MUMBAI MASALA FROM PUNE: CUMMINS BUILDS A GREEN FACTORY,

UNCLAS SECTION 01 OF 02 MUMBAI 000539 SENSITIVE SIPDIS STATE FOR EEB A/S SULLIVAN STATE FOR EEB/ESC DHENGEL, SGALLOGLY, MMCMANUS, DHENRY STATE FOR OES PDAS RHARNISH, GTHOMPSON STATE FOR STEVE MANN, GMANUEL DEPT OF ENERGY FOR U/S BUD ALBRIGHT, DSCHWARTZ DEPT OF ENERGY IP FOR A/A/S KFREDRIKSEN, RCOOPER DEPT OF ENERGY IP FOR TCUTLER, CGILLESPIE, GBISCONTI DEPT OF ENERGY FE FOR DAS JMIZROCH, MGINZBERG E.O. 12958: N/A TAGS: ENRG SENV EFIN EIND PGOV IN SUBJECT: MUMBAI MASALA FROM PUNE: CUMMINS BUILDS A GREEN FACTORY, PRAJ INDUSTRIES RESEARCHES NON-EDIBILE CROPS FOR ENERGY, KALYANI OF BHARAT FORGE DISCUSSES CEO FORUM AND MNS AGITATION DELAYS PROJECTS MUMBAI 00000539 001.2 OF 002 ¶1. (U) Table of Contents: - Cummins Builds India's first "Green" Factory - Praj Industries Researches Non-edible Food Crops as an Energy Source - Kalyani of Bharat Forge Reviews U.S.-India CEO Forum - MNS Agitation Against Non-Maharashtrians Delays Construction Activity in Pune Cummins Builds India's first "Green" Factory -------------- ¶2. (U) Cummins Generator Technologies India has constructed a "green" manufacturing facility to manufacture alternators at Ranjangaon in the Ahmednagar district in Maharashtra. The company plans to apply for Leadership in Energy & Environment Design (LEED) certification of the facility. Pradeep Bhargava, the Managing Director of Cummins Generator Technologies India, argued that the cost savings through reduced energy usage will enable the facility to "pay for itself" within six to eight months, although he acknowledged that the initial capital investment for construction of the facility was high. For example, the wind tower facility which provides natural ventilation to the shop floor, and the construction of large windows to let in natural light results in a 25-40 percent cut in energy consumption. The facility is built with bricks with a high fly ash content which not only utilizes the fly ash waste from coal plants but also reduces temperature by 1 degree Celsius. Rainwater harvesting will preclude external sourcing of water within 2-3 years. Over the first 10 years of operation, the facility is expected to save over 14 million KW of electricity and avoid over 14,000 tons of carbon emissions. Praj Industries Researches Non-edible Food Crops as an Energy Source -------------- ¶3. (U) Praj Industries, a leading local and global supplier of ethanol processing technology, is increasingly focusing on converting non-edible food crops like switchgrass and algae to energy. Pramod Chaudhari, the Chairman of Praj Industries, noted that "there is a groundswell of interest for alternative fuels and this presents a huge opportunity for Praj." The company has established a new research facility - the Matrix Innovation Center -- at a cost of $20 million. The company is researching ethanol conversion from ligno-cellulosic crops like sweet sorghum which requires less water than traditional sources of ethanol like sugarcane. While there has been much hype about Jatropha as an alternative fuel source, Praj interlocutors noted that the crop has a long gestation period of 3-5 years to achieve the necessary scale for conversion to bio-fuels and crop output is maximized only with irrigation. Balu Sarma, President & Chief Technology Officer of the research facility, pointed out that with irrigation you can get 60-80 Jatropha fruit each month as compared to 15-20 fruit without proper care and irrigation. The key is to develop high-yielding varieties of Jatropha which are drought-resistant, he added. Praj has also successfully tested the energy efficacy of dried distillers grain with solubles (DDGS),which is used as a cattle feed, and is looking for funding to launch this project on a commercial scale. The company has developed a process to extract oil from DDGS to make bio-diesel while retaining the protein so that the remaining DDGS can still be used to feed cattle. The company is also conducting genetic engineering to create "designer crops" with a higher calorific value to facilitate greater energy extraction. Kalyani of Bharat Forge Reviews U.S.-India CEO Forum -------------- -------------- ¶4. (SBU) In a meeting with the Consul General, Baba Kalyani, the Chairman and Managing Director of Bharat Forge and a member of the U.S.-India CEO Forum, evaluated the impact of the U.S.-India CEO forum. According to Kalyani, the forum had actively lobbied for the passage of the U.S.-India civil nuclear energy co-operation agreement and was now working to improve India's access to sensitive technology. The forum also planned MUMBAI 00000539 002.2 OF 002 to create a USD 5 billion fund to invest in Indian infrastructure projects two years ago. However, this has still not materialized, he said. (Note: This infrastructure fund, which is being led by Citigroup and the Infrastructure Development Finance Corporation in Mumbai, has raised almost $900 million in private equity funds and is now working to buy and develop infrastructure assets. End Note.) In contrast, the forum has made good progress in the area of educational co-operation and collaboration. He pointed to the number of Indian universities who have partnered with or have sister universities in the U.S. as a case in point. The forum has recommended that a regulator be appointed in India to oversee higher education to ensure transparency and to facilitate good governance. The forum is also trying to address legacy issues of U.S. companies like Dow Chemicals. ¶5. (SBU) Kalyani noted that the major challenge for India, besides inadequate and overloaded infrastructure, is sustaining higher economic growth and creating good political governance. He pointed out that India's economic growth was primarily driven by the private sector and the high growth rate in GDP was achieved "in spite of the government." He believes that governance at the state level presents the major challenge to India's growth. To illustrate, he noted the problems that the Tata Goup had recently in Singur, West Bengal caused by Mamta Banerjee and what he considered a minor political party. MNS Agitation Against Non-Maharashtrians Delays Construction Activity in Pune -------------- ¶6. (SBU) In discussions with companies in Pune, ConGenoff learnt that the agitation led by Raj Thackeray's Maharashtra Navnirman Sena (MNS) against non-Maharashtrian workers has affected the construction industry in Pune. Several business owners indicated that this agitation has forced delays in several major projects as many construction workers hailing from North India left Pune and have not returned. These workers could have been absorbed into infrastructure projects in other states in India and therefore did not need to come back to Pune for work, they opined. Local Maharashtrians will not perform manual jobs requiring heavy lifting so the shortage of workers will never be filled, they said. Worker shortages affected the timely completion of construction projects and disrupted business expansion plans. For example, the construction of Cognizant Technology Solution's new campus in the Rajiv Gandhi Infotech park was delayed and Cummins Generator Technologies green factory was commissioned one and a half to two months later than planned. ¶7. (SBU) GM Rao of Cognizant Technology Solutions noted that Shiv Sena's Bal Thackeray used the same "sons of the soil" argument as the MNS to gain prominence 20 years ago. He believes that the agitation against non-Maharashtrians is a political strategy to gather a large political following especially when there are a large number of people who are "unemployable." North Indian workers are "more productive and better workers" than Maharashtrians, he continued. D B Chatteerjee of Cognizant Technology Solutions lamented that "the economic growth of India is unfortunately in the hands of politicians. FOLMSBEE