India to strengthen its hydropower portfolio

India to strengthen its hydropower portfolio with 60,000 MW addition by 2025

India, with its enormous demand for power to serve its ever-growing economic expansion, is


planning to get an additional 60,000 MW of electricity from various hydro-power projects by the end of

2025, says India's Minister of State for Power, Jairam Ramesh. The Minister, during his recent visit to

Nepal, announced that the country seeks to generate 50,000 MW of hydro-power through its domestic

resources by 2025, while sourcing the rest of 10,000 MW from Bhutan.

River-intensive Indian state of Arunachal Pradesh alone would produce 25,000 MW of entire domestic

hydel power production, while the other 25,000 MW would be generated from new hydel power projects in

Jammu and Kashmir, Sikkim, Uttarakhand and Himachal Pradesh.

India is already into buying power from its neighbour, Bhutan, after it helped the latter develop new hydropower

projects, generating 1,400 MW of electricity, with another 1,100 MW of hydel power generation in

the pipeline.

India has also entered into a memorandum of understanding (MoU) with the Government of Myanmar to

develop hydro-power projects in the Chindwin basin, with the 1,200 MW Tamanthi project identified as the

first one to deliver. India is also engaged in two large transmission projects in Afghanistan and partnering

with Sri Lanka on setting up of a 500 MW thermal plant in Trincomalee as well as on grid-interconnection.

Power flow between India and Nepal is also expected to go up once the latter start to generate 10,000 MW

of hydel-power within the coming decade and trade it with India. India is also likely to raise the proportion of

hydel power in the hydel-thermal mix from the present 25:75 to a more desirable 40:60 over the coming 25

years
.

Global turmoil to have minimal impact on India

Despite financial crisis in the US market, India would continue to grow at high rate of 8% to 9%
in the next couple of years.
Chief economic advisor Arvind Virmani told  financial crisis will have a minimal direct impact on Indian
economy and it will grow at the projected rate of around 8% in 2008-09 and 9% in 2009-10.
The main reason behind the optimism is correction in the commodity prices in the international market,
because of the the slowdown in the global economy. The crude oil prices have already corrected to around
$ 100 per barrel from over $ 140 per barrel few weeks back. This will help bring down the inflation in the
country. Virmani said that by March 2009, inflation will be brought down to single digit from over 12% at
present.
However, the financial crisis will have some indirect effect on the Indian economy as it will lead to liqudity
tightening. This will lead to firming up of the interest rates, affect the inflow of foreign direct investment and
export of goods and services to an extent. But, Virmani said these will not have much effect on the growth,
as they can be addressed by tweaking the government policies.
Goldman Sachs also felt in the same manner. In a report, it said, "We believe the credit crisis, which
reversed the tidal wave of cheap foreign capital over the past few years, will have less of an impact on the
economy's fundamentals."
If the inflation is brought down to single digit, the government and the RBI can take measures to ensure
that liquidity crisis does not affect economy. Virmani said that India's financial system remained intact even
during the present crisis. This, he said would give confidence to the foreign investors, including the nonresident
Indians to invest in India.
Goldman Sachs pointed out India's external sector is holding well and various indicators suggest condition
is undercontrol. The financial sector, the report said, remained sound, mortgage are a fraction of total credit
and exposure to inflated real estate is small.

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India's mobile telephony segment to offer major scope for growth: ITU

According to the Geneva-based International Telecommunication Union (ITU), a leading UN
agency for information and communication technology issues, India's current mobile telephone
penetration rate of about 20 per cent and market liberalisation policies are some of the factors that may offer "great potential" for growth of telecom companies.
Further, according to ITU, while India had about 296 million mobile subscribers by end-July 2008, the world's second-most populous nation offers major scope for growth in terms of numbers. Also, market liberalisation in India has contributed majorly in spreading mobile telephony driven by increasing competitiveness and price reductions.
India's mobile telephony operators now compete for low-income customers and the Average-Revenue-Per-User in India has touched almost US$ 7, one of the lowest in the world, the data revealed.
The report also stated that developing countries like India and China are witnessing an upsurge in the number of mobile phone subscribers which may lead to growth in the numbers to four billion by the end of the year worldwide. The BRIC (Brazil, Russia, India and China – incidentally China, the world's largest mobile market, too has surpassed the 600 million subscriber mark by mid-2008) economies are expected to account for over 1.3 billion mobile subscribers by the end of 2008, owing to increasing impact in terms of population, resources and global gross domestic product (GDP) share.

A rich harvest from Kisaan Bazaars

Organised retail might be faltering in urban India, but is booming in rural India, going by the experience of DCM Shriram Consolidated Ltd’s Hariyali Kisaan Bazaar (HKB). Aimed exclusively at rural India, the company has seen sales from its 160 stores more than double in the last couple of years.

Average sales at an HKB store have gone up to Rs 5 lakh a day during the harvest seasons, while it is around a tenth of that during the lean season. That means the turnover of a single HBK store is over Rs 6 crore, annually, while the investment cost varies between Rs 2 crore and Rs 3 crore.

The growing popularity of HKB stores has also prompted banks and insurance companies to look at possible tie-ups to tap the rural customer. ICICI Lombard and HDFC Bank have already tied up with HKB for their products. Though he furnished few details, Ajay S Shriram, chairman & senior managing director, DCM Shriram Consolidated, said, “Banks and insurance companies get a ready customer base on a platter.”

Shriram said HKB’s retail model was developed exclusively for rural customers. “We have no intentions to bring it to urban areas; it has been designed for rural customers,” he said, adding that retail in rural India is commercially viable.

HKB not only sells products relating to agriculture like fertilisers and seeds, but also household items as 40% of rural India comprises those that are not engaged in farming, Shriram pointed out.

The success of HKB has also encouraged the company to launch pulses and masalas under its own Hariyali brand.

Tourism And Hospitality Industry in India

The Indian tourism and hospitality industry is on a roll, driven by a huge surge in both business and leisure
travel by domestic and foreign tourists. The year 2006 was not only a record year for India's inbound
tourism but was the fourth consecutive year showing a double-digit increase in foreign tourist arrivals.
Moreover, the growth of tourist inflows into India was well above world average, leading to a rise in India's
share in world arrivals from 0.37 per cent in 2001 to 0.53 per cent in 2006. Also, as noted by UN World
Tourism Organisation (UNWTO), the growth of the Indian tourism industry was instrumental in the
'emergence' of South Asia as a tourist destination.
Further, tourism is an important industry in the Indian economy contributing around 5.9 per cent of the
Gross Domestic Product (GDP) and providing employment to about 41.8 million.
Inbound Tourists
The flow of foreign tourist arrivals continues to grow in the current year. On the back of 14.3 per cent growth
in tourist arrivals in 2006 over 2005, foreign tourist arrivals grew by 12.4 per cent during the first ten months
of 2007 to reach 3.89 million as against 3.46 million during the corresponding period last year.
Along with the rise in foreign tourist arrivals, foreign exchange earnings showed a robust growth of 25.6 per
cent during January-October 2007 to touch US$ 6.32 billion as against US$ 5.03 billion during
January-October 2006. On the other hand, in the whole of 2006, earnings grew by 14.6 per cent over 2005
to total US$ 6.56 billion as against US$ 5.73 billion in 2005.
Outbound Tourists
With the economy growing consistently at over 9 per cent, increasing disposable incomes, a change in the
spending habits, liberalisation of exchange controls, increasing affordability due to numerous holiday
packages and cheaper air fares, outbound tourist traffic has been growing at a rapid pace.
The outbound travel market has been growing at an annual average growth rate of 25 per cent, with an
estimated 7 million people travelling abroad in 2006-07. Further, the United Nations World Tourism
Organisation (UNWTO) estimates this figure to reach 50 million by 2020.
Along with the rise in the number of Indians travelling abroad, both the total and per capita expenditure
spent abroad has been increasing. For example, according to the European Travel Commission, average
spend per trip of Indian outbound tourists has increased from US$ 611 in 2000 to US$ 822 in 2006.
Similarly, Euromonitor International estimates the outgoing tourism expenditure from India to grow to US$
21 million by 2011, representing a growth rate of over 25.7 per cent between 2006 and 2011.
Hospitality
The booming tourism industry has had a cascading effect on the hospitality sector with an increase in the
occupancy ratios and average room rates. While occupancy ratio is around 75-80 per cent, the average
increase in room rates hovered around 22-25 per cent (July-September 2007).
And with the continuing surge in demand, many global hospitality majors have evinced a keen interest in
the Indian hospitality sector. For example, over a dozen global hotel chains like the Hilton, Accor, Marriott
International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI) and InterContinental Hotels group
have announced major investment plans that would translate in to 65,000 additional rooms.
It is estimated that the hospitality sector is likely to see US$ 11.41 billion in the next two years. Also, India is
likely to have around 40 international hotel brands by 2011. Along with these large scale expansion plans,
international hotel asset management companies are also likely to enter India. Already, US-based HVS
International has firmed up plans to enter India, and industry players believe others like Ashford Hospitality
Trust and IFA Hotels & Resorts among others are likely to follow suit.
Online bookings
Travel portals are cashing in on the booming demand for hotel rooms. There has been a surge in hotel
booking on travel portals in the past 12 months. The online travel industry is a US$ 800-million industry in
India, that is, about 14 per cent of the entire travel industry.
According to Travel and Tourism research firm PhocusWright, the online travel market in India that is worth
US$ 1.3 billion in 2007, is likely to grow to US$ 2 billion by 2008.
Medical tourism
India is likely to become a major hub for medical tourism, with revenues from the industry estimated to grow
from US$ 333 million in 2007 to US$ 2.2 billion by 2012, says, a study by the Confederation of Indian
Industry (CII) and McKinsey.
The key "selling points" of the medical tourism industry are its "cost effectiveness" combined with the
attractions of tourism. Medical care, packaged with traditional therapies like yoga, meditation, ayurveda,
allopathy and other traditional systems of medicines, attract high-end tourists especially from European
countries and the Middle East.
Not only Medical Tourism, the scope for theme travel is vast in India with Adventure tourism, Heritage
tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism all having
tremendous potential.
Government initiatives
To unlock the huge potential in this sector, the Government has taken various initiatives for the
development of this sector.
Launch of Incredible India campaign to promote tourism both in domestic and international markets.
Recognition of spare rooms available with various house owners by classifying these facilities as
"Incredible India Bed and Breakfast Establishments"', under 'Gold' or 'Silver' category.
A new category of visa, "Medical Visa" ('M'-Visa), has been introduced which can be given for
specific purpose to foreign tourists coming into India.
Guidelines have been formulated by Department of AYUSH prescribing minimum requirements for
Ayurveda and Panchkarma Centres.
The Ministry of Tourism has tied up with the United Nations Development Programme (UNDP) to
promote rural tourism.
International Recognition
With the growth of this industry, international accolades have been flowing thick and fast.
India has been elected to represent South Asia on the Executive Council of UN World Tourism
Organisation (UNWTO), the highest policy making world tourism body represented by 150
countries. It is also set to head UNWTO.
The Association of British Travel Agents (ABTA) has ranked India as No.1 amongst the top 50
places for 2006.
The Incredible India campaign has been ranked as the Highest Recall Advertisement worldwide by
Travel and Leisure. It has also bagged the coveted PATA (Pacific Asia Travel Association) Grand
Award for Marketing. India also bagged two PATA Gold Awards for Cultural Tourism (Aranmula)
and Marketing Brochure (Kumarkom) awarded to Kerala Tourism.
The world's leading travel and tourism journal, "Conde Nast Traveller", ranked India as the numero
uno travel destination in the world for 2007, from fourth position in 2006.
India was adjudged Asia's leading destination at the regional World Travel Awards (WTA).
Bangalore-based Leela Palace Kempinski has been rated as the favourite business hotel in the
world in a Readers' Choice Awards by Conde Nast Traveller.

Insurance industry, major investor in equity markets

The life insurance industry was the largest investor in the Indian equity markets, ahead of foreign
institutional investors and mutual funds, according to figures released by the Life Insurance Council.
While the net inflow from life insurance companies into equity stood at Rs 55,000 crore till March 31, 2008,
foreign institutional investors and mutual funds invested Rs 53,403 crore and Rs 16,305 crore respectively.
Even for the five-month period from April to August this year, the insurance industry was the largest
investor in the equity markets, having made net investments worth Rs 20,000 crore during the period (when
foreign institutional investors have been net sellers).
Stabilising factor
Mr U. S. Roy, Managing Director and CEO, SBI Life, said Indian life insurance companies are the
stabilising factor in the capital markets, channelising retail investments into equity markets.
According to the Life Insurance Council, new business premium increased by 23 per cent to Rs 92,990
crore in FY 08, from Rs 75,400 crore in FY 07.
There is an increased demand for ULIPs, which accounted for over 80 per cent of the life insurance
business garnered in FY 08.
The total assets managed by the life insurance industry has gone up to approximately Rs 10,00,000 crore
till August this fiscal, from Rs 8,47,000 crore in FY 08, said Mr S. B. Mathur, Secretary General, Life
Insurance Council. The infrastructure investment also increased to Rs 90,200 crore.
'Health' potential
The life insurance industry sees tremendous growth opportunities in health insurance, as over 85 per cent
of the population is uninsured.
"In the post-detariffing scenario, the market has moved to sustainable pricing. The companies can now
reprice their products depending on the morbidity figures. Besides, in the present scenario of medical
inflation and the fact that 70 per cent of the total Rs 2 lakh crore spent on health comes out of the pockets
of the consumers, there is tremendous scope for long term health insurance provided by life insurance
companies", said Ms Shikha Sharma, Managing Director, ICICI Prudential Life Insurance Company.
Pension plans
The industry also sees itself as best suited to provide pension plans to all the sections of the society. "It has
become an increasingly attractive option with the current demographic scenario wherein the young
generation does not subscribe to provident funds", said Mr. Nandagopal, Chief Executive Officer, Reliance
Life Insurance.
According to the figures released by the Life Insurance Council, around 35 per cent of the new business
premium collected in 2007-08 was for pension plans.

Agriculture Sector In India

Agriculture -- across the expanse of India -- is heralding the country's second Green Revolution. A progressively larger number of states have been amending their Agricultural Produce Marketing Committee
(APMC) Act, along the lines of the Model APMC Act, to allow farmers to directly sell their produce to the
buyers.
Significantly, several agricultural sectors like horticulture, floriculture, development of seeds, animal
husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and
services related to agro and allied sectors have been thrown open to 100 per cent foreign direct investment
(FDI) through the automatic route.
Consequently, a number of corporate players have entered into agreement with the farmers with major
investment plans to tap the huge potential in this sector.
       1. PepsiCo after introducing farmers to high-yielding basmati rice, mangoes, potatoes, chillies, peanuts
and barley, has launched a five-year program with the Punjab Government to provide four million
sweet-orange trees.
       2.Cadbury India Ltd has entered into an agreement with the Tamil Nadu Horticulture Department to
promote cocoa farming in 50,000 acres.
       3.Reliance Retail plans to establish links with farms in Punjab, West Bengal and Maharashtra with an
US$ 5.6 billion investment.
      4.Skol Breweries India Ltd, the wholly owned subsidiary of SABMiller India, has entered into a
contract farming agreement with barley farmers in Haryana.
       5.Himalaya Drugs plans to associate with farmers across southern Indian states for sourcing at least
70 per cent of its herbs.
Already agriculture is one of the most important sectors of the economy contributing 18.5 per cent of
national income, about 15 per cent of total exports and supporting two-thirds of the work force. And with
recent developments, it is set to play a more dynamic role in the economy.
Production
India with its favorable agro-climatic conditions and rich natural resource base has become the world's
largest producer across a range of commodities.
      1.India is the largest producer of coconuts, mango, banana, milk and dairy products, cashew nuts,
pulses, ginger, turmeric and black pepper.
      2.It is also the second largest producer of rice, wheat, sugar, cotton, fruits and vegetables.
The year 2007-08 promises to be a bumper year for Indian agriculture, with a host of crops clocking record
output levels. Some of the highlights of the third advance estimates of the production of major crops,
released by the Agriculture Ministry for 2007-08, are:
      1.Food grain production is estimated to be at an all time record level of 227.32 million tonnes (MT).
      2.Wheat production is projected to be at a record 76.78 MT.
      3.Rice production likewise is estimated at an all time record of 95.68 MT.
     4.Coarse Cereals are also estimated to produce an all time record 39.67 MT.
     5.Cotton production is estimated to be 23.19 million bales of 170 kg, the best ever production level.
     6.Pulses production is estimated at the highest ever production level of 15.19 MT.
Apart from these, other crops which are likely to record highest ever production levels in 2007-08 include
Maize (18.54 MT), Tur (3.03 MT), Urad (1.56 MT), Oilseeds (28.21 MT) and Soyabean (9.43 MT).
In fact, the estimated growth in food grains output by 4.6 per cent in 2007-08 is nearly four times the
average annual growth of 1.2 per cent during 1990-2007.
Also, according to the US Department of Agriculture, India will register the highest increase in rice
production (16.3 million tonne) globally in the next 10 years.
Simultaneously, with the changing lifestyle and dietary pattern of the consumers along with the increasing
brand and variety consciousness of farmers, the demand for certified high quality seeds has been growing
rapidly. Already, a billion-dollar industry, the Indian seed industry is the eight largest in the world and has
been growing annually at 12 per cent growth rate. Consequently, several transnational players like Bayer,
DuPont, Monsanto, Syngenta and Advanta among others have been stepping up their operations in the
country.
Exports
Along with the impressive production growth rates, exports of agriculture and allied products have been
increasing steadily. For example, India's share in the world cotton trade has increased from 8 per cent in
2005-06 to 12 per cent in 2006-07. Further the government has prepared a plan to increase India's share in
processed food trade from the current 1.6 per cent to 3 per cent in 2015.
Agriculture and allied product exports increased by 20.5 per cent during April-October 2007 to total US$
11.9 billion as against US$ 9.87 billion in the corresponding period in 2006.
       1."Indian spices saw a 20 per cent rise in export volumes in April-May, totalling up to 98,570 tonnes
as against 82,210 tonnes a year back."
       2.Coir exports rose sharply by 20.47 per cent to 118,158 tonnes during April-November.
       3.Indian sugar exports are expected to more than double in 2007-08, on the back of 1.1 million tonnes
exports in 2006-07.
      4.Cotton exports stood at 6 million bales during the 2007-08 fiscal year.
     5. Rice exports grew by a whopping 61 per cent during April-October 2007 over the corresponding
period in 2006.
Organic Farming
With the global demand for organic food rising at a feverish pace, India is well placed to raise its share in
the US$ 30 billion global market of organic products, given its wealth of natural resources
Currently, India ranks 33 in the world in terms of total land under organic cultivation and 88 in terms of the
ratio of agricultural land under organic crops to total farming area. But this is set to improve with increasing
interest shown by many states.
Nine state including Haryana, Maharashtra and Tamil Nadu among others have already submitted
proposals for accreditation to APEDA, which will allow them to certify produce of their farmers as organic. In
fact, Kerala is set to turn "organically" green, with the government plans to convert 20 per cent of
agricultural land to organic farming each year, with total conversion in five years.
With the accelerating interest shown in organic cultivation, the area under such crops is estimated grow
almost four-fold to cross the 2 million mark, says National Centre for Organic Farming (NCOF). Currently,
land under organic cultivation is 528,000 (including 312,000 hectares of certified land). Already, India is the
second largest producer of organic cotton in the world with a production of 10,365 tonnes a year.
Simultaneously, exports from organic farm produce have been growing at a frenetic pace to total US$ 83.08
million in 2006-07 against US$ 26.4 million in 2005-06, and are well on way to surpass US$ 125.88 million
this year. In 2002, exports were US$ 15.5 million.
Agri-biotech
India has also been making rapid strides to fully utilise the advances in the biotechnology industry for
accelerating the growth of its agricultural sector. According to a report by Rabobank, the Indian agri-biotech
sector has been growing at a blistering 30 per cent growth rate in the last five years and is likely to maintain
this growth well into the future.
In fact, since 2002, when India made its entry in the agri-biotech segment, this segment has been the
fastest growing segment among all the biotech industries in the country.
The agri-botech industry's sales have been growing at a tremendous growth: from US$ 82.37 million in
2004-05 to US$ 149.14 million in 2005-06 and US$ 230.9 million in 2006-07. It accounted for about 10.84
per cent of total biotech industry's sales in 2006-07.
The growth of this segment can also be seen in the continuous increase in the area under cultivation of
such crops. For example, within six years, area grown under genetically modified (GM) cotton variety, Bt
cotton, rose sharply to account for 70 per cent of the total area under cotton cultivation.
According to Rabobank, India has the potential to emerge as the major producer of transgenic rice and
several GM vegetables by 2010. Already research work is being carried in 19 crops like rice, wheat, cotton,
potato, banana, tomato, rapeseed, mustard and coffee among others.
Government Initiatives
Government has been taking various progressive measures to accelerate the growth of this sector. Some
of the recent initiatives taken by the government include:
     Allowing private sector companies engaged in business of warehousing or transport of food grains

 in procurement operations on behalf of the Food Corporation of India (FCI)
     A weather-based agricultural insurance scheme is to be rolled out across select districts in 12 states
for the forthcoming rabi season.
     Construction of seven Modern Terminal Markets with modern infrastructure facilities that will help
farmers realize maximum returns for their produce, remove middlemen and ensure lower prices for
end-consumer.
In addition, the government has already approved 60 agricultural export zones (AEZs). Besides, four zones
have been identified to provide US$ 12.1 million worth of funds under a scheme called Assistance to States
for Infrastructure Development of Exports. Further the Government will provide an additional US$ 6.17
billion for new farm initiatives launched by states to double the growth rate in agriculture to 4 per cent over
the 11th Plan period.

World's largest hedge fund firm now in India

Renaissance Technologies, the world's largest hedge fund firm handling assets worth $35.4 billion (Rs 1,41,600 crore), has received approval from the Securities and Exchange Board of India to operate in the Indian stock markets as a foreign institutional investor.
Renaissance is the latest -- and the biggest -- among several hedge fund players that entered India following a liberal approach taken by the Indian regulator on hedge fund participation in the booming Indian stock market.
Others that recently entered include Vikram Pandit-founded Old Lane, DE Shaw (the world's fifth-largest hedge fund with $29 billion or Rs 1,16,000 crore (Rs 1,160 billion) worth assets) and Och-Ziff Capital Management (the seventh largest with $28.6 billion or Rs 1,14,400 crore (Rs 1,140 billion) in assets), according to the Sebi Web site.
Renaissance, founded by 69-year-old Jim Simons, is based out of Manhattan, the US, and is perhaps the most interesting hedge fund. It has more than 260 employees -- many of them are PhDs and not conventional analysts from management schools.
The hedge fund major's Medallion Fund uses trading algorithms to invest across the world markets.
It returned more than 50 per cent in the first three quarters of 2007, according to a Bloomberg report. It had about $6 billion (Rs 24,000 crore) in assets as of July 1.
Renaissance's returns stand out as the turmoil in the US credit markets and the meltdown in stock prices across the world took a knock on many hedge funds. Bear Stearns, for instance, saw two of its mortgage-related hedge funds falling into bankruptcy.
Others such as Goldman Sachs' Global Alpha Fund, which competes with Renaissance's funds, lost more than 25 per cent in the same period.
The approval, which was given in January, follows efforts by Sebi to get hedge funds and other overseas investors to register and participate directly in the Indian markets instead of through Participatory Notes or P-notes, which are offshore derivative instruments used by investors that are not registered with Sebi to invest in Indian securities.
Sebi had tightened the rules for trading through P-notes in October last year to arrest the surge in foreign inflows.
"It is good. At the end of the day, it is money and Sebi has made the inflow of money into our markets more transparent," said Prabhat Awasthi, head of equity research and managing director (equities) at Lehman Brothers.
According to Hedge Fund.net, which tracks the hedge fund industry, January was tough for hedge funds that have emerging market strategies, though many believed that India and China's fast growing economies could withstand shocks to other parts of the international business system.

Only 120 companies 'happy to help' consumers-National Consumer helpline

NATIONAL CONSUMER HELPLINE-1800-11-4000 (FROM BSNL/MTNL LINE)
Tall claims that companies make about their corporate social responsibility packages may not always ring true. Sample some figures. Only 120 companies in India have joined hands with the National Consumer Helpline to help their customers register complaints against their products and services. The helpline was started a year ago jointly by the Ministry of Consumer Affairs and the University of Delhi.
The helpline, which operates out of the university campus, now registers almost 4,000 complaints a month. However, it has managed to forward only 3,500 complaints to companies for redressal in four months. This is because very few companies have geared themselves up to participate in the helpline initiative. So a majority of the complaints are going unheard.
According to the consumer helpline, it receives the largest number of complaints against telecom services providers. In the last four months, there were 1,128 complaints against BSNL and 405 against Vodafone. Though both the companies have CSR programmes and Vodafone has a “happy to help” tag line, too, neither has linked up with the National Consumer Helpline programme designed to address grievances.
When contacted, BSNL’s deputy director general (public grievances) Narendra Kumar said that he wanted the helpline to be integrated with the company’s own redressal system, but this was ruled out by the helpline.
“We had received complaints through email from the helpline. We are waiting for the second set of complaints,” he said. The National Consumer Helpline Project Manager S K Virmani said that the company did not respond to the first set of complaints either.
He said Vodafone and Reliance do not respond to complaints sent through the helpline. When asked why the company did not link up with the helpline, a Vodafone spokesperson said that the company would not be able to comment immediately. Reliance Communications was silent on the helpline. Its spokesperson Gaurav Wahi said: “Our call centre, the single largest call centre facility in India, can handle a few lakh calls daily and is a major differentiator to provide quality customer support.”
Meanwhile, there were 320 complaints against Nokia and 481 against Airtel. The two companies, however, have signed up for the convergence programme of the helpline which allows them to access complaints against them. Both Airtel and Tata Indicom executives claimed that the companies have a large consumer base and some customers could face problems.
However, at least 22 leading banks and insurance companies are reporting to the helpline. While private companies like HDFC, ICICI, Kotak Mahindra HSBC, Centurion Bank of Punjab, and Punjab National Bank and insurance companies like Bajaj Allianz, Birla Sun life, Aviva Life Insurance etc. have joined the helpline’s convergence plan, nationalised banks have not. Among airlines, only Air Deccan has signed up.
Virmani said that the helpline has tied up with the Ficci to coax companies to respond to complaints by joining its covergence programme. Amita Joseph, executive director, Business and Community Foundation, a consultant on CSR for companies, said that the companies talk big when it comes to CSR. The least they can do is to bear responsibility for their consumers. This helpline is their hall of shame.”

SBI mulling overseas acquisition, hints Bhatt

Amidst global financial distress, State Bank of India (SBI) has hinted that it is mulling overseas bank acquisition. SBI Chairman O P Bhatt today indicated that though there were no immediate plans, but the bank was definitely having a look at it.
"It (overseas acquisition) will be. There is no immediate target, there is no immediate plan, but we are thinking about it. We are looking more in terms of consolidation (overseas) where we have business. Increasingly, we are aligning our overseas operation with the Indian diaspora," Bhatt said.
However, Bhatt also stressed that the bank would continue to focus on expansion in the domestic market. "With the way India is growing, there are huge pockets of profitability across the country. There is a need to expand in the domestic market vigorously," he said, while addressing the first press meet after the merger of State Bank of Saurashtra with SBI. Commenting on the bank's exposure to Lehman Brothers, he said that it has fully provided for its $5 million exposure."We expect to recover 60-70 per cent of it (Lehman Brothers' exposure)," Bhatt said.
SBI, the largest lender in the country, has raised concerns about rising interest rates as it may lead to an increase in the non-performing assets (NPAs) of the banking sector.
"At the moment, we are not seeing large increases in NPAs, but we should be watchful of them," Bhatt added.
The bank is eying a credit growth of 24-25 per cent during 2008-09. "Credit growth continues to be relatively high compared with deposit growth in absolute terms," he said, pointing to tight liquidity conditions in the banking system.
Bhatt also said that he did not expect interest rates to fall in the immediate future.

Search engine marketers look to double business by 2010

Google’s decision to stop giving commission to the agencies in the UK — 3-11 per cent of the digital campaign value — from January 1, 2009, may double the revenue of search engine marketing (SEM) companies in India, as agencies consider offshoring to maintain margins.
An IAMAI (Internet and Mobile Association of India) and IMRB (Indian Market Research Bureau) report pegs the total market revenue of the SEM industry in India at around Rs 500 crore in 2007-08. This is expected to increase to around Rs 1,000 crore by 2009-2010.
Viral Thakkar, director-sourcing advisory services, KPMG, says: “ Google’s move will push outsourcing and India will gain, as it has the cost advantage and availability of required skills.”
SEM spends exceed that of the TV in the UK, and a similar pattern is expected to emerge in other parts of the world. One third of the SEM revenue in India is contributed by domestic clients, while the rest by international ones.
There has been a decrease in the management of in-house organic SEO (search engine optimisation). In 2006, 84 per cent of SEO was managed in-house, while in 2007 it dropped to 79 per cent. Advertisers are now hiring SEM agencies to optimise their website so that it comes up in the first few searches.
Rising cost per click is also leading to increased outsourcing. In the increasing cost environment, advertising agencies are supposed to move more work to India. Typically, 30-100 projects per year are undertaken by SEM outsourcing organisations.
According to a 2007 I-Cube report, of the 250 million urban populace, 77 million speak English. Around 20 per cent of the business of Communicate 2 comes from offshore activities.
Compared to the Philippines, South Africa and China major competitors to India in outsourcing, SEM business is higher for India. The Indian workforce’s endorsements from Google helps.
Indian SEM companies earn bigger revenues from outsourcing. Thakkar of KPMG says: “Profit earned on domestic billing is just one-fourth of global client billing.”
Attracting talent is a big challenge. Lack of awareness of the opportunities in the field is the biggest challenge facing the industry. Professionals could make great careers in SEM, but many are not aware of SEM as a career option. Vivek Bhargava, MD, Communicate 2, says: “I think the SEM salary would be 2-3 times higher.”

Bangalore a global fashion hub?

FASHION: Karnataka ready with 50 acres to bag the prestigious project.
A melting pot of styles and influences from countries across the globe; a dazzling boutique for international visitors to enjoy the latest trends in fashion from hair-bands, shoes andlates bags to apparel and jewellery; immense business opportunities for manufacturers, sellers and designers; an excellent platform for students to get hands-on experience in the fashion industry. Visualise all this under one roof and what may come to your mind is the international fashion hub in Hong Kong or that in Paris. Well, hold on. As we ready for another season of fashion, here is some news for the brand conscious and the fashion savvy to cheer. If the government of Karnataka has its way, the days are not far when Bangalore, the Silicon Valley of India, will join the line of these cities with the ‘world boutique’ tag.
In its continued endeavour to sell ‘Brand Bangalore’ to the international community, the government of Karnataka is learnt to be vying for the international fashion hub status, for which Delhi is also in the race.
Since quite some time, the Centre is keen on setting up an international fashion hub in the country. Delhi has shown interest in the project. However, due to the lack of suitable land, the project has not yet taken off. Meanwhile, the government of Karnataka, which has got suitable land in its possession, is trying to grab this opportunity, sources in the state government told.
Considering a proposal to push for the international fashion hub status to Bangalore, the government of Karnataka has conceded to make an initial allotment of 50 acres of land for the project, as against the requirement of 100 acres. The land is situated at the state-developed Doddaballapur apparel park in the outskirts of Bangalore. Due to its proximity to the new international airport and NH-2, the land is ideally located for the project, said a government official.
The detailed project report is under preparation. Once the report is ready, the state will take it forward to the Centre and will try to sell the idea ahead of any other state, the official said.
The fashion hub is envisaged to involve an investment of Rs 500 crore, to begin with. Grants and investments will be sought from the Centre, respective state governments and other stakeholders. The idea is to seek representation from all states of the country to showcase their specialty products. World-class restaurants, hotels, convention halls and many other facilities will feature in the fashion hub. It will be a one-stop solution for brands, suppliers, manufacturers, designers and models from all corners of the world.
Bangalore is fast emerging as an important sourcing hub for international top brands in apparel and accessories. There are more than 2,000 textile and garment units in Bangalore. The city is also the silk capital of India accounting for about 50 per cent of country’s silk output. Bangalore has also achieved fame for its gold and diamond jewellery. Being an IT/BT hub, and a medical tourist destination, the city attracts people from different countries. All these factors, along with the pleasant climate strongly favour Bangalore’s development into a fashion hub, feel designers and style experts.
About 30 companies have bought land in the Doddaballapur apparel park and a few of them, including Everblue Apparel Ltd, Bombay Rayon, Himatsingka Seide, and Amtek industries, have already moved in. The park is spread across 187 acres and the government is planning to go ahead with the second phase of expansion. However, there are several infrastructure issues that need to be addressed before any expansion takes place, say industry experts.

Rajya Sabha to have its own TV channel

After the "success" of Lok Sabha TV, there are plans to launch a separate channel for Rajya Sabha. "A decision to have a separate television channel for Rajya Sabha will be taken shortly," said Secretary General of Rajya Sabha, V K Agnihotri, at the conference of secretaries of legislative bodies in India. Both the channels will, however, "function under one control and will have one CEO", he said. Earlier, his counterpart from the Lok Sabha, P D T Achary told the conference that the Lok Sabha TV Channel, a brainchild of Speaker Somnath Chatterjee that was started two years ago, has been attracting large viewership since then. "During the deliberations on Motion of Confidence on July 21 and July 22 this year, the TRP rating of this channel was at an all time high, leaving much behind even the popular entertainment channels," Achary said.

Best Global Brands 2008

Rank: 1

Company: Coca Cola Inc
Coca-Cola took the top spot among the Top 10 Global Brands 2008 for the eighth year in a row. Its sales surged in Asia, with Olympic sponsorship boosting its profile. But at the home front, the company continued to record sluggish sales.

Rank: 2

Company: IBM
IT major International Business Machines (IBM) pushed ahead of Microsoft for the first change to the top four since at least 2001.

Rank: 3

Company: Microsoft Corporation
Bill Gates brainchild Microsoft Corporation held the third position in 2008.

Rank: 4

Company: GE
GE held onto fourth position among the Best Global Brands 2008.

Rank: 5

Company: Nokia
Finnish telecom company Nokia was at no 5, amid all the iPhone buzz across the globe. Its reputation for quality put it far ahead of rivals in India and other emerging markets.

Rank: 6

Company: Toyota
Car maker Toyota held the sixth position in the list of Top 10 Global Brands for 2008.

Rank: 7

Company: Intel
The annual study on the hottest brands in the world showed that tech companies put on the strongest showing while financial companies were the weakest.

Rank: 8

Company: McDonald's
To qualify for inclusion in the Best Global Brands 2008 list, each brand must derive at least a third of its earnings outside its home country, be recognisable outside of its base of customers, and have publicly available marketing and financial data.

Rank: 9

Company: Walt Disney
To capitalize on a consumer trend for marking important events with vacations, its parent the Walt Disney Co will offer free tickets to parkgoers in the US on their birthdays in 2009.

Rank: 10

Company: Google Inc
Internet search engine Google jumped ten spots to reach at number 10 in the list of the Best Global Brands 2008. Google's brand value shot up by 43 per cent, from 21.9 billion dollars to 31.5 billion dollars.  
 

  

Govt-run financial brands ’ve upper hand

FINANCIAL brands are built on the bedrock of trust and expertise. But with the US-led global financial meltdown spawning an undercurrent of fear and distrust among millions of investors, employees and consumers alike, brand experts say that government-run Indian financial brands like SBI and LIC seem to have an edge, as they are built on strong relationships and a trust that emanates from an implicit sovereign guarantee rather than a claimed ‘expertise’ that many of the (now failed or failing) marquee global names used to harp on. Says SBI Life Insurance MD Uday Shankar Roy: “Government funded financial institutions have always been criticised for being stringent with the regulations and investments. But, we must understand that ultra-modern risk-monitoring practices adopted in the West have failed miserably. Considering the present scenario, the central banking regulatory authority in India stands the strongest. The traditional monitoring and investment practices will certainly see an upswing now.”The meltdown will hit the sheen of western brands hard and a conscious move towards Indian brands will be
noticed among the Indian consumers. Says Ogilvy & Mather India country head (discovery & planning) Madhukar Sabnavis: “Trust is what business relationships in the East are built upon. Culturally, in India, as long as trust remains consumers are willing to live with business ups and downs and accept that as a part of life. Indians as a race is forgiving and hence the importance of trust.”
Public sector banks riding high on credibility have underscored robust growth in the recent times. According to the recent ET-Brand Finance India’s Top 50 Most Valuable (Company) Brands 2008 study, India’s largest bank State Bank of India emerged as the most valuable financial services brand value at Rs 16,595 crore. While Punjab National Bank’s brand valuation escalated by about Rs 570 crore in 2007-08, Bank of India has shown a growth of over 50% as against the previous year. In comparison, now bankrupt Lehman Brothers had shown a drop in its brand value in 2007 ($4 billion) from $4.4 billion in 2006, according to Brand Finance’s annual report on 500 most valuable global brands.
Given the volatility of global financial market and lessons learnt from the South-Asian crisis, subprime crisis and present meltdown, the ideology of safety and security have superseded the ‘cool image and dynamism’ plank. Brand experts across various sectors have echoed the strong sentiment of building relations as the essence of Indian business practices. Says Publicis Asia regional strategist Partha Sinha: “Indian financial brands are build on relationships whereas multi-national have always been expertise driven. But now this edifice of ‘expertise’ is coming unstuck.”
Even as the US suffers from major financial crisis, Tata AIG Life claims to be well capitalised and is confident of meeting stringent local regulatory and capital requirements. “Since the Tata Group holds major stake (74%) in the company, the credibility earned by the conglomerate shields Tata AIG Life from any immediate material impact,” says the company statement.
Future Brands CEO Santosh Desai feels: “Merrill Lynch, Lehman Brothers and too a certain extent AIG are not too big brands for an average Indian. Moreover, the credibility lend by the brand Tata maintains the faith among the stakeholders.”Financial institutions in India see a silver lining amidst the crisis. For instance, Reliance Money acknowledges this scenario as the right time for expansion in the international markets. Says Reliance Money CEO Sudeep Bandopadhyay: “With a century-old American banks collapsing, I think, it is a wonderful opportunity for Indian banks to go international with their intrinsic values. We also see it as a good time to acquire quality assets.”

Raghuram rajan panel want Smaller banks For India

THIS should sound sage advice in the aftermath of the Lehman collapse. The Raghuram Rajan panel has suggested that the Reserve Bank should consider entry of smaller players into the banking sector as failure of small banks will not have systemic consequence created by failure of a giant banking entity. There is no need to believe that smaller banks would fail and historical evidence is not relevant since the situation has changed.
The panel has suggested that the regulator should prescribe tighter capital adequacy and regulatory norms for smaller banks. The Rajan committee submitted its final report on financial sector reforms to the government this week. The panel urged the regulator to “allow more entry to private wellgoverned deposittaking small finance banks offsetting their higher risk from being geographically focused by requiring higher capital adequacy norms, a strict prohibition on related party transactions, and lower allowable concentration norms”.
This means that these banks, if allowed, would be entitled to advance a lower percentage of their deposits as advances in comparison to larger banks. Such norms would minimise the risk of any of the entities going bust, the panel feels.
The committee has also questioned the honesty of the large banks, saying there is “no necessary link between size and honesty, as the recent experience with large banks suggests”. It has, however, suggested that the regulator should be more selective and find “fit and proper” criteria for giving licenses to the smaller banks.
The intent behind the need of such banks is to bring local knowledge to the bankers so that they are able to take decisions quickly in conformity with their customers whom they would personally know. The entry of such financial entities would also help in achieving the government’s goal of financial inclusion.
The committee has clarified it does not recommend smaller banks based on earlier models where governance structure was poor, political and government interference was excessive, besides unwillingness to take corrective regulatory measures.

Mobile banking only for card holders: RBI

SMALL-ticket payments and remittances from mobile phones will become a reality soon.Keeping in mind the superior reach of mobile phones as a delivery channel, The Reserve Bank of India on Friday released its final operative guidelines for mobile banking.
The central bank has decided to keep the limit on the ticket-size for mobile banking at Rs 2,500 per transaction, and Rs 5,000 per day. Banks have also been allowed to put in place a monthly transaction limit, depending on the bank’s risk perception of the customer.
While the guidelines will enable lenders such as State Bank of India and Axis Bank to go ahead with their launch of mobile-banking services, the central bank has decided to restrict the services only to holders of debit and credit cards. The card user base in the country is 80 million, with 55 million debit card users and 25 million credit card users.
However, it comes as a blow to players who intended to use mobile banking to reach out to the underbanked in rural India. A number of microfinance institutions and mobile payment operators such as mChek, PayMate and Obopay had tied up to offer mobile-based financial inclusion products in the hinterland. Banks, however, have been allowed to use the services of banking correspondents for extending this facility to consumers.
Only Indian rupee-based domestic services shall be provided on the mobile-payment platform, and the use of mobile-banking for cross-border transactions have been strictly prohibited. Banks which are based, licensed and supervised in India will be allowed to offer such services. Further, only banks which have implemented the core banking platform will be allowed to offer mobile banking.
At the same time, the RBI has recommended that all mobile banking transactions are validated through a two-factor authentication system, thereby complying to the latest security and encryption standards. The RBI has also said the long-term goal of the mobile-payment framework in India would be to enable funds transfer from and account in one bank to any other account in any bank on a real-time basis, irrespective of the mobile network the customer has subscribed to. The guidelines also recommend that banks do not compromise on their know-your-customer and anti-money laundering guidelines. They will also be required to file suspicious transaction reports (STRs) to the Financial Intelligence Unit for all mobile banking transactions, as in the case of regular banking transactions.
It has also been recommended that banks explicitly state the risks to the customer and also get them to sign a contract before the service is adopted. It has also asked banks to make their mobilebanking services available across all phone networks.
The number of mobile phone connections in the country was at about 296 million at the end of July this year and it is growing at about 8-9 million per month, according to telecom regulator Trai. Banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. Some banks have also started offering information-based services like balance enquiry, stop payment instruction of cheques, transaction enquiry, location of the nearest ATM or branch, etc. Acceptance of transfer of funds, instruction for credit to beneficiaries of same or another bank in favour of preregistered beneficiaries have also started in a few banks, the RBI said.

Bharti launches Venture fund of Rs 2 billiion($44 million)

Bharti Airtel Ltd has launched a venture fund on Thursday with an initial Rs2 billion ($44 million) to promote content and technology development.
India, with nearly 300 million mobile users, is the second largest wireless market in the world after China, and still has the potential for further huge growth as only just over a quarter of its billion-plus population use cellphones now.
Operators are signing up 8-9 million users every month, and consultancy Garter expects 737 million connections by 2012.
The growth potential has encouraged mobile operators to step up investment on technology and content as they look to tap underdeveloped rural areas.

Foreign telcos can go for 3G bid sans Indian partners

THE GOVERNMENT on Thursday said it will allow foreign telcos to bid for 3G spectrum as 100% entities.This implies, international communication majors will not need to tie up with an Indian JV partner and seek
clearance from the Foreign Investment Promotion Board (FIPB) to participate in the upcoming 3G auctions.
Following the auctions, successful telcos would be given a specific timeframe to find an Indian partner and
get the mandatory clearance from FIPB.
 “The foreign telcos can bid on their own for the 3G spectrum, but before rolling out services theyshould find an Indian partner,” telecom secretary Siddharth Behura told reporters on Thursday.
Mr Behura said the bidding process to find an agency that will overlook the rollout of the proposed mobile
number portability (MNP) will open within a week: “The agency would be finalised in three months. Six
months from thereafter, we will roll out the MNP services in the metros initially and later in the rest of the
country,” he added.
In an unrelated development, with increasing terrorist strikes raising security concerns, the DoT has set up
a committee to formulate stricter guidelines to strengthen the subscriber verification system. “This committee
will come out with strict guidelines within a month. We are very strict about this (subscriber verification). If we
find them (service providers) guilty we might even consider canceling their licence,” Mr Behura said.
While Indian regulations don’t allow foreign telecom players to hold more than 74% stake in any firm and
clearly specify that an Indian partner must have a minimum 26% stake, the logic for giving foreign telcos this
leeway is as follows: With the first round of 3G spectrum auction just a month or two away, foreign players
such as AT&T, NTT DoCoMo and Verizon feel it will not be possible to enter into JVs with Indian partners at such a short notice. Foreign telcos also don’t want a situation where, after having tied up with Indian partners, they fail to bag 3G spectrum and have to disband their JVs. Additionally, international communication majors also share the view that since the auction details are yet to be announced, there is no case to convince an Indian company for a possible partnership.
TELE TELLForeign telcos will be allowed to bid on their own for the 3G spectrum but before rolling out services they will have to find an Indian partner Telcos don't want a situation where, after having partnered with Indian cos, they fail to bag 3G spectrum and have to disband their JVs
Indian regulations don’t allow foreign telecom players to hold more than 74% stake in any firm

Ad Spending cut by 50 %

One of the worst global meltdowns in recent history is expected to immediately shortcircuit the advertising sector, as corporates continue to tighten their belt. The reverberating shockwaves have started making their presence felt, and corporates have cut back on their advertising and marketing spends, in some cases by almost 50%.
    While some advertising stalwarts insist it is too early to be overly concerned, others maintain that a recovery of the US economy should be under way mid next year or the advertising market could run out of gas.
“We believe structural headwinds (like fragmentation) remain as real in India as they are globally. The disconnect between the underlying economy and the ad market cannot continue indefinitely,’’ says Nakul Chopra, CEO, Publicis South Asia.
    “In the end,’’ he adds, “the whole marketing business is about funds and optimism. Corporates will hunker down for a brief period. Already, big clients have cut back their marketing spends by fairly large amounts in the US and Europe this year. This is bound to have a cascading effect in India.’’
    Adds ad guru Prahlad Kakkar, “Big financial brands going bellyup is bound to have a knock-on effect on consumer confidence and spending. Corporates have already cut down 50% of their ad spend, due to the oil crisis. The total advertising spend by major corporates is 6% of turnover. If inflation is 13%, where does that leave advertising?’’
    Maintaining that the economy has witnessed rising public spending and house prices, financial and business services, Kakkar adds, “Just as the boom has had a disproportionate effect on the economy, its suffering will have a similarly large impact.’’
    Executive chairman of O&M, Piyush Pandey, however, says, “We will have to wait for more from the markets before we start hitting the panic button. Corporates in India will definitely feel that US ripples, but it will reach them slowly. I don’t see any immediate impact. It all depends on how you play the game. One does need to be cautious though.’’

Infrastructure segment set to draw over US$ 345.28 billion investments by 2012

According to Crisil research estimates, eight infrastructure sectors, including oil and gas,
power, roads, ports, airports, railways, urban infrastructure and telecom, are expected to draw more than
Rs 16 lakh crore (US$ 345.28 billion) investment in India over the 2007-08 and 2011-12 period.
Rising financial overheads due to high interest rates as well as a global slowdown are not likely to impact
investments much as infrastructural projects have long gestation periods, the Crisil report revealed.
Further, the telecom sector has the least risk potential of the lot. The report forecasts that during the
specified period, power will grow at 60 per cent, roads at 100 per cent, airports at 400 per cent, ports by
160 per cent and railways at 250 per cent.
Crisil Research Head, Sachin Mathur, claimed, "There are three key reasons for being confident about
investment in Indian infrastructure - improved institutional framework for enabling infrastructure
investments, especially by the private sector; experience gained by governments, regulators and players
regarding the process of participation through concessions in infrastructure projects". The third key
reason, Mathur added, was the improved project execution and financial capabilities of players which
allow them to handle multiple, larger and more complex projects.

BSNL to roll out IPTV in 98 cities by November

Bharat Sanchar Nigam Ltd, or BSNL, the state-run telco that is India's largest by revenue,
plans to use franchisees to roll out its IPTV, or Internet protocol television services, across 98 cities by the
end of November as it tries to grow this business even as demand for alternative ways of receiving
television signals increases.
BSNL has already appointed five franchisees: Aksh Optifibre, Smart Digivision Pvt Ltd, IOL Broadband
Ltd, Times Broadband Ltd and Maharashtra Knowledge Company Ltd (MKCL).
Apart from BSNL, which has already launched its IPTV services in some parts of the country, Bharti Airtel
Ltd and Reliance Communications Ltd, the country's largest and second largest mobile telephony firms by
customers are also preparing to launch IPTV services.
"The IPTV roll-out is being done on a private-public partnership (PPP) model and three franchisees are to
be allowed in each city after 4-5 months (of the launch by BSNL), depending on the potential of the area
of operation. We have done three commercial launches in Jaipur, Jodhpur, and Kukas, a small village
30km away from Jaipur city," said Anil Jain, deputy director general (broadband), BSNL.
Jain added that the company expected to serve 150,000 customers by March. "For the IPTV to take off,
there should be some differentiating factor for the users to subscribe to the service," said Kunal Bajaj,
managing director of consultant BDA Connect Pvt. Ltd. "The compelling factor will be interactive features
and value-added services."

Intel unveils first Made-in-India chip

The world's largest chipmaker, Intel, on Tuesday unveiled its latest microprocessor for servers,
designed entirely by its Bangalore team and developed in a record two years. The Intel R&D centre in Bangalore designed the Xeon 7400 series processor and it marked the first time that work on the 45 nanometre technology was taken up by the company outside its US home base. The six-core microprocessor is based on Intel's x86 architecture.
A 300-member team from Bangalore undertook the work with support from units in the US and Costa Rica,Intel India president Praveen Vishakantaiah said.Intel's Bangalore R&D operations, which started a decade ago, have grown to become one of the largest centres outside the US. Besides the six-core microprocessor, the India R&D team has made important contributions to the teraflop and quad-core Xeon processor.Mr Vishakantaiah described it as a validation of the Bangalore operations and termed the country as a strategic destination as Intel India continues its focus on high-end technology development. The company said that upgradation costs in moving to the new server chips would be limited as the existing technology platform would support its new microprocessor. R Ravichandran, South Asia sales director Intel said the
new processor would allow a10-fold reduction in power consumption while substantially increasing performance.

'India most attractive market for investment'

Black Monday's chilling global financial meltdown, despite the overall gloom and initial impact
on the stock markets, has a golden upside for India by helping renew its tarnished India shining story.
"There is no cause for panic as a result of this temporary movement in the capital market as FII's pull out
money to replenish their funds overseas. India will be the most attractive market for investment in the next
five years", says Dr Amit Mitra, secretary general, Ficci.
"FDI inflows will be unaffected as India is the market of the future. Since we do not allow full capital
account convertability, insecure investors cannot flee to other markets, which means we are well insulated
from this global financial shock", he says.
Agrees, C Banerjee, director general, CII. "India is a stable economy. FII outflow is just a temporary
phenomenon. It will come back in 3-4 months and India's growth story will be renewed," he says.
"Short term impact is expected, but I do not see long term impact allthough we are not decoupled from the
global economies", says Jairaj Purandare, leader-markets & industries, PricewaterhouseCoopers.
However, he does warn of weak sentiment affecting corporate results. "But India stands out as a more
attractive market in this crisis," he adds.

Women in govt service to get 3 yrs' child care leave

This is one rule that could turn women in India Inc green with envy. The Centre has not only increased maternity leave for its employees to six months but has also cleared paid leave for two years to take care of children. 

The order, effective from September 1, increases maternity leave of women employees from 135 days to a cool 180 days for each of their two children. From now on, women employees can take paid leave up to two years (730 days) during their career for "taking care" of their two children without affecting their seniority.
Even if a woman has only one child, she can take the two-year leave. Termed "child care leave", this will be besides the maternity break they are entitled to. The new rules came into force on September 1.

Adding to the bonanza, a woman employee can avail of child care leave in any combination till her two children are 18 years of age. In line with the Sixth Pay Commission proposals, the new leave regime for women means that during their stint with the government, they can avail paid leave of as much as three years, provided they do it only for two children.

The child care leave can be taken for any of reason, including "rearing" or "to look after any of their needs like examination, sickness etc". Women in the private sector are often hard-pressed for such leave beyond the maternity break (rarely beyond 90 days), besides the regular quota of earned, casual and medical leave.

"The new rule has come as a godsend. I can now devote time to my son when he needs it the most. The best part is I can take this leave till he is 18," said a director-level IAS officer. Contrast it with what a senior corporate executive said: "I attended office up to two days before my child was born. I had to save as much of my 90-day maternity leave so that I could devote time to my child later. The entire period is over now and I am back to work. I now leave my baby at my mother's house and come to office."

The government has notified that child care leave can also be availed in continuation of the six-month maternity break. It means that a woman employee deciding to have only one child can continue on paid leave for two-and-a-half years at a stretch.

Of course, she has the option of saving some of it for exigencies and, above all, she continues to enjoy her share of the regular leaves. The new regime will definitely make government jobs much more attractive not only for women but also for men as the couple would be assured that at least the mother would be with the child when needed. Semi-government establishments — like PSUs, banks, insurance companies — should be expected to adopt the new women-friendly system sooner or later.

US mortgage loan crisis: A subprimer

What is a subprime loan?

In the US, borrowers are rated either as ‘prime’—indicating that they have good credit ratings based on their track record—or as ‘subprime’, meaning their track record in repaying loans has been below par. Loans given to subprime borrowers—which banks would normally be reluctant to—are categorised as subprime loans. Typically, it is the poor and young who form the bulk of subprime borrowers.
Why were the subprime loans given out?
In roughly five years leading up to 2007, many banks started giving loans to subprime borrowers, typically through subsidiaries. They did so because they believed that the real estate boom, which had more than doubled home prices in the US since 1997, would allow even people with dodgy credit backgrounds to repay on the loans they were taking to buy or build homes. The government also encouraged lenders to lend to subprime borrowers,arguing that this would help even the poor and young buy homes.
With stock markets booming and the system flush with liquidity, many big fund investors like hedge funds and
mutual funds saw subprime loan portfolios as attractive investment opportunities. Hence, they bought such
portfolios from the original lenders. This in turn meant the lenders had fresh funds to lend. The subprime loan
market thus became a fast growing segment.
what was the interest rate on subprime loans?
Since the risk of default on such loans was higher, the interest rate charged on subprime loans was typically about two percentage points higher than the interest on prime loans.
This, of course, only added to the risk of subprime borrowers defaulting. The repayment capacity of subprime borrowers was in any case doubtful. The higher interest rate additionally meant substantially higher EMIs than for prime borrowers, further raising the risk of default. Further, lenders devised new instruments to reach out to more subprime borrowers. Being flush with funds they were willing to compromise on prudential norms. In one of the instruments they devised, they asked the borrowers to pay only the
interest portion to begin with. The repayment of the principal portion was to start after two years.
How did this turn into a crisis?
The housing boom in the US started petering out in 2007. One major reason was that the boom had led to a
massive increase in the supply of housing. Thus house prices started falling. This increased the default rate among subprime borrowers, many of whom were no longer able or willing to pay through their nose to buy a house that was declining in value. Since in home loans in the US, the collateral is typically the home being bought, this increased the supply of houses for sale while lowering the demand, thereby lowering prices even further and setting off a vicious cycle.
That this coincided with a slowdown in the US economy only made matters worse. Estimates are that US
housing prices have dropped by almost 50% from their peak in 2006 in some cases. The declining value of the collateral means that lenders are left with less than the value of their loans and hence have to book losses.
How did this end up become a systemic crisis?
One major reason is that the original lenders had further sold their portfolios to other players in the market. There were also complex derivatives developed based on the loan portfolios, which were also sold to other players, some of whom then sold it on further and so on. As a result, nobody is absolutely sure what the size of the losses will be when the dust ultimately settles down.
Nobody is also very sure exactly who will take how much of a hit. It is also important to realise that the crisis has not affected only reckless lenders. For instance, Freddie Mac and Fannie Mae, which owned or guaranteed over half the roughly $12 trillion outstanding in home mortgages in the US, were widely perceived as being more prudent than most in their lending practices. However, the housing bust meant they too had to suffer losses—$14 billion combined in the last four quarters—because of declining prices for their collateral and increased default rates. The forced retreat of these two mortgage giants from the market, of course, only adds to every other player’s woes.
What has been the impact of the crisis?
Global banks and brokerages have had to write off an estimated $512 billion in subprime losses so far, with the largest hits taken by Citigroup ($55.1 billion) and Merrill Lynch ($52.2 billion). A little over half of these losses, or $260 billion, have been suffered by US-based firms, $227 billion by European firms and a relatively modest $24 billion by Asian ones.
Despite efforts by the US Federal Reserve to offer some financial assistance to the beleaguered financial sector,it has led to the collapse of Bear Sterns, one of the world’s largest investment banks and securities trading firm.
Bear Sterns was bought out by JP Morgan Chase with some help from the Fed.
The crisis has also seen Lehman Brothers—the fourth largest investment bank in the US—file for bankruptcy.
Merrill Lynch has been bought out by Bank of America. Freddie Mac and Fannie Mae have effectively been
nationalised to prevent them from going under. Reports suggest that insurance major AIG (American Insurance Group) is also under severe pressure and has asked for a $40 billion bridge loan to tide over the crisis. If AIG also collapses, that would really test the entire financial sector.
How is the rest of the world affected by the crisis?
Apart from the fact that banks based in other parts of the world also suffered losses from the subprime market,there are two major ways in which the effect is felt across the globe. First, the US is the biggest borrower in the world since most countries hold their foreign exchange reserves in dollars and invest them in US securities. Thus,any crisis in the US has a direct bearing on other countries, particularly those with large reserves like Japan, China and—to a lesser extent—India. Also, since global equity markets are closely interlinked through institutional investors, any crisis affecting these investors sees a contagion effect throughout the world.