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Books on India
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Update No: 043 - (28/08/07)
NUCLEAR TIFF RESULTS IN POLITICAL AND ECONOMIC
INSTABILITY
The UPA government has suffered a major beating from the Communist Party of
India which is totally opposed to an Indo-US nuclear deal. There has been
speculation that the government could be toppled over this issue prompting early
elections. The nuclear agreement would allow American companies to sell and
share civilian nuclear technology with India, which would, in exchange, open
some of its reactors to international inspections for the first time. The
support of the Communist Party has been critical for the survival of the
Congress government, and their opposition to the nuclear deal has generated a
severe political crisis for Manmohan Singh's government and his own career.
According to a LA Times Report, "the leftists' objections to the deal draw
on a deep well of suspicion toward Washington, which New Delhi has historically
held at arm's length. Although the agreement has been hailed by many as the most
important symbol of improving ties between the world's two most populous
democracies, critics on the left say it tethers India too closely to American
foreign policy and interests."
Even the right has protested against the nuclear deal calling it "an
infringement on national sovereignty because of ambiguous provisions that could
penalize India if it conducted nuclear weapons tests." The tussle to keep
the nuclear deal alive has raked up a lot of resentment amongst opposition
groups who believe that the Prime Minister has compromised the interests of the
nation. Political commentators have warned that the government could either fall
or call snap elections because of the impasse.
The political crisis has also had economic ramifications. In its latest brief,
Fitch Ratings has observed that the political instability is posing a risk to
the country's economic outlook along with the government's high fiscal deficit,
which is still at 5.2 per cent of GDP. However, besides those risks, Fitch
thinks that the India's growth sector will continue to surge ahead as its $200
billion strong forex reserve makes it less dependent on foreign investors and
less susceptible to a global downturn.
INDIA-US DEFENSE COOPERATION
Despite hitches in the India-US nuclear deal and the possibility of the
agreement getting completely scrapped, India and the United States have arrived
at an understanding to resolve differing perceptions on military cooperation.
While India has been assigned the U.S. Pacific Command (Pacom), it wants to be
shifted to the U.S. Central Command whose area extends westwards from India and
is considered by its security planners as more crucial to national interests. It
is believed that in future, senior officers from CENTCOM could be deputed to
attend all inter-services (called Executive Steering Group) meetings to address
India's concerns about greater awareness on its western flank. Admiral Keating,
a senior naval officer also said the lines were not really sacred and the
previous Pacom Commander Admiral Fallon would find it easier to coordinate after
being positioned at CENTCOM. Admiral Fallon has made several visits to India and
has a good working relationship with top Indian armed forces officers. India's
Chief of Naval Staff, Admiral Suresh Mehta said that the five-nation naval
exercise is scheduled to begin in the Bay of Bengal on September 4. Admiral
Mehta also said the exercises were in the national interest and would help
sharpen some of the Navy's skills. Over 70 fighter aircraft and three aircraft
carriers are expected to participate in this U.S.-
India-Singapore-Australia-Japan Malabar series of naval exercises.
ECONOMY/BUSINESS
INDIA-CHINA RELATIONS NEED "SYNERGY"
Hero Corporate Services Chairman, Sunil Kant Munjal has stated that India
and China must work together instead of always being wary of each other's
growth. "We should not be wary of China's progress, but should build
synergies and connectivity, wherein the progress is shared between the two
countries." Munjal made this statement at the industry chamber PHDCCI's CEO
lecture series. He also added that social awareness and affirmative action is
not only an expression of corporate social responsibility but also an
articulation of the enlightened self-interest since distributive justice is the
cornerstone of societal progress. And therefore, both countries should
collaborate on economic projects.
INDIA IS SECOND LARGEST MARKET FOR NOKIA
Separately, India has become the second largest market for Nokia in terms of
sales - ahead of even the US. Over the last three years, India has been gaining
major strides each year moving from fourth position in 2005 to third position in
2006, and is today poised right after China. Olli-Pekka Kallasvuo, president and
CEO, Nokia Corporation said, "India is playing an increasingly important
role in the global economy buoyed by impressive economic growth, skilled
manpower and tremendous business opportunity. Today, India hosts a comprehensive
Nokia R&D, manufacturing and design presence. Moreover, we are also the
country's leading provider of wireless infrastructure through Nokia Siemens
Network, the newly-merged entity. This not only reiterates our commitment and
belief in the market but also underscores India's emergence as a strategic
resource hub for Nokia globally." The company also announced that its
manufacturing plant in Sriperumbudur, Chennai, has reached production volume of
60 million handsets (August 2007), and is exporting half of its production to 58
countries across Middle East, Africa, Asia, Australia and New Zealand. The
company currently employs over 9,000 people and has 95,000 outlets with 50,000
exclusive Nokia brand stores. The Chennai manufacturing plant alone employs
4,700 people, 70% of which are women. Nokia Telecom Park has received
investments of $500 million (around Rs 2,043 crore) with seven global component
manufacturers likely to generate in excess of 30,000 jobs when fully functional.
Clearly buoyed by the growth of Indian economy and the telecommunications
segment, the company is looking at the country as a focused market. Its recent
act of issuing a prompt 'product advisory' (the company does not call it a
recall) for the BL-5C battery manufactured by Matsushita Battery Industrial
shows how sensitive it is in maintaining its reputation.
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