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Government for incentive to semiconductor industry
The software
and ITeS sector exports from India have exceeded target and
reached around US$24 billion in the year 2005-06 and are on the
right track to reach US$60 billion by 2010. Government is also
in the final stages of preparing a draft policy proposing a
special package of incentives for the semiconductor industry
which includes fabs, assembly and testing units, photo voltaic
cells, flat panel displays, storage devices, etc. This along
with a proactive and industry friendly hardware policy would
make the Indian Electronics/IT Hardware Manufacturing Industry
globally competitive and ensure more inflow of investment
including FDI into this sector. A special thrust has been given
by the Department of Information Technology, to enable IT
Industry growth in Tier 2 and 3 cities and STPI has been working
with several State Governments to identify such locations, to
ensure equitable growth for this sector and maintain global
competitiveness. The IT Ministry has proposed the doing away
with the land area stipulation for IT specific SEZs.
Global companies emulate Indian success stories
India Inc is
becoming a global trend-setter inspiring foreign majors to
emulate Indian success stories. And a set of smart information
technology companies are using the India story to create a
global footprint for themselves. Infosys’ Finacle division, for
example, cites the reference of ICICI Bank while making sales
presentations for its core banking solutions to banks in Europe
and Africa. Nucleus Software regularly puts forward its
software installation for the State Bank of India as an example,
while telecom system integrator ORG Informatics refers to its
role in the growth story of Airtel and Reliance Infocomm to
prospective telecom customers in Africa. Workflow and document
management software maker Newgen Software Technologies, which
began by selling its software to banks and insurance companies
like Citibank India, Max New York Life and ICICI Bank, is now
using these references to target the counterparts of these
companies in Africa, the Middle East and now Europe
Car companies queue up to source parts from India
Nissan, Fiat
and Mitsubishi may soon join the league of global vehicle makers
which source components from India through their joint venture
(JV) partners. According to the recent manufacturing arrangement
between Japanese car majors Nissan and Suzuki, Nissan models for
emerging markets will be produced at Maruti’s facility in
Gurgaon. The components required for producing these vehicles
are likely to be sourced from Maruti’s suppliers in India,
according to analysts. Tata Motors is in discussions with its
partner Fiat SpA, to extend their areas of co-operation
including supply of auto components, company officials said.
Tata Motors’ subsidiary Tata Auto Components has already been
supplying auto parts and services to global vehicle makers and
could also be the sourcing partner for Fiat globally. Hindustan
Motors (HM), which has a manufacturing tie-up with Mitsubishi of
Japan, is also looking at catering to the global component needs
of the latter. Vehicle makers like Mahindra & Mahindra, Ford
Motors, Ashok Leyland and TAFE have similar arrangements. In
fact, Force Motors, which has a JV with MAN Nutzfahrzeuge for
producing commercial vehicles, expects business of around Rs
1,0000 million for the Indian component industry, in supplying
to MAN’s European operations. It is a win-win situation
according to industry observers. While the Indian partners gain
in products and technology, the foreign partner benefits due to
the low cost advantage India offers.
'Rise
in FDI inflows shows increase in business confidence'
Better
investment climate has led to an increase in business confidence
in India; a fact that is corroborated by the increasing level of
foreign direct investment in the country, said the Governor of
Reserve Bank of India (RBI) . He was speaking at the 12th
International Conference on “The Future of Asia: The Road to an
Asian Community” - Concepts and prospects, organised by Nihon
Keizai Shimbun, Inc (Nikkei) in Tokyo. “There is evidence of
increasing business confidence as measured by various business
expectation surveys and improvement in the investment climate.
This is also corroborated by signs of enhanced levels of
foreign direct investment”, according to Governor. The increase
in the gross domestic savings rate to around 30 %, coupled with
sustained absorption of external savings of about 2% of GDP,
would provide the potential for attainment of an accelerated
growth trajectory, he added. Indian companies have managed to
exhibit impressive growth performance in recent years in terms
of most parameters despite adverse developments such as oil
price increases, he said. “The most progressive and dynamic
Indian companies are manifesting increasing levels of global
presence through acquisitions and higher outward foreign direct
investment.
GE
sets US$ 8 billion sales taret in Indian operations
American
corporate giant General Electric set an ambitious eight-fold
increase in its revenue to US$ 8 billion from its India
operations by 2010 — thus making India one of its core
investment destinations. Addressing a gathering of Indian
businessmen, GE Chairman and CEO announced a US$ 250 million
investment in infrastructure and healthcare projects in India.
‘‘Our target is to create sales and assets worth US$ 8 billion
by 2010. We will focus on infrastructure, while increasing our
footprint in financial services, technology and developing
business with our local partners,’’ he said, adding that
infrastructure will top GE’s agenda in India. In November 2005,
GE had reinvested all of its proceeds from settlement of the
Dabhol power project — valued at $145 million — in Indian
infrastructure projects. ‘‘GE will be adding another $100
million to this GE India Development Fund,’’ he said. ‘‘We
should not only make money in the region but also for the
region’’.
Agriculture
The world
knows that India is one of the largest producers of rice and
wheat. What it doesn't know is that India is also the largest
producer of coconuts, cashew nuts, ginger, turmeric, black
pepper and the second largest producer of groundnuts, fruits and
vegetables. That it accounts for about 10 per cent of the
world's fruits production with the country topping in the
production of mangoes and bananas. And that it is exploring new
frontiers in the areas of IT application, contract and corporate
farming and food processing. In recent years, there has been a
considerable emphasis on crop diversification towards
horticulture (fruits, vegetables, ornamental crops, medicinal
and aromatic plants, spices), plantation crops (coconut, cashew
nuts and cocoa) and allied activities. The farm sector in India
offers numerous opportunities for investment. Its 350 million
strong urban middle class with its changing food habits poses a
huge market for agricultural products and processed food. The
relatively low-cost but skilled workforce can be effectively
utilised to set up large, low-cost production bases for domestic
and export markets. The national policy aims at increasing the
level of food processing from the present 2 per cent to 10 per
cent by 2010 and 25 per cent by 2025. Though foreign direct
investment is not directly allowed in agriculture, ample
opportunities exist in related sectors.
Nod
to Emaar's US$ 1.5 billion SEZ plan
In a first
big-ticket foreign investment in special economic zones, the
government approved in principle the Dubai-based real estate
major Emaar Group's plan for setting up 10 SEZs in Haryana at an
estimated investment of US$ 1.5 billion. These include three
multi-product SEZs, one for gems and jewellery, one for auto
components and five for information technology. In addition,
the government formally cleared 23 proposals, including Sem
India’s Fab City project, Infosys Technologies’ proposal for an
IT project and Cadila’s proposal for a pharma project. Suzlon’s
proposal to set up a non-conventional energy windmill SEZ at
Mangalore, spread over 486 hectares, was part of the 18
proposals given in-principle clearance. |
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IBM to pump in US$ 6 billion in India
IBM, the
world's largest computer services company announced plans to
invest nearly US$ 6 billion in India over three years,
underscoring the country's growing importance as a global hub
for information technology outsourcing and expertise. "India and
other emerging economies are an increasingly important part of
IBM's global success, the firm's Chairman and Chief Executive,
told more than 10,000 company employees gathered in the grounds
of a palace in Bangalore, India's IT hub. IBM said it plans to
expand its services, software, hardware and research businesses
in India, where it already is the largest multinational company
with 43,000 employees in 14 cities. The deal, almost triple the
$2 billion that IBM has already invested in India over the past
three years, is the biggest investment by a multinational
corporation in India in recent years. International Business
Machines Corp. of Armonk, New York, is among a growing number of
multinational companies boosting investments in India, whose
economy expanded nearly 8 percent last year as demand surged for
its vast pool of English-speaking and relatively low-wage
technical workers. IBM also will develop a telecommunications
research and innovation centre at its laboratory in Delhi and
establish a hub linking IBM consultants, developers, engineers
and researchers.
India leads the pack in the FII race
India has
one of the highest exposures to FII inflows among other emerging
economies. While in India, FIIs formed nearly 70 per cent of
foreign investment (FDI plus net portfolio equity flows) flow,
in China and Brazil the percentage was 26 per cent and 30 per
cent, respectively, for '05. Unlike India, a major chunk of
foreign investment entered China, Brazil and Russia as FDI.
India, on the other hand, attracted nearly 20% of the net
portfolio investments flowing into developing countries, while
its FDI inflows were barely 2.4% of what was received by
emerging economies, according to data from the Global
Development Finance report 2006.
Farm
sector propels GDP growth to 8.4 per cent
The
Government put out revised figures of economic growth during
2005-06, showing that the agriculture sector had actually grown
by 3.9 per cent against the earlier estimate of 2.3 per cent. On
the other hand, the manufacturing sector growth was 9 per cent.
Thus, the overall gross domestic product (GDP) growth was 8.4
per cent during 2005-06, surpassing the 8.1 per cent growth
estimated by the Central Statistical Organisation in the advance
estimates. In 2004-05, the economy registered a 7.5 per cent
growth in GDP. As per the revised estimate, the economy grew
9.3 per cent in the fourth quarter, as against 8.6 per cent in
the same quarter in the previous year. The third quarter GDP
growth in 2005-06 was 7.5 per cent. While mining and quarrying
recorded sharp decline to 0.9 per cent growth (1 per cent in
advance estimate for 2005-06), as compared to 5.8 per cent in
2004-05, the electricity, gas and water supply showed growth of
5.3 per cent (5.4 per cent in advance estimate), as compared to
4.3 per cent in 2004-05. The construction sector maintained a
strong growth rate at 12.1 per cent during 2005-06 (12.1 per
cent in advance estimate), as against 12.5 per cent recorded in
the previous year. Trade, hotels, transport and communication
sector recorded growth rate of 11.5 per cent in 2005-06, as
compared to 10.6 per cent growth in the previous year.
Financing, insurance, real estate and business services grew by
9.7 per cent, as compared to 9.2 per cent in the previous year.
India
targets US$ 12 billion FDI in 2006-07
India
expects an inflow of US$ 12 billion foreign direct investment
into the country during the 2006-07 fiscal. Last year, the FDI
flow was $8.4 billion, Secretary in the Department of Industrial
Policy Promotion, said that during the current year, out of $12
billion, $8 billion was expected to come in the form of equity
and the balance from re-invested earnings and other capital
inflows. According to him, the three nations would bring huge
FDI inflows in the country. A few Taiwanese firms were already
in the process of setting up manufacturing units in India, he
said. However, he said that the US was the largest contributor,
followed by European Union and The Netherlands.
India
emerges as key investor for the first time in Russia
India's
investment in Russia accounted for US$ 1.5 billion (17 per cent)
out of the US$ 8.8 billion foreign investments in the country
and over 70 per cent of it's FDI, in the first quarter of 2006,
the Rosstat (the Russian Statistics Committee) said in a report.
In the first quarter of this year, the key investors in Russian
economy, were India, Cyprus and The Netherlands followed by
Germany, Britain, Luxemburg, Sweden and the US, the report said.
They accounted for 80 per cent of total investments in the
Russian economy and France's investment in Russia was 15 times
less than India. India and Luxemburg ranked first in
investments in extraction of minerals. Netherlands and Japan
took the lead in investments in the agricultural sector. India,
Cyprus, The Netherlands and Luxemburg actively invested in the
real estate sector. This is for the first time that India has
emerged as the key foreign investor in Russia.
France to set up aircraft manufacturing unit in India
France
intends to set up aircraft manufacturing and training facilities
unit in India in a bid to gain a bigger foothold in the
country's growing aviation market and also expand bilateral
trade. "We foresee greater co-operation between both countries
especially in the aeronautical sector. France is planning to set
up aircraft manufacturing and training facilities in India,
French Ambassador to India, said. His comments came months
after officials of France-based Airbus Industrie said the
aircraft manufacturer plans to outsource as much as 60% of its
production and intends to allocate more work to India and China.
Such a move will help the European aircraft maker gain more
customers in India as the national carrier Indian has placed
orders for 43 aircraft with Airbus. Besides, private airlines
like Kingfisher are also major customers of the aircraft maker.
He said the bilateral trade has already crossed the $3 billion
mark, was expected to more than double in the next five years.
"Besides setting up these facilities in the aeronautics sector,
we also plan to bring in technology transfer so that both
countries can benefit through joint research and development,"
he said.
Tech
Mahindra to invest US$ 300 million
Tech
Mahindra, formerly known as Mahindra-British Telecom, is
planning to invest an additional US$ 300 million over the next
couple of years in setting up new software development centres.
“Simultaneously, the company will focus on adding more clients
globally so as to reduce its dependence on British Telecom whose
share in total revenues has already been brought down to 65% in
2005-06 from 90% two years back,” its President-corporate
affairs said. The company is also moving into areas such as IT
security, gaming and entertainment, which also require
networking and telecom-based solutions. He said that a new
development centre is coming up at Pune on a million square feet
of land at an investment of Rs 3000 million. “The first block at
Pune will become operational in 18 months time,” he said. A new
centre, which will house 2,000 seats, is coming up at Noida.
The company has acquired 10 acres of land for setting up a
special economic zone (SEZ) at Chandigarh. Another SEZ is being
planned at Bangalore where it will add a further 1,000 seats to
its existing 1,250. In Kolkata, where it already has a 650-seat
facility, Tech Mahindra has acquired 15 acres of land for
another SEZ. The company is also planning 10-25 acres SEZs in
Hyderabad and Chennai.
BG
Energy plans US$ 420 million gas grid
UK-based
energy major BG Energy Holdings plans to set up a natural gas
transmission and distribution network in India on its own,
involving an investment of $270-420 million, through three fully
owned ventures. Of the envisaged investment, it is committing
$120 million as equity. For the new network, BG Energy Holdings
will set up subsidiaries in the south Indian states of Andhra
Pradesh, Karnataka and Tamil Nadu. The company has already
invested $800 million in India through its two gas joint
ventures, the Panna-Mukta-Tapti exploration venture, and a
wholly owned subsidiary.
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