Books on India
Irdian Rupee (INR)
Update No: 020 - (30/09/05)
India's vote against Iran at the United Nation's nuclear agency has caused
some turmoil within the UPA government. The Left launched a scathing criticism
of the government for alienating Iran. In an interview to NDTV, General
Secretary of the Communist Party, Prakash Karat stated that India's posture
towards Iran was conditioned by US pressure. The veto against Iran clearly
established India's concerns about Iran not meeting its nuclear obligations. BJP
leader Yashwant Sinha also criticized the Manmohan Singh government for
"abandoning" Iran when it voted with the US-EU on a resolution on
Tehran's nuclear program. Critics are arguing that India's stand appears to be a
submission to US policy and a surrender of its independence to American motives.
Sinha said that the UPA government has made India a client state of the US.
Singh further added that "India's consistent position has been that issues
in Iran's nuclear program should be resolved through discussions and consensus
and not through confrontation."
The government claims that it has not let Iran down but only followed a stated
policy that Iran must meet its obligations under the NPT. The issue had also
raised some questions with regard to its impact on the proposed gas-pipeline
with Iran and the ensuing talks. The government claims its national
self-interest will not be compromised but the Left, the opposition and even
experts seem to agree that a major shift in foreign policy has not been debated
As part of bilateral exchanges to improve ties between the two countries,
Union Home Minister Shivraj Patil embarked on a five-day visit to China between
September 7 and September 11. The Chinese Embassy released a statement saying
that "the visit of the Home Minister is part of the process of continuing
high-level bilateral exchanges and will contribute to the further development
and diversification of bilateral relations in accordance with the Declaration of
June 2003 and the Joint Statement of April 2005." The sixth round of
India-China Special Representative-level border negotiations also began with
both countries arriving at a "package" solution on the controversial
boundary issue. The talks were held between National Security Advisor M K
Narayanan and Chinese Vice Foreign Minister Dai Bingguo at the Diaoyutai State
Guest House in Beijing. Separately, Indian Ambassador to China Nalin Surie and
other senior officials from the Ministry of External Affairs also visited China
and met with Communist Party Politburo Standing Committee member and Chairman of
the Chinese People's Political Consultative Conference (CPPCC), Jia Qinglin. The
two sides agreed to each appoint a Special Representative to explore, from the
political perspective of the overall bilateral relationship, the framework of a
boundary settlement. (PTI)
In a historic meeting, Prime Minister Manmohan Singh and US President George
W Bush met in New York to discuss nuclear cooperation and India-Pakistan
relations. The Indian leader expressed his concerns about Pakistan's support to
terrorism in Kashmir. Even though Musharraf assured Singh that infiltration by
militants into Kashmir would be down by mid-August, the pattern seems to
continue. Separately, Indian and US national security advisors held talks on
relations with Iran and Pakistan. Singh is reported to have told the Americans
that if the violence graph dipped, India was ready to look at big peace
proposals, like an internal ceasefire, something that Pakistan is keen on.
President Musharraf on the other hand lobbied with Washington for a troop
reduction in the valley. In a recent interview with Time Magazine, Pakistan's
President Pervez Musharraf criticized the United States for abandoning Pakistan
as a strategic ally and embracing India. General Musharraf said, "Before
1989, we were a strategic ally of the US and fought a war in Afghanistan for 10
years. Then we got left high and dry. The United States then started to have a
strategic relationship with India, which was in the enemy camp. What would the
man on the street think?" he asked the interviewer.
This month the navies of India and the US also began their largest ever-joint
exercises off the coast of Goa. The exercises featuring the Indian Navy's
flagship, the INS Viraat will take on the massive American super carrier, the
USS Nimitz. The naval exercise symbolizes close relations between the two
countries. Despite the presence of a technology gap, the US Navy was impressed
with India's naval weaponry. Captain T N Branch, Commanding Officer of USS
Nimitz said that "the exercises are a fantastic opportunity for Indian
naval pilots to practice against the best." In the years ahead, India will
have two new aircraft carriers in addition to INS Viraat. This will include the
Vikramaditya, formerly the Russian Gorshkov and the Air Defence Ship being
constructed in Cochin. When these ships and their complement of MiG-29 K
fighters enter service, the gap in capability between the two navies will
marginally reduce. But for the foreseeable future, the US Navy remains by far
the most powerful in the world and the Indian Navy a junior partner in an
evolving strategic partnership.
On the Iraq issue, United States Under Secretary for Political Affairs Nicholas
Burns has been pushing for international sanctions against Iran. Burns said that
America would meet its commitments to India but the US Congress could be
persuaded to back the White House, only if India speaks to Iran. The US official
also pointed out that Iran has gone back on its resolution with the European
Union on nuclear power. He maintained that Iran should come back to those
negotiations and New Delhi should side with the US and persuade Iran to do so
peacefully. Burns further said that Prime Minister Manmohan Singh had made it
clear that Iran should not acquire nuclear weapons. Burns is likely to visit
India next month to carry forward the work on decisions taken during the summit
between US President George W Bush and Singh.
Prime Minister Manmohan Singh held talks with French President Jacques
Chirac, and described India's ties with France as "privileged and
strategic". Singh visited France as part of a two-day plan two-day visit en
route to New York for the UN General Assembly meet. The two leaders held
wide-ranging discussions on India's bid for permanent membership of the UN
Security Council and trade and economic cooperation. In Chirac's words India is
a major partner in the world for France today. And this is the reason why France
has always supported India's positions particularly its legitimate aspiration
for a seat at the UN Security Council as a permanent member. The Prime Minister
reiterated that India and France were strategic partners. Separately, India also
decided to acquire six highly advanced French Scorpene submarines worth US$3
billion (about Rs 13,000 crore). The move comes just days after placing an order
for 43 Airbus aircraft at a cost of about US$2.4 billion (nearly Rs 9,800 crore)
from a European consortium that includes France (PTI Report). France assured
India of cooperation on nuclear energy technology. Chirac also pledged to work
with other NSG countries to lift restrictions on purchase of nuclear fuel and
reactors. France today came out strongly in support of India's bid for a
permanent seat in an expanded UN Security Council. In addition the two leaders
held wide-ranging discussions on trade and economic cooperation. Singh invited
French power companies to invest in India's nuclear power sector and assured
single window clearance for major French investment in the country. As a
consequence of Singh's positive statement, the French carmaker company Renault
announced that it would manufacture right-hand drive cars in India for export to
The government is clearly worried about what could be yet another effort by
some market players to rig share prices. In a meeting on Saturday, specific
instructions were given to SEBI and RBI to start investigating any such moves.
In the last few weeks there have been reports of banks looking at loans being
taken by corporates and now they are investigating individual loans as well, as
per instructions from the Reserve Bank of India. The RBI has also been given the
mandate to look into the balance sheets of cooperative banks, which it earlier
couldn't ask as these banks come under the state governments. Officials fear
that money may be diverted into stocks and such diversion of funds is a serious
The European Union took the India-EU strategic partnership into the future. At
the India-EU summit held at New Delhi the two sides pledged to enhance
cooperation and boost bilateral ties in the areas of trade and the fight against
terrorism. The two sides signed a framework agreement allowing for New Delhi's
participation in the Global Navigation Satellite System (Galileo), designed
specifically for civilian use worldwide. The Galileo program, a joint European
Commission and European Space Agency initiative, represents the first global
satellite positioning and navigation system and has an estimated cost of 3.4
billion Euro. It is designed to meet the specific needs of users in every
transport domain, especially aviation, maritime, road and rail transport. The
London bombings placed the more immediate problem of locating terrorists and the
source of their money and infrastructure high on a joint action plan. As part of
joint efforts to fight terrorism, India and the European Union decided to work
towards blocking access to terrorist financing and cooperate in the fight
against money laundering. The European Union is India's largest trading partner.
A strategic partnership between India and the European Union would include
taking steps towards India's membership to the EU's thermo-nuclear fusion
project or ITER at France, a dialogue on Civil Aviation, easing migration and
consular issues and cooperation in areas like space, science, technology, health
and development. (PTI Report).
Indian Airlines gets clearance for purchase of 43 airbus jets
After more than three years, India has cleared the way for Indian Airlines to
buy 43 Airbus jetliners that the state-owned carrier needs to rejuvenate its
aging fleet and to compete with the country's privately owned airlines, the Wall
Street Journal Europe reported on Sept 8th.
Indian prime Minister, Manmohan Singh, who valued the order at about US$2.2bn
(1.8bn Euro), unveiled the agreement at a news conference with British Prime
Minister, Tony Blair, who was visiting India. Both leaders hailed the agreement
as a sign of growing cooperation and trade relations between India and Europe,
where Airbus is based.
The US$2.2bn figure is based on catalogue prices for the planes. Airlines
usually win supplier discounts on large orders, and while Airbus spokesman,
David Velupillai, acknowledged that his company had reduced its prices for the
jets, he declined to give details.
"What we are seeing is the final stage in a very thorough and long approval
by the Indian government," Mr Velupillai said from airbus's headquarters in
The jets include 20 A321s, 19 A319s and 4 A320s. The airline plans to use them
to replace some of its older planes and to add capacity to its fleet, which
currently consists of 62 planes.
Airbus is jointly owned by European Aeronautic Defence & Space Co., which
has an 80% stake, and Britain's BAE Systems PLC, which holds 20%.
Privately run Indian carriers stole the limelight at the Paris Air Show in June,
with new low-cost airline IndiGo buying 100 Airbus planes in a deal with a
catalogue value of US$6bn and Jet Airways, India's largest private carrier,
placing orders with both Airbus and US-based Boeing Co. with an estimated list
price value of US$4.3bn.
Indian Airlines first approved the Airbus deal in early 2002. But efforts by
Indian government officials to renegotiate prices for the aircraft postponed
completion of the order, according to Indian Airlines spokesman, Ashok Sharma.
ONGC states PetroKaz aspirations
India's Oil and natural Gas Corporation recently said publicly for the first
time that it remained in the race to buy PetroKazakstan, which went to a winning
US$4.18bn bid form China's CNPC in August.
RS Butola, managing director of ONGC Videsh, the overseas exploration arm of the
state-owned company, said the Indian management was still examining a
counter-bid, the deadline for which was October 18th. "We have kept all our
options open. We may re-bid," he said on the margins of ONGC's annual
general meeting in Delhi.
ONGC would probably bid with an entity controlled by the family of steel
billionaire Lakshmi Mittal. It is understood ONGC has researched the merits of a
counter-bid and has provisionally secured financing. However, the
state-controlled Indian company will have to weigh the risk that the move could
spark a political row between India and China.
State-owned CNPC's bid for PetroKaz is part of Beijing's plan to secure energy
resources to fuel its fast-growing economy.
Mani Shankar Aiyar, India's petroleum minister, who helped bring ONGC and Mr
Mittal together in a partnership to acquire overseas energy fields, said a final
decision to pursue PetroKaz was a matter for the joint venture.
"It is for OVL and Mittal to determine the value of a renewed commercial
bid." But Mr Aiyar told the FT that , if the company re-bid, he would
The ONGC-Mittal partnership was narrowly defeated in the contest for PetroKaz in
circumstances that the minister has described as unsatisfactory.
Subir Raha, ONGC chairman, also used the annual meeting to criticise what he saw
as meddling by petroleum ministry officials in the company's affairs.
"Companies are not (government) departments," Mr Raha said, referring
to a messy and unsuccessful attempt by ministry of petroleum officials to
appoint two additional civil servants to the ONGC board.
Mr Aiyar, who had rebuked his officials for their public spat with Mr Raha,
declined to comment on the matter. In private correspondence to the minister
that was leaked recently, Mr Raha, a powerful industry veteran who has
spearheaded ONGC's bold expansion overseas to strengthen India's energy
security, threatened to quit over the affair.
Mr raha said ONGC would be expanding its domestic capacity, with the resumption
of output from a well off the coast of Bombay that was damaged by fire in July,
and with a Rs33bn (US$751m) investment over three years to develop energy fields
in the north east of India.
India reviews ties with Kazakstan
India and Kazakstan explored ways to bolster mutual cooperation in oil and
energy areas during foreign office consultations held in the Kazak capital
Astana recently, Kazinform reported.
Negotiations were held between the Secretary of the Indian Ministry of External
Affairs, Rajiv Sikri and Kazak Deputy Foreign Minister Vladimir Skolin and
foreign Affairs Minister Kassymzhomart Tokaev were also present during the
meeting. The Kazak side assured to help OVL-Mittal Enterprise, a joint venture
floated by ONGC Videsh Ltd. Indian Petroleum Minister Mani Shankar Aiyar is
likely to visit Almaty in October to attend Kazakstan international oil and gas
The Kazak energy minister will also visit New Delhi to take part in the Asian
Energy Conference proposed to be held in November. Indian Minister of External
Affairs K Natwar Singh recently visited Kazakstan for the Shanghai Cooperation
Organisation summit in which India was, for the first time, granted observer