Embassy of India
-- A Monthly Economic Newsletter
Vol.5. No. 4
ECONOMY & FINANCE
Exim Bank to give US$ 2.2 Billion to Africa
The Export & Import Bank of India (Exim Bank) would shortly be expediting the extension of a line of credit to the tune of US$ 2.2 Billion to a few African countries as part of India’s recent commitment to promote and encourage its trade with them.
This was stated by Mr. E. Barwa, Joint Secretary in the Ministry of External Affairs at a seminar on Africa-India Business Opportunities organized by the Associated Chambers of Commerce & Industry of India.
The countries identified for the purpose comprise
Botswana, Egypt, Mauritius, Senegal, Tanzania, Uganda, and Zambia.
The Exim Bank would also be seeking partnerships with institutions such as the African Development Bank, the World Bank, the Afri-Exim Bank, and the East African Development Bank.
Rupee Peaks at 4-Year High
The Indian Rupee rose half a percent on the Dollar on April 7th 2004, closing at its highest for over 4 years - or since January 17th 2000 - as foreign investors snapped up local assets, and exporters sold foreign currency exposure in anticipation of more gains.
Strong capital and trade flows have strengthened the Indian currency unit for nearly two years; recent gains have taken the Rupee’s rise for calendar year 2004 to 4.7%.
Foreign funds have so far invested US$ 3.5 Billion in local Indian shares in 2004 after record investments of US$ 6.7 Billion in 2003.
India’s GDP Forecast Exceeds 8%
India’s overall GDP growth forecast for the fiscal year 2003-2004 stands at 8.1% against 4.0% in FY 2002-2003.
Industrial production growth in India during the period April-December 2003 is estimated at 6.3% against 5.5% in April-December 2002.
Reverse Outsourcing -- IBM wins $750m contract from Indian company
The US computing and information technology services group International Business Machines (IBM) has won a 10-year outsourcing contract worth up to US$ 750 Million - from an Indian company!
The decision by Bharti Tele-Ventures, India’s largest private telecommunications company, to outsource its IT requirements to IBM could help quell the political outcry over the transfer of US jobs to low-cost economies. "Arrangements like this will take the sting out of outsourcing”, Bharti Tele-Ventures’ Chairman, Mr. Sunil Bharti Mittal said.
Under the terms of the contract, IBM will take care of Bharti’s hardware and software requirements, consolidate its data centers, and manage the Indian group’s help desks and disaster recovery capabilities. IBM will also take over Bharti’s customer billing and customer relationship management operations.
About 200 Bharti computer engineers will be transferred to IBM’s Indian unit. However, some of the work will be transferred to the US and elsewhere. - ”We are a global company, and some of the work in support of the contract will be done overseas”, Mr. Dean Douglas, IBM’s Vice President for global services said.
Some jobs are likely to be transferred to IBM’s global telecom innovation center in Le Gaude, Southern France, while other work will come to the US, where about 30% of IBM’s global services workforce are located. As part of the deal, Bharti, which had about 7 million customers by end February 04, will also be the “preferred supplier” of telecom services to IBM India, the US group’s Indian subsidiary.
Bharti - 28% owned by Singapore’s SingTel - said it considered bids from Indian and other global IT services firms for the outsourcing contract and began talks with IBM 15 months ago. - IBM added that the agreement underlines the value of the company’s investments in India. “It is a reaffirmation of our commitment to the local market”, said IBM’s Asia-Pacific Vice President. - ”This is among the largest deals in South-East Asia”.
Infosys Sets up Subsidiary in Texas
Indian software giant Infosys Technologies Ltd. has set up a fully-owned consulting subsidiary named Infosys Consulting Inc. in the United States with an initial investment of US$ 20 Million and ambitious hiring plans.
Infosys - India’s largest listed exporter of software services - has grown steadily from being a provider of low-cost software services to global firms to a major league player offering an array of services such as business and high-tech consulting and product development.
“This is a wake-up call to our industry”, Mr. Stephen Pratt, the new unit’s Chief Executive Officer said in a statement, adding that “We will offer clients more priced projects, practical ways to increase competitiveness, and a much higher return on their consulting dollar.”
His statement also said that Infosys will hire aggressively in the United States for its new unit. This announcement comes against a backdrop of controversy in the United States in an election year over job losses resulting from outsourcing to low-cost locations like India.
Infosys, which counts Electronic Data Systems Corp and Accenture among its rivals, believes in a “global delivery model”, under which it will hire workers in places which suit it best in terms of costs and quality, though the bulk of its nearly 25,000-strong workforce is based in India.
INTERNATIONAL ENGINEERING & TECHNOLOGY FAIR (IETF)
(February 9th - 12th 2005)
Pragati Maidan, New Delhi
Automobile Industry, Water Management, Environmental Technologies, Biotech, Infrastructure & Housing, Safety & Security
Confederation of Indian Industry (CII)
Trade Fairs Division
Plot No. 249 F, Sector 18, Udyog Vihar, Phase IV
Phone: 00 91 124 50 14 060 - 067
Fax : 00 91 124 50 14 080 - 083
INDIA INTERNATIONAL JEWELLERY SHOW
(July 15th - 19th 2004)
Godrej Complex, Vikhroli, Mumbai
Gold, Silver, & Platinum Jewellery
Silverware, Loose Diamonds
Jewellery Making Machinery
The Gem & Jewellery Export Promotion Council
G-6, Radhe Vallabh Co-op. Hsg. Society
(Modi Chambers), French Bridge Corner
Opp. Opera House, Mumbai-400004, India
Infosys plans to recruit 500 in US
Software major Infosys Technologies Ltd, which on Thursday announced it has floated its US consulting subsidiary, plans to recruit 500 professionals in the US over three years.
It feels such job creations would defuse outsourcing backlash to some extent. The company will invest $20 million initially in Infosys Consulting Inc and add 75 professionals in the first year
Humane Genome Sciences Eyes Alliances with Indian Biotech Companies
US-based life sciences major Human Genome Sciences Inc. is looking for opportunities to co-operate with Indian pharmaceutical and biotechnology companies for the discovery and development of new pharmaceutical products. The US company, founded in 1992 by the renowned biophysicist Dr. William A. Haseltine, focuses on the discovery, development, manufacturing, as well as the marketing of gene-based, disease-curing drugs. It has nine products in clinical development, including drugs to treat cancer, rheumatoid arthritis, lupus, and hepatitis C.
“India is in the process of enormous change, and biotechnology industries here offer immense opportunities for domestic as well as overseas firms”, Dr. Haseltine states, adding that “there is a presence of vast, skilled manpower due to the country’s deep investment in higher education, and the infrastructure, too is being built up for the biotech industry. Looking at these avenues, we are seriously studying the possibilities to partner with Indian firms.”
According to Dr. Haseltine, there is also a need to set up venture capital companies focused on the biotech sector in India in order to attract investments for advanced research. “A venture capital base has to be strong, as capital flows where opportunity exists, and India offers it in abundance. Few people are aware that venture capital investment in the US biotech industry is not from the US alone, as European companies from, among other places, France and Sweden form the backbone of capital investment in the US biotech industry, and the same can be brought to India”, he declared.
Highlights of the Interim Union Budget for 2004 - 2005
The Government of India has introduced further liberalization measures for rationalizing the tariff structure. The salient features are as follows:
* Peak customs duty on non-agricultural goods reduced from 25% to 20%.
* Special additional duty of customs (SAD) of 4% abolished.
* Customs duty on projects imports, with investment of at least Rs. 50 million in plant and machinery, reduced from 25% to 10%.
* Customs duty on power transmission and distribution projects reduced from 25% to 10%.
* Customs duty on cellphones reduced from 10% to 5%.
Foreign Direct Investment Caps Enhanced
The Government of India has furthermore liberalized the FDI regime by raising the Foreign Direct Investment caps for the following activities:
·FDI up to 100% in printing scientific & technical magazines periodicals, and journals with prior Government approval.
· FDI up to 100% on automatic route for petroleum product marketing.
· FDI up to 100% on automatic route for oil exploration in both small and medium-size fields.
· FDI up to 100% on automatic route for petroleum product pipelines.
· FDI up to 100% with Government approval for Natural Gas/LNG pipelines.
* Water supply projects exempted from custom and excise duties.
* Laptops brought as part of baggage exempted from customs duty.
* Customs duty on Information Technology Agreement-bound items reduced from
15%/5% to 5%/Nil.
* Excise duty on aviation turbine fuel reduced from 16% to 8%.
* Inland Air Travel Tax of 15% abolished.
* Foreign Travel Tax abolished.
Inside This Issue
Rupee Peaks at 4-Year
Exim Bank to Give US$ 2.2 Billion
Human Genome Sciences Eyes
Alliances with Indian Biotech Companies
-- IBM bags $750m contract from India
Infosys Sets up Subsidiary in Texas
India International Jewellery Show
International Engineering &