India Newsletter: September 2006

Economic News

1. Labs of fortune: Things are looking good for the Indian chemical industry as international companies are increasingly seeing greater value in setting up contract manufacturing and R&D facilities in India, especially in the pharma, agro-chemicals and fine-chemicals sectors. A number of firms, especially from Europe and Japan (like Dai Nippon Ink and Chemicals, which has entered India through a joint venture with Sudharshan Chemicals), is entering into joint ventures with Indian companies as India is seen as a cost-effective location for manufacture of certain chemicals. The country is considered a great sourcing hub for specialty chemical industries such as textile, rubber, paper and paints, with affordable labour costs.
Meanwhile, domestic firms such as the Mumbai-based Supriya Chemicals and Shreyas Intermediaries are increasing capacities to meet the rising global demand.
The industry is currently growing at a rate of 12-15 % annually.

2. Maruti closes in on 1 million mark: Japanese automaker Suzuki Motor Corporation, ranked fourth behind local rivals Toyota Motor, Honda Motor and Nissan Motor, said that it aimed to raise the capacity at its Indian unit, Maruti Udyog, to 960,000 in 2009-10 from 630,000 this year. Maruti had earlier announced the setting up of a new plant with an initial capacity of 100,000 a year, which could be scaled up to 250,000 a year, raising the eventual capacity to 880,000. However, the Indian car market leader is known to harbour ambitions of a million in capacity by 2010.

3. Cars go full throttle in hinterland: Robust demand from small towns and rural areas in India is driving domestic car sales - a phenomenon that has gone completely unnoticed in the industry cruising at double digit growth rate. According to industry estimates, while passenger car sales are growing at a CAGR (compound annual growth rate) of 15% in metros and mini metros in the past three years, in smaller towns and hinterland, the growth is in excess of 20%. According to the National Council of Applied Economic Research, demand in the rural areas is bound to increase with improvement in infrastructure and rise in rural disposable incomes and the rural per capita income-urban per capita income ratio has increased from 0.58 in 1995-96 to 0.64 in 2004-05.

4. FDI inflow in the first quarter up by 47%: Foreign Direct Investment (FDI) inflows into India increased by 47% to US$1.7 billion during the period April-June in the current financial year, compared to US$1.1 billion in the same period during the last financial year. According to Commerce Minister Kamal Nath, India's exports and imports during this period increased by 34% to US$38 billion and 29% to US$54.5 billion, respectively. Mr.Nath said that these were provisional figures compared to the year-ago period provisional figures and added that these "will be revised upwards".

5. India has become key R&D center, says Dell: According to Ms. Susan E. Sheskey, Chief Information Officer of the US$54 billion Dell Corporation, India has become a strategic centre for research and development and has come up with a series of products now being deployed globally.

6. FIIs stage comeback in August: Foreign Institutional Investors (FIIs), which pulled out over US$ 1.63 billion from Indian equity markets in May, seem to be making a comeback. India has attracted more foreign money compared to other emerging markets such as South Korea, Taiwan, Indonesia, Thailand, and Philippines in August. In the cash segment alone, FIIs have pumped in US$ 220.90 million in the first eight trading sessions in August. This almost equals the net FII investment in July - US$ 252.20 million.
According to a recent Goldman Sachs report, India attracted the bulk of the US$1 billion of investments made by FIIs in emerging markets in the last week of July, showing that "foreign appetite has finally returned to India'.
"FIIs are finding the Indian markets attractive mainly because the fall (in prices) happened too quickly. In terms of the price to earnings ratio too, the markets look fairly priced, considering that the growth rates are higher," said Andrew Holland, head of the strategic risk group of DSP-Merrill Lynch.

Gems and Jewellery

India is a ading player in the global gems and jewellery market. The gems and jewellery industry occupies an important position in the Indian economy. It is a leading foreign exchange earner, as well as one of the fastest growing industries in the country.
The two major segments of the sector in India are gold jewellery and diamonds. Gold jewellery forms 80 percent of Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond studded as well as gemstone studded jewellery. A predominant portion of the gold jewellery manufactured in India is consumed in the domestic market. However a major portion of the rough, uncut diamonds processed in India are exported, either in the form of polished diamonds or finished diamond jewellery. The largest consumer of gold worldwide, India is also the leading diamond cutting nation.
The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and the availability of skilled labour. In addition, the industry has set up a worldwide distribution network, of more than 3,000 offices of the promotion and marketing of Indian diamonds.
The Indian diamond industry has the world's largest cutting and polishing industry, employing around 800,000 people (constituting 94 per cent of global workers) with more than 500 hi-tech laser machines. India is expecting to have its diamond bourse functioning in Mumbai in 2006.
India is therefore a significant player in the world gems and jewellery market both as a source of processed diamonds as well as a large consuming market.
In the global diamond market today, Indian diamonds account for 55 per cent share in value terms, 80 percent share in caratage (weight) terms and 90 percent share in volume terms. Today there is a ready availability of an entire range of diamonds in nearly every size, quality and cut.
India offers the twin advantage of skilled labor and low cost in the area of gemstone processing.
India's significance in the global gems and jewellery industry can be largely attributed to its strength in diamond processing. Value enhancement by the Indian diamond processing industry is the highest among other countries, with a value addition worth $ 1.48 billion in 2004 compared to $840 million in 2003.

Certification
Following the World Diamond Council's statement on adopting credible and effective measures against the trade in conflict gems, the Indian government has tightened its certification process for international trade. The Gems & Jewellery Promotion Council is India's certification authority. The government's Central Board of Excise and Customs has banned the import or export of rough diamond shipments, which are not accompanied by Kimberly Process certificate launched in Switzerland. Certification for quality diamonds and jewellery has given a fillip to exports and resulted in greater acceptance of Indian products in the world market.

Technology
The Indian gems and jewellery industry has made rapid strides in design, powered by a new generation of young, professionally trained, technology driven designers. Many of India's jewellery manufacturing facilities are equipped with the latest CAD/CAM and other advanced design systems. Technology solutions are also available for production control, supply chain and inventory management in the jewellery industry. The Special Economic Zones and Gems and Jewellery Parks developed in various states offer technology-enabled environments that are conductive to growth and quality production.

The domestic industry has been growing at a significant rate
The gems and jewellery sector in India has been growing across all key segments, as detailed below.

Precious Metals

Gold
The current consumption of gold in India is estimated at over 900 tons, used mostly in 20/22 carat jewellery. Nearly 95 percent of gold is used to manufacture gold jewellery for the domestic markets and the remaining 5 percent is exported. Gold consumption in India is primarily aimed at investment.

Silver
India annually consumes around 4,000 tones of silver. Silver jewellery and other articles for personal use, account for the bulk of the sales especially in the rural areas. India is also the third largest industrial user of silver in the world, after the US and Japan.

Platinum
Platinum or white gold, targeted at the premium jewellery segment, is gaining preference among designers and consumers globally. White India's share in the global platinum jewellery market is growing by 19 percent annually, it continues to be less than one percent in the global platinum jewellery market. Given the global growth and the maturing of the Indian market to the international trends, this represents an area of potential growth in India.

Gemstones
Due to the popularity of gemstone studded jewellery across the globe, India's gemstone industry has been growing with an estimated turnover of $ 0.22-0.26 billion.

Jewellery
The Indian jewellery market is one of the largest in the world, with a market size of $13 billion. It is second only to the US market of $ 40 billion and is followed by China at $ 11 billion.
The gold jewellery market is growing at 15 percent per annum and the diamond jewellery market at 27 cent per annum.
The emergence of branded jewellery is a new trend that is shaping the Indian jewellery market. Branded jewellery is a relatively new concept in the sector and has positioned itself on the quality, reliability and wearability factors. The branded jewellery market in India is estimated at $ 111.6 million per annum. Trends also show that traditional handcrafted jewellery is slowly giving way to machinemade jewellery.

Future Outlook
The future of the industry is quite promising. More and more buyers across the world are turning to India as their preferred source for quality jewellery.
The Gems and Jewellery Export Promotion Council (GJEPC) is looking at exploring new markets, such as Latin American countries. The industry also plans to make India a trading centre for cut and polished diamonds, and is closely working with the government of India in this regard. The long term prospects looks good with jewellery exports expected to touch $ 16 billion in 2010 according to industry estimates.

(Source: India Brand Equity Foundation)

Tourism - India Calls
Ooty

Udhagamandalam, popularly known as Ooty and located at an altitude of 2,240m above sea level in the mountainous Nilgiri district of Tamil Nadu bordering Karnataka and Kerala, is the most famous hill station of south India. Set amidst cloud-kissed peaks, dense forests, gushing streams, undulating lush-green meadows, flower-bedecked valleys and hills, Ooty, which is also the district headquarters, is a veritable paradise that beacons tourists all round the year. Like most other well-known hill stations of India, Ooty, too, owes its discovery to the British, who developed it as the summer capital of the erstwhile Madras Presidency by providing it with road and rail connectivity as early as the mid 1800s.The more than 150-year-old Nilgiri Mountain Railway, which connects Ooty with Mettupalayam, was recently accorded the world heritage status.

Tourist attractions
• Botanical Garden: This sprawling garden of over 50 acres has rare varieties of exotic and ornamental plants that were laid out in 1847. It is situated near the Raj Bhavan (residence of the governor of Tamil Nadu) and is about two km from Ooty railway station. The lovely garden has a rich collection of different species of plants from many parts of the world. A widely-attended horticultural show is held every year here in the month of May.
• Ooty Lake: This beautiful lake is set in a picturesque valley and offers boating facilities with row boats, paddle boats and motor boats for hire. Fishing is permitted under licenses issued at the office of the assistant director of fisheries.
• Kundal Mund: This is a village nine km from Ooty where the tribal people, the Todas, live traditionally in tiny domed huts and wear decorative tattoos and vivid hand woven shawls. The Todas are remnants of a great race and are of anthropological interest. They have been featured on the National Geographic Channel as one of the world's unique tribes.
• Doddabetta: Located about 10 km from Ooty, it is the highest peak (2,634m) in the Nilgiris and offers beautiful vistas of the hills, plateaus and plains, which can be viewed through a telescope atop the hill.
• The Mukurthi Peak & National Park: About 40 km away from Ooty, the Mukurthi National Park on the south-eastern corner of the Nilgiri mountains surprisingly has flora and fauna that compare well to those of the Himalayan ranges.
• Mudumalai Wildlife Sanctuary (1,140 m): This is the first sanctuary to be set up in India and forms part of the Jawaharlal Nehru National Park. It is located 36 km from Ooty. Spread over an area of 321 sq km, the sanctuary is home to diverse habitats.
• Coonoor: Located only 17 km from Ooty, Coonoor at an altitude of1,839m is a well-developed hill station and a tea garden town. It has a milder climate than Ooty and is a popular weekend getaway.
• Kotagiri: Unlike Ooty and Coonoor, Kotagiri is situated in an 'open-terrace' massif. At an elevation of 1,985m, the town, about 31 km from Ooty, has developed around numerous knolls and valleys. The Kotagiri weather is more bracing than that of Coonoor and balmierthan that of Ooty. Nilgiri Mountain Railway: Ooty is connected to Mettupalayam by the narrow guage Nilgiri mountain train, one of the oldest in the world. Powered by a steam engine, the train's picturesque journey in the Nilgiris takes it through several tunnels, over waterfalls, edge of cliffs, tea estates, etc.

How to reach
• By Air: Nearest airport is at Coimbatore, about 100 km away.
• By Rail: Main railhead is at Mettupalayam, about 46 km away.
• By Road: Well-connected by road from Coimbatore and other important cities.

Climate
• Winter: Maximum temperature is 21 degrees Celsius, minimum is 0 degree Celsius.
• Summer: Maximum temperature is 25 degrees Celsius; minimum is 10 degrees.
• Best time to visit: March-June and September-December.

Where to stay: Hotel Tamilnadu, Youth Hostel, Hotel Maurya Sudarshan, Holiday Inn, Gem Park Hotel, Monarch Nahar Hotel, Blue Hills International.

For more on India tourism, visit:
www.tamilnadutourism.org
www.tourinda.com
www.tourismofindia.com

Popular Indian Recipes: Gajar Ka Halwa (Carrot Dessert)

Ingredients for carrot halwa:

• 1 kg Carrots
• 2 litre Milk (with high fat content)
• Pinch of crushed Cardamom seeds for flavour
• 2 tablespoons Raisins
• 2 tablespoons Almonds
• 2 tablespoons cashew
• 450 grams Sugar

Preparation of carrot halwa:
1. Wash and grate the carrots. Soak the raisins in water for 30 minutes. Blanch and shred the nuts.
2. Put the milk to boil, when it starts boiling add the grated carrots. Cook.
3. Cook on a low flame for 1 hour stirring occasionally. Add sugar, mix well and cook till the sugar has dissolved and all the milk has been absorbed.
4. Add the slightly crushed cardamoms and the raisins. Mix well.
5. Remove the gajar halwa from heat and arrange in a serving dish. Garnish with almonds and cashews.

Serve hot.