Indian Economy - News & Updates - Archive

[Bushroda]

No end to growth story

New Delhi, Aug. 5 (PTI): Emerging economies, including India, will overtake the developed countries in growth by 2050. This is because the popularity of India and China as investment destinations is rising while that of Europe and North America is declining.

This was revealed in the Ernst and Young European Attractiveness Survey, 2007. Brazil, Russia, India and China, together with Indonesia, Mexico and Turkey, will be the seven new global powers by 2050 which will comprise the so-called Bric economies, the study said.

These emerging countries will overtake the economies of the G7 countries — Britain, Canada, France, Germany, Italy, Japan, United States — in terms of gross domestic product. However, it remains to be seen whether India’s infrastructure development can keep pace with that of global investments, the survey added.

The developing economies will outdo the G7 if they manage to mend the loopholes in transparency, fairness and infrastructure development.

India’s popularity is rising as 26 per cent of the respondents have said the country is among their top three preferences in 2007 against just 11 per cent in 2004.

The survey highlighted that with rising competitive cost pressure, companies across the world would outsource services and manufacturing to low-cost and high-growth economies such as China and India.

One company in five planned to relocate all or part of its European activities outside the region and for this they looked forward to the Asian countries.

 

[Bushroda]

The bigger the better for this boiler man
6 Aug, 2007, 0135 hrs IST,Maheswaran Parameswaran, TNN

It all started in 1985 when Apjinder Singh Cheema, a native of Punjab, went to Bazpur in the Nainital district of Uttar Pradesh to start a business of his own. Punjabis were known for their entrepreneurship and it was this entrepreneurial streak that made Cheema to quit his job in Hyco Products, to start the Himalayan Packaging Industry making corrugated boxes.

"I wanted to start something of my own, and decided that if I didn't succeed, there's always the option of going back to a job. So we took a chance - after all, you cannot be big in life if you are not willing to take risks," says Cheema.

The business did really well and Cheema managed to pre-pay the Rs 7 lakh loan he had taken from the Uttar Pradesh Financial Corporation. But the business of corrugated box was proving too small for Cheema and he wanted to go for something bigger. So he decided to wind up this business and started another company called Cheema Engineering Services manufacturing boiler parts and undertaking upgradation of boilers. His elder brother HS Cheema, who was with Thermax at the time, also joined him.

The business took off, but the location of the unit did not have connectivity and infrastructure. In 1999 the brothers returned home and decided to start afresh with a boiler manufacturing company at Mohali called Cheema Boilers Ltd (CBL).

The Mohali-based company, which was launched with an investment of Rs 2 crore, has now become one of the largest manufacturers of process steams and power generation boilers in north India. It's also the sole manufacturer of utility boilers in Punjab and Himachal Pradesh, and is competing with big names like Thermax. CBL has now spread its wings and is all set to export to countries like Vietnam and Zambia.

"We have export orders from Vietnam, Nepal and Zambia, and are looking at the overseas market in a big way. The future lies in exports and it will be a very important area, which will fuel our growth. We also have orders from Pakistan but we only supply the retrofitters as we are not allowed to export boilers to Pakistan," says Cheema.

The company, which has some of the India's biggest corporate houses as customers, such as Pepsi, the Tata Group, Bombay Dyeing and Dabur, is now awaiting certification from the American Society of Mechanical Engineering (ASME), which will allow the company to export to Europe as well.

The next step is to move up the product ladder, says Cheema: "We concentrate on making fuel-efficient high-pressure utility boilers. Now we are ready to make even bigger boilers." CBL also does capacity and efficiency enhancements of existing boilers through modifications and retrofitting, and also converts existing fuel usage into multi-fuel adaptability.

The company has registered a turnover of Rs 135 crore this fiscal and expects to double that next year. The company is also expanding its production capacity and has taken around 15 acres of land adjacent to its existing plant spread over 10 acres. With so much going for him, Cheema is preparing for even bigger plans and that's not very far away: "We have plans to go public and will be coming out with an IPO very soon," he says.

 

[Bushroda]

India plans sports tourism spruce-up
Bangkok Post

With the Commonwealth Games coming up in New Delhi in 2010, and cognizant of the huge economic and business potential of sports tourism, India has unveiled a policy initiative to upgrade the quality of its decrepit stadiums, attract more competitive events and boost the performance of its players and athletes. Designed to reap the financial, cultural and national-image advantages of a thriving ''sports industry,'' the first draft of Comprehensive Sports Policy 2007 has been placed on the website of the Ministry of Youth Affairs and Sports (www.yas.nic.in) to seek public comments by Aug 25 this year.

Part of a wider effort to ''create a more global, inclusive economic power,'' the policy will lead to massive investments in both hardware and software, from production of equipment and apparel to trainers and managers.

It is also part of the perennial competitive rivalry with China which is to host its first Olympics in 2008. Even South Africa, which only shook off apartheid in 1992, is to host the next soccer World Cup in 2010, arguably the world's most-watched sports event.

Targeted at all stakeholders in both the public and private sectors at the state and federal levels, the new policy is intended to make sports a part of the educational and recreational culture nationwide (boost quantity), improve the performance of teams and individuals (quality), and institute the ''constitutional, legal and institutional measures'' to implement it.

Once approved and funded, the policy will help provide universal access to sports and physical education for all classes of citizens, in all segments of society and across all age groups, including people with disabilities and senior citizens.

It will open opportunities for budding sportspersons to tap financial and other forms of support, boost indigenous games as well as paralympic events, help develop new high-end facilities, and create a new cadre of instructors, scientists/doctors and nutrionists.

It will raise the quality of sports facilities in rural and urban areas, attract public investments in sports infrastructure, and upgrade training centres and sports event management institutions.

The policy will encourage sports tourism, including adventure sports, and develop a strategy on bidding for major events in a planned and professional manner. It will also strive to ensure adequate support for talented sportspersons for gainful employment opportunities after their careers are over.

However, like most things in India, sports is a highly political issue.

On the positive side, the policy is designed to foster national cohesion by ensuring fair opportunities to all talented young sportspersons, irrespective of economic background, social origin, gender or regional location, to fully realise their potential.

On the other, the selection and other processes, which are in the hands of the local sports federations, can be hugely divisive among representatives of the various groups.

To resolve these issues at the local levels, rather than refer them to the central government, the policy proposes establishing a Sports Regulatory Authority. The policy says: ''It is neither feasible nor desirable that Government should take upon itself the burden of intervention when disputes arise within national sports federations (as they do disturbingly often) or when complaints are received about inefficient or inappropriate deployment of funds, mistakes in management, non-accountability for results achieved or not achieved, prejudice or bias in the selection of national teams/athletes, undemocratic or unethical electoral practices, and lack of openness and transparency in functioning''.

A key driver of the initiative is the need to bolster national pride. In spite of having a population of one billion people, Team India does not excel in any sport, rarely produces a world-class sportsman beyond cricket, nor does it have any world-class sports events.

However, with India now developing world-class airports, hotels, highways and convention centres, it is felt to be long overdue for sports facilities to follow suit. Already, the benefits of hosting international sports events are becoming apparent. New Delhi, where most of the 2010 Commonwealth Games sporting events will be held, is undergoing a major revamp.

But there will be downsides. India's massive illegal betting rackets, especially in cricket, have well-known links with organised crime. These, too, will grow in tandem with the sporting industry as a whole.

Imtiaz Muqbil is executive editor of Travel Impact Newswire, an e-mailed feature and analysis service focusing on the Asia-Pacific travel industry.

 

[Bushroda]

Great ability to spot sector trends
FUND ANALYSIS/ Tata Infrastructure
BS Research / Mumbai August 05, 2007

Another fire cracker from the infrastructure theme, Tata Infrastructure returned an awesome 60.32 per cent through 2006 to emerge as the third best performing diversified equity fund. For the NFO investors, the fund has delivered an absolute return of 196 per cent in two and a half years.

The fund achieved this essentially on the back of a large-cap growth-oriented focus, with some help from the mid caps. One can attribute this stellar performance also to the broad infrastructure theme. But the real clincher has been the fund manager’s ability to spot sector trends which have buffered the returns of the fund.

For instance, before the markets tanked in May 2006, the fund manager had cut back his exposure to financial services. The move was profitable, because the sector was amongst the biggest losers in the bear phase that ensued.

By February 2007 the fund manager re-entered the sector, timing the entry rather well, because through the June 2007 quarter (April-June) this sector delivered phenomenal returns. Similarly, the fund’s timing in the metal sector was flawless. These two significant calls have translated into a 23.3 per cent return in the June 2007 quarter compared to the category’s 16.88 per cent return.

The strategy has its share of pitfalls too. The March 2007 quarter was disastrous, for the fund lost (-) 8.26 per cent compared to the category loss of (-) 5.93 per cent.

The fund is definitely not for the faint hearted. Unlike most other core funds, Tata Infrastructure clearly has no sector loyalty and it takes aggressive positions.

 

[Bushroda]

Afghans fly Pune varsity for studies
6 Aug, 2007, 0141 hrs IST,SAKET AMBARKHANE, TNN

PUNE: While the whole world is helping Afghanistan to rebuild the country with generous donations and grants, Pune is helping the war torn country in its own unique way.

While the city is called the Oxford of the East, a large number of Afghan students are coming to the University of Pune (UoP) for higher studies. The varsity too, happy with the response, is also planning to start short-term courses for in-service personnel from Afghanistan.

Last year, UoP was rated as the university with largest number of foreign students by the association of Indian universities. Over the last five years, the university has admitted close to 14,000 foreign students.

According to the International Students Centre (ISC) of the UoP, which is the nodal agency for foreign students’ admission in UoP, 100 Afghan students were granted admission in the varsity and affiliated colleges in the last academic year. This year, the number has already shot up to 400 Afghan students.

“This quantum leap has been primarily facilitated by Prime Minister Manmohan Singh’s announcement of 1,000 new scholarships each year to Afghan students, during his visit to Afghanistan in August 2005. There is an acute shortage of educated and skilled people in the war ravaged country.

It needs graduates as well as civil and mechanical engineers for rebuilding. We are working on introducing short-term courses for in-service personnel from Afghanistan next year. We are also looking at student as well as faculty exchange. We had discussed this idea during the visit of the vice chancellor of Kabul University,” said UoP vice-chancellor Narendra Jadhav.

“More students from Afghanistan are expected to join considering that admissions to foreign students will continue till end of September. We are expecting over 500 students to join. Most of these students have been granted scholarships by the ministry of external affair’s Indian Council of Cultural Research. These students prefer conventional streams such as arts, science, commerce and fine arts studies besides civil and mechanical engineering,” said an official at UoP’s International Students Centre.

A large number of students were seen at the ISC office for final processing of their admission. However, most of them had not decided on which college to opt for.

“Most of us have got ICCR scholarship and will study BA or BCom here but we are yet to finalise the college. We are interested to join either Poona College, Ness Wadia College or Sinhgad College,” said Wahidullah Rahman, 20, hailing from Nurestan province of Afghanistan.

His friends, Mohamoud Sameem and Mohamoud Shoaib from Jalalabad, Anayatullah Nejrabi from Kabul and Ziaurahman Madany from Nurestan, were enthusiastic about the prospects of staying in Pune for next few years. “We appreciate that India gave us a chance to pursue higher study through scholarships,” said Madany. Most of these students sounded fairly conversant in Hindi, a trait that can be attributed to India’s close cultural proximity and historic trade links with their nation.

 

[Bushroda]

Adobe to invest $100 million for expansion in India

Noida, Aug 5 (UNI) Adobe Systems India Pvt Ltd has said it will invest 100 million dollars by the end of next year to expand its existing offices in Noida and Bangalore.

''We have approached the concerned authority for acquiring land in Noida and hopefully soon we will get the green signal,'' company Senior Vice President Naresh Chand Gupta told UNI.

The company is also looking for land in Bangalore, he added.

This expenditure is part of 200 million dollars that the company planned for expanding its business in the country.

The company's global revenue was 2.56 billion dollars in 2006.

''We expect to touch three billion dollars in our global revenue by the end of this year,'' said Mr Gupta.

 

[Bushroda]

The Great Indian CEO Hunt continues -- How the game changes
August 06, 07
Noor Fathima Warsia

The hunt for an Indian media company CEO continues, and head hunters are of the opinion that while the disproportionate demand and supply of the talent has made the hunt difficult, and even tougher to get the right fit for a longer period, they believe that in the course of time, the right talent pool would be created. This would happen in much the same way that it was created, when the media and entertainment sector was just finding its footing in India.

Abha Kapoor of K&J Search Consultants, a player that has been in the business of executive search for over 12 years, placing professionals at senior management and CEO/MD levels, explained, “Finding the right fit from the existing space for a senior level is a problem on account of the limited talent pool, and the special requirements of each engagement in terms of the softer issues like cultural fit, etc.”

“If we were to look at candidates from other categories, then with little or no domain knowledge they are, prima facie, not the perfect fit in the short term. However, we believe, high calibre talent can ramp up their domain expertise and transition their competencies fairly quickly into the media and entertainment space. Experience and emotional maturity are the key gaps in skills at the CXO level. These positions impact all aspects of the organisation and have to successfully interface with all stakeholders and manage multiple variables -- EQ is the key for successfully executing these roles,” Kapoor further elaborated.

Indiatimes’ Rajendra Mehta said, “It is very difficult to find a 100 per cent fit for senior management role, since the pace of work and expectation is so high that subsequent to hirings, the weak links start becoming a hindrance to operational success. Finding the right person and ability to attract people from the same domain is extremely difficult, and it’s more on account of unavailability of exact resources. The challenge is to pin point the dominant competency requirements in CEO role.”

The head hunters identify that the challenge is also from the candidate’s perspective, which is not just to manage candidate expectations especially in terms of pricing, but also ensuring long-term commitment from the candidate, as invariably there are numerous options in the media space today, and also across other emerging categories.

Media companies must change mindsets

Looking at the situation more critically, Kapoor observed, “In some ways this talent paucity is self-inflicted. Many organisations in the space are demanding talent with domain expertise and becoming risk averse to talent from other categories. When we started our search firm 12 years ago, specialising in the media and entertainment sector, we had no existing talent pool. We helped create that first talent pool as organisational heads gave us the flexibility, out of compulsion and not choice, to access other categories -- sectors where there were professionals who could transition their skills into the media and entertainment sector – so we found for them CEOs, General Managers, Functional Heads across HR, Finance, Distribution, Sales, Creative, Marketing, from FMCG and other traditional categories.”

“Subsequently, over the years, however, as the talent pool grew their expertise in the media and entertainment sector, most clients imposed stringent restrictions on us. We were asked increasingly to source professionals only from the media and entertainment sector. So, in a way, our work became increasingly constrained as it was a very limited talent pool, and as huge demand was chasing a limited supply,” Kapoor said.

Mehta added here, “With domains becoming very specific and very niche, it’s highly difficult to find and exact resources. Therefore, the only answer is to hire an individual for dominating competencies of the role and developing on the shadow competencies.”

The HR head of a leading international broadcast company in India explained, “You would expect a CEO’s function to be the most supported, given the pressure that it comes with. However, that is not the support that the companies in India are necessarily getting from international counterparts. The targets are unreasonable and the patience is limited. What would make any professional hold on to such a situation riddled with high-levelled pressures?”

Talent pool has to grow

At one level, experts believe that the talent pool will in any case grow -- both organically and inorganically. Kapoor explained, “Going forward, the middle management will need to be trained for broader roles in general management, which would lead to growth from the industry. Also, there would be talent acquisition from other sectors.”

The CEOs themselves should have the responsibility to ensure that the pool grows.

Mehta observed, “The CEO is a thought leader role and hence, getting strategic domain specific input to the organisation is a must for a long-term organisational growth. Finding a person from the global community is an answer to enlarging the pool of resources. The operational effectiveness should be left to the operational COO, CFO or the second line leadership team, and the CEO should build them for tomorrow’s leadership roles.”

Kapoor stated, “One of the most critical KRAs of every CEO in the media sector should be the development of an extremely capable and second line of command. More importantly, investing and developing talent needs to be built into the DNA of the industry, and for that, the ownership would rest with the CEO and top management. The CEOs of media companies should put together a collective vision for creating and nurturing a substantial talent pool, as also invest time and money on employer branding. They also will need to be flexible and farsighted in terms of acquisition of talent from other sectors.”

In today’s environment, the CEO’s role is no longer limited to a specific domain or geography. In a rapidly growing economy, one of the fastest growing sectors is media, and the CEO’s role will now require the ability to create a differentiated offering, the ability to identify and seize new business opportunities, all the while ensuring talent acquisition, training and retention.

 

[Bushroda]

Indian Rupee May Gain to 39 as Intervention Fails, HSBC Says
By Sam Nagarajan

Aug. 6 (Bloomberg) -- India's rupee may strengthen to 39 by the end of the year, the strongest since February 1998, because the central bank will fail in its efforts to stem both currency gains and inflation, HSBC Holdings Plc said.

The Reserve Bank of India is selling rupees so fast that it can't mop up the cash injected into the economy, causing overnight interest rates to fall to near zero, Robert Prior- Wandesforde, a Singapore-based economist, and Pieter Van Der Schaft, a Hong Kong-based strategist, wrote in a research note. That rate is too low for an economy growing at 9 percent a year, they wrote.

``We suspect the authorities are fighting a losing battle,'' they wrote. ``They are grappling with the so-called `impossible trinity,' wishing to control both the currency and inflation without erecting new capital controls.''

The local currency, the best performer in Asia this year, has risen 9.7 percent this year to a nine-year high, according to data compiled by Bloomberg. It closed at 40.3525 against the dollar on Aug. 3, after touching 40.215 on July 24, the highest since May 1998.

The local currency, which gained 0.4 percent to 40.3525 against the dollar last week, may strengthen to 40.27 this week, according to the median estimate of 10 traders surveyed by Bloomberg News.

Foreign-currency reserves in the four weeks through July 27 grew by $12 billion, twice as fast as in June, suggesting the central bank increased dollar purchases.

Cheap Money, Inflation

Rupees injected as a result of intervention pushed the rate at which banks lend to each other overnight to an average 0.4 percent last month, from 6.2 percent in May, Bloomberg data show. Reserve Bank of India Governor Yaga Venugopal Reddy is also concerned such cheap money will stoke inflation.

He told banks last week to set aside more cash to cover deposits, draining 160 billion rupees ($3.97 billion) from the banking system, which according to HSBC, is an amount too small given the pace of foreign-exchange intervention.

Reddy refrained from raising the key interest rate for the second time at the last meeting on July 31, after increasing it seven times since October 2005, because higher rates may add to the pressure on the currency to appreciate, they said.

Capital flows from abroad are likely to resume following a ``temporary interruption,'' the analysts said. Global funds turned net sellers of Indian stocks for four of five days through Aug. 2.

Share purchases by overseas investors this year surpassed those in 2006, while borrowings by Indian companies abroad surged six-fold to $16.1 billion in the year through March 2007. The inflows fueled the rally in the rupee, hurting exporters including Wipro Ltd., the country's third-biggest software maker.

``No doubt, egged on by the government, the RBI has drawn a metaphorical line in the sand at the current exchange rate,'' Prior-Wandesforde and Van Der Schaft said. ``Recent developments have again highlighted the difficulty to control both the rupee and inflation in an environment where capital is flooding in.''

 

[Bushroda]

India Outsourcing Giant Battles Volatile Market
By Jennifer Bosavage, CMP Channel
CRN, NY

Despite a challenging environment marked by wage increases and the negative impact of an appreciating currency, India outsourcing giant Tata Consultancy Services, or TCS (No. 32 on the VARBusiness 500), delivered impressive results in what it called a volatile quarter.
TCS, India's largest IT services organization, reported a 55 percent increase in earnings to $291 million on a 42 percent increase in sales to $1.3 billion for its first fiscal quarter ended June 30 compared with the similar quarter one year ago. TCS said it was able to maintain net margins through cost management, productivity increases and hedging gains.

TCS' strong showing comes with outsourcing rivals like EDS and Computer Sciences Corp. (CSC) expected to post single-digit sales growth for the similar quarter. For example, EDS is expected to post a 4 percent increase in sales to $5.41 billion compared with $5.19 billion, according to a survey of analysts by Thomson First Call. CSC, meanwhile, is expected to post a 5 percent increase in sales to $3.76 billion compared with $3.55 billion in the year-ago quarter, according to a survey of analysts by Thomson First Call.

At least at this point, TCS is not seeing a sales fall-off in the wake of concerns that outsourcing is becoming more costly and difficult to sustain.

"Over the last two to three years, there has been a tendency among U.S. corporations to see the value of outsourcing, especially to destinations like India," says Pradipta Bagchi, spokesman for TCS.

In fact, seven out of 10 companies on the Fortune 100 use TCS for some type of outsourced service, whether that's for business process outsourcing (BPO), infrastructure services or consulting. The reasons for the integrator's popularity, Bagchi explains, is threefold: global expansion, increasing Indian labor force and cost.

In the last quarter, the company opened its Mexico Global Development Center; TCS has more than 150 clients and in excess of 5,000 professionals in 14 Latin American countries. The center is strategic for furthering its success in the United States as well as for forging new markets in Mexico and Latin America.

"Our centers in Latin America speak Spanish and Portuguese," Bagchi says, "and our new center in Mexico serves not only that country but also U.S. businesses that have a need for Spanish-language services. It can also serve as a 'near-shore' center for U.S. companies because of its English capabilities, and it is in a more favorable time zone than our centers in India." Companies have made it clear that while it is advantageous to have work done overnight in the United States (the Indian workday), it's even more desirable to be able to speak to offshore employees in as close to real- time as possible. Sites in Mexico and Latin America, therefore, are briskly gaining popularity.

That high demand continues to fuel the attractiveness of engineering degrees in India. "[India] will have 400,000 engineering graduates this year," Bagchi says.

As a result, Tata has had its choice of hires. In the first fiscal quarter, 8,706 employees joined the company, bringing the total employee count to 94,902. Engineering is one of the most lucrative fields for Indians, and the challenge for both Tata and its customers now is containing salary costs, which have been growing rapidly.

Bagchi acknowledges that, on average, Indian wages have increased 15 percent in the past year, compared with 3 percent in the United States. But, he adds, in Latin America and Brazil, the workers are still 15 percent more expensive to hire than in India. And, he notes, Indian engineers are one-third the cost of U.S. engineers.

For Tata, the challenge for the future will be in continuing to attract talent while keeping the value proposition attractive to customers. That may take a bit of globetrotting for Tata and other outsourcing firms, as they continue to seek low-cost labor to meet high-tech needs.

 

[Bushroda]

Mumbai-Pune in just 19 mins
With Lohegaon airport runway to be closed, air taxis could be the next mode of travel for high-flying crowd
Sunanda Mehta

Pune, August 5: Trains are passé, the e-way has been tried and tested and the four flights in a day ferrying nearly 800 passengers grossly inadequate. For the Mumbai-Pune jet-setting crowd, here’s the latest travel option — chopper service.

With the Lohegaon airport runway going to be closed for re-carpeting in September and flight services likely to be affected, private helicopter charter service firms are eyeing the Mumbai-Pune sector. Among the players are Vectra Aviation, Ventura Aviation and United Helicharters Private Ltd (UHPL).

“We are waiting for the monsoon to get over to start a Mumbai-Pune chopper service,” said Goa-based Ventura Aviation’s chief operating officer Ajay Sareen. Ventura has already readied a four-seater that they plan to lease out to companies or individuals at the rate of Rs 60,000 per hour.

“Companies have approached us for the service. Frequency of the flights will depend upon demand,” added Sareen. The Mumbai-Pune flight will last 19 minutes. The trend has been confirmed by Vectra Aviation that leases and sells choppers.

“The potential is very high. We are working on moving into the Mumbai-Pune sector with a dedicated service,” said Marketing Manager Severine Rodosavljevic, adding that a construction company in Pune has already placed an order for the purchase of a chopper that will be delivered in early 2008. “With Pune getting to be a global business and IT centre, time is of essence for most professionals and we plan to deploy some choppers to cater to this demand,” she said.

UHPL has already catered to a few requests for a one-day trip between Pune and Mumbai. “A Pune-Mumbai service is the next logical move. But we have not decided to put a dedicated chopper on the sector as yet. We are going to make choppers available as per the demand. An air taxi service will happen only after studying the scenario,” said Managing Director Uday Gelli.

UHPL owns seven, 10-seater copters that cater to oil and gas companies like the ONGC.

According to Gelli, affordability will play a huge role. “A single seat on the chopper for a one-way trip would cost Rs 10,000 while the full chopper could well be Rs 90,000,” he said.

In April, Kingfisher chairman Vijay Mallya had announced their intentions to start a chopper service between Mumbai and Pune using the race courses of the two cities as landing pads. On agenda were six daily flights on a 15-seater chopper that would take 19 minutes.

According to airport Director Deepak Shastri, there is a huge demand for flights between Mumbai and Pune because of the business and international passenger traffic. “The closure of the runway will definitely affect flights,” said Shastri, adding that no private party had approached them for starting the service. “We are open to the proposal, subject to the approval of the Indian Air Force,” he added.

 

[Bushroda]

India, Slovenia to develop R&D unit
6 Aug, 2007, 0507 hrs IST, TNN

KOLKATA: In a bid to enhance economic cooperation between the two nations, India and Slovenia are keen to sign a memorandum of understanding to create a joint forum for promoting R&D in various fields, relating to the manufacturing sector.

This was disclosed by Miklavz Borstnik, charge d’affaires, embassy of the republic of Slovenia,
in New Delhi at an interactive session on Bilateral Trade And Investment Opportunities, organised by Merchants’ Chamber of Commerce.

Slovenia has submitted its proposals for the proposed MoU to India’s ministry of science
and technology, which are now being examined by the ministry.

Once the MoU is signed, it would pave the way for mutual collaboration in R&D not only among the scientific communities and educational institutions of the two states, but also between companies of the respective states.

In addition, there would be provisions under the MoU for marketing of products, emanating from joint R&D efforts, said Mr Borstnik. Inviting Indian investment in his country, Mr Borstnik said Slovenia as a gateway to central Europe, is an ideal investment destination. Having a port of a global scale on the Adriatic sea, called as the port of Koper, the country offers links to the entire centre and south Europe.

MCC president Atul Churiwal informed Mr Borstnik that West Bengal offers substantial incentives for investment in thrust areas like food processing, leather goods, garments and IT industries. If Slovenian companies are interested in making investment in these areas, MCC would help them getting Indian partners in these areas, Mr Churiwal said.

At present, Slovenia is interested in having foreign investment, including India in logistics, tourism, retail trade and industries. Slovenian companies are looking for more business opportunities in India which is emerging as a global economic power, added Mr Borstnik.

India is one of Slovenia’s most important trading partners in Asia. However, the bilateral trade between the two states is still at a nascent stage. In 2006, the total trade in goods between the two countries amounted to euro 84.7 million, representing only 0.2% of the total Slovenian international trade in goods worth euro 40 billion.

The reason for such a low volume is that the trade relations between the two countries was established just about five to six years ago. Trade between the countries started picking up since 2005.

 

[Bushroda]

Ambani brothers ride Mumbai's makeover
Ranju Sarkar in Mumbai
August 06, 2007 09:17 IST

Today, if you travel by road from the central suburb of Ghatkopar to the western suburb of Versova, it could take you an hour if you are not caught in a bad traffic jam. Come 2009 and you could cover the same distance by the Mumbai metro in 21 minutes and, since the metro will have air-conditioned coaches, you can hope to arrive in good shape. Besides, the maximum fare of Rs 10 will not pinch most pockets.

Similarly, if you are a businessman or a senior executive tired of coping with the city's crumbling infrastructure, you could think of buying an apartment in the Navi Mumbai special economic zone, which promises to offer living conditions on a par with the world's most sophisticated cities. The city will come up next to the Navi Mumbai airport from where you could catch a flight to anywhere in the world.

And in case you are worrying about visiting Mumbai, a new 22.5 km, six-lane highway across the harbour will get you to central Mumbai in just 30 minutes.

Sounds too good? Well, that's a glimpse of the future of Mumbai. And what's common in these dream infrastructure projects is that the Ambani brothers, Mukesh and Anil, are either involved or pitching for them.

The brothers already have a finger in many infrastructure projects in the city. Anil Ambani's Reliance Energy-led consortium has bagged the Rs 2,356-crore (Rs 23.56 billion) first phase of the metro project and will definitely bid for the next few phases.

Mukesh Ambani, with other partners, is building two SEZs (Navi Mumbai and Maha Mumbai) and setting up a world-class convention centre in the Bandra-Kurla complex for which the land alone costs Rs 1,104 crore (RS 11.04 billion). While Anil plans to expand Reliance Energy's [Get Quote] Dahanu plant by 1,000 Mw, Mukesh will set up a 1,000-Mw captive power plant in the Navi Mumbai SEZ.

Both brothers have bid for the Rs 4,000-crore (Rs 40 billion) trans-harbour link that will connect the island city with Navi Mumbai and Mukesh's two SEZs.

Anil is also likely to bid for the new international airport at Navi Mumbai even as a non-compete clause in the family split will ensure that Mukesh can't bid for airports. But given its strategic location (the airport will be next to the Navi Mumbai SEZs), experts feel that Mukesh may bid indirectly through an associate like Anand Jain.

"The brothers have emerged as serious players in infrastructure projects in and around Mumbai," said a high-ranking state government official who requested anonymity.

To be fair, it's not that the brothers are bidding only for projects in Maharashtra. Anil just won a road project in Tamil Nadu and the 4,000-Mw Sasan ultra mega power project, while Mukesh is setting up an SEZ in Haryana too. Both brothers are keen on city gas distribution projects, including in Mumbai.

Unlike the product-market economy (which was liberalised in the early 1990s) and the financial markets deregulation (of late 1990s, when foreign and private banks were allowed), the infrastructure business is yet to be liberalised.

"It still involves government licensing, award of concessions or build-operate-transfer schemes. These require extensive networking skills, which the Ambanis are good at," said a Delhi-based expert on infrastructure.

"Today, manufacturing has far higher risks with the threat of Chinese dumping or reducing import duties while if you have an infrastructure project in your bag, it can offer you a steady stream of income," he added. That explains why the brothers are betting big on infrastructure.

"As a promoter, I would be unhappy if an infrastructure project does not offer 18 per cent return on equity over a 15-year period," said Nikhil Gandhi, chairman, Skill Infrastructure, which roped in Mukesh and Anand Jain in the Navi Mumbai SEZ.

"I see no reason why Anil or Mukesh should not be interested in infrastructure projects in the city. It's a very good opportunity. In a city with high disposable incomes and crumbling infrastructure, if you build railways and road bridges, people are bound to travel by them," added an expert.

--------------------------------------------------------------------------------
Pitching for Mumbai's infrastructure Mukesh Ambani

- Will invest Rs 25,000 crore in setting up an SEZ in Navi Mumbai
- Bidding for the 22.5 km, Rs 4,000-crore trans-harbour expressway
- Building a world-class convention centre in the Bandra-Kurla complex
- A non-compete clause in the family settlement debars him from airport projects for five years.

But an associate like Anand Jain could bid for the Navi Mumbai airport

Anil Ambani

- Will build Mumbai metro's first phase at a cost of Rs 2,356 crore

- Reliance Energy will expand capacity of the 500-Mw Dahanu plant that supplies power to Mumbai by 1,000 Mw

- Expected to bid aggressively for the proposed Navi Mumbai Airport

- Also keen on the sea link project. The Supreme Court will hear a petition from Reliance Energy that challenges its disqualification from the bidding process

 

[Bushroda]

Give India a flying start
2 Aug, 2007, 0357 hrs IST,Nirbhay Kumar, TNN

Building airport infrastructure at a rapid pace in quest for modernisation

Sustained buoyancy in India’s aviation sector has been appreciated globally, but experts have not failed to notice that lack of adequate infrastructure could be a roadblock. That explains civil aviation minister Praful Patel’s emphasis on building the country’s airport infrastructure to lay the foundation for long-term growth in both passenger as well as cargo traffic.

With an open investment regime and liberal policy on bilaterals, the civil aviation minister wants to take aviation to the masses. Among the plans in the pipeline are building airports within 50 km of every significantly large habitat in the country. May sound like a fairy tale to the people of rural India, but that’s the shift away from metros which the civil aviation ministry seeks to achieve.

“The domestic aviation sector would grow at a compounded annual growth rate (CAGR) of 20% over the next five years. The growth would, however, stabilise later and over the next 20 years grow at the rate of 12%. There has been pressure on infrastructure in the last two years with air passenger traffic growing at over 25%. But in the long run, airport infrastructure would not be an issue. As the market matures, growth becomes steady and stabilised,” said Boeing’s Dinesh A Keskar.

The American company has revised its projection for India’s civil aircraft needs for the next 20 years — from 856 aircraft worth $72 billion predicted last year to 911 planes worth $86 billion by 2026. Arch rival Airbus has gone a step further by saying that the country would need 1,100 aircraft valued at about $105 billion over the next 20 years.

While there is no doubt about the growth potential, the key question that needs to be addressed is building of airport infrastructure to sustain the boom in the long run.

Combined with expansion of low-cost airlines, which are fuelling growth in the domestic circuit, the civil aviation ministry’s plan for liberalisation of international rights is sure to queer the pitch. By not allowing more domestic flights in congested airports like Delhi and Mumbai, the ministry is trying to control the situation, but the policy on international rights may undo the damage control exercise.

For instance, the ministry plans to allow private carriers to fly abroad even if they have not completed five years of service in the domestic market. This means more private players would be nominated to utilise India’s bilateral landing rights. Therefore, India may have to agree for similar nominations from other countries too, and this is sure to result in more flights landing at gateway airports like Delhi and Mumbai where congestion is already taking its toll.

Apart from the apprehensions about the health of Air India due to increased competition, this factor is a cause for worry in the case of airport congestion too. However, the civil aviation ministry is confident of managing the situation and providing adequate support for growth. “Providing requisite airport infrastructure is a challenge,” agrees civil aviation secretary Ashok Chawla.

To tackle the situation and ensure that infrastructure is not a constraint, the ministry is working on several models of development. “We would offer over 300 airports and airstrips to private players for development on the public-private partnership (PPP) model. We would aggressively market the idea once the civil aviation policy is in place,” said a senior government official.

At present, Airports Authority of India (AAI) operates 127 airports including 13 international airports and 25 civil enclaves in the country. “There are many airstrips in the country under various state governments which are unused. A number of aerodromes are under the military which could also be used for training purpose, but all this would happen only after the policy is cleared by the Cabinet,” he added.

At present, passenger traffic is concentrated at five major airports. About 70% traffic is confined to these metros with Delhi and Mumbai airports alone accounting for 45% of the country’s 96.4 million passengers. Government is planning to divert traffic to non-metros for distributing growth evenly and to reduce the pressure on metros.

Cargo traffic is also growing at a fast pace at these airports. From the current volume of 1.6 million, cargo growth is expected to reach 9 million MT by 2020, growing at a CAGR of 14%. AAI along with private players would invest Rs 41,000 crore in non-metro airport infrastructure over the next 4 to 5 years. “Out of 35 non-metro airports, expansion and modernisation work would be completed for 24 by 2009. Upgradation of the other 11 would be over by 2010,” Mr Chawla explains.

Non-metro airports would be developed partly through the PPP model. AAI would develop airside facilities and terminal buildings of these airports while city-side development work would be carried out on PPP basis. The government has already awarded contracts for terminal building at 15 airports. For airside development, contracts have been awarded at 24 airports.

For city-side development at five airports — Ahmedabad, Lucknow, Bhubaneshwar, Jaipur and Indore — bids would be invited by the end of 2007. This includes operation and maintenance of terminal building, cargo and commercial spaces.

The government is also drafting a policy paper for regional airlines. To spur the growth in smaller cities and towns, incentives in the form of lower landing and ground handling charges are on the cards. Lower capital base may also be fixed to encourage regional airlines.

The government has also proposed to connect 11 international airports with city centres by metro rail. The airports would also be connected with national highways via six-lane high speed roads. The work on connecting the Delhi international airport with the city centre, Connaught Place, has already started. The first high-speed rail corridor is expected to be operational in 2010 before the Commonwealth Games. The standard gauge rail corridor would cost about Rs 3,200 crore. Delhi International Airport and Delhi Metro Rail Corporation would jointly develop this high-speed corridor.

To expedite the development of the airport infrastructure, the civil aviation ministry has urged the local authorities to acquire land and remove encroachments. The authorities have also been urged to fast approve city-side development plans.

Over and above 400 airports and airstrips in the country, there would be a requirement of additional airports. Speaking on the occasion to introduce five new airplanes to the fleet of Air India, Mr Patel said last week: “The country would need 500 airports to handle increasing passenger and cargo growth.”

However, the number of infrastructure bottlenecks doesn’t end here. According to estimates, there are only 141 usable airports that can handle large commercial aircraft. This means one airport for every 7.7 million people. While in China the population to airport ratio stands at 4.09:1. The same is 1.47:1 in Japan. In the US and Canada, the ratio stands at 0.16:1 and 0.18:1, respectively.

As traffic moves up, the number of airport would also increase significantly in the years to come. The country is expected to have a good number of private airports, popularly described as merchant airports. “Rules and regulations regarding private airports would be finalised by the end of 2007,” a senior ministry official said.

“There would be seamless multi-model passenger and cargo traffic growth in the country in which air traffic is an important component. However, airport throughput times for cargo as also linkages with other transport modes need major improvements. Benchmarking against best international practice, there is a long way to go. We need to work on improving airport efficiencies as also establishing multi-modal linkages,” IDFC head-PPP Initiative Shailesh Pathak said.

 

[Bushroda]

Wal-Mart, Bharti Sign India Wholesale Venture Accord
By Saikat Chatterjee

Aug. 6 (Bloomberg) -- Wal-Mart Stores Inc., the world's biggest retailer, and India's Bharti Group signed an agreement to set up wholesale stores in the second-most populous nation.

The 50-50 venture will start ``cash and carry and wholesale'' stores, Rajan Mittal, joint managing director of Bharti Enterprises Ltd., said at a news conference today in New Delhi, where it's based. Wal-Mart had signed an initial accord with Bharti Group in November to start a wholesaling business.

While barred from opening retail and self-branded stores in India, Wal-Mart is betting it can get a foothold before the government eases restrictions, allowing foreign retailers to expand. Indian sales through store chains may increase by more than eightfold to $97 billion by 2012, according to consultant Technopak Advisors Pvt.

The venture, known as Bharti Wal-Mart Pvt., will seek to offer ``great prices under one roof,'' said Raj Jain, president of emerging markets at Wal-Mart's international unit. The first wholesale store, which will cater to small retailers, hotels and restaurants, will be opened by the end of 2008, the company said in an e-mailed statement.

The venture plans to open 10 to 15 wholesale stores in seven years, located in so-called tier-2 cities, or cities other than New Delhi, Mumbai, Bangalore, Chennai and Kolkata, and employing as many as 5,000 people, the company said.

`Strong Partner'

``Wal-Mart has got a strong partner in Bharti; this partnership will give Wal-Mart a lead over other foreign rivals once the government allows overseas companies in retail,'' said R.K. Gupta, who manages the equivalent of $86 million of stocks at Credit Capital Asset Management in New Delhi. ``The agreement will benefit both partners in the long run.''

The Bharti Group plans to spend $2.5 billion on a retail network to compete with local rivals, including Reliance Industries Ltd. and Pantaloon Retail India Ltd. That budget doesn't include money for the wholesale venture.

Mittal said Wal-Mart will be a ``natural partner'' for Bharti when the rules are relaxed on overseas investment.

Bharti Retail will set up supermarkets, hypermarkets and convenience stores and sell products ranging from food, electronics, clothing and furniture, Sunil Mittal, Rajan's older brother, said in an interview in New Delhi on July 21. The 49- year-old billionaire is starting a retail chain after building India's biggest mobile-phone services provider.

Reliance, Pantaloon

Reliance, owner of the world's third-largest oil refinery, plans to invest about $6 billion in retailing. The company has more than 200 convenience stores in India. Pantaloon plans to invest $1 billion to increase its stores to 4,000 by 2010.

Shares of Bharti Airtel Ltd., the country's biggest mobile services provider and part of the Bharti Group, fell 1.3 percent to 861.15 on the Bombay Stock Exchange today. The stock has risen 37 percent this year compared with the benchmark index's 8.1 percent gain.

The proposed Bharti venture seeks to serve the retail market by supplying it with goods directly from producers such as agriculturists, craftsmen and artisans, Rajan Mittal said. The venture plans to give ``the best of the yields to the farmer,'' he said.

Bharti's move comes as the expansion of retail chains draws protests from political parties, street vendors and small shop owners affected by the low-prices offered by the chains.

India's communist parties, key allies of the federal ruling coalition, have sought restrictions on the opening of retail stores by companies such as Reliance Industries. It also opposes foreign investment in Indian retail.

Traders, Vendors

Small traders and street vendors have led protests in Indian cities such as New Delhi, Ranchi in the east and Indore in the central province of Madhya Pradesh, accusing large chain- store owners, including Reliance, of undercutting them.

India's Congress party, which leads the federal coalition, has sought safeguards from the government before it allows overseas investment in the nation's retail industry.

India's economy expanded 9.4 percent in the year ended March 31, the most since 1989, and may grow 8.5 percent in this fiscal year, a pace surpassed only by China among the world's largest economies, according to the Organization for Economic Cooperation and Development.

 

[Bushroda]

U.S. Faces Danger of ‘Reverse Brain-Drain,’ Researchers Believe
WRAL.com, NC
06 August 2007

“Our conclusion was that the U.S. is setting the stage for a massive reverse brain-drain,” he wrote “If we wait 5 years for immigration reform, the illegal and unskilled will still be here, but those that contribute significantly to U.S. competitiveness will be long gone.” – Vivek Wadhwa

If the United States doesn’t make changes in its immigration policy soon, frustrated entrepreneurs, scientists and inventors just may say no to doing business here.

At least that’s the opinion of Vivek Wadhwa and other researchers who have been mining data on the contributions and challenges foreign-born technologists make to the U.S. economy.

“Our research has shown that things are moving faster than our ability to understand out whether outsourcing is good or bad,” writes Wadhawa. Wadhwa, the executive in residence at Duke’s Pratt School of Engineering, has accepted a fellowship to the Harvard Law School and will work with them as a “non-resident scholar” for the next year. He also is working with The Kauffman Foundation on the latest report.

Here’s a portion of what they have to say:

“While we debate the merits and impact of globalization the trend is gaining momentum. With breathtaking speed, India and its legions of well-trained, English-speaking technical talent are making impressive strides as a base of innovation for multinationals. From writing software and tweaking specs for auto parts just a few years ago, Indian engineers now are starting to design entire next-generation products for a who’s who of multinationals, from Boeing and General Motors to Texas Instruments. Meanwhile, China swiftly is amassing the requirements of a technology superpower: Modern research facilities, immense manufacturing infrastructure, universities capable of pumping out hundreds of thousands of engineers and scientists each year, and the world’s biggest consumer market for cars, consumer appliances, and telecom equipment…”

Much of the work being done by Wadhwa and others has focused on the immigrants trying to get “green cards” for U.S. residence or those trying to enter the country through programs set aside for tech workers. Wadhwa said the green card wait list is “much higher” than his original estimates of 200,000 to 300,000. Many of them just may throw up their hands and leave to use their knowledge elsewhere.

What Wadhwa said next is very alarming.

“Our conclusion was that the U.S. is setting the stage for a massive reverse brain-drain,” he wrote “If we wait 5 years for immigration reform, the illegal and unskilled will still be here, but those that contribute significantly to U.S. competitiveness will be long gone.”