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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 598,966 515,000  481,400 12
GNI per capita
 US $ 530 480 470 160
Ranking is given out of 208 nations - (data from the World Bank)

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Abdul Kalam

Update No: 025 - (27/02/06)

The Indian Parliament is ready to discuss New Delhi's decision to refer Iran's nuclear program to the UN Security Council. However, the Left parties such as the CPI (M) and the CPI are demanding that India should act independently and not be dictated to by Washington's position. Communist allies of the government criticized the vote at the International Atomic Energy Association backing the US position on Iran. The Samajwadi Party in India has also threatened to withdraw support to the UPA government if New Delhi favours the American position in the Iran nuclear issue. In Lucknow, the party's leader and Uttar Pradesh Chief Minister Mulayam Singh Yadav said that protests and demonstrations would be staged when US President George Bush visits India to draw attention to efforts that are directed to curb Iran's nuclear programs. Yadav called US initiatives and proposals towards Iran, a grave "injustice." 

This month, the political landscape witnessed a continuing debate over both the Bofors arms scandal and the Volker Report. The Central government in India has allegedly denied its role in de-freezing the bank accounts of Italian businessman Ottavio Quattrochhi, a prime accused in the case which involved the purchase of Bofors howitzers for the Indian Army. "The UPA Government has no connection with the decision. It is entirely the Central Bureau of Investigation's (CBI's) decision," said Suresh Pachauri, Minister of State for Personnel and Parliamentary Affairs in the Lok Sabha. Pachauri also said that the two bank accounts of Quattrochhi were frozen temporarily by the London High Court in July 2003. Earlier, the Quattrochhi issue generated strong responses and objections from the members of the Lok Sabha with protests from angry opposition members. The Lok Sabha had to be adjourned twice in the day. The Opposition demanded an explanation from Manmohan Singh over why the bank accounts of the key accused in the Bofors scam were defrozen at the CBI's request. 

In separate news related to the Volcker Report, the Enforcement Directorate in India impounded the passports of former External Affairs minister, Natwar Singh's son Jagat Singh in the oil-for-food scam. The passports of few others including Andaleeb Sehgal's father Suman Sehgal, Congress leader Vijay Dhar, and Asad Khan, son of Congress leader Aslam Khan were also impounded. The move indicates that the Enforcement Directorate's probe after allegations in the Volcker report against several Indian politicians and businessmen had entered a critical phase. The Enforcement Directorate has issued a statement arguing that "investigation in the oil-for-food scam is at a crucial stage and the persons are required to be in India so that evidence available abroad is not tampered with." The ED has collected several crucial documents from Iran and Jordan too. It is conducting a further enquiry into the role played by two companies registered in Luxembourg, one of which is Pipal Software Solutions. 

India-US Relations
President George Bush is visiting India in the first week of March and his visit is 8generating a lot of hype in political circles. Bush's visit comes after Indian Prime Minister Singh made a trip to Washington in July 2005 and signed a series of agreements. The President's forthcoming visit may have significant implications for India's bid to a permanent seat in the UN Security Council. Interestingly, the progress of talks will hinge on India's commitment to a non-nuclear peace process and its separation of civil and nuclear facilities. While Democrats like Senator John Kerry have strongly backed India as a nuclear weapons power, the Bush administration is more bent on placing certain restrictions on the further development of nuclear weapons. It will be interesting to see how talks progress once Bush lands in New Delhi. President Bush's visit to India in early March, US Undersecretary of State for Political affairs Nicholas Burns has been meeting India's Foreign Secretary Shyam Saran in New Delhi. Until now, the two sides have been locked over which nuclear sites India should open up for international inspection. It is not clear if the deal will go through before US President George Bush's scheduled visit to India next week. President Bush is believed to have stated that the agreement is not easy for both countries and will take time to implement. In his words, "this is not an easy decision for India, nor is it an easy decision for the US. Implementing this agreement will take time and will take patience from both our countries." President Bush further added that India must give a "transparent and defensible separation plan." While the President is pushing for the deal, he has to get it passed in the US Congress but many within the Congress are opposed to the motion. India has already declared that there is no timeframe for the nuclear deal. Also, according to the Global Nuclear Energy Partnership, Bush has stated that the so-called supplier nations like US, UK, France and Russia would collect India's spent nuclear fuel, reprocess it and give it back to India which implies that India will not be able to reprocess nuclear fuel at home. 

India-France Relations
President Jacques Chirac's visit to India can be reckoned as a milestone in the foreign relations of the two countries. Following talks between Indian Prime Minister Singh and President Chirac, nine major agreements have been signed. The leaders of both countries signed a declaration of intent on the development of nuclear energy for civilian use. The document called The Declaration on the Development of Nuclear Energy for Peaceful Purposes was signed by Atomic Energy Commission Chairman Anil Kakodkar and French Foreign Minister Philippe Douste Blazy. The nuclear agreement is especially significant since India is negotiating a deal with the US, which would give it access to crucial civilian technology. But France has urged India to place more of its nuclear facilities under international supervision to get access to that technology.

The major agreements included defence cooperation, and cooperation in commerce and industry. There also may be in the near future an agreement on facilitating tourism and civil nuclear facilities. Perhaps more importantly, the most critical part of the agreements for India is the joint declaration under which France favours and facilitates India's access to the Nuclear Supplies Group. This agreement comes at a crucial time; a time that is wracked by much speculation about India-US talks over the nuclear issue. France's support to India could act as a strong buffer to US bargaining on the issue. 
As per the joint declaration, India and France have reached common agreement on conducting research using low enriched uranium including use in light water nuclear reactor research in Tarapur, application of nuclear energy in power generation and setting up power projects like the 1600 MW European Pressurized Reactor, research in the field of nuclear fuel, waste management and nuclear safety, exchange and training of scientific and technical staff and expertise, previous nuclear agreements to be brought under present framework and future cooperation to be subject to international safeguards. 

Economy and Business
Edinburgh-based chip designer Wolfson Microelectronics is opening a new office in India to become one of the many firms to join the world's fastest-growing markets for high-tech consumer goods. Wolfson will open its office in Bangalore. Chief technical officer in charge of the India office, Mr Jim Reid has said that "there is a fast-increasing level of both design activity and manufacturing in India, especially in the portable and consumer audio space. Our Bangalore office will allow us to provide technical information and 'design-in support' to potential customers in the area. The office will offer a platform from which Wolfson can develop relationships with key Indian customers." The Wolfson firm is regarded as one of the chief players in the design and manufacturing of mixed-signal semiconductors - microchips that convert digital signals to analogue format, allowing users to see images and hear sounds. Its clientele includes big brand names such as Apple, Sony and Microsoft. 

In major business news, the leading and most widely used internet search engine company, Google, has announced setting up its offices in Delhi and Mumbai to develop business opportunities and provide locally relevant products and services. Google Vice President of Asia Pacific and Latin America, Sukhinder Singh Cassidy has said that "markets in the country are changing quite rapidly. Infrastructure here is expanding at a fast pace, which is resulting into more people coming online." The company which already has offices in Bangalore and Hyderabad will be setting up the offices in Delhi and Mumbai to look for local opportunities especially into online advertising space. The company has appointed Ashish Kashyap as its sales and operations manager for the country. Kashyap earlier worked with as general manager and business head of its E-Commerce services. Google intends to tap the best talent in the market for creating its place in the rapidly growing ad revenue market in the country. Google's current advertisers in the country include Citibank, Monster India,, Spicejet, ICICI bank, Ebay India and Birla sunlife. 

The Central government in New Delhi has approved 35 Foreign Direct Investment (FDI) proposals worth over Rs 183 crore including those of Scottish & Newcastle, Jardine Fleming and Merrill Lynch. Following the recommendation of Foreign Investment Promotion Board, Finance Minister P Chidambaram approved the proposals most of which pertain to whole trading, food processing, information and broadcasting, power, telecom and financial sectors. Mauritius-based Jardine Fleming received the government's approval to pump in Rs 22 crore (5 million dollars) in JP Morgan Pvt Ltd to set up an asset management company. FIPB also gave the go-ahead to another Mauritius-based FII Merrill Lynch will invest about Rs 10 crore to buy out shares of residents in its Indian arm DSP Merrill Lynch. Alaghnim Industries of Mauritius will buy out almost the entire equity of Kirby Building Systems India for Rs 20 crore to make its entry in the Indian engineering sector. Flint Ink (Mauritius) Ltd will increase its holding in Indian JV Incowax Pvt Ltd from 55 to 100 per cent for an investment of Rs 10.8 crore. Finland-based Wartsila Corporation will invest about Rs 6 crore to diversify its operations in India. UK-based Laing O'Rourke Plc obtained the permission to set up a new joint venture in the construction sector with an initial investment of Rs 17.5 crore. Chennai-based Sun TV will offer preferential shares worth up to Rs 7.5 crore to a clutch of FIIs and NRIs.

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Air India link-up with Indian comes step closer

Air India might combine with domestic carrier, Indian, aviation minister, Praful Patel said, delivering a firm signal that the government is beginning to move on the merger of the country's former international monopoly with the smaller business, the Financial Times reported on February 21st.
Mr Patel indicated a combined carrier, with an additional 111 aircraft by 2007 following fleet expansions approved recently by New Delhi, would be better able to tackle rivalry from five new budget carriers that are transforming air travel in India.
India's domestic air traffic market is forecast to grow 25 per cent this year, pushed by falling fares and services to remoter locations.
Buoyed by a strong economy, overseas air travel is likely to expand 15-18 per cent.
A merger would follow proposed initial public offerings by Air India, possibly in June, and Indian Airlines, which recently changed its name to 'Indian.'
"Merger has appeal," Mr Patel told the Financial Times, without specifying a timetable.
The IPOs would precede a merger, with a senior Air India executive saying this sequence made "sense because both our valuations would then have market visibility."
"We do not want to take a call on when the merger will happen but we believe it would be a win-win situation, especially for employees," said Mr Patel, whose privatisation of Indian airports recently provoked widespread opposition by staff fearing job cuts.
Transport unions representing 14,000 out of Indian Airlines 18,000 staff welcomed the idea of a merger, saying it would be "positive" provided it did not lead to any job losses at the two airlines.
"A merger would strengthen the cause of the workers because in today's era of conglomerates and consolidation, you need a minimum of 250 aircraft if you're to be able to invest in cabin crew, baggage handling and passenger care," said Arun Kumar, general-secretary of the Air Corporation Employees Union.
Indian's share of the domestic air travel market has shrunk to 35 per cent, a shade lower than Jet Airways, the private-sector market leader whose own dominance has been clipped by low-cost carriers in the past 18 months.
A merger would sustain the consolidation started in January by Jet airways' US$500m takeover of the loss-making Sahara.
Mr Patel has said the shakeout was inevitable.

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Holcim seeks control of Indian firm

Cement giant, Holcim Ltd, recently said it would spend up to US$1bn to acquire a controlling 35% stake in India's Gujarat Ambuja Cements Ltd, further increasing its clout in that booming market, the Wall Street Journal reported recently.
Holcim said it had already bought a 14.8% stake in Gujarat Ambuja from the founders for US$466m, or 105 rupees (US$2.38) a share, and would set aside up to US$560m to buy an additional 20% stake from the public at around 90 rupees a share.
Holcim became a major player in India last year with a similar deal, acquiring control over Ambuja Cement India Ltd for US$800m. Holcim, based in Jona, Switzerland, now controls the No.2 and No 3 cement makers in India, and with this deal closes the gap with India's market leader, Grasim Industries Ltd.
In a conference call, Hocim Chief Executive, Markus Akermann, said the company will back the transaction with equity, adding that a rights issue is required so Holcim can maintain a triple-B rating. He didn't elaborate on the possible size of the capital transaction. Holcim is one of the world's leading cement makers, competing against France-based Lafarge SA and Mexico's Cemex SA de CV.
Analysts said Holcim's further strengthening of its operations in India makes sense given the country's growth prospects. Holcim forecasts that Indian cement consumption will increase by 8% to 9% annually. Holcim shares closed at 94.50 Swiss francs (US$73.62), down 20 centimes.

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India interested in Sakhalin-1 gas 

India is interested in receiving all the gas produced at the Sakhalin-1 project, Indian Commerce and Industry Minister, Kamal Nath, said at a press briefing after a meeting with Russian Economic Development and Trade Minister, German Gref, New Europe reported.
"At the meeting we discussed cooperation in the gas sphere. ONGC is ready to take all the gas from the Sakhalin-1 project," he said. Asked whether the possibility of Indian companies buying Russian oil assets was discussed at the meeting, Nath said that for India it is important to cooperate with Russia in the oil and gas sphere. He said that this includes the possibility of setting up an energy joint venture. In turn, Gref said that India is taking part in the Sakhalin-1 project and "we hope that the end product will be supplied to the Indian market." The minister also said that Gazprom has signed a strategic partnership agreement with ONGC and GAIL. "We will help the development of energy relations in every way," Gref said. He said that Russia is the world's number one energy producer and the Indian market will require more and more energy every year.

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Trade and investment between Czech-India 

US$ one billion trade and investment is planned between the Czech Republic and India to develop their relationship and strengthen bilateral trade in future, said Jiri Paroubek, the prime minister of Czech Republic, New Europe reported.
Paroubek, addressing a plenary session at CII Partnership Summit, said though the present trade between the two countries amounts only to US$0.5 million, trade and investment are the key factors to increase this figure to US$ one billion. The Czech Republic is one of the most modern and liberal industrial countries, where high external trade and industrial productivity drive its economy, Paroubek told the CII members.

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Dell to expand in India, hiring 5,000

Dell, the world's leading seller of personal computers, announced recently that it would hire 5,000 more employees in India in the next two years, add a fourth customer support centre in the Gurgaon suburbs of Delhi, and explore setting up a manufacturing facility in the country, the International Herald Tribune reported.
Dell's president and chief executive, Kevin Rollins, detailing the expansion in a news conference in Delhi, said the Gurgaon centre would open in April and employ 1,000 people by the end of 2006.
Rollin's two day visit to India included a meeting with Prime Minister Manmohan Singh.
The company already has 10,000 employees in India, and call centres in Bangalore and Hyderabad in the south and Mohali in the north.
But Dell has less that 4 per cent marker share in India's fast-growing market for personal computers. About four million PCs are sold in the country each year, a number expected to grow to 20 million annually within the next few years. Building a factory in India would help the company expand its market share, Rollins said.
Dell, based in Round Rock, Texas, is one of several US-based technology companies that have recently announced ambitious plans to step up their Indian operations. Many multinational technology companies have turned aggressive about their Indian investments, saying they want to tap the country's talent reservoir of educated, English-speaking workers to write software and provide back office support. Indian technology workers' salaries are rising but still a small fraction of their Western counterparts', providing big cost savings to overseas companies outsourcing work to India.
Dell's Indian customer support centres are part of a network of 30 worldwide. The first one opened in India in 2001. The Indian centres are the only ones in the network that provide support to customers worldwide.
"As we continue to attract new customers worldwide, our team in India has played a vital role int eh company's operations," Rollins said.
Dell is also planning to double the size of its product development team in India int eh next two years. Currently, more than 300 engineers are engaged in developing and testing Dell products, including servers and storage systems.


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