EMBASSY OF INDIA DOHA |
| Vol. II No. 2 |
MONTHLY NEWSLETTER |
February 15th, 1999 |
THE THIRD INDO-QATAR JCM TO TAKE PLACE SHORTLY
The third meeting of the Indo-Qatar Joint Committee for Economic and Technical Cooperation is likely to meet shortly in New Delhi. The second meeting was held in 1988 while the first one was held in 1984. The joint committee was constituted in April 1984 in order to promote, facilitate and strengthen the economic and technical cooperation between the two countries. The third meeting is likely to discuss ways and means to further boost the bilateral trade, which presently exceeds $225 million annually, formation of joint ventures in either country, promoting mutual investments, besides cooperation in the hydrocarbons sector, cooperation in the health, science and technology, sports and manpower sectors.
CMS ENERGY-BIRLA TEAM TIES UP WITH RASGAS FOR LNG
THE CMS Energy-Aditya Birla Group-led consortium, which has bagged the $1.4 billion Ennore LNG terminal cum power project, has tied up with Ras Laffan Liquefied Natural Gas Company (RasGas), Qatar for the required LNG supplies.
The consortium, called Dakshin Bharat Energy, comprises CMS Energy, Grasim Industries Ltd of the AV Birla group, Unocal Corp, USA, Woodside Petroleum Ltd, Australia and Siemens Project Ventures GmbH, Germany. It had earlier emerged as the preferred bidder to finance, build, own and operate the 2.5-million tpa LNG terminal and the 1,886-MW power project at Ennore proposed by the Tamil Nadu Industrial Development Corporation (Tidco), which had invited international bids for the project. CMS Energy, Grasim Industries, Siemens and Woodside Petroleum hold 20.75% equity stake each in the Consortium while Unocal holds the balance 17% stake.
The consortium also aims to build a pipeline network to provide pollution-free natural gas throughout the state. Demand for natural gas in the next 15 years in Tamil Nadu for new industries is estimated at about 11 billion cubic metres per annum. The LNG Terminal cum power project will come up adjacent to the upcoming Rs 9.5 billion Ennore port project.
INDIA, FRANCE SIGN AGREEMENT ON RAILWAYS
India and France have agreed to promote greater cooperation in the Railway sector. Under an agreement signed in New Delhi there will be increased investments and joint ventures between Indian and French firms. Increasing the capacity of rail lines, safety measures, track maintenance and modernization are the main areas to be covered under the mutual cooperation.
INDO-VIETNAM JCM CHALKS OUT PLANS TO BOOST BILATERAL TRADE
India and Vietnam concluded their Joint Commission meeting in New Delhi on February 2nd with the signing of the Agreed Minutes by the Deputy Prime Minister and Foreign Minister of Vietnam H.E. Mr. Nguyen Manh Cam and External Affairs Minister Mr Jaswant Singh. The focus of the JCM was on giving further impetus to the economic dimensions of bilateral relations and to enhance the quantum of trade beyond the current level of US $ 120 million. Both sides also signed a work plan of cooperation in agriculture for the years 1999-2000. A five-member business delegation accompanied the Vietnamese dignitary to India and showed interest in the coal, software, construction and petroleum sectors.
INDIA, TRINIDAD AND TOBAGO SIGN TAXATION AGREEMENT
India and Trinidad and Tobago signed an agreement for avoidance of double taxation during the visit of Prime Minister, Mr. Atal Behari Vajpayee from 8-9 February 1999. The agreement, which is seen as yet another initiative to further strengthen bilateral ties with the Caribbean Island, provides impetus for mutual flow of investments, technology, trade and services between the two countries.
CII-CROATIAN CHAMBER OF ECONOMY SIGN MOU
A Memorandum of Undertaking was signed between the CII and the Croatian Chamber of Economy at a meeting with Mr Nenad Porges, the Minister of Economy of Croatia and the accompanying official and business delegation, which visited India recently. The Croatian minister urged the Indian Industry to explore all possibilities of JVs and collaborations especially in power generation, tractor manufacturing and pharmaceutical sectors.
INDIA TO SEEK FAO HELP ON AGRICULTURE PACT
India will seek assistance of the Food and Agriculture Organisation (FAO) for negotiations during review of the WTO agreement on agriculture due this year-end, agriculture secretary Mr Kamal Pandey has said.
Stating that many of the developing nations were not familiar with what was expected of them in the emerging scenario, he said government support and guidance had led to complacency in the agriculture sector. The developed and developing nations differed widely in their perceptions and third world nations would have to proceed on the issue assuming the industrialised nations had not fully comprehended the effect of integration of the international markets on self-sufficiency and self-reliance in food production of the under-developed countries, he said.
INDIA DRAGS EU TO WTO ON LINEN EXPORTS
India has once again dragged the European Union to the WTO against the anti-dumping duty imposed on its bed linen exports. India had earlier moved the dispute settlement mechanism of the WTO on the issue of repeated anti-dumping proceedings initiated by the European Union members on unbleached cotton grey fabrics (UCF). India still has the case on UCF pending at WTO despite the EU dropping the anti-dumping proceedings against UCF imports from New Delhi.
The Indian commerce ministry sources said going by the nature of reply to India's queries, India would most probably request the WTO to set up a dispute settlement body. The issue was taken up at the WTO a couple of months ago, they said. EU had imposed definitive anti-dumping duty ranging from 2.6% to 24.7% on bed linen imports from India in December 1997.
ADB FUND FOR INFRASTRUCTURE DEVELOPMENT
The Asian Development Bank (ADB) has agreed to provide 400,000 dollars technical assistance for development of urban and environmental infrastructure sector as part of its aid to India. The assistance provided under the urban and environmental fund is aimed at developing the projects in the sector as well as policy reform to support private sector involvement in urban infrastructure development. The fund would also help in engaging the private sector in financing and implementing commercially viable urban infrastructure projects.
INDIA, WORLD BANK SIGN AGREEMENT
India has signed an Agreement with the World Bank for over $543 million assistance for Andhra Pradesh Economic Restructuring project, which targets the poorest areas of the state. The project will provide urgently needed resources for Health, Education, Nutrition, Roads, Irrigation and Public Enterprises Reforms. The agreement was signed by Mr V. Govindarajan, Additional Secretary (FB), Ministry of Finance and Mr Edwin Lim. Country Director, World Bank.
GOVT TO COME OUT WITH PAPER ON ECONOMIC REFORMS
The government will come out with a paper, detailing the second phase of economic reforms during the budget session beginning shortly. The paper would list out the form, content, and various modalities for launching the second generation of economic reforms for enabling India to become an economic superpower in the next decade. The next phase would come along with the process of fiscal consolidation. India would utilize the current phase of economic recession worldwide for taking corrective measures. The emergence of the Euro would benefit Indian exporters, as it would stabilize the currency market. The Euro would also emerge as a powerful alternative to the US dollar, which would reduce the primacy of the greenback in world trade. India could also maintain significant reserves of the Euro to take advantage of its strength.
INFLATION RATE AT 5-YEAR LOW
Finance secretary Mr Vijay Kelkar said the inflation rate based on the wholesale price index had dropped to a record five-year low of 4.4% for the week ended January 16. In comparison to the WPI-based inflation rate of 4.4%, the latest available figures show that the rate of increase in prices based on the consumer price index for industrial workers (CPI-IW) stood at 15.3% in December 1998. The inflation rate based on CPI-IW decreased by over four percentage points in December from an all-time high of 19.7% in November 1998. The food articles' index declined by 0.5% to 439.4 from 441.6 while the index for non-food articles declined by 0.3% to 387.8 from 389.1. The index for fuel, power, light & lubricants remained unchanged at the previous week's level of 374.1. The index for manufactured products declined by 0.1% to 332.9 from 333.3.
RISE IN INDIA'S RICE AND GARMENTS EXPORTS
India's rice exports have almost doubled from 1.61 million tonnes in 1997 to 2.97 million tonnes in 1998, according to the latest central government estimates. Exports to the United States, Australia, Russia, Nigeria, the Philippines and Poland have plunged wildly in 1998, while sales to Bangladesh, Japan, Malaysia, South Africa, Angola, and Ivory Coast have shown a sharp increase in the same period.
Among the GCC countries, Kuwait has lowered its purchases to 40,179 tonnes in 1998 from 57,801 tonnes in 1997, while Saudi Arabia has brought down its imports marginally from 3,94,899 tonnes in 1997 to 3,76,255 tonnes in 1998. The United Arab Emirates has increased its imports from 62,854 tonnes to 73,479
tonnes in 1998.
Indian readymade garment exports have touched $ 5.05 bn in 1998, registering an increase of 3.81% in dollar terms as against $ 4.86 bn dollars in 1997, the Apparel Export Promotion Council, the apex body for apparel exports in the country, has said. In dollar terms, the exports increased by 4.35% in the case of United States and 9.03% for Canada but declined by 6.24% for the European Union.
68% JUMP IN SOFTWARE EXPORTS
India's software exports grew by 68% and grossed Rs 9.5 billion in calendar year 1998 as against Rs 5.64 billion during 1997, thus registering a record annual growth of 52% in dollar terms, according to a survey done by the National Association of Software and Services Companies (Nasscom).
As per Nasscom survey, a major opportunity exists in IT enabled services segment. In 1998 alone, this emerging industry, employed more than 23,000 people. It is expected that by the year 2008, IT enabled services would provide jobs to about 1.1 million people and generate revenues close to $18 billion, both for export and the domestic market and in the next few years, India may emerge as a global leader in IT enabled services.
The study also indicates that due to increased government spending towards IT in the domestic market, as well as increase in sale of PCs, the domestic software market will fetch a record revenue of almost Rs 82 billion in 1999-2000. This would be almost a record 57% cent increase in the domestic market. The survey also indicates that for the fiscal year 1999-2000, software exports from India may cross Rs 175 billion or $ 4 billion.
MARINE EXPORTS TO EU TO RISE SHARPLY
India's exports of marine products to the European Union (EU) is likely to go up sharply this year with 59 firms securing clearances for shipment according to the commerce ministry sources. Exports of marine products to the Union were worth $100.71 mn during April-November 1998 as against $76.14 mn during the same period in 1997. In volume terms, increase in exports during the first eight months of the current fiscal was 7641 tonnes from 24273 tonnes during the corresponding period last year.
OVERSEAS INVESTMENT NORMS RELAXED
THE Government has liberalised the policy on overseas investments by waiving the requirement of foreign exchange neutrality in the form of dividend and royalty within a period of five years for proposals under the fast-track route of the RBI and the normal route also.
Currently, overseas investments from the balance in the Exchange Earners' Foreign Currency (EEFC) account and investments out of the global depository receipts (GDRs) do not have to fulfil the norm of neutralizing the investment amount through inward remittances over five years.
The easing of these norms under the normal route also is aimed at encouraging Indian corporate houses to globalise rapidly, according to the Finance Ministry. The Committee on Capital Account Convertibility had recommended that the stipulation of repatriation by way of a dividend within a specific time frame should be removed.
However, the dividend and other entitlements due to Indian promoters would require to be repatriated as per the extant Exchange Control Regulations, the Government has said.
FIPB CLEARS 38 PROPOSALS WORTH RS 27.50 BN INVESTMENT
The Foreign Investment Promotion Board (FIPB) cleared 38 proposals involving foreign direct investments (FDI) worth Rs 27.50 billion, which include Enron's proposal to bring in $452.7 million as foreign equity in the 1,444-mw second phase of the Dabhol project in Maharashtra.
The FIPB also cleared a proposal of British Gas to increase the equity capital of its holding company for investing in energy, gas and power sectors in the country. Clearance was also given to the Virdian Group of Ireland to set up a holding company in the power sector with FDI worth Rs 225 million.
CABINET CLEARS IOC-MARUBENI JV, AIRPORT CORPORATISATION
The Cabinet Committee on Economic Affairs (CCEA) has approved a proposal of the state-owned Indian Oil Corporation (IOC) to form a joint venture with Japanese multinational Marubeni for a 301 mw power project in Panipat in the northern state of Haryana in which IOC and Marubeni will have 26% equity each, with the rest being shared between the financial institutions and associates.
The cabinet has also decided to corporatise five major airports at Delhi, Mumbai, Calcutta, Chennai and Bangalore. The move is aimed at financial and management restructuring of these major airports in the country. Clearance was also given for the Rs 250 bn technology upgradation fund to modernise the textile industry, especially the weaving and processing sectors.
TECHNOLOGY IMPORT REGIME EASED
The Cabinet Committee on Economic Affairs has further liberalized the technology import regime by allowing projects appraised and funded by financial institutions (FIs) to import technology through the automatic route without any restriction. Projects (both public and private) appraised and funded by FIs will be allowed to import technology through the automatic route without any restrictions. The liberalized technology import regime would facilitate inflow of appropriate technology with procedural simplifications and greater delegation of powers of approval.
CENTRE TO FLOAT RS 1BN FUND TO BOOST INFOTECH INDUSTRY
The Centre will float a Rs 1 billion venture capital fund before the end of the current fiscal to boost the information technology (IT) industry. The Small Industries Development Corporation (Sidbi) and ICICI will contribute Rs 400 million and Rs 200 million respectively, while the balance will come from union department of electronics (DoE) and IT industry. The government would soon formulate a Limited Partnership Act on the lines of the US Act for easy availability of funds to the IT units. The objective is to facilitate more funding through venture capital fund to entrepreneurs.
FOREIGN CAPITAL IN FILM INDUSTRY
In a bid to inject modern technology into film production and other allied activities, information and broadcasting minister Mr Pramod Mahajan has announced that foreign capital would be allowed in the film industry. Stating that the rules in this regard would be framed soon, he said though government does not expect much inflow of foreign capital in the sector, the development would help in modernisation of film industry as also export of films. He said the Sony Corporation had already evinced interest to invest funds in film making in the country on a smaller scale.
ENRON-ONGC-RELIANCE TO INVEST $900 MN IN PANNA-MUKTA OILFIELDS
Enron-Reliance-ONGC combine will pump in about $900 million more in the next two to three years to expand operations at its Tapti and Panna-Mukta oil fields, out of which about $130 million would go into the expansion programme of the Panna fields alone.
The Tapti and Panna-Mukta hydrocarbon blocks were awarded to the joint venture between Enron, ONGC and Reliance in 1997 and have been operational for about a year now. Enron and Reliance hold 30% stake each in the joint venture while the remaining 40% is with ONGC. The Panna field produces both oil and gas while the Tapti field produces only gas.
Enron was very keen about India as an emerging energy market and had long- term plans for the country. The company has made a whopping investment plan of about five billion dollars for the next five years in the areas of power and petroleum.
OIL STRUCK IN UPPER ASSAM
Oil India Limited (OIL) has struck a bonanza in the deeper horizon in Moran, Upper Assam. Oil was discovered in the Eocene formation in Moran through the first exploratory well drilled in the Moran south structure. The producing horizon is 4,673 metres deep and there are a few more promising sands above the Zone about 60 km from OIL's Nahorkatiya oilfield. This constituted a major breakthrough in this area since its discovery in the mid- 50s and would not only provide a fresh lease of life to Moran's oilfields but had also opened an unique vista for exploration of deeper horizons in the neighbourhood.
GUJARAT, WORLDTEL SIGN MOU FOR $100M IT NETWORK
The Gujarat government signed a MoU with UK-based WorldTel Ltd to implement an $100 million information network in the state, linking the state capital with all the district headquarters and taluka towns.
The Gujarat Chief Minister Mr Keshubhai Patel announced several incentives for setting up information technology (IT) units. The incentives included capital subsidy at the rate of 25% to eligible new IT units on total eligible capital investment, turnover incentive connected to productivity, liberal loans from financial institutions (FIs), exemption from electricity duty, captive power generation incentive -- besides sales tax holidays in all projects in the next five years, exemption from stamp duty and registration charges on allotment of land and built up area.
He said a special connectivity incentive would be granted by GoG in the form of subsidy up to 50% of the rental on `leased line data connectivity'.
TRACTABEL PICKS UP MAJORITY IN TN POWER PROJECT
The Belgian multinational in power sector, Tractabel, has picked up majority stake in two ongoing short gestation power projects in Tamil Nadu. Both the projects belong to the Hyderabad-based Sujana Group, and are to be implemented as naphtha-based combined cycle power projects, at Tuticorin and Gangaikondan in Tamil Nadu. Tractabel owns and operates plants worldwide to the extent of 30 000 MW. The two projects in Tamil Nadu, each of 105 MW capacity is being implemented with two special purpose companies and have been awarded through international competitive bidding. Both the projects of Rs 3.5 billion each are also to achieve financial closure shortly. Fuel supply agreements have already been signed with the IOC and power purchase agreements have been initiated with the Tamil Nadu Electricity Board.
AUSTRALIAN POWER FIRM PICKS 25% IN CHENNAI UNIT
Australia's Energy Equity Corporation has acquired a 25% stake in 200 MW Basin Bridge power project on the outskirts of Chennai. The stake has been picked up from the GMR Vasavi group, who along with US-based CMS Energy is the original joint promoters of the project. With this stake, Energy Equity will have an effective 25% stake, the GMR Vasavi group 26% while CMS Energy will hold the balance 49%. Energy Equity has paid $23 million for the stake through investment in a holding company in Mauritius. The Indian promoters together with Energy Equity will have a controlling interest in the project. The project operates on low sulphur fuel oil provided by HPCL and has already commissioned two units ahead of schedule. The power station comprises four units of 50 MW each and the Tamil Nadu Electricity Board has just provided an escrow cover for the project.
HMT TO EXPLORE JV POSSIBILITIES
Industry ministry has directed state-owned Hindustan Machine Tools (HMT) to explore possibilities of joint venture formation for its watch division. During a recent performance review meeting of heavy industries, Minister of State for Industry, Mr Sukhbir Singh Badal also directed HMT to expedite the process of forming subsidiaries of its machine tools, watches and tractor business groups.
He said the formation of subsidiaries would enable the company to pursue flexible growth strategies to successfully cope with increased competition. It would also help them to increase their financial strength while at the same time they would continue to enjoy the brand equity provided by the HMT name
SIEMENS FORAYS INTO SOLAR ENERGY
Electronic Hi-Tech Components Ltd, has entered into a joint venture with California-based Siemens Solar Industries to set up 1 MW photovoltaic production facility at Nashik at an estimated cost of Rs 90 million. The Indian venture at Nashik will be the fifth joint venture of Siemens. Earlier it has set up similar facilities at Germany, Portugal, Brazil, and California.
IBM INDIA, APTECH TIE UP FOR E-BUSINESS
IBM Global Services India and Aptech have announced a strategic e-business solutions partnership. The alliance covers a host of activities such as education, knowledge management, migration of legacy applications and development of web-enabled solutions based on IBM's e-business technology. Under the strategic alliance, IBM and Aptech would be offering courses in IBM products such as Net Commerce, Firewall, VA Java, Lotus Notes and concepts like Internet security and web administration.
IBM and Aptech would be able to combine their respective complementary strengths to bring a wide range of e-business solutions to the Indian and global marketplace, officials said. The e-business industry is expected to generate revenues worth $300 bn by 2002, which promises a huge market.
NIIT TARGETS GLOBAL LEADER STATUS BY 2002
NIIT Ltd plans to emerge as the world's number one information technology (IT) training company by the year 2002. NIIT, with a turnover of Rs 6.48billion and a market capitalisation of over Rs 40 billion, is already among the top 10 IT training companies in the world. The company has identified the creation of an integrated enterprise wide information technology (IT) training solution-EMPOWER-IT - for corporates. NIIT has also identified a series of international companies for possible acquisition. It has been scanning the global market for companies in the $50-100 million range.
PIRELLI TO INVEST $ 500 MN IN INDIA
Pirelli Tyres, the Italian tyre major, is all set to enter the Indian market by the first half of the year 2000. The company will make an initial investment of $500 mn towards its Indian operations. The company is learnt to be weighing out the options of both 100% subsidiary and a joint venture. In case, the company finalizes its plans to set up a 100% subsidiary, the initial investments would go up to $700 mn. Pirelli, at present, has a technical tie-up with a India's major company Birla Tyres for manufacturing radial tyres. The company will manufacture passenger car radial tyres and radials for multi-utility vehicles once it enters India, sources said. The Italian tyre major proposes to roll out about one-mn tyres per year for the first three years and double it later. It will also export tyres from India to neighbouring countries where there is a demand for tyres.
INDIA SELF-RELIANT IN NUCLEAR POWER: AEC CHAIRMAN
The Atomic Energy Commission Chairman Dr.R.Chidambaram says that India is now self reliant in nuclear power technology. He said that the work on building two 500 megawatt power plants have already begun in Tarapur and this is for the first time such big plants are being built up with indigenous technology. Mr. Chidambaram said that the gestation period for power plants has been greatly reduced and the plant load factor has also now gone upto 73%. He said we have uranium and the country is making heavy water needed for running these plants. Dr. Chidambaram said, the technology for converting Thorium of which the country has huge reserve into Uranium 233 for use in plants as fuel is also being developed.
TWO PRIVATE SATELLITE PROJECTS CLEARED
The Cabinet Committee for Foreign Investment (CCFI) today cleared the proposals of Ispat Telecom and Hindustan Technologies Pvt. Ltd. to launch, own and operate their own satellites. Hindustan Technologies' proposal involves a multi- purpose satellite, HindSat, to be located in the Indian Orbital Slot. This satellite is proposed to be used for rural telephony and value-added services, including Internet and distance education.
The project cost is estimated at Rs 10.80 billion with the equity component being Rs 3.60 billion. NRI investors will hold 25% equity, foreign equity holding would be 24% and the rest will be held by Indian entities.
Ispat Telecom's proposal envisages a multi-purpose satellite for communications and broadcasting activities. The geostationary orbit satellite project is expected to cost Rs 34.40 billion with a 3:2 debt-equity ratio. This project will have a 49% foreign equity component. | 
