresh vegetables.

Whirlpool has been able to overcome the typically fractious factory floor labor disputes and work stoppages in India by locating in the Pondicherry region, a former French colony that has a tradition of social peace described in Yann Martel's novel "The Life of Pi."

India also appeals to Whirlpool because it is easier to enforce contracts there than in China. A Whirlpool executive said that the company had a contract in 2002 with a Shenzhen company to supply many of the components for a new toaster oven, only to have the supplier raise the price sharply.

Whirlpool switched production to India. "We had a contract but we decided it wouldn't be prudent to enforce it,'' the executive said. "You never try to put a supplier too much in the corner because you get it back in quality."

But Whirlpool is not giving up on China, despite its difficulties here so far. In a workroom near Ms. Chen's cubicle, Cindy Wu, a 30-year-old engineer, was testing a new design for the fan blade that cools the microwave oven.

"Maybe someday,'' Ms. Wu said, "Chinese families will have microwaves like these."

snake

July 8th, 2004, 10:01 PM

Suncity

July 9th, 2004, 01:26 AM

Whirlpool is a loser in Chinese market.

It is not in top 10, can't compete with Chinese domestic brands and some Japanese and Korean brand, even Siemens doing better than it.

But the Chinese market is too important for it, it simply can't afford to give up.

I think they are not doing too well against local and Korean brands. However they do figure in top 10. They made a loss of Rs 340 million last year (on a sales turnover of Rs 13 billion) and are now shifting focus to A/Cs, microwaves and high end refrigerators.

ViMo

July 11th, 2004, 10:48 AM

snake

July 12th, 2004, 05:31 PM

Suncity

July 13th, 2004, 09:33 PM

It is a simplistic article. As I said, althoght whirlpool is world largest white electronical appliance maker in the world, it is a big LOSER in Chinese market, so it says it will use China as export base while want to sell in India, blah blah. It means nothing about made in India vs made in China. one case only.

There are tons of opposite cases, while they can sell alot in Chinese market, and most of them are made in China, but sell very little in Inida, so can only use India for some sort of export. Take GE, VW, Motorola, many cases.

But for either microware or washing machine market, or almost every goods, Chinese market is quantum times ahead of Indian, both in quantity and quality.

The article is not an India China comparison. Disregard the headline of NY Times which tries to make it sensational (to sell news of course).

Read the news item carefully. It is about how a company adapts to different situations in different places. In China the company is not doing well for various reasons. So it is using its capacity for exports. In India they are trying to make changes to the products for Indian conditions so that they can sell more locally.

Result: Both ways it is looking at its own profits. That's the lesson for management here.

Whether the Chinese market is quantum times ahead of Indian, both in quantity and quality is not an issue in the article.

Today's multinational companies are not loyal to any country. So they will go wherever they need to. If it's China today, they will go to China. If it is India they will go to India. if it is Brazil they will go to Brazil.

Fed on years of half baked information about India, many people find it hard to believe that India can improve or do anything good. These people rub their eyes in disbelief, shake their heads and say it's not possible. They are called the naysayers.

So if India does good in IT, then the response is "it is a fad" or "it will go to China". If India does good in pharmaceuticals then the response is "it is not big enough". If India does good in auto engineering then the response is "indian cars meet with accidents". If the economy does well, then the response is "there is lot of poverty".

India will continue to improve for the better despite the naysayers.

kshatriya

July 22nd, 2004, 01:36 PM

Market rallies on revised proposal

TIMES NEWS NETWORK[ WEDNESDAY, JULY 21, 2004 05:10:59 AM ]

MUMBAI: Investors were euphoric with the revised transaction tax proposal by the finance minister as it is being seen as a win-win for both, the government as well as the investing community.

As the new proposals brought some smiles back on the faces of the investors, mainly the day-traders and arbitrageurs, they pushed BSE Sensex beyond 5K mark in late trade on Wednesday. It finally closed slightly off that mark, up 36 points at 4,994, near its two-month closing high.

Brokers and dealers feel the rally will surely continue in Thursday's session. Deena Mehta of Nucleus Securities said at the outset, the proposals were positive, mainly the provision to allow tax credit against business income.

"We have to look into the details to understand the actual implications," she added. "The market has reacted positively to FM's revised proposals. This will bring some buoyancy back into the market," said Rajiv Sampat, director, Parag Parikh Securities.

zergcerebrates

July 23rd, 2004, 11:52 AM

Well JAI, I think India growth is still bellow china's one currently. China has made a lot progress in terms of economic, physical development, far ahead India.
Most ppl also optimistic about china's economy as well as india's.

It is. For now China's growth surpases India but in 40yrs time its hard to say. All I can say is China and India would compete with each other for FDI and for the world market.

huaiwei

July 29th, 2004, 12:01 AM

The Straits Times, Singapore

Mumbai moves

A concept store selling high-end Indian fashion and lifestyle items will open next month at the Palais Renaissance, the first of its kind here and in the region

By Lionel Seah

PALAIS RENAISSANCE will soon be home to a new, high-end Indian fashion and lifestyle concept store. Scheduled to open in the middle of next month, the boutique will take over the 5,000sq-ft space vacated by fashion label Versace, which left the complex in May.

Located on the second floor next to Passion hair salon, the store is owned by Singapore company Royal Sporting House, says Ms Corinne Yap, deputy general manager of City Developments, Palais' landlord. Although Royal Sporting House declined to comment for this story, it is believed the store will be called Mumbai Se, which means 'from Mumbai' in Hindi.

Sources say it will sell high-end Indian designer labels for both men and women. They include creations from Rocky S, a designer and personal stylist for Bollywood actor Hrithik Roshan. It will also stock furniture, home furnishings and objets d'art from India.

The boutique is believed to be the first of its kind here and in the region to combine Indian fashion and lifestyle retailing on such a scale. Start-up costs are estimated at $2.5 million, say industry players.

They add that although there are stores that sell fashion apparel and lifestyle accessories in Indian cities, there is a dearth of such concept stores merging the two in the sub-continent. One retail analyst who does not want to be named says the boutique will boost the public-listed company's expanding fashion retail portfolio, which includes Spanish labels Mango, Zara and Women's Secret.

Prices in Mumbai Se are expected to be between $300 and $1,000, and the store is likely to target both Indians and non-Indians, especially young professionals and upper-income earners here who favour the ethnic look, says Ms Yap. 'Tourists from the region and, possibly, even Indian tourists could be another clientele base seeing the success of the Bollywood extravaganza last March,' she adds.

In March this year, the Singapore Tourism Board organised the International Indian Film Academy Award, an event which it hopes to hold annually. From January to June this year, Indian tourist arrivals reached 240,000, says Ms Sulian Tan-Wijaya, STB's director of tourism shopping division. This is an 11 per cent increase over the same period in 2002. Last year, total tourist arrivals from India numbered 309,423, compared to 2002's 375,659. This was due to the Sars outbreak.

The Indian-themed boutique is the latest development in the tenant shake-up of the 14-year-old Palais Renaissance, following the exits of The Link and Versace boutiques after their leases expired. The stores are now at the Mandarin Hotel Shopping Arcade and Paragon respectively.

One of Palais' anchor tenants, DKNY, will also shut for major renovations this year, says a spokesman for Club 21, who owns the store, although details are not finalised.

Ms Yap says the mall, which has long been regarded as the first stop in high-end shopping, updates itself every three or four years to keep the mix fresh for shoppers. She declines comment on competition from newer malls like Paragon, but adds that their position is different.

'Palais has a more cosy and familiar feel to it.'

http://straitstimes.asia1.com.sg/mnt/media/image/launched/2004-07-21/indian1.jpg
It rocks: The store Mumbai Se will sell high-end Indian designer labels for men and women, including creations by Rocky S who designs for Bollywood actor Hrithink Roshan. It will also stock furniture, home furnishings and objects d'art from India.

http://straitstimes.asia1.com.sg/mnt/media/image/launched/2004-07-21/indian2.jpg

Bond James Bond

July 31st, 2004, 10:20 AM

NY Times
India Hopes for Growth in Textile Exports
By SARITHA RAI

Published: July 30, 2004

BANGALORE, India, July 29 - Business is good for Dinesh J. Hinduja. In the last three months, he has added four garment units, for a total of 41 factories. And in the next few months, he says, he will add another three.

But at a recent interview in his downtown office, surrounded by designs, swaths of fabric and clothing, Mr. Hinduja was anxious. Despite the expansion frenzy, Mr. Hinduja, the director of marketing and production for the family-owned Gokaldas Exports and two sister companies - India's top garment exporters - cannot cope with the escalating demand.

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"My buyers are pushing me like crazy to grow, grow, grow," he said, "but I have to draw the line somewhere, or my business will go totally out of control."

Mr. Hinduja's Bangalore-based company, which runs dedicated units for major American customers like the Gap Inc. and Tommy Hilfiger, is one of dozens of textile and garment exporters racing to prepare for the end of the global textile and apparel quota system on Dec. 31.

The quota system, whose ending was devised nearly a decade ago by the World Trade Organization's predecessor, has protected the textile and garment industry in the United States and Europe by limiting imports from low-cost manufacturing countries like India.

Under the Agreement on Textiles and Clothing, the restrictions were subject to elimination in several stages over the 10-year period but the biggest impact has been left for last, and the impending end has unleashed great expectations on both sides of the Atlantic.

"Many U.S. companies had to move production away from India due to quota restrictions, despite strong relations with some Indian firms,'' said Marshal Cohen, chief garment and footwear industry analyst at the NPD Group, a market research company in Port Washington, N.Y. "The end of the quota system will create an unlimited relationship."

The United States and the European Union have officially notified the W.T.O. that they are moving ahead with the final phase-out by the end of this year, and a coalition of American and European Union retailers has campaigned enthusiastically for the scheduled ending.

It continues, however, to be opposed by some powerful groups. The Bush administration just rejected a petition signed by more than 100 Republican and Democratic members of Congress, including John F. Kerry, the Democratic presidential nominee, asking that the phase-out be delayed. An end to the quotas, they said, would be disastrous for the textile and apparel industry in the United States, one of the country's largest manufacturing industries, employing 702,000 people.Though Indian garment and textile makers are crossing their fingers for all to go as planned, recognition of the stiff competition from China and the fragmented state of India's textile and garment industry is tempering the optimism a bit.

Still, it is hard for Indians not to hope too much when the prospects seem so grand. Under the current W.T.O. agreement, annual quotas to the United States and the European Union fill up months in advance, with limits on clothing like jeans, T-shirts and sweaters as well as on fabrics.

"Quotas have been the biggest hurdle for growth," said A. Sakthivel, chairman of the Apparel Export Promotion Council, India's government-sponsored trade body, and chairman of the Poppys Group, companies with interests in spinning, dyeing and knitwear exports.

According to a recent study by the McKinsey & Company consulting firm, India's $15 billion garment and textile exports industry could increase its global market share from the current 4 percent to 6.5 percent by 2008. The study said India could be the biggest winner after China, whose textile exports are four times that of India's, in the $248 billion global market.

Currently, the Indian textile and garment industry - some 20,000 garment makers and thousands of textile units employing 35 million people - accounts for nearly 4 percent of India's gross domestic product and about one-quarter of the country's total export earnings.

The end of the quota system may prompt large global brands to look at countries like India as markets as well as sources. Such changes "open new market opportunities for our products," said Peggy Carter, vice president for corporate affairs at the Sara Lee Corporation's Branded Apparel unit, whose brands include Hanes and Playtex. "We are watching with interest as India develops and its commercial potential grows."

India's garment and textile exporters are hoping to grab new opportunities right away. "Quotas prevented us from expanding our markets,'' said Mr. Hinduja of Gokaldas Exports, "but now the floodgates are open." Gokaldas Exports and its two sister companies recorded combined exports worth $140 million in the year that ended in March, and is expecting that to grow 30 percent annually in the next few years.

Arvind Mills, the world's fourth-largest denim maker, is also in major expansion mode. The company, based in the southwestern city of Ahmedabad, has $350 million in annual revenues and customers like Levi's and Eddie Bauer. It is setting up a factory in Bangalore that will manufacture for export, almost entirely to the United States, six million pairs of jeans and 1.5 million other pairs of pants a year, the company's first foray into such garments.

Until now, the total number of these garments - known in the trade as jeans and bottom wear - that India could export to the United States was nine million pieces.

Arvind Mills, the flagship company of the Lalbhai Group, has also increased its export capacity for woven tops, a category that includes shirts, from 1.7 million pieces to 4.5 million pieces this year.

"In 2005, we expect to grow further, as the market potential is enormous," said V. Sridhar, head of garment exports at Arvind Mills.

Smaller companies are consolidating, upgrading their plants and building capacities. "Everybody wants to scale up," said R. Krishna Kumar, managing director of Integra Apparels, the new apparel export division of Piramal Enterprises, a $500 million Mumbai-based industrial group that is seeking to expand its textile making business by branching out into apparel exports.

In fact, said Arvind K. Singhal, chairman of the retail consultancy KSA Technopak, "We are beginning to see big investments at all stages of the textile supply chain, starting from fabric manufacturing to fabric processing to apparel making."

Even as they grow and shift, though, many Indian garment exporters fear that China, their highly competitive neighbor, will grab an even bigger share of the market. Both countries have abundant raw materials, cheap labor and entrepreneurial skills. But for buyers looking for large runs and economies of scale, China's huge factories and sheer volume of low-cost production are unmatched.

"China might well become the monopoly, if we don't ramp up speedily," said Kannan Ramachandran, managing director of the Bangalore-based Fashion Fabricators, a buyer for global retailers, after a visit to China's textile hub, Guangzhou, to size up the competition.

China's range of products is much bigger than India's. According to Mr. Singhal, the consultant, "India's product basket for exports is rather narrow, and the supply base highly fragmented, so that scaling up to supply larger volumes can be a challenge for most exporters."

The Indian government had long been a stumbling block to the expansion of India's textile and garment industry. Until four years ago, it provided incentives like tax exemptions and special interest rates to small apparel units, thus discouraging investment in large machinery and the creation of more capacity.

"Some companies had separate little shacks for cutting, sewing, and finishing," said Mr. Kumar of Integra Apparels.

Labor laws remain unfavorable. Garment makers are not permitted to hire and fire according to seasonal needs, and in most parts of the country, women are not allowed to work the overnight shift.

Still, India's factories offer the flexibility of short runs and quick turnarounds. The country's strength is in cotton, with surplus production and a large, vertically integrated industry, from yarn making to garment making.

But there is a lot of catching up to do. The federal government has set a textile and apparel export goal of $50 billion annually by 2010, though some industry experts say the gains for Indian exporters may become obvious only after a couple of years.

Several states are setting up apparel export parks and providing incentives to garment makers. In Tirupur, a knitwear production hub in southern India, a 200-acre apparel park to house more than 50 knitwear exporters has arisen.

"Once we get our act together, there is no stopping India,'' said Mr. Sakthivel, whose company, Poppys Knit Wear, has customers like Sara Lee and Polo Ralph Lauren.

huaiwei

August 5th, 2004, 05:28 PM

Tapping India's pot of health-care gold

By Pranay Gupte

NEW DELHI - When the new government of Prime Minister Manmohan Singh presented its first national budget earlier this month, there was considerable commotion over the allocation of US$1.5 billion (S$2,5 billion) for new health-care projects, especially in rural areas.

The brouhaha wasn't over the relatively modest amount in a country of 1.1 billion people, where there's only one hospital bed for every 1,200 people - as compared to one bed for every 250 people in the industrialised countries of the West, and one bed for every 150 people in Japan. Rather, there was astonishment that the government still saw itself as playing the role of main health-care provider when its record has been largely dismal.

The twin problems of inadequate health-care facilities and uncertain access to existing ones bedevil not just India, but virtually all the 134 other countries of the Third World.

One would think health care and education were the highest priorities for the government of any emerging state. But a vast majority of poor nations are crippled by stunted statist policies that emphasise defence and white elephant schemes such as dams and steel mills at the expense of social services.

Third World leaders often forget that health and education are vital in promoting sustainable economic growth. A healthy and literate population invariably contributes to higher productivity.

That's why the enterprise of private-sector physicians like Dr Prathap C. Reddy of Chennai offers a timely solution to what the World Health Organisation (WHO) says is a growing health-care crisis in the Third World. In barely two decades, the 72-year-old cardiologist has built a network of 37 hospitals in India, Sri Lanka, and Bangladesh, with associated facilities in Nigeria and the United Arab Emirates. He is now in negotiations to open his Apollo Group hospitals in Cambodia, China and Vietnam.

'There's a huge opportunity for entrepreneurship in health-care,' Dr Reddy told The Straits Times during a visit to his Indraprastha Apollo Hospital on the outskirts of New Delhi. 'There's a big gap between demand and supply - it doesn't take a rocket scientist to realise this. So why aren't more private-sector people getting into the health-care business?'

Why not indeed? The growth possibilities are staggering. The health-care industry in India is estimated to be US$20 billion annually. Some 12 per cent of national expenditure is on health-care, but 82 per cent of this expenditure comes out of the pockets of individuals. Employers account for only 9 per cent and the insurance industry about 5 per cent.

The WHO says India needs to add at least 80,000 hospital beds each year for the next five years. Even that figure would barely keep up with the demand in a country whose population grows by 19 million each year. The National Health Policy of 2002 sees expenditures on public health facilities rising to 2 per cent of India's gross domestic product (GDP) of US$660 billion by the year 2010, from the current 0.9 per cent. It also envisions the money spent totally by both public and private sectors on health care increasing from 5.2 per cent of the GDP to 6 per cent in this period.

Such increases in spending are only likely if the private sector deepens its involvement in the health-care business. And there are encouraging signs that this may happen. Emboldened by Dr Reddy's success, international health-care companies like Fortis and Wockhardt have entered the arena.

There isn't much doubt that there's money to be made in health care. For example, the Apollo Group's annual revenues are in excess of US$180 million, with yearly growth projected at 20 per cent, according to Ms Suneeta Reddy, one of Dr Reddy's four daughters. The company's market capitalisation is approximately US$270 million.

Speaking to The Straits Times after returning from a visit to Singapore, Ms Reddy said that in India, as in much of the Third World, there isn't much of an alternative to letting the private sector develop the health-care industry.

'We know how to manage skills, build the infrastructure and run schools for doctors and nurses,' she said. Indian institutions turn out 20,000 doctors and 35,000 nurses each year - but many of these emigrate to seek more lucrative opportunities.

Ms Reddy's father added that the government's role should be limited to raising awareness of health issues, particularly HIV/Aids, which is becoming a pandemic in India and other parts of Asia. 'Why should the government be in the service sector?'

Both father and daughter are confident that the economic climate in India and some other Third World countries is improving. Dr Reddy recalls that in 1983, when he started the Apollo Group, he had to fill 12 applications for importing each piece of medical equipment. As a result of his own lobbying - and the assistance of late prime minister Rajiv Gandhi - such bureaucratic hurdles have almost been eliminated.

'Ultimately, profits are the result of good work and doing things right,' Dr Reddy said. 'That explains the success of the private sector, certainly in the health-care business. Our idea is to extend and improve services, particularly for the poor, while keeping our costs down, encourage participatory insurance for all, and generate operational efficiency.'

That seems as good a mantra as any for sustaining the health-care business all across the Third World.

Suncity

August 5th, 2004, 07:53 PM

Apollo has indeed revolutionized private sector healthcare in India. There was no nation wide branding concept in the hospital sector before. Small niche hospitals were located in different cities. Apollo has changed that. Now there are so many more groups - Wockhardt, Escorts who have come into a national brand hospiatl business.

The downside - these hospitals are expensive although they do provide free / subsidized healthcare to the underpriviledged (or at least they claim that officially).

Bond James Bond

August 6th, 2004, 06:27 AM

^Hmm, that's interesting. Good to see the private sector get involved in the health care biz there.

NY Times
India's Economic Growth Is Expected to Slow
By SARITHA RAI

Published: August 6, 2004

BANGALORE, India, Aug. 5 - After last year's spectacular economic performance, India's growth this year will probably be trimmed by lofty oil prices and a stop-and-go monsoon that has taken rainfall to both extremes.

As global oil prices rallied to more than $44 a barrel on Thursday, analysts trimmed their forecasts and predicted that the economy this year could slow to a canter. India imports about three-quarters of the 2.2 million barrels of crude oil it uses a day. In the last quarter, the country imported $6.6 billion of crude, about a third of the total value of its imports.

Each $5 a barrel rise in average crude prices could shave as much as 0.25 of a percentage point off India's economic output, analysts estimate. On average, India paid $26.70 a barrel for oil in 2003.

"Oil prices have gone through the roof, and that is adversely impacting the economy and industry," said D. D. Rathi, chief financial officer of Grasim Industries, a large cement producer. Grasim Industries is the flagship company of India's leading industrial conglomerate, the Aditya Birla Group.

Mr. Rathi said that rising oil prices were thinning profit margins at the company, which makes textiles, chemicals and cement among other items, and is among the country's top 20 private companies. "It is starting to pinch," he said.

In the fiscal year ended in March, India's economic output grew 8.2 percent, making it the world's second-fastest growing economy after China. But more costly oil will probably lead to higher inflation and lower private consumption.

"If global crude oil prices move up by $5 a barrel for the full year, then India's inflation rates rise by 0.5 percent to 0.6 percent and G.D.P. rates fall by 0.25 percent," said Chetan Ahya, India economist and senior vice president at JM Morgan Stanley.

On another front, India's rainfall in this monsoon season has been erratic, starting in June at a normal tempo, slackening to a spatter, and more recently causing floods and crop destruction in many parts of western and eastern India. The monsoon begins in June and ends in September, with most of the rain coming in the first three months.

Nearly two-thirds of the country's one billion people live on farm income, and India's economy is highly dependent on a soaking monsoon.

The country's meteorologists had at first predicted only light rain, but they revised their outlook when the rains turned into torrents. "Predicting the rainfall situation and its impact on the economy is worse than gambling," Mr. Ahya said.

JM Morgan Stanley pared its economic forecast to 5.6 percent in July from 6.4 percent, but has not altered it since the rain picked up. "It does not appear to be a normal revival and we are inclined to keep the forecast at 5.6 percent,'' Mr. Ahya said.

Elsewhere, Mahesh Vyas, chief executive of the Center for Monitoring of the Indian Economy, an independent research group based in Mumbai, said that India's manufacturers would probably absorb the oil price increase instead of passing it to consumers. "Indian companies will take in a large part of the oil price hike," he said, "as many of their other costs, such as interest costs, are declining."

"With rising oil prices and a worrying monsoon, we will possibly reduce our gross domestic product forecast from 6.3 percent to 6 percent," he added.

In the past, rising oil prices cut into India's foreign reserves, as the country spends to buy oil, and reduced the value of the rupee, leading the central bank to raise short-term rates.

But recent high levels of capital inflows will help the central bank keep interest rates low, analysts said.

Suncity

August 6th, 2004, 03:57 PM

FDI up by 71 pc in Jan-Mar period
Friday, August 06, 2004 at 1759 hours IST

New Delhi, August 6: FDI in Jan-Mar 04 increases 71 pc.

Foreign Direct Investment into the country in the first quarter of calender year 2004 increased by 71 per cent year to Rs 50 billion as compared to Rs 29 billion in the same period last year.

kshatriya

August 6th, 2004, 05:44 PM

Govt mulls FTA on services with US

Our Economy Bureau / New Delhi August 06,2004

Inter-ministerial consultations on to assess implications.

The Union government is examining a proposal that envisages a free trade agreement on services with the United States.

Inter-ministerial consultations are being held to assess the implications such an agreement may have for the services sector in the country.

Official sources here told Business Standard the government had not yet sounded out the US authorities on the proposal.

The proposal has been mooted in the wake of some significant relaxations made for export of services by developing countries in the new draft text for a World Trading Organisation (WTO) agreement finalised in Geneva last week.

If the proposal goes through, the existing quantitative curbs on the movement of Indian engineers, software programmers, scientists, accountants and other professionals to the US will be removed.

Similarly, the Indian government has to completely relax the restrictions on the opening of branches of US banks and insurance companies in the country.

It will become easier to travel to the US for education, just as the Indian health-care industry can offer its services to US patients without any restrictions.

Government sources pointed out that the impact of a free trade agreement on services with the US would benefit India in many ways.

According to them, India will benefit from cross-border trade--banking or architectural services rendered through the telecommunications network or mail--overseas services--consumers travelling for tourism, medical treatment or to attend educational establishments--and from movement of professionals to offer services--software engineers working in foreign countries.

The only area of concern pertains to the offer of commercial services through the establishment of branch offices or agencies abroad. This might allow US banks, insurance companies and telecom operators to set up branch offices in India.

Domestic players in these sectors might feel threatened. But the government is of the view that the opening up of branches of US banks and insurance companies will increase competition in the domestic market and consumers will benefit from improved service.

Moreover, branches are considered relatively safe because in the event of a financial emergency or collapse, the liability is shared by the foreign banks.

The Indian government is expected to use the offer for a free trade agreement on services to strengthen its negotiating position vis-a-vis the US at the next round of WTO talks.

The Indian delegation, led by Commerce and Industry Minister Kamal Nath, took a tough stand on contentious issues of subsidies and market support for agriculture, forcing both the US and the European Union to make a compromise offer.

The government hopes to use the offer for a free trade agreement on services with the US to maintain its tough stand in the coming negotiations.

India’s total services exports in 2003 were estimated at $25 billion, of which the US accounts for a large chunk.

Government officials are confident that India’s offer for a free trade agreement with the US on services will put more pressure on the developed countries to agree to offer more concessions to services exports from developing countries under the new WTO regime.
--------------------------------------------------------------------------------

If the proposal goes through ...

The existing quantitative curbs on the movement of Indian engineers, software programmers, scientists, accountants and other professionals to the US will be removed
India has to remove the restrictions on the opening of branches of US banks and insurance companies in the country

kshatriya

August 6th, 2004, 05:47 PM

TI to build low cost cellphones, electronic products for India
Press Trust of India
Bangalore, August 6

Global chip maker Texas Instruments (TI) said on Friday it will work with partners to build low-cost cellphones and silicon chip-embedded consumer electronic products for India's booming market in the next five years.
"I think the Indian market is a great example. This will allow TI working with customers to deliver and produce lower cost handsets," Texas Instruments president and CEO Rich Templeton said in his address to employees and vendors at the inaugural of the company's new campus.

Texas Instruments has been developing on 65-nano-metre (one nano metre is one thousandth of a hair strand) chip, in which the India centre is involved, Templeton said.

TI, which set up its development centre here in 1985, was the first multinational firm to outsource software from India.

"And as you make handsets and advanced communication products less expensive, they are able to reach people in the market place in terms of affordability," he said, adding that "TI had terrific opportunity to deepen the silicon industry in India."

Templeton said high speed broadband connectivity was another area for growth, besides TI would also work with telecom service providers to improve business.

"I think we will be profoundly surprised at the rate of consumption of electronic products in India as consumer of these technologies over the next five years," he said.

kshatriya

August 9th, 2004, 05:40 PM

Investments worth Rs 1500 cr in the pipeline

PTI[ SUNDAY, AUGUST 08, 2004 08:41:22 PM ]

CHENNAI: Jammu and Kashmir Chief Minister Mufti Mohammad Sayeed on Sunday said investment proposals worth nearly Rs 1500 crore were in the pipeline, in addition to Rs 600 crore investments already made in the industrial sector in the state in the past two years.

The law and order situation had vastly improved now and the atmosphere for investment, especially on leather, was very good, he told reporters here.

Earlier in the day, he, along with the Deputy Chief Minister, Mangat Ram Sharma, held discussions with top CLRI officials and some leading tanners, when Sayeed made an open invitation to them to put up units in his state, utilising the huge potential available there.

He said the Tamil nadu leather industry was actively working on having joint ventures in his state besides setting up independent manufacturing units.

A group of leading industrialists would soon visit Srinagar to work out collaboration, even as an internationally famous shoe company had already taken steps to invest in the footwear sector in Jammu and another company was putting up a leather garment factory in Srinagar.

Giving details, Sayeed said a prominent exporter, M M Hashim, had offered to put up a leather garment factory in Srinagar. Another industrialist, Dr Zacharia Sait, had offered to collaborate with local tanners to put up modern tanneries in the Kashmir Valley. Habib Hussain of the famous A V Thomas Group was ready to make a wide range of leather products in the state

Hindustani

August 9th, 2004, 08:35 PM

Kshatyriya.... Thats the only way to get J&K back on track. I'm happy for the Kashmiris, Ladakhis in general. Finally. a guiding light at the end of the tunnel.

Builder

August 12th, 2004, 05:45 AM

In 13 yrs, India will be where China is today and China will be thrice as large

MORGAN STANLEY- Ray of hope: India’s financial systems in stronger shape
ENS ECONOMIC BUREAU

MUMBAI, JULY 27: The Chinese dragon is 13 years ahead of the Indian elephant. If India’s economy grows at 6 per cent per annum, its per capita GDP ($545) will match current levels in China ($1,087) in 13 years.

By then, states a Morgan Stanley research report on the two economic superpowers, China’s economy would be nearly three times larger than India’s.

Not surprisingly, China scores over India in most segments of the economy. With one exception: notwithstanding the recent collapse of Global Trust Bank, the Indian financial system is healthier.

China leads on all other counts—infrastructure, consumption, trade. China spends eight times more than India on physical infrastructure. Its total capital spending in electricity, construction, transportation, telecom and real estate was $ 260 billion (20.3 per cent of GDP) compared with $ 31 billion (6 per cent of GDP) in India.

Specifically, while China has been investing around $ 24 billion on improving highways, India’s investment in the Golden Quadrilateral is only $ 12 billion. No wonder, the report stresses, the cost of infrastructure services in India is about 50-100 per cent higher than in China.

Apart from exports, China’s domestic market for products is much bigger than India’s. ‘‘Penetration rates and per capita consumption are higher in China for most broad-based manufactured consumption items,’’ says Andy Xie of Morgan Stanley, adding that India will need 10-15 years to reach China’s market size.

In fact, real per capita private consumption expenditure in China has increased by an average of 7.4 per cent a year over the past 10 years compared to India’s 3.4 per cent. The difference is so much that an average Indian spends only about 48 per cent of his expenditure on products other than food, beverages and tobacco compared to 62 per cent in China.

While Newsweek recently gave India the No. 1 rank among foreign investors, there’s no denying India’s share in global FDI remains poor at less than 1 per cent compared with China’s 12 per cent. ‘‘Indeed,’’ says the report, ‘‘China has received a cumulative inflow of $480 billion since 1990 compared with just $33.1 billion in India, a gap of a whopping $446.9 billion.’’

Not only that, India’s FDI inflows pale even when compared to emerging markets like Mexico ($10 billion). The only area where India scores over China is in financial systems. The report says that India’s financial system is much stronger with adequate capitalisation, risk assessment systems and manageable level of non-performing assets (NPAs). India’s NPA to GDP ratio is only 2.8 per cent as compared to 25.7 per cent in China. In totality, it’s all about commitment to reforms: in the 25 years since China initiated reforms, it has grown at 9.4 per cent (compared to 5.8 per cent in the preceding 25 years). However, India’s average GDP growth of 5.8 per cent in the post-reform period (1992-2003) is the same as that in the 1980s. The bottomline: in 1982, China’s per capita GDP was $275, marginally lower than India’s $280. But by 2003, China’s per capita income had shot up to $1,087, which is almost twice that of India’s $ 545.

Suncity

August 12th, 2004, 07:16 AM

India FDI strategies

BY KATHY FONG
FOREIGN direct investment (FDI) has certainly played a vital role in the economic progress of most developing countries in Asia.

One good example is China, which absorbed US$53bil worth of FDI in 2002. The growing inflow of FDI has helped fuel economic growth over the past decade. However, India - another economic giant in Asia - has lagged behind China in terms of attracting FDI. In 2002, only US$4.7bil worth of FDI flowed into India - worlds apart from the amount of FDI received by China.

Economists and policy makers have said that the Indian government should learn from China in attracting FDI so that the continent could also achieve the impressive economic growth that China enjoys.

But to Professor Tarun Khanna from Harvard Business School, the two countries have pursued radically different development strategies and thus a comparison between the two might show that FDI was not the only path to prosperity.

Speaking at a seminar organised by the Harvard Business School Alumni Club of Malaysia in Kuala Lumpur yesterday, Khanna said India did not have the necessary infrastructure and labour force that the MNCs needed for mass production.

“The Indian government has massive problems with blue-collar labour,'' he said, but added that India was a “liquid market for highly talented labour''.

As a result of this, he said, the development of that country's knowledge-based industries had been much faster than its labour-intensive industries.

Khanna said India had spawned a number of companies that could now compete internationally.

Last year, Forbes 200 - an annual ranking of the world's best small companies - included 13 Indian firms. Among the well-known India-based companies that have global presence are software firms Infosys and Wipro, and pharmaceutical and biotechnology powerhouse Ranbaxy.

In Khanna's view, India has developed a very strong infrastructure to support private enterprise. He said the capital markets in India operated with greater efficiency and transparency. This, he added, provided the avenue for local entrepreneurs in India to raise the capital required for business start-ups and expansion.

Suncity

August 13th, 2004, 04:45 AM

Industrial growth touches 7.6% in Q1

Thursday, August 12, 2004 (New Delhi):

Powered by a high growth of the manufacturing sector, Industrial growth touched 7.6 per cent during the first quarter of the current financial year as against 5.7 per cent during April-June, 2003.

According to Quick Estimates of the Index of Industrial Production (IIP), released by the Ministry of Statistics and Programme Implementation, the growth during June stood at 7.3 per cent as against 6.7 per cent during the same period of 2003.

The manufacturing sector grew by 7.9 per cent during the first three months of the current fiscal as against 6 per cent during the first quarter of last fiscal, the official estimates reveal.

During June, the sector grew by 8 per cent as against 6.9 per cent during the comparable period of 2003, the IIP figures show.

The electricity output, however, slowed down to 4.2 per cent during June as against 5.4 per cent during the same period of last year even though cumulatively during April-June it registered a growth of 5.8 per cent as against 4.2 per cent during the same period of 2003.

The Mining and Quarrying group grew by 6.1 per cent during the first quarter of current fiscal as against 5.6 per cent during the same period of last year.

It, however, registered a lower growth rate of 3.3 per cent during June, 2004, as against 5.7 per cent during the same month of 2003, the official figures state.

As per the "Use-Based" classification of the IIP, the growth rate during the first three months in Basic goods stood at 4.6 per cent as against 4.4 per cent during the comparable period of 2003.

It grew by 2.9 per cent in June as against 5.5 per cent during the same month last year.

The Capital goods and the Intermediate goods registered double digit growth of 14.9 per cent and 10.4 per cent respectively during the first quarter as against 8.4 per cent and 2.8 per cent during the same period of last fiscal. (PTI)

Suncity

August 13th, 2004, 04:47 AM

BSNL awards 11-m lines contract to Nortel, Nokia
Our Bureau

New Delhi , Aug. 11

BHARAT Sanchar Nigam Ltd (BSNL) has awarded the world's largest contract for supply of 11 million cellular lines to Nortel and Nokia. The contract, worth $860 million, envisages supply of Global System for Mobile (GSM) based mobile network across the country over the next one year.

While Canada-based Nortel will supply 7 million lines for the South and eastern parts of the country, Finnish technology major Nokia will roll out 4 million cellular lines in the North for the state-owned company. Though Nortel had emerged as the lowest bidder for all the three regions, as per the terms of the BSNL contract no single company could bag the contract for all the sectors. The contract for the western region has already been awarded to the joint venture between French major Alcatel and ITI for 1 million lines.

Other technology providers, including Motorola, Ericsson and Huawei were also in the fray to get a pie of the deal. This will be the first major deal for Nokia and Nortel in India's booming cellular market.

BSNL has over 5 million cellular subscribers. Though it is adding more than 3 lakh subscribers every month, its growth is stagnating owing to lack of capacity. The contract with Nokia and Nortel will enable BSNL to achieve its target of 25 million subscribers by December 2005.

Bond James Bond

August 14th, 2004, 05:14 AM

OIL!!!!!!! :banana:

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http://www.rigzone.com/news/article.asp?a_id=15516

Gujarat State Petroleum Corp (GSPC) announced a significant oil discovery in its Ahmedabad block.

GSPC, the operator, found 50 million barrels of oil on its onshore block CB-ONN-2000/2, which it won in the second round of bidding under New Exploration Licensing Policy, a senior company official told PTI from Ahmedabad.

"Exploration well PK-2 encountered oil and under test condition the well flowed 1000 barrels a day. We estimate five million barrels of oil could be recovered," he said.

The well, sixth by GSPC on the block, can produce 10,000 barrels per day in less than 3 years.

"The earlier five wells too had encountered oil and gas but the sixth encountered oil and gas but the sixth well on a separate structure struck significant oil reserves," the official said.

GSPC holds 60 percent interest in the Block CB-ONN-2000/2, also known as Ahmedabad block, while state-run gas transporter GAIL (India) Ltd has the remaining 40 percent interest in the 1400 sq km block.

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http://www.rigzone.com/news/article.asp?a_id=15444

Cairn Makes Fourth Discovery in Northern Rajasthan

Cairn announces a fourth significant oil discovery in northern Rajasthan with the N-V-1 exploration well on block RJ-ON-90/1 which is located 18 kilometers west-north-west of the Mangala field, 19 kilometers west-south-west of the N-C discovery, and in close proximity to the existing north-western boundary of the block.

The N-V-1 well, which is currently operating at a depth of 812 meters, enountered an oil column of 62 meters with an estimated 35 meters of net oil pay in excellent quality Fatehgarh sands. The well was drilled 90 meters down-dip from the currently mapped crest of the structure. The top Fatehgarh was encountered at 590 meters and an oil water contact was established in the well.

An open hole test programme has been carried out across one 10 meter interval just above the oil water contact. The well flowed for around six hours and produced oil to surface with a specific gravity of approximately 21 degrees API. Oil flow rates were limited due to the oil density and viscosity combined with the shallow depth and low pressure of the reservoir. As a result, a cased hole test on pump will be required to determine the true formation productivity.

The mean oil initially in place as currently mapped is estimated to be approximately 300 million barrels. However, the full extent of the structure is unconstrained due to the paucity of seismic data off the block to the north.

As was the case with the N-C discovery, agreement with the Indian Government will be required for a second extension area beyond the current north-western block boundary before further appraisal.

Further details of Cairn's ongoing drilling program in Rajasthan will be provided at the time of the interim results announcement on Tuesday September 7th.

Bill Gammell, Chief Executive, commented:

"This is the fourth significant oil discovery Cairn has made in the northern portion of the Rajasthan block this year. This further demonstration of the widespread distribution of high quality reservoir sands bodes well for future exploration and appraisal success."

http://www.rigzone.com/images/news/library/maps/7/1331_250x204.jpg

kshatriya

August 14th, 2004, 08:36 PM

FDI inflow up133% at $814 mn

August 13, 2004 17:05 IST

Propelled by strong growth in the pharmaceutical sector, India's foreign direct investment jumped over 133 per cent to $814 million during April-June 2004 as compared to $349 million reported in the corresponding quarter last year.

FDI inflow during June registered nearly 125 per cent growth at $380 million against $169 million during the same month last year.

In the reported month, Mauritius contributed the highest FDI of 58.81 per cent, while inflow from the US stood at 14.24 per cent followed by Sweden at 11.50 per cent, UAE at 3.07 per cent and Italy at 2.09 per cent.

Pharmaceutical sector attracted the highest FDI inflow at 28.29 per cent, followed by electronic equipment at 11.33 per cent, banking service at 6.83 per cent, manufacturers and steel at 4.88 per cent and agriculture services at 2.31 per cent, an official statement said.

Delhi received over 18 per cent of the FDI followed closely by Karnataka (16.90 per cent), while Maharashtra logged 10.33 per cent of the FDI inflow.

Suncity

August 15th, 2004, 04:50 AM

Target: The entry level, first time consumer
T R Vivek / New Delhi August 14, 2004

Corporates are slashing costs & re-working biz models to become true mass market players.

It was a surprise counter-attack from Ford India. On Wednesday, Ford came roaring down the highway with the announcement that it was slashing prices on its mid-sized Ikon sedans by between Rs 20,000 and Rs 60,000.

Ford India boss David Friedman is hoping that the sharp price cuts will send Ikon sales soaring from 18,500 last year to 27,000 in 2004.

Ford India isn’t the only vehicle manufacturer that’s cutting costs and putting cheaper autos on the road. Take a peep behind the scenes at Maruti Udyog’s sprawling complex in Gurgaon. Everywhere there are posters for something called ‘Challenge 50’. What’s Challenge 50? It’s a corporate goal of a 50 per cent boost in productivity by 2005.

Move away from autos to the LG Electronics complex in Greater Noida. Here there are no posters about productivity and cost cutting. But the same message is driven home during the constant training sessions for workers at all levels.

It has been the great dilemma of the Indian corporate world: how do you tap the huge Indian mass market that’s hungry for consumer durables but short on cash?

Now a host of companies from FMCG and auto giants to hoteliers are revamping their act in a bid to reach middle class buyers. They are cutting costs at every level starting from the factory floor and then making hefty cuts on their price tabs. What’s more, they are redoubling their efforts at selling low-end product ranges where costs have been slashed to the bone.

Leading the way is the auto industry. Three years ago the cheapest Ikon used to hit the road for around Rs 5 lakh plus taxes. From this week the cheapest Ikon will come out of the showroom for Rs 449,000 plus taxes. What’s more, this model comes with a new 1.3 Rocam engine and leather upholstery.

A few months ago Ford started a second shift to keep up with demand and it has benefited from the increased production. Says Friedman: “We are benefiting from better capacity utilisation and we’ll pass on the benefits to the customers.”

Ford’s move came in response to Maruti which recently slashed prices of its mid-size sedan Esteem by Rs 42,000. Earlier this year Maruti also brought out a stripped-down version of the compact car Alto and utility vehicle Versa with sharply reduced price tags.

Switch to the small screen and LG’s Sampoorna range of colour televisions (CTVs) targeted at the rural and semi-urban areas is packed with features like Golden Eye, which used to be reserved for its high end televisions.

The Sampoorna models retail for around Rs 8,200. For LG the low-priced segment is extremely important because nearly 60 per cent of its sales come from semi-urban and rural areas.

It’s true that at the top of the pyramid the Indian middle class is richer than it ever was before. But the vast majority of Indians — even those who can afford televisions and two-wheelers — are counting the rupees and the paisas with the utmost care.

If anything, would-be buyers are more careful now than they ever were before. That’s because scores of new products are competing for attention.

Says KSA Technopak’s Chairman Arvind Singhal: “In 1991 when we started the consumer outlook study there were only seven product categories that accounted for 80 per cent to 90 per cent of consumer spending. Today the basket has nearly 20 categories competing.”

Jagdeep Kapoor, managing director of the Mumbai-based Samsika Consultants, puts it slightly differently. In his recently published book Nine Brand Shastras, Kapoor argues that the Indian market will be dominated for the next five years by a category he calls the “never use” consumers.

As a result, according to Kapoor, companies will be forced to come up with cheaper products or come up with new tricks like selling products in sachets for which the unit cost is lower.

Says Kapoor: “The never use consumer initially is an occasional consumer who wants to be associated with a premium brand but is looking for a low-cost option.”

Even a fast-growing world leader like Nokia is bowing to the new realities of the Indian market. The era when mobile phones were a status symbol of the ultra-rich have long gone.

Today, millions of phones are sold each month and the newest subscribers who are dialling in want cheap handsets. Also, new challengers from the east like LG, Samsung and Ben-q have emerged with smart-looking but low-cost handsets.

That’s why Nokia launched the 1100 six months ago at around Rs 4,000. The 1100 isn’t the cheapest Nokia phone on the market but it does have plenty of features which handsets in that price range never had before. “The phone is a combination of product benefits and pricing,” says Sanjay Behl, head (marketing), Nokia India.

Nokia launched the 1100 after months of market research and studying the emerging new market carefully. Although Nokia won’t reveal how many handsets it has sold, industry experts say that the 1100 has definitely helped the company defend its turf in the face of aggressive challenges. Says Behl: “It certainly is the cheapest in its competitive reference given the features it is packed with.”

Head back to the road and the fast-moving motorbike industry. More than four million bikes are sold annually and the biggest action is, of course, at the lowest end of the market. Here the big winner in 2003-04 was Hero Honda which sold nearly 500,000 CD Dawns, currently priced at Rs 30,900.

That’s a whopping Rs 10,000 cheaper than executive segment bikes like the Splendor, Caliber and Victor. “This is the toughest segment to operate in. Market shares fluctuate wildly with every new launch or a new price point,” says Atul Sobti, executive director, Hero Honda.

In mid-2003, Hero Honda looked over its shoulder and noticed that sales of Bajaj’s lower-end bikes were revving up swiftly. That was when it turned its attention to the Dawn.

“In 2003 we decided to get aggressive with CD Dawn. But it is a tricky business because you cannot de-feature a bike beyond a point to reduce costs. We undertook several value engineering measures to beat down the price,” says Sobti.

Hero Honda’s cost-cutting moves included using special aluminium paints on the bikes instead of plating the metal. That saved around 10 per cent to 15 per cent. But Sobti warns that the company can’t cut prices any more.

“We are scraping the bottom of the price pit. We can’t bring down the price tag any lower. Already our entry level bikes are perhaps the cheapest such product anywhere in the world.”

Careful cost-cutting is the name of the game. Take a look at how Maruti has been taking the axe to costs. It now employs only two quality inspectors per shift instead of the eight who were on duty before. That’s roughly about Rs 120,000 saved per day. Maruti says it has taken additional steps to ensure quality which makes it possible to cut down the number of inspectors on the factory floor.

At a different level, the company has also cut back from 350 suppliers two years ago to 220 at end 2003-04. That makes for operational efficiencies and also gives the vendors better economies of scale.

“By lowering the time and cost involved in dealing with more vendors, we have increased our supply chain efficiencies. Going forward, we plan to have technically and financially capable set of vendors who can match up to MUL’s standards,” says a Maruti executive.

Maruti executives say they’ve streamlined the system to an extraordinary extent through a combination of controlling workshop costs, lean management systems and improving delivery schedules. For instance, the man-hours spent per car have been reduced by nearly 54 per cent in the last three years.

In other ways too Maruti has smartened up its act. Back in 2002-03 it had stocks of 30 days and that has now fallen to around 19 days. And this year production has zoomed to 472,908 vehicles from 359,960 in the previous fiscal.

Other sectors are also trying to bring down prices and attract a new class of clients. Take Indian Hotels which recently announced its IndiOne low-cost hotels.

The group’s first property in Bangalore — a 100 room hotel — is just about 45 days old, but the average occupancy rates have been upwards of 80 per cent. With rack rates of Rs 900 a day for delux rooms, and discounts thrown in for Internet bookings, the rush is understandable.

“Taj is an upscale hotel brand with low presence in the secondary and tertiary markets. Looking at the way information technology parks and business clusters are mushrooming outside the traditional central business districts, we felt there was a huge vaccum to be filled,” says Sheela Nair, COO, IndiOne.

According to Nair, keeping manpower cost at a minimum has helped IndiOne to rein in the rates in a big way. “For a 100 room hotel we have just 25 employees,” she says.

Buoyed by its initial success, IndiOne has ambitious plans of setting up 150 such properties across the country in the next five years. An average investment of Rs 10 crore per hotel means the group will have to pump in a massive Rs 1,500 crore.

“We are looking at pilgrimage places, state capitals, district headquarters and even the major railway junctions,” adds Nair.

It’s a slightly different story in the aviation industry. Around the world low-cost airlines like RyanAir, EasyJet, Air Asia and Virgin Blue have brought ticket prices down to unimaginable levels in recent years.

In India too a similar airborne revolution could be on the horizon — though there could be technical hitches and opposition from established players.

On the domestic sector around five or six new airlines are hoping to start services in the not too distant future. And foreign airlines like Malaysia’s Air Asia and Qatar’s Air Arabia are also looking at the Indian market.

“India has a great potential for low-cost airlines. We will see more activity in this area with a large number of companies starting their services,” says Peter Harbison, managing director, Centre for Asia Pacific Aviation (CAPA), an aviation consultancy.

The buzz about low-cost airlines has even forced national carrier Air-India to make new plans for the future. It’s now actively considering launching a low-cost subsidiary which will be called Air-India Express. The new airline will cut costs by doing most of its bookings online and keeping operating costs at rockbottom levels.

This will help the carrier cut costs by about 50 per cent, which is the norm for low-cost carriers globally. Typically, in a low-cost airline model, the ticketing and related costs — about 10 per cent of total costs — are completely eliminated by using Internet-based and call centre based ticketing.

“We will have to look at a completely new business model which will be centered around reducing cost to become a successful business. It is very different from operating a full service operation,” says a senior Air India executive.

Samsika’s Kapoor has bright hopes for the future. He expects lots of innovations as companies strive for new ways to control costs and attract price conscious customers.

“With more than half our population below the age of 25, there will be an enormous number of people who would be first time users of several products and services. Companies can succeed only if they understand the aspirational heterogeneity of the market and cater to it.”

centralized pandemonium

August 16th, 2004, 12:18 AM

Check out this link

timesofindia.indiatimes.com/articleshow/816245.cms.

The article really sounds good.

kshatriya

August 16th, 2004, 09:35 AM

Check out this link

http://timesofindia.indiatimes.com/articleshow/816245.cms.

The article really sounds good.
Does "sound" good. Here's another from India vs China -

Chinese economy: Complexities galore

TIMES NEWS NETWORK[ SUNDAY, AUGUST 15, 2004 10:48:58 PM ]

HYDERABAD: A riddle wrapped in mystery inside an enigma, was how Winston Churchill famously described Russia. Actually, that sounds remarkably transparent compared to the state of the Chinese economy today. Especially when you hear leading experts come up with radically different conclusions.

Depending on whom you heard at the international conference on India vs China at the Indian School of Business, Hyderabad, on Saturday, you could be convinced that China is an unfairly maligned manufacturing powerhouse, or a devious basket-case that’s going to go down the drain, taking the world economy along.

The first case was made by Deepak Goyal of McKinsey, the second by consultant John Talbott.

Goyal’s take: China’s GDP was actually less than India’s till 1982, and even in 1990, per capita income in both countries was around the same. Today, China’s GDP is almost double that of India and per capita income is 60 per cent higher.

Much of this has been achieved due to its remarkable success in the manufacturing sector. Contrary to popular belief, this is not due to export dumping or government subsidies but because of a surge in labour productivity, world-class infrastructure, and far lower indirect taxes on goods than in India.

In fact, Goyal even offered a seven-point plan for India to replicate China’s success: Replace all indirect taxes with a single VAT; cut import duties to 10 per cent by 2006; reform labour laws; kick-start growth of special economic zones; reform the power sector; eliminate reservations for small-scale industry and reduce interest rates. Do all this, he promised, and India could generate 25 million additional jobs and have exports worth $159 billion by 2010.

A little later, Talbott took the podium. The Chinese numbers don’t add up, he declared. The reported rate of unemployment is 4 per cent, it’s probably closer to 20 per cent. One year, state-owned enterprises were pulled up for not making money, the next year they were making 100 per cent profits. The banking system is riddled with bad loans, Chinese prices are low because of forced loans, and there’s no independent legal system worth speaking of.

To compound it all, China is nuclear-capable and a heavy spender on defence, and now accounts for almost 7 per cent of the global consumption of oil, 25 per cent steel and 27 per cent aluminium. In short, if something goes wrong, it could have terrifying consequences for the whole world. By the time Talbott finished, there was considerable gloom amidst the gathering.

Inevitably, though, an Indian speaker came up with a middle path. Tarun Khanna of Harvard Business School argued that while China was strong on hard infrastructure, India was ahead in soft infrastructure, including films, software, advertising, biotech etc. Goyal and Talbott weren’t making irreconcilable points either, he added. Both acknowledged that China is a formidable force.

The issue though, is whether you choose to regard that as positive or negative — and how much you wish to emulate the path it has taken. That particular debate should keep us busy for the next few years.

kshatriya

August 16th, 2004, 09:39 AM

Forex reserves rise by $1 bn to $119 bn

Press Trust of India
Mumbai, August 14

After witnessing a downward trend for the past two weeks, India's foreign exchange reserves rose by $1.01 billion to cross the $119 billion mark during the week ended August 6.

The forex reserves had witnessed an outflow of about $2.75 billion during the previous two weeks.

The foreign exchange reserves during the period under review rose from $1,18,319 million to $1,19,336 million.

The foreign currency assets also registered a rise of $951 million at $1,13,918 million, according to Reserve Bank of India's weekly statistical supplement released on Saturday.

RBI's intervention to mop up dollar and fresh inflows led to this growth in reserves, analysts said.

Gold reserves rose by $66 million to $4,123 million while the special drawing rights were static at $2 million, the central bank said.

India's Reserve Tranche Position (RTP) with the International Monetary Fund (IMF) stood at $1,293 million, it said.

Loans and advances to Central Government rose by Rs 7,567 crore to Rs 7,579 crore while that to state governments dropped by Rs 936 crore to Rs 3,162 crore, it added.

RBI said during the fortnight ending July 30, aggregate deposits grew by Rs 21,335 crore (1.4 per cent) to Rs 15,81,288 crore. The demand deposits rose by Rs 2,784 crore to Rs 2,15,337 crore. The time deposit base rose to Rs 13,65,950 crore, a growth of Rs 18,571 crore.

Food credit was down by Rs 769 crore to Rs 42,292 crore while non-food credit was up by Rs 7,556 crore to Rs 8,41,903 crore, RBI added.

Suncity

August 16th, 2004, 04:41 PM

India's Tata expands regional footprint via NatSteel buyout

Mon Aug 16, 6:27 AM ET

SINGAPORE (AFP) - India's Tata Iron and Steel Company Ltd. took a strategic step to expand its Asian footprint with the announcement it will buy the Asia-Pacific steel operations of Singapore's NatSteel Ltd.

The proposed deal involves Tata Steel taking over NatSteel Ltd.'s wholly-owned subsidiary, NatSteel Asia, for 486.4 million Singapore dollars (286.11 million US).

The transaction is expected to be completed by February 15, 2005.

When the deal is completed, Tata Steel will acquire NatSteel Asia's steel and related operations in China, Thailand, Vietnam, Malaysia, Indonesia, the Philippines and Australia.

NatSteel's Asia steel business, subsidiaries and assets in Singapore will be part of the transaction.

NatSteel Ltd. will retain its other businesses, which include chemicals, engineering, construction, property and investment.

Employees were informed of the deal just hours ahead of the announcement.

"It came as a shock to us, actually," a NatSteel employee told AFP on Monday.

Tata Steel Managing Director B. Muthuraman described the acquisition of NatSteel Asia as an "important step" in the company's plans to expand its business globally.

"NatSteel's steel business provides Tata Steel access to key Asian markets including China. I believe that the acquisition will prove to be a good strategic fit for Tata's steel business," he said in a statement issued here.

"I welcome members of NatSteel Asia's management team and all employees to the Tata Steel family."

Tata Steel is the largest private-sector steel company in India and is rated among the top four world-class steel companies.

It is part of the massive Tata industrial conglomerate, with some 80 firms involved in everything from cars and chemicals to information technology and hotels.

While the deal values NatSteel Asia at 486.4 million Singapore dollars, the actual payout could be around 466 million Singapore dollars after some adjustments are made, NatSteel said in a statemnet.

"Upon completion, Tata Steel will own 100 percent of NatSteel Asia, and will have acquired the company's steel businesses in Singapore and the region," the statement said.

NatSteel Ltd. chairman Cham Tao Soon said the Indian steel giant had made an "unsolicited offer", after which the NatSteel board appointed Goldman Sachs as its financial adviser to help evaluate the offer.

"After careful consideration, the board is pleased to support this transaction and recommend this for shareholders to consider," Cham said.

NatSteel Ltd. president Oo Soon Hee said that with Tata Steel's backing, NatSteel Asia "will be well-positioned to weather the volatilities in the steel industry because it will be part of a much larger, fully integrated steel group with extensive resources."

For NatSteel Ltd. the portion of its businesses being sold accounted for about 47 percent of profit before tax, minority interest and exceptional gains in 2003 and 52 percent of net asset value.

NatSteel Ltd. will use the proceeds of the sale to repay loans, further develop non-steel operations, pursue other growth opportunities and pay shareholders.

Bond James Bond

August 19th, 2004, 06:46 AM

The Financial Times
How India hopes to reshape the world drugs industry
By Geoff Dyer

Published: August 17, 2004

For the last two decades Nicholas Piramal, a drugs company based in Mumbai, has made a decent living by buying the rights to medicines developed in the US and Europe and selling them in India.

These days, however, the company has its sights set on much bigger targets. Swati Piramal, the director responsible for research, has given the company a challenge that - if met successfully - would rewrite the rules of the global drugs industry.

"The big pharmaceuticals companies say it costs them at least $800m to develop a new drug," she says. "Well, we can do it for $50m."

The obstacles facing the company are daunting, but Dr Piramal is brimming with confidence. "We are going to develop a cancer drug to prove it," she says. "We are hoping to turn the industry upside down."

With its combination of high-quality scientists and low costs, India has already become a significant player in the software and information technology industries. The streets of Bangalore, the country's IT hub, are lined with gleaming buildings built in the last few years to house companies such as Microsoft, General Electric and Dell.

Inspired by the revolution in IT, several Indian drugs companies have set out an ambitious game plan. By tapping the same low-cost pool of English-speaking scientists, they want pharmaceuticals to become the next phase in the shift of service industries to India.

Their fate over the next decade will be a fascinating experiment into how far globalisation can be pushed. If developing countries can genuinely compete in industries that depend on brainpower, such as pharmaceuticals, it will have profound implications for the corporate world.

The bold talk from India also comes at a time when many executives at large multinational drugs companies are in despair over the sector's future. Over the last decade, they have pumped ever greater sums into drug research, yet the number of medicines produced has not increased. Many admit that the industry faces a crisis in the productivity of its research. They are watching closely to see if India will emerge as a low-cost centre of medical research.

Indian success in pharmaceuticals would also raise political hackles in the US and could become more controversial than IT outsourcing has been. For many politicians in the US, it might be acceptable under the logic of globalisation that some manufacturing jobs shift to Asia. But by the same logic the invention of medicines such as cancer drugs - the ultimate value-added, capital-intensive economic activity - is supposed to take place in developed countries.

India has long boasted an army of talented chemists but for the last two decades they have been mostly focused on finding ways to copy other companies' drugs. Under a patent law dating from 1970 Indian companies have been allowed to sell versions of prescription drugs as long as they used a different manufacturing process.

That is all about to change, however. From the beginning of 2005, drug patents will apply in India as part of the World Trade Organisation's intellectual property rules. As a result Indian companies will no longer be able to rely on their lucrative domestic market. The search for new business models is being driven by necessity.

For a handful of Indian companies - including Nicholas Piramal, Ranbaxy and Dr Reddy's - the response has been to invest in innovation. They plan to harness skills in medicinal chemistry to shift from re-engineering other people's drugs to developing their own.

"India is moving centre-stage in the drugs industry," says Brian Tempest, chief executive of Ranbaxy, the Delhi-based company, which aims to have 40 per cent of its revenues from innovative products by 2012. "It will be like the scampering mammals taking over from the dinosaurs."

Cost is the key competitive advantage. Just as in the IT industry, India has huge numbers of trained scientists prepared to work at a fraction of European or US salaries. Indian companies estimate the cost of hiring a researcher is between one-third and one-fifth of the US rate.

Moreover, the Indians believe they can conduct clinical trials much more cheaply. Somesh Sharma, chief scientific officer at Nicholas Piramal, says that India's huge population makes it much easier to find patients to take part in trials. When the company participated in the trial of a cancer drug developed by a US group, it finished its part four years ahead of its partner.

"It was an important experiment that proved we could do it," he says.

The drugs companies are also beginning to tap the huge diaspora of Indian scientists working in the US. By some estimates, 20 per cent of all the researchers working in the biotechnology industry in the San Francisco area are of Indian origin. The Indian companies cannot afford to lure back too many expatriates as they would soon lose their cost advantage. But by recruiting a few experienced executives they can transfer industry skills and standards to local scientists.

"There are lots of people who want to come back," says Kasim Mookhtiar, vice-president of new drug discovery at Ranbaxy. "We are now in a position to provide them with a career of their choice."

Dr Mookhtiar, who used to run a research department at Bristol-Myers Squibb in Pennsylvania, also believes that this brain-drain of Indians is the most effective argument against political criticism in the US. "When I graduated from the Indian Institute of Technology in Bombay, from my class of 160 people, 120 went to the US," he says. "Indians have made a huge contribution to the US. It cuts both ways."

Yet despite the verve and optimism, the obstacles facing the Indian companies are immense. Pharmaceuticals executives estimate that only one in 10 drugs that enters clinical trials actually makes it to market. Over the last two decades, hundreds of biotechnology companies have been set up in the US and Europe staffed by well-trained scientists. Only a handful have actually managed to develop a drug.

The large pharmaceuticals companies manage this risk by conducting trials in dozens of different drugs, which they hope increases their chances of a few successes. The odds, however, are stacked heavily against smaller companies.

Dr Reddy's is a good example. The Hyderabad-based company was the first in India to try to build its own research operation a decade ago. It did have one drug for diabetes in late-stage clinical trials, but that failed 18 months ago. No Indian company has more than three molecules in clinical trials.

Dr Reddy's has opened a laboratory in the US, prompting rivals to claim that it could not find the necessary skills in India. Meanwhile attempts by Ranbaxy to lure high-profile Indians from the US have not always gone smoothly. Rashmi Barbhaiya, a former Bristol-Myers Squibb scientist hired to run its research department, left earlier this year after falling out with the senior management.

While India has great strengths in chemistry, some executives say it is harder to find people trained in molecular biology. Researchers complain about the bureaucracy; until recently, they say, it was difficult to get regulatory approval for animal experiments.

Moreover, drug research does not depend solely on talented scientists. As more has been discovered about the links between genes and disease, research has come to rely heavily on expensive equipment such as gene sequencers. The big increase in the cost of research in the US and Europe has partly been the result of these investments.

Despite their big cost advantages, the Indian companies do not have huge resources to spend heavily on research. While western companies spend more than 15 per cent of their huge revenues on research and development, the top Indian companies spend around 5 per cent. Ranbaxy has a research budget of $60m, Dr Reddy's closer to $40m. The entire revenue of the Indian drugs industry is less than the $7bn a year Pfizer alone spends on research.

"Are you really trying to tell me that the entire global industry is putting down its money badly?" asks Ranjit Shahani, managing director of Novartis in India. "To go from copying straight to innovation is some leap."

There is a chance that one of the Indian companies could make it with a successful drug. As Indian entrepreneurs are quick to point out, many of the big companies in the industry today were transformed by one drug - for instance Glaxo, with its ulcer pill Zantac. But it is a long shot. The likelihood is that they will not turn themselves into research-based companies in one swoop.

As a result, most have a "plan B". Rather than try to jump straight up the value chain from selling generics to developing their own drugs, the Indian companies are developing less ambitious strategies. There is a number of ways the companies can move into more value-added areas and acquire skills without betting everything on one or two projects.

Generics are still part of that strategy. With prospects for the Indian market weak in the long term, a number of Indian companies are pushing into international generics markets, where they can take advantage of their low-cost manufacturing. They are attractive businesses in their own right, but also good ways of funding research.

Producing generic versions of biotechnology drugs, which regulators are expected to allow soon, could also be an interesting market. Indian companies such as Biocon in Bangalore, for instance, have developed the ability to manufacture these drugs, which are much more complicated than pills, and have lower labour and land costs than most potential rivals.

Indian companies are also focusing on lower-risk types of research that play to their strengths in chemistry, such as devising new ways of delivering established drugs. Ranbaxy is already receiving royalties from Bayer of Germany after developing a once-a-day version of Cipro, its antibiotic. Dr Reddy's tried to use these skills to challenge to Pfizer's Norvasc, a $4bn-a-year blood pressure treatment. The company developed a version of the same drug that used a different salt in the formulation, hoping that this would allow it to evade Pfizer's patents. An initial court ruling went in its favour, but Pfizer won the appeal.

The company is now taking a different tack, acquiring a portfolio of established dermatology products that it hopes it can improve using its chemistry skills. These approaches are less glamorous but lower-risk than innovating new molecules and can help build up expertise in the development process.

The other strategy being adopted by Indian companies is not to compete head-on with the US and European industry but to collaborate. By partnering with multinationals on research projects, Indian companies can devolve some of the heavy development costs as well as learn more about how to manage research projects.

GV Prasad, chief executive of Dr Reddy's, says the company will not conduct late-stage clinical trials itself because the costs are too high. Its diabetes molecule in phase II trials has been licensed to Novo Nordisk, the Danish company.

Ranbaxy has entered into a different type of alliance with GlaxoSmithKline, the UK-based multinational, which allows it to benefit from GSK's extensive research infrastructure. GSK has invested billions of dollars in an early-stage discovery process that produces hundreds of possible ideas for drugs every year. Ranbaxy will get access to some of those leads and, if they prove viable in smaller trials, GSK will conduct the late-stage trials. Ranbaxy would then get a royalty on sales.

The multinationals are not talking about considerable outsourcing of drug research to India in the near future, but such alliances give them a window to view India's progress.

For all the potential growth that they predict, however, India's pharmaceuticals entrepreneurs are in a hurry. Like many other industries in India, they feel the hot breath of Chinese competition on their necks.

"We have about 10 years to make this transition," says Dr Sharma at Nicholas Piramal. "If we do not make it by then, we shall be overtaken by China."

IT experience holds lessons for sector

Many in India believe the country's drugs companies stand at the cusp of rapid growth - but for reasons that differ from those that transformed its information-technology industry, writes Khozem Merchant.

The key difference will result from a robust patent regime that will be implemented next year. The law will apply intellectual property rules, protecting companies' drug discoveries, thereby encouraging domestic and foreign companies to invest in research. By contrast, the IT industry's explosive growth in India happened without regulation. If the law is effectively enforced, Indian - and foreign - drugs companies could be able to climb the "value chain" far earlier than had been the case for their IT cousins.

Another difference is the gap in human resources. India's pharmaceuticals sector needs, but appears to lack, the mature biomedical community that commercial research requires.

"The academic contribution is particularly crucial in drugs innovation because so much flowers from researchers who can nurture drug discovery. But India's university-based research departments are not market driven," says Nermeen Varawalla, vice-president at PRA International, a US clinical trials company set to open a testing centre in Mumbai. Yet, Dr Varawalla says, the best pharma companies are still dependent on a global network of Indian scientists.

Nevertheless, Indian pharmaceuticals companies can learn much from the experience of their IT cousins. First, India's IT companies jumped into low-end and low-value services, while pharmaceuticals companies must "fight commoditisation of their services", says Ferzaan Engineer, chief executive of the Indian arm of Quintiles, the US clinical trials group. "We've got abundant home-grown chemistry skills and a mature IT industry to offer data-mining services based on, say, cardiovascular monitoring."

One sign of high value services in pharmaceuticals is the emergence of back-office clinical trials facilities. These offshore outsourcing services are far removed from the less complex tele-sales that have made their IT counterpart the fastest expanding segment in technology services.

Second, big Indian pharmaceuticals companies have responded to the patent law, not only by declaring their research and development ambitions, but also by installing the technology and plant that have met US regulatory requirements. That strengthens their hand in global competition, making them stronger than most of the early IT service companies.

Third, huge R&D costs have led Indian companies to collaborate, not only with global industry leaders, but also with other Indian companies and across sectors. Raghunath Anant Mashelkar, the government's chief scientific adviser, cites an alliance between 18 public-sector research bodies and Tata Consultancy Services - a private company - that yielded software for bioinformatics at a fraction of the usual cost.

Fourth, Sunil Mehta, vice-president of Nasscom, the Indian IT trade lobby group, says Indian pharmaceuticals companies "should follow our lead and speak in the language of global customers". But perhaps IT's biggest lesson for pharmaceuticals is showing the necessity a to create network of advisers, investors and lobby groups. "That will position Indian pharma for the huge healthcare opportunity in US and Europe, where high costs are forcing suppliers to turn to India."

Bond James Bond

August 19th, 2004, 06:51 AM

NY Times
August 18, 2004
Financial Firms Hasten Their Move to Outsourcing
By SARITHA RAI

BANGALORE, India, Aug. 16 - Last February, when the online lending company E-Loan wanted to provide its customers faster and more affordable loans, it began a program in India. Since then, 87 percent of E-Loan's customers have chosen to have their loans financed two days faster by having their applications processed in India.

"Offshoring is not just a fad, but the reality of doing business today," said Chris Larsen, chairman and chief executive of E-Loan, "and this is really just the beginning."

Indeed, seemingly a myriad of financial institutions including banks, mutual funds, insurance companies, investment firms and credit-card companies are sending work to overseas locations, at a scorching speed.

From 2003 to 2004, Deloitte Research found in a survey of 43 financial institutions in 7 countries, including 13 of the top 25 by market capitalization, financial institutions in North America and Europe increased jobs offshore to an average of 1,500 each from an average of 300. The Deloitte study said that about 80 percent of this went to India.

Deloitte said the unexpectedly rapid growth rate for offshore outsourcing showed no signs of abating, despite negative publicity about job losses. Although information technology remains the dominant service, financial firms are expanding into other areas like insurance claims processing, mortgage applications, equity research and accounting.

"Offshoring has created a truly global operating model for financial services, unleashing a new and potent competitive dynamic that is changing the rules of the game for the entire industry," the report said.

Michael Haney, a senior analyst at research firm, Celent Communications, said: "With its vast English-speaking, technically well-trained labor pool and its low-cost advantages, India is one of the few countries that can handle the level of offshoring that U.S. financial companies want to scale to." .

In a recent report "Offshoring, A Detour Along the Automation Highway," Mr. Haney estimated that potentially 2.3 million American jobs in the banking and securities industries could be lost to outsourcing abroad.

Girish S. Paranjpe, president for financial solutions at Wipro, a large outsourcing company in India, said, "Pent-up demand, recent regulatory changes and technology upgrade requirements are all making global financial institutions increase their outsourcing budgets." His company's customers include J. P. Morgan Chase, for which it is building systems for measuring operational risk, and Aviva and Prudential, the British insurers.

Several recent studies concur that there has been an unexpected and large shift of work since the outsourcing pioneer Citigroup set up a company in India two decades ago. They cite cost advantages as the primary reason. According to Celent, in 2003 the average M.B.A. working in the financial services industry in India, where the cost of living is about 30 percent less than in the United States, earned 14 percent of his American counterpart's wages. Information technology professionals earned 13 percent, while call center workers who provide customer support and telemarketing services earned 7 percent of their American counterparts' salaries.

Experts say that with China, India, the former Soviet Union and other nations embracing free trade and capitalism, there is a population 10 times that of the United States with average wage advantages of 85 percent to 95 percent.

"There has never been an economic discontinuity of this magnitude in the history of the world," said Mark Gottfredson, co-head of the consulting firm Bain & Company's global capability sourcing practice. "These powerful forces are allowing companies to rethink their sourcing strategies across the entire value chain."

A study by India's software industry trade body, the National Association of Software and Services Companies, or Nasscom, estimated that United States banks, financial services and insurance companies have saved $6 billion in the last four years by offshoring to India.

But cheap labor is not the only reason for outsourcing. Global financial institutions are moving work overseas to spread risks and to offer their customers service 24 hours a day.

"Financial institutions are achieving accelerated speed to market, and quality and productivity gains in outsourcing to India," said Anil Kumar, senior vice president for banking and financial services at Satyam Computer Services, a software and services firm. Satyam works with 10 of the top global capital markets firms on Wall Street.

Mastek, an outsourcing company based in Mumbai, is another example. Two years ago, Mastek turned from doing diverse types of offshore work to specializing in financial services. The results are already showing. In the year ended in June, 42 percent of Mastek's revenues, $89.28 million, came from offering software and back-office services to financial services firms, up from 22 percent last June.

Fidelity Investments, the world's largest mutual fund manager, started outsourcing to Mastek 18 months ago and is now among the top five clients in its roster.

Sudhakar Ram, chief executive of Mastek, said, "It is rare that within a year a new customer turns a top customer; this illustrates the momentum in the market."

Another Mastek customer, the CUNA Mutual Group, which is based in Madison, Wis., and is part of the Credit Union National Association, started a project billed at less than $100,000 two years ago. Now the applications that Mastek is building for CUNA, to handle disability claims, amount to a multimillion-dollar deal.

In the transaction-intensive financial services industry, offshoring of high-labor back-office tasks is becoming the norm.

ICICI OneSource, based in Mumbai, has added 2,100 employees in six months and signed on four new financial services clients, including the London-based bank Lloyd's TSB, for which it provides customer service.

In one year from March 2003 to March 2004, ICICI OneSource grew to $42 million in revenues from $17 million. Today, more than 70 percent of its revenues come from the financial services industry, up from 40 percent two years ago.

For India's outsourcing firms, growth has not been without hiccups. Earlier this year, Capital One canceled a telemarketing contract with India's biggest call center company, Spectramind, owned by Wipro, after some workers were charged with enticing the credit-card company's customers with unauthorized free gifts. Weeks earlier, the investment bank Lehman Brothers canceled a contract with Wipro saying it was dissatisfied with its workers' training.

In response, outsourcing companies are improving their offerings. Leading companies are investing in privacy and security due diligence as they handle sensitive customer data, doing reference checks on employees, providing secure physical environments with cameras, and banning employees from using cellphones and other gadgetry on the work floor.

Deloitte forecasts that by the year 2010, the 100 largest global financial institutions will move $400 billion of their work offshore for $150 billion in annual savings. Its survey forecasts that more than 20 percent of the financial industry's global cost base will have gone offshore in that period.

With competence levels rising, Indian companies are tackling more complex tasks. DSL Software, a joint venture of Deutsche Bank and HCL Technologies, a software company, is handling intricate jobs for the securities processing industry. "Indian firms are taking offshoring to the next level; in the banking industry for instance, they are getting into wholesale banking, trade finance and larger loan processing type tasks," said Mr. Haney, the analyst from Celent.

But the relentless demand for skilled workers is putting pressure on wage rates, narrowing the wage gap with the United States and other Western economies. Simultaneously, companies are plagued by higher attrition rates that may lead to quality and deadline pressures.

For the moment, however, there is no indication the industry cannot cope with the unflagging demand to send work offshore. "If India can continuously pull less paid, less educated people into the labor pool," Mr. Haney said, "a substantial wage gap will continue to exist."

nithin

August 20th, 2004, 10:05 PM

Inflation rises to 7.96%

PTI[ FRIDAY, AUGUST 20, 2004 12:25:39 PM ]
NEW DELHI: Households continued to bear the brunt of increased cost of living with inflation rising by 0.35 per cent to 7.96 per cent for week ended August seven, mainly due to costlier vegetables, petrol, diesel and aviation turbine fuel.

The point-to-point Wholesale Price Index (WPI) inflation rose from the previous week's level of 7.61 per cent with all major indices of primary, fuel and manufactured items going up. It stood at a mere 3.89 per cent in the previous year period.

The WPI rose by 0.3 per cent to 186.6 points due to the impact of price rise of petrol and diesel. The index was 173.4 points a year ago.

During the latest reported week, ATF prices went up by 11 per cent, diesel by five per cent and petrol by two per cent.

Analysts say the price hike, especially for diesel, would have a cascading effect for some more time.

During the week under review, oil prices in global markets ruled at over 44 dollar a barrel due to capacity constraints since Opec and other producers had limited capacity to compensate for disruptions in supply and Russia withdrawing a promised financial lifeline for oil titan Yukos.

The crude prices soared due to terror threats to oil pipelines in the Middle East, potential disruption in exports from Russia, Nigeria and Venezuela, along with the oil cartel saying it could not immediately increase supplies.

Besides, growing demand in India, China and the US also strained the producers.

Government revised upwards inflation to 6.58 per cent for the week ended June 12 as compared to the provisional figure of 5.89 per cent.

The final WPI stood corrected at 184.6 points during the second week of June as against 183.4 points.

This is really too high i really hope this comes down. High inflation effects the common man a lot!!

Jai

August 23rd, 2004, 02:19 AM

India, the world's R&D hot spot (http://www.atimes.com/atimes/South_Asia/FH18Df01.html)
By Kunal Kumar Kundu

MUMBAI - Kiran Shaw Mazumdar is the new poster girl of the Indian economy. The recent initial public offering (IPO) of Biocon, her biotechnology company, has made Kiran the richest woman in India and symbolizes the arrival of research and development (R&D) as the new star of the Indian economy.

As of now, 100 Fortune 500 companies - including Delphi, Eli Lilly, General Electric, Hewlett Packard, DaimlerChrysler and others - have put up R&D facilities in India over the past five years. GE's John F Welch Technology Center in Bangalore is the company's largest such facility outside the United States. With an investment of US$60 million, it employs 1,600 researchers and plans to raise the number of staff to 2,400. GE Plastics has a 300-member research team in India. GE Motors India has developed an almost noiseless motor for GE's most sophisticated washing machines and is the soul sourcing point of millions of motors every year. The DaimlerChrysler Research Center in Bangalore is engaged in fundamental and applied research in avionics, simulation and software development.

The best-known Indian R&D companies are in pharmaceuticals - Ranbaxy, Dr Reddy's Labs and Sun Pharma, among others. Biotechnology is heating up, with Biocon and Shanta Biotech leading the way. Reliance Life Sciences is recognized by the US National Institutes of Health for stem-cell research. Quality, credibility, reliability and a very reasonable cost structure are what has helped India emerge as the information-technology outsourcing destination of the world, and it is now emerging as the pharma R&D hub to beat all.

India currently is giving Europe tough competition as a growing pharma R&D hub. The latest Ernst and Young study has identified India as an emerging hub for collaborative and outsourced R&D in drug development, biotechnology and chemicals. The report follows a European Commission communication that called for increased cooperation between the European Union and India in various fields, including biotechnology. "The EU is the world's second-largest center of biotechnology research activity after the USA. Indian biotechnology has been advancing rapidly in the past few years. Its next challenge is to successfully integrate the Indian biotechnology industry into the global biotechnology innovation system," noted the EC report.

Indian pharma companies are going for alternative business models to draw on competition and opportunity. They have shifted from business-driven research to research-driven business. So much so, in fact, that Indian pharma companies topped drug filings with the US Food AND Drug Administration (FDA) in 2003, having filed a total of 126 Drug Master Files, accounting for 20% of all drugs coming into the US market, higher than Spain, Italy, Israel and China. Of the 108 abbreviated new drug applications pending approval from the FDA in February, as many as 52 were patent challenges, and nearly half of these were for first-to-file (180 day market exclusivity) applications.

India's biotech sector itself is expected to generate $5 billion in revenues and create over a million jobs in the next five years, according to Ernst & Young's 2004 "Progressions" report. As the companies focus on accelerating productivity, collaboration is the way forward for several US and European companies faced with a resource crunch. With its abundant high quality/low cost technical manpower, India is emerging as a partner of choice.

The emergence of Indian pharma giants, taking an active place in global R&D fields, has also helped. Indian companies have developed manufacturing processes for eight of the world's top 10 blockbuster drugs.

http://img14.exs.cx/img14/3089/Image491.jpg

A number of strategic overseas acquisitions took place in 2003 - Ranbaxy's acquisition of RPG Aventis' French business; Wockhardt's acquisition of CP Pharmaceuticals in the UK; and Zydus Cadila's acquisition of Alpharma in France - all of which have catapulted these Indian companies into the global league. There was a lot of inbound investment as well. Multinationals like Roche, Bayer, Aventis and Chiron have made India their regional hub for advanced pharmaceutical ingredients and bulk supplies. Clinical research outsourcing is seeing fast growth too. Pfizer doubled its R&D spending in India to around $13 million. Others such as Novartis, Astra Zeneca, Eli Lilly and GlaxoSmithKline have also committed to making India a global hub for their clinical research activities.

Less high-profile but more significant may be the mushrooming of new companies to do contract R&D for global ones. Divi's Labs, Vimta Labs and Matrix Labs are some new stars in this firmament. R&D is no longer confined to the government or big companies. It is sprouting everywhere. For example, patent applications in India have shot up from 4,000 in 1995 to almost 15,000 last year. Business Today estimates that Indian filings for US patents rose to 1,700 in 2003, up from 183 in 1997. The auto industry is another beehive of innovation. Multinational car companies originally came to India for the potentially huge domestic market. To cut costs, they had to use local components, which initially were of low quality. But soon the interaction between component manufacturers and multinationals led not just to quality improvement but innovations that nobody had dreamed of earlier. Today, Indian auto component companies are conducting computer-aided design and computer-aided manufacturing, constantly coming up with new designs that reduce costs and increase efficiency. This design savvy has made India a global player, exporting more than $1 billion worth of components last year. And car exports have shot up to more than 100,000 in 2003-04.

What makes India tick
India is ahead of China in terms of the proportion of its population that has attained tertiary education. According to the Institute for Management Development (IMD) World Competitiveness Year Book for 2001, about 8% of the Indian population ranging from 25 to 34 years old had attained some tertiary education compared with 5% in China. Another edge for India is that a majority of the tertiary programs use English as the main medium of instruction. This is not the case in China. India also adds about 2.3 million bachelor degree graduates and about 300,000 engineers annually. In terms of the degree to which the university education system meets the competitive needs of the economy, IMD ranks India sixth among 30 nations, with a score of 6.2 out of 10 compared with a ranking of 25 for China, which received a score of 4.4.

India also has a large pool of skilled labor, especially engineers, relative to its economy's needs. According to IMD, India ranks among the top three of 30 nations in terms of the availability of skilled labor. In fact, IMD ranks India No 1 in terms of the availability of qualified engineers, while China is in 29th place.

Availability of skilled labor

http://img14.exs.cx/img14/6057/Image492.jpg

The following graph shows India's competative advantage vis-a-vis other nations.

http://img14.exs.cx/img14/2308/Image493.jpg

In the bad old days of the license-permit raj (the system of allotting industrial and commercial permits to expand or initiate production ventures under government regulations), companies had no incentives to conduct R&D. Getting foreign collaboration approval ensured monopoly profits for years. But the new competition brought in by economic liberalization in the 1990s made R&D an essential tool to competing and surviving. Other miracle Asian economies such as South Korea and Taiwan used labor-intensive manufacturing as their launching pad, taking advantage of their low wages. Later, they moved up the value chain. India missed the bus in terms of labor-intensive exports, but has now caught the jet plane of brain-power exports. This began in computer software. It then spread to design-intensive manufacturing. And it is now sparking an R&D revolution.

Kunal Kumar Kundu is a senior economist with a leading bilateral Chamber of Commerce in India. He has a master's degree in economics, with a specialization in econometrics from the University of Calcutta.

(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

Jai

August 23rd, 2004, 02:31 AM

Exports grow by 25.57% in April-July period (http://www.thehindubusinessline.com/businessline/blnus/03171701.htm)

61.9% rise in oil imports push up imports
ENS ECONOMIC BUREAU

Posted online: Wednesday, August 18, 2004 at 0033 hours IST

NEW DELHI, AUGUST 17: Exports during the period April-July 2004 grew by an impressive 25.57 per cent to $21931.1 million over $17465.8 million recorded in the same period of last year. However, what is alarming is the fact that though exports have recorded a substantial growth, imports too have shot up by 33.48 per cent mainly due to a hefty increase of 61.9 per cent increase in oil imports. The high increase in the imports in turn pushed up the trade deficit for this period by 59.3 per cent.

According to official trade data released on Tuesday, the high growth rate of the exports for the period is over and above the 4.82 per cent growth recorded in the same period last year.

In rupee terms, exports during April-July 2004 grew by 21.2 per cent to Rs 99153.71 crore compared to the same period last year. Exports during July 2004 stood at $5433.04 million, a growth of 18.81 per cent over $4572.89 million recorded for the same month last year. In rupee terms, exports during July 2004 stood at Rs 25014.59 crore, which was 18.33 per cent higher than the exports recorded in July 2003.

However, imports during the period April-July 2004 also recorded a high growth by 33.48 per cent to $30457.28 million against $22818.03 million in the same period last year. As a fallout of the increasing international crude oil and product prices, oil imports during the period registered a hefty growth by 61.9 per cent to stand at $9900.03 million compared to $6114.92 million in the same period last year.

Jai

August 23rd, 2004, 02:33 AM

Indo-China trade witnesses steady growth (http://economictimes.indiatimes.com/articleshow/823425.cms)
PTI[ SUNDAY, AUGUST 22, 2004 07:32:24 PM ]

BEIJING: Buoyed by a 113.5 per cent increase in Indian exports, the Sino-Indian bilateral trade has touched $6.674 billion with a record surplus of $1.78 billion during the first six months of this year.

"The bilateral trade is witnessing impressive and steady growth and we are poised to achieve the targeted $10 billion during 2004," official sources said.

According to latest trade statistics from China's Customs, the gross volume of foreign trade during January-June touched $6.674 billion, a year-on-year increase of 93.1 per cent as against 39.1 per cent of Chinese trade volume in the same period, sources said.

China's exports to India during the first six months amounted to $2.447 billion, up 65.7 per cent. The communist nation's imports from India during the period touched $4.427 billion, up 113.5 per cent.

In 2001, the bilateral trade figure was $3.6 billion, up 23.4 per cent over 2000. In 2002, the figure jumped to $4.9 billion, up 37.6 per cent over the previous year.

Last year, the bilateral trade was worth $7.6 billion, up 53.6 per cent.
The growth rates in Sino-Indian trade are higher than those of the overall Chinese trade volume of each corresponding periods, namely 7.5 per cent, 21.8 per cent and 37.1 per cent.

India's annual trade surplus with China is also growing rapidly, sources noted. Before 2002, India's trade deficit with China was about $0.2 billion on average, not exceeding $0.4 billion.

Jai

August 23rd, 2004, 02:36 AM

Profit curve go up for IT biggies (http://economictimes.indiatimes.com/articleshow/818724.cms)

PRAGATI VERMA & ARSHDEEP SEHGAL
TIMES NEWS NETWORK[ WEDNESDAY, AUGUST 18, 2004 02:25:58 AM ]

NEW DELHI: It’s growth time in the IT world. After revenues, IT bigwigs’ profit curves have also been started looking up in 2004. The Big five IT club saw its profits jump over 50%, and the story is not much different for the top 10 as well.

Though revenues have been growing at over 25% for the Indian IT industry , even at the worst of times, such a healthy growth in profits is coming after a gap of almost two years. EBITDA margins of the top IT companies have moved up to 28.2% now.

Sharply lower prices from clients, who were cutting their IT budgets across the board, and the appreciation of the rupee had put the companies’ bottomlines under squeeze last year.

But they are now seeing healthy growth in profits as the prices stabilise and the rupee firms up. EBITDA margins were up despite 12-18% salary hikes at major IT companies. Analysts expect forthcoming increases in salaries to come from further gains in pricing.

The optimism for growth is best reflected in hiring trends. Biggies like Infosys, Wipro and Satyam continued to add 8-10% of work force each quarter, a sign of continuous visibility for growth. IT majors are not shying away from investments, too, and are expanding to new locations for offshore development centres.

Improved guidances also indicate a rise in confidence levels, mainly due to swelling order books. Infosys is expected to see its revenues grow 45% next year. At Wipro, margins improved on a mix of pricing contracts and select pricing increases.

Local IT companies are also benefiting from their clients ramping up operations and with the credibility of offshoring improving. They also offer wider range of service now. Even as top vendors add 20-30 new clients each quarter, the existing accounts are getting bigger, too, driving much of the growth. Big names such as Verizon, Bank of America, Fidelity, General Motors, Microsoft and DHL have been consolidating their outsourcing businesses with local vendors in the last 12-15 months

-------==--=--==-------

*UofT*

August 23rd, 2004, 02:36 AM

India should be able to become a Middle income nation by 2060 if it continues the kind of growth it has been experiencing, but i just don't know where India and China will find the fuel to their growth. Oil and Gas prices are swelling up and all nations to develop need fuel. China is at 1500 GNI per capita and already its finding it difficult to supply its Huge growth. Regardless I see great things for Asia as a whole.

zergcerebrates

August 23rd, 2004, 01:50 PM

In the future I think India and China would compete each other for resources.

ViMo

August 23rd, 2004, 03:13 PM

In the future I think India and China would compete each other for resources.

No, I don't think so! China's lack of openness and screwed up accounting system will eventually burst the bubble. Besides, India has always in a way encouraged alternatives, so resource restraining is automatically, a part of Indian lifestyle!

Suncity

August 23rd, 2004, 04:12 PM

Can't we avoid India - China comparisons?

Ubermensch

August 23rd, 2004, 05:01 PM

Can't we avoid India - China comparisons?

Dont think there's anything wrong with comparisons as long as its done in a healthy manner.

I think China is way ahead of India as most people know. Especially in terms of infrastructure and therefore in terms of manufacturing. Thus, we have much to learn from the Chinese. Over the course of this summer I worked with a Chinese girl during my internship and learnt than Chinese and Indian values are very similar.. I think its an eastern thing. If we can learn a thing or two from China it would benefit us greatly.

Go China, you are doing the east proud!

ViMo

August 23rd, 2004, 06:39 PM

Dont think there's anything wrong with comparisons as long as its done in a healthy manner.

I think China is way ahead of India as most people know. Especially in terms of infrastructure and therefore in terms of manufacturing. Thus, we have much to learn from the Chinese. Over the course of this summer I worked with a Chinese girl during my internship and learnt than Chinese and Indian values are very similar.. I think its an eastern thing. If we can learn a thing or two from China it would benefit us greatly.

Go China, you are doing the east proud!

See, this is the problem with the people :bash: Nobody is doing cultural comparisons here, but socio-economic and socio-politcal ones. Read the article in FT.com about China's mounting debt problems, and growing inability to produce enough food for itselff, because of burgeoning demand.

There's another interesting article by Sunil Jain in Business Standard, where he talks about with case examples of how multilateral agencies are having problems recovering loans from the Chinese.

It's a fact: China is a banker's nightmare! What's to compare then :cheers:

huaiwei

August 23rd, 2004, 06:43 PM

Erm..btw....you guys want this thread to be moved or copied to the Indian forum?

ViMo

August 23rd, 2004, 06:53 PM

Erm..btw....you guys want this thread to be moved or copied to the Indian forum?

No, let it be huaiwei....there should be threads open for common discussions too. There is a tendency on this forum to behave in a intra-regional manner, which should be discouraged for the larger sake! :)

Jai

August 23rd, 2004, 08:09 PM

No, I don't think so! China's lack of openness and screwed up accounting system will eventually burst the bubble. Besides, India has always in a way encouraged alternatives, so resource restraining is automatically, a part of Indian lifestyle!

Actually, on the contrary. The growth of the Indian economy will make the greater demand for resources inevitable. In order to sustain economic development, resources must be utilized, and in order for resources to be utilized, the economy must grow.

I think before oil demand causes friction between the two nations, water demand will be the biggest problem and source of contrition between Pakistan, India and China. Many major thinktanks have predicted that the next India-Pakistan war will be driven more by this demand, than for any political reason.

Most of the headwaters of Pakistani rivers are located in India, and increased Indian usage of the waters can cause catastrophic damage to the Pakistani economy. In a similar way, several major Indian rivers have their headwaters in Tibet, most significantly, the Brahmaputra.

India, thankfully, is not in as bad a situation as Pakistan wrt water, because, although the headwaters are in Tibet, and although the Chinese are increasingly diverting water, the majority of the river flow comes in Indian territory, with the near perpetual monsoon rains of the NE river valleys. However, there can still problems for India, in terms of river management and flooding. Hopefully, the plan to connect every major river system in India will ensure that flooding and drought will be kept to a minimum, and that a more equitable distribution of water will come about.

What is scary, however, is the ability to control waters in such a way to be used as an unconventional weapon...

India fears floods due to swelling Tibetan lake (http://news.newkerala.com/india-news/index.php?action=fullnews&id=7310)

New Delhi, Aug 12 (IANS) :

Indians living close to the border with China remained Thursday in constant fear of devastating floods due to a swollen artificial lake in neighbouring Tibet on the brink of overflowing due to incessant rains.

Indian authorities were on top alert amid warnings that the brimming lake created by a landslip on the Pareechu river flowing into Himachal Pradesh state could overflow any time, flooding territories along its banks.

Thousands of villagers living along the banks of the river Sutlej, which merges with the Pareechu in Indian territory, have been evacuated even as experts and Indian troops kept a close watch on the region.

Some 4,000 people were moved to safety from villages in the Mandi, Kullu, Shimla, Kinnaur and Bilaspur districts of Himachal Pradesh.

Apprehensions among authorities in India and China remained high Thursday amid rains that have brought the lake - located some 35 km from the India-China border -- dangerously close to spilling over downstream and flooding all regions along the river.

"It is raining all the time and the situation is not getting any better," Chinese embassy spokesperson Yang Shuying told IANS.

"We are closely monitoring the situation - we have to keep on high alert for now."

Satellite images showed that the level of the lake had been rising constantly.

Heavy landslides had blocked the course of the Pareechu since July, creating the lake that has swelled to the point of bursting now. The blockage took place in a region of high altitude, remoteness, difficult terrain and poor transportation and communication.

As per data available from satellite images provided by Hyderabad-based National Remote Sensing Agency, the lake expanded to 188 hectares from 150 hectares and acquired a tail, causing concern for Himachal Pradesh administration.

Any increase in rainfall and water flow from the upper reaches could result in a dam burst or overflowing at any time, warned the Chinese embassy.

The depth of the lake could be about 60 metres, estimate satellite surveys, and it could discharge 140 million cubic metres of water.

Indian officials have already temporarily shut the 1,500-MW Nathpa Jhakri hydroelectric project, owing to fears that it could be ripped apart by the breaching of the swollen lake.

Project director H.K. Sharma Thursday said authorities were in full preparation for an exigency, although the data for the depth of the lake had been revised to a less threatening level.

"It is difficult to predict the scale of devastation if the river overflows, but we are on high alert," Sharma said. "The depth of the lake is 35 metres, not 70 metres."

The volumes of water gushing in would depend on the material blocking the river, he said. Big boulders would block the flow and water would flow gradually. But softer material could mean danger.

Sharma recalled a disaster in the year 2000 when close to 100 people died when a 50-foot-high wall of water gushed into the river Sutlej. This time, he added, there were fears of similar volumes of water rushing into the region.

Disasters have kept residents on tenterhooks in the hilly tracts. Earlier this week, 20 workers had to be rescued from a tunnel at Kullu valley. They had been trapped when a storm blocked the entrance.

Suncity

August 23rd, 2004, 08:20 PM

Dont think there's anything wrong with comparisons as long as its done in a healthy manner.

I think China is way ahead of India as most people know. Especially in terms of infrastructure and therefore in terms of manufacturing. Thus, we have much to learn from the Chinese. Over the course of this summer I worked with a Chinese girl during my internship and learnt than Chinese and Indian values are very similar.. I think its an eastern thing. If we can learn a thing or two from China it would benefit us greatly.

Go China, you are doing the east proud!

I agree that China is way ahead of India in many fields. Instead of criticizing China there's plenty to learn from them.

Comparisons are okay as long as they are not turned into sneering. I don't like it when someone criticizes India just to show some other country is "better". Similarly I don't like anyone criticizing China to show that India is "better".

That's my personal opinion.

But of course if anyone criticizes India I will object to it if the criticism stems from ignorance or spite.

Suncity

August 23rd, 2004, 09:50 PM

Orissa wooing big-ticket investments

August 23, 2004 17:45 IST

Orissa could be on the cusp of a new era of industrialisation with the state government considering proposals for Rs 122,000 crore (Rs 1,220 billion) in investments, mainly in steel, alumina and power sectors, official sources said.

Work on projects worth Rs 30,000 crore (Rs 300 billion) had already commenced, they said.

The proposed investments included Rs 39,000 crore (Rs 390 billion) in steel and power projects to be set up jointly by South Korean steel major Posco and mining giant BHP Billiton of Australia, Rs 20,000 crore (Rs 200 billion) petrochemical complex to be developed by the IOC, a Rs 18,000 crore (Rs 180 billion) mega power project and a six million tonne steel plant proposed by Tata Steel with investment up to Rs 15,000 crore (Rs 150 billion).

Orissa has huge deposits of iron ore, thermal grade coal and bauxite to attract such industries. As per the government policy, mineral deposits could be leased to companies only if they decided to set up plants in the state.

The sources said the Australia-South Korea joint effort would include a steel plant, which is likely to be located at Duburi in Jajpur district, a power plant, development of iron ore mines, and a port at Dhamra.

Billiton proposes to set up a metallurgical coke plant, co-generation of power, a ferro-manganese unit, an iron ore beneficiation plant and an alumina refinery. Posco's plans include a three million tonne steel plant to be expanded to ten million tonnes later.

The memorandum of understanding between the two companies and the state government was expected to be signed by December next, the sources said, adding a delegation of the firms had recently met the Chief Minister Naveen Patnaik to discuss the projects.

Cho Sang Sik, executive vice president of Posco, and Peter Beavan, chief development officer of BHP Billiton, led the delegation.

Tata Steel, which had acquired land near Gopalpur to set up a shore-based steel plant in 1997 but shelved the project later due to slow pace of development of Gopalpur port and a resistance movement by local people, has decided to build a six million tonne plant at Duburi.

"We have applied for land and this time we want to develop our own infrastructure," Tata Steel chief B Muthuraman said in Bhubaneswar.

The infrastructure included development of the Dhamra port and a railway line between Dhamra and Bhadrak. In the first phase, the investment would be Rs 1,500 crore (Rs 15 billion), he said. The project is part of Tata Steel's plan to reach 15 million tonne capacity by 2010.

A thermal power project was likely to come up at Hirma near Jharsuguda with investment of Rs 18,000 crore, the sources said.

Other major likely investments included Rs 4,500 crore (Rs 45 billion) each by Jindal Steel and Essar Steel on 2.5 million tonne per annum (mtpa) capacity steel projects and expansion of central sector National Aluminium Company Ltd with a Rs 4,000 crore (Rs 40 billion) investment, the official sources said.

Three other alumina refineries are proposed to be set up in Koraput and Kalahandi districts at a total cost of Rs 12,000 crore (Rs 120 billion).

Visa Steel and Ashok Magnetics have planned one mtpa steel plants with investment of Rs 2,000 crore (Rs 20 billion) each, while the IB Valley Thermal Power project is being expanded by adding two units of 250 mw each and would cost Rs 8,000 crore (Rs 80 billion).

indian

August 23rd, 2004, 09:59 PM

Wow, that is so cool. these projects could really change the face of Orrisa. Orrisa, as u might know has a high poverty rate and is far behind in social development. These projects could go a long way in helping Orrisa to overcome such problems.

kshatriya

August 23rd, 2004, 10:04 PM

Yeah great for Orissa.....

Suncity

August 23rd, 2004, 10:32 PM

Mark Thirlwell: Booming India deserves attention

http://www.theaustralian.news.com.au/common/story_page/0,5744,10543739%255E7583,00.html

August 24, 2004
MOST of the headlines about global trade policy in recent weeks have been grabbed by the Australia-US free trade agreement. And even as that debate wrapped up, attention has shifted to the prospect of another important FTA, this time with China. But although a focus on these heavyweights is inevitable, they are not the only game in town. In particular, India's emergence as a growing force in the world economy and as an increasingly important trading partner for Australia is of great significance.

Not too long ago, that would have seemed a strange assertion. After all, India spent much of its post-colonial history in determined retreat from the global economy. Attracted by Soviet-style planning and driven by a self-fulfilling pessimism about the prospects for export-led growth, India's development model in the years following independence was based on public sector ownership of the economy's commanding heights - and eventually many of its foothills - and a complex system of controls, licences and regulations. The result strangled the private sector and restricted growth to about 3per cent per annum.

Yet beginning in the 1980s, with a cautious shift to a more pro-business environment, and accelerating in the next decade after a financial crisis in 1991, Indian economic policy has taken a different direction. A series of governments have liberalised domestic markets while seeking to re-engage with the global economy. True, the resulting reforms have been cautious, partial and at times faltering. Policy-makers still have to grapple with tough challenges, including fiscal fragility and regional inequality. But reform has transformed India into one of the fastest growing economies.

What has been particularly intriguing about this transformation is that it has taken a uniquely Indian path. Economic development in East Asia has tended to follow a standard model, based on the mass production of manufactured goods and a gradual move up the value chain. In contrast, India is making its mark in the global marketplace by exporting services, competing in areas that traditionally were thought to be the preserve of more developed economies.

India's growth model rests on a marriage of technological progress in the telecommunications sector with a large supply of well-educated, English-speaking and relatively low-cost labour. This has allowed India to grab market share in the information technology and business process outsourcing sectors. In principle, India has the potential to be competitive across an even broader range of services.

The more successful India that is being forged by this model has the potential to reshape the global economy. It will mean a higher standard of living for more than 1 billion Indians, about 17 per cent of the world's population. And with an estimated one-third of the world's poorest people living on the subcontinent, a healthier Indian economy will have a significant effect on global poverty.

IT should also be good news for the rest of the world. A stronger and more dynamic India means new markets for goods and services. India's development model, moreover, gives the international economy access to an enhanced supply of high-quality skilled workers. Over time, this boost to the effective global stock of human capital should provide a spur to international productivity and hence to global growth prospects.

India's rise will also bring adjustment strains for other countries. Its growing presence in the market for services is leading to the birth of a truly global labour market, with all the challenges that entails. As services account for the largest share of output in developed economies, that means the eventual effect of India's service revolution on patterns of employment and growth in the developed world could prove to be greater than that of East Asia's manufacturing revolution.

At the same time, India's growing importance, combined with a powerful China, will accelerate the shift in the geographic distribution of economic power back towards Asia. This in turn has implications for the architecture of international economic diplomacy. Existing mechanisms for governing the world economy will have to adapt to this changing balance of power or lose relevance.

Historically, India has been relatively neglected by an Australia focused more on the opportunities offered by East Asia. India's emergence as an economic power means that should change. Australia's prospects have repeatedly benefited from the rise of Asian economies, with Japan, South Korea and China all providing an important economic stimulus. The birth of another Asian economic giant is the latest instalment in this good news story.

Mark Thirlwell, program director, international economy, at the Lowy Institute for International Policy, is author of the recently published Lowy Institute Paper, India: The Next Economic Giant.

cicarra

August 23rd, 2004, 10:32 PM

Suncity

August 23rd, 2004, 10:45 PM

hahaha, I knew it. It's getting so predictable now. Any thread about Indian economy will INEVITABLY involve China, and I see so many indian forumers here talk together like experts how india is superior than china. LOL.

I don't see India as being superior to China and vice versa. That's ridiculous.

I don't like these India - China comparisons.

Both India and China are great countries. Let's leave it that way.

forgetpassword

August 23rd, 2004, 10:52 PM

I think people like to compare India with China because both India and China are big developing Asian countries with over a billion population, long historical and cultural civilization, presently in the period of fast economy growth. But I agree with Suncity that this thread is about India, not comparison between China and India. :)

kronik

August 23rd, 2004, 11:16 PM

This is good showing by Naveen patnaik, the Chief Minister of the state. And i think the people of the state agree with the good work he is doing, by electing him the CM for the second time.

I think the IT industry took shape in Bhubaneshwar under his tenure, and he has worked hard to showcase Orissa as a manufacturing base for major iron and steel concerns.

Jai

August 23rd, 2004, 11:17 PM

hahaha, I knew it. It's getting so predictable now. Any thread about Indian economy will INEVITABLY involve China, and I see so many indian forumers here talk together like experts how india is superior than china. LOL.

And perhaps you'd like to point out where such is being said by so many Indian forumers?

The Indian-Chinese comparison is inevitable. The similarities between the two countries are significant. Both are booming, billion+ economies, both have huge middle classes, both have huge numbers of skilled workers, both are liberalizing, and both are the focus of significant foreign investment.

China has a decade-plus lead on India in economic development. I do not think anyone is disputing that notion, except for the odd supersensitive member who comes into this thread with preconcived assumptions (I won't point fingers); regardless, it is rather en vogue to draw comparisons between the two nations in economic magazines and papers... not just 'many Indians' with supposed superiority complexes.

I personally feel that comparing India and China is comparing apples and oranges. I won't rehash the discussion that has already taken place in previous pages of this thread (by all means feel free to actually read the thread, as opposed to ranting about what you think is in it). In short, China's 'head start' aside, both countries are pursuing different paths toward development. Only the future will tell which route is less bumpy, but regardless of the pace, development for both countries is assured.

It is only a matter of when. And it is only a matter of egos, which country get there first.

-Jai

Suncity

August 25th, 2004, 07:26 PM

Note 1 crore = 10 million

Hardware exports up 38 pc to Rs 7,700 crore in FY-04

NEW DELHI: Electronics hardware exports from the country jumped 38 per cent in 2003-04 to Rs 7,700 crore over the previous fiscal with the northern region contributing over a third of the total.

Electronics hardware exports in the last fiscal increased to Rs 7,700 crore compared to Rs 5,600 crore in 2002-03, the Electronics and Computer Software Export Promotion Council said in a release here today.

Northern region accounted for 35.5 per cent of the total with exports worth Rs 2,870 crore during the year. Noida (UP) accounted for bulk of the northern regions share with exports of Rs 1,915 crore. Delhi exported hardware worth Rs 600 crore and Haryana Rs 143 crore, ESC Executive Director Mr D K Sareen said.

Western region accounted for 32.14 per cent of the total exports from the country. Exports from the region were to the tune of Rs 2,475 crore with Maharasthra alone making up about 95 per cent of it. Gujarat had an export turnover of Rs 120 crore.

The share of southern region was 31 per cent with exports worth Rs 2,378 crore. Karnataka topped the list with an export turnover of Rs 1,998 crore, followed by Kerala which sold hardware goods worth Rs 180 crore in the overseas market.

Eastern region exported a minuscule Rs 106 crore worth of electronics hardware goods with almost all exports coming from West Bengal, ESC said. - PTI

Hindustani

August 25th, 2004, 08:17 PM

Thats good news.

indian

August 31st, 2004, 05:06 PM

Another news on exports.

Foreign trade policy eyes $300bn exports by 2009
PTI
New Delhi, August 31

In a bid to double India's share in world trade in the next five years , the Union Government on Tuesday unveiled a comprehensive Foreign Trade Policy that focuses on stepping up employment generating agriculture and service exports.

The five year National Foreign Trade Policy announced by Commerce and Industry minister Kamal Nath allows duty free import of capital goods in agriculture and consummables for metals other than gold and platinum, for promoting gems and jewellery exports.

Apart from setting up a new Handicraft Special Economic Zone, the policy provides for setting up bio-technology parks and an export promotion council for giving major thrust to service exports.

While merchandise exports account for nearly $70 billion anually, the services get an addtional $50 billion at present.

The merchandise exports are expeected to be doubled to $150 billion anually by 2009,and the service exports,growing rapidly, are also expected to touch the figure of $150 billion by the end of this decade.

Apart from announcing a new scheme Vishesh Krishi Upaj Yojana to boost agricultural exports , the policy exempts all goods and services exported from service tax.

It also exempts export oriented units from service taxand all exporters with a minimum turnoverof Rs 5 crorefrom bank guarentee requirement.

The policy lays out a number of major procedural simplification and rationalisataion measures.

A new scheme to establish a free trade aand warehousing zones has also been introduced to make India a global trading hub. Hundred per cent FDI would be permitted for developing the zones and their infrastructure facilities.

Each zone would have a minimum outlay of Rs100 crore and units there would qualifyfor all other benefits as applicable to special economic zones.

Nath said that Vishesh Krishi Upaj Yojna would boost exports of flowers,fruit, vegetables,minor forest produce and value added products.

Such exportswould qualify for duty free credit entitlement equal to five percent of FOB value of exports. The capital goods import under EPCG for agriculture would be duty free.

A new scheme 'Target Plus' has been introduced under which exporters who achieve quantum growth would be entitled to duty free credit based on incremental exports substantially higher than the general annual export target.

For incremental growth of over 20,25 and 100 percent, the duty free credit would be 5, 10 and 15 percent respectively of FOB value.

Nath said the popular exportincentive scheme Duty Entitlement Pass Book(DEPB) would be continued till it is replaced by a new scheme which will be drawn up in consultation with the exporters.

Jai

September 5th, 2004, 02:06 AM

State governments work to computerize land records (http://www.sltrib.com/nationworld/ci_2397833)
By S. Srinivasan

The Associated Press

http://extras.mnginteractive.com/live/media/site297/20040830__WN_A2CENTER_0830~1_200.JPG
Venkata Narayanappa, center, the owner of rural property in a village in Bangalore South, is helped by others to see the status of his records on a touch-screen computer at the Bangalore South Taluka.

BANGALORE, India - For three generations, two families have fought over an acre of farmland in an arid stretch of southern India, each waving documents to support its claim.

Throughout this long feud, the land deeds that would settle it have probably lain in mounds of records in some dusty, rat-infested government storehouse, and they may never be found. But now computers are coming to the rescue.

''I have another plot of 2 acres in the village and I know it can never be snatched from me,'' said Chikka Arasappa, 55, ''because I have this.''

''This'' is a computer printout of the title to those other 2 acres, courtesy of the government of Karnataka state, which has digitized agricultural land records to make them accurate, fraud-proof and easily accessible.

For India, where one-third of the people are illiterate and land is fragmented into small holdings, sorting out the deeds would be a huge boon. If it spreads to the rest of the nation of 1.06 billion people, the country whose computer skills have done so much to advance the online world will have brought the revolution back home.

''Errors in land records are now a thing of the past,'' Arasappa said, standing at the entrance to a government building in Bangalore, the state capital, where he had come to collect the new land records for himself and his neighbors.

In India, a land record is at the core of a villager's life. It represents his right to farm and live on the land; it's the basis for getting loans or flood relief, and a symbol of social position. Now those villagers can walk into any of 200 kiosks - one-room cyber-centers across the Kansas-sized state and get a printout of their deed for 15 rupees (33 cents) or register a change of ownership.

No longer do they have to deal with overworked, semiliterate village registrars who often exact a bribe of anywhere between $2 and $20 to hand over the papers and even take payoffs from land grabbers to falsify records.

India's federal government asked the states in 1991 to computerize land records, but the few that tried failed repeatedly. There weren't enough computers, the work load was too much, and the village registrars saw their income from bribes shrinking.

Karnataka learned from several failures, surveyed 27,000 villages and verified 20 million land deeds involving 6.7 million farmers. In 2001 the program called ''Bhoomi'' - ''earth'' in India's ancient Sanskrit language - went into action. Within two years every paper relating to each piece of farmland in the state was available digitally. Paper records were then banned.

Computerization can't undo all the errors made over decades when documents may have been overwritten several times. But the program ensures that no new errors can creep into records.

Jai

September 5th, 2004, 02:09 AM

India, the home of world’s homework (http://www.thestatesman.net/page.news.php?clid=1&theme=&usrsess=1&id=52540)

Syed Asim Ali in New Delhi

Aug. 29. — American and British students are getting their homework done far away from home — in India, in fact.
In what is probably the most unusual, as well as ethically dubious, example of outsourcing, Indian “content providers” are doing the homework of US and British students and charging as little as $20 for a class assignment. The reasons for this form of outsourcing are the same as the more conventional ones — India’s large pool of English-speaking and — writing graduates and, by Western standards, the cheap costs of hiring their skills.

A freelance content writer gets the assignments over the Internet through individual contacts or as work contracted out by IT companies. “The students can easily afford to get their assignments written in India at that price,” said a freelance content writer, Ms Teena Jain, who is currently finishing an essay on ‘Sociology of Ethnic Minorities in France’ for an American student. The cost is a mere $20 for an essay of 400-800 words. While the actual writing may take about half-an-hour, a lot of research has to be done by the writer before he actually starts typing. “It’s not simply a case of doing a Google search. I have to go through research papers, read books and, of course, spend some time at obscure academic websites,” said a freelance content writer, Ms Sana Saeed, who gets about five to six homework assignments each week.

While there are a lot of freelance writers working in this field, a number of IT companies like ASM Infosystems and Teamwork have also jumped into the fray.

“There are a lot of bulk assignments given to students in the West, which are in no way related to their educational backgrounds. A student of computer science may be given an assignment on African literature; students of biotechnology might be asked to write on the history of ceramics. The idea may be to make these students more culturally broad-minded, but the work given to them hardly makes any sense, which forces them to reach for content writers,” said a freelance content writer, Mr Mohit Tomar.

The ethical dubiety of such work doesn’t really bother the content writers

Jai

September 5th, 2004, 02:37 AM

Mahindra & Mahindra joins Indian Oil Corporation to research hydrogen engine (http://www.just-auto.com/news_detail.asp?art=45519)

Source: just-auto.com editorial team
Deepesh Rathore / Tilak Swarup

Utility vehicle manufacturer Mahindra & Mahindra has signed an agreement with oil major Indian Oil Corporation to research alternative fuels and energy that may lead to the roll-out of India's first hydrogen engine in the next two years.

The key areas of research will be bio-diesel and hydrogen with IOC doing the fuel research and Mahindra undertaking the implementation and testing.

The research is significant as a major oil company is investing in alternate fuel technology. Mahindra is the second major manufacturer after DaimlerChrysler to invest in bio-diesel technology and perhaps the first Indian manufacturer to be looking seriously at hydrogen power.

The two companies expect their first hydrogen powered engine to be running in two years.

Suncity

September 10th, 2004, 07:33 PM

Rural India gets its first mall

TIMES NEWS NETWORK[ FRIDAY, SEPTEMBER 10, 2004 02:09:10 AM ]
KOLKATA: Call it the second wave of India’s retail revolution. While retail giants and mall operators are sweating it out to gain a foothold in B and C class towns, India’s first rural hypermarket has silently opened its doors. Courtesy, the tobacco to hospitality giant ITC. The latter calls this the ‘second layer’ of its e-Choupal initiative.

Spread over 5 acres of land at Sehore in Madhya Pradesh, ITC has soft-launched its first rural hypermarket about two weeks back. The initial response — footfall of about 700-800 people on weekdays and soaring to 1,000 on weekends with conversion levels of 35%.

Facts and figures that can easily put the up-market stores go green with envy.

Expectedly, ITC now plans to open about 50 such stores, spread across rural Madhya Pradesh and Uttar Pradesh over the next 12 months. Investments will hover in the range of Rs 2-4 crore for each such store.

Features and facilities at these ITC malls can overshadow those in the metros. The ITC store sells everything that a rural consumer may ask for — sarees to kurta-pyjamas to shirts (in the range of Rs 99-500), footwear, groceries, electronic durable from TVs to microwaves, cosmetics and other accessories, farm consumption products like seeds, fertilisers, pumps, generators and even tractors, motorcycles and scooters.

“There is even a fuel pump for which we have tied-up with BPCL and a cafeteria. There will be a primary healthcare facility to be serviced by a private healthcare service provider and banking facilities too.

The health and banking facility will be operationalised in two months time when we will formally launch the store,” Mr S Sivakumar, CEO, International Business Division of ITC, told ET.

ITC management prefers to call the initiative the ‘second layer’ of its agri-business model, e-Choupal. “While the first layer provides the farmers necessary information about weather and prices, this hypermarket initiative will provide them another platform to sell their produce and purchase necessary farm and household goods under the same roof,” Mr Sivakumar added.

nithin

September 10th, 2004, 11:33 PM

Great news!!!

Bond James Bond

September 11th, 2004, 08:16 AM

More oil!! :banana: . . . not a big find, though. :(

http://www.rigzone.com/news/article.asp?a_id=16231

GAIL Strikes Oil in Cambay Basin
Thursday, September 09, 2004

GAIL (India) Limited, in association with the Gujarat State Petroleum Corporation (GSPC), has struck oil in block CB-ONN-2000/1 located in the Cambay basin in Gujarat. The recoverable reserves, based on initial testing results, are estimated to be approximately 10 million barrels, with an upside potential of 50 million barrels.

GAIL and GSPC struck oil in the sixth well drilled in a 1,424 sq km block under a joint venture agreement. Tests have proven the well to be a prolific light crude oil producer (360 API). A detailed geo-scientific study is currently being carried out for appraisal and commercialization of the reserves.

GAIL (India) Limited today also signed two Joint Operating Agreements (JOA's) for exploration and production in the NELP IV blocks. One agreement was signed with Enpro Finance Private Limited, for the Tripura block in the Assam-Arakan basin. GAIL has an 80 per cent participating interest in this block. The other agreement was signed for Cauvery basin block in Tamil Nadu, where both Enpro and GSPC are the consortium partners. GAIL holds a 50 per cent participating interest in this block. The Tripura block is expected to yield gas while both oil and gas are expected in the Cauvery (on-shore) basin. Exploration activities are currently in progress in both blocks.

In a bid to further strengthen its position as an integrated gas major, GAIL is actively pursuing E&P opportunities. The company is actively involved in exploration activities over an acreage of more than 90,000 sq km, and plans to invest approximately Rs 600 crore in E&P activities over the next three years.

GAIL holds a participating interest in 12 exploration blocks, comprising two NELP I blocks, six NELP II blocks, two NELP IV blocks and two 'farm-in' blocks. Out of these, four are on-land blocks and 8 are offshore blocks. The various consortium partners of the company in the 12 blocks are ONGC, GSPC, Gazprom, OIL, IOC, Hardy Exploration & Production, Enpro Finance Private Ltd., Daewoo, OVL and Korea Gas. GAIL's participating interests in these blocks varies between 10 to 80 per cent.

Recent Developments

In order to develop a healthy portfolio of upstream assets, GAIL is actively involved in exploration and production in blocks of significant potential in the Bay of Bengal. These are blocks 7 (MS-OSN-2000/2), 24 (MN-OSN-97) and 26 (NEC-OSN-97/1) in the Bengal and Mahanadi basin. The data acquisition and drilling plans are being finalized and drilling activities in Block 26, in the Bengal basin, are expected to start by the end of the year.

GAIL is also a member of the consortium exploring the A1 offshore Myanmar block. The expected gas reserves are of the order of 14 to 42 tcf in four prospects. The drilling activity in one of the prospects has already confirmed the presence of gas reserves to the extent of 5 tcf. The Government of Myanmar has issued a letter of intent to GAIL as the preferred buyer for the gas produced from the A1 Block. Simultaneously, GAIL is also studying various options to transport the gas either through offshore and onshore pipeline routes or as LNG. The options being considered include a 500-600 km offshore pipeline across the Bay of Bengal, as well as a re-gasification terminal at Haldia for receiving the LNG shipped from Myanmar.

Further, both the Government of Myanmar and Daewoo have agreed to associate with the Indian consortium, comprising GAIL (India) Ltd and ONGC Videsh Ltd (OVL), for exploration and production in the A3 block offshore Myanmar. This block, adjacent to the gas bearing block A1, has a high potential for hydrocarbon finds. The A3 block was originally awarded to Daewoo International Corporation, Korea, by the Government of Myanmar in February 2004. The extent of participation by the Indian consortium and other commercial terms are under discussion and the consortium is hopeful of a sizeable level of equity participation. A negotiation team was recently in Seoul, Korea, to discuss the possibilities with Daewoo International.

kronik

September 15th, 2004, 04:17 AM

Unlocking rural markets (http://www.businessworldindia.com/sep2004/indepth02.asp)

ITC flags off its first rural mall in Madhya Pradesh. What is its gameplan?

Sometime back, ITC chairman Yogi Deveshwar promised his shareholders that the company would open 1,000 rural malls in India. This is the first one to have come up. As such, Chaupal Sagar is one of the first organised retail forays into the hinterland.

Walk into the building and the first thing you notice is the high ceiling. That is because the building is actually a sprawling warehouse for storing the farm produce that ITC buys through its e-chaupals. The mall has come up in one part of this warehouse.

It works like this. With its network of e-chaupals , ITC communicates its latest commodity prices to the farmers via the Internet or VSAT lines. If they find these attractive, they sell their produce to ITC.

In the first phase, having wired up the hinterland, it began using the network to enable a two-way flow of products and services to the rural economy. Working through the sanchalaks, ITC first pushed its own products, like salt, into the hinterland, and then invited others like Parachute and Philips to ride on this distribution chain. Today, it plans to similarly create revenue streams around its warehouses.

But the farmers will come here only after every harvest. To ensure that they keep coming to Chaupal Sagar even at other times, the company is offering a slew of other goodies. Another building is coming up next to the main warehouse. When completed, it will house a bank, a cafeteria, apart from an insurance office and a learning centre. ITC has tied up with agri-institutes to offer farmer training programmes. Then, plots of land have been earmarked to display large agricultural machinery like threshers. Other parcels of land have been earmarked for pesticide and fertiliser companies for demonstrating their products. A petrol pump is coming up as well.

Its a really detailed article about how the ITC plan is helping other companies sell products in tiny villages where they could never reach before. Worth a read.

http://www.businessworldindia.com/sep2004/images/images_20setember04/indepth/itc.jpg

http://www.businessworldindia.com/sep2004/images/images_20setember04/indepth/teactor.jpg

http://www.businessworldindia.com/sep2004/images/images_20setember04/indepth/itc2.jpg

Suncity

September 15th, 2004, 04:45 AM

Unlocking rural markets (http://www.businessworldindia.com/sep2004/indepth02.asp)
Its a really detailed article about how the ITC plan is helping other companies sell products in tiny villages where they could never reach before. Worth a read.

That's a real interesting article. It will be interesting to see how these malls turn out. Hopefully they will be successful.

Jai

September 16th, 2004, 10:11 AM

Tales of amazing progress and India’s enterprising sons (http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/opinion/2004/September/opinion_September13.xml&section=opinion&col=)

BY PHILLIP KNIGHTLEY

11 September 2004

INDIA’S amazing progress appears to continue unchecked. Every list of nations that will lead the world by the middle of this century now includes India. The business pages of western newspapers and magazines are full of Indian success stories.

Even the knockers have been silenced. A British journalist set out to show that the practice of moving the call centres of British companies to India had been a disaster. The story was to be that Indians staffing the call centres were ignorant of British attitudes and unhelpful. He found the exact opposite and was sufficiently honest to say so.

New examples of Indian business initiative appear almost daily. Take the electric car, a development that every major nation wants to encourage to remove our dependency on oil and help the environment. The solar car enthusiasts who race their cars over hundreds of kilometers in the United States and Australia have been at the forefront in inventing electric motors to power their vehicles. (They use solar power to charge the batteries that drive the motors).

The Northern Territory University of Australia (NTU) developed an electric motor that does not need a mechanical gearbox and could therefore be mounted directly on the axle of a vehicle. Known as the axial flux motor, it was further improved at George Washington University in Virginia by a team led by Professor Nabih Bedewi (an Indian Muslim) and which included a Japanese solar car builder, Eric Takamura, and an Indian MBA, Anubhav Sethi.

Their motors achieved an almost unbelievable efficiency rating of 95 per cent. You would imagine that every car maker in the world would be knocking at their door to mass produce their engine, but, almost unbelievably, their company, New Generation Motors (NGM), had financial problems. Enter Rahul Bajaj of Bajaj Motors, India. He acquired the licence to manufacture and market the NGM motors in India and immediately invested $5 million in a factory near Pune. He plans to launch an electric auto rickshaw, the Eco-Ric, later this year. According to the website goodnewsindia.com, the Eco-Ric will sell for Rs1.5 lakhs, does 130 kms on a single charge, can be recharged overnight and apart from being pollution free, is almost silent. Electric motors in scooters and bikes will follow in due time and, eventually, Bajaj plans electric cars as well. The Wall Street Journal points out that Indian motor scooters are making inroads in export markets from Manila to Miami and that Tata is exporting Indian-designed and made automobiles all over the world while well-known car makers such as Daimler-Chrysler and Toyota now import crankshafts, steering wheels and other automobile parts from India. Then there is a new growth industry of a very different kind - health tourism.

First class medical care in many western countries is either too expensive, or in countries like Britain that have a national health service, involves lengthy waiting lists for major operations. India has stepped into the gap in this market and hopes to attract one million health tourists a year worth up to $5 billion. A heart by-pass operation in the USA can cost $30,000 compared with $6,000 in India. A bone marrow transplant costs $250,000 in America and $26,000 in India. Elderly people who have waited months for a hip replacement in Britain can get it done immediately in India at little more than the cost of a holiday there. Clinical outcomes in India measure up the best in the world, the doctors are mostly internationally qualified, and the general care in the hospitals more attentive than in the West.

Last year about 150,000 patients travelled to India for treatment ranging from complicated brain surgery to the replacement of amalgam teeth fillings with porcelain. The next logical step will surely be care homes for the elderly. British old-age pensioners can have their pensions paid anywhere in the world. If they could be certain of a pleasant environment and a high standard of care, then I am sure many could be persuaded to move to India and use their pensions there.

When I have suggested this to elderly friends in Britain they often reply that they would not see their children and grandchildren so often. To this I reply that in modern Britain with the collapse of old-fashioned family life, they do not see them very often here anyway. And wouldn’t the relatives be more likely to visit grandpa and grandma if it involved a holiday in an exotic foreign country?

Phillip Knightley is a London-based columnist

huaiwei

September 16th, 2004, 01:56 PM

http://thestar.com.my/common/images/thestar_140x45.gif

Sunday August 15, 2004
India as option for investment

By Seah Chiang Nee

WHILE China remains a powerful attraction, Singapore – one of Asia’s major in- vestors – has been turning its attention to India and other countries to diversify its interests. In the last few months, the republic has been focusing on the world’s second most populous nation, which estimates that its population will hit 1.46 billion by 2035, overtaking China.

Besides, India’s economy has been rising rapidly in proportion to its expanding middle class.

Last month, Goh Chok Tong visited India to cement ties, just a month before he stepped down as Prime Minister. This was part of Singapore’s diplomatic offensive to gain more – and closer – friends and trading partners to counter a dangerous, terror-threatened world and a changed global economy.

The strengthened ties with India are not confined to trade and investment but, unlike China, also cover defence and military co-operation. In the past two months, new business activities have included:

• ONE of India’s fusion high-fashion retailers, RSH, set up an outlet in Orchard Road, the first of its kind in Asia.

• THE Ahmedabad-based Megh- mani Organics became the first Indian company to be listed in the Singapore Stock Exchange. It has begun trading, recording a history of sorts.

• SINGAPORE Airlines (SIA) announced the launch of direct flights between Amritsar and Singapore three times a week from Oct 1, raising to 10 the number of destinations with 49 weekly flights.

• SOME of Bollywood’s leading stars staged a dazzling show for a crowd of 6,000 at the Singapore Indoor Stadium. The city was also used for a location shoot.

India has been overshadowed by China in attracting foreign investment, both in volume and profile. But with China becoming overheated, overcrowded and foreigners finding it harder to make a profit, Singaporean businessmen are casting their eyes elsewhere.

This includes the government – with US$100bil (RM380bil) to invest – and government-linked companies, which are among the most active business predators in the region. These are people who have, since Singapore’s inception, been anxious not to put too many eggs in one basket.

Investment in India has, however not reached the level Singapore has with other neighbours. It has been actively buying up large stakes in banks, telcos, hotels, property and ports in Hong Kong, China, Australia, Japan, Indonesia, Thailand and Malaysia. By comparison, India has been a laggard but not for lack of enthusiasm. The ideological and myopic policies of successive Indian governments have kept many foreigners out.

Despite this, the city-state has become India’s third largest foreign investor, putting in US$1.27bil (RM4.9bil), but Goh said this could double in the coming months. Bilateral trade has also powered ahead to S$7bil (RM15bil) from S$4.2bil (RM9.2bil) in 2002.

Last month, the two countries decided to close ranks on a host of security, strategic and economic issues. It also paved the way for Singapore to train its Air Force and Army units in India. Last year, they signed a defence co-operation agreement, setting up a regular bilateral dialogue on security matters. In March, the Indian and Singapore navies conducted a joint 12-day anti-submarine exercise in Kochi, India.

Most young Singaporeans find democratic India, a fellow Commonwealth partner, more reliable and trustworthy than communist China. Being targeted for a bombing attack and the global war on terrorism are not the only reasons for widening Singapore’s window to the world. The republic also needs to expand its economic activities and find new partners. India is a natural choice.

Since early this year, Singapore’s top leaders had visited a total of 26 countries including the United States, China, India, Japan and several in the Middle East, South America and Africa. Making the foreign forays were Goh, Lee Kuan Yew and current Prime Minister Lee Hsien Loong as well as other ministers.

Some 7% of Singapore’s 3.5 million citizens are ethnic Indians. They provide a small, but relatively rich market for Indian products. Little India, a section in the city where ethnic Indians congregate, is expanding. Many Indian shops and restaurants are situated there.

This was why Bollywood chose Singapore to launch its international plan to promote itself. The idea was to choose a place with a large South Asian audience, fly in a colourful bunch of film stars and dance troupes from India, stage a glitzy film awards extravaganza, then party, party and party.

One journalist wrote: “Last year the party was in Johannesburg. The year before, it was Malaysia's Genting Highlands resort. This year the roulette ball stopped at Singapore.”

A growing number of Singaporean Indians are already setting up businesses in Indian cities. India is unlikely to replace China until its government frees up on its restrictive policies and clears its bureaucratic landmine.

China, however, is not without dangers. A big country with big opportunities has also big problems. Even leaving aside internal ones, a major overhanging danger is the Taiwan issue. For years, Chinese-educated businessmen here had believed that Singapore, being Chinese-dominated, would have a special advantage doing business in China.

It took some time to dispel this notion. With this experience, Singapore’s ethnic Indians appear not to believe it in India. “Being Indian helps only to the extent that I can talk to my workers, nothing more,” said a Singaporean textile factory owner in Chennai, India.

But one thing is certain. With three economic heavyweights in Hsien Loong’s new Cabinet, Singapore’s investment abroad is set to rise further.

Seah Chiang Nee is a veteran journalist and editor of the information website littlespeck.com

kshatriya

September 21st, 2004, 07:09 AM

Rajasthan turns Cairn Energy's fortunes (Sept 16-30, 2004)
PM News Bureau

British energy firm Cairn Energy plans to produce, by the end of 2007, up to 5 million tonne of crude oil from its recent discoveries in Rajasthan which would be equivalent to 15 per cent of oil produced in the country. The gigantic Mangala and N-A fields, the largest finds in more than two decades, are planned to come on stream at between 60,000 barrels and 100,000 barrels per day toward the end of 2007. According to Bill Gammell, Chief Executive, Cairn Energy, "During 2004 Cairn's fortunes and prospects have been transformed through major exploration success in Rajasthan. An extremely active exploration, appraisal and development campaign is continuing with the potential to add further significant value."
To date, Cairn has drilled 40 wells in Rajasthan block RJ-ON-90/1, comprising 22 exploration wells and 18 appraisal wells, which have led to 10 discoveries. These discoveries have established an in-place reserve of more than 2 billion barrels, half of which lie in Mangala field.

Suncity

September 23rd, 2004, 09:36 PM

India on verge of huge growth: NYSE CEO

http://im.rediff.com/money/2004/sep/23pm2.jpg

There is growing recognition in the United States that India stands on the threshold of tremendous growth and influence as an economic power in the global community, the chief of New York Stock Exchange, the world's largest bourse, said in New York on Wednesday.

"Your economic reforms favouring freer markets, development of infrastructure. . . prudent spending and commitment to education will further India's position in the global leadership," said John A Thain, Chief Executive Officer of NYSE welcoming Manmohan Singh who is the first Indian Prime Minister to visit the place.

Welcoming Singh as the leader who is directing India's effort at sustainable growth which will benefit every segment of India's society, Thain said Singh, in his previous role as finance minister was instrumental in directing an economic agenda that has become the foundation of India's economic growth in the past decade.

Hailing Singh as the leader of the world's largest democracy, Thain said the financial community is looking forward to hearing his vision for India's future. "We hope to hear of the opportunities for greater economic ties between our two great nations."

Thain said this was a very historic occasion for the New York Stock Exchange because it is the very first visit by a prime minister of India to the institution.

The visit, he said, comes at a propitious time when India and the United States already share the special distinction of being two of the world's largest and oldest democracies.

"Today," he said, "our two nations share not only common political values but also a commitment to free economic systems."

He noted the interaction of the entrepreneurs of the two economies and said the New York Stock Exchange has been fortunate to play a small part in facilitating it.

Thain pointed out that seven of India's companies are already listed on the stock exchange with the eighth to be listed soon.

The stock exchange listed the Indian companies listed with it already as ICICI Bank, VSNL, Wipro, Dr Reddy's Laboratories, Satyam Computers, HDFC Bank and MTNL. Tata Motors has announced its intention to list on NYSE by the end of this month and will become the eighth Indian company to join the NYSE.

The combined average daily trading volume of Indian stocks on NYSE this year, the exchange said, has been over 2 million shares a day, with ICICI Bank, Satyam Computers and Dr Reddy's being the three most liquid Indian stocks on the bourse.

The NYSE also serves as a global platform for the government of India, various state governments, industry associations and NYSE-listed Indian companies to reach out to the US business and investor community, the exchange said.

Currently, the NYSE is the premier listing venue for non-US companies with 456 companies from 47 countries with a global market capitalisation of $4.9 trillion. -- PTI

Suncity

September 23rd, 2004, 09:43 PM

NEW DELHI - The United Nations Conference on Trade & Development (UNCTAD) on Wednesday placed India among the top four Asian foreign direct investment (FDI) destinations and said it will get more foreign investment flows as the global economy rebounds this year.

The report showed that FDI inflows to India grew by 24% to US$4.26 billion in 2003 over $3.44 billion in 2002, putting India among top 10 FDI destinations among developing economies and fourth among Asian nations.

FDI outflows amounted to $913 million, against $1,107 million in 2002. It ranked 114 in an inward FDI performance index and 61 in outward FDI performance.

Launching the report here, economic think-tank Research and Information System, Director General, Nagesh Kumar said: "These figures are underestimated as India is not following international definition of FDI. This could be $7 billion according to international norms."

FDI should normally include fresh inflows, reinvestments and borrowing by foreign subsidiaries from their parent companies, whereas India only takes into account new inflows.

According to the UNCTAD estimation, the declining trend of FDI flow worldwide will reverse in 2004 as world economies have shown some encouraging figures this year.

Suncity

September 23rd, 2004, 09:45 PM

India needs USD 150 bn investment in infrastructure: PM

In the first Prime Ministerial presentation at the world's largest bourse, Manmohan Singh today said India needed USD 150 billion investment on a conservative estimate over the next few years for a "quantum leap" in infrastructure sector over which he claimed there was "maximum political consensus." In a luncheon-interaction at the New York Stock Exchange with top-notch American CEOs who account for over a trillion dollars of assets, he announced a proposal for establishment of an Investment Commission with an "envoy extraordinary" on the basis of a "stable and incrementalist" FDI policy that will seek investment, particularly in high technology, manufacturing and export sectors.

Conveying a message that he meant business, Singh said he himself headed a committee on infrastruture to eliminate policy bottlenecks and that the National Common Minimum Programme of his UPA government was very investment-friendly.

Singh, who pioneered economic reforms in India during early nineties at the height of a foreign exchange crisis, listed the various advantages in investing in India that has now set an annual growth target of 7 to 8 per cent.

The advantages included an English-speaking open society based on rule of law, an excellent potential R and D base, strong science and technology capabilities with the largest pools of trained technical manpower, he said.

Added to this was the low operational costs, large domestic market and scalability with many more areas of opportunity.

huaiwei

September 24th, 2004, 09:28 PM

Sino-Indian ties could alter the trade balance

By Anna Greenspan

BEHIND the headlines about a shifting power balance between the rising Asian giants - China and India - and the West, a new relationship is quietly taking shape that could affect the world economy profoundly: the rapidly growing business ties between the once estranged giants of Asia.

Newspaper headlines portray China as the world's manufacturing base for low-cost goods, like clothing and shoes, and India as the global IT monopoly-to-be. Unfortunately, media outside Asia have failed to acknowledge the growing partnership between the two giants.

According to director of the Institute of South and Central Asian Studies Wang Dehua, western China has been especially eager to promote regional cooperation.

Last month, a trade delegation from Yunnan province visited India and signed a joint declaration with the Confederation of Indian Industry, vowing to strengthen economic ties and further facilitate cross-border trade and investment. Given the complementary nature of their economies and the size of their markets (nearly 2.2 billion people in total), the nascent cooperation between the two holds the potential to dramatically alter the world trade balance.

A perusal of the Shanghai technology corridor reveals a hint of the countries' industrial interconnectedness. Walk through one of the main complexes in Shanghai's Pudong Software Park, and you will see a prominently displayed sign for Infosys, one of India's most respected IT firms.

The complex also holds Satyam, the first of India's software service companies to set up offices in Shanghai. Nearby is the headquarters of the largest software services company in Asia, Tata Consultancy Services (TCS), which runs an outsourcing centre for GE in Hangzhou. TCS is owned by the Tatas, one of India's most prominent business families.

Across the river is NIIT, the principal software training centre in India's private sector. Operating in China since 1998, it now runs an extensive two-year course in 25 provinces, training 20,000 students to be software professionals. There is widespread speculation that Wipro, India's only giant IT firm without a presence in the city, will establish a Shanghai office soon.

CREATING LINKS

IT IS no surprise that Indian software companies are setting up in China. They, like everyone else, sense great opportunity in one of the largest, fastest-growing economies in the world. What makes the activities of Indian companies particularly interesting is that they are helping to create links between these giant neighbours - two countries that have been estranged since the 1960s.

For thousands of years, the Sino-Indian 'border' was crisscrossed with trade routes. The flow of goods and ideas, particularly Buddhism, had a profound influence on shaping the entire culture of Asia.

As India's first ambassador to China, K.M. Panikkar writes in India And China: A Study Of Cultural Relations, the prolonged contact between the neighbours 'has been the major factor in the shaping of the Asian mind, for, from China, its influence radiated to Korea, Japan, Mongolia, and other more distant lands'.

In recent centuries, these links cooled and, after the Sino-Indian War of 1962, were almost completely severed. By the end of the 20th century, the two populations had become strangers. Speak to ordinary Chinese or Indian citizens about their neighbours, and they will more likely respond with stereotypes (not necessarily negative) or comments about strange eating habits than reply with first-hand knowledge or insight. Sometimes it seems that India and China appear even more exotic to each other than they do to those in the West. This is partly due to the fact that, although flights are beginning to open up, it still costs about as much to fly from Shanghai to Mumbai as it does from Shanghai to New York.

Yet, despite this estrangement, the fates of the two countries bear an almost uncanny resemblance, beyond anything that can be explained by mere geographical proximity. Both are demographic superpowers with more than a billion people each, and both are proud nations with ancient histories whose power waned throughout the modern period.

They felt similarly overwhelmed by colonial influences, and, in response, both developed strong leaders who led their respective countries to national independence. Both India's first prime minister Jawaharlal Nehru and Chinese leader Mao Zedong created highly independent modern states that pursued strategies of cultural and economic protectionism. These were eventually abandoned - or radically reinterpreted - as both countries adopted policies of economic reform and liberalisation, opening themselves to the world.

On the other hand, Asia's giants can also appear as mirror opposites, a perception most succinctly expressed in both countries by the oft-repeated idea that China has excelled in hardware while India has excelled in software.

In part, this reflects a division within the IT industry: China manufactures chips and electronic components, while India writes the codes that power the hardware. This division also demonstrates a much more profound difference between the two countries.

China excels at building infrastructural hardware - buildings, bridges, power, telecoms, roads - areas where India is remarkably weak. Meanwhile, China's great shortcomings in democratic development, information dissemination, and independent media are all soft power issues where India shines.

The realisation of these complementary strengths and weaknesses has prompted a surge of interest in bilateral business relations in the last one or two years. Businesses on both sides of the border are increasingly appreciative of the potential for growth in the giant next door.

'In the last couple of years the whole relationship is taking a complete U-turn,' said Harsh Vardhan of Satyam. 'The amount of engagement which is happening between India and China now, both at the government level and at the business level, has exponentially increased.'

This renewed relationship can be measured in overall levels of trade, with economic and bilateral trade tripling in the past three years.

In addition to IT trade and interactions, India facilitates China's economic development by exporting raw materials and semi-finished goods, as well as shipping Chinese cargo overseas. Chinese firms, for their part, have just begun to tap India's ever-expanding consumer market by exporting electrical machinery, home appliances, consumer electronics and mechanical goods. A decade ago, trade between India and China was a paltry US$300 million (S$509 million), by the end of this year, it will cross the US$10 billion mark.

Yet, this is just the beginning. 'We are going to see a lot more action in business and commerce between these two countries,' promises NIIT's Prakash Menon. And the result will not be merely the transformation of India and China from suspicious competitors to friendly collaborators.

PARTNERSHIP AHEAD

'IT'S like in the early stages of infatuation,' said Mr Sunil Kumar, of the Confederation for Indian Industry, musing about the relationship between India and China. 'You are mysterious to each other, but you are trying to find out more about each other.'

The world should pay attention and get ready for a time, in the not-so-distant future, when this infatuation turns into a full blown affair.

As Mr Menon suggests, 'If India and China can learn to market to each other, I don't think they will need any other country. In the first 50 years of this millennium, the East meeting the East is going to be a lot more powerful than the East meeting the West.'

The writer is an independent scholar working in the areas of digital culture and globalisation. Rights: YaleGlobal Online, www.yaleglobal.yale.edu

Suncity

September 25th, 2004, 04:00 AM

INDIA SEES GROWTH OPPORTUNITY THROUGH NANOTECH

By Candace Stuart
Small Times Magazine Editor

http://www.smalltimes.com/document_display.cfm?document_id=8285

Sept. 15, 2004 - Mention India and technology in the United States and Europe, and the response will likely include the words software services and outsourcing. But within India, nanotechnology is frequently taking a prominent role in presidential speeches.

India’s president, A.P.J. Abdul Kalam, is promoting nanotechnology as the vehicle for increasing wealth and improving the quality of life in the impoverished nation of more than a billion people. An aeronautical engineer recognized for his work with launch vehicles and satellites, Kalam has been encouraging the scientific and education communities to embrace the opportunities nanotechnology offers.

“Two technologies are unfurling for further investigation, development and application,” Kalam said from India during a joint India-United States videoconference on space. “One is the reusable technology with multiple launching capabilities and another is through nanotechnology.”

Kalam repeated the message in late July during an awards ceremony at the Indian Space Research Organization Satellite Center. “Nanotechnology is knocking at our doors,” he said. “It is the field of the future that will replace microelectronics and many fields with tremendous application potential in the areas of medicine, electronics and material science.”

In 2003, India’s Department of Science and Technology initiated a nanoscience research program that began to take shape this year. The agency earmarked about $400,000 for research equipment. The country is said to have allocated $26 million overall to nanotechnology recently.

The Indian Institute of Technology in Roorkee, Jawaharlal Nehru Center for Advanced Scientific Research and universities in Madras, Pune and Benaras are among the top contenders for funding that could exceed $1 million this year.

In late June that Kalam asked his administration to develop a plan for yet more nanotech funding. He is about midway through a five-year term in which he is stressing technology’s role as a catalyst for economic development and stability. He says his goal is to “transform India into a developed nation by 2020.”

In the meantime, he has continued to raise nanotechnology’s profile among children as well as adults. Addressing an audience of schoolchildren in a town outside Bangalore this summer, he predicted that fields such as nanoelectronics would dominate their future.

snake

September 25th, 2004, 11:48 PM

[B]Sino-Indian ties could alter the trade balance

No way under current situation and policy. Sino-Indian trade mostly keeps in raw materials exchange. India sells iron ores and China sells cokes.

India put ridiculously amount of anti-dumping against Chinese goods. Half of total India's anti-dumping cases are against Chinese goods, and half of anti-dumping cases Chinese received are from India. Too much untrust and no way two-nations trade can go further levels.

The world is puting too much hype on this Sina-India trade stuff.

Suncity

September 28th, 2004, 05:24 PM

India purchasing power going up: World Bank

Tuesday, 28 September , 2004, 14:55

Ahead of Fund-Bank meeting, the World Bank today placed India as the fourth largest economy in terms of purchasing power parity, even as it said the country lagged behind in technology and efficiency.

In its World Development Report 2005, the World Bank said India’s gross national income was at $ 3,068 billion and per capita income at $ 2,880 by purchasing power parity.

Praiseworthy of "improved" investment climate in India during the 1980s and 1990s, it said the share of private investment to GDP nearly doubled.

"As a result of liberalisation of the economy, private investment, as share of GDP, grew from less than 9 per cent in 1981 to more than 15 per cent in 2000. Growth increased from an average of 2.9 per cent a year in the 1970s to 5.8 per cent in the 1980s and 6.7 per cent in mid 1990s," it said.

However, the World Bank said India was held back in technology and efficiency due to lack of proper exit policy, which sought to close down inefficient industries and lay off surplus workers.

Apart from this, the report said the other factors were insistence on protecting smaller companies regardless of whether they were efficient and competitive and "snails pace" at which the judiciary disposes of cases.

"Though investment and productivity improved in industries close to technological frontier, they failed to improve in less technologically advanced industries," the World Bank report said.

It said the general trend was that many firms improved their total factor productivity "significantly" but "aggregate numbers have been slow to respond."

"In many sectors, the dispersion of productivity has increased with the more advanced firms realising additional gains, and the least producing firms failing behind," it said.

However, the World Bank said the recent Government reforms should speed up bankruptcy procedures in 2003 though it took longer in India (11 years).

Stressing that reservation policy to protect small firms was "self-defeating" since it "motivates small firms to stay small," it said the policy, which encouraged the stagnation and incurred high producer and consumer costs, had "hampered" growth in light engineering and food processing.

In a review, the bank found that over 550 items on the list of reserved products could be freely imported and as many as 90 items were manufactured by just one firm and 68 products accounted for 81 per cent of total value of production of reserved items and 83 per cent of the firms.

Finding delays in judicial dispensation, it said there was a need for an efficient court system and new research underlines the importance of well-performing courts for a sound investment climate.

Better courts reduce the risks firms face and so increase the firms willingness to invest more, it said.

Hindustani

September 28th, 2004, 06:24 PM

Thats about right I think. If I have to guess Top 3 would be US, Japan, China in that order. Yep. India is 4th.

Suraj

September 28th, 2004, 07:07 PM

We've been #4 for a few years now. The report doesn't indicate the years for which GDP PPP numbers were collected. The last World Bank numbers I saw were 2001-02, or earlier. With the huge bump last year, and a smaller one this year, we'll have liked moved into #3 position by now. Further, the WB document mentioned below has a rider against our PPP GDP figure - it is an estimate. I hope its higher in reality :)

The rankings are:
1. USA ($10.8 trillion)
2. China ($6.4 trillion)
3. Japan ($3.5 trillion)
4. India ($3.1 trillion)
5. Germany ($2.3 trillion)
6. France ($1.63 trillion)
7. UK ($1.6 trillion)
8. Italy ($1.55 trillion)
9. Brazil ($1.37 trillion)
10. Russia ($1.31 trillion)
(Source: http://www.worldbank.org/data/databytopic/GDP_PPP.pdf)

The latest figure I've seen for India's absolute GDP was $665 billion. Hopefully we'll make it close to, if not go beyond, $700 billion at the end of the fiscal. Go India!

Ubermensch

September 28th, 2004, 07:44 PM

I dont think I would go by PPP figures to denote economic standing. Would still do it with absolute numbers where I believe we are ranked 12th.

Need to keep moving up :)

Suraj

September 28th, 2004, 07:53 PM

PPP figures are there for a reason - to *attempt to* equalize the disparity in cost of living and cost of goods between countries. Its not perfect, but it is IMHO a better barometer of the relative sizes of economies than absolute GDP figures. There's definitely the bragging rights in absolute GDP figures that cannot be disregarded though. I yearn to see the day when our absolute GDP tops $1 trillion, hopefully within the next 2-3 years.

On another note, look at the 2003 (http://www.worldbank.org/data/databytopic/GDP_PPP.pdf) GDP PPP figures against the 2002 (http://encyclopedia.thefreedictionary.com/List%20of%20countries%20by%20GDP%20(PPP)) figures.

Our PPP GDP has risen from $2.65trillion to $3.1 trillion. Both the US and China have seen their GDP rise by a similar absolute amount. However they started on much higher bases. The US went from $10.4 to $10.8 trillion. China went from $5.9 to $6.4 trillion. We have therefore the fastest relative growth in PPP GDP among the big 10. Two countries (Japan and Russia) saw their PPP GDP figures fall. In fact another one year PPP GDP increase of the same amount will see us top Japan to move into the #3 slot.

kronik

September 30th, 2004, 04:27 AM

IMF sees Indian economy booming (http://us.rediff.com/money/2004/sep/29imf.htm)

Indian economy is poised to grow by 6.4 per cent during the current year and 6.7 per cent in 2005 but deficient rains are raising concerns about agricultural growth, the International Monetary Fund said in Washington on Wednesday.

The IMF, in its annual World Economic Outlook released in Washington, said current projections for 2005 was 6.7 per cent.

China's rapid growth, which may well be sustained for two decades or more, will also result in a sustained -- although on a smaller scale -- reorganisation of global production, the IMF said adding it will be more so if it is joined by India.

Both these developments suggest the scope for sustained productivity gains, coming most rapidly in those countries that are sufficiently adaptable to take advantage of them.

kshatriya

September 30th, 2004, 12:28 PM

Economy grows by 7.4 pc in Q1

New Delhi, Sept. 30. (PTI): In what has come as a boon to the UPA Government, the economy grew by a robust 7.4 per cent in the first quarter of this fiscal from 5.3 per cent in April-June 2003, raising hopes of sustaining high GDP growth this fiscal.

While manufacturing and services sector sustained high growth of over 8 per cent, the farm sector showed a respectable 3.4 per cent growth in slack seasons of April to June as against a marginal 0.1 per cent in year-ago period.

The impressive growth in the economy reinstates Prime Minister Manmohan Singh's assertion that the country was firmly on the reform track and was expecting 7-8 per cent growth in the next five years.

Finance Minister P Chidambaram too got a shot in the arm on the eve of IMF-World Bank meeting starting tomorrow in Washington, where he is expected to showcase India's economic strength and press for greater investments from multilateral agencies.

The high GDP growth comes as a surprise in the backdrop of near drought-like situation and flash floods in some parts of the country, spiralling inflation and the initial uncertainty over the pace of reforms.

According to the data released by Central Statistical Organisation, GDP was estimated at Rs 3,52,117 crore at constant prices during April-June 2004-05, as against Rs 3,27,842 crore in the year-ago period, showing a growth of 7.4 per cent.

At current prices, GDP is estimated at Rs 6,47,421 crore in the first quarter of this fiscal, from Rs 5,76,521 crore in the year-ago period, showing a growth of 12.3 per cent.

Bond James Bond

September 30th, 2004, 07:25 PM

^Damn, you beat me to it. :D

indian

October 1st, 2004, 01:26 AM

I dont think I would go by PPP figures to denote economic standing. Would still do it with absolute numbers where I believe we are ranked 12th.

Need to keep moving up :)

Don't worry bro, we will be the number 3 in 2050, with $27 trillion.If MMS can take some hard decisions on reforms, we will be there earlier.

Hindustani

October 5th, 2004, 09:24 PM

Suraj

October 5th, 2004, 09:37 PM

Information taken from www.projectstoday.com, India's largest database on New projects.

Projects by states

1.Maharashtra: 1584 projects, Rs.207466 crore

2.Gujarat: 529 projects, Rs.169298 crore

3.Tamil Nadu: 811 projects, Rs.160490 crore

4.Karnataka: 933 projects, Rs.155363 crore

5.Andhra Pradesh: 976 projects, Rs.140562 crore

Can someone convert these figures into US$$. It'll be much easier to understand. :) .......thanks.

Projects by Sectors

Services & Utilities: 8347 projects, Rs.869398 crore

Irrigation: 472 projects, Rs.163635 crore

Manufacturing: 1400 projects, Rs.351541 crore

Mining: 355 projects, Rs.91527 crore

Electricity & Non Conventional Energy: 1036 projects, Rs.645058 crore

Exchange Rate today: Rs.45.8/$

Maharashtra: $45.30 billion
Gujarat: $36.96 billion
TN: $35.04 billion
Karnataka: $33.92 billion
AP: $30.69 billion

Service&Utilities: $189.82 billion
Irrigation: $35.73 billion
Manufacturing: $76.76 billion
Mining: $19.98 billion
Electricity: $140.84 billion

Are these committed investments or planned ones ? The numbers are pretty big, though I wish more investments were made to the agri sector. It is the primary sector that holds down our GDP growth. Sustained agri growth rates of 4-5% per annum will help us maintain 8% overall GDP growth rate .

Hindustani

October 5th, 2004, 10:00 PM

indian

October 6th, 2004, 01:37 AM

Suncity

October 6th, 2004, 02:28 AM

Suraj......Thanks

"Projectstoday" is quiet accurate. They keep track of every project in remotest corner of India. These figures are believable. Looks like they are committed & planned (MoU) put together. Could be in various stages of implimentation.

New Projects as of today:232
New Tenders as of today:557

AP & Karnataka are neck to neck which was predictable. Whats surprising is Maharashtra so much ahead of Gujurat in terms of investments. & also West Bengal not even in top 5 being an energy surplus state.

Don't know about the numbers. Projects today bases them on what they are aware of.

West Bengal had been at the bottom of the heap of the states ever since the communists and their strange policies trashed the state. Private capital and investment was almost a no no! The communists thought that in the interests of the "greater good" of the people, they had right to pick and choose investment and everybody would bow to their wishes. The businesses just got fed up, packed their bags and left.

Since the early nineties (followed by the collapse of communism/socialism in most of the world) the Indian communists have been more pragmatic. But they have started late and playing catch up isn't easy. Private capital started getting a welcome in the earnest since 1994. The late pragmatism has meant slight improvements and West Bengal probably is a middle level state (my perception).

Though I also have to say that many of India's economic surveys by different groups are not trustworthy when it comes to West Bengal. If the economists happen to be leftist they paint a rosy picture too good to believe. If they are extreme left or right wing economists they will paint a gloomy picture too bad to believe. You can be sure if India Today or Ananda Bazar Patrika commission a national survey on anything, they will be heavily biased against West Bengal. So the truth probably lies between what the Left, Extreme Left, Right and the media tell.

Here's an interesting article..

Comrade capitalist
Even as the ideologues at the centre cry halt, the ruling left party in West Bengal embraces reforms.

D.N. Mukerjea

SITTING beneath a picture of Lenin, Nirupam Sen says: "We are not building communism in West Bengal. Neither are we building socialism. We are building capitalism, I can tell you that." He is West Bengal's minister for commerce and industries, and joined the communist party in 1964. A few rooms away in Kolkata's Writers' Building, chief minister Buddhadeb Bhattacharjee agrees with what his minister said and quotes Deng Xiaoping: "You learn the truth from the facts."

It would be wrong to say that West Bengal has turned just a paler shade of red. Except the red hammer and sickle signs that still colour Kolkata's walls, there is little that is red about the rest of the state today. Workers have been laid off, unviable public sector units have either been closed or put up for divestment, foreign firms have been encouraged to set up base, and unions asked to shut up.

Reconciling the ideals of Marx and Lenin with those of a free market is something Kolkata's communists do with practised ease these days. "Communists are realists," says Sen. "If I am to say no to private investment and say that only the government will invest, where will I get the money ?" asks Sen. Or, as Bhattacharjee declared famously some days back, "Marxists are not fools." He says he chose his words carefully, to send a message, particularly to businessmen and the media.

Yet his comrades-in-arms Sitaram Yechury, A.B. Bardhan and Harkishan Singh Surjeet seem intent on sending a very different message at the Centre. They are opposing everything from labour reform to privatisation of state-owned units, concepts that West Bengal's Left Front government has supported.

The contradiction stems from the fact that those at the Centre are ideologues with no state to run. West Bengal's communists, meanwhile, have a state to run and elections to win. Says Bhattacharjee: "We have some problems inside the party. But only theories and dogmas will not work. You have to learn the truth from the facts. And I have to face the music here. I cannot have some so-called ideologue come and say, 'No, this is not Marxism.' We must come face-to-face with reality. (Then), you are bound to take realistic decisions."

The 'realism' began 10 years ago, when, after over a decade of Marxist rule, the Left Front government realised that economic progress had passed them by. In 1994, the West Bengal government announced its new industrial policy. It invited private capital, spoke of a single window clearance, and so on. Commerce and Industries Principal Secretary Sabyasachi Sen says that was the inflexion point after which things changed in the state. After years of being seen as a state that shunned business, West Bengal suddenly put out a business-friendly image.

Many argue that the 1994 policy notwithstanding, the 1990s were the wasted decade for West Bengal's communists. Expectations ran high, but little happened on the ground. A road project would get stalled on issues of land acquisition and compensation. If land were allotted to industry, the issue of jobs for land-owners would scuttle the plan. More seriously, throughout the 1990s, both the BJP and the Trinamool Congress made major inroads into the state.

The communist party also realised that while its voter base among the poor and the disenfranchised was intact it couldn't represent only them forever. The party needed to broaden its appeal, become more inclusive and bring people from the middle classes into its fold. In 2000 there was also a change of guard with Jyoti Basu stepping down and Bhattacharjee stepping into his shoes.

Bhattacharjee, a great believer in symbolism, has since been publicly admonishing trade unions, admitting to past mistakes and making it a point to be seen with multinational investors, especially those from the US. This, according to a senior bureaucrat, would never have happened even five years ago.

Sometime back, a contract worker hit an executive at the Pepsi factory in Sonarpur near Kolkata. Bhattacharjee had his cohorts and him put behind bars immediately. The symbolism wasn't lost on anyone. "He doesn't get involved in every labour issue, but chooses those that have maximum impact. And sends out a message," says an official.

Some Writers' Building insiders call Bhattacharjee the 'focal point' of economic reforms in West Bengal. He hates such tags. "Individuals matter, but policies are decided by a collective process." Also, given the way the politburo functions, it's unlikely that any one person could carry a disproportionate amount of influence. But Bhattacharjee seems to have plenty of support from within the party.

The best evidence of this is Nirupam Sen's portfolio and position. That one of the party's senior-most members is handling commerce and industries is seen as the party's imprimatur on reforms. More importantly, he is considered to be the second-most important person in the government after the chief minister, though, protocol-wise, that's the prerogative of the labour minister. Sen's predecessor, Bidyut Ganguly, was never as important.

It's also clear that West Bengal's Left government is working through the party to spread the reforms message. "If any problem with industry arises at the ground level, I don't wait for any administrative mechanism to act. I directly get in touch with the local leaders and the party leaders, and tell them to intervene along with the administration so that issues can be cleaned up quickly," says Sen.

None of this is seen by party workers as an outright betrayal of Marxist ideology, says Bhattacharjee. But he adds there is still resistance from some party members, trade unionists and the like. The PSU restructuring programme, for example, stirred up a debate within the party recently.

We must come face-to-face with reality. Then you are bound to take realistic decisions. Buddhadeb Bhattacharjee, CM, West Bengal

West Bengal has 79 PSUs. The majority are loss making. The government argued that funding their losses forever didn't make any sense. Moreover, the state exchequer couldn't afford it. Bhattacharjee, with support from Sen, argued for restructuring the PSUs. Sen says the debate centred around the issue of whether the state could be run the way it had been in the past.

Finally, the reformers prevailed.

The West Bengal government roped in consultants PricewaterhouseCoopers to study some units as a pilot. Subsequently, the government divided PSUs into three categories - ones that could be turned around with little effort, ones that could be turned around with a lot of effort and, finally, the basket cases. It identified four PSUs for category one, where the government will retain ownership and 12 for category two - these will be handed over to the private sector (the government will retain only 26% equity) through a bidding process. Seven units will be closed.

Some 39 qualified bids have come for the companies. By July, Sen believes, most of the buyers will be identified. Again the restructuring effort has begun. Around 850 workers have been retired early. "In whatever restructuring we do, we will ensure that the workers' interests are looked after," says Bhattacharjee. The government has been given a grant by UK-based development agency DFID to provide for workers who may get laid off.

The state government is also planning an outright sale of Kolkata's historical Great Eastern Hotel. The unions, which resisted selling the hotel for a decade, have finally come around.

Sen doesn't see any of this as a victory for any kind of ideology. He believes restructuring PSUs is the logical thing to do. "It's not right that public money should be used to keep workers going. Rather, workers should create a surplus so that society can improve. After all, the working class has to provide social and economic leaders as well, not just political leaders."

Kolkata's political analysts see the PSU restructuring as the most important sign of the Left party's pro-reform mindset. (Once the first lot is done with, the state wants to restructure all 79 PSUs.) Some feel Bhattacharjee wouldn't have been able to pull it off without Sen's (read the party's) support. Others say since neither he nor Sen rose through the trade union route, they have been able to deal with PSU restructuring without any biases. One official stops just shy of comparing Bhattacharjee-Sen to the Narasimha Rao-Manmohan Singh combine.

There are many caveats still. As an insider puts it, for West Bengal's leftists, the biggest challenge will be to keep their original constituency of voters intact. "They will need to convince the disenfranchised that the Left is still with them even as it is seen with the suits," he says.

Last week, at the inauguration of City Centre, a Rs 120-crore shopping-cum-residential-cum-office complex - it's an equal JV between Kolkata Municipal Development Corporation and Gujarat Ambuja - Bhattacharjee publicly stated that for the state to progress, it needed to attract private capital. In the same speech he said he welcomed multinationals to West Bengal. A day earlier, he had told BW how he asked the US ambassador that if they can do business in China, why not in West Bengal? "I told them we aren't fools to invite you and then nationalise your businesses. Those days are gone. We aren't propagating socialism in West Bengal."
Of course, both Sen and he retain their grievances with capitalism. "I have not accepted capitalism as the last chapter of human civilisation," says Bhattacharjee. Sen adds: "I believe capitalism cannot solve the world's problems."

Grant the duo these utterances. For, without these, their comrades at the Centre may feel truly forsaken.

Suncity

October 6th, 2004, 02:49 AM

And here's a news item that has sent shockwaves through West Bengal

Bengal acts tough, cracks whip on Webel workers

INDRANIL CHAKRABORTY
Posted online: Friday, October 01, 2004 at 0000 hours IST

KOLKATA: The Left parties do not need foreign consultants —their government in West Bengal is doing a far better job at winding up companies and curbing workers’ rights.

Five companies owned by the West Bengal Electronics Industry Development Corp (Webel) are being closed down.

Webel has offered 106 of the 447 targeted workers, low-paying contract jobs elsewhere.

Under the early retirement scheme (ERS), the workers have been given two options: retain a job on contract with some other government department on lower salary, or take home a lump-sum payment.

To retain their jobs, the workers will also have to obey workplace rules unheard of in government jobs, especially in communist West Bengal.

For example, if a worker incites others to strike work or go slow, it will be treated as a serious misconduct. So would distribution of pamphlets, posters, bills — and even newspapers.

The ERS and the new rules have been worked out by the Left Front government, though the money to pay the workers is coming from Britain’s department for international development (DFID) under a wider programme.

The other rules, if implemented, could change the face of the government in West Bengal.

For example, workers are not supposed to sleep or doze while on duty, or knit or gossip. The punishment for such misconduct could range from withholding of increments to dismissal from service.

The offer letter notes, among other things, that employees are entitled to an “incentive payment” that will be “solely determined by the management strictly based on the company’s earning profit,” and the workers’ contribution to it.

“Be it clearly understood that the ‘incentive payment’ as aforesaid will not be a matter of right,” the letter notes.

Further the appointment will come to an end on the expiry of the specified period and no notice pay or retrenchment compensation will be payable.

During the term of the contract, their continuance will depend upon performance, competency and attainment of targets.

Workers can be transferred to any place or any unit without any change in remuneration. Refusal to accept such transfers may lead to “disciplinary action including termination.”

The state secretary of Centre of Indian Trade Unions (CITU), the trade union wing of Communist Party of India (Marxist), Shyamal Chakraborty, did not want to comment on one of the offers by the planning and development department to 65 employees for one year.

“I am in a state committee meeting, I will not comment anything over phone,” he said.

Information technology (IT) minister Manabendra Mukherjee, whose department controls the Webel companies, sees nothing wrong in the offer letter and the service rules.

“Tell me, which state government has come up with future plans for its employees?” he asked.

He said the government has a definite plan to make Webel Technology Ltd a company that can service the entire IT infrastructure of the state.

WTL is one of the 12 companies under Webel. Of these 12 units, the government is closing down five establishments.

“We have had enough of negative thoughts in the first 50 years, and now we should always think positive,” the minister remarked.

Mr Mukherjee did not mention that workers who, if they opt for a job instead of the “early retirement” would have to forgo their early retirement scheme lump-sum payment, which is Rs four lakh on average.

The companies being closed are Webel Video Devices, Webel Crystal, Webel Capacitor, Webel Carbon Metal Film Resistors and Webel Multimedia.

nova

October 6th, 2004, 07:50 AM

Ah, where's Haryana in that list?

PS Projects Today appears to be down..

kronik

October 6th, 2004, 07:53 AM

I think posting their link on our forum gave them too many hits and their server couldnt handle the traffic. Should be back soon.

It is ironic that the left is so against reforms at the center while doing the same in their bastion.

ViMo

October 7th, 2004, 01:58 PM

Business India: Following Investments In Key Sectors

LG plans $60 million mobile phone unit

Mumbai October 07, 2004

The Korean chaebol, LG Electronics, is planning to invest $250 million in India over six years in its consumer electronics, home appliances, IT and mobile phones businesses. The $60 million mobile phone (GSM) unit will be based in Pune.

This is the first time a global handset maker is setting up such a unit in India. The proposed plant is expected to commence production of GSM handsets by 2005.

LG is also planning to set up a manufacturing unit to roll out CDMA-based handsets, which could come up in Noida in Uttar Pradesh.

By 2010 the company aims to produce 20 million mobile phones, of which 50 per cent will be exported.

"A mobile phone plant in India will give us an edge over other players in terms of quality, production and subsequent market share," said KR Kim, managing director, LG Electronics.

The company is also looking at setting up a research and development facility for mobile phones in India. Bon Moo Koo, chairman and chief executive officer, LG Group, said: "India is an important market and LG India has top priority for investments. There will be fresh infusion of funds over the next years from 2005 to 2010, which will be close to $250 million. The investments will be for expanding our current facilities as well as for new capacities."

For its consumer electronics and home appliances business, LG has set up its second greenfield facility at Ranjangaon in Pune at an investment of Rs 150 crore ($32 million).

Currently the company has only one facility at Noida. The new facility will manufacture colour televisions, air conditioners, refrigerators, washing machines, microwave ovens and colour monitors.

LG India will become the export hub for LG Worldwide, catering to the Middle East and African markets.

The company aims to touch an export turnover of $3 billion by 2010 from India, which will contribute to 30 per cent of the Indian arm's turnover.

The contribution from mobile phones and IT will be 65 per cent and 35 per cent will be from consumer electronics and home appliances.

ViMo

October 7th, 2004, 02:02 PM

Daewoo Electronics may set up colour TV facility

Kolkata October 07, 2004

South Korea’s Daewoo Electronics Company has entered into talks with the Kolkata based JDS Technologies to set up a colour television (CTV) assembly unit in the city.

“Talks are at a final stage and we expect to clinch a deal in the next one month,” explained, Dilip Chatterjee, managing director, JDS Technologies.

The deal being worked out would involve a market survey to find out demand for its product in the eastern region which would be followed by marketing of Daewoo TVs in the region.

“After we have received a feel of the market in the region would we initiate production of Daewoo TVs here and the capacity installed would depend on the feedback,” Chatterjee said.

JDS has the requisite expertise in terms of assembling and manufacturing TVs because it has an existing setup where it manufactures and markets CTVs under the brand name ‘Ivision’.

The company has also tied-up with Grundig of Germany for assembling CTVs.

Plans being firmed up include assembling at least 3,000 TV sets per months to begin with.

“We are involved in talks with Daewoo for firming up investment plans for the plant. At present JDS is exploring various investment possibilities with Daewoo. This involves investment through joint venture, or sharing of labour cost,” Chatterjee said.

Picture tubes and other components would be sourced from China while smaller kits would possibly be bought from the country.

The CTVs will be priced to cater to the mid to premium segment. and would be priced upward of Rs 5,500.

“Daewoo intends to manufacture CTVs ranging from 14 inches to 29 inches, both in the normal and flat screen segment to begin with,” he added.

Daewoo has however also firmed up plans of washing machines, DVDs and Acs both window and split, pitching itself on competitive pricing and rebuilding the brand’s image.

Daewoo has also put in place a brand rebuilding exercise which received a jolt following the failure of the vehicle manufacturing unit.

ViMo

October 7th, 2004, 02:04 PM

Samsung bets big on flat screen TVs

Kolkata October 07, 2004

Korean chaebol Samsung is betting on flat screen TVs to expand its market share in the domestic colour television market.

Flat screen models now occupy about 30 per cent of all CTV sold in India. This is expected to go up to 40 per cent in 2005 and then to 80 per cent by 2007.

Samsung has 22 per cent market share in this segment, while its overall share is about 15 per cent. “As the price differential between curves and flat models reduce over time, the market is set to grow. For the entry level, the differential is only 5-8 per cent now.

We are focusing our energy on flat models as a paradigm shift is taking place in the market place,” Ravinder Zutshi, director of Samsung, said.

The company has CTV manufacturing facility at Noida with capacity of 1.5 million sets. With the volume of 9.6 million projected by the industry for the entire Indian market in 2005, Samsung is well placed to cater to the increased demand.

However, if the free trade agreement (FTA) with Thailand comes into effect, further expansion of capacity in India could be an issue. The excise duty on CTV was pegged at 16.5 per cent while the proposed import duty on electronics good coming from Thailand would be 12.5 per cent.

This would lead to an inverted duty structure. Zutshi said representative body CETMA (Consumer Electronics and Television Manufacturers Association) has taken up the issue with the government.

“We have made huge investment in India over last nine years and Samsung does not want that to go in vain,” he added.

Zutshi was in Kolkata to flag off a promotional campaign, ‘Pinning toh winning offer’ for the festival month in the country.

The company is offering Rs 100 crore worth of gift during the period while expecting sale of Rs 575 crore. It has tied up with Shopper’s Stop for special offer. Overall, it is expecting turnover of Rs 5,200 crore over last year of Rs 3,700 crore.

Samsung will be investing $ 5 million in the next fiscal for vertical integration exercise. It will set up a heat exchange plant for air conditioners. This used to be outsourced before but now the company plans to manufacture on its own.

Suraj

October 8th, 2004, 06:05 AM

From the latest Businessweek issue. No URL

Factories Are Humming in India

Indian manufacturing is surprisingly strong-and fueling an export boom

Ask any global investors for their quick take on India, and you'll get the usual answer: Software and outsourcing are all that count. Manufacturing -- hobbled by strict labor laws, red tape, and a lack of critical mass -- is just not a field where India can excel.

That's the conventional wisdom. But contrary to expectations, Indian manufacturing is proving surprisingly robust. So robust, in fact, that India's gross domestic product grew a healthy 7.4% in the second quarter, beating expectations by a long shot. The consensus is that manufacturing -- now growing almost as fast as India's vital services sector -- is what provided the extra kick. India's 25% surge in exports got a boost from manufacturing as well. Foreign and domestic investors have bid up shares of corporations such as tractor maker Mahindra & Mahindra and auto-parts biggie Bharat Forge.

India certainly has a ways to go before it turns into the next China, which has accumulated hundreds of billions in foreign investment in manufacturing during the past decade. Indian roads and ports still don't hold a candle to China's, and the mass production base already installed in China is still building up in India. "Global [companies] want to source $50 million to $100 million at a time, but often, in India, that's the size of the entire company," says Nagi Palle, a principal at consultant A.T. Kearney in India, adding that India doesn't yet have the scale to be a world-class manufacturer.

Yet powerful trends are giving manufacturing a lift. The ruling Congress Party coalition, under Prime Minister Manmohan Singh, wants to add billions more to the $177 billion in infrastructure spending already planned. Big-ticket projects include a $14.5 billion cross-country highway system, as well as the expansion of ports, airports, and railroads. Even India's maligned power sector is turning: About 12 new private power projects worth $2.6 billion have been approved by the government.

HOT STEEL
And the private sector? Indian companies are planning about $105 billion worth of capital expenditures. Tata Steel, for instance, will spend $3.2 billion to make overseas acquisitions and expand capacity in India from 3 million tons to 7.5 million. In all, about $440 billion will be spent in public and private projects over the next five years, according to Bombay researcher Projects Today. "The kind of investment we're seeing now, we haven't seen for years," says Arindam Bhattacharya, director and expert in manufacturing, Boston Consulting Group, India.

Companies such as Tata, Birla, Sterlite, and Gujarat Ambuja are rushing to meet the demand of ever-higher exports of steel to China and cement to the Middle East and Asia. But it's not just commodities that are flourishing. A hefty part of the capital expansion is going into autos, auto components, machine engineering, textiles, and pharmaceuticals. According to Projects Today, investment in these sectors grew 8.2% this year, compared with a decline of 3.6% last year. These industries have spent the past decade restructuring, battling with government to implement better economic policies, and preparing for global competition. The result has been a surge in productivity for the best companies. Take Tata Motors: In 1999, it made 129,000 cars with 35,000 workers. Today it makes more than 300,000 -- with 40% fewer factory hands.

EXPORTS TO EUROPE
Demand is brisk, too: Domestic car sales have soared by 25% in the past year, to more than 1 million vehicles, while parts exported worldwide have seen 30% growth. Tata and Mahindra are exporting, while Hyundai Motor Co. is using India as a manufacturing and export base for its compacts to Europe. Toyota Motor Co. (TM ) has just started exporting 150,000 transmissions to other Toyota plants in Southeast Asia. Indian forging and castings companies such as Bharat Forge Ltd. are exporting 40% of production to clients like DaimlerChrysler and Cummins Engine Co.

Indian executives hope they'll get even bigger boosts from special incentives the government is providing. India's first private China-style special economic zone (SEZ) has started up in Madras, and the 1,500-acre SEZ -- which is free from strangulating labor and tax laws -- has attracted the dynamic exporters: auto parts, apparel, and info tech.

Other companies are launching complex projects without the help of special incentives. In Hyderabad, a South Korean company will soon build India's first semiconductor plant. Korea's LG is investing $150 million in a new factory to make and export televisions and refrigerators. Finland's Elcoteq Network, which makes cell phones for companies such as Nokia (NOK ), will begin assembling handsets in Bangalore this year, while India's high-technology skills have attracted Ericsson (ERICY ) to manufacture radio transmitters and receivers for cell phones in Jaipur. India will move in the opposite direction from China, says Anand Mahindra, managing director of tractor maker Mahindra & Mahindra. "We will design and create value in products first; then the factories will follow. India will move from niche to mass manufacturing," he says. Not the textbook route, but with luck it's the one that will work for India.

By Manjeet Kripalani in Bombay

Bond James Bond

October 8th, 2004, 06:22 AM

No one's posted here in several days, sooooo . . .

NY Times
Reuters Plans to Triple Jobs at Site in India
By HEATHER TIMMONS

Published: October 8, 2004

LONDON, Oct. 7 - Reuters, the news service and data company, which is trying to meet stringent cost-cutting targets, said Thursday it would triple the number of employees it has in India by the end of next year.

As many as 1,500 employees, or a tenth of the company's total, will be in Bangalore by 2006, company executives said during a ceremony to open a building in southern India. Reuters already has 340 employees in Bangalore, including about 13 journalists. The company said it planned to move mainly data and technical jobs to Bangalore. The editorial staff in Bangalore is expected to increase to 50 by early next year, Reuters told union representatives.

The company's chief executive, Tom Glocer, is embracing outsourcing to reduce costs. He foreshadowed Thursday's announcement in September at an investor conference.

"The amazing thing - and this is the dirty little secret about outsourcing that people need to talk about publicly a bit more - not only is the cost conflation amazing at four, five or even six to one, but the quality and productivity is better too," Mr. Glocer said in September. "We are flooded. We have 100 qualified applications for every data input person and these people have qualified accounting degrees."

The company, which now employs 1,000 data-processing workers at about 40 sites worldwide, plans to shift 450 jobs to Bangalore initially, mainly from Tiverton, England; White Plains, N.Y.; and Singapore.

Analysts said that action fits into the company's greater strategy. "This doesn't surprise me at all, given the targets they have set for themselves," said Paul Sullivan, a media analyst at Merrill Lynch in London. Reuters has pledged to cut costs by £440 million ($782 million) by the end of 2006, and Mr. Sullivan said the number was considered "sacrosanct." Reuters said Thursday that costs in Bangalore were about 40 percent lower than in New York or London.

The Bangalore office supplies information on companies and debt and equity issues. Later, it will also provide information on mergers, acquisitions and equity pricing.

Union leaders expressed concern about the move, which they said could impair the quality of news and data Reuters offers. "We're talking about people halfway around the world from where the news is happening, in a different continent and time zone," said Peter Szekely, chairman of the Reuters unit of the Newspaper Guild of New York.

Reuters executives said that the plan would not result in job losses in the editorial division.

Bond James Bond

October 8th, 2004, 06:29 AM

On the other hand . . .

Financial Times
Has India finally lost its allure for GE?

Published: October 6, 2004

General Electric, the US-based multinational, pioneered the India "offshoring" model in the mid-1990s, when it hired staff in Delhi to perform simple data processing tasks. So with speculation rife over the company's plans to sell GE Capital International Services - its offshore arm - for an estimated $1bn, India is watching closely.

With 17,000 employees - three quarters of whom are in India and the rest at sites in China, Hungary and Mexico - GECIS is the largest back-office-processing employer in India, carrying out increasingly complex tasks such as auditing and financial analysis.

Overall, India now employs more than 300,000 people in call centres, many of whom work at other in-house - or "captive" - centres owned by foreign investors such as HSBC, the UK-based bank, and American Express.

But GE's planned sale, which the company is unable formally to confirm owing to US disclosure regulations, is likely to hasten the trend in India towards outsourcing - as opposed to mere offshoring. The country's "third-party" call centres, which cater to diverse customers, and which themselves are consolidating rapidly, will be the principal beneficiaries.

"When you move certain processes offshore to a country like India, your cost-savings are one-off - they tend to diminish pretty quickly," says John Atkinson, head of Gavs Information Services, a back-office-processing centre based at Chennai in southern India. "The temptation to sell the back office business to specialist outsourcers can only grow."

According to reports in the Indian media, GE's suitors include international private equity companies, such as Warburg Pincus and General Atlantic Partners. Indian software firms, including Tata Consultancy Services, the country's largest, and Wipro, its number two, have also expressed an interest.

Following the sale, GE would outsource its back- office tasks to the new owner and probably retain a 10 to 20 per cent stake in the company. Other large captive units, including some international banks, are watching to see what GE will do.

Vikram Talwar, chief executive of EXL, an Indian third-party service provider with 5,000 staff in Delhi, says: "What we hear increasingly loudly is international companies saying: 'We don't want to do this ourselves any more. If others can provide a better value proposition and we can still retain some control, then that's the way we should go.'"

GE's move is also motivated by growing problems in retaining staff. The company, which has call centres at Gurgaon - on the outskirts of Delhi - Bangalore, Hyderabad and Jaipur, is thought to have an annual employee-attrition rate of between 40 and 50 per cent. Many workers leave because the company has allegedly become too large and bureaucratic. The better-managed third-party companies offer clearer opportunities for staff to rise to the top.

"The hassle of managing local employee issues, like rising wage costs and high attrition, is sapping the appetite of multinationals such as GE for running captive centres," says Ananda Mukerji at ICICI One Source, an Indian back-office provider. "Why not outsource the headache?"

But Sunil Mehta, a senior official at Nasscom, India's software-industry body, says there are still tasks that may be too sensitive to outsource to third parties. These may include proprietary software development or dealing with larger financial transactions of big customers.

In addition, he says, the home regulators, such as the Securites Exchange Commission in New York, may raise concerns about the higher risks of outsourcing to third companies.

"There are some critical functions that may be too risky to outsource - yet you would still benefit from doing the work in India," says Mr Mehta.

Yet, where GE goes, others tend to follow. The company, which is estimated to have generated several billion dollars in savings from its India operations, has recently opened up its back-office service in India to other companies, including a large international retail chain and an airline.

But GE's potential to attract more customers is limited by the fact that it remains an in-house operation.

"GE can extract much more juice from the operation by opening it up to competitors who would feel too uncomfortable if it was still 'captive'," says one foreign executive. "If someone else can do it more cheaply, what is the point of keeping all those employees on your payroll?"

Suncity

October 8th, 2004, 06:44 AM

Nice posting. Feels good.

Why do journalists always tag us with either Pakistan or China? Maybe news doesn't sell without making such comparisons. I guess we have to live with it.

nova

October 8th, 2004, 06:58 AM

Nice posting. Feels good.

Why do journalists always tag us with either Pakistan or China? Maybe news doesn't sell without making such comparisons. I guess we have to live with it.

It's inevitable.. China is a nation of a billion and so is India. Pakistan has been having on-going conflicts with India since independence and shares some of India's culture and colonial legacy. It does provide us with an indicator of India's progress compared to its neighbours...

Suraj

October 8th, 2004, 07:03 AM

In response to the figures in the Businessweek article I have a question - are there rough metrics or estimates on how x amount of public+private investment translates to increase in GDP ? I ask this because Maruti/Suzuki's recent Rs.6000 cr investment was described as adding 'Rs.20000 cr to India's GDP'. Further the article (http://www.financialexpress.com/fe_full_story.php?content_id=70296url) claimed that this estimate was made according to 'benchmarks' .

Can anybody more familiar with economics weigh in on this ? How would $440 billion in investment translate to increase in GDP ? Or for that matter, the specific investments in various sectors, mentioned above ? A 2x multiplier would add nearly $900 billion by 2009 to our GDP, which is presently at $670 billion. That would make the aggregate GDP more $1.5-2 trillion by then counting in all other contributors, putting us within the top 5 in absolute GDP, not just PPP-adjusted figures.

Suncity

October 8th, 2004, 07:25 AM

That's an interesting question.

Who is the economics/business guru here?

Suncity

October 8th, 2004, 07:30 AM

Another important event that happened was the sale of NTPC's shares..

NTPC issue oversubscribed on Day 1

Nimesh Shah / Mumbai October 8, 2004

IPO received bids for 3.179 billion shares.

National Thermal Power Corporation’s (NTPC’s) initial public offering (IPO) opened to a thumping response today, and was subscribed almost four times.

Against an issue size of 865.8 million shares, the IPO received bids for 3.179 billion shares, according to figures posted on the Bombay Stock Exchange (BSE) website.

The State Bank of India bid for shares worth more than Rs 2,000 crore on the first day of the IPO.

Merchant bankers said 95 per cent of the bids received today were made by qualified institutional investors and most of them were at the upper end of the price band.

Therefore, 50 per cent of the offer size reserved for qualified institutional investors has been subscribed almost seven times.

Confirming SBI’s mega bid, bank sources said it had a long relationship with NTPC as its principal banker. “We believe that the NTPC share is value for money,” an SBI executive said.

The NTPC issue for 865.8 million equity shares of a face value of Rs 10 each opened today and will close on October 14. The IPO has been priced in a band of Rs 52-62 per share.

S Ramesh, executive director at Kotak Investment Banking, one of the book-running lead managers of the same, said, “The response to the offer reflects the confidence of investors in India, NTPC and the country’s infrastructure sector.”

He added that the huge subscription also reflected the depth of the capital market and the appetite for quality issues.

Manish Chokhani, director, Enam Secutities, another book-running lead manager, said: “The success of the NTPC issue has validated the depth of the market. The issue was managed by domestic banks and we still saw an overwhelming response from global investors.”

S Mukherjee, managing director of ICICI Securities, yet another book-running lead manager to the IPO, told Business Standard from London: “The issue received an excellent response from the East as well as the West owing to the strong fundamentals of the country’s largest power company.”

Mukherjee is part of the team that organised road shows for the offer in New York and London. The lead manager had planned a dozen road shows overseas to attract foreign investment for the issue.

Power packed IPO
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Second biggest
The NTPC issue will raise Rs 5,386 cr if it is priced at the top of the Rs 52-62 band, placing it just below the TCS issue

Bank to the future
SBI bid for shares worth Rs 2,000 crore

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Indian power sale warms investors

The government's holding in NTPC will be cut to 89.5%
India's major power producer, National Thermal Power Corp (NTPC), has sold out its $1.2bn (£0.67bn) flotation within 15 minutes.

The 865 million share offer is a mix of new shares and sales by the government.

NTPC will use the money from the share sale to feed the growing needs of the country's energy-starved economy.

It is India's second $1bn (£0.56m) stock debut in three months, coming after its largest flotation by software services firm Tata, in August.

'Bright future'

Merchant banking sources said the NTPC offer had attracted bids for 1.1 times the shares on offer, after its launch on Thursday.

The issue, which is due to close on 14 October, will raise 53.86bn rupees ($1.17bn), making it the country's second-largest IPO, and valuing the firm at close to 511bn rupees.

"The future of the power sector is bright in India," said Sanjay Sachdev, managing director of Principal Mutual Fund.

"The strong demand, despite a stiff valuation, reflects the long-term positives of the offer," said Mr Sachdev, whose funds bid for shares.

The company is the the sixth largest power producer in the world.

Government holding

NTPC is the largest thermal power generating company in India, and - till now - was a public sector company wholly owned by Government of India.

It accounts for just over one-quarter of India's power generation, but has faced competition from private utilities such as Reliance Energy, and Tata Power Company.

Bankers said the size of the float had generated demand from foreign fund managers, with half the offer reserved for qualified institutional buyers.

The government's holding in NTPC will be cut to 89.5% after the IPO.