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INDIA


 

 

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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)

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Update No: 040 - (29/05/07)

INDIA-BRAZIL PARTNERSHIP
India and Brazil have embarked on a new journey with a civilian nuclear agreement in the offing in June during Brazilian President Lula Da Silva's visit to India. The two countries have outlined a promising agenda which includes talks on a series of issues like UN security council reforms, promotion of trade and investment and other global issues. Brazilian ambassador to India, Jose Vicente Pimentel described the forthcoming visit of his country's President as an important stage in the relationship between the two countries. President Lula's visit in June comes after Prime Minister Manmohan Singh's visit to Brazil in September of 2006. Approximately 100 top businessmen from Brazil will be accompanying Lula to India to initiate a new business venture through a CEOs forum in order to reach a bilateral trade target of $10 billion by 2010. Brazil appears to better understand India's energy needs and hence is keen on providing nuclear technology for civilian use. A Brazilian envoy said that the country was hopeful about helping India given "India's growing need for energy and its emergence as an important world power." India's relationship with Brazil is particularly important also because there is huge scope for Indian companies in Brazil's pharmaceuticals and IT sectors. 

BJP AND CONGRESS SUFFER ELECTORAL DEFEAT IN U.P. ELECTIONS
In recently held state elections in Uttar Pradesh, the Bahujan Samaj Party (BSP) emerged victorious winning 206 of the 403 seats in the state assembly allowing it to form the state's first majority government since 1992. It won 30% of the popular vote with Mayawati being sworn in as the new Chief Minister. The BSP was formed in 1984 and represents the class of untouchables or Dalits in India; a group that has suffered severe social discrimination and oppression for many years. While the BSP seeks to uphold the cause of Dalits, in reality it caters to the interests of a narrow Dalit elite which in essence uses arguments against economic exploitation to maintain its own narrow sphere of power. The BSP aligned itself with the Bharatiya Janata Party (BJP) to form coalition governments in UP on three occasions and joined forces with India's political establishment in implementing a neo-liberal reform agenda. The Congress Party and the BJP, the two main national political representatives of big-business and finance, both suffered major reversals in the UP elections. The Congress party won just 21 seats, while the BJP captured 50 seats. Many are arguing that the losses suffered by these two leading parties represents a rejection of the pro-business policies by the people; policies that may have widened the gap between the rich and the poor and exacerbated social inequality. However, such arguments might be specious especially since the very same neo-liberal economic program has benefited many parts of the country by providing employment opportunities to deprived sections of Indian society. Whatever may be the reason for the change in party leadership in UP, it is premature to conclude that the BSP will be able to accomplish what all the other parties (Congress and BJP) have been unable to accomplish. As past experience indicates, the BSP has often tried to serve its own narrow interests at the cost of following an independent program of action. 

INTERNAL INSTABILITY AND SECTARIAN STRIFE
SOURCE: BBC NEWS REPORT
Clashes between India's long-established Sikh community and a religious sect in the northern Indian state of Punjab have left one person dead and dozens others injured. The group at the centre of the controversy is the Dera Sacha Sauda (DSS), one of many religious sects operating in northern India. Most of these sects provide community services but many of them have begun competing with each other for political influence. The DSS is hard to classify as a group. As Pramod Kumar, Director of the Institute of Development and Communication in Chandigarh claims, the "Dera Sacha Sauda combines the core of different religions." Most of its members comprise low caste Hindus but they also consist of Sikhs, Muslims and Christians. The latest tension between Sikh leaders and the DSS began when pictures of Baba Gurmeet Ram Rahim Singh baptising his disciples appeared in newspapers. Gurmeet Rahim Singh is known for his notoriety and the CBI even has a case of rape and murder against him. Seeing Rahim Singh dressed up as their revered Sikh leader Guru Gobind Singh, enraged the Sikh community. The DSS leader, on the other hand, denied that he was trying to emulate the Sikh guru and has refused to apologize for his actions, as demanded by the Sikh clergy. Moreover, all this can be understood in the light of the Punjab elections in February when the DSS issued a public appeal for people to vote for the Congress party even though most Sikhs in Punjab support the rival Akali Dal party. This was apparently, the first time that a public appeal was made in favour of a particular party. Hence, Sikh leaders, "angry at the direct intervention by the DSS in the elections, seized the opportunity to whip up popular sentiments of their community against the DSS." As a result of this conflict, the Sikh community has become even more polarized. Also, the Punjab government headed by the Akali Dal is not keen on reconciliation with the DSS. Security forces have been deployed in large numbers to maintain law and order and to prevent outbreak of sectarian and religious violence. The situation, for now, remains calm although it is unclear what steps the Punjab government will take to reconcile the differences between these various sects.

BRITAIN'S NEW LEADERSHIP AND ITS IMPACT ON INDIA
Will a change in leadership in UK bode well for India? This is the question that many are asking with Gordon Brown taking over from Tony Blair. The answer to this question is a resounding yes. While being Chancellor of the Exchequer, Brown has often used India in many of his pre-budget speeches, perhaps being one of the first British politicians to understand the opportunities and challenges posed by India and its impact on Britain's economy. Brown has repeatedly referred to India and its growing role in global issues such as climate change. As Brown takes over from Tony Blair, India and Britain will move ahead on a positive path particularly because of the presence of a man who comprehends the Indian realities with much candour. The biggest boost that the relationship will receive is in the area of trade and business. Interestingly, Indian Prime Minister Manmohan Singh and Gordon Brown already share a good rapport. Both share a strong background in economics. While Brown received his doctorate in Economics from Edinburgh University, Manmohan Singh received it from Oxford. Prior to becoming Prime Minister of India, Singh also held the much-coveted post of India's Finance minister, the equivalent to Britain's post of Chancellor of the Exchequer. Once Brown formally takes over as Britain's Prime Minister and outlines the agenda of the Labour Party and his foreign policy, we will be able to discern much more about future prospects for the relationship between the two countries.

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TELECOMMUNICATIONS

Indian blow to Vodafone's Hutchison Essar price hopes

The cost to Vodafone of acquiring a 67 per cent economic interest in Hutchison Essar, India's fourth-biggest mobile operator, may end up being more than the US$11.1bn the UK group agreed to pay in February, the Financial Times reported on April 26th.
In a briefing paper to the Indian regulator, the law ministry said Vodafone would not now be allowed to fix the price at which it could eventually exercise an option over a 12.26 per cent stake in Hutchison Essar.
The paper, seen by the Finanical Times, raises questions about whether Vodafone could buy the stake held indirectly by two Indian businessmen for as little as US$430m.
Indian foreign exchange management laws forbid overseas companies using "pre-determined" pricing formulae to set the terms on which they eventually buy out local partners if current foreign direct investment ceilings are relaxed.
The ministry reminded the Foreign Investment Promotion Board, the regulator, that shares in an unlisted Indian company might not be bought by a non-resident at "less than a fair valuation."
This would be determined by an accountant appointed in line with guidelines issued by the Reserve Bank of India, the central bank.
In February, Vodafone agreed to pay US$11.1bn (£5.5bn) in cash for a 67 per cent economic interest in Hutchison Essar from Hutchison Telecommunications International, a unit of the Hong Kong tycoon Li Ka Shing's Hutchison Whampoa.
HTIL owns 52 per cent of Hutchison Essar, with another 12.26 per cent held on its behalf by companies owned by Asim Ghosh, managing director of Hutchison Essar, and Analjit Singh, chairman of healthcare group Max India.
In a letter to the finance ministryon April 9th, seeen by the FT, HTIL said Vodafone, Mr Ghosh and Mr Singh had agreed that, assuming an equity valuation for Hutchison Essar of US$25bn, the two men's 12.26 per cent stake would be worth US$430m.
But an executive at a rival telecoms company said Vodafone would have to pay "a full market price, probably over US$3bn."
Vodafone said: "Vodafone has no additional liability to Mr Singh and Mr Ghosh."
People close to Vodafone defended the US$430m valuation of the stake. They said these companies were unlisted, with high levels of debt.

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