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22 Apr 2009,

WASHINGTON: The World Bank on Wednesday said India leads all countries in exports of information communication technology (ICT) services.

In its latest report 'World Development Indicators 2009', World Bank said India's exports from the ICT sector increased from about USD 5 billion in 2000 to over USD 30 billion in 2006. This accounts for about 42 per cent of total service exports, it said.

At a time when there is a global recession and hundreds and thousands of people are being laid off, India's software industry employs about 1.6 million people, the report said.

China, though a distant second, is the next largest ICT services trader, with about USD 5.5 billion in ICT service exports, the report said.

The report said China and India were among the fastest-growing exporters. Export growth was led by manufactures in China and by services in India, it said.
 

Thursday, Apr 23, 2009

MADRID: India and Spain on Wednesday signed a trade agreement that is expected to boost bilateral ties in six crucial sectors. These are infrastructure development, renewable energy, agriculture, research and development, tourism, and cooperation in Latin America, where Spain has a sphere of influence. The focus is on technological exchange and tapping each other’s areas of expertise.

The agreement was sealed in the presence of President Pratibha Patil and Spanish Prime Minister Jose Luis Rodriguez Zapatero, and the respective government and trade representatives.

Addressing a business meeting, Ms. Patil noted with satisfaction that bilateral trade was growing, crossing $ 4.5 billion.


IT’S A DEAL: In the presence of President Pratibha Patil and Spanish Prime Minister Jose Luis Rodriguez Zapatero, Indian Ambassador Sujata Mehta exchanges a document with Secretary of State for Rural Affairs Joseph Jose Puseu, in Madrid on Wednesday.


Spanish enterprises are known for executing large-scale infrastructure projects, she said, and invited them to make use of the opportunities India presents, in particular through small and medium enterprises.

Addressing Indian mediapersons, Ashwani Kumaar, Minister of State for Industrial Policy and Promotion, described the presidential visit as highly successful. Three framework agreements were signed in the fields of renewable energy, agriculture and tourism on Wednesday.

He said Spain’s FDI globally was worth over €100 billion. Of this, India accounts for only €320 million, while India’s investment in Spain was almost twice that.

Nalin Surie, Secretary (West), Ministry of External Affairs, said the exchanges were free, frank and warm. “There is genuine interest in the Indian elections,” he said, adding that the fact that the President is a woman raised her profile considering the importance Spain accords to gender equality.

Terrorism was a leitmotif and Mr. Zapatero was quoted as having told Ms. Patil: “Terrorism is a scourge which the 20th century has left [us], a legacy which has to be destroyed.”
 

Friday, April 24, 2009

NEW DELHI: Global investors are expected to remain positive on India and bring $30 billion foreign direct investment into the world's second-fastest growing economy in 2009-10 even when the world economy is facing a severe credit squeeze.

India is estimated to have received FDI of $27.5 billion in 2008-09, up from $24.57 billion in the previous year.

“The overall outlook (for 2009-10) remains positive,” Joint Secretary in the Department of Industrial Policy and Promotion, Mr Gopal Krishna said on the sidelines of a function organised by Booz & Company and AMCHAM here today.

However, inflows in March 2009 declined to $2.5 billion from $4.44 billion in the same month last year.

Though the cumulative increase for 2008-09 is small, it is considered a positive development, given the fact that the global financial crisis is the worst.

Mr Gopal Krishna said if reinvestment by foreign corporations is taken into account, FDI for 2008-09 was $37.5 billion. This is expected to go up to $40 billion in the current fiscal, he said.
 

26 Apr 2009,

MUMBAI: The stock market
uptrend, which has brought back the benchmark Sensex above the 11,000-points level, has recovered as much as Rs 10,00,000 crore of investors wealth in less than two months.

However, the total recovery so far is less than one-fourth of close to Rs 45,00,000 crore lost in the sharp downturn that started in early 2008 and continued for more than a year till early-March this year.

At the end of the last trading session (April 24), the total investor wealth measured in terms of cumulative market capitalisation of all the listed companies in the country, stood at Rs 36,25,000 crore.

This marks an increase of about Rs 10,00,000 crore since March 9, when the Sensex was trading near its one-year low of 8,000 points and the total investor wealth had dipped to just above Rs 26,00,000 crore.

The benchmark Sensex has also gained more than 3,000 points since then and closed at 11,329.05 points in the last trading session.

However, the index is still about 10,000 points below its record high level of 21,206.77 points scaled on January 10, 2008. At that time, the total investor wealth had soared to a high of nearly Rs 72,00,000 crore.

Incidentally, the recovery of Rs 10,00,000 crore since March 9 has been mostly led by the top large-caps in the country, with India's 25 most valued firms together accounting for nearly half of the total recovery.

In value terms, Mukesh Ambani-led Reliance Industries has alone added close to Rs 1,00,000 crore to investors' wealth, with its market capitalisation rising to about Rs 2,81,000 crore. PSU major ONGC has added about Rs 41,000 crore, while Sunil Mittal-run Bharti Airtel has gained over Rs 30,000 crore.

PSU majors SBI and NMDC have also added more than Rs 25,000 crore each, while Anil Ambani-led Reliance Communications, engineering major L&T, ICICI Bank and MMTC have gained close to Rs 20,000 crore each during this period.

NTPC, Infosys, BHEL, ITC, TCS, HDFC
, HDFC Bank, Reliance Petroleum, SAIL and Wipro have also added more than Rs 10,000 crore each to their market valuations.

While some analysts have cautioned that it could be a short-term rally and profit-booking at higher levels might again bring in a sharp downtrend, others have asserted that it could be the beginning of a long-running bullish phase.

Global equity research firm Elliott Wave International has gone to the extent of envisaging a milestone of as high as 1,00,000 points for the Sensex in the next 15 years. This would mean a rally of over 10-times from the level seen just a few days ago, when Sensex was toiling below 10,000-points.
 

Sunday, Apr 26, 2009

NEW DELHI: The Union Government has finalised the draft for the National Solar Mission. It aims to make India a global leader in solar energy and envisages an installed solar generation capacity of 20,000 MW by 2020, of 1,00,000 MW by 2030 and of 2,00,000 MW by 2050.

The total expected funding from the government for the 30-year period will run to Rs. 85,000 crore to Rs. 105,000 crore. The requirement during the current Five Year Plan is estimated to be Rs. 5,000 crore to Rs. 6,000 crore. It will rise to between Rs. 12,000 crore and Rs. 15,000 crore during the 12th Five Year Plan.

Implementation will be in three phases. The first phase of solar deployment (2009-2012) will aim to achieve rapid scaling-up to drive down costs. It will spur domestic manufacturing through the consolidation and expansion of on-going projects for urban, rural and off-grid applications. This will involve the promotion of commercial-scale solar utility plants, mandated installation of solar rooftop or on-site photo-voltaic applications in buildings and establishments of government and public sector undertakings. The target is 100 MW installed capacity here.

The Mission will encourage the use of solar applications to meet day-time peaking power requirement that is now met through diesel generation. Further expansion of solar lighting systems through market initiatives including micro-financing, in the rural and urban sectors, is expected to provide access to lighting for three million households by 2012.

In this phase, the Mission will make it mandatory for all functional buildings such as hospitals, hotels, guest houses and nursing homes to install solar water heaters. Residential complexes with a minimum plot area of 500 sq m will also be included.

In the second phase, to be implemented between 2012 and 2017, the Mission will focus on the commercial deployment of solar thermal power plants. This will involve storage options, and the promotion of solar lighting and heating systems on a large scale in market mode. This will be without subsidies but could include micro-financing options.

Finally, between 2017 and 2020, the target is to achieve tariff parity with conventional grid power and achieve an installed capacity of 20 gigawatts (Gw) by 2020. The installation of one million rooftop systems with an average capacity of 3 kilowatts (kW) by the same year is also envisaged.

The proposed strategy of the Mission should help achieve significant reduction in the cost of solar power and create a robust infrastructure for it.
 
India willing to contribute to IMF $10bn: Ahluwalia

WASHINGTON: Stating that it is ready to contribute about $10 billion (around Rs 50,000 crore) to the International Monetary Fund, India has proposed
the world body should issue security bonds against the amount as New Delhi is not in favour of making direct contribution.

Planning Commission deputy chairman Montek Singh Ahluwalia, while talking to Indian news agencies on the sidelines of the G20 ministerial level meeting here, said that the negotiations in this regard were still being carried out and nothing had been finalised yet.

"But our Prime Minister had said in April, and this has been our position for some time, we will be willing to contribute in proportion of the quota. Our view is that the resources being given to the IMF, should be viewed as an interim measure, through the new arrangements to borrow (NAB)," Ahluwalia said.

India's existing quota share is about two per cent. "So if for example the total NAB is $500 billion, which is what was agreed in the leaders summit then India's share would be $10 billion," he said.

India's concern, he said, is that this contribution should be made through the purchase of IMF bonds by the Reserve bank of India and not from the government because then it becomes part of the fiscal deficit.

"So our view is that the IMF should issue securities, which can then become eligible for the countries to invest their reserves. In that case no fiscal position is affected," Ahluwalia said.

"It is just that the central bank, in our case the Reserve Bank of India will shift some of its money, which is currently holding US treasury bills or other government bonds, to IMF bonds, which obviously are backed by the same Governments," he argued.

As the modalities of such a contribution through securities are being discussed, Ahluwalia said: "We have said that assuming this can be shorted out, we are willing to contribute in proportion to quota. If it is deployment of reserve, it does not require any government decision anyway."

Asserting that India's importance in the world economy is more than two per cent, Ahluwalia said: "Quota reflects the amount of weight and vote we have and I do not see why we should be contributing more than the share they are giving us to vote."

At the same time, India has said that it is willing to increase its contribution, if its shares were to increase. "If they were to increase our share, then obviously we would contribute more, otherwise this becomes the way of funding the IMF and leaving the quotas unchanged," he said, adding that India was not in the favour of that.

"Our view has been that this is an interim measure," he said.
 

Tuesday, Apr 28, 2009

Bilateral trade between India and Russia is expected to increase from $7 billion in 2008 to $10 billion by the end of next year and will grow further when the comprehensive trade pact is signed, according to officials.

"Judging the way trade has grown in the last 3-4 years, it ($10 billion target) will be certainly achieved by 2010," Trade Commissioner of the Russian Federation to India E A Korshunov told reporters at a CII function today.

Both the countries will be able to enhance bilateral trade to USD 10 billion despite delay in signing the Comprehensive Economic Cooperation Agreement (CECA).

The agreement, which will facilitate free trade in goods and services between the two countries, would be signed after Russia's membership in the World Trade Organisation is approved by the multilateral organistion, Commerce Ministry Joint Secretary Neeraj Kumar Gupta said.

"The issue is on the table. The moment they access the WTO, we can start our negotiations on the CECA," Gupta added.

On trade between the two countries, Korshunov said it has increased by 30 per cent in the first quarter of 2009 (calendar year) despite global economic downturn.
 

April 25, 2009

Mumbai's transport system will get a major boost with the Rs 1,300-crore (Rs 13-billion) Bandra Worli Sea Link all set to start functioning by May end.

Brushing aside reports that the city's first sea link would be thrown open for vehicles only next year owing to differences between the project consultants and contractors, Maharashtra State Road Development Corporation vice chairman Satish Gavai said, "We are confident that the Sea link would be ready by May end. There are no differences among any one involved in the project."

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Bandra-Worli sea link.

The contractors involved in surfacing the road with a final layer of tar and illumination had allegedly threatened to pull out of the project after they were asked to give longer guarantee periods for their work than what has already been mentioned earlier in the tender.

However, Gavai said the project work is in final stage, 'surface work on the road, signages and illumination would be done simultaneously'.

The MSRDC officials want it to be opened for public before model code of conduct comes into force in the state for Assembly polls scheduled in mid October, if not by May end.

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Britain's PM Gordon Brown (3rd from right) walks with officials at the sea link construction site in Mumbai.


Work on installing the maintenance lift that will climb to the cable-stayed bridge is also yet to be carried out.

As the deadline for commissioning of the project has been set, the contractors have been asked to finish the work as early as possible.

The project work, which was started in 2001 by Hindustan Construction Company, was supposed to be completed by mid-2008, but it suffered many delays either because of petitions over environmental or payment issues to the contractors.

The landmark structure in the city, after the Gateway of India, will have eight lanes of traffic including two lanes reserved for the buses.
 

With more than 500,000 new engineering graduates each year, India is in a strong position to be an engineering powerhouse.

But while India is one of the biggest players in the services and information technology sector, the same cannot be said of our supply chain and engineering capability.

India's manufacturing exports still amount to less than 10 per cent of gross domestic product, whereas more than one-third of China's GDP comes from manufacturing.

India still doesn't have the most congenial business environment. Bureaucratic hurdles and a tough approvals system for setting up new businesses are not as severe as in the past, but they continue to create bottlenecks.

Land acquisition is a major hindrance to setting up new plants, as the problems of Tata Motors in West Bengal last year demonstrated.

Illiteracy and unskilled labor are disincentives to modern organisations that thrive on high productivity. So, too, are infrastructure problems such as clogged ports and roads, power failures, and water shortages.

In spite of these many challenges, India is slowly but surely making a mark in the global supply chain.

We are still a long way behind China and Japan, but there has been definitive progress.

Automobiles

The Indian triumph in the auto supply industry is well known. A small set of Indian manufacturing companies are vendors of choice for global automobile multinationals that purchase small parts.

These suppliers are valued for their reliable, high-quality products and on-time delivery. Four Indian auto parts companies have received the coveted Deming Prize for excellence in quality.

The next challenge for Indian component suppliers is to upgrade from supplying simple parts to complex assemblies and transmissions.

The transition to high-end manufacturing already is in progress. In the automobile sector, quality is crucial for the top players.

And in a vote of confidence for India, leading carmakers such as Hyundai, General Motors, Toyota, and Ford have either tied up with a local operator or opened their own manufacturing units and are supplying cars from India to the rest of the world.

With India's manufacturers combining engineering excellence and low costs, more companies are discovering the benefits of operating out of the country. In the coming years, India should continue to be a major manufacturing base for auto companies. Local demand for small and midsize cars is growing, thanks to increasing disposable income.

The current global recession has dampened automobile demand, but it should encourage more cost-conscious manufacturers to shift operations out of Europe and the US to India.

Oil exploration and petroleum refining

India currently imports nearly two-thirds of its crude oil. With volatile oil and gas prices worldwide, self-sufficiency in energy is a national imperative.

The Indian government has come up with a National Exploration Licensing Policy, or NELP, under which exploration and production companies have acquired exploration blocks.

Aggressive implementation of NELP has resulted in quite a few new gas discoveries in the last few years. Oil refining companies in India have world-class capabilities.


But the government's oil subsidy policy and differential pricing has been hurting their bottom line. Future growth in the oil and gas sector depends on new discoveries.

To be more self-sufficient and globally competitive, India needs to shift from pricey crude imports to higher volumes of Indian crude.

India also is looking toward adapting cheaper, greener alternatives such as liquefied natural gas, biofuels, and hydrogen energy.

However, for this movement to pick up momentum, the government needs to offer more incentives for research and adoption of these fuels.

More state governments should follow the example of Delhi, where enforced use of compressed natural gas for commercial vehicles has led to cheaper transportation costs and a cleaner environment.

Power

Power generation, transmission, and distribution have historically been dominated by central and state government electricity boards.

More than 86 per cent of India's total capacity is owned by the central or state governments, with the private sector contributing just 13.5 per cent.

Saddled by transmission and distribution losses and rampant power theft, the state electricity boards have not been very efficient organisations, but private players have been unable to make significant inroads primarily because pricing remains subject to government control.

Introduction of private power distribution players in Delhi and Mumbai has reduced theft and streamlined the distribution process. Kolkata's RP Goenka-owned Calcutta Electric Supply Corp, the city's sole electricity provider, has brought near self-sufficiency to Kolkata through a combination of adopting modern technology in power generation and an efficient distribution mechanism.

It is a strategy worthy of emulation.

Three factors are crucial for growth and self-sufficiency in Indian power: a concerted public-private partnership in generation, transmission, and distribution; a financially viable pricing structure that is not subject to state government controls; and assured supply of fuel.

Since a power plant and its fuel source could be in different states, a predefined, mutually acceptable agreement between the state governments to facilitate smooth supply is critical.

Steel

India is one of the world's leading iron ore exporters, but Indian steel manufacturers have had trouble obtaining it.

Only a handful of manufacturers have their own captive iron ore mines; the rest depend on government-owned mines. Many states with high reserves have poor infrastructure.

So in recent times global steel manufacturers have set up steel plants in raw-material-rich states such as Orissa and Bihar.

To drive growth in the Indian steel industry, the government should encourage investment in fresh mining of iron ore, coal, and gas.

The government should also formulate a policy to encourage investors to buy (or lease) iron ore and coking coal deposits abroad.

In the short term, the government should narrow the supply gap by diverting some iron ore exports to domestic steel producers.

And since economy of scale is a proven success factor for growth in the steel industry, the government should encourage global manufacturers to tie up with Indian manufacturers.

Hardware and consumer electronics

Electronics hardware is one of the largest and fastest-growing industries in the world.

The Indian government's special economic zone policy encourages duty-free imports and tax concessions.

Global manufacturers such as Samsung, Nokia, Motorola, and Texas Instruments have already established manufacturing operations in India. That's because the government allows 100 per cent foreign direct investment in this sector.

As per the investment commission's estimate, India is expected to attract a total of $6 billion to $10 billion in foreign direct investment by the end of 2010.


With the availability of cheap skilled manpower, incentives on exports and imports, and an ever-growing domestic market, this industry should see rapid and continued growth in the next few years.
 

29 Apr 2009,

NEW DELHI: The government's revenue from telecom operators in 2008-09 is expected to be more than Rs 13,000 crore ($ 2.6 bn), the biggest non-tax income for the exchequer.

The Department of Telecom is expecting to get about Rs 13,000 crore upwards from the service providers as licence fee and spectrum charges, a senior official told reporters on Wednesday.

The DoT's calculation is based on an estimate of telecom companies earning about Rs 1.25 lakh crore in the said period. Their adjusted gross revenue (exclusive of revenue from non-telecom operations) is put at Rs 95,000 crore and DoT hopes to get 12 per cent (Rs 13,000 crore) of AGR as license fee and spectrum charges.

DoT collects an average of 12 per cent of the total levy (6-10 per cent of license fee depending on circles plus 2-6 per cent spectrum charges depending on the quantum of radio waves).

The official said this is the highest non-tax revenue for the Government of India.

The government has so far earned Rs 55,000 crore ($11 bn) over the past five years as telecom licence fee and spectrum charges.

"Licence fees and spectrum charges of over Rs 55,000 crore have been collected since 2003 when the UASL regime came into effect. Every year telecom revenues are growing by about 15 per cent," Telecom Minister A Raja had said last year.
 

Wednesday, April 29, 2009

WASHINGTON: Asking Reliance Industries Limited (RIL) and other energy firms doing trade with Iran to choose either Tehran or Washington, the US Senators have moved a Bill aimed at penalising such companies.

“We know who these companies are - Shell, Vitol, BP and Reliance - and we need to give them a choice: you can do business with Iran's $250 billion economy or our $13 trillion economy, but not both,” said Senator Mr Jon Kyl, who was a part of the bipartis an coalition of 25 Senators that introduced the Bill.

The Senators have sought to strengthen President, Mr Barack Obama's authority for stopping Iran's pursuit of nuclear weapons through their proposed legislation, which targets foreign companies that sell gasoline or other refined petroleum products to Ira n.

The legislation also authorises the President to impose stronger penalties on these firms, including a ban on conducting business in the US.

The legislation, introduced in the US Senate yesterday, comes within days of another resolution introduced in the House of Representatives on April 21 to enhance the Obama administration's diplomatic efforts with respect to Iran by expanding economic san ctions against the country. -
 

Wed, Apr 29, 2009

New Delhi: At a time when the global job scenario is gloomy, India Inc is expected to increase salaries up to eight per cent this year with infrastructure and FMCG sectors likely to see the maximum hikes, global HR consultancy Mercer says.

"Overall Indian companies are likely to increase salaries between six and eight per cent in 2009," Mercer India business leader (information product solutions) Gangapriya Chakraverti told PTI.

Despite the economic slowdown troubling the corporate world, the country's fast moving consumer goods (FMCG) and Infrastructure sectors are likely to see the highest increases in salaries this year.

"Sectors like FMCG and infrastructure are expected to get the highest hikes of 8-12 per cent this year," Chakraverti added.

Meanwhile, financial services and Information Technology sectors, which have been severely impacted by the global slowdown, are unlikely to see any considerable increases in wages this year.

"IT and financial services may be the worst hit ... IT sector may see an average salary increase of four per cent this year," Chakraverti added.

With the beginning of the new financial year, companies are now drawing up plans related to the salary increments. However, in the wake of the severe economic conditions firms are looking for ways to answer the HR challenges in a balanced manner.

Mercer, which provides HR consultancy services to companies, has launched a new product for its clients to provide quarterly information such as changes in HR budget, staff turnover, headcount growth and planning, changes to benefits and incentive plans.

The services also include first-hand market information on how companies plan to address a specific hot issue as well.

Interestingly, focus on performance has been enhanced substantially following cost-cutting initiatives introduced by companies amid the slowdown.

The trend is shifting towards a greater difference between salary increases for the high performing individuals and the average performers.
 

29 Apr 2009,

MUMBAI: The BSE Sensex rallied 3.65 percent on Wednesday and propelled gains to more than 17 percent in April, its best monthly performance in 10 years, as a wave of improved investor confidence swept across the world.

Foreign funds led the buying, pumping in more than $1.4 billion in April 1-27, their biggest inflow since October 2007. The rally was also powered by expectations India's economy would pick up later this year.

The 30-share BSE index jumped 401.50 points to 11,403.25, its highest since Oct. 14 last year. It rose 0.65 percent in the holiday-shortened week, taking the weekly winning streak to eight and matching the run of gains in September to October 2007.

The benchmark rose 17.45 percent in April, making it the best-performing major Asian index this month.

Outsourcer Infosys Technologies, energy giant Reliance Industries and private-sector lender ICICI Bank were among the major gainers as the rally drew fence-sitters into the market.

"There was a lot of money sitting on the sidelines, and once momentum in a market picks up, the people sitting on the sidelines automatically jump into it," Ambareesh Baliga, vice president at Karvy Stock Broking, said.

Much of the early rise was led by short-covering on the last day of monthly derivatives and then the momentum swept the market higher despite a four-day weekend ahead and concerns of a possible flu pandemic in some countries.

The market is closed on Thursday as Mumbai votes in national elections and for a local holiday on Friday.

All but one of the index components rose while in the broader market, advancers led losers 1,436 to 1,031 on above-average volume of 419.6 million shares.

The benchmark index, which has leapt 42 percent since hitting a 2009 low on March 6, could face resistance next week as political uncertainties come back to the fore ahead of election results due on May 16.

"I don't think this momentum can be sustained, because in May the election will start playing on the mind of investors," T.S. Harihar, senior vice president at ICICI Securities, said. "This could lead to a correction before the results are announced."

Added Karvy's Baliga: "No one knows who is going to come to power and all signs point to a very fractured coalition. Then how can one justify such a huge rally even if fundamentals may have slightly improved for the better. It has no logic."
 

29 Apr 2009,

NEW DELHI: Indian economy will begin to recover from the middle of this year, thanks to the fiscal and monetary measures taken up by the government, but the outcome of the ongoing general election remains a legitimate concern, global research firm Macquarie has said.

Macquarie said, "Our view remains that the largely domestically-driven Indian economy will begin to recover palpably from mid-year onwards."

The double-cylinder fiscal and monetary response has been aggressive and already paying dividend, the research firm said but added that "political uncertainty over the outcome for the ongoing general election remains a legitimate concern".

The other factors likely to contribute include that India is relatively less dependent on exports, its export profile is not heavily dependent on electronic or automotive shipments and the domestic fiscal and policy response has been aggressive and effective.

Macquarie further said the Reserve Bank of India appears to be approaching the end of the policy rate-cutting cycle, but banks have more room to cut their lending rates more aggressively, which in turn should boost economic activity.

"Indeed, the broader setting is evolving nicely to position the economy for a better second-half of FY'10. Currently, we forecast a full-year GDP growth of 5.5 per cent for FY'10 following an estimated 6.5 per cent in the last fiscal year," Macquarie said.
 
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