Indian Economy - News & Updates - Archive

[Bushroda]

Lankan pilots eye growing Indian market
Peninsula Online, Qatar
3/17/2008

Colombo • With the opening up of Indian aviation to foreigners, pilots from Sri Lanka have been eyeing the expanding Indian job market.

At least 15 of them, including three or four expatriates, have joined one Indian airline or the other in recent months, a spokesman of the Sri Lankan Pilots Association said.

"Jet Airways and Kingfisher are offering high salaries to get recruits from Sri Lanka. Kingfisher is planning to go international in its operations and is desperately looking for experienced pilots," he said.

Middle East airlines like Emirates, Qatar and Etihad are also attracting Sri Lankan pilots.

"So far Sri Lanka has lost 25 pilots. But we have also had four or five joining us from overseas. There is a global churning in the aviation industry in which airlines everywhere are gaining and losing personnel," the spokesman said.

India is facing a shortfall of over 600 pilots. In 2007, for instance, India needed 4,540 pilots but had only about 3,900. Not all the vacancies could be filled with local recruits.

The prospect of getting pilots from abroad to fill the gap has improved immeasurably because of a significant change in New Delhi's policy on the recruitment of foreign nationals.

"India is now giving work visas without a fuss to personnel of the executive cadre if the companies make a request for them," said an Indian official who did not want to be identified.

India has not waited for the signing of the Comprehensive Economic Partnership Agreement (CEPA) with Sri Lanka to throw open its services sector to Sri Lankan executives.

Sri Lankan companies that operate in India like Brandix Textiles (based in Visakhapatnam) and Aitken Spence (with resort hotels in Kerala) have been allowed to employ their own nationals in executive positions.

But when the CEPA is signed, recruitment of foreign personnel will get legitimised and opportunities will naturally increase.

Indian Minister of State for Commerce Jairam Ramesh said in Colombo recently that India would not insist on reciprocity when opening up its services sector to Sri Lankans once the CEPA was signed.

Ramesh's statement is partly founded on a shortage of personnel at the highest levels in Indian industry thanks to the booming economy. The supply of trained and experienced personnel does not match the growing demand.

A survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) showed high-level personnel shortages in a variety of industries and economic sectors.

"Shortages were seen at the shop floor level," an Indian official said.

Partly because of the shortage, executive salaries have been hiked to very competitive levels in India. It is said that in recent times, salary increases have been the highest in India and China because of their growing economies.

The CEPA, marked by liberalisation of the trade in services, will benefit Sri Lankans more than Indians because there will be a movement from Sri Lanka to India and not the other way round, Indian officials said.

Sri Lanka has been wary about liberalization in the trade in services because of the fear that Indian professionals will swamp the Sri Lankan market and squeeze the locals out.

But Indian officials said this is unlikely to happen, given the economic conditions in India and Sri Lanka. The Indian economy is booming with an expanding industrial base while the Sri Lankan economy is stagnant with a dormant industrial base. This difference will influence the movement of service personnel.

If today Sri Lankan pilots are seeking work in India and not the other way round, it is because of a boom in Indian aviation and deterioration in the condition of Sri Lankan aviation. Sri Lankan aviation received a major blow when Sri Lankan Airlines, the state-run national carrier, did not renew the management contract with Emirates. And the Tamil ethnic conflict continues to hamper domestic aviation.

 

[Bushroda]

The smart money's riding on India
by Patrick Frater
Variety Asia, Hong Kong
Monday, 17 March 2008

China Film Group, the production-distribution combine that bestrides the Chinese movie industry in a fashion unlike that of any other company in any other major movie economy, is ramping itself up for a stock market listing sometime this year.

The flotation, if it goes ahead -- CFG's previous attempt in 2005 was canceled -- will be a fascinating test of investor sentiment toward the Chinese entertainment sector. And it may give some further clue as to how far the Chinese industry is to be free to evolve.

One crucial question is whether foreign companies will be allowed to buy a stake of any significant size. Some might be happy with just a tiny parcel if that allows them a decent look at CFG's books and a better insight into the highly opaque finances of the Chinese industry.

It is not just Rupert Murdoch and News Corp. who have come to the conclusion that trying to build an entertainment business in China is simply too hard.

Warner Bros. last year walked away from its investments in China's hardtop sector, having found the regulatory environment too rigid for its liking.

Although China is too big and growing too fast to ignore, it's India that comes out on top when attracting coin from financial investors and industry alike.

Compare the Indian case with Korea, where local movie performance and exports have wilted lately, and with China, which offers poor returns and the constant threat of soverign intervention. Japan's stability and established brands mean investors may now be reassessing their previously cool attitudes to the world's second-largest entertainment economy.

Ashok Amritraj, an Indian-born Hollywood insider who is in the process of setting up shingle Hyde Park Asia, says he is close to launching local production deals in India, Korea and Japan. But, he admits, "I cannot figure how to do this in China yet."

Similarly, Continental Entertainment Capital, which is looking to replicate in Asia the project- and structured-financing activities it has in the U.S. and Europe, is steering a careful line on China.

Managing director D. Jeffrey Andrick says, "We are not excluding mainland China," and he suggests that budgets are often too low to justify sophisticated product like gap- or super-gap funding. But he is excited by growing global demand for the Weinstein Co., which successfully raised a $285 million fund to back Asian movies, and has a piece of big-budget Jackie Chan/Jet Li starrer "Forbidden Kingdom."

However, TWC was recently denied a permit to shoot "Shanghai," which would have been the first pic originated and bankrolled through the fund. If China's current crackdown on co-productions continues, company will have a harder job disbursing all the coin it raised.

Contrast that with the overseas cash flowing into Indian film and TV. Four Indian content companies have successfully raised money on the AIM section of the London Stock Exchange. In the last 12 months, Hollywood studio congloms Viacom, NBC Universal and DreamWorks (through Thomson) made their first content investments in India. Disney paid $230 million to raise its stake in UTV from 14% to 32%. Meanwhile, Sony and Singapore's WSG committed themselves to spending $1 billion for Indian sports rights.

Investors in India and Korea are well aware of the boom-and-bust cycles those countries' movie sectors have weathered over the past 10 years, and both could turn again. But without any meaningful foreign participation in CFG, China will miss an opportunity to lay to rest accusations that in the content biz it is isolationist, protectionist and a difficult place to do business.

 

[Bushroda]

Industrial sector to grow at 10.4 per cent in 2008-09: CMIE news
15 March 2008

Mumbai: Industrial sector in the country is expected to grow at 10.4 per cent, economic think-tank Centre for Monitoring Indian Economy said in its projection for the Indian Economy.

CMIE has pegged industrial expansion in the country at 10.4 per cent for fiscal 2009, despite a gloomy picture painted by the latest government data on industrial growth

"We expect the industrial production to grow by 10.4 per cent in FY09. The current investment boom is expected to correct the slowdown problem," CMIE said in its monthly report.

CMIE attributed the current slowdown in industrial production to supply problems faced by sectors like cement, aluminium, electricity and steel.

Industrial production growth in India slipped to 5.3 per cent in January against a 11.6 per cent growth achieved in the same month last year as growth in all major sectors, including manufacturing, electricity and mining, declined.

"We expect interest rates to start easing in the first quarter, thus, reviving demand for consumer durables," the report added.

Gross capital formation in the country is expected to increase by 15.5 per cent in FY09 while the country's gross domestic product (GDP) was expected to grow by 8.9 per cent in FY 08 and 9.1 per cent in FY 09, CMIE said.

India's real GDP grew by 7.5 per cent in FY 05, nine per cent in FY 06 and 9.6 per cent in FY 07.

CMIE based its projection of a 9.1 per cent growth in real GDP in FY09 on the assumption of an adequate monsoon as also the proposed sharp cuts in tax rates

 

[Bushroda]

Booming India discovers a luxury: retirement homes for seniors
St. Catharines Standard, Canada
15 Mar 2008

She grew up listening to her grandparents' stories over dinner, three generations gathered in the house they shared, like nearly every Indian family she knew.

But now that Uma Paranjpe is a grandmother, she finds herself living alone in a small apartment, her children abroad, her grandchildren far from her cooking and her stories.

And she's thrilled.

"Grandparents also want their own independence," said the 62-year-old widow, who lives in a bustling retirement community in this southwestern Indian city. "We want freedom. We would like to travel, to pursue our hobbies."

A cultural revolution is underway in India, led by an unlikely grey-haired vanguard that is dramatically changing what it means to be old here, and what it means to be a family. In a country where family is society's strongest cultural anchor, the thought of the elderly living alone has long been anathema, but many old people today are embracing the notion.

With the economy booming, children are moving away for jobs, leaving elderly parents on their own. While some lament the breakdown in family as a sign of cultural decline, others - especially the well-off - are happy to devote their old age to themselves instead of their grandchildren.

The new retirement communities are so far available only for the rich. There's nothing between the high-end faux Florida facilities and bleak government-run homes for those with nowhere else to go.

Roughly a dozen development companies across the country offer sparkling facilities complete with badminton courts, lap pools and game rooms to the wealthiest sliver of the country's 80 million people over 60.

Seniors in India traditionally occupy a role somewhere between family pillar and dependent hanger-on, with more than 71 per cent of the elderly living with their children or grandchildren, according to the 2001 national census.

Grandparents can be revered keepers of family lore or ghostly presences cooking nearly-forgotten recipes. But from teeming cities to sleepy villages, caring for one's parents is to most Indians a duty as important as caring for one's children, and home after home across the country is crowded with the same mix of generations.

 

[Bushroda]

Entertainment biz to double India’s overall growth
BY CHRIS NELSON

MUMBAI, India – The development of new technology, digitization of content and new distribution systems will fuel the Indian media and entertainment industry’s growth rate to double that of the country’s overall economy through 2011, according to a new report conducted jointly by audit and consultancy firm Ernst & Young Pvt. Ltd. and the Associated Chambers of Commerce and Industry of India.

The groundbreaking study, issued last December, predicts that digitization will influence substantial change in the industry, which according to Ernst & Young, is worth approximately $11 billion.

“Film and television account for over 50 percent of the entire media and entertainment industry and, with digitization, which is largely driven by change in media consumption habits of consumers and regulatory pressures, half the business will completely change over the next three years,” Farokh T. Balsara, a partner at Ernst & Young India in Mumbai and the head of the company’s media and entertainment division, stated in the report.

Titled “India’s Digital Revolution: Impact on Film and Television Sectors,” the 28-page study predicts that by 2010, more than one-quarter of the 100 million or so Indian households that pay for television service will have switched over to digital pay-television service, with direct-to-home, or DTH, trumping digital cable and Internet protocol television as the most popular means of delivering the service.

Balsara credits DTH’s stability, the lower cost of delivering digital pay television via the technology, particularly in rural markets; and the relatively quick pace which DTH has been brought to the masses as reasons why it will emerge as the victor over digital cable and IPTV in the years ahead.

“Consumers would benefit significantly through improved service quality, increases in content variety, interactive offerings and differential pricing,” Balsara wrote.

Ernst & Young India and the Associated Chambers of Commerce and Industry in India conducted the study over a three-month period by interviewing officials from the Indian entertainment and media industry and related groups in Mumbai, New Delhi and Chennai. The South Asian nation is the world’s third-largest cable- and satellite-television market, with approximately 70 million households; over the last 17 years, the Indian media market has grown by more than 38 percent on an annual basis.

According to Balsara, government regulations and the industry’s own disorganization have limited the growth of the country’s pay-television market, but that should change with the advancement of digitization.

“The pay-TV market in India has not been able to maximize its revenues due to restrictive regulations, an organized value chain and lack of addressability in the analogue platform,” he said. “However, with digitization of the platforms, more value will be created for each player across the value chain.”

He added that local cable providers comprise about 78 percent of the overall market, but by 2010, their reach is expected to decline to 24 percent.

The report also predicts that changing consumer preferences will have a major impact on advertising revenues of various media platforms. For example, online advertising in India currently stands at approximately $87 million, while overall media spending is roughly $5.5 billion. But in the next three years, online advertising should increase significantly, according to Balsara, though he noted that any increase in online advertising expenditures won’t affect television advertising, which currently accounts for 43 percent of the Indian entertainment and media industry’s advertising revenues.

“Over the next three years, the television-advertising market is expected to grow at the rate of 14 percent on year [sic] and will continue to maintain its 43-percent market share in the advertising pie,” Balsara said. “We expect that with any increase in the overall advertising spending, the share of television will also increase proportionately.”

However, the greatest impact of digitization may be felt by India’s massive film industry, which produces over 1,000 movies annually in more than 10 regional languages. According to the study, a confluence of factors including rising incomes, increasing content choices, digitization of film distribution and digitization of pay-television will collectively change the face of the country’s film industry.

“While investment in exhibition software is increasing theatrical capacity, digitization of distribution is helping film makers maximize theatrical revenues as well,” Balsara wrote. “In addition, the higher penetration of television sets, [video compact discs] and DVDs and the digitization of pay-television is opening up avenues for new revenue streams and business models.”

The study predicts that revenues generated by sales and rentals of DVD and digital compact disc movies will soar by 500 percent over the next two years, mainly because digitization of films will expand access of movies to Indians living in smaller cities and semi-urban areas.

 

[Neo]

GM to launch second small car in India ​

NEW DELHI: General Motors Corp wants to launch a second small car in India in the next two years as it looks to capitalise on growth in emerging markets to offset any sluggishness in US sales, a senior company official said.

The model will not compete directly with Tata Motors’ low-cost Nano but will be cheaper than GM’s current lowest priced car in India, David Reilly, GM group vice-president, told a news conference on Monday.

Small cars less than 4 metres in length make up nearly three-quarters of India’s market. General Motors offers the Chevrolet Spark in the sector for about 300,000 rupees ($7,350).

“We need some thing lower than what we have got now. I think if we could find a vehicle less than that, it would not only benefit India but could benefit other places also,” Reilly said, without detailing how much the new model would cost.

“But I would not call it an equivalent of Nano.”

Tata Motors unveiled the $2,500 Nano, the world’s cheapest car, in January and said the new four-seater would roll out later in the year from its West Bengal factory.

Reilly said sales growth in emerging markets would outpace any softening in established markets like the United States and would help maintain the firm’s total global sales expansion.

“I don’t predict a slowdown, but this year US would be tough,” he said.

General Motors, which has a 3 percent share of the Indian vehicle market, has a manufacturing plant in the western state of Gujarat and is building a second facility near Pune in neighbouring Maharashtra state.

Reilly said the first trial car from the Pune plant, which will begin commercial production in the last quarter of 2008 with an initial production capacity of 140,000 vehicles, would be rolled out on Wednesday.

The company also plans to build an engine plant in India, but Reilly would not share details.

“We are still in some negotiations ... We absolutely intend to go ahead with it,” he said, adding that the company would be give further information within the next two months. reuters

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Indian inflation leaps to nearly 6pc​

NEW DELHI, March 20: India’s inflation rate jumped by almost a full percentage point to hit a more than 10-month high this month, data showed on Thursday, dashing hopes of a swift interest rate cut to spur a slowing economy.

Annual inflation accelerated by 0.81 percentage points to 5.92 per cent for the week ended March 8 from 5.11 per cent the previous week, according to the wholesale price index, India’s most watched cost-of-living monitor.

The leap was driven by increases in prices of essential goods such as cooking oils, pulses, fruit, vegetables and spices and was bad tidings for the Congress-led government, which largely owes its 2004 national election win to support from India’s poor masses, who have been hardest hit by inflation.

The latest figure “completely rules out the chances of a near-term rate reduction from the central bank despite the slowing economy,” said HSBC economist Robert Prior-Wandesforde.

The government’s focus now would be fixed on battling inflation “given the huge political sensitivity to rising prices in India,” he said.

The new rate came despite aggressive monetary tightening and far exceeded market forecasts of around 5.20 per cent. The level was the highest since late April 2007 when inflation stood at 6.01 per cent and is way above the central bank’s five per cent tolerance level.

The data came a day after the government imposed a ban on the export of cooking oils to curb rising prices. Commerce Minister Kamal Nath said the government might soon cut duties on palm oil imports to help in the inflation fight.—AFP

Indian inflation leaps to nearly 6pc -DAWN - Business; March 21, 2008

 

[Neo]

Moneylenders only hope for India's poor farmers ​

ARTICLE (March 21 2008): Almost every farmer across India's arid cotton-bearing central plateau is a hostage, in one way or another, to a profitable mega-business of illegal moneylending. Families have lost land, farmers have been asked to prostitute their wives to pay off debts and, when all else has failed, borrowers have killed themselves to end their misery.

An inescapable cycle of debt is fuelling one of the worst agrarian crises facing India, a crisis that has seen some 150,000 farmers commit suicide since 1997. Yet the public image of menacing debt collectors does not entirely reflect the views of the region's three million farmers. The rapacious moneylender, who plugs the gaps in rural financial services, is also the man they can turn to in times of need.

Last month, India's government announced a $15-billion loan waiver for small farmers borrowing from banks, but experts say the efficacy of the scheme is badly diluted because it leaves out those borrowing from moneylenders.

"Moneylenders are now an inextricable part of the rural economy," said S. Parasuraman of the Tata Institute of Social Sciences. "So much so the bank has become secondary, or even redundant, for a small farmer."

Moneylenders have been around for generations, but their business has boomed ever since India's economic priorities shifted, with globalisation, from agriculture to industry. The arrival of high-cost seeds and pesticides has added to the debts.

Indeed, one or two crop failures, a sudden health expense or a marriage in the family have become that much more perilous in a livelihood where the risks are already high.

Officially, almost half of India's nearly 100 million farming families are in debt. Of these borrowings, almost 30 percent are said to be in debt to private moneylenders, although farmers' lobby groups say the ratio is many times higher.

Prakash Uike grows soybeans and works as a labourer in a nearby town two days a week to pay moneylenders who gave him $200 two years ago. At $25 every two months Uike's loan should have been covered, but by some wily calculations of the loan-shark he continues to be in debt.

"I have had to mortgage my land to him," said Uike, an emaciated man who looked older than his 47 years. "But at least he has given me a loan." Virtually every cotton farmer in these parts, for instance, needs the assistance of someone like Yakub, a veteran moneylender who gave only one name. Typically, he charges 30-40 percent interest on a four-month loan.

He collects his dues at harvest time, but exacts an extra premium, compelling farmers to sell their cotton to him at a price lower than it fetches on the market, pocketing the profit. As collateral, the borrower signs away his land title that gives Yakub the right to collect the property at any time.

Most deals are illegal because the moneylenders don't have licences, a crime punishable with a $25 fine. Usurpation of property invites three months in jail, but convictions are rare.

Farming distress has attracted a new breed of moneylenders. Anyone with some disposable money - from shopkeepers, government officials and policemen to village teachers - lends in the hope of making a killing. In this dusty town, about an hour's flight from Mumbai, India's financial capital, almost every shopkeeper lends at a premium.

Their names are known to everyone in town, though few are willing to point them out for fear of reprisals. But rural credit and indebtedness is far from being a simplistic usurious lender-farmer spiral.

Even though farming supports 60 percent of India's 1.1 billion people, it contributes only a fifth of gross domestic product and accounts for only around 15 percent of bank credit. Marginal farmers hardly get formal credit because they almost never have any collateral. Other farmers are often underfinanced by banks, forcing them to turn to private lenders whose usurious interest rates bind them to a never-ending cycle of debt. "I have nothing left to mortgage to banks, so they will not give me credit," Uike said. "Where can I go then?"

In fact, bank interest rates are high as well, especially for rural borrowers. At interest rates ranging 13-14 percent for a crop loan, it is cheaper to borrow to buy a small car than to purchase seeds. Sometimes farmers have to bribe bank officials for a loan.

Predatory lenders are only part of the problem. Health-care and education costs have risen dramatically in the past few years, while income from cotton has slumped.

And then there is the growing obsession with the luxury goods that now consume much of the farmers' incomes. Television has given even the poorest a glimpse at the world outside. "People get upset if I tell them to curb the tendency to borrow unwisely," said Kishor Tiwari, a farming activist. "The propensity is to go with the flow, the pocket permitting or not."

Two years ago, a senior local government minister advised people to "skin alive" moneylenders. No one responded. If you hurt the sahukar (moneylender) you hurt the farmer, villagers said, and the clampdown on loan-sharks fizzled out. In every village, moneylenders are reviled, and their business seen as thriving on squeezing out the blood of poor farmers.

Yet, villagers know there is no life without the loan-shark. "We stay alive because the sahukar gives us some money," said Jyoti Sanjay Jiddewar, whose husband killed himself unable to pay moneylender. "I still have to deal with them otherwise we will starve."

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Foreign firms seek a bite of India's $90 billion food market ​

ARTICLE (March 20 2008): When Kellogg launched breakfast cereal in India 14 years ago, it underestimated the stranglehold of traditional cooked breakfasts. Cartons of cornflakes sat unsold on shop shelves. Those who ventured to buy cereal ate it with hot milk, another ritual as until recently milk was rarely pasteurised in India, and they were put off by the soggy consistency with none of the crackle and pop promised by the advertisements.

Kellogg fought back with a massive educational campaign and introduced products to suit local tastes such as Basmati rice flakes and mango-flavoured cereal for sweet-toothed Indians. It also made small packs for 10 rupees ($0.25) to encourage trial.

"It would be foolhardy for me to say Kellogg has replaced cooked breakfast ... I don't think we can ever hope for that," said Anupam Dutta, managing director of Kellogg India. "But we've become a part of the consideration set for breakfast in many Indian homes, and that's a tipping point," he said.

Getting a foothold in India's processed foods market, estimated to be worth $90 billion, requires persistence and a willingness to adapt products to suit culinary and cultural preferences, experts say. Rising incomes, more working women, modern stores and greater culinary adaptation are helping food giants such as Pepsico, Nestle, Unilever, McDonald's and Yum Brands get a piece of the market.

"Every company that wants a share has to invest heavily, localise extensively and be very patient," said Jayanta Roy, at consultancy Frost & Sullivan, which estimates that only a third of the processed foods market is in the hands of large Indian and multinational firms. The rest is controlled by regional firms.

Culinary adaptation appears to be key. Pepsi has had a big hit with ethnic salty snacks and also sells "aam panna", or green mango nectar, along with its colas.

Nestle pushed its Milkmaid condensed milk as being ideal for traditional Indian sweets. But it tasted more success with Maggi noodles, a bold step in a nation divided between eaters of rice and "roti" (flat wheat bread).

Maggi soon became a staple in school lunch boxes, helped by the ethnic "masala" (mixed spices) flavour. Nestle recently launched packaged yogurt, taking on another time-honoured tradition, while French rival Danone, along with Yakult Honsha, launched yogurt probiotic drinks.

A few years back, Indian and foreign firms struggled to push packaged foods. But these days it's much easier to break into the market thanks to a younger population, higher incomes, new technologies and a growing middle class, estimated at some 50 million households.

"We have a young population with higher disposable incomes, living away from the large joint families and seeking greater convenience," said Hemant Kalbag, head of consultancy AT Kearney's retail practice. He estimates processed foods will grow at about 15 percent annually over the next four years.

Large Indian firms are also muscling their way to the table. Top cigarette maker ITC Ltd is adding to its range of instant ethnic foods and pasta, cookies and salty snacks. "Increasingly, Indian consumption patterns are mirroring global trends such as a preference for protein and for functional foods," said Pankaj Gupta, head of consumer and retail practice at consultancy Tata Strategic Management Group.

"So companies can choose to go after the mass market or focus on niche segments which are also viable now," he said. Foreign fast-food chains McDonald's and Domino's Pizza are addding more vegetarian and ethnic options.

McDonald's, which is doubling its outlets in India to nearly 300 this year, does not sell beef products in keeping with the sensitivity of the dominant Hindu population. Half its menu is vegetarian, with best-sellers like the McAloo Tikki (potato patty) Burger. It also has more sit-down eateries for large Indian families and home delivery, a first. Domino's also has a dine-in option in several locations.

Nimble Indian firms are imitating these fast food giants to attract youngsters, who make up about half of India's billion-plus population. Jumbo King, a Mumbai-based eatery is mass producing "vada pav", a spiced potato patty in a bun, using modified cookie dough machines and temperature-controlled stoves, a far cry from the hand-assembled snack sold by street hawkers. "We wanted to give the vada pav a modern look," said Dheeraj Gupta, head of Jumbo King, which also has a whole-wheat option.

"Our inspiration is clearly McDonald's and Subway," he said. Despite the opportunity, challenges remain: cumbersome tax rules give smaller local firms an edge. An inadequate cold chain and storage facilities result in wastage of nearly 40 percent of all fresh produce.

"We need stronger legislation on food safety, more robust supply chains and improvements in the cold chain," Kalbag said. The government as well as modern retailers are addressing these issues, with new laws on packaging and labelling, as well as greater investments in the supply chain.

Changing lifestyles and rising prosperity are also driving the move to processed foods and Indian taste buds are becoming more adventurous. So products such as Unilever's 'Make a Meal' in a range of flavours including one with a Chinese bent are filling supermarket trolleys alongside traditional favourites such as packages of tender coconut water and spiced buttermilk. "The market's constantly evolving and creating demand for products that you never thought would have had a chance," said Kellogg's Dutta.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Indian govt workers’ pay hike to cost Rs125.61bn ​

Tuesday, March 25, 2008

NEW DELHI: An Indian pay panel recommended on Monday an increase in pay and other benefits for federal government workers that would cost 125.61 billion rupees ($3.1 billion) in the fiscal year 2008/09 if taken up.

The panel’s report posted on a government Web site said pay back-dated to January 2006 would cost a one-time 180.60 billion rupees and it recommended a salary increase of 77 per cent for the lowest rung of central government workers.

It suggested the minimum wage for government workers should be 6,660 rupees ($165) a month, and the maximum salary should be 80,000 rupees a month. The report said in fixing the minimum salary it had taken into account the inflationary impact, the knock-on effect on state government pay scales and the government’s ability to pay.

Analysts had been expecting the panel, which convenes about once a decade to assess civil servant salaries, to propose an average increase of 30 per cent for about 3 million central government employees. “The numbers are broadly in line with our expectations for the 2008/09 fiscal year,” said A Prasanna, economist at ICICI Securities in Mumbai.

“Along with the farm loan debt waiver, this means higher market borrowing in the second half of 2008/09, though the first half numbers are likely to be on the lower side. “The government is going to overshoot its fiscal deficit target of 2.5 per cent for (fiscal 2008/09) and we may even see it rising above 3 per cent.”

In the previous pay round in 1997, state governments were forced to match the pay rise for their workers, blowing out the combined federal and state deficit to nearly 10 per cent of gross domestic product.

That pay round raised central and state government workers’ salaries to an annual cost of $13 billion. In February’s budget, Chidambaram revised the federal fiscal deficit estimate to 3.1 per cent of gross domestic product for the 2007/08 financial year that ends in March, and said he aimed to bring it down to 2.5 per cent in 2008/09.

Analysts say a hefty pay rise for central and state government workers, along with other populist measures ahead of general elections due by May 2009, could push the deficit back up again.

Indian govt workers’ pay hike to cost Rs125.61bn

 

[Neo]

India adds 8.53m mobile users in Feb ​

NEW DELHI: Indian telecoms firms added 8.53 million wireless subscribers in February, maintaining the world’s fastest pace of growth and putting the country on course to become the largest market after China by mid-April.

India has been adding 8-9 million wireless users a month, compared with China’s 6-7 million and 2-3 million monthly signings in the United States, thanks to call rates as low as 1 US cent a minute and cheaper handsets.

The Telecom Regulatory Authority of India said on Monday the country had 250.93 million wireless users at end-February, against 256 million in the United States and an estimated 540.5 million in China.

With only a quarter of India’s more than a billion people having access to a phone now, the potential for growth was huge.

The regulator said India could topple the United States for the second spot by mid-April.

“India’s wireless subscriber base will surpass that of USA. and will become second largest wireless network in the world,” it said in a statement.

Top mobile operator Bharti Airtel led the subscriber growth, adding 2.26 million new customers in February, while No. 2 Reliance Communications added 1.61 million.

Unlisted Vodafone Essar, controlled by Britain’s Vodafone Plc added 1.41 million mobile customers in February.

As the total wireless subscribers in India surged by more than a half in February from a year earlier, fixed-line telephones continued to contract as more users shifted to mobile phones, the regulator’s data showed. reuters

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Tata buys Jaguar in £1.15bn deal ​

Ford put Jaguar and Land Rover up for sale last June

Car giant Ford has sold its luxury UK-based car brands Jaguar and Land Rover to Indian company Tata.
Tata, India's biggest vehicle maker, is paying $2.3bn (£1.15bn) for the British brands after months of negotiations over price and supply relationships.

The negotiations started last June when Ford announced its intention to sell the companies as a package.

Jaguar and Land Rover employ about 16,000 staff at UK plants in the West Midlands and Merseyside.

Although Land Rover remains profitable, Ford has never managed to make money from its investment in Jaguar.

Now, it is time for Ford to concentrate on integrating the Ford brand globally

Alan Mulally, chief executive, Ford

Ford has been forced to sell the two companies, based at Solihull and Castle Bromwich in the West Midlands and Halewood on Merseyside, in order to concentrate on its loss-making core US car business, which it hopes to turn around in the next two years.

The $2.3bn price tag is about half the amount Ford originally paid for the marques, leading some analysts to argue that the purchase was a mistake.

"How can you call it anything else?" said Erich Merkle, an auto expert for US consulting company IRN.

"You have to cut your losses at some point. It's been draining them of cash and resources."

Ford sold its iconic Aston Martin marque to a UK-led investment consortium in a deal worth $955.2m last year.

No significant changes

The companies said there would not be any "significant changes" to Jaguar or Land Rover employees' terms of employment on completion of the sale.

They said that staff, trade unions and the UK government had been kept informed of developments and supported the move.

Tata said the deal should be completed by the end of the summer, subject to applicable regulatory approvals.

The purchase will give Tata the opportunity to expand its presence in the passenger car market beyond India and gives it the clout necessary to compete with international players.

TATA'S NANO

3.1m long, 1.5m wide, 1.6m high
Can seat four to five people
Meets European emission standards
Costs 1 lakh, or 100,000 rupees
Tata hopes to eventually export the car
Source: AFP

In January, Tata launched the world's cheapest car, the Nano, priced at $2,500 (£1,250).

By contrast, the starting price for Jaguar's latest sports car, the XF is more than £32,000 ($64,000).

"We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business," Tata said.

"We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact.

"We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business."

Alan Mulally, the president and chief executive of Ford, said he was "confident" that the brands would continue to thrive under Tata's stewardship.

"Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all," he added.

Terms

Under the terms of the deal, Ford will contribute about $600m to the Jaguar and Land Rover pension plans.

Ford will continue to supply Jaguar and Land Rover for differing periods with engines, stampings and other car components, in addition to a variety of technologies.

In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period of up to 12 months.

"It seems as though they have resolved some tricky supply issues," said Ernst & Young's automotive expert Eric Wallbank.

"The deal will give Ford the cash to revive its fortunes in the US and focus on its core brand, while it adds an important plank to Tata's automotive ambitions," he added.

BBC NEWS | Business | Tata buys Jaguar in £1.15bn deal

 

[Neo]

Indian inflation leaps ​

Saturday, March 29, 2008

NEW DELHI: Indian inflation raced towards 7 per cent in mid-March to its highest in nearly 14 months, and expectations of central bank action grew as the finance minister said he would accept lower growth to curb price rises.

Top policy makers said controlling inflation was a priority, and the central bank said its objective was to keep it below 5 per cent and bring it lower in the medium term. The rupee surged to a one-month high as traders factored in tighter policy settings, and the 10-year bond yield hit a four-month closing high of 7.91 per cent.

The wholesale price index rose 6.68 per cent in the 12 months to March 15, data showed, sharply higher than the previous week’s 5.92 per cent and a market forecast of 5.96 per cent. In Mumbai, Finance Minister Palaniappan Chidambaram told reporters he was prepared to give up bit of growth to control inflation, and said interest rates remained the most effective instrument to manage price pressures.

Indian inflation leaps

 

[Neo]

Indian inflation leaps, economy slowing​

NEW DELHI: Indian inflation raced past 6 percent in mid-March to its highest in nearly 14 months, raising market expectations that the central bank may have to respond and sending the rupee to its highest in a month against the dollar.

Indian federal bond yields hit a three-month high of 7.89 percent after Friday’s price data, up from Thursday’s close of 7.78 percent, and traders said the risk the central bank would have to act was growing.

The widely watched wholesale price index rose 6.68 percent in the 12 months to March 15, sharply higher than the previous week’s 5.92 percent and well above a market forecast of 5.96 percent, government data showed.

It was the highest since a reading of 6.69 percent on January 27, 2007, and the fourth consecutive week above 5 percent, below which the Reserve Bank of India (RBI) wants to keep inflation in the fiscal year ending March.

“Inflation number now looks ‘ugly’,” said Shubhada Rao, chief economist at Yes Bank in Mumbai.

“Clearly, this headline number may prompt monetary measures as well. At first instance, we expect RBI to allow rupee appreciation for now. Some liquidity impounding measures are also likely.”

The partially convertible rupee initially showed little response to the data but then began to climb, breaking through 40.00 per dollar for the first time in a month and gaining to 39.8500. Wholesale inflation has shown a rising trend since early December 2007, driven largely by higher food prices, posing a major policy headache against the backdrop of slowing growth in the broader economy and general elections due by May 2009.

A modest rise in retail fuel prices in mid-February has also contributed to higher inflation, but the latest data caught many off guard.

“This is surprisingly high and carries ominous implications for the magnitude of the problem that is likely to dominate policy making for much of 2008,” said Saumitra Chaudhuri, economic adviser at domestic rating agency ICRA.

“At the moment, I expect rates to be steady, but if this high trend continues one doesn’t know what will happen.”

Slowing growth: The central bank has kept its main lending rate unchanged at 7.75 percent for a year, after raising it five times between June 2006 and March 2007 to stem price pressures in a fast-growing economy. The RBI’s next policy review is scheduled for April 29 and it has also used its cash reserve ratio, the proportion of cash banks have to keep with it on deposit, as a monetary tool to soak up inflation-fuelling excess cash in the past.

Prospects for some policy easing surfaced briefly after the statistics office estimated India’s economy to expand 8.7 percent in the fiscal year ending March, slower than an 18-year high of 9.6 percent in the previous year. reuters

Daily Times - Leading News Resource of Pakistan

 

[Malang]

Videocon bid for Motorola biz

NEW DELHI, April 1: Consumer electronics major Videocon group today said that it had bid to acquire Motorola Inc's global mobile handset business.
“Yes, we have sent them an expression of interest to acquire their global mobile handset business. It is in the initial stages and will take time but we are the only one from India to do so,” Videocon group chairman, Mr Venugopal Dhoot said.
He said the company's move to acquire Motorola's mobile phone business was in line with its growing interests in the mobile telephony business. “We have already got licences for offering GSM-based mobile services in all 22 circles in India and we see a synergy,” Mr Dhoot added.
Asked what could be the value of the deal he said: “It is too early to talk about numbers”.
When contacted, a Motorola India spokesperson declined to confirm the development saying “we do not comment on market speculation”.
According to reports, Motorola's non-profitable handset business has been estimated to be worth about $3.8 billion as evaluated by Merrill Lynch.
While Videocon itself is on the prowl, US telecom giant AT&T is eyeing a stake in its subsidiary Datacom, which has been issued a licence recently for mobile services throughout India.
However, the deal is expected to take shape only after the government allocates spectrum for wireless telecom services to new players, as a mere licence may not fetch a good value.
Datacom is the first in the list to get spectrum, except in Delhi and Mumbai, as and when the government starts allocating the radio frequency.
Datacom has announced an investment of Rs 6,000 crore for a pan-India network expansion in the first phase. It has also been approached by another foreign player Telephonica of Spain.
Videocon in the past has been active in acquiring consumer durable firms across different geographies. It had acquired Thompson's colour tube business and AB Electrolux' Indian subsidiary, but failed to acquire Korea's ailing electronics firm Daewoo.

The Statesman