What's new

Indian Economy - News & Updates - Archive

Status
Not open for further replies.
Thursday, June 14, 2007

India confident on 07/08 export target

NEW DELHI: India is confident of meeting its 2007/08 export target of $160 billion, despite the rise in the rupee, but the government is looking into possible job losses due to the gain, Trade Minister Kamal Nath said on Wednesday. “We will meet the target. I am confident,” Nath told reporters.

The partially convertible rupee has gained nearly 8 percent against the dollar since the start of January, and hit a nine-year peak of 40.28 per dollar in late May.

It is Asia’s best-performing currency against the dollar so far this year, and was trading around 41.0 per dollar on Wednesday.

Small and medium-sized exporters, who account for more than 45 percent of India’s total exports, say the appreciation is hurting business and is likely to cost jobs.

Nath told reporters his ministry was setting up a panel of experts to examine the extent of job losses in the export sector, and said he would meet the finance ministry to seek tax rebates to enable exporters to tide over the appreciation.

“Since the loss is felt by small companies and traditional sectors of exports with very high export-employment ratio, we are likely to suffer job losses of 8 million in the current fiscal,” GK Gupta, president of the Federation of Indian Export Organisations, said after meeting Nath.

India’s export target of $160 billion for the fiscal 2007/08 year, which began in April, compares with exports of $125 billion in 2006/07. Exports were $10.6 billion in April, lower than $12.6 billion a month earlier.

The exporters suggested the rupee could be pegged to a basket of currencies of competitor countries, including China, Thailand, Pakistan, Sri Lanka, Bangladesh, Vietnam and Indonesia.

The central bank has raised interest rates and bank reserves sharply in the past half-year to help curb inflation and strong credit growth. reuters

http://www.dailytimes.com.pk/default.asp?page=2007\06\14\story_14-6-2007_pg5_26
 
.
Formula One prepares to invest in new Indian wealth
Ashling O’Connor in Bombay
THE TIMES

India has received a conditional offer to stage a Formula One grand prix in 2009 as the sport seeks to embrace the world’s fastest-growing economy after China.

The Indian Olympic Association (IOA) said yesterday that it had received a memorandum of understanding from Bernie Ecclestone, the Formula One ringmaster, about hosting a race in Delhi, subject to funding and infrastructure being in place. “We have bagged a Formula One championship for India,” Suresh Kalmadi, the IOA president, said.

India has long been earmarked as a potential destination for Formula One because of its huge television audience, young demographic and soaring incomes. More than half the 1.1 billion population is under 35 and a booming economy is cultivating a society where young software entrepreneurs drive sports cars and own private jets.

Motor sport is yet to attract a significant following, but this could change if India produces a world-class Formula One driver. Narain Karthikeyan became India’s first when he signed for the former Jordan team in 2005, but has since dropped to test-driver status with Williams. Karun Chandhok, who joined the GP2 Series this year, is a potential talent.

In April, Ecclestone said that he was “personally enthusiastic” about India as he is keen to extend the sport’s reach in Asia. Singapore is the latest to win a race. However, he has had difficulties with Indian bureaucracy and talks with other cities, including Hyderabad and Bangalore, faltered.

The chances of a race in India increased this year with the involvement of Vijay Mallya, the Kingfisher beer baron who sponsors the Toyota team. The billionaire has lobbied hard for India and recently gained the backing of the state government of Delhi. However, this was for a street race similar to the Monaco Grand Prix, which appears to have been ruled out by the IOA in favour of building a track.

Olympic officials hope to ride a wave of infrastructure development before the 2010 Commonwealth Games in the Indian capital, seeking the funds for a track through the public and private sectors. If India is to host a race, the IOA must sign a contract and submit financial guarantees by the end of September.
 
.
Goldman buys stake in Indian firm
By Darla Mercado
June 14, 2007

Goldman Sachs Group Inc. will purchase a stake in ICICI Financial Services in Mumbai, India, published reports said.

Goldman India CEO and managing director Brooks Entwistle confirmed today that the New York-based investment bank will purchase shares in ICICI, but declined to reveal just how many shares it would buy or how much it would invest, Bloomberg reported.

India, the world’s second-fastest growing economy, is already attracting attention from the asset management and insurance business sectors: ICICI Bank has already announced it would sell a 5.9% stake in ICICI Financial Services to five unnamed investors, MarketWatch reported.

ICICI Bank said that next Monday it will set the price band for its share offering, which is India’s largest, Bloomberg said.

The investment is subject to clearance from India’s national bank, the federal Foreign Investment Promotion Board and the Insurance Regulatory & Development Authority.
 
.
As upper-class India changes, a storied prep school sees old ways erode, new money arrive
International Herald Tribune, France
Published: June 14, 2007

DEHRA DUN, India: For generations, the sons of India's elite have gone into the hills, heading to this once quiet Himalayan town, to a small, spartan boarding school hidden behind high brick walls.

And until very recently, a boy leaving the Doon School could expect to find a place in the upper rungs of Indian life.

From this privileged enclave — an Indian Eton, modeled on England's most exclusive boarding school — it once seemed impossible to fail. The ambitious boys, those with names still found on school award lists, were bound for top positions in the establishment. Many students found jobs through the "Old Boys," the network of Doon graduates working in nearly every important Indian institution.

They became ambassadors and corporate chieftains. One, Rajiv Gandhi, class of 1960, became prime minister.

If all else failed, a few phone calls would be made, a few strings pulled, and a Doon boy — now a man — could live a quiet, genteel life running a tea plantation.

"There would be a big bungalow, and servants," said Philip Burrett, Doon's deputy headmaster. "A boy knew he could have that, at least.

"Those days are gone," he said one recent evening. "It's a more complicated world out there now."

So it is.

This island of carefully crafted austerity, founded in 1935, has become a reflection of a traditional upper class that is disappearing — and a new upper-class emerging to replace it.

India's old class lines have been tangled by an explosion of wealth since it opened its economy in the early 1990s, and once finely drawn social distinctions have been clouded by everything from standardized university entrance exams to jobs reserved for lower-caste Indians.

So today, the sons of diplomats are increasingly outnumbered on the vast Doon cricket grounds by the sons of newly wealthy gas-station owners and factory managers. Established families are being replaced by small-town success stories. Among the 500 or so students, it's no longer bad form to openly strive for well-paying jobs and imported cars.

"This rising class is very ambitious, and they drive their kids hard," said Kanti Bajbai, a Doon graduate and foreign affairs analyst who became headmaster in 2003. "The people who began to make money suddenly felt they could compete anywhere."

They are also growing fast. In 1995, 79,000 households earned more than US$50,000 per year. By 2005, the number was 609,000.

Nouveaux riches, some would call the recent arrivals who increasingly dominate India's boardrooms, its staid British-style clubs — and Doon School. Talk informally to some alumni, particularly those from older, well-connected families, and they'll lament the arrival of new money.

But such talk goes over badly at Doon, which is trying, in its own quiet way, to make peace with the country shifting around it.

"Doon mirrors a changing India," said Ashish Mitter, 17, the son of an Old Boy who became a top diplomat. "Doon has the reputation of being an elite school, of having the children of rich families, but that's not what it really is."

To most Indians, the school remains part of a barely conceivable universe of wealth and privilege. Its US$4,800 (€3,600) annual fees are more than five times the country's average per capita income.

But, Mitter said, the Doon mystique is rooted in other things — in academics, sports and intense friendships nurtured in boarding school isolation. It's about taking pride in being an "all-around boy," as they like to say here. "Doon gives you an education in the true sense of the term," he said.

What it doesn't give you anymore is a guarantee of the good life.

While the school remains among India's best, the unspoken extras that Doon long provided — entrance into most any Indian university and connections leading to professional success — have largely disappeared.

Today, success in India is most often defined by admission to a handful of exceedingly competitive universities. A diploma from these schools — most prominently the Indian Institute of Technology — is the most prominent springboard to professional achievement.

But admission is based on one thing: a standardized admission test. And the stellar scores required for entry mean ambitious high school students often spend a year or more in the top day schools — or even full-time cram schools — that focus on the exams.

Doon students who want to get into those universities normally leave at least a year before graduation, to enter a cram school and prepare for the tests.

Because if there's one thing Doon is not about, it's cramming.

Just ask Mitter.

There are his seven classes a day, the student council he sits on, the weekly magazine he helps edit, the cricket games he plays. He's the school "captain," helping oversee the lives of the other boys.

At Doon, boys are molded into a particular type of man.

Time spent here is not always easy. The classes are demanding and the homework exhausting. The bullying can be pitiless. Former government minister Karan Singh recalled his "four rather unpleasant years" there in his autobiography.

But Doon's imprint is lasting.

It's a place where students read Shakespeare in small, discussion-filled classes, and grow comfortable wearing coats and ties. They take grueling treks into the mountains, cementing friendships that are often carried far into adulthood. They learn to be confident, and well-spoken.

Its austerity is almost monastic: The boys sleep on narrow beds and study in unheated rooms; the floors are rough stone and the lights are fluorescent tubes. Students are rarely allowed into Dehra Dun, once a small town now paved over with construction and pushing up against Doon's red walls.

With its quiet, leafy grounds, its requisite ivy-covered walls, its graceful colonial brick buildings and its increasingly scruffy stuffed tiger in the library, it can seem a place out of time.

Not long ago, when India's elite was a tiny, well-defined community, Doon was simply a part of life for 11-year-old boys of a certain pedigree.

It found its model in Eton, the centuries-old boarding school outside London with deep roots in Briton's upper classes and political aristocracy.

Doon's first headmaster, Arthur Foot, had been a teacher at Eton, and imbued the school with much of its ethos: study hard, play hard, become a leader. Surrounded by the sons of privilege, but horrified by outright snobbery, he urged boys not to mistake wealth for success while encouraging them to "develop that elusive faculty known as taste."

Doon became an enclave of tradition, where money alone didn't bring admission. The boys came from well-educated, well-connected families. Most were high caste. Most grew up speaking English.

"When I was a boy, it wasn't for people like us. It was for big chaps," said Anand Vardhan, a small-town north Indian doctor whose two sons go to Doon — but whose own father would never have thought of sending him.

In Doon, Vardhan sees possibility. He knows the diploma won't mean automatic entry for his sons into India's most elite corridors, but it will bring an excellent education.

Then there are other, less tangible, benefits.

A Doon student may not come from an elite family, but by graduation he probably looks as if he does — and is comfortable in that world.

"You should be good-looking, well-mannered .... They have to have expression power that must be very good," said Vardhan. "I didn't have that."

"For my sons, things are different," he added.

It's surprising then, when students insist that class really doesn't matter — at least not among themselves.

In part, that's the result of the school's aggressively spartan policies.

You can't wear the latest clothes at Doon, or show off the latest iPod. Spending money works out to less than US$3 (€2.60) a week.

What you get here, Bajpai says, "is a metal bed, two metal (clothing) hooks and a metal locker."

"We come from different places, different towns, but we're equal at Doon," said Vardhan's 16-year-old son Suhaas.

But it goes deeper than that, according to Mitter. Once someone becomes a Doon boy, his home life — his family's money, status and influence — is left at the gates.

"We don't ask, and we don't care, who someone's parents are," he said. "We all play together, we all eat together, we all live together."
 
.
Brazil Rolls Dice on India to Hedge China Bet: William Pesek
By William Pesek

June 15 (Bloomberg) -- In a world where just about everyone is scared silly of upsetting China, Brazil may be an anomaly.

Google Inc., Yahoo! Inc. and Microsoft Corp. are so worried about crossing China that they help it censor the Internet. For all its tough talk and actions around the world, the Bush administration shies away from branding China a currency manipulator or getting closer to Taiwan.

Yet here you have Brazil risking China's wrath by cozying up to that other rising Asian superpower, India. Brazilian President Luiz Inacio Lula da Silva did just that earlier this month, visiting India to quadruple trade to $10 billion and talking of a special partnership with Asia's No. 4 economy.

Mindful of how that might look in Beijing, Lula said in New Delhi that ``today, it is important to talk to China. You can't take China out of the picture. As in all pictures, China will be present.'' There, he said it: China is still the big economic cheese.

The real impetus behind Lula's growing India focus was articulated by Roberto Jaguaribe, undersecretary general of political affairs at Brazil's Foreign Ministry. On the eve of Lula's trip, Jaguaribe told O Estado de S. Paulo newspaper that ``it's inevitable for Brazil to have a special relationship with India.''

Why? Because unlike China, Jaguaribe said, India is ``a real democracy'' and doesn't compete directly with Brazilian producers. ``We need to consolidate this process of strategic association with India to exploit our reciprocal competences,'' Jaguaribe said.

Controversial China

The subtext of all this is that China is a problematic trading partner for Brazil. On the one hand, Chinese demand for everything from iron ore to agriculture products to diamonds to graphite is boosting Brazilian growth. On the other, cheap Chinese exports of everything from shoes to textiles to toys are undermining industries Brazil needs to reduce poverty.

In 2005, Lula took a calculated risk by becoming the first leader of a major nation to recognize China as a ``market economy'' under World Trade Organization rules. At the time, Lula and Chinese President Hu Jintao said they expected to double trade to $20 billion within three years.

Things didn't turn out as planned. Chinese investment rolled in far more slowly than anticipated, while cheap goods flooded the domestic market. Bottom line, Brazil weakened its defenses for a rising superpower unwilling to do the same. It doesn't help that Brazil's currency is up 10 percent so far this year, while China continues to amass more than $1.2 trillion of reserves to keep its own weak.

Hedging With India

Hence the appeal of India. Brazil hopes it will offer trade and business opportunities that benefit both nations equally. It's a chance to hedge Brazil's bet on China. The move is a wise one, even if it comes at the expense of Brazil's China ties.

There are many logical reasons for Brazil and India to get close. Both nations are allies in getting the world's richest nations to scrap the agricultural subsidies eroding living standards in poorer economies. Brazil and India also are pushing for greater influence at the United Nations, International Monetary Fund and World Bank.

India also offers Brazil an important opportunity to go up- market. Unable to compete with China's cheap labor, Brazil is realizing that service industries hold the most promise in creating good-paying jobs. Given India's growing role as a hub for information technology, biotechnology and pharmaceuticals, Brazilian companies may find greater profits there than in China.

Grand Vision

While that's the grand vision, Lula has considerable work to do to achieve it. India is growing much faster than Brazil -- 9.1 percent year-over-year versus 4.3 percent -- and it's getting more attention globally than Latin America's biggest economy.

Even though Brazil's $967 billion economy is bigger than India's $854 billion one, India is in a far more vibrant part of the world. While currency devaluation and hyperinflation no longer dominate the headlines about Latin America, Brazil doesn't have the kind of growth in its backyard -- including from the U.S. economy -- that India does.

Yet there are some important points to keep in mind as Brazil and India become closer.

One is that Brazil and India are essentially saying ``don't forget about us.'' Among the so-called BRICs economies, the potential of Brazil and India are often no match for China's rapid growth and Russia's oil and massive nuclear arsenal.

China in particular continues to get much of the world's attention and a disproportionate amount of its investment. And yet, many of the biggest challenges -- including climate change, sustainable economic development, poverty reduction and finding cleaner energy sources -- will require significant Indian and Brazilian input.

Diversification

It's also a reminder that hitching your future to one economy can be dangerous. If growth in China slowed sharply, many economies in Latin America and Asia would be in big trouble. For proof, look no further than Peru, where on May 30 stocks fell the most in 17 years on concern that China's demand for commodities may slow.

Diversifying your key trading partners is never a bad thing. And clearly, China may not like it. Yet considering the risks China faces -- economic overheating, stock bubbles and rampant pollution -- Lula is doing the right thing for Brazil in looking to India.
 
.
IMG to develop signature golf courses in India
Livemint.com, Wallstreet Journal

IMG now joins a short list of companies cashing in on the golf boom

Anik Basu New Delhi

International Management Group (IMG), long associated with cricket, tennis and fashion shows here, senses serious greenbacks in the greens—as in designing and developing golf courses around Indian real estate projects.

The US firm has lined up an ace up its sleeve—Fijian golfer Vijay Singh, who IMG represents, and who will be involved in planning the courses that will cost around $8 million (about Rs32 crore) each to develop.

“The ethnicity factor is certainly there,” admits Mark Adams, IMG senior vice-president and director of its golf services in Asia, visiting India for the third time in recent months. “We definitely see a couple of Vijay Singh opportunities.” Singh’s grandfather migrated from India to Fiji.

IMG’s entry into a segment dominated by individual Indian golf course designers, such as Ranjit Nanda or the occasional imports from abroad such as pro-turned-entrepreneur Greg Norman, underscores the importance of the sport in a country driven by a booming economy and affluent families who sees golf as a lifestyle.

IMG now joins a short list of companies cashing in on the golf boom. This month, consumer electronics company LG Electronics India Pvt. Ltd ended its decade-long association with cricket in favour of golf. Auto components leader Hero Motors Ltd says it will soon begin manufacturing golf carts. Sports gear major Puma Sports India Pvt. Ltd has unveiled a range of golf lifestyle apparel and accessories, endorsed by British golfer of Indian origin, Kiran Matharu.

Real estate developers have realized there’s money to be made from the sport. Premium gated communities are coming up around golf courses carrying signature names, such as Jaypee Greens, around a fairway once known as the Greg Norman Golf Course in Greater Noida, a suburb of the Capital. The apartments typically cost several crores each.

Earlier this year, the first-ever professional Indian Open for women was held at the DLF golf course in Gurgaon.

People associated with golf in India say they are not surpised; they reckon the sport has witnessed a 35-40% growth over the last four years. Brandon de Souza, managing director of golf events management company Tiger Sports Marketing Pvt. Ltd, claims 150,000 people have taken up the sport since 2003, swelling the number of serious golfers to 400,000.

Whereas once a handful of golf courses dotted the country, he says, today there are 190 across the country. “It’s an industry and I’d say it’s worth between Rs30 crore and Rs50 crore,” de Souza says.

But the golf course designing and development proposed by IMG is new for India even though IMG says it has designed golf courses and provided management services in other markets.
Recently, IMG Golf Course Management, a specialized division, was selected by the world’s top golfer Tiger Woods to manage the only course he designed: the Al Ruwaya golf course in Dubai. IMG has also developed 17 golf courses in China, is developing four more and managing another four.

As it did in China, IMG plans to educate Indian clients that it can do more than just manage events but also design golf courses and the infrastructure around them. The IMG brand—and the Vijay Singh signature—definitely “open doors” in India, Adams says, adding that real estate developers have shown interest. “We hope to wrap up at least three projects in the next 60-90 days.”

IMG India’s managing director Balu Nayar says there’s more sense in looking at realtors rather than plan stand-alone courses because of the real estate boom. “There’s a lot of demand for golf and developers are looking at creating golf infrastructure in real estate projects... It’s a new revenue source (for IMG),” he says.

IMG already is aware of one area of concern: the environment. Golf courses strain water resources and use massive amounts of fertilizers and pesticides to maintain the turf. Critics of golf courses also allege they waste resources from land to water.

“Golf has no place in the development strategy for India,” says Amit Srivastava, director of India Resource Center, an anti-globalization group. IMG says it would strive to work towards environment enhancement, rather than degradation. Nayar says as the company was focusing only on real estate projects, courses developed by it would have access to waste water from the residential properties around. “It’s this water we’ll recycle,” he said.
 
.
Biotech industry exports grow 47% to touch US$ 1.2bn
2007-06-14 18:19:45 Source : Moneycontrol.com

The Indian Biotech industry, comprising 325 firms, has several reasons to celebrate its performance in the just concluded fiscal 2006-07.

For one the Biotech exports grew 47% to post revenues Rs. 4,937 crore or US$1.2 Bn in export revenue. Secondly, the Top 3 Biotech company slots occupied by three firms of Indian origin, contributed nearly 27% of industry revenue of Rs. 8541 crore. Top 3 industry positions went to – Pune-based Serum Institute (Rs. 951 crore), Bangalore-headquartered Biocon (Rs. 823 crore) and New Delhi-based Panacea Biotec (Rs. 600 crore)--contribute 27 pc of the industry revenue.

For the second year in running, Serum Institute has improved its lead over No 2 player, Biocon to Rs.128 crore compared to Rs. 15 crore last year. The 40-year old Serum Institute, set up by Dr Cyrus S Poonawalla, is the largest vaccines maker in India and second largest Paediatric vaccines maker in the world. Sold in over 150 countries, Serum's vaccine shot is the first for every second child born in the world. The company has capacity to produce 100 million doses of the human influenza vaccine and other key vaccines like hepatitis B and DTP.

These findings will be released in the 5th industry survey conducted by CyberMedia Group's specialty BioSpectrum magazine in its forthcoming issue. BioSpectrum and Association of Biotechnology Led Enterprises (ABLE) initiated this annual exercise to map the contours of the biotech industry and to identify indomitable winners in 2003.

According to Mr. Pradeep Gupta, Chairman and Managing Director of CyberMedia, publishers of BioSpectrum, "The Biotech industry is now truly global with two-thirds of the revenue coming from exports. The Rs. 8541 crore industry (FY 05-06 Rs. 6521 crore) has emerged among the stars of the knowledge economy by inventing and launching several breakthrough products."
 
.
New Delhi to host first European Tour golf tournament in India in 2008
PRInside, Austria
© AP 2007-06-11

DUBAI, United Arab Emirates (AP) - India will host a European Tour golf tournament for the first time next year.

The US$2.5 million Indian Masters will be played in New Delhi from Feb. 7-10, promoters and organizers announced Monday.

The tournament will be sanctioned by the European Tour and the Indian Golf Union.

"Golf is fast becoming extremely popular in India," said Mohamed Juma Buamain, chief executive of Golf in Dubai, the promoter of the event.

The news was welcomed by Jeev Milkha Singh, the highest ranked Indian golfer at No. 58 in the world.

"This is just fantastic news for Indian golf," he said. "I think it is also an acknowledgment of the superb results posted by Indian golfers across the globe. A tournament of this stature is sure to catalyze exponential growth of the game back home."

India has traditionally hosted Asian PGA Tour events. With India's booming economy, several new golf courses are in the pipeline.

"The growth of the Indian economy has coincided with the emergence of golf as a major sport in the country," European Tour chief executive George O'Grady said. "We are always keen to expand our tournament portfolio into new territories and we believe that the Indian Masters offers huge potential on that front."
 
.
IA trumps Jet in May as leading airline
P R Sanjai / Mumbai June 14, 2007

State-owned carrier Indian Airlines has squeezed past rival Jet Airways to emerge as the largest airline in terms of market share in the country in May. The airline has cornered 23 per cent market share against 22.5 per cent recorded by the private Jet Airways (excluding Air Sahara).

Indian Airlines, which had been the second largest airline in terms of market share, had lost even this position to budget carrier Air Deccan in July 2006.

Later in April 2007, Indian Airlines jumped to the number two slot thanks to an aggressive marketing initiative, coupled with the crashing of Air Deccan’s reservation system for a few days.

The market share of Indian Airlines in April was at 22 per cent, while that of Jet Airways was at 22.3 per cent. Air Sahara, rechristened JetLite after being acquired by Jet Airways, has maintained a market share of 6.8 per cent in May against 7.1 per cent.

The Vijay Mallya-promoted Kingfisher Airlines, which has recently picked up 26 per cent stake in Air Deccan, has improved its position to 12.2 per cent in May against 10.9 per cent in April.

“The aggressive marketing initiatives by Indian Airlines and the emergence of Kingfisher Airlines as a potential competitor to Jet Airways in services have helped the national carrier to grab the top slot,” industry analysts pointed out.

Commenting on the market share, Indian Airlines officials said the carrier was always the number one in the domestic circuit, in terms of revenue per kilometers per day.

Jet executives said the latest data was not available and added that it was irrelevant to consider the standalone market share of Jet Airways, excluding JetLite, as the latter was very much a part of Jet. “Indian Airlines has been dropping fares to garner market share. The spot fares of Indian Airlines is cheaper than low-fare carriers.

The carrier was offering tickets at throw-away prices on the premium economy fares, surf and save schemes and other similar schemes,” said a senior executive of a leading low-cost carrier.

According to highly placed sources, SpiceJet garnered 8.2 per cent market share (8.3 per cent in April), Air Deccan 18 per cent (18.3 per cent), and IndiGo 6.9 per cent (6.3 per cent) in May.
 
.
Islamic investors turn to India
By Indrajit Basu
Asia Times Online

KOLKATA - The relentless rise of the price of oil over the past two years has hardly been good news for India's stock markets and economy. While high oil prices gave the country's stock investors many sleepless nights, its impact on the economy was greater, including a spike in inflation rates and higher costs across industries.

Lately, however, there seems to be at least one upside emerging from the oil-price rallies. A part of the immense wealth that the Islamic - primarily Persian Gulf - countries generated from the years of escalating oil prices is trickling into India's stock markets and other investment avenues, such as the property and commodities markets, for the first time.

Of course, direct or indirect investments from Islamic countries are not new to India. Every year, India sees inflows of billions of dollars in its stock and real-estate markets, and even industries, but until recently, much of it came from the huge population of non-resident Indians working is such regions as the Persian Gulf. Islamic investors hardly invested any money in India.

Now, however, say industry sources, India (along with China), which has been ignored for so long, has begun to feature prominently on the radar screens of Islamic investors as they look to expand beyond their traditional markets - mainly the United States and Britain - and explore emerging investment destinations.

"Over the last year or so, there has been a marked increase in investment inflows from Islamic countries," said Anand Tandon, founder and managing director of Gryffon Investment Advisors, a Mumbai-based firm that is trying to promote Islamic investments in the country. "And although it is hard to put a number to the amount of investments that have come in lately, anecdotal evidence indicates that the interest of the Islamic investors for investing in India is significant."

Indeed, thanks to almost five years of high oil prices, the coffers of the Gulf countries are overflowing. Although those countries do not provide much information about their outward investments and wealth, according to the estimates of the Washington, DC-based Institute of International Finance, a global bankers' group, the total export earnings of the member countries of the Gulf Cooperation Council (GCC - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) during 2002-06 exceeded US$1.5 trillion, which is more than double those in the previous five-year period. About $1 trillion went toward imports. The remainder of the earnings - some $542 billion - represented surplus funds that entered global capital markets and contributed to an increase in the GCC's foreign-asset holdings.

Again, no firm numbers are available on how much of that booty went where, but the Institute of International Finance estimates that of the accumulated surplus of $542 billion, about $300 billion must have gone to the US, $100 billion to Europe, $60 billion to the Middle East and another $60 billion to Asia, while $22 billion was invested in other locations.

But the India story may not be all about numbers. "The point is," said Talah Sareshwala, "after investing in Islamic countries in Asia like Malaysia, Indonesia and Pakistan, Islamic investors are turning to India because they realize that India may be the best option for them now." Sareshwala is the co-founder of Parsoli Corp, an Indian stock-brokerage firm that adheres to Islamic investment laws and has also created the country's first Islamic equity stock index, the Parsoli Islamic Equity Index.

To understand why India is emerging as the best option, it is important to understand the principles or rules that govern investments of the Islamic community in general. One of the biggest drawbacks of Islamic investments is that the principles (sharia) laid out by the Koran do not allow the division or separation of profit from risk in any of a person's commercial dealings.

Muslims who follow sharia investment principles therefore cannot invest in ventures that earn from giving or taking interest, and as an extension of sharia, neither can they invest in ventures that are involved in activities that the Koran identifies as unethical, such as tobacco, fashion, pornography, alcohol, hotels and entertainment.

"To a large extent, therefore, the investment options of the sharia investors are limited compared [with] the options available to non-Islamic investors," said Dr Shariq Nisar, an expert on Islamic finance.

Against this background, India's biggest attraction for them is that it offers investment opportunities in a wide variety of sectors. Take the stock markets for instance. A study undertaken by Gryffon Investment Advisors on the compliance of stocks of the Bombay Stock Exchange (BSE 500) reveals that the market capitalization of sharia-complaint stocks is more than 58% of the total market capitalization.

And according to a study conducted by Idafa Investment, the other Indian stock brokerage that adheres to Islamic investment law, there are more than 840 sharia-compliant stocks in the indices of the Bombay (BSE Index) and National (NSE Index) stock exchanges.

"That is higher than the sharia-compliant listed stocks in countries like Malaysia, Pakistan, Indonesia and the GCC countries put together," said Sareshwala. "Moreover, it is also a fact that over the past three years the returns on investments like stocks and real estate in India have also been higher than [in] most other Asian economies."

The shift in the center of gravity for Islamic investments is actually not a recent phenomenon. According to Nisar, investors started slowly moving away from established and wealthy economies like Europe and North America as far back as just after the September 11, 2001, terrorist attacks on the US.

After those attacks "and the restrictions imposed on money flows from Muslim states, Islamic investors realized back then that they must look elsewhere and reduce their dependence on developed markets. which have been their favorite destinations for decades", Nisar said.

Consequently, China and India in particular, with their red-hot economies, have emerged as ideal alternatives. The fact that Gulf investors are now increasingly looking at China as well is evident from the fact that in the recent $19 billion initial public offering made by the Industrial and Commercial Bank of China - the largest ever - Middle Eastern investors picked up as much as $2.5 billion worth of shares. Besides, reports suggest that GCC investors in recent times have also poured $1 billion in China's property markets and infrastructure sector.

However, Nisar said that while China, riding high on its manufacturing capacity, has recorded tremendous economic growth recently, it is still viewed with suspicion by Islamic Investors, mainly because of its political ideology and economic structure. On the other hand, India, the world's largest democracy, offers some very clear advantages.

"With a population of over 1.3 billion, huge human and natural resources, and with costs that are at the very low end of the global average, India represents economic opportunities on a scale almost equivalent to China," Nisar said. "But its legal framework, which protects foreign investments, is one of the best in the region, and that's where India scores higher over many Asian countries."

Nevertheless, entry to India is not always easy. According to Ashraf Abdul-Haq Mohamedy of Idafa Investments, while China welcomes Islamic investors with open arms, India still treats money from Islamic countries with suspicion.

"For instance, any money from the United Arab Emirates and Mauritius is scrutinized microscopically and seen as terrorist funds," said Mohamedy, "which is why you will find Islamic investments these days are mostly taking other routes, like the Singapore or the United Kingdom route, or are coming in through joint ventures with local partners."

That may be another reason Islamic investment inflow numbers are hard to track - most so far have been in the country's real-estate sector, which is largely unorganized, or in sharia-complaint industrial ventures via local partners.

However, that's changing. According to Nisar, over the past few months Islamic investment of close to $750 million in the stock markets and infrastructure sector have been announced. During the same period last year, India saw just $50 million of Islamic investments in its capital markets. "The recent announcements, therefore, may be a precursor to the billions that may be waiting to get in," he said.

The trend is clear, said Amrit Pandurangi, director of global audit firm PricewaterhouseCoopers, in a comment to India's Economic Times. "Everybody is looking at India as a good place to invest."
 
.
London Gets Influx of Indian Tourists as Japanese Stay Home
By Nick Allen

June 14 (Bloomberg) -- Visitors from India are spending more in London than the Japanese for the first time, highlighting the strength of India's economy and the changing nature of tourism in the U.K. capital.

Indians spent 139 million pounds ($273 million) last year, up from 107 million pounds the previous year and 78 million pounds in 2003, according to the latest figures from Visit London, which promotes the city to tourists. The number of Indian tourists rose from 130,000 in 2003 to 212,000 last year.

``It's all about how deep is your pocket,'' said Rajesh Saxana, 49, a government official from New Delhi as he watched the changing of the guard outside Buckingham Palace. ``I always dreamed in my childhood that I would come to London one day. Now India has more economic power and prosperity and we can do it.''

India, Asia's fourth largest economy, is growing at the second-fastest pace after China among the world's major economies. The $854 billion Indian economy will grow 8.5 percent in the 12 months ending March 31, according to the Reserve Bank of India. It averaged 8.6 percent growth in the previous four years. The $12 billion real estate industry is growing at 30 percent a year.

Salaries may grow an average 14.5 percent this year, Hewitt Associates Inc., a human resources consultant, said in March, enriching the country's middle class which numbers about 300 million people.

``Those who were middle class are becoming upper middle class,'' said Lakshmi Prattipati, an Indian tourist in Parliament Square. ``They have money and they want to travel to see places all over the world.''

The rise in Indian tourism coincides with a decline in Japanese visitors to London. There were 434,000 in 2000 and last year only 230,000 visited, spending 123 million pounds.

Developing Countries

``It's illustrative of the way the mix of people coming into London is changing with an influx from nations who are finding their economic feet and their travel bug,'' said Ken Kelling, a spokesman for Visit London. ``We see the number of visitors from India growing quite fast over the next few years.''

London faces competition from countries including the U.S., Australia and South Africa to harness the growing number of Indians traveling abroad, Kelling said. He believes most will favor the U.K. because of historical links between the two countries. India gained independence from British rule in 1947.

``Bollywood is also a big draw because the films have used lots of locations here,'' Kelling said, referring to the Indian film industry. ``We've just produced a Bollywood map of London so people can go and see them.''

London Convention

London is also bidding to host the 2008 annual convention of the Travel Agents Association of India, which would be the first time it has been held in Europe. About 90 percent of bookings in India are made through travel agents who together represent hundreds of millions of potential tourists.

``If we succeed we could expect to see tourism from India grow by up to 30 percent in the years following,'' said Martine Ainsworth-Wells, of Visit London.

At London's famous Madame Tussauds waxwork museum sculptors have just given pride of place in the entrance hall to a new figure of Bollywood actor Shah Rukh Khan. Tourists queue to have their picture taken with him, mostly ignoring a waxwork of pop star Madonna nearby.

Outside the Houses of Parliament tourist Y.G. Bhave said he was more interested in India's shared history with Britain.

``It gives a special kind of pleasure to visit the country of India's erstwhile masters, not as their slaves but as their equals,'' he said. ``They can no longer pass laws over us.''
 
.
Best Western And Cabana Hotels Announce India Expansion Plan
Hotel Interactive, Inc., NY
6/14/2007 12:39:30 PM

The world’s largest hotel chain, Best Western International, Inc., today announced its aggressive development plan for India under the leadership of master licensee Cabana Hotel Management Pvt. Ltd. Over the next 10 years, the companies intend to add more than 100 hotels and 10,000 rooms to the burgeoning Indian hospitality market.

Through the partnership, Cabana Hotels will represent the Best Western brand in India, provide hotel management services and establish an advanced hotel management institute in Bhubaneshwar. Designed as the first of its kind in this country, the school broke ground yesterday and will bring world-class hotel management standards to India by providing in-depth training programs for employees working in new Best Western properties.

Cabana Hotels is planning a major investment of more than $1.2 billion in Best Western-branded hotels during the next decade, and building or converting hotels at 3.5- and 4-star levels or above in markets including Mumbai, Delhi, Bangalore, Bhubaneshwar, Ooty, Rameshwaram, Bhubaneshwar, Hyderabad Kanyakumari and Jaisalmer.

“India's booming economy and growing travel market make the country an excellent strategic fit as Best Western furthers its global reach,” said David Kong, president and CEO of U.S.-based Best Western International. “With more than 30 years of hospitality and management experience in North America and India, Cabana Hotels is a respected and proven leader within the industry, and a well-suited partner. The company’s co-chairman and co-founder, B.B. Patel, owns and operates eight Best Western-branded properties in California, bringing a thorough knowledge and understanding of the brand to our development efforts.”

Best Western’s India expansion is consistent with its overall growth strategy for increasing brand awareness and preference in new markets by building high-caliber hotels that receive Best Western’s Premier® descriptor. Designed to identify properties offering a discriminating level of service and amenities that meet the needs of sophisticated business and leisure travelers, the Premier model has been operating successfully in Europe and China for the last several years.

“Best Western’s global footprint and worldwide reservations system make it a strong partner for international hotel developers,” said Dr. Prabhu Goel, a co-founder and co-chairman at Cabana Hotels and leading private venture investor who serves on boards of directors for public and private companies in the United States and India. “Cabana will leverage this strength to become the leading provider of high-quality hotel accommodations in India, with a focus on achieving excellence and building relationships with existing and potential clients.”

In addition to Patel and Goel, Cabana Hotels’ directors include Sushant Patnaik, a successful entrepreneur with holdings in both India and the United States. Cabana Hotels CEO Anil Wad brings more than 25 years of hospitality management experience to the leadership team.
 
.
Cool It, But Let's Grow
15 Jun, 2007 l 0152 hrs IST

The Reserve Bank of India (RBI), which has been cracking down on inflation, may be somewhat disturbed by the latest data released by the Central Statistical Organisation. According to the figures, India's industrial production has witnessed the highest growth in a decade of 13.6 per cent in April 2007 compared to 9.9 per cent in April 2006, outdoing all expectations, including perhaps the RBI's. It is surprising how such growth has been achieved despite tighter credit and rising interest rates. The apparent drivers seem to be the rise in investment in many sectors and an increased demand for consumer non-durables.

Production of consumer non-durables has grown by a healthy 21.9 per cent in April 2007, compared to just 9.4 per cent in April 2006, that too at a time when inflation in these products has been high. Perhaps this is because salaries in India are rising as well. Salaries are expected to grow the fastest in India among all Asian countries, at the rate of 14.5 per cent this year.

Manufacturing too saw a phenomenal 15.1 per cent growth owing to increased capacities being created in steel, automobile, cement, petrochemicals and plastics among others. The tightening of monetary policy has not hit big manufacturers as they can easily avail cheap international credit. Moreover, the rising rupee has made the import of capital goods cheaper.

What is disturbing is that some sectors, like automobiles and consumer durables, are beginning to slow down. The growth in production of consumer durables fell to 5.3 per cent against 7.4 per cent last year. Although this might be good news to central bankers who want to curtail inflation, it can impede India's growth trajectory. Already, there are clear signs that small and medium enterprises have been hit by tighter interest rates.

Small and medium enterprises account for nearly 50 per cent of India's industrial output, and contribute almost 35 per cent of exports. And exporters in general have seen an 8 per cent fall in realisations due to the rupee appreciation last year. Any adverse impact on this sector can have long-term implications on the country's economic health in general.

Overheating of the economy has been a major worry for the government. Inflation in India, in real terms, has been much higher than that in China. However, now that the inflation rate has fallen below the RBI's target for the first time in nine months, the authorities might reconsider the tight monetary policy that they have adopted.

A balance must be struck between controlling inflation and allowing healthy economic growth.
 
.
Distributors see India as a growth driver
By James Carbone
Purchasing
June 14, 2007

While India's electronics industry is still in its infancy, some distributors see the country as the next hotbed for electronics distribution because India's OEMs have a history of using distributors rather than buying direct.

"In the late 1990s and in 2000, most semiconductors sold in India went through distributors," says Kamath Suresh, general sales manager for Avnet Electronics Marketing Asia. "Suppliers did not have a presence in India and did not see business growing there. There was no concept of direct customers. Everything was through distribution," he says.

Over the last three years that has changed a bit and some semiconductor and component manufacturers have started to set up offices in India. Still only about 5–10% of the component business has shifted from distribution to component manufacturers, according to Suresh.

With major OEMs and electronics manufacturing services providers increasing their presence in India, distributors doing business there can expect strong revenue growth. Roy Vallee, CEO of Avnet, says Avnet is seeing very high growth rates coming out of India. Avnet's business is coming from indigenous OEMs which build white goods and from EMS companies that are starting to set up shop in India.

"It will be a while before India is the size of China, but we are established in India and I am encouraged by our prospects," says Vallee. "We are well positioned there."

In addition to white goods, equipment such as set top boxes, cell phones and some telecommunications base stations are being built there, he says.

"India is the region to watch," says Michael Long, president of Arrow Global Components. "We are investing and we will build infrastructure as the market grows. We will be there to support the manufacturers that build in India."
 
.
′India, China are real growth markets for world economy′
FreshPlaza, Netherlands

Global head honchos of Ernst and Young are bullish on India's success story. Global Chairman & CEO, Ernst & Young, Jim Turley and COO, Ernst & Young, John F Ferraro spoke about this on the sidelines of the Ernst & Young World Entrepreneur award ceremony in Monte Carlo.

Excerpts from an interview given to CNBC-TV18:

India story has been looking robust and stronger, you have been a frequent visitor to India but at this point in time, there are some concerns like the rupee is appreciating, interest rates are high and inflation is at about 6%, how strong is India story looking to you?

Turley: I still think its looking very strong, you saw great growth last quarter and the things like strong rupee, some concerns about inflation are really a result of great strong success and so, while there are always things to be concerned about, I think the positives far outweigh the concerns.

You have been monitoring property prices in India?

Turley: The property prices have been going up dramatically, more in some sectors and geographies than others but I still think that is not holding back the economy. The strength, the entrepreneurship, the focus of the business community is very much on the positives and so it's a positive story still.

We were talking about the internal situation in India, but what about the external triggers and the external factors because everybody is worried about the Chinese economy and what's going to happen to it and the Chinese stock markets, your thoughts on that?

Ferraro: If one looks at the long-term, then China and India are real growth markets for the world economy and if you look at the India particularly, and you look at the private equity firms, they are now all setting up house in India. You look at the Indian companies that are investing outside of India, we just see robust opportunities in the future for both parts of the world.

What about the US economy and the concerns on the sub-prime market, have those concerns eased for the moment?

Turley: I think when you look around the world, corporate profits are in good shape, there are some concerns about valuations, like China being one but when one looks at the fundamentals, the profitability of companies and the level of innovation coming, I still think we are in for some good positive future.

At this point, there are some concerns because of the US presidential elections, the outsourcing outcry gaining momentum, also concerns on what's going to happen with H1-B visas, how much of an issue is that likely to be?

Turley: Every time there are presidential elections in the United States, there are is an element of the political environment - the talks about job placement and outsourcing of jobs. I think this cycle will be no different.

In many ways, whenever I am in India and speaking about this with business leaders, they say that more the discussion happens in United States, the better it is for India because inevitably the story that is being told in the US is about the relative cost advantages in India, the relative talent advantage in India and so at the end of the day, it is actually benefiting India.

There is debate currently in India what companies should do with their annual shareholder reports, what are your thoughts on this and what is the global trend that you are seeing at this point?

Ferraro: That is not a big debate unique only to India; it is all around the world and we have to work stronger on clearer, more transparent and more useful annual reports and in terms of it being a trend yet, I won't say it is a trend yet in terms of taking the dialogue into action.

Turley: I think it's going to be something that is going to be studied by a lot of different people from a lot of different perspectives, not just the companies but also the investor groups, the regulators, firms like ours, etc.

It's really about great minds together thinking about what the future financial reporting should be because it has to be relevant and reliable and demonstrably what is there today may have been the right thing for a time that was less global, for a time where there was less technology and for a time less complex than today. I think you are going to see continuing dialogue and probably some experimentation towards reform.

And also some experimentation with quarter to quarter results and financial reporting that happens every quarter?

Turley: Not everybody around the world is on a quarterly reporting system. So, you are going to see some who have not been quarterly, move to quarterly. The technology is available if companies and regulators could arrange to report even more frequently.

I think getting the balance right between what the investors want, what information they need and how timely they need it, is going to be the real discussion taking place.
 
.
Status
Not open for further replies.

Pakistan Defence Latest Posts

Back
Top Bottom