India Newsletter: May 2007

Economic News

Nissan set to enter small car market
Japan's Nissan Motor admitted that it was eyeing India's burgeoning small and compact car market. Two days after General Motors (GM) entered the fray with its Spark, Nissan said on 20 April, it would step into the compact and small car market as it would like to be a formidable player in the country.
Currently, Nissan's presence in India is limited to sports utility vehicles (SUVs) and luxury sedans. "To be competitive in India, we need to have a presence in the compact and small car segment. We are keen to enter the volume and low-price segment," Nissan Motor India Managing Director Yoshie Motohiro said.
It will manufacture compact cars from is Chennai facility, being set up under a three-way joint venture (JV) with Renault and Mahindra & Mahindra.

Government to invest US$ 231.3 million in nanotech
The government is planning to pump $231.3 million in the next five years to create a nanotechnology industry from the scratch. The proposed mission aims to create a mechanism for funding research in the industry and to build research capacity at various elite research institutions and universities.
The current proposal is to utilize $ 46 million during every year of the 11th Five Year Plan. If the mission fructifies, the products that may eventually hit the market may include high-precision drug delivery tools for difficult-to-cure diseases like cancer, long lasting medicated stents for implants, high-end cosmetics and higher quality television screens, besides many engineering products.

Isn't small beautiful?
India's small and medium enterprises (SMEs) are a key driver of India's current double-digit industrial growth, which is the longest cyclical upswing underway since the second quarter of 2002. Their importance derives from fact that they account for a substantial 39 percent of industrial production, contribute directly 34 percent to India's exports and employ 20 million people. Strengthening SMEs domestically is imperative so that they hold their own and more of them can leverage the benefits of globalization.

Wockhardt buys France.s Negma Labs for $265 mn
Close on the heels of acquiring U.K.-based Pinewood Laboratories, the Mumbai-based Wockhardt Ltd. Has announced their fifth buy out in Europe by acquiring French pharmaceutical company Negma Laboratories in an all cash deal worth $265 million. France is the third-largest pharmaceuticals market in Europe after Germany and the U.K. With the buyout, Wockhardt says it will be the largest Indian pharmaceuticals company in Europe with more than 1,500 employees. Negma Labs, the fourth-largest independent pharmaceuticals group in France with sales of $150 million, owns a portfolio of 172 patents and has a few molecules under pre-clinical stages of development. The company has various drugs belonging to the osteoarthritis, rheumatology and hypertension segments. Earlier, Wockhardt had bought Wallis and CP Pharmaceuticals in the U.K, Esparma in Germany and Pinewood Labs in Ireland. Says Habil Khorakiwala, chairman, Wockhardt, "The acquisition will allow us to extend our patented portfolio to other European markets. Further, it will provide us the right entry vehicle to the French generics market, valued at $2 billion. With this acquisition, we are on the fast track to achieve our corporate strategy of $1 billion in turnover by 2009."An analyst from IDBI Capital said that Wockhardt's entry into the French market is well-timed.

JP Morgan to invest $97.6 mn in realty
JP Morgan Property Fund, which has mobilised over $300million to focus on Indian real estate, is going to set up a residential project in Chennai, at an estimated cost of Rs. 4 billion ($ 100 mn). Chennai-based realty developer Arihant Foundations and Housing will develop the residential property, which will be spread over 45 acres of land, in joint venture with J P Morgan. The JV would have 50:50 equity participation from both the partners. The India property fund targets key economic centres in the country, including Mumbai, Bangalore, Chennai, Kolkata, Hyderabad and New Delhi, among others, to develop projects along with local partners. Last year, JP Morgan Asset Management had announced the mobilisation of around $360 million from institutional and high net worth investors (HNIs) from the U.S., Asia, Europe and the Middle East.

India's SEZs aim to attract $ 50 billion in FDI

With billions of dollars being invested in a slew of Special Economic Zones (SEZs) in India, the industrial scenario in the country is undergoing a dramatic change. Over the last 10 years, aggregate inflows of FDI to India was roughly $45 billion. "It is high time we did something about it," points out the Commerce and Industry Minister Kamal Nath. "Until we provide a single-window clearance for FDI, we will not be able to keep pace with the investments taking place in Asia, more so in China. That is why we are laying added emphasis on the Special Economic Zones."

So what exactly are SEZs? They are vehicles to deal with deficiencies in infrastructure and barriers raised by monetary, fiscal, trade and labour policies. It is not that India is newly promoting the concept of SEZs. The country's first SEZ (at that time it was called a free port and later Export Processing Zone, or EPZ) was set up way back in 1965. However, in the new century, the EPZ concept has received a boost and now features at the top of India's economic priorities as a means to attract FDI. The Ministry of Commerce and Industry is confident that SEZs will attract investments of $200 billion, including FDI of$50 billion, and create 500,000 jobs by the end of the 2007-08. "We are quite confident that our laws will establish the perception that India has a very strong manufacturing base," points out Nath. To keep investors happy, the SEZ Act was framed in 2005 and became operative in February 2006. The Act provides for setting up of SEZs in public, private, joint sector or by state governments. It was also used to convert some of the existing EPZs into SEZs.

The Act has a number of salient features, the most important among them being tax benefits. The Act offers a financially lucrative fiscal incentive package, which ensures exemption from customs duties, central excise duties, service tax, central sales tax and securities transaction tax to both the developer as well as the units operating within the SEZ. The Act also offers a tax holiday for 15 years against the seven-year tax holiday that is being enjoyed at present. The 15-year benefit offers 100 percent tax emption for the first five years, 50 percent for the next five and 50 percent of the ploughed back export profits. It also offers100 percent income tax exemption for 10years out of the 15 years for developers. The Act also provides the stake holder the opportunity of establishing free trade and also warehousing zones to create world class trade-related infrastructure to facilitate import and export of goods. The aim is to make India a global trading hub. It also allows public-private participation in infrastructure development. Finally, it allows the setting up of offshore banking units and international financial services.

There are other lucrative propositions that the Act has for the investor. Now an investor can expect to get clearance within seven days if all the paperwork is in order. Another important feature of the Act is that it provides a comprehensive SEZ policy framework, something that satisfies the requirements of the main stakeholders in an SEZ, namely the developer and the operator, as well as the out-zone supplier and the occupant. The result since the Act became operative has been there for everyone to see. The rush to set up SEZs in India has suddenly increased. The total number of approvals and in-principle approvals across 21 states of India currently stands at 212 and 152,respectively. And as of February, 34 SEZs out of the approvals have already been notified.

India is all set to become a booming trading hub in South East Asia. The government is taking all possible steps to ensure the speedy development of infrastructure, transparency in administration and simplification of laws. Emphasis is being laid on surface transport and development of ports and airports. The aim is quite clear: To provide cent percent cooperation to the investor.

Do You Know?

India Asia's largest DTH market
India looks all set to overtake Japan as Asia's largest satellite direct-to-home market by next year, says a top Malaysian research house. The researchers, Aseambankers, also noted that India was also targeted to be Asia's leading cable market by 2010 and the most lucrative pay-TV market by 2015. Aseambankers, in its report, was also optimistic about Malaysian pay TV operator Astro All Asia Networks' prospects in India. It said, based on the profile of joint venture partner Sun Direct, Astro should be looking at a target market of 250 million viewers. "However, prospects are promising given that the southern Indian states are relatively more prosperous based on the average per capita income, which is 10 percent higher than the national average," Aseambank claimed in its recent report.

Oberoi group in global Top 10
India's leading hotel chain, Oberoi Hotels, figures among the world's top 10 hotels, according to a new survey. Oberoi Hotels, which manages luxury hotels and cruises in India, Egypt, Indonesia, Mauritius and Saudi Arabia, has been ranked 9th overall in the study by Zagat Survey, a leading provider of consumer survey - based leisure content. In the small hotels, resorts and inns segment with less than 100 rooms, Oberoi Udaivilas was ranked sixth and in terms of rooms and service it was ranked fifth in a tie with Inn/Little Washington, D.C. In dining and facilities, Oberoi Udaivilas was ranked third - again in a tie with Inn/Little.

India top offshoring destination
An unbeatable mix of low costs, deep technical and language skills, mature vendors and supportive government policies have taken India to the top among global destinations for offshoring services. And this is despite all the recent concerns expressed about overheating, wage inflation and service levels, a recent survey by AT Kearney said. India is followed by China, Malaysia, Thailand and Brazil, the survey, christened Global Services Location Index 2007 said. To arrive at the final ranking, AT Kearney surveyed over 50 countries for different aspects related to offshoring, like people's skills, financial attractiveness and business environment.

Tourism - India Calls
SIKKIM – The Land Of Mystic Splendour

Sikkim, the land of mystic splendour, is situated in the eastern Himalayas. Spread below Mount Kanchenjunga(8,534 m), the third highest mountain in the world, this northeastern Indian state is wedged between Bhutan, Tibet and Nepal. With an area of 7,300 sq km and measuring114 km from the north to south and 64km from east to west, its elevation ranges from 300 m to over 8,540 m above sea level, which makes it one of most verticalplaces in the world.

Amidst the grandeur of the mountain peaks, lush valleys, fast flowing rivers and hills, Sikkim offers its visitors a rare and singular experience.

Within a matter of hours, one can move from the subtropical heat of the lower valleys to the cold of the rugged mountain slopes and up till the snowline. The state offers a vacation that is more like a voyage of adventure and discovery.

Major attractions
Sikkim has nearly 200 monasteries or Gompas belonging to the Nyingma and Kagyu order. Feel the peace and quiet of being one with nature and close to the almighty as sacred words mingle with the whirring prayer wheels.
Among the monasteries, the most important one is the Rumtek Monastery, 24km from Gangtok. A drive through beautiful countryside takes one to Rumtek DharmaChakra centre, which was built in the1960s.
Sikkim also offers ample scope for adventure sports.

Trekking: With captivating landscape, and incomparable diversity of flora and fauna, Sikkim is the ultimate destination fora trekking holiday.
It offers everything – from short and easy excursions to the long challenges of the snowy peaks, invoking visions of the spectacular Himalayas, the lush meadows, green woodlands and fragrant orchards.
Mountain Biking: Mountain biking is another adventure sport that has been recently introduced in Sikkim.
Mountaineering: The Sikkim Himalayas, the epitome of the world's mountains, encompass a wonderland, which for sheer beauty and magnificence, remains unbeaten elsewhere in the globe.
River Rafting & Kayaking: Rafting and kayaking have also been added to the list of adventure sports in Sikkim. Rivers Teesta and Rangit offer long stretches, which are ideal for rafting. The Teesta has been graded on the professional rafting international scale at Grade 4.

Foreigners' entry formalities
Foreigners must obtain an Inner Line Permit from the Home Ministry, New Delhi, four weeks in advance. They should apply to the Ministry of Home Affairs, Government of India, New Delhi through the Indian diplomatic missions in their respective countries. A copy should be endorsed to Grand Sikkim Tourism, Room No. 10, Hotel Janpath, New Delhi, to expedite matters. This permit allows them to stay for seven days in case of sight seeing, and 10 days for group-trekkers, each group not exceeding 20 in number.

How to reach
• By Air: Bagdogra, near Siliguri, 117 km from Gangtok, is the nearest airport. This is connected with regular flights from Kolkata.
• By Rail: New Jalpaiguri, 117 km from Gangtok, is the nearest railway station.
• By Road: Gangtok is well connected by road with Kolkata (721 km), Darjeeling (139 km), Guwahati (589 km) and Patna (584 km).

Best time to visit: From March to June and September to December.

Accommodation: There are modern hotels and restaurants in Gangtok. Comfortable resort lodges are available in the outlying areas.

For more, visit:
www.indiatourism.com
www.sikkim.gov.in

Popular Indian Recipes: Curried Mushroom with Peas

Serves: 4
Cooking time (approx.): 15 minutes

Ingredients:

• 2 cup(s) mushrooms diced
• 1 cup(s) shelled green peas
• 2 cup(s) water
• 3 each of cloves and green cardamoms
• 1" piece cinnamon
• 2 medium onion(s) chopped finely
• 1 tablespoon ginger and garlic paste
• 1 cup(s) diced tomato(es)
• 1/2 teaspoon(s) each of hot spice mix (garam masala) and red chilli powder
• 1 teaspoon coriander powder
• 1 tablespoon(s) tomato puree
• 2 tablespoons butter / oil
• salt to taste
• finely chopped coriander leaves for garnishing

Method:
1. Heat the butter / oil in a heavy-bottomed pan on medium level and lightly fry the cinnamon, cloves and the cardamoms. Add the chopped onions and fry for about 3 minutes or till they are golden brown.
2. Add the ginger-garlic paste and fry briefly. Add all the dry spice powders and the diced tomatoes. Mix well and saute on medium level for about 3 minutes or till the fat leaves the sides of the pan.
3. Add the salt, water and bring to boil. Now add the diced mushrooms, peas and tomato puree. Mix well. Cover and cook on medium level for about 5 minutes or till the peas are well cooked.
   Garnish with finely chopped coriander leaves.

Serve hot with: Rice or Indian bread (Poori, Roti).

Note: Even if some spices are not locally available, still go ahead with cooking and you will enjoy the dish.

NRI/PIO Corner

Government to setup three new IITs

The Union government proposes to setup three new Indian Institutes of Technology (IITs) in Bihar, Rajasthan and Andhra Pradesh, the Rajya Sabha was informed on May 7. In addition, two new Indian Institutes of Science Education and Research (IISERs) in Bhopal and Thiruvananthapuram, two new Schools of Planning and Architecture in Vijayawada and Bhopal are proposed to beset up during the XIth Plan period, Minister of State for HRD D. Purandeswari said in a written reply. Government also proposed to set up 20 new Indian Institutes of Information Technology (IIITs) in various states during the period under Public Private Partnership mode, she said. It is also proposed to upgrade the infrastructure facilities in one polytechnic in each of the 177 Specially Identified Districts in the country, she added.

Facilitation centre for NRIs

The Ministry of Overseas Indian Affairs has launched a facilitation centre, which will act as a "one-stop-shop" for addressing all the queries of the 25 million-strong Indian diaspora regarding opportunities available in the country.
The Overseas Indian Facilitation Centre (OIFC), through its website (www.oifc.in) and offices, will provide reliable data on investment opportunities free of cost besides facilitating clearance of projects on an individual basis as a paid value-added service. The centre would also offer advisory services to Non-resident Indians (NRIs) like consular issues, financial services and their stay in India.
"The centre will promote overseas Indian investment into India and facilitate business partnerships, by giving reliable information and also by providing paid handholding services to the potential investors," Minister for Overseas Indian Affairs Vyalar Ravi said.

India's first trillionaire

Reliance Industries Chairman Mukesh Ambani has won the rare distinction of being the only trillionaire in the country with over Rs. 1,000 billion of wealth in his companies' shareholdings.
Younger brother Anil is close behind with close to Rs. 900 billion of wealth in the stock market through his holdings in various group companies.
Early this year, Mukesh Ambani was ranked 14th in the Forbes 2007 list of the world's billionaires.
Since splitting with younger brother Anil in 2005 and taking control of the $20 billion (revenues) flagship Reliance Industries Ltd., founded by his father Dhirubhai Ambani, Mukesh's fortune has soared by $11 billion.