Books on India
Irdian Rupee (INR)
Update No: 026 - (27/03/06)
POLITICAL UPHEAVAL IN THE CONGRESS PARTY
The leader of the governing Congress party, Sonia Gandhi, has resigned as Member
of Parliament. The decision followed allegations from the opposition side that
she has held an office of profit and an ordinance on holding an office of profit
was aimed at protecting her. Such an ordinance was passed by the Parliament a
few days prior to Gandhi's resignation. Sonia Gandhi also resigned from the
National Advisory Council but maintained that she would contest elections from
her stronghold seat in Rae Bareilli, Uttar Pradesh. A number of resignations
from parliamentary members followed. Karan Singh, also from the Congress party,
resigned from Parliament for holding a second office as Chairman of Indian
Council for Cultural Relations. The government is planning to introduce a Bill
in Parliament to redefine offices of profit for MPs. The government's ordinance
was aimed at identifying 62 posts as offices of non-profit, including the post
of Chairperson of the National Advisory Council. Meanwhile, the opposition
party, BJP, said the resignation of Gandhi was an attempt to save face. Both
Houses of Parliament had to be adjourned amid an opposition uproar against the
ordinance. Opposition MPs met President APJ Abdul Kalam and sought Gandhi's
disqualification as a Member of Parliament.
A STRATEGIC PARTNERSHIP IS LAUNCHED
President George Bush visits India and Pakistan
India and the United States have embarked on a fresh chapter in their relations,
which hopes to usher in an era of power and respect for South Asia's regional
hegemon, India. In the words of President George Bush, "India in the 21st
century is a natural partner of the United States because we are brothers in the
cause of human liberty. Recently, I visited a memorial to Mahatma Gandhi, and
read the peaceful words of a fearless man. His words are familiar in my country
because they helped move a generation of Americans to overcome the injustice of
racial segregation. When Martin Luther King arrived in Delhi in 1959, he said to
other countries, "I may go as a tourist, but to India, I come as a
pilgrim." I come to India as a friend. For many years, the United States
and India were kept apart by the rivalries that divided the world. That's
changed. Our two great democracies are now united by opportunities that can lift
our people, and by threats that can bring down all our progress. The United
States and India, separated by half the globe, are closer than ever before, and
the partnership between our free nations has the power to transform the
Perhaps the most critical segment of the partnership between the two countries
was the nuclear agreement reached by President Bush and Prime Minister Singh.
According to the nuclear deal, the United States will provide India with nuclear
fuel in perpetuity in lieu of India separating its civil and nuclear facilities.
This is a tremendous development in the relations between the two countries as
the American step is being viewed as a recognition of India's global power; not
just regional. Although the agreement has also generated a lot of controversy as
critics repeatedly point to how the agreement blows a fuse in the international
non-proliferation regime, President Bush and his administration seem resilient
in getting the bill passed in Congress. Among the other highlights of the visit,
the two leaders made strides in furthering trade and economic prosperity,
endorsed the efforts of the US-India Trade Policy Forum, sought to launch the
Knowledge Initiative on Agriculture, reaffirmed their commitment to the WTO Doha
Development Agenda, and, welcomed the creation of the Asia Pacific Partnership
on clean Development and Climate
The success of President Bush's visit was evident in the fact that his visit to
India was followed by the visit of Australian Prime Minister John Howard who has
also considered supplying uranium to India. While stating that Australia would
stick to its policy of not selling to non-NPT countries like India, Howard
called the Indo-US nuclear agreement as a "significant development",
and said Australia would take into consideration, the safeguards agreement for
India to assess whether they met Australian safety and non-proliferation
Prime Minister Manmohan Singh offered a treaty of "peace, security and
friendship" to Pakistan, this month. The Prime Minister made the
announcement after inaugurating the bus service between Amritsar and Nankana
Sahib in Pakistan. But the emphasis on Kashmir remained. Singh said that India
is ready for a practical solution to Kashmir but one, which must be based on
ground realities. According to his statement, "President Musharraf and I
are in agreement that to achieve a solution to the Kashmir problem we need to
take concrete steps. I realise that President Musharraf has time and again said
that relations between the two countries won't improve unless the J&K
problem is resolved. But I feel that the relations between the two countries
need to move beyond carrying forward the J&K issue. At the same time, we
have no hesitation in the dialogue on J&K." Singh also stated that
unresolved issues between the two countries such as Siachen, Sir Creek and
Baglihar could be resolved amicably. Singh applauded Musharraf's efforts to curb
the tide of terrorism in Pakistan but felt that more needed to be done toward
the interest of both countries. The Chief Minister of Kashmir, Mufti Mohammad
Sayeed, has hailed Singh's peace initiative as a positive development. He
suggested self-governance for entire Kashmir and said its people should be free
to do what it wants to do. While most people see this as a positive step taken
by Prime Minister Singh, we can only hope that a speedy resolution to these long
standing issues is arrived at in the near future. Also, the import of Prime
Minister Singh's peace initiative might hold further weight since President
Bush's visit to India also impacted India's image in the worldview.
India's oil and gas companies have a poor record of finishing projects on time.
Currently, there are 30 such extension cases pending with the Oil Ministry and
applicants include ONGC, Reliance, GSPC and Oil India. Until the recent past,
extensions for blocks were granted in a haphazard manner without any standard
guidelines. Now, the Oil Ministry has worked out a new policy, which is going to
be tough on companies with a poor track record. Under the new rules companies
who have discovered oil and gas are likely to get extensions more easily. Those
who haven't had much success with such discoveries will need additional bank
guarantees. All extensions will also come with built-in penalties. The time
period for extensions has been capped at 18 months. Some analysts feel that the
Oil and Natural Gas Commission will find the new regime extremely rigid and
tough because of its dreary record in finding oil and gas in its blocks. But
ONGC sources claim that Reliance, their old rival, gained the most under the old
system of extensions. The new standardized policy on extensions should hopefully
put an end to all such claims, whether spurious or authentic.
Two of India's domestic carriers, Jet Airways and Sahara Airlines, have
announced a 90-day extension of the deadline for the share purchase agreement.
In a joint statement Jet Airways's Naresh Goyal and Sahara's Subroto Roy said
the purchase value would remain the same. Jet Airways had reached a buyout deal
with Sahara at Rs 2200 crore. There is mounting speculation over price
negotiations - ranging from political pressure to reports of Kingfisher stepping
in if Jet pulls out. Sahara says the deal is still being worked out with Jet and
the price will stay at Rs 2200 crore. Jet Airways has already got the requisite
clearance from the Company Affairs Ministry for buying out the other airline.
However, according to sources, Air Sahara President Ronojoy Dutta, Executive
Vice President Alok Sharma and Subrata Ro's elder son Seemanto were involved in
attempts to resolve the pending issues from Sahara's side. (PTI REPORT).
India, Pakistan talk to improve air links
India and Pakistan recently continued their talks, reviewing the bilateral air
services agreement in a bid to further air connectivity between the two
In the two-day talks, officials from the two sides discussed ways to increase
commercial cooperation and reduce tariff and non-tariff barriers.
The six-member Pakistani delegation was headed by additional secretary of
defence, Muhammad Ashraf Chaudhry, while the Indian side is led by Director
General of Civil Aviation (DGCA), Satinder Singh.
Currently, Pakistan International Airlines (PIA) flies to Delhi and Mumbai and
Indian Airlines to Karachi and Lahore.
Officials from the two countries will also discuss the possibility of setting up
air links between more cities and increasing the number of airlines, including
"There are a host of issues associated with this which will also be sorted
out," said a DGCA official.
"Actually under the existing conditions, not many are interested in
operating in this sector. Certain issues have to be addressed to encourage
traffic on these routes," the official said.
While the two sides are expected to discuss issuance of visa to the passengers
of both the countries to ensure economic viability to operators, they will also
exchange views on broadening trade cooperation and removing tariff and
non-tariff barriers, a senior government official said.
During the inconclusive meeting last year, Pakistan surprised India by asking
for permission to operate PIA flights to Kochi, Hyderabad and Chennai in
addition to Delhi and Mumbai.
Pakistan has offered Islamabad and Peshawar as additional routes for Indian
Airlines and Indian private operators. India, while promising to consider
Pakistan's request for three more destinations on Indian routes, did not show
much interest in the new destinations proposed by Islamabad due to viability
The two countries resumed their air services in early 2004 after a two-year
Cairn looks at partial Indian IPO on rise in key reserves
Cairn Energy said it was considering partially floating its Indian business, as
it substantially raised its estimates of the amount of oil in its key Rajasthan
The Edinburgh-based explorer said it believed there were at least 3.5bn barrels
of oil in its Rajathan block, about 20 per cent more than earlier estimates.
Cairn said it would return the proceeds of any offering to investors through
dividends and stock buybacks.
ONGC, India's state-owned energy group, has previously expressed an interest in
buying Cairn's Indian asset, about 90 per cent of the company's value. However,
it is understood the two sides could not agree on the Rajasthan fields' value.
Cairn would not comment on talks with ONGC but Bill Gammell, chief executive,
suggested the company would try to go it alone.
The company said it would consider listing between 25 per cent and 80 per cent
its Indian operations on the Mumbai Stock Exchange. It had no plans to sell
itself to another company.
With four of Cairn's seven discoveries in norther India due to go into
production from October, ONGC believes the company will need more outside help.
However, Mr Gammell said the company had the expertise and capital to develop
them on its own.
The company's plans for a partial IPO disappointed some analysts. Teather &
Greenwood said its was a "halfway measure that does not solve Cairn's
The company reported a pre tax for 2005 of US$101.2m, against a loss of US$30.4m
the year before. Earnings per share were 50.37 cents on revenues of US$262.6m.
Cairn shares rose 126p, or 6.5 per cent, to a record £20.63, valuing the group
Suzlon buys into wind turbine technology
Tulsi Tanti, the Indian industrialist, has bought the world's second-largest
producer of wind-turbine gear-boxes in a deal that underscores the rising global
ambition of India's manufacturers.
The purchase by Suzlon Energy, in which the Tanti family hold a 69.8 per cent
stake, of Hansen Transmissions of Belgium for 465m Euro (US$567m) in an all-cash
deal, is the second-largest overseas acquisition by a Indian company. Mr Tanti's
coup - funded by debt and 15 per cent from reserves - caps a sizzling recent
past for Suzlon, which with 2,000 MW of wind-turbine manufacturing capacity is
India's largest integrated wind-energy products company.
Suzlon, based in Pune, south of Mumbai, raised US$330m last September in an
initial public offering. Recently, when Hansen deal was announced, the share
price closed at Rs1,295, compared with an IPO tender price of Rs510. Sales in
the third quarter to December were Rs8.71bn (US$197m). Company officials expect
a big jump for the full year to March.
Though wind-energy comprises just 4,000MW of India's 131,400MW of generating
capacity, the resource has won big converts such as commodities group Aditya
Birla. In a recent report, Ernst & Young, a professional services company,
ranked India as the fourth most attractive global market for wind-energy based
on criteria such as regulation government incentives and equipment suppliers.
Hansen with sales in the year to March of 213m Euro (US$260m), will plug a big
hole in Suzlon's line-up. The European company's gear-box technology, the
critical component in wind-turbine generators, will be married to Suzlon's
turbine expertise, forming a base for future manufacturing in India. Suzlon also
gains access to a mature customer base.
Mr Tanti offered a reassurance, however, that Hansen would continue as a
"separate, profitable business unit," and that its existing
manufacturing would not be shifted to India. "One thing we have learned is
it pays to be close to customers," he said. Suzlon, which already has
product development centres in the Netherlands and Germany, wants sales from
outside India to generate 70 per cent of revenues within three years.
A big step will be taken in August when manufacturing starts in the US, where
Suzlon's customers include John Deere, a tractor-maker also experimenting with
wind energy, and in China.
Suzlon was advised by Mumbai-based Yes Bank.