FREE GEOPOLITICAL NEWSLETTER

india  

For current reports go to EASY FINDER

INDIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

Books on India



Update No: 035 - (20/12/06)

HOPES OF A NEW LEADERSHIP
With the New Year around the corner, there are new hopes about change in leadership in the Congress party. In a recent Newsweek article, Rahul Gandhi, son of former Prime Minister Rajiv Gandhi and Sonia Gandhi is predicted to be the next dynamic and influential figure in Indian politics beginning 2007. Rahul Gandhi has been playing a major role in Congress politics for a long time now but the upcoming elections in Uttar Pradesh appears critical to his success. Many Congress members believe that he is the key to rescuing the party in the state and providing a new direction. According to the Newsweek article, Rahul's ascendancy to the throne will bring with it many challenges. For one, the Indian masses, 
would want him to pursue a vigorous poverty alleviation program. Also, they would look to him for development in education, health care and welfare. Rahul Gandhi seems to have an advantage in bringing change as he has followed in the footsteps of his grandmother, Indira Gandhi and father, Rajiv Gandhi. For a while, Rahul Gandhi has tried to stay away from media attention but it seems that there the pressure on him to take on a wider responsibility in politics is mounting gradually. His last accomplishment was the vitality he brought to Sonia Gandhi's campaign resulting in a landslide victory in a by-election early this year. 
Perhaps, the greatest strength that Rahul Gandhi could bring to the Congress party is his secular ideals. India is in need of a strong secular leader who will do everything in his capacity to prevent the country from breaking up along caste and class lines. 

A MAJOR BREAKTHROUGH
President Bush has finally signed the civilian nuclear deal with India which provides India with an unlimited supply of fuel and know-how According to President Bush, "the bill will help keep America safe by paving the way for India to join the global effort to stop the spread of nuclear weapons," The bill carves out an exemption in U.S. law to allow civilian nuclear trade with India in exchange for Indian safeguards and inspections at its 14 civilian nuclear plants. Eight military plants, however, will remain off-limits. Critics have said the measure undermines efforts to curb the spread of nuclear weapons and technology and could spark a nuclear arms race in Asia by boosting India's atomic arsenal. India still refuses to sign the Nuclear Non-proliferation Treaty. Many have previously argued that giving India this freedom, will not send the right signal to other states in the international system; especially those like North Korea and Iran who might see this as a means to develop even more nuclear weapons. Rep. Ed Markey, D-Mass., a senior Democrat on the House Energy and Commerce Committee, said that this deal is a severe blow to the Nuclear Non-Proliferation Treaty. Markey's fears stem from the fact that America has created an exception in its nuclear policy with regard to India even though India has not become a member of the NPT. This would reduce the efficacy of the NPT as a non-proliferation regime by making most observers question American hypocrisy. 
While critics might argue against the deal, we would argue that the strength of this nuclear deal is that it recognizes India's democratic history and places faith in India's democratic governance. The exception made to India is rightly deserved as India was one of the main proponents of disarmament in the world during Prime Minister Nehru's period. We believe that the United States realizes that India is a country that has made its choices on going nuclear, quite wisely and that unlike other pariah states, it will not pursue weaponization at random. Moreover, India's democratic past itself works as a constraint on her pursuit of nuclear weapons which is difficult to expect from countries such as North Korea since the latter has had a history of covertly providing nuclear technology to other states like Pakistan and Libya. And finally, India has recorded very high growth rates in the last year making it one of the most powerful countries in the world today. Given these reasons, we think, America sees that keeping India on its side is in its best interests. 
However, given this achievement, there are possible hurdles in the way. First, it is not clear how well India will accept any limitations on its ability to conduct nuclear tests in the future. As India has always maintained an independent posture in international relations, any limitations on its nuclearization will be viewed as interference by the United States and a loss of credibility. Second, the basics of the agreement have to be fleshed out. American and Indian officials need to work out a separate technical nuclear cooperation agreement, which is expected to be finished next year. And finally, Indian officials have to negotiate a safeguard agreement with the IAEA. But until then, one thing is certain: this nuclear agreement is a milestone in the history of Indo-US relations, for better, or, for worse. 

STALEMATE ON KASHMIR
While India might have significantly improved its prospects with the United States, with regard to Pakistan, both countries are at a standstill. This entire year has gone by without a major breakthrough on Kashmir. It almost seems that this issue will never find resolution. Pakistan keeps harping on the fact that there must be a resolution to Kashmir and India keeps harping on the fact that terrorism must be stopped. Both countries don't seem to trust each other much with the exception of occasional cricket matches! For example, Pakistani Prime Minister Shaukat Aziz recently said that Pakistan would continue to steadfastly uphold the "Kashmir cause" until a just and fair settlement is found in keeping with wishes of Kashmiri people. Aziz said the ongoing composite dialogue process with India needed to move from "dispute management to dispute resolution" and Islamabad has made several proposals in this direction. India and Pakistan's problems on Kashmir get further vitiated by opposition from hardline Islamic groups who are not willing to let either side go ahead with talks in a smooth and workable fashion. 

ECONOMIC GROWTH
India's expanding economy has drawn the interest of a number of Thai investors as they see India as becoming one the world's key engines of growth in the near future. Chairman of a leading India based financial services company; Anand Rathi argues that India has great opportunities in virtually every sector from infrastructure development, cement, textiles, services to others. "Thailand, which has strength in agricultural-related goods, can participate in this growth either in the agricultural sector or others." Mr Rathi, whose firm runs one of India's leading securities houses, said that investors looking for equity investments in India, either via the stock market or in private partnerships, need not worry about the country's growth prospects. Mr Rathi was the president of BSE before he set up his firm in 1994. "Over the next 10 years, it is not impossible for India to show growth of between 8% and 10% per year as the country has the strength to achieve such growth levels." India's economic reforms, which started in the early 1990s after its foreign-exchange reserves dwindled, has yielded results as India's gross domestic product (GDP) has seen a sharp increase. It has risen from about 3.7% during the 1960's to more than 6.5% in the past six years. The International Monetary Fund (IMF) recently raised this year's forecast by 1% to 8.3%. 

India's $775 billion economy has grown more than 8 percent in five of the past six quarters. China's $2.2 trillion economy, Asia's second largest, expanded 10.4 percent in the quarter ended Sept. 30, the quickest pace among the world's 20 largest economies and almost four times the 2.6 percent gain in the 12 European nations sharing the euro. General Motors Corp., Royal Dutch Shell Plc. and other companies have invested in about 3,000 new factories and expansion projects worth about $21 billion in India since May 2004 to cater to growing demand. Per-capita income in India has doubled in the last nine years and the number of households earning an annual income of at least $10,000 is rising more than 20 percent a year, according to McKinsey & Co. The creation of new jobs in the software industry and at call centres is putting more money in the hands of some 350 million middle-class Indians. For example, Dell Inc., the world's second-largest personal-computer maker, opened its fourth customer-service centre in India this month as it seeks to reduce costs to shore up declining profit. Agriculture production rose at the fastest pace in two years in the year ended March 31, increasing incomes of 650 million people who depend on farming for their livelihood. Bharti Airtel Ltd., India's largest mobile-phone service provider, said second-quarter profit soared 79 percent to a record because of a near-doubling of subscribers. India is the fastest-growing cell phone market in the world and companies added a record 6.71 million users last month compared with 6.07 million new users in September. I addition to all this, Prime Minister Manmohan Singh made an important decision to increase spending on roads, ports and other infrastructure by a quarter to 992 billion rupees ($22 billion) in the year that started April 1 in a bid to attract overseas manufacturing companies and spur growth to 10 percent over a decade. Infrastructure spending is spurring demand for steel, cement and electricity in India, which spends a seventh of China's $150 billion investment in public works each year according to Morgan Stanley. "India can't afford to slow down its pace of growth,'' said Adi Godrej, chairman and managing director, Godrej Consumer Products Ltd., an Indian maker of personal-care items. It needs to grow faster to pull out large part of the population which is still reeling under poverty."

« Top

AUTOMOBILES

VW plans to expand into India 

Volkswagen, the largest European carmaker, will spend $530 million to set up a factory in India, the German embassy said recently.
An expansion into India may reduce Volkswagen's dependence on China, where increased competition has eroded its market share. India's car market, in which General Motors and Suzuki are already well established, is set to triple to 3 million annually by 2015, according to the Society of Indian Automobile Manufacturers.
"Automakers are rushing to India to take advantage of rising disposable incomes," said Dipen Sanghavi, an analyst at Pranav Securities. "India is emerging as a big story in the passenger car market."
India's economy has grown an average 8.2 percent in the past three years, lifting salaries and creating more jobs. The nation's economy may grow at 8.5 percent this year, putting more money into the hands of its 1.1 billion people to buy cars and sport-utility vehicles.
The German automaker's announcement follows similar plans by other carmakers. General Motors, the world's biggest automaker, said it would spend more than $300 million to set up a second car factory in the country and win 10 percent of the market by the end of the decade. The company now has 2.9 percent of the market.
Suzuki, the maker of half the cars in the South Asian country, will spend about $2 billion by 2010 to expand capacity and set up a new diesel engine factory. Renault of France said this month that it would build a second factory in India.
"A lot of new models are coming out from the existing automakers in India, so the new ones have to be extremely aggressive to get a share of this growing pie," said K.K. Mital of Escorts Asset Management in New Delhi.
India has about one car for every 142 people, compared with one for every 100 in China and one for every two in Western Europe, according to estimates made last year by London-based analyst Neil King of Global Insight.
Volkswagen's plant will begin production of a small car model in the second half of 2009, the company said in a Nov. 17 statement without naming the model. The carmaker's supervisory board approved the plan on that day.
Jürgen Kornmann, a spokesman for Volkswagen, declined to comment.

« Top

INFORMATION TECHNOLOGY

Asus Plans to Expand in India 

Computer solutions provider, AsusTek Inc. has announced plans to expand its presence in India. The company has plans to move to a larger base in Mumbai in the first quarter of 2007, and will invest Rs. 10 Crore in the first phase of this expansion plan.
Andrew Tsui, managing director Asus India said, "Our growth plans aim at the expansion of not just the office but also our capabilities of sales, marketing, service support and channel operations. Our new office will be the first step towards expanding our efficiency level to have a much stronger branding position in the India market."
Asus, which has been in the Indian market for over 10 years now, has been predominantly known in the Motherboard category, but is now involved in user products like notebooks and LCD monitors. In the Indian market Asus is also present in the graphics cards, server solutions, networking products, digital home products and optical disk drives.
Tsui added, "The Indian market has been a very challenging one and we being a leading technology company have thrived on challenges. Continuous improvement in infrastructure is the fundamental way to growth and expansion. ASUS is a progressive organization that believes in mutual benefit and growth."
Asus India says it expects a 100 percent growth at the end of this year, is optimistic about the same rate of growth for the year 2007 as well. 

« Top

MINERALS & METALS

POSCO-India project, Fuelling Orissa Economy's future 

The world 3rd largest Steel major, POSCO's Chief Executive Officer, reaffirms its commitment on the India Project and its role in the economic development of the state. Mr. Ku-Taek Lee visited Bhubaneswar, Orissa on Dec 12 and held meetings with the Chief Minister of Orissa, Shri Naveen Patnaik and key members from Government of Orissa. 
The key points discussed included the progress of the project in Orissa, its economic impact on the state, steps taken by POSCO-India towards creating suitable infrastructure for the initiation of the project. Mr. Lee expressed POSCO's commitments towards the realization of the India project to the Chief Minister and appreciated the support received from both the state and central government.
The POSCO CEO put forth the latest National Council of Applied Economic Research (NCAER) report to the Chief Minister. According to the findings of the report the proposed Orissa project will set up a chain reaction on the economy of the State resulting in increase in its gross output, employment and value addition. The CEO briefed the Chief Minister about the various Corporate Social Responsibility (CSR) initiatives being taken by POSCO-India and the R&R measures, which have been incorporated in addition to the State Government's R&R policies. 
Status on POSCO-India's participation in the Special Purpose Vehicle (SPV) for Haridaspur-Paradeep Railway Line with Indian Railways and the proposed Port at Jatadhari, poised to create immense opportunities for infrastructure development in Orissa were also discussed during this meeting. 
Reassuring commitment to the project, Mr. Lee expressed POSCO's support to the economic development of the state in a long-term perspective and making Orissa the steel hub of India in the coming years. He also emphasized that POSCO-India will grow together with the state and the community as POSCO has grown with the Korean economic over the years. 
Prior to his visit to Orissa the CEO also met the Minister of Finance, Shri. P.Chidambaram and Dy. Chairman of the Planning Commission Mr. Montek Singh Ahluwalia in Delhi.

« Top

« Back

 


 
Published by 
International Industrial Information Ltd.
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com