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INDIA


 

 

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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REPUBLICAN REFERENCE

Area (sq.km)
3,287,590

Population
1,049,700,118

Capital
New Delhi

Currency
Irdian Rupee (INR)

President
Abdul Kalam

Update No: 009 - (02/11/04)

India-Pakistan Relations
The Pakistani President has recently come up with a proposal stating that certain regions of Kashmir should be identified and demilitarised. The response by the Congress party has been a clear rejection of this proposal declaring that the proposal implies a division of the state which is totally unacceptable to the Indian side. The Jammu and Kashmir Congress Chief Peerzada Mohammad Sayeed responded by saying that "the people of J&K had decided their future in 1947 when they acceded to India and are opposed to any move to divide the state". The decision taken by the people of Jammu and Kashmir in 1947 is "final and irrevocable". Pakistan's Foreign Minister Khursheed Mehmood believes that since Pakistan cannot show "unilateral flexibility" both countries should withdraw from their original positions. According to Khursheed Mehmood, President Musharraf's suggestions are not something new but just a continuation of the proposals that were part of the Agra and New York summits. Pakistan's New Prime Minister Shaukat Aziz is preparing for his first meeting with Indian Prime Minister Manmohan Singh during the meeting of the South Asian Association for Regional Cooperation (SAARC). While the two countries are struggling with achieving some measure of success in diplomatic talks, the Hizbul Mujahideen, a Pakistani based militant group has blamed Pakistan for backtracking on its stand on Kashmir. Islamabad's intentions in resolving the Kashmir issue seem unclear to the Hizbul leaders because a division of Kashmir appears to run contrary to the very beliefs of all Kashmiris. The leaders of the Hizbul Mujahideen want greater involvement of the representatives of the Kashmiri people. 

Politics
This month has been especially important in evaluating the successes and failures of the current government. Former Prime Minister Atal Bihari Vajpayee met with his BJP counterparts this month to finalize the political resolution of the BJP and establishing the posts for the new team of office bearers. The opposition party plans to adopt a political resolution which will emphasize rashtravad (nationalism). The party members still seem to be debating over how the various aspects of this resolution will be implemented. The document is likely to focus on the issue of internal security and also intends to highlight the shortcomings of the current government Simultaneously the resolution plans to acknowledge that to be true to the principles of coalition politics, the needs and interests of all NDA allies will be given voice. 
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 privatisation 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 to urgently. The CPI however seems quite calculating 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 
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' today (Oct 31, 2004). 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. Mitall'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 accept losing money as they've done in the past but are about making money. 
The latest news on the outsourcing front in India is that the textile industry in India is being seen as the next big outsourcing story for India. Apparel Export Promotion Council chairman A Sakthivel estimates that Tirupur has seen an investment of Rs 750 crore in plant and machinery and fresh employment of as many as 15,000 people in the last one year. The Netaji Apparel Park in Tirupur, being set up at an investment of Rs 300 crore, is about to go on stream, and when fully functional, will see some 21,000 people working there. A high-tech weaving and processing park that will house shuttle-less looms is coming up near Surat, which houses the largest artificial silk and synthetic textiles cluster in the country with around 6.5 lakh power looms. Total garmenting capacity of Arvind Mills is expected to increase from the current 11.5 million pieces per shift to 14.5 million pieces by the end of 2004-05, and this is proposed to be doubled by fiscal 2007 by working two shifts. The company is also planning incremental investments of Rs 50-100 crore per annum in fabric (Times of India Report). 
A major development on the economic front is that Foreign Direct Investment (FDI) in the crucial sectors of telecom and civil aviation are likely to be raised. While the government received some initial opposition to this move from the left parties, the latter have given their green signal to hike FDI to 49 per cent from the present 40 per cent in civil aviation, particularly in private Indian airlines like Jet Airways and Air Sahara. Finance Minister P Chidambaram convinced the Left parties on the importance of foreign investment. In return, he agreed to seriously consider the Left's demands of hiking the EPF interest rates to 9 per cent. In Civil Aviation it is now agreed upon that even after the hike, Indian Airlines and Air India (the two major airlines in India) will be out of the FDI ambit. "If the management control remains with Indians then we have no problem if it is hiked to 49 per cent. It will help the airlines to expand and modernize their fleet," says D Raja, CPI leader. And foreign airlines will not be allowed to pick up equity in domestic airlines. But analysts say the restriction on private airlines entering the domestic sector will certainly hamper the growth of an industry that's desperate for big ticket investments. 
In the telecom sector, the internal differences between the Finance, Home and Telecom ministries have been sorted out. The government has opted for a middle path to hike the ceiling to 74 per cent. While the Telecom Ministry will not insist on minority Indian shareholders controlling over 50 per cent voting rights in the companies board. The Finance Ministry has also agreed that boards of telecom companies must have 50 per cent Indians, including Indian CEOs. Security clearance will also be required but only from one agency, a move clearly to pacify the Home Ministry.

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FOREIGN ECONOMIC COOPERATION

India, Myanmar holds talks on enhancing strategic ties

Prime Minister Manmohan Singh recently held talks with Myanmar's military strongman Than Shwe here on enhancing strategic ties, particularly in areas like security and the energy and transport sectors. 
The talks were held at Hyderabad House after Than Shwe, on a six-day official visit to India, was accorded a ceremonial welcome by President A.P.J. Abdul Kalam. 
Kalam warmly received Than Shwe, who is the head of state being chairman of the ruling State Peace and Development Council (SPDC), as he arrived at the red-gravelled forecourt of Rashtrapat Bhavan, the presidential palace, for the welcome ceremony, including an inter-services guard of honour. 
Manmohan Singh and senior ministers and officials were also present at the ceremony. 
India has described Than Shwe's visit as "historic", noting that it is the first by a Myanmar head of state in 24 years and the first head of state-head of government level interaction in 17 years. 
"It is expected to contribute significantly to further consolidation and expansion of bilateral relations," the external affairs ministry said. 
During the visit, India hoped to secure Myanmar's cooperation in launching military crackdown on insurgent groups from the northeastern states taking sanctuary across the border in Myanmar. 
Myanmar shares a 1,400 km-long border with four of India's northeastern states -- Arunachal Pradesh, Nagaland, Manipur and Mizoram. The two countries also share strategic space in the Bay of Bengal. 
Yangon had launched a crackdown on these insurgent groups operating across its border with India three years ago when Lt. Gen. Soe Win, who has replaced ousted prime minister Khin Nyunt last week, was the military commander of the region. 
But New Delhi is aware that Yangon is more concerned about its border problems with China and Thailand and the Indian border is of low priority. 
In a bid to make the Myanmar administration take more interest on the Indian border, New Delhi has been raising Yangon's economic stakes in the region by undertaking various infrastructure projects, like the Moreh-Kalemyo highway. 
India also sees natural gas-rich Myanmar as a source for its energy requirements and as the gateway to the Southeast Asian region. 
Work on a trilateral highway, linking India with Thailand through Myanmar is under way. 
New Delhi had also undertaken a feasibility study for starting a multi-modal transport system to link Kolkata with the northeast via Myanmar and it was expected to be discussed during Than Shwe's visit. 
President Kalam will host a banquet in honour of the Myanmarese leader, who is accompanied by his wife Daw Kyaing. 
Than Shwe and his high-level delegation consisting of eight cabinet ministers, will also visit Agra, Bangalore, Kolkata, Sarnath and Bodh Gaya, the latter two being places of Buddhist pilgrimage. 

New Delhi - India is calling for closer economic integration with the nations of East Asia.

Indian Prime Minister, Manmohan Singh, wants East Asian and South Asian nations to create an integrated market spanning the region from the Himalayas to the Pacific Ocean.
Mr. Singh's call for closer economic integration in Asia came at the third business summit between India and the Association of Southeast Asian Nations, or ASEAN, which was recently held in New Delhi. The call was echoed by several East Asian countries.
According to Mr. Singh, the ASEAN nations, along with China, Japan, South Korea and India, could create an economic community comprising nearly half the world's population. It would be larger than the European Union in terms of income, and bigger than the North American Free Trade Agreement in terms of trade.
India is also wooing East Asian investment as it tries to build infrastructure to keep pace with its expanding economy. Prime Minister Singh says India's huge requirements in the transport, communications and power sectors represent an opportunity for East Asian businesses.
"The requirement for airports and railways will alone amount to US$55 billion in the next ten years," he said. "Our power sector needs US$75 billion and the telecom sector US$25 billion over the next five years. We believe the Indian economy can absorb up to US$150 billion of foreign investment in the infrastructure sector over the next ten years."
Soon after India liberalized its closed economy in 1991, New Delhi initiated what it called its "Look East Policy" by seeking to build closer political and economic ties with countries stretching from Burma to the Philippines.
India signed a framework trade agreement with ASEAN last year that will eventually lead to a free-trade area in goods, services and investment.
Trade between India and the ten ASEAN nations are still relatively small, only about US$10 billion in 2003. Both sides want to raise that to US$30 billion in three years.

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