Indian Economy - News & Updates - Archive

[Bushroda]

For want of a hotel room, a booming Mumbai stagnates
MARCUS GEE
Globe and Mail, Canada
February 20, 2008

MUMBAI -- Arriving in Mumbai at midnight after a 20-hour journey, I find my hotel has never heard of me. A night clerk flips through a stack of reservation slips. No such person. Producing an e-mail confirming the reservation leaves him unmoved. I can stay for one night, that's it.

The next day a travel agent searches every known hotel in the city for a room. All booked - except the Maharaja Suite at the Leela Kempinski for $2,000 (U.S.). I try to imagine explaining that item on my expense report.

Finally, a second travel agent finds me a $500 room at the Grand Hyatt, a walled oasis of luxury in neo-Dickensian Mumbai; but again, only for one night.

As I steel myself to join the millions of people living on the city's pavement, a distant cousin living in the city with her Indian husband invites me to stay at their place. Saved.

But why is it that the financial capital of the world's second most populous country has no hotel rooms to spare? And what does it means for the booming Indian economy?

To find out, I went to see Adarsh Jatia, director of the Indian group that put up Mumbai's new Four Seasons hotel, which opens next month. A gorgeous glass tower with rooms panelled in blond wood, it stands in splendid isolation amid a collection of shacks in a developing, but hardly glamorous, district.

Mr. Jatia tells me it cost $100-million to build. Rooms will go for $500 a night, about what an Indian farm labourer earns in a year. Filling those room will be a piece of cake. With India's can-do economy growing at around 9 per cent a year, outsiders are thronging to India to get in on the action - government delegations, corporate titans, business owners, inquisitive tourists. The government expects 10 million visitors a year by 2010, twice the current figure.

If I can't find a single room for the night, where are they all going to stay? India has only about 100,000 hotel rooms in the whole country. To put that in perspective, New York City alone has 74,000. In the four- and five-star category suited to business travellers, it has just 40,000 rooms. Mr. Jatia says it needs 100,000 more.

Things are so tight that in the information technology hub of Bangalore some business travellers have been forced to commute there from Hyderabad, an hour away by air. "Not many people are going to want to come to a country where you have to fly to another city to sleep," said Mr. Jatia, a suave 28-year-old in a pink shirt whose family partnered with Canada's Isadore Sharp to put up the Four Seasons. "India's reputation is at stake."

He's right. The hotel room shortage is a sign both of India's success and its failure. Its economic success makes everyone want to come here; yet in many ways it is failing to cope properly with the boom.

To fill the gap, big Indian and international hotel firms are rolling out ambitious plans for expansion.

An arm of the Hyatt group plans to open hotels with a total of 3,000 rooms over the next decade. Citymax Hotels India, a branch of Dubai-based Landmark Group, expects to open 30 mid-market hotels in the next decade.

It's not nearly enough. In the hottest market, Mumbai, Mr. Jatia says, just two major five-star hotels are under construction. Red tape discourages some potential entrants. Mr. Jatia had to get 150 government permissions for the project: permission to excavate, permission to build a basement, permission to build above ground level. He even needed permission to have music broadcast in the hotel, considered a public space.

Real estate prices are another barrier. Sky-high prices in Mumbai mean that it doesn't make sense to buy land just for a hotel. Since work began on the Four Seasons, the plot it sits on has increased in value by a factor of 10, to $200-million.

As demand for hotel rooms exceeds supply, the inevitable happens: prices soar. Average room rates are up 40 per cent in the past year alone, hardly an incentive to visit. American Express predicts that high-end Indian hotels will see another 38- to 41-per-cent rise in 2008, 34 to 38 per cent for mid-range hotels.

"The hotel bill is the first bill you have to pay," Mr. Jatia notes. "It makes you think: This is an expensive city to be in."

The hotel room crisis is a rather typical one for India. As the country charges into the 21st century after decades in the doldrums, everything is under stress: roads, ports, airports. Hotels, too, are an essential part of any modern country's infrastructure.

You can't do business without moving around and you can't move around unless you have somewhere to sleep.

India needs more hotels, and fast.

 

[Bushroda]

Bollywood backers bid for cricket's million-dollar men
Mario Xuereb
The Age, Australia
February 21, 2008

IT WAS the moment cricket joined the free market or sold out — depending on your point of view.

The game's centre shifted violently from the green of Lord's and the MCG to the Indian subcontinent, riding on the ready millions of India's business tycoons and Bollywood stars.

An expensive auction for players has decided the composition of the Indian Premier League, the brash, upstart Twenty20 competition that will pit international players in an eight-team tournament over 44 days from April 18.

Andrew Symonds, who has had a problematic relationship with Indian crowds and players, topped the foreign player bids. The Hyderabad side claimed him for $1.47 million, his price propped up not only by his all-round talents, but his decision not to tour Pakistan, which could have conflicted with his IPL commitments.

Symonds' price was second only to the $1.65 million for Indian Twenty20 captain Mahendra Dhoni.

The attention of the cricket world was fixed on the Mumbai Hilton's ballroom as each of the franchises spent up to $5 million and 78 cricketers went under the hammer.

The money goes directly to the players involved in the 44-day tournament, which has set new standards for the commercialisation of the game. The television rights were reportedly sold to Sony Television for $1.08 billion for 10 years, while Channel Ten is showing the series in Australia, having shelled out more than $10 million over five years.

The league's co-founder, Inderjit Singh Bindra, did not spare the hyperbole when he said the sight of all the money in display was more arresting than even the game itself.

"The market is determining the price. That's how a free market economy should flow," he said. "I have never seen anything so riveting and so absorbing and so exciting, even on the field. It's amazing drama."

While India players were heavily favoured, Australians were in high demand. Joining Symonds in Hyderabad is Adam Gilchrist, who fetched $765,000.

He was being chased by IPL glamour side Kolkata, owned by the biggest star in Bollywood, Shah Rukh Khan, who turned up in trademark bangs, dark aviators and with leopard-skinned wife in tow. Instead, Khan picked up Ricky Ponting for a relatively modest $436,000.

More popular was fast bowler and sometime Indian pop star Brett Lee, who went to the other Bollywood-backed side, Mohali, for $981,000.

The team's part-owner, Preity Zinta, caused a mini stampede among photographers when she emerged from the closed auction to announce some of the winning bids. She ended up pleading for the 200 journalists crammed into a tiny media centre to calm down.

Like the entire Twenty20 concept, there was little room for subtlety. Big hitter David Hussey, who normally plays in front of a handful of spectators in Australian dometic cricket, has the chance to make his name on the world stage, having fetched $738,000 to play with Kolkata. His brother Michael, a more traditional strokemaker, was passed over in the first round of bidding.

Shane Warne turned out to be a first-round bargain, snapped up by Jaipur at his reserve price of $492,000.

Despite the massive bidding prices, the highest-paid players were not those whose services were purchased last night. Each of the teams has a so-called "icon" player — all Indians — who will earn 15% more than the player who attracts the highest bid in their team.

"We are taking domestic cricket to an altogether new plane," said Bindra. "This is a milestone in the history of Indian cricket."

 

[Bushroda]

Indian SMEs among the most upbeat in Asia - HSBC
Wed Feb 20, 2008 6:59pm IST

MUMBAI (Reuters) - India's small and medium enterprises are the most optimistic among their Asian peers after Vietnam while South Koreans have turned cautious, HSBC said on Wednesday, citing a survey.

The survey was conducted in the last quarter of 2007 and covered 2,736 SMEs in nine Asian countries, Puneet Chaddha, HSBC's country head, commercial banking, (India) told reporters.

Around 58 percent of the 333 respondents in India expected the economy to grow, second only to Vietnam, where 90 percent of the respondents expected the same for their economy, he said.

In contrast, more than 80 percent of SMEs surveyed in South Korea expected their GDP growth to stay unchanged or decrease.

A majority of Indian SMEs surveyed plan to undertake capital expenditure in the next six months while 43 percent plan to increase their staff count, the survey said.

The SMEs expecting faster economic growth far outnumbered those expecting a slowdown, Chaddha said. "SMEs are not competing on price, they are picking up niches," he said adding the companies expect cross-border trade to grow further.

 

[Bushroda]

India's H1 consumer confidence at all-time high - MasterCard Worldwide survey
CNN Money
February 20, 2008: 08:01 AM EST

MUMBAI, Feb. 20, 2008 (Thomson Financial delivered by Newstex) -- MasterCard Worldwide said its index of consumer confidence for India came in at 86.6 on a scale of 100 during the first half of this year -- the highest-ever score for India since the survey commenced in 2004 -- showing increasing optimism amongst surveyed consumers.

Nitin Gupta, who manages the South Asia operations of MasterCard Wordlwide said the results show a significant jump in consumer confidence compared to the corresponding period last year, when the index stood at 65.1, and the 63.6 seen in the second half of 2007. The score was higher across all five components - employment, economy, regular income, stock market and quality of life, showing the opinion is both 'deep-rooted and all-pervasive', MasterCard said in a release.

Suman Bery, director-general of independent economic think-tank National Council for Applied Economic Research (NCAER), said the survey results were quite 'unexpectedly buoyant' and reveals the increased optimism among middle-class consumers living in major Indian cities.

The findings are taken from a broad survey conducted across the South Asia, Middle East and Africa (SAMEA) region on a bi-annual basis, with a sample of urban individuals within the age group of 16-64 who own a bank account, the unit of MasterCard Inc (NYSE:MA) said.

Egypt's performance on the index dropped significantly to 65.9 from 78.2 for the first half of 2007, while the indices for the United Arab Emirates showed a smaller decline. Other countries surveyed showed no drastic changes, it said.

 

[Bushroda]

Is India's oil-to-retail giant setting up a fab?
Sufia Tippu
EE Times Europe
02/20/2008 5:48 AM EST

BENGALURU, India — An Indian government minister has announced that Indias largest corporate house, Reliance Industries Ltd., might consider investing in semiconductor activity.
Reliance Industries (Mumbai, India) is an oil company that has expanded into chemicals, textiles, clothes and retail activity and in 2007 made a $2 billion profit on annual sales of about $28 billion. Reliance doesn't have any paperwork or semiconductor business plan, but the announcement by the Minister of State for Commerce, Jairam Ramesh at the Indian Semiconductor Association summit here on Monday (Feb. 18) grabbed attention.

A RIL spokesperson declined to comment on the minister's announcement. Industry observers attending the ISA said it is unlikely that Reliance would opt for a sand-to-silicon manufacturing model.

"If they could invest the money in petrochemicals the returns they would get would be much more than what they would get in the semiconductor industry. The fundamental mantra of the Reliance group is to get 20 per cent returns year on year. I doubt whether they would go in for such a huge investment in the semiconductor sector at this point in time where tangible returns would come only after seven to 10 years," said one observer.

But some venture capitalists tracking the semiconductor segment said a government-backed venture by Reliance could be part of a bigger sand-to-consumer strategy that could fit with the government's national development strategy.

"I think it [the semiconductor plant] is a subset of a much bigger, comprehensive electronics manufacturing strategy that RIL is drawing up. You see the PC, laptop and cell phone market in India is exploding. For instance, India is adding 8 million phones a month and about 30 to 40 percent are being manufactured locally. If RIL is looking at the bigger picture which spans manufacturing across these two verticals, then setting up a manufacturing plant makes much more business sense," said Bob Kondamoori, managing partner of Sandalwood Partners (Santa Clara, Calif.), a venture capital firm that invests in India.

"Today, at the current value, setting up a fab with a $5 billion to $7 billion investment is not possible. It would need to be more because the investment that went in from Chartered Semiconductor for its Singapore plant was close to $15 billion. If you were talking about this kind of a plant three years ago, it could be in that range (of $5 billion to $7 billion) but in todays scenario you would need $15 billion. And, it is not like an oil company blueprint — here you need a world class team and technologies put together to come up with a successful business venture," he noted.

 

[Bushroda]

India to launch prototyping fab
K.C. Krishnadas
EE Times
04/12/2007 3:54 PM

BENGALURU, India — Construction will begin within the next 12 months on a prototype fab which will be part of the India Design Center in Kolkata. The fab is being established by the information technology ministry of West Bengal, with support likely from federal agencies.

The prototype fab will be part of the approximately $120 million design center which also houses incubation centers, chip design and EDA tool development companies. Once the facility is ready, it will serve as the first domestic fab for chip prototyping.

Debesh Das, West Bengal's minister for information technology, said the prototype fab is intended for emerging Indian companies.

Das, a former professor of test technologies, said the state government will also look at offering venture capital to design startups.

According to Pradip Dutta, managing director of Synopsys (India), "The prototype fab will help fabless startups in India who can try out their chips here instead of committing to a foundry elsewhere." He added that the fab will have facilities for characterization and "could even provide 45-nanometer process technologies for prototype purposes."

The fab will be located near prestigious engineering institutes such as the Indian Institute of Technology, Kharagpur (IITK) and Jadavpur University. The former will be the technical partner for the prototype fab.

Most Indian chip designers are located here or in Noida (near New Delhi), Hyderabad and Pune. Synopsys said it is not now considering a tool development center in the proposed facility since it has facilities around the country, Dutta said.

Anand Anandkumar, managing director of Magma Design Automation's Indian operations, also said it has no current plans to launch an additional design center in Kolkata.

Poornima Shenoy, president, India Semiconductor Association, predicted the project will push the Indian semiconductor design ecosystem to a higher level. "Given that the industry is battling a shortage of talent, the emergence of a new center is always welcome," Sheny said.

Others noted that the Kolkatta fab will compete with the existing infrastructure in Bengaluru. "A lot of factors will have to play together" for the new fab to attract customers, said chip industry consultant P.V.G. Menon.

Still, Das said several companies have indicated an interest in setting up operations at the new center. In response, the West Bengal government is planning another facility near IITK to house chip design companies.

 

[Bushroda]

Indian Employees Enjoying Swiftest Pay Hikes
Ruth David,
FORBES, NY
02.20.08, 4:22 AM ET

MUMBAI - Indian employees were at the top of the heap worldwide when it came to salary hikes in 2007, averaging increases of 15.1%, with the highest pay raises in real estate, a new study from Hewitt Associates revealed.

As the fight for talent intensified last year, salary hikes rose from the previous year’s average of 14.4%, according to the study. In 2008, compensation is expected to increase by an average of 15.2%, making it the fifth consecutive year that salaries have risen in excess of 10%.

"The struggle for talent and sustainability is large and rapidly growing in India. Organizations are using compensation as a strategic lever in attracting, retaining and motivating talent," said Sandeep Chaudhary, head of Hewitt's India rewards consulting practice. Hewitt said it had surveyed 540 companies in the country between November and January. The global average increase is estimated at 6%.

Real estate salaries grew by an average of 25.2%, compared with 17.6% in retail and 16.4% in banking and finance. Technology companies have been reporting average wage hikes of about 15%. At an industry summit last month, management executives at a host of companies said finding talent was a key industry challenge. (See: " Indian IT Firms Facing Employee Wage, Quality Pressures")

Staff turnover rates have reached an all-time high in India, Hewitt found, with the insurance industry reporting the highest rate at 35.2%. This was followed by information technology services at 28.9% and the hospitality/restaurants industry at 27.1%. But, as cost pressures rise, companies will have to look beyond compensation and find other ways to retain talent, Hewitt said.

The two fastest-growing cost components in the Indian business environment are real estate and talent. Information technology and outsourcing companies, which are dependent on the U.S. economy for absorbing more than 75% of their production, are now concerned about how to manage these resources, Hewitt found. The rupee appreciated about 12% against the dollar last year, eating into revenue gains for export industries.

Increasingly, middle-management salary increases have also started climbing, accelerating to 15.7% last year. This is largely as a result of a shortage of managerial and technical talent in India, said Hewitt, which estimates that India faces a shortage of leadership talent of 26%.

 

[Bushroda]

India way ahead of China in economic transformation
Tehran Times, Iran
Wednesday, February 20, 2008

India has been ranked 25th in terms of economic transformation, way ahead of world’s fastest growing economy China, which has been placed at the 85th position by a German foundation.

India ranks just behind Singapore (23), Brazil (20) and South Africa (18) in the transformation index prepared by German Bertelsmann Foundation and published in Berlin.

The transformation index is a study of market economics and democracy in 125 transformation states.

In terms of management performance, India has attained the 19th position for its political decision making, equivalent to an improvement of 13 rankings on the previous comparative investigation conducted two years ago and 24 rankings higher than five years ago, the report said.

“The plans of the Indian government to shape the country to become a developed economy and a key player in international politics are now bearing fruit,” Josef Janning of the Bertelsmann Foundation said.

India should also exploit this favorable situation to increase efforts to tackle its greatest problem: the continuously pronounced inequalities in the society, particularly in terms of education, health, social security and earnings, Janning added.

The creation of a greater equilibrium between the regions and enabling as many people as possible to share in economic success should be central objectives of future policy, he said.

The report recommended that India should continue to pursue economic reforms rigorously to sustain the growth rate of eight percent.

The Transformation Index 2008 in terms of economic transformation has been topped by Czech Republic, followed by Slovenia. In terms of the management index, Chile lead the pack, followed by Estonia. However, Myanmar (124) and Somalia (125) are the tail-enders in the index.

India appears for the first time in the group of stable democracies.

“The country has one of the most dynamic national economies in the world is beyond doubt, but deficiencies in the area of reform have threatened to block this development,” the report stated.

The country is well placed in terms of the management index ranking ahead of Singapore (32rd) and China (67th).

“The appraisal primarily lauds India’s efforts to achieve peaceful integration of ethnic minorities and its international cooperation with its regional partners, particularly Pakistan. However, continuing weaknesses include a cumbersome justice system and inadequate protection of civil rights in conflict regions,” the report said.

The evaluation of India in the appraisal is embedded in the analysis of overall development in Asia. This has seen economies in the northern Asian landscape achieving the fastest international growth rates in recent decades.

India, has rapidly developed in about a decade to become a global economic power, the report said, adding that excellent economic performance has also been witnessed in China and Singapore.

A negative aspect is also the fact that the population in only nine of the 21 countries investigated is able to freely elect their rulers.

 

[Bushroda]

BULGING FOREX RESERVES, STRONG RUPEE POSE CHALLENGES FOR INDIA
Trading Markets, CA
Tuesday, February 19, 2008


MUMBAI, Feb 20, 2008 (AsiaPulse via COMTEX) -- IBN | news | PowerRating | PR Charts -- The growing Indian economy will have to learn to deal with the challenges of burgeoning forex reserves and a sharply appreciating rupee in the coming years, a top banker said today.

"Given the growth in the economy, the rupee is going to strengthen further in the coming years. How to utilise the rising (forex) balances is another issue," ICICI Bank (BSE:532174) Managing Director and CEO K V Kamath told a CII-seminar here.

The country's foreign exchange reserves stood at nearly US$291 billion for the week ended February 8 and the domestic currency has appreciated by over 10 per cent against the dollar in calendar 2007.

Citing the creation of Sovereign Wealth Funds (SWF), in countries like China, Mr Kamath said, "the SWF is going to play an important part in the economic growth of emerging markets."

"SWFs provided a bailout of nearly US$70 billion to companies affected by the US sub-prime crisis," Mr Kamath said.

"Of the US$700 billion of estimated spend in the country's development, US$500 billion is likely to come from Indian companies or foreign companies operating in India," he said.

"This shows the growth is possible internally," he said.

He pointed out that India's growth is mainly driven by the booming services industries unlike China, Japan, Taiwan and South Korea, whose growth is driven by their manufacturing sectors.

"Services contribute around 60 per cent to the national GDP, while the share of manufacturing is only 25 per cent."

The CEO of the India's largest private sector lender said that around 600 million people in the country are yet to be brought under the banking system and this provides a great opportunity to the domestic banking sector.

 

[Bushroda]

India, France, Japan May Join Sovereign-Wealth Arms Race
Gregory Corcoran
Wall Street Journal

Is the world beset by dangerous proliferation?

Sovereign-wealth fund proliferation, that is.

Last weekend, the Economic Times reported India was considering setting up a sovereign-wealth fund to invest a small portion of the country’s foreign-exchange reserves, a report echoed today by Reuters. (India’s foreign-exchange reserves were $291 billion as at Feb.8, up 57% from a year earlier.)

Today, AFP reports that Japan’s ruling Liberal Democratic Party will set up a task force this week to study the creation of a sovereign-wealth fund, citing a party official, using that country’s forex reserves. (Those reserves hit $996.04 billion last month, the world’s second-largest behind China.)

Is it getting crowded in the government-investment fund arena, or is it just us? Already there is, by some estimates, $2.5 trillion to $3 trillion held by government investment funds in 15 countries. Total assets are expected to increase to $15 trillion to $20 trillion in the next five years, equivalent to 10% of the world’s capital.

Governments say these are but passive investment vehicles for squeezing a few extra percentage points out of cash reserves. But the envious reactions from rival governments show that this is quickly become a strategic, political arms race.

Perhaps that’s why there is no shortage of alarmism sparked by the increasing buying activity of such funds. Vehicles from Asia and the Middle East have pumped roughly $69 billion into ailing U.S. financial institutions since the credit crunch hit in June. And fund officials have found themselves on the the defensive as politicians from Australia to the U.S. and Europe have threatened closer scrutiny of such investments at least and have rattled the protectionist cages at most.

Certainly the Indian and Japanese proposals are couched in good investing vernacular. Witness an official quoted in the Economic Times article: “The country has piled up large forex reserves for sucking liquidity….The reserves have associated costs. Up to a certain level, the costs are justified in minimising[sic] risk of fluctuations and any kind of shocks.” Beyond a point, however, costs cannot be justified and “therefore we need to find other ways to earn revenue,” the official said.

Interesting is India’s preferred investing targets: energy assets abroad–just the thing to secure the continued growth of India’s sizzling economy.

Thank goodness, then, for plain-speaking French folks like Finance Minister Christine Lagarde, who in a recent television debate more nakedly said she is ’seduced’ by idea of a French government investment fund to counter the rising power of the state-owned funds from the developed world. In time maybe we might be able to look up that French fund at the Web site Les-etats-c’est-moi.com.

 

[Bushroda]

India and China complementary economies: Zheng Xinli
19 February 2008

New Delhi: The Chinese and Indian economies are highly complementary and have great potential for bilateral trade and investment relations, with trade worth $40 billion between the two countries being reached two years ahead of target, Zheng Xinli, deputy chief of the Policy Research Office, central committee of the Communist Party of China has said.

Zheng was speaking at a conference on 'The Chinese economy and society in transition: policies, prospects and challenges', organised by the Confederation of Indian Industry (CII) and the Institute of Chinese Studies.

One of the architects of policy directions taken in China, Zheng was present at the conference along with Zhang Yan, ambassador of the People's Republic of China to India, Dr Patricia Uberoi, director, Institute of Chinese Studies, and Dr Lu Wei.

Speaking at length about the economic and social changes in China over the last 25 years, Zheng asserted that China was on an economic path where it aimed to "quadruple the per-capita GDP of the year 2000 by 2020."

Since 1978, China's GDP had fluctuated for the first 25 years, but has witnessed steady growth since 2000. While per capita GDP was a mere US$250 in 1978, in 2007, it had increased to US$2500.

China's priority, Zheng said, was development 'for the people, by the people and with the people sharing its fruits." He also emphasised the importance of sustainable development.

Zheng mentioned that India and China had common challenges in agriculture, rural industry and social security. China, he said, could learn from India in the services sector, and the slowing down of the US economy provides opportunities for both countries to sustain economic growth through increase in demand and consumption.

Zhang Yan, China's ambassador to India, spoke of the shared vision signed by the prime ministers of China and India recently during Prime Minister Manmohan Singh's visit to China. He said, "Learning from each other and through strategic cooperation, China and India will walk shoulder to shoulder to make the 'Asian Century' and the hope of a more harmonious world would come true."

 

[Bushroda]

Microsoft India opens Tech Lab at IIT Madras
By CXOtoday Staff
Mumbai, Feb 19, 2008

Microsoft India has inaugurated a technology laboratory at the Indian Institute of Technology, Madras (IITM). The IITM Microsoft Windows Technologies Lab has been envisaged as a hub that will harness innovations through research, and provide a platform for faculty and students to leverage the platform for a variety of research and trainings. T.A Gonsalves, head of CSE, and Will Poole, vice president of Microsoft, inaugurated the laboratory.

Microsoft Unlimited Potential focuses on transforming education, fostering local innovation and enabling jobs & opportunities through relevant, accessible, and affordable technology solutions. The laboratory is part of the same initiative.

Latif Nathani, general manager, (Unlimited Potential Group), Microsoft India, said, "Education and enhancement of technological skills remains crucial for India's continued growth. The investments made in it over the years have propelled India's growth in the knowledge economy; and if India has to continue to exert an even greater influence across the globe, it will have to foster innovation. We at Microsoft believe that it is critical to continue the focus on education and this laboratory at one of the country's premier institutions is a step towards harnessing the potential of our youth".

The laboratory will offer MS technology for the faculty and students to work with. In addition to helping students with their B Tech and M Tech projects, as well as MS and PhD research, the laboratory will have experts from Microsoft visit the institution regularly to conduct seminars and workshops. The company envisages that an integration of research and innovation will in the long term enable incubations from the Institute and beyond.

V Kamakoti, of department of CSE, said, "With the advent of multicore architectures, deep understanding of the internals of operating systems is crucial to ensure efficient utilization of the underlying hardware. This IIT M-Microsoft interaction shall enable this."

The initial focus in the Lab will be on Windows terminal services, device drivers, Windows Embedded, networking protocols, Windows Kernel, Windows Mobile, and Multi-modal localization.

 

[Energon]

^^ This is great news. The one thing I've noticed about India is the absence of a strong relationship between the private sector, educational institutions and the government. Dr. Kalam has come up with many novel ideas to establish this "golden triangle" and I'm glad to see that progress is being made on this front. It's just too bad that the initiatives are coming from foreign companies and not local conglomerates.

However, a true golden triangle cannot be complete unless India first establishes intellectual property rights systems.

 

[Bushroda]

More Ways to Invest in India
Two exchange-traded funds focusing on this fast-growing nation debut this month.

By Amy Bickers
February 21, 2008

India is one of the great economic growth stories of the 21st century. The nation has undergone an astonishing transformation over the past 17 years, as the government has shifted away from socialism and opened and reformed its economy. Today, India (along with China) is one of the fastest-growing countries in the developing world.

India's powerful economic growth, coming from expansion in both services and manufacturing, is a strong indicator of its burgeoning economic clout. According to the government, gross domestic product in India expanded by 9.6% in 2007 and 9.4% in 2006, helping to make the economy the world's 12th largest.

Fueling the expansion has been rapid growth in services, including call centers, software design and back-office out-sourcing. The ability of Indian companies to design and produce well-made goods at a fraction of U.S. costs has also helped India become a major exporter.

The booming economy, hefty corporate profits and an unprecedented flow of foreign investment have propelled a spectacular surge in Indian share prices. Over the past five years through February 20, the Bombay Stock Exchange's 30-stock Sensitive Index, or Sensex, returned an annualized 40%. Real estate, banking and information-technology stocks have been at the forefront of the boom.

The outlook for the Indian economy remains bright, but the picture for Indian stocks is murkier. Volatility has increased amid concerns about the global credit crunch and the rupee's strength against the dollar, which hurts Indian exporters. Year-to-date through February 20 the Sensex has lost 13%.

Meanwhile, the fund industry is supplying U.S. investors with an expanding range of choices for investing in India. The first of two exchange-traded funds that focus on India is due to launch on February 22, and the second one is expected to follow quickly.

ETFs, which trade just like stocks, are funds that hold pools of securities and are designed to follow a specific index. They include mechanisms designed to keep the funds' share prices close to the value of their underlying assets.

Emerging from the gate first is WisdomTree India Earnings. Relative stock weightings in this ETF, like others from WisdomTree, will be based on a company's earnings rather than market capitalization. The ETF (symbol EPI) will draw from a universe of 150 profitable Indian companies that WisdomTree will reviewed annually.

WidsomTree's research director, Luciano Siracusano, says it's important for investors to consider the fund in the context of their overall investment plan. "People need diversity by having exposure around the world," he says. "But investing in India and other emerging markets should be done in the context of a larger global asset allocation model."

Also due out soon is PowerShares India Portfolio (PIN). This ETF, which is scheduled to start trading before March 1, will track an index of 50 stocks developed by Indus Advisors. The index is designed to represent the overall Indian stock market.

Exchange-traded notes are similar to ETFs. But instead of owning a basket of stocks, as ETFs do, ETNs are a type of debt instrument that's linked to the performance of an underlying index.

The iPath MSCI India ETN (INP), tracks a group of 62 Indian stocks. But because of a decision by Indian securities regulators, this ETN's sponsor, Barclays Bank, cannot issue more shares. As a result, the ETN now trades like a closed-end fund (see more on closed-ends below).

The ETN had a great run in 2007, but '08 has been a stinker. The stock, which closed at $76.38 on Feburary 21, is 35% off the $118 intra-day high it hit on January 14.

For investors who want a traditional open-end fund, all but one of the five choices are unattractive because they levy sales charges. The exception is the no-load Matthews India fund (MINDX). In 2006, its first full year, the fund returned 36%, compared with a 47% gain by the SENSEX index. However, in 2007, Matthews India soared 64%, outrunning the benchmark index by 17 percentage points.

So far, 2008 has been difficult. The fund has lost 17% year-to-date through February 21. Co-manager Sharat Shroff attributes the drop to the fund's heavy weighting in consumer stocks, which have performed poorly recently. "People in India are buying cars and cell phones and taking out mortgages for the first time and we are focused on that domestic consumption," says Shroff.

Key holdings include Infosys Technologies (INFY), a technology outsourcing company; Dabur India, a healthcare company; and wireless-phone service provider. Matthews India requires $2,500 to start. It carries a reasonable annual expense ratio of 1.41%, and charges a 2% redemption fee on shares sold within 90 days of purchase.

The only other open-end fund with a track record of at least a year is Eaton Vance Greater India. Its class A shares (ETGIX), which levy a front-end sales charge of 5.75%, have returned an annualized 45% over the past five years through February 20. Top holdings include industrial materials giant Reliance Industries and HDFC Bank.

Investors can also buy into India through two closed-end funds. Closed-ends issue a set number of shares and then trade just like stocks. Supply and demand determine the price of closed-end shares, which typically trade above or below the underlying value of the funds' assets.

Both India closed-ends earned astronomical returns in 2007. On the basis of its net asset value (NAV) per share, Morgan Stanley India Investment fund (IIF) soared 70% in 2007, while its share price jumped 50%. Over the past five years through February 15, the fund gained 48% annualized on assets and 51% annualized on the basis of its share price.

But the fund's NAV has dropped 16% so far this year, and its share price has fallen 20%. As of February 20, the fund, which closed that day at $43.40, sold at a 5.9% discount to NAV. The fund's annual expense ratio is 1.35%.

The performance of India fund (IFN) has been similar. Over the past five years through February 15, it returned 44% annualized on assets and 46% annualized on its shares. Year-to-date, the fund has dropped 15% and 16% on NAV and share price, respectively.

The fund, which carries an expense ratio if 1.41%, recently sold for a 5% discount to NAV. The shares closed at $52.47 on February 20.

 

[Bushroda]

U.S workers fear for their jobs as Indian salaries boom
Nic Paton
Management Issues, UK
22 Feb 2008

A third of American firms are considering freezing their hiring or even cutting staff as the financial turmoil following the sub-prime mortgage-led credit crunch starts to bite ever more deeply.

Yet at the same time across the globe their counterparts in India are revelling in record pay rises.

Figures from the U.S. Labor Department have shown a slowdown in hiring activity in December, although this is traditionally one of the slower months for hiring anyway.

There were 4.6 million new hires hired during the month, down from a peak of 5.1 million in July 2006, and 4.04 million job openings, down from 4.4 million at the same point a year ago.

The employment consultancy Mercer has also warned that firms are starting to take "a harder line on adding staff", with job-seekers finding it harder to switch jobs too.

A study by consultancy Spherion has concluded that overall worker job confidence fell for the sixth consecutive month in a row in January, and was now at its lowest level since the survey started in 2004.

The survey of 3,137 employed adults showed that 16 per cent of workers believed there were more jobs available, down from 19 per cent in December.

Just nine per cent of workers believed the economy was getting stronger in January, down from 12 per cent in December.

But while American workers are suffering, their counterparts in India are laughing all the way to the bank.

Fuelled by a booming economy, growing at between 8-9 per cent, Indians are now enjoying some of the highest salary hikes in the world.

Salaries were expected to rise by 15.2 per cent this year, against 15.1 per cent last year, according to a survey by consultancy Hewitt Associates.

The pace of economic growth rate was giving employees greater career opportunities than ever before, while employers were increasingly using compensation as way to attract and retain key workers, said Sandeep Chaudhary, leader of Hewitt's rewards consulting practice in India.

But he also predicted the annual increase in salary might come down and stabilise to between 9-10 per cent by 2012.

And, in perhaps the quirkiest survey of the week, fewer than a tenth of U.S. workers, meanwhile, have said that if their job was a person they would love it enough to marry it.

While four out of 10 of the 1,215 workers surveyed by research firm Taleo said their relationship with their job was "OK", a third, perhaps worryingly, said they liked their job enough to date it.

A total of five per cent hated their job and would break up with it immediately if it were a person, the survey added.