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Korean Companies To Benefit by Trade Deal with India

Import duties on 85 percent of Korean goods, including auto parts and electronics, will be cut or phased out over the next decade, Korea's Trade Ministry said today. Indian Commerce Minister Anand Sharma and his Korean counterpart Kim Jong Hoon will sign the agreement in Seoul, said Choi Kyong Lim, the official overseeing trade agreements, said today in Seoul.

Hyundai Motor Co., LG Electronics Inc. and other South Korean companies will get greater access to India's 1.2 billion people in a trade deal to be signed tomorrow. India's $1.2 trillion economy grew 5.8 percent in the three months to March 31, brushing off the global slowdown that has dragged Korea into recession. Singapore's exports to India excluding oil products more than doubled in the two years after they signed a similar accord in 2005, turning the city state's deficit to a surplus, according to Indian Commerce Ministry data. "South Korea is looking to expand its presence in India with its vibrant economy and 1.2 billion population," said Myong Jin Ho, a researcher at the Institute for International Trade in Seoul. Bilateral trade between India and South Korea rose 39 percent last year to $15.6 billion. South Korea exported $3.6 billion of goods to India, and imported $1.6 billion in the first six months of this year. India's growth puts more money into the hands of consumers in a country where almost 30 percent of the population is under 15 years of age. Younger people tend to spend more on vehicles, phones and other consumer goods. Car Demand India will eliminate or reduce tariffs on 85 percent of South Korean exports over 10 years, Korea's Trade Ministry said. These will include auto parts, tankers, electronic goods, machinery parts and synthetic rubber. South Korea's cuts will cover about 90 percent of Indian exports, including polycarbonates, leather, industrial diamonds, gasoline and corn for livestock. Hyundai, which operates an auto plant near Chennai in southeastern India, sold 244,030 vehicles in the country in the year ended March 31. The largest South Korean automaker gets 55 percent of sales from emerging markets including India and China, where car demand has withstood the global slowdown. LG Electronics, the world's third-largest maker of liquid- crystal-display televisions, also has plants in India to make consumer appliances and personal computer monitors. The two nations decided to exclude other agricultural goods, finished automobiles, fisheries and textiles from the deal. The Korean law implementing the pact is expected to take effect on Jan. 1, Choi said. Once the cuts begin, Korea's exports to India will likely increase by an annual average of $177 million and India's exports to Korea $37 million over the next 10 years, according to Korea Institute for Industrial Economics & Trade. Conservative "Those forecasts may be conservative, given India's potential," said Myong. The two nations will also expand job opportunities for skilled personnel from India in the field of information technology, engineering, management consulting, machinery and telecommunications, and scientific research, the ministry said. It didn't specify any quotas on the number of Indian nationals expected to take up jobs in Korea in the future. India has also opened up its market to investment in all its industries with the exception of agriculture, fisheries and mining. South Korea will be able to invest in food processing, textiles, garments, chemicals, metals and machinery, it said. The following is a table of the top 10 traded goods for South Korea and India, according to the Korean Trade Ministry.

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Indian Shares Rise 1.6% with Signs of Economic Recovery

Indian shares rose 1.6 percent on Monday, July 20 as reports of positive corporate earnings "from across the world" convinced many that the global economy is actually recovering.

Several factors, including strong global and local liquidity, a recovery in earnings growth and strong corporate balance sheets, will spur the market over the next 12 months, Morgan Stanley analyst Ridham Desai said. He added, "Indian equities are in a sweet spot. We would continue to buy the dips in the market". A few of the biggest companies in India, Reliance Industries, Tata Consultancy Services Ltd and Infosys Technologies rose, gained 3.1 percent, 11.9 percent and 4.5 percent, respectively. Signs of economic recovery are whetting investor's appetite for riskier assets, with "record low global interest rates and trillions of dollars of stimulus spending helping the world recover" from the deep recession.

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Indian Gov Stimulus helped Revive Industrial Production in 2.7%

"Industrial activity in India will gain more traction as the favorable effect of lower bank lending rates and a continuing fiscal boost offsets a still-weak export sector," said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore. The rise in output "pretty much destroys the probability of further rate cuts."

India's industrial production increased at the fastest pace in eight months as record-low interest rates and government stimulus measures helped revive demand and investment. Output at factories, utilities and mines jumped 2.7 percent in May from a year earlier after a revised 1.2 percent gain in April, the statistics agency said in New Delhi today. That was more than double the 1.3 percent increase expected by economists. Economies across Asia are starting to show signs of recovery from the worst global recession since the Great Depression, prompting policy makers to stop lowering interest rates. The World Bank last month said India may overtake China next year as the world's fastest-growing major economy.

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India to Borrow $ 93 billion to Fund Buget

India's Finance Minister Pranab Mukherjee announced plans to borrow a record 4.51 trillion rupees ($93 billion) to fund budget spending on roads, power and aid for the poor. Stocks, bonds and the currency slumped. Unveiling the budget for the year to March 2010, Mukherjee said India's fiscal deficit is expected to widen to a 16-year high of 6.8 percent of gross domestic product from a revised 6 percent. Indirect taxes will be streamlined through a goods and services tax, he said in his speech in New Delhi today.

Prime Minister Manmohan Singh's government is spending more to speed up economic growth and reduce poverty in a nation where malnutrition is worse than Sub-Saharan Africa. Stocks and the currency weakened on investor disappointment that Mukherjee didn't announce major asset sales and concerns a ballooning budget deficit may lead to a credit-rating cut. "The budget has failed to instill confidence as to how the government will achieve fiscal consolidation," said Rupa Rege Nitsure, chief economist at state-owned Bank of Baroda in Mumbai. "With this kind of a deficit, there is a possibility that India's rating may be downgraded." The Bombay Stock Exchange's Sensitive Index fell the most in six months, declining 5.8 percent to 14,043.40 at the 3:30 p.m. close in Mumbai. The rupee weakened 1.3 percent, the most in almost six weeks, to 48.5375 against the dollar. The yield on the most-traded 6.07 percent note due May 2014 surged 22 basis points, the most since March 17, to 6.45 percent.

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Good News for India's Economy

As reported by the finance ministry, Indian economic growth is predicted to spur as much as 7.75 percent in 2009. Two of the most important reasons are the improving U.S economy in second quarter reports and the recent successful harvests from the monsoon rains.

India's exports fell for the eighth consecutive month in May 2009, while industrial output increased 1.4 percent in April 2009. The economy expanded 6.7 percent, which is the most sluggish pace in the past six years, since 2003, where the economy expanded between 8.5 percent and 9 percent. Among India's many strengths is the country's large service sector, which contributes about 55 percent of India's GDP. Furthermore, the government's rural jobs program, which guarantees 100 days of work in a year for the poor has kept "rural income and consumption strong," according to the finance ministry. With income, consumption, growth, output and a strong service sector, India's economy "has shock absorbers" that will ensure the country's economic revival.

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Indian Stocks Increased 49% This Year

The rally this year has helped India post the fifth-best performance among the 89 markets tracked by Bloomberg News globally. Valuations have also climbed, with the Sensex now valued at 16 times reported earnings, double November's low of 8.1 times. "The relative outperformance and the strong move in the market post the elections have now priced in improving economic fundamentals," the analysts wrote in the report. "The upcoming budget next month will be very important for the overall direction of the market." The Sensex advanced 1.7 percent to 14,590.18, the highest in more than a week, as of 1:23 p.m. in Mumbai.

India's Sensex gained 49 percent advance this year and further gains depend on government policies to boost economic growth and pare a budget deficit, Nomura Holdings Inc. said. The benchmark Bombay Stock Exchange Sensitive Index may rise to 16,400 in the next 12 months, a "muted" 14 percent gain from yesterday's close, Nomura analysts led by Prabhat Awasthi said in a report today. Investors should own a mix of so-called defensive and domestic cyclical shares, they added.

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India and Deflation

There are numerous reasons for deflation to occur. It can be caused by a decrease in the supply of money or credit or by a decrease in government and consumer spending. Side effects that accompany deflation are increased unemployment, due to lower levels of demand in the economy and dwindling profits. This could further increase the severity of a recession.

There are numerous reasons for deflation to occur. It can be caused by a decrease in the supply of money or credit or by a decrease in government and consumer spending. Side effects that accompany deflation are increased unemployment, due to lower levels of demand in the economy and dwindling profits. This could further increase the severity of a recession. In India, the Ministry of Commerce and Industry has reported that "wholesale prices fell 1.61% in the year to June, compared with a rise of 0.13% the previous week" Analysts said that prices would continue falling for the next fourth months, now that lower food prices have pulled the index down. An economist at Nomura, Sonal Verma, predicts that the country will "have negative numbers at least till September, primarily because inflation had picked up very sharply during this period last year." Figures show that inflation rose up to 12.9% in August 2008 but has been decreasing since then.

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Indian Economy Shows Signs of Recovery

India's industrial output increased 1.4% from April 2008. An economist at HSBC, Robert Prior-Wandesforde said, "[Indian] output growth almost certainly bottomed on a year-on-year basis in March and we are looking for a healthy upward trend to develop from here."

India's industrial output increased 1.4% from April 2008. An economist at HSBC, Robert Prior-Wandesforde said, "[Indian] output growth almost certainly bottomed on a year-on-year basis in March and we are looking for a healthy upward trend to develop from here." This improved perspective of output is due mainly to an increase in domestic demand, particularly from government infrastructure and construction projects, according to Nikhilesh Bhattacharyya, an analyst at Moody's.

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India's Plan to Boost Economic Growth

President Pratibha Patil has announced that she will push for reforms to revive the economy by taking steps to increase foreign investment in-flows and inject more capital in banks.

President Pratibha Patil has announced that she will push for reforms to revive the economy by taking steps to increase foreign investment in-flows and inject more capital in banks. Welfare programs and higher investment in sectors such as infrastructure will be pursued as well. The president said that welfare projects for farmers and an expansion of rural employment guarantee project are high on the agenda. Families below the poverty line will be given 25kg of rice or wheat every month at 3 rupees a kilo.

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India grew more than expected

For the 2008/09 fiscal year to March 31, India's economy grew 6.7 percent, its weakest in six years and sharply slower than rates of 9 percent or higher in the previous three years. "A main reason (for the slowdown) was financing drying up as a result of the global crisis," said Malik. "The revival in capital markets automatically means one of the negatives crippling investment is addressed." Growth was seen at around six percent in the first half and closer to seven percent in the second. Next year, economists expect growth of eight percent. The economy still has "significant pent-up demand for investment, especially in infrastructure and in affordable housing," said Goldman Sachs economist Tushar Poddar. The numbers gave cheer to the Congress-led government, which swept back to power earlier this month on a poverty alleviation platform. Its strong mandate is seen as a positive for investors, spelling political stability. Finance Minister Pranab Mukherjee has said the government will make increasing growth its top priority to help India's "common man" -- even at the risk of ballooning an already large fiscal deficit.

The rise in expenditure on the election campaign may have boosted India's March quarter performance but downside effects from the external turmoil have been far too strong to be fully offset by the jump in political spending, the note said. "The impressive victory of the Congress party foreshadows economic reforms, which may help to strengthen the Indian economy," said Sherman Chan, economist at Moody's Economy.com.

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India 10-Year Bond Yield at Six-Week Low. RBI Plans to Buy Debt

April 22 (Bloomberg) -- India's 10-year bonds advanced for a sixth day, the longest winning streak in four months, after the central bank said it will buy existing debt. Benchmark yields were at the lowest in six weeks after the Reserve Bank of India said it will purchase 60 billion rupees ($1.2 billion) of securities in open-market operations tomorrow. The central bank's decision to cut interest rates yesterday may help the government reduce borrowing costs as it plans record debt sales in the fiscal year that started April 1. Bonds erased the day's gains after the drop in yields deterred investors before a debt sale on April 24.

April 22 (Bloomberg) -- India's 10-year bonds advanced for a sixth day, the longest winning streak in four months, after the central bank said it will buy existing debt. Benchmark yields were at the lowest in six weeks after the Reserve Bank of India said it will purchase 60 billion rupees ($1.2 billion) of securities in open-market operations tomorrow. The central bank's decision to cut interest rates yesterday may help the government reduce borrowing costs as it plans record debt sales in the fiscal year that started April 1. Bonds erased the day's gains after the drop in yields deterred investors before a debt sale on April 24.

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New Delhi Adopts New Energy Strategy

On March 28th, thousands of cities and communities participated in one of the largest annual global efforts to fight global warming.

On March 28th, thousands of cities and communities participated in one of the largest annual global efforts to fight global warming. The event known as "Earth Hour" urged everyone to shut off their lights for one hour in order to create more awareness about how much energy people waste. Although cities from around the world participate in this event once a year, New Delhi has decided to take a more pro-active approach and implement "Earth Hour" on the last working day of every month. Chief Minister Sheila Dikshit commented by saying "It is an important concept and we will get support from the people of Delhi just as we did for the global campaign".

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India February Exports Down 21.7%

Amidst a declining global economy, India's exports as well as imports are continuing to decline. While India isn't as dependent on external trade as its regional peers, the malaise in the global economy, coupled with the weakening domestic demand and slowing capital inflows, has dealt a blow to Asia's third-largest economy.

Amidst a declining global economy, India's exports as well as imports are continuing to decline. While India isn't as dependent on external trade as its regional peers, the malaise in the global economy, coupled with the weakening domestic demand and slowing capital inflows, has dealt a blow to Asia's third-largest economy.

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India Engineers loose 50,000 Jobs

EEPC India, the apex body of engineering exports from India, has attributed the loss of 50,000 engineering jobs to the global recession.

EEPC India, the apex body of engineering exports from India, has attributed the loss of 50,000 engineering jobs to the global recession. Around 80 percent of these losses will come from small and medium sized businesses. Even though the engineering sector has experienced 35 percent growth last year, the shrinking economy may constrict this number to around 20 percent of negative growth. Many officials in the industry are hoping that the up-coming stimulus package will help sustain the jobs in the industry, but there are yet to be any announcements that this will happen.

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Inflation Rate in India Falls to .27 Percent

India's Finance Industry announced earlier that the country's inflation rate has slowed down to .27 percent, representing a new thirty-year low.

India's Finance Ministry announced earlier that the country's inflation rate has slowed down to .27 percent, representing a new thirty-year low. Many are hoping that this will motivate the RBI to cut interest rates, although they have already cut the rate four times since last October. One of the main concerns for the Finance Ministry is avoiding any possible deflation, which would cause consumer spending to decrease and cause GDP growth to recede. Although India has one of the fastest economies in the world right now, their growing population requires that the government continue to spur economic growth in order to support future job creation.

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India Tourism Thrives in Harsh Economic Climate

Despite the fact that the global economy is shrinking, India's economy is still growing at a faster rate than other nations and tourism is an industry that is greatly helping this.

Despite the shrinking global economy, India's economy is still growing at a faster rate than other nations and tourism is an industry that is greatly helping this. By 2017, tourism is expected to generate around $42.8 billion, which is a 42 percent increase from 2007. Poor infrastructure is seen as the biggest issue with the country's developing economy, although the government is hoping to update and rebuild airports.

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Tata Nano Expected to Receive 500,000 Orders

Tata Motors Ltd., the India-based car company, announced today that they are expecting to receive as many as 500,000 orders for the new Nano that was released earlier this month.

Tata Motors Ltd., the Indian-based car company, announced today that they are expecting to receive as many as 500,000 orders for the new Nano that was released earlier this month. 120,000 cars will be delievered during the first two-week sales period and the rest will be distributed through a lottery system. The number of orders is about five time more than the company had expected to sell for the world's least expensive car. The company is also expecting to sell one million Nano's per year, as families will be trading in their motorcycles and three-wheeled vehicles for the new car.

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Car Sales in India Flurishing

Car sales in India have been able to outpace global car sales so far in 2009.

Car sales in India have been able to outpace global car sales so far in 2009. According to BBC, car sales in February of 2009, compared to sales in February of 2008, were up 22%. Increases in sales were realized across the industry, as ten out of thirteen car makers reported rises in auto sales during the month. Analysts at Angel Broking in Mumbai are not ready to take this as a sign of a turnaround for the economy, rather attribute this success to the easing of bank credit. "Turnaround is a strong word. Sequential spurt would be better", commented Vaishali Jajoo, an analysts at Angel Broking.

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Indian Stock Markets Slow Down After Three Day Rally

Stock markets in India, which had been rallying for three days, finally receded today.

Stock markets in India, which had been rallying for three days, finally receded today. The Sensex Stock Index fell by 79.72 points to 8,863.82, marking the first daily fall in three days. Other indicators also took a dip; the National Stock Exchange's Nifty fell 19.8 points and the BSE Midcap Index dropped by .16 percent. Increases in U.S. credit card defaults, falling European markets, and increases in the reported profits from traders who had gone long in securities are all being attributed to the stock market's pull-back.

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G-20 Conference Helps Boost Confidence in Indian Markets

Indian markets were helped in continuing their growth from last week by the G-20 meeting that took place this past weekend.

Indian markets were helped in continuing their growth from last week by the G-20 meeting that took place this past weekend. The G-20, otherwise known as the Group of Twenty Finance Ministers and Central Bank Governors, is an international forum of the world's 19 largest economies and the EU. This past weekend, the G-20 dedicated their time to laying out a plan to relieve banks of distressed securities. Restoring lending from banks was one of their top priorities and announcements from G-20 officials only boosted confidence, especially for stock markets and benchmark indices in India to their highest level in two weeks. The Sensex arose for the third straight day climbing to 8,943.54 points, which is a gain in 2.13 percent from Friday's closing. Additionally, the State Bank of India gained 3.6 percent from Friday's closing.

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Rupee Gets Help from JPMorgan and Citigroup

Stock market gains are creating speculation that overseas investors may still be interested in Indian investments, helping to strengthen the rupee.

Stock market gains are creating speculation that overseas investors may still be interested in Indian investments, helping to strengthen the rupee. As of today, the rupee stands at 51.87 per dollar, although it reached a daily high of 51.88. Roy Paul, assistant manager of treasury at Federal Bank Ldt, reported that "the rupee is stronger, reflecting the improved sentiment across equity markets this week". The main stimulant in the up-swinging equity markets has been attributed to increased profit outlooks for JPMorgan Chase & Co. and Citigroup Inc.

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Inflation Rate in India Hits Six-Year Low

India's inflation rate dropped to 2.43 percent, its lowest level in six years.

India's inflation rate dropped to 2.43 percent, its lowest level in six years. The drop is being primarily attributed to falling commodity and energy prices. Because the inflation rate has been held to such low levels, India's central bank has been allowed to reduce its repurchase rate and reverse repurchase rate to 5 percent and 3.5 percent, respectively. The inflation rate is expected to be revalued in two months after the commerce ministry receives additional pricing information.

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Indian Companies Reluctant to Hire

Indian job markets are being described as 'bullish' as many companies are holding off on hiring additional employees.

Job markets in Indiaare being described as 'bullish' as many companies are showing signs that they are holding off on hiring additional employees. A survey of 3,600 companies showed that 64 percent of those companies are still uncertain about hiring for next quarter. Naresh Malhan, Manpower India MD, stated that "Lots of companies are rationalizing every cost that they are incurring and examining them very microscopically". Despite the fact that many Indian companies are holding off on adding to their work force, foreign companies are seeing India's low minimum wages as a way to save money. Late last month, JP Morgan announced that it would be increasing its workforce in India by 25 percent.

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Sensex Falls to Three Year Low

The benchmark Bombay Stock Exchange Sensitivity Index (Sensex) fell to a three-year low over increased uncertainty about the state of India's government.

The benchmark Bombay Stock Exchange Sensitivity Index (Sensex) fell to a three-year low from increased uncertainty about the state of India's government. India will hold general elections in April, but the emergence of smaller political parties, such as the communist party, is creating skepticism about India as an investment. Foreign investors are shying away from Indian markets, putting their money in U.S.-based equity markets instead.

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India Reject Critisism from Goldman Sachs

The Indian government fell under further criticism today by financial analysts over recent moves made by State-owned Oil and Natural Gas (ONGC).

The Indian government fell under further criticism today by financial analysts over recent moves made by State-owned Oil and Natural Gas (ONGC). Analysts from Goldman Sachs reported that India's minority shareholders were not properly consulted about recent spending within the company, including the use of $20 billion for refinery subsidies. Officials from the Indian government reputed these charges, claiming that "the government is the majority shareholder in ONGC and in every company, the majority shareholder decides". This is the third time that the Indian government has fallen under fire from U.S.-based financial firms this year; Moody's Investor Services recently reported that the Indian government was "powerless"amid the global economic crisis, and Standards and Poor's downgraded India's credit rating to 'junk' in January.

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Indian Bonds Gain

The RBI cut key interest rates leading to gains in bonds today. Yields on 10-year notes fell as much as 9 basis points, dropping to 6.35 percent from 8.24 percent.

RBI's key interest rate cuts led to gains in bonds today. Yields on 10-year notes fell as much as 9 basis points, dropping to 6.35 percent from 8.24 percent. The move to cut interest rates was done to stimulate growth in domestic markets, which expanded 5.3 percent in the past three months. The lower interest rates will make Indian investment more attractive. Jayant Chiney, a Treasurer at the Bank of India, stated that "the central bank has been pro-active on broader issues and investors are going to price that now... debt securities are going to be an attractive investment option in the near term".

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Inflation Rates Fall in India

As prices of commodities fell in New Delhi this past week, the weekly inflation rate declined by 36 basis points, receding to 3.03 percent.

As prices of commodities fell in New Delhi this past week, the weekly inflation rate declined by 36 basis points, receding to 3.03 percent. The fall in the inflation rate is being attributed to recent interest rate cut backs. This has helped lower the cost of fruits, vegetables, tea, and manufactured items. Although the drop in the inflation rate is a fall from the previous week's inflation rate, it is a significant drop from last year's average inflation rate of 5.69 percent.

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RBI Slashes Interest Rate

The Reserve Bank of India reduced both the benchmark repurchase rate and the reverse repurchase rate by half a point, marking the fifth time that India has cut their interested rates since October.

The Reserve Bank of India reduced both the benchmark repurchase rate and the reverse repurchase rate by fifty basis points, marking the fifth time that India has cut their interested rates since October. The RBI decided to cut rates in the midst of the slowest growth that India has seen since 2003. It was necessary to make borrowing easier to do because the global recession is cutting off funds from companies. Exports are falling and the crashing stock market is decreasing the funds that companies have in stock market.

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Falling Trade in India

International trade in India receded for the month of January as both imports and exports fell.

International trade in India receded for the month of January as both imports and exports fell. Imports fell by 18.2 percent, while exports fell by 16 percent. The fall in imports is being attributed to the slowdown in industrial production as well as declining domestic demand for commodities. Although exports have been falling for four consecutive months, the trade deficit has actually narrowed because of the recent decline in imports.

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Indian Markets Take a Hit as Exports Skid

Both of India's oversea sales and rupee hit ten year lows today on speculation that decreasing exports will repel foreign investment.

Both of India's oversea sales and rupee hit ten year lows today on speculation that decreasing exports will repel foreign investment. Many economists, such as Sherman Chan of Moody's Economy.com, believe that Asian markets will undergo a large contraction in 2009, stating that "for some, this year will be the most difficult since the Asian financial crisis; for others, the economic situation will be the worst in a few decades". Indian Prime Minister Monmohan Singh recently announced a set of tax refunds to help exporting companies with the recent news. This new policy will only be the latest fiscal policy issued by India's government, as Singh has announced three stimulus packages since December.

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India Continues to Battle U.S. Protectionism

As the global economic crisis continues to damage world economies, national governments are rushing to implement policies that will help alleviate domestic markets.

As the global economic crisis continues to damage world economies, national governments are rushing to implement policies that will help alleviate domestic markets. Many of these policies are largely impacting foreign markets, creating political disputes between foreign nations. Earlier last year, President Barack Obama pledged to the American people to stop millions of American jobs from being outsourced to other counties. The U.S. views this type of policy as a safeguard for American jobs, but Indian Finance Minister Pranab Mukherjee sees this as a trend that "we need to argue against". Currently, thousands of U.S. companies, including IBM, HP, Motorola, and Boeing are among the thousands of companies that outsource millions of jobs to India every year.

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Rupee Gains Strength Against the Dollar

The Interbank Foreign Exchange (Forex) market quoted a 14 paise increase of the Indian rupee against the U.S. dollar.

The Interbank Foreign Exchange (Forex) market quoted a 14 paise increase of the Indian rupee against the U.S. dollar. This increase is the first in three sessions. Forex dealers have attributed this gain to expectations of recovery for domestic businesses, which creates promise of new capital inflow from foreign funds. Other Asian markets also showed improvement including Japan's Nikkei index, which was up by 1.87 percent, and the Hang Seng index, which was up 2.49 percent on Wednesday.

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India's Credit Rating to Fall to Junk

Standard & Poor announced earlier today that it may be forced to cut India's credit rating to junk.

Standard & Poor announced earlier today that it may be forced to cut India's credit rating to junk. This news came in response to India's new stimulus package, which includes increased government spending and decreased taxes. Prime Minister Manmohan Singh has claimed that reviving the economy through spending is more important than worrying about an accumulating deficit, but economists, such as Rajeev Malik, have disputed that "such sizable deficits are unsustainable". S&P;reported that India's deficit is unsustainable.

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India Retailers to Cut Inventories

As consumers spend less in India, retailers are being forced to lower their purchases from their suppliers. Suppliers, such as electronics components manufacturing, are facing a 50 percent decrease in sales, despite the fact that demand for computers has not fallen.

As consumers spend less in India, retailers are being forced to lower their purchases from their suppliers. Suppliers, such as electronics components manufacturing, are facing a 50 percent decrease in sales, despite the fact that demand for computers has not fallen. Retailers are opting to lower their inventories on speculation that future sales will decrease. Eliyahu Goldrar noted that as inventory levels fall, retailers should return to their normal level of purchases from their suppliers.

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India to Oppose U.S. Protectionism

The latest stimulus package for the United States includes many provisions that different groups oppose.

The latest stimulus package for the United States includes many provisions that different groups oppose. One of the provisions was a "buy American" provision that mandated that only U.S. steel could be used in the construction of any public project. Earlier today, India announced that they would opposed any acts of protectionism made by the U.S.. External Affairs Minister Prenab Mukherjee declared at a labor conference in New Delhi that "we are already witnessing worrying signs of protectionism in the world's biggest economy. We will need to argue against this trend at the international fora (forums)". This news arrives only a month after India had installed a temporary embargo against all China-made toys.

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India's Economy to Surpass Britains within a Decade

Goldman Sachs recently reported that India could surpass Britain as having the fifth largest economy in the world within a decade.

Goldman Sachs recently reported that India could surpass Britain as having the fifth largest economy in the world within a decade. The report attributes this growth to a new program of reforms, which could help India attain the second largest economy in the world by 2050. The rapid growth may be hindered by India’s relatively weak infrastructure. Shortages in electricity have been occurring because the supply of electricity has not able to match the increasing demands for production. A shortage of skilled workers is also a cause for concern. Many foreign nations are seeing this as opportunities to invest in India. Earlier this month, Russian President Vladimir Putin visited India to discuss nuclear power contracts, which could help with India's power shortages.

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India Receives Interest-Free $518 million loan from World Bank

On Friday, the government secured an interest-free loan of $518 million from the World Bank, which will be used for eradicating polio and other diseases spread by agents such as mosquitoes and rodents.

On Friday, the government secured an interest-free loan of $518 million from the World Bank, which will be used for eradicating polio and other diseases spread by agents such as mosquitoes and rodents. Funds will be targeting at the distribution of a vaccine for polio as well as creating programs for controlling malaria. India is aiming to borrow more from multilateral agencies as its fiscal deficit grows due to tax cuts and economic stimulus plans. India also now borrows about $1.5 to $2 billion from the International Bank for Reconstruction and Development.

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Indian Foreign Exchange Reserves Up By $2.9 Billion

Foreign exchange reserves rose by $2.9 billion during the week ending February 6, on improved dollar supplies.

Foreign exchange reserves rose by $2.9 billion during the week ending February 6, on improved dollar supplies. Total reserves once again passed the $250 billion mark to reach $251.53 billion. Besides purchasing US dollars, reserves rose on account of strengthening domestic currency.

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India’s Output, Inflation Raise Chance of Rate Cut

India has suffered its largest industrial production fall since 1993, while at the same time having the lowest inflation in a year this month.

India has suffered its largest industrial production fall since 1993, while at the same time having the lowest inflation in a year this month. According to Bloomberg, policy makers are now feeling the pressure to cut taxes and interest rates in order to boost the country's slowing economy. Output at India's factories, mines and utilities fell 2% from a year earlier, contracting the second time in three months. Meanwhile, inflation slowed to 4.39%. Authorities expect the government to considerably boost spending in an effort to stimulate demand and avoid further job losses. The central bank has announced that it plans to closely monitor the country's weakening economy and take quick measure when necessary, including possible rate cuts. The global economic crisis has slashed demand for India's exports, with the Indian overseas shipment falling 22% in January from a year earlier. Plunging exports are expected to cause about 10 million job losses by March this year. Experts have stated that about 1 million jobs have already been lost in India.

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India's Exports to Rise 17% This Year:

India's government expects the country's exports to rise 17% this year.

India's government expects the country's exports to rise 17% this year. The government has stated that most sectors are already showing signs of recuperation and will experience a significant upturn in the following weeks. The government did state however, that job losses will continue as the global financial crisis takes its toll on the country's economy.

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Indian Rupee Up 19 Paise Against the Dollar

On Wednesday, the rupee was up 19 paise against the US dollar on expectations of firm opening of the domestic stock exchange.

On Wednesday, the rupee was up 19 paise against the US dollar on expectations of firm opening of the domestic stock exchange. The rupee traded at 48.62 against the dollar at the Interbank Foreign Exchange (Forex) market. Forex dealers said that fresh capital inflow and the selling of dollars by banks were the main reasons why the rupee appreciated against the US currency.

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1.5 Million Indians Unemployed by March

Commerce Secretary G K Pillai announced that 1.5 million Indians of the export sector will lose their jobs by March.

Commerce Secretary G K Pillai announced that 1.5 million Indians of the export sector will lose their jobs by March. The global slowdown has caused people not only from India but from other countries their jobs. According to Sec. Pillai about 700,000 - 1,000,000 Indians have lost their jobs from August till mid January. He further stated that if the global slowdown continues an additional 500,000 people will lose their jobs by March bringing up the total to 2 million. Exports account for less than 20 percent of India's GDP but the sector has an estimated 60.5 million workforce.

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India's Per Capita Income Rises Again

Now at Rs 33,283, India's per capita income for 2007-08 increased again , thanks to robust economic growth.

Now at Rs 33,283, India's per capita income for 2007-08 increased again , thanks to robust economic growth. The information, released by the Central Statistical Organisation, notes an almost 60 percent increase in India's per capita income since 2003-04. For the past five years, India has experienced double digit growth in per capita income. India's rapid growth in per capital income is a direct correlation with the impressive economic growth throughout the same period. With recent predictions of India's economic growth slowing, there has been no mention of how this will affect the continued growth of per capita income.

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Third Stimulus Package Likely Very Soon, Says India Minister

Ashwani Kumar, of the minister of state for industry, said the government is likely to announce a third stimulus package soon to fuel economic growth.

Ashwani Kumar, of the minister of state for industry, said the government is likely to announce a third stimulus package soon to fuel economic growth. The package is predicted to be very sector-specific, with a particular focus on infrastructure and exports. Recent growth predictions for the year have been down to 6.5-7 percent. Coupled with the recent monetary and fiscal measures initiated by the Reserve Bank, the minister believes India will be in prime position to excel when the global financial crisis begins to subside.

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Spice Group Bids for Satyam

The Spice Group, led by B. K. Modi, made a formal bid the acquire the scandal ridden Satyam IT company.

The Spice Group, led by B. K. Modi, made a formal bid the acquire the scandal ridden Satyam IT company. The Spice Group is a diversified company with interests in entertainment, BPO, IT, retail and mobile handsets. The Spice Group becomes the second suitor of Satyam, after the engineering company Larsen & Toubro has been courting Satyam for quite a while. The Spice Group chairman, Modi, confirmed the interest. The Spice Group has also appealed to the government appointed Satyam board, that because of its proven management and track record, it's the most suited to turn around the computer company.

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Global Meltdown May Pull India Growth to 7.1%

The Prime Minister's Economic Advisory Council lowered India's growth even lower to 7.1%.

The Prime Minister's Economic Advisory Council lowered India's growth even lower to 7.1%. The council, headed by economist Suresh Tendulkar, also said that the country's gross domestic product will expand by 7-7.5 percent during the next fiscal year. Prime Minister Manmohan Singh himself lowered the growth forecast to 6.5-7 percent. The council has also predicted that the inflation rate will continue to fall to 4.1 percent by the end of February, down from the current 5.6 percent.

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RBI Keeps Key Rates Unchanged; Lowers GDP Growth Forecast to 7%

The Reserve Bank of India lowered the growth forecast to 7% on Tuesday, as the global economic crisis continues to spread.

The Reserve Bank of India lowered the growth forecast to 7% on Tuesday, as the global economic crisis continues to spread. However, the RBI has kept key policy rates and ratios unchanged. The lending rate was held at 5.5 percent, and the cash reserve ratio was held at 5 percent. Along with the lowered GDP growth forecast, the RBI has also lowered inflation estimates to 3 percent by the end of March.

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Satyam's Rs 5,000 Cr Cash Disappeared in a Quarter

The ongoing saga of Satyam continues as it has been discovered that funds of almost Rs 5,000 crore (approximately $1.03 billion) have disappeared in a quarter.

The ongoing saga of Satyam continues as it has been discovered that funds of almost Rs 5,000 crore (approximately $1.03 billion) have disappeared in a quarter. According to the audit by Price WaterHouse for the quarter ending 2008, Satyam had over Rs 5,000 crore from long-term and short-term fixed deposits plus accrued interest. However, now that the the company founder Raju has admitted to fudging accounts, it has been revealed that the firm may be left with only Rs 200 ($40.8 million) crore of maturable fixed deposits.

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Indian Techies in US May Lose Jobs in Microsoft

The announcement that Microsoft Corp will lay off 5,000 workers over the next 18 months may affect a large portion of Indian workers in the United States.

The announcement that Microsoft Corp will lay off 5,000 workers over the next 18 months may affect a large portion of Indian workers in the United States. Republican Senator, Chuck Grassley of Iowa, has asked that Microsoft first fire foreign workers hired on H-1B visas, the majority of whom are Indians. The plan is an attempt to protect American jobs. However, Microsoft has issued a statement that they care about all employees equally, casting some doubt on whether that plan will be enacted.

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India Bans Chinese Toy Imports

India banned imports of all toys from China on Friday in an attempt to protect local manufacturers from cheap imports and also over safety concerns of the Chinese-made products.

India banned imports of all toys from China on Friday in an attempt to protect local manufacturers from cheap imports and also over safety concerns of the Chinese-made products. An official from the directorate general of foreign trade, which imposed the ban, said "This restriction will remain in force for a period of six months." According to the All India Toy Manufacturing Association, Chinese products consist of over 50% of the Indian toy market. The ban adds to the already in place ban of all milk products coming in from China after the widespread scandal.

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India Govt Offers Incentives for Foreign Tourists

In an effort to increase tourism revenue that has been lost from the global economic downturn and the recent terror attacks in Mumbai, India's government has launched an incentive program to increase the inflow of tourist.

In an effort to increase tourism revenue that has been lost from the global economic downturn and the recent terror attacks in Mumbai, India's government has launched an incentive program to increase the inflow of tourist. The program, named Visit India 2009, will offer free flights and hotel stay for companions of foreign tourists. Also offered to companions are a local sight-seeing tour and a rural eco-holiday. Essentially a buy one, get one free program, the Indian tourism ministry hopes the incentives will spur tourism that has seen a dip of 22% since the terror attacks.

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Bank of India Q3 Revenue up 45.57% y.o.y.

On Thursday, Bank of India posted a quarter on quarter revenue growth of 16.94 percent and a 14.32 percent increase in profits for the December quarter.

On Thursday, Bank of India posted a quarter on quarter revenue growth of 16.94 percent and a 14.32 percent increase in profits for the December quarter. Although the company's profit margins have declined slightly, Bank of India posted a 45.57 percent year on year revenue growth and a 70 percent growth in profits. On NSE, the Bank of India stock was trading up 2.04 percent.

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India Signs BIPA with Jordan and Syria

On Thursday, the Indian government signed two separate bilateral investment promotion and protection agreements (BIPA) with Jordan and Syria.

On Thursday, the Indian government signed two separate bilateral investment promotion and protection agreements (BIPA) with Jordan and Syria. The goal of the agreements is to increase the flow of funds between the two partner nations. Investors from either county are to be accorded National Treatment and Most Favored Nation Treatment. An official statement said, "BIPA seeks to promote and protect investments from either country in the territory of the other country with the objective of increasing bilateral investment flows." With the addition of the two BIPA agreements signed Thursday, India has now ratified agreements with 63 countries and signed BIPA agreements with 73 countries.

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Morgan Stanley Recommends India Swaps on Rates

As there is a further push towards the slashing of interest rates by the governments of India and Korea, investors should seek interest rate swaps as to receive fixed-rate payments, as advised by Morgan Stanley.

On Tuesday a report released by Morgan Stanley's Rohit Arora and Linan Liu suggested that investors seek fixed five-year rates in India in exchange for floating-rate payments. There is speculation that the Central Bank may add further to the four reductions in its benchmark rate since Oct. 20. On the second of Jan the Reserve Bank of India cut its benchmark overnight lending and borrowing rates to the lowest they have been since their introduction in 2000. This move in turn allowed the five-rear swap rate in India to reach an all time low of 4.34 percent on January 5th. India's overnight trading and borrowing rates fell 3.6 percentage points last quarter, which also set a record as it is the largest drop since the inroduction of derivatives trading which began in 1999. The Indian central bank will need to allow "further relaxation in monetary conditions" to ease the availability of credit to companies, Liu and Arora wrote. India's economy which stands at a whopping 1.2 trillion dollars and Asia's second largest has seen steady slowdown in the last two quarters. The government of India is predicting a growth rate of around seven percent in the current fiscal year which is the lowest since 2003. The reserve bank of India has reduced the repurchase rate by 3.5 percentage points to 5.5 percent since October will further revise this policy come January 27th.

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Indian Shares Rattled by Scandal

The scandal that has been dubbed "India's Enron" has shocked the country's main index today causing the Sensex to drop nearly 3% closing at 9,110.05.

India's software giant Satyam, which operates in 66 countries and employs over 53,000 employees, is facing harsh scrutiny from the Securities and Exchange Board of India. Satyam's Chairman, Ramalinga Raju, stepped down on Wednesday after admitting the firm's accounts had been false. The massive accounting fraud committed by Satyam has sent shocks through the regions markets, affecting Indian indexes heavily. Satyam shares have been falling rapidly, from 70 percent when the scandal first broke and another 40 percent at closing today. The Satyam scandal comes as much surprise and has left many investors in a cautionary stance which has in turn affected Indian markets. Satyam was founded by former chairman Ramalinga Raju who in 2007 won Ernst & Young's 2007 Entrepreneur of the Year award and led the firm to become India's fourth largest software company. There is growing fear that this scandal is perhaps just the tip of the ice berg as there is growing suspicion that other large firms may be committing similar type scandals that are yet to be exposed. The Satyam scandal has caused India's main index to fall to a one month low and has prompted concern over the withdrawal of foreign investors in wake of the scandal.

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India Moves to Cut prices on Fuel

India has cut fuel prices taking advantage of falling crude prices in an effort to boost its economy amidst global financial slowdown.

India has cut fuel prices taking advantage of falling crude prices in an effort to boost its economy amidst global financial slowdown.It is the country's first cut in fuel prices for 22 months. Officials also announced a probable cut in short-term interest rates over the weekend in a possible economic stimulus announcement.

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India, Russia to Ink N-deal Tomorrow

India and Russia plan to sign a nuclear deal tomorrow aimed at the construction of four additional reactors at the Kudankulam nuclear power plant and the expansion of other nuclear power sites.

India and Russia plan to sign a nuclear deal tomorrow aimed at the construction of four additional reactors at the Kudankulam nuclear power plant and the expansion of other nuclear power sites. The two countries might also sign an agreement that would allow Russia to supply nuclear fuel to Indian nuclear power plants.

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India's Prime Minister Sees Growth at 7.5% Despite Recession

Prime Minister Manmohan Singh confirmed that India's growth rate will be maintained at around 7.5% in 2008-09 despite economic turmoil in western countries.

Prime Minister Manmohan Singh confirmed that India's growth rate will continue to hover around 7.5% in 2008-09, despite economic turmoil in western countries. Due to the actions taken by the Central government, the export industry and credit availability would bear the minimum affect.

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Fighting Global Crisis: Turkey Seeks India’s Hand

Turkey has urged India to work together in bailing out small economies suffering from the negative impacts of the global financial crisis.

Turkey has urged India to work together in bailing out small economies suffering from the negative impacts of the global financial crisis. Turkey wants both countries to increase investments, raise employments and strengthen bilateral trade between each other. Turkey wants India to join its efforts in raising investments in energy, iron, steel and construction sectors in less developed economies. India agreed that both countries have the means and should seize the current investment opportunities, while alleviating the impacts of the current financial meltdown. Moreover, Turkey and India expressed the need to increase bilateral trade by increasing collaboration in technology and science.

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Indian Real Estate Sliding Fast

The Reserve Bank Of India has decided to help the rapidly sliding real estate market by temporarily allowing some housing finance companies to raise foreign currency borrowing.

The Reserve Bank Of India has decided to help the rapidly sliding real estate market by temporarily allowing some housing finance companies to raise foreign currency borrowing. This is one of several efforts to boost the country's economy.

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India's FM Assures More Loans for Realty

India's Finance Minister has announced that the government will push banks to accelerate lending to realty, which is currently experience one of the worst slowdowns in years.

India's Finance Minister has announced that the government will push banks to accelerate lending to realty, which is currently experience one of the worst slowdowns in years. The government stated that it sees real state as an engine of growth for India's economy and it could be used to revive the economy during threats of slowdowns. The government will also decrease interest rates and infuse liquidity in the system.

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Brakes Put on Indian Car Making

India's car production went down 12.32% this past year due to slowing demands.

India's car production went down 12.32% this past year due to slowing demands. Between 2002-2007, India has experienced a 14% average yearly increase on vehicle sales, however that figure is expected to drop significantly. Currently, India's automobile industries are suffering from expensive automobile loans despite the central bank's several rate cuts.

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India's Trade Deficit Likely To Widen By 39% To $111.6 bn: Citigroup

India's trade deficit is expected to widen by 39 percent going from $80.3 billion last fiscal year to $111.6 billion during this fiscal year.

India's trade deficit is expected to widen by 39 percent going from $80.3 billion last fiscal year to $111.6 billion during this fiscal year. The increase is due to lower crude oil prices and the decrease in exports caused by lower external demand.

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India's Tata Power Q2 Net Rises Marginally

India's Largest private power utility, Tata Power, has shown a significant marginal rise in its fiscal second quarter.

India's Largest private power utility, Tata Power, has shown a significant marginal rise in its fiscal second quarter. Tata Power has been known to focus on sustainable and renewable energy creating wind, hydro and geothermal power. The company has also announced its recent partnership with the Royal Government of Bhutan and its plans to develop the country's 114 megawatt hydroelectric power project.

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Indian Govt to Table Companies Bill This Week

The Indian government will present the new Companies bill in Parliament by the end of the week.

The Indian government will present the new Companies bill in Parliament by the end of the week. The new bill will include greater shareholder democracy and replace Companies Act of 1956.

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TCS Picks Up Citigroup's BPO Arm for $505 Million

Tata Consultancy Services has acquired the Indian back office of Citigroup for $505 million.

Tata Consultancy Services (TCS) has acquired the Indian back office of Citigroup for $505 million. The deal with Citigroup puts TCS in the number two position in the BPO space after Genpact.

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Volkswagen to Bring in Global Research and Development to Inida

Volkswagen has announced that it plans to bring its global research and development to India in the near future.

Volkswagen has announced that it plans to bring its global research and development to India in the near future. A technical center will be built at Pune. Volkswagen cited India's engineering talent as a major reason for its decision.

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India's Suzlon Energy to Consider Rights Issue

Suzlon Energy, India's largest wind-energy provider, will consider a rights issue of equity shares to raise funds.

Suzlon Energy, India's largest wind-energy provider, will consider a rights issue of equity shares to raise funds. The energy company will meet on September 27 to discuss this issue.

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India's Government to Allow More Private Participation in PPP Projects on Cards

India's government is currently discussing plans to change the model concession agreement to allow more qualifying bidders for road projects.

India's government is currently discussing plans to change the model concession agreement to allow more qualifying bidders for road projects. The government plans to modify the shortlisting norms for public-private partnership projects in highways.

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Inflation in India Dips to 12.1%

For the third week in a row, inflation fell in India.

For the third week in a row, inflation fell in India. Inflation dipped to 12.1%, down .24% from a week ago. Price of edible oil, fruit, and spices went down.

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India's Infrastructure Growth Slows to 4.3% in July

The growth rate of India's infrastructure industries slid to 4.3% in July as compared to 7.2% in July of 2007.

The growth rate of India's infrastructure industries slid to 4.3% in July as compared to 7.2% in July of 2007. The six main infrastructure industries include crude oil, coal,electricity, and steel and cement. Crude oil actually posted negative growth.

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India's Auto Exports to Reach 25 Billion Dollars by Next Decade

Auto exports from India's auto exports are expected to reach 25 billion dollars in the next decade.

Auto exports from India's auto exports are expected to reach 25 billion dollars in the next decade. According to Union Minister Commerce and Industry Kamal Nath, the government will help to allow the auto industry to expand to other parts of the world. More foreign countries should be making India their choice for design and manufacture of automotive components

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Indian MNCs Face New Slew of Challenges Overseas

According to a study by Mercer, India-based multinationals have been forced to a address numerous new policy issues.

According to a study by Mercer, India-based multinationals have been forced to a address numerous new policy issues. The most common issues that multinationals have had to deal with are those pertaining to international assignments. Companies have been trying to reduce costs by hiring local staff instead of making an expatriate assignment.

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Investment in India's SEZs to Reach Rs 2 Trillion by End of 2009

According to a senior government official, investment in Special Economic Zones (SEZs) will hit RS 2 trillion by the end of 2009.

According to a senior government official, investment in Special Economic Zones (SEZs) will hit RS 2 trillion by the end of 2009. The government has given official approval to 513 SEZs and 138 others have been granted in-principle approval till date. Investments in SEZs should generate approximately 8 million jobs.

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India story intact but 'moderation' in short-term: Edelweiss

Investment banking firm Edelweiss expects "some level of moderation" in India's growth story in the short-term.

Moderation in the economy in the short-term could be because of high inflation, rising commodity prices, high oil prices, increasing fiscal deficits and global uncertainties, Edelweiss said in its annual report. The Indian debt market would continue to perform better provided issues such as non-availability of trading platform, central clearing and settlement, stringent documentation requirements and secondary market volumes are addressed, the report said.

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Higher sugar prices Iin India may spoil party this festive season

Sugar prices in India reach new heights before festive season as sugar mills become defaulters due to selling of buffer supplies to open market.

Sugar prices in India may sky-rocket this coming season unless the government release 5,000,000 tonnes of the sweetener into the open-market, for the October-December quarter. In response to this the government ordered 3,000,000 tonnes of sugar to be released into the market this however proved to be difficult as the mills have not complied as such the Centre issued show-cause notices to each of them. To make things worse it has been discovered that these mills are defaulters and had no sugar to release as they had already exported the buffer stock or sold it at high prices in a supply-strained market.

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India's share in global tea exports declining, says ICRA

India's tea exports declined from 25 percent to 10 percent to preferred suppliers like Kenya and Turkey, ICRA study states.

India's tea exports declined from 25 percent to 10 percent to preferred suppliers like Kenya and Turkey, an ICRA study points out. In term of the country's exports annual growth rate, tea exports have declined 2.6 per cent between 1998-2007 period.In 2007, the exports declined by 28.4 percent at 156.7 million kg.

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India-UK economic and financial dialogue held

Finance Minister P Chidambarm (India) and Chancellor of the Exchequer Alistair Darling(UK)signed a Memorandum of Understanding to encourage sharing of best practices in the development of Public Private Partnerships in London.

The 2 sides took note of the global macro economic issues and the matter of climate change. At the end of the meeting, both the Finance Minister and the Chancellor agreed to reduce GHG emissions without compromising growth and development, and to work towards the creation of a larger and deeper carbon market, and to explore the possibility of providing the necessary financial flows and technology transfers to developing countries.

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600 companies to participate in Aero India-2009

One of the largest international aerospace exhibitions known as Aero India-2009 will be held in Bangalore, India, in February 2009.

Nearly 330 companies from 50 countries, including the US, Britain, Russia, France, Germany, Italy, Israel, Belgium, Brazil, Spain, Ukraine and the Netherlands, and 230 from India will set up their exhibits known as Aero India-2009 to be held at Air Force Station Yelahanka in Bangalore on February 9, 2009.

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ASEAN and India to sign free trade agreement

The lengthy negotiations between ASEAN and India over a free trade agreement were concluded today. ASEAN is going to sign a free trade agreement on cutting tariffs on goods with India in December this year.

After a year Negotiations between ASEAN(Singapore, Thailand, the Philippines, Indonesia, Malaysia, Brunei, Vietnam, Laos, Cambodia and Myanmar) and India, New Delhi has agreed to cut import tariffs to around 5 percent from around 30 percent on agriculture products and textiles by the middle of next year.

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Inflation in India reaches 12.1%

Inflation rises slightly in India for the week ending July 26.

Inflation rose from 12 percent to 12.1 percent for the week ended July 26, and are expected to be higher in the next fiscal period. Inflation rose from 12 percent to 12.1 percent for the first time in 13 years. 0.1 percent rose in food products, 0.4 percent in non-food articles and 0.4 percent in textiles. Similarly, primary articles were up 0.1 per cent and chemical and chemical products 0.5 per cent. Fuel and petroleum, however, remained high.

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India-Oman trade to cross $2 billion in 2008

Non-oil trade, including infrastructure, real estate and construction sectors had been a major engine of economic growth in both India and Oman

According to Indian Ambassador to Oman Anil Wadhwa,the total trade during 2007, including Omani LNG exports, stood at USD 1.8 billion, up by 98 per cent as compared to the previous year. For 2008, Non-oil trade, including infrastructure, real estate and construction sectors between India and Oman, is expected to cross USD 2 billion as growth of 35-40 per cent.

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India: Inflation may fall below 8 pct

Inflation in India is expected to cool down below 8 per cent by March 2009 if the global crude oil prices do not go up from the current level.

The inflation which stood at 7.82 per cent in May this year, shot up above 11 per cent in June after hike in petroleum prices. It touched 11.98 per cent for the week ended July 19. However, Inflation in India is expected to cool down below 8 per cent by March 2009 if the global crude oil prices do not go up from the current level, Prime Minister's Economic Advisory Council (EAC) Chairman C Rangarajan said.

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India Tap cheap deposits to ease rising rates: FM

India Finance Minister states current high interest rates will moderate in next 6 to 12 months

India Finance Minister Chidambaram on Friday stated that interest rates have been going up since early 2007 and tightening of monetary policy by RBI, banks must improve efficiency and banking reach by adopting low cost business models like employing business correspondents and branchless methods of banking.

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Toyota to double investment in India to Rs 2,800 crore

Toyota will increase in their investment up to Rs 2,800 crore from Rs 1,400 in India.

The world's second largest motor Toyota Kirloskar Motor(TKM)said that a second unit for an investment of Rs 1,400 crore is to be started adjacent to the existing unit near Bangalore by 2010. The second unit will be responsible for a small car and can produce up to 100,000 units of car annually.

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India, U.S. urge progress made in WTO talks be saved

Indian Commerce Minister Kamal Nath said on Wednesday that the latest talks were not a breakdown in talks, just a paused.

Indian Commerce Minister Kamal Nath said on Wednesday that the latest talks were not a breakdown in talks, but a pause. Negotiators had worked over the past six months to resolve India and The United States agreement on farm and manufacturing issues. 30 WTO members had been trying to finish the task, but failed to do so after nine days of the talks.

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Trade talks collapse after U.S., China, India reject compromise

The United States and two big emerging markets, China and India, clash over the latter's failure failed to compromise on farm import and industrial trade rules.

With the latest trade talks dragging into their second full week, U.S. trade official David Shark told the World Trade Organization (WTO) members on Monday China is fighting for last-minute concessions. Those concessions include the right to shield important farm products from competition and to delay cutting some of its tariffs for years. Both China and India have demanded concessions to deal with an anticipated sudden surge of imports or drop in prices.

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India to see slow growth

Top CEOs from India fear dip in GDP growht for fiscay year 2009 due to inflation

The 350 of CEOs from top Indian companies do not expect the GDP growth to surpass from 7.9 percent to 7.6 percent for fiscal 2009 as the Assocham has forecasted. The ABB fears that the GDP could go down to 7.2 because of the increase in interest rates. Because of inflation, interest rates could rise, along with increases in fuel prices and the prices of manufactured goods, thereby reducing consumer demand,and causing a slow down in stock markets.

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Pakistan signals readiness for investment from Indian industry

Pakistan may allow Indian investment in transportation.

The Pakistan government has approved an Indian firm to invest in the country for making Buses run on compressed natural gas (CNG)in New Delhi. According to an official in the board of investment, there is no law to harm India to invest in Pakistan. From the record in the past 10 months,i t showed Pakistan's trade worth over USD 4.1 billion towards India.

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Indian economy to slow after RBI rate hikes

" Tighter monetary policy settings will slow India's Economy" Moody's Economy said after RBI hiked the rate.

The short-term interest rate hike announced by RBI on July 19 is likely to slow down the world's fastest growing economy after China. It makes India's growth rate will moderate to 7.6 percent during the current fiscal from 9 percent a year ago. According to the Moody's Economy, the RBI is ready to be more focus on tightening monetary policy and more likely to act on the rupee in order to control imported inflation.

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The Dollar Peg Conundrum: To Drop or Not To Drop?

Monetary policy makers from the United States, Britain and France say that low interest rates based on pegs are fueling rising prices.

Many economies in the Middle East and Asia are running double-digit or record-high inflation. But central banks cannot deliver interest rate increases that are needed as long as dollar pegs force them to follow the monetary policy of the United States, where rates are at a three-and-a-half-year low of 2 percent.

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India's Iranian Pipeline Deal

India, Pakistan and Iran will sign a deal this month to build a natural gas pipeline.

The $7.5 billion, 1,700-mile Peace Pipeline (IPI) project would bring gas from the South Pars Gas Fields through Balochistan (in Western Pakistan) into India.

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Markets Plunge, Sensex Closes Below 13k

Stock markets plunge to 16-month lows after major sell-offs.

The Sensex and Nifty indices fell below 13k and 4k after losing nearly 500 points and more than 140 points on the day.

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FDI Inflow Up 127 Percent in April'08

Foreign Direct Investment increased 127 percent in the month of April in India.

Despite concerns of high inflation impacting India, foreign investors poured 3.74 billion dollars in Foreign Direct Investment in April. Foreign investors shrugged off concerns of high inflation rate impacting economic growth in India and poured in 3.74 billion dollars FDI in April showing a whopping 127 per cent jump over a year-ago period.

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Banks Likely To Raise Rates This Week

Banks are expected to hike their lending and deposit rates this week.

With double-digit inflation and the Reserve Bank hiking its repo rate and cash reserve ratio, commercial banks are expected to raise lending and deposit rates this week.

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RBI Hikes Repo, CRR By 50 bps Each

Reserve Bank raised mandatory cash reserve requirements and its short-term lending rate.

Reserve Bank raised mandatory cash reserve requirements and its short-term lending rate. The increase in rates is the first round of measures aimed to fend off inflation which has reached a 13-year high of 11.05 percent.

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RBI to hike repo rate by 100 bps: StanChart

The RBI may increase its key overnight rates as well as reserve requirement to curtail inflation.

The RBI may increase its key overnight rates as well as reserve requirement to curtail inflation which running at 13-year highs, Standard Chartered Bank said in a note.

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Market Deep in Red, Sensex Sheds 338s Pts

Markets take big losses as fear of inflation and high oil prices put downward pressure on the economy.

Markets take big losses as fear of inflation and high oil prices put downward pressure on the economy. Investors are bracing for a spike in annual inflation to 13 year highs when the data is released on Friday.

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RBI Acting Promptly to Curb Inflation: FM

The Reserve Bank of India raised the short-term lending rate by 0.25 percentage points to 8 percent.

As part of a series of inflation control measures, due to the hike in fuel prices, the Reserve Bank of India has increased its short-term lending rate by 0.25 percentage points to 8 percent.

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CPI Urges Finance Minister and PM to Step Down

The Communist Party of India is asking that Finance Minister Chidambaram and PM PM Manmohan Singh resign under financial and fiscal mismanagement.

The Communist Party of India is asking that Finance Minister Chidambaram and PM PM Manmohan Singh resign under financial and fiscal mismanagement. Both refused to be blamed for the 8.5% inflation since this may, and will not step down.

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Indian Inflation Hits 7-yr High, RBI May Move Again

Indian inflation came to its seven years' highest at the end of May and could grow up 10 percent this month as higher fuel prices feed in.

Indian inflation came to its seven years' highest at the end of May and could grow up 10 percent this month as higher fuel prices feed in. It is estimated by ICICI Securities in Mumbai that the inflation will increase 10 percent next week and remaining around 9.5 percent in June and July.

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RBI raises repo rate by 25 bps to 8 %

India Reserve Bank on Wednesday raised its key lending rate by 25 basis points to 8.00 percent to against inflation.

India Reserve Bank on Wednesday raised its key lending rate by 25 basis points to 8.00 percent to against inflation. The repo rate is now at its highest since November 2002. The Reserve Bank expects CRR hike by year-end.

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india

India's Grasim Set to Sell Iron Biz

Grasim Industries Ltd, the flagship company of the Aditya Birla Group, sold it's iron business to Welspun at INR 1,030 crore.

Grasim Industries Ltd, the flagship company of the Aditya Birla Group, sold it's iron business to Welspun manufactures at INR 1,030 crore. This slump sale will be completed in six months.

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india

India's Cadila to Buy South African Drug Company

Zydus Cadila, Indian fourth-largest pharmaceutical company, will purchase 70 percent stake in South Africa's Simayla Pharmaceuticals.

Zydus Cadila, Indian fourth-largest pharmaceutical company, will purchase 70 percent stake in South Africa's Simayla Pharmaceuticals. Ben Classen,the promoter of the Simayla Pharmaceutical, will hold the rest 30 percent and continue to head the company's operations.

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india

India's Inflation Jumps to 8.24%; Fastest Since 2004

India's inflation jumped to 8.24 percent, the fastest since August 2004, adding pressure on the central bank to raise interest rates.

India's inflation jumped to 8.24 percent, the fastest since August 2004, adding pressure on the central bank to raise interest rates. Wholesale-price gains accelerated for a seventh straight week through May 24, after increasing 8.1 percent in the previous week, the commerce ministry said in a statement in New Delhi today. Analysts had forecast inflation at 8.29 percent.

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india

REFILE-Fuel price protests spread in India, hit business

Strikers and protests against India's decision to raise fuel prices continued on Friday for the second day.

Strikers and protests against India's decision to raise fuel prices continued on Friday for the second day. Angry consumers hit businesses including software firms in Hyderabad and Kolkata.

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india

India Corn Futures Higher on Short-Covering, Export

Indian corn futures raised on Thursday afternoon after a sharp fall last session.

Indian corn futures raised on Thursday afternoon after a sharp fall last session. Futures NMZN8 grew 1.23 percent at 905.5 rupees per 100 kg on the National Commodity & Derivatives Exchange(NCDEX.

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india

India Cotton Production May Reach Record on New Seed

Cotton output in India, the world's third-largest grower, may rise to a record next year as farmers increase their use of genetically altered seeds to boost yields, a government official said.

Cotton output in India, the world's third-largest grower, may rise to a record next year as farmers increase their use of genetically altered seeds to boost yields, a government official said. Production may total 32.5 million bales in the year starting October, compared with 31.5 million bales estimated for this year's crop, Textiles Commissioner Jagadip Narayan Singh said in a phone interview from New Delhi yesterday. A bale weighs 170 kilograms (375 pounds) in India.

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india

India, Malaysia Raise Fuel Prices, Risking Inflation

India and Malaysia were forced to raise fuel prices after crude oil almost doubled in a year, risking fanning inflation and social unrest.

India and Malaysia were forced to raise fuel prices after crude oil almost doubled in a year, risking fanning inflation and social unrest. Gasoline will rise 11 percent in India's capital New Delhi to 50.6 rupees ($1.17) a liter from midnight. Pump prices in Malaysia will increase 41 percent to 2.70 ringgit (83 U.S. cents) a liter from tomorrow and will now track global market rates.

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india

India's NALCO Plans USD9.3 bln Expansion over 5 Yrs

Indian National Aluminium Company Ltd (NALU) plans to invest 400 billion rupees (USD9.3 billion) in the next five years on overseas projects and domestic expansion.

Indian National Aluminium Company Ltd (NALU) plans to invest 400 billion rupees (USD9.3 billion) in the next five years on overseas projects and domestic expansion. They will invest smelter and power projects in Indonesia, South Africa and Iran.

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india

India Sees Bumper Wheat, Rice Crops Next Year

India expects their rice and wheat outputs to increase by two million tonnes and one million tonnes next year, respectively.

India expects their rice and wheat outputs to increase by two million tonnes and one million tonnes next year, respectively. India government forecast the rice harvest of 95.68 million tonnes and wheat harvest of 76.78 million tonnes

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india

India Domestic Airlines Raise Fuel Surcharge As Oil Prices Soar

Indian private carriers Jet Airways, Kingfisher, and budget airline Deccan Aviation have raised their fuel surcharge on June 2.

Indian private carriers Jet Airways, Kingfisher, and budget airline Deccan Aviation have raised their fuel surcharge on June 2. All three airlines increased their fuel surcharge by 300 rupees for sectors under 750 kilometers and by 550 rupees for sectors over 750 kilometers.

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india

India Hosts EU Ministerial Troika Meet to Boost Trade, Ties

The 19th European Union Troika ministerial meeting among India, France and Slovenia toke place this Friday to target at enhancing trade and ties with New Delhi.

The 19th European Union Troika ministerial meeting among India, France and Slovenia toke place this Friday to target at enhancing trade and ties with New Delhi. They reviewed the issues in the political, defence, economic, scientific and cultural areas.

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india

RBI Raises Interest Rates on Trade Credits

The Reserve Bank of India raised the interest rate ceiling on trade credits which made it is more convenient for banks to fund import transactions.

The Reserve Bank of India raised the interest rate ceiling on trade credits which made it is more convenient for banks to fund import transactions. The banks can provide short-term credit up to 75 basis points over six months LIBOR (London Interbank Offer Rate).

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india

Indo-Russian Bilateral Trade Poise to touch $10 billion

Top official of the Russian Federation said that bilateral trade between Russia and India is predicted to encompass USD 10 billion by 2010.

Top official of the Russian Federation said that bilateral trade between Russia and India is predicted to encompass USD 10 billion by 2010. At this moment the bilateral trade between countries is about USD 5 billion but it is expected to double in a couple of years.

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india

India, Australia Agree to Finalize FTA Study by End of 2008

India and Australia settled to finalize a report at the end of the year about their Foreign Trade Agreement (FTA).

India and Australia settled to finalize a report at the end of the year of their Foreign Trade Agreement. The Minister of Australia for Trade, Simon Crean, stated that both countries' economies are complementary; therefore, they are natural investment partners.

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india

India's Export Duty Gifts Pakistani Basmati Traders INR 3k-cr Business

The Indian government imposed an export duty of INR8,000 a tonne on basmati rice as an effort to discourage exports.

The Indian government imposed an export duty of INR8,000 a tonne on basmati rice as an effort to discourage exports. Nonetheless, these changes in Indian exports might benefit Pakistan since it will receive a transfer of INR3,000 crore worth of Indian farm income.

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india

Inflation Will Come Down Hopefully in 3 Months

The Prime Minister of India, Manmohan Singh, announced this Wednesday that inflation growth rate of 7.5 percent will go down in the next three months.

The Prime Minister of India, Manmohan Singh, announced this Wednesday that inflation growth rate of 7.5 percent will go down in the next three months. He also added that the government has taken several measures to succeed in the fight against inflation but it will take some time to be effective.

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india

Fall in Business Confidence Index a Matter of Serious Concern

The Business Confidence Index (BCI) in India has fallen by 3.4 percent for the first quarter of this year.

The Business Confidence Index (BCI) in India has fallen by 3.4 percent for the first quarter of this year. The decline of BCI is mainly due to spread inflation, commotion in financial markets and the impact of a probable recession in the U.S.

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india

RBI Monetary Policy Will not Check Price Rise

The Kerala Finance Minister, Thomas Isaac, explained that the monetary policy of the Reserve Bank of India (RBI) will not control the price rise of basic products.

The Kerala Finance Minister, Thomas Isaac, explained that the monetary policy of the Reserve Bank of India (RBI) will not control the price rise of basic products. Instead, some measurements will be taken to improve the tax collection in the country.

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india

Norwegian PE Fund to Invest INR400 Cr in India's Energy Sector

India's energy sector will receive an investment boost of INR400 crore (10 million) from a Norway-based private equity fund.

India's energy sector will receive an investment boost of INR400 crore (10 million) from a Norway-based private equity fund. The investment focus will be on gas and oil, hydro power, renewable energy, and energy efficiency companies.

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india

Gov't Admits Importing Wheat at Higher Rate than MSP

India is now paying USD372.82 per tonne for wheat; during 2006-2007 it was only paying USD204.66.

India's is now paying USD372.82 per tonne for wheat; during 2006-2007 it was only paying USD204.66. The government has been importing at a more elevated rate than the minimum support price (MSP) paid to farmers, this last two years.

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india

Indirect Tax Collections Touches INR 2,79,000 Crore

India's government exceeded its original target of tax collections on revised indirect taxes for 2007-2008, and collected instead INR 2,79,00 crore (10 million).

India's government exceeded its original target on tax collections of revised indirect taxes for 2007-2008, and collected instead INR 2,79,00 crore (10 million). It also exceeded its original plan of collecting only INR 3,05,000 crore of direct tax collection, in fact it gathered INR3,12,000 crore.

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india

Steel Minister Asks Mills to Curb Prices

The steel minister of India is requesting a slash on exercise duty on steel and enforcing an export duty on iron ore.

The steel minister of India is requesting to slash exercise duty on steel and enforcing an export duty on iron ore. The government has taken several measures to boost domestic supply of essential items and control inflation, such as cutting import duties on edible oils, prohibit exports of cement and non-basmati rice and detached export incentives on steel.

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india

India, China M&A;Seen Risky but Fruitful

Lately, Multinational Corporations (MNCs) worldwide see India, China and South East Asia as the most desired destinations for merger and acquisition (M&A;).

Lately, Multinational Corporations (MNCs) worldwide see India, China and South East Asia as the most desired destinations for merger and acquisition (M&A;). The expected risks of investing in these regions are less than the expected rewards; South East Asian countries are preferred over African countries even tough they share the same risks.

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india

Stage Set for More Vibrant Ties with Central Asian Countries

The Hydrocarbon-rich countries, Turkmenistan and Kazakhstan, are heading towards a close economic relationship with India.

The Hydrocarbon-rich countries, Turkmenistan and Kazakhstan, are heading towards a close economic relationship with India. The Vice President Hamid Ansari stated that India has capacities, Turkmenistan and Kazakhstan capabilities and energy is the "prime factor".

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india

Government Should Focus on Reducing Cost on Exports in FTP: CII

The Confederation of Indian Industry (CII) said that the government should make efforts to reduce the cost of Indian exports in the annual supplement to the Foreign Trade Policy (FTP).

The Confederation of Indian Industry (CII) said that the government should make efforts to reduce the cost of Indian exports in the annual supplement to the Foreign Trade Policy (FTP). Sanjay Budhia, the CII Trade Committee Chairman said that transaction costs of exports can be reduced.

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india

Government Approves 20 FDI Proposals

The Finance Minister of India, P Chidambaram, approved 20 Foreign Direct Investment (FDI) proposals, they are worth INR 1962.05 crore (10 million).

The Finance Minister of India, P Chidambaram, approved 20 Foreign Direct Investment (FDI) proposals, they are worth INR 1962.05 crore (10 million). The Foreign Investment Promotion Board (FIPB) recommended these proposals, plus a proposal of merging Lafarge India Holding Pvt Ltd with Lafarge India Pvt Ltd.

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india

India Ranks Second-Lowest in Terms of Economic Prudence

According to Standard & Poor's, India is the second from the bottom in terms of the country's fiscal balance to its GDP size.

According to Standard & Poor's, India is the second from the bottom in terms of the country's fiscal balance to its GDP size. However, India is the second-fastest growing economy in Asia-Pacific.

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india

FDI Inflows in India Cross USD 20 Billion

India received from April 2007 to February 2008 the highest Foreign Direct Investment (FDI) in their country, with a total of USD 20.13 billion.

India received from April 2007 to February 2008 the highest Foreign Direct Investment (FDI) in their country, with a total of USD 20.13 billion. The FDI is 70 percent more than last year, which was only USD11.88 billion.

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india

Govt in India Unveils Measures To Fight Inflation

In an effort to battle inflation, the Indian government has decided to do away with the import duty on crude palm and soya oils, in addition to the export of non-basmati rice and pulses.

In an effort to battle inflation, the Indian government has decided to do away with the import duty on crude palm and soya oils, in addition to the export of non-basmati rice and pulses. This, in addition to raising the Minimum Export Price of Basmati rice and stopping the import of maize, are important measures taken to contain the inflation in India that has reached up to 6.68% per week.

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india

Indian Exporters Are Expected to Go Through Difficult Times in 2008

While export growth is expected to keep expanding, decelerating global demand, especially from the US, will temper outbound shipments.

While export growth is expected to keep expanding, decelerating global demand, especially from the US, will temper outbound shipments. This is due to the slow down in the US economy and rupee appreciation.

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india

Changes in India-Singapore CECA; Impact on 30 items

Changes for the India-Singapore Comprehensive Economics Cooperation Agreement (CECA) were approved this Thursday.

Changes for the India-Singapore Comprehensive Economics Cooperation Agreement (CECA) were approved this Thursday. 14 items where categorized as sensitive with the intention of protecting domestic producers from tariff-free imports. Some of the items in the list are: discs for laser reading system, still image video cameras and magnetic tapes.

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india

Government Mulling Debt Relief Fund for Loan Waiver Scheme

India's government may possibly create a debt relief fund that will provide liquidity to the banks that implemented the Rs 60,000-crore loan waiver package.

India's government may possibly create a debt relief fund that will provide liquidity to the banks that implemented the Rs 60,000-crore loan waiver package. This waiver will benefit four crore (million). Three crore small and marginal farmers will receive 84 percent of the relief package and one crore of large farmers will receive 16 percent

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india

Regulator to Discourage Potential Investors: ISA

Indian Steel Alliance's President, Moosa Raza, stated that Indian steel prices are the lowest in the world, regulating steel prices will generate hesitation in potential investors.

Indian Steel Alliance's President, Moosa Raza, stated that Indian steel prices are the lowest in the world, regulating steel prices will generate hesitation in potential investors. The Steel Minister Ram Vilas Paswan, recommended a regulator, withdrawing of import duty an imposition of export duty, as a measure to control the rising steel prices.

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india

Farmers Who Repaid Loans in Time Will Get Their Due Too

The Maharashtra government has come up with an interest rate subsidy for responsible farmers; they plan to promote a culture of loan repayment.

The Maharashtra government has come up with an interest rate subsidy for responsible farmers; they plan to promote a culture of loan repayment. There will be a substantial interest rate cut for loans taken from the co-operative banks and credit societies. However, farmers who didn't make their payments on time will not receive a loan repayment.

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india

Rice, Edible Oil Duties Cut to Tame Inflation

India's inflation is close to 6 percent mark, the government is taking measures to contain prices in the domestic market.

India's inflation is close to 6 percent mark, the government is taking measures to contain prices in the domestic market. The Customs duty on rice was reduced from 70 percent to zero, for crude palm oil was slashed from 45 percent to 20 percent and crude sunflower oil from 40 percent to 20 percent.

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india

Indians Abroad Sent Home USD 27 Billion in 2007

India is now the main remittance receiver in the world.

India is now the main remittance receiver in the world. Around 5.7 million Indians abroad sent a total of $27 billion in 2007. Among low-income countries, India had the highest immigration volume. Nonetheless, US is still the top immigration country and remittance source.

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india

Inflation beyond comfort zone: PM's advisor

Indian annual wholesale inflation rose to 5.11 per cent.

Indian annual wholesale inflation rose to 5.11 per cent. C. Rangarajan, the Chairman of the Economic Advisory Council and advisor of the Prime Minister Manmohan Singh, wishes to keep the inflation rate between 4.0-5.0 per cent. Nonetheless, inflation rate is above the "comfort zone'.

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india

Govt bans all edible oil exports for a year

The Indian government has banned vegetable oil exports for a period of one year, as an effort to control the increase of edible oils' prices and improve the domestic supplies.

The Indian government has banned vegetable oil exports for a period of one year, as an effort to control the increase of edible oils' prices and improve the domestic supplies. In accordance with the Solvent Extractor's Association (SEA), India primarily exports groundnut oil and coconut oil. India consumes 10 millions tons of edible oil annually and imports half of it. The ban is effective on March 17, 2008.

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india

'No FDI in retail sector'

India's government will not allow foreign direct investments in the retail sector.

India's government will not allow foreign direct investments in the retail sector. The government considers that the interests of retailers still need to be protected.

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india

Jan Exports up 20.5 percent year on year to USD 13.14 billion

Exports sharply increased 20.5 percent in January year on year to 13.14 billion.

Exports sharply increased 20.5 percent in January year on year to 13.14 billion. Imports also rose to 22.5 billion in January while the trade deficit grew USD 6.51 billion year on year.

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india

India Railways to Receive Huge Investment

India's state-run railway network is in line to receive a USD 56 billion investment over the next 5 years.

India's state-run railway network is in line to receive a USD 56 billion investment over the next 5 years. Railways Minister Lalu Prasad Yadav announced the large investment while he unveiled the railways' budget for 2008/2009. The money will be spent on new routes, better safety and other improvements. For the current fiscal year, the railway network will post a cash surplus of USD 6.3 billion.

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india

Chili Exports Getting Hot

Chili exports have reached an all time high, in terms of quantity and value, during the first ten months of the current fiscal year.

Chili exports have reached an all time high, in terms of quantity and value, during the first ten months of the current fiscal year. 157,000 tons worth INR 848.37 crores were exported compared to 104, 885 tons worth INR 557.69 crores last year, year over year. Of the total spice export market, chili accounts for 24 percent of the total value.

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india

India Raises Fuel Costs for the First Time in 20 Months

The Indian government has raised the price of petrol and diesel fuel for the first time in 20 months in order to help petrol dealers with the high oil prices.

The Indian government has raised the price of petrol and diesel fuel for the first time in 20 months in order to help petrol dealers with the high oil prices. The cost of petrol will raise 4.6 percent per litre and diesel will rise 3.3 percent. India currently spends billions of dollars subsidizing fuel costs and has been reluctant to raise prices in order to keep down inflation. India currently has some of the lowest fuel costs in the world. While the consumers have complained about the negative effects of the price hike on their daily lives, Indian oil companies are applauding the decision. Currently, Indian oil companies lose USD 50 million a day due to the subsidies.

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india

Economists Read Lower IIP Figures as Early Signs of Slowdown

India's industrial growth rate has slowed to 7.6 percent in December 2007 from 13.4 year on year.

India's industrial growth rate has slowed to 7.6 percent in December 2007 from 13.4 year on year. Slow manufacturing and mining performance, the rising rupee, and higher interest rates have been listed as possible causes of the slowdown.

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india

Trade Gap Shrinks as US Exports Leap 75%

US exports to India increase to USD 15.85 billion. India's exports to the US also increased by 10.9% during January-November 2007 year on year, to USD 22 billion.

US exports to India increase to USD 15.85 billion. India's exports to the US also increased by 10.9% during January-November 2007 year on year, to USD 22 billion. US exports of aviation and aircraft, the largest trade gain, expanded by more than 33%, and engineering goods and machinery grew by 19.7 percent.

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india

India Inc Spends about USD 85 billion in Infrastructure Development

India Inc has invested about 81 percent of the total planned private investment toward infrastructure projects, according to Industry Chamber Assocham.

India Inc has invested about 81 percent of the total planned private investment toward infrastructure projects, according to Industry Chamber Assocham. Most of the investment was geared toward the steel sector with a robust USD 31 billion on the table. The petroleum sector, specifically Essar Oil with a capital investment of USD 6 billion, is going to get USD 16 billion to rebuild troubled refineries.

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india

India’s Fiscal Deficit falls in Dec to USD 19.7 billion

India's deficit had been close to INR 1 trillion at the end of November and fell to USD 19.7 billion (INR 775 billion) at the end of December 2007.

India's deficit had been close to INR 1 trillion at the end of November and fell to USD 19.7 billion (INR 775 billion) at the end of December 2007. This was mainly driven by advance tax revenues collected from the business sector.

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india

RBI says Real GDP Growth Moderated to 8.9 from 10.2 percent

Real GDP growth this quarter is 8.9 percent, according to the Reserve Bank of India.

Real GDP growth this quarter is 8.9 percent, according to the Reserve Bank of India. During the same period last year, India experienced a 10.2 percent growth in real GDP. The industrial and service sectors experienced a slowdown while the agriculture sector had higher growth rate due to favorable weather conditions this year.

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india

Indonesia to Diversify Export Partners

Indonesia is planning to diversify its export trade markets in 2008 according to Trade Minister Mari Elka Pangestu.

Indonesia is planning to diversify its export trade markets in 2008 according to Trade Minister Mari Elka Pangestu. This plan is driven by reduced demand from the US and will focus on exporting to China, India, Russia and the Middle East.

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india

NRI Remittances touch new high at USD 10 bn

Instead of depositing money in NRI deposit accounts, the Indian Diaspora is sending higher amounts to their relatives back home.

Instead of depositing money in NRI deposit accounts, the Indian Diaspora is sending higher amounts to their relatives back home. For the July-September 2007 quarter, NRI bank deposits only accounted for USD 346 million of the USD 10 billion remittances traveling to India. The rising rupee is now attracting more investors willing to transfer money to their relatives because the money is directly converted into rupees at the time of deposit.

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india

Ministers Say More Cooperation Between China and India Coming

China and India will cooperate economically more in the future according to statements at the China-India Economic, Trade and Investment Cooperation Summit in Beijing.

China and India will cooperate economically more in the future according to statements at the China-India Economic, Trade and Investment Cooperation Summit in Beijing. Current bilateral trade volume stands at $38.7b for 2008 and is growing at 34%. Statements by the Chinese Vice-Premier, Hui Liangyu, and the Indian Prime Minister, Manmohan Singh, indicated strong desire for increased cooperation and bilateral trade in the future.

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india

Infrastructure Growth Plunges by 4.3 pc YoY

In wake of supply constraints, Indian infrastructure industries grew very slowly at 5.3 percent in comparison to a 9.6 percent growth just a year ago.

In wake of supply constraints, Indian infrastructure industries grew very slowly at 5.3 percent in comparison to a 9.6 percent growth just a year ago. Crude petroleum was one of the weakest sectors only growing at 0.3 percent in November compared to 9.8 percent last November. According to India's Chief Statistician, Pranab Sen, the industry is undergoing supply constraints. However, he also explained that it was too early to make a judgment concerning an overall slowdown in the industrial production sector.

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india

India’s Naphtha Exports to Drop Sharply on Gas Cut

India will export much less naphtha early this year (petroleum ether) because of a slowing of natural gas output.

India will export much less naphtha (petroleum ether) early this year because of a slowing of natural gas output. According to the Oil and Natural Gas Corporation and the Indian Oil Corporation, naphtha exports are likely to slow down because ONGC shut a natural gas field down for upgrades. Output has been forecasted to go down by 26 percent and regain full production around the end of January.

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india

11th Five Year Plan Gets Final Approval

Amidst caution of the price pressures on commodities and the pending financial crisis, India's National Development Council passed its 11th five year plan.

Amidst caution of the price pressures on commodities and the pending financial crisis, India's National Development Council passed its 11th five year plan. The plan allocates more than half of the budget to agriculture, education and health. The total allocation for the plan is INR 3,644,718 crore with budget support of INR 1,421,711 crore. The Prime Minister added that this plan pays special attention to the marginalized groups of India.

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india

SBI Cuts Peak Tern Deposit Rate by 25 Bps

To improve asset-liability management and reduce cost, the State Bank of India has cut the peak term deposit rate by 25 basis points to 8.5 percent.

To improve asset-liability management and reduce cost, the State Bank of India has cut the peak term deposit rate by 25 basis points to 8.5 percent. This is the second time in over a month that the SBI has cut deposit rates. SBI is now going to offer 8.5 percent on 550 day deposits; a significant decrease from the 9.5 percent set about nine months ago.

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india

Lower Rates Boost SBI Home Loans

Even though soaring real estate prices in India have slowed the credit demand, the State Bank of India (SBI) is experiencing strong growth in its home loan portfolio.

Even though soaring real estate prices in India have slowed the credit demand, the State Bank of India (SBI) is experiencing strong growth in its home loan portfolio. Recently, SBI has lowered its interest rates and invested in other banks' home loans. As a result, they have effectively strengthened India's home loan sector. SBI's home loan portfolio grew by INR 2,825 crore in April-September 2007.

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india

New Bilateral Agreements Between Cambodia and India

On Dec 8, 2007 Cambodia and India signed a series of bilateral agreements to improve cooperation and increase trade in several areas.

On Dec 8, 2007 Cambodia and India signed a series of bilateral agreements to improve cooperation and increase trade in several areas. The agreements included the following topics: transfer of sentenced persons; improved cooperation in the areas of water resources, agriculture and defense; credit for Cambodia; foreign office consultation; and petroleum industry technical assistance.

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india

World Bank to Loan Maharashtra USD 5.8 billion

The World Bank plans to provide loans to the Maharashtra government for infrastructure projects.

The World Bank plans to provide loans to the Maharashtra government for infrastructure projects. World Bank also accepted that the London Interbank Offer Rate (LIBOR) will be the rate for the loan to India. The funds will be made in rupees to avoid international market fluctuation. About USD 2 billion of the USD 5.8 billion is to go to the Mumbai Makeover program.

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india

India’s Hot Property Market is Likely to Cool Soon: Kamath

A slowdown in the number of homes sold this year has prompted KV Kamath, a top bank in India, to say that the property market is likely to slow down.

A slowdown in the number of homes sold this year has prompted KV Kamath, a top banker in India, to say that the property market is likely to slow down. In additional to the home sales slowdown, there has been more land available for sale which would also cool the market. The home market has been growing steadily because the economy has been growing at 8 percent a year. This paved the way for more Indians to buy homes and attracted foreign investors to buy real estate funds.

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india

Q2 GDP Growth Slows to 8.9%

In comparison to the last financial year, this second quarter slowed a bit to 8.9 percent.

In comparison to the last financial year, this second quarter slowed a bit to 8.9 percent. Although this second quarter's outlook is worse than last year's numbers, many economists predict that the country is still back on track and will end the year growing at a stable 9 percent. According to the Finance Minister, the slowing can be attributed to a low output in the manufacturing sector. He went on to explain that since India has a sustained rate of investment that he remains confident that the annual growth rate will be about 9 percent.

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india

Competition Act will Curtail M&As; Biz: Industry

Industry in India is concerned about the new Competition Act that was passed by Parliament in September.

Industry in India is concerned about the new Competition Act that was passed by Parliament in September. This could impact acquisitions and mergers locally and internationally by putting power in the hands of the Competition Commission of India. Mergers and Acquisitions is Industry's biggest concern because any company with assets INR 10,000,000,000 or more and a profit of INR 30,000,000,000 or more has to seek CCI approval within 30 days of signing.

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india

Cibil is Geared Up for Challenges Ahead

Credit Information Bureau, the only credit bureau operating in India, introduced generic credit scoring today.

Credit Information Bureau, the only credit bureau operating in India, introduced generic credit scoring today. This would help banks and financial institutions better evaluate an individual's credit. The bureau also plans to develop new ways to notify businesses of fraud alerts, KYC alerts, limit alerts, and product-specific credit scores. Cibil became operational in 2004 and now has 143 members and boasts over 90 million trades.

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india

Reserve Bank of India: This Year's Highest Liquidity Infusion

In order to enable banks to meet their required cash reserve ratio, the Reserve Bank of India (RBI) has infused INR 306.55 billion of liquidity into the banking system. This is the largest sum to have been infused during the current financial year.

In order to enable banks to meet their required cash reserve ratio, the Reserve Bank of India (RBI) has infused INR 306.55 billion of liquidity into the banking system. This is the largest sum to have been infused during the current financial year. RBI provides this liquidity support for a period of three days.

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india

Rising Rupee Creates Stress for Gem Industry

After the textile and garment sector, it seems as if also the gem industry might be under pressure soon due to the appreciating rupee. The 13 percent appreciation since this year's January has led to melting margins. Banks are already seeing signs of stress on some loan accounts of diamond and jewelry exporters as loan payments arrive delayed.

After the textile and garment sector, it seems as if also the gem industry might be under pressure soon due to the appreciating rupee. The 13 percent appreciation since this year's January has led to melting margins. Banks are already seeing signs of stress on some loan accounts of diamond and jewelry exporters as loan payments arrive delayed.

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india

India: Fastest Increase in M3 Within a Decade

India's Money supply (M3) has grown as fast as last time in 1997 through the fortnight ending October 26. In a year on year consideration this means an increase of 22.5 percent, compared to the 21.8 percent increase two weeks earlier.

India's Money supply containing currency in public circulation, bank deposits and money invested in other saving plans (M3) has grown as fast as last time in 1997 through the fortnight ending October 26. In a year on year consideration this means an increase of 22.5 percent, compared to the 21.8 percent increase two weeks earlier. Overall, the country's money supply under M3 summed up to INR 36.1 trillion (USD 921.3 billion) on October 26.

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india

India Inflation at 5 Year Low

Decreased prices for food articles and some manufactured items have caused India's inflation to sink below the 3 percent mark for the first time in 5 years.

Decreased prices for food articles and some manufactured items have caused India's inflation to sink below the 3 percent mark for the first time in 5 years. In comparison, the inflation index in the same week last year stood at 5.35 percent.

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Indian Government to Issue Oil Bonds Worth INR 700 Billion

The Indian government is considering to issue fresh oil bonds worth INR 700 billion to support the three national oil marketing companies. With oil on the international market approaching the psychological mark of USD 100, the spread between consumer prices and oil costs increases significantly.

The Indian government is considering to issue fresh oil bonds worth INR 700 billion to support the three national oil marketing companies. With oil on the international market approaching the psychological mark of USD 100 per barrel, the spread between consumer prices and oil costs increases significantly. Under recoveries for the three companies had previously summed up to INR 5.5 trillion.

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Negotiations on Indo-ASEAN FTA Drag on into Next Year

The waiting for the free trade agreement between India and the ASEAN member countries will continue until next year. The negotiators were not able to agree on tariffs for palm oil and refined palm oil, both being part of the highly sensitive list, against which India objected in general as well. ASEAN negotiators had wanted to decrease duties on crude palm oil from 45 percent to 40 percent and for refined palm oil from 52.5 to 30 percent.

The waiting for the free trade agreement between India and the ASEAN member countries will continue until next year. The negotiators were not able to agree on tariffs for palm oil and refined palm oil, both being part of the highly sensitive list, against which India objected in general as well. ASEAN negotiators had wanted to decrease duties on crude palm oil from 45 percent to 40 percent and for refined palm oil from 52.5 to 30 percent.

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Indian Companies Need to Deal With Rising Rupee in the Long Run

According to India's Finance Minister P Chidambaram, Indian companies need to learn to live with an appreciating rupee as the fast pace of economic growth will spur the continued strengthening of the INR.

According to India's Finance Minister P Chidambaram, Indian companies need to learn to live with an appreciating rupee as the fast pace of economic growth will spur the continued strengthening of the INR. India's currency has already appreciated more than 10 percent against the USD since this year's March. India's government is supporting exporters, but Chidambaram suggests innovations to be able to compete internationally.

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India's Biggest Lender Cuts Deposit Rates

India's biggest lender, the state bank of India (SBI) has cut its interest rate for 550-day deposits from 9.0 to 8.75 percent.

India's biggest lender, the state bank of India (SBI) has cut its interest rate for 550-day deposits from 9.0 to 8.75 percent. The development is caused by an expected rise of the bank's costs for deposits by 5-15 basis points, further narrowing down the net interest margin, which just recently fell from 3.02 percent to 2.84 percent.

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RBI Raises Cash Reserve Ratio

Upon their mid-term review of monetary policy, the Reserve Bank of India has kept key policy rates unchanged as expected, but has increased the cash reserve ratio in order to counteract inflation.

Upon their mid-term review of monetary policy, the Reserve Bank of India has kept key policy rates unchanged as expected, but has increased the cash reserve ratio in order to counteract inflation. As of November 10, banks are required to keep 7.5 percent instead of 7 percent of their deposits with the central bank. RBI aims at absorbing INR 160 trillion of excess liquidity from the market.

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Reserve Bank of India Unlikely to Change Interest Rates

After India's headline inflation has dropped significantly below the Reserve Bank of India's target of 5 percent, and money supply is 3.3 percent above the target of 17.5 percent, India's central bank (RBI) is unlikely to change interest rates.

After India's headline inflation has dropped significantly below the Reserve Bank of India's target of 5 percent, and money supply is 3.3 percent above the target of 17.5 percent, India's central bank (RBI) is unlikely to change interest rates. Currently, RBI provides liquidity to banks at 7.75 percent (repo rate) and absorbs liquidity from banks at a rate of 6 percent (reverse repo rate.

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India's Consumer Durables Sector to Grow 12 Percent

The Federation of Indian Chambers of Commerce and Industry (Ficci)expects the Indian sector for consumer durables to grow 12 Percent in the current fiscal year.

The Federation of Indian Chambers of Commerce and Industry (Ficci)expects the Indian sector for consumer durables to grow 12 Percent in the current fiscal year. After the sector grew 11.5 per cent in 2006-07 and 8.5 per cent in 2005-2006, the federation's latest consumer durables survey shows an outstanding increase of 25 percent at the rural markets, and a strong growth of 7-10 percent at the urban market.

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India Toward The Bottom End of List of Globalized Countries

According to the AT Kearney and Foreign Policy Globalisation Index 2007 published by the international consulting company AT Kearney, India only ranks 71st out of 72 examined countries. The annual study assesses the extent to which nations are globally connected. The categories considered for the study are economic integration, personal contact, technological connectivity and political engagement. Last year, India had held rank 61.

According to the AT Kearney and Foreign Policy Globalisation Index 2007 published by the international consulting company AT Kearney, India only ranks 71st out of 72 examined countries. The annual study assesses the extent to which nations are globally connected. The categories considered for the study are economic integration, personal contact, technological connectivity and political engagement. Last year, India had held rank 61. The list is spearheaded by Singapore followed by Hong Kong, the Netherlands, Switzerland and Ireland.

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India Strives to Conclude Free Trade Negotiations with ASEAN

India and ASEAN are hoping to resolve negotiations before ASEAN holds a summit in November.

India and ASEAN are hoping to resolve negotiations before ASEAN holds a summit in November. The unresolved aspects of the negotiation involve duty reductions on products like palm oil, coffee, tea and pepper. While both side are in constant communication, Indian Commerce Secretary G.K. Pillai has said, "We are trying to sort out differences. It will be our last effort. Otherwise, we will have to continue with the negotiations."

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India Supports Exporters Through Duty Remissions

India's appreciating rupee has been worrying exporters for several months. Now, the Indian commerce ministry under Kamal Nath is considering ways to ease the burden.

India's appreciating rupee has been worrying exporters for several months. Now, the Indian commerce ministry under Kamal Nath is considering ways to ease the burden. The Commerce Ministry is currently preparing a Cabinet note suggesting to exempt more services from service tax, following the principle that no tax should be exported."

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Strong Inflows in India due to Growth Expectations

According to K V Kamath, managing director and chief executive officer of India's ICICI Bank, inflows of foreign investments continue to be strong as investors expect India to keep its growth rate of around 10 percent for at least 10 to 15 more years.

According to K V Kamath, managing director and chief executive officer of India's ICICI Bank, inflows of foreign investments continue to be strong as investors expect India to keep its growth rate of around 10 percent for at least 10 to 15 more years. Even the proposal of the Securities and Exchange Board of India (SEBI) to exclude foreign institutional investors and their agents from issuing or renewing offshore derivative instruments such as participatory notes, equity-linked notes and capped-return notes.

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India Shifts from IT to Finance for Growth

According to India's Finance Minister P Chidambaram, India intends to focus on financial services as source for growth in the future.

According to India's Finance Minister P Chidambaram, India intends to focus on financial services as source for growth in the future. Having Mumbai in mind as an international Finance Center, the finance Minister outlined India's possibility to turn into a provider of financial services from currently being a purchaser.

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India's Market Recovers from Sharpest Fall Ever

India's stock market has recovered by 900 points after it had lost a record of 1,800 points earlier, leading to an hour long suspension of trading.

India's stock market has recovered by 900 points after it had lost a record of 1,800 points earlier, leading to an hour long suspension of trading. Before the crash, market regulator SEBI had proposed to curb participatory notes and other offshore derivative instruments. The recovery was preceded by assurances by the Indian Finance Minister P Chidambaram that the Indian government welcomes FDI through participatory notes. See also: http://www1.timesofindia.indiatimes.com/Business/India_Business/There_is_no_need_for_alarm_says_Chidambaram_/articleshow/2465764.cms

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PwC: 38 Percent of Companies Experienced Bribery in India

The international consulting firm PricewaterhouseCoopers has recently published the findings of their latest study, according to which 38 percent of the companies with contacts in India have experienced bribery.

The international consulting firm PricewaterhouseCoopers has recently published the findings of their latest study, according to which 38 percent of the companies with contacts in India have experienced bribery. These findings put India behind Russia, Indonesia and Brazil, but still ahead of Turkey, Mexico and China. Besides concerns about the perception of India's businesses, this might negatively effect the inflow of foreign direct investments into the country.

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Goldman Sachs Raises Three Months Forecast

Goldman Sachs Group Inchas revised their three months forecasts for six Asian currencies in the light of expected Central Bank interventions in the respective countries. As inflation and growth accelerate the central banks are expected to try to strengthen their currencies.

Goldman Sachs Group Inchas revised their three months forecasts for six Asian currencies in the light of expected Central Bank interventions in the respective countries. As inflation and growth accelerate the central banks are expected to strengthen their currencies. The currencies under revisions are INR 39.50 per USD, from previous 41.30, MYR 3.33 compared to 3.41, PHP 43.50 from 45.50. Singapore's dollar is expected to gain to SGD 1.45 compared to SGD 1.51, TWD 32.00 from a prior TWD 32.50, THB 32.00 instead of THB 35.00.

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India's SEZs start to Perform

After the SEZ Act has come into effect in February 2006, 22 SEZs have been established and are performing well, against a lot of criticism. In the fiscal Year 2006-2007, the 22 special economic zones together contributed a considerable 6 percent to India's overall exports.

After the SEZ Act has come into effect in February 2006, 22 SEZs have been established and are performing well, against a lot of criticism. In the fiscal year 2006-2007, the 22 special economic zones together contributed a considerable 6 percent to India's overall exports. Expectations for the ongoing fiscal year, ending next March, are that the results will have doubled by then.

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Credit Quality of Indian Corporations Dwindles

After five consecutive years of continuous improvement, the credit Quality of Indian corporations has decreased during the first six months of the Indian fiscal year.

After five consecutive years of continuous improvement, the credit quality of Indian corporations has decreased during the first six months of the Indian fiscal year. Reasons, according to one rating agency, were mainly acquisitions and large, debt-funded capacity expansions.

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India's Biggest Pharmaceutical Company Enters Philippine Market

Dr. Reddy's Laboratories Ltd., India's biggest constituent within the pharmaceutical industry, has entered the Philippine market seeking to close a gap in the supply of affordable medication.

Dr. Reddy's Laboratories Ltd., India's biggest constituent within the pharmaceutical industry, has entered the Philippine market seeking to close a gap in the supply of affordable medication. Although the pharmaceutical market in the Philippines is dominated by multinational companies and their expensive drugs, the competition from India with branded as well as generic drugs might lead to a decrease in prices for drugs in general.

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India's Big Banks Cut Loan Rates

Only a few days after a meeting between the Indian Finance Minister P Chidambaram and representatives from big banks and indusry, the two major banks in India, State Bank of India (SBI) and ICICI have cut their interest rates on several types of loans by up to 200 basis points.

Only a few days after a meeting between the Indian Finance Minister P Chidambaram and representatives from big banks and industry, the two major banks in India, State Bank of India (SBI) and ICICI have cut their interest rates on several types of loans by up to 200 basis points. The meeting had taken place to discuss ways to prevent interest-sensitive sectors from suffering in the light of decreasing demand.

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India, Myanmar to Sign Agreement on Port

Despite political turmoil in Myanmar, India and Myanmar are very likely to sign an agreement on a port at the Kaladan River very soon. The river will provide India's land-locked states in the

Despite political turmoil in Myanmar, India and Myanmar are very likely to sign an agreement on a port at the Kaladan River very soon. The river will provide India's land-locked states in the northeastern part of the country with access to the Bay of Bengal, allowing to overcome Bangladesh's refusal to provide transit. According to the Ministry of External Affairs, the agreement is going to be signed within a few weeks, enabling the project to be started early next year.

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India, Singapore Form Steering Comittee for SEZs

In order to provide India with foreign direct investment, Singapore has proposed the establishment of Special Economic Zones in India's states Tamil Nadu and Maharashtra.

In order to provide India with foreign direct investment, Singapore has proposed the establishment of Special Economic Zones in India's states Tamil Nadu and Maharashtra. One of the proposals discussed by the already set up Steering Committee includes the establishment of a 2,500-acre multi-product SEZ.

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India Trumps China in Overseas Mergers and Acquisitions

India has outperformed any competitor in overseas mergers and acquisitions within the Asia Pacific Region, in particular China. Indian companies have realized a stunning overseas M&A growth rate of 126 percent in comparison to 36 percent growth throughout the overall growth in Asia Pacific. China holds the second place, having realized a growth rate of 82 percent.

India has outperformed any competitor in overseas mergers and acquisitions within the Asia Pacific Region, in particular China. Indian companies have realized a stunning overseas M&A growth rate of 126 percent in comparison to 36 percent growth throughout the overall growth in Asia Pacific. China holds the second place, having realized a growth rate of 82 percent.

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IMF: India to Grow by 8 Percent

The International Monetary Fund has recently published a report on India's growth potential stating the subcontinent's medium-term growth capacity at around 8 percent.

The International Monetary Fund (IMF) has recently published a report on India's growth potential stating the subcontinent's medium-term growth capacity at around 8 percent. Despite this positive outlook, the IMF has mentioned the necessity for India to establish policies to foster improvements in labor market conditions and in the financial sector for sustaining investment efficiency.

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India Promotes Northeast to Foreign Investors

In order to attract foreign investors to India's northeast, the Ministry of Development of Northeastern Region has originated the Northeast India Trade and Investment Week, a five-day event held in Thailand's capital Bangkok.

In order to attract foreign investors to India's northeast, the Ministry of Development of Northeastern Region has originated the Northeast India Trade and Investment Week, a five-day event held in Thailand's capital Bangkok. Besides an Indian delegation of 70 ministers and officials from a variety of organizations, 150 businessmen attend the event to discuss possible relations in both sector-wise interactive sessions and ono-on-one discussions.

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India: Slump in Credit Off-Takes

Due to increased interest rates, the Indian banking sector has only seen a growth rate in loan portfolios of 3.6 percent within the first six months of the financial year 2007-2008.

Due to increased interest rates, the Indian banking sector has only seen a growth rate in loan portfolios of 3.6 percent within the first six months of the financial year 2007-2008. In this light, banks either need to perform very strongly in the second half, or need to revise their target of 25 percent growth.

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First Steps Towards Free Trade Agreement between India, China

According to an announcement by the China's Ministry of Commerce, a meeting between officials of both countries is scheduled for next month. After joint studies of general feasibility and an agreement on required supportive measures, a decision about whether or not to start talks about a free trade agreement is expected to take place as soon as the studies are concluded.

According to an announcement by the China's Ministry of Commerce, a meeting between officials of both countries is scheduled for next month. After joint studies of general feasibility and an agreement on required supportive measures, a decision about whether or not to start talks about a free trade agreement is expected to take place as soon as the studies are concluded.

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Indian Finance Minister Concerned About Food Prices

India's Finance Minister P. Chidambaram has expressed concerns about increased prices of food. Although the headline inflation with 3.32 percent is nearly the lowest within the last 5 years, the prices for primary food articles have risen 7.5 percent.

India's Finance Minister P. Chidambaram has expressed concerns about increased prices of food. Although the headline inflation with 3.32 percent is nearly the lowest within the last 5 years, the prices for food articles have risen 5.8 percent, contributing to overall inflation for primary articles of 7.5 percent. As Chidambaram considers the high prices as being beyond the impact of monetary policy, he suggests wheat and pulse imports as one possible solution.

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Pakistan: India Needs to Remove Non-Tariff-Trade Barriers

Although having the status as most favored nation, Pakistan still faces a lot of difficulties in trading with India, accusing the Indian government of increasing non-tariff barriers to trade.

Although having the status as most favored nation, Pakistan still faces a lot of difficulties in trading with India, accusing the Indian government of increasing non-tariff barriers to trade. Bilateral trade between Pakistan and India still accounts for 0.315 percent of their overall international trade. The President of the Lahore Chamber of Commerce and Industry, Shahid Hassan Sheikh, states an unfriendly visa policy between both countries as main obstacle interested businessmen have to face.

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Indian Oil Corp. Hopeful for Expansion

Over the next five years Indian Oil Corp., the biggest oil-refining company in the country, will invest 432.5 billion rupees to expand, shares in the company rose nearly 6 percent.

After the announcement that over the next five years Indian Oil Corp., the biggest oil-refining company in the country, would invest 432.5 billion rupees to expand, shares in the company rose nearly 6 percent. It is hoped that India will become a refining hub emphasizing exports, lessening the dependence on the Indian market where prices are fixed. Indian oil is hoping to increase the company's profit via the investment by ultimately lowering the cost of it's raw materials. The company is also looking to expand by building infrastructure, providing more gas distribution as well as sourcing more liquefied natural gas.

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Optimistic Forecast Made for India's Economic Growth

India's Finance Minister forecasts the economy should grow 9 percent by the end of the fiscal year, closing in March 2008. This optimistic prediction is made despite the Reserve Bank of India's prediction of 8.5 percent growth

India's Finance Minister forecasts the economy should grow 9 percent by the end of the fiscal year, closing in March 2008. This optimistic prediction is made despite the Reserve Bank of India's prediction of 8.5 percent growth and that July's industrial output growth hit a low of 7.1 percent.

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Indian Finance Minister in the Running to Break IMF Tradition

Considerations for the next chair of The International Monetary Fund's policy-setting committee include the Indian Finance Minister, Palaniappan Chidambaram.

Considerations for the next chair of The International Monetary Fund's policy-setting committee include the Indian Finance Minister, Palaniappan Chidambaram. Traditionally, a European has held the chair, however, with the need to engage with growing market countries, Chidambaram has an advantage. Placing the Indian Finance Minister in such a place would slowly allow for Asia to become a more prominent role in the Institution.

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Exports Bet on Organic Growth

Paras Jain, owner of Shell Exports, is one of the many exporters planning to meet the demand of the west as the demand for organic cotton rises.

Paras Jain, owner of Shell Exports, is one of the many exporters planning to meet the demand of the west as the demand for organic cotton rises. Upcoming global regulations have the potential to ban genetically engineered products as well as toxic agricultural chemicals. Jain, who produces 31.71 percent of the worlds clean cotton, is the second largest organic grower. By 2008, the production of organic cotton is expected to surpass 10,000 million tonnes.

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Indian Oil Companies In Need of Additional Bonds

Oil companies have called for a price hike of petrol and diesel to offset increasing revenue loss from the rising price of Indian crude oil. The government, however, is not considering this an option.

Oil companies have called for a price hike of petrol and diesel to offset increasing revenue loss from the rising price of Indian crude oil. The government, however, is not considering this an option. Instead, Parliament may grant early booking of oil bonds.

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India: No special status for Singapore Bank's Branches

Despite a Comprehensive Economic Co-operation Agreement between India and Singapore, signed in 2005, Singapore's Banks will not receive a special status regarding branch licensing for foreign banks in India.

Despite a Comprehensive Economic Co-operation Agreement between India and Singapore, signed in 2005, Singapore's Banks will not receive a special status regarding branch licensing for foreign banks in India. The originally signed agreement had provided three Indian banks with qualified full bank licenses in Singapore and, vice versa, India had agreed to provide free access for three Singapore banks in the Indian banking sector.

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State Bank of India to Raise INR 100 Billion

According to the Chairman of the State Bank of India (SBI), India's largest lender plans to raise INR 100 Billion. The fund raising however still is to be clarified.

According to the Chairman of the State Bank of India (SBI), India's largest lender plans to raise INR 100 Billion. The fund raising however still is to be clarified. The finalization of the raise is planned for December 2007.

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Overleveraging Raises Defaults Amongst India's Mid-Size Companies

An increasing number of mid-sized Indian companies is getting into troubles. Availing of inexpensive credits during the lending boom within the last years, they seem to have overleveraged, now not being able to meet their liabilities. The problem has been prominent for for housing loans, personal loans and small and medium-sized enterprises already, but recently spilled over to mid-size companies as well.

An increasing number of mid-sized Indian companies is getting into default troubles. Availing of inexpensive credits during the lending boom within the last years, they seem to have overleveraged, now not being able to meet their liabilities. The problem has been prominent for for housing loans, personal loans and small and medium-sized enterprises already, but recently spilled over to mid-size companies as well.

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South Korea Focused on Protecting Farmers as Indian Trade Talks Begin

According to a statement from the Republic of Korea's (ROK) Agriculture Ministry, sensitive sectors of the Korean farm industry will be protected during negotiations for a comprehensive economic partnership agreement with India. The negotiations, which are scheduled to be held in Seoul next week, will be start the process of the aforementioned economic partnership between the two nations that will include a free trade pact affecting various sectors including technology and farm products.

According to a statement from the Republic of Korea's (ROK) Agriculture Ministry, sensitive sectors of the Korean farm industry will be protected during negotiations for a comprehensive economic partnership agreement with India. The negotiations, which are scheduled to be held in Seoul next week, will be start the process of the aforementioned economic partnership between the two nations that will include a free trade pact affecting various sectors including technology and farm products.

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India: New Renault- Nissan Business Center in Chennai

French automaker Renault and Japanese Nissan Motor are planning a 50/50 joint venture in Chennai. The new Business Center is expected to open in 2008, creating 1,500 jobs until 2010.

French automaker Renault and Japanese Nissan Motor are planning a 50/50 joint venture in Chennai. The new Business Center is expected to open in 2008, creating 1,500 jobs until 2010.

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India Improves Economic Freedom but Slips in Worldwide Ranking

Although having improved their index of economic freedom to an all time high of 6.6 out of 10, India has dropped down some places in the overall ranking, sliding from rank 60 to 69. The index, prepared by Canada-based Fraser Institute, examines on an annual basis a list of 141 countries considering their economic freedom. The highest ranks in the recent report are held by Hong Kong, Singapore and New Zealand.

Although having improved their index of economic freedom to an all time high of 6.6 out of 10, India has dropped down some places in the overall ranking, sliding from rank 60 to 69. The index, prepared by Canada-based Fraser Institute, examines on an annual basis a list of 141 countries considering their economic freedom. The highest ranks in the recent report are held by Hong Kong, Singapore and New Zealand.

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India's Festive Season might Lead to Lower Interest Rates

A State Bank of India Senior official has announced that the Bank may consider to reduce their interest rates as the festive season starts.

A State Bank of India Senior official has announced that the Bank may consider to reduce their interest rates as the festive season starts. Current interest rates for home and retail loans vary between 10.75 and 12.75 percent. As the demand for those loans, especially retail loans, is not satisfying at the moment, bankers are likely to reduce interest rates to attract consumers.

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India: Slowdown in Export Growth of Engineering Goods

According to the chairman of the Engineering Export Promotion Council, Rakesh Shah, the appreciation of the rupee is the key factor behind a slump in export growth for engineering goods. In comparison to last year's 36 percent growth, this year the sector faces a slowdown to 12 percent.

According to the chairman of the Engineering Export Promotion Council, Rakesh Shah, the appreciation of the rupee is the key factor behind a slump in export growth for engineering goods. In comparison to last year's 36 percent growth, this year the sector faces a rather moderate growth rate of 12 percent.

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Bangladesh and India to Sign Memorandum to Revitalize Exports

Amidst a sharp decrease in Bangladesh's ready-made garments exports, the country has signed a memorandum of understanding (MoU) with India for the duty-free export of eight million units of ready-made garments. The decreasing number of exports followed labor unrest attributed to poor working conditions and a failure to revise wages as well as political turmoil. The president of Bangladesh Garment Manufacturers and Exporters Association blamed the fall in exports to a weakened US economy and factories being damaged by rioting.

Amidst a sharp decrease in Bangladesh's ready-made garments exports, the country has signed a memorandum of understanding (MoU) with India for the duty-free export of eight million units of ready-made garments. The decreasing number of exports followed labor unrest attributed to poor working conditions and a failure to revise wages as well as political turmoil. The president of Bangladesh Garment Manufacturers and Exporters Association blamed the fall in exports to a weakened US economy and factories being damaged by rioting.

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India's Banks Face Extra Pension Burden of INR 260 Billion

Bank unions in India are demanding a second opportunity after 1995 for employees to sign pension agreements.

Bank unions in India are demanding a second opportunity for employees to sign pension agreements. This request encounters strong opposition from the Indian Bank Association (IBA) which has calculated the extra burden to amount up to as much as INR 260 billion. The IBA states that India's commercial banks would be incapable of bearing the additional liabilities.

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Tajikistan's Strategic Importance Attracts Infrastructure Development

Tajikistan's rich reserve of hydrocarbons, and its strategic location, bordering China, Afghanistan, Uzbekistan, and Kyrgyzstan has helped it to attract many large scale investments and infrastructure development projects. The Indian government is looking to win Tajikistan's favor through the erection of hydroelectric power plants that will help to solidify the country's infrastructure. In return, Tajikistan can help India to meet it's need for fuel sources with its own natural resources as well as providing easier access to other central Asian countries.

Tajikistan's rich reserve of hydrocarbons, and its strategic location, bordering China, Afghanistan, Uzbekistan, and Kyrgyzstan has helped it to attract many large scale investments and infrastructure development projects. The Indian government is looking to win Tajikistan's favor through the erection of hydroelectric power plants that will help to solidify the country's infrastructure. In return, Tajikistan can help India to meet it's need for fuel sources with its own natural resources as well as providing easier access to other central Asian countries.

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No Issuance of Bonds from Indian Railway Finance Corporation

The Indian Railway Finance Corporation had planned to issue five year bonds at 9.7- 9.75 percent to raise capital amounting up to INR 3-4 billion.

The Indian Railway Finance Corporation had planned to issue five year bonds at 9.7- 9.75 percent to raise capital amounting up to INR 3-4 billion. However, according to the source, the state-owned enterprise has been able to arrange more favorable conditions than those beeing offered at the corporate bond market.

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India's Markets Up Nearly 3 Percent

Both India's National Stock Exchange Nifty as well the Bombay Stock Exchange's Sensex Index closed with gains of 2.68 and 2.89 percent, respectively.

Both India's National Stock Exchange Nifty as well the Bombay Stock Exchange's Sensex Index closed with gains of 2.68 and 2.89 percent, respectively. Besides the stock exchanges, capital goods and consumer durables gained considerably. Positive global cues and a surge in realty and banking stocks are considered to be the main reasons for this development.

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India Luring Tourists to Bhutan’s Dooars as Top Leisure Destination

As the Travel and Tourism Fair (TTF) held at Netaji Indoor Stadium commenced in Kolkata, representatives from the Union Ministers for Tourism and Culture, India's Ministry of Tourism, Travel Agents Association of India (TAAI) and Indian Association of Tour Operators (IATO), among many others were in attendance to illuminate Bhutan's Dooars Valley region as a popular tourist destination. West Bengal Tourism Development Corporation (WBTDC), for example, has increased their offerings of package tours in Bhutan and Jaldapara to lure travelers to the distinct culture and natural beauty of places like Green Dooars. Several national parks and wildlife sanctuaries pepper the Dooars region, which helps drive up inflows Indian and International tourism money and ultimately makes the region an important contributor to the economy and local labor markets.

As the Travel and Tourism Fair (TTF) held at Netaji Indoor Stadium commenced in Kolkata, representatives from the Union Ministers for Tourism and Culture, India's Ministry of Tourism, Travel Agents Association of India (TAAI) and Indian Association of Tour Operators (IATO), among many others were in attendance to illuminate Bhutan's Dooars Valley region as a popular tourist destination. West Bengal Tourism Development Corporation (WBTDC), for example, has increased their offerings of packaged tours in Bhutan and Jaldapara to lure travelers to the distinct culture and natural beauty of places like Green Dooars. Several national parks and wildlife sanctuaries pepper the Dooars region, which helps drive up inflows of Indian and International tourism money and ultimately makes the region an important contributor to the economy and local labor markets.

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India: Rupee Recovers From Four-Months Low

As expectation mount that the US Federal Reserve will cut interest rates, the Indian rupee has recovered from the four-month low it slipped into last week, marking a weekly high at 40.89. According to a US Politician, the Fed would use all available tools to calm down markets. After a cut in the discount rate last week markets had boosted already, expecting further actions taken by the Federal Reserve.

As expectation mount that the US Federal Reserve will cut interest rates, the Indian rupee has recovered from the four-month low it slipped into last week, marking a weekly high at 40.89. According to a US Politician, the Fed would use all available tools to calm down markets. After a cut in the discount rate last week markets had boosted already, expecting further actions taken by the Federal Reserve.

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India and Japan to boost Cooperation

Japan's Prime Minister Shenzo Abe has arrived in India with a delegation of 200 business executives. The purpose of the visit is to boost cooperation with India, which had not lived up to expectations due to Japan's focus on China and Southeast Asian countries as partners. Preliminary estimates value the trade potential of the two countries at USD 14 billion by 2012.

Japan's Prime Minister Shenzo Abe has arrived in India with a delegation of 200 business executives. The purpose of the visit is to boost cooperation with India, which had not lived up to expectations due to Japan's focus on China and Southeast Asian countries as partners. Preliminary estimates value the trade potential of the two countries at USD 14 billion by 2012.

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India: 47% Growth for Business Process Outsourcing Companies

According to a study conducted by an Indian IT magazine, business process outsourcing (BPO) companies in India have reached a growth rate of 47 percent for the term 2006-2007. This growth totals to INR 208.9 billion. Further, the top 20 BPO companies added nearly 60,000 new employees.

According to a study conducted by an Indian IT magazine, business process outsourcing (BPO) companies in India have reached a growth rate of 47 percent for the term 2006-2007. This growth totals to INR 208.9 billion. Further, the top 20 BPO companies added nearly 60,000 new employees.

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India: NABARD Supports Innovative Projects

Being aware of the need, India's National Bank for Agriculture and Rural Development (NABARD) has stated to co-finance innovative projects, especially in the fields of sunrise technologies, food and agro-processing and other projects with long gestation and repayment periods. As part of the co-financing agreement, NABARD would take over up to 50 percent of the long term loan components of the respective projects. General terms and conditions for the loans would be negotiated to a mutual agreement with the co-financing institution.

Being aware of the need, India's National Bank for Agriculture and Rural Development (NABARD) has stated to co-finance innovative projects, especially in the fields of sunrise technologies, food and agro-processing and other projects with long gestation and repayment periods. As part of the co-financing agreement, NABARD would take over up to 50 percent of the long term loan components of the respective projects. General terms and conditions for the loans would be negotiated to a mutual agreement with the co-financing institution.

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Indian Rupee Finally Seeing Improvement

The rupee finally emerged from a four-month low period Friday, primarily due to exporters selling dollars. Traders said that rumors that the Indian central bank sold dollars have helped to boost outlook. The rupee closed at 41.33 per USD Friday, stronger than Thursday's close of 41.36 per USD after it had fallen 1.5 percent. Nizam Idris, Asian foreign exchange strategist in Singapore said Friday: "The rupee has been one of the better performing Asian currencies in this global turmoil."

The rupee finally emerged from a four-month low period Friday, primarily due to exporters selling dollars. Traders said that rumors that the Indian central bank sold dollars have helped to boost outlook. The rupee closed at 41.33 per USD Friday, stronger than Thursday's close of 41.36 per USD after it had fallen 1.5 percent. Nizam Idris, Asian foreign exchange strategist in Singapore said Friday: "The rupee has been one of the better performing Asian currencies in this global turmoil."

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Check Out Asia Economic Institute Volunteer Programs!

The Asia Economic Institute (AEI) has a wide variety of opportunities for scholars, professionals, and investors across the globe. Get Involved!

The Asia Economic Institute (AEI) has a wide variety of opportunities for scholars, professionals, and investors across the globe. Get Involved!

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Bear, Stearns & Co. Seeks to Buy Ford Motor Co. in India

A Ford Motor Co. financial unit in India is being eyed by Bear, Stearns & Co. as the international bank seeks to take advantage of the expanding market by obtaining an additional license. Bear, Stearns & Co. has already offered some services in India to overseas clients but cannot sell other products into the market. A representative for the bank said Wednesday: "We are in advanced discussions with Ford but it is too early to confirm the outcome."

A Ford Motor Co. financial unit in India is being eyed by Bear, Stearns & Co. as the international bank seeks to take advantage of the expanding market by obtaining an additional license. Bear, Stearns & Co. has already offered some services in India to overseas clients but cannot sell other products into the market. A representative for the bank said Wednesday: "We are in advanced discussions with Ford but it is too early to confirm the outcome."

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Japan Loans India INR 13.45 Billion For Development Projects

Japan has agreed to lend India INR 13.45 billion to be used for developmental projects, including the Goa Water Supply and Sewerage Project, which will have a 1.3 percent interest rate per annum. The loan is part of the Official Development Assistance (ODA) package, and will be supplied to India in two parts. The repayment period is 30 years, with a grace period of ten years.

Japan has agreed to lend India INR 13.45 billion to be used for developmental projects, including the Goa Water Supply and Sewerage Project, which will have a 1.3 percent interest rate per annum. The loan is part of the Official Development Assistance (ODA) package, and will be supplied to India in two parts. The repayment period is 30 years, with a grace period of ten years.

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India: HCL Technologies Doubles Its Profit

India's HCL Technologies Ltd. announced that its net profit had doubled from a year earlier to USD 119.5 million from USD 57.45 million. Representatives from the company said the growth was due to new outsourcing orders that offset the impact of a strong rupee. In addition to profit growth, HCL also experienced sales growth with the addition of 20 new clients.

India's HCL Technologies Ltd. announced that its net profit had doubled from a year earlier to USD 119.5 million from USD 57.45 million. Representatives from the company said the growth was due to new outsourcing orders that offset the impact of a strong rupee. In addition to profit growth, HCL also experienced sales growth with the addition of 20 new clients.

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Wal-Mart To Enter the Indian Retail Market

Wal-Mart has signed a deal with Bharti Enterprises in an effort to enter the Indian retail market, which is worth USD 350 billion. The deal will enable the partners to build 15 stores within the next seven years, with the first store opening in late 2008. Walmart's country president Raj Jain said Friday: "By partnering with Bharti, our business-to-business wholesale cash-and-carry offers us the opportunity to invest and develop a robust supply chain that will service the Indian business community."

Wal-Mart has signed a deal with Bharti Enterprises in an effort to enter the Indian retail market, which is worth USD 350 billion. The deal will enable the partners to build 15 stores within the next seven years, with the first store opening in late 2008. Walmart's country president Raj Jain said Friday: "By partnering with Bharti, our business-to-business wholesale cash-and-carry offers us the opportunity to invest and develop a robust supply chain that will service the Indian business community."

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India's Reliance to Invest in Egypt

Indian industrial group Reliance will invest USD 10 billion to the plastic and petrochemical industries of Egypt, the Egyptian government announced after a meeting with Reliance executives in Alexandria. A spokesman for Egyptian Prime Minister Ahmed Nazif said Thursday that the Reliance investments would include USD 1 billion for an oil refinery and USD 7 billion for petrochemicals.

Indian industrial group Reliance will invest USD 10 billion to the plastic and petrochemical industries of Egypt, the Egyptian government announced after a meeting with Reliance executives in Alexandria. A spokesman for Egyptian Prime Minister Ahmed Nazif said Thursday that the Reliance investments would include USD 1 billion for an oil refinery and USD 7 billion for petrochemicals.

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Asian Development Bank to Finalize Framework for Gas Pipeline

The Asian Development Bank (ADB) is working on finalizing the framework for a USD 4 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. Delegations will determine how to allocate gas quantities for the producers as well as the requirements for recipient countries. The United States has openly expressed support for this project and is prepared to aid the project in security issues.

The Asian Development Bank (ADB) is working on finalizing the framework for a USD 4 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. Delegations will determine how to allocate gas quantities for the producers as well as the requirements for recipient countries. The United States has openly expressed support for this project and is prepared to aid the project in security issues.

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Bangladesh Reviews Indian Sensitive List of Products

Bangladesh's government is planning to request that the Indian government reduces the number of Bangladeshi goods on the sensitive list prepared for trade under the South Asian Free Trade Area (Safta). India has requested 744 products to be on the sensitive list and a Bangladeshi inter-ministerial committee is meeting to finalize their list of products to be submitted to India.

Bangladesh's government is planning to request that the Indian government reduces the number of Bangladeshi goods on the sensitive list prepared for trade under the South Asian Free Trade Area (Safta). India has requested 744 products to be on the sensitive list and a Bangladeshi inter-ministerial committee is meeting to finalize their list of products to be submitted to India.

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Indian Rupee Falls and Stocks Rise

The rupee fell and Indian stocks rose the most in more than four months. Software exporters, especially Infosys Technologies Ltd., increased exports to the United States after the government imposed limits on overseas borrowing. The rise of stocks is also attributed to reports from the US Federal Reserve stating that the US will withstand the current sell-off.

The rupee fell and Indian stocks rose the most in more than four months. Software exporters, especially Infosys Technologies Ltd., increased exports to the United States after the government imposed limits on overseas borrowing. The rise of stocks is also attributed to reports from the US Federal Reserve stating that the US will withstand the current sell-off.

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India's Tata Power's Plans to Generate Nuclear Power

If the Indian government allows, Tata Power Co. Ltd. will start execute plans to generate nuclear power. Tata has connected with Areva, a French nuclear group, about sourcing the nuclear power equipment. Currently, the Indian government does not allow private utilities to generate nuclear power, but has said that it may start to permit private utilities to partner with state-run nuclear firms.

If the Indian government allows, Tata Power Co. Ltd. will start execute plans to generate nuclear power. Tata has connected with Areva, a French nuclear group, about sourcing the nuclear power equipment. Currently, the Indian government does not allow private utilities to generate nuclear power, but has said that it may start to permit private utilities to partner with state-run nuclear firms.

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India to Facilitate Import of 20 Specified Items from Pakistan

India has expressed its willingness to facilitate import of "Pakistan-wished" 20 items and remove non-tariff barriers without seeking "Most Favored Nation (MFN)" status. Asif Shah, Commerce Secretary, indicated that the list would be complied after consulting all stakeholders so that it comprises of items that Pakistan can export easily, without affecting its domestic market. He went on to say that India was concerned over the lack of infrastructure at the border, which is necessary to facilitate bilateral trade. Both sides have agreed that they would complete the infrastructure on their sides to assist transportation of goods by road vehicles.

India has expressed its willingness to facilitate import of "Pakistan-wished" 20 items and remove non-tariff barriers without seeking "Most Favored Nation (MFN)" status. Asif Shah, Commerce Secretary, indicated that the list would be complied after consulting all stakeholders so that it comprises of items that Pakistan can export easily, without affecting its domestic market. He went on to say that India was concerned over the lack of infrastructure at the border, which is necessary to facilitate bilateral trade. Both sides have agreed that they would complete the infrastructure on their sides to assist transportation of goods by road vehicles.

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Wealth Gap Widens Throughout Asia

According to the Key Indicators 2007 report of the Asian Development Bank (ADB) relative inequality between the rich and the poor, referred to as the "wealth gap", has increased in many Asian countries. First and foremost Nepal and China, but as well India, Cambodia and Sri Lanka were not able to antagonize the inequality. As main reasons for the development, the report states the discrepancy in investment between urban and rural areas as well as government policies which deterred private investment, especially in the hinterlands.

According to the Key Indicators 2007 report of the Asian Development Bank (ADB) relative inequality between the rich and the poor, referred to as the "wealth gap", has increased in many Asian countries. First and foremost Nepal and China, but as well India, Cambodia and Sri Lanka were not able to antagonize the inequality. As main reasons for the development, the report states the discrepancy in investment between urban and rural areas as well as government policies which deterred private investment, especially in the hinterlands.

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Reserve Bank of India Takes Steps to Control Capital Inflows

In an attempt to control capital inflows, the Indian government now requires local companies who take out a foreign loan of more than USD 20 million to spend the money abroad. Recently, the rupee has risen to a nine-year high, complicating the Reserve Bank of India's (RBI) monetary policy. Although the new rule will eventually weaken the rupee, analysts believe that the RBI will have to take greater steps to control capital inflows.

In an attempt to control capital inflows, the Indian government now requires local companies who take out a foreign loan of more than USD 20 million to spend the money abroad. Recently, the rupee has risen to a nine-year high, complicating the Reserve Bank of India's (RBI) monetary policy. Although the new rule will eventually weaken the rupee, analysts believe that the RBI will have to take greater steps to control capital inflows.

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Bhutan Bans Poultry From India

Due to the recent outbreak of bird flu in Manipur India, Bhutan has banned the import of poultry and poultry products from india for an indefinite period of time. Analysts expect this ben to be in effect for at least three months. BAFRA records in dicate that Bhutan imported 99.8 MT of processed chickens and 29971 cartons of eggs from India during the past year. Bafra personell have been place at all entry points and have been instructed to increase surveillance.

Due to the recent outbreak of bird flu in Manipur India, Bhutan has banned the import of poultry and poultry products from india for an indefinite period of time. Analysts expect this ben to be in effect for at least three months. BAFRA records in dicate that Bhutan imported 99.8 MT of processed chickens and 29971 cartons of eggs from India during the past year. Bafra personell have been place at all entry points and have been instructed to increase surveillance.

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Terrible Floods Damage Indian Crops

After two weeks of flooding, India's crops and residents have been impacted immensely. The floods has killed 200 people, forced millions out of their homes, and damaged huge areas of major crop production. The water has also damaged cultivable land which will make planting harder for the next several months.

After two weeks of flooding, India's crops and residents have been impacted immensely. The floods has killed 200 people, forced millions out of their homes, and damaged huge areas of major crop production. The water has also damaged cultivable land which will make planting harder for the next several months.

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Wal-Mart Stores Inc. to Open Stores in India

Wal-Mart Stores Inc. and India's Bharti Enterprises signed an agreement, creating Bharti Wal-Mart Private Ltd., giving Wal-Mart access to India's growing retail industry. Wal-mart, a multiple brand-retailer, will open up to 15 facilities and employ approximately 5,000 people within the next seven years. The first of the stores is set to open in North India by the end of 2008.

Wal-Mart Stores Inc. and India's Bharti Enterprises signed an agreement, creating Bharti Wal-Mart Private Ltd., giving Wal-Mart access to India's growing retail industry. Wal-mart, a multiple brand-retailer, will open up to 15 facilities and employ approximately 5,000 people within the next seven years. The first of the stores is set to open in North India by the end of 2008.

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The Bank for International Settlements’ Report: Potential Global Crisis

This report is based on the Bank for International Settlements' 77th Annual Report released June 24, 2007 in Basel, Switzerland.


The Bank for International Settlements (BIS) forecasts all manner of dismal future trends in its 77th Annual Report. The BIS telegraphs through their report that current global growth is not sustainable and there is a strong probability that the credit boom may ignite a long-lasting global crisis not unlike that of the Great Depression of the 1930s or the East Asian Financial Crisis of the 1990s.

The Bank (BIS) states that recently "real growth has been maintained around levels that are among the highest recorded" and "despite significant upward shocks to most commodity prices, underlying inflation levels have generally remained subdued." The Bank also affirms that "real interest rates and risk premia of all sorts have remained uncharacteristically low" and "global trade imbalances have thus far been easily financed and exchange rates have been generally quite stable." Although some economists believe that this exuberant growth is sustainable, the BIS addresses certain issues in the current global economy that could possibly lead to serious problems in the near future.

Although inflationary pressures are suppressed right now, the threat of global inflation is real as growth in industrialized countries is slowing and growth in developing countries is rapidly increasing. The Annual Report highlights the Chinese government's failed attempts to slow growth by tightening monetary policies perpetuating "robust broad money and credit growth" that could increase inflationary pressure and has "raised questions for some central banks about sustainable growth." Currently, lenders are increasingly willing to extend risky credit to corporations with inflated debt levels. In addition to increased sovereign, corporate and personal credit around the world, the cost of raw materials is increasing, which will only add to global inflationary pressure. Despite the signaling of these cautionary markers in the Annual Report, the long-term effects of this credit boom are unknown.

Another important uncertainty in the global market is the effect of the all-time high ratio of house prices to rents in the United States. According to the BIS, wages are not increasing sufficiently to support the increase in consumer spending and investment, citizens are increasing personal debt, and mortgage rates continue to rise. If housing prices decline there may be steep deceleration in US growth and dire consequences for social infrastructure. The United States economy still has a large impact on the world economy and any downturn in the US housing market could have significant effects on global growth. According to the United Nations' "World Economic Situation and Prospects 2007," the occurrence of a plunge in US housing prices will considerably weaken global growth and cause problems in financial markets around the world.

The Bank comments that global trade imbalances are important medium-term uncertainties. Many economists believe that the US external imbalance is unsustainable and will eventually adjust. According to the Annual Report, the uncertainty lies in the possibility of "large and perhaps abrupt movements in exchange rates" or whether "capital inflows needed to finance such deficits will be available" in the future.

The Bank asserts two reasons to explain how public sector inflows may become unreliable. First, country currencies may rise as a result of government "hands-off" policies rooted in distorted beliefs regarding effects of government intervention. Second, current holders of large reserves of US dollars may start to favor reserves in other currencies.

The Bank acknowledges that many people believe "individual asset price increases are justified and therefore more likely to be sustainable" but it also portends that "market reaction to good news might have become irrationally exuberant." If the latter is the case, purchasers of risky investments could be vulnerable in the long run. Banks, global players, and companies have been encouraged to invest in risky instruments based on low expected loss, but there is a probability of an unwelcome shock that would have massive consequences.

Based on the above excerpts from the Annual Report and the economic analysis of all the issues affecting the conclusions stated in the report, it appears that the global economy is vulnerable and growth may not be sustained.

This report is based on the Bank for International Settlements' 77th Annual Report released June 24, 2007 in Basel, Switzerland.


The Bank for International Settlements (BIS) forecasts all manner of dismal future trends in its 77th Annual Report. The BIS telegraphs through their report that current global growth is not sustainable and there is a strong probability that the credit boom may ignite a long-lasting global crisis not unlike that of the Great Depression of the 1930s or the East Asian Financial Crisis of the 1990s.

The Bank (BIS) states that recently "real growth has been maintained around levels that are among the highest recorded" and "despite significant upward shocks to most commodity prices, underlying inflation levels have generally remained subdued." The Bank also affirms that "real interest rates and risk premia of all sorts have remained uncharacteristically low" and "global trade imbalances have thus far been easily financed and exchange rates have been generally quite stable." Although some economists believe that this exuberant growth is sustainable, the BIS addresses certain issues in the current global economy that could possibly lead to serious problems in the near future.

Although inflationary pressures are suppressed right now, the threat of global inflation is real as growth in industrialized countries is slowing and growth in developing countries is rapidly increasing. The Annual Report highlights the Chinese government's failed attempts to slow growth by tightening monetary policies perpetuating "robust broad money and credit growth" that could increase inflationary pressure and has "raised questions for some central banks about sustainable growth." Currently, lenders are increasingly willing to extend risky credit to corporations with inflated debt levels. In addition to increased sovereign, corporate and personal credit around the world, the cost of raw materials is increasing, which will only add to global inflationary pressure. Despite the signaling of these cautionary markers in the Annual Report, the long-term effects of this credit boom are unknown.

Another important uncertainty in the global market is the effect of the all-time high ratio of house prices to rents in the United States. According to the BIS, wages are not increasing sufficiently to support the increase in consumer spending and investment, citizens are increasing personal debt, and mortgage rates continue to rise. If housing prices decline there may be steep deceleration in US growth and dire consequences for social infrastructure. The United States economy still has a large impact on the world economy and any downturn in the US housing market could have significant effects on global growth. According to the United Nations' "World Economic Situation and Prospects 2007," the occurrence of a plunge in US housing prices will considerably weaken global growth and cause problems in financial markets around the world.

The Bank comments that global trade imbalances are important medium-term uncertainties. Many economists believe that the US external imbalance is unsustainable and will eventually adjust. According to the Annual Report, the uncertainty lies in the possibility of "large and perhaps abrupt movements in exchange rates" or whether "capital inflows needed to finance such deficits will be available" in the future.

The Bank asserts two reasons to explain how public sector inflows may become unreliable. First, country currencies may rise as a result of government "hands-off" policies rooted in distorted beliefs regarding effects of government intervention. Second, current holders of large reserves of US dollars may start to favor reserves in other currencies.

The Bank acknowledges that many people believe "individual asset price increases are justified and therefore more likely to be sustainable" but it also portends that "market reaction to good news might have become irrationally exuberant." If the latter is the case, purchasers of risky investments could be vulnerable in the long run. Banks, global players, and companies have been encouraged to invest in risky instruments based on low expected loss, but there is a probability of an unwelcome shock that would have massive consequences.

Based on the above excerpts from the Annual Report and the economic analysis of all the issues affecting the conclusions stated in the report, it appears that the global economy is vulnerable and growth may not be sustained.

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Corporate Social Responsibility: The Asian Impact

Over the years, Asian companies have begun to realize the significant effects that corporate social responsibility can have on businesses, employees and stakeholders alike. The move towards building more socially responsible enterprises has been gradually gaining momentum across the region. In recent years, many Asian governments have initiated a series of measures aimed at encouraging private organizations to participate more effectively in community development projects. This, they believe, will not only help raise the economic welfare of the local populace but also result in a more equitable distribution of domestic economic resources. Such steps are critical if the end goal of preventing the lopsided concentration of economic power in the region and ultimately promoting social stability are to be achieved in the near future.

CSR: The story so far

Corporate social responsibility (CSR) is not an entirely unknown concept in the Asian region. In the past, national leaders like Indira Gandhi of India and Lee Kuan Yew of Singapore, have stressed that local businesses should act with a greater sense of responsibility and consider the social, moral and environmental consequences of their enterprises and their resultant effects on the safety and well-being of the communities which they serve. However, the overall record of many countries on the ethical business front has been disappointing. This has been attributed to factors like poor work conditions prevalent in many factories existing in the low-cost manufacturing hubs of the region and the lack of concerted efforts on the part of local governments to enforce stricter compliance standards for both domestic and foreign companies. In recent years, much criticism has been directed toward developed countries for using developing nations as a dumping ground for "e-waste" and other environmentally hazardous materials. There has been a spike in the number of mass protests and demonstrations being staged by international and local human rights groups to highlight the abysmal work conditions and massive exploitation of human labor being carried out in particular countries. Also, certain organizations like India's ICICI (Industrial Credit and Investment Corporation of India) are already leading the way in terms of incorporating more employee-centric policies and promoting a greater degree of transparency in their financial reporting and public accountability standards. These organizations clearly believe that the private sector should play a greater role in improving infrastructure, health and safety standards in the local economies and act as a catalyst in the broader economic development process. Even corporate heavyweights like Nike have started implementing better corporate standards in Indonesia after the backlash they received in the international news media over the unfair labor standards..

Future of CSR in the region

Despite all the above measures, the overall success on the CSR front remains largely limited. There are several corporations who believe that advancing the greater common good and realizing bigger profits are mutually exclusive goals. Also, questions have been raised about the efficacy of the CSR initiatives undertaken by the companies in the region. It is believed that the kind of CSR that merely goes through the motions, delivering no new resources to worthy causes gives the firm's workers or customers no good reason to think more highly of it (perhaps the opposite) and may ultimately involve a net loss of welfare. This occurs when the costs of enforcing the requisite CSR measures outweigh the overall social welfare gains realized. Therefore, organizations that desperately want to be perceived in a flattering light by the general public must rationally consider the potential costs and resultant benefits arising from the various socially responsible initiatives that are implemented. Only then can corporate social responsibility truly fulfill its role of achieving a fairer distribution of resources, thereby disseminating the benefits of social welfare across the various strata of society across the Asian region.

Over the years, Asian companies have begun to realize the significant effects that corporate social responsibility can have on businesses, employees and stakeholders alike. The move towards building more socially responsible enterprises has been gradually gaining momentum across the region. In recent years, many Asian governments have initiated a series of measures aimed at encouraging private organizations to participate more effectively in community development projects. This, they believe, will not only help raise the economic welfare of the local populace but also result in a more equitable distribution of domestic economic resources. Such steps are critical if the end goal of preventing the lopsided concentration of economic power in the region and ultimately promoting social stability are to be achieved in the near future.

CSR: The story so far

Corporate social responsibility (CSR) is not an entirely unknown concept in the Asian region. In the past, national leaders like Indira Gandhi of India and Lee Kuan Yew of Singapore, have stressed that local businesses should act with a greater sense of responsibility and consider the social, moral and environmental consequences of their enterprises and their resultant effects on the safety and well-being of the communities which they serve. However, the overall record of many countries on the ethical business front has been disappointing. This has been attributed to factors like poor work conditions prevalent in many factories existing in the low-cost manufacturing hubs of the region and the lack of concerted efforts on the part of local governments to enforce stricter compliance standards for both domestic and foreign companies. In recent years, much criticism has been directed toward developed countries for using developing nations as a dumping ground for "e-waste" and other environmentally hazardous materials. There has been a spike in the number of mass protests and demonstrations being staged by international and local human rights groups to highlight the abysmal work conditions and massive exploitation of human labor being carried out in particular countries. Also, certain organizations like India's ICICI (Industrial Credit and Investment Corporation of India) are already leading the way in terms of incorporating more employee-centric policies and promoting a greater degree of transparency in their financial reporting and public accountability standards. These organizations clearly believe that the private sector should play a greater role in improving infrastructure, health and safety standards in the local economies and act as a catalyst in the broader economic development process. Even corporate heavyweights like Nike have started implementing better corporate standards in Indonesia after the backlash they received in the international news media over the unfair labor standards..

Future of CSR in the region

Despite all the above measures, the overall success on the CSR front remains largely limited. There are several corporations who believe that advancing the greater common good and realizing bigger profits are mutually exclusive goals. Also, questions have been raised about the efficacy of the CSR initiatives undertaken by the companies in the region. It is believed that the kind of CSR that merely goes through the motions, delivering no new resources to worthy causes gives the firm's workers or customers no good reason to think more highly of it (perhaps the opposite) and may ultimately involve a net loss of welfare. This occurs when the costs of enforcing the requisite CSR measures outweigh the overall social welfare gains realized. Therefore, organizations that desperately want to be perceived in a flattering light by the general public must rationally consider the potential costs and resultant benefits arising from the various socially responsible initiatives that are implemented. Only then can corporate social responsibility truly fulfill its role of achieving a fairer distribution of resources, thereby disseminating the benefits of social welfare across the various strata of society across the Asian region.

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Private Equity Firm in Asia: An Emerging Presence in Emerging Economies

Over the past decade, the amount of private equity deals in Asia has grown exponentially. According to Dealogic, the total value of private equity deals in the Asia-Pacific region, excluding Japan, tripled in 2006 to USD 26 billion. This has been attributed to factors like strong economic growth in the region, severe competition for deals in the developed markets of Europe and America and more efficient local capital markets in the Asian region. Moreover, there exists a vast network of domestic companies in these emerging economies that have an immense desire to acquire global recognition via the expertise and network of foreign investors. Factors like shoddy infrastructure, poor corporate governance standards, hostile local governments, severe shortage of skilled personnel and a relatively higher cost of borrowing, however, may tend to severely disrupt the current pace of expansion. It is critical for the governments of these emerging economies to take the requisite measures to remove the aforementioned shortcomings if they still hope to remain attractive investment destinations in the near future.

Challenges to growth

Private equity firms primarily function as follows: They purchase publicly traded companies, take them private, restructure the acquired firms in the hope of reselling these companies at a huge profit a couple of years later. Yet in countries like India-despite the active presence of several heavyweights of the private equity arena like the Carlyle Group, Kohlberg Kravis Roberts & Co, the Blackstone Group etc.-the size and volume of the deals have been comparatively smaller as compared to similar deals being struck in North America and Europe. In fact, most of the big private-equity deals in India so far have involved the purchase of small, passive stakes in companies. This is an unusual strategy for most of the big players who prefer to call the shots by acquiring a controlling stake in the target companies. In India, this can be explained by the fact that most large, publicly traded companies are family-owned, which makes it extremely difficult for a foreign company to aspire to buy a majority stake. Even more, these private equity firms are viewed with a considerable degree of suspicion by local governments and local citizens. The massive restructuring steps that typically accompany any large private equity deal invariably do result in countless jobs being lost and other cost-cutting measures. Another factor limiting the size of the deals in the region is the fact that most emerging economies of Asia like China and India remain grossly overvalued, which drives up the prices that the acquirer would have to pay for deals being struck with potential targets. According to a survey conducted by the Tuck School of Business at Dartmouth, most of the private equity firms seek returns of at least 25 percent on their investments in the emerging economies.

One principal reason why bank shares in a country like Taiwan seem particularly attractive to the private equity players is the fact that these shares are some of the region's least expensive-trading at an average of 1.1 times 2007 book value as compared to 1.5 for the South Korean banks and 2.8 for the mainland China bank shares.

What lies ahead?

Despite the above setbacks, Asia still has immense growth potential as a region for several private equity players. Industry giants like Texas Pacific, which has earmarked roughly USD 4 billion for the future in the region, desire to make continued investments in Asia. Although these private equity players are driven primarily by the profit motive, they can still prove to be an advantage to the local economies they invest in. They possess the requisite global expertise, immense international experience, a highly professional code of conduct and a wide network. All these strengths can be leveraged by ambitious domestic firms who partner with these firms in the hope of eventually growing into full-fledged thriving global players in the years to come. Thus, the influx of long-term capital into Asia, coupled with the potential advantages that can be realized by the local firms via mutually advantageous partnerships with foreign firms, can help to further accelerate the economic expansion process in the Asian region in the immediate future.

Over the past decade, the amount of private equity deals in Asia has grown exponentially. According to Dealogic, the total value of private equity deals in the Asia-Pacific region, excluding Japan, tripled in 2006 to USD 26 billion. This has been attributed to factors like strong economic growth in the region, severe competition for deals in the developed markets of Europe and America and more efficient local capital markets in the Asian region. Moreover, there exists a vast network of domestic companies in these emerging economies that have an immense desire to acquire global recognition via the expertise and network of foreign investors. Factors like shoddy infrastructure, poor corporate governance standards, hostile local governments, severe shortage of skilled personnel and a relatively higher cost of borrowing, however, may tend to severely disrupt the current pace of expansion. It is critical for the governments of these emerging economies to take the requisite measures to remove the aforementioned shortcomings if they still hope to remain attractive investment destinations in the near future.

Challenges to growth

Private equity firms primarily function as follows: They purchase publicly traded companies, take them private, restructure the acquired firms in the hope of reselling these companies at a huge profit a couple of years later. Yet in countries like India-despite the active presence of several heavyweights of the private equity arena like the Carlyle Group, Kohlberg Kravis Roberts & Co, the Blackstone Group etc.-the size and volume of the deals have been comparatively smaller as compared to similar deals being struck in North America and Europe. In fact, most of the big private-equity deals in India so far have involved the purchase of small, passive stakes in companies. This is an unusual strategy for most of the big players who prefer to call the shots by acquiring a controlling stake in the target companies. In India, this can be explained by the fact that most large, publicly traded companies are family-owned, which makes it extremely difficult for a foreign company to aspire to buy a majority stake. Even more, these private equity firms are viewed with a considerable degree of suspicion by local governments and local citizens. The massive restructuring steps that typically accompany any large private equity deal invariably do result in countless jobs being lost and other cost-cutting measures. Another factor limiting the size of the deals in the region is the fact that most emerging economies of Asia like China and India remain grossly overvalued, which drives up the prices that the acquirer would have to pay for deals being struck with potential targets. According to a survey conducted by the Tuck School of Business at Dartmouth, most of the private equity firms seek returns of at least 25 percent on their investments in the emerging economies.

One principal reason why bank shares in a country like Taiwan seem particularly attractive to the private equity players is the fact that these shares are some of the region's least expensive-trading at an average of 1.1 times 2007 book value as compared to 1.5 for the South Korean banks and 2.8 for the mainland China bank shares.

What lies ahead?

Despite the above setbacks, Asia still has immense growth potential as a region for several private equity players. Industry giants like Texas Pacific, which has earmarked roughly USD 4 billion for the future in the region, desire to make continued investments in Asia. Although these private equity players are driven primarily by the profit motive, they can still prove to be an advantage to the local economies they invest in. They possess the requisite global expertise, immense international experience, a highly professional code of conduct and a wide network. All these strengths can be leveraged by ambitious domestic firms who partner with these firms in the hope of eventually growing into full-fledged thriving global players in the years to come. Thus, the influx of long-term capital into Asia, coupled with the potential advantages that can be realized by the local firms via mutually advantageous partnerships with foreign firms, can help to further accelerate the economic expansion process in the Asian region in the immediate future.

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India's Reliance Industries Plans Loan

India's largest company, Reliance Industries Ltd., has hired five banks to help execute a USD 500 million loan to meet India's energy needs. By 2011, Reliance will spend about USD 25 billion on its oil, gas, refining, chemical, and retail businesses. The company also made a gas discovery off of India's eastern coast that could make Reliance the nation's largest supplier of gas.

India's largest company, Reliance Industries Ltd., has hired five banks to help execute a USD 500 million loan to meet India's energy needs. By 2011, Reliance will spend about USD 25 billion on its oil, gas, refining, chemical, and retail businesses. The company also made a gas discovery off of India's eastern coast that could make Reliance the nation's largest supplier of gas.

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Interest Rates Hurting India's Automobile Industry

The Indian automobile industry is facing decreased sales due to a lower customer demand for credit. Although demand for cars is still strong, according to N.R. Narayanan, the head of vehicle finance at ICICI Bank, raised interest rates are deterring customers from purchasing new cars. He also states that unless interest rates fall, auto sales will continue to decline.

The Indian automobile industry is facing decreased sales due to a lower customer demand for credit. Although demand for cars is still strong, according to N.R. Narayanan, the head of vehicle finance at ICICI Bank, raised interest rates are deterring customers from purchasing new cars. He also states that unless interest rates fall, auto sales will continue to decline.

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India Approves Plans for South Korean Steel Plant

The Indian government has approved plans and has given environmental clearance for a USD 12 billion steel plant to be built in Orissa, a state on the eastern coast of India. South Korea's POSCO will operate the project that will be India's largest direct foreign investment (FDI) project. The clearance comes after POSCO met opposition from local villagers because the plant could possibly displace up to 20,000 villagers.

The Indian government has approved plans and has given environmental clearance for a USD 12 billion steel plant to be built in Orissa, a state on the eastern coast of India. South Korea's POSCO will operate the project that will be India's largest direct foreign investment (FDI) project. The clearance comes after POSCO met opposition from local villagers because the plant could possibly displace up to 20,000 villagers.

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Two Major IT Companies Expand into South India

The Andhra Pradesh government has allocated 40 acres of land to Cognizant Technology and 75 acres of land to Tata Consultancy Services to set up offices in the outskirts of Adibatla, the new IT hotspot in the south Indian state. The state's government hopes to develop Adibatla to decrease congestion in Hyderabad's Hitec City, the city where many large IT companies operate.

The Andhra Pradesh government has allocated 40 acres of land to Cognizant Technology and 75 acres of land to Tata Consultancy Services to set up offices in the outskirts of Adibatla, the new IT hotspot in the south Indian state. The state's government hopes to develop Adibatla to decrease congestion in Hyderabad's Hitec City, the city where many large IT companies operate.

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india

India and Pakistan Aim to Strengthen Trade

India and Pakistan have agreed to set a goal to increase their trade to USD 10 billion by 2010 from USD 1.7 billion in 2006/2007. The two countries will permit banks to open branches in either countries, increase the number of goods traded, improve transportation, and work to eliminate tariffs that have hindered business as well as promoted illegal smuggling across borders.

India and Pakistan have agreed to set a goal to increase their trade to USD 10 billion by 2010 from USD 1.7 billion in 2006/2007. The two countries will permit banks to open branches in either countries, increase the number of goods traded, improve transportation, and work to eliminate tariffs that have hindered business as well as promoted illegal smuggling across borders.

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Possibility of Bangladesh Foreign Direct Investment in India

India's Minister of State for Commerce is confident that Bangladeshi companies will soon have the opportunity to invest in India. There is currently a ban on foreign direct investment from Bangladesh into India, but according to the minister, if Bangladesh's government approves Tata Group's investment proposal, relations between the two countries would quickly improve.

India's Minister of State for Commerce is confident that Bangladeshi companies will soon have the opportunity to invest in India. There is currently a ban on foreign direct investment from Bangladesh into India, but according to the minister, if Bangladesh's government approves Tata Group's investment proposal, relations between the two countries would quickly improve.

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Australia May Lift Ban on Uranium Sales to India

Australia will announce soon if it will lift the current ban on uranium sales to India. The United States completed negotiations on a bilateral civil nuclear cooperation deal that will give India access to U.S. nuclear fuel and equipment. Australia holds almost half of the world's known uranium reserves and is now considering selling the export to India even though India has not signed the Non-Proliferation Treaty.

Australia will announce soon if it will lift the current ban on uranium sales to India. The United States completed negotiations on a bilateral civil nuclear cooperation deal that will give India access to U.S. nuclear fuel and equipment. Australia holds almost half of the world's known uranium reserves and is now considering selling the export to India even though India has not signed the Non-Proliferation Treaty.

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Reserve Bank of India Announces Unexpected Policy Change

The Reserve Bank of India suddenly raised the minimum amount of funds that banks must put in reserves to control lending and investment. Starting August 4, lenders must set aside 7 percent of deposits to prevent surplus funds and inflation. As a result, Indian bonds weakened, pushing yields to the highest in over two weeks. The lending rate remained at 7.75 percent and foreign reserves rose USD 8.7 billion this month as the central bank aims to initiate rupee gains.

The Reserve Bank of India suddenly raised the minimum amount of funds that banks must put in reserves to control lending and investment. Starting August 4, lenders must set aside 7 percent of deposits to prevent surplus funds and inflation. As a result, Indian bonds weakened, pushing yields to the highest in over two weeks. The lending rate remained at 7.75 percent and foreign reserves rose USD 8.7 billion this month as the central bank aims to initiate rupee gains.

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United Arab Emirates Bans Indian Poultry Imports

After an outbreak of the H5N1 virus, known as the bird flu, the United Arab Emirates banned the import of all live birds and poultry products from India. The outbreak is the first reported in India this year and the United Arab Emirates does not want to risk spreading the deadly disease to other animals or humans in their nation.

After an outbreak of the H5N1 virus, known as the bird flu, the United Arab Emirates banned the import of all live birds and poultry products from India. The outbreak is the first reported in India this year and the United Arab Emirates does not want to risk spreading the deadly disease to other animals or humans in their nation.

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india

Indian Government Believes Inflation is Contained

India's central bank announced that interest rates and import duty cuts coupled with fiscal and supply-side measures have contained inflation below the 5 percent target. Foreign currency reserves also rose USD 8.7 billion this month as the Reserve Bank increased its dollar purchases. Because of curbed inflation, the government will not immediately raise interest rates further.

India's central bank announced that interest rates and import duty cuts coupled with fiscal and supply-side measures have contained inflation below the 5 percent target. Foreign currency reserves also rose USD 8.7 billion this month as the Reserve Bank increased its dollar purchases. Because of curbed inflation, the government will not immediately raise interest rates further.

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Pakistan, India to Begin Trade Talks

India and Pakistan will hold 2-day talks to diversify the trade basket and resolve issues that stand in the way of closer economic ties. The talks are part of the fourth round of composite dialogue that will focus on easing trade restrictions, joint patent registration of basmati rice, and export of cement by Pakistan to India.

India and Pakistan will hold 2-day talks to diversify the trade basket and resolve issues that stand in the way of closer economic ties. The talks are part of the fourth round of composite dialogue that will focus on easing trade restrictions, joint patent registration of basmati rice, and export of cement by Pakistan to India.

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india

India's Mittal Group to Invest in Bangladesh's Energy Sector

Global Oil and Energy Ltd., a subsidiary of India's Mittal Group, signed a memorandum of understanding (MoU) with the Board of Investment of Bangladesh to invest USD 2.9 billion in many different Bangaldeshi sectors. The investment will go towards developing Bangladesh's energy sector with a focus on the petrochemical industry. Mittal Group's chairman hopes to complete the formalities needed to start the projects by the end of this fiscal year.

Global Oil and Energy Ltd., a subsidiary of India's Mittal Group, signed a memorandum of understanding (MoU) with the Board of Investment of Bangladesh to invest USD 2.9 billion in many different Bangaldeshi sectors. The investment will go towards developing Bangladesh's energy sector with a focus on the petrochemical industry. Mittal Group's chairman hopes to complete the formalities needed to start the projects by the end of this fiscal year.

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Indian Rupee Drops in Response to United States

In response to market concerns about the US credit and housing markets, the Indian rupee dropped to 40.51/53 against the US dollar. According to forex dealers, the US stock market's weak performance caused a rush to cover short dollar positions. Other emerging markets also posted losses resulting from the US stock market.

In response to market concerns about the US credit and housing markets, the Indian rupee dropped to 40.51/53 against the US dollar. According to forex dealers, the US stock market's weak performance caused a rush to cover short dollar positions. Other emerging markets also posted losses resulting from the US stock market.

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India's Thermax Ltd. Expects Further Increase in Profits and Sales

Thermax Ltd., an Indian supplier of power-equipment, announced that the company's profit and sales are expected to increase 40 percent this year and next year. The company expects growth to be maintained through new contracts with energy companies including Reliance Industries Ltd. In the past quarter, orders increased by 11 percent and in the past year, the company's profit increased by 52 percent.

Thermax Ltd., an Indian supplier of power-equipment, announced that the company's profit and sales are expected to increase 40 percent this year and next year. The company expects growth to be maintained through new contracts with energy companies including Reliance Industries Ltd. In the past quarter, orders increased by 11 percent and in the past year, the company's profit increased by 52 percent.

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india

Large Indian Car Manufacturer Reports High Profit

Maruti Udyog Ltd., the manufacturer of half the cars sold in India, reported first-quarter profit that exceeded analyst estimates. Net income in the first quarter this year amounted to INR 4.99 billion from INR 3.7 billion in the first quarter last year owing to new models and a stronger currency that decreased the cost of imports. To keep sales and profit high, Maruti will invest up to USD 2 billion by 2012 to expand production and capacity.

Maruti Udyog Ltd., the manufacturer of half the cars sold in India, reported first-quarter profit that exceeded analyst estimates. Net income in the first quarter this year amounted to INR 4.99 billion from INR 3.7 billion in the first quarter last year owing to new models and a stronger currency that decreased the cost of imports. To keep sales and profit high, Maruti will invest up to USD 2 billion by 2012 to expand production and capacity.

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india

Possible Currency Swap Between ADB and India

The Asian Development Bank (ADB) and India are working on a dollar-rupee currency swap deal that would help fund India's new infrastructure development needs without causing more difficulties for the Reserve Bank of India (RBI). Currently, India's growth and stock market is bringing in a lot of direct and portfolio foreign investment which is complicating the RBI's monetary policies. The ADB believes that they can help the RBI manage their monetary policies and help private-sector companies fund their business transactions.

The Asian Development Bank (ADB) and India are working on a dollar-rupee currency swap deal that would help fund India's new infrastructure development needs without causing more difficulties for the Reserve Bank of India (RBI). Currently, India's growth and stock market is bringing in a lot of direct and portfolio foreign investment which is complicating the RBI's monetary policies. The ADB believes that they can help the RBI manage their monetary policies and help private-sector companies fund their business transactions.

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india

Foreign Companies Invest in Vietnam's Steel Industry

Vietnam's steel industry is attracting foreign investors because of strong domestic demand that is growing by 40 percent per year. India's Tata Group, one is the largest international steel companies, will operate a USD 3.5 billion facility in Vietnam that will produce 4.5 million tons of steel per year. Other steel companies including Korea's Posco Group, India's Essar, and Taiwan's Tycoons and E-United are all investing in Vietnam's growing steel industry.

Vietnam's steel industry is attracting foreign investors because of strong domestic demand that is growing by 40 percent per year. India's Tata Group, one is the largest international steel companies, will operate a USD 3.5 billion facility in Vietnam that will produce 4.5 million tons of steel per year. Other steel companies including Korea's Posco Group, India's Essar, and Taiwan's Tycoons and E-United are all investing in Vietnam's growing steel industry.

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india

India's Infosys Technologies Ltd. Signs Contract with Royal Philips Electronics NV

Infosys Technologies Ltd., one of India's largest computer-services providers, has signed a seven-year, USD 250 million contract with Royal Philips Electronics NV. As a result of the rupee gain against the United States dollar, Infosys is expecting a drop in profit and sales. The new contract is an opportunity for Infosys to expand its share in the European and Indian market and decrease its reliance on the United States. Under the contract, Infosys will acquire three back office service centers in Poland, Thailand and India.

Infosys Technologies Ltd., one of India's largest computer-services providers, has signed a seven-year, USD 250 million contract with Royal Philips Electronics NV. As a result of the rupee gain against the United States dollar, Infosys is expecting a drop in profit and sales. The new contract is an opportunity for Infosys to expand its share in the European and Indian market and decrease its reliance on the United States. Under the contract, Infosys will acquire three back office service centers in Poland, Thailand and India.

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india

Profits and Sales Rise for Indian Steelmaker

The Steel Authority of India Ltd. has announced that its profits for the first quarter this year rose to INR 15.25 billion from INR 13.86 billion for the same quarter last year. The company attributes the increase in profits to the growing demand in China and India that has led to higher prices. Steel Authority is the largest state-run steelmaker in India; the company sold 2.5 million tons of steel and hot-metal output reached 3.8 million tons.

The Steel Authority of India Ltd. has announced that its profits for the first quarter this year rose to INR 15.25 billion from INR 13.86 billion for the same quarter last year. The company attributes the increase in profits to the growing demand in China and India that has led to higher prices. Steel Authority is the largest state-run steelmaker in India; the company sold 2.5 million tons of steel and hot-metal output reached 3.8 million tons.

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india

Bhutan and India Agree on New Hydropower Plant

India and Bhutan plan to sign an unprecidented agreement to build a 1,095 megawatt hydro powerplant called the Punat-sangcchug-I Project. This project is the largest of its kind to be funded by India. Both sides will also discuss how to upgrade border management, infrastructure and border links. Punat-sangcchug-I will be key in promoting relations between the two nations, which already conduct extensive trading.

India and Bhutan plan to sign an unprecidented agreement to build a 1,095 megawatt hydro powerplant called the Punat-sangcchug-I Project. This project is the largest of its kind to be funded by India. Both sides will also discuss how to upgrade border management, infrastructure and border links. Punat-sangcchug-I will be key in promoting relations between the two nations, which already conduct extensive trading.

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india

India Proposes Legislation to Protect Farmers

In the past year, over 18,000 farmers have committed suicide because of the stress of high prices and accumulated debt. India's central bank has proposed rules to control and regulate unauthorized moneylenders who are charging interest of as much as 150 percent to rural farmers. Through their new legislation, the central bank wants to encourage lending to farmers by rural moneylenders but protect the farmers' rights as well.

In the past year, over 18,000 farmers have committed suicide because of the stress of high prices and accumulated debt. India's central bank has proposed rules to control and regulate unauthorized moneylenders who are charging interest of as much as 150 percent to rural farmers. Through their new legislation, the central bank wants to encourage lending to farmers by rural moneylenders but protect the farmers' rights as well.

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india

Lack of Rain in India is Affecting Food Production

India's rainfall will probably be about 10 percent less than the expected 11.5 inches this month. The lack of rainfall will effect the production of oilseeds, peanut, and lentil crops which will inevitable push the prices of food products up. Also, the government has lowered the import duty on cooking oil four times this year in response to low production levels.

 

India's rainfall will probably be about 10 percent less than the expected 11.5 inches this month. The lack of rainfall will effect the production of oilseeds, peanut, and lentil crops which will inevitable push the prices of food products up. Also, the government has lowered the import duty on cooking oil four times this year in response to low production levels.

 

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india

Myanmar to Build a Deep-Sea Port for Trade with India and Bangladesh

Myanmar is planning to build a deep-sea port in an effort to promote maritime trade and serve as a transit unit for goods to be transported to Yangon, Myanmar; Kolkata, India and Chittagong, Bangladesh. The port will be located in Kyaukphyu in Rakhine State and will be built by private-sector company AsiaWorld, which has already surveyed the site.

Myanmar is planning to build a deep-sea port in an effort to promote maritime trade and serve as a transit unit for goods to be transported to Yangon, Myanmar; Kolkata, India and Chittagong, Bangladesh. The port will be located in Kyaukphyu in Rakhine State and will be built by private-sector company AsiaWorld, which has already surveyed the site.

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Indian Drugmaker Faces Decreased US Sales

Dr Reddy's Laboratories Ltd. reported its net income to be INR 1.83 billion in the second quarter of 2007, which falls short of the projected INR 2.02 billion. Dr. Reddy's Laboratories has typically made money by selling their versions of drugs at a lower price in the United States and Europe, but due to increased competition, U.S. sales and profits have declined. Although sales declined, the company's cost of revenue has decreased and it has added profit through gains in foreign exchange.

Dr Reddy's Laboratories Ltd. reported its net income to be INR 1.83 billion in the second quarter of 2007, which falls short of the projected INR 2.02 billion. Dr. Reddy's Laboratories has typically made money by selling their versions of drugs at a lower price in the United States and Europe, but due to increased competition, U.S. sales and profits have declined. Although sales declined, the company's cost of revenue has decreased and it has added profit through gains in foreign exchange.

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India's Bharti Group to Open Retail Stores

Bharti Group has already built India's biggest mobile-phone services provider and will expand its presence by opening its first retail store in India by 2008. Partnering with Wal-Mart Stores Inc., Bharti plans to operate 200 large stores in the next seven years but will have to compete with other companies such as Reliance Industries Ltd. and Aditya Birla Group. Bharti is willing to spend USD 2.5 billion to compete with other retailers.

Bharti Group has already built India's biggest mobile-phone services provider and will expand its presence by opening its first retail store in India by 2008. Partnering with Wal-Mart Stores Inc., Bharti plans to operate 200 large stores in the next seven years but will have to compete with other companies such as Reliance Industries Ltd. and Aditya Birla Group. Bharti is willing to spend USD 2.5 billion to compete with other retailers.

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india

Bharti Airtel Leads India's Sensex to Second Straight Record High

The Bombay Stock Exchange's benchmark Sensitive Index (BSE Sensex) hit a record high for the second straight day, led by expectations that Bharti Airtel Ltd. will join Reliance Communications Ltd. in unlocking shareholder value by selling off a small stake in its infrastructure unit. The BSE Sensex gained 15.42 points, or 0.1 percent, to close at 15,565.55, the index's sixth weekly gain for a cumulative rise of 1.9 percent. The National Stock Exchange's S&P/CNX Nifty Index gained 3.95 points, or 0.1 percent, to close at 4,566.05.

The Bombay Stock Exchange's benchmark Sensitive Index (BSE Sensex) hit a record high for the second straight day, led by expectations that Bharti Airtel Ltd. will join Reliance Communications Ltd. in unlocking shareholder value by selling off a small stake in its infrastructure unit. The BSE Sensex gained 15.42 points, or 0.1 percent, to close at 15,565.55, the index's sixth weekly gain for a cumulative rise of 1.9 percent. The National Stock Exchange's S&P/CNX Nifty Index gained 3.95 points, or 0.1 percent, to close at 4,566.05.

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Sri Lanka, India Finalizing Comprehensive Economic Partnership

Sri Lanka and India are officially recognizing one another's professional standards and have nearly completed a full Comprehensive Economic Partnership Agreement (CEPA). The CEPA has required 10 rounds of talks so far and is geared towards expanding the existing free trade agreement to enhance bilateral investments and trade in services.

Sri Lanka and India are officially recognizing one another's professional standards and have nearly completed a full Comprehensive Economic Partnership Agreement (CEPA). The CEPA has required 10 rounds of talks so far and is geared towards expanding the existing free trade agreement to enhance bilateral investments and trade in services.

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india

Starbucks Corporation Postpones Entry Into the Indian Market

Starbucks Corporation has delayed its plan to operate single-brand retail stores in India. Starbucks had planned to enter India with Kishore Biyani as its partner because currently, India prohibits 100 percent foreign ownership in single-brand retail companies. Starbucks' holdup will allow other coffee chains such as Barista Coffee Co. and Café Coffee Day to expand their business and gain market share before Starbucks enters the Indian market.

Starbucks Corporation has delayed its plan to operate single-brand retail stores in India. Starbucks had planned to enter India with Kishore Biyani as its partner because currently, India prohibits 100 percent foreign ownership in single-brand retail companies. Starbucks' holdup will allow other coffee chains such as Barista Coffee Co. and Café Coffee Day to expand their business and gain market share before Starbucks enters the Indian market.

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india

Company Earnings Push India's Sensex to Record High

The Bombay Stock Exchange's Sensitive Index (BSE Sensex) hit a record high on Thursday, posting its largest advance in three months, as investors speculate that the earnings reports to be released this month will contain favorable share valuation numbers. Top companies are expected to have an earnings momentum exceeding 20 percent. The Sensex rose 248.96 points, or 1.6 percent, to close at 15,550.13. The National Stock Exchange's S&P/CNX Nifty gained 62.55 points, or 1.4 percent, to close at 4,562.10.

The Bombay Stock Exchange's Sensitive Index (BSE Sensex) hit a record high on Thursday, posting its largest advance in three months, as investors speculate that the earnings reports to be released this month will contain favorable share valuation numbers. Top companies are expected to have an earnings momentum exceeding 20 percent. The Sensex rose 248.96 points, or 1.6 percent, to close at 15,550.13. The National Stock Exchange's S&P/CNX Nifty gained 62.55 points, or 1.4 percent, to close at 4,562.10.

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india

Unitech Ltd.'s Plans to Build Homes for India's Masses

As India's economy continues to experience huge growth, more Indians are rising above the poverty line and are in need of new housing. According to the Asian Development Bank, India will need as many as ten million new housing units a year by 2030. Ramesh Chandra, an Indian billionaire and Director of Unitech Ltd., recognizes this demand for housing and is considering building houses to sell at INR 1 million. To keep favorable profit margins, Unitech will consider building homes on the outskirts of the cities.

As India's economy continues to experience huge growth, more Indians are rising above the poverty line and are in need of new housing. According to the Asian Development Bank, India will need as many as ten million new housing units a year by 2030. Ramesh Chandra, an Indian billionaire and Director of Unitech Ltd., recognizes this demand for housing and is considering building houses to sell at INR 1 million. To keep favorable profit margins, Unitech will consider building homes on the outskirts of the cities.

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india

Pakistan, India Reluctant to Facilitate Bilateral Trade

Both Pakistan and India have shown reluctance to facilitate bilateral trade because each country desires to export to the other rather then create opportunities for import. The high growth in the two countries has led to supply shortages mainly due to the lack of capacity to produce, particularly in cement and cotton industries. Experts in both countries have calculated the potential gains from trade and are urging their governments to implement policies to cut transaction costs and create adequate transportation links.

Both Pakistan and India have shown reluctance to facilitate bilateral trade because each country desires to export to the other rather then create opportunities for import. The high growth in the two countries has led to supply shortages mainly due to the lack of capacity to produce, particularly in cement and cotton industries. Experts in both countries have calculated the potential gains from trade and are urging their governments to implement policies to cut transaction costs and create adequate transportation links.

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india

India, Kazakhstan Interested in Cooperation in Oil, Gas and Textiles

In a meeting between the Vice Minister of Economy and Budget Planning of Kazakhstan, Berdibek Saparbayev, and the Ambassador of India to Kazakhstan, Ashok Sajjanhar, India's representative has shown interest in strengthening the cooperation with Kazakhstan. Fields of interest for India include in particular oil, gas and textiles. Kazakhstan in turn is particularly interested in Indian investment in a tire factory in Shmykent.

In a meeting between the Vice Minister of Economy and Budget Planning of Kazakhstan, Berdibek Saparbayev, and the Ambassador of India to Kazakhstan, Ashok Sajjanhar, India's representative has shown interest in strengthening the cooperation with Kazakhstan. Fields of interest for India include in particular oil, gas and textiles. Kazakhstan in turn is particularly interested in Indian investment in a tire factory in Shmykent.

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india

Asia-Pacific Index Declines for Third Consecutive Day

The Morgan Stanley Capital International Asia-Pacific Index slid 1 percent to close at 175.54 on Wednesday, a cumulative three-day decline of 1.2 percent. Only the markets of China, India, and the Philippines rose, with Japan's Nikkei 225 Stock Average sliding 1.1 percent and South Korea's Kospi index declining 1 percent. Concerns that losses at Bear Stearns Cos. hedge funds will prompt a shift in favor from equities to government bonds has been a major influence on the longest losing streak in 2 months.

The Morgan Stanley Capital International Asia-Pacific Index slid 1 percent to close at 175.54 on Wednesday, a cumulative three-day decline of 1.2 percent. Only the markets of China, India, and the Philippines rose, with Japan's Nikkei 225 Stock Average sliding 1.1 percent and South Korea's Kospi index declining 1 percent. Concerns that losses at Bear Stearns Cos. hedge funds will prompt a shift in favor from equities to government bonds has been a major influence on the longest losing streak in 2 months.

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India's Bharti Airtel Ltd. Signs Contract with Ericsson AB

In addition to Bharti Airtel Ltd.'s current USD 900 million contract with Nokia Siemens Network, Bharti placed a USD 2 billion order with Ericsson AB, currently the world's largest maker of wireless networks. Over the next two years, Ericsson will help Bharti realize its plan of expanding network coverage in rural India. Within the next year, Bharti plans on spending as much as USD 3.5 billion on expansion in all of the 23 zones that make up India's telecommunications market.

In addition to Bharti Airtel Ltd.'s current USD 900 million contract with Nokia Siemens Network, Bharti placed a USD 2 billion order with Ericsson AB, currently the world's largest maker of wireless networks. Over the next two years, Ericsson will help Bharti realize its plan of expanding network coverage in rural India. Within the next year, Bharti plans on spending as much as USD 3.5 billion on expansion in all of the 23 zones that make up India's telecommunications market.

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Gas Firm in India Will Not Buy Into Myanmar's A-7 Block

GAIL, a state-run gas firm in India, announced Wednesday that it will not buy into Myanmar's A-7 block. An official from the company said the prospects in Myanmar are poor, but that it will keep its stakes in two other gas fields. "It is purely on the basis of data that we have analyzed, and the commercial availability there only," said GAIL's firm director for business development A.K. Purwaha.

GAIL, a state-run gas firm in India, announced Wednesday that it will not buy into Myanmar's A-7 block. An official from the company said the prospects in Myanmar are poor, but that it will keep its stakes in two other gas fields. "It is purely on the basis of data that we have analyzed, and the commercial availability there only," said GAIL's firm director for business development A.K. Purwaha.

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Hotel Companies Expand Into India

Unitech Ltd. will invest USD 720 million within the next four years to build 28 hotels with partners including Marriott International Inc. By the end of this year, Unitech Ltd. will have 14 hotels under construction. Due to the rising per capita annual income in India and the current shortage of hotel rooms, many hotel companies are looking to expand their business into the country in response to increasing tourist demand.

Unitech Ltd. will invest USD 720 million within the next four years to build 28 hotels with partners including Marriott International Inc. By the end of this year, Unitech Ltd. will have 14 hotels under construction. Due to the rising per capita annual income in India and the current shortage of hotel rooms, many hotel companies are looking to expand their business into the country in response to increasing tourist demand.

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India's HDFC Bank Selling Shares

India's HDFC Bank Ltd. raised USD 698 million by selling 6.59 million New York Stock Exchange-listed American Depository Shares (ADS) at USD 92.10 each and raised another USD 91 million through an overallotment option. Many Indian firms are responding to investor demand by selling shares in order to fund growth in India's fast-growing economy.

India's HDFC Bank Ltd. raised USD 698 million by selling 6.59 million New York Stock Exchange-listed American Depository Shares (ADS) at USD 92.10 each and raised another USD 91 million through an overallotment option. Many Indian firms are responding to investor demand by selling shares in order to fund growth in India's fast-growing economy.

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WTO Accuses Indian Pharmaceutical Companies of Collusion

The World Trade Organization (WTO) has stopped doing business with India-based Nestor Pharmaceuticals Ltd. and Pure Pharma Ltd. because they are accused of engaging in collusive practices while involved in the Reproductive and Child Health Project in India. The WTO has stopped lending to India's health care sector because of the country's corrupt procurement methods. This policy has received criticism from shareholder nations who believe the WTO should keep lending while simultaneously working to reduce India's corruption.

The World Trade Organization (WTO) has stopped doing business with India-based Nestor Pharmaceuticals Ltd. and Pure Pharma Ltd. because they are accused of engaging in collusive practices while involved in the Reproductive and Child Health Project in India. The WTO has stopped lending to India's health care sector because of the country's corrupt procurement methods. This policy has received criticism from shareholder nations who believe the WTO should keep lending while simultaneously working to reduce India's corruption.

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India May Put Limits on External Commercial Borrowing

In an attempt to control the abuse of external commercial borrowing (ECB) by companies, the Indian government is thinking of implementing a policy that will limit the conversion of ECB proceeds into rupees. Some companies are using ECB proceeds for purposes other than overseas acquisitions or necessary imports in order to dodge high domestic interest rates. The government is making clear that it does not want to put any restrictions on equity inflows such as portfolio or direct investment.

In an attempt to control the abuse of external commercial borrowing (ECB) by companies, the Indian government is thinking of implementing a policy that will limit the conversion of ECB proceeds into rupees. Some companies are using ECB proceeds for purposes other than overseas acquisitions or necessary imports in order to dodge high domestic interest rates. The government is making clear that it does not want to put any restrictions on equity inflows such as portfolio or direct investment.

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India's Tata Consultancy Services Ltd. Sees Increased Profits

India's largest computer-services provider, Tata Consultancy Services Ltd., stated that their net income rose to USD 292 million in the past three months and that their first-quarter profit increased 37 percent this year. The company doubled the number of their high-paying clients and started hiring cheaper labor to raise profits. Other rival companies are expecting earnings to decrease as a result of the rupee appreciation.

India's largest computer-services provider, Tata Consultancy Services Ltd., stated that their net income rose to USD 292 million in the past three months and that their first-quarter profit increased 37 percent this year. The company doubled the number of their high-paying clients and started hiring cheaper labor to raise profits. Other rival companies are expecting earnings to decrease as a result of the rupee appreciation.

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India Decreased Duties After Pressure From the EU and US

India decreased duties on imported liquor after the EU and the United States both filed complaints with the World Trade Organization regarding India's high duties. The EU believes that the high duty was cutting demand for whiskey and rum imported from EU countries. Under the tariffs, India imported only 1 percent of its spirits and 15 percent of its wine from foreign countries. Now that the tariffs are eliminated, India is expected to increase foreign liquor shipments.

India decreased duties on imported liquor after the EU and the United States both filed complaints with the World Trade Organization regarding India's high duties. The EU believes that the high duty was cutting demand for whiskey and rum imported from EU countries. Under the tariffs, India imported only 1 percent of its spirits and 15 percent of its wine from foreign countries. Now that the tariffs are eliminated, India is expected to increase foreign liquor shipments.

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Malaysia Looks to India and China for Agricultural Exports

Due to their large populations, the Malaysian government is looking at China and India to be its next destinations for its agricultural exports. China and India have a combined growth rate of 8 percent and a joint population of 2.5 billion people. Malaysia hopes to focus on product development, competitive marketability, and promotion of quality in order to gain a larger market share. Future plans also include venturing into Latin American, African, and Russian markets.

Due to their large populations, the Malaysian government is looking at China and India to be its next destinations for its agricultural exports. China and India have a combined growth rate of 8 percent and a joint population of 2.5 billion people. Malaysia hopes to focus on product development, competitive marketability, and promotion of quality in order to gain a larger market share. Future plans also include venturing into Latin American, African, and Russian markets.

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Indian Banks Selling Shares To Raise Capital

India's UTI Bank Ltd., plans to sell shares to domestic and overseas investors as well as to its founders worth at least USD 1.1 billion. Many Indian banks are selling shares because of the good investor demand, high global liquidity, and profitably lending rates. UTI Bank needs money in order to meet the growing credit demand as well as future international rules that require higher capital adequacy ratio.

India's UTI Bank Ltd., plans to sell shares to domestic and overseas investors as well as to its founders worth at least USD 1.1 billion. Many Indian banks are selling shares because of the good investor demand, high global liquidity, and profitably lending rates. UTI Bank needs money in order to meet the growing credit demand as well as future international rules that require higher capital adequacy ratio.

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Improved Earnings Drive India's Sensex to Record High

Speculation that earnings growth coupled with increased money flow into equities led the Bombay Stock Exchange Sensitive Index (Sensex) to a record high on Thursday. The Sensex rose 181.42 points, or 1.2 percent, to close at 15,092.04, while the National Stock Exchange S&P/CNX Nifty Index jumped 59 points, or 1 percent, to close at 1,718.9. Gains were paced by ICICI Bank Ltd. and Reliance Industries Ltd.

Speculation that earnings growth coupled with increased money flow into equities led the Bombay Stock Exchange Sensitive Index (Sensex) to a record high on Thursday. The Sensex rose 181.42 points, or 1.2 percent, to close at 15,092.04, while the National Stock Exchange S&P/CNX Nifty Index jumped 59 points, or 1 percent, to close at 1,718.9. Gains were paced by ICICI Bank Ltd. and Reliance Industries Ltd.

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India's Central Bank is Affecting Growth

To keep inflation down and make imports cheaper, the Reserve Bank of India has kept interest rates high and allowed to rupee to gain to a nine-year high. Many people are worried that the bank may be crippling growth; industrial production growth, manufacturing growth, and consumer goods growth all slowed in May. Loan growth has also been stunted which has decreased sales. India's central bank expects that economic growth will hover around 8.5 percent this year, compared to the 9.4 percent growth last year.

To keep inflation down and make imports cheaper, the Reserve Bank of India has kept interest rates high and allowed to rupee to gain to a nine-year high. Many people are worried that the bank may be crippling growth; industrial production growth, manufacturing growth, and consumer goods growth all slowed in May. Loan growth has also been stunted which has decreased sales. India's central bank expects that economic growth will hover around 8.5 percent this year, compared to the 9.4 percent growth last year.

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India in Need of New Power Plants

Because of India's strong economic growth, the country will need to add 70,000 megawatts of electricity in the next five years to keep up with demand. JSW Energy Ltd., part of India's Sajjan Jindal group, is planning to sell USD 248 million worth of shares to fund new power plants. JSW Energy is planning to build plants in Rajasthan, Maharashtra, West Bengal, Jharkhand, and Andhra Pradesh.

Because of India's strong economic growth, the country will need to add 70,000 megawatts of electricity in the next five years to keep up with demand. JSW Energy Ltd., part of India's Sajjan Jindal group, is planning to sell USD 248 million worth of shares to fund new power plants. JSW Energy is planning to build plants in Rajasthan, Maharashtra, West Bengal, Jharkhand, and Andhra Pradesh.

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Credit-Default Swaps on India's Tata Motors Increase

Credit-default swaps based on USD 10 million of Tata Motors' debt increased 6 percent this month to USD 111,300. The apparent risk of owning Tata Motors' debt is increasing due to the decline in company sales as well as the fear that losses on U.S. home loans will stunt economic growth. Tata Motors' sales have decreased as a result of higher interest rates imposed by India's central bank to curb inflation.

Credit-default swaps based on USD 10 million of Tata Motors' debt increased 6 percent this month to USD 111,300. The apparent risk of owning Tata Motors' debt is increasing due to the decline in company sales as well as the fear that losses on U.S. home loans will stunt economic growth. Tata Motors' sales have decreased as a result of higher interest rates imposed by India's central bank to curb inflation.

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India's Wireless Service Market is Expanding

Reliance Communications Ltd., India's second-largest wireless service company, confirmed a USD 400 million order to Alcatel-Lucent, the world's largest supplier of telecommunications equipment. Reliance's goal is to expand their network to over 20,000 towns and 600,000 villages throughout India; with the help of Alcatel-Lucent's supreme equipment, Reliance would be able to cover 9,000 towns by October, 2007. Reliance's rival, Bharti Airtel Ltd., is also expanding coverage in India after signing a deal with Nokia Siemens Networks.

Reliance Communications Ltd., India's second-largest wireless service company, confirmed a USD 400 million order to Alcatel-Lucent, the world's largest supplier of telecommunications equipment. Reliance's goal is to expand their network to over 20,000 towns and 600,000 villages throughout India; with the help of Alcatel-Lucent's supreme equipment, Reliance would be able to cover 9,000 towns by October, 2007. Reliance's rival, Bharti Airtel Ltd., is also expanding coverage in India after signing a deal with Nokia Siemens Networks.

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Indian Energy Company to Increase India's Power

Reliance Energy Ltd. will take advantage of the opportunities in India's poor infrastructure by spending INR 500 billion to add 15,000 megawatts of power capacity in the next five years. The company will concentrate on large projects using coal, gas, hydro, and other renewable fuels. Their biggest project is the construction of the world's largest gas-fired power plant in Uttar Pradesh, worth USD 3.5 billion. In addition to their own projects, Reliance Energy is projected to win at least two of the nine power projects being offered by the Indian government and is bidding for six hydro-based projects in Arunachal Pradesh.

 

Reliance Energy Ltd. will take advantage of the opportunities in India's poor infrastructure by spending INR 500 billion to add 15,000 megawatts of power capacity in the next five years. The company will concentrate on large projects using coal, gas, hydro, and other renewable fuels. Their biggest project is the construction of the world's largest gas-fired power plant in Uttar Pradesh, worth USD 3.5 billion. In addition to their own projects, Reliance Energy is projected to win at least two of the nine power projects being offered by the Indian government and is bidding for six hydro-based projects in Arunachal Pradesh.

 

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India's Benchmark Sensex Falls From Record High

The Bombay Stock Exchange's (BSE) Sensitive Index (Sensex) felt the effects of investors judging recent gains as excessive on Tuesday, slipping from Monday's record high on profit taking. The Sensex slid 35.85 points, or 0.2 percent, to close at 15,009.88. The National Stock Exchange's S&P/CNX Nifty Index dropped 13.35, or 0.3 percent, to close at 4,406.05. Losers on the BSE were paced by engineering giant Larsen & Toubro Ltd., whose shares fell by 1.1 percent.

The Bombay Stock Exchange's (BSE) Sensitive Index (Sensex) felt the effects of investors judging recent gains as excessive on Tuesday, slipping from Monday's record high on profit taking. The Sensex slid 35.85 points, or 0.2 percent, to close at 15,009.88. The National Stock Exchange's S&P/CNX Nifty Index dropped 13.35, or 0.3 percent, to close at 4,406.05. Losers on the BSE were paced by engineering giant Larsen & Toubro Ltd., whose shares fell by 1.1 percent.

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Indian Trade Delegation Scheduled to Visit Bhutan

The Confederation of Indian Industry (CII) released a statement saying that a delegation comprised of CEOs of various Indian companies will be sent to Bhutan to identify, explore and capitalize on the great investment opportunities that Bhutan presents. These CEOs will have interactive sessions with the Bhutan Chamber of Commerce, the prime minister, and the minister of trade and commerce. This privileged welcome has been extended to India because of their strong relationship with Bhutan, both politically and financially. India is Bhutan's largest trading partner and accounts for over 90 percent of its exports and 50 percent of its imports.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Confederation of Indian Industry (CII) released a statement saying that a delegation comprised of CEOs of various Indian companies will be sent to Bhutan to identify, explore and capitalize on the great investment opportunities that Bhutan presents. These CEOs will have interactive sessions with the Bhutan Chamber of Commerce, the prime minister, and the minister of trade and commerce. This privileged welcome has been extended to India because of their strong relationship with Bhutan, both politically and financially. India is Bhutan's largest trading partner and accounts for over 90 percent of its exports and 50 percent of its imports.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Japan to Propose GDP-linked Global Energy Index

In hopes of persuading major greenhouse gas emitters such as China, India and the United States to drop their resistance towards emissions reduction targets, Japan will propose a new international framework that would allow countries to increase their energy consumption as their GDP grows. Japan hopes it can get these major emitters on board before next year's G-8 summit in Hokkaido.

In hopes of persuading major greenhouse gas emitters such as China, India and the United States to drop their resistance towards emissions reduction targets, Japan will propose a new international framework that would allow countries to increase their energy consumption as their GDP grows. Japan hopes it can get these major emitters on board before next year's G-8 summit in Hokkaido.

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Boeing to Invest USD 1.7 Billion to Buy Goods, Services from India

According to Boeing's Senior Vice President of Sales, the aircraft manufacturer will buy goods and services from companies in India which will create a lot of potential jobs in India and create opportunities for transfer of technology. Boeing will work closely with several Indian companies including Infosys, Wipro, Satyam and HCL.

According to Boeing's Senior Vice President of Sales, the aircraft manufacturer will buy goods and services from companies in India which will create a lot of potential jobs in India and create opportunities for transfer of technology. Boeing will work closely with several Indian companies including Infosys, Wipro, Satyam and HCL.

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Bombay's Sensex Hits Second Straight Record High

The Bombay Stock Exchange's Sensitive Index (Sensex) rose to a record high for the second straight day amid speculation that second quarter earnings will beat analyst estimates. The Sensex jumped 81.61 points, or 0.6 percent, to close at 15,045.73. The S&P/CNX Nifty Index on the National Stock Exchange climbed 34.55 points, or 0.8 percent, to close at 4,419.40.

The Bombay Stock Exchange's Sensitive Index (Sensex) rose to a record high for the second straight day amid speculation that second quarter earnings will beat analyst estimates. The Sensex jumped 81.61 points, or 0.6 percent, to close at 15,045.73. The S&P/CNX Nifty Index on the National Stock Exchange climbed 34.55 points, or 0.8 percent, to close at 4,419.40.

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India's Sugar Industry Faces Low Prices

A domestic surplus of sugar means India may need to double sugar exports to 3 million tons of sugar next year but this may not be realistic. India is under pressure to export the sugar because overproduction has lowered domestic prices. However, international sugar prices have also decreased because of India's global impact as the world's second-largest producer of sugar. This puts India's sugar industry in a bad situation because prices domestically and abroad are very low.

A domestic surplus of sugar means India may need to double sugar exports to 3 million tons of sugar next year but this may not be realistic. India is under pressure to export the sugar because overproduction has lowered domestic prices. However, international sugar prices have also decreased because of India's global impact as the world's second-largest producer of sugar. This puts India's sugar industry in a bad situation because prices domestically and abroad are very low.

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Indian Government Approves Plans for New Pipeline

India's Ministry of Petroleum and Natural Gas approved plans for the creation of a pipeline that will carry oil away from the Mangala field to many Indian refineries. Shares of Cairn Energy Plc and Cairn India Ltd. both rose after the approval of their plans. The pipeline will cost USD 866 million to build; Oil and Natural Gas Corp. will finance 30 percent of the project and Cairn will pay for the remaining 70 percent.

India's Ministry of Petroleum and Natural Gas approved plans for the creation of a pipeline that will carry oil away from the Mangala field to many Indian refineries. Shares of Cairn Energy Plc and Cairn India Ltd. both rose after the approval of their plans. The pipeline will cost USD 866 million to build; Oil and Natural Gas Corp. will finance 30 percent of the project and Cairn will pay for the remaining 70 percent.

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Indian Bank Borrows More as Credit Grows

ICICI Bank Ltd., an Indian bank, is borrowing USD 1.5 billion which is nearly twice the collective borrowings of Indian banks this year. The loan will go towards funding the increased demand for loans by Indian companies and the country's growing middle class. Credit is expected to expand by as much as 30 percent as the economy is grows at 9.4 percent, the highest growth since 1989.

ICICI Bank Ltd., an Indian bank, is borrowing USD 1.5 billion which is nearly twice the collective borrowings of Indian banks this year. The loan will go towards funding the increased demand for loans by Indian companies and the country's growing middle class. Credit is expected to expand by as much as 30 percent as the economy is grows at 9.4 percent, the highest growth since 1989.

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South Asia Struggling to Keep Up with Cross Border Trade

As cross border trade and investment flows continue to soar on the back of rapid economic growth, South Asian nations are struggling to keep up without properly modernized regional payments systems. Ranee Jayamaha, deputy governor of Sri Lanka Central Bank, expects cross border trade and investment flows to exceed manageable levels within the next two years if the right payment instruments, clearing mechanisms and settlement systems are not utilized.

As cross border trade and investment flows continue to soar on the back of rapid economic growth, South Asian nations are struggling to keep up without properly modernized regional payments systems. Ranee Jayamaha, deputy governor of Sri Lanka Central Bank, expects cross border trade and investment flows to exceed manageable levels within the next two years if the right payment instruments, clearing mechanisms and settlement systems are not utilized.

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Lanka IT Firms to Attend Indian BPO Summit

Eager to develop the business process outsourcing (BPO) sector, Sri Lanka's information technology sector will send a delegation to the BPO Summit in India to gain valuable insight. In addition to the summit, the delegation will meet with Indian firms, training institutions and IT parks to develop industry exposure and gauge future trends and ideal practices.

Eager to develop the business process outsourcing (BPO) sector, Sri Lanka's information technology sector will send a delegation to the BPO Summit in India to gain valuable insight. In addition to the summit, the delegation will meet with Indian firms, training institutions and IT parks to develop industry exposure and gauge future trends and ideal practices.

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India to Lift Restrictions on Sri Lankan Apparel Exports

Sri Lankan apparel exporters will have wider access to the Indian subcontinent market, as India has agreed to lift restrictions relating to fabric origins on duty free apparel exports. While India originally required Lanka's exporters to use Indian fabric, the move is a show of good faith on India's part, as recent problems have cropped up in the two nations' bilateral free trade deal.

Sri Lankan apparel exporters will have wider access to the Indian subcontinent market, as India has agreed to lift restrictions relating to fabric origins on duty free apparel exports. While India originally required Lanka's exporters to use Indian fabric, the move is a show of good faith on India's part, as recent problems have cropped up in the two nations' bilateral free trade deal.

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Fueled by Chipmakers, Asian Securities on Six-day Rise

Samsung Electronics Co. and BHP Billiton Ltd. led the way as Asian stocks rose for a sixth straight day, reflecting the current strength and rising prices of computer chips and metals. The Morgan Stanley Capital International Asia-Pacific Index gained 0.5 percent to hit a record of 156.67 at 8:03 PM in Tokyo, and the region's leading benchmark index, the Nikkei 225, rose 0.3 percent. China's CSI 300 Index paced losers as questions swirled concerning the impact of new share sales. The markets of Singapore, Malaysia, Thailand, India, Sri Lanka and New Zealand also took losses on the day.

Samsung Electronics Co. and BHP Billiton Ltd. led the way as Asian stocks rose for a sixth straight day, reflecting the current strength and rising prices of computer chips and metals. The Morgan Stanley Capital International Asia-Pacific Index gained 0.5 percent to hit a record of 156.67 at 8:03 PM in Tokyo, and the region's leading benchmark index, the Nikkei 225, rose 0.3 percent. China's CSI 300 Index paced losers as questions swirled concerning the impact of new share sales. The markets of Singapore, Malaysia, Thailand, India, Sri Lanka and New Zealand also took losses on the day.

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Toyota Announces Plan for Tenfold Indian Production Increase

Toyota Motor Corp. has announced that it will increase its annual production capacity in India to 600,000 units by 2015, a tenfold increase. Toyota is the world's largest automaker by market value, but will compete heavily with Honda Motor Co. and General Motors Corp. for India's automotive market, which is the fourth-largest in Asia.

Toyota Motor Corp. has announced that it will increase its annual production capacity in India to 600,000 units by 2015, a tenfold increase. Toyota is the world's largest automaker by market value, but will compete heavily with Honda Motor Co. and General Motors Corp. for India's automotive market, which is the fourth-largest in Asia.

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Indian Construction Companies Join Bidders in Nepal Airport Project

Two Indian construction companies, IRCON International Limited and an Indo-Nepal joint of Valecha Engineering Limited and YP Construction, have joined the auction to take on the responsibility to improve the Tribhuvan International Airport in Kathmandu, Nepal. They are among the six companies to have qualified to work on the runway and taxiway overlay, which were last overlaid in 1996 by a Chinese company, Sietco.

Two Indian construction companies, IRCON International Limited and an Indo-Nepal joint of Valecha Engineering Limited and YP Construction, have joined the auction to take on the responsibility to improve the Tribhuvan International Airport in Kathmandu, Nepal. They are among the six companies to have qualified to work on the runway and taxiway overlay, which were last overlaid in 1996 by a Chinese company, Sietco.

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Sri Lanka Delays Free Trade Construction Deal with India

Sri Lanka's government has decided to defer liberalization of construction and construction-related services to India, the result of successful lobbying by the nation's construction industry. While the industry is open to the idea of liberalization, it does not feel its domestic firms are ready to thrive in that type of business environment.

Sri Lanka's government has decided to defer liberalization of construction and construction-related services to India, the result of successful lobbying by the nation's construction industry. While the industry is open to the idea of liberalization, it does not feel its domestic firms are ready to thrive in that type of business environment.

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Bangladesh Interested in Indian Market

Bangladesh aims to increase exports to India to approximately USD 1 billion by 2010. Bangladesh's government believes that there is a promising market in India for Bangladeshi goods such as garments, pharmaceuticals, cosmetic products, and cement. Currently, Bangladesh is currently facing many tariff and non-tariff barriers that are limiting opportunities in India. These barriers must be removed to allow Bangladesh increased access to the Indian market.

Bangladesh aims to increase exports to India to approximately USD 1 billion by 2010. Bangladesh's government believes that there is a promising market in India for Bangladeshi goods such as garments, pharmaceuticals, cosmetic products, and cement. Currently, Bangladesh is currently facing many tariff and non-tariff barriers that are limiting opportunities in India. These barriers must be removed to allow Bangladesh increased access to the Indian market.

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Japan to Invest in India's Development

Japan has agreed to help finance India's USD 90 billion development project to build ports, airports, and roads along the New Delhi - Mumbai railroad. India wants to build infrastructure to attract investment as well as create jobs and promote economic and industrial growth. The first stage of the project which includes improving six airports and building two ports is set to be finished by 2012.

Japan has agreed to help finance India's USD 90 billion development project to build ports, airports, and roads along the New Delhi - Mumbai railroad. India wants to build infrastructure to attract investment as well as create jobs and promote economic and industrial growth. The first stage of the project which includes improving six airports and building two ports is set to be finished by 2012.

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India’s Consumer Boom: The Road Ahead

Several sweeping changes have transformed the face of the Indian consumer market over the past two decades. This has been primarily attributed to the explosive growth rates averaging close to 7.3 percent over the years, thereby creating a vibrant middle-class in the nation numbering close to 50 million people. According to recent studies on the prospective size of the domestic consumer market, India may eventually become the fifth biggest consumer market in the world by 2025. However, the government must take strong measures to improve the deplorable infrastructure standards and ensure a complete overhaul of the current educational facilities prevalent in the nation if it wants to realize the turbo-charged growth potential it foresees for itself.

Opportunities for growth

The economic reforms initiated in India in 1990-1991 have brought about a radical transformation in the spending propensities of India's residents. It has been estimated that over the next twenty years, 123 million Indian households will possess discretionary income . This would lead to the creation of massive new consumer markets and thus create highly profitable business opportunities for a wide range of the domestic industries. Also, the anticipated rise in income patterns would help to lift millions of people out of poverty and enable them to join the swelling ranks of the Indian middle class. In fact, a recent McKinsey study on the rise of the consumer markets in India has estimated that the country's middle class will rapidly expand to 583 million from the present level of 50 million over the next twenty years. The study also highlights the critical fact that most of the predicted consumption increases will be dominated by the middle and richer strata of society, who are estimated to account for 59 percent and 20 percent of the total spending in the country. Moreover, over time, there has been a marked shift in the consumption patterns of the domestic residents who are gradually spending more on discretionary items like household appliances, designer cars, clothing and fancy restaurants as opposed to basic necessities like food and clothing. Other factors that have contributed immensely to the current consumer boom in India are the widespread access to the internet and cable television, a huge degree of interconnectedness among people via cheap cellular phones and the persuasive power of advertising which has now become a daily fixture in the lives of ordinary citizens. All of these reasons have led to massive flows of capital and resources into India's consumer markets by domestic and global retailers alike who do not want to lose out on one of the biggest growth opportunities of the coming decades.

Setbacks and challenges ahead

However, some caveats are in need of order here. Firstly, infrastructure standards remain abysmal in the nation and recent efforts by the government to make improvements in this area remain ineffectual at best. Secondly, financial systems in the nation still remain relatively unmodernized and are subject to excessive political interference. Financial sector reforms would have a significant impact and would help to accelerate the annual growth rates of GDP in the nation. Finally, bureaucratic controls and the persistent red tape prevalent at all levels of authority are other challenges confronting the players in the field. Only a strong concerted effort on the part of the central and state governments to deal quickly and effectively with these age-old issues would remove the impediments to domestic growth and enable India to reshape the face of global consumer markets in the near future.

Several sweeping changes have transformed the face of the Indian consumer market over the past two decades. This has been primarily attributed to the explosive growth rates averaging close to 7.3 percent over the years, thereby creating a vibrant middle-class in the nation numbering close to 50 million people. According to recent studies on the prospective size of the domestic consumer market, India may eventually become the fifth biggest consumer market in the world by 2025. However, the government must take strong measures to improve the deplorable infrastructure standards and ensure a complete overhaul of the current educational facilities prevalent in the nation if it wants to realize the turbo-charged growth potential it foresees for itself.

Opportunities for growth

The economic reforms initiated in India in 1990-1991 have brought about a radical transformation in the spending propensities of India's residents. It has been estimated that over the next twenty years, 123 million Indian households will possess discretionary income . This would lead to the creation of massive new consumer markets and thus create highly profitable business opportunities for a wide range of the domestic industries. Also, the anticipated rise in income patterns would help to lift millions of people out of poverty and enable them to join the swelling ranks of the Indian middle class. In fact, a recent McKinsey study on the rise of the consumer markets in India has estimated that the country's middle class will rapidly expand to 583 million from the present level of 50 million over the next twenty years. The study also highlights the critical fact that most of the predicted consumption increases will be dominated by the middle and richer strata of society, who are estimated to account for 59 percent and 20 percent of the total spending in the country. Moreover, over time, there has been a marked shift in the consumption patterns of the domestic residents who are gradually spending more on discretionary items like household appliances, designer cars, clothing and fancy restaurants as opposed to basic necessities like food and clothing. Other factors that have contributed immensely to the current consumer boom in India are the widespread access to the internet and cable television, a huge degree of interconnectedness among people via cheap cellular phones and the persuasive power of advertising which has now become a daily fixture in the lives of ordinary citizens. All of these reasons have led to massive flows of capital and resources into India's consumer markets by domestic and global retailers alike who do not want to lose out on one of the biggest growth opportunities of the coming decades.

Setbacks and challenges ahead

However, some caveats are in need of order here. Firstly, infrastructure standards remain abysmal in the nation and recent efforts by the government to make improvements in this area remain ineffectual at best. Secondly, financial systems in the nation still remain relatively unmodernized and are subject to excessive political interference. Financial sector reforms would have a significant impact and would help to accelerate the annual growth rates of GDP in the nation. Finally, bureaucratic controls and the persistent red tape prevalent at all levels of authority are other challenges confronting the players in the field. Only a strong concerted effort on the part of the central and state governments to deal quickly and effectively with these age-old issues would remove the impediments to domestic growth and enable India to reshape the face of global consumer markets in the near future.

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India to Raise Money for Infrastructure Needs

India's Finance Minister is confident that within the next five years, the country will be able to raise the required USD 450 billion for its infrastructure needs. If the government spends 8 percent of India's gross domestic product (GDP) per year on infrastructure then the task is possible. To reach their goal, the government will have to utilize taxes efficiently, have multi-lateral and bi-lateral aid and use private equity funds.

India's Finance Minister is confident that within the next five years, the country will be able to raise the required USD 450 billion for its infrastructure needs. If the government spends 8 percent of India's gross domestic product (GDP) per year on infrastructure then the task is possible. To reach their goal, the government will have to utilize taxes efficiently, have multi-lateral and bi-lateral aid and use private equity funds.

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India's Rupee is Rising

India's rupee rose 6.8 percent this quarter, its biggest quarterly gain in over thirty years. Due to the growth of the Indian economy, experts believe that foreign investment may grow to USD 30 billion in 2007 and capital inflows will continue to be strong. Although the rupee's gain has many benefits such as helping oil refineries, the central bank may intervene in the currency market to slow the rupee's growth to protect exporters.

India's rupee rose 6.8 percent this quarter, its biggest quarterly gain in over thirty years. Due to the growth of the Indian economy, experts believe that foreign investment may grow to USD 30 billion in 2007 and capital inflows will continue to be strong. Although the rupee's gain has many benefits such as helping oil refineries, the central bank may intervene in the currency market to slow the rupee's growth to protect exporters.

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India and Canada to Strengthen Ties

India and Canada are exploring bilateral trade and investment opportunities after the recently held International Economic Forum of the North Americas in Montreal. Topics of discussion were centered on agriculture and agri-food priorities for India and Canada. India is interested in increasing Canadian imports such as wheat and pulses and Canada is interested in available investment opportunities in India.

India and Canada are exploring bilateral trade and investment opportunities after the recently held International Economic Forum of the North Americas in Montreal. Topics of discussion were centered on agriculture and agri-food priorities for India and Canada. India is interested in increasing Canadian imports such as wheat and pulses and Canada is interested in available investment opportunities in India.

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Indian Banks Allowed Pension Fund Management Units

India's central bank announced that if a bank has a net worth of at least INR 5 billion, then they may start pension fund management units. The Indian government wants to manage the savings of their employees in an effort to reduce government expenditure and the budget deficit. With more banks opening pension fund management units, India's pension bill is predicted to increase to INR 350 billion by 2010.

India's central bank announced that if a bank has a net worth of at least INR 5 billion, then they may start pension fund management units. The Indian government wants to manage the savings of their employees in an effort to reduce government expenditure and the budget deficit. With more banks opening pension fund management units, India's pension bill is predicted to increase to INR 350 billion by 2010.

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Economic Blockade in Eastern India Causes Damage

Jharkhand, a state in eastern India, has suffered an economic loss of close to INR 1.5 billion in the past two days because of an economic blockade started by the Communist Party of India-Maoist. Transport services stopped running and shops, school, and colleges remained closed in the rural parts of the region, accumulating a huge loss. The import-export business has also significantly contributed by losing INR 500 million.

Jharkhand, a state in eastern India, has suffered an economic loss of close to INR 1.5 billion in the past two days because of an economic blockade started by the Communist Party of India-Maoist. Transport services stopped running and shops, school, and colleges remained closed in the rural parts of the region, accumulating a huge loss. The import-export business has also significantly contributed by losing INR 500 million.

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India Receives World Bank Loan

The World Bank approved a critical loan to help India's rural poor have better access to finance. In the past, 87 percent of marginal farmers and 70 percent of small farmers have not had access to credit from any formal body and thousands have committed suicide because they could not repay their debt. The World Bank wants to help alleviate this problem by giving money to rural banks to fund loans to poor Indian farmers.

The World Bank approved a critical loan to help India's rural poor have better access to finance. In the past, 87 percent of marginal farmers and 70 percent of small farmers have not had access to credit from any formal body and thousands have committed suicide because they could not repay their debt. The World Bank wants to help alleviate this problem by giving money to rural banks to fund loans to poor Indian farmers.

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India to Sign Free-Trade Agreement with Thailand

India and Thailand are on course to signing a trade agreement by the end of this year that will lower tariffs and increase trade between the two countries. Discussions began in January 2004 but have been hindered by India's demands to exclude nearly 500 items from the range of goods covered under the agreement. Even still, tariffs may be cut on 80 percent of the goods and services exchanged between the two countries.

India and Thailand are on course to signing a trade agreement by the end of this year that will lower tariffs and increase trade between the two countries. Discussions began in January 2004 but have been hindered by India's demands to exclude nearly 500 items from the range of goods covered under the agreement. Even still, tariffs may be cut on 80 percent of the goods and services exchanged between the two countries.

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Indian Gas Company to Form Partnership with China Gas

GAIL (India) Limited, a state-run natural gas company, is teaming up with China Gas to form a strategic joint venture that will operate internationally. The two companies will have equal representation in the management of the venture and projects will be focused in the areas of compressed natural gas, city gas, coal bed methane, pipelines, and liquefied gas.

GAIL (India) Limited, a state-run natural gas company, is teaming up with China Gas to form a strategic joint venture that will operate internationally. The two companies will have equal representation in the management of the venture and projects will be focused in the areas of compressed natural gas, city gas, coal bed methane, pipelines, and liquefied gas.

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World's Largest Titanium Producer to Set Up Indian Joint Venture

Russia's VSMPO-AVISMA, the world's largest producer of titanium, is planning a joint-venture with India's government-owned Kerala Minerals and Mining Limited for the purposes of smelting and processing titanium. The plant will process up to 10,000 tonnes of titanium sponge and supply India's Hindustan Aeronautics Ltd. The plant is expected to become operational in 2009. VSMPO-AVISMA is controlled by Russia's RosoboronExport, a State-owned arms exporter.

Russia's VSMPO-AVISMA, the world's largest producer of titanium, is planning a joint-venture with India's government-owned Kerala Minerals and Mining Limited for the purposes of smelting and processing titanium. The plant will process up to 10,000 tonnes of titanium sponge and supply India's Hindustan Aeronautics Ltd. The plant is expected to become operational in 2009. VSMPO-AVISMA is controlled by Russia's RosoboronExport, a State-owned arms exporter.

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Japan to Support India's Infrastructure Development

At his visit later this month, Japan's Minister on Economy, Trade, and Industry is expected to announce financial support to India's infrastructural development amounting to USD 30 billion. The support shall be provided in loans and investments and be used for India's national project to build a freight rail network, industrial parks, ports and other infrastructure in Delhi and Mumbai.

At his visit later this month, Japan's Minister on Economy, Trade, and Industry is expected to announce financial support to India's infrastructural development amounting to USD 30 billion. The support shall be provided in loans and investments and be used for India's national project to build a freight rail network, industrial parks, ports and other infrastructure in Delhi and Mumbai.

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Myanmar Resists India's Offer for a Gas Deal

India is still hoping to strike a gas deal with Myanmar, but Myanmar has resisted, saying that it would sell gas to China, according to Dr. U.D. Chobey from the Gas Authority of India Ltd. India, China, Thailand and South Korea are all competing for gas in Myanmar, which is a plentiful natural resource there.

India is still hoping to strike a gas deal with Myanmar, but Myanmar has resisted, saying that it would sell gas to China, according to Dr. U.D. Chobey from the Gas Authority of India Ltd. India, China, Thailand and South Korea are all competing for gas in Myanmar, which is a plentiful natural resource there.

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Pakistan, India Breakthrough on IPI Pipeline Deal

The Iran-Pakistan-India (IPI) gas pipeline deal of USD 7 billion is close to settlement, with the Indian government accepting the transportation tariff and the transit fee that Pakistan was demanding. Pakistan was seeking a transportation tariff of USD 0.70-0.75 per million British thermal unit (mBtu) of gas while India was only willing to pay only USD 0.55 per mBtu. India had been exploring various options of getting gas into the country through transnational pipelines to meet its high gas demands.

The Iran-Pakistan-India (IPI) gas pipeline deal of USD 7 billion is close to settlement, with the Indian government accepting the transportation tariff and the transit fee that Pakistan was demanding. Pakistan was seeking a transportation tariff of USD 0.70-0.75 per million British thermal unit (mBtu) of gas while India was only willing to pay only USD 0.55 per mBtu. India had been exploring various options of getting gas into the country through transnational pipelines to meet its high gas demands.

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South Korean Hyundai Heavy Industries to Build Plant in India

Hyundai Heavy Industries Co., the world's largest shipbuilder, announced Wednesday that it will spend USD 45.9 million to establish an excavator manufacturing factory in India. When completed, the plant will manufacture 3,500 excavators annually. Doosan Infracore Co., Korea's largest construction equipment maker, also plans to build a factory in India, which is expected to produce 3,000 excavators annually. Doosan Infracore Co. claims that this will have a dramatic effect on Indian manufacturing as excavator production rises from 7,000 units annually to 33,000 units annually by 2016.

Hyundai Heavy Industries Co., the world's largest shipbuilder, announced Wednesday that it will spend USD 45.9 million to establish an excavator manufacturing factory in India. When completed, the plant will manufacture 3,500 excavators annually. Doosan Infracore Co., Korea's largest construction equipment maker, also plans to build a factory in India, which is expected to produce 3,000 excavators annually. Doosan Infracore Co. claims that this will have a dramatic effect on Indian manufacturing as excavator production rises from 7,000 units annually to 33,000 units annually by 2016.

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India Gets in Gear With Plans for Small Car Production

As auto market competition continues to ramp up, India might soon be the next manufacturing center, with a market of willing buyers in tow, for the emergence of entry-level small cars. Nissan Renault already has plans to team up with Mahindra & Mahindra, an Indian manufacturer, unveiling a USD 3,000 car suitable for both Indian roads and clientele. Nissan Renault CEO Carlos Ghosn praises India as ideal for this sort of endeavor as "suppliers are there, the plants will be there, and the environment in India would be very favorable to frugal engineering and manufacturing". Production is set to open next year.

As auto market competition continues to ramp up, India might soon be the next manufacturing center, with a market of willing buyers in tow, for the emergence of entry-level small cars. Nissan Renault already has plans to team up with Mahindra & Mahindra, an Indian manufacturer, unveiling a USD 3,000 car suitable for both Indian roads and clientele. Nissan Renault CEO Carlos Ghosn praises India as ideal for this sort of endeavor as "suppliers are there, the plants will be there, and the environment in India would be very favorable to frugal engineering and manufacturing". Production is set to open next year.

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Wednesday Marks Two Week Closing High for India

Led by ICICI Bank's record share sales in the past days, along with positive gains in Sterlite Industries Ltd. and Blue Dart Express Ltd., Wednesday brought a two week high for Indian shares in what may soon be a climb to an overall record high for the Indian stock market. Indian shares rose .81 percent, with the country's largest private bank, ICICI Bank, contributing substantially with a 0.4 percent gain. Technical analyst Subash Gangadharan notes heightened momentum and confidence in the Indian economy, predicting a new peak by the end of the month.

Led by ICICI Bank's record share sales in the past days, along with positive gains in Sterlite Industries Ltd. and Blue Dart Express Ltd., Wednesday brought a two week high for Indian shares in what may soon be a climb to an overall record high for the Indian stock market. Indian shares rose .81 percent, with the country's largest private bank, ICICI Bank, contributing substantially with a 0.4 percent gain. Technical analyst Subash Gangadharan notes heightened momentum and confidence in the Indian economy, predicting a new peak by the end of the month.

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India to Build Pipeline to Iran

Oil Minister Murli Deora announced today that plans for the 1,600 mile pipeline from Iran's South Pars gas field will be solidified by mid-July. The accord will start construction on the USD 7.4 billion pipeline which will ultimately transport 60 million cubic meters of gas per day, allowing a partial substitution for the 70 percent currently imported for India's energy needs. This July will finally bring to a close plans which have been in progress since 1994.

Oil Minister Murli Deora announced today that plans for the 1,600 mile pipeline from Iran's South Pars gas field will be solidified by mid-July. The accord will start construction on the USD 7.4 billion pipeline which will ultimately transport 60 million cubic meters of gas per day, allowing a partial substitution for the 70 percent currently imported for India's energy needs. This July will finally bring to a close plans which have been in progress since 1994.

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India's Trade Aims Not Yet Met

Efforts intensify this week with compromise seemly out of reach in trade negotiations between the United States, European Union, India and Brazil, as the countries rush to come to a decision before meeting with WTO members in the next few weeks. The agreement involves agricultural compromise within the industrialized nations, most notably with measures for the U.S. to lower their current spending ceiling on agricultural subsidies from USD 22 billion to USD 19 billion per year in hopes of minimizing "export dumping" on poorer countries.

Efforts intensify this week with compromise seemly out of reach in trade negotiations between the United States, European Union, India and Brazil, as the countries rush to come to a decision before meeting with WTO members in the next few weeks. The agreement involves agricultural compromise within the industrialized nations, most notably with measures for the U.S. to lower their current spending ceiling on agricultural subsidies from USD 22 billion to USD 19 billion per year in hopes of minimizing "export dumping" on poorer countries.

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Britain's Premier Travel Inn to Locate in India

British Whitbread Plc.'s Premier Travel Inn is geared to unite with India's leading real estate firm Emaar MGF to develop 80 hotels across the region. The USD 600 million pledged by Emaar in addition to the British company's contribution in their 50-50 joint venture will fill the alleged gap in the hotel market with the addition of over 12,000 rooms at an affordable rate suitable for any traveler.

British Whitbread Plc.'s Premier Travel Inn is geared to unite with India's leading real estate firm Emaar MGF to develop 80 hotels across the region. The USD 600 million pledged by Emaar in addition to the British company's contribution in their 50-50 joint venture will fill the alleged gap in the hotel market with the addition of over 12,000 rooms at an affordable rate suitable for any traveler.

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India's Top Lending Bank Sells USD 4.3 Billion of Its Shares in 20 Minutes

India's ICICI Bank Ltd. sold a record 270.85 of its shares for a USD 4.3 billion sale by the time the stock exchange closed yesterday, raising shares of the bank 2.9 percent on the Bombay Stock Exchange upon opening today. The local portion of the shares sold in 20 minutes and even greater results are projected when the bidding opens for international buyers later on today. India's lending banks have grown an average of 35 percent annually and will likely continue to grow as funding for manufacturing and infrastructure within the country is expected to exceed USD 500 billion within the next three years.

India's ICICI Bank Ltd. sold a record 270.85 of its shares for a USD 4.3 billion sale by the time the stock exchange closed yesterday, raising shares of the bank 2.9 percent on the Bombay Stock Exchange upon opening today. The local portion of the shares sold in 20 minutes and even greater results are projected when the bidding opens for international buyers later on today. India's lending banks have grown an average of 35 percent annually and will likely continue to grow as funding for manufacturing and infrastructure within the country is expected to exceed USD 500 billion within the next three years.

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Citigroup To Cash In Their Indian Investment at USD 750 Million

Citigroup has recently moved to sell 80 percent of their business process outsourcing (BPO) arm in India after private equity giant Blackstone announced plans to buy a similar back-office firm in the country. Citigroup Global Services is entering into negotiations with similar private equity firms for an all-cash deal which should settle around USD 700-750 million at completion. The recent rush to invest in such firms follows a new realization of the high potential for rapid growth in the sector.

Citigroup has recently moved to sell 80 percent of their business process outsourcing (BPO) arm in India after private equity giant Blackstone announced plans to buy a similar back-office firm in the country. Citigroup Global Services is entering into negotiations with similar private equity firms for an all-cash deal which should settle around USD 700-750 million at completion. The recent rush to invest in such firms follows a new realization of the high potential for rapid growth in the sector.

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Free Trade Zone Puts India's PSL Ltd in Reach of New Markets

PSL Ltd, one of India's leading pipe producers, plans to take advantage of a UAE free trade zone in the Sharjah region. The facility in Sharjah will be the site of USD 16 million in investment from the company, but will put it in reach of markets in Saudi Arabia, Oman, Qatar, and Kuwait, circumventing critical transportation costs. The unit will employ 120 workers and will produce an initial capacity of 75,000 tons per year, helping to boost productivity levels and profits for the Indian firm.

PSL Ltd, one of India's leading pipe producers, plans to take advantage of a UAE free trade zone in the Sharjah region. The facility in Sharjah will be the site of USD 16 million in investment from the company, but will put it in reach of markets in Saudi Arabia, Oman, Qatar, and Kuwait, circumventing critical transportation costs. The unit will employ 120 workers and will produce an initial capacity of 75,000 tons per year, helping to boost productivity levels and profits for the Indian firm.

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India, China Vow Border Disputes Won't Stall Trade

Despite decades of border disputes between China and India over regions such as Arunanchal Pradesh, India vows not to let old conflicts burden the goals of strengthening economic ties between the nations. The two rapidly growing economies hope to double bilateral trade to USD 40 billion by 2010 and "grow together" to take their place as the economic center of a new international order, says External Affairs Minister Pranab Mukherjee.

Despite decades of border disputes between China and India over regions such as Arunanchal Pradesh, India vows not to let old conflicts burden the goals of strengthening economic ties between the nations. The two rapidly growing economies hope to double bilateral trade to USD 40 billion by 2010 and "grow together" to take their place as the economic center of a new international order, says External Affairs Minister Pranab Mukherjee.

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India: Commerce & Industry Minister Stresses India-Canada Link

In a recent roundtable of India and Canada's CEOs, Commerce and Industry Minister Kamal Nath discussed the possibility of India-Canada corporate bilateral trade reaching heights of $20 billion by 2012, citing several examples of recent corporate acquisitions. The minister has even suggested signing a Bilateral Investment Protection Agreement to further economic integration between the two nations. The minister says that India's close to 10 percent growth will incite even greater demand beneficial to the countries' mutual trade, such as the need for power, roads, energy, environmental technology and raw materials.

In a recent roundtable of India and Canada's CEOs, Commerce and Industry Minister Kamal Nath discussed the possibility of India-Canada corporate bilateral trade reaching heights of $20 billion by 2012, citing several examples of recent corporate acquisitions. The minister has even suggested signing a Bilateral Investment Protection Agreement to further economic integration between the two nations. The minister says that India's close to 10 percent growth will incite even greater demand beneficial to the countries' mutual trade, such as the need for power, roads, energy, environmental technology and raw materials.

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Indian Trade Boom Boosts Traffic at Colombo Port

Strong demand from the Indian subcontinent has helped boost monthly container throughput at Colombo's South Asia Gateway Terminals (SAGT) to 118,602 twenty foot equivalent units (TEUs), a 9.1 percent year-on-year increase. SAGT, a privatized container facility, hopes to handle 1.6 million containers by the end of the year, as Colombo Port expects to retain its regional transhipment hub status.

Strong demand from the Indian subcontinent has helped boost monthly container throughput at Colombo's South Asia Gateway Terminals (SAGT) to 118,602 twenty foot equivalent units (TEUs), a 9.1 percent year-on-year increase. SAGT, a privatized container facility, hopes to handle 1.6 million containers by the end of the year, as Colombo Port expects to retain its regional transhipment hub status.

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Taiwan's Opposition Leader Seeks Stronger Ties with India

Ma Ying-Jeou, the Taiwanese opposition leader, recently visited India in hopes of strengthening economic ties. Trade between India and Taiwan is approximately at five billion US dollars and is currently at a nascent stage. The relationship between the two is garnering attention from mainland China as it does not want India to formally recognize the island.

Ma Ying-Jeou, the Taiwanese opposition leader, recently visited India in hopes of strengthening economic ties. Trade between India and Taiwan is approximately at five billion US dollars and is currently at a nascent stage. The relationship between the two is garnering attention from mainland China as it does not want India to formally recognize the island.

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India and G-33 Stand Their Ground on Talks of Agriculture

The G-33, a group of 46 countries, united to exert pressure on the United States and EU over the opening up of agricultural markets for their products in the developing world. Commerce and Industry Minister Kamal Nath spoke at the event and persisted that "...the issue would not be allowed to be diluted in any way", as it is one which involveds issues of food and livelihood security. India and Brazil, outspoken leaders on the topic, said the EU and US would have to cut their agricultural subsidies significantly if any further trade concessions were to be made.

The G-33, a group of 46 countries, united to exert pressure on the United States and EU over the opening up of agricultural markets for their products in the developing world. Commerce and Industry Minister Kamal Nath spoke at the event and persisted that "...the issue would not be allowed to be diluted in any way", as it is one which involveds issues of food and livelihood security. India and Brazil, outspoken leaders on the topic, said the EU and US would have to cut their agricultural subsidies significantly if any further trade concessions were to be made.

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Growth Credited to India's Manufacturing and Electricity Sectors

Recent data released Tuesday largely credits India's manufacturing and electricity sub-sectors, accounting for 15.1 and 8.7 percent of growth respectively, for the 9.4 percent overall growth rate experienced nationally in the past year. While applauding recent growth within the nation, the Confederation of Indian Industry (CII) expresses worry that overemphasis in these sectors will lead to a decline in the nation's other industries, such as the those of consumer durables, basic goods, and capital goods.

Recent data released Tuesday largely credits India's manufacturing and electricity sub-sectors, accounting for 15.1 and 8.7 percent of growth respectively, for the 9.4 percent overall growth rate experienced nationally in the past year. While applauding recent growth within the nation, the Confederation of Indian Industry (CII) expresses worry that overemphasis in these sectors will lead to a decline in the nation's other industries, such as the those of consumer durables, basic goods, and capital goods.

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Indian Real Estate Firm Expects Highest IPO in Nation's History

India's leading real estate firm, DLF, launched yesterday what is expected to be the largest initial public offering of shares (IPO) in the nation's history, totaling upwards of USD 2.1 billion by its closure on Thursday, and rocketing the company to USD 23 billion in terms of its market capitalization. The property market has profited extensively in recent years, taking advantage of the 9 percent average annual growth rates India has been experiencing, and profiting the companies who own the land on the outskirts of many of the nation's major cities.

India's leading real estate firm, DLF, launched yesterday what is expected to be the largest initial public offering of shares (IPO) in the nation's history, totaling upwards of USD 2.1 billion by its closure on Thursday, and rocketing the company to USD 23 billion in terms of its market capitalization. The property market has profited extensively in recent years, taking advantage of the 9 percent average annual growth rates India has been experiencing, and profiting the companies who own the land on the outskirts of many of the nation's major cities.

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Canadian Steel Finds Buyer in India

After a two-year hunt for a buyer, Canadian steelmaker Algoma finally ends its search with Mumbai-based Essar Steel, following an overwhelming vote of approval by its shareholders. The Indian steel company has agreed to pay a 48 percent premium to Algoma's average stock price, buying the shares at USD 56 each (a USD 1.85 billion total overall). The steel company, which produces steel sheets for the auto industry, has recently experienced a period of decline in the past year with a fourth-quarter profit drop of USD 55 to USD 50.4 million.

After a two-year hunt for a buyer, Canadian steelmaker Algoma finally ends its search with Mumbai-based Essar Steel, following an overwhelming vote of approval by its shareholders. The Indian steel company has agreed to pay a 48 percent premium to Algoma's average stock price, buying the shares at USD 56 each (a USD 1.85 billion total overall). The steel company, which produces steel sheets for the auto industry, has recently experienced a period of decline in the past year with a fourth-quarter profit drop of USD 55 to USD 50.4 million.

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Taiwan's Nationalist Party Seeks Renewed Indian Relations

Taiwan's presidential candidate Ma Ying-jeou visited New Dehli today to "seek a new beginning with an old friend". The first visit in 60 years for a Nationalist Party member, Ma's visit brings calls for increased trade and investment between Taiwan and India's growing economy. The trip was labeled a private visit by New Dehli as sensitivity concerning India's diplomatic relations with mainland China complicates ties with Taiwan.

Taiwan's presidential candidate Ma Ying-jeou visited New Dehli today to "seek a new beginning with an old friend". The first visit in 60 years for a Nationalist Party member, Ma's visit brings calls for increased trade and investment between Taiwan and India's growing economy. The trip was labeled a private visit by New Dehli as sensitivity concerning India's diplomatic relations with mainland China complicates ties with Taiwan.

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Russia, India Agree to Task Force to Increase Trade to USD 10 Billion by 2010

Russian and Indian officials have decided to sign a Comprehensive Economic Partnership Agreement (CEPA), seeking to increase bilateral trade between the two countries to USD 10 billion by 2010. The CEPA will resemble a Free Trade Agreement and also include support for trade in investment and services. A joint task force will be created to review the steps taken by Russia and India to open up trade between the countries since 2006 in order to create a list of recommendations for both countries on how to increase trade and investment.

Russian and Indian officials have decided to sign a Comprehensive Economic Partnership Agreement (CEPA), seeking to increase bilateral trade between the two countries to USD 10 billion by 2010. The CEPA will resemble a Free Trade Agreement and also include support for trade in investment and services. A joint task force will be created to review the steps taken by Russia and India to open up trade between the countries since 2006 in order to create a list of recommendations for both countries on how to increase trade and investment.

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India's Stock Market Falls

The Indian stock market gave into selling pressure on Friday as stocks fell in every sector except metal and technology. The Bombay Stock Exchange's Sensex fell 70 points, or 0.5 percent, and the National Stock Exchange's nifty fell 0.4 percent to 4,183. The biggest losers in the market were the banking and automobile sectors.

The Indian stock market gave into selling pressure on Friday as stocks fell in every sector except metal and technology. The Bombay Stock Exchange's Sensex fell 70 points, or 0.5 percent, and the National Stock Exchange's nifty fell 0.4 percent to 4,183. The biggest losers in the market were the banking and automobile sectors.

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India and China Agree on Climate Change

During a meeting between Indian Prime Minister Manmohan Singh and Chinese Prime Minster Hu Jintao, the two leaders pledged to increase cooperation in dealing with global climate change. Singh explained that China and India's positions on climate change were "close" and that developed nations should not ask the two developing giants to shoulder the burden of climate change. These issues will be further discussed at the G8 summit in Germany this week as China, India, Brazil, Mexico, and South Africa join the meeting, which is being called the G8 plus five summit. China and India also discussed border issues between the two countries during the meeting of the two prime ministers.

During a meeting between Indian Prime Minister Manmohan Singh and Chinese Prime Minster Hu Jintao, the two leaders pledged to increase cooperation in dealing with global climate change. Singh explained that China and India's positions on climate change were "close" and that developed nations should not ask the two developing giants to shoulder the burden of climate change. These issues will be further discussed at the G8 summit in Germany this week as China, India, Brazil, Mexico, and South Africa join the meeting, which is being called the G8 plus five summit. China and India also discussed border issues between the two countries during the meeting of the two prime ministers.

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China and India Interested in Sri Lanka's Rock Phosphate Deposits

Unable to afford the massive capital expenditure required to process their phosphate deposits into high grade fertilizer, Sri Lanka has received interest from both China and India regarding the development of mining and processing plants. The phosphate deposits have been part of an ongoing debate, as previous negotiations with a Western mining firm were met with stiff opposition. Sri Lanka is currently required to import all of its high soluble fertilizer.

Unable to afford the massive capital expenditure required to process their phosphate deposits into high grade fertilizer, Sri Lanka has received interest from both China and India regarding the development of mining and processing plants. The phosphate deposits have been part of an ongoing debate, as previous negotiations with a Western mining firm were met with stiff opposition. Sri Lanka is currently required to import all of its high soluble fertilizer.

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India Receives USD 2 Billion Solar Energy Investment

On Thursday, US-based Solar Energy developer Signet Solar Inc. said it would invest more than USD 2 billion into India over the next 10 years. According to a company statement, the privately held firm intends to cater to the burgeoning local market as well as the energy export market by establishing a manufacturing presence. The three intended factories, each with an annual output of 300 megawatts, are set to be constructed in 2008.

On Thursday, US-based Solar Energy developer Signet Solar Inc. said it would invest more than USD 2 billion into India over the next 10 years. According to a company statement, the privately held firm intends to cater to the burgeoning local market as well as the energy export market by establishing a manufacturing presence. The three intended factories, each with an annual output of 300 megawatts, are set to be constructed in 2008.

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India to Develop Food Processing Parks

In an attempt to bolster foreign investments in agriculture, India's Minister for Food Processing, Subodh Kant Sahi, said Tuesday that the government is planning to install mega-food processing parks. While speaking at a US-India Business Council event, he noted that 30 locations have been identified that will cover the entire food processing cycle. Government subsidies will aid in financing the project, with aims to have 50 percent of the production from such parks allocated for export. Currently, only 2 percent of India's food production is processed.

In an attempt to bolster foreign investments in agriculture, India's Minister for Food Processing, Subodh Kant Sahi, said Tuesday that the government is planning to install mega-food processing parks. While speaking at a US-India Business Council event, he noted that 30 locations have been identified that will cover the entire food processing cycle. Government subsidies will aid in financing the project, with aims to have 50 percent of the production from such parks allocated for export. Currently, only 2 percent of India's food production is processed.

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Sri Lankan Economic Growth Depends on Increased Indian Ties

President Mahinda Rajapakse announced that Sri Lanka will not allow a growing budget deficit and fierce internal conflict to undermine economic growth in 2007, pointing out that the nation achieved a 7.4 percent growth rate in 2006 despite similar, serious challenges. To achieve such economic goals, Rajapakse highlighted the importance of riding on India's economic success, as their neighbor, only 20-miles away, is on the verge of overtaking China as the fastest growing economy in the world.

President Mahinda Rajapakse announced that Sri Lanka will not allow a growing budget deficit and fierce internal conflict to undermine economic growth in 2007, pointing out that the nation achieved a 7.4 percent growth rate in 2006 despite similar, serious challenges. To achieve such economic goals, Rajapakse highlighted the importance of riding on India's economic success, as their neighbor, only 20-miles away, is on the verge of overtaking China as the fastest growing economy in the world.

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Singapore Airline Permitted to Fly into India

India recently gave Singapore's Tiger Airways permission to fly from Singapore to various destinations within India. Tony Davis, chief executive of Tiger Airways, stated that these new routes offer a great opportunity for the airline to grow within Asia. Tiger Airways is a budget carrier owned by four stakeholders, with Singapore Airlines being the majority stakeholder and the state-linked Singapore investment firm Temasek holding about 11 percent.

India recently gave Singapore's Tiger Airways permission to fly from Singapore to various destinations within India. Tony Davis, chief executive of Tiger Airways, stated that these new routes offer a great opportunity for the airline to grow within Asia. Tiger Airways is a budget carrier owned by four stakeholders, with Singapore Airlines being the majority stakeholder and the state-linked Singapore investment firm Temasek holding about 11 percent.

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India-UAE Meeting Validates Claims of Improved Relations

The India-United Arab Emirates Joint Commission for Economic, Scientific and Technical Cooperation met Tuesday for the first of a 2-day talk regarding issues of commerce, investment opportunities, security, labor, energy, civil aviation, and tourism. As the first meeting of the commission held since 1994, the talk spurs hopes of greater, and more regular, cooperation between the two nations who have experienced a heightened integration of labor markets in the recent past.

The India-United Arab Emirates Joint Commission for Economic, Scientific and Technical Cooperation met Tuesday for the first of a 2-day talk regarding issues of commerce, investment opportunities, security, labor, energy, civil aviation, and tourism. As the first meeting of the commission held since 1994, the talk spurs hopes of greater, and more regular, cooperation between the two nations who have experienced a heightened integration of labor markets in the recent past.

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China and India May Side with US Over Emissions Policy

The G-8 summit's most controversial issues, due to be discussed at their June 6th meeting, most notably include climate change. Climate change is a topic on which newly industrializing nations may side with the US policy approach of nuclear power, bio-fuels and R&D for clean energy generation, in contrast to Europe's conservative and risk-averse approach. Critics of the European model note that rapidly industrializing nations like China, India, and Brazil cannot afford to sacrifice their economic growth for the sole purpose of reducing greenhouse emissions.

The G-8 summit's most controversial issues, due to be discussed at their June 6th meeting, most notably include climate change. Climate change is a topic on which newly industrializing nations may side with the US policy approach of nuclear power, bio-fuels and R&D for clean energy generation, in contrast to Europe's conservative and risk-averse approach. Critics of the European model note that rapidly industrializing nations like China, India, and Brazil cannot afford to sacrifice their economic growth for the sole purpose of reducing greenhouse emissions.

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Maoist Bombing of Electricity Towers Forces India into Darkness

Recent bombings of eight electricity towers in Chhattisgarh have left the surrounding area without reliable water or power, and five dead. The Maoist attack is one of hundreds blamed on the group since the start of their insurgency in the 1960s, and has targeted 13 out of India's 29 states. The hardest hit has been the mineral-rich region of Chhattisgarh, where mining production has come to a halt following Tuesday's attacks.

Recent bombings of eight electricity towers in Chhattisgarh have left the surrounding area without reliable water or power, and five dead. The Maoist attack is one of hundreds blamed on the group since the start of their insurgency in the 1960s, and has targeted 13 out of India's 29 states. The hardest hit has been the mineral-rich region of Chhattisgarh, where mining production has come to a halt following Tuesday's attacks.

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India, Brazil, US, & EU Trade Summit Framework Flounders

Efforts by he US, EU, Brazil, and India to work out a framework for the World Trade Organization (WTO) trade negotiations in August amidst an alleged "lowering of ambition" from various sides has been an ongoing struggle. The negotiations had hoped to coordinate agricultural reform in developed nations with a lowering of tariffs on industrial goods, but the agenda will likely undergo further transformation within the next weeks as the framework is solidified for the upcoming August meeting.

Efforts by he US, EU, Brazil, and India to work out a framework for the World Trade Organization (WTO) trade negotiations in August amidst an alleged "lowering of ambition" from various sides has been an ongoing struggle. The negotiations had hoped to coordinate agricultural reform in developed nations with a lowering of tariffs on industrial goods, but the agenda will likely undergo further transformation within the next weeks as the framework is solidified for the upcoming August meeting.

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Sri Lanka, India to Hold Crucial Power Plant Discussions

A Sri Lankan governmental delegation will visit India to discuss the establishment of a USD 500 million coal power plant by India's National Thermal Power Corporation (NTPC) in collaboration with Sri Lanka's Ceylon Electricity Board (CEB). Originally slated for construction in Sampur, which was recently reclaimed from Tamil rebels, the plant's production site has been moved to the Eastern port city of Trincomalee. Amidst the locational controversy, the upcoming discussions will be crucial to moving forward with development.

A Sri Lankan governmental delegation will visit India to discuss the establishment of a USD 500 million coal power plant by India's National Thermal Power Corporation (NTPC) in collaboration with Sri Lanka's Ceylon Electricity Board (CEB). Originally slated for construction in Sampur, which was recently reclaimed from Tamil rebels, the plant's production site has been moved to the Eastern port city of Trincomalee. Amidst the locational controversy, the upcoming discussions will be crucial to moving forward with development.

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Singapore Enters Into a Joint Venture with India and Kuwait

Singapore recently entered into an agreement with India and Kuwait to build a USD 110 million petrochemical plant on the man-made island of Jurong. This facility is expected to produce more than 100,000 tons of Normal-Parafin, a chemical used in laundry detergents, each year. The expanded production will help to combat the shortages of Normal-Parafin that are expected through 2010. Under the agreement, India will own 51 percent, Kuwait will own 44 percent, and Singapore will control the remaining 5 percent.

Singapore recently entered into an agreement with India and Kuwait to build a USD 110 million petrochemical plant on the man-made island of Jurong. This facility is expected to produce more than 100,000 tons of Normal-Parafin, a chemical used in laundry detergents, each year. The expanded production will help to combat the shortages of Normal-Parafin that are expected through 2010. Under the agreement, India will own 51 percent, Kuwait will own 44 percent, and Singapore will control the remaining 5 percent.

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23 Special Economic Zones Approved in India

The Indian Board of Approval (BOA) for Special Economic Zones (SEZs) has given formal approval to 23 applicants, and "in principle" approval to six more. The approved SEZs include different kinds of operations and sectors, such as information technology and biotech, as well as gems and jewelery or multi-product SEZs.

The Indian Board of Approval (BOA) for Special Economic Zones (SEZs) has given formal approval to 23 applicants, and "in principle" approval to six more. The approved SEZs include different kinds of operations and sectors, such as information technology and biotech, as well as gems and jewelery or multi-product SEZs.

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Nineteen-Year High for Growth in India

For the term of 2006-2007, India has reported a record high for its GDP growth of 9.4 percent, marking a nineteen-year high. The record was enabled in particular by stable, double-digit growth in the manufacturing and services sectors, as well as by upward revisions.

For the term of 2006-2007, India has reported a record high for its GDP growth of 9.4 percent, marking a nineteen-year high. The record was enabled in particular by stable, double-digit growth in the manufacturing and services sectors, as well as by upward revisions.

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Bhutan's Hydroelectric Project Exceeds Expectations

The Tala Hydroelectric Project is a 1,020 MW plant in western Bhutan. It is the largest joint venture between India and Bhutan and is already exceeding expectations. Even though the project will not be formally comissioned until 2008, it has produced 1,395 million units and generated over USD52 million during the 2006-2007 period. This project is expected to double Bhutan's per capita income, and will also greatly benefit India in relieving its accute power scarcity.

The Tala Hydroelectric Project is a 1,020 MW plant in western Bhutan. It is the largest joint venture between India and Bhutan and is already exceeding expectations. Even though the project will not be formally comissioned until 2008, it has produced 1,395 million units and generated over USD52 million during the 2006-2007 period. This project is expected to double Bhutan's per capita income, and will also greatly benefit India in relieving its accute power scarcity.

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Indian Power Firm Pleads for Sri Lankan Plant Location Change

India's National Thermal Power Corporation (NTPC) has asked the Indian government for assistance in changing the location of a proposed coal plant in Sri Lanka. The plant is slated to be built in the island's eastern Sampur area, which was recently reclaimed from Tamil rebels. NTPC is not only worried about regional conflict affecting infrastructure development, but believes that constructing a plant at the proposed site would stir up political sensitivities in India.

India's National Thermal Power Corporation (NTPC) has asked the Indian government for assistance in changing the location of a proposed coal plant in Sri Lanka. The plant is slated to be built in the island's eastern Sampur area, which was recently reclaimed from Tamil rebels. NTPC is not only worried about regional conflict affecting infrastructure development, but believes that constructing a plant at the proposed site would stir up political sensitivities in India.

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Indian Company to Build Telecom Service in Cambodia

India's Essar Group, a partner in Vodafone-controlled Hutchinson Essar, is planning on making its first international foray into Cambodia. In a joint venture with a local group, Essar plans on constructing a network of the Global System for Mobile Communication (GSM) standard. Cambodia's mobile market has been growing at 35 percent annually and much of the potential market is yet to be penetrated.

India's Essar Group, a partner in Vodafone-controlled Hutchinson Essar, is planning on making its first international foray into Cambodia. In a joint venture with a local group, Essar plans on constructing a network of the Global System for Mobile Communication (GSM) standard. Cambodia's mobile market has been growing at 35 percent annually and much of the potential market is yet to be penetrated.

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Multinational Drug Co. Finds Local Partner in India

A local manufacturing partnership with multinational pharmaceutical company Johnson & Johnson will seek to provide India's HIV/AIDS population with the much needed second-line drug Prezista by licensing and manufacturing the drug locally for India's more than 5.8 million patients. The new initiative hopes to dispense the high-priced medication, valued at $20 per day in the U.S., to India's low income population at a rate similar to that of sub-Saharan Africa. The move will cut India's full dependence on outside imports for both the second- and third-line therapies.

A local manufacturing partnership with multinational pharmaceutical company Johnson & Johnson will seek to provide India's HIV/AIDS population with the much needed second-line drug Prezista by licensing and manufacturing the drug locally for India's more than 5.8 million patients. The new initiative hopes to dispense the high-priced medication, valued at $20 per day in the U.S., to India's low income population at a rate similar to that of sub-Saharan Africa. The move will cut India's full dependence on outside imports for both the second- and third-line therapies.

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India's Outsourcing Firms Begin Next Generation

New companies in India claim to possess the second-generation of outsourcing enterprise, leveraging intellectual property in a way that traditional outsourcing never employed. Firms have begun a shift toward knowledge and domain driven areas - attracting the attention of venture capital investors who see an opportunity to re-invest their profits from the first-generation of such firms. New firms increase focus on legal, financial, product development, education, and technology-enabled services, alongside key institutional changes which investors can hardly ignore.

New companies in India claim to possess the second-generation of outsourcing enterprise, leveraging intellectual property in a way that traditional outsourcing never employed. Firms have begun a shift toward knowledge and domain driven areas - attracting the attention of venture capital investors who see an opportunity to re-invest their profits from the first-generation of such firms. New firms increase focus on legal, financial, product development, education, and technology-enabled services, alongside key institutional changes which investors can hardly ignore.

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India Welcomed Into ASEM

India's introduction into the 45-nation Asia Europe Meeting on Tuesday regarding the region's position on Iran represents a growing dialogue between European nations and South Asia, increasing the organization's representation to 50 percent of world's GDP, 58 percent of global population, and 60 percent of international trade. The organization hopes the increased participation will heighten the capacity of the group to influence international politics and policy with security, socio-political, communication technology, and inter-cultural issues in the region.

India's introduction into the 45-nation Asia Europe Meeting on Tuesday regarding the region's position on Iran represents a growing dialogue between European nations and South Asia, increasing the organization's representation to 50 percent of world's GDP, 58 percent of global population, and 60 percent of international trade. The organization hopes the increased participation will heighten the capacity of the group to influence international politics and policy with security, socio-political, communication technology, and inter-cultural issues in the region.

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Vodafone Announces Deadline for India's Bharti Airtel Transfer

British-operated Vodafone announced a timeline Tuesday for a plan to transfer 5.6 percent of its stake in Bharti Airtel back to the Indian company following its acquisition of controlling shares in mobile firm Hutch-Essar in early May. The Bharti transfer, which is to reach completion by November 2008, and Vodafone's USD10.9 billion deal with Hutch-Essar represent a reshaping of the company's portfolio and a furthering of its exposure to growth opportunities in emerging markets.

British-operated Vodafone announced a timeline Tuesday for a plan to transfer 5.6 percent of its stake in Bharti Airtel back to the Indian company following its acquisition of controlling shares in mobile firm Hutch-Essar in early May. The Bharti transfer, which is to reach completion by November 2008, and Vodafone's USD10.9 billion deal with Hutch-Essar represent a reshaping of the company's portfolio and a furthering of its exposure to growth opportunities in emerging markets.

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India Fears the Loss of Workforce Productivity

A recent Assocham study of India's workforce predicts a loss of 17.9 million potentially productive years due to chronic disease in the aging population. The study targeted workers aged 35-64 and projects their growing disability to be the main cause for a loss of USD200 billion in the nation's income within the next few years.

A recent Assocham study of India's workforce predicts a loss of 17.9 million potentially productive years due to chronic disease in the aging population. The study targeted workers aged 35-64 and projects their growing disability to be the main cause for a loss of USD200 billion in the nation's income within the next few years.

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India: Government Subsidized Farming a Priority for Future

Prime Minister Manmohan Singh announced to the chief ministers of the Central government his plan for productivity enhancement in the agricultural sector. The Rs25,000 plan for food security aims at making small and marginal farming endeavors a viable proposition by raising the production of wheat, rice, and pulses in efforts to reduce rural distress. The program follows a new trend by the government to increase subsidies in the wake of declining investments and technology fatigue.

Prime Minister Manmohan Singh announced to the chief ministers of the Central government his plan for productivity enhancement in the agricultural sector. The Rs25,000 plan for food security aims at making small and marginal farming endeavors a viable proposition by raising the production of wheat, rice, and pulses in efforts to reduce rural distress. The program follows a new trend by the government to increase subsidies in the wake of declining investments and technology fatigue.

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India to Triple Economic Assistance to Nepal

On Monday this week, Indian Ambassador to Nepal Shiva Shanker Mukherjee announced that India would triple the existing Indian economic assistance to Nepal. Ambassador Mukherjee stated this increase in assistance had begun since last June's meeting between the two countries Prime Ministers.

On Monday this week, Indian Ambassador to Nepal Shiva Shanker Mukherjee announced that India would triple the existing Indian economic assistance to Nepal. Ambassador Mukherjee stated this increase in assistance had begun since last June's meeting between the two countries Prime Ministers.

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Rupee's Appreciation is a Concern

At the third India-GCC Industrial Forum, Kamal Nath, the Minister of Commerce and Industries, stated that the Ministry of Commerce and the Reserve Bank of India are in discussions to devise a plan to counteract the impact of the appreciating rupee. The rupee appreciation is a concern for manufacturers and exporters, and the two sides hope a plan to refund local taxes and levies to labor-intensive industries with a small import component will help.

At the third India-GCC Industrial Forum, Kamal Nath, the Minister of Commerce and Industries, stated that the Ministry of Commerce and the Reserve Bank of India are in discussions to devise a plan to counteract the impact of the appreciating rupee. The rupee appreciation is a concern for manufacturers and exporters, and the two sides hope a plan to refund local taxes and levies to labor-intensive industries with a small import component will help.

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India Embraces Foreign Investment

On Thursday, Indian Finance Minister P. Chidambaram said that there were no reasons to impose any foreign investment restrictions, regardless of the ills associated with a copious flow of outside investment. Chidambaram added that proper management of investments is imperative, yet restrictions must be avoided for continued inflow in both the private and public sectors.

On Thursday, Indian Finance Minister P. Chidambaram said that there were no reasons to impose any foreign investment restrictions, regardless of the ills associated with a copious flow of outside investment. Chidambaram added that proper management of investments is imperative, yet restrictions must be avoided for continued inflow in both the private and public sectors.

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Indian Banks May Manage Pension Funds

The Indian Government has changed its regulations concerning the management of pension funds to the effect that, in the near future, banks will be allowed to step into it. May 25, 2007 has been established as a deadline for banks to express interest to act as fund managers. After this deadline, the funds most likely will be invested up to 5 percent in equity and 10 percent in equity-linked mutual funds, according to the interim investment guidelines. The remaining part is to be invested in government securities, corporate bonds, and other money market instruments.

The Indian Government has changed its regulations concerning the management of pension funds to the effect that, in the near future, banks will be allowed to step into it. May 25, 2007 has been established as a deadline for banks to express interest to act as fund managers. After this deadline, the funds most likely will be invested up to 5 percent in equity and 10 percent in equity-linked mutual funds, according to the interim investment guidelines. The remaining part is to be invested in government securities, corporate bonds, and other money market instruments.

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Japan's Kobe Steel Prepares for Low-Cost Production in India

Racing to match the global expansion pace of the steel industry, Japan's Kobe Steel Ltd. has announced its plans to produce steel in India by 2009, just one of three major expansion projects that may be underway by the year's end. The firm's investment in the Indian mill would be 20 billion yen, with output ability of 500,000 tons of steel per year, with raw materials costs expected to be a third of current levels.

Racing to match the global expansion pace of the steel industry, Japan's Kobe Steel Ltd. has announced its plans to produce steel in India by 2009, just one of three major expansion projects that may be underway by the year's end. The firm's investment in the Indian mill would be 20 billion yen, with output ability of 500,000 tons of steel per year, with raw materials costs expected to be a third of current levels.

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India and Thailand Said to Further Tariff Reduction

New negotiations on further tariff reductions between India and Thailand are to be discussed in Phuket later on this month, says Director-General Chutima Bunyaprapasara. The original Thailand-India FTA in 2003 enabled the reduction of tariffs for 82 products, and further negotiations hope to extend that number to more than 5,500. This will assist in the flow of goods between the two nations, most notably in steel, metal, and chemical products, along with auto accessories, gold, and diamonds.

New negotiations on further tariff reductions between India and Thailand are to be discussed in Phuket later on this month, says Director-General Chutima Bunyaprapasara. The original Thailand-India FTA in 2003 enabled the reduction of tariffs for 82 products, and further negotiations hope to extend that number to more than 5,500. This will assist in the flow of goods between the two nations, most notably in steel, metal, and chemical products, along with auto accessories, gold, and diamonds.

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India and China to Lead Asia in Pharmaceuticals

According to a recent PriceWaterouseCoopers report, India and China are going to drive the continent's development in pharmaceuticals, as they are the major destination for greenfield investments in the pharmaceutical sector in Asia. As the report states further, nearly 60 percent of the respondents believe that the focal point of worldwide pharmaceuticals will shift within the coming years from Europe and North America to Asia.

According to a recent PriceWaterouseCoopers report, India and China are going to drive the continent's development in pharmaceuticals, as they are the major destination for greenfield investments in the pharmaceutical sector in Asia. As the report states further, nearly 60 percent of the respondents believe that the focal point of worldwide pharmaceuticals will shift within the coming years from Europe and North America to Asia.

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Soaring Demand Helps Indian Steel Authority's Net Surge

Soaring demand and the closure of a number of steel plants in China helped the Steel Authority of India Ltd. realize record share prices and increases in prices and sales, all of which beat analyst's estimates. The state-run steelmaker reported that profit increased to 19.02 billion rupees ($468 million), while sales rose by 14 percent to 99.84 billion rupees. With China likely unable to keep up with its own rampant demand for steel, the outlook for Indian steelmakers looks even better in the near future.

Soaring demand and the closure of a number of steel plants in China helped the Steel Authority of India Ltd. realize record share prices and increases in prices and sales, all of which beat analyst's estimates. The state-run steelmaker reported that profit increased to 19.02 billion rupees ($468 million), while sales rose by 14 percent to 99.84 billion rupees. With China likely unable to keep up with its own rampant demand for steel, the outlook for Indian steelmakers looks even better in the near future.

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Cambodia to Receive Rural Development Aid from India

India plans to extend a loan of $35.2 million to Cambodia for purposes of rural infrastructure development. Cambodian officials intend to use the loan for constructing dams, irrigation systems, electricity networks, as well as water pumps for countering drought seasons, which are detrimental to the nation's vital rice trade.

India plans to extend a loan of $35.2 million to Cambodia for purposes of rural infrastructure development. Cambodian officials intend to use the loan for constructing dams, irrigation systems, electricity networks, as well as water pumps for countering drought seasons, which are detrimental to the nation's vital rice trade.

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British Banking Giant Barclay's Enters Indian Market

During a period when banks have been losing much of their profitability higher interest rates and increasing defaults, Barclay's has entered the crowded Indian market as a retail banker. Most of the other banks that have entered have focused on the upper end of the market. Barclay's plans to focus on the entire market much as they have done throughout Africa.

During a period when banks have been losing much of their profitability higher interest rates and increasing defaults, Barclay's has entered the crowded Indian market as a retail banker. Most of the other banks that have entered have focused on the upper end of the market. Barclay's plans to focus on the entire market much as they have done throughout Africa.

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India's Investments Decline as a Result of Budget Proposal

Due to a budget proposal limiting the tax benefits to venture capitals (VC), India has seen a significant decline in investments. The sectors that have been most effective are real estate, media, and entertainment. Gross investments in these sectors during the March-April period were about half what they were in January-February, the period prior to the proposal.

Due to a budget proposal limiting the tax benefits to venture capitals (VC), India has seen a significant decline in investments. The sectors that have been most effective are real estate, media, and entertainment. Gross investments in these sectors during the March-April period were about half what they were in January-February, the period prior to the proposal.

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Early Rains in India and Thailand May Drive Up Rubber Prices

With early rains presumed to hamper rubber tapping in Thailand and India, output is expected to decline sharply. With such a reduction in global supply, prices are expected to rise even faster than the 48 percent gain that has been realized over the past 6 months. Already trading at 286 yen per kilogram at closing yesterday, rubber is projected to hit 324 yen by the end of June.

With early rains presumed to hamper rubber tapping in Thailand and India, output is expected to decline sharply. With such a reduction in global supply, prices are expected to rise even faster than the 48 percent gain that has been realized over the past 6 months. Already trading at 286 yen per kilogram at closing yesterday, rubber is projected to hit 324 yen by the end of June.

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India Targets Lower Inflation

According to the Governor of the Reserve Bank of India (RBI), a target is aimed to keep the lower inflation limit at 4-4.5 percent in the medium run. RBI hopes that the announcement will have an impact on inflation expectations and thus keep price increases on a socially tolerable level. For the fiscal year of 2007-2008, the RBI strives to keep the rate of inflation at close to five percent.

According to the Governor of the Reserve Bank of India (RBI), a target is aimed to keep the lower inflation limit at 4-4.5 percent in the medium run. RBI hopes that the announcement will have an impact on inflation expectations and thus keep price increases on a socially tolerable level. For the fiscal year of 2007-2008, the RBI strives to keep the rate of inflation at close to five percent.

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Indian Banks Profitably Financing Rural Groups with Micro-Credit

Rather than take on the risk of oft-defaulted individual loans, local Indian banks are financing groups of villagers with micro-credit, allowing for economic growth in the most rural regions of India. Groups of villagers manufacturing such products as FM radios and incense sticks have been able to repay the small loans and are yielding dividends on top. Encouraged by the level of group discipline, the State Bank of India alone has disbursed loans totaling over US$857 million in micro-credit.

Rather than take on the risk of oft-defaulted individual loans, local Indian banks are financing groups of villagers with micro-credit, allowing for economic growth in the most rural regions of India. Groups of villagers manufacturing such products as FM radios and incense sticks have been able to repay the small loans and are yielding dividends on top. Encouraged by the level of group discipline, the State Bank of India alone has disbursed loans totaling over US$857 million in micro-credit.

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US, India Civil Nuclear Deal in a Fragile State

Hoping to develop a strategic partnership with India, the US will send their undersecretary of state to New Delhi in an effort to bridge the outstanding differences currently stalling progress on a landmark civil nuclear deal. With the two nations' political leaders set to meet at next month's G8 summit, the deal is in a fragile state as it becomes increasingly clear that neither side will be afforded 100% satisfaction in clausal negotiations over India's right to test nuclear weapons.

Hoping to develop a strategic partnership with India, the US will send their undersecretary of state to New Delhi in an effort to bridge the outstanding differences currently stalling progress on a landmark civil nuclear deal. With the two nations' political leaders set to meet at next month's G8 summit, the deal is in a fragile state as it becomes increasingly clear that neither side will be afforded 100% satisfaction in clausal negotiations over India's right to test nuclear weapons.

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Australian Banks Expand to India

Booming consumer finance space and growing opportunities in the corporate finance sector are the biggest incentives for foreign banks to enter India's banking sector. In particular, the sector is interested in Australian banks due to the further increase in trade relations between both countries. Since Macquire has already expanded to Australia, Westpac Institutional Bank has been approved to open a representative office as well.

Booming consumer finance space and growing opportunities in the corporate finance sector are the biggest incentives for foreign banks to enter India's banking sector. In particular, the sector is interested in Australian banks due to the further increase in trade relations between both countries. Since Macquire has already expanded to Australia, Westpac Institutional Bank has been approved to open a representative office as well.

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ACU Considers Multi-Currency Adoption, Names New Members

Meeting at the 36th board meeting of the Asian Clearing Union (ACU), the directors of the union's member banks created a technical committee to look into the possibility of introducing multi-currency settlements. Currently, ACU countries are required to settle external trade payments exclusively with US dollars. In addition, the ACU welcomed Afghanistan and the Maldives to its ranks, and have extended membership invitations to a number of Central Asian and CIS nations.

Meeting at the 36th board meeting of the Asian Clearing Union (ACU), the directors of the union's member banks created a technical committee to look into the possibility of introducing multi-currency settlements. Currently, ACU countries are required to settle external trade payments exclusively with US dollars. In addition, the ACU welcomed Afghanistan and the Maldives to its ranks, and have extended membership invitations to a number of Central Asian and CIS nations.

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Sri Lanka Approves Indian Telecom Investment

Sri Lanka's Board of Investment has approved a $150 million investment proposal from Indian telecom giant Bharti Airtel. Attracted by a low penetration rate in the industry, Airtel has received regulatory approval for both 2G and 3G services, and intends to expand its services into the country's northern and eastern regions despite conflict with the Tamil Tigers. Sri Lanka's telecom sector has experienced rapid growth recently, largely fueled by cutting-edge technology and intense competition.

Sri Lanka's Board of Investment has approved a $150 million investment proposal from Indian telecom giant Bharti Airtel. Attracted by a low penetration rate in the industry, Airtel has received regulatory approval for both 2G and 3G services, and intends to expand its services into the country's northern and eastern regions despite conflict with the Tamil Tigers. Sri Lanka's telecom sector has experienced rapid growth recently, largely fueled by cutting-edge technology and intense competition.

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India's Manufacturing Sector Grows by 14%

With a growth rate of 14.1 per cent in March 2007, the Indian manufacturing sector has reached its highest growth rate in more than ten years, having outreached last year's March growth rate of 10.1. Beneficiaries of this development are in particular wood and wood products, furniture and fixtures, metal products and parts, food products, basic metal and alloy industries, and cotton textiles.

With a growth rate of 14.1 per cent in March 2007, the Indian manufacturing sector has reached its highest growth rate in more than ten years, having outreached last year's March growth rate of 10.1. Beneficiaries of this development are in particular wood and wood products, furniture and fixtures, metal products and parts, food products, basic metal and alloy industries, and cotton textiles.

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Asian Naval Industries Benefit from Maritime Security Enhancements

In an effort to enhance their regional maritime security, Asian nations will spend an estimated $108 billion on naval vessels, which industry watchers insist will not go towards a naval arms race. Japan, China, and India are expected to lead the buying spree, and naval industry leaders such as Japan, South Korea, and Singapore are set to reap the benefits with over half the contracts still available.

In an effort to enhance their regional maritime security, Asian nations will spend an estimated $108 billion on naval vessels, which industry watchers insist will not go towards a naval arms race. Japan, China, and India are expected to lead the buying spree, and naval industry leaders such as Japan, South Korea, and Singapore are set to reap the benefits with over half the contracts still available.

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Rising Rupee's Dilemma

Although the rupee reaching a nine year high has several positive impacts on Indian economy such as a relative decrease of oil prices and the reduction of the existing trade deficit, India's exporters are still worried. The Ministry of Commerce has already sent out a letter to India's central bank, asking them to support exporters through intervention. Dissidents however, argue that the picture drawn on the rupee's impact on exporter's situation is exaggerated, for more than 80 per cent of exports are value-added products.

Although the rupee reaching a nine year high has several positive impacts on Indian economy such as a relative decrease of oil prices and the reduction of the existing trade deficit, India's exporters are still worried. The Ministry of Commerce has already sent out a letter to India's central bank, asking them to support exporters through intervention. Dissidents however, argue that the picture drawn on the rupee's impact on exporter's situation is exaggerated, for more than 80 per cent of exports are value-added products.

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Lagging Broadband Hinders India’s Growth

INDIA has enjoyed some of the fruits of the most advanced technologies in the world and is considered to be the information technology hub for the world. Indeed, high technology has allowed Western hospitals and investment banks to send X-rays and spreadsheets respectively to India for analysis. However, the wave of high technology that has hit India seems to have skipped a beat in one critical area: broadband.

India Left Behind

The broadband revolution that started occurring across the world seven years ago seems to have had little or no effect on India, while some of its largest competitors have taken full advantage. In 2006, less than 2 percent of Indian homes had broadband access compared with 13 percent in China and 8 percent in Brazil. To add insult to injury, as of September 2006, India had only 1.8 million broadband users, which are barely half the 3 million that it had set as a goal by 2005. This is reflected in the Economist Intelligence Unit's 2006 e-readiness rankings in which India slipped 4 notches.

Broadband Potential

Broadband is critical to realizing the socioeconomic goals of India. With widespread use of broadband, the IT sector in India could grow in the untapped rural areas and bring them into the world economy. It would afford villagers the ability to access modern education, entertainment services, e-governance, healthcare services, agricultural services, and employment opportunities that it has afforded other countries. Students in these rural villages could videoconference with educational institutions across the country and around the world, and entertainment programs could be telecast to remote areas along with internet telephony services via technologies such as Voice over Internet Protocol (VoIP). E-Governance via broadband could decrease the waiting time for services and boost productivity in government offices. In agriculture, high-resolution photos or real-time images of crop diseases could be sent to agricultural experts around the world for instant expert advice, containing the crop disease faster as a result. In health care, doctors could employ real-time video to confer patient symptoms with distant experts. As a result, they would be able to provide timely and better care to patients. Information access would increase worker productivity and quicker communication between producers and suppliers could stimulate greater demand for Indian products.

Policy Prescriptions

India must leverage its huge, $4.3 billion cable industry to develop its broadband penetration. 71 million homes receive cable, a market that continues to grow at an annual clip of 14 percent. In terms of subscriber numbers, India has the world's largest cable market, an achievement that was accomplished last year when it overtook the US. To encourage investment by the cable industry into broadband, Media Partners, a consulting firm, argues for deregulation of the highly restrictive Telecom Regulatory Authority of India (TRAI). Lifting current restrictions on downloads and making downloads unlimited for households would be one way. In order for this to become a reality, consolidation of the nearly 30,000 small cable operators that drive the cable industry needs to be achieved in order for them to have the economies of scale to capitalize on broadband. Initiatives to provide free wireless internet in educational institutions, public libraries, and government agencies would encourage its use and take-up in households.

Solutions to the "last mile" network

As important as it is to get the cable industry involved, there are simply not enough fixed lines going into homes through the "last mile" network. Unbundling its local loop would open up the bandwidth for the private sector. As a result, the sector would become more organized as a consequence of a greater number of internet service providers (ISPs). Competition will increase, leading to better services, higher speeds, and low-priced, stable, and unlimited broadband.

More importantly, mandating access to backbone networks would allow wireless technologies such as WiMAX to bridge the digital divide created by the last mile deficit. WiMAX, a relatively new, standards-based wireless technology, could expand broadband Internet and services like Internet telephony throughout India without interfering with transportation and other services. Furthermore, the standards-based feature of WiMAX allows for the reduction of costs through economies of scale and through competition, as service providers will be able to buy from many different suppliers and search for the lowest price. This standards-based feature also allows for effortless implementation. It is particularly accommodating to India where there is not an extensive broadband infrastructure already in place. WiMAX offers the perfect solution to the last mile deficit with wireless, long-range, and scalable broadband that is capable of meeting the needs of the Indian consumer.

INDIA has enjoyed some of the fruits of the most advanced technologies in the world and is considered to be the information technology hub for the world. Indeed, high technology has allowed Western hospitals and investment banks to send X-rays and spreadsheets respectively to India for analysis. However, the wave of high technology that has hit India seems to have skipped a beat in one critical area: broadband.

India Left Behind

The broadband revolution that started occurring across the world seven years ago seems to have had little or no effect on India, while some of its largest competitors have taken full advantage. In 2006, less than 2 percent of Indian homes had broadband access compared with 13 percent in China and 8 percent in Brazil. To add insult to injury, as of September 2006, India had only 1.8 million broadband users, which are barely half the 3 million that it had set as a goal by 2005. This is reflected in the Economist Intelligence Unit's 2006 e-readiness rankings in which India slipped 4 notches.

Broadband Potential

Broadband is critical to realizing the socioeconomic goals of India. With widespread use of broadband, the IT sector in India could grow in the untapped rural areas and bring them into the world economy. It would afford villagers the ability to access modern education, entertainment services, e-governance, healthcare services, agricultural services, and employment opportunities that it has afforded other countries. Students in these rural villages could videoconference with educational institutions across the country and around the world, and entertainment programs could be telecast to remote areas along with internet telephony services via technologies such as Voice over Internet Protocol (VoIP). E-Governance via broadband could decrease the waiting time for services and boost productivity in government offices. In agriculture, high-resolution photos or real-time images of crop diseases could be sent to agricultural experts around the world for instant expert advice, containing the crop disease faster as a result. In health care, doctors could employ real-time video to confer patient symptoms with distant experts. As a result, they would be able to provide timely and better care to patients. Information access would increase worker productivity and quicker communication between producers and suppliers could stimulate greater demand for Indian products.

Policy Prescriptions

India must leverage its huge, $4.3 billion cable industry to develop its broadband penetration. 71 million homes receive cable, a market that continues to grow at an annual clip of 14 percent. In terms of subscriber numbers, India has the world's largest cable market, an achievement that was accomplished last year when it overtook the US. To encourage investment by the cable industry into broadband, Media Partners, a consulting firm, argues for deregulation of the highly restrictive Telecom Regulatory Authority of India (TRAI). Lifting current restrictions on downloads and making downloads unlimited for households would be one way. In order for this to become a reality, consolidation of the nearly 30,000 small cable operators that drive the cable industry needs to be achieved in order for them to have the economies of scale to capitalize on broadband. Initiatives to provide free wireless internet in educational institutions, public libraries, and government agencies would encourage its use and take-up in households.

Solutions to the "last mile" network

As important as it is to get the cable industry involved, there are simply not enough fixed lines going into homes through the "last mile" network. Unbundling its local loop would open up the bandwidth for the private sector. As a result, the sector would become more organized as a consequence of a greater number of internet service providers (ISPs). Competition will increase, leading to better services, higher speeds, and low-priced, stable, and unlimited broadband.

More importantly, mandating access to backbone networks would allow wireless technologies such as WiMAX to bridge the digital divide created by the last mile deficit. WiMAX, a relatively new, standards-based wireless technology, could expand broadband Internet and services like Internet telephony throughout India without interfering with transportation and other services. Furthermore, the standards-based feature of WiMAX allows for the reduction of costs through economies of scale and through competition, as service providers will be able to buy from many different suppliers and search for the lowest price. This standards-based feature also allows for effortless implementation. It is particularly accommodating to India where there is not an extensive broadband infrastructure already in place. WiMAX offers the perfect solution to the last mile deficit with wireless, long-range, and scalable broadband that is capable of meeting the needs of the Indian consumer.

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India's Aviation Market Flying High

Cheap fares, rapidly expanding economy and new low cost airlines have made India the fastest growing aviation market in the world. The liberalization of the Indian aviation industry has resulted in the incorporation of a dozen new airlines as compared to three airlines pre-liberalization. India is also seen as a very attractive market for Airbus and Boeing that collectively have orders of 500 aircrafts from Indian customers. Construction of new airports capable of handling up to 100 million passengers a year shows the potential of this industry that is in its infancy in India.

Cheap fares, rapidly expanding economy and new low cost airlines have made India the fastest growing aviation market in the world. The liberalization of the Indian aviation industry has resulted in the incorporation of a dozen new airlines as compared to three airlines pre-liberalization. India is also seen as a very attractive market for Airbus and Boeing that collectively have orders of 500 aircrafts from Indian customers. Construction of new airports capable of handling up to 100 million passengers a year shows the potential of this industry that is in its infancy in India.

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India:Reserve Bank to Check Gold Retailing by Top Banks

In a clear violation of banking norms laid out by the Reserve Banks, top banks in India have been partnering up with non-financial banks and rural co-operative banks in order to increase their gold retailing network. The reserve bank has issued a circular to these banks warning them of such activites to boost their gold trading volumes. State Bank of India, ICICI Bank, HDFC Bank, UTI Bank, Union Bank of India among others import gold for sale to jewellery manufacturers, exporters and domestic users.

In a clear violation of banking norms laid out by the Reserve Banks, top banks in India have been partnering up with non-financial banks and rural co-operative banks in order to increase their gold retailing network. The reserve bank has issued a circular to these banks warning them of such activites to boost their gold trading volumes. State Bank of India, ICICI Bank, HDFC Bank, UTI Bank, Union Bank of India among others import gold for sale to jewellery manufacturers, exporters and domestic users.

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Indian Government Allows FDI in Pension Funds

Despite the pressure from the left parties in the coalition, the Government of India allowed foreign pension fund players to own up to 26% in companies that will be set up by financial institutions and mutual fund players to manage pension funds.

Despite the pressure from the left parties in the coalition, the Government of India allowed foreign pension fund players to own up to 26% in companies that will be set up by financial institutions and mutual fund players to manage pension funds.

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Rupee Finally Depreciates agains US$

The rupee has lost sharply against the dollar augmenting from 40.92 to 41.28 INR/USD. It is supposed that India's central bank interfered in order to protect domestic exporters from further cuts due to the strengthening of the rupee.

The rupee has lost sharply against the dollar augmenting from 40.92 to 41.28 INR/USD. It is supposed that India's central bank interfered in order to protect domestic exporters from further cuts due to the strengthening of the rupee.

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Airbus, Indian Freighters Reach $1 Billion Agreement

India's Flyington Freighters agreed upon a $1 billion order for six Airbus cargo aircrafts, despite preliminary talks with Boeing regarding a similar order. Airbus expects to invest over $1 billion in the Indian aviation industry over the next ten years, attracted by the nation's rapid air traffic growth. Airbus expects that aircraft orders from Indian firms over the next twenty years will be worth well over $100 billion.

India's Flyington Freighters agreed upon a $1 billion order for six Airbus cargo aircrafts, despite preliminary talks with Boeing regarding a similar order. Airbus expects to invest over $1 billion in the Indian aviation industry over the next ten years, attracted by the nation's rapid air traffic growth. Airbus expects that aircraft orders from Indian firms over the next twenty years will be worth well over $100 billion.

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$100,000 Speculation Limit for Indian Investors

India's central bank, the Reserve Bank of India, has adopted restrictions whereby individuals' facilities for any kind of speculative positions in overseas markets are limited to $100,000. After its adoption in 2004 with an amount of $25,000, the limit had already been raised to $50,000 in 2006.

India's central bank, the Reserve Bank of India, has adopted restrictions whereby individuals' facilities for any kind of speculative positions in overseas markets are limited to $100,000. After its adoption in 2004 with an amount of $25,000, the limit had already been raised to $50,000 in 2006.

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India: SEZ Proposals Receive Mixed Support

The New Delhi government Board of Approval intends to go ahead with the Special Economic Zone (SEZ) approval process amidst a barrage of citizen protest. Within the next few months, 150 organizations are said to be proposed for clearance by the board, including a number of state development corporations and international industries. These zones will carry more liberal economic restrictions than the rest of the nation and hope to promote investment from abroad in response to growing global competition. However, locals voice their discontent over the loss of fertile farming land to these corporate ventures.

The New Delhi government Board of Approval intends to go ahead with the Special Economic Zone (SEZ) approval process amidst a barrage of citizen protest. Within the next few months, 150 organizations are said to be proposed for clearance by the board, including a number of state development corporations and international industries. These zones will carry more liberal economic restrictions than the rest of the nation and hope to promote investment from abroad in response to growing global competition. However, locals voice their discontent over the loss of fertile farming land to these corporate ventures.

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Record Rupee Concerns India's Exporters

Indian exporters have expressed their concerns regarding the further appreciation of the rupee, fearing the loss of trade shares to cheaper China. Therefore, the FIEO Committee on International Trade and Export Promotion re-emphasizes their requests towards the Indian government for taking action to protect domestic exporters. The rupee had touched its nine-year-high of 40.55/USD on Monday.

Indian exporters have expressed their concerns regarding the further appreciation of the rupee, fearing the loss of trade shares to cheaper China. Therefore, the FIEO Committee on International Trade and Export Promotion re-emphasizes their requests towards the Indian government for taking action to protect domestic exporters. The rupee had touched its nine-year-high of 40.55/USD on Monday.

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Biggest Chinese FDI in India

The Chinese Sinosteel is planning to establish a 5 MT steel plant. The project's value amounts to a total of US$4billion, which makes it the biggest Foreign Direct Investment in India ever.

The Chinese Sinosteel is planning to establish a 5 MT steel plant. The project's value amounts to a total of US$4billion, which makes it the biggest Foreign Direct Investment in India ever.

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India Fifth-Largest Consumer Market in 2025

A recently published study of the consultancy McKinsey states that by 2025 India will be the world's fifth-largest consumer market. At that point, it will have moved from rank 12 to rank five only being behind the US, China, UK and Japan. As a condition for this development, the report states that they must undertake reforms to sustain an average annual economic growth of 7.3 per cent.

A recently published study of the consultancy McKinsey states that by 2025 India will be the world's fifth-largest consumer market. At that point, it will have moved from rank 12 to rank five only being behind the US, China, UK and Japan. As a condition for this development, the report states that they must undertake reforms to sustain an average annual economic growth of 7.3 per cent.

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India Removes Non-tariff Barriers on Bangladesh Cement

In order to remove India's non-tariff barriers (NTBs) on Bangladesh cement exporters, a four-member Indian experts team will visit Bangladesh to test the capabilities of Bangladesh Standard and Testing Institute (BSTI) for cement quality. This policy might reduce local cement entrepreneurs' export cost and release the saturated situation of cement production in Bangladesh.

In order to remove India's non-tariff barriers (NTBs) on Bangladesh cement exporters, a four-member Indian experts team will visit Bangladesh to test the capabilities of Bangladesh Standard and Testing Institute (BSTI) for cement quality. This policy might reduce local cement entrepreneurs' export cost and release the saturated situation of cement production in Bangladesh.

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Japanese Bike Makers compete for Harley Bikes in India

The Harley-Davidson Company, America's major bike maker, is reconsidering its strategy with India's government in regards to the high import duty structure. On the other hand, Japanese bike makers, such as Honda and Suzuki, are already moving ahead with plans to manufacture and import super luxury bikes to India, irrespective to the duty structure and other impediments.

The Harley-Davidson Company, America's major bike maker, is reconsidering its strategy with India's government in regards to the high import duty structure. On the other hand, Japanese bike makers, such as Honda and Suzuki, are already moving ahead with plans to manufacture and import super luxury bikes to India, irrespective to the duty structure and other impediments.

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World Bank Willing to Support Iran-Pakistan-India Pipeline

The World Bank has indicated its cooperativeness concerning the funding of a gas pipeline, connecting Iran with Pakistan and India. The World Bank's Vice President Praful Patel considers the $7 billion project a win-win constellation for both India and Pakistan to cover their energy needs.

The World Bank has indicated its cooperativeness concerning the funding of a gas pipeline, connecting Iran with Pakistan and India. The World Bank's Vice President Praful Patel considers the $7 billion project a win-win constellation for both India and Pakistan to cover their energy needs.

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Indian Companies Fear Rupee's Fall

As the rupee is anticipated to depreciate to 43.75/$ within the next six months due to moderating inflation and thus a possible intervention by the Reserve Bank of India, Indian companies start hedging their imports to avoid costs of currency volatility by covering their imports at attractive levels. Nevertheless, some dissidents recommend to leave the imports uncovered, expecting a further depreciation of the US$ against the rupee.

As the rupee is anticipated to depreciate to 43.75/$ within the next six months due to moderating inflation and thus a possible intervention by the Reserve Bank of India, Indian companies start hedging their imports to avoid costs of currency volatility by covering their imports at attractive levels. Nevertheless, some dissidents recommend to leave the imports uncovered, expecting a further depreciation of the US$ against the rupee.

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Singapore Invests in India's Property Boom

Singapore gets involved with India's property boom as designers and developers land projects worth millions within the country. Singapore based companies are estimated to have more than 500 million square feet of floor space for projects. The property boom in India has flourished since the new rules of 2005 have allowed foreign investment within the construction industry.

Singapore gets involved with India's property boom as designers and developers land projects worth millions within the country. Singapore based companies are estimated to have more than 500 million square feet of floor space for projects. The property boom in India has flourished since the new rules of 2005 have allowed foreign investment within the construction industry.

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Yahoo in India

Yahoo plans to have India become a core center in the design of products and services for Asia and Latin America. Currently, there are a 1,000 employees within India, with plans aimed toward expanding their research and development facilities. Yahoo's plans for expansion are aimed to face strong competitors such as AOL and Google.

Yahoo plans to have India become a core center in the design of products and services for Asia and Latin America. Currently, there are a 1,000 employees within India, with plans aimed toward expanding their research and development facilities. Yahoo's plans for expansion are aimed to face strong competitors such as AOL and Google.

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India's Reserve Bank Keeps Rates to Control Inflation

The Reserve Bank of India has stabilized all key rates and plans to decline interest rates in order to sustain growth and keep the inflation close to 5 percent in the future. This Monetary Policy will reduce the risk weight on resident housing loans, support export and increase the demand of investment.

The Reserve Bank of India has stabilized all key rates and plans to decline interest rates in order to sustain growth and keep the inflation close to 5 percent in the future. This Monetary Policy will reduce the risk weight on resident housing loans, support export and increase the demand of investment.

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India to Build US$50 Billion Industrial Corrridor with Japan As Partner

India is partnering with Japan in the construction of a US$50 billion industrial corridor in Mumbai-Delhi. The corridor is based on the Tokyo-Osaka industrial corridor. India's Commerce Ministry expects the corridor to deliver within 5 years of its completion a 15% increase in employment, 28% increase in industrial output, and a 38% increase in exports.

India is partnering with Japan in the construction of a US$50 billion industrial corridor in Mumbai-Delhi. The corridor is based on the Tokyo-Osaka industrial corridor. India's Commerce Ministry expects the corridor to deliver within 5 years of its completion a 15% increase in employment, 28% increase in industrial output, and a 38% increase in exports.

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Study Free Trade Agreement between India and New Zealand

Both countries' Ministers Goff and Nath have agreed on a study about the implications of a free trade agreement on both countries. Further development of this issue is expected to take place in this year's September at a Joint Trade Commission meeting.

Both countries' Ministers Goff and Nath have agreed on a study about the implications of a free trade agreement on both countries. Further development of this issue is expected to take place in this year's September at a Joint Trade Commission meeting.

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Seven New Nuclear Plants for India

Seven of the thirty nuclear plants that are under construction worldwide at the moment are situated in India, trying to satisfy India's thirst for energy with an additional capacity of 3,400 MW after completion. Estimating that India's coal resources will be gone in 45 years, the country seeks for other energy generating ways, in particular emphasizing on the cost effectiveness of nuclear power.

Seven of the thirty nuclear plants that are under construction worldwide at the moment are situated in India, trying to satisfy India's thirst for energy with an additional capacity of 3,400 MW after completion. Estimating that India's coal resources will be gone in 45 years, the country seeks for other energy generating ways, in particular emphasizing on the cost effectiveness of nuclear power.

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India Waives Tax to Activate Exports

India's Minister of Commerce, Kamal Nath, has announced that export-related services, e.g. services rendered abroad or services to be delivered to Indian exporters, are henceforth exempted from the service tax of 12.24 percent. Through combination with other actions such as extended duty benefit schemes or an expanded scheme for focusing on certain products and markets, Nath aims to support export activities. India's export target has already been revised by $10 billion towards $160 billion.

India's Minister of Commerce, Kamal Nath, has announced that export-related services, e.g. services rendered abroad or services to be delivered to Indian exporters, are henceforth exempted from the service tax of 12.24 percent. Through combination with other actions such as extended duty benefit schemes or an expanded scheme for focusing on certain products and markets, Nath aims to support export activities. India's export target has already been revised by $10 billion towards $160 billion.

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Finance Minister Suggests India's Bank Curbing Home and Retail Loans

The Union Finance Minister has asked public sector banks to decline disbursals of home and other consumption loans to help fight inflation. Because the inflation was demand driven, India's banks were asked to restrict their lending to the retail sector.

The Union Finance Minister has asked public sector banks to decline disbursals of home and other consumption loans to help fight inflation. Because the inflation was demand driven, India's banks were asked to restrict their lending to the retail sector.

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India Government Seeking To Borrow To Help Lower Home Loan Rates

The Indian goverment is planning to seek long term loans from multilateral finance institutiions in order to facilitate lower lending rates for housing purchases. The government will approach sources such as the World Bank and the Asian Development Bank in order to provide credit to domestic housing finance companies to enable them to provide lower home loan rates.

The Indian goverment is planning to seek long term loans from multilateral finance institutiions in order to facilitate lower lending rates for housing purchases. The government will approach sources such as the World Bank and the Asian Development Bank in order to provide credit to domestic housing finance companies to enable them to provide lower home loan rates.

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Why Foreign Investment is so Important for India

IT IS DISAPPOINTING to see India having made inadequate progress since 57 years of its independence. While the poverty level has decreased, it still hovers over 25%. The problem with previous years was a low growth of GDP, what many call as ‘the Hindu Rate of Growth' which resulted in a much low per capita income growth. The GDP growth rate of India between 1950 and 1980 was around 3% and annual growth of per capita income was just 1.5%. For a country like India which is world's second largest populous nation, this growth rate was found to be inadequate to make any significant impact on overall progress of the nation. Some initiation was taken up during the 1980s by the government of India to set things right. Though they were half hearted, it improved the per capita income growth to 3.0% as poverty levels fell from over 45% to 35% by the end of 1990.

India then realized that only a strong economic growth rate could increase the per capita income levels of the people which in turn helps in bringing down the poverty levels and improve the socioeconomic conditions of the poor. Thus, the foundation for strong economic growth was laid in the form of economic reforms in 1991 which is popularly known as Structural Adjustment Program (SAP). This program was a result of a "closed economic policy" which India followed over the decades which resulted in a severe macroeconomic crisis by early 1990s. The reforms focused on strengthening the economic growth which should translate into reduction of poverty levels. The reforms started yielding results by mid 1990s as India posted a growth rate of over 7% for three consecutive years followed by a low growth rate which was a resultant of world wide recession. On the other hand, the governments changed, but the reforms program continued. More reforms brought a much higher growth rate and this was evident during the early 2000s where the growth rate for the first five years of 2000 was over 7.5% per annum.

How to Sustain the Growth?

The biggest challenge before the government is how to attain a much more solid economic growth, say over 9% per annum, and more importantly, how to sustain it? Many economists opine that this can be attained by a massive increase in investments which should result is sustained economic welfare in the years to come. For that, the overall investment levels should be increased substantially from 2006 for the next 15 years to come. Maddison, 1998, found in his research that in the last three decades the countries that were able to significantly increase their investment growth rates have actually seen an increase in their GDP growth between 6 to 8% and this helped those countries achieve per capita income growth of over 6%. In the case of India, if it has to have a per capita income growth of 6% at the present rate of growth of population consistently for the next ten years then the investments growth rate should be increased by leaps and bounds. In the last decade, most of the developed nations and also the emerging economies like China, Taiwan, and Mexico have increased their investment levels significantly. So if India wants to accelerate its economic growth then an investment ratio (Investments/GDP) of more than 35% immediately is what required.

Can India pull it?

The question which is confronting India is can it mop up an investment ratio of over 35% in the years to come? The public sector investments have been declining significantly from 1985 onwards. This is because of the ever-increasing fiscal deficit at both center and states levels, leaving the states with virtually no funds available for any massive investments required in the country. However, this being so on one hand, on the other hand, the private sector investments seem to be increasing right from 1980. But, analysts argue that this would not suffice the present investment requirements.

Therefore, it becomes very important for India to attract more foreign direct investments which can supplement the domestic investable resources for enabling a higher growth rates. This apart, FDI can be attracted in key infrastructure projects like power, roads, housing etc, which are genuine needs for the country. The FDI also enables the foreign companies to transfer the technology to the host country which can improve its competitiveness globally. Another great advantage through FDI is it can generate lot of employment opportunities. It is a known fact that India has a highest stock of people in the age group of 15 to 30 years and there is also an increasing pressure on the government to provide them the right kind of jobs. Allowing FDI would also make the services more efficient for the consumers as it would lead to competition and reduces market concentration of any company in that industry. Surely FDI has a very important role to play at least for India in its overall development and progress in the years to come.

IT IS DISAPPOINTING to see India having made inadequate progress since 57 years of its independence. While the poverty level has decreased, it still hovers over 25%. The problem with previous years was a low growth of GDP, what many call as ‘the Hindu Rate of Growth' which resulted in a much low per capita income growth. The GDP growth rate of India between 1950 and 1980 was around 3% and annual growth of per capita income was just 1.5%. For a country like India which is world's second largest populous nation, this growth rate was found to be inadequate to make any significant impact on overall progress of the nation. Some initiation was taken up during the 1980s by the government of India to set things right. Though they were half hearted, it improved the per capita income growth to 3.0% as poverty levels fell from over 45% to 35% by the end of 1990.

India then realized that only a strong economic growth rate could increase the per capita income levels of the people which in turn helps in bringing down the poverty levels and improve the socioeconomic conditions of the poor. Thus, the foundation for strong economic growth was laid in the form of economic reforms in 1991 which is popularly known as Structural Adjustment Program (SAP). This program was a result of a "closed economic policy" which India followed over the decades which resulted in a severe macroeconomic crisis by early 1990s. The reforms focused on strengthening the economic growth which should translate into reduction of poverty levels. The reforms started yielding results by mid 1990s as India posted a growth rate of over 7% for three consecutive years followed by a low growth rate which was a resultant of world wide recession. On the other hand, the governments changed, but the reforms program continued. More reforms brought a much higher growth rate and this was evident during the early 2000s where the growth rate for the first five years of 2000 was over 7.5% per annum.

How to Sustain the Growth?

The biggest challenge before the government is how to attain a much more solid economic growth, say over 9% per annum, and more importantly, how to sustain it? Many economists opine that this can be attained by a massive increase in investments which should result is sustained economic welfare in the years to come. For that, the overall investment levels should be increased substantially from 2006 for the next 15 years to come. Maddison, 1998, found in his research that in the last three decades the countries that were able to significantly increase their investment growth rates have actually seen an increase in their GDP growth between 6 to 8% and this helped those countries achieve per capita income growth of over 6%. In the case of India, if it has to have a per capita income growth of 6% at the present rate of growth of population consistently for the next ten years then the investments growth rate should be increased by leaps and bounds. In the last decade, most of the developed nations and also the emerging economies like China, Taiwan, and Mexico have increased their investment levels significantly. So if India wants to accelerate its economic growth then an investment ratio (Investments/GDP) of more than 35% immediately is what required.

Can India pull it?

The question which is confronting India is can it mop up an investment ratio of over 35% in the years to come? The public sector investments have been declining significantly from 1985 onwards. This is because of the ever-increasing fiscal deficit at both center and states levels, leaving the states with virtually no funds available for any massive investments required in the country. However, this being so on one hand, on the other hand, the private sector investments seem to be increasing right from 1980. But, analysts argue that this would not suffice the present investment requirements.

Therefore, it becomes very important for India to attract more foreign direct investments which can supplement the domestic investable resources for enabling a higher growth rates. This apart, FDI can be attracted in key infrastructure projects like power, roads, housing etc, which are genuine needs for the country. The FDI also enables the foreign companies to transfer the technology to the host country which can improve its competitiveness globally. Another great advantage through FDI is it can generate lot of employment opportunities. It is a known fact that India has a highest stock of people in the age group of 15 to 30 years and there is also an increasing pressure on the government to provide them the right kind of jobs. Allowing FDI would also make the services more efficient for the consumers as it would lead to competition and reduces market concentration of any company in that industry. Surely FDI has a very important role to play at least for India in its overall development and progress in the years to come.

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Microfiance in India: Impact on the Rural Poor

MICROFINANCE PLAYS A pivotal role in transforming the lives of the rural poor in India by extending timely and adequate credit facilities to them. Access to credit is crucial in order to break the vicious cycle of poverty that the marginalized sectors of the rural population are currently experiencing. In fact, microfinance institutions have an enormous amount of potential to address the credit needs of the rural poor and bring about a radical change in their economic and social status.

This is particularly important in a developing nation like India, where informal credit continues to occupy a substantial share of the rural credit market due to several advantages like collateral-free lending, proximity, timely delivery and flexibility in loan transactions. However, adequate steps need to be taken to ensure that the problems currently plaguing the formal credit delivery system do not seep through the micro-credit system thereby undermining its purpose and efficiency.

Microfinance in India:

Importance and functioning

Micro-credit institutions are slowly and steadily filling the gap that the large commercial banks, Regional Rural Banks (RRB's) and cooperatives have been unable to fill in the area of agricultural credit. Several factors like the convoluted lending practices, insufficient participation of the poor and excessive external interference by politicians and bureaucrats have hindered the ability of these formal institutions to act as viable sources of finance to the rural poor. Also, the lending practices of most commercial banks stipulate that borrowers must possess a stable source of income and have adequate collateral. Moreover, loans are only granted by these formal institutions for productive purposes and primarily to the bigger borrowers among the rural poor in an effort to minimize banks' administrative costs. In such a scenario, these micro enterprise loans can be profitable for both the borrowers and for the lenders thereby making microfinance one of the most effective poverty alleviation strategies. The functioning of such enterprises is simple: The loans are extended to individuals mainly through small groups who have in effect joint liability. These loans are for a wide range of purposes and collection is frequent, usually on a weekly basis. Moreover, the interest on such loans is comparatively lower than the exorbitant rates charged by the exploitative money-lenders. This helps to greatly reduce the transaction costs and enables people from the economically weaker sections of society to get access to relatively easy and timely credit to meet their production and consumption requirements. Over the years, the micro experience has demonstrated that contrary to expectations, poor people, when given access to responsive and timely financial services at market rates, repay their loans and use the proceeds responsibly to increase their income and assets. A plausible reason for this is that in the absence of such forms of relatively cheap credit, the rural poor would have to borrow funds at sky-high rates from the informal market consisting predominantly of the village money lenders. All these factors have contributed to the success of several micro enterprises in India and these institutions have the potential to extend the reach of rural credit to large sections of the rural population and effectively contribute to the grassroots-level development process.

Stumbling blocks and the road ahead. However, a few caveats are in order here: Although there is demand for credit by poor and women at market interest rates, the volume of financial transactions of microfinance institutions has to reach a certain level to ensure that their financial operations become self sustaining. Thus, the scale problem of microfinance needs to be resolved if it aspires to fulfill the market demand for financial services by the vast numbers of the rural poor which constitute its target group. There are some other hurdles which need to be surmounted before these institutions realize their enormous potential. Firstly, such enterprises should seek ways to reduce their transaction and administrative costs and also improve their access to various forms of capital. The former goal can be achieved in various ways like the simplification of the process of obtaining loans and the reduction in the average time taken to deal with customers while the latter objective can be realized by mobilizing savings, accessing capital markets, loan funds and effective institutional development support. And secondly, the critics point out that such micro-credit is not available to the poorest segments of society and there is a skewed growth of the Self-Help Groups across regions (SHG's) with the southern part of India accounting for the major share of the SHG credit while the relatively poor regions in the north-east, eastern and central regions account for only 0.2, 4.1 and 6.9 per cent of SHG credit. This fact highlights the growing need to involve various rural development agencies in the credit-extension process in order to achieve a fairer distribution of credit facilities across diverse regions, communities and backgrounds. These steps are critical to ensure that these micro-finance institutions truly accomplish the primary goal for which they were established which is alleviating poverty and accelerating the process of rural development in the most backward regions of India.

MICROFINANCE PLAYS A pivotal role in transforming the lives of the rural poor in India by extending timely and adequate credit facilities to them. Access to credit is crucial in order to break the vicious cycle of poverty that the marginalized sectors of the rural population are currently experiencing. In fact, microfinance institutions have an enormous amount of potential to address the credit needs of the rural poor and bring about a radical change in their economic and social status.

This is particularly important in a developing nation like India, where informal credit continues to occupy a substantial share of the rural credit market due to several advantages like collateral-free lending, proximity, timely delivery and flexibility in loan transactions. However, adequate steps need to be taken to ensure that the problems currently plaguing the formal credit delivery system do not seep through the micro-credit system thereby undermining its purpose and efficiency.

Microfinance in India:

Importance and functioning

Micro-credit institutions are slowly and steadily filling the gap that the large commercial banks, Regional Rural Banks (RRB's) and cooperatives have been unable to fill in the area of agricultural credit. Several factors like the convoluted lending practices, insufficient participation of the poor and excessive external interference by politicians and bureaucrats have hindered the ability of these formal institutions to act as viable sources of finance to the rural poor. Also, the lending practices of most commercial banks stipulate that borrowers must possess a stable source of income and have adequate collateral. Moreover, loans are only granted by these formal institutions for productive purposes and primarily to the bigger borrowers among the rural poor in an effort to minimize banks' administrative costs. In such a scenario, these micro enterprise loans can be profitable for both the borrowers and for the lenders thereby making microfinance one of the most effective poverty alleviation strategies. The functioning of such enterprises is simple: The loans are extended to individuals mainly through small groups who have in effect joint liability. These loans are for a wide range of purposes and collection is frequent, usually on a weekly basis. Moreover, the interest on such loans is comparatively lower than the exorbitant rates charged by the exploitative money-lenders. This helps to greatly reduce the transaction costs and enables people from the economically weaker sections of society to get access to relatively easy and timely credit to meet their production and consumption requirements. Over the years, the micro experience has demonstrated that contrary to expectations, poor people, when given access to responsive and timely financial services at market rates, repay their loans and use the proceeds responsibly to increase their income and assets. A plausible reason for this is that in the absence of such forms of relatively cheap credit, the rural poor would have to borrow funds at sky-high rates from the informal market consisting predominantly of the village money lenders. All these factors have contributed to the success of several micro enterprises in India and these institutions have the potential to extend the reach of rural credit to large sections of the rural population and effectively contribute to the grassroots-level development process.

Stumbling blocks and the road ahead. However, a few caveats are in order here: Although there is demand for credit by poor and women at market interest rates, the volume of financial transactions of microfinance institutions has to reach a certain level to ensure that their financial operations become self sustaining. Thus, the scale problem of microfinance needs to be resolved if it aspires to fulfill the market demand for financial services by the vast numbers of the rural poor which constitute its target group. There are some other hurdles which need to be surmounted before these institutions realize their enormous potential. Firstly, such enterprises should seek ways to reduce their transaction and administrative costs and also improve their access to various forms of capital. The former goal can be achieved in various ways like the simplification of the process of obtaining loans and the reduction in the average time taken to deal with customers while the latter objective can be realized by mobilizing savings, accessing capital markets, loan funds and effective institutional development support. And secondly, the critics point out that such micro-credit is not available to the poorest segments of society and there is a skewed growth of the Self-Help Groups across regions (SHG's) with the southern part of India accounting for the major share of the SHG credit while the relatively poor regions in the north-east, eastern and central regions account for only 0.2, 4.1 and 6.9 per cent of SHG credit. This fact highlights the growing need to involve various rural development agencies in the credit-extension process in order to achieve a fairer distribution of credit facilities across diverse regions, communities and backgrounds. These steps are critical to ensure that these micro-finance institutions truly accomplish the primary goal for which they were established which is alleviating poverty and accelerating the process of rural development in the most backward regions of India.

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India Invites Thailand to aid in Progress of Northeast

The Minister for Development of Northeastern Region Mani Shankar Aiyar invited Thailand to partake in the regions development. 'I invite them to invest in the road construction process in India's northeast, the terrain of which is very similar to that in Thailand.'

The Minister for Development of Northeastern Region Mani Shankar Aiyar invited Thailand to partake in the regions development. 'I invite them to invest in the road construction process in India's northeast, the terrain of which is very similar to that in Thailand.'

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IMF: China and India drive Growth in Asia

The International Monetary Fund (IMF) recently has published its semiannual World Economic Outlook report, stating that emerging Asian economies, mainly driven by China and India will see an overall growth of 8.4 percent this year. This means a slight reduction compared to last year's 8.9 percent. As reason for the lower pace of growth the IMF states the decline of US influence.

The International Monetary Fund (IMF) recently has published its semiannual World Economic Outlook report, stating that emerging Asian economies, mainly driven by China and India will see an overall growth of 8.4 percent this year. This means a slight reduction compared to last year's 8.9 percent. As reason for the lower pace of growth the IMF states the decline of US influence.

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Trade Between India and Pakistan Gains Momentum

Despite still existing barriers to trade and the strong leaning towards protectionism on both sides in the past, India and Pakistan have boosted their bilateral trade within the last five years from $235.74 million in 2001-02 to more than $ 1 billion last year. Within this period of time, Pakistan's exports to India have surged from 0.5 percent to 1.8 percent, and India's export has increased from 1.8 percent to 2.8 percent.

Despite still existing barriers to trade and the strong leaning towards protectionism on both sides in the past, India and Pakistan have boosted their bilateral trade within the last five years from $235.74 million in 2001-02 to more than $ 1 billion last year. Within this period of time, Pakistan's exports to India have surged from 0.5 percent to 1.8 percent, and India's export has increased from 1.8 percent to 2.8 percent.

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India and South Korea Reach Agreement on Duty/Tariff Cuts

India and South Korea concluded the sixth round of negotiations on a free trade agreement between the two countries. This present round was crucial because both countries were negotiating various levels of duty cuts on items, and finally agreed to open up 80% of the tariff lines to duty cuts and preferential treatment.

India and South Korea concluded the sixth round of negotiations on a free trade agreement between the two countries. This present round was crucial because both countries were negotiating various levels of duty cuts on items, and finally agreed to open up 80% of the tariff lines to duty cuts and preferential treatment.

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India-EU Free Trade Deal on the Rocks

The planned European Union and India free trade deal has come across some problems as to whether or not it should include clauses relating to human rights and weapons of mass destruction. Experts believe that the agreement is undesirable for India since it will reduce the country's control over its own economy. Recent research also shows that free trade deals often benefit the stronger party, which in this case is EU, hence, making India is on the losing end.

The planned European Union and India free trade deal has come across some problems as to whether or not it should include clauses relating to human rights and weapons of mass destruction. Experts believe that the agreement is undesirable for India since it will reduce the country's control over its own economy. Recent research also shows that free trade deals often benefit the stronger party, which in this case is EU, hence, making India is on the losing end.

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Indian Production Up in January

Production at India's factories, utilities, and mines grew 10.9% year-to-year in January. The growth was largely linked to strong consumer demand fueled by record bank lending. The central bank is expected to raise interest rates beyond their current record high to fight inflation, which is now at 6.1%. India is expected to grow 10% this year, ahead of the 9.9% expected growth rate of China.

Production at India's factories, utilities, and mines grew 10.9% year-to-year in January. The growth was largely linked to strong consumer demand fueled by record bank lending. The central bank is expected to raise interest rates beyond their current record high to fight inflation, which is now at 6.1%. India is expected to grow 10% this year, ahead of the 9.9% expected growth rate of China.

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Forging an India-Pakistan Economic Partnership

Forever tied by a shared history but broken apart by fate, India and Pakistan are like a divorced couple seeking retribution. The conflict has gone on for over half a century with the situation getting direr by the day. India and Pakistan need to look beyond their religious and political differences and open their eyes to the economic growth that could accrue through partnership.

Once Upon a Time…

When India and Pakistan were unified under British rule, there were great flows of trade between the two nations. Just as sound economic theory predicts, each specialized at which they had a comparative advantage. Pakistan exported their surpluses in jute, cotton, spices, food grains, dry fruits and condiments for Indian raw materials such as iron and coal and finished consumer products. There was strong bilateral trade up to twenty years after independence, a period in which more than 70 percent of Pakistan's trade was with India.

India-Pakistan Economic Relations Today

The economic relationship between India and Pakistan dissipated quickly with disputes like the fight over ownership of Kashmir. In 1996, India granted Pakistan Most Favored Nation (MFN) status in a gesture of peace but India still heavily subsidizes exports that put Pakistan at a disadvantage. As it stands today, India-Pakistan official bilateral trade accounts for only 1 percent of their respective global trade because of restrictions on the types of goods that can be traded. This restriction on traded goods has forced both countries to rely on trade with far-off countries for important raw materials, leading to high transportation costs. However, there is great potential for growth since contraband trade between the two regions accounts for five to eight times official trade.

Bilateral Trade Makes Sense

Economically speaking, India and Pakistan are a perfect match. Because of shared land borders, transportation costs are minimal. The goods in which each has a comparative advantage complement each other and could lead to economies of scale and greater efficiency. For example, India is the largest producer of tea and Pakistan is the second largest consumer of tea. Yet less than 1 percent of Pakistan's tea is imported from India while 60 percent is imported from Kenya, a location much farther away. Pakistan has to import coal, steel, and iron from the West, China, and South Korea when it could get it at half the price from India. Likewise, India has had to convert areas that are best suited for paddy cultivation to jute cropping when Pakistan banned the export of jute to India.

Lessening trade restrictions would not only expose consumers to a wider variety of goods at cheaper prices but manufacturers would have access to larger markets. Governments would also benefit from greater tax revenue currently lost to contraband trade. Currently, there are no joint ventures or direct investments between India and Pakistan and official bilateral trade between the two countries accounts for only $200-$250 million annually. According to the Strategic Foresight Group, if peace prevails and real synergies are formed between the two countries, bilateral trade can potentially reach $3-4 billion a year.

Policy Prescriptions

In order to reap the full benefits of trade liberalization, major goods should receive attention. India needs to lower its export subsidies so Pakistan does not feel threatened by Indian hegemony. In return, Pakistan needs to reciprocate the Most Favored Nation standing to India. Common tastes and cultures should help create a regional market for goods.

If targeted right, joint ventures in certain industries could provide huge benefits. Collaboration on technology enhancement is one such benefit. Pakistan could see great benefits from access to the Indian Council of Scientific and Industrial Research and its 2000 industrial technologies. India would benefit from the Pakistan Council of Scientific and Industrial Research and its improved techniques in food and fermentation technology, ore processing, metallurgy, fine chemicals, and polymers. Cooperative technology in agriculture, the industry that employs the most people in both countries, would be cost effective and give way to greater yields through improved pest control and seed breeding.

A lack of water accessibility in Pakistan has been a real threat to economic growth and floods have hampered the region for centuries. One solution is creating a joint venture with India in water management that would effectively streamline their hydropower resources. This would create stability and lead to irrigation benefits and decreased risks of floods. Energy is another formidable area of partnership. Pakistan has an advantage in the production of electric power while India has strength in the engineering industries. Creating a continuous natural gas pipeline that extends across Pakistan and India would be more economically feasible than if each respective country built their own pipeline independently.

Consumers benefit from lower prices, companies benefit from larger markets and exposure to best practices and other efficiencies, and the government benefits from greater revenue from official trade. Perhaps most importantly, such linkages of interdependence would raise the stakes and go a long way in reducing hostilities. An economic partnership makes sense.

Forever tied by a shared history but broken apart by fate, India and Pakistan are like a divorced couple seeking retribution. The conflict has gone on for over half a century with the situation getting direr by the day. India and Pakistan need to look beyond their religious and political differences and open their eyes to the economic growth that could accrue through partnership.

Once Upon a Time…

When India and Pakistan were unified under British rule, there were great flows of trade between the two nations. Just as sound economic theory predicts, each specialized at which they had a comparative advantage. Pakistan exported their surpluses in jute, cotton, spices, food grains, dry fruits and condiments for Indian raw materials such as iron and coal and finished consumer products. There was strong bilateral trade up to twenty years after independence, a period in which more than 70 percent of Pakistan's trade was with India.

India-Pakistan Economic Relations Today

The economic relationship between India and Pakistan dissipated quickly with disputes like the fight over ownership of Kashmir. In 1996, India granted Pakistan Most Favored Nation (MFN) status in a gesture of peace but India still heavily subsidizes exports that put Pakistan at a disadvantage. As it stands today, India-Pakistan official bilateral trade accounts for only 1 percent of their respective global trade because of restrictions on the types of goods that can be traded. This restriction on traded goods has forced both countries to rely on trade with far-off countries for important raw materials, leading to high transportation costs. However, there is great potential for growth since contraband trade between the two regions accounts for five to eight times official trade.

Bilateral Trade Makes Sense

Economically speaking, India and Pakistan are a perfect match. Because of shared land borders, transportation costs are minimal. The goods in which each has a comparative advantage complement each other and could lead to economies of scale and greater efficiency. For example, India is the largest producer of tea and Pakistan is the second largest consumer of tea. Yet less than 1 percent of Pakistan's tea is imported from India while 60 percent is imported from Kenya, a location much farther away. Pakistan has to import coal, steel, and iron from the West, China, and South Korea when it could get it at half the price from India. Likewise, India has had to convert areas that are best suited for paddy cultivation to jute cropping when Pakistan banned the export of jute to India.

Lessening trade restrictions would not only expose consumers to a wider variety of goods at cheaper prices but manufacturers would have access to larger markets. Governments would also benefit from greater tax revenue currently lost to contraband trade. Currently, there are no joint ventures or direct investments between India and Pakistan and official bilateral trade between the two countries accounts for only $200-$250 million annually. According to the Strategic Foresight Group, if peace prevails and real synergies are formed between the two countries, bilateral trade can potentially reach $3-4 billion a year.

Policy Prescriptions

In order to reap the full benefits of trade liberalization, major goods should receive attention. India needs to lower its export subsidies so Pakistan does not feel threatened by Indian hegemony. In return, Pakistan needs to reciprocate the Most Favored Nation standing to India. Common tastes and cultures should help create a regional market for goods.

If targeted right, joint ventures in certain industries could provide huge benefits. Collaboration on technology enhancement is one such benefit. Pakistan could see great benefits from access to the Indian Council of Scientific and Industrial Research and its 2000 industrial technologies. India would benefit from the Pakistan Council of Scientific and Industrial Research and its improved techniques in food and fermentation technology, ore processing, metallurgy, fine chemicals, and polymers. Cooperative technology in agriculture, the industry that employs the most people in both countries, would be cost effective and give way to greater yields through improved pest control and seed breeding.

A lack of water accessibility in Pakistan has been a real threat to economic growth and floods have hampered the region for centuries. One solution is creating a joint venture with India in water management that would effectively streamline their hydropower resources. This would create stability and lead to irrigation benefits and decreased risks of floods. Energy is another formidable area of partnership. Pakistan has an advantage in the production of electric power while India has strength in the engineering industries. Creating a continuous natural gas pipeline that extends across Pakistan and India would be more economically feasible than if each respective country built their own pipeline independently.

Consumers benefit from lower prices, companies benefit from larger markets and exposure to best practices and other efficiencies, and the government benefits from greater revenue from official trade. Perhaps most importantly, such linkages of interdependence would raise the stakes and go a long way in reducing hostilities. An economic partnership makes sense.

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india

India's Overheated Economy

THE SPECTACULAR growth of India's economy during the last decade has stunned many worldwide. Currently, India's annual growth rate of over 9 percent is surpassed in Asia only by China. However, it is widely believed by many experts that this pace of expansion is unsustainable in the foreseeable future. This has largely been attributed to the widespread inflationary fears which threaten to impair the economy's strong growth momentum. In fact, this has put the central bank of the nation, the Reserve Bank of India, in the predicament of attempting to prevent prices from soaring without slamming the brakes on the economy.

Inflationary Woes: An Impediment to Growth

The biggest challenge for the Reserve Bank of India's governor, Mr. Y.V. Reddy, is to take adequate measures to curtail the inflation slowly taking root in the domestic economy. This is problematic, since India's monetary policy is still in the experimental stage, according to former central bank governor, Mr. Bimal Jalan.1 In India, interest rate changes can take up to two years to take effect on the economy.2 This is in sharp contrast to the developed countries where the time span needed to achieve the requisite results is much shorter. Despite the recent interest rate hikes initiated by the central bank, the results are not particularly encouraging. The wholesale-price index (WPI), the most commonly used measure of the price of food, rose to an annualized 6.6 percent in the week ending January 27th, which is a two-year high and sharply above the ceiling of 5.5 percent set by the Reserve Bank of India (RBI).3 It has prompted the government to take necessary precautions to prevent the economy from getting derailed from its present growth. However, it is widely recognized that the modest monetary tightening by the RBI is not going to achieve the desired results. Far more stringent long-term measures are needed to sustain the current pace of the country's growth.

Other Ominous Signs

Experts who closely track the Indian economy share the view that there are signs of overheating. Demand is outpacing supply, resulting in an unsustainable pace of growth. Capacity utilization is higher than at any time in the past decade and the resultant severe shortage of skills have caused wages to skyrocket.4 Another factor to be considered is that India's tremendous economic growth rates have attracted a huge amount of ‘hot money' from foreigners seeking quick returns on their investments. This is in sharp contrast to India's closest competitor in the region, China, which receives a greater percentage of its foreign investment in the form of assets such as factories, making it much harder for foreign investors to liquidate.5 The credit boom brought about by the relatively relaxed credit policies adopted by the banks and other financial institutions in the country have made matters worse. Lending on commercial property is up by 84 percent and home mortgages by 32 percent and asset prices are tremendously over-priced at present.6 The recent boom in the financial markets are well-documented and have made India's stock markets one of the most expensive in the world with an extraordinarily high price-earning ratio exceeding 20.7 In order to prevent a potential financial crisis from wreaking havoc on the economy, much needs to be done to ensure that supply keeps pace with the sharp rise in the demand.

The Road Ahead: Opportunities for Development

One alternative to slowing down the demand would be to speed up reforms, improve the country's physical infrastructure and overhaul the archaic educational system. However, these are long-term solutions which not only involve substantial outlays of money, but would produce the desired results only after a period of time. This is worrisome because the budget deficits of the central and state governments are currently close to 6.2 percent of GDP.8 The budget deficit would widen if there were to be a slowdown in the domestic economy or if the interest rates rose in a bid to attract and retain foreign players investing money in the country. The current efforts of the government in the above mentioned reforms can at best be classified as meek and insubstantial. The government has to take extremely comprehensive and rigorous steps, especially in the areas of infrastructure spending, public services and labor law reforms, if it truly aspires to translate its long-term potential into a sustainable pattern of growth for the future generations.

THE SPECTACULAR growth of India's economy during the last decade has stunned many worldwide. Currently, India's annual growth rate of over 9 percent is surpassed in Asia only by China. However, it is widely believed by many experts that this pace of expansion is unsustainable in the foreseeable future. This has largely been attributed to the widespread inflationary fears which threaten to impair the economy's strong growth momentum. In fact, this has put the central bank of the nation, the Reserve Bank of India, in the predicament of attempting to prevent prices from soaring without slamming the brakes on the economy.

Inflationary Woes: An Impediment to Growth

The biggest challenge for the Reserve Bank of India's governor, Mr. Y.V. Reddy, is to take adequate measures to curtail the inflation slowly taking root in the domestic economy. This is problematic, since India's monetary policy is still in the experimental stage, according to former central bank governor, Mr. Bimal Jalan.1 In India, interest rate changes can take up to two years to take effect on the economy.2 This is in sharp contrast to the developed countries where the time span needed to achieve the requisite results is much shorter. Despite the recent interest rate hikes initiated by the central bank, the results are not particularly encouraging. The wholesale-price index (WPI), the most commonly used measure of the price of food, rose to an annualized 6.6 percent in the week ending January 27th, which is a two-year high and sharply above the ceiling of 5.5 percent set by the Reserve Bank of India (RBI).3 It has prompted the government to take necessary precautions to prevent the economy from getting derailed from its present growth. However, it is widely recognized that the modest monetary tightening by the RBI is not going to achieve the desired results. Far more stringent long-term measures are needed to sustain the current pace of the country's growth.

Other Ominous Signs

Experts who closely track the Indian economy share the view that there are signs of overheating. Demand is outpacing supply, resulting in an unsustainable pace of growth. Capacity utilization is higher than at any time in the past decade and the resultant severe shortage of skills have caused wages to skyrocket.4 Another factor to be considered is that India's tremendous economic growth rates have attracted a huge amount of ‘hot money' from foreigners seeking quick returns on their investments. This is in sharp contrast to India's closest competitor in the region, China, which receives a greater percentage of its foreign investment in the form of assets such as factories, making it much harder for foreign investors to liquidate.5 The credit boom brought about by the relatively relaxed credit policies adopted by the banks and other financial institutions in the country have made matters worse. Lending on commercial property is up by 84 percent and home mortgages by 32 percent and asset prices are tremendously over-priced at present.6 The recent boom in the financial markets are well-documented and have made India's stock markets one of the most expensive in the world with an extraordinarily high price-earning ratio exceeding 20.7 In order to prevent a potential financial crisis from wreaking havoc on the economy, much needs to be done to ensure that supply keeps pace with the sharp rise in the demand.

The Road Ahead: Opportunities for Development

One alternative to slowing down the demand would be to speed up reforms, improve the country's physical infrastructure and overhaul the archaic educational system. However, these are long-term solutions which not only involve substantial outlays of money, but would produce the desired results only after a period of time. This is worrisome because the budget deficits of the central and state governments are currently close to 6.2 percent of GDP.8 The budget deficit would widen if there were to be a slowdown in the domestic economy or if the interest rates rose in a bid to attract and retain foreign players investing money in the country. The current efforts of the government in the above mentioned reforms can at best be classified as meek and insubstantial. The government has to take extremely comprehensive and rigorous steps, especially in the areas of infrastructure spending, public services and labor law reforms, if it truly aspires to translate its long-term potential into a sustainable pattern of growth for the future generations.

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india

Japan and India Plan Energy Deal

Japanese and Indian trade officials will meet in April to discuss joint investment in oil and gas projects as well as the sale of Japanese power plant technology. The countries are the 4th and 5th largest energy users respectively and India needs much investment in energy production to keep pace with its projected 9% annual economic growth rate. Most attractive to India, is the use of Japanese clean-burning coal technology.

Japanese and Indian trade officials will meet in April to discuss joint investment in oil and gas projects as well as the sale of Japanese power plant technology. The countries are the 4th and 5th largest energy users respectively and India needs much investment in energy production to keep pace with its projected 9% annual economic growth rate. Most attractive to India, is the use of Japanese clean-burning coal technology.

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Indian Realty Draws Gulf Investors

Gulf Arab investors are looking to pour money into India's booming real estate market. The country's 8.1 percent economic growth in 2005-06 and a rapidly growing middle class have attracted the attention of developers and retailers.

Gulf Arab countries have a $227bn oil-fueled current account surplus to invest after the decline in Arab stock markets this year , and they know the Indian market well. Indian entrepreneurs have been conducting business with Gulf States such as the United Arab Emirates (UAE) for years, and many of the professionals managing Gulf funds are Indian expatriates.

The Reserve Bank of India (RBI) has prohibited most foreign investments for fear of a rise in inflation rates. The Indian government also enforces certain regulations in order to promote stable, long-term capital and discourage speculators. There is a $10m minimum investment size, and companies cannot withdraw these funds for at least three years.

The RBI knows it risks curtailing market growth if it continues to restrict investment. Outside investment will increase transparency and liquidity. Large-scale projects should also foster economies of scale.

The relaxation of real estate foreign direct investment (FDI) restrictions in April 2005 has drawn a number of Arab investors to India. Gulf investment flows are minimal, but India can expect to see drastic increases if restrictions are further reduced.

Future Developments Plans

The Dubai-based Emaar Properties is launching a $4bn investment plan to develop small towns in partnership with Indian developer MGF. The projects will be located in or near the capital New Delhi and throughout the Maharashtra state.

ETA Star and Nakheel, two other Dubai-based companies, are planning to build residential complexes and hotels respectively. Global Investment House, a Kuwaiti company, is considering properties in Bangalore, Chennai, Hyderabad, and Puna. It aims to invest $100m in residential and technological establishments in these cities.

Istithmar, a leading investment house in Dubai, has partnered with American International Group to create a real estate fund focused on emerging markets, including India.

Potential Barriers

Those looking for immediate returns may be deterred by high acquisition costs. The most expensive properties can be found in India's major cities New Delhi and Bombay. A buyer can expect to pay as much $1,000 per sq ft in Bombay and around $400 per sq ft in New Dehli. Bangalore and Pune trail closely behind at $125 per sq ft.

Investors may face other potential barriers. Development is vulnerable to policy shifts and other changes in government. A Dubai company, TECOM, who has already started work on a $1.2bn technology park in Kochi has come across this problem. The recently elected communist party in Kerala, where Kochi is located, is critical about the project. The two parties recently negotiated the issue. The results are yet to be announced.

The acquisition of property is also problematic due to restrictions on agricultural land, and partnerships with local developers are difficult to secure.

Current foreign aid accounts for a trifling 1 percent of the GDP. Many obstacles still remain as the real estate market opens to outside trade. Indian policy makers recognize the need to encourage aid. This should steadily increase the FDI.

Gulf Arab investors are looking to pour money into India's booming real estate market. The country's 8.1 percent economic growth in 2005-06 and a rapidly growing middle class have attracted the attention of developers and retailers.

Gulf Arab countries have a $227bn oil-fueled current account surplus to invest after the decline in Arab stock markets this year , and they know the Indian market well. Indian entrepreneurs have been conducting business with Gulf States such as the United Arab Emirates (UAE) for years, and many of the professionals managing Gulf funds are Indian expatriates.

The Reserve Bank of India (RBI) has prohibited most foreign investments for fear of a rise in inflation rates. The Indian government also enforces certain regulations in order to promote stable, long-term capital and discourage speculators. There is a $10m minimum investment size, and companies cannot withdraw these funds for at least three years.

The RBI knows it risks curtailing market growth if it continues to restrict investment. Outside investment will increase transparency and liquidity. Large-scale projects should also foster economies of scale.

The relaxation of real estate foreign direct investment (FDI) restrictions in April 2005 has drawn a number of Arab investors to India. Gulf investment flows are minimal, but India can expect to see drastic increases if restrictions are further reduced.

Future Developments Plans

The Dubai-based Emaar Properties is launching a $4bn investment plan to develop small towns in partnership with Indian developer MGF. The projects will be located in or near the capital New Delhi and throughout the Maharashtra state.

ETA Star and Nakheel, two other Dubai-based companies, are planning to build residential complexes and hotels respectively. Global Investment House, a Kuwaiti company, is considering properties in Bangalore, Chennai, Hyderabad, and Puna. It aims to invest $100m in residential and technological establishments in these cities.

Istithmar, a leading investment house in Dubai, has partnered with American International Group to create a real estate fund focused on emerging markets, including India.

Potential Barriers

Those looking for immediate returns may be deterred by high acquisition costs. The most expensive properties can be found in India's major cities New Delhi and Bombay. A buyer can expect to pay as much $1,000 per sq ft in Bombay and around $400 per sq ft in New Dehli. Bangalore and Pune trail closely behind at $125 per sq ft.

Investors may face other potential barriers. Development is vulnerable to policy shifts and other changes in government. A Dubai company, TECOM, who has already started work on a $1.2bn technology park in Kochi has come across this problem. The recently elected communist party in Kerala, where Kochi is located, is critical about the project. The two parties recently negotiated the issue. The results are yet to be announced.

The acquisition of property is also problematic due to restrictions on agricultural land, and partnerships with local developers are difficult to secure.

Current foreign aid accounts for a trifling 1 percent of the GDP. Many obstacles still remain as the real estate market opens to outside trade. Indian policy makers recognize the need to encourage aid. This should steadily increase the FDI.

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india

Criticism of India's Trade Zone Policy

Criticism of India's Trade Zone Policy Sonia Gandhi, president of the Congress Party, has recently voiced her opposition to India's economic zoning initiative. The Special Economic Zones (SEZ) Act, which came into effect initially in February 2006, provides tax breaks to businesses. It aims to encourage foreign domestic investment and export-led growth. Gandhi is concerned about the diversion of agricultural land for business use.

The SEZ program has also aroused ire among members of the Finance Ministry, the Reserve Bank of India, and the International Monetary Fund (IMF).

Economists and large companies believe that the small size plots that the Indian parliament is allotting will not allow manufacturers to achieve economies of scale. Currently, 133 of the 265 SEZs are less than one square kilometer in size. The average size of a plot is 4.2 square kilometers. Kamal Nath the Commerce Minister and one of the strongest proponents of the policy argues that giant export-oriented manufacturing zones are not possible in India because of high population density and democracy.

The Finance Ministry has also reopened debate with a campaign against the SEZ program. It argues that initiative will cost the government US$19bn by 2010. Internal critics also question whether Finance Minister P. Chidambaram will reach his goal of reducing the budget deficit to 3.8 per cent of GDP this year. Kamal Nath believes that long term benefits outweigh short term costs. According to the Commerce Ministry estimates, the incentives will attract US$5bn to US$6bn of investment by the end of 2007.

Reserve Bank of India has expressed concern that SEZs could exacerbate the problem of unbalanced development; thereby, reducing investment in less developed areas. The Bank also objects to the fact that exporters will enjoy a tax free enclave for five years and further concessions for ten years.

The question that most concerns critics is whether SEZ's provide tax breaks for development that would have eventually taken place. The IMF's chief economist Raghuram Rajan holds that companies are taking advantage of the tax havens to shift production to SEZs. Rajan also anticipates that companies will use the designated plots for new development that would otherwise have taken place independently. The Indian government claims that SEZs will only facilitate new investment. According to Rajan, the government has unrealistic expectations. It has created excessive economic incentives and asked bureaucrats to prevent exploitation of the system. The result will be less revenue for the government and richer bureaucrats.

Many business leaders themselves criticize the policy. Bajaj Automobile owner and Chairman Mr. Rahul Bajaj and Infosys's Mr. Nandan Nilekani believe the tax breaks are unnecessary, but like other businessmen they too are taking advantage of the handout.

SEZs are a sign of the government's increased political will to create conditions for successful public-private partnerships. However, the Indian government seems to be skirting the core issues. While India may be widely recognized for its red hot economy, it is not the easiest place to do business. The International Finance Corporation, an affiliate of the World Bank, ranked India as 116 out of 155 nations for ease of doing business.

Poor governance, an underdeveloped infrastructure, need for further liberalization, insufficient privatization, caps on or prohibition of FDI in certain industries, and labor laws are only a few of the obstacles that investors face.

In the end, it seems that that the SEZs may prove beneficial to businesses, but do not address the gamut of problems that businesses face. They will likely fuel corruption and result in an unnecessary loss of much needed revenue for the Indian government.

Criticism of India's Trade Zone Policy Sonia Gandhi, president of the Congress Party, has recently voiced her opposition to India's economic zoning initiative. The Special Economic Zones (SEZ) Act, which came into effect initially in February 2006, provides tax breaks to businesses. It aims to encourage foreign domestic investment and export-led growth. Gandhi is concerned about the diversion of agricultural land for business use.

The SEZ program has also aroused ire among members of the Finance Ministry, the Reserve Bank of India, and the International Monetary Fund (IMF).

Economists and large companies believe that the small size plots that the Indian parliament is allotting will not allow manufacturers to achieve economies of scale. Currently, 133 of the 265 SEZs are less than one square kilometer in size. The average size of a plot is 4.2 square kilometers. Kamal Nath the Commerce Minister and one of the strongest proponents of the policy argues that giant export-oriented manufacturing zones are not possible in India because of high population density and democracy.

The Finance Ministry has also reopened debate with a campaign against the SEZ program. It argues that initiative will cost the government US$19bn by 2010. Internal critics also question whether Finance Minister P. Chidambaram will reach his goal of reducing the budget deficit to 3.8 per cent of GDP this year. Kamal Nath believes that long term benefits outweigh short term costs. According to the Commerce Ministry estimates, the incentives will attract US$5bn to US$6bn of investment by the end of 2007.

Reserve Bank of India has expressed concern that SEZs could exacerbate the problem of unbalanced development; thereby, reducing investment in less developed areas. The Bank also objects to the fact that exporters will enjoy a tax free enclave for five years and further concessions for ten years.

The question that most concerns critics is whether SEZ's provide tax breaks for development that would have eventually taken place. The IMF's chief economist Raghuram Rajan holds that companies are taking advantage of the tax havens to shift production to SEZs. Rajan also anticipates that companies will use the designated plots for new development that would otherwise have taken place independently. The Indian government claims that SEZs will only facilitate new investment. According to Rajan, the government has unrealistic expectations. It has created excessive economic incentives and asked bureaucrats to prevent exploitation of the system. The result will be less revenue for the government and richer bureaucrats.

Many business leaders themselves criticize the policy. Bajaj Automobile owner and Chairman Mr. Rahul Bajaj and Infosys's Mr. Nandan Nilekani believe the tax breaks are unnecessary, but like other businessmen they too are taking advantage of the handout.

SEZs are a sign of the government's increased political will to create conditions for successful public-private partnerships. However, the Indian government seems to be skirting the core issues. While India may be widely recognized for its red hot economy, it is not the easiest place to do business. The International Finance Corporation, an affiliate of the World Bank, ranked India as 116 out of 155 nations for ease of doing business.

Poor governance, an underdeveloped infrastructure, need for further liberalization, insufficient privatization, caps on or prohibition of FDI in certain industries, and labor laws are only a few of the obstacles that investors face.

In the end, it seems that that the SEZs may prove beneficial to businesses, but do not address the gamut of problems that businesses face. They will likely fuel corruption and result in an unnecessary loss of much needed revenue for the Indian government.

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india

Asian Markets Fall Again After Rebound

Chinese stocks fell again after rebounding Wednesday from their biggest drop in a decade. Elsewhere, Japan, Taiwan, Hong Kong, Singapore, Australia, and New Zealand markets were all down. The Philippines, India, Pakistan, Thailand and Indonesia indices were up, with the Philippines' rise as the region's biggest gain of the day after seeing Asia's biggest drop Wednesday at 7.9 percent.

Chinese stocks fell again after rebounding Wednesday from their biggest drop in a decade. Elsewhere, Japan, Taiwan, Hong Kong, Singapore, Australia, and New Zealand markets were all down. The Philippines, India, Pakistan, Thailand and Indonesia indices were up, with the Philippines' rise as the region's biggest gain of the day after seeing Asia's biggest drop Wednesday at 7.9 percent.

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india

India Finds Ways to Extend Growth

The Indian government has announced plans to slash import tariffs and invest heavily in agriculture and infrastructure to curb inflation and spur growth. The economy slowed to an 8.6% growth rate in the fourth quarter of 2006, largely held back by slow growth in the farming sector. The government plans to increase spending on ports, roads and farms in order to maintain the high growth seen recently in Asia's fourth largest economy.

The Indian government has announced plans to slash import tariffs and invest heavily in agriculture and infrastructure to curb inflation and spur growth. The economy slowed to an 8.6% growth rate in the fourth quarter of 2006, largely held back by slow growth in the farming sector. The government plans to increase spending on ports, roads and farms in order to maintain the high growth seen recently in Asia's fourth largest economy.

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Homeward Bound for India's Diaspora

India has suffered a net brain drain over the past three decades as many of its best and most skilled professionals moved to countries that provide better opportunities. The result has been economically devastating. However, with India's rapidly growing economy we may see a return of India's diaspora, made up of 25 million people, back to their homeland. This could result in what is called a "brain gain." As a report by AeA, an American trade body, aptly titled "America's brain drain will be India's brain gain" - that time is near. Recent literature on diasporas has been focused on remittances, of which India has been the largest beneficiary. However, such a focus on financial inflows does not consider the negative effect of human capital outflows. The focus should be on the impact of the return of high skilled workers and implementation of policies that will attract more Indians to return home.

Impact of a Reverse Brain Drain

In recent years, India's brain drain has resulted in a US brain gain. The US alone received a total of 42,046 Indians in 2000, 26,232 of which became nationalized citizens – most of whom were skilled professionals and entrepreneurs. Additionally, Jagdish Bhagwati, a world renowned trade economist and Professor at Columbia University, argues that Indians immigrate during their most productive years. According to the United Nations Human Development Report in 2000, brain drain represents a $2 billion annual loss to India.

A reversal of the brain drain that began in the 1970s would have a huge beneficial impact on the economy as the Non Resident Indians (NRIs) of today are bona fide skilled professionals and entrepreneurs unlike the NRIs of yesteryears, a group that was largely composed of blue collar workers.1 These NRIs would bring with them transferable skills offering best practices and cutting edge skills that could lead to spillover effects as well as capital remitted from abroad. Given the skills that many NRIs have achieved in the West, they have great potential to improve public governance and to help the urban poor.

India Warms to Diaspora

A catalyst for this brain gain is India's newfound enthusiasm for its NRI base as their government has realized the enormous positive impact the diaspora could have if it returned. Legislation passed in 2003 that permits dual nationality for Indians based in seven developed countries is part of a growing trend of interest in NRIs – a reversal of India's long time distrust of NRIs.2 The Overseas Citizenship Certificate allows most of the benefits of full citizenship without having to give up a foreign passport. Furthermore, a Ministry of Overseas Indian Affairs has been established as well as a number of programs to attract NRI intellectuals and professors to Indian universities. 3

India's Attractiveness

While the IT sector is a big part of it, as 35,000 NRI software professionals returned home permanently – mostly to IT rich Bangalore - between 2002 and 2003,4 diverse job opportunities abound in finance, telecommunications, pharmaceuticals, and R&D. Indian companies continue to grow in scale through buyouts, mergers and acquisitions and foreign multinationals are increasing their exposure in India.

Job opportunities are, however, just part of the equation. Add in rapidly increasing economic growth (projected at 9.2 percent in 2007) and standards of living, a traditionally rich social life, improving schools and infrastructure, attractive housing, and strong family and cultural ties, and the temptation to return home permanently becomes very attractive. 5

Policy Prescriptions

To further encourage this brain gain, India needs to introduce policies that would attract the secondgeneration NRIs to spend time in their motherland through semester study abroad programs during their high school and college years or through internships at NGOs in India. Greater investment and further liberalization in education could attract NRIs to study in India and would go a long way in increasing its human capital if these Indians return permanently. There have been innovative solutions, such as the "dual degree" program put into place at the India Institute of Technology (IIT). Such solutions need to be broad based and new institutional frameworks need to be created that link universities to industries through creative partnerships that are hospitable to return migration policies. Shanghai's recent efforts of building centers for overseas scholars to develop businesses in development zones serve as a blueprint for Indian implementation.

While the government has made strides in welcoming back its diaspora, it needs to go further. Greater coordination across central and local governments and administrative and academic institutions are needed to allocate sufficient funds to higher education and concrete return-migration oriented policies.7 Two steps that would further attracts NRIs are agreements with industrialized countries so that returning NRIs do not suffer penalties for paying social security taxes and removing the military obligation for those holding dual citizenship.8 The Indian government could go even further by offering financial incentives through bonuses and other measures that would ease the transition. These measures could include job search services, housing discounts, and schooling arrangements. 9

India has taken small steps in encouraging a returning diaspora but more needs to be done if India is going to attract its best and brightest NRIs back home. During these times of economic prosperity, the task is a greater priority than ever before.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

India has suffered a net brain drain over the past three decades as many of its best and most skilled professionals moved to countries that provide better opportunities. The result has been economically devastating. However, with India's rapidly growing economy we may see a return of India's diaspora, made up of 25 million people, back to their homeland. This could result in what is called a "brain gain." As a report by AeA, an American trade body, aptly titled "America's brain drain will be India's brain gain" - that time is near. Recent literature on diasporas has been focused on remittances, of which India has been the largest beneficiary. However, such a focus on financial inflows does not consider the negative effect of human capital outflows. The focus should be on the impact of the return of high skilled workers and implementation of policies that will attract more Indians to return home.

Impact of a Reverse Brain Drain

In recent years, India's brain drain has resulted in a US brain gain. The US alone received a total of 42,046 Indians in 2000, 26,232 of which became nationalized citizens – most of whom were skilled professionals and entrepreneurs. Additionally, Jagdish Bhagwati, a world renowned trade economist and Professor at Columbia University, argues that Indians immigrate during their most productive years. According to the United Nations Human Development Report in 2000, brain drain represents a $2 billion annual loss to India.

A reversal of the brain drain that began in the 1970s would have a huge beneficial impact on the economy as the Non Resident Indians (NRIs) of today are bona fide skilled professionals and entrepreneurs unlike the NRIs of yesteryears, a group that was largely composed of blue collar workers.1 These NRIs would bring with them transferable skills offering best practices and cutting edge skills that could lead to spillover effects as well as capital remitted from abroad. Given the skills that many NRIs have achieved in the West, they have great potential to improve public governance and to help the urban poor.

India Warms to Diaspora

A catalyst for this brain gain is India's newfound enthusiasm for its NRI base as their government has realized the enormous positive impact the diaspora could have if it returned. Legislation passed in 2003 that permits dual nationality for Indians based in seven developed countries is part of a growing trend of interest in NRIs – a reversal of India's long time distrust of NRIs.2 The Overseas Citizenship Certificate allows most of the benefits of full citizenship without having to give up a foreign passport. Furthermore, a Ministry of Overseas Indian Affairs has been established as well as a number of programs to attract NRI intellectuals and professors to Indian universities. 3

India's Attractiveness

While the IT sector is a big part of it, as 35,000 NRI software professionals returned home permanently – mostly to IT rich Bangalore - between 2002 and 2003,4 diverse job opportunities abound in finance, telecommunications, pharmaceuticals, and R&D. Indian companies continue to grow in scale through buyouts, mergers and acquisitions and foreign multinationals are increasing their exposure in India.

Job opportunities are, however, just part of the equation. Add in rapidly increasing economic growth (projected at 9.2 percent in 2007) and standards of living, a traditionally rich social life, improving schools and infrastructure, attractive housing, and strong family and cultural ties, and the temptation to return home permanently becomes very attractive. 5

Policy Prescriptions

To further encourage this brain gain, India needs to introduce policies that would attract the secondgeneration NRIs to spend time in their motherland through semester study abroad programs during their high school and college years or through internships at NGOs in India. Greater investment and further liberalization in education could attract NRIs to study in India and would go a long way in increasing its human capital if these Indians return permanently. There have been innovative solutions, such as the "dual degree" program put into place at the India Institute of Technology (IIT). Such solutions need to be broad based and new institutional frameworks need to be created that link universities to industries through creative partnerships that are hospitable to return migration policies. Shanghai's recent efforts of building centers for overseas scholars to develop businesses in development zones serve as a blueprint for Indian implementation.

While the government has made strides in welcoming back its diaspora, it needs to go further. Greater coordination across central and local governments and administrative and academic institutions are needed to allocate sufficient funds to higher education and concrete return-migration oriented policies.7 Two steps that would further attracts NRIs are agreements with industrialized countries so that returning NRIs do not suffer penalties for paying social security taxes and removing the military obligation for those holding dual citizenship.8 The Indian government could go even further by offering financial incentives through bonuses and other measures that would ease the transition. These measures could include job search services, housing discounts, and schooling arrangements. 9

India has taken small steps in encouraging a returning diaspora but more needs to be done if India is going to attract its best and brightest NRIs back home. During these times of economic prosperity, the task is a greater priority than ever before.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

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India Accedes to the Madrid Protocol

In a move to strengthen intellectual property rights, the Indian government announced earlier this month the country's accession to the Madrid Protocol governing the international registration of trademarks. This move marks a much-needed initiative to register Indian trademarks in other countries, as the Indian trademark registration system had no provisions for international registration. India has been slower than most competitive economies to accede to the system, even though it set the ball rolling on the lengthy application procedure two years ago.

The Madrid Protocol

This low-cost method of registering trademarks administered by the World Intellectual Property Organization has the added advantage of registering a single trademark in multiple countries through a single, efficient application. This system greatly facilitates the changing, maintaining and renewing of the registration. Furthermore, the agreement specifies that "if the trademark office of a designated country does not refuse protection within a specified period, the protection of the mark is the same as if it had been registered by that office."1

The Madrid System consists of the Protocol, which came into force in 1996, and the much older Madrid Agreement of 1891. Filed under the agreement is the trademark of Swiss watch-maker Longines, the longest-standing international trademark registration still in existence. A country may become a party to either the Protocol or the Agreement or both. The Madrid system has 80 members, including the US, UK, Japan, and the countries of the European Union. China has been a member since 1989 and in recent years has become an important member, with over 40 percent of international applications received in 2006 designating China as one of the countries where the trademark would be registered.2

The Indian Case

India's success in the technology sector over the past decade has prompted it to strengthen protection of intellectual property rights. The Trade Marks Act of 1999 was one such important legislation, now being amended to include membership in the Madrid protocol. Given the rise of technology and export-oriented Indian firms, which stand to benefit the most, this has been a logical response. For multi-nationals, international trademark filing is a key step in protecting and promoting their trademarks internationally. For smaller and upcoming firms, the convenience and affordability offered by the Madrid system helps facilitate the registration process. More international credibility and confidence will be added to the Indian trademark system, as foreign companies too can better protect their trademarks in a country where such infringement occurs frequently.

It will be interesting to see how India's accession to the Protocol impacts the large pharmaceutical industry. Pharmaceutical companies have consistently been big users of this trademark registration process in Europe and America. Industry giants like Novartis and Merck rank among the top users of the system. According to a 2005 Best Practices study on trademarks, two out of every three American biotechnology or pharmaceutical firms planned to use the Madrid Protocol.3

While India's accession to the Madrid Protocol makes international trademark registration a simpler and cost-effective process, it also requires increased investment in infrastructure and personnel in the Indian Trademark Offices, driving up the cost for domestic trademark registration.4 Other general drawbacks include the inability to differentiate the scope of the brand protection from market to market and the adverse implications of the cancellation or refusal of the application.

There are clear benefits of being part of a system that includes many economically competitive countries, and trade partners. In October last year, WIPO registered the 900,000th trademark under the system. Even though there are limitations, it is better to be on the inside of such an agreement than to stay out.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

In a move to strengthen intellectual property rights, the Indian government announced earlier this month the country's accession to the Madrid Protocol governing the international registration of trademarks. This move marks a much-needed initiative to register Indian trademarks in other countries, as the Indian trademark registration system had no provisions for international registration. India has been slower than most competitive economies to accede to the system, even though it set the ball rolling on the lengthy application procedure two years ago.

The Madrid Protocol

This low-cost method of registering trademarks administered by the World Intellectual Property Organization has the added advantage of registering a single trademark in multiple countries through a single, efficient application. This system greatly facilitates the changing, maintaining and renewing of the registration. Furthermore, the agreement specifies that "if the trademark office of a designated country does not refuse protection within a specified period, the protection of the mark is the same as if it had been registered by that office."1

The Madrid System consists of the Protocol, which came into force in 1996, and the much older Madrid Agreement of 1891. Filed under the agreement is the trademark of Swiss watch-maker Longines, the longest-standing international trademark registration still in existence. A country may become a party to either the Protocol or the Agreement or both. The Madrid system has 80 members, including the US, UK, Japan, and the countries of the European Union. China has been a member since 1989 and in recent years has become an important member, with over 40 percent of international applications received in 2006 designating China as one of the countries where the trademark would be registered.2

The Indian Case

India's success in the technology sector over the past decade has prompted it to strengthen protection of intellectual property rights. The Trade Marks Act of 1999 was one such important legislation, now being amended to include membership in the Madrid protocol. Given the rise of technology and export-oriented Indian firms, which stand to benefit the most, this has been a logical response. For multi-nationals, international trademark filing is a key step in protecting and promoting their trademarks internationally. For smaller and upcoming firms, the convenience and affordability offered by the Madrid system helps facilitate the registration process. More international credibility and confidence will be added to the Indian trademark system, as foreign companies too can better protect their trademarks in a country where such infringement occurs frequently.

It will be interesting to see how India's accession to the Protocol impacts the large pharmaceutical industry. Pharmaceutical companies have consistently been big users of this trademark registration process in Europe and America. Industry giants like Novartis and Merck rank among the top users of the system. According to a 2005 Best Practices study on trademarks, two out of every three American biotechnology or pharmaceutical firms planned to use the Madrid Protocol.3

While India's accession to the Madrid Protocol makes international trademark registration a simpler and cost-effective process, it also requires increased investment in infrastructure and personnel in the Indian Trademark Offices, driving up the cost for domestic trademark registration.4 Other general drawbacks include the inability to differentiate the scope of the brand protection from market to market and the adverse implications of the cancellation or refusal of the application.

There are clear benefits of being part of a system that includes many economically competitive countries, and trade partners. In October last year, WIPO registered the 900,000th trademark under the system. Even though there are limitations, it is better to be on the inside of such an agreement than to stay out.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

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india

The Asian Stock Markets: Boom or Bust?

The year 2006 for the Asian stock markets saw unprecedented gains of the kind rarely witnessed. The stock markets of China, Hong Kong, Singapore, India, Indonesia, Malaysia, New Zealand and Vietnam hit record highs while Japan, South Korea and Taiwan also posted muted though respectable gains. With this state of affairs, it was perhaps unsurprising that global investors flocked to the Asian markets just hoping to reap some of the big rewards. However, some people feel that the amazing growth of these stock markets needs to be tempered with a healthy dose of caution since the nightmarish memories of the 1997-meltdown in the region's equity markets just refuse to die out. This has raised a few doubts among analysts studying the region and has prompted many to be skeptical about the potential growth prospects of these markets in the future.

A Year of Skyrocketing Growth

During the last few years, many stock markets in Asia have been rising rapidly. In China, during 2006, stocks in the home market sizzled, at long last reflecting the country's gathering economic might after years of paltry returns. The MSCI China A, an index of domestically listed stocks, soared 128 percent.1 The scenario was also quite rosy in India when the Bombay stock exchange rocketed another 46.7 percent in 2006.2 Elsewhere in the region, markets bolted ahead on sound economic fundamentals, with markets in Indonesia, the Philippines and Singapore returning 55.3 percent, 42.3 percent and 27.2 percent, respectively.3 Even the so-called stragglers, Taiwan and Malaysia, clocked returns of 19.5 percent and 21.8 percent in 2006, a reflection of just how turbo-charged the growth trend has been. The only disappointments were South Korea which rose by a modest 4 percent last year and Japan, which, contrary to expectations, managed to end the year up only 6.9 percent. This is creditable given that these enormous returns occurred despite a plunge in the region's stock markets during May and June, when foreign investors were spooked by the prospect of rising interest rates and fled riskier assets.4 With massive investor confidence and a huge amount of global liquidity, it is no wonder that there has been a mad rush by global investors to invest in the region.

Factors Driving the Growth

Many changes have transformed the domestic economies of the Asian region radically over the last decade. Many market watchers believe that these emerging economies are on a much surer financial footing than in the past. Many have pared their deficits, increased their reserves and reduced their dependence on exports to the US, thereby decreasing their vulnerability to a potential US economic slowdown.5 Some investors believe that these countries are finally beginning to decouple from the US economy either by trading more among themselves or relying more on local consumer demand.6 Skeptics discount this hypothesis and consider it too early to draw conclusions. A slow US economy could still trigger a region-wide recession in the near future.

Impediments to Sustainable Growth

Despite all the hype and hoopla surrounding the Asian economies and their booming stock markets, the future growth outlook for these economies is strangely benign. Experts believe that even though Asia is presently more resilient to a US slowdown than in the past, a drastic slowdown to the US economy might seriously upset the status quo. Currently, investor sentiment remains strong as evidenced by several positive factors like lower international oil prices and a recovery staged by Wall Street after the mid-year slump in 2006. However, financial markets might feel the impact if institutional investors in the US and Europe become more risk-averse, or if the global liquidity that has been funding portfolio investment in Asia dries up.7 The region is still highly export-dependent and vulnerable to developments in the US. In fact, many of the goods traded within Asia are still used as inputs for products that are ultimately sold to the US and other OECD economies.8 These emerging economies are currently characterized by weak inflation levels, strong growth, solvent governments and a lesser degree of dependence on foreign money to finance their investment requirements.9 Although the domestic economies in Asia seem to be in impressive shape, they remain vulnerable to disruption if investment-positive factors begin to wane. Potential investors should exercise a significant degree of caution and restraint while deciding whether or not to invest their money in Asia's growing bourses.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

The year 2006 for the Asian stock markets saw unprecedented gains of the kind rarely witnessed. The stock markets of China, Hong Kong, Singapore, India, Indonesia, Malaysia, New Zealand and Vietnam hit record highs while Japan, South Korea and Taiwan also posted muted though respectable gains. With this state of affairs, it was perhaps unsurprising that global investors flocked to the Asian markets just hoping to reap some of the big rewards. However, some people feel that the amazing growth of these stock markets needs to be tempered with a healthy dose of caution since the nightmarish memories of the 1997-meltdown in the region's equity markets just refuse to die out. This has raised a few doubts among analysts studying the region and has prompted many to be skeptical about the potential growth prospects of these markets in the future.

A Year of Skyrocketing Growth

During the last few years, many stock markets in Asia have been rising rapidly. In China, during 2006, stocks in the home market sizzled, at long last reflecting the country's gathering economic might after years of paltry returns. The MSCI China A, an index of domestically listed stocks, soared 128 percent.1 The scenario was also quite rosy in India when the Bombay stock exchange rocketed another 46.7 percent in 2006.2 Elsewhere in the region, markets bolted ahead on sound economic fundamentals, with markets in Indonesia, the Philippines and Singapore returning 55.3 percent, 42.3 percent and 27.2 percent, respectively.3 Even the so-called stragglers, Taiwan and Malaysia, clocked returns of 19.5 percent and 21.8 percent in 2006, a reflection of just how turbo-charged the growth trend has been. The only disappointments were South Korea which rose by a modest 4 percent last year and Japan, which, contrary to expectations, managed to end the year up only 6.9 percent. This is creditable given that these enormous returns occurred despite a plunge in the region's stock markets during May and June, when foreign investors were spooked by the prospect of rising interest rates and fled riskier assets.4 With massive investor confidence and a huge amount of global liquidity, it is no wonder that there has been a mad rush by global investors to invest in the region.

Factors Driving the Growth

Many changes have transformed the domestic economies of the Asian region radically over the last decade. Many market watchers believe that these emerging economies are on a much surer financial footing than in the past. Many have pared their deficits, increased their reserves and reduced their dependence on exports to the US, thereby decreasing their vulnerability to a potential US economic slowdown.5 Some investors believe that these countries are finally beginning to decouple from the US economy either by trading more among themselves or relying more on local consumer demand.6 Skeptics discount this hypothesis and consider it too early to draw conclusions. A slow US economy could still trigger a region-wide recession in the near future.

Impediments to Sustainable Growth

Despite all the hype and hoopla surrounding the Asian economies and their booming stock markets, the future growth outlook for these economies is strangely benign. Experts believe that even though Asia is presently more resilient to a US slowdown than in the past, a drastic slowdown to the US economy might seriously upset the status quo. Currently, investor sentiment remains strong as evidenced by several positive factors like lower international oil prices and a recovery staged by Wall Street after the mid-year slump in 2006. However, financial markets might feel the impact if institutional investors in the US and Europe become more risk-averse, or if the global liquidity that has been funding portfolio investment in Asia dries up.7 The region is still highly export-dependent and vulnerable to developments in the US. In fact, many of the goods traded within Asia are still used as inputs for products that are ultimately sold to the US and other OECD economies.8 These emerging economies are currently characterized by weak inflation levels, strong growth, solvent governments and a lesser degree of dependence on foreign money to finance their investment requirements.9 Although the domestic economies in Asia seem to be in impressive shape, they remain vulnerable to disruption if investment-positive factors begin to wane. Potential investors should exercise a significant degree of caution and restraint while deciding whether or not to invest their money in Asia's growing bourses.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

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India Must Produce More to Curb Inflation

India must increase its production of products like wheat, steel, and cement in order to quell surging inflation, the finance ministry announced today. Current demand for these products is outpacing supply, causing inflation to hit a 2-year high. The Indian Central Bank has raised its key interest rate 5 times in the last year and import tariffs on many products have been lifted in order to slow inflation.

India must increase its production of products like wheat, steel, and cement in order to quell surging inflation, the finance ministry announced today. Current demand for these products is outpacing supply, causing inflation to hit a 2-year high. The Indian Central Bank has raised its key interest rate 5 times in the last year and import tariffs on many products have been lifted in order to slow inflation.

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Nissan Plans to Build Cars in India

Japanese auto firm Nissan has plans to begin building cars in India. The firm will partner with Renault and Mahindra & Mahindra Ltd. to build a factory in the southern city of Chennai. Automotive manufacturing investment in India is predicted to total $5 billion by 2012.

Japanese auto firm Nissan has plans to begin building cars in India. The firm will partner with Renault and Mahindra & Mahindra Ltd. to build a factory in the southern city of Chennai. Automotive manufacturing investment in India is predicted to total $5 billion by 2012.

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india

India to Pay Interest on Reserves

The central bank of India has announced that it will retroactively pay interest on extra reserves it asked Indian banks to withhold in recent months. The RBI had ceased paying interest on reserves based on a regulatory change but decided to continue the practice until further notice. The increase in the reserve ratio, as well as increases in lending rates, was made to curb inflation.

The central bank of India has announced that it will retroactively pay interest on extra reserves it asked Indian banks to withhold in recent months. The RBI had ceased paying interest on reserves based on a regulatory change but decided to continue the practice until further notice. The increase in the reserve ratio, as well as increases in lending rates, was made to curb inflation.

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india

India's Economic Boom Reliant on Democratic Politics

India is a low-income democracy, so it must nurture its entrepreneurs in the short-run, despite the fact that it may cause resentment among the masses. The way the government handles this issue is integral in the country's economic future. India also has government transition rules deeply institutionalized in its political system. Thus, new firms and labor can continue to make their mark on the international scene due to India's stability

India is a low-income democracy, so it must nurture its entrepreneurs in the short-run, despite the fact that it may cause resentment among the masses. The way the government handles this issue is integral in the country's economic future. India also has government transition rules deeply institutionalized in its political system. Thus, new firms and labor can continue to make their mark on the international scene due to India's stability

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india

India's Special Economic Zones Cause Protest

The presence of special economic zones (SEZs) in India has lead to widespread protests and turmoil within the political parties of India. SEZs are export-oriented tax-free enclaves that support industry. Many believe that the policies discriminate against the underprivileged small landholders, give favors to businesses through undeserved tax breaks, and create few benefits in relation to the number of people they affect. The government of India has agreed to look at this domestic economic problem further.

 

The presence of special economic zones (SEZs) in India has lead to widespread protests and turmoil within the political parties of India. SEZs are export-oriented tax-free enclaves that support industry. Many believe that the policies discriminate against the underprivileged small landholders, give favors to businesses through undeserved tax breaks, and create few benefits in relation to the number of people they affect. The government of India has agreed to look at this domestic economic problem further.

 

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india

Citigroup to Invest in India and China

A Hong Kong-based team from Citigroup has raised $1.29 billion for its first fund to invest in real estate in Asia, with a focus on China and India. This announcement comes a day after Citigroup announced plans to invest $3.5 billion in companies in emerging markets, including India and China.

A Hong Kong-based team from Citigroup has raised $1.29 billion for its first fund to invest in real estate in Asia, with a focus on China and India. This announcement comes a day after Citigroup announced plans to invest $3.5 billion in companies in emerging markets, including India and China.

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india

Indian Money Supply Sees High Growth in 2007

In a recent 2 week span, one of the measures of money supply in India saw the fastest growth recorded in 9 years. The M3 measurement hit US$706 billion on Feb 2, a 21.3% increase from the year before.

In a recent 2 week span, one of the measures of money supply in India saw the fastest growth recorded in 9 years. The M3 measurement hit US$706 billion on Feb 2, a 21.3% increase from the year before.

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india

China, India, Russia Vow to Cooperate on Regional Disputes

The foreign ministers of China, India, and Russia pledged to cooperate and solve disputes ranging from energy to insurgency issues. The three foreign ministers agreed that cooperation is the right approach to regional and global affairs. They also called for strengthening the United Nations to promote the "democratisation of international relations" to build a multi-polar world.

The foreign ministers of China, India, and Russia pledged to cooperate and solve disputes ranging from energy to insurgency issues. The three foreign ministers agreed that cooperation is the right approach to regional and global affairs. They also called for strengthening the United Nations to promote the "democratisation of international relations" to build a multi-polar world.

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Doing Business Easier in India, Pakistan

The World Bank released a new regional report that doing business became easier in India and Pakistan in 2005-2006. The report also indicated that India's five reforms and Pakistan's two reforms reduced the time, cost, and hassle for business to comply with legal and administrative requirements.

The World Bank released a new regional report that doing business became easier in India and Pakistan in 2005-2006. The report also indicated that India's five reforms and Pakistan's two reforms reduced the time, cost, and hassle for business to comply with legal and administrative requirements.

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China and India Announce Joint Venture

An Indian software firm has announced a partnership with three Chinese firms to create a joint venture that will employ some 5,000 Chinese. The new firm, announced by Tata Consultancy Services, will be one of the five largest software companies in China. China lags far behind its southern neighbor in software exporting, though its domestic industry has been growing 30-40% yearly.

An Indian software firm has announced a partnership with three Chinese firms to create a joint venture that will employ some 5,000 Chinese. The new firm, announced by Tata Consultancy Services, will be one of the five largest software companies in China. China lags far behind its southern neighbor in software exporting, though its domestic industry has been growing 30-40% yearly.

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Toyota's Indian Aspiration: Build Cars, Profits in India

Toyota announces plans for a new factory in Bangalore India. Toyota began Indian manufacturing efforts in 1999, producing the Toyota Corolla and Innova Minivan, each model costing consumers more than US$20,000. The next plant hopes to produce 100,000 cars per year at an average cost of less than US$8,500, keying in on the largest consumer market in India.

Toyota announces plans for a new factory in Bangalore India. Toyota began Indian manufacturing efforts in 1999, producing the Toyota Corolla and Innova Minivan, each model costing consumers more than US$20,000. The next plant hopes to produce 100,000 cars per year at an average cost of less than US$8,500, keying in on the largest consumer market in India.

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Indian Government Announces Oil & Food Bonds

The Indian Government announced a slew of bonds, including 50 Trillion Rupees (US$ 1.1 trillion) and 62 trillion Rupees (US$ 1.4trillion) for state owned oil marketing companies and the Food Corporation of Indian, respectively. The Oil bonds carry a coupon rate of 8.2% for 17 years, while the Food Corporation bonds will carry 9.23% for 20 years.

The Indian Government announced a slew of bonds, including 50 Trillion Rupees (US$ 1.1 trillion) and 62 trillion Rupees (US$ 1.4trillion) for state owned oil marketing companies and the Food Corporation of Indian, respectively. The Oil bonds carry a coupon rate of 8.2% for 17 years, while the Food Corporation bonds will carry 9.23% for 20 years.

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Does Capital Account Openness Lower Inflation?

This paper investigates the relationship between capital account openness and inflation since the 1980s. It argues that widespread capital account liberalization during the last two decades appears to have contributed to the worldwide disinflation observed during the same period. The paper builds a theoretical model to motivate the presence of a negative link between financial integration and inflation. It tests the prediction of the theoretical model by employing static and dynamic panel data procedures. Financial integration appears to discipline monetary authorities, or to help them convince the private sector that they will be more disciplined in the future.

This paper investigates the relationship between capital account openness and inflation since the 1980s. It argues that widespread capital account liberalization during the last two decades appears to have contributed to the worldwide disinflation observed during the same period. The paper builds a theoretical model to motivate the presence of a negative link between financial integration and inflation. It tests the prediction of the theoretical model by employing static and dynamic panel data procedures. Financial integration appears to discipline monetary authorities, or to help them convince the private sector that they will be more disciplined in the future.

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The Indian Retail Revolution

GOOD TIMES lie ahead for the retailers in India. The Indian retail sector is poised for ‘big-bang' growth in the foreseeable future, after some recent initiatives undertaken by the government to open up the sector to foreign players. And with a large number of domestic and foreign players namely Reliance Retail, the Bharti-Wal-Mart combine, AV Birla Group, Future group, Tesco's and Carrefour all set to announce some really aggressive plans for their eventual entry into the sector, things just could not have gotten any better in the country. However, retailers must surmount several obstacles in order for the sector to successfully embark on the path towards tangible reforms and growth.

Ready for Growth
Analysts consider India's retail business one of the most attractive in the world. Consumer demand is booming as the government's liberalizing policies have produced 8-9 percent annual GDP growth. Technopak, a Delhi-based retail consultancy, expects retail sales of $250-300 billion now to rise to nearly $430 billion by 2010.1 Also the retail industry is the largest provider of jobs after agriculture, accounting for 6-7 percent of employment and about 10 percent of GDP.2

Currently India lags behind other Asian countries like China, Thailand and South Korea where the organized retail sector has a much greater percentage share of the total business carried out in those nations. This is in stark contrast to India, where of the approximately 98 percent "traditional retailing" taking place, most of the business is being handled by the mom-and-pop kirana stores.3 These stores suffer from some severe limitations, namely the small size of their operations, low-cost format and the widespread under-reporting of business transactions resulting in tax evasion. Additionally, the Indian retail sector suffers from limited access to capital, labor and suitable real estate options. 4 Technopak estimates that over the next four years, organized retail in India will receive investments in excess of $25 billion from 40 players.5 The primary advantages of organized retailing is that retailers are able to leverage their massive size and well-established supply chains in order to deliver a variety of choice at competitive prices to the consumer.

Major Constraints
Things, however, are not as rosy as they appear. Some believe that the retail sector should be kept shut since an influx of foreign supermarket chains would wipe out the millions of small shops presently dominating the retail landscape. This potential loss in jobs has invited the ire of the Communist parties who want to protect the interests of the small traders and local shopkeepers. Since the government relies on the votes of these Communist parties for its parliamentary majority, implementing the reforms in the retail sector has become somewhat tricky. Other problems acting as potential stumbling blocks in the growth of organized retailing include poor infrastructure, land grabs, the massive red tapism prevalent in the bureaucracy and labor disputes. All of these legal, infrastructural, cultural and educational constraints would have to be overcome if the sector truly aspires to achieve the kind of growth it envisages for itself.

Retail Rolls On
Just recently, the Commerce and Industries Minister Kamal Nath said that the government is considering opening up retail sector for multi brand specialty formats like consumer electronics, sports goods, building and construction equipment and stationery. The move follows last year's decision to allow 51 percent foreign direct investment (FDI) in single brand retail outlets.6 Big players like Reliance Retail have already seized the opportunity and have announced plans to open approximately 5000 shops across India over the next five years. The government has received FDI proposals for single brand outlets from companies like Starbucks, Lee Cooper and Argentina's Rino Jreggio but has yet to decide on these proposals.7 Despite setback, analysts estimate Indian retailing will grow about 37 percent in 2007 and 42 percent in 2008.8 If this is the case, the government will be forced to open up even further after of the current spate of reforms are underway.

Winners and losers
Indian consumers can expect to benefit enormously from the influx of foreign competition in the retail sector. Not only would they have access to a vast array superior quality of products at extremely affordable prices from competing producers all over the globe. However, millions of small store-owners are terrified of the onslaught from giant domestic and foreign retailers and fear being driven out of business. The government must take strong steps to ensure that consumer's and big retailer's huge gains do not result in the ultimate demise of the kirana stores, which have been a staple feature of India's retail landscape since time immemorial.

GOOD TIMES lie ahead for the retailers in India. The Indian retail sector is poised for ‘big-bang' growth in the foreseeable future, after some recent initiatives undertaken by the government to open up the sector to foreign players. And with a large number of domestic and foreign players namely Reliance Retail, the Bharti-Wal-Mart combine, AV Birla Group, Future group, Tesco's and Carrefour all set to announce some really aggressive plans for their eventual entry into the sector, things just could not have gotten any better in the country. However, retailers must surmount several obstacles in order for the sector to successfully embark on the path towards tangible reforms and growth.

Ready for Growth
Analysts consider India's retail business one of the most attractive in the world. Consumer demand is booming as the government's liberalizing policies have produced 8-9 percent annual GDP growth. Technopak, a Delhi-based retail consultancy, expects retail sales of $250-300 billion now to rise to nearly $430 billion by 2010.1 Also the retail industry is the largest provider of jobs after agriculture, accounting for 6-7 percent of employment and about 10 percent of GDP.2

Currently India lags behind other Asian countries like China, Thailand and South Korea where the organized retail sector has a much greater percentage share of the total business carried out in those nations. This is in stark contrast to India, where of the approximately 98 percent "traditional retailing" taking place, most of the business is being handled by the mom-and-pop kirana stores.3 These stores suffer from some severe limitations, namely the small size of their operations, low-cost format and the widespread under-reporting of business transactions resulting in tax evasion. Additionally, the Indian retail sector suffers from limited access to capital, labor and suitable real estate options. 4 Technopak estimates that over the next four years, organized retail in India will receive investments in excess of $25 billion from 40 players.5 The primary advantages of organized retailing is that retailers are able to leverage their massive size and well-established supply chains in order to deliver a variety of choice at competitive prices to the consumer.

Major Constraints
Things, however, are not as rosy as they appear. Some believe that the retail sector should be kept shut since an influx of foreign supermarket chains would wipe out the millions of small shops presently dominating the retail landscape. This potential loss in jobs has invited the ire of the Communist parties who want to protect the interests of the small traders and local shopkeepers. Since the government relies on the votes of these Communist parties for its parliamentary majority, implementing the reforms in the retail sector has become somewhat tricky. Other problems acting as potential stumbling blocks in the growth of organized retailing include poor infrastructure, land grabs, the massive red tapism prevalent in the bureaucracy and labor disputes. All of these legal, infrastructural, cultural and educational constraints would have to be overcome if the sector truly aspires to achieve the kind of growth it envisages for itself.

Retail Rolls On
Just recently, the Commerce and Industries Minister Kamal Nath said that the government is considering opening up retail sector for multi brand specialty formats like consumer electronics, sports goods, building and construction equipment and stationery. The move follows last year's decision to allow 51 percent foreign direct investment (FDI) in single brand retail outlets.6 Big players like Reliance Retail have already seized the opportunity and have announced plans to open approximately 5000 shops across India over the next five years. The government has received FDI proposals for single brand outlets from companies like Starbucks, Lee Cooper and Argentina's Rino Jreggio but has yet to decide on these proposals.7 Despite setback, analysts estimate Indian retailing will grow about 37 percent in 2007 and 42 percent in 2008.8 If this is the case, the government will be forced to open up even further after of the current spate of reforms are underway.

Winners and losers
Indian consumers can expect to benefit enormously from the influx of foreign competition in the retail sector. Not only would they have access to a vast array superior quality of products at extremely affordable prices from competing producers all over the globe. However, millions of small store-owners are terrified of the onslaught from giant domestic and foreign retailers and fear being driven out of business. The government must take strong steps to ensure that consumer's and big retailer's huge gains do not result in the ultimate demise of the kirana stores, which have been a staple feature of India's retail landscape since time immemorial.

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india

Singapore Exchange Leads Race for India's Bombay Stock Exchange

The Singapore Stock Exchange (SGX) has emerged the frontrunner for a 5 percent stake in Bombay Stock Exchange (BSE), the Business Standard newspaper said on Thursday. The BSE had received offers that valued it at $600-$800 million, the paper said, citing sources close to the development.

The Singapore Stock Exchange (SGX) has emerged the frontrunner for a 5 percent stake in Bombay Stock Exchange (BSE), the Business Standard newspaper said on Thursday. The BSE had received offers that valued it at $600-$800 million, the paper said, citing sources close to the development.

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Foreigners Finding Opportunities in India

India's rapidly growing economy has become an important destination for expatriate professionals seeking work. The job seekers are comig from Europe, North America, as well as other Asian countries like Japan and South Korea. With so many investments coming from around the globe, economists now see India, along with China, as the new business models in an expanding world economy.

India's rapidly growing economy has become an important destination for expatriate professionals seeking work. The job seekers are comig from Europe, North America, as well as other Asian countries like Japan and South Korea. With so many investments coming from around the globe, economists now see India, along with China, as the new business models in an expanding world economy.

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india

India Expects the Fastest GDP Growth in 2007

India, Asia's second fastest growing economy, is expected to break its highest GDP growth record in almost two decades this fiscal year. India's chief economist, Shuchita Mehta, expects that this year nominal GDP will touch about 900 billion, a 9.2 percent growth, and next year nominal GDP will cross 1 trillion.

India, Asia's second fastest growing economy, is expected to break its highest GDP growth record in almost two decades this fiscal year. India's chief economist, Shuchita Mehta, expects that this year nominal GDP will touch about 900 billion, a 9.2 percent growth, and next year nominal GDP will cross 1 trillion.

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Indian Central Bank Moves to Curb Inflation

The cost of borrowing was raised to 7.5%, a quarter of a point increase and the highest rate since March of 2003. The move was made to assuage fears of rising housing costs and unhealthy credit growth. The Indian economy grew 9.1% in the first half of the fiscal year, though the central bank expects that to cool to between 8.5% and 9%.

The cost of borrowing was raised to 7.5%, a quarter of a point increase and the highest rate since March of 2003. The move was made to assuage fears of rising housing costs and unhealthy credit growth. The Indian economy grew 9.1% in the first half of the fiscal year, though the central bank expects that to cool to between 8.5% and 9%.

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India is Expected to Have a Larger Economy Than UK in a Decade

Asia has been drawing the attention of the world. China has just passed the UK to become the world's fourth largest economy and seems set to pass Germany to become the third by 2009. Analysts predict India's economy will pass UK in a decade as it ambitiously seeks to expand into the global market through internal economic reforms.

Asia has been drawing the attention of the world. China has just passed the UK to become the world's fourth largest economy and seems set to pass Germany to become the third by 2009. Analysts predict India's economy will pass UK in a decade as it ambitiously seeks to expand into the global market through internal economic reforms.

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India's Booming Economy May Not Be So Impressive

"India has been swept by optimism that its economy can do as well as China's. A recent article in the Economic Times claimed that the growth in India's total factor productivity (TFP), the efficiency with which inputs of both labour and capital are used, had accelerated, whereas China's had slowed owing to wasteful investment. As a result, the article boasted, rising productivity—the main driver of long-run economic growth—is now running neck and neck in the two economies. Close inspection of the numbers, however, reveals that China remains well ahead."

"India has been swept by optimism that its economy can do as well as China's. A recent article in the Economic Times claimed that the growth in India's total factor productivity (TFP), the efficiency with which inputs of both labour and capital are used, had accelerated, whereas China's had slowed owing to wasteful investment. As a result, the article boasted, rising productivity—the main driver of long-run economic growth—is now running neck and neck in the two economies. Close inspection of the numbers, however, reveals that China remains well ahead."

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Essar Oil, Steel to Quit Bourses

The Ruias of Essar have decided to delist from both the BSE and the NSE. Since promoters hold 87.08 per cent stake in Essar Oil and Steel, delisting might give more flexibility in operation and management of these two companies.

The Ruias of Essar have decided to delist from both the BSE and the NSE. Since promoters hold 87.08 per cent stake in Essar Oil and Steel, delisting might give more flexibility in operation and management of these two companies.

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India’s Government Cuts Import Cost on Edible Oils

The Indian Government cut the cost of importing edible oils in an attempt to slow down inflation, which hit a two-year high on January 6th when it reached 6.12 percent. Since India is the world's third largest importer of vegetable oils the Government believes that cutting the cost of importing the oils will lower the prices in domestic markets.

The Indian Government cut the cost of importing edible oils in an attempt to slow down inflation, which hit a two-year high on January 6th when it reached 6.12 percent. Since India is the world's third largest importer of vegetable oils the Government believes that cutting the cost of importing the oils will lower the prices in domestic markets.

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Industrial competitiveness of the auto parts industries in four large Asian countries

Rationalization and stabilization following the Asian financial crisis of the late 1990s combined with the expansion and liberalization of regional and global trade to create significant parts industries in China, Indonesia, and the Republic of Korea. Conventional policies of stabilization and liberalization, however, cannot fully explain growth patterns. Japan and Korea grew into major players before liberalizing trade and investment, while even after extensive liberalization Indonesia has yet to move from extensive to intensive growth. These anomalies suggest that to explain success in the auto parts industry we need to move beyond liberalization to look at policies and institutions promoting economies of scale, skill formation, quality upgrading, supplier-linkage cooperation, and innovation. In Japan, the regional and global leader, innovative assemblers led industrial development and supported key suppliers, but the government also supported diffusion of quality control techniques and new technology to small and medium enterprises, and encouraged stable employment among core employees. Korea remains weaker on both small and medium enterprise and employment fronts, but government-encouraged consolidation around a small number of business groups, an extended period of protection, and support for export promotion led to economies of scale. Liberalization of foreign investment after the financial crisis helped ameliorate the excessive statism of earlier policies and strengthened the parts industry. In China, liberalization for WTO entry, rapid expansion in demand, and strong support by local governments encouraged a wave of foreign investment in both assembly and parts. In contrast, institutional weaknesses continue to constrain development opportunities in Indonesia.

Rationalization and stabilization following the Asian financial crisis of the late 1990s combined with the expansion and liberalization of regional and global trade to create significant parts industries in China, Indonesia, and the Republic of Korea. Conventional policies of stabilization and liberalization, however, cannot fully explain growth patterns. Japan and Korea grew into major players before liberalizing trade and investment, while even after extensive liberalization Indonesia has yet to move from extensive to intensive growth. These anomalies suggest that to explain success in the auto parts industry we need to move beyond liberalization to look at policies and institutions promoting economies of scale, skill formation, quality upgrading, supplier-linkage cooperation, and innovation. In Japan, the regional and global leader, innovative assemblers led industrial development and supported key suppliers, but the government also supported diffusion of quality control techniques and new technology to small and medium enterprises, and encouraged stable employment among core employees. Korea remains weaker on both small and medium enterprise and employment fronts, but government-encouraged consolidation around a small number of business groups, an extended period of protection, and support for export promotion led to economies of scale. Liberalization of foreign investment after the financial crisis helped ameliorate the excessive statism of earlier policies and strengthened the parts industry. In China, liberalization for WTO entry, rapid expansion in demand, and strong support by local governments encouraged a wave of foreign investment in both assembly and parts. In contrast, institutional weaknesses continue to constrain development opportunities in Indonesia.

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Indonesian Vice President to Visit India; Strengthen Economic Ties

Indonesian Vice President Jusuf Kalla will lead a delegation to visit India's two biggest cities, Mumbai and New Delhi. The Indonesian delegation's purpose is to deepen the bilateral corporationin with India in manufacture and tourism industry during the five days visit.

Indonesian Vice President Jusuf Kalla will lead a delegation to visit India's two biggest cities, Mumbai and New Delhi. The Indonesian delegation's purpose is to deepen the bilateral corporationin with India in manufacture and tourism industry during the five days visit.

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India's Potential Oil Crisis

India's oil supply is too little to satisfy its rapidly growing demand. India seeks Saudi help for stabilising global oil prices. If these will fail and India, analysts predict India could collapse in an economic meltdown.

India's oil supply is too little to satisfy its rapidly growing demand. India seeks Saudi help for stabilising global oil prices. If these will fail and India, analysts predict India could collapse in an economic meltdown.

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Sensex Soars 426 Points; Reaches New Record 14,070.88

On January 11th, the India's stock markets set new records with the benchmark BSE Sensex surging 426 points to regain the 14,000 mark on back of sharp growth in industrial production and impressive gains in banking shares. The Sensex rose to an intra-trade record of 14,070.88 and ended at a new closing peak of 14,056.53, a net gain of 425.82 points or 3.12 per cent over yesterday's close.

On January 11th, the India's stock markets set new records with the benchmark BSE Sensex surging 426 points to regain the 14,000 mark on back of sharp growth in industrial production and impressive gains in banking shares. The Sensex rose to an intra-trade record of 14,070.88 and ended at a new closing peak of 14,056.53, a net gain of 425.82 points or 3.12 per cent over yesterday's close.

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India Expands Trade Ties with ASEAN

India said on Thursday it was close to reaching a free-trade agreement with the Association of Southeast Asian Nations (ASEAN) and expected to have it wrapped up by July. India, an emerging economy which adopted a free-market policy in the early 1990s, is keen to expand in the global market.

India said on Thursday it was close to reaching a free-trade agreement with the Association of Southeast Asian Nations (ASEAN) and expected to have it wrapped up by July. India, an emerging economy which adopted a free-market policy in the early 1990s, is keen to expand in the global market.

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India: Interest Rate Cycle Peaks

"Claiming that interest rate would remain stable in the short term, State Bank of India Chairman O P Bhatt today said that interest rate cycle has more or less peaked... When asked about the liquidity position, the SBI Chairman said there is slight pressure on liquidity, but there was no shortage of credit for the ''productive sector.'"

"Claiming that interest rate would remain stable in the short term, State Bank of India Chairman O P Bhatt today said that interest rate cycle has more or less peaked... When asked about the liquidity position, the SBI Chairman said there is slight pressure on liquidity, but there was no shortage of credit for the ''productive sector.'"

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Black Market and Official Exchange Rates: Long-Run Equilibrium and Short-Run Dynamics

This paper presents further empirical evidence on the relationship between black market and official exchange rates in six emerging economies (Iran, India, Indonesia, Korea, Pakistan, and Thailand). First, it applies both time series techniques and heterogeneous panel methods to test for the existence of a long-run relationship between these two types of exchange rates. Second, it tests formally the validity of the proportionality restriction implying a constant black-market premium. Third, it also analyzes the short-run dynamic responses of both markets to shocks. Finally, it tries to shed some light on the determinants of the market premium. Evidence of slow reversion to the long-run equilibrium is found. Further, it appears that capital controls and expected currency devaluation are the two main factors affecting the size of the premium and determining the breakdown in the proportionality relationship.

This paper presents further empirical evidence on the relationship between black market and official exchange rates in six emerging economies (Iran, India, Indonesia, Korea, Pakistan, and Thailand). First, it applies both time series techniques and heterogeneous panel methods to test for the existence of a long-run relationship between these two types of exchange rates. Second, it tests formally the validity of the proportionality restriction implying a constant black-market premium. Third, it also analyzes the short-run dynamic responses of both markets to shocks. Finally, it tries to shed some light on the determinants of the market premium. Evidence of slow reversion to the long-run equilibrium is found. Further, it appears that capital controls and expected currency devaluation are the two main factors affecting the size of the premium and determining the breakdown in the proportionality relationship.

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Revealed comparative advantage: An analysis for India and China

This paper examines the structure of comparative advantage enjoyed by India and China in the global market, individually and in a comparative framework. Following this, an analysis of the comparative advantage according to factor intensity for the two economies is undertaken. The pattern of comparative advantage is also examined for inter-temporal variation over the period 2000-2003. The analysis of comparative advantage has been undertaken using the Balassa (1965) index of revealed comparative advantage for the two and six digit level of HS classification. Comparative advantage according to factor intensity has been analyzed at the two and three digit level of SITC (Rev. 3)1 classification.

This paper examines the structure of comparative advantage enjoyed by India and China in the global market, individually and in a comparative framework. Following this, an analysis of the comparative advantage according to factor intensity for the two economies is undertaken. The pattern of comparative advantage is also examined for inter-temporal variation over the period 2000-2003. The analysis of comparative advantage has been undertaken using the Balassa (1965) index of revealed comparative advantage for the two and six digit level of HS classification. Comparative advantage according to factor intensity has been analyzed at the two and three digit level of SITC (Rev. 3)1 classification.

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Tripolar century: USA, China and India

The current paper argues that the global economy is evolving in a direction that will result in a tripolar World by the middle of the 21st century. Thus the 21st century will be a ‘Tripolar Century' with two of the poles in Asia and one on the other side of the Pacific. So ironically it could end up as partly a Pacific, partly an Asia-Pacific and partly an Asian century. This is based largely on an economic view of power a la Kennedy(1988). The next two sections outline this approach and present an index of Power Potential. Section 4 shows how this index captures the current unipolar world. Section 5 outlines the evolution of global power first into bipolar and then into a tripolar world based on our economic projections. Section 6 presents the rationale for the growth assumptions about China and India that underlie these results. Sections 7 discuss the reasons why the European Union may not become a fourth pole. Section 8 concludes the paper with some policy suggestions.

The current paper argues that the global economy is evolving in a direction that will result in a tripolar World by the middle of the 21st century. Thus the 21st century will be a ‘Tripolar Century' with two of the poles in Asia and one on the other side of the Pacific. So ironically it could end up as partly a Pacific, partly an Asia-Pacific and partly an Asian century. This is based largely on an economic view of power a la Kennedy(1988). The next two sections outline this approach and present an index of Power Potential. Section 4 shows how this index captures the current unipolar world. Section 5 outlines the evolution of global power first into bipolar and then into a tripolar world based on our economic projections. Section 6 presents the rationale for the growth assumptions about China and India that underlie these results. Sections 7 discuss the reasons why the European Union may not become a fourth pole. Section 8 concludes the paper with some policy suggestions.

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Asian Economic Integration: ASEAN+3+1 or ASEAN+1s?

In this paper an attempt is made to evaluate the most efficient approach to regional economic integration in Asia. For the purpose, Asia is defined as inclusive of ASEAN, the plus three economies of China, Japan, Korea and India that is the ASEAN plus four. Given that ASEAN is an existing regional bloc in Asia, alternative approaches to the alignment of the plus four economies with ASEAN for the formation of the ASEAN+4 trade bloc have been evaluated to determine if there are efficiency costs by way of distortion in the patterns of trade away from those expected on the basis of comparative advantage. The findings of our analysis underscore the efficiency of a prior alignment with ASEAN for all the plus four economies.

In this paper an attempt is made to evaluate the most efficient approach to regional economic integration in Asia. For the purpose, Asia is defined as inclusive of ASEAN, the plus three economies of China, Japan, Korea and India that is the ASEAN plus four. Given that ASEAN is an existing regional bloc in Asia, alternative approaches to the alignment of the plus four economies with ASEAN for the formation of the ASEAN+4 trade bloc have been evaluated to determine if there are efficiency costs by way of distortion in the patterns of trade away from those expected on the basis of comparative advantage. The findings of our analysis underscore the efficiency of a prior alignment with ASEAN for all the plus four economies.

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india

India Becomes #1 Sugar Producer: Emphasis Now On Biofuel

In the previous year, India produced 27.5 million tons of sugar; a significant rise from the 19 million produced in the year before. With that, India has become the largest producer of sugar in the world. At the "Bio-energy Tech 2007" conference, Union Minister of Agriculture Sharad Pawar emphasized the need to focus on alternative biofuels. India is currently importing 72% of its annual crude oil needs. Not only would this decrease dependency on foreign energy sources, it would also promote the use of biodegradable, low-pollution fuels.

In the previous year, India produced 27.5 million tons of sugar; a significant rise from the 19 million produced in the year before. With that, India has become the largest producer of sugar in the world. At the "Bio-energy Tech 2007" conference, Union Minister of Agriculture Sharad Pawar emphasized the need to focus on alternative biofuels. India is currently importing 72% of its annual crude oil needs. Not only would this decrease dependency on foreign energy sources, it would also promote the use of biodegradable, low-pollution fuels.

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india

Myanmar Commits Its Gas to Japan and South Korea, Leaving India in the Cold

This may be the biggest set back for Indian growth. The Myanmar-India gas pipeline deal has been placed on the back burner. Myanmar has decided to set up LNG projects with Japan and South Korea instead.

This may be the biggest set back for Indian growth. The Myanmar-India gas pipeline deal has been placed on the back burner. Myanmar has decided to set up LNG projects with Japan and South Korea instead.

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india

India's Sensex Breaches All Time High

The Sensex has bounced back and closed at 14,015. The first two trading sessions of the new year witness the most activity in a long while. Various sectors championed the rally while major companies led the pack.

The Sensex has bounced back and closed at 14,015. The first two trading sessions of the new year witness the most activity in a long while. Various sectors championed the rally while major companies led the pack.

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india

India's Exports Are Likely to Cross $US125bn this Fiscal Year

An export survey by the Federation of Indian Chambers of Commerce and Industry (Ficci) claims that India will cross $US125 billion. Exports from a wide range of industry sectors will reach markets in S. Asia, S. East Asia, the Middle East, and European Markets.

An export survey by the Federation of Indian Chambers of Commerce and Industry (Ficci) claims that India will cross $US125 billion. Exports from a wide range of industry sectors will reach markets in S. Asia, S. East Asia, the Middle East, and European Markets.

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india

India's November Exports Up 34%

India's exports for November is up 34 percent from the previous year, according to the government. Exports reached US$9.7 billion in November compared to US$7.2 billion in the same month last year. The exports of the country skyrocketed the past year as it widen its horizon and had other trading partners aside from the US and Europe. India has made economic ties with other Asian countries and mineral-rich countries in Africa.

India's exports for November is up 34 percent from the previous year, according to the government. Exports reached US$9.7 billion in November compared to US$7.2 billion in the same month last year. The exports of the country skyrocketed the past year as it widen its horizon and had other trading partners aside from the US and Europe. India has made economic ties with other Asian countries and mineral-rich countries in Africa.

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india

George Soros on India's Market

George Soros says "India is the flavor of the month", but warns that the market should not be allowed to overheat.

George Soros says "India is the flavor of the month", but warns that the market should not be allowed to overheat.

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india

Forecasting Interest Rates: A Comparative Assessment of Some Second Generation Non-Linear Model

Modelling and forecasting of interest rates has traditionally proceeded in the framework of linear stationary models such as ARMA and VAR, but only with moderate success. We examine here four models which account for several specific features of real world asset prices such as non-stationarity and non-linearity. Our four candidate models are based respectively on wavelet analysis, mixed spectrum analysis, non-linear ARMA models with Fourier coefficients, and the Kalman filter. These models are applied to weekly data on interest rates in India, and their forecasting performance is evaluated vis-à-vis three GARCH models (GARCH (1,1), GARCH-M (1,1) and EGARCH (1,1)) as well as the random walk model. The Kalman filter model emerges at the top, with wavelet and mixed spectrum models also showing considerable promise.

Modelling and forecasting of interest rates has traditionally proceeded in the framework of linear stationary models such as ARMA and VAR, but only with moderate success. We examine here four models which account for several specific features of real world asset prices such as non-stationarity and non-linearity. Our four candidate models are based respectively on wavelet analysis, mixed spectrum analysis, non-linear ARMA models with Fourier coefficients, and the Kalman filter. These models are applied to weekly data on interest rates in India, and their forecasting performance is evaluated vis-à-vis three GARCH models (GARCH (1,1), GARCH-M (1,1) and EGARCH (1,1)) as well as the random walk model. The Kalman filter model emerges at the top, with wavelet and mixed spectrum models also showing considerable promise.

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Debt and Corporate Governance in Emerging Economies: Evidence from India

We analyze the role of debt in corporate governance with respect to a large emerging economy, India, where debt has been an important source of external finance. First, we examine the extent to which debt acts as a disciplining device in those corporations where potential for over investment is present. We undertake a comparative evaluation of group-affiliated and non-affiliated companies to see if the governance role of debt is sensitive to ownership and control structures. Second, we examine the role of institutional change in strengthening the disciplining effect or mitigating the expropriating effect of debt. In doing so, we estimate, simultaneously, the relation between Tobin's Q and leverage using a large cross-section of listed manufacturing firms in India for three years, 1996, 2000, and 2003. Our analyses indicate that while in the early years of institutional change, debt did not have any disciplinary effect on either standalone or group affiliated firms, the disciplinary effect appeared in the later years as institutions become more market oriented. We also find limited evidence of debt being used as an expropriation mechanism in group firms that are more vulnerable to such expropriation. However, the disciplining effect of debt is found to persist even after controlling for such expropriation possibilities. In general, our results highlight the role of ownership structures and institutions in debt governance.

We analyze the role of debt in corporate governance with respect to a large emerging economy, India, where debt has been an important source of external finance. First, we examine the extent to which debt acts as a disciplining device in those corporations where potential for over investment is present. We undertake a comparative evaluation of group-affiliated and non-affiliated companies to see if the governance role of debt is sensitive to ownership and control structures. Second, we examine the role of institutional change in strengthening the disciplining effect or mitigating the expropriating effect of debt. In doing so, we estimate, simultaneously, the relation between Tobin's Q and leverage using a large cross-section of listed manufacturing firms in India for three years, 1996, 2000, and 2003. Our analyses indicate that while in the early years of institutional change, debt did not have any disciplinary effect on either standalone or group affiliated firms, the disciplinary effect appeared in the later years as institutions become more market oriented. We also find limited evidence of debt being used as an expropriation mechanism in group firms that are more vulnerable to such expropriation. However, the disciplining effect of debt is found to persist even after controlling for such expropriation possibilities. In general, our results highlight the role of ownership structures and institutions in debt governance.

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Sensex Stages Smart Recovery

The Sensex witnessed a smart recovery as demand for index pivotals rose. Buying continued to intensify throughout the day's trading with small-cap and mid-cap stocks.

The Sensex witnessed a smart recovery as demand for index pivotals rose. Buying continued to intensify throughout the day's trading with small-cap and mid-cap stocks.

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Implications of the Economic Rise of the PRC for ASEAN and India: Trade and Foreign Direct Investment

An important and vigorous policy debate ongoing in Asia concerns the impact of
the economic rise of the PRC on the rest of the region. This paper examines the relative
performances of the PRC, selected ASEAN countries (Indonesia, Malaysia, the
Philippines, Singapore and Thailand), and India over time, as well as the intensity and
changing dynamics of their intra-regional economic interactions. Focus is on trends and
patterns in merchandise trade, trade in commercial services, and FDI flows the last two
decades and potential impact of the PRC's continued economic emergence on ASEAN
and India.

An important and vigorous policy debate ongoing in Asia concerns the impact of
the economic rise of the PRC on the rest of the region. This paper examines the relative
performances of the PRC, selected ASEAN countries (Indonesia, Malaysia, the
Philippines, Singapore and Thailand), and India over time, as well as the intensity and
changing dynamics of their intra-regional economic interactions. Focus is on trends and
patterns in merchandise trade, trade in commercial services, and FDI flows the last two
decades and potential impact of the PRC's continued economic emergence on ASEAN
and India.

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Macro Economic Effects of Public Investment in Infrastructure in India

This paper attempts to build an aggregative, structural, macroeconometric model for India. Investment and output in the model are disaggregated into four sectors, viz., (a) agriculture including forestry & fishing, (b) manufacturing,(c) infrastructure, which includes power, transport, communication and construction and (d) services sector, covering all other activities. The model emphasizes the interrelationships between internal and external balances and also the relation between money, output, prices and balance of payments. A unique feature of the model is that it incorporates the savings-investment identity. The model also tries to link economic growth with poverty reduction. Annual time series data for the period 1978-79 to 2002-03 are used for this purpose. Three-stage least squares method is used to estimate the model. The model is validated for its in-sample forecasting ability. A few counter factual policy simulations relating to public investment in infrastructure are undertaken to illustrate the usefulness of the model for analyzing the policy options in a simultaneous equations framework.

This paper attempts to build an aggregative, structural, macroeconometric model for India. Investment and output in the model are disaggregated into four sectors, viz., (a) agriculture including forestry & fishing, (b) manufacturing,(c) infrastructure, which includes power, transport, communication and construction and (d) services sector, covering all other activities. The model emphasizes the interrelationships between internal and external balances and also the relation between money, output, prices and balance of payments. A unique feature of the model is that it incorporates the savings-investment identity. The model also tries to link economic growth with poverty reduction. Annual time series data for the period 1978-79 to 2002-03 are used for this purpose. Three-stage least squares method is used to estimate the model. The model is validated for its in-sample forecasting ability. A few counter factual policy simulations relating to public investment in infrastructure are undertaken to illustrate the usefulness of the model for analyzing the policy options in a simultaneous equations framework.

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"Relationship Banking" and the Credit Market in India: An Empirical Analysis

Relationship banking based on Okun's "customer credit markets" has important implications for monetary policy via the credit transmission channel. Studies of LDC credit markets from this point of view seem to be scanty and this paper attempts to address this lacuna. Relationship banking implies short-term disequilibrium in credit markets, suggesting the VECM (vector error-correction model) as an appropriate framework for analysis. We develop VECM models in the Indian context (for the period April 1991- December 2004 using monthly data) to analyse salient features of the credit market. An analysis of the ECMs (error-correction mechanisms) reveals that disequilibrium in the Indian credit market is adjusted via demand responses rather than supply responses, which is in accordance with the customer view of credit markets. Further light on the working of the model is obtained through the "generalized" impulse responses and "generalized" error decompositions (both of which are independent of the variable ordering). Our conclusions point towards firms using short-term credit as a liquidity buffer. This fact, together with the gradual adjustment exhibited by the "persistence profiles" provides substantive evidence in favour of "customer credit markets".

Relationship banking based on Okun's "customer credit markets" has important implications for monetary policy via the credit transmission channel. Studies of LDC credit markets from this point of view seem to be scanty and this paper attempts to address this lacuna. Relationship banking implies short-term disequilibrium in credit markets, suggesting the VECM (vector error-correction model) as an appropriate framework for analysis. We develop VECM models in the Indian context (for the period April 1991- December 2004 using monthly data) to analyse salient features of the credit market. An analysis of the ECMs (error-correction mechanisms) reveals that disequilibrium in the Indian credit market is adjusted via demand responses rather than supply responses, which is in accordance with the customer view of credit markets. Further light on the working of the model is obtained through the "generalized" impulse responses and "generalized" error decompositions (both of which are independent of the variable ordering). Our conclusions point towards firms using short-term credit as a liquidity buffer. This fact, together with the gradual adjustment exhibited by the "persistence profiles" provides substantive evidence in favour of "customer credit markets".

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india

Forecasting Interest Rates: A Comparative Assessment of Some Second Generation Non-Linear Model

Modelling and forecasting of interest rates has traditionally proceeded in the framework of linear stationary models such as ARMA and VAR, but only with moderate success. We examine here four models which account for several specific features of real world asset prices such as non-stationarity and non-linearity. Our four candidate models are based respectively on wavelet analysis, mixed spectrum analysis, non-linear ARMA models with Fourier coefficients, and the Kalman filter. These models are applied to weekly data on interest rates in India, and their forecasting performance is evaluated vis-à-vis three GARCH models (GARCH (1,1), GARCH-M (1,1) and EGARCH (1,1)) as well as the random walk model. The Kalman filter model emerges at the top, with wavelet and mixed spectrum models also showing considerable promise.

Modelling and forecasting of interest rates has traditionally proceeded in the framework of linear stationary models such as ARMA and VAR, but only with moderate success. We examine here four models which account for several specific features of real world asset prices such as non-stationarity and non-linearity. Our four candidate models are based respectively on wavelet analysis, mixed spectrum analysis, non-linear ARMA models with Fourier coefficients, and the Kalman filter. These models are applied to weekly data on interest rates in India, and their forecasting performance is evaluated vis-à-vis three GARCH models (GARCH (1,1), GARCH-M (1,1) and EGARCH (1,1)) as well as the random walk model. The Kalman filter model emerges at the top, with wavelet and mixed spectrum models also showing considerable promise.

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india

Diversification, Propping and Monitoring: Business Groups, Firm Performance and the Indian Economic Transition

The industrial landscape of many emerging economies is characterized by diversified business groups. Given the well-known costs of diversification, their prevalence in emerging economies is a puzzle that has not been completely resolved. While there is evidence that business groups in emerging economies confer diversification benefits on group affiliated firms by substituting for missing institutions and markets, whether such benefits persist over the economic transition as institutions and markets develop is unclear. We investigate this issue in the context of the wide-ranging transformation of the Indian economy over the past decade. We find that business group affiliation continues to generate higher market valuation vis-à-vis standalone firms ten years into the transition, but diversification is not the source of these benefits. Instead, we find that propping through profit transfers among firms within a group and better monitoring through group level directorial interlocks explains the higher market valuation of business group affiliated firms. The effect of propping and directorial interlocks on firm value depends on the equity stakes of the controlling shareholders. Propping appears to be the source of group affiliation benefits in firms with below median cash flow rights of the controlling shareholders, while director interlocks are the primary source of the group effect for firms where the controlling shareholders have above median cash flow rights.

The industrial landscape of many emerging economies is characterized by diversified business groups. Given the well-known costs of diversification, their prevalence in emerging economies is a puzzle that has not been completely resolved. While there is evidence that business groups in emerging economies confer diversification benefits on group affiliated firms by substituting for missing institutions and markets, whether such benefits persist over the economic transition as institutions and markets develop is unclear. We investigate this issue in the context of the wide-ranging transformation of the Indian economy over the past decade. We find that business group affiliation continues to generate higher market valuation vis-à-vis standalone firms ten years into the transition, but diversification is not the source of these benefits. Instead, we find that propping through profit transfers among firms within a group and better monitoring through group level directorial interlocks explains the higher market valuation of business group affiliated firms. The effect of propping and directorial interlocks on firm value depends on the equity stakes of the controlling shareholders. Propping appears to be the source of group affiliation benefits in firms with below median cash flow rights of the controlling shareholders, while director interlocks are the primary source of the group effect for firms where the controlling shareholders have above median cash flow rights.

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Financial Sector Reforms in Bangladesh: The Next Round

The present paper attempts to take stock of the earlier initiatives of financial sector reform, analyse the thrust of the present policy approach and indicate some immediate measures with a view to meet the increasing demand for financial sector reform.The present paper is not a comprehensive review of the state of banking sector in Bangladesh. Rather it seeks to highlight some of the on-going policy debates to seek guidance for the future.

The present paper attempts to take stock of the earlier initiatives of financial sector reform, analyse the thrust of the present policy approach and indicate some immediate measures with a view to meet the increasing demand for financial sector reform.The present paper is not a comprehensive review of the state of banking sector in Bangladesh. Rather it seeks to highlight some of the on-going policy debates to seek guidance for the future.

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india

India Pushes for Stable Oil Prices

Major energy consuming countries meet in Beijing to encourage oil producing countires to increase investment in supply capacities. India hopes the international community will communicate the need for resource transparency. The other countries include the US, China, Japan, and South Korea.

Major energy consuming countries meet in Beijing to encourage oil producing countires to increase investment in supply capacities. India hopes the international community will communicate the need for resource transparency. The other countries include the US, China, Japan, and South Korea.

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india

India Requires More than $500 Billion in Investment in the next 10 Years

PM Singh invited continued investment from Japan as a means to strengthen the Comprehensive Economic Partnership Agreement (CEPA) between these two nations. Investment in infrastructure is the biggest challenge and opportunity in India. Both countries are pushing for increased trade in services.

PM Singh invited continued investment from Japan as a means to strengthen the Comprehensive Economic Partnership Agreement (CEPA) between these two nations. Investment in infrastructure is the biggest challenge and opportunity in India. Both countries are pushing for increased trade in services.

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india

Has the Great Depression of Asia Started in India?

For the second consecutive day the Sensex crashed due to "panic selling", closing below 13,000. The "panic" is said to have been caused by the government's report on "sluggish growth"and the Reserve Bank of India's move to raise bank's cash reserve ratio's.

For the second consecutive day the Sensex crashed due to "panic selling", closing below 13,000. The "panic" is said to have been caused by the government's report on "sluggish growth"and the Reserve Bank of India's move to raise bank's cash reserve ratio's.

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india

ADB to Lend $1 billion to Help Strengthen Rural Finance in India

Asian Development Bank (ADB) is lending $1 billion to India for a project to help improve rural financing system in the country. According to ADB, the program would tackle farmers' dilemmas by commencing a comprehensive reform of the country's cooperative credit structure. The planned program will be carried out in five states namely Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, and either Gujarat or Orissa. The loan carries a 15-year term, including a three-year grace period.

Asian Development Bank (ADB) is lending $1 billion to India for a project to help improve rural financing system in the country. According to ADB, the program would tackle farmers' dilemmas by commencing a comprehensive reform of the country's cooperative credit structure. The planned program will be carried out in five states namely Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, and either Gujarat or Orissa. The loan carries a 15-year term, including a three-year grace period.

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india

Asean-India Trade Agreement Expected by June

India is expecting to sign a free trade pact with the Association of Southeast Asian Nations (ASEAN) by June next year after both sides failed to meet the December deadline due to some conflicts on goods to be excluded from the agreement. Both parties are in disagreement on items such as agricultural products that India wants to exclude from tariff cuts. If the free trade agreement will push through, ASEAN will open up new overseas market for India's software and other services. In turn, the pact will give ASEAN more access to the world's second fastest growing economy.

India is expecting to sign a free trade pact with the Association of Southeast Asian Nations (ASEAN) by June next year after both sides failed to meet the December deadline due to some conflicts on goods to be excluded from the agreement. Both parties are in disagreement on items such as agricultural products that India wants to exclude from tariff cuts. If the free trade agreement will push through, ASEAN will open up new overseas market for India's software and other services. In turn, the pact will give ASEAN more access to the world's second fastest growing economy.

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india

India's PM Says, "Rise of Asia Will Alter Global Income Balance"

Prime Minister Manmohan Singh spoke at the London School of Economics Asia Forum in New Delhi. The PM highlighted that both India and China will provide new opportunities and increase global growth as their respective GDPs rise. He emphasized these devolpments as the most important in the 21st century. The world must accommodate Asia's new economies in an era of globalisation.

Prime Minister Manmohan Singh spoke at the London School of Economics Asia Forum in New Delhi. The PM highlighted that both India and China will provide new opportunities and increase global growth as their respective GDPs rise. He emphasized these devolpments as the most important in the 21st century. The world must accommodate Asia's new economies in an era of globalisation.

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Indian PM Unhappy with Level of Japan Trade

Indian Prime Minister Singh showed his country's dissatisfaction with the current status of trade and investment relations between India and Japan. He stated in his statement that the two countries' trade and investment were disproportionately small given the size of the Japanese economy and India's potential for growth. He also stated that the volume of trade and investment between the two countries compares poorly with the trade between Japan and China. Furthermore, Singh mentioned that Japan in its trade policy had been more interested with other Asian countries than with India.

Indian Prime Minister Singh showed his country's dissatisfaction with the current status of trade and investment relations between India and Japan. He stated in his statement that the two countries' trade and investment were disproportionately small given the size of the Japanese economy and India's potential for growth. He also stated that the volume of trade and investment between the two countries compares poorly with the trade between Japan and China. Furthermore, Singh mentioned that Japan in its trade policy had been more interested with other Asian countries than with India.

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US Appeals to India to Open its Economy to Foreign Investments

A top US trade envoy appealed to India to open its economy to foreign investments during the US business delegation's visit to the country. US companies are very serious about doing business with India, since most of them think that it's a good time to enter the Indian market. In fact, India's economy is expanded by 9.2 percent during the second quarter of the year. However, US businesses are aware that doing business in the country holds a lot of hurdles due to foreign ownership caps, problems with piracy, and counterfeit pharmaceuticals. Also, India's problem with the commitment to economic reforms is also an issue that needs to be considered when US businesses will push with investing in the country.

A top US trade envoy appealed to India to open its economy to foreign investments during the US business delegation's visit to the country. US companies are very serious about doing business with India, since most of them think that it's a good time to enter the Indian market. In fact, India's economy is expanded by 9.2 percent during the second quarter of the year. However, US businesses are aware that doing business in the country holds a lot of hurdles due to foreign ownership caps, problems with piracy, and counterfeit pharmaceuticals. Also, India's problem with the commitment to economic reforms is also an issue that needs to be considered when US businesses will push with investing in the country.

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india

India's GDP Growth Lures Foreign Investors

India has been experiencing positive economic growth and continued expansion is expected in FY'07. Foreign firms have achieved great success in India.

India has been experiencing positive economic growth and continued expansion is expected in FY'07. Foreign firms have achieved great success in India.

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India's Fiscal Year 07 to Turn Out Best Year of Growth So Far

India's is experiencing growth of 9.1 percent. Finance Minister P. Chidambaran says growth will continue to expand. The only road bump along the way may be supply-side inflation and slim agricultural growth.

India's is experiencing growth of 9.1 percent. Finance Minister P. Chidambaran says growth will continue to expand. The only road bump along the way may be supply-side inflation and slim agricultural growth.

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india

Asian Economic Integration: ASEAN +3+1 or ASEAN + 1s?

This working paper outlines the rationale for regional trade agreements in Asia, and how India and the other three large Asian economies like China, Korea, and Japan may accomplish more efficient paths to integration into ASEAN. Also, it highlights challenges these economies face in various sectors due to competition, efficiency costs, and comparative advatage.

This working paper outlines the rationale for regional trade agreements in Asia, and how India and the other three large Asian economies like China, Korea, and Japan may accomplish more efficient paths to integration into ASEAN. Also, it highlights challenges these economies face in various sectors due to competition, efficiency costs, and comparative advatage.

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india

Singapore and Malaysia Must Work Together to Face Economic Giants China and India

Malaysia and Singapore must stop competing against each other, instead, they must collaborate in order to face the growing economic giants of China and India. Malaysia's DPM stated that the two countries must build the necessary partnerships to take advantage of new opportunities present within the region. SIngapore's DPM also stressed the importance of being in a position to take advantage of the growth of China and India. This shows that both countries are aware of the need to cooperate with each other, however, experts say that there's a long way to go to overcome mutual suspicion. Furthermore, both countries will have to work close together and leave their political issues behind.

Malaysia and Singapore must stop competing against each other, instead, they must collaborate in order to face the growing economic giants of China and India. Malaysia's DPM stated that the two countries must build the necessary partnerships to take advantage of new opportunities present within the region. SIngapore's DPM also stressed the importance of being in a position to take advantage of the growth of China and India. This shows that both countries are aware of the need to cooperate with each other, however, experts say that there's a long way to go to overcome mutual suspicion. Furthermore, both countries will have to work close together and leave their political issues behind.

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China and India Must Cooperate to Strengthen Peace and Growth

Chinese President Hu Jintao said that China and India must cooperate to ensure peace and development in the region. Furthermore, he mentioned that the two countries working hand in hand will make great progress. The two countries, want to boost trade and investment and work together in areas such as civilian nuclear energy.

Chinese President Hu Jintao said that China and India must cooperate to ensure peace and development in the region. Furthermore, he mentioned that the two countries working hand in hand will make great progress. The two countries, want to boost trade and investment and work together in areas such as civilian nuclear energy.

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Gas Pipeline Project Turkmenistan-Afghanistan-Pakistan-India Approved

At a regional conference held in New Delhi foreign ministers supproted a gas-pipeline project that would span all four countries. The pipeline's construction would be the realization of an "energy bridge between Central Asia and Southeast Asia."

At a regional conference held in New Delhi foreign ministers supproted a gas-pipeline project that would span all four countries. The pipeline's construction would be the realization of an "energy bridge between Central Asia and Southeast Asia."

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india

Central Bankers Upbeat Over Global Growth Next Year

The world's top central bankers discussed the future of global growth. There seems to be a consensus that the global economy was strong and sustainable, but in order to mitigate risks banks would have to fix their attention on inflation. Some hint to continued raises in interest rates to offset "overly optimistic investment".

The world's top central bankers discussed the future of global growth. There seems to be a consensus that the global economy was strong and sustainable, but in order to mitigate risks banks would have to fix their attention on inflation. Some hint to continued raises in interest rates to offset "overly optimistic investment".

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india

Will China Dam the Brahmaputra?

As China seeks to divert water to the Yellow river by damming the Brahmaputra river; fishermen downstream fear their livelihood is in danger. The Indian state of Assam fears the dam will cause economic and ecological devastation in the region. Chinese officials deny plans, but the issue will be raised as Chinese President Hu Jintao visits Delhi today.

As China seeks to divert water to the Yellow river by damming the Brahmaputra river; fishermen downstream fear their livelihood is in danger. The Indian state of Assam fears the dam will cause economic and ecological devastation in the region. Chinese officials deny plans, but the issue will be raised as Chinese President Hu Jintao visits Delhi today.

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india

India to China: No Market Economy Status

India is very unlikely to accept China's demand for market economy status. If India was to accept this then Chinese products would sell for the same price in India as they do in the Chinese markets. India stated that one some of the problems they have with China include huge subsides, cheap loans and poor intellectual property rights.

India is very unlikely to accept China's demand for market economy status. If India was to accept this then Chinese products would sell for the same price in India as they do in the Chinese markets. India stated that one some of the problems they have with China include huge subsides, cheap loans and poor intellectual property rights.

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Reserve Bank of India Releases Report on Banking in India, 2005-06

The Reserve Bank of India today released its Report on Trend and Progress of Banking in India, 2005-06. The Report provides a detailed account of policy developments and performance of commercial banks, co-operative banks and non-banking financial institutions during 2005-06. The Report also presents a detailed analysis of the Indian financial system from the financial stability viewpoint.

The Report has seven chapters. Statistical tables appended to the Report provide information on operations and performance of financial institutions both at individual and aggregate levels.

Financial sector reforms in India have been introduced in a calibrated and well-sequenced manner since the early 1990s. The sustained efforts by the Government, the Reserve Bank and by banks themselves have resulted in a competitive, healthy and resilient financial system. The asset quality and soundness parameters of the Indian banking sector, on the whole, are now comparable with global levels. This has been achieved in the backdrop of gradual alignment of prudential norms with international best standards and in an environment of growing competitive pressures. There is also an evidence of some financial deepening in recent years. Having achieved substantial success in improving the financial health of commercial banks over this period, there is now need to focus on the further expansion and deepening of financial services so as to serve the needs of those who are underprivileged. This would include particular attention being given to the underdeveloped regions of the country. The reform process is also being extended to the improvement of financial health and prudential regulation of urban co-operative banks, regional rural banks, the rural co-operative banking sector and non-banking financial institutions. In view of the dual regulatory control of urban co-operative banks, the strategy of reform is being conducted through a consultative mechanism involving State Governments.

Overview
The first Chapter provides an overview of the macroeconomic developments in the global and the Indian economy during 2005-06, as also the performance of various financial institutions.

Policy Developments in Commercial Banking
This Chapter provides a detailed account of the various policy measures undertaken by the Reserve Bank during 2005-06 and some major developments up to October 31, 2006. These relate to monetary policy, credit delivery, regulation and supervision, customer service, financial inclusion, payments and settlement systems, technological developments and legal reforms. The objective of various policy measures has been to ensure an efficient and stable financial system for sustaining the growth momentum, and to expand banking services to all sections of society. Major policy initiatives undertaken by the Reserve Bank include allowing banks to raise capital through innovative instruments, advising banks to open ‘no frills' accounts with nil or low balances, one-time settlement scheme for SME accounts, guidelines on securitisation of standard assets and sale/purchase of NPAs, and introduction of the national electronic funds transfer (NEFT) system.

Operations and Performance of Commercial Banks
This Chapter profiles the operations and financial performance of scheduled commercial banks, at the aggregate and bank group levels, based on their audited balance sheets. The analysis in this Chapter covers important aspects such as trends in overall bank credit, credit to the priority sector, lending to sensitive sectors, investment portfolio, trends in deposits, structure of interest rates, financial performance and soundness parameters, extent of technology application and regional spread of scheduled commercial banks. The Chapter also covers the operations of scheduled commercial banks in the capital market. An analysis of the balance sheet parameters and financial performance of regional rural banks is presented in the Chapter. Finally, the financial performance of the four local area banks is also covered in this chapter.

The main points emerging from the analysis are:
· Bank credit growth remained robust for the second year in succession.
· Credit growth turned more broad-based even as credit expansion was more pronounced in respect of retail sector, particularly housing and loans to commercial real estate.
· Net accretion to deposits was lower than expansion in credit, with banks having to partially unwind their holdings of Government securities.
· Net profits of scheduled commercial banks, as a group, increased during the year as against the decline in the previous year due mainly to a turnaround in non-interest income.
· Gross NPAs and net NPAs declined significantly during the year and are now comparable with global levels.
· Banks' capital to risk weighted assets ratio remained more or less at the previous year's level, despite application of capital charge for market risk; significant increase in risk-weighted assets and increase in risk-weights for certain sensitive sectors. This, to an extent, was facilitated by large resources raised by banks from the capital market.
· Till October 31, 2006, 137 RRBs were consolidated to form 43 new RRBs, sponsored by 18 banks in 15 States, bringing down the total number of RRBs all over India from 196 at end-March 2005 to 102.

Developments in Co-operative Banking
The Chapter outlines major policy initiatives, and operations and performance of various segments of the co-operative credit institutions in India, i.e., urban co-operative banks (UCBs) and rural co-operative credit institutions. The data coverage for UCBs has been widened to include complete balance sheet information in respect of both scheduled and non-scheduled UCBs. Besides, the analysis also covers non-scheduled UCBs with deposit size of Rs.100 crore and above. The Chapter also covers, for the first time, information on balance sheet, financial performance and asset quality of State Co-operative Agriculture and Rural Development Banks (SCARDBs) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).

The policy initiatives for UCBs during 2005-06 were guided by the ‘Vision Document' for revival of UCBs. Eight States have entered into Memoranda of Understanding with the Reserve Bank so far. As envisaged in the ‘Vision Document' a differentiated approach to regulation has been adopted with regulatory forbearance for the smaller UCBs while at the same time strengthening their operations. Regulatory measures undertaken during the year related to improving credit delivery mechanism, strengthening prudential norms, improving customer service and enhancing business opportunities.

The major points emerging from the analysis of balance sheet, financial performance and soundness indicators in this Chapter are as follows:

· Assets of urban co-operative banks (both scheduled and non-scheduled) increased moderately during 2005-06.
· Total assets of scheduled urban co-operative banks increased at a higher rate during 2005-06 in comparison with 2004-05.
· Net profits of scheduled UCBs more than doubled during 2005-06 in contrast to a decline in the previous year.
· Asset quality of UCBs improved significantly during 2005-06.
· All segments of the rural co-operative sector were able to expand their business operations during 2004-05. However, their financial performance varied across the institutions.
· Within the short-term structure, while the state co-operative banks (StCBs) earned lower profits, the district central co-operative banks (DCCBs) recorded higher profits. Primary agricultural credit societies (PACS), on the whole, continued to incur overall losses, although a sizable number of them earned profit during 2004-05. In the case of long-term structure, while the SCARDBs continued to incur losses, PCARDBs staged a turnaround during 2004-05.
· Asset quality of short-term structure of rural co-operative banks including StCBs, DCCBs and PACS improved, while that of long-term institutions including SCARDBs and PCARDBs declined.
· The SHG-Bank linkage programme continued with 0.6 million new SHGs having been credit linked by the banking system during 2005-06, benefiting over 32.9 million poor families at end-March 2006.


Non-Banking Financial Institutions
The Chapter analyses business operations, financial performance, and policy developments relating to Financial Institutions (FIs), Non-Banking Financial Companies (NBFCs), and Primary Dealers (PDs). The coverage of data on NBFCs section has been widened to NBFCs not accepting public deposits, but with asset size of ‘Rs.100 crore and above' as against ‘Rs.500 crore and above' earlier.

The main points emerging from the analysis in this Chapter are:
· Financial assistance sanctioned and disbursed by FIs registered a significant increase during 2005-06, reversing the trend of the previous year.
· Assets of FIs expanded during 2005-06.
· A shift in asset portfolio of FIs away from investments to fund increased demand for loans and advances was observed during 2005-06.
· Profits of FIs increased significantly during the year. The capital adequacy ratio of FIs continued to be higher than the minimum prescribed. Asset quality of FIs improved during the year.
· Total assets of NBFCs declined marginally during the year as compared with the previous year.
· A sharp increase in expenditure resulted in a sharp decline in profitability of NBFCs. However, asset quality of NBFCs improved significantly.
· Financial performance of Residuary Non-Banking Companies (RNBCs) improved significantly during 2005-06. A sharp rise in their income was reflected in their higher profitability.
· Operations of NBFCs not accepting deposits but with asset size of Rs.100 crore and above expanded. Their gross NPAs registered a significant decline during the year.
· PDs made robust profits in 2005-06 as compared with substantial losses during 2004-05.
· The CRAR of PDs continued to be much in excess of the stipulated minimum of 15 per cent of aggregate risk-weighted assets.


Financial Stability
The Chapter reviews the regulatory and supervisory measures relating to financial institutions, developments in financial markets and technological improvements in financial infrastructure from the financial stability perspective. The Chapter identifies the major sources of risks, viz., (i) risks of inflationary pressure emanating from higher oil prices (although prices have receded in the recent period, they still continue to be volatile); (ii) rising interest rates globally and potential turnaround in the corporate credit cycle; and (iii) global financial imbalances. These risks may impact the Indian financial sector in varying degree and could pose challenges for the financial system in the near future. However, in the overall assessment undertaken in the Chapter, it emerges that the domestic financial system has become resilient and is found to cope with adverse developments as they occur.

The main points that emerge from the analysis in this Chapter are:

· Financial markets remained generally orderly during 2005-06.
· The activity in the money market migrated significantly from the uncollateralised to the collateralised segment during 2005-06.
· Conditions in the foreign exchange markets also remained broadly stable during 2005-06.
· Yields in Government securities market hardened during 2005-06 leading to significant portfolio adjustments.
· The financing conditions for the corporates remained comfortable during 2005-06.
· Huge resources were mobilised by mutual funds, especially under the equity-oriented schemes, reflecting growing investor confidence.
· The stock market remained stable, barring some volatility in May and June 2006. However, even during these episodes there was no spill over of stock market volatility to the other segments of markets and disruption of the payments and settlement system.
· The volume and amount of transactions through RTGS has increased manifold, which has considerably reduced a major source of systemic risk in the payment and settlement system.

Perspectives
The Chapter highlights some of the emerging issues facing the Indian banking system. These include, inter alia, credit delivery and pricing, customer service and financial inclusion, implementation of Basel II, NPA management, corporate governance and application of technology in banking.

The Reserve Bank of India today released its Report on Trend and Progress of Banking in India, 2005-06. The Report provides a detailed account of policy developments and performance of commercial banks, co-operative banks and non-banking financial institutions during 2005-06. The Report also presents a detailed analysis of the Indian financial system from the financial stability viewpoint.

The Report has seven chapters. Statistical tables appended to the Report provide information on operations and performance of financial institutions both at individual and aggregate levels.

Financial sector reforms in India have been introduced in a calibrated and well-sequenced manner since the early 1990s. The sustained efforts by the Government, the Reserve Bank and by banks themselves have resulted in a competitive, healthy and resilient financial system. The asset quality and soundness parameters of the Indian banking sector, on the whole, are now comparable with global levels. This has been achieved in the backdrop of gradual alignment of prudential norms with international best standards and in an environment of growing competitive pressures. There is also an evidence of some financial deepening in recent years. Having achieved substantial success in improving the financial health of commercial banks over this period, there is now need to focus on the further expansion and deepening of financial services so as to serve the needs of those who are underprivileged. This would include particular attention being given to the underdeveloped regions of the country. The reform process is also being extended to the improvement of financial health and prudential regulation of urban co-operative banks, regional rural banks, the rural co-operative banking sector and non-banking financial institutions. In view of the dual regulatory control of urban co-operative banks, the strategy of reform is being conducted through a consultative mechanism involving State Governments.

Overview
The first Chapter provides an overview of the macroeconomic developments in the global and the Indian economy during 2005-06, as also the performance of various financial institutions.

Policy Developments in Commercial Banking
This Chapter provides a detailed account of the various policy measures undertaken by the Reserve Bank during 2005-06 and some major developments up to October 31, 2006. These relate to monetary policy, credit delivery, regulation and supervision, customer service, financial inclusion, payments and settlement systems, technological developments and legal reforms. The objective of various policy measures has been to ensure an efficient and stable financial system for sustaining the growth momentum, and to expand banking services to all sections of society. Major policy initiatives undertaken by the Reserve Bank include allowing banks to raise capital through innovative instruments, advising banks to open ‘no frills' accounts with nil or low balances, one-time settlement scheme for SME accounts, guidelines on securitisation of standard assets and sale/purchase of NPAs, and introduction of the national electronic funds transfer (NEFT) system.

Operations and Performance of Commercial Banks
This Chapter profiles the operations and financial performance of scheduled commercial banks, at the aggregate and bank group levels, based on their audited balance sheets. The analysis in this Chapter covers important aspects such as trends in overall bank credit, credit to the priority sector, lending to sensitive sectors, investment portfolio, trends in deposits, structure of interest rates, financial performance and soundness parameters, extent of technology application and regional spread of scheduled commercial banks. The Chapter also covers the operations of scheduled commercial banks in the capital market. An analysis of the balance sheet parameters and financial performance of regional rural banks is presented in the Chapter. Finally, the financial performance of the four local area banks is also covered in this chapter.

The main points emerging from the analysis are:
· Bank credit growth remained robust for the second year in succession.
· Credit growth turned more broad-based even as credit expansion was more pronounced in respect of retail sector, particularly housing and loans to commercial real estate.
· Net accretion to deposits was lower than expansion in credit, with banks having to partially unwind their holdings of Government securities.
· Net profits of scheduled commercial banks, as a group, increased during the year as against the decline in the previous year due mainly to a turnaround in non-interest income.
· Gross NPAs and net NPAs declined significantly during the year and are now comparable with global levels.
· Banks' capital to risk weighted assets ratio remained more or less at the previous year's level, despite application of capital charge for market risk; significant increase in risk-weighted assets and increase in risk-weights for certain sensitive sectors. This, to an extent, was facilitated by large resources raised by banks from the capital market.
· Till October 31, 2006, 137 RRBs were consolidated to form 43 new RRBs, sponsored by 18 banks in 15 States, bringing down the total number of RRBs all over India from 196 at end-March 2005 to 102.

Developments in Co-operative Banking
The Chapter outlines major policy initiatives, and operations and performance of various segments of the co-operative credit institutions in India, i.e., urban co-operative banks (UCBs) and rural co-operative credit institutions. The data coverage for UCBs has been widened to include complete balance sheet information in respect of both scheduled and non-scheduled UCBs. Besides, the analysis also covers non-scheduled UCBs with deposit size of Rs.100 crore and above. The Chapter also covers, for the first time, information on balance sheet, financial performance and asset quality of State Co-operative Agriculture and Rural Development Banks (SCARDBs) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).

The policy initiatives for UCBs during 2005-06 were guided by the ‘Vision Document' for revival of UCBs. Eight States have entered into Memoranda of Understanding with the Reserve Bank so far. As envisaged in the ‘Vision Document' a differentiated approach to regulation has been adopted with regulatory forbearance for the smaller UCBs while at the same time strengthening their operations. Regulatory measures undertaken during the year related to improving credit delivery mechanism, strengthening prudential norms, improving customer service and enhancing business opportunities.

The major points emerging from the analysis of balance sheet, financial performance and soundness indicators in this Chapter are as follows:

· Assets of urban co-operative banks (both scheduled and non-scheduled) increased moderately during 2005-06.
· Total assets of scheduled urban co-operative banks increased at a higher rate during 2005-06 in comparison with 2004-05.
· Net profits of scheduled UCBs more than doubled during 2005-06 in contrast to a decline in the previous year.
· Asset quality of UCBs improved significantly during 2005-06.
· All segments of the rural co-operative sector were able to expand their business operations during 2004-05. However, their financial performance varied across the institutions.
· Within the short-term structure, while the state co-operative banks (StCBs) earned lower profits, the district central co-operative banks (DCCBs) recorded higher profits. Primary agricultural credit societies (PACS), on the whole, continued to incur overall losses, although a sizable number of them earned profit during 2004-05. In the case of long-term structure, while the SCARDBs continued to incur losses, PCARDBs staged a turnaround during 2004-05.
· Asset quality of short-term structure of rural co-operative banks including StCBs, DCCBs and PACS improved, while that of long-term institutions including SCARDBs and PCARDBs declined.
· The SHG-Bank linkage programme continued with 0.6 million new SHGs having been credit linked by the banking system during 2005-06, benefiting over 32.9 million poor families at end-March 2006.


Non-Banking Financial Institutions
The Chapter analyses business operations, financial performance, and policy developments relating to Financial Institutions (FIs), Non-Banking Financial Companies (NBFCs), and Primary Dealers (PDs). The coverage of data on NBFCs section has been widened to NBFCs not accepting public deposits, but with asset size of ‘Rs.100 crore and above' as against ‘Rs.500 crore and above' earlier.

The main points emerging from the analysis in this Chapter are:
· Financial assistance sanctioned and disbursed by FIs registered a significant increase during 2005-06, reversing the trend of the previous year.
· Assets of FIs expanded during 2005-06.
· A shift in asset portfolio of FIs away from investments to fund increased demand for loans and advances was observed during 2005-06.
· Profits of FIs increased significantly during the year. The capital adequacy ratio of FIs continued to be higher than the minimum prescribed. Asset quality of FIs improved during the year.
· Total assets of NBFCs declined marginally during the year as compared with the previous year.
· A sharp increase in expenditure resulted in a sharp decline in profitability of NBFCs. However, asset quality of NBFCs improved significantly.
· Financial performance of Residuary Non-Banking Companies (RNBCs) improved significantly during 2005-06. A sharp rise in their income was reflected in their higher profitability.
· Operations of NBFCs not accepting deposits but with asset size of Rs.100 crore and above expanded. Their gross NPAs registered a significant decline during the year.
· PDs made robust profits in 2005-06 as compared with substantial losses during 2004-05.
· The CRAR of PDs continued to be much in excess of the stipulated minimum of 15 per cent of aggregate risk-weighted assets.


Financial Stability
The Chapter reviews the regulatory and supervisory measures relating to financial institutions, developments in financial markets and technological improvements in financial infrastructure from the financial stability perspective. The Chapter identifies the major sources of risks, viz., (i) risks of inflationary pressure emanating from higher oil prices (although prices have receded in the recent period, they still continue to be volatile); (ii) rising interest rates globally and potential turnaround in the corporate credit cycle; and (iii) global financial imbalances. These risks may impact the Indian financial sector in varying degree and could pose challenges for the financial system in the near future. However, in the overall assessment undertaken in the Chapter, it emerges that the domestic financial system has become resilient and is found to cope with adverse developments as they occur.

The main points that emerge from the analysis in this Chapter are:

· Financial markets remained generally orderly during 2005-06.
· The activity in the money market migrated significantly from the uncollateralised to the collateralised segment during 2005-06.
· Conditions in the foreign exchange markets also remained broadly stable during 2005-06.
· Yields in Government securities market hardened during 2005-06 leading to significant portfolio adjustments.
· The financing conditions for the corporates remained comfortable during 2005-06.
· Huge resources were mobilised by mutual funds, especially under the equity-oriented schemes, reflecting growing investor confidence.
· The stock market remained stable, barring some volatility in May and June 2006. However, even during these episodes there was no spill over of stock market volatility to the other segments of markets and disruption of the payments and settlement system.
· The volume and amount of transactions through RTGS has increased manifold, which has considerably reduced a major source of systemic risk in the payment and settlement system.

Perspectives
The Chapter highlights some of the emerging issues facing the Indian banking system. These include, inter alia, credit delivery and pricing, customer service and financial inclusion, implementation of Basel II, NPA management, corporate governance and application of technology in banking.

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india

Report Expects India's Business Cycle to Peak by 2010

According to a report by Man Financial, investors can expect the current business cycle to peak by 2010. If India can maintain its expected 8% average GDP growth, India should join the "1$ trillion club" by 2008.

According to a report by Man Financial, investors can expect the current business cycle to peak by 2010. If India can maintain its expected 8% average GDP growth, India should join the "1$ trillion club" by 2008.

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Sri Lanka Faces Tough Call On Interst Rates in Face of Rising Inflation

Sri Lanka faces a tough call on interest rates on Tuesday as it balances the need to keep inflation in check and ensure economic growth remains on track, analysts said.

Sri Lanka's economy is growing by near eight percent, the stock market is at record highs, corporate profits are strong and the property market is booming.

The stock market is at record peaks, with the broader index up 30 percent since the beginning of this year on deal making in selected blue chip and mid sized stocks.

In that positive mix, inflation too is picking up, with the Colombo Consumer Price Index (CCPI), the country's main measure of inflation, now running at a high of 17.2 percent in October from 15.4 percent in September.

"Inflation has now gone up to 17.2 percent, and oil prices are falling," says former deputy finance minister and UNP parliamentarian Bandula Gunawardena. "They (the government) can no longer say inflation is caused by rising oil prices. It is because they are printing money to finance the budget deficit."

Despite a slight dip in oil prices, domestic factors such as rising inflation, robust bank credit and money supply growth and a strong underlying economy favour further tightening, says Central Bank's Assistant Governor H N Thenuwara.

"However, we must keep in mind that 17 percent inflation is mainly due to heavy rains, that's disrupting supplies of foodstuffs like vegetables. A newly developed core-inflation index, is showing a downward trend of 10 percent in October and we expect it to ease down to about 8.5 percent by year end," Thenuwara told businessmen during a seminar on international trade organized by Hatton National Bank on Monday.

Over the last few months, the bank has raised policy rates by 87.5 basis points to curb credit demand and stamp out inflation.

Central Bank's repurchase or repo rate now stands at 9.625 percent, while the reverse repurchase rate is kept at 11.125 percent.

"I think policy rates will stay where they are, the Central Bank might favour a wait-and-see attitude before the budget on Thursday," says Sadduk Ghazzali, Manager Portfolio Management Services, First Capital Asset Management Ltd.

"It's a tough call," said Dudeepa Ratwatte, Head of Global Markets at Commercial Bank of Ceylon, adding that his "gut feeling" was that the bank would go for a 25-basis point hike – if not on Tuesday, then at its next policy meeting in January.

Meanwhile, others say market rates have moved ahead and upward movements in treasury rates after the last rate hike has given room for the monetary board to raise policy rates without antagonizing the fiscal authorities further.

Analysts say a recent dressing down received by state banks after they raised deposit rates, indicate that fiscal authorities still want rates to remain as low as possible, though monetary authorities have indicated that they are in favour of economic stability.

Bank credit to the private sector is expanding by over 23 percent – much to the Central Bank's dismay – as people buy consumer durables, motor vehicles and invest in property to avoid negative returns on their savings deposits.

Governor Nivard Cabraal told businessmen recently that the bank was taking measures to contain credit growth with an aim to curb inflationary pressures, so that growth could be sustained over the longer term.

"You should not think that we are putting a dampener on your activities," Cabraal said. "We want to sustain the high growth path we have achieved by having stable conditions to sustain growth over a longer period."

"If the bank wants to curtail credit growth, they must raise interest rates, then people will save without borrowing to spend. The way things are going there's no impact," said Ratwatte.

Sri Lanka is due to post a 8.0 percent growth in the nine months to Sept, treasury secretary P B Jayasundara said last month, after the economy expanded 8.0 percent from Jan-June 2006.

Cabraal says the island is heading for an 8.0 percent growth next year, the best in 28 years, when the economy expanded by 8.2 percent.

"In the short term, the government has very little room to maneuver because high inflation. I hope the budget will spell out what they plan to do to fundamentally change things," quips Dushyanth Wijayasingha head of research at Asia Securities.

"The problem is the government is printing money and that's not helping the current situation, given the heavy military expenses and no signs of trimming the public sector," says Wijayasinghe.

Central Bank credit to the government in terms of treasury bill purchases have climbed up to 63 billion rupees as at end October from about 20 billion rupees in February.

The bank's practice of printing money and taking up treasury issues has come under fire from critics as it increases inflation and puts pressure on the balance of payments.

During the last two years, treasury bill rates have been fixed around the short term policy rates in a bid to keep down government borrowing costs, a policy that has gradually been relaxed as inflation started to rocket up.



The content of this article is provided courtesty of Lanka Business Online (LBO).

Sri Lanka faces a tough call on interest rates on Tuesday as it balances the need to keep inflation in check and ensure economic growth remains on track, analysts said.

Sri Lanka's economy is growing by near eight percent, the stock market is at record highs, corporate profits are strong and the property market is booming.

The stock market is at record peaks, with the broader index up 30 percent since the beginning of this year on deal making in selected blue chip and mid sized stocks.

In that positive mix, inflation too is picking up, with the Colombo Consumer Price Index (CCPI), the country's main measure of inflation, now running at a high of 17.2 percent in October from 15.4 percent in September.

"Inflation has now gone up to 17.2 percent, and oil prices are falling," says former deputy finance minister and UNP parliamentarian Bandula Gunawardena. "They (the government) can no longer say inflation is caused by rising oil prices. It is because they are printing money to finance the budget deficit."

Despite a slight dip in oil prices, domestic factors such as rising inflation, robust bank credit and money supply growth and a strong underlying economy favour further tightening, says Central Bank's Assistant Governor H N Thenuwara.

"However, we must keep in mind that 17 percent inflation is mainly due to heavy rains, that's disrupting supplies of foodstuffs like vegetables. A newly developed core-inflation index, is showing a downward trend of 10 percent in October and we expect it to ease down to about 8.5 percent by year end," Thenuwara told businessmen during a seminar on international trade organized by Hatton National Bank on Monday.

Over the last few months, the bank has raised policy rates by 87.5 basis points to curb credit demand and stamp out inflation.

Central Bank's repurchase or repo rate now stands at 9.625 percent, while the reverse repurchase rate is kept at 11.125 percent.

"I think policy rates will stay where they are, the Central Bank might favour a wait-and-see attitude before the budget on Thursday," says Sadduk Ghazzali, Manager Portfolio Management Services, First Capital Asset Management Ltd.

"It's a tough call," said Dudeepa Ratwatte, Head of Global Markets at Commercial Bank of Ceylon, adding that his "gut feeling" was that the bank would go for a 25-basis point hike – if not on Tuesday, then at its next policy meeting in January.

Meanwhile, others say market rates have moved ahead and upward movements in treasury rates after the last rate hike has given room for the monetary board to raise policy rates without antagonizing the fiscal authorities further.

Analysts say a recent dressing down received by state banks after they raised deposit rates, indicate that fiscal authorities still want rates to remain as low as possible, though monetary authorities have indicated that they are in favour of economic stability.

Bank credit to the private sector is expanding by over 23 percent – much to the Central Bank's dismay – as people buy consumer durables, motor vehicles and invest in property to avoid negative returns on their savings deposits.

Governor Nivard Cabraal told businessmen recently that the bank was taking measures to contain credit growth with an aim to curb inflationary pressures, so that growth could be sustained over the longer term.

"You should not think that we are putting a dampener on your activities," Cabraal said. "We want to sustain the high growth path we have achieved by having stable conditions to sustain growth over a longer period."

"If the bank wants to curtail credit growth, they must raise interest rates, then people will save without borrowing to spend. The way things are going there's no impact," said Ratwatte.

Sri Lanka is due to post a 8.0 percent growth in the nine months to Sept, treasury secretary P B Jayasundara said last month, after the economy expanded 8.0 percent from Jan-June 2006.

Cabraal says the island is heading for an 8.0 percent growth next year, the best in 28 years, when the economy expanded by 8.2 percent.

"In the short term, the government has very little room to maneuver because high inflation. I hope the budget will spell out what they plan to do to fundamentally change things," quips Dushyanth Wijayasingha head of research at Asia Securities.

"The problem is the government is printing money and that's not helping the current situation, given the heavy military expenses and no signs of trimming the public sector," says Wijayasinghe.

Central Bank credit to the government in terms of treasury bill purchases have climbed up to 63 billion rupees as at end October from about 20 billion rupees in February.

The bank's practice of printing money and taking up treasury issues has come under fire from critics as it increases inflation and puts pressure on the balance of payments.

During the last two years, treasury bill rates have been fixed around the short term policy rates in a bid to keep down government borrowing costs, a policy that has gradually been relaxed as inflation started to rocket up.



The content of this article is provided courtesty of Lanka Business Online (LBO).

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India and Malaysia Form Tech Alliance

Malaysia and India have signed an initial bilateral agreement to ride on each other's strengths in the technology industry.

"We have formed alliances in terms of market, technology creation, protection of intellectual property and funding," Minister of Science, Technology and Innovation Datuk Seri Jamaludin Jarjis said.

The minister was in New Delhi, India, to attend the Asean-India Technology Summit on Tuesday and a memorandum of understanding was signed between Malaysia, representing the Asean region, and India.

Asean countries hope to draw on India's muscle in technology while India can use the region as a springboard to China and to other Islamic countries, Jamaludin told Malaysian journalists in Bangalore.

India has a Silicon Valley in Bangalore, which houses more than 250 technology giants of the world.

"India has many qualified scientists. Malaysia can ride on their talent pool and knowledge. We are working on an early tsunami warning system with the country," he said.

Jamaludin hopes to present these initiatives in a formal meeting with his Asean counterparts in Myanmar next year.

The minister met up with two Indian giants during his visit - business consulting firms Infosys Technologies Ltd and Satyam Computer Services Ltd.

The firms have expressed interest to expand their presence in Malaysia, and one of them is eyeing to invest in outsourcing business that will help create 2,500 jobs. The minister declined to reveal further. Satyam is the only one between the two that has an office in the country.

"Indian biotechnology firms have also expressed interest to invest in Malaysia, particularly in research and development, and in commercialising end products," Jamaludin said.

So far, there are 55 technology companies from India based in Malaysia.

Countries plan to ride on each other's strengths in the technology industry

Malaysia and India have signed an initial bilateral agreement to ride on each other's strengths in the technology industry.

"We have formed alliances in terms of market, technology creation, protection of intellectual property and funding," Minister of Science, Technology and Innovation Datuk Seri Jamaludin Jarjis said.

The minister was in New Delhi, India, to attend the Asean-India Technology Summit on Tuesday and a memorandum of understanding was signed between Malaysia, representing the Asean region, and India.

Asean countries hope to draw on India's muscle in technology while India can use the region as a springboard to China and to other Islamic countries, Jamaludin told Malaysian journalists in Bangalore.

India has a Silicon Valley in Bangalore, which houses more than 250 technology giants of the world.

"India has many qualified scientists. Malaysia can ride on their talent pool and knowledge. We are working on an early tsunami warning system with the country," he said.

Jamaludin hopes to present these initiatives in a formal meeting with his Asean counterparts in Myanmar next year.

The minister met up with two Indian giants during his visit - business consulting firms Infosys Technologies Ltd and Satyam Computer Services Ltd.

The firms have expressed interest to expand their presence in Malaysia, and one of them is eyeing to invest in outsourcing business that will help create 2,500 jobs. The minister declined to reveal further. Satyam is the only one between the two that has an office in the country.

"Indian biotechnology firms have also expressed interest to invest in Malaysia, particularly in research and development, and in commercialising end products," Jamaludin said.

So far, there are 55 technology companies from India based in Malaysia.

Countries plan to ride on each other's strengths in the technology industry

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india

India's Economic Growth: A Force to Be Reckoned With.

India's Finance Minister urges India's financial sectors to ready themselves to become an engine of growth in the world economy by preparing to finance growing GDP within India. India expects to be the third largest economy in just a few years.

India's Finance Minister urges India's financial sectors to ready themselves to become an engine of growth in the world economy by preparing to finance growing GDP within India. India expects to be the third largest economy in just a few years.

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Asian Market: Potential Risks Ahead

Although Asian stock markets have performed very well this past year, analysts foresee a risk ahead. The next 12 months are said to prove extremely volatile for equity markets in Asia, as regional instability increases.

Although Asian stock markets have performed very well this past year, analysts foresee a risk ahead. The next 12 months are said to prove extremely volatile for equity markets in Asia, as regional instability increases.

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india

India & China: Financial Systems Upgrade Needed

New research conducted by the McKinsey Global Institute illustrates the shortcomings of the Chinese and Indian financial systems.

New research conducted by the McKinsey Global Institute illustrates the shortcomings of the Chinese and Indian financial systems.

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Indian Interest for Sri Lanka’s Sovereign Bonds

Sri Lanka, Wednesday, threw open the government bond market for overseas investors to buy rupee-denominated sovereign debt for the first time beginning today, the Central Bank said.

Prior to this, overseas investors were only allowed to invest in equities and dollar bonds issued by the government, also known as Sri Lanka Development Bonds.

Overseas investors, which include mutual funds and regional funds approved by the Securities & Exchange Commission of Sri Lanka (SEC), companies incorporated outside Sri Lanka and citizens of foreign states are now allowed to invest in treasury bonds, the bank's Public Debt department said.

"We are opening 5-percent of the government bond market for maturities over two years for foreign investors. They have to hold it for at least a year before selling it to a resident Sri Lankan, but that clause doesn't apply if its sold to another foreign investor during a one year period," Central Bank's superintendent of Public Debt Chandra Premaratne said.

According to Central Bank figures, total outstanding treasury bond portfolio now stands at 875.4 billion rupees as at end October.

"Accordingly, the amount now offered to non-residents would be 44 billion rupees," she said.

"We have got some initial interest from few Indian investors who say they see arbitrage opportunities by investing in Sri Lankan rupee-denominated bonds," the bank's Assistant to the Governor, H N Thenuwara said.

Overseas investors need to open a rupee account or a Treasury Bond Investment External Rupee Account (TIERA) to route their investments, the bank said.

The content of this article has been provided courtesy of Lanka Business Online.

Sri Lanka, Wednesday, threw open the government bond market for overseas investors to buy rupee-denominated sovereign debt for the first time beginning today, the Central Bank said.

Prior to this, overseas investors were only allowed to invest in equities and dollar bonds issued by the government, also known as Sri Lanka Development Bonds.

Overseas investors, which include mutual funds and regional funds approved by the Securities & Exchange Commission of Sri Lanka (SEC), companies incorporated outside Sri Lanka and citizens of foreign states are now allowed to invest in treasury bonds, the bank's Public Debt department said.

"We are opening 5-percent of the government bond market for maturities over two years for foreign investors. They have to hold it for at least a year before selling it to a resident Sri Lankan, but that clause doesn't apply if its sold to another foreign investor during a one year period," Central Bank's superintendent of Public Debt Chandra Premaratne said.

According to Central Bank figures, total outstanding treasury bond portfolio now stands at 875.4 billion rupees as at end October.

"Accordingly, the amount now offered to non-residents would be 44 billion rupees," she said.

"We have got some initial interest from few Indian investors who say they see arbitrage opportunities by investing in Sri Lankan rupee-denominated bonds," the bank's Assistant to the Governor, H N Thenuwara said.

Overseas investors need to open a rupee account or a Treasury Bond Investment External Rupee Account (TIERA) to route their investments, the bank said.

The content of this article has been provided courtesy of Lanka Business Online.

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India’s Sensex Reaches a Milestone Monday

Sensex has it's best-ever finish after reaching 13,024.26, a gain of over 100 points. A majority of this can be attributed to the Reserve Bank of India and a technology firm, Infosys Technologies.

Sensex has it's best-ever finish after reaching 13,024.26, a gain of over 100 points. A majority of this can be attributed to the Reserve Bank of India and a technology firm, Infosys Technologies.

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India Prime Minister Shows Confidence in Economy

Prime Minister Manmohan Singh said that with a growth rate of 8-9 percent this year, India can possibly attain 10% by next year. The completion of current projects should lead to agricultural and industrial growth that will help alleviate India's historical problems with poverty, illiteracy and unemployment.

Prime Minister Manmohan Singh said that with a growth rate of 8-9 percent this year, India can possibly attain 10% by next year. The completion of current projects should lead to agricultural and industrial growth that will help alleviate India's historical problems with poverty, illiteracy and unemployment.

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Search-Engine Marketing: India’s New Buzzword

Internet adverting is moving fast in India. About 90 Indian brands are investing their advertising dollars wisely on search-engine marketing. Researchers said that of the 1 billion searches in a month, more than 300 million feature ads, of which 5 million are clicked.

Internet adverting is moving fast in India. About 90 Indian brands are investing their advertising dollars wisely on search-engine marketing. Researchers said that of the 1 billion searches in a month, more than 300 million feature ads, of which 5 million are clicked.

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Asia: Stocks at a Five-Month High

Asian stocks were at a five-month high Monday as word spread that strong earnings would be reported for Toyota Motor and Hyundai Motor companies. Toyota advanced ¥80 to ¥6,960. Hyundai Motor climbed 1,300 won to 77,800 won.

Asian stocks were at a five-month high Monday as word spread that strong earnings would be reported for Toyota Motor and Hyundai Motor companies. Toyota advanced ¥80 to ¥6,960. Hyundai Motor climbed 1,300 won to 77,800 won.

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Corus Confirms Takeover at US$8.1bn

India's efforts to takeover an Anglo-Dutch steel firm, Corus, at US$8.1bn looks bright. Corus is the worlds fifth-biggest steel firm and employs nearly 50,000 people worldwide. This purchase marks the largest Indian takeover of a foreign company.

India's efforts to takeover an Anglo-Dutch steel firm, Corus, at US$8.1bn looks bright. Corus is the worlds fifth-biggest steel firm and employs nearly 50,000 people worldwide. This purchase marks the largest Indian takeover of a foreign company.

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india

Tata Steel and Corus Group Create Steel Giant

The Great Britain steel company, Corus Group, accepted India's Tata Steel acquisition offer of $8 billion. The deal should be closed mid-January, at which point they will become the world's 5th largest steel company. This is India's greatest foreign deal to this date.

The Great Britain steel company, Corus Group, accepted India's Tata Steel acquisition offer of $8 billion. The deal should be closed mid-January, at which point they will become the world's 5th largest steel company. This is India's greatest foreign deal to this date.

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india

Japan's Suzuki Sales Increase in Europe and Asia

Suzuki Motor will focus on selling more profitable compact vehicles in Asia and Europe. This decision has surged shares 48 percent this year to become the fifth-best performer in the Nikkei. Analysts agree this is a smart decision as demand for vehicles is on the rise in India and China.

Suzuki Motor will focus on selling more profitable compact vehicles in Asia and Europe. This decision has surged shares 48 percent this year to become the fifth-best performer in the Nikkei. Analysts agree this is a smart decision as demand for vehicles is on the rise in India and China.

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india

Indian Steel Co. Offers to Buy UK Steel Co.

The Indian company, Tata Steel, made an offer to purchase one of the largest steel producers in the world, Corus Group. Tata Steel made a non-binding offer of $10 billion for a 100% stake in the United Kingdom based company

The Indian company, Tata Steel, made an offer to purchase one of the largest steel producers in the world, Corus Group. Tata Steel made a non-binding offer of $10 billion for a 100% stake in the United Kingdom based company

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india

India Inc Raises Over $13 b from Overseas Markets

India Inc raised over $13 billion from overseas debt securities this year, with a bulk coming through Foreign Convertible Currency Bonds. Barclays Capital companies raised about $5 billion through FCCBs. The jump in Indian companies' overseas fund raising was due to the need to fund their overseas expansion and acquisitions.

India Inc raised over $13 billion from overseas debt securities this year, with a bulk coming through Foreign Convertible Currency Bonds. Barclays Capital companies raised about $5 billion through FCCBs. The jump in Indian companies' overseas fund raising was due to the need to fund their overseas expansion and acquisitions.

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india

EU and India Pursue Cooperation and Trade

India and the European Union were among the first countries to step towards a bilateral trade and investment deal on Friday. India is moving towards the global scene as they play an important role in the WTO negotiations. India wants to attract more investment from the EU to develop its economy.

India and the European Union were among the first countries to step towards a bilateral trade and investment deal on Friday. India is moving towards the global scene as they play an important role in the WTO negotiations. India wants to attract more investment from the EU to develop its economy.

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india

India-Korea Agreement Close to Completion

India and South Korea are very close to finishing the Comprehensive Economic Partnership Agreement (CEPA). The Koreans have been are looking for India to open up its exports and would like exports to be free of duties. India is also looking for the same except they would like to retain duties for certain items, like leather. There will be another meeting later this month to clear up details and then one in December to make the agreement final.

India and South Korea are very close to finishing the Comprehensive Economic Partnership Agreement (CEPA). The Koreans have been are looking for India to open up its exports and would like exports to be free of duties. India is also looking for the same except they would like to retain duties for certain items, like leather. There will be another meeting later this month to clear up details and then one in December to make the agreement final.

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india

Is India Too Reliant on Foreign Direct Investment?

Despite a dramatic increase in FDI since last year, India can not securely expect or rely upon further FDI to maintain its development goals.

Despite a dramatic increase in FDI since last year, India can not securely expect or rely upon further FDI to maintain its development goals.

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india

India FDI Almost Doubles

India's FDI nearly doubled since last year. Up nearly 92 % from last April-July Quarter, India's FDI is quickly playing a larger part in India's Economy. FDI is expected to keep growing and could possible reach 12 billion by the end of the fiscal year.

India's FDI nearly doubled since last year. Up nearly 92 % from last April-July Quarter, India's FDI is quickly playing a larger part in India's Economy. FDI is expected to keep growing and could possible reach 12 billion by the end of the fiscal year.

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india

India-Taiwan Bilateral Trade to Reach $3billion in 2006

"Trade between India and Taiwan is expected to touch 3 billion dollar this year on the back of growing ICT (information, communication and technology) sector in the country, a Taiwanese expert on Friday said."

"Trade between India and Taiwan is expected to touch 3 billion dollar this year on the back of growing ICT (information, communication and technology) sector in the country, a Taiwanese expert on Friday said."

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india

India Looks to Make Overseas Investment More Accessible

At an India-UK business summit, India revealed plans to create a center to attract foreign investment for overseas Indians. The investment center would help facilitate access to information regarding foreign investment. Services provide would include investment advisory services on taxation, legal requirements, information on capital market investment and information on real estate investment opportunities. Overseas Indian Affairs Minister Vayalar Ravi said he hoped that the plans would be finalized by January.

At an India-UK business summit, India revealed plans to create a center to attract foreign investment for overseas Indians. The investment center would help facilitate access to information regarding foreign investment. Services provide would include investment advisory services on taxation, legal requirements, information on capital market investment and information on real estate investment opportunities. Overseas Indian Affairs Minister Vayalar Ravi said he hoped that the plans would be finalized by January.

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india

Australia Considers Uranium Deal with India

Australia is considering whether it should match a controversial US nuclear deal with India to allow Canberra to sell uranium to the Indian Government.  Foreign Minister Alexander Downer urges caution in selling uranium to countries that have not signed the NPT (nuclear non-proliferation treaty) warning that it would set a dangerous precendent.  Prime Minister John Howard has stated that it would not bow under current pressure to sell uranium to India, though it may reconsider its position in the future.

Australia is considering whether it should match a controversial US nuclear deal with India to allow Canberra to sell uranium to the Indian Government.  Foreign Minister Alexander Downer urges caution in selling uranium to countries that have not signed the NPT (nuclear non-proliferation treaty) warning that it would set a dangerous precendent.  Prime Minister John Howard has stated that it would not bow under current pressure to sell uranium to India, though it may reconsider its position in the future.

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india

Hyundai to Spend $1.5billion in India

Hyundai Motor Co. has laid down plans to construct a second car, engine, and transmission factory as well as a research and development center in India.  As South Korea's largest automobile producer, it will personally invest $911 million while its auto-parts makers will cover the rest.  Other car companies, such as General Motors and Honda Motor, are also looking to expand capacity in the world's second-fastest growing major economy.  India's passenger car sales in the fiscal year ending March 31st rose by 7.6% from the same time last year.  Car sales have risen in seven of the past 10 years, helped by economic expansion and interest rates that have fallen by 50% in the last five years.

Hyundai Motor Co. has laid down plans to construct a second car, engine, and transmission factory as well as a research and development center in India.  As South Korea's largest automobile producer, it will personally invest $911 million while its auto-parts makers will cover the rest.  Other car companies, such as General Motors and Honda Motor, are also looking to expand capacity in the world's second-fastest growing major economy.  India's passenger car sales in the fiscal year ending March 31st rose by 7.6% from the same time last year.  Car sales have risen in seven of the past 10 years, helped by economic expansion and interest rates that have fallen by 50% in the last five years.

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india

Malaysia's Palm Oil Exports to India May Fall

Despite a 10% import duty cut, Malaysia's palm oil exports to India are likely to fall to 500,000 tons in 2006 from 650,000 tons in 2005.  The Indian government reduced import duties on palm oil and palmolein in August, with duties on crude products dropping to 70% from 80% and refined products dropping from 90% to 80%.  On another note, Malaysia's biofuel production should rise to 500,000 tons in 2007 from a projected 100,000 tons at the end of 2006.

Despite a 10% import duty cut, Malaysia's palm oil exports to India are likely to fall to 500,000 tons in 2006 from 650,000 tons in 2005.  The Indian government reduced import duties on palm oil and palmolein in August, with duties on crude products dropping to 70% from 80% and refined products dropping from 90% to 80%.  On another note, Malaysia's biofuel production should rise to 500,000 tons in 2007 from a projected 100,000 tons at the end of 2006.

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india

India and China Look to Build Up Renewable Energy Sources

China and India, respectively the 2nd and 4th largest greenhouse gas emitters, are looking to expand their renewable energy resources. Both are looking to have 15% of their energy renewable within the next 20-25 years. India already has 7% of its energy renewable, mostly being produced by wind.

China and India, respectively the 2nd and 4th largest greenhouse gas emitters, are looking to expand their renewable energy resources. Both are looking to have 15% of their energy renewable within the next 20-25 years. India already has 7% of its energy renewable, mostly being produced by wind.

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india

Debate in India over Foreign Investment in Education

A debate over whether or not the education system in India can receive foreign investment has left the government divided. The idea involves opening elementary and high education to foreign investors. India did this in 2001, but due to tough regulations and government controls there was a poor response. Government officials are now reviewing the idea and will arrive at a decision in 3 to 6 months.

A debate over whether or not the education system in India can receive foreign investment has left the government divided. The idea involves opening elementary and high education to foreign investors. India did this in 2001, but due to tough regulations and government controls there was a poor response. Government officials are now reviewing the idea and will arrive at a decision in 3 to 6 months.

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india

India and Pakistan: on the Path to Peace?

While attending the Non-Aligned Movemet summit in Cuba, Pakistan's President Pervez Musharraf met with Indian Prime Minister Manmphan Singh. The two leaders agreed to improve relations and resume peace-talks regarding the contested Kashmir regions. Taking a step beyond rapprochment, Musharraf and Singh plan to form a "joint agency to fight terrorism."  Musharraf was quoted by Reuters saying that a solution to the problems between India and Pakistan are within reach.

While attending the Non-Aligned Movemet summit in Cuba, Pakistan's President Pervez Musharraf met with Indian Prime Minister Manmphan Singh. The two leaders agreed to improve relations and resume peace-talks regarding the contested Kashmir regions. Taking a step beyond rapprochment, Musharraf and Singh plan to form a "joint agency to fight terrorism."  Musharraf was quoted by Reuters saying that a solution to the problems between India and Pakistan are within reach.

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india

Boeing to Send More Jobs to India

Boeing Integrate Defense Systems has announced that it will increase the amount of work outsourced to Indian companies, and also form joint ventures in India.  The US-based aeronautics corporation is already doing business with Hindustan Aero Limited, as well as several other Indian software companies.  The push for a greater presence in India is part of an effort on Boeing's behalf to increase its IDS sales to the Indian Air Force and Indian Navy.  There are already talks of orders for Harpoon air-to-surface missles and T-45 training craft, as well as multi-purpose combat aircraft.

Boeing Integrate Defense Systems has announced that it will increase the amount of work outsourced to Indian companies, and also form joint ventures in India.  The US-based aeronautics corporation is already doing business with Hindustan Aero Limited, as well as several other Indian software companies.  The push for a greater presence in India is part of an effort on Boeing's behalf to increase its IDS sales to the Indian Air Force and Indian Navy.  There are already talks of orders for Harpoon air-to-surface missles and T-45 training craft, as well as multi-purpose combat aircraft.

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india

ASIA DEVELOPMENT OUTLOOK 2007

Despite challenges from rising oil costs, commodity costs, and interest rates, the Asia Development Bank expects 7.7% growth for 2007.

Despite challenges from rising oil costs, commodity costs, and interest rates, the Asia Development Bank expects 7.7% growth for 2007.

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india

Singapore's Tamasek Holdings To Increase Holdings Throughout Asia

Tamasek's Chief Financial Officer is quoted by Bloomberg Saying "We've got all three engines of growth in Asia firing all at the same time. In the next 10 years, we believe in the Asian Story." The same report cited Asia Development Bank's expectations that Asian economies will expand 7.7% this year.

Tamasek's Chief Financial Officer is quoted by Bloomberg Saying "We've got all three engines of growth in Asia firing all at the same time. In the next 10 years, we believe in the Asian Story." The same report cited Asia Development Bank's expectations that Asian economies will expand 7.7% this year.

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india

Money Market Report from Reserve Bank of India

Check RBI Press Releases daily for money market reports from the Reserve Bank of India.

Check RBI Press Releases daily for money market reports from the Reserve Bank of India.

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india

India's SENSEX Slips

Indian Stocks slipped 79 today points following poor performance from the BSE IT index (down 1.4%), the Healthcare index (down 1.2%) and the Oil and Gas index (down 1%). Poor performance aross-industries leads some economists to expect a topping pattern -- causing them predict slowing growth during the  next two years.  Others view it as a bump in the road.

Indian Stocks slipped 79 today points following poor performance from the BSE IT index (down 1.4%), the Healthcare index (down 1.2%) and the Oil and Gas index (down 1%). Poor performance aross-industries leads some economists to expect a topping pattern -- causing them predict slowing growth during the  next two years.  Others view it as a bump in the road.

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india

Australian Cities Seek Indian Investments

Seeking Indian investments, delegations from two Australian cities, Melbourne and Ballarat, Tuesday held interactive meetings in New Delhi with leading investors and highlighted possibilities they offer.  Australia has become an increasingly important economic partner for India, with bilateral trade at $5.8 billion in 2005-06.  Leaders discussed possible collaborations in information and communications technology, mining, manufacturing, and entertainment.  Melbourne also offered assistance in preparing for the 2010 Commonwealth Games to be held in New Delhi (it was hosted this past year in Melbourne).

Seeking Indian investments, delegations from two Australian cities, Melbourne and Ballarat, Tuesday held interactive meetings in New Delhi with leading investors and highlighted possibilities they offer.  Australia has become an increasingly important economic partner for India, with bilateral trade at $5.8 billion in 2005-06.  Leaders discussed possible collaborations in information and communications technology, mining, manufacturing, and entertainment.  Melbourne also offered assistance in preparing for the 2010 Commonwealth Games to be held in New Delhi (it was hosted this past year in Melbourne).

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india

Reuters Report Sri Lanka Sea Battle

Sri Lanka's military clashed with Tamil Tiger rebels in hopes of retaking the Tamil Tiger held town of Trincomalee in northeastern Sri Lanka.  Military stratgists view the town as a threat to nearby port-town Sampur.

Sri Lanka's military clashed with Tamil Tiger rebels in hopes of retaking the Tamil Tiger held town of Trincomalee in northeastern Sri Lanka.  Military stratgists view the town as a threat to nearby port-town Sampur.

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Other Important News In India


Indian Shares Rise 1.6% with Signs of Economic Recovery

Indian shares rose 1.6 percent on Monday, July 20 as reports of positive corporate earnings "from across the world" convinced many that the global economy is actually recovering.

Several factors, including strong global and local liquidity, a recovery in earnings growth and strong corporate balance sheets, will spur the market over the next 12 months, Morgan Stanley analyst Ridham Desai said. He added, "Indian equities are in a sweet spot. We would continue to buy the dips in the market". A few of the biggest companies in India, Reliance Industries, Tata Consultancy Services Ltd and Infosys Technologies rose, gained 3.1 percent, 11.9 percent and 4.5 percent, respectively. Signs of economic recovery are whetting investor's appetite for riskier assets, with "record low global interest rates and trillions of dollars of stimulus spending helping the world recover" from the deep recession.

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Indian Gov Stimulus helped Revive Industrial Production in 2.7%

"Industrial activity in India will gain more traction as the favorable effect of lower bank lending rates and a continuing fiscal boost offsets a still-weak export sector," said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore. The rise in output "pretty much destroys the probability of further rate cuts."

India's industrial production increased at the fastest pace in eight months as record-low interest rates and government stimulus measures helped revive demand and investment. Output at factories, utilities and mines jumped 2.7 percent in May from a year earlier after a revised 1.2 percent gain in April, the statistics agency said in New Delhi today. That was more than double the 1.3 percent increase expected by economists. Economies across Asia are starting to show signs of recovery from the worst global recession since the Great Depression, prompting policy makers to stop lowering interest rates. The World Bank last month said India may overtake China next year as the world's fastest-growing major economy.

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India to Borrow $ 93 billion to Fund Buget

India's Finance Minister Pranab Mukherjee announced plans to borrow a record 4.51 trillion rupees ($93 billion) to fund budget spending on roads, power and aid for the poor. Stocks, bonds and the currency slumped. Unveiling the budget for the year to March 2010, Mukherjee said India's fiscal deficit is expected to widen to a 16-year high of 6.8 percent of gross domestic product from a revised 6 percent. Indirect taxes will be streamlined through a goods and services tax, he said in his speech in New Delhi today.

Prime Minister Manmohan Singh's government is spending more to speed up economic growth and reduce poverty in a nation where malnutrition is worse than Sub-Saharan Africa. Stocks and the currency weakened on investor disappointment that Mukherjee didn't announce major asset sales and concerns a ballooning budget deficit may lead to a credit-rating cut. "The budget has failed to instill confidence as to how the government will achieve fiscal consolidation," said Rupa Rege Nitsure, chief economist at state-owned Bank of Baroda in Mumbai. "With this kind of a deficit, there is a possibility that India's rating may be downgraded." The Bombay Stock Exchange's Sensitive Index fell the most in six months, declining 5.8 percent to 14,043.40 at the 3:30 p.m. close in Mumbai. The rupee weakened 1.3 percent, the most in almost six weeks, to 48.5375 against the dollar. The yield on the most-traded 6.07 percent note due May 2014 surged 22 basis points, the most since March 17, to 6.45 percent.

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Good News for India's Economy

As reported by the finance ministry, Indian economic growth is predicted to spur as much as 7.75 percent in 2009. Two of the most important reasons are the improving U.S economy in second quarter reports and the recent successful harvests from the monsoon rains.

India's exports fell for the eighth consecutive month in May 2009, while industrial output increased 1.4 percent in April 2009. The economy expanded 6.7 percent, which is the most sluggish pace in the past six years, since 2003, where the economy expanded between 8.5 percent and 9 percent. Among India's many strengths is the country's large service sector, which contributes about 55 percent of India's GDP. Furthermore, the government's rural jobs program, which guarantees 100 days of work in a year for the poor has kept "rural income and consumption strong," according to the finance ministry. With income, consumption, growth, output and a strong service sector, India's economy "has shock absorbers" that will ensure the country's economic revival.

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Indian Stocks Increased 49% This Year

The rally this year has helped India post the fifth-best performance among the 89 markets tracked by Bloomberg News globally. Valuations have also climbed, with the Sensex now valued at 16 times reported earnings, double November's low of 8.1 times. "The relative outperformance and the strong move in the market post the elections have now priced in improving economic fundamentals," the analysts wrote in the report. "The upcoming budget next month will be very important for the overall direction of the market." The Sensex advanced 1.7 percent to 14,590.18, the highest in more than a week, as of 1:23 p.m. in Mumbai.

India's Sensex gained 49 percent advance this year and further gains depend on government policies to boost economic growth and pare a budget deficit, Nomura Holdings Inc. said. The benchmark Bombay Stock Exchange Sensitive Index may rise to 16,400 in the next 12 months, a "muted" 14 percent gain from yesterday's close, Nomura analysts led by Prabhat Awasthi said in a report today. Investors should own a mix of so-called defensive and domestic cyclical shares, they added.

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India and Deflation

There are numerous reasons for deflation to occur. It can be caused by a decrease in the supply of money or credit or by a decrease in government and consumer spending. Side effects that accompany deflation are increased unemployment, due to lower levels of demand in the economy and dwindling profits. This could further increase the severity of a recession.

There are numerous reasons for deflation to occur. It can be caused by a decrease in the supply of money or credit or by a decrease in government and consumer spending. Side effects that accompany deflation are increased unemployment, due to lower levels of demand in the economy and dwindling profits. This could further increase the severity of a recession. In India, the Ministry of Commerce and Industry has reported that "wholesale prices fell 1.61% in the year to June, compared with a rise of 0.13% the previous week" Analysts said that prices would continue falling for the next fourth months, now that lower food prices have pulled the index down. An economist at Nomura, Sonal Verma, predicts that the country will "have negative numbers at least till September, primarily because inflation had picked up very sharply during this period last year." Figures show that inflation rose up to 12.9% in August 2008 but has been decreasing since then.

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Indian Economy Shows Signs of Recovery

India's industrial output increased 1.4% from April 2008. An economist at HSBC, Robert Prior-Wandesforde said, "[Indian] output growth almost certainly bottomed on a year-on-year basis in March and we are looking for a healthy upward trend to develop from here."

India's industrial output increased 1.4% from April 2008. An economist at HSBC, Robert Prior-Wandesforde said, "[Indian] output growth almost certainly bottomed on a year-on-year basis in March and we are looking for a healthy upward trend to develop from here." This improved perspective of output is due mainly to an increase in domestic demand, particularly from government infrastructure and construction projects, according to Nikhilesh Bhattacharyya, an analyst at Moody's.

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India's Plan to Boost Economic Growth

President Pratibha Patil has announced that she will push for reforms to revive the economy by taking steps to increase foreign investment in-flows and inject more capital in banks.

President Pratibha Patil has announced that she will push for reforms to revive the economy by taking steps to increase foreign investment in-flows and inject more capital in banks. Welfare programs and higher investment in sectors such as infrastructure will be pursued as well. The president said that welfare projects for farmers and an expansion of rural employment guarantee project are high on the agenda. Families below the poverty line will be given 25kg of rice or wheat every month at 3 rupees a kilo.

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India grew more than expected

For the 2008/09 fiscal year to March 31, India's economy grew 6.7 percent, its weakest in six years and sharply slower than rates of 9 percent or higher in the previous three years. "A main reason (for the slowdown) was financing drying up as a result of the global crisis," said Malik. "The revival in capital markets automatically means one of the negatives crippling investment is addressed." Growth was seen at around six percent in the first half and closer to seven percent in the second. Next year, economists expect growth of eight percent. The economy still has "significant pent-up demand for investment, especially in infrastructure and in affordable housing," said Goldman Sachs economist Tushar Poddar. The numbers gave cheer to the Congress-led government, which swept back to power earlier this month on a poverty alleviation platform. Its strong mandate is seen as a positive for investors, spelling political stability. Finance Minister Pranab Mukherjee has said the government will make increasing growth its top priority to help India's "common man" -- even at the risk of ballooning an already large fiscal deficit.

The rise in expenditure on the election campaign may have boosted India's March quarter performance but downside effects from the external turmoil have been far too strong to be fully offset by the jump in political spending, the note said. "The impressive victory of the Congress party foreshadows economic reforms, which may help to strengthen the Indian economy," said Sherman Chan, economist at Moody's Economy.com.

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India 10-Year Bond Yield at Six-Week Low. RBI Plans to Buy Debt

April 22 (Bloomberg) -- India's 10-year bonds advanced for a sixth day, the longest winning streak in four months, after the central bank said it will buy existing debt. Benchmark yields were at the lowest in six weeks after the Reserve Bank of India said it will purchase 60 billion rupees ($1.2 billion) of securities in open-market operations tomorrow. The central bank's decision to cut interest rates yesterday may help the government reduce borrowing costs as it plans record debt sales in the fiscal year that started April 1. Bonds erased the day's gains after the drop in yields deterred investors before a debt sale on April 24.

April 22 (Bloomberg) -- India's 10-year bonds advanced for a sixth day, the longest winning streak in four months, after the central bank said it will buy existing debt. Benchmark yields were at the lowest in six weeks after the Reserve Bank of India said it will purchase 60 billion rupees ($1.2 billion) of securities in open-market operations tomorrow. The central bank's decision to cut interest rates yesterday may help the government reduce borrowing costs as it plans record debt sales in the fiscal year that started April 1. Bonds erased the day's gains after the drop in yields deterred investors before a debt sale on April 24.

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