INDIA FOLIO

Vol.4 No.2

Embassy of India ~ Copenhagen  

February 17, 2003

 

INDO-DANISH  RELATIONS


Crown Prince Frederik Visits India
   

The visit to India of a high-profile Danish Business Delegation spearheaded by His Royal Highness, Crown Prince Frederik of Denmark and the Danish Deputy Prime Minister and Minister for Economic & Business Affairs, Mr. Bendt Bendtsen (Conservative Party) – concluded successfully on February 8th 2003. The Danish Deputy PM had called on Shri Jaswant Singh, Minister of Finance & Company Affairs and Shri Arun Shourie, Minister of Communications, Information Technology, & Disinvestments.

The visit comprised business conferences held at the Maurya Sheraton Hotel & Towers, New Delhi and at Hotel Oberoi Towers, Mumbai respectively as well as a variety of private company seminars. Specific visits were also paid to the physical factory sites of Danish companies active in India.

A follow-up conference on business opportunities in India – in which the Crown Prince will also participate – will be organized by the Confederation of Danish Industries (DI) on Thursday, February 20th 2003.

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ECONOMY


Rising Inflation Rate No Cause for Concern

For the first time in the current fiscal year, the inflation rate in India touched a high of 4.61% during the week ending January 25th 03 as compared to 4.41% in the week ending January 18th 03. In the corresponding week of 2002, the inflation rate stood at just 1.26%.

 However, the Reserve Bank of India (RBI) Governor, Mr. Bimal Jalan has reiterated that the Central Bank is comfortable with the  current level of inflation and is not worried about a recent rise in the wholesale price index-based inflation rate. He added that despite drought, oil prices, and a possible US-Iraq war, there is no threat of food shortages or balance of payments problems, the only remaining problem on the macro-economic front being the fiscal deficit.

 

European Investment Bank's New Focus on India

The European Investment Bank (EIB), the long-term financing arm of the European Union and the world's largest multilateral funding institution, has finally given a green light to India. Nearly a decade after signing an agreement with India in 1993 granting the country preferred creditor status, the EIB has decided on its first loan to an Indian private sector entity - with promises that a lot more Euros are going to flow into the country.

The actual deal has been struck with Rabo India Finance Ltd., under which the finance company soon set to turn into a bank would avail of a line of credit between 40 and 50 Million Euros for lending to small- & medium-sized enterprises. The deal needs formal approval from the EIB's Board of Directors.

 

Indian Government to Prepay World Bank and ADB Loans

The Government of India has decided to prematurely repay its loans from the World Bank and the Asian Development Bank (ADB) aggregating US$ 2.8 Billion. The proposed repayment, ahead of schedule, will take place during the current financial year itself. The prepayment process would basically involve the Centre borrowing from the domestic market - through fresh auction of dated securities - and using the Rupee proceeds therefrom to buy Dollars from the RBI.

In this process, the Central Bank's forex reserve holdings will not only come down from their existing level of US$ 72.4 Billion as on January 17th 03, there will also be a corresponding sucking up from the market of Rupee resources worth more than In. Rs. 136 Billion.

Considering that the entire exercise is to take place within the next two months, it will also help contain the Rupee's current up-trend against the Dollar, which has been affecting the country's export competitiveness.

 

POLICY


PM Speaks of Oil Buffer for India

"Oil security has come to occupy a key position in the present policy matrix of our Government", the Prime Minister of India, Mr. Atal Bihari Vaypayee said while speaking at the 5th International Petroleum Conference named Petrotech 2003. - "We are examining the feasibility of establishing strategic storage of crude oil and petroleum products in our country to create a buffer for meeting unforeseen disturbances and strengthening India's oil security", the Prime Minister declared in New Delhi.

The Prime Minister's statement came after OPEC agreed to increase its oil output in the wake of the continuing oil strike in Venezuela. OPEC had also requested Mexico, Norway, and Russia to increase crude output, which, however, they had declined on the grounds that they were already producing as per capacity.

FIPB Shifted to Finance Ministry

The Government of India has shifted the Foreign Investment Promotion Board (FIPB) to the Finance Ministry. With this move, the Indian Finance Ministry will become the one-stop shop for directing all foreign investment into the country. FIPB is the clearance window for overseas investment in all sectors except those, where the Reserve Bank of India grants an automatic approval.

At its creation, the FIPB formed part of the Prime Minister's Office. It was later shifted to the Ministry of Industry.

 

Foreign Investment in News Agencies Being Reviewed

After permitting foreign direct investment in the print media, the Government of India has decided to look into the issue of allowing foreign investment in news agencies. Currently, foreign agencies can distribute news in India only through an Indian news agency. While almost all of the big wire services are available in India, industry sources say that several of them have adopted complex structures and distribute their services directly. - There are several grey areas that need to be addressed. For instance, direct distribution of financial news by foreign news agencies to select clients for their use and not for further distribution or publication has been allowed. "Some of the existing news agencies use this route. They distribute their news through specialized services meant for financial companies", industry sources claim.

 

Government Spares Foreign Airlines from Paying Sales Tax

Foreign airlines and domestic oil companies have heaved a combined sign of relief with the Ministry of Civil Aviation finally issuing a notification exempting the airlines from sales tax, duties, and levies. The sales tax wrangle has continued for several decades, with airlines refusing to pay local levies at various airports, and the states imposing a sales tax of 20% to 39% on international carriers refueling at their airports. The airlines stopped paying the tax, citing bilateral treaties under international aviation conventions, but for the past three years the burden fell on the oil companies, Indian Oil, BPCL, and HPCL, that have been paying on behalf of the airlines.

India Wants Pact with Spain on Market Access

India has suggested to Spain that for better market access for Indian products, a Memorandum of Understanding (MoU) could be entered into between the Export Inspection Council of India and its Spanish counterpart to tackle operational difficulties faced by Indian products like marine items.

Both sides also resolved that further initiatives and better market access remain crucial to expanding bilateral trade flows, which are presently well below their potential. This was indicated in the agreed minutes of the 7th meeting of the Indo-Spanish Joint Commission held in Madrid.

 

IT-SECTOR


India Inc.: Global Leader for Outsourcing

During the last decade, India has emerged as the chosen favorite for IT services outsourcing by clients from the USA and Europe. A study by the CIO magazine comparing various destinations worldwide thus validates India's position as the global leader for IT services outsourcing. If countries are compared on parameters such as total industry size, average IT employee costs, total workforce, number of quality certifications, and main clients, the most preferred destinations for IT services outsourcing currently include Ireland, India, Israel, Canada, the Philippines, and South Africa. While Ireland is - narrowly - the largest outsourcing destination in terms of actual industry size, average IT employee costs in India are much lower at just 5,880 US$ a year than those of any of other, above-stated countries. Moreover, India also boasts of the largest numbers of clients from the Fortune 1000 list as well as of Capability Maturity Model (CMM) certifications for software processes - all in all making India a more attractive and competitive destination than countries with high average software employee costs.


French Delegation Visits Hyderabad

A French delegation from the Alsace Development Agency has visited the Center for Cellular and Molecular Biology (CCMB) as well as the Satyam Technology Campus (STC) in Hyderabad. The delegation studied the possibilities of collaborations between India and France within the sectors of Biotech/Bio-Informatics. A meeting with Central / State Government officials and representatives of various Indian IT, biotech, and pharma companies was likewise organized by the Hyderabad office of the National Association of Software & Services Companies in India (NASSCOM).

Data Access Gets Carrier Licence in North America

Data Access America, a wholly owned subsidiary of Data Access India has acquired a full carrier licence in North America, making it the first tier South Asian telecom service provider to offer international and national long distance services in the American market. The company plans to acquire licences in 7 more markets by the end of the year. Targeting Indians and Chinese in the USA, it will also be able to cut leased line rates and connectivity costs for the call centres in India, where Data Access India is already an international long distance licence holder. The company's facilities will cater to the entire American continent incl. Caribbean countries, Latin America, and Canada. Data Access America has already set up Points of Presence in Denver, Jersey City, and Los Angeles. It further plans such points in Miami, San Francisco, and in Washington.

 

PHARMA/BIOTECH SECTOR


CII Forms Biotech Forum

The biotechnology committee of the Confederation of Indian Industry (CII) has initiated the formation of the Association of Biotechnology-Led Enterprises (ABLE) meant to represent the biotechnology sector.

The formation of the association was announced at Biotech India 2003, organized by CII and being held concurrently with the International Engineering & Technology Fair (IETF) 2003. To the biotechnology industry, the Association will be what the National Association of Software & Service Companies (NASSCOM) is to India's InfoTech industry. President of the Association will be Mr. Kiran Mazumdar Shaw, Chairman and Managing Director of BioconIndia.

There are over 160 biotechnology companies in India with a combined revenue of US$ 150 Million. Diverse domains of biotechnology, from industrial enzymes and diagnostics to biotherapeutics, like recombinant vaccines and human insulin, are encompassed within the broad spectrum of these companies.

The objectives of the Association include accelerating the pace of biotechnology in the country by enabling strategic alliances between researchers, the Government, and the global biotech industry. ABLE also intends to showcase noteworthy breakthrough technologies and cutting-edge initiatives that will take the domestic biotech sector to new heights. The Association will act as a partnering and consulting body to the Government.

Nicholas Piramal in Talks to Sell Ivax Inhalers

Indian pharma major Nicholas Piramal (NPIL) is in talks with the US$ 1.2 Billion American drugmaker Ivax to market the latter's asthma inhalers in India, discussions having taken place for some months now. NPIL already has a relationship with Ivax, having worked with its UK subsidiary on joint drug development on earlier occasion.

In a market dominated by India's second-largest drugmaker 'Cipla', a veteran in asthma treatment controlling 75% of the Indian inhalation market, NPIL has to work hard to make inroads, however. The Indian "asthma market" is growing at about 17% a year. According to the Asthma Foundation of India, about 10% of the Indian population suffers from the illness.


Indian Immunologicals to Extend Patent Reach

The Indian Immunologicals company, which recently filed an international patent for the world's first combination vaccine for treating rabies, is now gearing up for filing patents in all the countries that have signed up the Patent Co-Operative Treaty (PCT). Pharma industry sources say "the development is a fallout of the International Search Report, which has confirmed the vaccine to be unique". The combination vaccine contains DNA and low doses of cell culture vaccine for treating rabies. Indian Immunologicals has developed the vaccine in association with the Indian Institute of Science (IISc), Bangalore. The vaccine is understood to be making rapid progress on the clinical trails front and would soon be moving into Phase 3, which involves human clinical trails.

The human death toll due to rabies (a highly fatal viral disease of the nervous system) in developing countries is estimated to add up to 60,000 incidents a year in Asia (40,000 cases in India), 5,000 in Africa, and 300 in Latin America. Indian Immunologicals, which produces veterinary vaccines, has the second-largest facility in the world certified under WHO GMP guidelines.

 

CONSUMER GOODS SECTOR


Marks & Spencer to Expand Indian Operations

Marks & Spencer, UK's retail chain of clothing, foods, homeware, and financial services, announced the expansion of its Indian operations by opening a new store at Gurgaon in February 2003.

Marks & Spencer began its Indian operations in December 2001 with two outlets at Ansal Plaza in Delhi and Crossroads in Mumbai through its exclusive franchise, Planet Sports. It had a good first year and plans to expand further by opening new stores in Delhi and in Mumbai this year.


Honda's New Plans for India

Japan's number two carmaker is determined to emerge as one of the largest players in India's automobile market, rolling out over ten thousand vehicles in the next five to eight years. The core of Honda's game plan in India is the belief that more and more Indians would go for a sedan in the coming years, upgrading from the compact cars they now own. In the process, India would become a larger market for mid-size cars, where Honda's strength lies. "The 'B' segment comprising compact cars is getting somewhat saturated. The average replacement period for a car in India is 3-4 years, and a lot of people would upgrade to a 'C' segment car", the General Marketing Manager of Honda Siel Cars India Ltd. says.

 

TOURISM SECTOR


Tourist Inflows into India Rise

The last quarter of the calendar year 2002 saw the fortunes of India's tourism and hospitality sector change for the better. Tourist inflow figures collated by the Department of Tourism thus reveals a 15% growth for the period October - December 2002, total number of tourists consequently rising to 737,000 visitors - against a negative growth of 23% reported in the corresponding period of 2001.

Industry officials stated that a growth of this magnitude had not been reported since 1996. Of the foreign guests, the UK represented 16.6% followed by the USA at 14.1% and Germany at 7.7%.

Demand for hotels has risen across many cities like Mumbai, Bangalore, Goa, Delhi, and Hyderabad. Hotels in Bangalore are likely to gain the most in the absence of new supply.

 

FORTHCOMING EVENTS

 

DELHI INTERNATIONAL JEWELLERY & WATCH EXHIBITION
August 1st – 4th 2003

 (‘DIJE 2003’)

Venue: Pragati Maidan International Exhibition Complex, New Delhi

Organizers:

I.T.E. Group India 

Further information obtainable from: 

Ms. Neeta Arora, Project Manager – Jewellery Show Division

I.T.E. India Pvt. Ltd.

E-Mail: iteindia@vsnl.in

 

Published by: Economic & Commercial Section, Embassy of India, 15, Vangehusvej, 2100 Copenhagen, Phone: (+45) 39 29 08 54, Fax: (+45) 39 27 02 18, E-Mail: indcom@songmail.dk  or india@email.dk, Web: www.indian-embassy.dk

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