India Newsletter: May 2006

Economic News

1.European Manufacturing Companies look at India for outsourcing
India participated in the Hanover (Germany) Trade Fair as partner country for the second time, a unique honour bestowed on India. 'India Everywhere' was the theme for the Fair, which brought together over 5,200 of the world's largest manufacturing companies. 370 Indian companies participated in the Fair. A large number of European manufacturing companies want India as a sub-contracting, R&D & Manufacturing base. Labour shortage and associated costs hike up European companies' cost of operations. More than 30 German companies have already set up base in India.

2.Exports of Auto parts to reach US $ 25 billion by 2015
Exports of auto components from India have reached a record compounded annual growth rate of 33% in the last three years due to huge increase in sourcing of auto companies into India by several developed countries. Many Indian companies are acquiring plants and operations overseas to gain direct access to global OEMs (Original Equipment Manufacturers) and expanding their product range, besides benefiting from outsourcing synergies. The Indian auto industry produces an estimated 9.7 million vehicles propelled by a surging domestic demand, which has pushed the growth rate of the auto industry to 20% in the last couple of years. Many international auto majors are manufacturing in India today such as, General Motors, Toyota, Ford, Honda, Hyundai, Volkswagen, Suzuki and Mercedes and most of them are outsourcing their components from India.

3. King Fisher Airlines signs US$ 1 billion deal with Airbus
With a view to flying international routes, King Fisher Airlines signed a deal with Airbus to buy five 340-500-passenger planes worth US $ 1 billion for non-stop flights connecting Indian cities with American cities. These long-range four engine planes will seat around 225 people.

4. German investments in India
Auto giant BMW, component manufacturer Bosch and commercial vehicle maker Mann plan to set up or expand their manufacturing facilities in India with huge investments in the next 18 months. Bosch, which has a subsidiary in India named MICO would invest Euro 500 million while Mann would set up a facility in Madhya Pradesh to manufacture trucks and buses at an estimated investment of Euro 300 million.

5. Chevron to invest US$ 300 million in Reliance Petroleum Limited (RPL) Refinery
In the first ever-transnational deal in the Indian oil industry, Chevron, the world's fifth largest oil company has picked up a 5% stake in Reliance Petroleum for US $ 300 million. Chevron has the right to acquire an additional 24% in the refinery project in the future. If Chevron acquires the additional 24% equity in RPL, its investment in RPL will go up to close to US $ 2 billion, one of the largest investments from any multinational company in a single project in India.

6. India allows 100% FDI in coal sector
India has allowed 100% Foreign Direct Investments in coal sector to provide adequate quantity of the fuel to core sectors such as power and steel as well as non-core sectors. India is trying to encourage private participation for promoting competition in the sector with the objective of providing best quality coal to the consumers. In the past two years efforts have been made to streamline functioning of this sector to yield good results and bring transparency.

7. India is world's 29th largest exporter
According to trade statistics released by the WTO, India's ranking among the top merchandise exporters during 2005 moved from 30 to 29 and it's ranking among importers jumped to 17 from 24 in 2004. In commercial services, India joined the ranks of the top 10 service exporters with the rank of 10 compared with a rank of 16 in 2004.

8. Skoda Export Company Limited to set up US $ 1 billion Port Complex in India
The Czech firm Skoda Export Company Limited has announced its plans to establish an integrated Port complex in Andhra Pradesh, India with an investment of US $ 1 billion which will include a special economic zone, a port, a 250-mw power plant and a urea manufacturing base.

9. India on way to becoming biotech studies hub
India is rapidly moving from being a label extension support center to being included in global pivotal studies and the growing generic industry is boosting the flow of biotech industries in the country. According to "The Global Biotechnology Report 2006" brought out by Ernst & Young, the next big step for India will in products including biogenerics, novel therapeutics, vaccines, biochemicals, nutraceuticals and cosmeceuticals.

10. Information Technology Sector
Over the past decade, the Information Technology (IT) industry has become one of the fastest growing industry in India, accounting for more than a quarter of India's services exports in 2004-2005. The key segments include software and services (IT services) and IT-enabled services (business services). On a conservative growth rate of 20%, Indian IT exports could reach US$ 42 billion by 2010.

India Inc. acquires greater profile in Europe

A string of recent big-ticket acquisitions and takeover moves - from Romania to France - is changing the profile and face of India in Europe. Although India-born Lakshmi Mittal's $22.5 billion takeover bid on Arcelor continues to hang in balance, India Inc. is eyeing takeover opportunities in Europe like never before. It is no coincidence that two of the biggest acquisition deals struck by Indian companies in the current calendar year were in the European market, with companies little heard of before rising from the shadow in recent months to take over European companies in areas like drugs, energy and chemicals.

The latest to join the acquired list is Romania's generic major Terapia SA which has been scooped up by Ranbaxy, India's largest generic drug maker, for $324 million. This acquisition followed its buying up of GSK of Italy's unbranded generic business.

Then wind turbine maker Suzlon Energy recently bought Belgium-based Hansen Transmissions International for $565 million in an-all cash transaction. "The acquisition of Hansen gives us technological leadership and will make Suzlon a leading integrated wind turbine manufacturer in the world," said Tulsi Tanti, chairperson and managing director of Suzlon Energy. Suzlon's acquisition of the world's second largest maker of wind turbine gearboxes has made it the second-largest foreign corporate takeover by an Indian company in the current year.

Earlier this year, Indian drug major Dr. Reddy's Laboratories surprised the stock market by acquiring German generic drug maker Betapharm for a staggering $570 million to expand presence in the European market. The deal followed other major acquisitions in the pharmaceutical space last year, including Matrix Laboratories takeover of Belgium's Docpharma and Wockhardt buying German drug maker Esparma for $11 million.

Videocon Group, a leading Indian electronics goods maker, inked a major takeover deal in June last year with the television tube making business of France's Thomson SA for 240 million euros ($290 mil- lion). The acquisition of Thomson's television tube making business strengthened the international expansion strategy of Videocon, which competes with South Korea's LG and Samsung in the consumer electronics and white goods market in India. The deal also allowed the group to develop its global manufacturing base through the integration of Thomson's four major tube manufacturing plants in China, Mexico and Poland that together employ around 11,500 people.

Tata AutoComp Systems Limited (TACO), an auto component products and services provider arm of India's diversified conglomerate Tata Group, in August last year acquired the business and assets of a German automotive components supplier. TACO said it acquired the business and assets of W?ndsch Weidinger, which produces functional plastic parts and systems for the automotive industry, as well as its 270 employees. The German firm's customers include Audi, Bentley, BMW, Daimler Chrysler, Volkswagen and Volvo.

Analysts said the string of acquisitions in the European market in recent months were helped by spiraling Indian industrial earnings on the back of a booming economy and a blistering stock market rally. While the economy is poised to expand by 8.1 percent in the year ending March 31, making it one of the fastest growing economies in the world, the benchmark share market index has risen over 15 percent in the current year so far. Foreign institutional funds, which provide crucial support to long- term rally in the Indian capital market, pumped in a record $10.7 billion in the market in 2005 and have already bought shares worth over $3.37 billion this year.

"The biggest change that has happened to the Indian corporate sector is the mindset change," said N. Srinivasan, director general of the premier lobby group Confederation of Indian Industry (CII). "Indian companies are now acquiring firms of global scale to get proximity to the market they are targeting. There is an appetite to become global players by adding capacity, getting new technology and proximity," Srinivasan said. And fuelled by this passion of establishing a global footprint, India's corporate firms were on an overseas shopping spree in 2005 like never before.

The past calendar year saw Indian companies striking as many as 100 acquisition deals in the overseas market by spending a total of whopping Rs.106.70 billion ($2.37 billion). This compares with 60 acquisition deals worth Rs.76.50 billion ($1.7 billion) in 2004, according to India Advisory Partners, a London- based database firm on mergers and acquisitions.

Experts say acquisitions have now become an important driver in the evolution of Indian multinational companies, who not too long ago shied away from global competition, and reflected the country's rising international influence and changing image.

(Source: Indo-Asian News Service)

"We need huge investments": Excerpts from Interview of Prime Minister Dr. Manmohan Singh with Die Handelsblatt of Germany

Handelsblatt: Mr. Prime Minister, you were the architect of the far reaching reforms in India. The economy is growing fast since then. Can this development really continue?

PM: The process of economic reforms has clearly accelerated the pace of growth. Since 1991 our economy has grown at an average rate of 6% and in recent years even at 7.5 to 8%. In the next five years, we want to increase the rate of growth to ten percent.

Is this realistic?

It is achievable. India's savings rate has increased to 29% of GDP. Parallel to this, the investment rate has increased to 31%. This has made it possible for us to have 8% economic growth. The savings rate will increase further in the coming years. Our demographic profile, which increases the number of the employed, will make this happen. The investment rate will soon grow to 35 or 36%. Thus our society is headed towards a growth rate of 10%. And we need such growth to be able to create sufficient number of jobs and to generate resources for investing in infrastructure, health, education and protection of the environment.

The condition of India's infrastructure is the greatest concern of investors. How quickly can one improve the situation?

We need huge investments if we are to remove the bottlenecks and at the same time overcome the great challenges in sectors such as energy and water. Foreign companies can play an important role here. But a lot is happening already. We have established regulators in all important areas. Our highway system is growing, ports are being constructed and airports modernized. Now, the railway network is also being modernized. If we keep up this momentum, the country will soon look different.

The Indian state does not have a lot of resources. How are you improving the framework conditions for the participation of private sector in the area of infrastructure?

Infrastructure sectors are by definition oligopolistic. We therefore need a good regulatory framework, and we are creating this. We have established regulators in all important sectors, from roads to petroleum. In the telecom sector we have had for some years a regulator and a dispute settlement mechanism, and this sector has seen explosive growth. We are using this model now in the electricity sector as well.

While the services sector is prospering, India is lacking labour intensive industries that create jobs for the unskilled.

You are quite right.

Can your country become a second "factory for the world" just like China?

The conditions for this are improving. India's manufacturing companies have become lean, efficient and globally competitive in many areas. If the World Trade System does not become more protectionist, our industry will continue to grow rapidly.

But the risk of protectionism is increasing, because globalization is no longer disadvantageous for countries like India.

The world trade system continues to damage emerging countries. Agricultural protectionism, especially in the EU and USA, deprives us of export opportunities. But we are realistic. We know that developing countries cannot shape the world trade system freely in accordance with their needs. We should therefore use all available opportunities. At the same time, the Doha Round should, as promised, become a real development round. This is the litmus test of whether old protectionism will raise its head. This will hinder our progress. But this will also adversely affect the rest of the world.

Will India's rise change the world as strongly as that of China?

If India continues to grow at 8 to 10%, it will stimulate the world economy. And the more we export, the more we will import as well. Unlike other counties, we are no mercantilists. We do not want to horde unlimited currency reserves and we also have a large trade deficit. If Europe and USA help India in achieving its growth targets, they are doing themselves a favor as well.

India and China have good relations at present. But is it not likely that the two Asian giants become rivals over the long term?

At the moment the two countries complement each other. Our bilateral trade is booming. This was unimaginable five years ago. We do not view China as a rival, but as a friend. The world is big enough to accommodate the growth ambitions of both countries. There are still problems relating to the border, but we are making progress here as well. Cooperation between the two most populous and fastest growing economies is important for peace in the region and the world. And this is also of decisive importance for Asia to become the political and economic epicenter of a new world order.

How important is nuclear energy for India?

It provides us greater possibilities to meet our growing energy requirements. This will help Europe as well. If our requirement for oil and gas were to increase greatly, it will exercise enormous pressure on the world market price and increase competition for diminishing reserves. I hope that we will be able to convince Germany to look at this issue for mutual benefit.

Tourism - India Calls
Gulmarg - Meadow of Flowers

The beautiful valley of Gulmarg, a large meadow spread over three sq. kms and located 56 km south- west of Srinagar, is a famous tourist spot in the State of Jammu and Kashmir.

Gulmarg means 'Meadow of Flowers' and during spring it's just that - a rolling meadow dotted with countless colourful bluebells, daisies, buttercups and other flowers. Gulmarg's legendary beauty, prime location and proximity to Srinagar naturally makes it one of the premier hill resorts in the country.

The journey to Gulmarg is enchanting- roads bordered by rigid avenues of poplar give over to flat expanses of rice fields interspersed with picturesque villages. Depending on the season, nature's colours could be the translucent green of spring, summer's rich emerald, or autumn's golden hues.

After Tangmarg, the climb to Gulmarg begins through fir-covered hillsides. From here, there are two paths to Gulmarg -a steep footpath or a winding sealed road. There is also a pony track from Gulmarg that leads upwards to Khilanmarg, Kongdori and seven springs. At one point, known as View Point, travelers generally stop to look at a spectacle of snow-covered mountains, almost within touching distance.

Today, Gulmarg is not merely a mountain resort of exceptional beauty - it also has the highest green golf course in the world, at an altitude of 2,650metres, and is the country's premier ski resort during winter. For the would-be golfer, there are golf sets on hire, pros to instruct one in the game and temporary memberships. Naturally, these facilities are available top layers as well.

In winter, Gulmarg acquires a new persona - that of the most famous skiing and heli-skiing resorts in Asia. Come December, and the verdant green slopes of Gulmarg are blanketed with snow, forming some of the finest natural slopes for ski runs of all levels.

Gulmarg is the ultimate beginner's skiing resort. Ski enthusiasts can easily find all required gear and equipment as well as professional ski instructors here. The longest ski run here is provided by the Gondola cable car, which allows a ski run of 2,213 metres. This newly constructed lift through pine-clad slopes from high above Gulmarg is exhilarating.

Gulmarg also makes an excellent base for trekking in the northern Pir Panjal Range. All around are snow-capped mountains, and on a clear day one can see the Nanga Parbat peak is one direction and Srinagar in another.

The beautiful valley of Gulmarg, a large meadow spread over three sq. kms and located 56 km south- west of Srinagar, is a famous tourist spot in the State of Jammu and Kashmir.

Gulmarg means 'Meadow of Flowers' and during spring it's just that - a rolling meadow dotted with countless colourful bluebells, daisies, buttercups and other flowers. Gulmarg's legendary beauty, prime location and proximity to Srinagar naturally makes it one of the premier hill resorts in the country.

The journey to Gulmarg is enchanting- roads bordered by rigid avenues of poplar give over to flat expanses of rice fields interspersed with picturesque villages. Depending on the season, nature's colours could be the translucent green of spring, summer's rich emerald, or autumn's golden hues.

After Tangmarg, the climb to Gulmarg begins through fir-covered hillsides. From here, there are two paths to Gulmarg -a steep footpath or a winding sealed road. There is also a pony track from Gulmarg that leads upwards to Khilanmarg, Kongdori and seven springs. At one point, known as View Point, travelers generally stop to look at a spectacle of snow-covered mountains, almost within touching distance.

Today, Gulmarg is not merely a mountain resort of exceptional beauty - it also has the highest green golf course in the world, at an altitude of 2,650metres, and is the country's premier ski resort during winter. For the would-be golfer, there are golf sets on hire, pros to instruct one in the game and temporary memberships. Naturally, these facilities are available top layers as well.

In winter, Gulmarg acquires a new persona - that of the most famous skiing and heli-skiing resorts in Asia. Come December, and the verdant green slopes of Gulmarg are blanketed with snow, forming some of the finest natural slopes for ski runs of all levels.

Gulmarg is the ultimate beginner's skiing resort. Ski enthusiasts can easily find all required gear and equipment as well as professional ski instructors here. The longest ski run here is provided by the Gondola cable car, which allows a ski run of 2,213 metres. This newly constructed lift through pine-clad slopes from high above Gulmarg is exhilarating.

Gulmarg also makes an excellent base for trekking in the northern Pir Panjal Range. All around are snow-capped mountains, and on a clear day one can see the Nanga Parbat peak is one direction and Srinagar in another.

Nearby Attractions
• Srinagar: This capital city is 56 km from Gulmarg. Famous for its canals, houseboats and Mughal gardens, Srinagar is quite unlike other large Indian cities forhere you are much more in Central Asiathan on the sub continent.
• Gulmarg Biosphere Reserves: Located 48km southwest of Srinagar, this reserve isfamous for several rare and endangeredspecies such as the musk deer, and a richand varied avifauna.
• Khilanmarg: This smaller valley is a 6-kmwalk from Gulmarg. The meadow,carpeted with flowers in spring, is the sitefor Gulmarg's winter ski runs and offers afine view of the surrounding peaks andover the Kashmir Valley.

How to get there
• By Air: The nearest airport is situated in Srinagar.
• By Rail: The nearest railhead is at Jammu.
• By Road: The journey from Srinagar to Gulmarg takes approximately 2 hours.

Climate
• Winter: November to February
• Summer: May to September
• Best time to visit: Throughout the year.

Clothing: Light woolens in summer; heavy woolens in winter.

Where to stay: Hotel Hilltop, Hotel Highlands Park, Green Heights, Gulmarg Inn.

For more on India tourism, visit:
jammukashmir.nic.in
www.tourinda.com
www.tourismofindia.com

Indian Vegetarian Recipes: Paneer (Cottage Cheese) Cutlets

Serves: 4
Cooking time (approx.): 4 minutes
Style: North Indian Vegetarian

Ingredients:
• 300 grams (about 12 oz.) cottage cheese crumbled
• 2 big potatoes boiled and mashed
• 2 big slice(s) of white bread
• 1 onion(s) finely chopped
• 2 green chilli(es) finely chopped (optional)
• 2 tablespoon(s) cornflour (if not available, try any other flour for binding the mixture)
• 2 tablespoon(s) coriander leaves finely chopped (optional)
• salt and pepper to taste
• oil for shallow frying

Method:
• Place the bread slice(s) in water just enough to soak them. Squeeze gently between palms of hand and discard excess water. Tear into small pieces and keep aside.
• Mix the cottage cheese, potato(es), onion(s), green chilli(es), cornflour, chopped coriander leaves, bread pieces, salt and pepper. Shape the mixture into patties.
• Spread 1 teaspoon of oil on a griddle and heat on medium level for about 2 minutes. Reduce heat to low. Place 4-5 patties on the griddle and fry for 3 minutes on each side or till both the sides are golden brown. Fry the remaining patties in the same way.

Serve immediately with: Tomato Ketchup.