Tracking India Business and Economy News: SEZs continue to attract investor interest

Weekly reports on Indian economy and business

• Government Policy & Infrastructure
• Sector Specifics
• Economy

Those juggling expenses and bank balance statistics, high housing-related EMIs and higher real estate prices, might raise an incredulous eyebrow – but inflation seems to be taking a downward swoop since April. Meanwhile, SEZs continue to attract investor interest, political debate notwithstanding.

- Chillibreeze Business Research Team

Government Policy & Infrastructure

India and the US on Friday inched closer to concluding an agreement to operationalise the civil nuclear deal but "some work" still needed to be done after the second day of high-level talks.

Foreign Secretary Shivshankar Menon and US Under Secretary of State Nicholas Burns held detailed discussions on the proposed 123 agreement with an aim of sorting out differences on various aspects, particularly the reprocessing right. The two sides also held marathon technical-level talks focusing on nitty gritty that would govern the agreement, like fuel supplies, sources said.

"The talks were positive," a source said, adding there was forward movement in the negotiations. "But there is still some work to be done," the source said. The talks will continue on Saturday. Both sides are keen to conclude the agreement as early as possible.
Burns also discussed the issue with External Affairs Minister Pranab Mukherjee, National Security Adviser M K Narayanan and Minister of State for External Affairs Anand Sharma.

June 01, 2007
The Economic Times

US committed to nuclear deal with India

The United States on Friday said "some technical issues" have delayed progress on an agreement to operationalise the civil nuclear deal with India but it is clearly committed to the initiative. "I can't give you a sense on the final timing, but, look, the government is clearly committed to it (nuclear deal).

We understand that the civil nuclear agreement not only is important, but it's also a template for dealing with other countries," White House Spokesman Tony Snow told reporters here.

He was responding to a query on whether the '123 Agreement' would be finalised during the meeting of President George W Bush and Prime Minister Manmohan Singh during the G-8 Summit in Germany next week. "... any time you have an agreement this big and this ambitious, you're going to run into some technical issues that make progress a little more halting than you'd like it to be.

June 01, 2007
The Economic Times

I-card for expats to be mandatory from next year

All expatriates living in the United Arab Emirates (UAE) will be issued multipurpose identity cards from next year. "Registration with the authority and the obtaining of ID cards will become obligatory for expatriates older than 15 years from the beginning of next year," Darwish Ahmad Al Zarouni, director general of the Emirates Identity Authority (EIDA), was quoted as saying by Gulf News.

By mid-2008, electronic scans will be taken of both eyes as part of the enhanced security measures. The card will eventually replace the driving licence, labour, residency and health cards. It will also act as an e-gate, ATM card and e-passport when crossing into other Cooperation Council for the Arab States (GCC) countries.

"The validity of the card will be that of the residence period. Once a resident's visa is cancelled, his or her card will be deactivated automatically," Al Zarouni said.

The cost of the card has been fixed at 100 dirhams annually.

May 31, 2007
The Economic Times

Sector Specifics

Energy

Indian power show on global stage

It’s an Indian power show in the global energy arena. After having bought power company Globeleq Americas for $568 million in partnership with Israel Corp, India’s DS Construction is forming a joint venture (JV) with the Israeli firm to acquire power companies in Peru, Canada and Africa.

The JV will also bid for power projects in the country, including ultra-mega power projects (UMPPs) in Jharkhand, Maharashtra and Orissa. Globeleq has assets in Tanzania, Cote d’lvoire and Kenya with a power generation capacity of over 500 mw.

DS Construction director (commercial) ND Mehra confirmed the JV was being incorporated to acquire power assets in India and abroad. Both the partners will have an equal equity stake in the JV. “The JV will also be interested in Globeleq’s remaining assets in Africa, in the event it decides to liquidate them,” he said.

On the recent $568-million acquisition of Globeleq Americas, Mr Mehra said his company and the Israeli partner plan to finance the transaction through equity capital and debt financing. A special purpose vehicle will be incorporated jointly, which will be the holding company. The equity investment is expected to be around 20% and the balance will be raised through debt financing. The deal is likely to get approval from the authorities by the end of this month, he said.

DS Construction, which is a multinational infrastructure developer, has recently entered the power business. In March 2006, it bagged the 1,000-mw Naying hydro-electric power project in West Siang district of Arunachal Pradesh. In January this year, it bagged its second power project, the 260-mw Kutehr Hydro unit in the Himachal Pradesh, where it is both developer as well as operator.

June 04, 2007
The Economic Times

Future Energy's SEZ may get $500-m investments

Overseas manufacturers of renewable energy generation equipment are likely to invest over $500 million (Rs 2,000 crore) in the special economic zone that is coming up near Chennai.

The Rs 1,300-crore, 670-acre SEZ that is being developed by Future Energy Zone India Ltd (FEZ) received the approval of the Tamil Nadu Cabinet on Saturday. It is coming up "off GST-road" some 45 km from Chennai city centre. FEZ has been promoted by Malavalli Power Plant Ltd and the Kamala group of Mumbai.

The Chairman of Malavalli Power, Mr K. Krishnan, told Business Line today that the SEZ would have two components— a technology park and an industrial park. The technology park will feature facilities for R&D, education and training, laboratories and even convention centres. The industrial park is where the manufacture of renewable power equipment will happen.

Among the larger investments that are expected to come into the park is that of an Italian company Elosole, a manufacturer of photo voltaic cells. Elosole was promoted by Mr Krishnan, but has several large companies as shareholders.

Mr Krishnan said that Elosole alone could invest anywhere between $250 million and $500 million (Rs 1,000 crore and Rs 2,000 crore) in the SEZ. Other manufacturers would invest at least $300 million, he said.

Why Chennai? Mr Krishnan said that the SEZ developers were looking for an area which had strengths in both mechanical and chemical engineering. They came up with a shortlist — Chennai and Pune. But "Chennai has a port." The Tamil Nadu Government is also very pro-active, he said.

May 28, 2007
The Hindu Businessline

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India & The World

Brown to strengthen ties with India

Exactly a month from Sunday, James Gordon Brown will take over as Britain's new Prime Minister and he has already pledged to accord ``very high priority'' to strengthening and deepening relations with a ``pulsating, dynamic India.''

The 56-year-old son of a Church of Scotland preacher was recently described by a leading British newspaper as a ``blank sheet of paper'' because he has not given any specific outlines of the policies he will follow at home and abroad. But his excitement about India is palpable.

The Prime Minister-designate recalls that he had been brought up on stories of India's great history, its struggles, achievements and ``essential greatness.'' An uncle in his family was a Professor of electrical engineering at IIT and introduced him to India ``from my youngest days.''
Five months ago, Mr. Brown, said to be a reluctant traveller, paid his first visit to India and has come back hugely impressed. ``I had a wonderful visit. India is, indeed, a very dynamic country which is moving ahead very fast,'' he told PTI here.

How much importance would his Government give to Britain's ties with India? Undoubtedly it will be a high priority,'' Mr. Brown said recalling the “astonishing speed of change and progress in India as it claims its rightful place in the emerging new world order.''

May 28, 2007
The Hindu

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Economy

There seems to be a sustained downward trend in inflation, which fell to 5.06% in the week ended May 19, after a steady decline for four weeks. The continuous decline in inflation was noted by the Cabinet Committee on Prices that reviewed the price situation in the country, finance minister P Chidambaram told reporters after the meeting.

Inflation fell to 5.77% in the week ended April 21 and has been on a decline since then. Economists, however, projected a higher rate of inflation.

“I expected inflation to stand at around 5.2%. It could be that the food prices didn’t rise or that the prices of non-ferrous metals have shown a small decline, or a combination of both factors that has resulted in lower inflation than expected,” Economic Advisory Council to PM member Saumitra Chaudhuri said. Crisil’s DK Joshi said he expected inflation to hover around 5.1%.

June 01, 2007
The Economic Times

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