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
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
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
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.
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."
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
"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
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.
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.
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
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
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.