Indian Economy - News & Updates - Archive

[Bushroda]

Stock and awe
First Published: 00:22 IST(3/8/2007)

The global meltdown in stock prices has, as was only to be expected, hit Indian stock markets hard. Expected, because globalisation has both an upside and a downside. For quite some time now, Indian corporates have been reaping the benefits of a sustained boom in global economies, as well as easy access to cheap credit in overseas markets. This has helped them to grow rapidly in size, expand their international presence, finance large mergers and acquisitions abroad, and show healthy profits. Expectedly, this made their stocks attractive investments, both for domestic and foreign investors. The result has been a Sensex on steroids, and a massive influx of foreign funds. As of August 1, data released by markets regulator Securities and Exchange Board of India shows that foreign institutional investors (FIIs) had pumped in more than Rs 43,237 crore, or over $10.3 billion, into Indian equities. This is a massive vote of confidence in the Indian growth story. FII buying has, in fact, been one of the major accelerators of the Sensex’s rapid rise. However, this comes with a caveat: this money originates overseas, and will inevitably react to overseas linkages.

The massive slide over the past few trading sessions, therefore, has to be seen in context. Worries over looming credit defaults in the US sent stock prices crashing worldwide. The tremors rocked India as well. In just two days of freefall, the benchmark Sensex has shed more than 1,100 points. Investors — both big and small — have been hit hard. On Wednesday alone, the combined value of listed stocks declined by Rs 1,81,000 crore. However, most analysts see this as a ‘correction’.

The fundamentals appear to justify this view. Over the past five years, the Sensex has a return of almost 500 per cent. This year’s return, despite the crash, is still over 28 per cent. More importantly, the Sensex’s long-term trend is still charting an upward path. Our economy is also not heavily dependent on the US. The International Monetary Fund raised its global growth estimate to 5.2 per cent barely a fortnight ago. India’s GDP growth for the current fiscal is expected to be in the 9-10 per cent range. While investors definitely need to tread cautiously in the short-term, the long-term outlook is still positive.

 

[Bushroda]

ANA targets higher fliers with new business-class-only service to Mumbai
Channel News Asia, Singapore
03 August 2007

TOKYO: Japan's All Nippon Airways announced Thursday a new service between Tokyo and the Indian financial capital of Mumbai catering exclusively to well-heeled business travellers.

A Boeing-737 with 36 business class seats will fly six times a week to and from Tokyo Narita airport and Mumbai from September 1 -- with no room for economy class passengers in the rear.

The airline is believed to be the first in Asia to offer business class-only flights, which have already taken to the skies elsewhere.

"Mumbai is India's western gateway and centre of culture and finance. Many Japanese firms have entered Mumbai," said ANA vice president Shinichiro Ito.

"With this new flight we would like to contribute to the further development of relations between Japan and India," he said at a press conference.

The new service reflects expanding business ties between Japan and India, which is enjoying near double-digit economic growth.

It also follows the success of business class-only services criss-crossing the Atlantic between the United States and Europe.

Analysts said other airlines in Asia would carefully study the market for such services before following ANA's lead.

"The business jet is obviously a trial for ANA," said Osuke Itagaki, an aviation analyst at Credit Suisse.

"The airline will have to examine whether it can earn a profit or not. I doubt similar flights will suddenly increase in Asia in a short period of time," he said.

The cheapest fare for the new ANA business jet service between Tokyo Narita airport and Mumbai is 430,000 yen (3,622 US dollars), according to ANA's website.

Passengers get a standard business-class seat with a 61-inch pitch, as well as a portable media player with music, movies and videos to keep them entertained during the nine hour-plus flight.

"Our main target is Japanese business people flying from Japan to India as there are already many Japanese companies investing in the Mumbai area," said Ryoichi Fujisaki, a spokesman for Japan's second largest airline.

But he said ANA would also promote its new flights to Indian travellers. ANA does not currently offer any flights to India.

From October 28 until next March 29 the service will make a stop in the southwestern city of Nagasaki on the outbound flight to Mumbai, also known as Bombay.

With no Concorde to whiz rushed executives across the Atlantic faster than the speed of sound, business-class only flights have grown increasingly popular between the United States and Europe in recent years.

Their success has spawned a new wave of carriers offering nothing but business class seats, such as Britain's Silverjet, US airline Eos and France's L'Avion.

Analysts said the new service could be lucrative for ANA.

"I guess potential demand for business jet flights to and from India is high in Asia, but it will probably take time for ANA to make its customers aware of the new service," said Mizuho Investors Securities analyst Takahiko Kishi.

The aviation authorities of India and Japan in December agreed to increase the total number of flights between the two countries to 42 from 18 as part of efforts to strengthen bilateral ties.

 

[Bushroda]

How the leaders delivered
A K Bhattacharya / New Delhi August 03, 2007

Let this review start with a general advisory: Do not get put off by the title of this book.

Yes, this is an anthology of important speeches made by eminent Indians between 1877 and now. It’s also true that speeches being what they are can generally be very boring and soporific.

But the 161 speeches (classified under 17 broad themes) that find place in this volume are neither boring nor soporific. They are selected with great care and thought. Indeed, they capture the evolution of India as a nation over the years. Almost all the speeches articulate the various ways India has evolved as seen by some of its greatest thinkers, social reformers, economists, scientists and politicians—before independence and after.

Thus, Surendranath Banerjea or Dadabhai Naoroji emerge in a new light—not as intellectual or political collaborators of colonialism, but as forces that saw in the British raj the many virtues that could be assimilated and absorbed. As Rakesh Batabyal, the editor of the volume, argues, all these leaders believed in what Karl Marx described as the “regenerative role of colonialism”. Arguing in those days that the British education system or the railways network also had some redeeming features required political courage and the vision to look ahead.

Another idea that these leaders of the early nineteenth century grappled with was whether India could emerge as a nation from merely being a geographical entity. Gokhale, Naoroji, Banerjea and Gandhi spoke at length and at different times on how the various states under the British raj could be united as a single political entity. They all seemed to have recognised the daunting task. But not for once did they give up in arguing their case cogently.

Eventually, as the speeches reproduced here show us, it took the grit and determination of Jawaharlal Nehru and Sardar Vallabhbhai Patel to use persuasion and even threats to get all the 500-odd princely states to agree and submit to the sovereignty of the Indian state. One of Patel’s speeches made at Jaipur in the presence of the Kapurthala royalty gives adequate evidence of how the then home minister had alternated gentle persuasion with blatant threat to get the Nizam of Hyderabad and some other recalcitrant kings to sign on the dotted line.

Equally bold is Nalini Ranjan Sarkar, who headed the Federation of Indian Chambers of Commerce and Industry (Ficci) in 1934. In his presidential speech that year, he outlined a detailed agenda for action to usher in planned economic development in India. His speech, delivered at a time when most Indian political leaders were in jail, showed that Indian business leaders and Sarkar in particular were clear in their mind that building a strong industrial base and attaining high economic growth were as important goals as political freedom from the British rule. Not surprisingly, it is Sarkar again who pushed the Indian government to set up the Indian Institutes of Technology so that the country could produce engineers of international class.

The range of the subjects covered by the speeches is indeed vast—from Jagadish Chandra Bose on his belief in the existence of life in plants to Swami Vivekananda on the social purpose of the Hindu religion, CV Raman on the Nobel prize winning Raman Effect, Kanu Sanyal on the formation of the CPI-ML and to Indira Gandhi on why the commercial banks had to be nationalised.

The speeches become more interesting during the post-independence era. It is Brajesh Mishra who in 1974 explains to the world why the Indian government went in for a nuclear test at Pokhran. In 1998, Brajesh Mishra is part of the Vajpayee government at the Centre. And the explanation offered by Vajpayee after the series of nuclear tests in May 1998 is quite different.

What assures for this book a permanent place in one’s bookshelf is the highly informative and succinct introduction to each of the speeches. The context and the significance of the speech are outlined with an objectivity that would be the envy of any historian.

Objectivity suffers only in one place—the section which carries speeches on economy and development. The volume editor seems to have been ideologically biased towards the economic views espoused by the Left. How otherwise does one explain the inclusion of a fairly ordinary and long speech of Somenath Chatterjee, at present the Lok Sabha Speaker! The speech is ostensibly a critique of the new economic policies introduced by the PV Narasimha Rao government, but the arguments therein are poorly marshalled and flawed as well.

A notable omission from this volume is the historic speech delivered by Ghanshyam Das Birla at a Ficci luncheon meeting in the late 1970s. In that speech, Birla voiced the collective anguish of Indian business leaders, who were constrained by a plethora of restrictive economic laws. Birla went a step ahead and called upon business leaders to violate the economic laws that barred them from producing more. Among those who listened to Birla at that meeting was George Fernandes, the industry minister at that time. Such a speech should have surely found a place in a volume that is otherwise unmatched in its comprehensiveness.

 

[Bushroda]

Infrastructure identified as priority area by IFC
2007-08-02 18:23:25
Source : Moneycontrol.com

IFC, a member of the World Bank Group, today reaffirmed its commitment to contribute to India's economy by expanding its investments in private enterprises in the sectors where IFC is needed most. IFC Vice Presidents Farida Khambata and Declan Duff joined South Asia Director Paolo M. Martelli in India this week to discuss with government and private sector partners how to move ahead with IFC's growing focus on India's infrastructure, midsize companies, and financially underserved markets.

In the financial year ending June 30, 2007, private sector projects worth $3 billion were supported as a result of IFC's assistance to the Indian corporate sector. IFC's annual investments in India this year surpassed the $1 billion mark for the first time since IFC's founding in 1956. IFC invested more in India in FY07 than in any other country, making the India investment portfolio its second largest after Russia.

This year IFC also doubled its portfolio in the infrastructure sector, to $600 million. Investments ranged from natural gas to wind power, and from port services to a fund for developing public-private projects in infrastructure sector.

Dhanendra Kumar, who represents India on IFC's Board of Directors, welcomed the development, saying, "Today, a poised and confident India has set larger goals for inclusive growth and sustainable development. IFC is providing valuable advice and financing to help the private sector contribute to these goals. We are particularly pleased that a significant part of IFC's commitments in the financial year have been to the infrastructure sector, in keeping with India's priorities."

"India's impressive growth is improving the quality of life. The government seeks to ensure that growth is inclusive and sustainable. We want to help this important effort by boosting rural growth, building infrastructure, and supporting reform," Declan Duff, IFC Vice President for Industries, explained.

Farida Khambata, IFC Vice President for Asia and Latin America, elaborated, "India's priority is infrastructure, where the problem today is a shortage of bankable projects. IFC is setting up an infrastructure advisory facility with donor support to develop bankable public-private partnerships, in close collaboration with government agencies at the central and state levels. This will help create model PPP arrangements in newer subsectors and increase access to infrastructure services across the South Asia region."

Paolo M. Martelli, IFC's newly appointed South Asia Director, added, "IFC not only invests, but also manages advisory programs in challenging markets. We offer our global and local resources to the private sector in support of the larger goal of sustainable growth and poverty reduction."

IFC's strategic priorities include strengthening the focus on challenging markets; differentiating through sustainability; addressing constraints to private sector growth in infrastructure, health, and education; supporting local mid-tier manufacturing companies become globally competitive and helping local financial market development through institution-building and innovative financial products.

IFC's products and services have expanded from the original dollar-denominated senior loans and equity, to include loans in a variety of currencies, including Indian rupees, quasi-equities of varying types, currency and interest rate swaps and, most recently, carbon credits. IFC's advisory services are an increasingly integrated component of the Corporation's contribution to private sector growth in developing regions.

Today IFC's activities in India cover a wide range of sectors, from power, transportation, and oil and gas to manufacturing companies in auto components, engineering, pharma sectors to microfinance and housing finance institutions, poultry and vegetable farms, IT companies, and hospitals.

IFC's focus is on supporting mid-tier banks and manufacturing companies that aspire to global competitiveness and lack easy access to long-term funding. In India, IFC was a founding investor in key financial institutions, such as HDFC and IDFC that remain partners today.

Since 1956, IFC has supported then early-stage Indian companies, such as Bharat Forge and Titan Watches, that have since grown into global brands; firms such as Bajaj Scooters, Arvind Mills, and Moser Baer, that have become household names; and industry leaders, including Tata Steel and Larsen and Toubro, that had sought to establish credibility in global markets.

Today too, IFC selects mid-sized high growth companies that are modernizing, restructuring, or expanding to become globally competitive. Recent investments include include MSPL, Lanco, ABC Coffee, Ocimum Bio, OCL, Kanoria, Suguna Poultry, Electrotherm, LG Balakrishnan, PSL, Drishti, Nevis, Montalvo, Indecomm, and iLabs.

IFC focuses on combining investments with capacity-building advisory services in such areas as governance structures, staff training, and systems and procedures for management, accounting, and risk assessment.

 

[Bushroda]

Thai jewellery traders complain of market seizure by Indians
Asia Thailand Biz
Posted: 2007/08/02
Mathaba News Network, Thailand

Thai jewellery traders have complained their markets in the eastern province of Chantaburi have been seized by some groups of Indian gem traders through a price distortion.

Pornchai Chuenchomlada, president of the Thai Precious Stones and Ornaments' Association, submitted a written complaint to a member of Thailand's National Legislative Assembly that the number of Indian gem graders in the province had increased considerably.

Some groups of the Indian traders had distorted product prices to such an extent that Thai entrepreneurs including manufacturers and traders could not compete with them.

He said the Indian traders had an advantage because they had a larger amount of capital, more branches overseas, and lower trading costs.

In addition, most of the Indian traders had often shunned abiding by state rules and regulations.

Currently, more than 100 out of 200 jewellery manufacturing plants had closed their business since they could not compete with the Indian traders in terms of prices.

So, the association wanted state agencies concerned in security affairs to examine whether the Indian traders' behaviour had undermined the country's economy or not, he said. (TNA)

 

[Bushroda]

CRR hike to slow short term growth: Moody's
BS Reporter / Mumbai August 2, 2007

Reserve Bank of India’s (RBI) decision to hike cash reserve ratio (CRR) to suck out excess liquidity and its general policy stance may lead to slower short term growth for Indian economy, according to rating agency Moody’s.

The central bank in its first quarter of review of annual monetary policy for FY08, raised the CRR (the share of deposits that banks have to keep with the central bank without getting any interest), by 50 basis points to 7% from August 06, 2007.

This is fourth time it has raised CRR. This is expected to take about Rs 16,000 crore out of the system.

The RBI also removed the Rs 3,000 crore cap to mop up funds from banks under the reverse repo window.

"From a credit standpoint, the preservation of India's macroeconomic stability remains in a critical phase, and Tuesday's moves are consistent with that," Aninda Mitra, VP, Moody's, said.

"In an atmosphere of still-strong underlying growth, a prolonged tightening stance goes to show that one or two benign price signals are not enough to effect a short-term change in the course of policy." Moody’s said.

In Moody's view, he said, it is not usually enough for policy makers to simply manage short-term demand without credibly addressing longer-term capacity problems, especially in high-growth potential economies. "Nor is it typically feasible for the private sector to somehow step into the structural void and bear the financial brunt of capacity building," he said.

As a result, he said, Moody's believes that a tightening bias in the overall monetary framework could remain in place until the government is further able to reduce its own debt burden, which currently precludes better resource usage in more productive areas, or officials can establish a more effective enabling role for the private sector or foreign participants in the capacity-building process.

 

[Bushroda]

Good news on Indo-Pak trade front

The news that India and Pakistan have decided in New Delhi to increase their bilateral trade by six times to $10 billion by 2010 should not go unnoticed because it means the pulling down of some of the political barriers that have stymied economic development in both countries. Like all trade negotiations, the two sides should seek mutual advantage and learn to adjust their economies accordingly, all the while keeping focus on what they have agreed under their World Trade Organisation (WTO) commitments.

It is the political barrier in Pakistan that has to be pulled down; and India’s economy has to get rid of the hangover from its Nehruvian days and match the openness it demands from its free-trade neighbours. All said and done, though, getting bilateral trade to touch $10 billion by 2010 will stretch the imagination of both parties which are used to deadlocking each other as a good domestic gimmick. Trade now stands at $1.7 billion and is heavily in India’s favour, which clearly indicates where the logjam has to be broken. Many more items will have to be included in the list of tradable commodities, which today stands at 1,800, having grown painfully slowly from only 40 under the regime of General Zia-ul-Haq in the 1980s.

Economic wisdom is not a plant that grows wild in South Asia. The Indo-Pak economic thaw has been forced by external leverage as Pakistan has got used once again to American assistance and India has quenched its thirst for nuclear technology from the United States. Pakistan has been linking a “breakthrough” in trade with India to “progress” in peace talks with special reference to the Kashmir dispute. The idea in Islamabad is to “punish” (sic!) India in order to get its way on Kashmir. It says it has great “geopolitical” advantage because it sits astride a clutch of trade routes joining South Asia with Central Asia. But the operationalisation of this vision is “obstructive” rather than “constructive”. The purpose is to deprive someone else of advantage, not to seek advantage for oneself.

The one item in President General Pervez Musharraf’s political agenda that has found favour among the masses in Pakistan is normalisation with India. While not detracting from his efforts to ease the tensions that peaked in 2001, one has to fault his men for not grasping the urgency to get Pakistan’s equation straightened out with India as the status quo power in the region. India had granted Pakistan the most favoured nation (MFN) status in 1996 but Pakistan has not reciprocated “because of Kashmir”, a decision accepted by Pakistan’s ruling politicians “because of internal pressures”.

What militates against this policy is the multilateral treaty of a free trade area (SAFTA) signed by it at South Asian Association for Regional Cooperation (SAARC). The treaty required the signing of bilateral free trade treaties among SAARC members. Pakistan signed the free trade treaty with India but refused to ratify it “because of Kashmir”. That leaves Pakistan isolated in the region where all other states have signed and ratified their free-trade treaties with India.

There are reasons for holding Pakistan more responsible than India for the delay in economic normalisation. It is not useful for Pakistan to view its geopolitical advantage in military terms. And if it takes another look at itself as a trading nation rather a warrior state, then it has to actively sell its trade routes to the two regions it has actually tried to separate for the past 60 years. Its efforts to extract a price for being the impenetrable barrier to movement of commodities have given a strangely anachronistic definition to the Indo-Pak border. There are few frontiers left in the world today that are as off-limits as this boundary line. The examples that spring to mind — North and South Korea, Israel and some of its neighbours (Syria and Lebanon) — explain how threatening the policy is to the region.

The two economies are communicating all right, but through third countries and through smuggling. Analysts rightly add a couple of billion dollars to this regular trade by computing a huge chunk that Pakistani importers consume on the side. But now that the two sides have pledged to facilitate Pakistan’s exports to India — cement is on the line — things may start looking different. It is only after agreeing to do normal trade that one can get into the nitty-gritty of getting the other partner to pull down its non-tariff barriers. There are no trading partners in the world who don’t occasionally lock horns, at times quite aggressively, over trade imbalances.

Pakistan is threatened on its western border in a most glaring contradiction of its traditional security perception in the region. But it is taking too long — even after loss of territory — to even recognise this threat. Normalisation with India is on the cards, the people of Pakistan want it, the changing threat perceptions demand it, and one can, and should, choose to do the right thing without being dragged to it kicking and screaming.

 

[Bushroda]

Buddha Can Show The Way
3 Aug 2007, 0054 hrs IST,Kaushik Basu

I had argued in these columns last week that changes in the states of Bihar, Orissa and Bengal raise the possibility of an industrial resurgence in the eastern region of the nation.

The source of West Bengal's change is the CPM's recent realisation of what the Chinese realised in 1978 — that good economic policy has nothing to do with one's fondness for or dislike of big companies and capitalists.

In today's world, with free-floating capital and footloose corporations, if you are in charge of just a region, or even a country, and want your workers to be employed and paid decent wages, you have no choice but to welcome capital. In an interview in 2005, Buddhadeb Bhattacharjee said, "I want investment. Money has no colour or nationality... We cannot dwell in the past. Look at China. Does it have any problems accepting investments from capitalist countries? Does Vietnam not want American capital?"

From the manner in which re-industrialisation is being attempted in West Bengal, there are signs that the government is trying to take a page out of China's book of "capitalism by fiat". The state government is using its party power and proximity to the unions to forcibly acquire rural land and other rights for big business houses to start up large industrial projects.

The state has struck deals on steel, port development, hydro-chemicals, and food processing with large corporations — all in the last two or three years. It had earlier persuaded IBM and Wipro to start operations in the state; and has received investment from Pepsi and Mitsubishi.

In the services sector eastern India cannot any more take the lead. Misled into thinking that this skilled labour-intensive sector is not in the interest of the masses, the gravy train was allowed to pass. Fortunately for India, the southern states cashed in on this great opportunity.

India has not done well in the industrial sector over the last 20 years. As a consequence the opportunities here are enormous and it is possible for eastern India to take the lead in this sector. I disapprove of the use of CPM cadres to settle disputes and terrorise people as happened in Nandigram. At the same time we must not give in to Trinamul Congress's mindless effort to stall industrialisation.

Industrial development is the only way to make a serious dent in poverty. This in turn means that land acquisition for large-scale industrialisation is unavoidable. And let us not delude ourselves into believing that this can be done under conditions of unanimous support.

Large industries often require large tracts of land, which means many contiguous farmers have to be persuaded to sell their plots. In every sufficiently large group there are bound to be one or two farmers who will not want to sell their land no matter what the price. Hence, if we insist on voluntary participation of all farmers, we will be forced to abandon the very idea of industrialisation. Government should pay the farmers not just the market price but also a substantial mark-up on it. But, even with such high payment, to think that everything can be done entirely on the basis of voluntary land sales by farmers is an illusion.

One strategy that can help government smoothen the land acquisition process is to find two potential areas for every industrial project, announce that one will be chosen and list the benefits that will accrue to the region. This will build up pressure from those who are in favour of getting the project to their region. Fearful of it going to the other region, they will take the initiative to neutralise the naysayers.

It is possible that in Singur, when the immediate costs and benefits of the car factory are added up, we will find that Bengal has made a net loss. But the deal is nevertheless worthwhile. After so many years of deindustrialisation, the first large industry to set up shop in the state will need disproportionate inducement.

Hence, we have to view the first entrants as the Pied Pipers of industrialisation. And if i were to choose one from among India's major industrial houses, the Tatas, with their reputation for integrity and quality, would certainly be high up on my list. If this goes well, many more industrialists will want to come to the region, and the regional economy can then recoup the losses of the short run many times over.

Whether the West Bengal government has the ambition and imagination to lead the entire eastern region to economic prosperity and industrial leadership remains an open question. Moreover, unlike the Chinese communists, the CPM government functions within a nation that is a vibrant democracy with a powerful legal system; so there will be limits to how far they can imitate China. Also, the unions controlled by the CPM are a small part of India's labour movement and so the party's hold over labour in general is limited.

But even with all these caveats, for the first time in decades it seems within the realm of possibility that West Bengal will see a massive re-industrialisation, which can generate employment throughout the eastern region of India, and cut poverty and raise the common man's standard of living more sharply than ever before.

 

[Bushroda]

Boeing, Jet Airways Announce Order for Three 777-300ERs
(WebWire) 8/2/2007 9:54:32 AM

SEATTLE,- The Boeing Company [NYSE: BA] and Jet Airways, India’s largest private airline, today announced that the airline has exercised options for three 777-300ER (Extended Range) airplanes.

The order, valued at more than $790 million at list prices, follows a previous order for 10 777-300ERs in September 2005, for a combined total of 13 777-300ERs. The order was recently included on the Boeing Commercial Airplanes Orders and Deliveries Web site, attributed to an unidentified customer.

"It is vital that Jet Airways continues to expand its fleet progressively to ensure its leadership position in India’s dynamic aviation market," said Jet Airways Chairman Naresh Goyal. "The 777’s operating efficiencies and passenger comfort play a pivotal role in our long-haul growth strategy, and will play a pivotal role as we expand our international operations."

Jet Airways took delivery of its first 777-300ER in April. In December 2006, the airline also placed an order for 10 787 Dreamliners.

"The 777’s market-leading efficiency and passenger comfort will help our airline customers generate profitability from their operations," said Dinesh Keskar, Boeing Commercial Airplanes vice president, Sales. "Jet Airways is making the passenger-preferred 777 a cornerstone for its success."

The 777 family of airplanes is popular with passengers and airlines because of its fuel-efficient twin-engine design, high reliability, low operating costs, and comfortable and spacious interior. The 777-300ER typically carries 365 passengers up to 7,930 nautical miles (14,685 kilometers).

With the 787 and 777, Boeing offers a complete family of airplanes to cover the 200- to 400-seat market segment. With complementary range, speed, efficiency and operational commonality, yet differing seating and cargo capacities, airlines can use both models in their fleets to tailor capacity to meet seasonal demand.

Jet Airways, with more than 330 daily flights to 49 destinations, operates throughout India and has international routes that include London, Singapore, Kuala Lumpur, Bangkok, Colombo and Kathmandu. The airline’s current 777-300ERs operate a Mumbai-London route. The aircraft are configured in three classes, including eight First Class suites, 30 Premiere seats and 274 Economy seats.

The 777 is the market leader in the 300- to 400-seat segment, capturing more than 65 percent of that market since its launch. The 777 has logged orders for more than 975 airplanes over the life of the program, and has more than 325 unfilled orders worth more than $82 billion at current list prices.

 

[Bushroda]

A million jobs by 2010?
Gaurav Choudhury, Hindustan Times
August 02, 2007
First Published: 07:20 IST(3/8/2007)

After information technology, India is emerging as a global hub for biotechnology. The Indian biotech industry, excluding the organised pharmaceutical and drug manufacturing companies, reported revenues in excess of $1 billion in 2005-06. Encouraged, the government has prepared a draft biotech strategy to provide a clear roadmap to the industry for 10 years.

The draft strategy has tried to take a holistic look at the current scenario and has suggested several measures and timeframes to promote innovation and manufacturing. The declared goals are to create world-class human capital, build quality infrastructure, and address the basic needs of society. All this would be aimed at logging $5 billion and generating a million jobs by 2010.

The sector is characterised by dynamic changes in terms of new ideas and developments. The applications cover a broad spectrum of sectors including agriculture, food processing, pharmaceuticals, textiles, chemical sciences, and environmental preservation.

“The world has woken up to the fact that India is a country that cannot be ignored while plotting the landscape of the biotechnology industry,” consulting firm Frost & Sullivan has said in a report.

Arvind Lal of Dr Lal’s Pathlabs said the quest for improving the standard of healthcare has led to a tremendous global effort dedicated to new drug discovery and development. “Today, the pharmaceutical industry faces significant challenges such as cost optimisation, competition from generic drug makers, and, most crucially, an ‘innovation deficit’,” said Lal.

“There is a shortage of people with the appropriate research and development skills. In clinical research outsourcing, we have to recruit for the focus area of research,” said Dr Kashmira Pagdiwalla, director (HR operations) at Intas Biopharmaceuticals.

A survey Ficci found that the shortage of doctorate and post-doctorate scientists in biotech at a worrying 80 per cent.

That’s why growth of employment in biotechnology is 10 times that in the other sectors of the larger life sciences industry. “There are several employment opportunities in R&D, manufacturing and quality control. On a sub-sectoral perspective, the requirement of skilled manpower in R&D is more,” Pagdiwalla said, adding: “Recruiting in biotechnology does not mean that an HR person can relax.”

 

[Bushroda]

BioTek opens offices in China and India
Laboratory Talk, UK
3 August 2007

These countries are devoting major resources toward the rapid growth of their respective pharmaceutical and biotechnology sectors,' stated Peter Weith, vice president of marketing and sales at BioTek

'BioTek's core microplate technologies will complement their associated investments in Life Science research, while allowing us to further build upon our global branding initiatives and service infrastructure', said Peter Weith. The company's new office in China, BioTek Instruments Representative Office Beijing, has been opened in direct response to their expanding customer base and distribution partners throughout China.

Chief representative Steven Fisher and local staff will offer a high level of technical and sales support to China's dramatically growing pharmaceutical market.

BioTek Instruments India, a joint venture with Medi-Spec Instruments India, will be based in Mumbai under the leadership of managing director Vipul Chhatbar.

Commenting on the new venture, Chhatbar noted: 'Growth within the Indian sub-continent has been tremendous.

'The joint initiative between BioTek Instruments and Medispec India will allow us to remain a step ahead of our competition by leveraging our existing customer base with local currency and tax-free benefits'.

 

[Bushroda]

Apollo to run mini-hospital at new Hyderabad airport

New Delhi, Aug 3: GMR Hyderabad International Airport Ltd (GHIAL), which is building a greenfield airport in Hyderabad, Thursday selected Apollo Hospitals for setting up a medical centre inside the passenger terminal.

The 17-bed medical centre will be built in the passenger terminal building (PTB) of the airport in Shamshabad, which is expected to become operational by March 2008.

"We are fully aware of the importance of providing emergency treatment to the passengers as well as the basic medical care for employees working in the airport. We are sure it will live up to our expectations in making the new Hyderabad international airport a truly customer-friendly one," T. Srinagesh, chief operating officer of GHIAL, said in a statement.

As per the agreement, Apollo Hospitals will set up the medical centre spread over 300 sq meters in Level B of the PTB and first aid kiosks in passenger restricted areas.

"It (Apollo) will provide permanent staffing and dedicated paramedics in this centre. It will have facilities like ultrasound, ECG as well as round-the-clock emergency dental services," the company added.

GHIAL is a joint venture company promoted by the GMR Group, which has a stake of 63 percent, and Malaysia Airports Holding Berhad with an 11 percent stake.

The Andhra Pradesh government and the Airports Authority of India will have 13 percent stake each in the project.

"The facility will serve as an emergency treatment centre for passengers who may develop medical complications while on travel or in the airport premises.

"It will also serve as an important partner in disaster management during crisis periods such as explosion, fire, earthquake, plane crash etc within the airport premises," the company added.

In addition to the passengers, the centre will provide medical care to needy airlines and airport staff, and will also act as a centre for conducting pre-flight medical tests for pilots and flight crews.

The agreement also envisages the medical centre to own and operate a minimum of four advanced ambulances, the company added.

 

[Bushroda]

Up, through highs and lows
Gautam Chikermane
Friday, August 03, 2007

July 27: 542 points down. July 30/31: 316 points up. August 1: 615 points down. The uncertainty has only begun, with the Sensex rising 50 points yesterday. This seesaw is here to stay and for investors who came in over the last four years, who so far have only met Mr High Returns, it is time to look at his shadow, Mr High Risk. Like it or not, Mr Risk accompanies Mr Returns. Sometimes investors think Mr Returns is their friend, and put in money as if the friendship will end if the increased investing stream ends — this is what has happened over the past four years, between May 2003 and today. At other times, investors feel close to Mr Risk and look to another entity, Mr Zero Risk, whose shadow is Mr Low Returns — the period between February 2000 and May 2003, for instance.

This uncertainty is here to stay. According to experts, the epicentre of this time’s financial earthquake with destruction across the world lies in risks in the US subprime lending market. Subprime lending is the offering of loans to borrowers who have bad credit histories and hence do not qualify for market interest rates but higher ones. Somewhat perverted in its creation, the problem doesn’t end in its creation or culmination or even with banks — critics argue that this encourages predatory practices that hurt borrowers, who, when they default, end up bankrupt; while bankers say they’re only helping citizens who otherwise would be financially excluded get credit.

The whizkids of Wall Street have converted this practice into a debt wish. They bought these loans from banks, repackaged them into securitised debt products called collateralised debt obligations (CDO), and sold them to investors. Before the sale, however, the bonds had to be rated and credit rating agencies gave them investment grade ratings, which in hindsight were perhaps not warranted. Again, in hindsight, investors who bought the CDOs are being termed ‘too greedy’. And as money managers told their investors that the CDOs in their portfolios were, in hindsight, all but a glossary, panic set in. And beyond all this hindsight lies a foresight: over the next few months, expect lawsuits to follow.

But what do ACC, Reliance Energy or Hindalco, the biggest losers on Nifty on August 1, have to do with CDOs? The answer: uncertainty. But does uncertainty mean that the underlying companies that comprise the various indices like Sensex or Nifty are going to stop their profits streak? The numbers say no — as the first quarter results show, net profits of 1,654 companies for the period April 1, 2007 through June 30, 2007 are up 39 per cent, compared to 32 per cent in the previous year. This is on a lower sales growth (19 per cent versus 29 per cent), implying productivity gains, and despite rising interest costs, which have grown 45 per cent compared to 25 per cent.

If companies are doing fine, is it that in a fit of irrational exuberance investors have pushed up prices to unsustainable heights? Possible — PE multiple of Sensex, even after being beaten down 841 points in just four trading sessions, is still over 20 times, way above most developed markets (UK’s and Germany’s 13, France’s 16) and emerging economies (Russia’s 11, Brazil’s 14, Indonesia’s 16), but close to Taiwan’s 21, and Japan’s and Malaysia’s 23. As I have argued earlier, the relatively higher valuation for Indian equities is nothing to worry about as it is backed by globally above-par corporate performance — with just six companies in Fortune 500, corporate India is still to attain global scale.

The path to that scale is currently being built by heavy investments — private, public and PPPs — in infrastructure. Not as much as China’s but much more than ever seen before. Physical connectivity, infrastructure of roads, ports, railways and airports will speed up goods delivery. Communications infrastructure of telecom is already doing its magic to productivity and will continue. Regulatory and financial infrastructure that oversees all these and links them through finance (banking, insurance, capital markets and pensions) will, we hope, make doing business in India a more pleasant, more profitable experience. Coming to ride that infrastructure are not only crores of rupees but billions of dollars as well.

So, with an almost certain medium- to long-term future ahead, just what is the uncertainty we’re talking about? It is short-term trading and speculation that create higher volatility. But unless you are riding this volatility full time, chances are against you. Now, ‘chance’ is a word that takes us into a realm that goes beyond investing — it takes us into a casino where, looking at the cards you’ve been dealt (that is today’s numbers), you take ‘bets’ on whether to buy more or sell out. Which suits the temperament of some people just fine.

For the larger mass of people wanting to create long-term wealth, however, these are noisy but often profitable blips. An 841 point fall in just four days that has brought the prices of many good companies down by over 20 per cent makes them more attractive than they were. It’s like buying the latest Rs 10,000 iPod for Rs 8,000 or getting a Rs 3,000 iPod Shuffle for your sweetheart for free. But why bother? Your mutual fund would be doing that for you anyway, just continue with your systematic investment plan.

When I use the word ‘you’, I mean it as India being a young nation. Compared to the current numbers where every third Indian is below 15, by 2020 the average Indian will be 29 years old (average Chinese and American will be 37, average Japanese 48). These young people will be closer to Mr Returns because they’re not mortally afraid of Mr Risk. They will enter, stay in and profit from the markets.

 

[Bushroda]

India, Sri Lanka targets trade pact by October

New Delhi, Aug 3 (IANS) India and Sri Lanka have decided to sign a Comprehensive Economic Partnership Agreement (CEPA) by October this year for augmenting mutual trade and investment, Minister of State for Commerce Jairam Ramesh said here Thursday.

"Both India and Sri Lanka can thrash out the differences and early conclusion of the CEPA would ensure the sustained interest of all the stake holders," Ramesh said during his meeting with Sri Lankan Minister for Investment Promotion Navin Dissanayake.

Sri Lanka also invited more investments from India in several areas including oil exploration and refining, information technology and apparel and textile sectors.

"During the meeting, the Sri Lankan Minister also agreed on holding an Investment Expo in his country in October-November this year, focusing exclusively on the Indian companies. Both Ministers agreed that the Expo should focus on two major sectors such as information technology and apparel and textiles," said a joint statement.

The visiting minister also invited Indian companies to help Sri Lanka in development of infrastructure, including the proposed 1000 acre Special Economic Zone in eastern Lankan province of Trincomalee.

 

[Bushroda]

Pune set to edge out Bangalore in Infosys space race
VIVEK NAIR

Mumbai, Aug. 2: The ground is beginning to shift at Infosys. Literally.

Stymied for growth in land-scarce Bangalore, the country’s second largest software maker with revenues of over $3.1 billion in fiscal 2007, is making huge investments in Pune.

A little over a year from now, the centre at Pune will house more employees than its current base in Bangalore.

When that happens, the wheel will have come full circle because it was at Pune that seven founders met on a fateful day in 1981 and marked their tryst with destiny. Two years later, N. R. Narayana Murthy and his six colleagues moved their headquarters to Bangalore — and turned it into India’s silicon city.

Almost 25 years later, frustrated by the breakdown of infrastructure in Bangalore and fighting off accusations of being land grabbers, Infosys has drawn up plans to create 14,400 more seats in Pune, which now has 9,181 seats — taking the total number to 23,581 seats when complete.

Compare this with the fact that Infosys' existing campus in Electronics City now has 20,715 seats; the company is only adding 2,330 seats. Observers say that the quantum jump in seat additions could see Pune having the maximum number of employees (excluding its BPO operations) in Infosys’ domestic setup.

Infosys now has over 75,000 employees; Bangalore has 18,490 employees and 10,750 are located in Pune.

It isn’t clear whether Pune will overtake Bangalore in revenue earnings. In any case, Infosys does not give a breakup of the revenue earnings of its nine development centres.

It’s not only Pune that is enjoying the spinoff benefits from the infrastructure gridlock that has started to choke development in Bangalore. Over the past one year, other cities like Hyderabad and Chennai have grown faster than Bangalore and the net addition of seats in these places is also higher than that in Bangalore.

Infosys now has facilities in nine locations around the country. Among them, while 7,500 seats are to be added in Chennai, 2,850 more seats are being put in Hyderabad and 3,500 in Mangalore.

Responding to an e-mail questionnaire sent by The Telegraph, T. V. Mohandas Pai, member of the board- HR, E&R & administration, Infosys, explained that Pune was seeing the largest addition of seats since the company had the maximum land available to expand there.

“In Bangalore, we do not have any more land,” he added. Infosys is investing Rs 725 crore in Pune and Pai said the facility would be a delivery centre.

However, Infosys is not the only company that is halting expansion in Bangalore due to infrastructure woes in the city. Last year, global engineering giant Siemens AG had announced that it would freeze all expansion plans in the state. Siemens had then said it would opt for other cities which had better infrastructure facilities like Chennai, Hyderabad, Pune and Calcutta to expand its business.

Sources added Infosys had been looking to expand in Bangalore for more than two years now and that it had made repeated requests to the previous state governments to make land available, but to no avail.