India Business News from www.indianembassy.org.sa

	Embassy of India, Riyadh		Issue 14 ♦ January 2006
	India Biz News
www.indianembassy.org.sa		Previous Issues	- A snapshot of India’s economic scene

King Abdullah Bin Abdul Aziz Al Saud visits India

خادم الحرمين الشريفين الملك عبد الله بن عبد العزيز آل سعود يزور الهند

The Custodian of the Two Holy Mosques King Abdullah Bin Abdul Aziz Al Saud paid a historic and landmark visit to India from January from January 24-27, 2006. The two countries signed Agreements on Bilateral Investment Promotion and Protection (BIPPA) and Double Taxation Avoidance (DTAA). As per the Delhi Declaration signed by Prime Minister of India, Dr. Manmohan Singh and the Custodian of the two Holy Mosques, King Abdullah Bin Abdul Aziz Al-Saud, both countries affirmed the importance of stability in the oil market for the world economy. The Indian side expressed appreciation of the balanced petroleum policy of Saudi Arabia. Both countries will develop a strategic energy partnership based on complementarities and inter-dependence which will include reliable, stable and increased volume of crude supplies to India; cooperative and joint ventures in up and down stream oil and gas sectors, both in India, Saudi Arabia and third countries; setting up of Indo-Saudi joint ventures for gas-based fertilizer plants in Saudi Arabia. The Government of India and Saudi Arabia have agreed to encourage and support entrepreneurs in both countries to harness each other’s interests for mutual benefit and promote economic activities. India will assist Saudi Arabia in setting up and ICT Centre of excellence as well institutes of higher learning.

India has moved up five notches to 50 in the Global Competitiveness ranking in the World Economic Forum's Global Competitiveness Report 2005. India's improvement in ranking has been largely on the back of a higher mark in the area of technology. Since technology has become a major driving force in today’s knowledge-based economy, it touches everything from the range, quality and price of goods produced in a country. The degree to which rates of growth and productivity can be sustained depends on the technological readiness and its impact on life. India has fared well in most technology-related indicators in the executive survey of the WEF report with technological readiness at 28 and firm-level technology absorption at 19, leaving China (68 and 37) and Brazil (56 and 46) way behind. In prevalence of foreign technology licensing, India stands at 7, having moved up from 8 in the 2004 report. In comparison, Malaysia is ranked 9, Philippines 19, Brazil 37 and China 71 in 2005. Technological readiness refers to a combination of factors that facilitate and enable the technological capacity of a country. This includes the general availability of technologies, and the penetration rate of information and communication technologies (ICT). ICT plays a significant role in the establishment of effective and rapid communication systems and in providing efficient infrastructure for commercial transactions.

Investment in Infrastructure

استثمـار في البنيـة التحتيـة

Infrastructure development in India has set off in a major way in the last two years and is witnessing impressive growth across various segments. A recent study indicates that India would be merely scratching the surface of the potential infrastructure opportunity with US$ 191.51 billion of investments committed over the next five years. The sector is estimated to grow at a CAGR of 15 per cent over the next few years. The construction sector will be the biggest beneficiary of the infrastructure boom. In India, construction is the second largest economic activity after agriculture. The investment in construction accounts for nearly 11 per cent of India’s Gross Domestic Product (GDP) and nearly 50 per cent of its Gross Fixed Capital Formation (GFCF). It accounts for nearly 65 per cent of the total investment in infrastructure and is expected to be the biggest beneficiary of the surge in infrastructure investment over the next five years. The investment in this segment over the financial year 2005 to 2010 is estimated at USD 124.65 billion.

India topped a global survey of business confidence among mid-sized companies, accounting firm Grant Thornton said. Business confidence in previous high-flyers Britain and the United States dropped particularly sharply in the survey of over 7,000 business chiefs in 30 countries. India boasted 93 percent of respondents who were positive about 2006 prospects, compared to 88 percent last year. "The economy continues to be extremely buoyant, the stock market is breaking all time highs on a weekly basis, foreign direct investment has increased substantially," said Grant Thornton's Director of International Business, India.

Mahindra & Mahindra (M&M) announced that it had acquired a 98.6 per cent stake in the UK-based automotive forging maker Stokes Group for an undisclosed amount. The Stokes Group is the largest automotive forging company in the UK with a turnover of £25 million. It has two manufacturing facilities at Walsall and Dudley, near Birmingham. Its clientele includes Koyo Bearings, GWK Group, Land Rover, ZF, Bosch, Benteler, Visteon, Ford and Jaguar.

Boeing Co. will invest US$ 185 million in facilities in India and source US$ 1.9 billion in products and services over a period of 10 years. The Chicago-based aerospace company will spend $100 million on a repair, maintenance and overhaul facility and $75 million on a pilot training facility, with a further $10 million on other facilities. State-run Air-India also has placed a firm order with Boeing for 68 aircraft. "The introduction of these aircraft will allow Air-India to expand and modernise its fleet, effect cost savings and add new long-range routes," Air-India Chairman said.

Tishman, ICICI to invest US$ 1 billion

تستثمر شركة تيشمان الأمريكية وبنك "آي سي آي سي آي" الهندي أكثر من بليون دولار أمريكي في الهند

U.S.-based real estate developer and investor Tishman Speyer and India's ICICI Ventures will invest more than US$ 1 billion over the next three to five years in India. The fund marks the biggest commitment to real estate in Asia's third-largest economy after India last year allowed 100 percent foreign direct investment in townships and housing projects. Tishman, which owns the New York Times Building and Rockefeller Center, has teamed up with the private equity arm of ICICI Bank, in TSI Ventures (India) Pvt. Ltd. to build commercial, residential and mixed-use properties across India.

German auto component major Bosch, said it would invest US$ 405 million in the Indian market between 2005 and 2008, which is an extension of the US$ 226 million investment already announced. "India is a growth economy and we are confident that the steep upward trend will continue in the future," Robert Bosch GmbH Chairman, Bernd Bohr, told reporters at the Eighth edition of the Auto Expo. A major part of the new investments will go towards the expansion of the company's automotive activities in India, including additional investments in MICO, Bosch Chassis Systems (formerly Kalyani Brakes) and IT company Robert Bosch India Ltd.

The government allowed 100 per cent foreign direct investment in uplinking of television channels in the non-news category and 26 per cent for news channels. "FDI up to 100 per cent would be allowed with prior approval of the government for uplinking of non-news and current affairs TV channels. For the news channels, the government has put the condition that portfolio investment in the form of FII and NRI deposits shall not be persons acting in concert with FDI investors as defined by Securities and Exchange Board of India. For setting uplinking hub and teleports the government has allowed FDI of 49 per cent.

The Centre is likely to open up five more sectors for 100 per cent foreign direct investment through the automatic approval route within the next one month and is awaiting approval of the Cabinet. The five sectors, where FDI would be allowed are power trading, processing and warehousing of rubber and coffee, coal, greenfield airports and petroleum infrastructure.

Despite a slight slowdown, India boasts one of the fastest growing industrial production rates in the world. While the latest release from the ministry of statistics has shown industrial production growth to have dipped a tad to 6.9 per cent in November, this level is still higher than most of the major economies like US, UK, Eurozone, Japan, Brazil, Indonesia and Russia. In fact, in the April-November Financial Year 2006 period, industrial production has recorded an 8.3% growth. Among the countries being compared, only China and Argentina seem to have recorded faster industrial production growth rates of 16.6%, and 9.6% respectively.

Exports cross US$ 66 billion in April-December

تتجاوز الصادرات الهندية 66 بليون دولار أمريكي في أبريل - ديسمبر

After witnessing negative growth in November, India's exports bounced back in December to register a 16.19 per cent growth at 8.2 billion dollar. Exports in the first nine months of the current fiscal (April-December, 2005-06) clocked a growth of 18.03 per cent at 66.4 billion dollar as against 56.2 billion dollar in the same period previous fiscal, according to the official trade figures.

India's animation sales to quadruple by 2009

مبيعات الصور المتحركّة للهند تتوقع التربُّع عام 2009

India's animation and gaming market is expected to quadruple to US$ 1.3 billion by 2009, as companies tap the country's large pool of low-cost software professionals. The industry would employ about 30,000 animators by 2009. In 2005, the industry generated revenues of $310 million, he said. Several Indian firms, including Padmalaya Telefilms Ltd., Crest Animation Studios, Color Chips Ltd., UTV Software and Satyam Computer Services' Nipuna Services Ltd., have Western clients looking to cut costs on animation and co-production.

Indian luxury market to touch US$ 452 million

متطلبات السوق الكمالية الهندية تقدر أن تصل 452 مليون دولار أمريكي

With its burgeoning High Net worth Individuals (HNI), Indian market for luxury goods is estimated to touch US$ 452 million in coming years making it the land of promise for global brands, says a survey on luxury goods and Indian consumers. The survey, conducted by industry chambers FICCI and designed in consultation with leading advertising agency Ogilvy and Mather, was carried out among 80 HNIs across five cities of Chennai, Delhi, Jaipur, Kolkata and Mumbai.

It's a tryst with destiny of another kind. Charles O Holliday, the global chairman and CEO of DuPont, is merely building upon what one of his predecessors started in 1802. After all, India had some role to play in the $27bn science and technology company’s inception, when it shipped raw material for black powder for explosives when the company started 203 years ago. “We have a natural affinity towards India. We want to tap the local market, use India for sourcing knowledge and material, do high-end R&D, product development in India. A few days ago, Sir John Bond, chairman, HSBC, flew his entire board down to make a tryst with India. Even for the global bank, India has been important right from the start with one of the founder shareholders of the bank being an Indian family.

The investments by FIIs in the Indian equity markets have crossed US$ 10 billion in the 2005 calendar, the highest ever by the foreign funds in a single year after FIIs were allowed to make portfolio investments in the country's stock markets in the early 90s. As per SEBI figures, FIIs made net purchase of $587.3 million, taking the total net investments in the 2005 calendar to $10.11 billion.

Mitsubishi to invest US$ 368 million for second unit in Bengal

تستثمر شركة ميتسوبيشي المبلغ قدره 368 مليون دولار أمريكي لوحدتها الثانية في بنغال

Mitsubishi Chemicals of Japan, which already has a significant presence at Haldia in West Bengal, is setting up its second unit at Haldia. The Japanese major has planned to invest close to Rs 16650 million on a second chemicals unit with a capacity of 800,000 tonnes. The first unit, with a capacity of 470,000 tonnes and now making profits, had entailed an investment of Rs 14750 million.

Volvo India Private Limited was established in 1998 as a fully-owned subsidiary of Volvo, Sweden. The company has its manufacturing plant at Hoskote near Bangalore, where it assembles heavy commercial vehicles. Set up with an investment of about US$ 70 million, the plant operates at 1000 units capacity in a one-shift operation. Increasing the number of shifts can further enhance this capacity. In the last 5 years Volvo in India has introduced 4 new truck model platforms, a range of construction equipment and engines and recently upgraded the Volvo B7R bus. In 2001, Volvo overhauled its product range globally, and introduced the new generation FM series of trucks. These have been introduced in India starting early 2003.

To increase its presence in India, Radiant Infosystems, a fully-owned subsidiary of US-based Radiant Systems Inc, will invest US$ 10 million in the country. "The investment will go into people and infrastructure," Radiant Infosystems president and chief executive officer said. Radiant will add another 1,800 to its current headcount of 300 in Bangalore and Hyderabad.

India targeting US$ 10 billion FDI in 2006-07

تستهدف الهند تدفّق 10 بليون دولار أمريكي كالاستثمار الأجنبي المباشر خلال عامي 2006 - 2007

The Government is targeting an overall foreign direct investment (FDI) inflow of US$ 10 billion during the next fiscal and expects around US$ 7.5 billion in the current financial year, the Minister for Commerce and Industry, Mr Kamal Nath,said. The actual FDI inflow till October this fiscal stood $2.59 billion. Elaborating on the new FDI policy that was announced, he said it was solely for the purpose of employment generation

Government approves sweeping FDI reforms

توافق حكومة الهند على إصلاحات شاملة بشأن الاستثمار الأجنبي المباشر

The government approved sweeping reforms in foreign direct investment with a first step towards partially opening retail markets to foreign investors. The Cabinet approved for 51 per cent FDI in retail of single-brand products. The approval, after the Group of Ministers on FDI referred it to the CCEA, showed the government’s will to attract investment while protecting the interest of small retailers in the country.

PSLV to fetch US$ 10-million contract by April-May

شركة "بي أس أل في" الفضائية الهندية تقرر جلب عقد قدره 10 مليون دولار أمريكي في أبريل - مايو

After the landmark Insat 4A launch, India has lined two more satellite launches before July. And one of these is set to be India' first completely commercial satellite launch. “In April-May, PSLV-C8 will take the Italian satellite, Agile, to outer space,” Isro chairman G Madhavan Nair divulged, speaking to reporters on the sidelines of a workshop ‘Space Applications for Mankind,’ organised by Vikram Sarabhai Space Centre. The launch marks a $10-million contract for the Bangalore-based Antrix Corporation, Isro’s commercial arm. Nair considers the Italian contract as a “good beginning” to commercial space, adding that the target was to capture at least 10% in the world’s $2-billion satellite launch business. German and South Korean payloads had piggybacked PSLV’s famed triple launch in 1999, marking Antrix Corporation’s testing of waters for its commercial big splash this year.

Some Important Websites:

بعض مواقع الانترنت الهامة

Ministry of External Affairs : http://meaindia.nic.in/

Ministry of Finance: http://finmin.nic.in

Ministry of Commerce and Industry:http://commin.nic.in

Confederation of Indian Industry (CII) : www.ciionline.org

Federation of Indian Chambers of Commerce & Industry (FICCI) : www.ficci.com

India Trade Promotion Organisation (ITPO) : www.indiatradepromotion.org

Trade-India.com : www.trade-india.com / Indian Exporters : www.indianexporters.com
Exporters India : www.indiamarkets.com / India Mart : www.indiamart.com