Business News 



Economy grows a scorching 9.4 per cent
The Indian economy grew 9.4% in 2006-07, the fastest in 18 years, on the back of an impressive performance by services and the manufacturing sector.
Services posted a healthy 11% clip, up from 9.8% the previous year. The manufacturing sector grew 12.3% against 9.1% in 2005-06, data released by the Central Statistical Organisation (CSO) showed. The agricultural sector, however, grew only 2.7% in 2006-07, from over 6% in the previous fiscal. Rising interest rates pulled down the construction sector growth rate to 10.7% from 14.2% in 2005-06.
The scorching pace of GDP growth has catapulted India into the elite trillion-dollar club of a dozen economies. The GDP value at market prices stood at Rs 41,25,724 crore, equivalent to nearly $101 trillion at the current exchange rate. The market cap of Indian stocks has also crossed the trillion-dollar mark.
The latest CSO estimate is next only to the 10.5% GDP expansion achieved in 1988-89. The income of an Indian on an average grew only 8.4% in real terms (based on 1999-2000) prices. Per capita income stood at Rs 22,483 in 2006-07, against Rs 20,734 the previous fiscal.

India’s biotech exports reach $1.2 bn in 2006-07: Survey
Revenues from India’s biotech industry exports grew by 47 percent to reach $1.2 billion in the financial year ending March 2007, according to a survey.
The leading pharma companies, which contributed almost 27 percent of the industry revenue, are Serum Institute, Biocon and Panacea Biotec, according to the survey conducted by BioSpectrum, a journal published by the CyberMedia Group, along with Association of Biotechnology Led Enterprises (ABLE).
The industry introduced more than a dozen new products along with several new transgenic cottonseeds for the bio-agri sector. According to the survey, as much as 400 firms would earn revenues of about $5 billion by 2010, bringing almost 100 biotech products in the market. The biopharma segment, accounting for over two-thirds of the industry, reported sales of Rs.59.73 billion, representing a growth of 27 percent. 
The bioservices sector registered 53 percent growth, the bioagri sector 55 percent, and the bioinformatics and bioindustrial sectors recorded growth of 21 percent and 5 percent respectively.

B A N K I N G  N E W S

OIFC to make India info easy for NRIs
For the 25 million Indians living abroad, getting information about their country, especially the growing investment opportunities in various sectors would now be just a click away.
The Ministry of Overseas Indian Affairs in association with the Confederation of Indian Industry (CII) on Monday launched a facilitation centre, which will act as a ‘one-stop-shop’ for addressing all the queries of the Indian diaspora regarding opportunities available in the country.
The centre, through its website and offices, will provide reliable data on investment opportunities free of cost besides facilitating clearance of projects on an individual basis as a paid value-added service.
“The Overseas Indian Facilitation Centre (OIFC) would act as a one-stop-shop for enhancing partnership with Indians residing abroad by giving authentic and real-time information,” Minister for Overseas Indian Affairs Vayalar Ravi said while launching the centre in New Delhi.
Besides providing a data base of investment opportunities, the centre would also offer advisory services to non-resident Indians like consular issues, financial services and their stay in India, he said. Based on a public-private partnership model, the OIFC is being promoted by the ministry and managed by the CII and will operate as a “not-for-profit trust” with a two-tier body for its management.
The centre will screen the opportunities available in the country before enlisting these for the Indian diaspora so that they do not fall pray to “fly-by-night operators” and cheats, Ravi added.
Having received $23 billion in remittances from overseas Indians in 2005, Ravi said the investment made by the diaspora has been far short of its potential and the centre was aiming at tapping these prospective investors.
“The centre will promote overseas Indian investment into India and facilitate business partnership, by giving reliable information and also by providing paid handholding services to the potential investors,” he added.
The minister also launched the website which would make available the database and information, both sector wise and geographic specific, for the use of the potential investors at the click of a mouse.
“There are investment opportunities everywhere. It can be sectors like power, infrastructure, aviation or ports,” Ravi said.
The focus of the centre is to facilitate individuals to come and invest in India and it was not meant for the large business houses, said CII chief mentor Tarun Das.
In June, he said, the CII is organising a meeting with about 100 NRIs in the US to make the Indian community more aware about the initiatives being taken by the government in partnership with the industry.
The centre would also assist the states in India to project investment opportunities in infrastructure and social sectors. The objective is to bring Indian states, business and potential overseas investors on the same platform, Ravi said.

Crisis in Kuwait skies, Indians pin hope on bilateral talks
With Kuwait threatening to disallow landing of Air India and ‘Indian’ at its capital from, passengers planning to fly to India during summer holidays are now pinning hopes on the crucial talks between both countries.
While civil aviation authorities of both the countries are engaged in a second round of negotiations in New Delhi, the Indian Ambassador in Kuwait and Civil Aviation Ministry joint secretary are expected to hold parleys with their counterparts before July one in Kuwait.
“If the flights between the two countries are halted, the services of India's national carriers, Air India and ‘Indian’ to Kuwait will be heavily disrupted,” a report in the Kuwait Times said.
The crisis for passengers between India and Kuwait was aggravated after the latter issued a notice to Air India and 'Indian' saying it will not receive flights of the airlines from July 1.
The row was sparked after Kuwait asked India to increase seat capacities of Kuwait Airways and Jazeera Airways to and from India, while the Indian civil aviation authority is reportedly unwilling to grant the request as it feels that its national carriers will face stiff competition.
Top regional managers of both Air-India and ‘Indian’ in Dubai have said passengers wishing to cancel their flight bookings can do so without paying any cancellation charges.
Air-India operates 12 flights every week to Kuwait, while ‘Indian’ operates six flights on the same sector from different destinations in India.
Freddie Vaz, Air-India's Regional Director for Gulf, Middle East and North Africa, said: “We are still optimistic that bilateral talks between India and Kuwait will resolve this issue. In case, Kuwait goes ahead with its decision, we are already looking at various alternatives. We are talking to other airlines about the feasibility of carrying our passengers to Kuwait on their flights from other Gulf destinations, including Dubai.”

Centre for more foreign funds in education
The Central government is planning to open up the country’s education sector to foreign investment in a big way. The proposal, to be moved by the human resources ministry for Cabinet approval, will allow easier norms for foreign educational institutions to set up campuses and courses in India.
Many of the courses, offered by the foreign institutions, will not come under the University Grants Commission regulations, Kapil Sibal, minister of Science and Technology and Earth Sciences, said at the annual session of Confederation of Indian Industry (CII). “We are working on the proposals. It is yet to reach the Cabinet,” Sibal said.
Sibal added that growth and innovation can happen only through education. “Only eight out of 100 students who enroll in our schools reach graduation level. It has to change if we need to have sufficient technical expertise. The focus should be on innovation in agriculture as that benefits 80 per cent of India’s population.”
Sibal also favoured genetically engineered seeds and crops that could provide additional revenues to Indian farmer.
Sibal also launched a project on Global Innovation and Technology Alliance (GITA), a project initiated by CII and the Department of Science and Technology to identify technology and innovation at the higher level.
The broad objective of the GITA project is to promote and facilitate technology partnership between overseas and Indian industry or institutes.


India ahead of China’s offshore market
China’s push to become an alternate off shoring hub for MNCs tackling soaring wages and high attrition rate in India remains a distant dream as its market is developing slower than expected, a study says. Despite massive government support and huge visibility on the global arena, China’s offshore market has not taken off as expected and still has a long way to become a potential alternative to India, technology research firm Forrester said in a report.
Multinational firms, considering China as a “quick-fix” solution to deal with rising costs and high attrition in other offshore locations like India, would be sorely disappointed by the country’s slowing offshore momentum, the report said.
“When we first looked at China’s offshore and IT services global delivery model (GDM) nearly two years ago, the country was widely viewed as the key challenger to India for offshore supremacy. However, the market has not taken off as expected,” Forrester’s Vice-President John McCarthy said. He said while Japanese firms were more aware about China’s potential, those from the US and Europe have been slow to respond. “In fact, China’s percentage of GDM resources for top services firm like Accenture has dropped, while India and the Philippines have seen far greater investment,” he said.
McCarthy, who had predicted in 2002 that over three million BPO jobs in the US would go offshore, added that firms with large bases in India should consider other geographies when addressing the risk mitigation issue.
Even countries like the Philippines, Mexico and Brazil could prove to be better alternatives than China for diversifying offshore exposure in terms of skills, language and convenience, he added.
Forrester also said like India, China also faces similar problems of attrition, increasing wages and lack of experienced manages and technical leads. In addition, the appreciation of the yuan against the dollar was hurting margins of companies outsourcing their work to China, it said.
“The consensus among interviewees was that China still has not overcome clients’ concern about limited English skills, attrition and weak intellectual property protection.
One executive went so far as to say that China had to be 20 per cent cheaper than India to be viable,” the study said.


July 2007

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