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High growth to continue: Reddy
1 Aug 2007, 0337 hrs IST,TNN

NEW DELHI: Despite deceleration in corporate sales and profit growth, the high growth rate in industrial and service sector will continue, said RBI governor YV Reddy in the first quarter review of annual statement on monetary policy.

He said domestic economic activity has continued to expand at a strong pace and there are indications that growth impulses are getting broad-based. The recent gains in bringing down inflation and stabilising its expectations should support the current expansionary phase of the growth cycle.

Given the current momentum of expansion, despite evolving uncertainties in recent weeks, growth in industrial and service sectors — which constitute over 80% of the economy and contribute more than 94% of the GDP growth — is expected to sustain, the policy statement said.

RBI maintained its GDP growth projection for 2007-08 at around 8.5%. The governor also noted that there is some deceleration in sales and profit growth, as against the levels recorded in the preceding year — may be because of increase in input and staff costs.

Select private non-financial companies indicated that sales in 2006-07 grew at 26.2% — highest since the 1980s. The pick up in the activity in 2006-07, the statement noted, was aided by improvements in operational efficiency, increased plant automation, cost control through better product mix, capacity utilisation and economies of scale, rising incomes from financial activity and return of pricing power.

The net profit of these companies was high at 45.2% as compared with 24.2% a year ago.
 
Record works under NHDP this year
Animesh Singh / New Delhi July 31, 2007

The Ministry of Road Transport and Highways is planning to award contracts worth Rs 46,000 crore for 7,084 km of national highways (for four-laning and six-laning) in 2007-08.

This is the highest yearly target set by the ministry since the National Highway Development Programme (NHDP) started by the National Highway Authority (NHAI) in 1999.

The ministry is also aiming to complete the upgrade of 2,885 km of highways during this fiscal. A senior NHAI official said work for only 1,790 km of highways was awarded in 2006-07.

The Public Private Partnership Appraisal Committee (PPPAC) of the ministry has now cleared an 882 km stretch for six-laning under phase V of the NHDP at a cost of Rs 6,293 crore. Ministry sources said with the toll policy cleared, the ministry would go all out to upgrade as many highways as possible.

In fact, a section of officials had said the PPPAC, set up in October 2005, led to a slowdown in the awarding of the contracts. In 2005-06, the ministry awarded contracts for a 4,665 km stretch. The lull witnessed in 2006-07 (when contracts for only 1,790 km of highways were awarded) was attributed to delays by the PPPAC.

However, the ministry is trying to make up for the lost time, sources say.

The ministry has divided the 7,084 km stretch, to be awarded this fiscal, into three parts. Around 3,000 km stretch will be six-laned, while the rest will be four-laned.

The ministry is in the process of preparing detailed project reports for the projects, for which the PPAC is yet for clear the bids.
 
India Central Bank Tightens Money Policy
FORBES, NY
By RAJESH MAHAPATRA
07.31.07, 12:19 PM ET

NEW DELHI - India's central bank on Tuesday ordered lenders to hold a larger share of deposits in cash and took other measures to counter inflationary pressures arising from a surge in foreign money.

The Reserve Bank of India increased the cash reserve ratio - the proportion of deposits that commercial banks must hold in cash - from 6.5 percent to 7 percent, but kept its key interest rates unchanged. It also scrapped an existing cap on the money it can drain from the banking system.

The decision to persist with tight money policy hit banking stocks and bonds, and disappointed middle class borrowers battling higher lending rates.

It also underscored the risks confronting countries like India and China, where rapid economic growth has boosted demand and fueled inflation, a problem that is further aggravated by a surge in foreign capital into these countries.

In India, a series of interest rate hikes and tight money measures has seen credit growth slow and the inflation rate drop in recent months, but the central bank doesn't appear to believe that it is time to loosen monetary policy.

"We believe there is still a fear of higher inflation," said Governor Y. Venugopal Reddy. "Price stability is important for growth."

Reddy said he was also taking cue from the actions of central banks in many other countries that faced similar challenges.

On Monday, China announced measures to tighten bank credit and cool its sizzling economy, ordering a half percentage point increase - the sixth such hike this year - in the proportion of reserves that lenders must keep with the central bank.

"Risks from global developments continue to persist, especially in the form of inflationary pressures, repricing of risks by financial markets and danger of downturns in some asset classes, with implications for emerging market economies," a statement from the Reserve Bank of India said.

Also, as India's economy increasingly gets integrated with the global economy, the inflation rate at home must come down to the levels prevailing in developed economies such as the United States and Europe, Reddy said.

Inflation is currently hovering around 4.5 percent, down from a high of 6.7 percent reached in February but much higher than international levels.

Middle class borrowers, who have seen interest rates on housing and other consumer loans rise sharply over the past one year, were disappointed.

"The RBI's hawkish policy stance has likely torpedoed expectations that some commercial banks may soon cut their retail rates," investment bank Lehman Brothers (nyse: LEH - news - people ) said in a statement.
 
Road of new rich littered with potholes
Financial Times, UK
By Joe Leahy in Mumbai
Updated: 8:10 p.m. ET July 31, 2007

To see signs of the increasing spending power of India's affluent classes, a visitor need only drive along the main western road into Mumbai.

After passing the "Auto Hangar" selling Mercedes cars, the visitor will see the Rolls-Royce dealership and then, further on, a showroom that is still under construction but above which the word "Porsche" is already clearly visible.

The sudden emergence in India of Porsche, the ultimate symbol of brazen consumption, is raising eyebrows in a country in which, not so long ago, the elite drove the indigenous Hindustan Ambassador.

"People have had the money for a very long time but it is only now that they are starting to feel more comfortable spending it locally rather than abroad," says Ashish Chordia, chief executive of Porsche Centre India.

The showroom, part of a push by Porsche into India's four biggest cities, is one example of the invasion of the country by high-end carmakers and luxury retailers.

Leather goods maker Louis Vuitton and a variety of other LVMH brands are already present in India and a flood of others, such as elite Italian suit maker Brioni, are setting up shop in the country.

Capgemini and Merrill Lynch estimated in their annual World Wealth Report that the number of people with net assets of $1m or more in India reached 100,000 last year, up 20.5 per cent from a year earlier. It was the second fastest rate of growth in the world, after Singapore's 21.5 per cent.

As long as India's economy grows at rates of more than 9 per cent a year, the country is expected to continue generating wealth on this scale, analysts say.

Alex Kuruvilla, managing director of Condé Nast India, which is launching a domestic edition of its flagship magazine Vogue in September, says that during market research, the magazine discovered two types of luxury consumer.

There is the "old money", the people who for decades have shopped and holidayed overseas. They tend to be as discerning as their counterparts anywhere.

Then there are the nouveau riche – the new industrialists, professionals, entrepreneurs and others – who are not as familiar with luxury goods but have the cash to experiment.

Describing the average, nouveau riche consumer, Mr Kuruvilla says: "She's got the money. She can come into Delhi and pick up half a dozen of those $2,000 bags and that makes her a very important person as far as the market's concerned."

He envisages introducing more niche magazines as the market develops, such as Brides. India's wedding market is worth $10bn and is growing at a rate of 25 per cent a year.

The industry faces a number of challenges, however. Duties on luxury products, such as watches, can be as high as 60 per cent plus state taxes and value-added tax, making them uncompetitive against overseas prices, according to research by retail advisory firm Savigny Partners.

There is also a paucity of quality retail space outside the luxury hotels. Ermenegildo Zegna, the luxury menswear retailer, discovered this when it opened its first store in India in 2000 in one of Mumbai's leading malls.

It was later forced to close because of the "deteriorating brand environment", which included a McDonald's opening next door, according to Savigny. It reopened this year in Mumbai's Taj Mahal Hotel.

New luxury developments are on the way. DLF, India's largest property developer, is building the Emporio luxury shopping mall in New Delhi. Meanwhile, the Wadia Group is planning to create a 25-acre development in Mumbai aimed at high-end retailing.

But life for the conspicuous consumer remains challenging in India. Mumbai, for instance, lacks the necessary infrastructure for sports cars.

While Mr Chordia says the company's sales have increased from about 40 units a year after it opened in 2004 to nearly 200 today, about 60 per cent of these are of the Cayenne sports utility vehicle.

Selling for up to Rs11m ($275,000), this is more practical than the Porsche sports cars, which cost up to Rs14m and are more vulnerable to abuse on Mumbai's potholed streets, where traffic often moves at walking pace and cars bump each other jostling for space.

In addition, the lack of parking often forces car owners to have their driver follow behind in a back-up vehicle to take care of the Porsche when it is not being driven. "There is always the worry a valet will not handle the car properly," says Mr Chordia.
 
From lean years to the bulge bracket
INDEPENDENCE SPECIAL/ EXECUTIVE LIFESTYLE
Kanika Datta / New Delhi August 01, 2007

When M M Sabharwal joined Dunlop as a management trainee in early 1947, his salary was a princely Rs 75. Sent to England for training — Dunlop was UK-owned in those days — he returned a few months later when India was an independent country.

Later, his salary rose to Rs 700, which was considered decent in those days.

In 1961, P M Sinha started out in Esso, the oil company that was later nationalised to become HPCL, on a monthly salary of Rs 710. When he joined Levers seven years later, his monthly salary was Rs 2,410.

On the whole, executive pay and perks in the India imbued with socialist values nowhere matched the compensation packages of today at any level. For instance, a starting salary of Rs 75 for a management trainee then would have been equivalent to Rs 900 today — way behind the Rs 20,000 that even a call centre rookie is paid.

The explosion in executive pay in India Inc is a mid-nineties/early-2000 trend, a product of the urgent need for talent in a rapidly growing economy. Much has been written about the humungous CEO pay packages today — Rs 1 crore to Rs 3.5 crore a year, for instance, is considered par for the course.

But CEOs and directors in the days preceding liberalisation were, on the whole, an undercompensated tribe. This was because till 1986, CEO and directorial salaries were, like everything else in the economy, government-controlled. The unwritten reason was that the government did not want significant salary differentials between bureaucrats and corporate executives.

Thus, Sabharwal rose to become head of Dunlop. His salary?

Rs 7,500 a month, the maximum ceiling imposed by the government. This ceiling was relaxed in the mid-seventies to Rs 10,000 a month, but only for about a year after which the earlier ceiling was re-imposed.

There were limits on directorial salaries. For instance, when Sinha become a director on the Levers board in 1981, his salary was Rs 60,000 a year. This was higher than the Rs 48,000 a year that bureaucrats earned, but hardly qualified as bulge bracket.

High taxation rates — at one time they touched the high nineties — meant that the low salaries were compounded by low take-home pays. “Taxes were extremely high — and they included wealth tax, income tax and surcharges,” Sabharwal recalls.

As a result, corporations looked at various ways to compensate their senior managers. Many unlisted proprietary companies, aided by opaque accounting standards, simply paid their executives under the table. The larger listed companies offered lavish perquisites. These came in the form of large houses, company car and drivers, and a set of allowances — servants’ allowance, furnishing allowance, travel allowance — that required armies of clerks to administer.

But perks were mostly tax-free so they allowed senior executives to enjoy living standards that were significantly above their means, so to speak. This was evident in the sharp diminution in CEO lifestyles once they retired. Both Sabharwal and Sinha say that there was little money to save or invest in homes as even junior executives do today.

Sinha recalls being unable to raise the money in 1972 for a house in New Delhi’s Defence Colony that cost Rs 1,60,000 and was being offered in instalments. That was the year the government imposed price controls on commodities, so Levers wasn’t doing well and couldn’t offer loans.

Sinha also recalls that the controls on directorial salaries meant that direct reports were often paid more because there were no limits on their salaries.

The other (legal) way to get round the low-pay-high-tax trap was to alter designations. Thus, in the mid-eighties, Levers set up a “management committee” which basically did the same work as the board, only its members were designated vice-presidents. Being outside the purview of the Companies Act, vice presidents could be compensated more generously.

The catch was that the government stipulated that companies had to have a chairman and at least three directors, so membership to management committees was limited in that sense.

By the mid nineties, things had changed. “Salaries really started taking off from 1994-5,” says Sinha, who was CEO of Pepsi India from 1992 to 2002 and says his compensation was significantly better than his Levers directorial salary.

Tax reforms started by Manmohan Singh in the early nineties swept many of yesterday’s tax-free perks into the tax net, a process that reached its apogee with Chidambaram’s fringe benefit tax. As a result, salaries today are consolidated and more transparent.

Second, with stock option schemes, companies are able to offer their senior managerial talent rewards that are tied to company performance and, although they are taxed, hold out a promise that is far more lucrative and lasting than the lavish perks of yesteryear.
 
Nvidia development centre opened in Hyderabad
Special Correspondent

HYDERABAD: Nvidia, a US $ 4 billion fabless semiconductor and graphics solutions company, opened its sophisticated Hyderabad Development Centre at Nanakramguda on Tuesday. President and CEO of the company Jen Hsun Huang inaugurated the facility.

Mr. Huang said that the company, which currently employed 800 people in India, would expand its operations in the Asia-Pacific region.

He said the company was growing fast in the region and was expecting a significant contribution towards development and design from India.

He said that Indian technocrats had their share of contribution in the company’s phenomenal growth in the last 14 years.

"In fact, their number is so big that soon some one may comment that it is any Indian company," he said.

Nvidia acquired PortalPlayer, a technology solutions provider for digital devices, which added significant capabilities in chip design. In fact, Nvidia wanted to provide all the features of a personal computer in mobile devices to produce a mobile computer.

PortalPlayer had developed all personal computing capabilities on a single chip, he said.
 
Ranhill awarded RM2.8b India jobs Contracts involve two power plants
Malaysia Star, Malaysia
Jul 31, 2007

PETALING JAYA: The Ranhill group has been awarded construction contracts worth a total of RM2.8bil involving two power plants in India.

The larger contract, worth US$590.5mil (RM2bil), was for a power project in Korba District in the state of Chhattisgarh, while the other, valued at US$242.3mil (RM820mil), was for a power plant in Cuttack District, Orissa, Ranhill Bhd told Bursa Malaysia in two separate announcements yesterday.

In the Korba project, the company said its wholly-owned subsidiary, Ranhill Engineers and Constructors Sdn Bhd (Ranhill Engineers), was awarded the contract by Dheeru Powergen Ptd Ltd.

The contract is for the provision of engineering, procurement and construction (EPC) for the planned power plant, comprising US$172.5mil for onshore costs and US$418mil for offshore costs.

Under the EPC contracts, Ranhill Engineers’ scope of works include design, engineering, material selection, supply to site, construction and commissioning for the complete plant and equipment.

These contracts provide a good opportunity for Ranhill Engineers to make inroads into the Indian market, which offers many opportunities with its expanding economy and buoyant power industry. They would also enable Ranhill Engineers to expand its power division, the company said.

In the Orissa project, Ranhill Engineers and Ranhill (India) Pte Ltd accepted EPC contracts for a 300MW coal-fired power plant that would be developed by KVK Nilachal Power Pte Ltd.

Raw water for this plant will be drawn from the Mahanadi River, located about 7km from the project site, while coal linkage will be obtained from Talcher of Mahandi coalfields.

The EPC works for this project are expected to commence by the last quarter this year, with completion scheduled within 33 months from Notice to Proceed.

These Indian power plant projects further reinforced Ranhill’s position as “a burgeoning player in the international engineering and construction industry,” the company said.
 
Back to India
FORBES, NY
Robyn Meredith

Harsh Manglik spsent 35 years building his career in the U.S. Then he went home.
On a starry night 55 years ago, deep in a remote forest of northern India, a 4-year-old boy nicknamed "sher baccha" (Hindi for "tiger cub") rode safely in the arms of his father, who carried him into the moist air. "Can you hear that?" the boy's father asked. Then it came again: a deep, threatening rumble from a mile away. "That," his father said, "is a tiger."

The father was Ved Mitra Manglik, a towering figure famous for building dams and irrigation projects critical to the development of postcolonial India. He had dragged his family to this remote outpost, a hundred miles and a two-day trek from the nearest railroad station. No schools, no roads, no running water. He would always sling a rifle over his shoulder before stepping out of the tent that served as the family home. His son, the tiger cub, is Harsh Manglik, 59, chief of Accenture (nyse: ACN - news - people )'s thriving India business and overlord of 35,000 employees--4,000 more than the $16.7 billion American consulting giant employs in the U.S. Five years ago the firm employed only 800 people in the country. In his own way Manglik is helping to build modern India, just as his late father had done half a century before him. "It is heady to think you'll have a role in shaping things and seeing your fingerprints on it," Manglik says. "The future is being designed."

Yet Manglik long ago left behind India and the $100-a-month job he got after graduating from the Indian Institute of Technology Kanpur to seek a better career in the U.S. And for most of his 35 years in America he doubted he ever would move back to his homeland. Instead, he got a graduate engineering degree at Case Western Reserve University, followed by an M.B.A. at Carnegie Mellon. He became a U.S. citizen and climbed the ranks of big names in tech--Booz Allen, United Technologies (nyse: UTX - news - people ), Accenture, IBM, Symantec (nasdaq: SYMC - news - people ).

And then Manglik shocked his wife and two grown daughters and his relatives in India by doing the one thing they never expected: He moved back to India. He rejoined Accenture in September 2006 to run its far-flung India business from Bangalore, overseeing the hiring of 1,000 new employees a month, expanding service to U.S. clients and wooing Indian companies that could become the global giants of tomorrow.

"We know it is going to be big, and we know we have to get in now," he says.

Ever more executives, engineers and salesmen, India-born and U.S.-trained, are returning to their homeland to cash in on the Asia boom. The same is true for returnees to the once backward but now surging economies of China and Vietnam. In India these returnees are known simply as NRIs (for nonresident Indians); in Vietnam they are called Viet Kieu, meaning "overseas Vietnamese." In China they are "sea turtles," or Hai Gui Pai, although some jealous Chinese who never left dub these new arrivals Hai Dai--"seaweed."

Some 20,000 people of Indian descent have returned in the past two years, says Kiran Karnik, president of India's Nasscom, a tech trade group. Last year 40,000 returnees resettled in China, up from 7,000 in 1999, says David Zweig, a professor at Hong Kong University of Science & Technology. In Vietnam the government has eased visa requirements and investment restrictions to encourage the flow back, and since the 1990s thousands of Vietnamese have returned.

India's return tide started with the tech bust in 2000, when many Indians working in California lost their jobs; the joke then was that B2B meant not "business to business" but "back to Bangalore." The trend grew as U.S. companies began sending data processing and call center work to cheaper labor markets in Asia and India.

Accenture runs four small research labs around the world, and the newest one was set up in Bangalore in November 2006, two months after Manglik arrived there; it will have a hundred researchers in three years. Manglik is hiring 2,000 management consultants in India to bid for more gigs. "India is a key country for Accenture, a critical element in our global delivery network" and "integral to our growth strategy," says William D. Green, Accenture's chief executive. He personally wooed Manglik, who had put in two years at the firm before leaving in 1992, to rejoin and run India operations last year.

To use a phrase uttered by India's first prime minister, Jawaharlal Nehru, on the night India won its independence from Britain in 1947, for Manglik it was a long delayed "tryst with destiny." Like Gandhi, Manglik's grandparents on his mother's side had been jailed by the British for fighting to free India from colonial rule.

But Manglik would spend most of his adult life in the U.S., and with each promotion any thought of a permanent return to his homeland faded a bit more. "When I left India [in 1972] I was very clear I wanted to come back," Manglik says. "As I progressed in my career, it began to recede to the background." His father and mother seemed to accept this. "Fathers are heroes to most children--particularly to boys," he says. "But he brought me up to be independent. Never once did he say, 'Why don't you stay here?'"

He lived in Washington, D.C. , New York and Connecticut; in 1981 he married an Air India flight attendant. They settled in northern California and raised their two daughters there (neither of whom speaks Hindi). Every three years Manglik and his wife brought their American children with them to visit family in India.

As India's high-tech sector boomed in the build-up to the Y2K scare (the computer glitch that later fizzled), Manglik began to imagine returning to India once his daughters finished college. The scenario grew more real as his once swashbuckling father, in his 80s, had a stroke in 2004.

One summer afternoon in Delhi, as the father lay in bed, his health in rapid decline, Manglik's sister Kalpana visited his bedside to read him a passage she had penned in a biography she was writing about him. She wanted to describe how he felt about the long absence of Harsh, the only one of his five children to leave India. She voiced a hope that their father had harbored silently:

"I know my son will come back, because he knows his history is in the dust of India. One day he will know that this dust is his mother." She paused, waiting for her dad, ever stoic, to speak. He could not. His eyes filled with tears, and finally he managed to say, "I could not have said it better."

A few days later Kalpana read the passage over the phone to her brother, who was up late at night at his home near San Francisco. She listened for a reaction, from 7,690 miles away, but could hear only silence. "He didn't say anything," she says now. "He is the last person to cry."

Within a week Manglik visited her and their father in Dehra Dun. He began flying from San Francisco to India more often, each time finding the country modernizing before his eyes. His father died in September 2004, and Manglik attended the funeral, watching his dad's ashes sink into the same stretch of river where the elder Manglik had swum as a boy. A notion began to gnaw at him.

"My father never said it, but I do wonder what he thought about the fact that there I was, somewhere else, building my career, and whether I was being selfish."

And so when Accenture's chief, Bill Green, called him one day in August 2006 to entice him into quitting Symantec to take a job at Accenture--maybe a post running India?--Manglik's answer came quickly: "When do I show up?" He began his new job a month later.

The Mangliks moved to Bangalore in September 2006, and for months they lived out of a hotel room, having left behind their two grown daughters. This month they move into their new home, an apartment in central Bangalore. Manglik's wife, who had gone by the nickname Sally since she was a girl, has reclaimed her Indian name, Madhuri, meaning "sweetness."

Bangalore, a place of palm trees, traffic jams and tech entrepreneurs, is as close to Silicon Valley as you can get in India. It takes Manglik an hour, in a chauffeured Toyota (nyse: TM - news - people ) Corolla, to navigate the 9-mile drive to work each morning. "I've adapted to that," he says. "I make my phone calls in the car."

Past the shopping mall with a Citibank and Sony (nyse: SNE - news - people ) and Adidas (other-otc: ADDDY.PK - news - people ) shops, a row of office towers houses IBM, EMC and Oracle (nasdaq: ORCL - news - people ). Just past the Hindu temple lies his destination, the glass-and-concrete office complex housing Accenture India's Bangalore hive.

The brightly painted hallways are crammed with new hires in a rush, high-potential prospects who, in Manglik's generation, had to leave India if they wanted to exploit their technology degrees. But Manglik says he is lucky to be back in the land he left 35 years ago. "These are not even once-in-a-lifetime opportunities," he says, "because you don't usually get the chance, in an entire lifetime, to shape your country."

His father couldn't have said it better.
 
Waking The U.S. Giant
FORBES, NY
Robyn Meredith
07.31.07, 6:00 AM ET

Before our eyes, two giant nations--India and China--are simultaneously embracing both capitalism and globalization. The world economy is being transformed as a result, as Forbes Senior Editor Robyn Meredith explains in her new book, The Elephant and the Dragon: The Rise of India and China and What it Means to All of Us ($26, W.W. Norton, 2007) . This is the final excerpt from the book, which we have been serializing throughout July.

With both China and India now open for business with the West, more than 1 billion workers earning dramatically less than Westerners have suddenly been added to the world's labor pool--including 6.8 million college graduates a year.

Suddenly, Americans must compete for their jobs with much of the rest of the world, and are learning the hard way that they have no automatic right to earn 10 times more than everyone else on the planet for the same work.

India and China are rising so breathtakingly fast that they inspire fear--fear of the unknown. Unless America and Europe make changes, they risk decline even as their economies grow more interconnected with those of the fast-growing Asian giants.

The West cannot afford complacency. "Americans have to get more competitive," said Sybase (nyse: SY - news - people ) CEO John Chen. "We know how to do this; we just need to get it done." Former Treasury Secretary Robert Rubin agrees that the U.S. urgently needs to prepare for the increased competition from the East. "It is the greatest challenge since the emergence of the U.S. over 100 years ago," Rubin said.

Rubin and Chen are hardly alarmists, but they see the U.S. sailing blithely into the big waves of new competition almost entirely unprepared. Everyday families--as well as the U.S. government--have been spending well beyond their means.

Just when the U.S. should be beefing up its educational system, voters have tolerated--and federal, state and local governments have allowed--the failure of many public school systems to educate their students even at a basic level year after year after year.

Companies have become more and more focused on the next quarter’s results instead of long-term strategy during the very time that the re-emergence of India and China is roiling the global business landscape. Like the federal government, companies have cut back on basic research spending at a moment when innovation may be the only means for staying ahead.

Today's challenge is to ready the nation for the coming wave of stiff competition from India and China. What the U.S. must do is clear: It must strengthen its educational and economic foundations and foster the innovation that will keep the U.S. lead in the technology that underpins so many parts of the nation's culture and economy. Now is the time for the U.S. to recognize the threat to American standards of living and to resolve to raise its game and compete on the new global terms.

The stakes are high: Without dramatic changes at the personal and government level, standards of living could fall as more and more white-collar as well as blue-collar jobs move overseas to hungrier, hard-working, lower-paid Indians and Chinese.

Make no mistake: The U.S. doesn't have a billion people, but it has enormous advantages and resources when it comes to competing in the world economy--even one in the midst of a historic shake-up.

The American system is renowned for its ability to foster the kind of creativity and flexibility that has helped it rise above past challenges. Those are the traits that helped America send a man to the moon after President Kennedy called on the nation to concentrate its efforts.

Americans must be ready for disruption and willing to undergo retraining to upgrade their skills and to be ready to change careers to jump on new job opportunities when they arrive. While the free market should be allowed to work, both the government and corporations must install a sturdier safety net for those whose livelihoods are disrupted by the enormous--and inevitable--changes afoot.

The U.S. is the world's largest, strongest, most resilient economy by a good measure. Americans must embrace that, and walk tall into the ways of a new world shaped by the rise of India and China. There is one thing impossible for any company to move overseas, and difficult for other nations to duplicate: America's essentially scrappy culture of thinking of, funding and bringing to market new ideas and ventures--its people's inventive, can-do mindset. Americans are at their best as underdogs.

So let the rise of India and China be a catalyst to re-establish America's competitiveness. Let it be this generation's space race. If inward-facing India and Communist China can transform themselves and face the world, so can the United States of America.
 
Two of Mumbai's oldest rail terminuses to get a new look

Mumbai, July. 30 (PTI): The Indian Railways is set to give two of the city's oldest railway terminuses, Chhatrapati Shivaji Terminus and Dadar, a new look with more passenger amenities in the near future.

Three new platforms and passenger amenities of the CST were expected to be opened to the public this September, a project which has cost the railways Rs 94 crore, while beautification work of Dadar station is scheduled to begin shortly, railway official said.

The CST, a World Heritage site built in 1888 in south Mumbai, is one of the most enduring sights of the city. The new amenities including additional booking offices, new waiting halls and better parking facilities were expected to add charm to the place, he said.

The three platforms, which were originally scheduled to be ready by March 2007, will be long enough in keeping with the Railways plan to extend the length of outbound trains to 24 coaches.

Among other unique features, it will also have a lift to carry handicapped persons from one platform to another, the first in any railway station in the city.

Railway authorities also said that work to improve the appearance of the Dadar station, a major halt for most outbound and suburban trains, will begin soon and a budget of Rs 2 crore had been sanctioned for its beautification.

"The facade of the station is to be modernised while additional passenger conveniences will be provided on the platforms," Division Railway Manager J N Lall said.

He said that the authorities would also take up the extension of some of the platforms on the suburban tracks in order to ensure that they were compatible with the longer 12-coach train that are to be introduced soon.
 
July 31, 2007

Indian demand for planes revised up

NEW DELHI, July 30: US aerospace giant Boeing on Monday revised up its estimate of the commercial aircraft India would need in the next two decades to 911 from 856, but added demand would be far below China’s.

The new order projection is worth more than $86 billion, compared to a previous estimate of $72 billion last year, said Dinesh Keskar, Boeing’s senior vice president in India.

“The increased projection is supported in part by robust economic growth, and increasing demand for domestic and international travel and ongoing efforts within airlines to reduce costs,” a statement from Seattle-based Boeing said.

“Our forecast for the Indian market is bullish,” Keskar said adding that the company saw an average increase of 10 per cent annually in air passenger traffic in the next two decades.

According to Boeing, India’s state-run and private carriers had placed orders for 141 aircraft worth more than $20 billion in the past two years.

But he said the pace of growth in India lagged its main Asian rival China.

“The market for Boeing in India is not as big as China,” Keskar said.

Commenting on the 787 Dreamliner ordered by international flag carrier Air India, Keskar said Boeing’s delivery plans remained on schedule.

“Air India is scheduled to get its first Dreamliner by September 2008. We don’t see any changes in the delivery date,” he said.

Besides air passenger traffic, Keskar said he saw potential for Boeing in India’s freight and aircraft maintenance market as well.—AFP

http://www.dawn.com/2007/07/31/ebr19.htm
 
India Inc in the brandscape
31 Jul, 2007, 0224 hrs IST,Mansi Bhatt, TNN

The importance of brands in creating value for businesses cannot be over emphasised. Though globally, on an average, intangibles-brands, know-how (R&D, patents et al), contracts and other intangibles (processes, human capital et al)-make up roughly 62% of enterprise value, in India its' 76%, higher than perhaps any other developed or developing market in the world — Switzerland (74%), France (73%), Australia (72%) and USA (71%).

No wonder, even while the Indian economy remains significantly under-branded (advertising spends is under 0.4 % of the country's gross domestic product, compared to a global average of around 1 %), across sectors, brands are becoming the most dominant intangible asset. And a company brand — the face of the business for all its stakeholders — is no less important here.

Reliance Industries (RIL), the company that pioneered retail participation in the capital markets under its founder Dhirubhai Ambani, emerges as the India's most valuable brand ($ 5.8-billion) on Brand Finance India's Top 50 Most Valuable (Company) Brands list. With a huge impetus on the direct consumer facing business, Reliance Retail, the brand also garners an A on Brand Rating, which demonstrates the resilience of the brand asset and its strong ability to secure future cash flows for the business.

Public sector petroleum marketing brands — IOC, BPCL and HPCL — under strain due to rising crude prices and high under realisation due to government price controls, will have to exploit the substantial distribution muscle and brand recognition to economic use.

The Tata Group's crown jewel and India's largest software company, Tata Consultancy Services, muscles its way to be among India's top three brands with a valuation of $4.02-billion. It is also one among India's most powerful brands (Brand Rating A+) in terms of its ability to sustain earnings into the future with the least risk. Wipro follows as the second most valuable IT brand ($2.65-billion, ranked sixth in BF Top 50), with Infosys ($1.61-billion), India's third most valuable IT brand, not making the BF Top 10 cut. While Indian IT companies continue to grow rapidly, the first strains in the India cost arbitrage model are beginning to show with relatively high employee attrition. All three brands are at strategy crossroads and will need to work harder on brand differentiation going forward.

Among banks, SBI emerges as the most valuable financial services brand at $3.14-billion. ICICI Bank ($ 2.04-billion) at number nine in the BF Top 50 pecking order emerges as India's second most valuable financial services brand. The debate in the financial service market is rapidly changing with technology implementation and operational efficiency becoming table stakes. To break the current supply side parity, players will have to come up with market expansion strategies which are based on unique consumer value propositions.

At number five on the BF Top 50 list, Tata Motors with a bigger portfolio in passenger and commercial vehicles pips Maruti Sukuki India ($ 1.01-billion, rank 16), Bajaj Auto ($825-million, rank 17) and Hero Honda ($599-million, rank 23) as the country's most valuable auto brand.
 
RBI may halt Re advance at 40: JPMorgan
Bloomberg
Mumbai August 02, 2007

India's central bank is likely to stop the rupee's rally at 40 against the dollar after signaling yesterday that it will mop up surplus cash from the banking system, JP Morgan Chase & Co. said in a research note.

The Reserve Bank of India yesterday told lenders to set aside more cash to cover deposits and scrapped a daily limit on the amount of money it drains, to remove funds injected as a result of dollar purchases. The rupee last week failed to break 40.215, the highest since May 1998, on speculation the central bank stepped up intervention.

"The central bank is responding like a firefighter to the evolving challenges in the money market, owing to strong capital inflows,'' Rajeev Malik, JPMorgan's Singapore-based economist and Mumbai-based strategist Vikas Agarwal wrote in the note. ``Their foreign-exchange operations are likely to stay strong.''

Central bank Governor Yaga Venugopal Reddy is fighting to contain the 9.4 percent surge in the rupee this year that has curbed sales and profit at exporters including Infosys Technologies Ltd., the country's second-biggest software maker.

Sales of the currency have increased money supply, forcing Reddy to take complementary steps to combat inflation. The rupee today fell 0.4 percent to 40.5275 as a slump in stocks fueled speculation global funds will pare riskier emerging-market assets on growing concerns of losses from subprime loans in the U.S.

The rupee this year is the best performer among the 10-most active currencies traded in Asia outside of Japan. Foreign-exchange reserves rose $8.7 billion in the three weeks ended July 20, compared with $5.1 billion in June, suggesting the central bank stepped up dollar purchases.

Reddy and fellow policymakers yesterday increased the cash reserve ratio of lenders by half a percentage point to 7 per cent, which according to the central bank may help drain as much as Rs 160 billion ($3.95 billion) from the economy.

Capital flows from overseas will remain ``robust'' as Asia's fourth-biggest economy expands 9 per cent in the year ending March 31, said Sonal Varma, an economist at the Mumbai unit of Lehman Brothers Inc.

"We expect the central bank to continue to lean against sharp rupee appreciation by actively intervening and simultaneously using sterilization measures,'' she said in a note sent to clients yesterday.

Net purchases of Indian stocks by global funds almost tripled last month from June, while overseas borrowings by local companies rose six-fold to $16.1 billion in the year ended March 31. The central bank faces ``severe policy challenges'' in managing the flows, Reddy said on July 3 in a speech in Moscow.
 
India FX market boom stokes high salaries, turnover
Wed Aug 1, 2007 10:57PM EDT
By C.J. Kurrien

MUMBAI, Aug 2 (Reuters) - The salaries of foreign exchange traders in India are expected to jump by up to 30 percent this year as the rising rupee stokes demand for hedging services and trading volumes swell.

Some traders are now earning as much as their counterparts in Asian centres like Singapore, and keeping experienced staff is increasingly expensive. Banks face turnover of up to a fifth of staff each year.

"Retention is the name of the game. Banks don't mind paying heavily for it. Treasury is making so much money that they don't mind sharing a bit of the profits," said Tzeitel Fernandes at human resources firm Hewitt Associates.

India's annual foreign exchange market turnover has grown to a gross $6.5 trillion in the fiscal year 2006/07 from $1.4 trillion six years earlier.

"Volumes flowing through the system are much more than last year," said Hitendra Dave, co-head of global markets for treasury at HSBC (HSBA.L: Quote, Profile, Research) in India.

Dave guesses salaries have at least doubled in the past 12 to 18 months, while treasury revenues for the industry have doubled in the past year.

More commercial banks are offering treasury products to their corporate clients, whose overseas exposure is increasing as India's economy opens up, and foreign banks that are boosting operations in financial centre Mumbai are willing to pay more for talent.

Global houses like Credit Suisse (CSGN.VX: Quote, Profile, Research), Lehman Brothers (LEH.N: Quote, Profile, Research) and Goldman Sachs (GS.N: Quote, Profile, Research) have been ramping up in India and hiring experienced treasury sales and dealing staff. The new arrivals often don't train staff up themselves, they buy experienced talent, senior traders say.

"I lost a lot of people last year, but the bank is getting wise to the fact it's silly to lose people -- that you have to do all you can to retain them," said one head of trading at a foreign bank that has been in India for several years.

BEATING THE TRAFFIC

Traders say the average annual salary for a middle manager in treasury at a private sector or foreign bank is between 1.5 million and 2 million rupees (US$37,000-49,500). That's excluding bonuses, which can add another 8 million rupees, nearly $200,000.

That's still below Hong Kong, where middle-ranking foreign exchange traders pocket $220,000-300,000 a year, including bonus. But it's near or exceeding levels in Singapore, the world's fourth-largest currency trading centre, where traders earn about S$100,000 ($66,000) a year before sales commissions.

In London, big bonuses often mean new sports cars or diamond pendants. But Mumbai's traders use their new-found wealth to beat the traffic and upgrade their homes.

One senior currency trader, who moved from a private sector Indian bank to a foreign one, used to commute for an hour and a half on the city's overflowing trains. After a big bonus last year, he has a Honda City sedan and a bigger apartment just half an hour's drive from his office.

The advent of private equity and venture capitalists has also taken a toll on employers' wage bills and staff turnover.

"It's a huge drain in talent on treasury, which has contributed to the rise in wages and attrition," Fernandes said, adding banks were getting creative to retain staff, offering them equity, deferred bonuses and overseas postings.

Some banks also train up B or C teams.

"We always have people sitting on the bench," said a senior trader at an Indian bank. ICICI Bank (ICBK.BO: Quote, Profile, Research), India's largest private bank, says its treasury team has grown by 63 percent since March 2006, on top of a 60 percent expansion in the 12 months before.

Seasoned market players doubt the boom times will last.

They expect consolidation between local banks as a central bank regulatory review nears in 2009. Others think the sector will see an influx of talent attracted by the high pay, eventually forcing down wages.

For now, the only way to do business is to pay up.

"The rate of growth in salaries has to slow -- that's a fact -- but it will continue rising for a bit, at least till local compensations close in totally with the rest of Asia," said the head of trading at a foreign bank.
 
Japanese PM to fund Delhi-Mumbai Industrial Corridor
2 Aug, 2007, 0339 hrs IST,Amiti Sen, TNN

TOKYO: The proposed $90-billion Delhi-Mumbai Industrial Corridor (DMIC) project is likely to emerge as the hot-spot for Japanese investors over the next few years. When Japanese Prime Minister Shinzo Abe visits India later this month, he will be accompanied by around 50 top businessmen, half of them CEOs, from the country.

Such is the interest in the project that companies like Mitsui, Hitachi, Mitsubishi, Honda and Orix have already started identifying potential areas of investment around the corridor.

Officials from the ministry of economy, trade and investment confirmed to ET that the prime minister was likely to announce Japan’s willingness to contribute to the $250 million project development fund for the corridor. Japan is also hopeful that a detailed report for the DMIC project will be compiled by the end of the year.

“The DMIC project is very important for both India and Japan. It will provide investment opportunities for Japanese companies on an unprecedented scale,” said vice-minister for international affairs (METI) Masakazu Toyoda. The work on the 1,483-km industrial corridor is expected to start next year. As many as 250 projects would be part of the corridor in sectors such as roads, ports, industrial parks and SEZs.

Japanese financial services group Orix, which has already launched a $100 million project development fund in India together with ILFS last year, is upbeat about the investment prospects in DMIC. “This project is huge. We want to invest in a large number of sectors including real estate development, SEZs, road construction, technology and training and ports,” said Yukion Yanase from Orix.

Mitsui corporation, which is investing in a free trade warehousing zone in Noida, wants to create more such zones along the DMIC. “We are planning to construct major logistics centre around the DMIC, especially cold chain facilities and port facilities,” said Mitsui general manager (strategic planning department) Takao Omori. He added that Japanese shipping companies keep complaining about port congestion in India which needed to be addressed. According to Jetro chairman Yasuo Hayashi, the project would transform the way the Japanese investors look at India.

“Earlier Japanese investors were only selling products in India. But now it could become a manufacturing base for exporting to countries in the EU, Middle East, CIS and Africa,” he said. Jetro is organising seminars in Japan to increase awareness about the potential of the project among the small and medium enterprises.

Another Japanese company with big plans for the DMIC project is Hitachi which has more than ten years of experience of doing business with India. “We want to invest in a large number of sectors including transport, power plants, elevators and escalators,” said Hitachi’s senior manager (Asia business department) Takafumi Kimishima.

He, however, said that there was a lack of clarity on how the project would take shape. “Although we know about the project, things are just a bit hazy at the moment,” Mr Kimishima said.

International affairs minister Mr Toyoda pointed out that there needed to be a number of follow-up meetings after Mr Abe’s visit and also after the project report is finalised to ensure its smooth implementation.
 
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