Indian Economy - News & Updates - Archive

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Incredible India@60 Brings the Best of India to the Rest of the World
Business Wire, NY

NEW YORK--(BUSINESS WIRE)--Saluting India’s 60th anniversary of independence and its resurgence, Incredible India@60 kicks off a week-long celebration in New York City on Sunday, September 23rd. The celebration brings Indian leaders from diverse fields to engage, inform and partner with global dignitaries.

Incredible India@60 has been brought to New York by India’s apex Industry Association, Confederation of Indian Industry (CII) and the Ministry of Tourism, Government of India. The campaign promotes India’s vibrant democracy, diversity along with its remarkable development and impact on world business and culture. Various events will highlight India’s cultural fare, including fashion shows, musical performances, dance and culinary programs. In addition, separate sessions will cover a variety of business initiatives and feature prominent speakers and captains of industry to inspire debate and discussion.

Sunil Bharti Mittal, president of the Confederation of Indian Industry (CII) and Chairman of Group MD Bharti Enterprises, is the lead of a 30 member strong CEO delegation, all of whom represent the voice of Indian industry.

"India has come of age and today is the fastest growing free market economy,” said Mittal. “India has a 9.4 percent GDP growth, $475 million USD infrastructure investments, over 500 million young people driving the economy, and the fastest growing telecom market in the world.”

Mittal acknowledges that India is a work in progress but believes it has a good story to tell. “We wish to present India to the world in New York through Incredible India@60.”

Agreeing with Mittal, CII’s Chief Mentor, Tarun Das, added "India is a continent of confidence. There are challenges to its growth, but we recognize the challenges. We feel good and want to shake hands with the world, and strongly believe that Incredible India@60 will show the world a new contemporary-facing India."

India@60 is the largest initiative undertaken by CII outside India to showcase the plurality of India’s cultural, business, intellectual, and culinary delights. The program represents a unique collaborative effort of business and government comprising 41 Events, 13 Conferences and Panel Discussions, 9 Cultural performances, 3 Dinners and 7 Receptions by partners/sponsors in addition to ongoing events on all 4 days.

Incredible India@60 is the largest brand India show held anywhere. “The scale of the campaign is huge and the message simple, Experience India,” said Nandan Nilekani, co-chairman of the board of Infosys Technologies, Ltd. and chairman of the Incredible India@60. "The top leadership of India from government, Indian industry and the cultural czars are coming together in New York to present vibrant India. Incredible India@60 will showcase the plurality and richness of India's cultural, business, intellectual and culinary delights.”

 

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Vodafone brand becomes India-wide
BBC News, UK
Thursday, 20 September 2007

The British mobile telephone company, Vodafone, has begun using its brand across India, officials say.

This follows the company's $11.1bn purchase five months ago of the Indian cellular firm, Hutchison Essar.

The company says that the brand change is one of the biggest in the country, covering nearly 35 million customers and 400,000 shops across India.

Officials say it will be one of the world's biggest rebranding campaigns and will cost several millions dollars.

Correspondents say that Vodafone's purchase of a majority stake in Hutchison Essar India in March is vital to the British company's earnings growth, as it grapples with saturated cellular markets in the developing world.

The company says that it wants to become the top mobile provider in India by 2010.

The country is one of the world's fastest-growing cellular markets, with more than six million new customers a month.

India's economy is growing fast and its burgeoning middle class means the market for mobile phones is rocketing.

 

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Latin America-Asia trade accelerates
BY JANE BUSSEY
Posted on Thu, Sep. 20, 2007
MiamiHerald.com, USA

When it comes to Asia, ''more of the same'' is ruled out for Latin America as the countries scramble to find new markets and new investment, experts said Thursday.

Trade between a number of Latin American countries and China and India has been growing at double, triple or quadruple digits in the last decade, said Antonio de Aguiar Patriota, the Brazilian ambassador to the United States.

In the past five years, Brazil's total exports have jumped from $60 billion to $155 billion, the Brazilian diplomat told the attendees at the annual The Miami Herald Americas Conference, which this year focused on the theme ``Latin America and the Caribbean: More Competitiveness or More of the Same?''

''This would not have been possible if we had kept all our bets in traditional markets,'' Patriota said at the Biltmore Hotel in Coral Gables. Not only does Brazil supply increasing amounts of iron ore and soybeans to China's growing market, but the two countries have also launched three satellites together.

''The trade with China does not present the same type of challenge as it does for Mexico,'' he said.

While economic relations between China and Latin America are characterized by exports of raw materials from countries like Chile, Argentina and Brazil to China, Central America and Mexico have experienced strong competition from cheap Chinese imports and have lost some of their assembly industry as corporations move their businesses to Asia -- especially China, which has become the favored factory floor for much of the United States and other countries.

Economic relations between Latin America and the Caribbean and India are much smaller, but in some cases represent less competition since India's economy is strongly based in the services sector.

Pramit Pal Chaudhuri, an Asia Society fellow, said that India's economic reforms started about 15 years after China began its push to attract investment and start exporting to the world as part of its globalization efforts. Now the economy is growing by at least 8 percent annually, with the high-tech, software, pharmaceutical and biotech sectors expanding by rates of 22 percent to 25 percent annually. Even the manufacturing sector has recovered from a decade of reversals and is growing at 10 percent yearly, said Chaudhuri, who is also the foreign editor of the Hindustan Times.

''Companies have become globally active,'' he said, noting that Indian acquisitions of companies around the world were doubling every year and expected to top $35 billion this year. India now has the largest number of billionaires in Asia, he said.

Trade with Latin America is very small but growing, Chaudhuri said, noting that because of an aggressive marketing campaign by Chile, wine from that South American country was more readily available in India than Italian wine.

The Indian information technology and services company Tata Consulting Services decided to open its Latin American headquarters in Montevideo, Uruguay, in 2001 after deciding against going into Argentina because of economic turmoil there, said Mario Tucci, who is Tata's vice president of Iberoamerica. Uruguay is also one of the software centers of the region and its government is small enough that a company can gain the attention of the government and business sector, Tucci said.

Tata, which has worldwide headquarters in Mumbai, India, now has software development centers in Brazil, Chile and Mexico, serving customers in the United States, Latin America and Europe.

''We do believe that Latin America can help India enter into Europe,'' Tucci said, noting that the company can often find Latin Americans who speak European languages -- from Greek to Polish -- living in countries like Uruguay.

 

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Does Urban Development Drive Rural Growth in India?
Knowledge@Wharton
September 20, 2007

A topic that is often discussed in India across political corridors, corporate boardrooms and households is the rural-urban divide and how the country's two economies -- the rural and the urban -- are increasingly growing apart. The popular notion is that growth not only has been skewed towards urban India but also has been gained at the expense of the countryside.

Some of this thinking can be traced back to economic decisions made soon after India won independence from Britain in 1947. At that time, policy makers emphasized capital-intensive industrialisation and urban infrastructure rather than agricultural investment and rural land reform, leading to the urban-rural imbalance. Often overlooked in discussions of this issue, however, is the fact that the rural economy is no longer limited to agriculture. During the past two decades, rural India has diversified significantly into non-farm activities -- and this has brought India's cities much closer to their hinterlands than people might imagine.

Those insights into the changing relationship between rural and urban India come from Roopa Purushothaman, a U.S.-trained economist who first gained prominence as a co-author of the famed BRIC report published in 2003 by Goldman Sachs. (That report predicted that four economies -- Brazil, Russia, India and China, or "BRIC" -- would drive the growth of the world economy over the next 50 years.) Purushothaman has now moved to India and is the chief economist for Future Capital Research, part of Future Group, a fast-growing Indian retailer.

Speaking at the recent Global Supply Chain Summit 2007, organized by the Indian School of Business in Hyderabad, Purushothaman maintained that despite the "near devotional status" of the rural-urban divide, fundamental misconceptions exist about how these two economies in India interact with one another. "Most of the discussions on the rural-urban divide are based on anecdotes about rural India, but if we look at the data, the story in rural India is a lot more dynamic that it gets credit for," she said.

Purushothaman and two colleagues -- Saurabh Bandopadhyay and Anindya Roy -- have written a paper titled, "Is Urban Growth Good for Rural India?" which addresses these questions. "Our studies show that a 10% increase in urban expenditure is associated with a 4.8% increase in rural non-farm employment," Purushothaman says. "As supply chains strengthen across the country, growing urban demand could provide a significant boost to the rural economy."

In their research, Purushothaman and her colleagues uncovered four links between rural and urban economies: Production relationships, consumption relationships, financial linkages and migration. Their study explores the consumption connection and highlights the impact of growing urban consumption expenditure on rural employment and incomes. The categories of consumption expenditure the researchers studied include food, housing, health, transport, education, clothing and footwear, consumer durables, automobiles, entertainment, household appliances, toiletries and cosmetics. Using an econometric approach spanning the past 26 years, their study shows that a Rs. 100 ($2.50) increase in urban consumption expenditure leads to an increase of Rs. 39 (just under $1) in rural household incomes. The channel through which this takes place is increased employment in the rural non-farm sector. "Our interpretation of the data suggests that a sustained urban household consumption growth rate, similar to that seen over the last decade, could lead to 6.3 million non-farm jobs in rural areas and $91 billion in real rural household incomes over the next decade," she notes.

Rural India: Myths and Reality

Purushothaman emphasizes that rapid changes in the country's consumption and production patterns require a more nuanced understanding of the integration between urban and rural India rather than falling back on traditional myths about the rural-urban divide. She lists three urban myths about contemporary rural India. The first is that faster economic growth in urban India -- as compared to rural areas -- is driving rapid urbanization; second, that rural India is still an agricultural economy; and third, that rural-urban inequality is on the rise.

The reality, Purushothaman points out, is very different. During the past two decades, the rural economy in India has grown significantly faster than the urban economy. During the past decade alone, the rural economy is estimated to have grown on average by 7.3% as compared to 5.4% in the urban economy. The latest Central Statistical Organisation figures show that the rural economy accounted for 49% of India's GDP in 2000. This is a significant increase from 41% in 1981-82 and 46% in 1993-94.

Purushothaman points out that with agriculture only growing at 3.2% on average, much of this growth is driven by the rural non-farm sector. As of 2000, agriculture accounted for 51.8% of rural economic activity. This represents a significant decline from 64% in the early 1980s and 72% in early 1970s. Moreover, services -- which accounted for 21% of rural activity in 1981 -- now account for 28%. In addition, manufacturing, utilities and construction have nearly doubled their share in the rural economy, from just under 10% in 1971 to 18% in 2000. "It is the growth in the non-farm sector that has been really crucial for rural India. A lot of the drivers for the rise in the non-farm sector have come from manufacturing, construction and trade, hotels and restaurants," she said.

Purushothaman also debunked the popular notion that India's economic growth is driving rapid urbanization. According to Census data, while rural-urban migration as a share of total rural population was 6.5% in 1981, in 2001 it fell to 2.8%. The study points out that "the slow rates of rural-urban migration along with declining rates of natural increase in urban areas" indicate that the process of urbanization in India is actually slowing down as a result of economic growth.

According to Purushothaman, policies that inhibit the growth of labor-intensive industries and a lack of urban infrastructure investment have slowed the process of urbanization. "There is a lot of demand to move into urban India, but the infrastructure and labor policy initiatives don't support it," she says. Purushothaman adds that the slow process of urbanization in India, despite the growing economy, is a different scenario than what exists in the rest of Asia. She claims urban growth in India has been too slow during the past 20 years and it needs to accelerate further.

On the issue of rural-urban inequality, research by Purushothaman and her colleagues indicates that the urban-rural income gap (or the ratio of mean urban to rural incomes) has decreased since the early 1990s. "Though this [change] is not very dramatic, it is happening in a very different way from what we see in other economies. In China, for instance, rural and urban inequality has increased as a result of growth."

Rural employment figures also reveal interesting insights. Between 2000 and 2005, rural agricultural employment growth was as low as 1%. This indicates that growth in the agricultural sector has not really resulted in a significant increase in jobs in the countryside. In contrast, during the same period, non-farm jobs have gone up by 20%.

Purushothaman emphasizes that agricultural growth will not sustain the rural economy. Her research shows that India's average yield per hectare today is roughly half that of China, although the agricultural sector in India employs roughly six million more people. In contrast, India employs just seven million people in the formal manufacturing sector compared with more than 100 million in China. "In a situation where agricultural capacity is limited and the urban economy is not fully able to absorb a growing labor force, the rural non-farm sector could act as an outlet for surplus semi-skilled labor. Urban demand, therefore, could be an important and largely overlooked engine helping to drive this shift from farm to non-farm employment in rural India," Purushothaman notes.

Role of Retail

Other Indian economists agree with Purushothaman's findings. N. Viswanadham, executive director of the Centre for Global Logistics and Manufacturing Strategies at the Indian School of Business, says it is true that "urbanization has slowed in India." He also believes, like Purushothaman, that for rural India to grow, urban spending must increase. "As supply chains strengthen, urban demand will definitely boost the rural economy," he says. He adds, however, that in addition to urban consumption, retail will be a major driver of growth in rural India.

"Worldwide, retail is among the biggest drivers of growth and employment," Viswanadham notes. "In India, unfortunately, the retail revolution has come rather late in the day. But going forward, I believe that urban retailing will fuel rural growth in a very significant manner, and this will be both agricultural and non-agricultural growth." He argues that as urban retail expands, it will necessarily move a lot of action to the villages. As a result, rural and urban supply chains will be integrated.

In his book titled, Achieving Rural and Global Supply Chain Excellence: The Indian Way, Viswanadham points out that rural supply chains lack sophisticated infrastructure, and they mostly deal with food and other agricultural products, handicrafts, toys and apparel. Though these supply chains are underdeveloped, they are still extremely important because they provide food and clothing to urban India. Moreover, 70% of India's population depends on the production and distribution activities of these networks for its livelihood, he adds.

India's retail sector has a market size of some $300 billion, of which barely 2% to 4% is in the organized sector. The industry, however, is going through a massive transformation and the share of the organized sector is likely to increase to 20% to 25% by 2010. "India is all set for a retail revolution," says Viswanadham. "As rural supply chains are integrated with those of organized urban retailers, this will be a critical driver of rural growth."

 

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The malling of Bangalore
The rise of a new middle class in India's Silicon Valley has led to a demand for western-style shopping malls. Fortune's Sufia Tippu breaks ground.

By Sufia Tippu, Fortune Magazine
May 16 2007: 12:15 PM EDT

In June an Indian developer based in Oman is expected to break ground on a two-million-square-foot shopping complex in downtown Bangalore that will be India's largest mall. Nine other malls are on the drawing board for the epicenter of India's tech revolution, including projects by liquor baron Vijay Mallya, retailer Pantaloon and the Tata Group, India's largest business conglomerate.

What's driving the surge in mall projects in Bangalore is the rise of a new middle class. Many have been exposed to shopping malls in the West. "Disposable income is rising," says P.N.C. Menon, chairman of Sobha Developers, which is spending $250 million on Bangalore's biggest mall, scheduled to open in 2009.

The Sobha Global Mall, as Menon's shopping paradise will be called, features stores built around a skylighted atrium on 16 acres, a 13-screen multiplex, food courts, a rooftop disco, a 300-room hotel tower and enough parking for 3,400 cars. It is being built not in Bangalore's newer, more upmarket neighborhoods but in the center of the city, a kilometer from the bustling train station.

"I don't want this to be merely the largest shopping mall in India," says Menon, 59, who established his reputation for quality by building palaces in the Gulf and most of the California-style campus for Infosys (Charts), the Bangalore tech giant. "This should be a one-of-a-kind experience for the shopper - never to be forgotten, always to be relived and to come back to again and again."

Although relatively small by global and even regional standards - the South China Mall in Dongguan, China, with 7.1 million square feet, is the largest in the world - the Sobha Global Mall promises to set new standards in a country that already has 100 malls of more than 200,000 square feet. That number is expected to increase to 350 in the next two years as retailers, both domestic and foreign, seek to bulk up their operations in India.

Wal-Mart (Charts, Fortune 500) recently inked a deal with India's Bharti to open a chain of superstores, and Reliance Industries is spending $5 billion to expand into the retail sector. "There are so many global brands, such as Burger King (Charts) to Taco Bell to Chili's, waiting to enter India," says Bikash Kumar, managing director of Integrated Retail, an Indian retail and technology-services company. "To break even, stores have to see top-line sales of $1 a square foot a day. They believe they can achieve this here in India."

Not everyone is so upbeat. "Building the largest mall doesn't necessarily mean it will be successful," says Atul Mahajan, principal consultant at Technopak, a management consultancy in Bangalore. "There are so many huge malls that are almost empty in China. You need a right mix of tenants for it to be successful."

Menon won't reveal which, if any, retailers have committed to opening stores in his mall. All he will say is that they will include some of the world's best-known names in retail and perhaps his own branded chain of home stores, which he is launching soon. But judging from his previous work, he won't have any trouble attracting quality merchants.

A native of Kerala, in southern India, Menon moved to Oman when he was 24 to redo the interior of a photographer's small studio. He went on to make a fortune building luxury hotels and resorts in Dubai, Oman, Egypt and France and started taking on projects in India only a decade ago.

Sobha is the only company in India and possibly the world that makes almost everything that goes into its buildings - from concrete blocks to electrical and plumbing fittings to doors and windows and metalwork parts made at its Bangalore factory. "It is this backward integration," Menon says, "that gives us absolute control over quality at every level."

That attention to quality impressed Narayana Murthy, chairman and chief mentor of Infosys. "Menon is the first builder with a world-class quality that I have come across in India," says Murthy, who hired him to construct a number of architecturally distinctive buildings on the company's Bangalore campus. "He is an artist." Menon has also built Hewlett-Packard's (Charts, Fortune 500) training center in Bangalore and is putting up a new factory for Dell (Charts, Fortune 500) in Chennai.

Will he be able to translate his artistry to the world of retail? That depends, says N.G.N. Puranik, director of Enam Financial Consultants in Bangalore. "If India is able to sustain a GDP growth rate of 8 percent, the demand would definitely be there," Puranik says. "But they have to invest in the back-end infrastructure - supply chain, logistics and warehousing - not just the front end."

Menon, whose quiet manner belies his obsession for perfection, doesn't seem the least bit worried. "India," he says, "will never have a deficit of shoppers."

 

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Displaying the hallmarks of a rapidly expanding economy
Ashling O’Connor
From The Times
September 22, 2007

The investment arm of LVMH, the French luxury goods maker, will spend up to €500 million (£348 million) acquiring and investing in brands in India, according to one of the company’s regional executives.

L Capital Partners will make the substantial investment in the sub-continent as part of a €1 billion private equity fund for emerging markets in Asia to be launched in the next 12 months.

Mainstream investment projects include retail chains and jewellers and, in the alternative sector, Ayurvedic medicine producers and spas will be targeted. The group is already in talks with Hidesign, an Indian handbag and accessories designer, about taking a 20 per cent stake.

Ravi Thakran, group president of LVMH’s operations in South Asia, said: “We are looking to invest in retail, and brands of Indian origin.” He added that Group Arnault, LVMH’s holding company, would also invest in Indian property.

The move comes amid an explosion in the luxury goods sector fuelled by India’s increasing affluence and a foreign investment environment that allows single-brand retailers to own 51 per cent of the equity in an Indian operation. LVMH, which owns TAG Heuer and Moët & Chandon, has two shops, in Delhi and Bombay.

This month it emerged that Louis Vuitton, its flagship brand, plans to build a shoe plant in India, the world’s largest manufacturer of shoes after China. The factory, near Pondicherry, would be LVMH’s first in Asia and would only attach soles to the shoes, enabling the company to retain its Made in Italy kitemark.

 

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Ready to read - Vogue India goes after the wealthy woman
Ashling O’Connor in Bombay
The Times
September 22, 2007

The affluent women of Asia’s third-largest economy have finally been given access to the latest fashion news and gossip with the launch of an Indian edition of Vogue.

The launch marks Condé Nast’s entry into India, where the publisher believes there is an underserved, cash-rich consumer base and significant revenue potential in one of the world’s fastest-growing advertising markets. The magazine has an initial print run of 50,000 copies and is anticipating a readership of about 250,000.

The English-language edition bears a cover price of 100 rupees (£1.25) and will feature international and Indian fashion, travel, health, music, food, society and culture.

Most of the content will be commissioned in India, although articles could be syndicated from across Condé Nast’s stable of 120 titles. It will be edited by Priya Tanna.

The first-edition cover was shot by Patrick Demarchelier, the French-born fashion photographer who also did the first China edition in 2005.

Vogue’s launch on the sub-continent coincides with a growing international interest in Indian designers, but is late compared with its rivals. Elle, the largest-selling women’s magazine with a monthly circulation of 20,000, entered the market a decade ago. Cosmopolitan, Marie Claire, Seventeen and OK! also have a presence. But many foreign magazines, including Elle, are published by local partners under licensing deals because of market restrictions that existed when they launched. Although Condé Nast has had its eye on India for many years - Nicholas Coleridge, its Old Etonian managing director, has strong personal connections with the country – it did not execute an entry strategy until the Government’s decision in 2005 to allow foreign media groups to own 100 per cent of nonnews publications. Vogue India is a wholly owned subsidiary of Condé Nast International.

“It helps you invest more and you have control of the brand and its destiny,” Alex Kuruvilla, Condé Nast India’s managing director, said.

The company plans further magazine launches. The next in line are GQ and Glamour. Within three to four years, it will have five titles in India.

A glitzy launch party today, attended by the world’s fashion elite and the best of Bollywood, will give Vogue India a high-profile inauguration. But it faces challenges in a fragmented market that has seen foreign magazines struggle to attain significant circulations relative to the country’s size. Condé Nast insists the market is there for the taking. Its research shows there are about one million homes in India with an annual income of more than $100,000 (£50,000), representing the same number of women with the potential to buy high-end clothes and accessories.

With the law allowing foreign investors economic control of single-brand retailing operations, top-end fashion houses such as Dior, Chanel and LVMH are an increasingly common sight in big Indian cities. This is changing the perception that Indians need to travel abroad to buy the most desired labels.

The first edition’s advertising space – costing up to $10,000 for a premium page – was a sell-out, Mr Kuruvilla said. “Luxury brands see India as a long-term opportunity,” he added. “Jean Paul Gaultier was here recently ahead of his own launch and Gucci just opened. The timing could not have been more provident for us.”

 

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Asia Economies To Overtake As Western World Is Unprepared
by Stewart Douglas
Investment Markets, UK

The more developed global economies are not doing enough to keep up with the rise of India and China as economic superpowers, which could lead to significant global economic problems, according to a speech made today by a former president of the World Bank.

The richer economies have not yet adapted to the fact that the global power shift is headed towards the emerging giants in the East, and this could bring significant problems, according to James Wolfensohn formerly of the World Bank.

He also added that China and India would succeed as the number one and two global economies in terms of wealth and size by as early as 2040, leaving traditional superpowers trailing in their wake.

China has seen significant economic growth over the last few years, strongly trumping the rate of any other global economy. With growth figures exceeding double digits for several consecutive years, analysts are forecasting that at present rate China will soon overtake the US at the top of the world economic leaderboard.

Likewise, India has seen massive growth, largely as a result of a developing services sector through outsourcing from currenty large economies like the US and Europe.

Whilst the growth is set to continue in India for the foreseeable future, some analysts are predicting that it will require clever economic management to maintain India at its current level of growth, particularly with cheap labour being their most valuable commodity at present.

However both economies are currently contending with the problems of inflation, which has called for significant interest rate hikes which could affect growth in the medium term.

Wolfensohn criticised the ‘colonial’ attitudes of Western economies to the emerging Easter powers for leaving many established economies unprepared for the ‘tectonic shift’ the global balance of power will see over the coming decades.

 

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Indian mobile phone subscribers pass 200m mark ​

Sunday, September 23, 2007

NEW DELHI: The number of Indian mobile phone subscribers has passed the 200 million mark after the country added another eight million customers last month, industry figures show.

India’s wireless market, the world’s fastest growing, attracted a further 8.31 million wireless subscribers in August to touch 201.29 million users, according to figures from the Telecom Regulatory Authority of India (Trai) on Saturday.

The latest mobile milestone comes just over a year after India crossed the 100-million subscriber mark in May 2006.

At the end of August, India had 241.02 million telephone subscribers in total, compared with 232.87 million at the end of July.

The country’s teledensity the number of people owning a telephone out of every 100 people rose slightly to 21.20 percent by August-end compared with 20.52 per cent by July-end, the data showed. Among the wireless operators, India’s top mobile company Bharti Airtel added 2.05 million users in August, taking its subscriber base to 46.8 million.

The fixed-line segment stood at 39.73 million subscribers at the end of August while broadband connections rose by 90,000 to reach 2.56 million.

India’s mobile revolution is mainly confined to the cities, but the real prize for phone companies is the vast rural market, where nearly 70 per cent of India’s 1.1 billion population live, analysts say.

The government is aiming for more than half a billion mobile phone subscribers by 2010.

By the end of 2008, three-quarters of India’s population will be covered by a mobile network. Many of the people in these new areas to be covered by mobile networks live in poor, rural districts with scarce health and education facilities and high illiteracy rates.

Indian mobile phone subscribers pass 200m mark

 

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India's Davos economy​

By Shashi Tharoor

21 September 2007

15 years ago, India had to mortgage its gold in London because the foreign exchange coffers were dry. Today, it has $140 billion in foreign reserves.

I DIDN'T GO TO Davos this year, but I've seen a list of the Indian delegates who did. They're a "Who's Who" of our country's business and industry, with an impressive sprinkling of top politicians and bureaucrats alongside.

It was not quite the A to Z of the Indian economy, but the A to V - the list ran from "Adi" (Godrej) to "Vilasrao" (Deshmukh, the Chief Minister of Maharashtra). Amongst the 67 names on the list were enough movers and shakers to cause a small earthquake, and the number of zeroes in their collective net worth would probably fill the rest of this column.

But impressive though that is, it's not the whole story of the Indian numbers at the World Economic Forum. I asked a prominent NRI businessman I know why he didn't go this year. "Oh, I did," he said. "But since I'm based in London, I'm not included in the Indian list."

The Indian presence in Davos is emblematic of a larger transformation in India, and in the way India is perceived internationally. It reflects the discovery of India by the world's financial markets.

When I first went to Davos in the early 1990s Indians were present, of course, but they bore the faint whiff of the exotic minority, noticeable but hardly worth noticing. The annual Indian reception thrown by the CII in those days was a semi-forlorn affair, overpopulated by official desis in bulging bandhgalas wolfing down samosas and beverages.

Today it's the hottest ticket in the town of the Magic Mountain; the lines of well-heeled international businessmen queuing up to shake the hand of Finance Minister Chidambaram are reminiscent of those involving ticket-holders to the World Cup final. Indians are sought after because India, indubitably, matters to the world.

And why shouldn't it? India's gross domestic product will rise by 9.2% this financial year, which means that India is annually becoming richer by more than $200 billion, an increase in one year that exceeds the total GDP of Portugal or Norway.

The level of investment in 2006-07 crossed 40% of GDP; just five years ago, it stood at 25%. If McKinsey are to be believed, some nine million jobs may be moved to India from the developed West in the next eight years.

India's foreign reserves have exceeded $140 billion, enough to cover 15 months' worth of imports; fifteen years ago, the country had to mortgage its gold in London because the foreign exchange coffers were dry.

The speed of India's growth is so remarkable that the IMF this year even warned of the risks of the economy "overheating". In Forbes magazine's published list of the world's billionaires, 27 of the world's richest people are Indians, and even more surprising, only four of them live abroad: Indian wealth is staying in India, and it's growing.

Of course, a rather large portion of the world's poorest people live in India too, and you don't need to go to Davos to meet them. Our country's poor live below a poverty line that seems to be drawn just this side of the funeral pyre.

And yet, for all the tragic news of farmers committing suicide and the undeniably sad sight of human beings reduced to begging on our city sidewalks, there have been positive developments here too.

In 1991, 36 per cent of India's population (in those days, 846 million people), lived on less than one dollar a day, the World Bank's classic measure of absolute poverty. That added up to nearly 305 million people, giving India the dubious distinction of being home to the largest collection of poor people in the world.

In 2001, our population had grown to 1.02 billion people, but after a decade of economic reforms, however fitful, the percentage of those living on less than a dollar a day had fallen to 26%, or some 267 million people.

In other words, even though India had added 156 million more people to its population in the decade between those two censuses, the number of poor Indians had actually fallen by 37 million. The liberalised and liberated Indian economy had, in effect, lifted 94 million people out of absolute poverty in 10 years - a feat on a scale that no country on earth, other than China, had ever accomplished.

TODAY, FIVE YEARS later, estimates of people below the poverty level stand at 22 per cent. Economic growth is steadily chipping away at poverty, and it is doing so far faster than in the first four decades of Independence, when statist economic policies ruled the commanding heights in Delhi.

None of this is grounds for complacency. We still have a long way to go; 22% is still 250 million people living in conditions that are a blot on our individual and collective consciences.

We must take the necessary steps to ensure that every Indian is given the means to live a decent life, to feed his or her family, and to acquire the education that will enable him or her to fulfil their creative potential.

As an Indian, I'm chuffed at India's prominence at Davos, but to me that's not the most important measure of the country's international standing. I'm much more proud of the fact that India has shown a willingness to use its new-found prosperity to benefit others: it's an article of pride, for instance, that the Government has written off the debt owed to it for years by African countries.

Let us celebrate, too, the fact that India was quick to respond to the devastation that followed the tsunami and helped lead international relief efforts in Sri Lanka even though Indian victims needed attention.

India must show the world that it can go to Davos and stay true to its soul as well.

Khaleej Times Online - India's Davos economy

 

[Marathaman]

BELGRADE: An Indian company looking to cash in on eastern European "near-sourcing" has signed a deal here to construct an IT park that Serbia hopes will become the biggest on the continent.

The deal with Bangalore-based property developer Embassy Group was potentially worth up to 600 million dollars (425 million euros) over five years, which would make it Serbia's biggest ever greenfield investment, said Economy and Regional Development Minister Mladan Dinkic.

Greenfield projects are implemented from the ground up by an investing company on sites where there had been no previous activity. "I'm very satisfied ... that today I signed a memorandum of understanding for the construction of the first IT park in Serbia and, I'd say, the future biggest technology park in the whole of Europe," Dinkic told a press conference.

Initially, the technology park would occupy 280 hectares (690 acres) of land in an industrial zone of the northern town of Indjija, where it would employ around 2,500 IT professionals, said Dinkic.

However, depending on client uptake, it could be expanded during the next five years to offer global IT companies 250,000 square metres (2.7 million square feet) of office space for up to 25,000 employees, he added.

Embassy Group chairman Jitu Virwani welcomed the agreement for the project, which he said had already attracted interest from some of its biggest clients, such as IBM and Hewlett-Packard.

"We've been looking for an east European country, mainly from the perspective of having some of our clients from the IT sector to be servicing the eastern European market," Virwani said at the end of the signing ceremony.

"After a lot of research, we found Belgrade to be highly suitable for the needs of our clients, more from the perspective of costs.

 

[Bushroda]

Powerful dash of new spice
Greg Sheridan, Foreign Editor
The Australian, Australia
October 06, 2007

IN India, as in China, it's sometimes the raw numbers that tell the story. There are more than 200 million mobile phones in India.

And seven or eight million new phones are sold each month. With more than 1.1 billion people, India is already the world's second largest nation and its largest democracy

By 2030, or thereabouts, India will overtake China as the world's most populous nation. And its population is so much younger than China's that it will keep expanding for many more decades than its giant neighbour. India's army is the second largest in the world.

India's trillion-dollar economy is growing at the breakneck speed of 9per cent a year. Measured by parity purchasing power, India's is already the world's fourth largest economy. Measured by existing exchange rates, India's is the 10th largest economy. Either way, it's very big and getting much bigger, fast.

These figures could go on and on. They are not the whole story. They are a part of it, a large part, certainly. But there is much more to India's rise as likely one of the great superpowers of the 21st century.

That rise is historic in ways that are not generally understood. It is the first we've seen of a democracy, especially a democracy with global cultural power, since the US 100 years ago. Japan is the nearest other case. It first rose as a democracy in the first part of the 20th century, but its democracy was quickly distorted by militarism. Japan emerged after World War II to become a huge economy, but it was a strategic client of the US, and its foreign and security policies, and its projection of itself, were anemic, in part due to the need to live down its war record.

India, on the other hand, is nobody's strategic client and its projection of itself is by no means anemic.

Like the US, India will eventually shape the world we live in. This will happen in terms of hard power and soft power. This can seem hard to believe, given the enormous contradictions of India. It's true nonetheless.

But first, here are some of those contradictions, in four images that will long stay with me after two weeks in India. It is just after dawn and I am catching the Shatabdi express train from New Delhi to Amritsar, from where I will journey to the border with Pakistan. Inside the first-class carriage of the Shatabdi, things are a little scruffy but perfectly modern. The cabin is airconditioned. Friendly attendants serve tea and breakfast. Mobile phones are buzzing. Some people have laptops plugged into power sockets in the carriage wall.

But at the edge of the station platform, just as we are pulling out and just after we've left the station, are piles, metres high, of undifferentiated rubbish. Amid all this rubbish, dozens of people are living.

One of them strikes me particularly, a comely woman, in a brightly coloured sari, lying back on a pile of ***** as though it's the sofa in her living room, and it is.

On another day I join a group on a walking tour of Old Delhi.

I join the group at the Turkoman Gate. Outside the gate, still in New Delhi, is a modern city -- noisy, cacophonous, car and truck horns blaring ceaselessly.

But step a few metres inside the Turkoman Gate and you seem to have stepped back 500 years. Donkeys are carrying loads of earthen brick, every other household has a goat tethered in the street. The streets and lanes narrow at points to the width of a single person. I go to see a mosque built in the 1300s, and find myself standing in the middle of someone's lounge room, so unimaginably crowded are the living spaces.

On another occasion a friend gets me invited to a huge dinner at the New Delhi home of one of India's leading commercial families. The house and grounds are straight out of Bollywood.

There is a long, low, white bungalow, a vast and perfect green lawn and a generous buffet dinner under a huge marquee.

But it is image No4 that is most important, and it is here that I may have discovered the soul of the new India. I spend one day at the New Delhi suburb of Gurgaon. If the traffic is good, Gurgaon is about a 40-minute drive from the heart of New Delhi. Soon it will be an even easier commute, for a metro line is being built.

Gurgaon is home to many of the overseas call centres that have moved so many jobs from the First World to India. These are mostly middle-class jobs, not the super hi-tech IT high-flyers, though Gurgaon has its share of those too, and a manufacturing base.

All over Gurgaon, building is taking place at a frenetic pace. There is talk of a dozen new top-line hotels. Huge apartment blocks are going up all over the place. These are not the drab, concrete monoliths of India's Soviet-influenced past, but gaily decorated, stylish buildings with faux minarets and domes and decorative balconies. These buildings, with their spacious grounds, have names such as Belvedere and Woodlawn.

Beyond the apartments, I drive into a slice of California, a gated community of attractive but by no means lavish suburban bungalows. The gardens are green, and lovingly tended, the sidewalks are neat, a school bus drops off little girls in crisp, neat uniforms, their day's lessons complete.

Gurgaon's real glory lies along MG Road, which is home to a seemingly endless line of shopping malls. All glass and swagger, these could have been relocated from Sydney's Chatswood or Melbourne's Doncaster. Most telling of all, they have clean toilets. These shopping malls are the quintessence of bourgeois living.

In Gurgaon I witness the emergence of an authentic Indian middle class. No one will find mystical India in Gurgaon's shopping malls. The only things you chant there are brand names or drinks orders at Ruby Tuesday. But Gurgaon is the vision splendid of the Indian soul, the promise of a decent life for millions upon millions of people.

The world is taking notice of India at last, not for its mystical soul but its booming economy. But it is not just the economy. It is the combination of India's hard power and its soft power which at every point will make it so formidable, which makes its rise potentially comparable with that of the US.

The obvious factors compelling the world to take notice are India's economy, its military power and its nuclear deal with the US. But it is India's soft power that is most distinctive and that acts as a vast force multiplier to its hard power. Soft power is the ability of a country to get others to do what it wants without the use of force or the direct expenditure of money.

India has this in abundance. India is a democracy and its success as a society is immensely important to the prestige of democracy. But India is also diplomatically and politically far more powerful just because it is a democracy. It is inconceivable, for example, that the US would do for anyone else the nuclear deal it is doing for India, a deal in which the entire global nuclear governance regime is being revolutionised.

For India, like the US, its political character is a central component of its soft power. But India's soft power does not end there. It has a worldwide diaspora of 20 million, many of whom are immensely rich and powerful in their own right, and who look on India with great political and cultural fondness.

Indians form the most successful ethnic community in the US and their support has been critical to the nuclear deal.

India also has a huge cultural presence in the Western imagination. The ethical inheritance of Mahatma Gandhi is incomparable, and nearly universally recognised.

Culturally, India has colonised Britain. London is now a common cultural space with India. Former British foreign secretary Robin Cook nominated chicken tikka marsala as the English national dish.

The England cricket team, though still not up to much, always has a few Indian members. David Beckham became a star in the US because he was mentioned in the title of a smash hit, the Anglo-Indian film Bend it Like Beckham. The Indian star of that film went on to star in the US television series ER.

Increasingly, the Indian diaspora is centred on the US. This is showing up in exquisite recent films such as The Namesake. Indian writers such as Vikram Seth and Rohinton Mistry and countless others are part of the Western mainstream. The Indian film industry, intensely popular in many nations, is a force to rival Hollywood. Thus, through films and novels and much else, millions of Westerners experience Indian culture intimately and positively.

If we are not yet living in a world made in India, we are increasingly inhabiting a world imagined by Indians. It can only get more interesting as new spices are added.

 

[Flintlock]

'Made in India' rising to challenge China: Report

NEW DELHI: "Made in India" could be the next big economic story with the country challenging China's position as the leading global manufacturing hub within five years, says a new report.

Right now China is the favourite choice for outsourcing manufacturing while India is preferred for information technology, finance and customer services, said Capgemini, Europe's largest computer consultancy.

But "there's a very keen interest in moving more manufacturing to India," said Roy Lenders, vice-president at Capgemini Consulting Services and the report's author.

In fact, "India could challenge the position of China as the manufacturing centre of the world in the next three to five years," Lenders said, citing a survey of 340 mainly Fortune 500 global manufacturing companies.

"What surprised us was when we asked about their plans for the next three or four years, they said outsourcing manufacturing (to India) was a higher priority than outsourcing back office work," he said in a telephone interview from Utrecht in the Netherlands.

"If we look at the respondents' plans for the coming years, manufacturing will become the number one activity to be off-shored to India," Lenders said, with lower costs the key factor driving the trend.

Right now, China's share of the world's manufacturing exports is more than eight percent while India stands at just under one percent.

But "the interest of global manufacturers in manufacturing in India is very high compared to China. In terms of trend there will definitely be a move. China has a reason to be worried," Lenders said.

However, India must improve its infrastructure with nearly half of the firms surveyed that had already outsourced manufacturing to India complaining about a lack of manufacturing and supply chain infrastructure.

India's ramshackle infrastructure of potholed roads, dilapidated ports, shabby airports and erratic power is regularly cited as an obstacle to economic growth along with the maze of red tape.

It has already taken some steps to promote an export-led manufacturing boom by setting up special economic zones or SEZs -- havens of economic freedom that drove China's industrialisation.

But even more "substantial investments" need to be made, Lenders said. The lead factor driving India's new manufacturing popularity is price, he said. Some of the main manufacturing sites in China are becoming too pricey.

Chinese manufacturing wages are 250 to 350 dollars a month whereas they average 100 to 200 dollars per month or lower in Thailand and other parts of Asia. In India factory jobs start at 60 dollars a month.

Analysts often point to South Korea's Hyundai Motor's one-billion-dollar car plant in the southern city of Chennai which opened in 1998 and turns out thousands of export-bound cars annually as an example of what could be the future for the Indian economy.

Hyundai has been moving production of its smallest cars to India to exploit lower costs. Now other firms have followed suit.

India's Auto Components Manufacturing Association expects global sourcing of parts from the country will double to 5.9 billion dollars next year and hit 20 billion dollars in seven years.

All the international players "are looking at India as the new sourcing hub," said association vice-president JC Chopra. Others setting up manufacturing facilities in India include Finnish telecom leader Nokia, South Korean steel heavyweight POSCO and US computer giant Dell.

And the companies don't only have their eyes on foreign markets. India's huge domestic market of 1.1 billion people is also a draw along with its push to boost infrastructure.

"India is building like hell, improving its infrastructure, so a lot of suppliers would like to be there," said Lenders.

 

[solid snake]

Soaring Indian rupee in ‘uneasy’ zone​

NEW DELHI, Oct 13: India’s finance minister has said unprecedented foreign investment flows into the rapidly growing economy have pushed the rupee higher into an “uncomfortable” zone.

Finance Minister P. Chidambaram said the country was having problems in handling the rush of funds.

“We must find ways to manage a competitive exchange rate without hurting investments,” Chidambaram told a conference organised by the Hindustan Times newspaper late on Friday.

The rupee is in an “uncomfortable zone,” he said.

Lifted by a tide of overseas money into domestic shares following a cut in US interest rates last month, the currency strengthened beyond the psychologically key 40 rupees to the dollar barrier.

“This is a new situation,” Chidambaram said. “But we are not alarmed by it.

We will gain mastery.”

The rupee finished the week Friday flat against the dollar at 39.3, a nine-and-a-half year high.

Dealers say the central bank has been buying dollars to restrain the rupee’s rally and protect exports which have been slowing.

But analysts say there is relentless upward pressure on the rupee and expect it to gain further as foreign investors buy shares and pour money into plants and infrastructure projects to exploit the booming economy.

As of Friday’s finish, the benchmark Bombay Stock Exchange Sensitive Index, or Sensex, had gained nearly 34 per cent this year, led by record net overseas fund inflows of $16.54 billion.

Some analysts say the rupee could be at 38 to the dollar by mid-next year or even lower. The rupee has already risen by over 11 per cent this year against the dollar, making it Asia’s best performing currency.

Chidambaram said as long as investors were getting good returns “I don’t believe they are waiting to take their money out.”

The benchmark Sensex stock exchange index has risen over 15 per cent since the US Federal Reserve cut interest rates by 50 basis points on September 18.

“The liquidity outlook for India equities remains positive... but the magnitude remains excessive by historic standards,” said Bharat Iyer, head of equities at J.P. Morgan Chase.—AFP

Soaring Indian rupee in ‘uneasy’ zone -DAWN - Business; October 14, 2007

 

[tyagi]

Emission cut to cost India $2.5 trillion


GOA: It could cost India a whopping $2.53 trillion in investments to reduce greenhouse gas emissions by 9.7% by 2036 if 1990 emissions levels are taken as the baseline. Worse still, undertaking technological changes that help increase efficiency in the way India uses its fossil fuels (like petroleum which emit GHGs) will become extremely exorbitant.

This startling figure has been thrown up by studies being carried out and commissioned by the Indian government to understand the impact of climate change and its mitigation. The revelations were made by Dr Prodipto Ghosh, retired secretary of the environment and forests ministry, speaking at a conference organised by The Energy and Resources Institute and KAF, a Germany based think-tank and funding organisation.

While there was some scepticism about the figure, the meeting saw an emerging consensus among the gathered experts that the toll such emission cuts and adoption of new technologies would take is huge. “If India undertakes any kind of commitments under the UN framework on climate change, it is bound to hit Indian economy,” said a key Indian negotiator on the sidelines of the meeting. Developed countries have begun a loud campaign demanding that India and China too undertake some kind of binding targets to cut emissions just like the developed countries do under the existing regime.

TERI has been commissioned by the environment ministry to bring out a white paper on climate change ahead of the critical UN conference of all countries on climate change in December. Dr Ghosh, speaking at the meeting, said that the amount needed for abatement of climate change causing gases under existing technological innovations would be so massive that it would exceed the GDP of all countries except Japan and the US at 2004 levels.

Also based on computations made at TERI, taking into account data and methods also used by the International Energy Agency, France, the cost of demanding high levels of efficiency from the manufacturing sector from India could hit Indian economic growth beyond a limit. The calculations show that India could achieve another 3% efficiency in its total energy consumption methods without pinching its growth but any further push to increase efficiency would hurt the economy and future growth.