Indian Economy - News & Updates - Archive

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Malaysia's AGC Powers Into India With RM5.48 Billion Project
Bernama, Malaysia

NEW DELHI, July 26 (Bernama) -- In what is seen as the first fully-owned Malaysian company to penetrate the tough Indian power sector, Asian Gateways Construction Sdn Bhd (AGC) has secured a 30-year contract to supply power -- projected to generate about RM1.028 billion in annual profit for the company.

After two years of intense negotiations, AGC signed the power purchase agreement (PPA) with PTC India Ltd, paving the way to build and operate a staggering RM5.48 billion thermal coal-fired power plant in Krishnpatnam in Andra Pradesh..

"It is 100 percent Malaysian project. This project is classified as a mega project by the Indian government and AGC will enjoy tax-free status," a jubilant AGC executive chairman/managing dircector, Datuk Seri Ho Seng Kung, told Bernama after clinching the deal here Wednesday.

"The duration of the project is 25 years with an extension of another five years and the total capacity of the plant is 1,600 megawatts (MW).

"The construction of the first phase will start once the environmental impact assessement report is ready and the project will kick off in 12 months or even earlier. Under the first phase we will supply 1050 MW," he said.

Robust India is hungry for power, where about 10,000 MW would be needed over the next five years to fuel its sizzling economy, steaming at about nine percent annually.

Ho said under the PPA, PTC, India's power-trading arm, agreed to buy all the power generated by AGC at US$0.05 per kWh.

PTC would tap the power from AGC plant and feed into India's national grid, which would be distributed nationwide, where demand from the booming industrial and commercial sectors are spiralling daily.

Ho said 1,000 acres of land in Krishnapatnam town, about 150 km north of Chennai, had been earmarked for the coal-fired power plant and the first phase was expected to be completed in 48 months, while the second phase was targeted to begin after the commissioning of the first phase.

Yearly, about two million metric tonnes of coal would be needed to power the plant and AGC's plans to import the fuel from its own coal mines in Sumatra, in Indonesia.

The company had also set up a special-purpose vehicle, AGC Power (India) Pte Ltd, to spearhead the project in Andra Pradesh, home to about 60 million Indians and investment-friendly state in the southern belt of India.

"It is great challenge for us as a Malaysian company but with our experience and expertise we managed to get this project.

"We also like to invite other public-listed companies from Malaysia to join us," he said.

India is the third largest producer of electricity in Asia with an installed capacity that has rose from 1,362 MW in 1947 to about 115,545 MW in 2005.

Yet, this production is inadequate to meet the colossal demand and frequent power outages have become a seasonal nightmare in many parts of India -- especially during peaks hours in summer.

 

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Bollywood brings sound of ringing tills
Ashling O’Connor
The Times
July 26, 2007

When members of the International Indian Film Academy were scouring the globe looking for a suitable venue for their annual awards ceremony, they had the choice of both New York and Paris.

It is a measure of Britain’s importance to Bollywood, the world’s most prolific film industry, that this year the academy chose Yorkshire.

Outside India, the UK is Bollywood’s biggest market with Hindi films routinely screened by the three largest multiplex chains and making the top-ten box office charts.

Bollywood is also bearing the “Made in Britain” kitemark, with more and more Indian directors migrating to London as a favoured shooting location. Last year, more than 40 Bollywood films were shot in the capital, including Namaste London, Vipul Shah’s £3 million hit about the cultural gaps between generations of non-resident Indians.

“Britain has always been a home away from home,” Yash Chopra, the studio owner voted Bollywood’s most powerful player, said. He was one of the first directors to shoot outside India and has a lake in Switzerland named after him for his services to tourism.

Bollywood’s new fascination with London is bringing a new breed of Indian tourist to the UK. Whereas their parents flocked to the Swiss Alps to visit the faux-Kashmiri backdrop against which their silver-screen heroes sang and danced their way to a schmaltzy denouement, the twenty-somethings and thirtysomethings of India today are drawn to the London landmarks they see in contemporary films.

James Bidwell, chief executive of Visit London, the tourism promotion agency, said: “The heritage and depth of connection [between India and Britain] is powerful, but the younger tourists are coming for Bollywood.”

Financially empowered by Western-standard pay packets, Indian tourists are an important source of revenue for the UK as they stay in the top hotels and dine in all the best restaurants. They numbered 212,000 in London last year, spending more than the Japanese. Each time they visited, they spent on average £645 per head, generating £139 million for the metropolitan economy. “We can see that doubling or tripling in the next three years,” Mr Bidwell said.

 

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Railways to invest Rs100bn in container operation
India Infoline News Service / Mumbai Jul 26, 2007 17:12

Railways requires the development of new ICDs and multi modal logistics parks, as the new container train entrants would need to have access to rail linked ICDs or develop their own ICDs within next three years.

An investment of about Rs100bn is expected to flow into Railways’ Container Operation sector in the next two years for wagons, logistics parks and Inland Container Depots (ICDs). This was stated by K.C. Jena, Member Staff, Railway Board while speaking at a Conference on “Privatization of Container Transportation by Rail – Issues & Options” on Thursday.

Jena who is also the National Chairman of the Chartered Institute of Logistics & Transport –India (CILT) said that the Rail Container policy announced by the Ministry of Railways requires the development of new ICDs and multi modal logistics parks, as the new container train entrants would need to have access to rail linked ICDs or develop their own ICDs within next three years.

He said that overall the exercise is likely to make Logistics in India more effective to enable growth of physical trade and economy, and optimize the cost of supply chains and transactions. It will also facilitate moving towards a system of multimodalism based on co-existence of rail and road modes in the transport sector in our economy with a view to optimize fuel costs, control pollution, and minimize wasteful investment, he added.

The Conference, which was attended by about 150 delegates from all over the country and abroad had a focused approach and was able to bring about consensus between the representatives of the container transport industries and the Government on the various issues. CILT is a worldwide organization of professional transportation, set up to promote the study of the art and science of transport in all its modes such as road, rail, shipping, civil aviation and pipelines.

 

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Wal-Mart to increase its Indian procurement
Mikrofax eProcurement News, UK
25/07/2007 15:49

Retail giant Wal-Mart is to ramp up its procurement from India in order to enhance its global operations, it has been reported.

According to Moneycontrol India, the company will be sourcing electronics, leather accessories and footwear from the country in addition to the $600 million (£300 million) worth of apparel, jewellery and textiles that came from the sub-continent in 2006.

Rajnish Kapur, general manager for Wal-Mart Global Outsourcing India, commented that the company was taking "more and more penetration" in the area.

"We see that as a growing opportunity from India and we are exploring our opportunities there … We see huge growth opportunities in small towns," the official said.

The retailer was founded in 1962 by Sam Walton and became a listed entity on the New York Stock Exchange in 1972.

It is the fourth largest private employer in the world, following the Chinese Army, the NHS and Indian Railways.

 

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Abroad training made mandatory for railway managers

New Delhi, July 26: After Railway Minister Lalu Prasad Yadav`s success tour of Europe, it is now the turn of senior railway officers to go globe trotting.

Railways made it mandatory for its officers to go abroad for training. While Divisional Railway Managers (DRM) would be sent to HEC Paris, General Managers to Stern Business School at New York. Similarly, other senior officials would go to Singapore and Malayasia.

"It is very essential to have global exposure for our senior staff to keep the railways surging ahead," says a senior railway ministry official.

"Though earlier officials were allowed to avail foreign training facility, it was never mandatory. Now as a policy, senior officials have to go to foreign countries to upgrade their skill and expose themselves to latest technology," the official said.

There are about 14.12 lakh employees in railways including 14,000 officers. While the total number of DRMs is 67, there are only 24 GMs.

As per the global training plan, the DRMs and GMs would be sent twice a year in a group of 20 for two weeks.

"We need to learn and adopt the system in the heavy haul operation in the western countries. While Indian railway`s freight train carries maximum of 58 wagons, in South Africa, Brazil, Australia and Canada, the capacity is up to 400 wagons at a time," said the official.

Last year, Yadav along with senior officials had visited Europe. After the tour the minister had instructed to follow the western model in services like passenger amenities and cleanliness.

"The process of skill up-gradation drive is a continuous exercise to suit emerging railway business and technological needs. The plan is to ensure training of every officer in all functional management areas like assets maintenance, safety management, project management as well as general management," said the official. however, since the focus is now on to increase the volume in freight as well as passenger traffic with safety measures, there is a special emphasis to adopt the latest technology in the field, added the official.

About the other staff, the official said, there is also a training plan to improve their skill in customer care, accident investigation, bridge inspection etc. Safety categories staff are given special training on disaster management with emphasis on relief, rescue and rehabilitation.

The ministry has decided to select only global majors like Alstom, Siemens, Bombardier, General Electric to handle large projects such as setting up wheel factory, diesel locomotive factory, electric locomotive factory and coach factory in the country.

 

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Indian Institute Launches Online Grading of Diamonds
By Commodity Online
26 Jul 2007 at 11:08 AM GMT-04:00

SURAT (CommodityOnline.com) -- An institute dealing with diamonds in India has launched an online system to verify the diamond grading documents.

The Indian Diamond Institute (IDI), based in Surat, a major town for diamond industry in the country, has taken the initiative to start the online service for verifying the diamond grading documents.

Grading documents are certificates that consumers get when they buy diamonds from jewellers. Officials of the institute said the new online grading system will allow consumers from across India to validate diamonds they have purchased.

According to the institute’s executive director K K Sharma, the online grading of diamonds will provide a stamp of authenticity to consumers.

“So far the diamonds have been graded by the laboratories, but they are inconsistent in their work. So that is why the institute has decided to step in to verify the diamond grading report,” Sharma told Commodity Online.

He said the exercise would put pressure on jewellers as well as diamond brands that have stormed the retail market to ensure that their data conforms to international standards which the institute intends to follow.

Consumers can access the new facility from the institute’s website http://www.diamondinstitute.net.

Consumers need to enter the relevant data from the diamond grading report which they obtain after making the purchase. The institute will produce an authentic grading analysis of the diamonds. The consumers could match the IDI analysis report with the diamond grading report that they have.

Sharma said the institute has been inspired by a similar move by the American Gem Society (AGS). The AGS has been providing similar services to validate the grading reports from the last couple of years in the US.

India is one of the largest importers of diamonds in the world as the country emerged as a major hub for processing of cut and polished diamonds.

India imported $1986.53 million worth of cut & polished diamonds during the financial year 2006-07, and the country processed about 58% ($10.84 billion) of the world’s polished diamonds, worth $18.72 billion, in 2006.

 

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Indian Retail Becomes Customer Freak
By Priyanka Akhouri
Mumbai, Jul 26, 2007

Retail sector one of the India's largest industry accounts for over 10 % of the country's GDP and around 8 % of the employment. Looking at the increasing demand in the retail market that is driven by customers' changing lifestyles, income growth, and different demographic patterns, the retail sector is expected to grow at a higher rate than the Gross Domestic Product (GDP) of the country. It's witnessing a dramatic transformation. Retailer's main area of focus is on customers, to transform their shopping experience from a traditional format to tech-savvy feeling. Not only the number of retail outlets is booming but also the system in itself is changing with the involvement of Indian corporates and international retail giants.

Various studies carried out on the future of retail industry in India seem to point that the size of the organized retail would triple in another 4-5 years. However, this sector is expected to touch an estimated amount of US $17 billion as compared to the current size of US $6 billion.

To meet this significant need - CIOs, retailers, enterprises, and customers can leverage on Intelligent Retail Network (IRN) solutions - introduced in India in early 2006. It enables to streamline business operations, access decision-making, improve consumer satisfaction, and ameliorate the management of inventory. The focus is on retailers to boost productivity by connecting people, places, and information, and improve customers' satisfaction by enhancing the shopping experience. Besides, it claims to increase revenue by improving decision making through utilization and delivery of data, and secure brand image and assets. This solution is now in the process of being rolled out in the market for the customers. Usage of IRN will enable retailers to attain flexibility in meeting frequent changing business demands.

The solution, provided by Cisco, aims to integrate an existing retail system or infrastructure for easy implementation. Its components vary from a simple retail solution like the Point of Sale (POS) enterprise to media-rich customer interactive environments. Various offerings of this solution include Integrated Services Router, which ranges from a simple, wireless router to secure enterprise-wide platforms. The Unified Communications provide voice, video, mobility, and Internet Protocol (IP) communication solutions to facilitate effective interaction. The Video Surveillance enables the retail sector a consistent and efficient data integration. It also helps retailers to increase revenue and improve the in-store experience for shoppers. When combined with video analytics intelligence, the solution give retailers new ways to gather vital data about how assets and people move through a store.

Anil Bhasin, VP (Enterprise) of Cisco India and SAARC said, " Across retail-sector operations, merchandising, human resources, training, customer services, and supply chain organizations can develop a roadmap, based on IRN foundation which will support their corporate vision for years into the future."

Digital Signage - designed to meet specific needs of retailers offers comprehensive and scalable networking solutions, which enables retailers to customize their content to individual screens in individual stores. It includes mobility solutions that help retailer's productivity and responsiveness enabling secure access to network resources and applications. It enables to access corporate and store information, reduces retail costs through converging data and voice systems, provides instant communication with enterprises applications and resources throughout stores. It claims to support employee training and productivity, and maximizes customer's satisfaction with in-store broadcasting, multi-channel shopping, and digital signage as well as revenue-boosting smart technologies and information. Among the other assistance, it provides CIOs and retailers a more cost-effective employee training and management by connecting store sites via a Wide-Area Network (WAN). To improve the productivity, it supports employee communication by means of e-mail, voicemail, internet access, and videoconferencing.

The solution attempts to make shopping quick, efficient, and pleasurable for customers and with a unified IP information network, retailers can resort to consumer driven replenishment, which can change the way the store handles forecasting along with better analysis of pre-sales data and real-time availability of data on customer behavior.

 

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Middle rank employees have high job satisfaction : ASSOCHAM
India Infoline News Service / Mumbai Jul 26, 2007 10:53

Survey carried out by ASSOCHAM on `Job Satisfaction Levels’ that covered 700 Employees also revealed that other factors for job satisfaction comprise flexible working hours, plenty of leave facilities with reasonable perks, said 80% of respondents, adding that these are available in abundance in aforesaid jobs.

Job Satisfaction is found to be highest at Middle ranks at centre in state governments and PSUs under them, foreign embassies and faculties in academic institutions as little sense of accountability chase them after office hours due to their employers moderate expectations and working practices offering such employees enough flexibilities.

Above findings are in a Survey carried out by ASSOCHAM on `Job Satisfaction Levels’ that covered 700 Employees also revealed that other factors for job satisfaction comprise flexible working hours, plenty of leave facilities with reasonable perks, said 80% of respondents, adding that these are available in abundance in aforesaid jobs.

The respondents felt that that jobs that drive maximum satisfaction include rank holders of Under Secretary, Dy. Secretary & Directors with government. Faculties in academic institutions like Lecturers & Sr. Lectures including Readers and Officials like Advisers, Commercial & Trade Officers in Foreign Embassies. Middle rank managers, senior managers and Chief Managers in PSUs are among others that remain highly contended and satisfied with their assigned job responsibilities, say majority of respondents.

It also reveals interesting disclosures saying that satisfaction levels are rising even in over 65% middle rank working in MNCs, IT giants and large Indian corporate houses in view of attractive salary package and conducive work environment. Earlier, job satisfaction in these 3 places were at very lower side.

However, over 40% of them said that senior officers of Joint Secretary ranks and above with government are among highly tense lot as their working hours have no defined ceiling and accountability varying from their normal hierarchical bosses to political masters and media, for which there is no particular specified time.

Commenting on the Survey, ASSOCHAM President, Venugopal N. Dhoot said, “apart from senior government officials, those that face severely tight schedule and thick and heavy responsibilities include top ranking executives in PSUs and banks”. Ambassadors/High Commissioners and Presidents, Vice Presidents, COO in professional managed companies and other corporate houses including Country President, Country Manager, Director –IT, HR, Technical & Operations, though have the squeezed schedule but draw them lower satisfaction as compared to middle rank holders elsewhere, said 55% of respondents.

The most dissatisfied employees as per 85% of respondents are found in BPOs, call centres followed by engineering & construction companies, stock markets, textile and garment manufacturers, railways, FMCG, export houses, retail malls & multiplexes, hotels, transporters, etc. in view of longer working hours, higher targets to achieve with great expectations.

Key Factors for Job Satisfaction :

· Reasonable accountability

· Justified expectations

· Flexible working hours

· Adequate leave facilities

· Employee friendly work culture

· Good time for vacations/tours

· Balanced life between home and office



Factors for Job Dissatisfaction

· Over 60 hours work in a week compared to 40-48 in Europe and US

· Frequent changes of jobs for greener pastures

· Stiff competition to come up in life

· Higher targets with unreasonable expectations



Dhoot further said that employees in India have longer working hours, i.e. over 60 compared to 40-48 working hours in Europe and US. The employees in BPO, call centres and domestic & overseas corporate sector who frequently quit the jobs for better salary & incentives and working in obsolete working conditions have the highest level of disappointment.

 

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Australia Follows US on India Nuke Sales
By ROD McGUIRK 07.26.07, 10:54 AM ET
FORBES, NY

CANBERRA, Australia - Australia might lift its ban on selling uranium to India if New Delhi forms the nuclear partnership it is negotiating with the United States, Foreign Minister Alexander Downer said Thursday.

Australia, which holds 40 percent of the world's known uranium reserves, currently won't sell uranium to India because New Delhi is developing nuclear weapons and refuses to join an international nonproliferation treaty.

But Downer said India's dramatic economic expansion and the threat of global warming has forced the government to reconsider that ban.

Australia will take its cue from the civilian nuclear partnership deal that Washington and New Delhi have been negotiating for the past two years, Downer said.

Under the deal, the U.S. would ship nuclear fuel and technology to India in return for India opening its civilian nuclear reactors to international inspectors. India's military reactors would remain off-limits.

Downer said those negotiations were "heading in the right direction."

If a deal is reached, "it is a possibility that we would begin negotiations with India over supplying uranium for those power stations which were subject to United Nations inspections and to the regime of the International Atomic Energy Agency," Downer said.

Senior government ministers gave conditional support Thursday to making India Australia's only uranium customer that is not a member of the Nuclear Nonproliferation Treaty.

Resources Minister Ian Macfarlane argued that if Australia did not sell uranium to India, someone else would.

"If it's not from Australia under the strictest guidelines and safeguards, they will simply source it from other countries with much less restriction," Macfarlane told Australian Broadcasting Corp. radio.

The Australian Democrats, a minor opposition party, said in a statement that selling uranium to India "will undermine the most fundamental international treaty on weapons proliferation and could lead to further escalation of tensions in South Asia."

Security analyst Sandy Gordon said Australian uranium, while quarantined for peaceful purposes, would enable India to divert uranium from other sources to weapons.

"India is in some form of nuclear competition with China and Pakistan ... and it would have an effect on that," Gordon told ABC.

Pakistan's Religious Affairs Minister Mohammed Ijaz ul-Haq said his country, which came close to nuclear war with India in 2002, expected a similar offer of Australian uranium.

"As a Pakistani, I can tell you the entire nation will be very upset" if Pakistan is excluded, ul-Haq told ABC.

The Nuclear Nonproliferation Treaty calls on nations to pledge not to pursue nuclear weapons in exchange for a commitment by five nuclear powers - the U.S., Russia, Britain, France and China - to move toward nuclear disarmament.

India and Pakistan, known nuclear weapons states, remain outside the treaty, as does Israel, which is considered to have such arms but has not acknowledged it.

 

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Tips for a smooth passage to India
India’s booming economy make it a tempting destination for export deals, but make sure you take the right precautions, says Simon Groves

Personal Computer World, UK
Simon Groves, CRN 26 Jul 2007

UK exporters with their eyes on India’s booming economy need to proceed with caution. India’s economy continues to grow at about eight per cent a year, fired by a burgeoning services sector that contributes three-quarters of the nation’s economic growth. But although money continues to flood in, India is facing significant inflation – reaching 7.3 per cent year on year last October.

In addition, the government is still struggling to implement economic reforms, bring in much-needed infrastructure projects and manage costly subsidy systems.

These pressures highlight the importance of checking carefully the creditworthiness of trading partners in India. All too often UK firms chasing export deals forget to apply the same checks and measures that they would use for domestic customers. The basic principles are the same, but they need to be adapted.

Credit check. It is especially vital to check if a potential customer is under the supervision of the Board for Industrial and Financial Reconstruction. This means it is protected from bankruptcy, making it virtually impossible to reclaim a bad debt.

Payment terms. These must be in writing and agreed to by your customer before any transaction begins. Indian importers expect open account terms, but if there are concerns, exporters might try to opt for advanced payment or Cash Against Documents.

Getting paid. Slow payments are not excessive, but do not extend credit terms beyond 180 days as this will result in the Reserve Bank of India getting involved, delaying payment even further.

Late payment. Recovery of overdue payments through the legal system is slow, so out-of-court settlements are preferred. UK firms need a collection agency with local experience.

Legal action. If firms do have to go to court, be prepared to wait. Debt recovery takes on average 1,420 days, four times as long as in the UK, while bankruptcy proceedings take a staggering 10 years on average, compared with less than 18 months in the UK.

 

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Boeing, Air India Celebrate First 777-200LR Delivery
PRNEWSWIRE, NY
Source: BOEING

SEATTLE, July 26 /PRNewswire-FirstCall/ -- The Boeing Company (NYSE: BA) and Mumbai, India-based Air India today celebrated the delivery of the airline's first 777-200LR (Longer Range) Worldliner airplane. This is the first 777 from Air India's order of 68 Boeing jetliners. The airline will receive an additional three 777-200LR Worldliner and three 777-300ER (Extended Range) airplanes this year.

Air India's order for 68 Boeing jetliners, placed in December 2005, was the largest commercial airplane order in India's civil aviation history in terms of price. The order consisted of 23 777s, including eight 777-200LR Worldliners and 15 777-300ERs, and 27 787-8 Dreamliners. Additionally, Air India Express, a wholly owned subsidiary of Air India, ordered 18 Next-Generation 737-800s.

Air India will use the 777-200LR to become the first India-based operator to offer direct, nonstop flights between the United States and India. It begins service to New York's John F. Kennedy International Airport from Mumbai, India, on Aug. 1.

"Air India is connecting India to the world and is doing so in a manner that combines real economic advantages for the airline and a positive experience for our passengers," said V. Thulasidas, chairman and managing director of Air India. "Boeing's 777-200LR is the most technologically advanced passenger aircraft in its class and will enable Air India to fly passengers around the world with direct, nonstop routes."

The 777 family of airplanes is popular with passengers and airlines because of its fuel-efficient twin-engine design, high reliability, low operating costs and comfortable and spacious interior. It is the market leader in the 300- to 400-seat segment, capturing more than 65 percent of that market.

"The 777 delivers proven economic leadership and a very high level of passenger comfort," said Dinesh Keskar, Boeing Commercial Airplanes vice president, Sales. "Air India and Boeing embarked on a strategic fleet renewal and expansion plan in 2005. Today, we are seeing the results of that vision, plan and partnership coming together."

Air India's 777-200LR will have a three-class configuration, including eight first-class cabins, 35 executive class and 195 economy seats. All executive class seats will turn into flat beds and economy seats will be larger, at 18.5 inches in width. Passengers also will have access to an in-flight entertainment system provided by Thales on video screens that measure 23 inches in first class, 15.4 inches in executive class and 10.6 inches in economy. Additionally, the airplane will be able to carry up to 15 tons of cargo.

With the 787 Dreamliner and 777, Boeing offers a complete family of airplanes to cover the 200- to 400-seat market segment. With complementary range, speed, efficiency and operational commonality, yet differing seating and cargo capacities, airlines can use both models in their fleets to tailor capacity to meet seasonal demand.

Air India, India's national flag carrier, operates approximately 170 flights a week, carrying more than 5 million passengers a year to 59 cities worldwide from various points in India. Its subsidiary, Air India Express, operates 116 services a week to 10 destinations in the Gulf and South East Asia.

Air India, which is celebrating its 75th year of operation this year, operates 24 weekly flights to the U.S., including a daily service to New York via London and a daily service to Newark, N.J., via Paris.

 

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A-I cuts non-stop US fares by 33%
P R Sanjai / Mumbai July 27, 2007

To compete with private airlines, state-owned carrier Air-India has reduced fares by an average 33 per cent for its non-stop Mumbai-New York flight from August 1 on its fully furnished new Boeing B777-200-LR aircraft.

Air-India took delivery of these B777-200 aircraft in Seattle yesterday. Air-India has positioned its fares on a par with airlines offering one-stop services to US, as part of testing the market.

The national carrier has reduced its economy fares by 37.17 per cent to Rs 50,700 (return fares excluding taxes) from Rs 80,700. The executive (business) class fares were lowered by 40.11 per cent to Rs 159,700 against the original price of Rs 2,66,700.

The first class fares of this brand new carrier has reduced by 22.01 per cent to Rs 3,57,700 against Rs 4,58,700. The duration of the flight is approximately sixteen hours, resulting in saving of over 4 hours.

A senior Air-India executive said: “This is the part of strategy of testing the market. This will be a kind of introductory offer. The original fares would be restored once the market becomes sensitised about the experience of non-stop US flights which is offering a world-class facilities on-board.”

Travel Agents’ Federation of India (TAFI) General Secretary Ajay Prakash said this is the step in right direction which will enable passengers to experience brand new aircraft and its comforts.

Air-India’s non-stop flights are equipped with the iThales Entertainment System, with an Audio Video on Demand (AVOD) facility. This handy system attached to every seat can be accessed by a touch screen. Passengers can avail of more than a hundred hours of audio and video entertainment.

 

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Appreciating Re: No need to panic

Indian software firms get 60 per cent of their revenues from the US. They need to reduce their dependence on the US market and move towards the European market, Japan etc and start earning in Euros and Yen.

The appreciation of the rupee vis-à-vis the US dollar (the same as the depreciation of the US dollar vis-à-vis the rupee) is causing concern among the exporters especially the software companies as they expect a fall in their export earnings because the US dollar would now fetch less rupees. Clearly, this is a part of the ongoing economic dynamics wherein the fiscal fundamentals are strong, foreign investors are quite upbeat about the Indian economy and are thus willing to pour in more money. Reportedly, in the first fortnight of this month foreign funds pumped US $4.1 billion into India, more than double the $ 2 billion they had pumped in November 2006.

One side effect of this is that the rupee is being increasingly accepted as a "hard currency" in many countries even though the Reserve Bank of India has not yet declared it as fully convertible. However, the people believe that the rupee could make good asset! Recall, 10 years ago, when a depreciating rupee had made the Indian importers jittery, I had then written in my column that there was no need to panic.

To quote: "After 27 months the rupee is again in turmoil vis-à-vis dollar and other hard currencies. On 1st December, 1997 the value of rupee crashed to Rs 39.30 to a US dollar. It may be recalled that in September 1995 the rupee was in turmoil when it touched a low of Rs 35 against the US dollar in the foreign exchange market. In other words in past the 27 months the value of rupee vis-à-vis US dollar has depreciated from Rs 33.78 to Rs 39.30, ie, by almost five and a half rupee.

Since the introduction of the economic reforms in 1991 when the controlled exchange rate policy was done away with, the rupee has depreciated by almost Rs eight. Not bad, given the political instability in the country. Indeed it should not cause any concern since we have shifted to a market determined rate of rupee against all the hard currencies. This depreciation (and sometimes appreciation) is part of the game and most of the time good for the economy."

Moreover, from 1998 till 2003 the rupee was relatively stable vis-à-vis the US dollar and then rose steadily. But it is only in the past few weeks that the appreciating rupee began unsettling the applecart of many exporters. The rupee hit the intra-day high of $40.28 on 28 May while it finished at 39.85 a dollar on 13 May 13, 1998. Last week it was Rs. 40.50 to a dollar. In 2002, for every dollar worth of exports, an exporter got nearly Rs 49. But in December 2003, an exporter got Rs 45 for every dollar, which translated into a fall of approximately seven per cent.

The software companies are the hardest hit as their software exports are mainly for the US market. To quote: "Indian software firms get 60 per cent of their revenues from the US and a one per cent appreciation of the rupee against the dollar can impact earnings before interest and tax margins by between 30 and 50 basis points. Irrespective of the fact whether the company is big or small, all of them have been hit. The margins may be impacted by as much as 4 per cent."

What is the remedy? One, devaluation, but this instrument to check appreciation of any currency is outdated. Two, the buying and selling of the dollar by the Central Bank to stabilize the exchange rate of the rupee, is effective only as a short term measure. However, because of the hue and cry raised by the exporters the Government has come out with a Rs 1,400 crore relief package for the exporters.

This includes interest subsidy to the tune of Rs 600 crore on bank loans and Rs 800 crore on duty drawback on inputs used in the manufacture of export goods and other measures. The interest subsidy is meant only for small and medium sized exporters while the duty drawback measure will apply to all the exporters. According to the exporters, though the relief package is not sufficient it would mitigate some of their problems.

Paradoxically, when the rupee is depreciating the importers are a worried lot and when the rupee is appreciating the exporters are the worried lot. This is because when the rupee is depreciating the importers have to pay more rupees to buy a dollar and thus imports become expensive while the exporters get more from a dollar. However, when the rupee is appreciating the importers have to pay less to buy a dollar while the exporters get less from a dollar. For instance, India imports huge quantities of oil, so when the rupee is depreciating our oil import bill goes up and when the rupee is appreciating our oil import bill comes down.

If the exporters are fretting about the declining export earnings because of the appreciation of the rupee, many others are happy as the appreciating rupee brings down our import bill of a number of capital goods and commodities like oil, pulses, grain etc. True, the appreciating rupee is only a temporary phenomenon which will stabilize at some level but we can use this opportunity to import capital goods to strengthen the capital base of our manufacturing sector. The time is also appropriate to import and build inventories of critical raw materials. We can also build our stocks of grain, pulses and edible oil to keep a check on inflation.

The ideal thing would be for the Reserve Bank of India to manage the exchange rate fluctuations within a certain band to be determined by it. But more important, our business houses and industries must realize that as the economy gets stronger, the rupee will also get stronger in relative terms. Therefore, businesses which are heavily oriented towards the US markets must factor in the appreciating rupee in their calculations and devise strategies to check the erosion in their export earnings. Moreover, they also need to reduce their dependence on the US market and move towards the European market, Japan etc., and start earning in Euros and Yen.

However, for a large number of people the exchange rate variations do not have much of a meaning unless some of the items of their daily consumption like pulses happen to be imported. The common man is concerned more with the domestic inflation which affects his living standards and not the appreciation or depreciation of the rupee which is remotely connected to his living standard. Fortunately, the domestic rate of inflation has come down which should make the consumer happy.

Plainly, there is no need to panic about the appreciation in the value of the rupee as it will not affect the common man to any significant extent. In economic terms, it means automatic correction in the exchange rate with every player in the foreign exchange market adjusting his requirements accordingly. The packages for exporters are unnecessary. The businessmen must learn to live with the exchange rate fluctuations in this era of globalisation and stop looking for succour from the Government.

 

[genmirajborgza786]

Thursday, July 26, 2007
Business
India to grow @9%, says IMF

Agencies

Washington, July 26: Buoyant global economic outlook has prompted the International Monetary Fund (IMF) to revise upward India's Gross Domestic Production (GDP) growth rate by 0.6 per cent to 9 per cent for 2007.
Major upward revision has been made for emerging markets with growth projection for China, India and Russia being raised substantially, IMF said in its update on the World Economic Outlook (WEO) on Wednesday.

IMF had revised India's GDP forecast to 9 per cent over the projection made in April this year.

The WEO update has also revised the growth forecast for 2008 by 0.6 per cent to 8.4 per cent.

The Economic Advisory Council to the Prime Minister, headed by former Reserve Bank Governor C Rangarajan, had on July 16 pegged the country's economic growth rate at 9 per cent in 2007-08.

The RBI, however, in its Annual Policy Statement had projected a growth rate of 8.5 per cent.

India has recorded a GDP growth rate of 9.4 per cent during 2006-07.

IMF has also revised the forecast for world economic growth to 5.2 per cent, up by 0.3 per cent from the projection made in April.

The growth rate for China, however, has been revised by 1.2 per cent to 11.2 per cent and for Russia by 0.6 per cent to 7 per cent.



URL: http://www.expressindia.com/fullstory.php?newsid=90048




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[genmirajborgza786]

Thursday, July 26, 2007
Infotech


India fastest growing Internet market

Agencies

Kolkata, July 26: India is the fastest growing internet market in the world with over 23 million active Internet users, holding out prospect of a larger growth in the number of netizens.
The top eight metros were driving the growth of internet in India with fast growing adoption in smaller cities, said Manish Agarwal, Vice-President (Marketing) of rediff.Com, one of the leading online community portals.

Kolkata accounted for 1.05 million activer users and was ahead of technology hubs like Bangalore (0.97 million) and Hyderabad (0.95 million).

Kolkata also had the highest percentage of 'innovators' among online users in the country, he said after launch of rediff's new multimedia application 'iShare'.

"iShare comes with a very light and easy to use utility tool which users can install on their PCs and upload multiple files even at a low- speed without having to worry about the source of the file," he said.

For example, he said, users would be able to shoot videos on mobile phones, digicam, digital camcorder and upload it.

Photos and music from any digital camera and MP3 player like ipods could be uploaded on iShare, he added.



URL: http://www.expressindia.com/fullstory.php?newsid=90043




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