Economic News

India's garments exports up 4% in July

India's garment exports increased by a little over four per cent to 458 million U.S. dollars in July this year compared with shipments to the tune of 439 million dollars a year ago. According to data provided by Apparel Export Promotion Council (AEPC) garment exports in July were up in terms of volume also to 109.6 million pieces from 104.6 million pieces in July last year. Garment exports for the January-July period of the current annual year showed an impressive 10.09 per cent growth to 3.29 billion dollars from 2.99 billion dollars during the same period last year. In terms of volume, it was up 7.46 per cent to 876.2 million pieces from 815.4 million pieces during the period. For the April-July period of the current fiscal, the exports increased by 5.06 per cent to 1.7 billion dollars. In terms of volume, it was up 1.84 per cent to 438.2 million pieces. Exports in July to the U.S. slid to 130 million dollars against 148.6 million dollars. But during January-July, exports to the U.S. rose by 2.35 per cent in value to 995.8 million dollars against 972.9 million dollars a year ago.

India's industrial output index up 5.6% in first quarter

Buoyed by a steady performance of manufacturing sector especially consumer durable, Industry recorded a modest 5.6 percent growth in first quarter of current fiscal up from 4.5 percent in corresponding period last year, giving firm hopes of revival. In June 1999, Industrial output grew by 5.5 percent and the General Index stood at 144.6 compared to a growth of 4.8 percent in the corresponding period in 1998. Manufacturing and Electricity sectors grew by 6.5 per cent and 4.1 per cent in June while the Mining output dropped by 1.5 percent, according to the quick estimates of Index of Industrial Production (IIP) released by the Central Statistical Organization (CSO). Cumulatively also, Manufacturing and Electricity sectors grew by 6.5 percent and 5.1 percent in the period April-June 1999 while the growth in electricity sector declined by 0.6 percent. The consumer durables and consumer non-durables have recorded growth of 11.1 percent and 1.7 percent respectively with the overall growth in consumer goods being 3.6 percent.

Spices export decline in first quarter

India's spices exports declined both in value and volume during the first quarter of the current fiscal due to sharp fall in shipments of items like ginger, turmeric, coriander and cumin. Spices exports during April-June this year were 56,120 tonnes valued at 113.85 million dollars compared with shipments of 63,985 tonnes worth 116.73 million dollars during the corresponding period last year, according to the Spices Board data said. In view of depreciation of the Indian rupee against the U.S. dollar, exports showed a three per cent rise in rupee terms. However, spices exports showed signs of resurgence in June with shipments of all major items in the basket showing an upward trend. Despite spices exports in June this year being lower in volume at 19,802 tonnes against 20,419 tonnes during same period last year, the value of the shipments increased to 39.40 million dollars compared with 37.08 million dollars in June 1998. Pepper exports made up 54 per cent of the total earnings from spice shipment at Rs 2.63 billion with 14,250 tonnes being shipped. Compared with this, exports of pepper during corresponding period last year were 11,240 tonnes valued at Rs 2.03 billion.

International Pepper Community to launch generic promotion of pepper

The International Pepper Community (IPC), an organization of six-pepper growing nations including India, plans to launch a generic campaign to promote worldwide usage of pepper. "The generic promotion will be by popularizing different uses of spices/pepper including medicinal uses, uses in perfumery and cosmetic industry," according to IPC executive director K P G Menon. One of the reasons for IPC to contemplate the generic campaign was the realization that supply position of pepper would improve in the years to come and there was a need to raise its demand to ensure its prices did not crash.

Cement, steel sectors post good first quarter growth: CII

Key infrastructure sectors like cement, steel and aluminium in India have shown robust growth rates in the first quarter of the current financial year, data provided by the Confederation of Indian Industry (CII), country's leading business chamber reveals. While heavy commercial vehicles sales grew by 44 per cent during April-June compared to last year, scooters saw negative growth at 11 per cent of the 122 sectors that reported data, 21 posted growth of over 20 per cent, while 14 had negative growth. The top performers were cement, soda ash, color picture tube, auto components, telecom cables, consumer durables and segments of the automobile industry. Segments like drugs and pharma, food processing, alcoholic beverages, paper and pulp industry reported a turnaround from negative growth in the first quarter of the last fiscal year and grew by between 10 and 20 per cent, he said. The wagon industry, textile machinery and electrical goods were among the segments of manufacturing sector which posted negative growth rates during the period.

Domestic starch manufacturers resorting to heavy corn imports

Indian starch and poultry feed-millers are resorting to large-scale imports of corn following shortfall in domestic production and low corn prices in the international market, according to the Indian industry sources. Over 150,000 tonnes of corn, popularly known as maize have been contracted during January-July by the poultry feed-millers, starch and corn flake manufacturers, sources said. While the poultry feed-millers are allowed to meet their import requirements of corn after registration with the NAFED, the starch and corn flake manufacturers get their supply through the Project Equipment Corporation (PEC).

"The import has been spurred by a shortfall in domestic maize production during last year and the economy of imported material," S L Chopra of the apex body Indian Maize Development Association said.

Corn is available at 117 dollars a tonne free-on-board overseas as compared to the domestic prices of about 160 dollars a tonne. He said a total of 27,000 tonnes of maize imported by the PEC for starch manufacturers had arrived at the Kandla port in western region recently. Main sources for Indian imports were the U.S., Latin American countries and China.

Policy

Indian government permits interconnectivity among Closed Users Groups networks

The Indian government has permitted interconnectivity among the Closed Users Groups (CUG) to facilitate data transfer work in airlines, financial sector. CUGs would have to obtain license from telecom commission for data networking. CUGs would now be able to communicate smoothly among themselves for data purposes. This decision follows the long pending demand for linkages by the CUGs from financial sector, especially stock markets. Task force on information technology had also recommended for providing interconnectivity between the government data networks and CUG networks. The country's Department of telecommunications was giving network approvals for CUGs private telecom networks to goods or service providers to link themselves with their agents, subsidiaries in closed network. Following this decision, now stock exchanges, banks, airlines and hotels could now own Communication networks for data purposes.

India may lift ban on export of primary bamboo

The Indian government is considering lifting the ban on export of primary bamboo for a temporary period, according to the federal environment and forests minister Suresh P. Prabhu. The ministry has recommended removing primary bamboo from the negative list for a temporary period so that bamboo, which is being allowed to rot in certain areas of the country, could be put to better use, Prabhu said.

At present, primary bamboo is put on negative list and export of only bamboo products are allowed.

Prabhu said the Northeastern states, which account for about two-third of the total bamboo production in country, would be if India could corner at least a small share of the world's 12 billion US dollar trade in bamboo and its products. The government had launched an integrated bamboo development programme earlier this year to raise the productivity of bamboo in the country, the minister said. He said there was a need to look at bamboos potential as an alternative "green gasoline".

Bilateral Trade Relations

India builds Trans-Asian rail corridor

India has taken another step in the direction of building the much talked-about Trans-Asian Rail (TAR) corridor connecting Asia with Europe. The TAR project consists of building rail-land bridges - divided into three corridors for providing long-distance international surface transport links between the two continents. India is to form the southern corridor of the project linking Singapore to Turkey via Myanmar, Bangladesh, Pakistan and Iran. The northern and central corridors will pass through China.

Honda, Godrej proposals among Rs 4.25 billion 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 per cent stake to its equal partner in Godrej Pacific Technology, which markets office automation and equipments, 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 per cent to 70 per cent. FIPB sources said Reliance group withdrew applications to international multilateral agencies to invest in Reliance Capital Asset Management Ltd.

Corporate News

Hero motors in talks with Peugeot, Aprillia for scooter venture

Leading two-wheeler manufacturer Hero Motors is negotiating with French auto company Peugeot and Aprillia of Italy to rope in either of them for making a foray in the scooter manufacturing business.
Hero Motors plans to produce 150 cc and 125 cc scooters with four-stroke engines to exploit the vast scooter market of India and is also eyeing the European and South American markets. The company was earlier in talks with Piaggio of Italy for the project but the same could not materialize due to several reasons. While the 150-cc model would be marketed in India, the 125-cc model would be manufactured exclusively for exports. The company has targeted to produce 70,000-80,000 units of 150 cc scooters and about 40,000 units of 125 cc scooters every year initially. Hero Motors is looking for technical collaboration and vehicle designing of the scooters and discussing with these companies in this direction.

Gaz De France oppose Mogil's participation in petronet LNG

Multinational Gaz De France (GDF) has objected to the proposed equity participation of U.S. oil major Mobil in Petronet LNG saying the U.S. company was a supplier, not a user, of the Liquefied Natural Gas (LNG). Petronet LNG, a consortium of state-owned oil companies, has recently entered into a 25 year pact with Rasgas-Mobil consortium for importing 7.5 million metric tonnes of LNG annually to its proposed terminals at Dahej in the western state of Gujarat and Kochi in southern state of Kerala. Mobil had sought a 26 per cent stake at Dahej terminal and Petronet LNG was negotiating with the multinational to accommodate it in the project.

Deutsche bank to expand operations in India

At a time when many multinational banks are downsizing operations in India, European banking major Deutsche Bank has said it was expanding its presence in India by opening its sixth branch in the country at the southern metro city of Chennai by this month-end. "Our policy is to invest during slowdown and reap the riches when the country comes out of the recession," according to the Wolf D. Von Bothmer, Head of Corporate Banking, India. Deutsche Bank, which began its Indian operations in 1980 by opening its first branch in western metro city Mumbai, currently has offices in Bangalore (south), Calcutta (east), Chandigarh and New Delhi in north with a total of 525 employees. He said the bank, which made an operating profit of Rs 2.67 billion during 1997-98, was expecting the Indian economy to revive only by next annual year.

Tisco, Fls agree on converting TCIL debt into equity

Tata Iron and Steel Company (TISCO) and the FIs have agreed to convert the huge debt amount of the Tinplate Company of India Limited (TCIL) into equity, optionally converting to preferential shares, as part of their bailout package for the sick unit. The managing director of TCIL B L Raina said the FIs had also insisted to shut the unproductive 80-year-old hot dip plant (HDP) with option for Voluntary Retirement Scheme (VRS) to one thousand employees of the plant. The 80-year-old company, which owes Rs 2000 million to the FIs and about Rs 1000 million to TISCO, has undertaken cost control measures and financial restructuring programme for revival of the company, Raina said. The oldest plant of its kind in the world and with no technical feasibility for upgradation, HDP was shut down in February 1999 for the obsolescence and non-availability of raw materials.

Lucent Technologies signs distributorship pact with ERIL

Lucent Technologies Gobal Commercial Markets (GCM) has signed a distributorship agreement with Electronic Resources India Ltd. (ERIL) for Lucent Technologies' "SYSTIMAX" Structured Connectivity Solutions (SCS) and "WaveLAN" Wireless Connectivity Solution in India. Under the deal, ERIL, a subsidiary of Ingram Micro Inc, the world's largest wholesale provider of technology products and services, has the right to market and distribute the fiber copper and wireless cabling solutions offered by Lucent Technologies. SYSTIMAX SCS is a single, end-to-end structured cabling solution that supports all information traffic including voice data, video and even building management systems while WaveLAN wireless connectivity hold significant potential in applications where cabling cannot be easily installed or is no suitable, according to officials of Lucent Technologies.

Indian Oil Corporation asks government to speed up decision on Lubrizol sell off

State-owned Indian Oil Corporation (IOC) has asked the Government to decide quickly on the value of its entire 60 per cent stake in the joint sector Lubrizol India Ltd. (LIL) to effect the sale of these to IOC as per a decision of the federal Cabinet. IOC had already worked out new shareholders' agreement with LIL, in which U.S lubricant giant Lubrizol Corporation has 40 per cent stake. Union Cabinet had decided last year to divest its entire holding in the joint venture in favor of IOC, of which 10 per cent equity would be transferred to the U.S. partner to make LIL a 50:50 joint venture. IOC had earlier offered to buy government stock in LIL, which markets Lubrizol brand of additives and lubricant oils, at Rs.850 million on the basis of an evaluation made by merchant bankers' ICICI securities. IOC's communication to Petroleum Secretary T S Vijayraghavan said that a quick decision was essential for inking the final shareholders' agreement and that IOC has already finalized technical and technology sharing details with the U.S. multinational.

Seagate and Ingram micro tie up for data storage products

Seagate Inc, a prominent player in data storage products has forged a alliance with Electronics Resources India Ltd. (ERIl), a subsidiary of Ingram Micro Inc to distribute its full range of disc drives in India.As part of the alliance, ERI would make available Seagate's full range of disc drives to the Growing Indian market, according to the vice president of Seagate Don Kennedy. The latest tie up by Seagate aims to capture one third of the total Indian market for the US major's data storage products, according to the Prasad Mamidanna, President of ERIL. Seagate already has similar tie ups for disc drives with three distributors of IT products in India. Customers would benefit from Ingram Micro's presence in Enterprise, PC server and workstation market, Mamidanna said adding with this tie up they would have a wider choice for disc drives to add to the range of computers.

Microsoft in pact with kale consultants for banking software

US-major Microsoft corporation has announced a strategic alliance with Mumbai-based Kale Consultants Ltd. to develop software products for the banking and financial sector to expand its share in the Indian market. Kale was chosen to be the strategic partner for their competitive technology edge and experience in the sector, according to the Sanjay Mirchandani, managing director of Microsoft Corporation India Pvt. Ltd.,. "We would help Kale in meeting the automation challenges ahead and would like to work closely with Kale as a technology partner and to provide our mutual customers advanced banking business solutions," he said. "Currently, out of the 60,000 banking branches in the country only 5,000-6,000 are automated and at least 15,000 more branches are to be computerized by January, 2000 as per the directive issued by the chief vigilance commissioner (CVC)'s office," managing director of Kale Vipul Jain said, adding that this opens a big market for them. As per the partnership agreement, Kale, will utilize Microsoft's middleware - Distributed Internet Applications Architecture for Financial Services (DNAfs) strategy to develop future versions of the recently-launched Winbank, a ready-to-use offering for the banking industry. The Windows DNAfs will simplify the adoption of the Winbank and would lay a strong foundation for exposing the activities to ATMs, telebanking and on-line banking.

Industrial Development Bank of India to resume funding Non-Banking Finance Companies

After a half-decade long gap, the Industrial Development Bank of India (IDBI) will soon resume lending to Non-Banking Finance Companies (NBFCs). "We are planning to start lending to NBFCs again. The proposal has already received initial approvals and is expected to be launched by next week," according to senior IDBI officials. The financial institution (FI) had stopped funding NBFCs way back in 1994, when it had felt that 'things were not going too well with them.' IDBI is aiming to reach the medium and small size customers, via the NBFCs. Though the FI has decided not to enter into retail financing in the near future, funding of NBFCs will in effect act as a 'channel' providing access to a semi-retail and retail customer base. "The funding would be done under certain guidelines. Only those NBFCs who have good credit records and good ratings would be given loans", the officials said. The NBFC seeking IDBI funds would require a minimum rating of 'AA', they said adding 60 per cent of its income has to be from leasing and hire purchasing. IDBI has set a ceiling of Rs 300 to 400 million for providing loans to NBFCs. The move on the part of the FI comes when banks, who have been permitted by the Reserve Bank of India (RBI) to lend to NBFCs, are hesitant to do so, quoting high credit risk as the reason.

IBC Solutions opens office in India

IBC Solutions India Pvt. Ltd., a provider of enterprise wide mission critical software and an affiliate of the U.S-based International Business Corporation (IBC), has announced the opening of the first phase of its state-of-the-art Information Technology Park at Whitefield in Bangalore. Built at a cost of Rs 50 million, the facility presently accommodates over 250 software engineers and can house 1,000 engineers when completed, according to company officials. Dedicated voice and data links seamlessly connect this facility to its corporate headquarters in the US, and the Technology Park enhances IBC's ability to execute projects in information technology for its clients worldwide, they said. Officials said IBC was a preferred partner to Fortune 500 corporations such as Lockheed Martin, Hughes, Alcatel, World Bank, Lucent and many more across the globe.

Major trade fairs

Globoil India '99, the third annual international conference and exhibition on vegetable oil, feed, feed ingredients, oilseeds related industries and services will be held in Mumbai from September 19 to 20, 1999.

The six-day International Fair for Lighting Industry "Prakash '99" begins on October 29, 1999 in New Delhi.