Indian Economy - News & Updates - Archive

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Indian belly freight feeding DLC growth
Air Cargo News, UK
23-Jan-2008

DUBAI Logistics City, part of the world’s first truly integrated logistics and multi-modal transport platform within the giant Dubai World Central (DWC) urban aviation community being built in Jebel Ali, Dubai, will be looking at key prospects from India’s globalisation process, at Air Cargo India 2008 in Bombay, from 24-25 January.

India, which has been projected to be a world economic superpower by 2020 by analysts globally, as revealed that its exports will touch US$150 billion by 2008-09 – a significant opportunity for Dubai’s trading hub proposition.

“After the liberalisation of its economy in 1991, India followed with the opening up of its markets to global players and went on a fast track economic boom with an eight-nine per cent GDP growth per year,” said Michael Proffitt (above), chief executive officer, Dubai Logistics City.

“With 50 per cent of the world’s air cargo still being transported in the aircraft belly, India’s air cargo and aviation sector growth is linked to the Middle East’s economic boom,” said Abdulla Al Falasi, DWC’s director for marketing and corporate communications.

“DLC’s strategic geographical position and excellent infrastructure adds to Emirates push into India through connecting Dubai to most vital Indian cities. This will also enable Indian operators to use flights landing at the Al Maktoum International Airport, seamless transportation onward to other countries,” added Falasi.

 

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Indian exports to reach $150 b this fiscal
Wednesday, 23 January , 2008

New Delhi: India's exports will touch $150 billion in fiscal 2007-08 against the target of $160 billion due to a sluggish US economy and the rising rupee, said a senior official.

"Exports of $150 billion are certain this year. If there is a surge, they could even go up to $155 billion," Commerce Secretary G.K. Pillai told reporters on the sidelines of an event organised by the Confederation of Indian Industry (CII) here Wednesday.

Pillai also said that in the coming fiscal (2008-09), an export target of $200 billion could be achieved.

He indicated that certain promotional schemes targeted at exporters might be done away with due to their minimal benefit. He invited suggestions from the industry in this regard.

"Our trade policy is complicated. This discourages our exporters. The focus should shift from getting a number of approvals from various government agencies to self-certification. The majority should not suffer for misdeeds of a handful of unscrupulous exporters," he said.

"We should have only meaningful incentives to promote the competitiveness of our exporters."

Pillai urged India Inc to provide its inputs and feedback for the Krishnamurty Committee, which is expected to submit its report to Prime Minister Manmohan Singh by end of this month.

The prime minister set up the Krishnamurty Committee to evaluate and examine methods of providing relief to the rupee-hit exporters, especially in sectors such as textiles, leather and handicraft, which have been witnessing shrinking profits and job losses.

The ministry is likely to submit its first draft of the trade policy with the Department of Revenue within the next couple of weeks, Pillai said.

 

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India fastest growing partner
VALERINA CHANGARATHIL
News, Australia
January 23, 2008 08:30pm

INDIA is now Australia's fastest-growing export market with energy and climate change solutions key opportunities for local businesses.
The nation buys more than $10 billion worth of our goods and resources, SA's senior trade commissioner (India and South Asia) Tareen Ayub said today.

An Indian trade delegation, here to coincide with the start of the fourth cricket Test between Australia and India tomorrow, was told energy and climate change solutions presented key opportunities for Australian businesses.

Mr Ayub, leading the 13-member delegation, said while much of the focus was on China, India should not be overlooked. "As our fastest growing exports market, feeding India's growth is essential," Mr Ayub said.

Consul General of India, Sujan Chinoy, told SA and Indian business leaders at a KPMG-hosted meeting trade relationships in Asia would drive the global economy. "Australia is in a unique position to interface between emerging and resurgent economies like China and India," he said.

With India needing about $580 billion in foreign investments to sustain growth momentum over the next five years, there was an opportunity for Australia to step in.

Atul Chandra, international operations president of India's largest private sector company Reliance Industries, which has committed $13 million to uranium exploration in SA and the Northern Territory, was part of the delegation.

While India was keen to buy Australian uranium, Federal Government policy precluded that as India was not a signatory to the nuclear non-proliferation treaty.

Konkan Railway Corporation's managing director Anurag Mishra said he saw a lot of "interesting possibilities". He had held talks with Robway Systems and others.

The University of Adelaide's Andrew Stoler said he was sceptical as Australia's trade ties with China had grown faster and it was difficult to make investments into India.

 

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The `Age of India' is upon us
JOHN C. BERSIA
McClatchy-Tribune News Service
Wednesday, January 23, 2008

Hardly a breath passes in today's busy world without the mention of India. It is as if that emerging power's presence reaches in all directions, demanding a voice in every significant global conversation. Indeed, some have argued that the "Age of India" is upon us.

At the very least, the 21st century will witness New Delhi's continued rise as one of the principal centers of influence. As such, the community of nations should extend to India more of the benefits that its status warrants, including permanent membership in the United Nations Security Council.

Now, I am not bringing this up simply because British Prime Minister Gordon Brown made it an issue during his visit to India this week, although I was pleased to hear his comments. Both Brown and Indian Prime Minister Manmohan Singh called for India to have a permanent seat, largely because of the country's growing economic clout.

It is time.

I have long believed that the thinking behind the current U.N. Security Council configuration was appropriate for its moment in history, that is, the period following World War II. In the interim, however, several additional nations have climbed to prominence. The old order should change, even though that could dilute the power of the permanent five: the United States, Russia, China, Britain and France.

In considering candidates, India is a logical one, as are Japan, Brazil, Germany, Nigeria, Mexico, South Africa, Indonesia, Egypt and perhaps others. One appealing proposal would increase the total number of permanent seats to 10, while adding four more revolving positions. In the end, though, an acceptable modification of the U.N. Security Council could happen in several ways.

Brown also discussed the benefits of having New Delhi join an international group - the Paris-based Financial Action Task Force - that combats money laundering and terrorist financing. India's long experience with political violence, combined with its increasing role in the global economy, offers a compelling reason for its participation.

Finally, Brown shared words that no doubt resonated with many Indians when he stressed that Britain - the former colonial power in India until 1947 - was no longer the dominant partner in their relationship. Even though some might argue that he was stating the obvious, it was no small gesture to emphasize the new reality. A dose of humility goes a long way in building international ties - a lesson that President George W. Bush once advocated but appears to have essentially forgotten.

"Ours is a strategic partnership of equals. A confident, modern, 21st-century India and a confident, modern, 21st-century Britain," Brown said.

Such respectful dialogue creates the basis for mutually beneficial, enduring cooperation, whether the coming era is the "Age of India" or an environment where several heavyweights - including the United States, China, Europe and India - share the stage.

 

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A waking giant tugging hard at its chains
By Martin Wolf
Financial Times, UK
January 25 2008

India is not China. Its development path has been very different and, so far at least, its global impact far smaller. But it is now more open to the world economy than at any time in its post-independence history and more economically dynamic than ever before.

The opening has been unambiguously beneficial to India, and it will be beneficial to most of the rest of the world. But it will also create substantial challenges for both sides.

The differences between the two giants' integration into the world economy are indeed large.

First, in 2006 China was the world's third largest exporter of merchandise products (after Germany and the US) and the eighth largest exporter of commercial services, while India's rankings were 28th and 10th respectively. Thus, even in the latter category, where India's success is noteworthy, its exports of $74bn lagged behind China's $91bn.

Second, in 2006 China generated 8 per cent of world exports of goods and 3.3 per cent of world exports of commercial services. India's shares were 1 per cent and 2.7 per cent respectively.

Third, both countries are growing more open to world trade. The ratio of merchandise trade to GDP for India jumped from 14 per cent in 1990 to a forecast level of 34 per cent in 2007. But China is far more open: the rise over the same period was from 24 per cent to an extraordinary 66 per cent. India's trade ratio last year was slightly higher than China's as recently as 1999.

Fourth, China is running vast trade and current account surpluses, while India is running modest deficits: in the World Economic Outlook published last September, the International Monetary Fund forecast China's current account surplus for 2007 at close to $380bn, or 12 per cent of gross domestic product, and India's at minus $23bn, or minus 2 per cent of GDP.

Fifth, both countries have accumulated substantial foreign currency reserves. But at the end of October 2007, China's reserves were worth $1,455bn (45 per cent of GDP), while India's were worth $265bn at the end of November (24 per cent of GDP).

Sixth, both countries have managed exchange rates, but given the scale of the reserve accumulations, China's is much more heavily managed than India's. Since July 2005, when the renminbi's exchange rate was made more flexible, the currency has appreciated by 14 per cent against the dollar.

Since a trough in July 2006, India's rupee has appreciated 20 per cent. Yet, over the past decade, real exchange rates have remained reasonably stable for both countries.

Seventh, both countries enjoy substantial inflows of foreign direct investment, though China's are far bigger. China started receiving significant inflows long before India and is forecast in 2007 to receive gross inflows of $96bn (3 per cent of GDP) against India's $19bn (1.7 per cent). But India's inflow is up from only $3.6bn in 2000 (0.8 per cent of GDP), when China's was already 3.2 per cent of GDP.

Finally, both countries are making substantial direct investment abroad, with China's outflow twice as big as India's last year. But India's direct investment abroad, estimated at $13bn last year, up from just $2.5bn in 2005, is already almost as large as its imports, estimated at $18.7bn. China's exports of FDI, estimated at $26bn last year, are far smaller than its imports of $96bn.

India's opening to the world then remains well behind China's. But since the foreign exchange crisis of June 1991, policy has moved decisively towards greater openness. This shift has helped transform economic performance.

A report by Goldman Sachs published a year ago (India's Rising Growth Potential, January 22 2007) argued that India's sustainable growth potential had reached 8 per cent a year. An important element in this higher sustainable growth rate has been the improved rate of growth of so-called "total factor productivity" (TFP) - a measure of the efficiency with which factors of production are used.

The growth of TFP has jumped from a rate of minus 1 per cent a year in the very early 1980s to 2 per cent a year in the 1990s and an estimated 3.5 per cent in the most recent years.

As Goldman Sachs noted, increased openness - in particular the decline in barriers to trade from the prohibitive tariffs as high as 200 per cent to below 15 per cent - has played a big role in generating the more rapid rate of improvement in productive efficiency.

The opening has improved Indian companies' access to ideas, inputs and technology, increased competition, allowed efficient companies to expand operations and encouraged a shift in employment to more productive sectors.

Yet this is not the end of the story, either for India or the rest of the world. Barriers to trade remain quite high. Integration into global capital markets is still to be completed. Further reform and sustained improvement in infrastructure will be essential.

As confidence grows, already demonstrated in Indian businesses making bold acquisitions abroad, the giant's role in the world economy is bound to rise. But it is also likely to remain very different from China's, with a far heavier concentration on commercial services, finance and sophisticated manufacturing.

Meanwhile, a rising India will have a big impact on the world, as a provider of cheaper products and services, as a destination for fixed investment and as a source of growing demand, particularly for resources.

Today, energy demand per head is a mere 10th of the high-income countries' level. But, according to the "reference scenario" in the International Energy Agency's latest World Energy Outlook, India's primary oil demand will rise from 2.6m barrels a day in 2006 to 6.5m by 2030. This would still be well behind China's 16.5m, although the forecast growth rate of 3.9 per cent a year is slightly higher than China's.

India's decision in the early 1990s to embrace the world economy, as part of a wider embrace of the market economy, has led to an accelerating opening up of its economy. While its impact on the world is still relatively modest, it will continue to grow.

The impact on India itself is less modest and growing fast. Both sides - India and the world - will need to get used to the experience: they will grow much closer together in the years ahead.

 

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Indian Automaker Buys British Icons, Hoping For Global Presence
CNNMoney
Jan. 25, 2008 (Investor's Business Daily delivered by Newstex) --

The British lorded over India for years. Now one of India's biggest companies -- Tata Motors -- wants to play Indian Raj in Great Britain.

Tata Motors TTM is seeking control of two of Britain's most prestigious auto brands -- Jaguar and Land Rover. If a deal with owner Ford F is completed as expected, Tata would oversee 16,000 employees in plants and offices in five cities in the U.K.

Meanwhile, at home in India, Tata Motors is out to rule the mass market. It's gearing up to provide the auto equivalent of a chicken in every pot, at least for the millions who make do on two-wheelers.

Tata unveiled its natty, five-seat, 30-horsepower Tata Nano at the recent Auto Expo in New Delhi. Priced at $2,500, it will be the world's cheapest car. It's slated to go on sale in India later this year.

Tata might take over Ford's struggling premium brands in the UK even earlier. A deal valued at about $2 billion is expected to be announced sometime this quarter.

If anyone can pull off making a go of two polar opposite businesses, Tata can, observers say.

"Tata has a knack for being well-organized and planned," said Amer Kahn, analyst with Lusight Research. "These are necessary steps to becoming a global automotive powerhouse, and I think that's what they have in mind."

In a few years, Tata envisions exporting the Nano to select markets in Asia, Africa and Eastern Europe.

Tata already is a household name in India, where the Tata family business dynasty was founded in 1868. Tata Motors is part of the Tata Group, now a huge conglomerate with companies that deal in things ranging from tea to steel.

The parent Tata Group planted its first stake in Britain eight years ago when it bought the English icon Tetley Tea. Last year, it acquired the Anglo-Dutch steel giant Corus.

The big question for Tata's Nano is how soon it will become profitable. At $2,500 for the no-frills basic model, margins likely will be slim, especially considering the high price of raw materials, such as steel.

But Tata is working on line extensions with added amenities, which would push up prices. Also, fiscal incentives from the West Bengal government, where the Nano plant is located, "will materially alter the viability and expected financial returns from the project," wrote Deutsche Bank (NYSEB) analyst Srinivas Rao.

At the other end of the spectrum, cost savings will be key to making Ford's now-struggling luxury car business in England more profitable, analysts say.

"With (Jaguar and Land Rover) having combined revenue of $13 billion, a relatively small improvement in profitability would translate into significant benefits for Tata Motors," wrote analysts in a report for Mumbai-based IDFC-SSKI Securities.

While Land Rover is holding its own, Jaguar sales continue to plummet. Jaguar sales through most of 2007 fell almost 20% in Europe and 26% in the U.S. from 2006 levels.

"It'll take additional investment from Tata to have a turnaround," said Standard & Poor's (NYSE:MHP) analyst Efraim Levy. "Ford has been working on turning around Jaguar for a decade. The brand has a certain cache, but it also has been dinged by the lack of success."

"But sometimes it takes a fresh perspective and fresh cash," Levy added.

Tata dominates the commercial vehicle market in India. Tata-branded trucks, including the hit $5,000 Ace pickup, are ubiquitous.

In passenger cars, Tata is a distant second to market leader Maruti Suzuki. Tata Motors has said that a slowdown in its car sales over the past several months was due in large part to higher interest rates on auto loans. But analysts noted that unlike rivals, Tata also came up short on new products.

That's expected to change in the coming year with the rollout of new models and a make-over of its top selling Indica compact car.

The princely Nano will knock the $5,000 Maruti 800 from its throne as the smallest and lowest-priced car in India.

"I wouldn't be surprised if Tata is completely swamped with orders for this car," said Khan.

Tata's light truck sales have been growing at double-digit rates the past five years. Large-truck sales have been spottier. With concerns about the global economy, sales in larger trucks have slowed.

Overall revenue in the quarter ending Sept. 30 still was able to grow 23% over last year to $2.1 billion. Earnings rose 17%, to 34 cents a share.

After jumping 45% last year, analysts polled by Thomson Financial estimate Tata Motors' earnings this fiscal year ending in March will grow only 10%, to $1.38 a share. They expect profit the next year to grow 20%.

Despite trauma in parts of the developed world, the Indian economy continues to steam ahead. It's now in its third year of 9% growth.

A couple of other automakers in India say they might try to develop a car as small as the Nano, but it likely would be several years before one hits the market. Meanwhile, foreign auto makers such as Honda are expanding their compact-car presence in India, though with sizes and prices that are still way above the Nano's. They would target India's rising middle class.

Tata expects to pull in first-time car buyers from a lower income pool, largely from the huge motor bike market, which overruns the car market by a ratio of 8 to 1. More than 8.4 million two wheelers were sold in India last year, compared with 1.2million cars.

Tata plans an initial annual production run of 250,000 Nanos, expandable to 350,000 with a third shift. Tata has said that it could sell 1 million Nanos by 2010. Tata sold fewer than 200,000 cars last year.

 

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Mahindra launches Scorpio and Pik-Up range in Brazil
Trading Markets, CA
Thursday, January 24, 2008; Posted: 04:13 PM

Jan 24, 2008 (Datamonitor via COMTEX) -- MAHDY | news | PowerRating | PR Charts -- Indian automobile manufacturer Mahindra & Mahindra has launched its Scorpio SUV and its Pik-Up range in Brazil, in partnership with Bramont-Montadora Industrial e Comercial de Veiculos.

The models introduced in the Brazilian market are equipped with the 2.6-liter Mahindra common rail engine that delivers 110 horse power. The models are available with 4X2 and 4X4 electronic shift on the fly and the engine conforms to Euro III emission norms. From 2009, Mahindra vehicles will be offered with a Euro IV compliant engine.

Pravin Shah, executive vice president for international operations, said: "Mahindra has carved a distinct niche for itself in markets across the globe with its unique combination of rugged utility and style. The Brazilian economy and automotive industry is highly evolved and has strategic importance for Mahindra."

 

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Shifting the balance
Chinese and Indian capitalism

The Economist, UK
Jan 24th 2008

FIVE years ago, Tarun Khanna, an Indian-born professor at Harvard Business School, grabbed attention with an article in Foreign Policy magazine speculating that India might eventually overtake China. Co-written with Yasheng Huang, a Chinese-American scholar at the Massachusetts Institute of Technology, the article argued that India's economic model offers more freedom to entrepreneurs which could help the country outpace its fellow Asian giant in the longer term.

From a macroeconomic viewpoint, this argument was rather implausible, except in the extremely long term, for China's economy is already three times the size of India's. At the corporate level, though, it made more sense: as its recent unveiling of the world's cheapest car showed, companies such as Tata Motors promise to make the global grade rather faster than their Chinese counterparts.

With his new book Mr Khanna has returned to the topic of entrepreneurship in Asia's emerging giants. But he has dropped the idea of India outpacing China and replaced it with thoughts about the potential for co-operation between the two countries. Their social and economic systems are vastly different, as he shows in admirably detailed but chatty studies of companies and cities in both places. But they have strengths that could be complementary, he thinks, and he argues that foreign multinationals need to start thinking about the countries together rather than separately.

Unfortunately, the book's enthusiasm for Sino-Indian co-operation is rather unconvincing. Trade between the two countries is rising fast, as Mr Khanna points out, but from a very low base: it is only a tenth as large as trade between China and Japan, and a fifth as large as that between China and South Korea. Chinese companies want to learn about Indian software and outsourcing, just as Indian companies want to learn about Chinese manufacturing prowess. But then companies in both countries are also eagerly studying practices and skills in Europe, America and Japan too: there is nothing particularly special about the flow of people and ideas between India and China.

Politics, too, plays a part. Mr Khanna makes much of the opening of a border crossing high in the Himalayas to trade in 2006, for the first time since the Sino-Indian border war of 1962. Yet that crossing does not connect any of the large areas that are still disputed between the two countries, and only a few categories of goods may be traded through the reopened area. Relations between China and India have indeed been getting warmer in recent years, but the pair still harbour strong and understandable suspicions about one another: they are natural rivals, whether in Asia as a whole or in the countries squeezed between them, as the book's excellent section on Myanmar demonstrates.

Nevertheless, although the book's overall thesis feels as implausible as that of Mr Khanna's 2003 Foreign Policy article, “Billions of Entrepreneurs” remains well worth reading. The eye of this business-school professor for interesting stories is sharp and he offers illuminating explanations of why India and China work in the ways that they do.

 

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Will India And China Destroy The Planet Through Global Warming--Or Save The Planet By Forcing The West To Reduce Carbon Emissions?

Businessweek
Bruce Nussbaum
January 24

I went to a wonderful dinner on Wednesday night with the theme of “India’s Intrernational Agenda.” Late in the conversation, about 10:15PM someone asked the very astute Minister of Finance Palaniappan Chidambaran, about an article in the FT saying that if India and China continued to modernize along the lines of the West, with tens of millions of cars, the resulting carbon emissions would, in effect, cause global warming on a scale that would destroy most of the earth. India and China, in short, needed to find another, better way, of growing.

Wow, the reaction by the Minister of Finance was fierce. He said energy and economic growth are linked and India has the right to grow and the right to consume energy. He said it is unfair to ask developing countries not to use as much energy as the West. India is entitled to grow and to consume energy that emits carbons.

The Indian Finance Minister went on to say that India has agreed to keep its maximum per capita carbon emissions just below that of the West (I believe that is the metric he used. If it isn’t, will folks in India let me know the precise measurement). If the West lowers its emissions, so will India. India’s per capita carbon emissions are currently way below that of the US or Europe so they will be growing strongly as India grows economically.

Of course, the Indian Finance Minister is completely correct—India and all emerging economies have the right to grow and must grow. The challenge ahead for all countries, the US, India, China, Europe, is to change the way we all grow to cut back on carbon emissions. There are huge economic opportunities ahead in this. We can grow our way out of our carbon conundrum. Who will build the first 100 mpg car? The first mass-produced all electric car? The electric jet plane? The newest public transportation system? The lowest priced video-conferencing system that cuts back on travel?

The hybrid Prius outsold the old Ford Explorer last year in the US, a sign that people are waking up (at least waking up to $3 a gallon oil). Transforming the US carbon economy which is sending its wealth and ownership overseas to non-democratic nations is both an economic and foreign policy priority.

And don’t bother asking India and China to do what the West won’t. They won’t. Pressuring them to cut back can only lead to trouble.

 

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Modern India a new center of economic power
NATION READY FOR NEW ROLE IN GLOBAL AFFAIRS
John C. Bersia
01/24/2008 03:34:11 AM PST

Hardly a breath passes in today's busy world without the mention of India. It is as if that emerging power's presence reaches in all directions, demanding a voice in every significant global conversation. Indeed, some have argued that the "Age of India" is upon us.

At the very least, the 21st century will witness New Delhi's continued rise as one of the principal centers of influence. As such, the community of nations should extend to India more of the benefits that its status warrants, including permanent membership in the United Nations Security Council.

Now, I am not bringing this up simply because British Prime Minister Gordon Brown made it an issue during his visit to India this week, although I was pleased to hear his comments. Both Brown and Indian Prime Minister Manmohan Singh called for India to have a permanent seat, largely because of the country's growing economic clout.

It is time.

I have long believed that the thinking behind the current U.N. Security Council configuration was appropriate for its moment in history, that is, the period following World War II. In the interim, however, several additional nations have climbed to prominence. The old order should change, even though that could dilute the power of the permanent five: the United States, Russia, China, Britain and France.

In considering candidates, India is a logical one, as are Japan, Brazil, Germany, Nigeria, Mexico, South Africa, Indonesia, Egypt and perhaps others. One appealing proposal would increase the total number of permanent seats to 10, while adding four more revolving positions. In the end, though, an acceptable modification of the U.N. Security Council could happen in several ways.

Brown also discussed the benefits of having New Delhi join an international group - the Paris-based Financial Action Task Force - that combats money laundering and terrorist financing. India's long experience with political violence and its increasing role in the global economy offer a compelling reason for its participation.

Finally, Brown shared words that no doubt resonated with many Indians when he stressed that Britain - the former colonial power in India until 1947 - was no longer the dominant partner in their relationship. Even though some might argue that he was stating the obvious, it was no small gesture to emphasize the new reality. A dose of humility goes a long way in building international ties - a lesson that President George W. Bush once advocated but appears to have essentially forgotten.

"Ours is a strategic partnership of equals. A confident, modern, 21st-century India and a confident, modern, 21st-century Britain," Brown said.

Such respectful dialogue creates the basis for mutually beneficial, enduring cooperation, whether the coming era is the "Age of India" or an environment where several heavyweights - including the United States, China, Europe and India - share the stage.

 

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Mumbai showcased at Davos as future global financial centre
Thursday, 24 January , 2008, 18:15

Davos: Transacting 95 per cent of the stocks of an economy projected to become the world's third largest, the city of Mumbai was Thursday showcased before businessmen and investors gathered in Davos as a future world financial centre to rival London and New York.

"With $60 billion earmarked to develop the Mumbai Metropolitan Region, and if all other things fall into place, then a world financial centre has to come to Mumbai," said Maharashtra Chief Minister Vilasrao Deshmukh told investors at a meeting held on the sidelines of the World Economic Forum (WEF).

He was backed up Aviation Minister and Maharashtra politician Praful Patel and Sunil Bharti Mittal, CEO of Bharti Enterprises and head of the Confederation of Indian Industries.

"From a size of $1 trillion today, the Indian economy is projected to grow $30 trillion by 2040," Mittal said.

"There is no reason why Mumbai cannot stand alongside New York, London and Singapore as a world financial centre in the future," he pointed out.

"India deserves a global financial centre," Mittal said, adding that the economy was backed by "regulation, framework and institutional mechanisms".

Patel, Deshmukh and Mittal are in an 80-strong Indian delegation to the WEF, the largest team at the annual business event that has drawn some 2,500 business and political leaders from 88 countries this year.

Mittal contrasted India's private sector fuelled growth with that of China.

He said Shanghai was being developed as a world financial centre by China "which as a state was determined to make acquisitions outside China".

Although aware of the challenges of poor infrastructure the Indian team has highlighted progress made in telecommunications and information technology, as well as urban development plans involving tens of billions of dollars, to push Mumbai's case before foreign investors here.

"The strength of the Indian economy is its future potential," said Praful Patel but he acknowledged that the infrastructure sector could be further opened up to foreign investors.

"With as many as 46 major international companies having opened their offices in Mumbai in the last year alone, he said: "We certainly deserve to be in the same league as London, New York and Singapore".

Indian households had spent $13 billion on foreign financial products in 2007 and the figure is set to grow to $48 billion in 2015 and $80 billion if the economy grows at 9 per cent, said Sanjay Nayar, CEO of Citi India.

 

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Michigan looks to India to attract businesses
TOM WATKINS
Northville Record, MI

Like the trick card game three-card Monte, while the world has kept its eye on China, India has grown up and may be the economy to watch as the 21st century unfolds.

India is the most populous democracy in the world with more than 1.2 billion people. This is only slightly fewer people than the communist Peoples Republic of China. India is growing economically along with many Asian nations and becoming a global player in the 21st century. India has a long and rich cultural and entrepreneurial history. Today it is the world's 12th largest economy due to economic reforms put into place in the early 90's.

After the fall of the Berlin Wall, many Asian countries opened up their economies and brain power to the world. With the end of a quasi-socialist government, with tight controls over foreign trade and investment and private sector business activities, India's economy began to take off. Today, its economy is among the fastest-growing in the world with a GDP growth of nearly 10 percent in 2006-07.

India's growth has been in the shadows of China's ascending economy, which grew by a blistering double-digit rate in the past 20 years. Being in the shadow of China, whose economy seems to be on steroids, makes India's growth seem anemic in comparison.

Yet India has two advantages over China. It has many English speakers and a democratic government.

While they have made great strides since gaining independence from British rule in 1947, many Indian people still suffer from poverty, illiteracy, hunger, religious strife, environmental degradation and the hangover from a harsh and discriminatory caste system.

It seemed not that long ago that the only time you heard of India was when you were seeking help with a computer problem. Today the country is bursting with knowledgeable workers that are seeking their equivalent of the American Dream. As Thomas Friedman points out in his often-quoted book, The World Is Flat, India has capitalized on its educated, English-speaking people and technologically-prepared professionals to become the English-speaking world's outsourcing capitol and a ripe destination that is bearing fruit for global corporations.

State to cash in on India

The Detroit Regional Chamber and Automation Alley have led trade missions to India to continue attracting new businesses to Michigan, as well as to continue giving Detroit businesses an opportunity to expand into India's fast-growing market. Another trade mission will be in taking place this month.

"The vision of both, Indian companies doing business here and Detroit companies doing business there, is the basis for the Partnership's trip," said Detroit Regional Economic Partnership Executive Director John Carroll. "We are looking to build on the successes of the Partnership's 2006 mission to India that produced new business for the Detroit Region." The results included multiple new strategic alliances between Indian and U.S. companies.

The Center for Automotive Research is teaming up with Automation Alley and the Detroit Regional Chamber to lead this month's trade mission to the India Auto Expo 2008. It is for automotive suppliers and communities interested in developing business opportunities in India.

An Indian car company that many here in the Motor City have never heard of, Tata Motors, is about to break onto the world scene. Ford Motor Co. could complete the sale of its Jaguar and Land Rover units to Tata early in 2008, giving them a global brand and dealer network.

India continues to gain momentum as it struggles to educate more of its rural population and increase the standard of living that is mere subsistence for hundreds of millions of its people. They have come far - but have a long way to go.

Like the con game three-card Monte, while the world watches China, India could drive away with the economic consolation prize as the century unfolds. It would behoove us to make sure Michigan finds ways to cash in, as well.

 

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India takes sourcing to new heights
By Vivian Yeo, ZDNet Asia
Thursday, January 24 2008 06:03 PM

The number of outsourcing contracts in the Asia-Pacific region as well as contract values have risen for a second consecutive year, according to a report by consulting agency TPI.

The TPI Index, released Wednesday, revealed that the region's outsourcing contracts contributed US$12.8 billion to the global outsourcing market in 2007, a 30 percent increase over 2006. The quarterly index analyzes global outsourcing contracts valued over US$25 million.

Annual contract values also rose by 13 percent year-on-year--nearly double that of the global average.

Indian companies were the main engine behind the growth, accounting for US$4.9 billion, up from US$2.7 billion in 2006. Outsourcing contracts out of Australia contributed a stable US$3.5 billion, while those from China registered a US$1.4 billion increase over 2006 to US$1.9 billion.

Arno Franz, partner and managing director for TPI Asia-Pacific, noted that the growth from China had been largely due to a single telecommunications mega deal; on the other hand, India's growth was championed by its bolstering economy.

"The Indian industry in particular has found outsourcing to be a viable tool to improve performance and drive growth in market share," said Franz. "With increased competition among Indian corporations and the potential privatization of public sector organizations in the next few years, we expect to see this level of activity continue through 2008 and beyond."

At a time when mega outsourcing contracts are far and few between, the Asia-Pacific region witnessed nine deals in 2007--four alone in the last quarter. TPI cited the tie-up between India's third largest wireless operator Vodafone Essar and IBM, as one of the mega deals signed last year.

Indian IT service providers also gained on their global rivals.

Their share of global contracts increased from 6 percent in 2006 to 9 percent in 2007. In the Asia-Pacific region, they held a market share of 16 percent last year, up from 11 percent in 2006.

Asia's BPO market going strong

According to TPI, the Asia-Pacific region recorded the highest growth (101 percent) in business processing outsourcing (BPO) contracts last year. In comparison, the BPO of that scale in the Americas fell by 28 percent, while that in the EMEA (Europe, Middle East and Africa) region increased by 24 percent.

In absolute dollar terms however, the BPO market in EMEA outweighed the other two with a total worth of US$12.45 billion; the BPO markets in the Americas and Asia-Pacific were worth US$8.62 billion and US$2.09 billion, respectively.

 

[Bushroda]

Is Booming India Immune to a U.S. Downturn?
By MADHUR SINGH/NEW DELHI
TIME
Thursday, Jan. 24, 2008

Until last week, there was at least some evidence to back a belief that India's stock markets would continue to defy gravity even as fears of a U.S. recession sent indexes plummeting across Europe and Asia. As recently as January 8, India's benchmark Sensex crossed the 21,000 mark, up 1,000 points from a previous record of 20,000 in just 49 days. Investors elsewhere may have been bracing for a fall, but in India their optimism was at a dizzying peak. That much was evident when a much-anticipated initial public offering by Reliance Power — India's largest ever at $2.9 billion — was oversubscribed within 60 seconds of opening on January 15, and oversubscribed 73 times by January 18. It looked like there was only one way for the bourses to go, and equity trading had risen to the top of the list of lucrative career choices.

The market's fall, like its rise, was sudden and steep. The Sensex lost 13% in a week starting last Wednesday, which, as the daily Hindustan Times reported, amounted to $375 billion — or 2.2 times the country's budget. "Brokers were left gasping for breath," says Jyoti P. Sharma, a New Delhi-based day trader. "It gave us no time to recover, or even think of cutting our losses." As retail traders across the country got a severe fright, the Times of India reported on its front page that a stock broker had attempted suicide on Tuesday, and "doctors reported a sudden spurt of patients complaining about cardiac problems in Mumbai and elsewhere."

It wasn't as if traders and analysts could claim to have been caught unawares. Even though Indian markets had continued to perform well despite the global downturn, there was good reason to doubt that India could remain immune. "India is just 2 percent of the world's economy," says Ramdev Agrawal, Director, Motilal Oswal Financial Services. "If everyone else is experiencing a meltdown, you will too." Dhirendra Kumar, CEO of Value Research, a mutual-fund research company, adds, "In today's world of digital connectedness, we all talk the same language and watch CNBC. Not only are Indian and U.S. equity markets interconnected, the key drivers of our emotions and psychology are also the same."

Analysts also agree that India's market correction is driven more by domestic factors than by the U.S. credit crisis. India's equity markets were already short of cash with huge amounts locked into the giant Reliance Power IPO, and margin calls worsened the situation. Many also believe that a correction was overdue as the market's hasty rise was unsustainable. Finance Minister P. Chidambaram told traders on Monday: "There is no reason to allow the worries of the western world to overwhelm us. Our economy is very different from the economies of some developed countries which are facing some stress. Our economy is a strong economy, our corporate sector is very strong. If the economy will grow this year at 8.9% and is expected to grow at 8.5% next year, the market sentiment should be a very positive sentiment."

Nevertheless, it was only after the Federal Reserve cut interest rate by 75 basis points to 3.5 per cent on Tuesday that the Sensex recovered some of its losses, rising 864.13 points on Wednesday to end the day at 17,594.07. While a U.S. slowdown may not affect India's 8%-plus growth, Indian equity markets may not be able to curtail their exposure. "The [Indian] markets remain vulnerable to the extent that FIIs [Foreign Institutional Investors] with exposure in the U.S. as well could pull out to consolidate and compensate for their losses in the U.S.," says Sharma, adding, "Fed rate cuts won't help. Unless employment and demand picks up in the U.S., things will remain gloomy."

But not everyone is as pessimistic. "The Indian corporate sector is strong and buoyant," says Agrawal. "The Indian market alone can give a 20-22% return on equity. Things are bound to improve, the question is: How soon?"

 

[Bushroda]

India Regional Hub for Korean Firms
By Nagesh R. Parthasarathi, Indian Ambassador to Korea
Korean Times, South Korea

India and the Republic of Korea enjoy age old and time tested friendly relations. The legend of a Princess of Ayodhya who traveled to Korea in the 1st century A.D. to marry King Kim Suro perhaps laid the foundation of cultural and spiritual values that we share today.

The enduring philosophy of Lord Buddha, which has influenced the lives and thoughts of the peoples of our two countries, has also provided a strong link. India was the chairman of the nine-member U.N. Commission set up to hold elections in Korea in 1947.

The work by the 60th Indian Field Ambulance Unit of the Army Medical Corps during the Korean War symbolized our friendship. India was also chosen as the chairman and executive agent of the Neutral Nations Repatriation Commission and was entrusted with the responsibility of organizing an Indian Custodial Force to resolve the difficult issues concerning the prisoners of war and their repatriation.

India and Korea established consular relations in 1962. In 1973, the relations were upgraded to ambassador-level. Prime Minister of India P.V. Narasimha Rao paid the first-ever visit by an Indian prime minister to Seoul in September 1993.

The visit paved the way for Korean conglomerates such as Samsung, Hyundai and LG to enter the Indian market.

The state visit of President Roh Moo-hyun to India in October 2004 proved to be a milestone in enhancing bilateral relations.

During his visit, the two countries decided to establish a ``Long-term Cooperative Partnership for Peace and Prosperity.'' Following the state visit of President A.P.J. Abdul Kalam to Seoul in February 2006, India-Korea relations entered a new vibrant phase.

The year 2007 has been successful year for India-Korea relations.

Economic complementarities and political convergences have further elevated this close relationship to a higher pedestal.

There were a number of important bilateral visits including the visits of Song Min-soon, foreign minister, to India to attend the South Asian Association of Regional Cooperation meeting held in New Delhi in April 2007 and Indian External Affairs Minister Pranab Mukherjee's visit to Korea in September 2007 to co-chair the fifth Joint Commission Meeting.

There is a growing desire to strengthen the defense and security cooperation which is reflected by the first ever visit of Kim Jang-soo, minister of national defense, to India in June 2007.

Both India and Korea have constituted their Parliamentarians' Friendship Associations. Visits of a number of other political and business delegations during the year contributed to further strengthening of relations.

President-elect Lee Myung-bak visited India in April 2007.

During his visit, he had a very fruitful meeting with the Indian President. The two leaders agreed on the need to launch a ``World Knowledge Platform'' to optimize core competencies of participating members.

Lee addressed an interactive luncheon meeting with the business leaders, hosted by the Confederation of Indian Industries, visited a premier engineering institute, the Indian Institute of Technology in New Delhi, and visited the IT city of Bengaluru.

Bilateral trade has more than quadrupled over the last five years and has crossed the $10 billion mark, well ahead of the target date of 2008.

Negotiations on the Comprehensive Economic Partnership Agreement, which is an FTA plus agreement, are proceeding smoothly and only a few outstanding issues remain before finalizing the draft agreement.

Similarly, Korea is among the important investors in India. With the investment of POSCO ($12 billion), Korea is likely to emerge among the top investors in India.

However, compared to the potential that exists, India-Korea trade and investment are still miniscule. Tremendous potential exists for Korean investment in sectors like energy, automobile, food processing, pharmaceuticals and major infrastructure projects.

To facilitate investment, the Department of Industrial Policy and Promotion in the Ministry of Commerce and Industry in India has set up a Korea desk to help investors from Korea.

India would not only provide a large market, but would serve as a regional hub for Korean companies to access markets in neighboring countries and in the Middle East.

India's rapidly expanding economy and our big market makes India an attractive destination for Korean investors. The government of India is pursuing reforms and liberalization not out of any compulsion but out of conviction and consensus.