India's export growth: Tracking India Business and Economy news

Weekly reports on Indian economy and business

India's export growth, in value terms, has dipped in July, indicating that the rupee's appreciation will hurt exporters more than anticipated. The economy on the other hand remains buoyant clocking 9% growth and an inflation rate lower than 4%.

- Chillibreeze Business Research Team

Government Policy & Infrastructure
Economy
SEZs
Agriculture
HR
Power
Banking & Finance

Government Policy & Infrastructure

Railways to modernise six stations

Railways have decided to develop world class facilities at six stations - New Delhi, Patna, Agra, Anand Vihar, Jaipur and Amritsar - in the first phase of its modernisation drive. While a total of 22 stations have been identified to be developed as world class, six stations have been chosen to be taken up in the first phase.

Hong Kong-based firm Terry Farell has been appointed to carry out the study and submit the concept plan for modernisation of New Delhi railway station. A consultant for Patna station would also be appointed shortly.

As per the parameters prepared by the ministry, the proposed world class stations would have a state-of-the-art station building with all modern passenger amenities like food plazas, currency exchange counters, hotels, retail outlets, ATM facilities.

It would have separate departure and arrival arenas to streamline passenger movements with proper connectivity to other transport modes, well illuminated circulating areas, adequate signages, inter-platform transfer through elevators and barrier free access for physically challenged persons.

September 4, 2007
Source: Economic Times

India, China airports struggle to meet air travel boom

China and India's air infrastructure is creaking under the soaring demand for air travel and huge investment is needed to satisfy the boom, officials said Tuesday.

Both countries are enjoying an unprecedented aviation boom, with China's air traffic expected to double every five years and India seeing an increase of 29 percent in the number of flights taken from its airports this year. But the growth is exposing a lack of airports and inadequate facilities, forcing them to invest rapidly to prevent stunting their economic booms, officials from both countries told the Asian Aerospace International Expo and Congress here.

September 4, 2007
Source: Economic Times

Govt to net Rs 4,100 cr from divestment

The UPA government is likely to close this financial year with around a billion dollars (around Rs 4,100 crore) as receipts from disinvestment of minority shareholdings in four public sector undertakings and a complete exit from leading car maker Maruti Udyog.

The recently concluded sale of the government’s residual 10.27 per cent shareholding in Maruti to public sector banks and financial institutions helped raise around Rs 2,367 crore. The remaining funds, around Rs 1,700-odd crore, are expected to be raised through sale of minority stakes in four public sector undertakings – Oil India, National Hydroelectric Power Corporation (NHPC), Rural Electrification Corporation (REC) and Power Grid Corporation of India (PGCIL).

The sale, which will see the government ride piggyback on initial public offers planned by these firms, is expected to be completed by February next year.

September 3, 2007
Source: Business Standard

Punjab plans strong takeoff for airports

The Punjab government has sent a proposal to the civil aviation ministry for setting up an international airport in Mohali — the second in the state after Amritsar — near Chandigarh.

The state government also proposes to develop Bathinda, an air base station, and the airport in the industrial town of Ludhiana, which gets one flight a day, into full-fledged domestic airports.

The airports at Mohali and Bathinda are proposed to be developed by the AAI while Ludhiana airport is likely to be developed through a private-public partnership.

An airport in Mohali is considered viable as Amritsar airport has already absorbed a lot of international traffic of Delhi airport. As a result, Amritsar airport has seen a huge increase in the number of international passengers.

In the northern region, only Delhi, Amritsar, Jaipur and Varanasi have active international airports. Airports in Lucknow and Srinagar also get international flights, but very few.

A large number of people from Punjab travel to and from key international destinations in Canada, the US, the UK, South-East Asian countries and West Asia.

September 3, 2007
Source: Business Standard

Cabinet to clear farmers' rehabilitation policy soon

The Rehabilitation and Resettlement Policy for farmers affected by large industrial projects, including SEZs, will be cleared by the Cabinet in the next few days and will come up for discussion in Parliament in the current session itself.

The GoM on the R R policy was headed by Agriculture Minister Sharad Pawar and comprised Finance Minister P Chidambaram, Commerce and Industry Minister Kamal Nath, Rural Development Minister Raghuvansh Prasad Singh and Science and Technology Minister Kapil Sibal.

At its meeting on August 30, the GoM suggested that states be allowed to acquire 30 per cent of land required for Special Economic Zones, in contrast to a decision by a different panel imposing a total ban on compulsory land acquisition by government agencies.

This has been done to facilitate contiguity of land by the developers who would be required to directly buy 70 per cent of it from the farmers. The decision is not specific to SEZs but would apply to all industrial projects, Sibal had said after the GoM meeting.

The GoM was constituted after a widespread opposition in the country to the compulsory land acquisition by the states. In April this year, the Empowered Group of Ministers on SEZs headed by External Affairs Minister Pranab Mukherjee had imposed a ban on compulsory acquisition of land, while fixing an upper limit of 5,000 hectares for multi-product zones.

September 1, 2007
Source: Economic Times

Economy

Export growth slows to 18.5%

India's growth in the value of its exports slowed to 18.5 percent in July, the government said on Monday, suggesting the rupee's appreciation in recent months was beginning to hurt exporters.

Exports totaled $12.4 billion in July compared with $10.5 billion in the same month a year earlier, the commerce ministry said in a provisional update. Exports growth averaged 18.2 per cent between April and July, the first four months of the current fiscal year.

The ministry's update did not elaborate on factors behind the slowdown, but analysts attributed it to a sharp appreciation of the rupee that dents price competitiveness of Indian products in the world market.

September 3, 2007
Source: Times of India

Chidambaram confident of 9% growth this year

Buoyed by the 9.3 per cent growth in gross domestic product (GDP) in the first quarter and inflation falling below four per cent, the Union Finance Minister, Mr P. Chidambaram, on Friday expressed confidence over the economy expanding by close to nine per cent this fiscal.

He felt that this should help revise the average GDP growth of 8.6 per cent over the past three years. The Finance Minister said that GDP growth of 9.3 per cent in the first quarter, although a shade below the 9.6 per cent growth in same period last year, was “quite satisfactory” given the circumstances on account of the external situation.

Mr Chidambaram said that the Government would make all efforts to ensure that credit flows to productive sectors are not reduced. “Despite compulsions of a tight monetary policy, we will ensure that credit flow to the productive sectors of the economy remains strong,” he said.

The Finance Minister also highlighted that electricity, gas and water supply segment has showed better performance by recording 8.3 per cent growth in first quarter of current fiscal compared to 5.8 per cent growth in the same period last year.

September 1, 2007
Source: Hindu Businessline

PM lauds 'spirit' of small and medium entrepreneurs

Underlining the importance of small and medium enterprises (SMEs) and their contribution to the growth of new industries, Prime Minister Manmohan Singh on Thursday lauded the spirit of enterprise in this sector and urged entrepreneurs to be globally competitive.

"Nowhere is this spirit of enterprise, this willingness to take risk and an eagerness to strike out on one's own to seek a fortune more in evidence than in our small and medium enterprises sector," Singh said while giving national awards for micro, small and medium enterprises at a function here.

With almost 60 million people employed in this sector including the handloom and handicraft segments, Singh said they formed a highly important component from a regional developmental perspective and as a means to promote balanced and equitable growth all over the country.

Detailing governmental and institutional support to this sector through incentives and infrastructure facilities, Singh hoped the enactment of the Micro, Small and Medium Enterprises Development Act would improve competitiveness and benefit firms in business ventures.

August 30, 2007
Source: Economic Times

Inflation seen at 3.94%: Poll

India's wholesale price inflation rate is forecast at 3.94 per cent for the 12 months to August 18, its lowest in nearly 16 months, a poll of 11 analysts showed on Thursday.

Annual inflation in the previous week was at 4.10 per cent, and had last dropped below 4 per cent in April 2006. It would be the eleventh consecutive week that inflation has remained below 5 per cent, the RBI's target for the 2007/08 fiscal year.

Last month, the Reserve Bank of India raised banks' cash reserve ratio to 7.0 per cent from 6.50 per cent in a bid to mop up excess cash that could fuel inflation.

August 30, 2007
Source: Economic Times

SEZs

Congress keen on 'good deal' for farmers

Hectic activities are on to ensure speedy Cabinet clearance to the resettlement and rehabilitation policy, barely approved by a group of ministers, in what could suggest that the Congress is preparing for any "eventuality".

A key pro-poor promise of Congress, the party and government want the R&R policy to roll out before any snap polls. Promising a "good deal" to farmers losing land to displacement, the R&R policy is being given legal sanctity through an amendment in Land Acquisition Act.

Sources said the government wants the policy to be approved in the Cabinet meet on Thursday. This way, government can look to introduce the Bill in Parliament before it ends on September 14, and clear it in the winter session of Parliament.

A senior leader said the priority was on fulfilling the remaining "social sector" promises in NCMP as soon as possible. While rural job guarantee programme, RTI and Bharat Nirman remain its calling card with voters, Congress feels R&R policy has acquired a new resonance with farmers after the row over SEZs.

September 4, 2007
Source: Times of India

Gitanjali Gems gets nod for SEZ

Gitanjali Gems has received approval from the Union Government for establishing two Special Economic Zones – one at Nagpur and another at Aurangabad.

In a communication to the NSE, the company said that it has received ‘in-principle approval’ from the Ministry of Commerce, Board of Approvals, for establishing a 1,000-hectare multi-products SEZ at Nagpur and a gems and jewellery SEZ on 50 hectares at Augrangabad

September 1, 2007
Source: Hindu Businessline

SEZ-displaced to get up to 75% registered mkt price

State governments buying land for various projects will from now on pay a ‘rich rehabilitation’ price of up to 75% above the registered market rate to project-affected people (PAP). While that price would be applicable for ‘special and emergency’ cases where time is of key essence, they will pay 60% premium above the registered market price for land that is otherwise procured at normal pace.

If land is being procured on behalf of corporate houses for SEZs in the name of development, state governments will pay a price that is 60% (75% in special cases) above the average price paid by the corporates to contiguous lands acquired by them for the same SEZ. Earlier, the quantum or relief was pegged at only half the amount (30% above the registered market price).

The meeting decided to give state governments a discretion to acquire 30% of the land required for an industrial project or SEZ provided the developer has acquired the balance 70% on his own. Sources said state governments would step in to buy land for industrial projects only where necessary land was not offered by the land owners themselves to the developers.

The premium price would be paid by state governments, not just for SEZ-related PAP relief, but for all industrial projects for which land is bought by them. While corporate developers would set the benchmark for the price to be paid to land owners in the case of SEZs, the same may not apply to industrial projects developed by the state. Here, it would be the registered market price that would be the benchmark price above which premium would be paid.

September 1, 2007
Source: Economic Times

'SEZ agitations have little impact on India's FDI zeal'

India continues to be an attractive foreign direct investment (FDI) destination to foreign investors despite controversies over special economic zones (SEZs), a global investments expert here said.

Noting that the SEZ issue was a "political landmine" in India, Courtney Fingar, editor of Financial Times' global investments magazine fDi, said SEZ investment is a "double- edge sword" that could be a mode of development at some places but not everywhere.

"It may be too early to say what it will do for India, but apart from anything else, the creation of such zones do send a signal to the global business community about the country's keenness for FDI," Fingar said.

He was here to felicitate Commerce and Industry Minister Kamal Nath who was selected for the "fDi Personality of the Year" award among other business and political leaders from Latin America, Africa, Middle East, Europe and North America.

August 31, 2007
Source: Economic Times

State govt can buy 30% land for SEZ developers

The group of ministers (GoM) set up to frame a relief and rehabilitation policy for those displaced by industrial projects, including special economic zones, on Thursday decided to give state governments the power to acquire 30% of the land required in case the developer has acquired the rest 70%.

In the wake of violence and social unrest over land acquisition for SEZs, the government had decided to impose a total ban on official acquisition of land for such projects, ruling that all land would have to be bought by the developer.

With most developers, backed by state governments, saying this would allow just a handful of people to block any project, it was proposed by the PMO that the policy could provide for the government acquiring up to 10% of the required land for maintaining contiguity and preventing a handful of malcontents from aborting vital projects. Now, the GoM has relaxed the ratio further to 30:70.

August 31, 2007
Source: Economic Times

Agriculture

Waive farmers loans up to Rs 30,000: Rau

Maharashtra Congress chief Prabha Rau today said farmers loans up to Rs 30,000 should be waived to provide relief to the community in the state.

Although the relief package for Vidarbha farmers has reduced suicides, more efforts are needed to completely stop the menace, Rau said.

September 3, 2007
Source: Economic Times

Govt doubles subsidy for sericulture

In a move to give a push to sericulture as an alternative crop in the suicide-hit Vidarbha, the state government has doubled the subsidy for farmers taking up sericulture, state marketing, EGS and parliamentary affairs minister Harshvardhan Patil said here on Saturday.

Under the employment guarantee scheme, farmers taking up sericulture will get a subsidy of Rs 25,000 per acre. Till now, they were getting Rs 12,060.

Patil said sericulture was grossly untapped in Maharashtra with only 9,000 hectares under it while in the neighbouring state of Karnataka it was cultivated in one lakh hectares. The state has demand for 25,000 metric tonnes of silk cocoons a year and a quarter of it is imported from China.

While a major portion of Rs 15,000 for labour component will be paid at the start, the remainder will be paid in two instalments, he said elaborating on the special subsidy scheme.

September 3, 2007
Source: Times of India

Haryana rice exporters seek abolition of market fee

Rice exporters in Haryana have asked the state government to abolish market fee and rural development fund fee levied on rice exports, saying otherwise the state's share would be diverted to neighbouring regions.

"We are becoming uncompetitive in rice export business due to imposition of 2 per cent market fee and 2 per cent rural development fund fee on such exports. Neighbouring states such as Punjab, Uttarakhand and Uttar Pradesh are not levying such charges on the exporters," Haryana Rice Exporters Association President Sushil Jain said.

September 2, 2007
Source: Economic Times

Bug makes meal of Punjab cotton, whither Bt magic?

The magic of Bt cotton in southern Punjab has vanished. Weary and stressed farmers - who are said to have sprayed pesticides worth over Rs 500 crore (over $120 million) this season to save their cotton crop from the mealy bug - are headed for major losses this time around.

Just a few months ago, in the February assembly elections in Punjab, the victory of the Congress in assembly seats from the once Akali Dal stronghold of Malwa - the cotton growing belt of south Punjab - was credited to the two years of success of the genetically modified Bt cotton crop with its bumper yields and returns. But in the first cotton season after the Akalis took over in Punjab, the mealy bug - a kind of insect - has wreaked devastation in Malwa's fields.

Farmers refer to the mealy bug as "chitti bhoondi" (white insect) in local parlance.

Hundreds of farmers in this belt of Punjab and even in neighbouring Pakistan could have never imagined that Bt cotton could be hit by a virus. The white-colour bug, considered deadlier than the American bollworm, is now threatening the cotton crop in Punjab and elsewhere. At least 25 per cent of the crop is already destroyed.

Global crop protection chemicals major, Dupont, has admitted that there is currently "no perfect solution" to deal with the new bugs attacking Bt cotton crops across the country.

Agriculture officials in Bathinda say that pesticides sprayed in recent weeks have not rid the crop of the mealy bug. The Punjab government has sent a report to the central govenrment saying the mealy bug problem was there but was "under control".

September 2, 2007
Source: Economic Times

HR

Govt to formulate manpower road map for aviation sector

To identify HR challenges faced by the rapid growth in the aviation sector, the government has set the ball rolling to draw up an aviation sector manpower plan for the next 20 years. The plan of action is not only to create an aviation manpower pool within the country for meeting the growing needs of the domestic industry, but also to position India as an HR sourcing hub globally.

A detailed study of the industry’s manpower requirements, including a road map for creating a pool of technical and management professionals, is expected to be completed by October this year. The ministry has roped in CII, which will soon appoint a leading consultancy firm to undertake the study.

September 1, 2007
Source: Economic Times

PSEs beat private sector in mid-level salaries

Public sector enterprises (PSEs) may have fence-sitters in their senior management rungs, but these enterprises still have enough to keep their flocks together at the junior management level. The Central Public Sector Enterprises (CPSE) salaries are way ahead of the compensation dished out in the private sector to junior management staff, and this is across all verticals.

The salary differential remains reasonably high for the first 6-7 years of service, but things start to change after that. This is due to the fact that the rate of progression of salaries in CPSEs is gradual as the ratio between the entry-level salaries and that of the CEO is to be maintained at about 1:4 in line with the specified norms.

This was highlighted in a presentation made by Standing Conference of Public Enterprises (SCOPE) on its recommendations for salary and benefit review. The recommendations based on a study by the global HR consultancy — Mercer — propose a paradigm shift in the approach to the establishment, implementation and review of salary management practices in CPSEs at higher levels.

August 31, 2007
Source: Economic Times

Central govt may give 6% DA hike

The central government employees have something to cheer about. The government is proposing to hike their dearness allowance (DA) entitlement by 6% — from 35% to 41%. The Union Cabinet is expected to take up the proposal in its meeting on Thursday, a source said.

The proposed hike would be applicable on a retrospective basis from July 1. The proposal also entails a raise in dearness relief (DR) for pensioners. The government may have to bear an additional burden of Rs 4,000 crore with the hike.

The Centre had last revised DA in March by 6% over the existing allowance of 29%. It had also approved DR to pensioners at the same rate.

The increase in DA by the Centre is likely to put pressure on state governments to do the same for their employees.

August 30, 2007
Source: Economic Times

Petroleum/Energy

Oil exploration cos seek changes in merger policy

Oil exploration companies including Reliance Industries Ltd have sought modifications in the proposed extension policy which seeks to merge exploration phases of offshore blocks under NELP three and four rounds thereby giving these companies additional two years to undertake activities.

The exploration companies have cited technical hitches in implementing the proposed policy. Industry sources said the recently formulated policy falls short of intent to address the unforeseen situation of non-availability of offshore rigs in the international market.

September 1, 2007
Source: Hindu Businessline

Power

UP to take steps to improve power situation

The Uttar Pradesh government has chalked out an ambitious plan to increase the power production by 10,000 MW within four years, state Power Minister Ramveer Upadhyaya has said.

He said government was working on plans to meet the shortage of power and to make the state self reliant in power production. "The foundation stone of two thermal power units, one at Harduaganj and other at Pariccha would be laid by UP Chief Minister Mayavati within this month," Upadhyaya said.

The capacity of each power unit, to be developed by BHEL, would be 500MW, he said.

Upadhyaya added that another 1000 MW power unit would be set up at Anpara in private sector. "To meet the shortage, the state has to take 3500 MW of power from center at present," he said.

September 4, 2007
Source: Economic Times

Power Grid to set up 13,000 km of transmission lines

Public sector transmission major Power Grid Corporation of India (PGCIL) will use the proceeds from its initial public offer to set up 13,000 km of additional transmission lines under 15 projects identified for completion during the Eleventh Plan.

The total investment in the projects is expected to be in the region of Rs 13,000 crore.

Post issue, government’s holding in the company will fall to 86.36% from present 100%. The offer, set to open on September 10 and close on September 13, has been priced in the band of Rs 44-52 a share of face value Rs 10.

September 1, 2007
Source: Economic Times

Banking & Finance

Bankers ask govt to allow Islamic Banking in India

International and domestic banks led by Indian Banks Association (IBA) on Wednesday pitched for allowing Islamic banking, estimated at over 1.2 trillion dollars and growing at 15 per cent annually, in India.

"It (Islamic banking) is an idea, whose time has come. The IBA will study the concept, but will wait for the regulatory framework by the RBI to run it," IBA Chairman M B N Rao told reporters, on the sidelines of an international conference on Participatory Banking. The two-day conference is being organised by Indo-Arab Economic Cooperation Forum.

Islamic finance is based on the main concept of outlawing fixed-interest returns and speculation, as well as forbidding investments in what Islam considers vices such as dealing in alcohol, pork or gambling.

August 31, 2007
Source: Economic Times

BoB reduces interest rate on housing loans by 0.5 percent

Public sector Bank of Baroda has reduced interest rate on new housing loans by 0.5 per cent for individuals, non-resident Indians and person of Indian origin.

The new rates will be effective for all new housing loans sanctioned on or after September 1, the bank said here in a statement.

In case of floating rate option for loans up to Rs 20 lakh, the rates vary from 10-11 per cent for different periods from five years to 25 years and for more than Rs 20 lakh, the rates vary from 10.25 per cent to 11.5 per cent.

For fixed rate option, the rates for loans up to Rs 20 lakh will vary from 11.25 per cent to 12.5 per cent for different periods from five to 15 years.

For more than Rs 20 lakh, the rates vary from 11.50 per cent to 12.75 per cent, the bank said.

August 31, 2007
Source: Economic Times