Indian Economy - News & Updates - Archive

[Bushroda]

Luxury living rises from the slums
Ashling O’Connor in Bombay
The Times, UK
January 2, 2008

A flagrant style of luxury living is springing up above Bombay’s densely populated slums for a select few prosperous enough to spend up to £5 million on a designer apartment.

Developers are targeting bankers, textile manufacturers, retailers and IT entrepreneurs made rich by a surging economy to sell them their urban residential projects where sky gardens, whirlpool spas, high-speed personal lifts, fingerprint entry and Philippe Starck bathrooms are the norm.

During the next two years at least 16 luxury developments will open across the country as a standard of living once limited in Asia to financial hubs such as Hong Kong and Singapore comes to India.

The country’s most expensive flat, costing £5.3 million, can be found in Bombay. Demand for quality housing in the city far outstrips supply, and Bombay is the seventh most expensive place in the world to buy an apartment, according to the Global Property Guide, despite half the 18 million population living in slums without a lavatory or running water. Thousands of construction workers bustle around the foundations of Lodha Bellissimo, a 48-storey tower overlooking the race-course. Despite being nine months from completion, nearly all the 300 homes have been sold. Abhisheck Lodha, the developer, said: “It’s important for people to feel exclusive. Their address is a status symbol in their social circles. Where you live defines who you are.”

Ranging from £630,000 for a three-bedroom flat to £2.5 million for a penthouse, the apartments have sun-decks, Italian marble floors, motion-sensor lighting, Poggenpohl kitchens and air conditioning that can be remotely controlled by mobile phone. The building further boasts a cricket pitch, valet parking, library, business centre, yoga pavilion, banquet hall and 18,000 sq metres of gardens.

“The amenities and open space are unique to Bombay,” said Vijay Chandok, 39, a banker who has bought a flat in the complex. “There is a clear aspiration for such properties and that is only going to increase.” As India’s economy has grown at an average of 8 per cent during the past five years, so too has the pool of people able to afford a Western standard of designer living. There is not an expat in sight.

Piyush Pandey, executive chairman of Ogilvy & Mather in India, has bought a three-bedroom flat in Bellissimo for himself, his wife and their dogs. “The whole infrastructure takes you one level up in your quality of living. It’s about comfortable living with like-minded people,” he said.

By far the most extravagant residence in postindependence times is being built by Mukesh Ambani, chairman of Reliance Industries and India’s richest man, who is spending $1 billion (£503 million) recreating the mythical island of Antilia in downtown Bombay. The 27-storey glass-fronted skyscraper will include three helipads, a ballroom, a 50-seat mini-theatre and four floors of gardens. It is expected to be ready in September.

Desirable residences

— 84,000 homes are needed in Bombay each year; only 55,000 are provided

— India is the only country where house prices have risen by more than in the US

— Flats in south Bombay cost about three times their equivalent in Shanghai

— The world’s most expensive flats, at £84 million each, are being built overlooking Hyde Park in London

 

[Neo]

India to provide subsidy for solar power plants ​

Thursday, January 03, 2008

NEW DELHI: India will subsidise the running of solar power plants to help develop a renewable energy infrastructure, where high costs can be prohibitive, the minister for renewable energy said on Wednesday.

Renewable energy accounts for about 7.5 percent of India’s installed generation capacity of 127,673MW, a rate that compares favourably with much of the rest of the world. Much of this capacity is wind based, and the share of solar power is small.

“My ministry will provide financial assistance amounting to 12 rupees per kilowatt hour in case of solar photovoltaic and 10 rupees per kilowatt hour in case of solar thermal power fed to the electricity grid,” Vilas Muttemwar said at a press conference.

The private sector is expected to invest about 10 billion rupees in solar plants eligible for aid under the scheme during the five years to 2012, Muttemwar said. A maximum capacity of 10 megawatt (MW) in each of the country’s states and a maximum of five MW per developer will be considered under the scheme. Capital investors will not be allowed to apply, a statement from the ministry said.

Developers will sell electricity to state-run utilities and the incentives will be paid to them based on the tariff the utilities provide, the statement said. The incentives, for a period of 10 years, will be over and above any financial assistance provided by the states, said V Subramanian, secretary to the ministry.

India to provide subsidy for solar power plants

 

[Bushroda]

Tata Pulls Ford Units Into Its Orbit
By HEATHER TIMMONS
New York Times
January 4, 2008

LONDON — When Ratan Tata visited the home of the designer Ralph Lauren last autumn, the two auto enthusiasts spent much of the time in the garage, admiring Mr. Lauren’s car collection, including the Batmobile-esque 1955 Jaguar XKD.

Now Mr. Tata is poised to take over Jaguar.

Tata Motors said Thursday that it was beginning detailed talks with the Ford Motor Company about buying the Jaguar and Land Rover brands, confirming what investors and analysts in India, Detroit and Britain have anticipated for months. Tata said it intended to reach an agreement over the next few weeks.

For Mr. Tata, who is 70, the takeover will cap 16 years of transforming one of the world’s most diverse and unusual conglomerates, the Tata Group. Through 98 companies, Tata creates and sells products ranging from steel to tea to watches, making the company’s name ubiquitous in India. Under Mr. Tata, the name has started to reverberate around the globe as well.

A string of international deals has diversified Tata to the point where more than half its revenue this year will come from outside India. Tata’s increasingly global outlook is also bolstering the overseas ambitions of other Indian companies.

Going overseas was necessary, Mr. Tata said. In the late 1990s, the group’s truck unit recorded a loss that was the “biggest in Indian history,” he said in a recent interview in Tata’s headquarters in the leafy, historical Colaba district of Mumbai. “We were so dependent on one economy,” he said. “I decided we needed a broader view.”

Since then, Tata has done dozens of deals, buying businesses as diverse as the Tyco Global Network; Daewoo Commercial Vehicles; the Moroccan chemical company Imacid; Tetley Teas; and, most audaciously, the $11.3 billion takeover of the British steel maker Corus last year, a company several times the size of Tata Steel. The group’s 27 listed companies have a market cap of over $70 billion, and the group reported after-tax profit of $2.8 billion in the last fiscal year — a 33 percent increase from the year before, in part because of the Corus acquisition.

The latter deal garnered Mr. Tata some rare criticism, with analysts wondering if he had taken on too much. Corus “came to us, we didn’t seek them out,” Mr. Tata said, and it was a deal he could not pass up. In “one swoop we were in Europe, where we weren’t before,” he said. “That opportunity was going to happen once, and it was not going to happen again.”

The Tata Group is an unusual corporate enterprise. Started in 1868 by Jamsetji Tata, one of India’s dwindling group of Parsis, the group has often seemed to value employees as much as profits (paying laid-off Tata Steel employees for the rest of their lives when the company made cuts, for example), and has prided itself on fair practices, rather than cut-throat maneuvering or paying bribes, a practice still prevalent in some of corporate India.

Indeed, Mr. Tata seems the most unlikely of corporate titans — almost preternaturally humble, unabashedly open about the company’s mistakes and about the fact that he never really wanted to be an industrialist. He studied architecture at Cornell University. After decades of working for the family business, he says he is considering opening a small architecture firm when he retires.

He is a distant relative of the founder — his father was adopted by the wife of one of Jamsetji’s sons. Never married, he lavishes attention on his dogs, writes thank-you notes to employees who do him favors, and is often spied on Sundays driving alone on Marine Drive in Mumbai in one of the several cars he owns.

“None of us observers of the Tatas could have predicted that he would grow and blossom the way he has and be in total charge of the company the way he has,” said R. M. Lala, the author of several books about the family and companies, and a onetime director of the Tata Trust, a charity that finances health care and education projects in India. Other executives and companies may have made more money in India, Mr. Lala said, “but Tata is still the most respected name in Indian industry.”

As company chairman, Mr. Tata has been instrumental in carrying on the family legacy, and turning what was a loosely aligned group of companies that shared one name into a group with seven business lines and centralized management.

It is a business plan Mr. Tata developed in the most unlikely of settings — he spent three months at his mother’s bedside at Memorial Sloan-Kettering Cancer Center in Manhattan in 1981. At the time he was chairman of Tata Industries, then a small part of the group responsible for new ventures. When he was named chairman in 1991, he started reining in some of the company’s independently minded managers and giving the parent company sizable equity stakes in its offspring.

The process was not easy, Mr. Tata wrote with typical candor in a 2003 epilogue to “The Creation of Wealth,” a book about the Tatas.

“If I reflect on what these 10 years have been for me personally, they have been a mixed bag,” he wrote. “There is some satisfaction that I’ve seen the group come together in many ways,” he wrote, but “at the same time there is a sense of frustration at the resistance to change from many of my colleagues that I have seen through this period of time.” All in all, he wrote, “it has been a hard and sometimes unrewarding experience.”

Outsiders do not see it that way, though. The Tata family has been “all about building businesses and being far-sighted about it,” said Tarun Jotwani, the chief executive of Lehman Brothers in India. What Mr. Tata has done very well is be the strategic and ethical head, while providing a “culture of integrity,” Mr. Jotwani said.

Mr. Tata’s reign may come to an end soon — he says he is considering retiring after one of his pet projects, the $2,500 People’s Car, hits showrooms this year. Mr. Tata has no heirs, and there is no likely family member to take over his role, meaning the man who brought the Tata Group to the rest of the world may be the last Tata to run the company.

 

[Neo]

Reliance Power to raise up to $2.9 billion​

MUMBAI: Reliance Power, a unit of Reliance Energy, plans to raise up to $2.9 billion in what would be India’s biggest public offering, investment bankers said Friday.

The previous highest initial public offer (IPO) was by property giant DLF which raised 2.24 billion dollars last July.

Reliance Power will offer 260 million shares through the IPO or 10.1% of the company’s capital.

Reliance Power aims to raise between 105 billion and 115 billion rupees ($2.6 to $2.9 billion) through the offering, which will open for subscription on Jan 15, investment bankers said. The shares will be offered in the 405 to 450 rupees price band, they said.

Shares of Reliance Energy, India’s second largest utility by market capitalisation, have surged more than 32% to 2,510.3 rupees in the past month ahead of the IPO from its Reliance Power subsidiary.

The company has said the issue proceeds will be used to fund construction and development costs of various power projects of its subsidiaries.

Reliance Energy grew out of a split two years ago in the Reliance group that was sparked by a family feud. afp
Daily Times - Leading News Resource of Pakistan

 

[Neo]

China gains as Indian rupee strengthens ​

Sunday, January 06, 2008

KOLKATA: Indian exporters negotiating for a rise in product pricing following the strengthening of the rupee have had little luck with overseas buyers, who were now turning to Chinese suppliers for their supply, the Business standard newspaper reported the other day.

According to the findings of a national survey on issues plaguing Indian engineering exporters, conducted by the Engineering Export Promotion Council, 90 per cent of exporters who demanded a price hike from overseas buyers had their request rejected.

The main reason was the emergence of China as the alternative supplier for Indian engineering products globally.

In the survey, 58 per cent of respondents stated that they lost out to Chinese competitors on account of rupee appreciation.

Approximately 76 per cent of the respondents belonged to the ordinary category of EEPC members, with exports of over Rs60lakh per annum. The balance 24 per cent were associate members, with annual exports less than Rs60 lakh. A total of 13 questions were asked.

USA remained the most important single export market for firms which responded to the survey. The appreciation of the rupee against the dollar affected them considerably.

Half of the respondents shifted focus from exports to domestic market sales. In all, 19 per cent of respondents believed that the rupee appreciation would lead to decline in exports of products in the current fiscal.

As many as 81 per cent warned that the export growth rate in value terms would drop in the current year.

Also, 22 per cent said that the growth rate could fall by over a quarter. In fact, 59 per cent said exports growth could fall to 10-25 per cent this fiscal.

The survey revealed that firms were using a combination of measures like internal cost control and investment in new technology to combat the problem and stay afloat.

There was a shift to a more capital intensive and labour saving manufacturing process in the small and medium scale sector. This meant significant downsizing in labour force on account of rupee appreciation

The percentage of reduction in labour force was still less than 10 per cent in most cases as many exporters were still fulfilling long-term contracts and enjoying good domestic market sales.

China gains as Indian rupee strengthens

 

[Neo]

India’s largest IPO offering next week ​

Sunday, January 06, 2008

NEW DELHI: India’s Reliance ainitial public offering of shares next week in what could be the country’s largest listing yet, the company said.

Reliance Power is a subsidiary of Reliance Energy Ltd. and a part of the Anil Dhirubhai Ambani Group, a business conglomerate with interests spanning telecommunications, finance and entertainment.

The planned sale of 260 million shares is expected to raise nearly US$3 billion (euro 2.5 billion), with shares offered in a price band of 405 rupees to 450 rupees, company chairman Anil Ambani told a news conference in Mumbai on Friday.

The sale would, if it meets expectations, make it India’s largest initial public offer, or IPO, of shares.

India’s booming economy has seen several billion-dollar plus IPOs recently. Real estate company DLF Ltd. raised nearly US$2.3 billion (euro 1.65 billion) in June last year, while Britain’s Cairn Energy listed its Indian subsidiary on local stock exchanges last December, raising 58 billion rupees (US$1.4 billion) in Dec. 2006.

According to Forbes Asia Magazine, Mittal’s net worth totalled US$51 billion as on Nov. 2, while that of the Ambani brothers stood at US$49 billion and US$45 billion respectively.

The company wants to invest the money raised in the IPO in gas, coal and hydroelectric power generation projects in various parts of the country, Ambani said.

India’s largest IPO offering next week

 

[Neo]

India’s touted job welfare scheme struggling: report ​

Tuesday, January 08, 2008

NEW DELHI: Just three per cent of households signing up to a multi-billion-dollar Indian welfare drive promising 100 days of work to every rural family actually got such jobs, a report said on Monday.

India’s ruling Congress party had billed the drive as a “landmark” in its battle against poverty, but only 3.2 per cent of registered households had received employment for 100 days, the Indian Express newspaper said.

Most of those who signed up for the anti-poverty National Rural Employment Guarantee Scheme were employed for just over two weeks, the report said. The data came from a six-month internal audit of the programme, which was launched by the ruling Congress Party in 2006, the report said.

The audit cited widespread examples of corruption, inefficiency and misuse of funds for the poor performance of the programme. In one state, payments were made to deceased beneficiaries while another state claimed it had employed 600,000 people in an area with only 70,000 households.

The aim of the scheme was to employ one member of every rural household in areas such as water conservation, irrigation, flood prevention and road construction. Investment firm JP Morgan in a research report estimated the programme would cost India at least nine billion dollars. The Indian Express report put the plan’s current cost at about three billion dollars.

Prime Minister Manmohan Singh launched the plan in 2006, saying its aim was to remove “poverty from the face of our nation,” but there was no immediate comment from the government on the newspaper report.

India’s touted job welfare scheme struggling: report

 

[Neo]

French compressed air car set for take-off in India ​

Tuesday, January 08, 2008

CARROS, France: A car that runs on air? What seemed like a pipe dream may soon become a reality as Frenchman Guy Negre hopes versions of his compressed air car will be produced in India this year by Tata Motors Ltd after a 15 year quest for backers for his invention.

Negre believes the time is right for his design with oil prices at record highs and pressure on carmakers to improve the fuel efficiency of their vehicles. “It is clear that with oil at $100 a barrel this will force people to change their use of fuel and pollute less,” Negre told Reuters in an interview at his firm Motor Development International (MDI), based near Nice in the south of France.

“My car is zero pollution in town and almost no pollution on the highways,” he added, saying the vehicle could travel 100 kilometres at a cost of one euro in fuel. The former Formula One motor racing engineer’s invention depends on pressurised air to move the pistons, which in turn help to compress the air again in a reservoir. The engine also has an electric motor, which needs to be periodically recharged, to top up the air pressure.

French compressed air car set for take-off in India

 

[Neo]

India sees stable wheat output, rapeseed fall ​

Tuesday, January 08, 2008

NEW DELHI: India will produce 75 million tonnes of wheat in 2008 if temperatures are favourable in the run up to the start of the harvest in March, but rapeseed output may drop on lower acreage, a top farm official said on Monday.

Traders and analysts say wheat production at that level would trim the need for costly imports, helping global prices stabilise amid stretched supplies. But a fall in rapeseed production in the world’s second-biggest vegetable oil importer after China may lead to higher edible oil purchases and a spike in international prices.

“We will be able to achieve the expected production level of wheat but this will be subject to the temperatures in February and March,” Farm Secretary P K Mishra told Reuters in an interview.

India sees stable wheat output, rapeseed fall

 

[Neo]

After difficult year, Indian IT braces for US slowdown​

BANGALORE: After weathering a tough 2007, India’s flagship IT companies face the spectre of a US economic slowdown squeezing profits as they start unveiling earnings this week, analysts say.

Software firms such as Tata Consultancy, Infosys and Wipro were last year roiled by the rupee’s steepest appreciation against the dollar in three decades, surging wages and real-estate values and the end of a tax holiday.

Now come possible cutbacks in the information-technology budgets of US clients preparing to tighten their belts as a housing slump, tighter credit and high energy costs take their toll on the world’s biggest economy.

“The negative view is that US corporate budget growth will slow and we won’t see as much demand for outsourcing and offshoring as we saw last year,” said Suveer Chainani, technology analyst at Macquarie Capital Securities in Mumbai.

“Most people’s perception is drastically negative.”

Clues to the extent of the fallout may surface when Infosys, a Bangalore-based pioneer of the software industry, kicks off the corporate earnings season on Friday by announcing its fiscal third-quarter results.

Investors hammered the shares of IT companies last year as the bad news kept piling up. IT stocks trailed the benchmark Sensex by more than 40 percent in 2007 and analysts see no relief in 2008.

“The rising risk of an IT spending slowdown raises the hurdles on a 12-month view and we remain underweight Indian tech,” investment house CLSA said in report.

“Barring periodic deviations, we see absolute long-term annual stock returns of 10 to 12 percent, down from the heady 30 to 40 percent of the past,” CLSA analysts Bhavtosh Vajpayee and Nimish Joshi said in the report.

Sentiment remains negative although IT firms have remained profitable. TCS, India’s biggest software services exporter, reported a second-quarter net profit jump of nearly 23 percent to 12.51 billion rupees ($318 million).

Infosys saw its profit in the quarter ended September 30 rise 18.4 percent to 11 billion rupees. Wipro’s profit climbed 18 percent to 8.237 billion rupees.

The United States is the biggest market for Indian software and service exports, which jumped 33 percent to $31.4 billion in the year, ended March and are forecast by the industry grouping Nasscom to reach $60 billion by 2010.

The industry has been at the forefront of India’s strong economic growth, benefiting from work farmed out by cost-cutting global companies to take advantage of India’s vast engineering talent pool and low labour costs.

But last year took the sheen off the sector as it reeled from a 12 percent rise in the value of the rupee against the dollar, an 18 percent jump in wages and increasing rental costs and real-estate valuations.

The government also last year extended a 13.3 percent tax to export earnings. The tax previously only applied to local profits.

The rupee’s rise caused the biggest hit, reducing the local equivalent of every dollar earned by an industry whose expenses are almost all incurred in rupees.

“The rupee is the biggest issue because currency movements are not in the hands of the industry,” said Tejas Doshi, analyst at Sushil Finance.

According to Hiten Shah, an analyst at Angel Broking, every percentage point rise in the rupee shaves 30 to 50 basis points off the profit margin of Indian IT companies. In October, Infosys predicted the currency’s gain would wipe 20 billion rupees off revenue and 2.5 billion rupees off profit in the financial year to March 31.

Higher fees and business expansion as clientele grew helped make up for the currency losses, but a US slowdown may force US corporations to curtail spending and investment, including IT outsourcing budgets.

“There will be some ups and downs,” said Kiran Karnik, who heads industry body Nasscom. “But I get a sense the US has overcome the worst of its problems and will get back on track soon.”

“And the exchange rate will be reasonably steady — we’re not going to see the 12 percent rise we saw (last year) in the rupee,” said Karnik.

In the long run, Indian IT firms could benefit from a US slowdown as clients farm out more computer services work to low-cost locations, said Chainani at Macquarie Capital.

“When you’re in troubled times, you fly budget carriers instead of business class in a top airline,” he said. “Instead of building in-house IT capabilities and local sub-contracting, they’ll look more at offshoring and outsourcing to India.” afp

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Tata Motor’s 1 lakh car to be launched tomorrow ​

Wednesday, January 09, 2008

MUMBAI: Only 10 years ago, Tata Motors Ltd unveiled its first car, a hatchback, that established the truck maker’s credentials as a car-maker.

On Thursday, the $7.8 billion company unveils its boldest initiative yet, a car that will sell for just $2,500, less than half the cheapest car on the market. Dubbed the ‘People’s Car’, it will determine Tata’s place in the global automotive arena, where the battle is increasingly being fought in emerging economies such as India, China and Russia.

The new model, using re-engineered plastics and modern adhesives, is a far cry from the premium Jaguar and Land Rover bands Tata is negotiating to acquire from Ford Motor Co. Tata Motors’ drive to produce a cheap, no-nonsense, small car was born from close observation of a local market where millions often ferry families of four, plus baggage, on motorbikes and scooters.

Critics initially derided Tata’s 100,000 rupee, or 1 lakh, price target, more so as oil and steel prices rocketed. But global car makers have taken note and are scurrying for their own versions to meet growing environmental and cost concerns.

Tata Motor’s 1 lakh car to be launched tomorrow

 

[Logic note]

India pips China to take top slot in Asia PE race- Finance-Banking/ Finance -News By Industry-News-The Economic Times

India pips China to take top slot in Asia PE race
11 Jan, 2008, 1906 hrs IST,Thanuja B M , TNN

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BANGALORE: In a year which saw private equity (PE) investments in Asia decline by 21% to $42.4 billion, the Elephant has pipped the Dragon to pole position. For the first time, India stood first on the Asian PE chart in terms of deal value aggregate, garnering $9.9 billion in PE investments from 290 deals in 2007. China was second with $9.5 billion, followed by Taiwan with $5.8 billion.

In Asia (including Japan), India has been fourth in investment volume for the 2004-2006 period when the country has seen huge strides in this segment. Incidentally , Japan which has been the numero uno since 2003, except for last year when Australia topped the charts, dropped to sixth place with $3.2 billion, according to Centre for Asia Private Equity Research data.

However, it must be mentioned here that Indian PE trackers have pegged the total investment into India in 2007 at a much higher figure — about $14 billion across 390 deals. Says Centre for Asia Private Equity Research MD Kathleen Ng, “For the first time in 2007, India led all other markets in recording the largest deal value aggregate as well as the number of deals, boasting $9.9 billion and 290 deals respectively. These two figures represent 23.5% and 42% of the overall deal value and number, respectively.”

She adds that foreign investors’ level of confidence in India was reflected in the first $1-billion deal for the first time while no deals in China reached seven digits in dollar terms during 2007. This landmark transaction led by Temasek Holdings, Investment Corporation of Dubai, Goldman Sachs, Citigroup and Australia’s Macquarie Bank was with Bharti Infratel, an infrastructure services provider and subsidiary of Bharti Airtel.

In 2007, the Asian PE industry (including Australia and New Zealand) saw an additional $36.4 billion of fresh capital into the market. China led in recording the largest pool of new capital, at $6.9 billion, followed by India, which garnered $5.3 billion of fresh capital. For the first time, both China and India recorded their respective billion dollar fund.

However, PE investors encountered setbacks in deal making, as the 2007 deal value aggregate declined by 21% to $42.4 billion. Some 691 deals have been completed , an increase of 17.3% from 2006. The region saw deal value aggregate of $53.2 billion in 2006. But the industry witnessed a new high in divestment activities, with $17.3 billion of realised capital returned to investors’ coffers during the year. Realised capital from China and India accounted for $3.8 billion and $2.24 billion, respectively.

INDIA $9.9b

For the first time, India stood first in terms of deal value aggregate, garnering $9.9 billion in PE investments from 290 deals in 2007

CHINA $9.5b

However, Indian PE trackers have pegged investment into India in 2007 at a much higher figure -- about $14 billion across 390 deals

TAIWAN $5.8b

Foreign investors’ level of confidence is reflected in $1b deal for first time in India. No deal in China reached seven digits in dollar terms in ’07

AUSTRALIA $5.7b

In 2007, the Asian PE industry (including Oz & New Zealand) saw an additional $36.4 billion of fresh capital into

 

[solid snake]

Indian industrial growth slows sharply​

NEW DELHI, Jan 11: India’s industrial output growth slowed to its lowest level in 13 months in November, according to data on Friday, but analysts forecast no swift cut in interest rates to spur the economy.

Industrial production in Asia’s third-largest economy expanded by 5.3 per cent, down from 12 per cent in October and 15.4 per cent in November 2006, the official figures showed.

The slowdown in mining, manufacturing and other industrial output surprised analysts who had forecast growth of more than seven per cent and was attributed mainly to aggressive monetary tightening to tame inflation.

“Overall, the message is clear and that is the industrial sector is slowing,” said HSBC economist Robert Prior-Wandesforde.

The data came after Premier Manmohan Singh set up a committee this week to map a plan for reviving industrial growth, which accounts for a fifth of GDP and has shown a steady decline in the current fiscal year to March 31, 2008.

Nine interest rate hikes since 2004 and steps by the central bank to force commercial lenders to put aside more reserve funds to brake lending growth have dampened industrial expansion -- slowing demand for consumer goods.

The economy grew by 9.4 per cent last year, sparking fears of overheating.

But economists said they expected no early easing of interest rates, even as other data Friday showed annual inflation remaining steady at 3.5 per cent.

The central bank “may hold interest rates for some time due to concerns over rising international crude oil and food prices,” HDFC chief economist Abheek Baruah said.

Inflation has fluctuated recently but has stayed well below the central bank’s five percent ceiling for this year and is down sharply from 5.89 per cent a year earlier.

However, the bank fears record global oil prices could trigger a rise in state-set domestic fuel prices to cut losses at state-run refiners and is concerned about strong world commodity prices.

With industrial production slowing, low inflation and upward pressure still on the rupee that is trading near decade highs against the dollar, clamour from industry for a rate cut would mount, analysts forecast.—AFP

Indian industrial growth slows sharply -DAWN - Business; January 12, 2008

 

[Neo]

Israel’s pharma major to invest in India ​

Saturday, January 12, 2008

MUMBAI: Israel’s Teva Pharmaceutical Industries, the world’s largest manufacturer of copycat patented drugs (generics), plans to invest over $1 billion in India to acquire Indian drug companies and set up greenfield manufacturing facilities, the Business Standard newspaper reported on Thursday.

The investment is planned for the next 24 months. Around $250-$300 million will be utilised for manufacturing facilities and the rest to fund acquisitions in India. A few weeks ago, Teva had acquired over 100 acres of land near Gwalior, Madhya Pradesh, to set up active pharmaceutical ingredient manufacturing facilities that will match the production capacity of domestic generic majors such as Ranbaxy, Cipla, Dr Reddy’s, Sun Pharma and Wockhardt, sources told the Business Standard.

The sources said Teva would start civil works at the site after it obtains necessary government clearances. “Teva considers India an interesting geographical region and is looking to broaden its activities in the country,” Shir Altay, a company spokesperson said in an e-mail.

Teva is also likely to integrate Regent Drugs, which it acquired from JK Industries in 2003, with its API business. Regent Drugs, now a 100 per cent subsidiary of Teva, manufactures some APIs that Teva requires for its global business. The company also sources APIs from many Indian companies.

Israel’s pharma major to invest in India

 

[Bushroda]

The boom in India now heard overseas
Foreigners sell to the new middle class and help build infrastructure, while domestic giants take a global view.

Cherian Thomas,
Los Angeles Times, US
January 14, 2008

Gordon Brown's plane will have barely departed New Delhi's Indira Gandhi International Airport this month before Nicolas Sarkozy arrives with another contingent of executives seeking opportunities in India's rapidly opening markets.

The British prime minister and the French president, separately visiting next week, are bringing along commercial delegations, including retailers Tesco and Carrefour, attracted by a burgeoning middle class and loosening curbs on foreign ownership in the nation of 1.1 billion people.

Foreign investment in India may double in 2008 for the second straight year to reach $30 billion, the government forecasts, as the world's second-fastest-growing major economy arrives at what Lehman Bros. calls its takeoff point. That's when consumer demand and business spending start feeding off each other and drive even more investment.

"India's growth acceleration is not a flash in the pan," said Robert Subbaraman, chief economist at Lehman Asia in Hong Kong. "A middle class is fast emerging, which is spurring demand as consumption and investment interact."

Like China and South Korea previously, India is benefiting from an increasingly open economy that has already stimulated enough growth to double per-capita income since 2000, according to Lehman.

The resulting surge in demand for consumer goods has tripled mobile-phone use in two years and fueled a 29% jump in sales of microwave ovens last year.

With the explosion of purchasing power, India's economy is poised to expand at a 9% pace for the third straight year, while the U.S., Europe and Japan slow to less than 3%.

McKinsey & Co., the consulting firm, estimates that India's middle class -- comprising those with annual disposable incomes of $4,380 to $21,890 in current dollars -- will increase more than tenfold to 583 million by 2025.

India's appeal is more than a matter of demographics. Prime Minister Manmohan Singh, who as finance minister in 1991 started dismantling barriers to foreign investment and other controls on industry, is preparing to permit overseas companies to build retail chains in the country.

That's prompting interest from companies including Tesco, Britain's largest retailer, and Paris-based Carrefour, which operates supermarkets on four continents.

Singh's government is also moving to raise the limit on foreign equity stakes in local insurers to 49% from 26% and has a road map to let foreign banks increase their holdings in India's private banks.

Brown's party will include representatives of Prudential, Britain's second-biggest insurer, and Barclays, the No. 3 bank, both based in London.

"India has long been noted for its superb 'micro' -- good companies, rule of law, democracy," said Stephen Roach, chairman of Morgan Stanley in Asia. "What has been missing is the 'macro' -- foreign direct investments, infrastructure. What's encouraging to me about India now is that the macro is starting to improve and is reinforcing the already positive micro."

Foreign ownership in telecommunications has helped India become the world's third-largest user of telecom services after China and the U.S. It's the world's fastest-growing wireless market.

"India is a country of enormous opportunity. It's the heart of globalization, in a way," said Ben Verwaayen, chief executive of London-based BT Group, Britain's largest phone company. "You see a growing base for companies from around the globe, being here not just for this region itself, but being here as a kind of base for what they can do in other parts of the world as well."

San Jose-based Cisco Systems Inc., the world's largest maker of computer-networking equipment, plans to triple its Indian workforce to 10,000 by 2010, CEO John Chambers said in October.

Automakers including General Motors Corp. and Suzuki Motor Corp. are spending more than $6.6 billion to build factories in the country. PricewaterhouseCoopers said India's vehicle output will grow about 17% annually until 2011, the fastest among the 20 largest car-making nations.

India's higher profile in the global economy makes it a magnet for foreign investment and gives its companies a bigger role on the world stage.

Indian companies led by Tata Steel and Hindalco Industries, both based in Mumbai, completed a record $39.2 billion of overseas acquisitions in 2007.

Tata's $12.9-billion purchase of Britain's Corus Group, the biggest overseas takeover by an Indian company, made it the world's fifth-biggest steelmaker. Buying Novelis Inc. of Atlanta provided Hindalco, India's biggest aluminum producer, access to customers such as GM and Coca-Cola Co.

The trend is continuing. Tata Motors of Mumbai, India's largest truck maker, was recently selected as the preferred bidder for Ford Motor Co.'s Jaguar and Land Rover units, the U.S. automaker announced.

Brown and Sarkozy are joining a parade of world leaders coming to India with agendas that include closer commercial ties. U.S. Treasury Secretary Henry M. Paulson Jr., visiting in October, said U.S. companies would participate in India's $500-billion program to modernize roads, ports and other infrastructure by 2012. The U.S. will help India transform its financial capital, Mumbai, the former Bombay, into an international financial center, he said.

During an August visit, then-Prime Minister Shinzo Abe of Japan said his nation would help plan a $90-billion infrastructure corridor between New Delhi and Mumbai, including freight lines and power stations.

Such projects may reduce one of the biggest remaining impediments to doing business in India -- poor infrastructure. For all the expansion in the Indian market, its foreign direct investment still pales in comparison to what China has received.

It takes 24 days for Indian exports to reach the U.S., compared with only 15 days from China and 12 from Hong Kong, according to Lehman Bros.

"If India doesn't get its act together on infrastructure urgently, then it can never realize its aim of accelerating growth," said Vineet Agarwal, executive director of Gurgaon-based Transport Corp. of India, the nation's biggest cargo transportation and logistics company.

Even as India's economy reaches takeoff speed, almost 300 million people continue to live on less than $1 a day, according to the World Bank.

The number of poor people in India fell from 1999 to 2004 for the first time, after the government's policies to boost foreign investment and reduce regulation on industry spurred growth, according to the Organization for Economic Cooperation and Development.

"The Chinese takeoff began in the 1980s and didn't show through in terms of increased living standards for the majority for quite some time," said Howard Davies, director of the London School of Economics and a former chairman of Britain's Financial Services Authority. "Just the same way, India has got the economic takeoff, but it needs to be sustained for a decade before you really see the place looking different."