Indian Economy - News & Updates - Archive

[Bushroda]

Expatriates to launch International Business School in Kerala
8/6/2007
The Peninsula, Qatar

Doha • The Indian expatriates from the Southern state of Kerala will launch a state-of-the-art facility B-School in the state's commercial capital Kochi.

The NRI joint venture, is promoted by Dr Mohan Thomas, Chairman of Birla Public School and Professor Jay Kandampully.

The establishment of the International Business School (IBS- Kochi) is in partnership with the Management Center Inssbruck (MCI), University of Applied Sciences, Innsbruck, Austria, will mould future business leaders of India. IBS-Kochi, in conjunction with MCI, will offer an 18 month International MBA programme, especially designed to produce graduates who are commercially astute, socially responsible and international in outlook, said Dr Thomas.

"The vision of IBS-Kochi is to serve as the international school for excellence in providing future business leaders with world class business and management education. The mission is to promote excellence in learning and research in an effort to develop globally competitive and insightful leaders who will have a conscientious understanding of the relationship between the economy, society and the environment", he said.

IBS-Kochi will nurture management education and research in India by providing students with a unique opportunity to undertake innovative business education and research in India by providing students with a unique opportunity to undertake innovative business education and research that is the equal of international business schools anywhere in the world, Dr Thomas said.

IBS-Kochi have attracted top professors from the key business disciplines to its faculty.

All of them are recruited from highly reputed business schools in Europe, the US, Canada and Australia. Foundation Dean, Professor David Lamond, was a long-time faculty member of the top-ranking Macquire Graduate School Management and dean of Sydney Graduate School of Management, he added.

 

[Bushroda]

Foreign students put India on global education map
Monday, 6 August, 2007, 02:03 AM Doha Time
Gulf Times, Qatar
By Prashant Nanda

In the years from 5th-13th century AD, eastern India’s ancient university of Nalanda was home to foreign students from as far away as China.

Thousands of years later, history spills over to the modern-day Indian nation that continues the tradition of being a centre of educational excellence and a lodestone for students from all over the world.

Sixty years after it attained independence, India boasts of 310 universities and 16,000 colleges offering the widest spectrum of courses. Its centres of higher learning like the Indian Institutes of Management (IIMs) and the Indian Institutes of Technology (IITs) are global brandnames.

Adding to the quality of education is the fact that English is the generally accepted mode of teaching and living standards are economical - attracting thousands of students from at least 100 countries.

A large number of students come to India from countries like Afghanistan, Bangladesh, Bhutan, Ethiopia, Fiji, Iran, Iraq, Japan, Jordan, Kenya, Ghana, Lebanon, Madagascar, Malaysia, Mauritius, Myanmar, Nepal, Somalia, Sri Lanka, Suriname, Syria and even the US.

“They (the global populace) look at the Indian education system with trust,” said Educational Consultants India Limited (Ed. CIL), a body under the Human Resource Development (HRD) ministry.

“India is today recognised as a world centre for education. Indian entrepreneurs are making waves throughout the world. Their ideas, technical knowledge and entrepreneurship have yielded unprecedented growth in income, employment and wealth. The credit goes to the sound and practical educational foundation they have received in India,” they said.
It’s a rapidly increasing phenomenon.

A case in point is southern Karnataka’s Mysore University where at least 1,200 foreign students study, up from only 150 four years ago.

Vice Chancellor Shashidhara Prasad attributes the spurt to the IT revolution and India’s economy that is growing at over 9%.

“The quality education provided by many universities in our country is increasingly getting noticed. When I became the vice chancellor, there were around 150 foreign students. The trend is growing.”

Of course, it’s a lot to do with the arithmetic of education as well.

The Mysore University, for instance, offers an MBA degree for Rs150,000 (approx $3,750) as against $12,000 to $15,000 in Europe, Australia or in the US.

Director of the prestigious IIM-Ahmedabad Bakul Dholakia disclosed that his institute had student exchange programmes with 50 others in the world.

“Yes, India is becoming a global destination of education. Our education is at par with any major institute of the world. Our students are increasingly getting global attention and job offers and this is a good yardstick of our quality.

“Currently, IIM-A has student exchange programmes with exactly 50 institutes across the continents. Some students stay in our campus to pursue a fulltime one-year MBA programme. India is progressing and there is no full stop,” Dholakia said.

Tyler William Walker from the US perhaps best represents the trend of students from a developed country opting for India.

Walker, who is doing his M Phil in Hindi from New Delhi’s Jawaharlal Nehru University (JNU), said: “I came to India first as an exchange student during my stint at California University and then joined JNU for a full time course in Hindi. While students from developing countries come to India to get quality education because it costs less, students from developed nations come for variety.”

“The culture, the languages and even the social set up of India attract students here,” he said, adding that there were only two students from the US three years ago.

The global recognition of Indian education is helping the cause of students as well. “The courses and professionals trained in Indian educational institutes are recognised the world over - 200 of the Fortune 500 companies regularly participate in campus placements in Indian institutions,” the body said. – IANS

 

[Bushroda]

Apollo eyes acquisition in US
6 Aug 2007, 0430 hrs IST,Sidhartha,TNN

Prathap C Reddy, the 74-year-old chairman of Apollo group, seems to have his hands full. He is just back from Mauritius where Apollo is setting up a 250-bed hospital. His health insurance joint venture with German insurer DKV is set to begin operations this week. He is also planning to acquire hospitals in America. Reddy, who ushered in corporate healthcare in India, spoke of all this and more even as architects waited in the adjoining room to work out a blueprint to expand the hospitals in Delhi, Chennai and Hyderabad. Excerpts.

Q: You are about to complete a quarter century in the hospital business. You have gone overseas. What should we expect now?
We have finished phase-I and we have some 7,500 hospital beds. We have brought quality healthcare and broken myths about India. Now, patients from across the world are coming to India because we offer services which are at par with the US at one-tenth the cost.

Our revenue is rising and we are building hospitals in Vizag, Bhubaneswar, Dehradun, Kota, Bhilai and there are two major projects in Chennai and Hyderabad. Everyone is doing a medicity, which are just hospitals. We have health city since health for us is a 360-degree issue. We have invested Rs 20 crore in Delhi and will be investing another 32 crore this year. We do not have sufficient number of beds in Delhi, Hyderabad and Chennai and we are going to address that issue.

Q: What about hospitals abroad?
A 250-bed hospital in Mauritius will be ready by 2008-end and we will have another hospital of the same size in Fiji by December 2008. We had set up a hospital in Sri Lanka but decided to exit as we were getting good value for our stake. We are still running the hospital and it continues to be Apollo. The contract is for three years and we will decide what we have do after that.

Q: Do tax concessions have a role to play in your overseas investment plans?
We looked at the Middle-East but decided against investing because we can at best have 49% ownership. The board has said that we should have majority control.

In Mauritius we had asked for land, exemption from customs duty and VAT and tax holiday and we got all that. So we decided to invest. There is a tax holiday for doctors too till 2010. In Bangladesh, we got a five-year tax holiday and in Sri Lanka it's a 15-year tax holiday.

Q: What about plans to enter the US?
We have a BPO and are trying to expand it. We are also looking at acquisitions. We hope to make profit this year and through an acquisition reach double digit profit next year. There are a number of hospitals which are living on the edge.

We will do acquisition in US at the right time. It's not a one-day game. As time goes on, as prices rise, more hospitals will find it tough to survive.

Q: What about succession plan?
I have four daughters and each one has a clearly defined role in the group. The eldest (Preetha) is the MD of the group. The second (Suneetha) is director finance and is the one who works with the CFO and the president finance. My third daughter (Shobhna Kamineni who was also Apollo's third employee) is the one in-charge of the insurance venture, pharmacy and research. The fourth (Sangita who is director operations) handles the medical BPO and is in-charge of the Hyderabad region. But we have a very strong team of professionals who are responsible for building the organisation and have ideas to take it further.

 

[Bushroda]

Premium flying: A taste of luxury on air
6 Aug 2007, 0428 hrs IST,Anshul Dhamija,TNN

BANGALORE: Travelling first class or business class on international flights is today akin to checking into a five-star hotel. International carriers are pampering their premium passengers with a host of value adds that make flying a luxurious experience. From super comfortable beds and in-flight TV on 23-inch screens to buffet dinners and limousine transfers — a host of goodies have been thrown in to ensure the worth of a Rs 4,00,000 ticket.

"Luxury on air is a lifestyle issue from a customer's point of view since he's used to such comforts," says Gaurang Shetty, VP in Jet Airways.

Air India, which has started its Mumbai-New York non-stop daily fights, is offering limousine services at the JFK airport and a shower facility at 'The Lounge' on arrival. The seats in the aircraft have been designed to offer a soft massage to combat the stress levels. Passengers are entitled to $75 and $50 worth gift vouchers for in-flight shopping.

Jet Air, which started its Mumbai-New York flight via Brussels has provided suites that give passengers privacy.

"Such value-addition will only feature on the first and business class as both combined account for only 10% of seat capacity on a long haul flight," says Y S Shashidhar, VP at Frost & Sullivan.

Singapore Airlines' premium customers now receive an amenities kit containing Salvatore Ferragamo toiletries and perfumes as well as Givenchy sleeper suits and suede slippers to lounge onboard. Emirates in-flight entertainment system 'ICE digital widescreen' allows passengers to view their holiday photos onscreen during the flight by connecting to a USB port.

The airline offers free transfers in luxury cars like Mercedes E or V Class, Audi A6, BMW 5 series or Chrysler on arrival in Europe. Their passengers arriving in Venice enjoy transfers in speed boats.

First class travel in India had seen a drop of around 90% five years ago, which saw many airlines changing from a three-class to a two-class configuration. "Now there's increasing demand for luxury travel from foreign business travellers coming to India," says an industry official. Over 65% of first and business class passengers are foreign business travellers, while rest are Indians.

Fares in first and business classes have been going up by around 8% annually.

At present a return fare on first class to the US would be between Rs 3 and Rs 4 lakh and on business class between Rs 1 and Rs 2 lakh.

 

[Bushroda]

Infrastructural Boon
6 Aug 2007, 0201 hrs IST,Manash Pratim Gohain,TNN

The very foundation of economic, industrial and social development lies in the infrastructure of an economy. The multiplier effect of infrastructure development on the economy is, thus, significant. Road transport, telecom, housing, railways, power, steel, cement, bridges, townships, shopping malls, food parks, aviation and shipping among others, all fall under the infrastructure sector. And if industry experts are to be believed, this is one sector, in India, which will be witnessing a remarkable growth in the next 10 years.

Just a decade ago, it was almost a tenet of faith that infrastructure services were best provided by the state.

However, with liberalisation and technological upgradation, private sector participation in infrastructure services has gained momentum. An expert committee on infrastructure, under Rakesh Mohan of Confederation of Indian Industries (CII), has projected a total fund requirement of about US$ 346 billion during 1996-2006. And with the government giving a nod to foreign direct investment (FDI) in infrastructure, this is the sector where most of our skilled workforce is likely to find a suitable career option.

Be it technical or non-technical, the infrastructure sector has thrown open various job opportunities in the Indian market, which till now lie unexplored. To mention a few:

Technical
On the technical front, engineers would be the prime beneficiaries because of the boom in infrastructure. According to a Federation of Indian Chambers of Commerce and Industry (Ficci) survey, there would be a manifold increase in demand for engineers specialising in civil, water, transport, architecture, electrical, industrial, structural and environment for the infrastructure sector. With food parks, IT parks and townships mushrooming, graduates in town planning and landscape designers would be another sought-after career option.

Among the core industries in this sector, crude oil, petroleum refinery and mining would require large number of chemical, electrical, mechanical, civil, instrumentation, mining, metallurgical and drilling engineers. Geologists and mine analysts would also have lucrative options in these sectors.

Aviation is another sector, which would benefit from the growth of both tourism and hospitality business and infrastructure industries. With modernisation and privatisation of airports, pilots, air traffic controllers and aeronautical engineers would find the going easy in this sector.

With a large number of upcoming projects, the telecom industry is going for high scale recruitments. There is a huge demand for software engineers, mobile analysts and hardware engineers for mobile handsets. Besides, there are ample opportunities for marketing people whose services are required to capture more and more customer base.

Shipping jobs have their own charm and a unique lifestyle. Shipping jobs in India are primarily located at various port cities and even at non-port cities like New Delhi and Bangalore. These shipping jobs include merchant navy, cruise ship jobs, freight jobs, jobs in bulk carrier companies and oil tanker jobs.

India has a lot of cruise ship companies and many international cruise ship companies are connected to India, thus offering numerous cruise job vacancies such as chef cruise ship jobs, freight agent jobs, air freight jobs, freight forwarding agent jobs, marine nursing jobs, cruise ship nurse jobs, cargo ship jobs, marine medical jobs and cruise ship summer jobs in India.

Non-technical
Although, it seems as if the skilled manpower with technical knowledge would walk away with the best job opportunities in infrastructure, those on the non-technical side too have equally lucrative and diverse options.

If the aviation sector grows, so would be the demand for ground handling staff, cabin crew and other verticals like travel planners and ticketing, offering several options.

Similarly with the development of townships, IT parks and malls, demand for facilities management personnel would also grow. Pervin Malhotra, career counsellor, Caring, said: "Big complexes and facilities outsource their management with facility managers acting as the backbone for maintenance and smooth running of these infrastructure."

In the management arena itself, project management would be the most lucrative assignment a manager can have in his kitty, with designing and managing a complete project right from concept. "And obviously the sales and marketing personnel would be there as the vanguard of the project," added Malhotra.

 

[Bushroda]

Dollar doldrums
Ila Patnaik
Monday, August 06

RBI’s avoiding the big monetary issue: cost of keeping rupee weak. So government must step in

The credit policy statement last week didn’t address the difficult choice facing India today. Can RBI deliver the ‘impossible trinity’ — an open capital account, a weak rupee and low inflation — in the coming year? In recent months RBI has used a variety of monetary policy instruments, yet the outcome has been undesirable: sharp appreciation of the rupee, high inflation and sharply rising interest rates.

Instruments that used to work in the 1990s are now failing to deliver. Until January 2004, while keeping the rupee weak by buying dollars, RBI was simultaneously able to ‘sterilise’ its foreign exchange intervention by selling government bonds from the stock it held. In this way it kept control over the rupee in the system and prevented inflationary pressure from building up. There was little conflict with the increasing openness of the economy, and RBI could continue to liberalise the capital account.

The problem started when RBI ran out of its stock of government bonds. It then turned to the government to issue Market Stabilisation Scheme (MSS) bonds that were meant solely to sterilise its foreign exchange intervention. The pace of sterilisation slowed down as its cost became transparent. For example, in 2006-07, the government paid Rs 2,600 crore as interest on these bonds. The last nine months have seen large-scale unsterilised intervention by RBI. As a consequence, money supply increased sharply as new money created grew at 29 per cent compared to 17 per cent last year.

High money growth was accompanied by high inflation. To counter inflationary pressure, RBI stepped down its intervention in foreign exchange markets in March and the rupee appreciated sharply. Cash Reserve Ratio (CRR) and interest rates hikes were deployed to reduce liquidity. But these led to sharp interest rate shocks. Higher interest rates began attracting more capital and also raised concerns about investment slowing down. Subsequently these were countered by lack of sterilisation, which resulted in zero interest rates in the overnight inter-bank market. There was complete confusion on monetary policy as RBI struggled to tackle one problem after another.

At every stage the fire-fighting caused fresh problems and more instability. As a policy framework this is ultimately futile, because it is rooted in inconsistency. The central bank is being asked to deliver conflicting objectives that cannot be all obtained at the same time. To put it in a somewhat simplistic fashion, the picture looks like this: one month politicians scream about rising prices and so RBI keeps away from the foreign exchange markets and brings down the inflation rate; the next month exporters scream about losses due to rupee appreciation, and RBI steps back in and buys dollars to keep the rupee weak. This time it sterilises its intervention to prevent inflation and raises the Cash Reserve Ratio. But now interest rates go up. Households and firms scream about higher interest rates and RBI stops intervening and liquidity hits the economy. The cycle starts all over again.

One way to manage both the exchange rate and inflation is to go back to being a closed economy. However, as the Prime Minister’s Economic Advisory Council report notes, any restriction on foreign investment — FDI or FII — will be ad hoc and “most unwise”. Policy continuity is an essential element to initiate and maintain such flows.

Can restrictions on debt flows such as external commercial borrowings (ECB), which are allowed up to a gross limit of $22 billion, help? In 2006-07, $473 billion entered India. Of this, $21 billion was on account of ECB. The impact of blocking ECB can only be marginal. Today if India opts to restrict dollar inflows on a serious scale, it can be done only through very drastic restrictions on investment and trade, with drastic implications for India’s economic growth.

In addition to growth, globalisation has also meant a much larger flow of foreign exchange in and out of the country. India’s annual foreign exchange market turnover has grown to a gross of $6.5 trillion in 2006-07 from $1.4 trillion six years earlier. There has been a sharp increase in the average daily turnover in the foreign exchange market from $24 billion last year to $38 billion this year. This means it has become increasingly difficult to manipulate the rupee. The amount of dollar purchases required to make an impact on the price of the dollar is higher when larger volumes are involved.

In end-October 2006 the rupee stood at Rs 45.47 per dollar. From November 2006 to July 2007, RBI purchased about $28 billion in the foreign exchange market, an average of $3 billion per month. Despite this, the rupee moved to Rs 40.77 per dollar by end-July. If the rupee is to be kept weak, increasing amounts of dollar purchase will be required. If this is unsterilised, it will result in inflation. If it is sterilised, it will result in higher interest rates and lower investment. Considering that investment (not exports) is the biggest engine of growth in the Indian economy today, intervention, whether sterilised or not, is a very costly option. Instead of helping GDP growth through higher exports, it could reduce investment and growth through higher macroeconomic instability.

The government must recognise that it cannot have it all. It must decide where it wants to be two years from now and take steps to get there with the least pain. If investment and low inflation are to take precedence, it must move towards greater currency flexibility. A road map towards a consistent monetary policy framework needs to be created. RBI would have done the government a favour by laying it out in the credit policy. However, the responsibility lies with the government. These are after all political choices. The government must now act.

 

[Bushroda]

India is now waking up to tackle the big bucks
By Andy Mukherjee

Excess liquidity may disappear, reappear, or turn into a drought. Banks will simply have to live with not knowing which of the three it might be tomorrow.

The Indian authorities may have finally become serious about mopping up unwarranted liquidity in the banking system. With RBI’s announcement of a 50-basis-point increase in the ratio of deposits that lenders have to keep with it as unremunerated reserves, the call-money rate may now rise from the 0.17 per cent level it fell in the week to July 28, 2007.

Overnight rates hovering near zero in an economy that’s growing at a nine per cent annual pace, and where inflation may be simmering just beneath the surface? That wasn’t just ridiculous; it was plain dangerous.

Had it gone on for some more time, bankers would have judged the excess liquidity to have become permanent. Part of it would have then been funnelled into the overheated property market, jeopardising the central bank’s efforts to slow down mortgage demand.

Banks are itching to cut home-loan rates, which have risen two percentage points this year because of monetary tightening. Already, high borrowing costs are pushing up delinquencies in unsecured personal loans that are usually the first ones to witness defaults by households with stretched mortgages.

If banks cut lending rates prematurely, credit growth may pick up speed again. Inflation, which accelerated to a six-week high in the week to July 14, may not be tamed without raising interest rates. Although an eighth quarter-point increase in the policy rate since October 2005 may not derail corporate investment growth, it would still be entirely unnecessary. The liquidity glut has been caused by foreign inflows that haven’t been “sterilised,” or absorbed by the central bank.

Lower absorption

U.S. dollars brought into the country by foreign investors and local corporate borrowers have been bought by the central bank to keep the local currency from rising. In the first five months of the year, such purchases amounted to $23.5 billion. But the rupee funds released into the banking system in the process haven’t been neutralised by bond sales.

In a July 16, 2007 note to investors, Peter Redward and Puay Yeong Goh, economists at Barclays Capital in Singapore, estimated that less than a third of the foreign inflow into India in the second quarter was sterilised. Since June 8, 2007, the figure has plunged to just nine percent, the Barclays economists said.

Every hedge-fund manager investing in India knows the near- zero rates will have to rise. And they are betting that they will rise through an appreciation of the exchange rate: The central bank will simply have to stop buying dollars, so that it has less domestic money to mop up.

The sloshing liquidity has thus become a lightning rod for currency speculators, who are emboldened by a renewed interest among investors to allocate capital to India funds.

Budget Deficit

More overseas money heading into Indian equities will push the Reserve Bank to choose between keeping the exchange rate steady (by buying dollars), or controlling inflation (by not buying dollars).

The only way the Reserve Bank can control both inflation and the exchange rate for any length of time is if the government is willing to take a hit on its budget. Even on that count, there seems to be a lack of urgency.

The Finance Ministry has imposed a limit of Rs 1.1 trillion ($27 billion) on the total stock of bonds and bills, the central bank can sell. This is inadequate and must be increased to at least Rs1.5 trillion, say Redward and Goh.

Since the government will have to pay interest on these bonds, it is hesitant. But without the central bank possessing the ammunition to sterilise every rupee of liquidity released by every dollar purchased, it can never make the currency speculators go away.

Many Constraints

The authorities want high growth, low inflation and a stable, preferably undervalued, currency. And they don’t want to pay for it explicitly. Into the bargain, what has been allowed to drift is liquidity.

The overnight index swap, which has a floating interest rate tied to call-money levels, fell more than two percentage points between April 27, 2007 and July 23, 2007.

The increase announced on July 31, 2007 by the Reserve Bank in the cash-reserve ratio (CRR) will help mop up liquidity in the short term.

It is, however, neither a permanent fix, nor a free lunch: Preemption of bank deposits by the central bank acts as a tax on the banking system and erodes its competitiveness.

No end to volatility

Overnight adjustment of banking-system liquidity doesn’t quite work in India. When money is loose, just like now, the central bank is loath to drain the lot overnight because of the obligation to pay six per cent on these funds. So it decided in March, 2007 to limit its daily borrowings to Rs 30 billion. That ceiling on absorption will now be scrapped, the Reserve Bank said on July 31, 2007.

When liquidity in the system becomes tight, a different limitation kicks in: Banks aren’t able to borrow from the Reserve Bank even if they are willing to pay the asking rate of 7.75 per cent because of a shortage of collateral.

That’s because they have to set aside 25 per cent of their deposits in “statutory liquidity,” or government securities that don’t qualify as collateral. With all these constraints, an end to the volatility in the overnight rates isn’t in sight. Excess liquidity may disappear, reappear, or turn into a drought. Banks will simply have to live with not knowing which of the three it might be tomorrow.

 

[Bushroda]

Will Egypt become the new India?
7DAYS, United Arab Emirates
Monday 06 Aug, 2007

Egypt has set its sights on grabbing a share of the multi-billion dollar Indian-dominated call centre market and is looking to an unexpected corner for a helping hand – India. As it makes its pitch to the world, touting a multilingual workforce over India’s English-speakers, a time zone shared with Europe and proximity to the US, Egypt is marketing its edge over India to India itself.

The government has sent a high-level delegation to India to convince the IT behemoth to sub-outsource its outsourcing to Egypt. Several co-operation agreements and memoranda of understanding were signed between the two countries, and Indian industry giants such as Wipro and Satyam have signed agreements to set up support centres in the Middle-East nation.

According to industry experts, Egypt is 15 to 20 years behind India, which has boomed to dominate 60 per cent of the overall offshore market. But the south Asian giant struggles to maintain an adequate supply of skilled workers, and handing some of the pie to Egypt could be mutually beneficial, Egypt says.

The Information Technology Industry Development Agency (ITIDA) was set up by the government of technocrat Prime Minister Ahmed Nazif in 2004 to guide Egypt’s burgeoning IT industry and propel it onto the world stage. The government hopes to entice major IT players to set up their call centres, accounting and payroll management – known as business process outsourcing (BPO) – in Egypt, pumping resources into an industry it hopes will elevate the national economy.

“This sector will lead to a renaissance in Egypt,” ITIDA CEO Mohamed Omran said. So will Egypt become the new India?

“Absolutely not,” said Omran. “We cannot compete with India, we don’t want to compete with India, we want to cooperate with India.” “It’s what makes the most sense,” said Mai Farouk, an IT analyst. “It would help the industry grow and elevate its standard,” said Farouk, but she fears that the lack of a formal analysis of Egypt’s IT experience so far could send the country down the wrong path. “There has been no thorough analysis of the Egyptian experience,” she said.

Far from the clutter of Cairo, the government has allocated a vast expanse of desert to the highly marketed ‘Smart Village’, a gated compound built with state-of-the-art technological services. The lush techno park already houses industry giants Microsoft, Vodafone, Ericsson and Alcatel among others.

Sherif Bakir, head of retail at Vodafone Egypt, says the Smart Village has been very enticing for investors as well as new recruits. “Young graduates in Egypt are attracted by so many factors in the IT industry: the prospects of a career, the salaries (which are four times that of the average starting salary in this country) and the opportunity to work somewhere like Smart Village with all its benefits,” he said.

Nevertheless, critics say Egypt’s outsourcing ‘boom’ won’t develop into more than a boutique industry, with the much-touted multilingual and skilled human resource pool amounting to a tiny percentage of Egypt’s 76 million population.

The ministry of communication and information technology is, however, trying to attract foreign companies with a special focus on call centres, by offering five to ten-year tax exemptions, branding Egypt as a safe oasis in a ‘troubled region’.

 

[Bushroda]

Impact of social changes on financial behaviour
By Rajesh Sud

The changing face of the Indian society is bringing with it new challenges and opportunities.

India has come to be known, around the globe, as a nation producing value-enhanced superior, trained human power. Indians have made their mark in the field of information technology, biotechnology, pure sciences and economics.

The globalisation of the job market, demand and acceptance of Indian skills worldwide has opened up opportunities for creation of new jobs within the country, particularly back office operations of multinational corporations.

Furthermore, the service sector in India is also witnessing robust growth. This flat world is bringing a confluence of culture and new lifestyles across India. Emerging lifestyle trends have altered the fabric of the Indian society and have also modified the social and financial behaviour.

To identify the reasons for shift in tastes and preferences of Indian consumers from traditional and conservative looking product lines to more varied, modern and liberal assortment of commodities; a few critical trends are enumerated and some may be appreciated:

*Households making way for nuclear families

*Increased mobility especially for career

*Increase in number of working women and they want a career while managing a family.

*Increasing tendency to spend on fashion, health, fitness, education, etc, attributed to increased incomes,

societal factors and independence from parental pressures.

Changing values

These emerging trends are more pronounced in Metropolitan cities because of availability of a broader range and better quality of products and services. Overridden by guilt over protracted absence, fatigue or work pressures, the parent-centered family has changed its orbit and become child-centered. For most families cultural values were imparted to children by grandparents, but with increased urbanisation, values are now self-acquired. Technology has filled the void of grandparents.

With joint families disintegrating, the social and financial responsibilities have to be shared by the husband and wife. The joint family used to act as a protection against the impact of any untoward incidence in the family. That natural protection now needs to be replaced by financial planning to protect against economic shock and steady inflow of finances to manage old age needs and any unplanned expenditure.

The India Financial Protection Survey- an all India survey conducted in 2006 across 63,000 households, confirms the change in financial behaviour. It is seen that 82 per cent households save for emergencies and 69 per cent of the households save for old age.

Parallely, a trend is seen in increasing literacy and education levels. There is increasing inclination to provide quality education for children. The survey also revealed that 81 per cent of Indian households save for children education, a reason second only to emergencies. Seventy nine per cent of rural households also save for children education which clearly points towards the growing awareness of providing quality education to children.

Gender bender

Career opportunities and better education has provided women greater financial and emotional freedom; this has leveled the playing field on the domestic front. However, this change in social standing of women is more evident in urban India especially in upper income groups. Conversely, gender discrimination is still rampant in major sections of the society, which acts as a major impediment in acquiring basic education and social skills.

Uneducated women are increasingly vulnerable to poverty and exploitation. On one hand this brings the need for change in the outlook of the society, on the other there is an increasing need to make women financially independent to have the status of equality in society. Financial services sector including life insurance can play an important role by developing products specifically designed to meet the requirements of women.

Life insurance is also helping women in urban India through micro entrepreneurship initiative where women can have the flexibility of managing their time and still earn to be financially independent by being distributors of insurance. Further, as employees in the same sector, great opportunities especially in sales, training and servicing are on offer for women. The initiative needs to gather momentum both in rural and urban India to bring a lasting change in the social structure of Indian society.

Info on demand

Technology has also made a significant impact on the lives of consumers. With television and internet reaching to rural India also, people are more informed and their aspirations have changed. The urban-rural divide is fast fading and the aspirations of rural India are almost similar to their urban counterparts.

But this does not mean, what will work in urban India can be replicated in rural India also, there is a need to understand the consumer behaviour, needs of rural India and develop products, distribution channels and communication media specially to address those needs.

In rural India lies a massive potential waiting to be tapped, what urban India makes up in value, rural India will substitute in volume. With almost 70 per cent of India residing in rural India and almost 50 per cent of our Gross Domestic Products (GDP) contributed by rural economy, it is time that corporate India work overtime to develop and provide products and services better suited to the needs of rural India.

The changing face of the Indian society is bringing with it new challenges and opportunities. It brings to forefront a new India, where women and children will gain more importance, where rural India will have the purchasing power, be more demanding and where products and service offerings would be tailored to suit this new set of consumers.

 

[Bushroda]

Spreading the net wide
6 Aug, 2007, 0114 hrs IST,Pramugdha Mamgain, TNN

The Net casted its net on him, and he became an ally in casting it on others. "I had a dream of connecting my country to the outside world", says Dinesh Agarwal, 37, the founder CEO of India's one of the biggest B2B portals Indiamart.com.

Born in New Delhi, Agarwal showed little interest in his traditional family business of fertiliser trading and operating petrol pumps. The Internet revolution had just started gaining momentum in the US, and after completing his B.Tech from Kanpur's Harcourt Butler Technological Institute, he left for the US in 1992.

For the next three years, Agarwal worked with companies such as HCL America, Bank of America, and Centre for Development of Telematics (CDoT), in the field of development and testing of system software for networking, database and telecommunication. But, deep down, something was missing, he says: "Though I was doing well, I was not satisfied internally. I wanted to do something for my own people." So, in 1995, he came back to India to chase his dream of connecting Indians to the world.

In 1996, armed with Rs 40,000, Agarwal began Indiamart, a B2B portal from his home in Delhi with a team of just three people. It was an online marketplace, for buyers and sellers to communicate and transact with each other, and the objective was "to open the doors of the global economy for our small exporters and importers".

Starting the business and choosing people with sound technical knowledge was a major challenge as the Internet hadn't gained widespread acceptance. To address this, Agarwal launched a training portal 'Intrauniv' to familiarize more people with the Internet and its potential. Since during that time, Indian small and medium enterprises (SMEs) were not fully exposed to the business benefits of the Internet, Agarwal also offered free listing and query forwarding through his online marketplace. Clients were charged an annual subscription fee only for the product catalogue that the company made for them. And this is how Indiamart's business model still works.

But there was another roadblock — many exporters and manufacturers did not have access to a computer. So Agarwal created a service, where his team gathered overseas trade enquiries, got them printed and distributed to the respective suppliers across India. "That was the first time we started promoting the Indiamart.com brand," says Agarwal.

By the end of the first year of business, Indiamart was a Rs 6 lakh company. Almost 100 paid clients and 5,000 free clients had registered on the portal. With an efficient distribution network in place, Agarwal hit the first million in 1997-98 itself. And he celebrated it in style with a rain dance party, for his employees. "We had lot many parties after that but that party is still cherished and remembered. I also took my family out to Nainital for a week."

With the dotcom boom happening, Agarwal looked at expansion avenues. For two years, he ran Auto.india.mart, which was targeted at consumers and had information about the latest products available in the auto sector. But that venture didn't work out. "Since it was not doing well, we started focusing on our original business," he says.

By 2001 Indiamart was going strong and was featured as the only profitable online portal in a leading national magazine. But then the portal hit another big bump. The day after the foundation of Indiamart's new corporate office in Noida was laid on September 10, 2001, the World Trade Centre in New York was attacked.

"We lost touch with the US economy for almost an year. But that didn't stop us from growing. We continued to grow, though slowly, thanks to my family and colleagues. And that was the year when my company witnessed lowest attrition," says a beaming Agarwal.

Now, Indiamart employs over 800 employees in 24 locations across the country and has also forayed into online gifts and shopping with Indiangiftsportal.com . The journey to make Indiamart a 30-crore company was fraught with its own challenges, but as Agarwal puts it, "One should have the courage to fight and fulfill one's dream."

 

[Bushroda]

Educational reforms a must

We have done exceptionally badly in the area of developing skills in the past and this will prove to be a constraint towards achieving growth rate of 9 per cent.
To become a world economic power, should talent building be the new mantra for India? Yes, but present systems need to change. Reform in the educational system is a must. Be it is schools, colleges or technical institutions.

According to top corporate bodies and experts, India is woefully short of workforce in spite of us being a nation of over a billion people. Though the Confederation of Indian Industry (CII) estimates a booming economy with about nine per cent GDP growth annually, it suggests that the country will require a two-fold increase in the present skilled workforce. A recent study reveals that of the existing 8.5 million work force, about 30 per cent will retire in the next five years.

It is feared that inequity in the demand-supply of manpower will present itself in diverse industry verticals such as IT, retail banking, manufacturing, logistics, infrastructure and management due to lack of quality workforce, absence of vocational training and job hopping.

The mismatch between demand and supply of the manpower in industry is due to shortage of employable graduates, say statistics. As the Indian GDP is estimated to double to $ 3.6 trillion from present 8 billion current capacity, the capacity building to create talented workforce and meet the targets is a challenge faced by all stakeholders, especially in industry, academia, government and civil society.

"Talent creation and management have become the most critical business process for India," is the CIIs forecast. This is dittoed by a NASSCOM/Mc Kinsey estimate, which states that in the next decade, shortage of skilled workers will be staring the Indian industry in the face.

Its report on talent supply said that India would need a 2.5 million strong IT and BPO workforce by 2010 to maintain its current market share. It projected a potential shortfall of nearly 9.5 million qualified employees, nearly 70 per cent of which would be concentrated in the BPO industry.

Most telling views in this regard have been aired by the Planning Commission Deputy Chairman Montek Singh Ahluwalia, who had inter alia warned that this shortage could prove a "major bottleneck" in achieving higher growth targets in the coming years. "We have done exceptionally badly in the area of developing skills in the past and this will prove to be a constraint towards achieving growth rate of 9 per cent", he confessed at an Employment Summit.

"Current skill development is inadequate and we need employment-linked degrees. We will scale up the programme to upgrade and modernise the Industrial Training Institutes (ITIs) to improve both their quality and quantity of training. Private sector has a major role to play in delivering job-related training because private colleges are more flexible in curriculum development than government institutions."

According to NRI industrial tycoon, Swaraj Paul, "If India is to maintain the momentum of its economic miracle and ensure that benefits reach all Indians then change and reform in the overall education system is a must" Delivering a lecture at an Indian University he was firm that the country was poised to become a world economic power. However, to achieve this goal, change was necessary; and that "without reforms in education, reforms in economic field will be incomplete."

Indeed, for long there has been a clamour for transforming the present 'static' education system into a dynamic and creative regime. Different perceptions have been advanced touching different aspects of development of students in this regard.

Looking at the problem from an economic angle, Paul recommends: Reforms in education must recognize the reality of globalization. India must respond to the needs of the economy and the demands of the students for modern and relevant educational programmes that will equip them for employment and the challenges of New India and a globalised world economy.

Besides, there is need for access to higher education for more students and teaching of new subjects. Indian Universities, according to him must emulate the U.K. experience, take courage to develop new subjects and challenge traditional ideas.

So far so good, viz the economic development of India. But there is another basic angle to education reforms. It concerns the environment in which the talent and personality of students can be best developed to cope with the future challenges in any sphere of work.

Recent media reports point out that the National Council of Education Research and Training (NCERT) is preparing a revolutionary concept viz "dynamic time schemes." It aims at using the school time more creatively.

Time table in schools across the country is set to change beyond recognition. Students will no longer have to sit through a succession of 35-minute periods mugging lessons from the blackboard. The NCERT is said to be set to replace the "time table" system with concept of "time packaging"--- a flexible schedule involving students' activities, time for self-study and even trips beyond the school bounds.

NCERT had already begun collecting feedback from schools on the time management system and hopes to introduce it from 2008-2009. "The rigidity in the education system is best portrayed in the school time table. Our aim is to make time management an essential aspect of academic planning and bring flexibility and variation in practices."

The dynamic time scheme will allow kids to choose the subject they would like to study on a particular day. If they wanted to learn about water the topic would be included in discussions on subjects like math, science, social science, health and hygiene. The system plans to use school time more creatively. So, instead of students just sitting in class and listening to instructors, time could be set aside for them to clean, sing together, listen to a guest talk, put up display boards in classrooms or enjoy the weather outside the school premises. Let's start at the very beginning.

 

[Bushroda]

More than two crore jobs are on the way
5/8/2007

The resurgence of India’s manufacturing sector in the past last few years has been quite magical. Not only have profits been soaring, but the sector is also witnessing increased employment opportunities and is fast spreading its roots abroad. Many Indian manufacturing firms are today close to becoming true-blue multinationals.

It was only after 2003 that the sector started seeing strong development, with technology revolutions, liberalisation and globalisation. This was the time when Indian manufacturing displayed a sturdy rise of more than 9 per cent, thus ensuring more employment opportunities.

Elixir identifies the following four segments to be the major ones in the Indian manufacturing industry for contribution to overall sectoral growth and employment generation rate.

1) The auto components market, which is growing at 15 per cent a year. Exports have grown at a compounded rate of 19 per cent.

2) The textiles and garments segment, which is one of the largest employers and thus important for the Indian economy.

3) Pharmaceuticals, with growth rate of 6-8 per cent over the last two years, continues its sturdy progress.

4) Engineering goods, too, have emerged as a dynamic segment in the country’s industrial economy.

Based on the rate at which foreign investments are proceeding, industry specialists have noted that nearly 10 million people will join the manufacturing sector work-force annually and about 25 million new jobs are to arise in the segment by 2015.

India has a big advantage when it comes to cost-effective labour and highly skilled manpower, and this has led to foreign majors either announcing plans to set up large production units here, or outsourcing of manufacturing to the country.

Our rich domestic raw material base adds to the potential. Our estimates say the country will have 25 per cent of its population in the 25-30 age group by 2020. Also, the high percentage of our English speaking population, managerial excellence and existence of strong technological capabilities have their own major contribution to make.

With the hiring intentions of companies being lot more open now, the sector has recorded a net employment outlook of 40 per cent, which is a rise of 15 per cent over the previous year.

However, there are big challenges facing Indian manufacturing. To address these, the government and the industry need to put in efforts, preferably through a well-designed public-private partnership mode on increasing competitiveness.

 

[Bushroda]

Starbucks may take 2 yrs to enter India
3 Aug 2007, 0250 hrs IST,PTI

NEW YORK: Coffee lovers in India may have to wait up to two years to savour the Starbucks brand, with the Nasdaq-listed world's biggest coffee retail chain revising its plan to open its first store in the country.

Starbucks, which was earlier eyeing its India foray by the end of 2007, withdrew a application on July 19 to operate single brand retail stores and said it was postponing its India plans without giving a time-frame for future plans.
However, the company's COO and international business head Martin Coles said Starbucks now planned to open its India stores in "the next year or two".

"We recently withdrew our application to enter India as we refocus our efforts in Asia Pacific, which is a key region for our company, but we remain excited about the potential of this country (India) and plan to open that market in the next year or two," Coles said.

Starbucks reported a 20% jump in quarterly revenue to $2.36 billion. It also announced plans to open 2,600 new stores in FY08, an increase of 200 from this fiscal's target. Its international revenue rose 28% to $432 million in the quarter.

International store openings will accelerate while the US store openings will stabilize at 2007 levels, Coles said. "Our International business is still in the very early stages of expansion and represents a tremendous source of growth for the company," Coles added.

Starbucks has 4,000 stores overseas, still very far from the long-term target of at least 20,000 stores outside US, he said. After withdrawing its application last month, Starbucks said it was reviewing all options and evaluating how it will foray into one of the fastest growing economies in the world.

When asked what was the time-frame Starbucks was looking at regarding its revised plan for India, a company official had earlier said it was premature to announce any new dates.

There have been reports that the decision was due to expectations of a change in regulations concerning FDI in single-brand retail, but the company did not comment on this.

At present, India allows up to 51% FDI in single-brand retail. The company had first announced its plans to enter India in 2006 and sought approval from government authorities for its proposed venture through the FDI route.

It had filed a revised application later on April 13, 2007 with a restructured equity structure nearly three months after its previous application was rejected, apparently due to foreign holding exceeding the 51% cap.

Late last month, Indian authorities told Starbucks to file a fresh application due to lack of clarity over the proposed equity structure and subsequently the company asked them to hold back its application for the time being.

 

[Bushroda]

Manufacturing registers 10% growth in Apr-June
6 Aug 2007, 0423 hrs IST,PTI

NEW DELHI: Resting fears of slow down in Indian manufacturing sector, a recent survey by industry chamber CII finds out that most companies in the segment recorded a double digit 10% growth in the April to June quarter.

In its quarterly industry survey CII said, out of a total of 101 manufacturing sectors 23 have recorded an excellent growth of more than 20% while as many as 27 sectors recorded a high growth rate of 10-20%.

Nearly 36 sectors registered moderate growth rate in between 0-10%. However, 14 manufacturing sectors reported a negative growth in the quarter.

The percentage of sectors in each category remained almost constant during the period, which reaffirms that Indian manufacturing is on track. "It is good to see that 50% of the manufacturing sectors have shown above moderate growth despite various pressures in terms of the appreciating rupee and hardening interest rates," CII industry council chairman Satish Kaura said.

The industry body said sectors like cold rolled steel strips, pig iron, textile machinery, industrial gases, electric fans and microwave ovens were amongst a few, which reported excellent growth during the quarter.

The electric two wheelers segment was the latest entrant to the list of sectors, which reported exponentially growth. The sector grew over 100% during April-June. The survey said three wheelers and motorcycles sectors have also shown a good growth on the export front.

 

[Bushroda]

'Rural FMCG market to grow faster than urban'
6 Aug 2007, 0424 hrs IST,PTI

NEW DELHI: Fuelled by growing fascination of youth towards the fast moving consumer goods (FMCG) and rising income levels, the FMCG market in rural and semi-urban parts is likely to grow at a faster pace in the next three years while the urban areas may register a drop in growth.

"The rural market contributes 52% to the total FMCG market in India, which is expected to grow by 10% by 2010, driven by 180 million young population," an Assocham statement said.

The semi-urban market is expected to grow by 6% in the next three years and contribute 21% to the country's total market, up from 19%. In chamber's view, in urban India the market size is estimated at 29% which is likely to come down to 22% by 2010 as consumers are becoming more health conscious and shift away towards adoption of organic products.

The study says that growth in rural and semi-urban market will be mainly due to rising population of youngsters, which has already touched 180 million, and has special attraction for FMCG products.

As per estimates, the size of domestic FMCG market in volume terms is $15 billion, of which $7.9 billion come from rural areas and $2.85 billion from semi-urban markets while metros and other cities contribute $4.2 billion. "The government's permission to 100% FDI in FMCG will further fuel the growth in rural and semi-urban India," Assocham president VN Dhoot said.