London, October 9
Listing financial sector reforms and infrastructure as India’s “two biggest priorities,” Prime Minister Manmohan Singh has exuded confidence of getting political support on these issues.

“Financial sector reforms and an increase in investment in infrastructure are our two biggest priorities,” he said in an interview published in Financial Times today, coinciding with his visit to Britain.

About the obstacles in the way of reforms, he said: “Politics is the art of the possible and I have to live with the situation I inherited. There have been difficulties, but I have not given up hope. We have not completed half the term.” The CPM is opposed to lifting FDI caps in the insurance sector, currently set at 26 per cent, while the RBI is ring-fencing banks from takeover until 2009.

He said, “we cannot achieve our social and economic objectives unless there is reform of the insurance and banking system. Infrastructure requires long-term investment and our banking system is essentially short-term oriented.” Sustaining a growth rate of 8-10 per cent would hinge on “massive investments” in infrastructure that would require India to mobilise long-term capital more effectively than was currently possible in a short-term debt market, he said.

He also defended the creation of special economic zones which have been attacked by Left wingers in the Congress and fiscal hawks in the Finance Ministry.

His defence of SEZs came days after Congress President Sonia Gandhi warned that farmers needed better protection from abuses of compulsory land acquisition provisions included in the new SEZ Act that came into force in February.

“Special economic zones have come to stay. There are certain aspects, such as the use of prime agricultural land, which must be addressed, but in some states such as Punjab where there is no vacant land, that may be the only way,” Dr Manmohan Singh said.

The newspaper observed that Sonia’s intervention had added to the considerable policy uncertainty surrounding the future of SEZs, a central plank of the government’s strategy for attracting domestic and foreign investment into labour- intensive manufacturing.

The Finance Ministry has warned of revenue losses from the proliferation of tax-exempt zones, while economists say that, with an average size of 4 sq km, the 267 SEZs so far approved will be sub-scale and uncompetitive.— PTI 

New Delhi, October 9
Swedish telecom major Ericsson has emerged the lowest bidder followed by Nokia to supply equipment estimated at a cost of over Rs 20,000 crore to BSNL for its mega expansion of mobile services.

If selected after due process of evaluation, Ericsson would be awarded 60 per cent of the contract while Nokia the remaining 40 per cent for 45.5 million lines expansion project. The financial bids were opened today.

“We have emerged the lowest bidder based on the numbers. Evaluation process is on and BSNL’s decision will be final,” P Balaji, Vice-President (Marketing and Strategy), Ericsson (India), said.

Asked if Ericsson had quoted a price of $109 per line for the tender, Mr Balaji declined to give financial details citing confidentiality clause in the tender process.

When contacted BSNL Director (Finance) S.D. Saxena said the entire process of evaluation and finalisation could take up to three weeks before the contract was awarded.

Besides Ericsson and Nokia, three other global players - Siemens, Motorola and ZTE - were also in the race for the prestigious project.

But Motorola and ZTE were not called for the meeting today as they did not qualify the technical evaluation, BSNL sources confirmed.

BSNL would be implementing the project in phases spread over the next three years. About 25 per cent of the additional lines would be for next generation (3G) GSM lines while the remaining would continue to be for 2.5 G telephony.

Meanwhile, the Prime Minister’s Office has sought clarifications from the Department of Telecom (DoT) regarding alleged lack of transparency in the BSNL’s tender.

“The specifications of the above tender have been repeatedly changed to protect the interest of some foreign firms,” a letter from the PMO to the DoT says.

French telecom major Alcatel has tied up with the ITI, which is getting contract from BSNL under reserved quota for PSU and of this Alcatel would indirectly get 40-45 per cent share.

In other words, Alcatel would be getting a major contract without even participating in the tender process. According to PMO, Alcatel’s share has been valued at about Rs 2,000 crore. — PTI

US-based Motorola today challenged in the Delhi High Court, its disqualification from the bidding process for the supply of equipment to BSNL, but the court declined to stay the tender process.

Fixing November 2 as next date of hearing on Motorola’s petition, a Division Bench of the High Court, comprising Acting Chief Justice Vijendra Jain and Justice Kailash Gambhir issued notices to the Centre and BSNL.

Motorola was disqualified on technical grounds on October 7 and not allowed to participate in financial bids for the 45.5 million line GSM contract of BSNL at an estimated cost of over Rs 20,000 crore. — PTI

New Delhi, October 9
Customers are losing over Rs 10,000 crore annually in the purchase of gold and gold jewellery as the impurity levels range from 13.44 per cent to 44.66 per cent. It implies that after paying around Rs 8,800 per 10 gm of gold, one may get only 5.5 to 8.7 gm of pure yellow metal.

In a nationwide survey of jewellery shops conducted in 16 cities, including Delhi, Chandigarh, Jaipur, Ahmedabad, Mumbai, Surat, Chennai, Hyderabad, Pune, Cochin, Kanpur, Lucknow, Allahabad, Bangalore, Agra and Bhopal, the industrial chamber Assocham has found that 90.7 per cent of total 162 samples were short in purity.

While the average shortfall stood at 13.44 per cent, the highest shortage stood at 44.66 per cent.

The annual consumption of gold and gold jewellery in India is over 750 tonnes annually, estimated to cost around Rs 70,000 crore. With the onset of festival seasons, the consumers are likely to lose huge amount, industry experts apprehended.

According to state-owned MMTC, India's leading importer of gold, "Adulteration is not restricted to gold articles but also silverware." It has recently found that silver offerings at the Vaisho Devi shrine contained 50-55 per cent impurity.

Since the prices of gold and silver continue to remain at higher levels than last year, there is more incentive for impurities as recent sample checks by the Bureau of Indian Standards (BIS) have found.

Having forecast a further rise in gold prices, MMTC is encouraging the buyers to ask for jewellery with hallmark stamping to ensure purity. 

New Delhi, October 9
While the domestic industry is opposed to 100 per cent of foreign equity in the growing retail sector, the majority of the domestic firms are keen on allowing 49 per cent FDI in a caliberated manner, said industry chamber Assocham here today.

The chamber’s proposal comes to provide the domestic players in the organised retailing at least two to three years’ time to face the competition from giant foreign players in the retail sector.

In a note submitted to the Commerce and Industry Ministry, Assocham has suggested the government to first consult the domestic industry before finalising and announcing entry of overseas mega malls in the country.

“Consultation with the domestic players is needed before any policy announcement is made,” the Chamber stated.

In response to the Assocham questionnaire circulated to the domestic players, one of the leading retailing companies which runs value-buying chains throughout the country, wanted a period of two to three years for the domestic industry to consolidate.

Many of the retail firms in the domestic sector favoured export commitments on the FDI investment, by as much as 20 times. They also wanted FDI investment in back end infrastructure like cold storage so that the supply chain becomes smooth.
— UNI 

Chandigarh, October 9
ICICI International Banking Group will soon introduce “Easy Receive Account”, a savings account for resident Indians who receive remittances from abroad. This account will cater to the domestic banking needs while offering additional benefits like a zero balance if one remittance is received in a quarter, besides a higher daily limit of Rs 50,000 for cash withdrawal at any Visa affiliated ATM.

This was stated by Mr Manish Mishra, Head (Remittance Business), ICICI International Banking Group, in an interview with The Tribune here.

He said the account would be available in all 630 branches of the bank across the country, with special focus on Punjab, Gujarat, Mumbai and Kerala. “Free cash withdrawals at the correspondent bank’s ATM (three withdrawals a month); free one-time health check up at leading diagnostic centres and remittance coupons for free remittances sent through select exchange houses will be offered in this product,” he said.

Mr Mishra said India was a well-banked market and bulk of remittances was through the banks. “Almost 90 per cent of the payouts are through banks in India, unlike in the Gulf, where majority of payouts are through non-banking exchange houses. ICICI is a leading player in the remittance market with a market share of 20 per cent. Remittances worth $23-24 billion are made through our bank branches,” he said.

He said ICICI had presence in 13 overseas locations and planned to expand its overseas presence. “We have just included Australia, for receiving remittances. Maximum remittances (almost $3. 5 million) are received from the UK and Canada. Money from the USA is received across the country while remittances from Gulf and West Asia are received in Kerala,” he added. 

Mumbai, October 9
The US Exim Bank today agreed to extend guarantee for up to 85 per cent of the $7.2 billion (Rs 33,500 crore) loan that Air-India requires for replenishing its fleet with 68 new aircraft from Boeing Co.

Air-India would meet the remaining 15 per cent of the cost of acquisition through commercial loans from The SBI and ICICI Bank.

Of the 68 aircraft to be acquired from Boeing, 18 would be 737-800 for its budget airline, Air India Express, now operating mainly to the Gulf, 15 777 300 ER (extended range), eight 777 LR (long range) and twenty-seven 777 for medium range, an Air-India press note said here.

While the US Exim Bank guaranteed loan would be at sub- libor rates, the commercial borrowings would be at above-libor rates.

“This clearance provides for a final commitment in respect of 17 aircraft and engines to be delivered from November this year to December, 2007,” the release said.

With the acquisition of the new aircraft, Air-India proposes to start flights to new destinations, including Washington, Houston, Beijing, San Francisco, Taipei, Melbourne and Sydney.

Seven of the Boeing 777 aircraft — three 777 LR and four 777 ER— would be delivered between February and June, 2007, enabling Air-India to start non-stop flights to the US and Australia. The remaining 51 aircraft are to be delivered between January, 2008, and February, 2012.

The Indian Government would provide sovereign guarantee for 85 per cent of the loan guaranteed by the US Exim Bank.

With the acquisition of the 68 aircraft, Air-India would have one of the youngest fleet.

Today’s approval follows meetings by Air-India team led by its Chairman-cum-Managing Director V. Thulasidas with the top brass of the US Exim Bank in the first week of August this year.— PTI 

London, October 9
After the success in IT outsourcing, India is poised to become a clinical research offshoring hub for world’s leading pharmaceutical companies.

Clinical Research outsourcing (CRO) is a young industry worth about $118 million a year in India, but it is growing fast. Analysts predict that it will be worth $380 million by 2010 as American and European companies look to India to cut the cost of drug development.

With costs ranging between $800 million to $1.2 billion from patenting to approval, reducing the length of expensive research means more time to sell the drug before the patent expires and it can be copied by others.

“It’s not so much that India has a cost arbitrage,” Dr Vasudeo Ginde, President and MD of iGate Clinical Research, a Nasdaq-listed company, was quoted as saying by “The Times”.

“It is that India can save significant time to market. You don’t know what is going to be a block-buster when you launch a drug. But even if you save three months, that might mean $100 million or $50 million in sales - in which case, it is worth it.”

Most of the big pharmaceutical companies, including Astra-Zeneca and GlaxoSmithKline, conduct drug trials in India. “It demonstrates the growing importance that India is playing in the sector,” Mr Utkarsh Palnitkar, head of the firm’s Indian Pharma practice, said.

“It (India) is becoming a significant player in R & D initiatives, manufacturing and licensing as well as clinical trials. The big European companies have subsidiaries in India, but now they are looking at how better to leverage the India advantage,” Mr Palnitkar said. — PTI 

New Delhi, October 9
The country’s richie-rich club expanded to 83,000 millionaires last year, witnessing a whopping 19.3 per cent growth rate — the second highest in the world, a latest study shows.

Indian high net worth individuals (HNWIs) held $290 billion in assets at the end of 2005, representing 3.8 per cent of total Asia Pacific HNWI wealth, according to Asia-Pacific Wealth Report released by Merrill Lynch and Capgemini today.

HNWIs are people with net financial assets of at least $1 million, excluding their primary residence and consumables.

“Economic conditions have remained robust in India with an impressive GDP growth rate and strong performances in the industrial and service sectors and the country’s economic landscape and robust stock markets have been the drivers of wealth creation in the country,” Merrill Lynch Global Private Client Head for India Rahul Malhotra said.

The India growth rate in the HNWI population is the second highest among all countries and markets globally and the emerging markets in India and China are offering new potential for the wealth management business, the report said.

Indian HNWIs allocated 31 per cent of their portfolio in equities, while 20 per cent of their assets were in alternate investments, which is above South Korea at 5 per cent but below the rest of the Asia Pacific markets. — PTI