Indian Economy - News & Updates - Archive

[Contrarian]

WTO talks may restart soon: Lamy

BANGALORE: The Doha Development Agenda negotiations may soon resume with the global political climate emitting positive vibes, according to World Trade Organisation (WTO) chief Pascal Lamy.

Addressing a session on "Mulitalateral Trade Vs RTAs: Which way to go", Lamy said, "We are at a defining moment in the Doha round of talks. The window of opportunity in front of us will close sometime this year. I am confident that India will make a constructive contribution to the last laps."

He said, India will play a critical role in restarting talks, currently stalled. If India was to be flexible on tariff on industrial goods, other players can be prevailed upon to make similar adjustments on agriculture, he said.

But commerce minister Kamal Nath said, "We can be flexible about tariffs. But I don't want to make any offers without seeing what the others bring to the table. I don't want to negotiate only with myself."

"We expect the Doha round to create a strict rule based system. Attempts should be made not to perpetuate the structural flaws especially in agriculture and industrial products. Our prime concern should be to increase trade flows. And given the changing global economic architecture, the completion of the Doha round is crucial."

Nath also said that he has enlisted the help of Gordon Brown, British Chancellor of the Exchequer, in persuading the US to move forward.

 

[Contrarian]

Wipro net rises 41% on off shoring deals

Wipro met investor expectations with a 45% increase in revenues and a 41% growth in net profit in the quarter ended December 31, 2006.

BANGALORE: Wipro, the country's third largest software company, met investor expections with a 45% increase in revenues and a 41% growth in net profit in the quarter ended December 31, 2006, compared to the corresponding quarter of the previous year.

The company registered a profit of Rs 765 crore on revenues of Rs 3,979 crore, of which global revenues from IT services and products accounted for Rs 2,876 crore, a 35% increase on the corresponding quarter of the previous year.

Suresh Senapaty, CFO of Wipro, said the pressure on profitability arising out of wage increase and rupee appreciation was offset by operational improvements and improved profitability in the BPO business and Wipro's acquisitions portfolio.

The company's India, Middle East and Asia Pacific operations did particularly well, recording a 56% growth in PBIT (profit before interest and tax) in the quarter, while revenues from these regions grew at 76%, against about 50% last year.

Wipro chairman Azim Premji said a considerable amount of growth during the quarter was driven by verticals like energy, utility, technology services and enterprise application services, while domains like financial services and retail brought in 50% of the growth. During the quarter, the company brought down its overall attrition rate from 18% to 16%.

On future outlook, Premji said, "For the quarter ending March 2007, we expect revenue from global IT services and products to be around $685 million. The picture is positive as the demand for services is growing. However, the margins may be in the narrow range of 24 to 25%."

The company acquired 37 new clients — including 13 tech clients and 24 other multi-domain firms — during the quarter, taking the global client base to over 600. It had a net addition of 3,489 techies and 1,508 BPO employees, taking the total strength of the workforce to 66,176.

Wipro said the consumer care and lighting business grew (YoY) at 36% against the industry average of 10 to 12% while its hydraulic components business continued to grow at 30 to 40% CAGR. During Q3, Wipro effected salary hikes for offshore employees which had 1.8%bearing on its margins.

 

[Contrarian]

Sebi allows exchange traded fund for gold

MUMBAI: Four-and-a-half years ago two Indian financial wizards took an idea of a new product to the market regulator the Securities and Exchange Board of India (Sebi). It was a financial innovation which proposed to give gold-crazy Indians the option to hold the yellow metal in electronic form (called gold ETF), rather than in the traditional forms —ornament, coins or biscuits.

That was 2002. The idea was a break-through one for the financial world. What the product gold ETF or exchange traded fund — proposed to do was in one shot turn a very popular physical asset into a financial asset. In the process it also promised to take care of most of the security risks associated with holding it in physical form.

Australia, also known for it vast mineral reserves, was the first to accept the idea of investing in a precious metal in electronic form. And in 2003 world's first gold ETF was launched in Australia.

Soon enough the kangaroos were followed by the Wall Street bulls and then those across the Atlantic, in the City in London. At last count, on the New York Stock Exchange alone, gold ETFs were worth over $8 billion and is one of the most popular ETF products now.

Back in India, after weighing the pros and cons, going through several presentations and committee meetings, on Wednesday Sebi finally gave its green signal to two Indian fund houses — Benchmark MF and UTI MF — to launch gold ETF. The Indian duo who had ideated the product, Sanjiv Shah and Rajan Mehta, are a happy lot now. These are also the two men who run Benchmark MF.

However, there isn't much time for the two to enjoy the good news. They are already on the job to be the first in the market with their brain-child, literally. "Yes. We have received the Sebi nod. We are working to launch the product in about one to one-and-a-half months," said Shah, ED, Benchmark MF.

UTIMF, the country's largest fund house with an enviable retail reach, is also gearing up to launch its version of gold ETF soon. "Among Indians gold commands a huge psychological advantage even as an investment option. With our reach and supporting logistics, we believe we could be the first in the market," said Jaideep Bhattacharya, chief marketing officer of UTI mutual fund.

Interestingly, the Indians' weakness for gold, punched with the convenience of not holding it in physical form, is what market players feel could turn Gold traded funds as a great success story for the fund industry.

For record, India is the largest consumer of gold in the world which imported an estimated 800 tonnes of this yellow metal in 2006. And ranked behind crude oil, in value terms, this precious metal is the second biggest import item for the country.

 

[Contrarian]

Morgan Stanley invests Rs 675cr in Mumbai firm

MUMBAI: In the single largest FDI in the country's booming real estate sector, Morgan Stanley has invested $152 million (Rs 675 crore) in a city-based firm, Oberoi Construction. The world's largest private equity realty fund, which manages $100 billion (one-seventh of India's GDP), will in return get a 10% stake in the three-decade-old unlisted company which has a land bank of 15 million sq/ft, most of it in western suburbs of the city. The deal has valued Oberoi at Rs 6,750 crore.

According to Vikas Oberoi, the promoter, the city-based company which sells 1,000 apartments a year, is developing residential and commercial properties, including a deluxe five star hotel in the suburbs. The global fund had earlier made Rs 1,500 crore in the country, highest being the Rs 300 crore in Mantri Developers in the south.

Anand B Madduri, an ED at Morgan Stanley, said the three drivers that attracted the fund were the property developer's execution of projects, entrepreneurial vision of promoter and delivering housing and commercial establishments to a community.

Oberoi said the money can be leveraged to raise around Rs 2,500 crore of debt for speedy execution of projects that will give him a cash flow of $1b in 3-4 years.

India's property market has attracted several PE funds and foreign investors who see a tremendous opportunity as demand for homes and commercial space rises fast. The scramble for buying assets was evident recently when three prominent real estate companies—Hirandani Constructions, Rahejas and Unitech raised close to $2.3 bilion from the London market.

Last year, US's Farallon Investments along with LN Mittal had invested close to Rs 1,429 crore in four real estate companies of IndianBulls, a financial services firm which diversified into property development. Ten Indian real estate companies have raised money by selling shares to the public, which eagerly lapped up the issues.

Industry sources say around 150 foreign PE have lined up nearly $10 billion to invest in real estate in the next two years as government relaxes norms to ramp up the country's inadequate infrastructure. Indian and multinational institutions such as J P Morgan, Falcon, 3i, Blackstone, Carlyle, Kotak Real Estate, IL&FS, ICICI and HDFC are some of them who are waiting to storm the sector.

ICICI Realty fund is learnt to be raising $1 billion and Kotak Mahindra $500 million.

 

[Contrarian]

'India driving global business confidence'

NEW DELHI: Dynamism in emerging markets, mainly India, has driven the global business confidence to a five-year-high, a survey by Economist Intelligence Unit (EIU) says.

EIU's fifth annual CEO Briefing Survey, found that nine out of 10 top global executives rated business prospects during the next three years as "good" or "very good".

The main drivers behind the optimism among global business executives were the bustling emerging markets especially — India and China.

In the survey, majority of the 1,006 executives from around the world are planning to invest more in developing countries than in developed economies.

One of the key finding of the survey shows that India is more upbeat than China. Respondents from India are abuzz with optimism for the years ahead, with 98% of them seeing "good" or "very good" business prospects. Meanwhile, the survey pointed out that in comparison to India, China-based executives were notably less enthusiastic.

Eight out of the 10 respondents in China say that the outlook is promising, but just 3% agree that it is "very good", though both countries are highly positive about the prospects for business in 2007, the survey said.

The survey highlights the importance of emerging markets to companies as primary revenue and sourcing opportunities.

A majority of respondents intend to invest more time and money in emerging markets over the next three years than in the developed economies.

The survey, which polls more than 1,000 executives every year is sponsored by UK Trade and Investment, a government body which promotes exports and inward investment. "Emerging markets are clearly top of the agenda but they are not risk-free environments and business culture is frequently very different," UK Trade and Investment chief executive Andrew Cahn said.

"It is more important than ever that corporate leaders have access to high quality, impartial advice on which to base their management decisions," he said. Interestingly, nearly a third of the executives (28%) chose the latter option, up from 20% in 2006 and just 9% in 2005.

Reasons behind the growing optimism are majorly the expanding global economy by some 5.4% in 2006 and is expected to continue to grow robustly over the next five years. However, the rosy picture is marred by economic risks that continue to concern the business leaders. Interest rates have been on a rise in the past two years in US and Europe, while a sharp slowdown in the US housing market is leading to fears of a decline in consumer spending.

 

[Contrarian]

Maruti steps on gas for final showdown

This is Jagdish Khattar’s final fight. Before the 64-year old MD of Maruti Suzuki takes a bow this December, he wants to ensure that the largest passenger car maker in India maintains its lead. A decade ago, three out of every four cars sold was a Maruti. Entry of new players in the midnineties and more sophisticated models have eaten into its market share which is now 55%. With the top 15 automobile manufacturers in the world either expanding their presence in the country or in the process of setting up shop, the gap is narrowing. And Khattar is ready to shift into the top gear.

"This is the third phase for Maruti. The first phase for Maruti, between 1983 to 1993, was of dominance, while the second one saw global players enter the market making it competitive. Now that the industry has matured and more are players entering, we see new challenges in this third phase. We aim to make a million units by 2010 and we are gearing up for that," he says.

A second car plant, entry into the fast-growing diesel segment, new models, a revamp of the existing line-up and the stage is set for Maruti to take on the competition.

Beginning with the launch of new Zen Estilo last month, the entire range of Maruti models is set for an overhaul. It has also announced that it will be entering newer segments which include models above Baleno, its top-of-the-line model. The new Baleno and Grand Vitara are expected by mid-2007, while the next generation Alto and Esteem are not far behind. "We are working on a brand new car in Alto segment to be introduced in 2008-09. While the car is primarily for export to Europe, it will also hit Indian roads in due course," he says.

The company had stopped servicing the European market since September 2005, as bulging domestic demand had diverted exports from Europe. Besides, stringent emission norms in Europe would mean the Alto, which leads Maruti’s exports, would have to undergo major changes.

Maruti has increased its exports to non-European countries by more than three times. Three years ago, exports to non-European regions were around 12,000 units. They went up to about 22,000 last year, and this year it will export about 38,000-40,000 cars.

"Once the new model comes and we resume our exports to Europe, we are looking at total exports of over 1,60,000 units," Khattar says.

The second plant at Manesar, starting with a capacity of one lakh units, is already in the process of being expanded to three lakh units per annum to meet the one million target by 2010, says Khattar.

However, the knockout punch is Maruti’s entry into the diesel market. Maruti has fitted the 1.3 litre multijet under the hood of the Swift aiming squarely at Tata Motors’ nine year domination in the diesel segment.

"Many people ask us, why we were so late to enter into the diesel segment? We interpreted things wrongly," he admits. In 1998, government announced that administered price mechanism for petroleum would be abolished. If this was implemented, the gap between diesel and petrol prices would have been cut and therefore the market for diesel cars would not have grown sharply. "Even today, our reading is that diesel is popular due to price differences rather than because of performance."

"And therefore, in 1999, we decided against investing in a diesel car, because by the time we would have got a diesel in 2002, we expected the demand in diesel to slow down. Maruti took the bait and paid for it. For neither was controlled pricing mechanism abolished, nor did the demand for diesel stem. In fact, Tata Motors made most of demand for the sticky fuel and today sells over 90% of the diesel cars sold in India. In 2002 we made a noise at Suzuki that we need a diesel engine and the plant was announced by 2004," he says.

Although late, debut of the 1.3 litre multijet manufactured through a licence from Fiat is bound to shake up the diesel sector in India. The diesel engine developed by Fiat is one of the most refined in the world and combined with Maruti’s brand value and aggressive pricing, it will make it tougher for rivals who are planning to enter the segment, an industry expert says.

 

[Contrarian]

Govt puts new SEZs on hold

NEW DELHI: Stung by fast spreading protests, government has finally blinked on controversy-scarred special economic zones, putting on hold clearances for all proposals from developers. The retreat came in the form of an announcement on Wednesday for sudden postponement of the meeting of the board of approvals, the single-window clearing agency for SEZs, following a missive from the Prime Minister’s Office.

The meeting, scheduled for Thursday, has been postponed indefinitely though commerce department sources said BoA may resume work after the empowered group of ministers (EGoM) on SEZs headed by Pranab Mukherjee meets on January 22.

Sources said even those SEZ projects where clearances have been given but work is yet to commence will be under scrutiny. The move is expected to severely affect the plans of a large number of corporate houses including Mukesh Ambaniled Reliance Industries Ltd’s proposal for Maha Mumbai SEZ and Tata’s zone in Gopalpur.

Commerce & industry minister Kamal Nath said the decision was taken as the government wanted to avoid any controversy. "States which have approached us with proposals have to tell us how the land will be acquired and what kind of land is going to be used for building SEZs. The issue will be discussed by the EGoM, which will decide on land acquisition," he said. The EGoM will also deliberate on the area that should be earmarked for non-processing activities like setting up hotels, hospitals and residential units — another reason for which the SEZs have come under fire.

The green light for the SEZs put on hold is likely to delayed because a section in government wants the zones to be kept in abeyance till a new rehabilitation policy focussing on use of agricultural land and better compensation for displaced has been put in place.

 

[Contrarian]

Yemen invites ONGC to build refineries

NEW DELHI: Yemen has invited Oil and Natural Gas Corp (ONGC) to build a 100,000 barrels per day refinery on its Arabian sea coast but the Indian state-run firm has conditioned participation in the 1-billion dollar project on being allotted an oilfield in return.

"We have plans to build 100,000 barrels per day refineries at Hardamout and southeastern region of Al-Mukalla. We have invited ONGC to participate in one of them," Yemen Oil Minister Khalid Mahfoudh Bahah told reporters.

The projects will typically involve an investment of one-billion dollar each and can be wholly-owned by foreign companies. "They will have the freedom to sell products in local market as well as export."

The projects discussions with prospective investors will be concluded by 2008 and construction will take another 3 years.

"ONGC has said they will think of participation in the refinery projects when they are given an oil block in Yemen," the minister said.

Yemen, he said, was not considering allocating an oil block to ONGC on nomination basis.

"We want to do away with such a dispensation. We want to put all on an equal footing. They will be invited to participate in the fourth round of offering of exploration blocks in second half of 2007," he said.

Five to ten offshore exploration blocks will be available for competitive international bidding. This will be Yemen's maiden tender for offshore exploration block.

Bahah said Yemen also plans to set up a petrochemical complex based on gas reserves in the Gulf nation.

 

[Neo]

Indian GDP forecast revised up to 8.4 per cent

NEW DELHI: Indian think tank NCAER on Wednesday revised up its 2006/07 economic growth forecast for a third time to 8.4 per cent on the back of booming industry and services sectors.

The National Council for Applied Economic Research (NCAER), which raised its forecast for gross domestic product growth from 8.1 per cent, also expected inflation to be at the bottom of the central bank’s target range at the end of the fiscal year in March.

“The overall macroeconomic indicators for the current year point to maintainance of a growth momentum that delivered GDP growth of over 8 per cent in the last two years,” NCAER said in a report.

The economy grew by 8.4 per cent in 2005/06. It grew an annual 9.1 per cent in the first six months of 2006/07, and policy makers have said growth could be close to 9 per cent for the full year.

Although monsoon rains were better in 2006/07 than the previous year, NCAER expected farm output growth to moderate to 2.7 per cent from 3.9 per cent in 2005/06.

Industrial output was seen growing by 9.1 per cent this fiscal year, up from 8.7 per cent in 2005/06, while the services sector was expected to grow by 10.2 per cent, marginally higher than a year before.

“There is some relief from the exceptionally high levels of crude oil prices that prevailed for the last one year, buoyancy in tax revenues has kept budgetary deficits in check, and there is a record growth rate in exports and foreign capital inflow, particularly FDI,” NCAER said.

The think tank said inflation would be 5.0 per cent by the end of March, the bottom of the central bank’s forecast of 5.0-5.5 per cent. Annual wholesale price inflation was running at around 5.6 per cent at the end of 2006.

The NCAER expected the federal fiscal deficit to fall to 3.6 per cent of GDP from 4.1 per cent in 2005/06. The government is aiming for a deficit equal to 3.8 per cent of GDP.

But the current account deficit was forecast to rise to 1.9 per cent of GDP in 2006/07 from 1.3 per cent in 2005/06.

“The improved growth performance will make it easier to carry the two macro-economic deficits in the current year to more manageable levels.”

http://www.thenews.com.pk/daily_detail.asp?id=39273

 

[Contrarian]

Pharma firms bet on healthy bacteria

NEW DELHI: Generally consumers associate harmful or bad with the word bacteria. But a relatively new area, probiotics, which is basically bacteria with a beneficial health effect, is increasingly becoming popular in therapy.

With more therapeutic applications emerging everyday, major companies such as Danone are planning a foray in the sector.

Bacterial species lactobacillus sporogenes, lactobacillus acidophillus, lactobacillus plantarum, Bifidobacterium; yeast species saccharomyces boulardii and saccharomyces cerevisiae are probiotics used for therapeutic purposes.

Probiotics, which are normally associated with fermented dairy products, are used as dietary supplements in US. Refrigerated, fermented milks containing probiotic bacteria labeled as dietary supplements are currently being marketed in US.

Domestic companies that are marketing probiotic products for therapy in India are Zydus Cadila, Tablets India, Microbax and Unichem India (tie up with Japanese firm Uni-Sankyo).

Tablets (India) has entered into agreements with TOA Pharmaceutical Co, Japan and with European major, Hansen of Denmark, while Cadila Pharmaceuticals markets probiotics (ampicilin and lactobacillus; lactic acid bacillus).

In India, probiotics are being used mainly for gastroenterology. For instance, lactobacillus sporogenes formulations are used for various indications like diarrhea (neonatal, infant, adult), constipation, lactose intolerance, dyspepsia and colitis.

In fact, beyond its well-established usefulness in promoting digestive health, its most impressive research finding is in the area of containing cholesterol levels, industry experts say.

"Probiotic R&D is poised to make great advances during the next five years", says Utkarsh Palnitkar, national health sciences industry leader, Ernst & Young.

"The challenge in probiotics in India is that it falls under preventive care which is yet to be accepted as a line of therapy here," he added.

Probiotics are being used for treating urogenital infections, diarrhea, inflammatory bowel diseases, allergy, hypertension, AIDS and leukemia and for overall growth.

 

[Contrarian]

HPCL, Total may tie up

NEW DELHI: Hindustan Petroleum is in talks with Total for partnering its upcoming refinery at Vizag in Andhra Pradesh and may offer a majority stake of 51% to the French oil major.

This will be the second strategic tieup that the company is eyeing after trying to rope in steel tycoon Lakshmi Niwas Mittal and Oil India Ltd for its Bhatinda refinery.

"We are in talks with Total for a possible partnership in the 9 million tonne expansion at Vizag refinery," HPCL chairman MB Lal said on the sidelines of 'Petrotech 2007', India's biennial hydrocarbons showcase.

HPCL is ramping up Vizag refinery capcity from 7.5 million tonnes a year and is building another export-oriented 9 million tonne unit next to it.

Lal will meet Total CEO Thierry Desmarest for talks on the planned stake sale. HPCL, he said, was also in talks with several firms for its $3 billion Bhatinda refinery in Punjab.

HPCL will pump up to Rs 16,000 crore by 2011-12 into its petroproduct export plans by setting up a greenfield refinery some 30 km from its existing unit at Vizag.

The company has asked the state government to allot 2,500 acres in the special economic zone being set up by the YSR Reddy government.

It is augmenting refining capacities at its Mumbai and Vizag refineries for higher volumes and Euro-II/III fuels. In Mumbai, it is investing Rs 1,152 crore to expand capacity.

 

[Contrarian]

'Agriculture has maximum sensitivity'

NEW DELHI: For a foreigner visiting India, Pascal Lamy knows the country very well and his knowledge on problems facing agriculture could even embarrass some locals.

After all, he is no stranger to India having visited it nearly a dozen times in the last 10 years, first as European trade commissioner and now as the head of WTO.

But with Doha talks having been in suspension mode for over six months, the WTO director general is trying to gauge afresh the "red line and the bottomlines" that India has on some issues on negotiating table especially agriculture.

"It (convergence of views) will have to be everywhere since single undertaking remains. But agriculture has taken precedence over others.

If the main reason for the round is rebalancing the rules in favour of developing nations, then agriculture is the first candidate in this round. It has maximum sensitivity," Lamy told TOI.

He has been doing the same with others having met US Trade Representative Susan Schwab last week and African trade ministers just before he landed in India to find the margins of maneouver to get the talks moving again.

While the world may be thinking that the 150 WTO members have not made much headway, Lamy says the initiative has been taken at the political level.

"US president, Angela Merkel and Tony Blair have refreshed sense of commitment after the shock of last July. There was a sense of leniency earlier and a sense that talks will resume but July showed them failure was possible and they started looking at the cost of failure. For them Doha Round is not problem number one, but probably number three or four from being number 20 on the list earlier," he says.

Though optimistic, he is not quite confident that a consensus is anywhere in sight. He is unwilling to set a date for a WTO ministerial meeting due this year as per rules.

"The Doha ministerial declaration says there will be a ministerial at the end of negotiations. But that needs substance and we are not there yet. It needs political traction... There is more commitment but the numbers are not there."

While all the members know what each one wants from the other, a broad agreement is still elusive. What makes the task more difficult is that no one is willing to move first.

"USTR won't come and make an offer and say tell me what your new price is. There is a fear that others will pocket the offer and it will not be reciprocated," he says.

He believes a solution lies in discrete diplomacy, which is happening in Geneva, where ambassadors are exchanging notes and testing waters before ministers meet.

But the WTO DG isn't quite sure if this will result in a move towards a "landing zone". "The water is boiling but it's not yet reached boiling point.

I can take the responsibility of convening ministers in a visible way if I am convinced we have reached boiling point," he says but is unwilling to gauge the temperature of water at this point. Nor is he willing to hazard a guess on when talks will culminate into an agreement.

What about the mini-ministerial in Davos next week? It may be a useful interaction but Lamy does not expect any breakthroughs. So, will he take the initiative?

"I am talking to them and I am digging into technicalities. Option A is bottom up negotiating process which I help but which I don't drive," he says. And without any provocation, Lamy says, he is unwilling to put a compromise draft on the table to see to it that the round is not a failure.

 

[Contrarian]

RIL Q3 net soars to Rs 2,799 cr

MUMBAI: Mukesh Ambani group's flagship company Reliance Industries on Thursday posted a net profit of Rs 2,799 crore in the October-December quarter, up from Rs 1,776 crore in the year-ago period.

The total income (net of excise) was Rs 26,514 crore for the third quarter ended December 31, while the same was at Rs 18,348 crore for the corresponding quarter a year ago, Reliance Industries informed the Bombay Stock Exchange.

The figures for the corresponding periods of the previous year are not comparable in view of the planned shutdown of the refinery during October and November 2005, the company said.

The company said refining margins for the December quarter were $11.7 a barrel.

Shares in Reliance, rose 1.27 per cent to 1,367 rupees in a firm Mumbai market. They rose 8.5 per cent in the December quarter, lagging a 10.7 per cent rise in the benchmark BSE index.

 

[Contrarian]

Bharti Airtel to invest over $2 bn next fiscal

NEW DELHI: Bharti Airtel, India's largest private cellular operator, on Thursday announced an investment of over two billion dollar (Rs 9,000 crore) in 2007-08 to expand network, but wanted state-run BSNL to share infrastructure.

"Of the total capex for the next financial year, maximum will go for the rural areas," Akhil Gupta, Joint Managing Director, Bharti Airtel, said on the sidelines of a conference organised by Confederation of Indian Industry and Ericsson.

Gupta, however, raised the issue of infrastructure sharing with Bharat Sanchar Nigam Ltd, saying this would lead to faster roll out of networks there.

"I appeal to the government to force BSNL to share its infrastructure with private operators," he said.

BSNL has so far opposed such an arrangement, saying huge investments have gone in creating rural infrastructure and private players should not be allowed to take undue advantage.

Gupta also said the company was waiting for rules to be framed for introduction of next generation (3G) mobile services to start operations both in rural and urban areas.

The company has chalked out its rural strategy and would concentrate on rural areas, which have huge growth potential, in the years to come, he said.

Bharti, which has 30 per cent market share in GSM-based industry with 32 million subscribers, would also bring the broadband in rural areas, Gupta said.

He claimed that as on September 2006, Bharti had presence in 155,000 smaller towns as part of its strategy to cover rural India and another 20,000 towns to be added soon.

Bharti would bring the broadband, especially with wireless technology, in rural areas when the policy to start 3G services was announced, he said.

Rural areas have so far been given mainly voice and message services. Wireless broadband had great potential for rural India, he said, adding this would also help the rural community to remain connected.

Besides, broadband would also help increase business activity for the farming community, he said.

 

[Contrarian]

Ericsson to pump in $100 mn annually in India

NEW DELHI: Swedish telecom equipment major Ericsson on Thursday announced an investment of $100 million every year in India with an option to enhance it depending upon the growth in the telecom sector.

“We will be investing $100 million annually for the next five years. The figure could go up depending upon the growth in the sector," Mats Granryd, Managing Director, Ericsson India, said, while briefing reporters in the Capital.

Ericsson's Global CEO, Carl-Henric Svanberg, who is here to attend CII-CEOs forum, said: “Indian telecom market has grown more than double in last five years and we have a lot of activity here.”

Asked about BSNL's mega 45-million line GSM tender, in which Ericsson emerged the lowest bidder, getting into a legal row after US telecom giant Motorola challenged the process in the Delhi High Court, Carl-Henric said: “The faster the solution, the better it is. Delay is not positive for BSNL.”

The company was working with various operators on the next generation (3G) mobile services and the trial runs were on. However Carl-Henric did not name the operators, citing the company's policy not to declare the names.