EMBASSY OF INDIA DOHA
Vol. II No. 9	MONTHLY NEWSLETTER	September 15th, 1999

SENIOR IOC OFFICIAL VISITS QATAR

The General Manager for Business Development of the public sector Indian Oil Corporation Limited, Mr B.M.Bansal, visited Qatar recently, along with a senior official of BP Amoco and held discussions with officials of the  Qatar General Petroleum Company (QGPC) on matters of common interest.

Several leading Indian companies like the Indian Oil Corporation (IOC), ONGC Videsh Limited and Bharat Heavy Electricals Limited (BHEL) are keen to involve themselves in Qatar. IOC, which has set up a regional office at Dubai, is looking at possibilities in the downstream sector in Qatar, while BHEL is looking at opportunities in the power, oil and gas, fertilizer and petrochemical sectors, for supplying compressors, pressure boilers and wellhead engines.

BHEL BAGS PROJECT IN OMAN

The Bharat Heavy Electricals Limited (BHEL) has won a project in the Sultanate of Oman for putting up a 1x (90-120) MW unit for expansion of the power plant at Rusail.  The total project value is approximately US$27 million.  The Rusail project is particularly significant for BHEL, as with this order it has made a break-through in large-sized gas turbine generators in Omani market.  At present BHEL is executing the prestigious 3x30 MW power plant project order for Petroleum Development Oman (PDO).

DUBAI GROUP PLANS RETAIL CHAINS IN INDIA

The Dubai-based Landmark group, which owns a 120-shop retail chain in the Gulf, plans to invest over Rs 1 billion in setting up a similar chain of retail stores in India. The NRI-owned group, with sub-brands like Splash, Home Center, Baby Shop and Shoe Mart, which are well known in the Gulf countries, is starting off in India under the `Lifestyle’ brand. The country’s first Lifestyle store, a 30,000 square feet retail outlet, was opened in Chennai in May this year. Two more are planned, in Hyderabad and Bangalore in a year’s time. The group also plans to expand to Mumbai, Delhi and Pune, once the southern retail outlets are in place. Apart from India, the group is looking at a presence in countries like Cyprus, Lebanon, the United Kingdom and Spain.

ONIDA TO SWITCH ON GULF-SPECIFIC CTVS

The Rs 6.88 billion Mirc Electronics, owner of the Onida brand of television, aims at conquering the Gulf market with a specially-designed product range. It has also outlined plans to enter the highly competitive UK market. ``Onida is today a leading brand in the Gulf market. Despite a stiff competition from several multinationals, Onida colour television sets are sold at a premium. Onida’s products focus on the likes and sentiments of the local population there, while the CTVs sold by MNCs are the same across the globe,” G Sunder, executive vice president, Mirc Electronics said. ``The 21-inch CTV for the Gulf region sells in silver and champagne gold colour with steel knobs. And the 14-inch CTV is green in colour and the model number is 786,” he said, adding, ``The number 786 is considered auspicious by the Arab community.” Mirc Electronics plans to hike its exports in the current financial year to 150,000 CTVs from 25,000 in FY ’99. While in FY ’99, the company manufactured 450,000 television sets, it has set a target of 700,000 units for the current financial year. Besides Onida, Indian television brands such as BPL and Videocon are doing well in the Gulf owing to price advantage over MNC brands.
 

INDIA READY TO CONSIDER LOWER TARIFFS

India is willing to accept lower bindings on industrial tariffs on a quid pro quo basis in  a new round of international trade negotiations at World Trade Organisation. India's position regarding the issue is that if a new round is launched post- Seattle, it may be desirable to have renegotiations on the entire issue of market access, which includes tariffs for agricultural products. India is, however, not in favour of any form of standstill agreement on applied tariffs for the next two to three years, according to government sources. A government analysis has found that the trade-weighted tariff averages from all sources for two major groups - textiles, clothing and leather and rubber and footwear - are as high as 12.1% and 7.3%, respectively. There are several tariff lines that attract much higher peak customs duties, particularly for the items of export interest to developing countries. In other words, the average level of 3.8% tariff in the post-Uruguay round period for developed countries is not a proper indication of the market access allowed to the exports from developing countries.

INDIA ADVOCATES HARMO-NISING TRIPS AND CBD ON BIODIVERSITY

India has advocated harmonizing the approaches to WTO's Trade-related Intellectual Property Rights (TRIPS) and the UN Convention on Biological Diversity (CBD) to ensure conservation of natural resources, equitable sharing of benefits from their use and prevent bio-piracy. "While the preamble to the TRIPS agreement recognises Intellectual Property Rights (IPR) to be private rights, the CBD  recognises it as the sovereign right of nations over their own biological resources, " India said in a paper circulated in the General Council of the World Trade Organisation (WTO) earlier this year on IPR. The paper also suggested that commercial exploitation of innovations based on biological resources be allowed only on the condition that the innovators share their benefits through material transfer agreements or transfer of information agreements. The CBD underlines the importance of equitable share of benefits arising from the use of these provisions to meet the requirements of developing countries. India has proposed that such an obligation should be incorporated in Article 29 of the TRIPS Agreement, which deals with conditions of patents application, requiring a clear mention of the biological source material and the country of origin. Apart from this, the patent application should be open to public scrutiny, the paper said, adding that this would help prevent bio-piracy. 
 

MINISTRY SETS UP FOREIGN INVESTMENT IMPLEMENTATION AUTHORITY

The Ministry of Industry has set up a Foreign Investment Implementation Authority to work as a single-point interface between investor and government agencies for obtaining necessary approvals, sorting out operational problems and maximizing opportunities through a partnership approach. The authority will also resolve difference in perceptions and initiate multi-agency consultations. It will make recommendations on any issue relating to speedy implementation of FDI (foreign direct investment) approvals and provide transparency in government functioning regarding FDI projects. The authority will set up a fast track committee to review and monitor mega projects and this will have representatives of various ministries, agencies and state governments. The committee will prescribe a time frame within which various approvals or permissions are to be given on a project-to-project basis. 

HONDA, GODREJ PROPOSALS AMONG Rs 4.25 BN FDI CLEARED

Japanese auto giant Honda Motors has been allowed to bring in investment of Rs 1.83 billion to set up a wholly-owned subsidiary for two-wheelers among Rs 4.25 billion worth foreign investment proposals cleared by Foreign Investment Promotion Board (FIPB). The board also permitted Tech Pacific of Mauritius to buy out Godrej & Boyce's stake in their marketing joint venture for Rs 1.15 billion, according to FIPB sources. 43 proposals, including those of US telecom equipment giant Motorola, GE India and  music company BMG Crescendo were cleared by the board on Monday. Honda's proposal is to set up manufacturing facility for motorcycles and scooters in the range of 50 cc to 250 cc, the sources said. They said the Japanese company had got the No Objection Certificate from its two-wheeler joint ventures Kinetic Honda and Hero Honda for setting up the new subsidiary. 

FIPB sources said Honda proposal had projected export worth 18 million US dollars of Honda brand products from India in five years. Godrej would sell its 50% stake to its equal partner in Godrej Pacific Technology, which markets office automation and equipment, the sources said. Motorola has been allowed to take over the entire stake in software company Cross Check Technology at two million dollars (Rs 86 million). The US company would also bring in Rs 80 million as additional equity in the company. A proposal by Entry Line Holdings of UK to buy out Indian partners in Usha Beltron was also cleared. The UK-based company would bring in 5 million dollars to buy the equity and for subscribing to preference shares. GE India, the Indian arm of General Electric of the US, was allowed to set up a wholly-owned company for sourcing GE's worldwide requirements.

The US company would invest 4.25 million dollars in the venture. Music and video major BMG Crescendo was allowed to increase stake in the company from 51% to 70%. FIPB sources said Reliance group withdrew applications to international multilateral agencies to invest in Reliance Capital Asset Management Ltd.
 
 

READYMADE GARMENT EXPORTS UP 11.6% IN FIVE MONTHS

Readymade garments (RMGs), which account for almost 13% of the country's aggregate exports, clocked a 11.6% increase in the first five months of the calendar year, grossing $2,367.7 millions, as compared to January-May 1998. Provisional figures compiled by the Apparel Export Promotion Council (AEPC) here shows that the country exported RMGs numbering 651.50 million pieces, up 9.04% in terms of volume as compared to the corresponding period of 1998. Exports to the US during the period under review have amounted to 136.7 million pieces valued at $729.1 millions. Compared to January-May 1998, there has been an increase of 14.3% and 7.62% in terms of quantity and value respectively. In the case of the European Union (EU), India's exports during January-May 1999 have amounted to 313.8 million pieces valued at $878.3 millions, an increase of 9.3% and 9.65% in terms of quantity and value respectively. 

A particularly noteworthy feature is a substantial spurt in exports to Canada, which grew by 35.17% in volume terms and 19.63% in value terms. Exports of Indian RMGs to Canada during the period have amounted to 31.9 million pieces valued at $98.1 millions. India's exports of RMGs to restricted countries (where exports are governed by quotas) amounted to 482.4 million pieces valued at $1,705.5 millions, an increase of 12.11% in terms of volume and 9.29% in terms of value. 

INDIAN TYRE EXPORTS SURGE 22%, PRODUCTION UP BY 9% IN JULY

Aided by the revival in the global automobile industry, India's tyre exports have registered a robust 22% growth in July, according to the Automotive Tyre Manufacturers Association (ATMA). Exports of tyres in July rose to 1,98,974 units as against the figure of 1,63,497, shipped during the same period last year, figures compiled by ATMA revealed. The total shipment of tyres during the April-July period, however, was up only by 10% with an average monthly export of 1,76,704 tyres, as compared to 1,60,542 recorded during the same period last year. While the shipments of truck and bus tyres recorded an impressive 22% growth in July to 1,43,480, exports of passenger car wheels fell by 65% to just 1,999, as compared to 5738 tyres shipped during a year-ago. With the robust export growth of truck and bus tyres in July, which accounts for a major portion of industry's turnover, the overall exports during the first four months have risen up to 15% as compared to a negative growth of 53% witnessed in the passenger car wheel segment during the same period. Another segment that witnessed sharp rise in shipment was light truck tyres, registering a growth of 40% to 33,736, from 24,171 wheels exported during July 1998. 

GOVT TARGETS RS 6.5 Bn EXPORTS FROM EPZS

The Commerce Ministry has set an ambitious target of Rs 6.5 billion of exports from export processing zones for fiscal 1999-2000. This will be a 22% growth over the previous year despite a modest growth in the overall export trend from the country this year. The EPZs have already exported goods worth over Rs 1.05 billion in the first three months of the year. ``A series of steps have been taken by the ministry for liberalising the regulatory environment, focus on strengthening of infrastructure in zones and an improvement in export outlook have helped these zones increase exports,’’ the Ministry officials said. 

The highest export growth will be expected from SEEPZ (Santacruz Electronics Export Processing Zone) which will account for around Rs 40 billion of exports, followed by Noida EPZ (NEPZ) with about Rs 10  billion and Madras EPZ (MEPZ) with Rs 7 billion. 

The sector that accounts for the highest exports from EPZ units is the tried and tested gems and jewellery sector followed by the electronics and software sector. The other large contributors to the export effort by the EPZ units are pharmaceuticals, textiles and garments, engineering goods, plastic and rubber goods. Officials said that of the over 3,500 export-oriented units (EOUs) which have come up in the country since liberalisation, one-sixth have been in Tamil Nadu, followed by Maharashtra, Gujarat, Andhra Pradesh and Karnataka. As  against this Delhi has bagged only 91, Uttar Pradesh 96 and Haryana 204 accounting for the EOU growth in North India. Punjab’s share stands at 116, Rajasthan 198 and Chandigarh 1, completing the picture in the northern belt. 

In investment terms, out of the total investment of Rs 641.08 billion attracted through EOUs till now, one-eighth has gone to Gujarat, followed by Orissa, Tamil Nadu, Maharastra and Karnataka. Orissa stands out in this list primarily because just 40 units account for investments amounting to Rs 81.37 billion, which indicates that the average size of each of the EOUs in the state is Rs 2 billion, as against Rs 190 million in Gujarat by the same parameter.
 

GOVT PLANS DECANALISATION OF PETRO PRODUCT EXPORTS

The Indian Government is contemplating decanalisation of exports of petroleum products. Currently, both imports and exports of POL products are canalised through Indian Oil Corporation Ltd (IOC), which is the sole agency in the country. The need for a decision to this effect has risen owing to the self-sufficiency levels being achieved in the domestic production of certain oil products. With the commissioning of the refinery by Reliance, the first private sector company to do so, mostly motor spirit (petrol) and, to some extent, diesel would be surplus once it is fully stabilised and production levels increased. 

While discussions are on over this proposed move, no final decision has been taken on it so far. Already, the Government has allowed sourcing and import of crude to joint and private sector refineries under actual user-licensing policy. The country already exports products to some of the neighbouring countries like Bhutan wherein IOC has a total of 11 retail outlets and Bharat Petroleum Corporation Ltd (BPCL) 10. 

The blue-print chalked out for the dismantling of the administered pricing mechanism (APM) governing the domestic oil sector broadly states that both imports and exports of all petroleum products, except crude (slop crude and crude condensate), natural gas liquid (NGL), aviation turbine fuel (ATF), motor spirit (MS) and high speed diesel (HSD) would be decanalised during the  dismantling period. This process took off in the previous fiscal, i.e., 1998-99, and is likely to be completed with full deregulation by 2002.

IOC EXPORTS ITS SERVO TO MALAYSIA

The IOC’s flagship brand, Servo lubricants, has entered the Malaysian market by the despatch of the initial consignment of 14 kl Servo automotive lubricants and 1 MT of Servo industrial greases to that country recently. Servo, which is India’s largest selling lubricants with a market share of 42%, has already made significant entries in Nepal, Kuwait, and United Arab Emirates. In Bangladesh, it has recently finalized Barrak Ltd as its distributor to market Servo lubricants. Other lucrative export markets being tapped by the IOC include Sri Lanka, Kazakhastan, Bangladesh.

IOC PLANS RS 3.50 BN INVESTMENT IN TN

Indian Oil Corporation Ltd has proposed to make investments worth Rs. 3.50 billion in Tamil Nadu. The company is in the process of setting up LPG bottling plants at Ennore (capacity 70,000 mtpa) and Erode (44,000 mtpa). These will cost Rs. 520 million and Rs. 420 million respectively, according to an IOC press release. The company also wants to put up bottling plants at Ilayangudi and Mannargudi, each with a capacity of 12,000 mtpa, at a total cost of Rs.180 million. In addition, Rs. 880 million would be spent on bottling plants at Chenglepet and Dharmapuri. Each of these plants would have a capacity of 44,000 mtpa. An LPG import terminal would be put up at Ennore at a cost of Rs. 1.5 billion, the release added. 

ONGC OFFERS STAKE TO IOC, GAIL IN
DEEP SEA VENTURES

National Upstream oil giant ONGC has offered a stake to the IOC and GAIL in its deep-sea exploration ventures. Sources disclose that indication of hydrocarbons have emerged in the third deep-sea well that the ONGC has drilled recently off the Krishna Godavari coast in the east. The deep-sea find has boosted the prospects of these two companies picking up a stake in the exploration block. The deep-sea areas are now the frontier areas of oil exploration.  Recent discoveries of major oil fields in the deep-sea areas off the West African coast and in the Gulf of Mexico have strengthened the case for oil exploration in the deep sea. Apart from the blocks that it has already been given the up-stream oil major will also be bidding for blocks under the NELP. Krishna Godavari is emerging as an area of promise as the ONGC has recently struck some oil in the on-land coastal area close to the shallow waters off the coast. The wells are being drilled in such a manner that the oil in the shallow waters of around 8 to 9 m depth can be reached from the on-land area. 

ONGC MAKES INDIA’S FIRST DEEP-WATER
OIL DISCOVERY

Prospects of deep-water oil exploration in India have brightened with the ONGC striking oil in a well in the Krishna Godavari offshore area. This is the first deep-water find in the country. The initial results are very positive. The well where oil has been struck is located 24 km north-east of the Amalapuram coast of AndhraPradesh. The well was spudded on 14 April at a depth of around 300 metres, using ONGC owned drill-ship Sagar Vijay. The latest depth of about 1000 metres was reach on 22 July. ONGC plans to go as deep as 2000 metres. Initial testing has indicated oil flow at the rate of 3600 barrels a day and gas flow at the rate of 41 000 cubic metres a day. 

PETRONET PLANS FOUR NEW PIPELINES

The PIL (Petronet India Ltd) has proposed four new major pipeline projects in the country through its JV/subsidiaries. The PIL has drawn up elaborate plans to increase the capacity of two existing pipelines, including that of Haldia Mourigram. The PIL is also considering constructing a central pipeline originating from Jamnagar for evacuating or transporting the products of Reliance, Essar Refineries, and the  Koyali Refinery of the IOC. The four new pipe-lines are the Bina-Jhansi-Kanpur pipeline, the Chennai-Trichy-Madurai pipeline, the Paradip-Rourkela-Ranchi-Allahabad pipeline, and the Bhatinda-Jalandhar-Jammu pipeline. The PIL also plans to increase the capacity of the Haldia Mourigram and the Kandla Bhatinda pipelines.

CORPORATE NEWS

SWAGELOK PLANS INDIAN OPERATIONS

Swagelok, the US-based fluid system components' company, has unveiled plans to launch its operations in India. According to the company, India represents one of the key thrust areas in its Asian operations. ``The Asian region is currently the fastest growing market for Swagelok products and services. With the launch of our products and services, we can now offer Indian industry the Swagelok advantage of significant process performance improvements,'' said Mr. Rod C. Fallow, Vice-President, Marketing of Swagelok. Swagelok manufactures and markets the entire range of fluid system components that include high quality tube fittings, quick connects, valves, high performance process instrumentation, ball valves, tube welding systems, micro-fittings, face seals and high pressure valves. The entire range of over 8,500 Swagelok products will now be available to the industries in India. The company's products are used by various sectors, including oil and gas, power generation, semi-conductors, chemicals, petrochemicals, pharmaceuticals and biotechnology. Swagelok is already a supplier to ONGC, Bharat Petroleum, Enron, MICO, Hindustan Petroleum, Gas Authority of India Ltd, Pepsi Foods and National Thermal Power Corporation. 

L&T PLANS TO SET UP ARM FOR POWER PROJECTS

Larsen & Toubro Ltd (L&T) is planning to set up a subsidiary for undertaking new power projects. ``The idea is to invest Rs. 1 billion in the equity of the subsidiary and set up power projects worth about Rs. 30 billion,'' Mr. A.M. Naik, Managing Director & Chief Executive Officer said. The company will route future investments in the power sector through this subsidiary. Mr. Naik said that the company could consider offering a minority stake in its subsidiary to multinationals. The company had appointed two international consultancy organisations -- Boston Consulting Group and William Mercer -- for reviewing business portfolio and revalidating strategic plans. 

CORE HEALTHCARE SETS UP PLANT IN MYANMAR

The Ahmedabad-based Core Healthcare Ltd has set up a plant for the Government of Myanmar for manufacturing I.V. fluids, tablets (like paracetamol) and penicillin capsules. The $ 5-million plant, located near Yangon (Rangoon), is the company's first international project to be fully commissioned and certified. Mr. Sushil Handa, Chairman and Managing Director of Core Healthcare, said: ``The Yangon pharmaceutical factory is one of the most modern healthcare facilities which will provide the highest quality I.V. fluids and other pharmaceutical products to the people of Myanmar.'' 

The company has also bagged a project order to set up an  I.V. fluids manufacturing plant in Malaysia. This apart, a joint venture, `Core Pharmasanoat', has been established in Uzbekistan for manufacturing I.V. fluids and tablets. This venture has been set up with Uzpharmprom, a local Government organisation. 

SONY, OTHER GLOBAL AUDIO COs INCORPORATE INDIAN CHIPS

SHARC, the first major product out of India under the $1.23 billion Analog Devices’ alliance with Indian software development houses, has been incorporated into audio products by four leading companies in the world, including Sony. Denon Electronics, TAG McLaren Audio and Madrigal Audio Laboratories are other audio product vendors to announce products incorporating the SHARC. The SHARC  has also been certified by Digital Theater Systems Inc (DTS), California, a leading worldwide supplier of digital sound systems for motion pictures. The vendors will use the SHARC-based Melody chipsets for decoding 32-bit digital audio. The SHARC is the audio engine of the chipset that auto-detects and decodes multiple sound programmes in real time. Analog Devices’ Indian technology partner in developing the ADSP 21065L is Jasmin Infotech, Chennai, an outfit employing about a dozen or so and only into software for audio products. The ADSP 21065L, a 32-bit digital signal processor (DSP) is the world’s highest performance 32-bit  general  purpose  DSP available today, according to 
Analog  Devices. 

NEWS IN BRIEF

ORISSA BECOMES FIRST STATE TO FULLY PRIVATISE POWER DISTRIBUTION

Orissa has become the first state in the country to wholly privatise power distribution. The state-owned distribution and transmission concern, Grid Corporation of Orissa (Gridco), on Wednesday signed an agreement with AES Distribution Corporation (AESDC), a joint venture of US-based AES Corporation and Mumbai-based Jyoti Construction,  for the sale of a 51% stake in Central Electric Supply Company (Cesco), the last of the power distribution companies in Orissa still in the public sector. Gridco has got about 14% price premium in offloading the 51% in Cesco. Earlier on April 1, Gridco had sold majority stakes in three other regional distribution companies to BSES Ltd at a premium of 50%. Gridco, however, continues to hold a 39% stake in each of the four distribution companies with the balance 10% being held by the employees. 

AESDC will manage the central power distribution zone with the reconstitution of the new boards, which will now have five directors from AESDC, three from Gridco and one from the employees. AESDC will nominate the managing director while the Gridco nominee will be the chairman of the distribution company. With the conclusion of the deal with Gridco, AES Corporation has emerged as a significant player in the post-power reforms period in the state. AES is already putting up two thermal units of 250 MW capacity at Ib Valley in western Orissa. AES has also picked up a 49% stake in the state-owned Orissa Power Generating Corporation, which has two coal-fired units of 210 MW at Ib Valley.

EXIM BANK EXTENDS RS 200Mn LINE OF CREDIT TO NAMIBIA

The Export-Import Bank of India and Offshore Development Company (ODC) signed an agreement for EXIM Bank's line of credit of Rs 200 million to ODC, Namibia. EXIM Bank's credit will facilitate import of capital goods, industrial manufacturers and related services by Namibian companies from India.  EXIM Bank will support by way of finance, information and advisory services and joint ventures of Indian companies in Namibia. This line of credit is expected to open up opportunities to tap the potential that exits for cooperation between Namibia and India.

MARKET FOR CTVS POISED TO TOUCH 5-M MARK NEXT YEAR

Year 2000 may prove to be a landmark year for the country’s colour TV (CTV) market with sales in terms of units expected to nudge the five-million mark. In the last fiscal, 1998-99, CTV sales in the country as a whole were pegged at around 3.6 million units. This fiscal, sales are expected to grow by a minimum of 35%, which would make for total sales of around 4.86 million sets. If the growth rate is a higher 40%, then the 5 million mark will be crossed in 1999-2000. This might not be an unrealistic assumption, given that in the first half of the current calendar year (Jan-June), with the cricket World Cup, CTV makers reaped a bumper harvest with sales zooming 58%. The general buoyancy in the economy combined with marketing activities of CTV majors is expected to keep the momentum going in the second half. CTV sales have been rising very sharply in the last two years. Last fiscal, the growth was an impressive 38%. Growths of 30% plus are expected to be sustained in the next couple of years too. 

According to conservative estimates, there are around 18-19 million CTVs in India, of which over 8 million sets are over five to eight years old. These sets are coming up for replacement. People are also upgrading from 20-inch CTVs to 21, 22 and 29 inch CTVs. The price differential between CTVs and black and white (B/W) TVs is also narrowing. Last year, the price of a 14-inch CTV was around Rs 10,000. This year, it is down to Rs 7,500, while the price of a 20-inch B/W TV is about Rs 5,000. In fact, according to the industry, while in absolute numbers, B/W TVs represent a big market, it has been ‘de-growing’ in the last two years. CTV demand is also expected to rise, given that with higher disposable incomes and purchasing power, there is a higher demand for these products from small towns and rural areas.