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INDIA

NEWS REPORT
 

 

In-depth Business Intelligence

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 515,000 481,400  460,616 11
         
GNI per capita
 US $ 480 470 450 159
Ranking is given out of 208 nations - (data from the World Bank)



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Area (sq.km)
3,287,590

Population
1,049,700,118

Capital
New Delhi

Currency
Irdian Rupee (INR)

President
Abdul Kalam

Update No: 010 - (29/11/04)

India-Pakistan Relations
The Pakistani President Pervez Musharraf proposed in October 2004 that certain regions of Kashmir should be identified and demilitarized. The response by the Congress party was a clear rejection of the proposal declaring that the proposal implied a division of the state which was totally unacceptable to the Indian side. Following up on the developments of last month, India has expressed concerns about the way in which Islamabad seems to be dealing with the Hurriyat leaders. The Indian political establishment is worried that the importance being given to the Hurriyat leaders by Pakistan may prove to be an "irritant" in bilateral relations between the two countries. India labeled Pakistan's attitude on this issue as "fundamentally wrong" and believes that the Pakistani leadership does not seem to understand the realities of Jammu and Kashmir. India's criticism is based on the fact that the Pakistani position is a reflection of their belief that the Hurriyat represents the people of Kashmir; a belief that runs contradictory to the actual ground realities of the situation. India's External Affairs Minister, Natwar Singh holds the view that there is nothing wrong with Pakistani leaders meeting Hurriyat factions but it could be a major problem for bilateral ties especially since the Hurriyat factions were not talking to the Indian leadership. What appears interesting is that under the leadership of Prime Minister Shaukat Aziz, Pakistan is trying its best to unite the warring factions of the Hurriyat. However, this is a futile exercise since the Hurriyat leaders are adamant in not succumbing to Pakistani pressures to unite. Pakistan wants to use the unified Hurriyat as symbolizing Kashmiri unrest as a freedom struggle. India reiterated its stand on no-third party role with Prime Minister Manmohan Singh not just ruling out third party mediation but also urging the Pakistanis to arrive at "credible and mutually acceptable" solutions to the Kashmir dispute. India is firm on its position that it was not going to favour any third-party mediation. New Delhi is trying to be hopeful about the Pakistani President's commitment to stop cross-border terrorism. We are hopeful that president Musharraf will stand by the commitment. We hope cross-border activity will cease and terrorist movement will stop," he told reporters here.

Politics
This month has not been particularly exciting on the political front. To recapitulate the events of last month, the successes and failures of the current government were evaluated by the opposition leaders in October of 2004. Former Prime Minister Atal Bihari Vajpayee met with his BJP and they adopted a political resolution which emphasizes rashtravad (nationalism). It seems that the BJP's Hindutva flavor is still quite strong among party members and will remain one of the pillars of the BJP party agenda. 
The Communist Party of India (CPI) recently evaluated the performance of the five-month tenure of the Manmohan Singh government and concluded that the performance of this government has been "mixed." The party said that the government had drifted away from the Common Minimum Program (CMP) particularly with regard to issues like reduction in Employee Provident Fund interest rate, FDI and the privatization of airports. The party also alleged that the government's decisions on a number of issues were "flawed". The CPI has suggested a change of focus towards the rural economy and agriculture sector. The CPI also emphasized that the programs outlined in the CMP to take care of the interests of the rural and other working people needs to be attended urgently. The CPI however seems quite calculated in declaring its interests especially because it appears to be measuring the success of the UPA government's efforts largely based on how much support it receives. Thus much of what the CPI wants is conditional upon how much its own ideology and interests are promoted by the present government. Maintaining that the Left was not being consulted on several issues, The CPI's Party General Secretary Bardhan stated that "our objections or protests have always been in the interests of the toiling masses and in national interests and never out of any narrow or sectarian interests." Bardhan said the government should focus on matters aimed at strengthening the public distribution system, employment generation, redistribution of surplus land, poverty alleviation and relief to farmers. (Press Trust of India Report). 

Economy 
Coca-Cola's bottling franchise arrangement with the Kandhari group, one of its biggest bottlers in Northern India has run into major problems over issues of operations and pricing. The differences are so acute that it might lead to Coke's cancellation of its deals with the Kandharis. Punjab is one of the biggest per capita soft drink consuming states. It accounts for close to 20 per cent of Coke's overall soft drink sales. Besides the Kandharis, Coke's other 3 leading franchisee bottlers are the Agarwals in Delhi, the Ladhanis in UP and the Goenkas who service the East. The Kandhari family has been in the bottling business since 1956 and holds franchisee licenses for Chandigarh, Haryana and parts of Punjab and HP. The more general problem at the root of the issues is that although companies like Coke and Pepsi have recorded healthy volumes sales, these firms have been operating under severe margin pressures. Sharp increases in the prices of sugar and freight have also exacerbated the problem. 
Among other economic issues this month, inflation fell to 7.34 per cent during the week ended November 13 due to cheaper vegetables and other essential food and manufactured products even though fuel became costlier. Inflation based on Wholesale Price Index fell to 7.34 per cent from 7.76 per cent a week ago but was still significantly higher than 5.42 per cent in the year-ago period. The price level fell by 0.42 per cent during the week ended November 13 as essential primary food and non-food articles became cheaper by 0.4 per cent and prices of manufactured products moved down by 0.2 per cent. But fuel prices rose by 0.1 per cent. 
The automobile industry also received a major boost when the Rolls Royce chief executive John Rose visited India this month. Rose was positive that India's growing economy had created a large number of opportunities for further investment. One of the major objectives of Rose's visit was to explore avenues to collaborate with Indian tech firms for outsourcing some IT-related work. The firm was looking for new partnerships with Indian universities under its university technology centre program for research activities. He noted that "we invest about $1 billion annually in research activities, and nearly 60 per cent of this budget is spent outside the UK. We want to look at Indian firms and institutions now". (Source: Times of India). India accounts for £100m in Rolls Royce turnover, half of which comes from its civil aerospace business. 
The head of the world's largest steel company Lakshmi Mittal, a renowned UK businessman is keen to have his firm's presence in India and China in an effort to supply to global customers. "If you look at us, we are in 14 countries, in four continents, and this is the only truly global steel company. But this is not enough," the NRI business tycoon, head of the newly-created Mittal Steel Corporation, said in an interview published in 'The Sunday Telegraph.' Mittal is Britain's richest resident with a fortune of 12 billion pounds. The business tycoon's desire is to revamp the steel industry which was in the midst of a tremendous upheaval that could potentially lead to the disappearance of local companies and rise of global giants. Mittal's vision is to build on creating five or six world class groups each producing 100 million tonnes of steel each year. According to Mittal, there is a new breed of CEOs in the steel industry who do not want to lose money as they've done in the past but also want to make money. 

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FOREIGN COOPERATION

Delhi and Astana explore cooperation possibilities

India and Kazakstan decided to expand cooperation in a host of fields, including energy, during talks between Indian External affairs Minister, K Natwar Singh, and Kazak President, Nursultan Nazarbayev, in Almaty recently, New Europe reported.
Singh also discussed various regional and international issues bedsides the ways in which the two countries can strengthen their relationship.
Forging cooperation in energy sector with Kazakhstan, which is rich in petrochemical products, was on of the major issues discussed during the meeting, official sources said.
India realises the tremendous potential for cooperation in oil and natural gas sector considering the immense quantity of reserves existing in this Central Asian country for which Indian companies can conduct exploration. Other areas that figured in the talks included trade in pharmaceuticals and tourism, the sectors where India finds a considerable scope for cooperation.

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