NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF

UNCLAS SECTION 01 OF 02 NEW DELHI 002690

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STATE FOR SCA/INS AND EEB
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR
DEPT PASS TO USTR CLILIENFELD/AADLER/CHINCKLEY
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN
USDA PASS FAS/OCRA/RADLER/BEAN/CARVER/RIKER
EEB/CIP DAS GROSS, FSAEED, MSELINGER

E.O. 12958: N/A
TAGS: EAGR EAIR ECON ECPS EFIN EINV ENRG EPET ETRD BEXP
KIPR, KWMN, PHUM, SENV, ASEC, IN

SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
OCTOBER 6 TO OCTOBER 10, 2008


1. (U) Below is a compilation of economic highlights from Embassy
New Delhi for the week of October 6 to October 10, 2008, including
the following:

-- India Drafts Legislation to Protect Trade Secrets
-- Foreign Workers Now Face Obligatory Pension Contributions
-- Trading Commerce, Not Fire At LOC

India Drafts Legislation
to Protect Trade Secrets
--------------


2. (U) The GOI's Ministry of Science and Technology last week
released a draft National Innovation Bill for public comment. The
Federation of Indian Chambers of Commerce and Industry (FICCI)
drafted this bill with the help of all stakeholders. The draft bill
enables states to take public, private, or public-private
partnership initiatives for building an "ecosystem" to encourage
innovation. The draft legislation mandates an annual comprehensive
presentation by the GOI on a National Integrated Science and
Technology Plan. In addition, the legislation will authorize state
governments to take specific measures to support innovation,
including tax breaks, stamp duty waivers, and other fiscal
incentives and the establishment of Special Innovation Zones.
Finally, the draft law contains statutory language relating to the
protection of trade secrets. Previously, trade secrets were
protected under the common law in India. With an increasing number
of trade secrecy cases in Indian courts, the draft language would
provide more clarity and assurance in the law. The text of the
draft bill can be found at http://dst.gov.in.

Foreign Workers Now Face
Obligatory Pension Contributions
--------------


3. (SBU) The Ministry of Labor and Employment this week announced
the creation of a new category of "international workers" which
requires that foreign workers in India pay into India's Employee
Provident Fund (EPF, similar to a 401K fund) unless the foreign
worker's home country has a social security agreement (SSA) with
India. Previously, foreign workers could choose not to contribute
to an EPF if they were paying into a social security or pension
scheme in their home country. The Law Ministry claims the changes
make India's social security system at par with global social
security norms. The changes, issued under a notification, now
require that international workers pay the 12 percent of wages that
domestic workers pay, matched by an equal amount from the employer.
Further, after October 1, the effective date of change, expatriates
who had contributed to an EPF can no longer refund their
contributions back to their home country when they leave India,
absent their country's maintaining an SSA with India.


4. (U) India says it already has SSAs with France and Belgium.
India and Germany signed an SSA agreement on October 8, which will
exempt Indian workers in Germany from making social security
contributions. The exemption will be given to people on short-term
contracts for a period of four years, extendable to another one
year. German workers in India will also receive similar benefits on
a reciprocal basis. For short term contract up to 48 months, no
social security contribution would need to be paid under the German
law by the detached workers provided they continue to make social
security payments in India.

5. (SBU) S.K. Verma, Director (Social Security) at the Ministry of
the Labor told Econoff that the government is looking at concluding
negotiations on totalization agreements with about 10 countries in
the near future and is also proposing another 10 agreements. Verma
stated that the change was a signal to the US to prompt it to sign
an SSA with India and that he expected that a totalization agreement
with the US could be signed by April 2009. The Government of India
has requested an SSA with the US, saying that it estimates that
approximately 80,000 Indians working in the US contribute about $1.5
billion per year to the US social security system, but cannot bring
their funds back to India when they return. Verma confirmed that

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the new notification also requires that Indian workers in the US pay
into both systems.

Trading Commerce, Not Fire At LOC
--------------


6. (U) On the eve of the Prime Minister's visit to Jammu and
Kashmir, a 19-member trade delegation from Pakistan-occupied Kashmir
crossed the line of control on October 9 to mark the resumption of
cross-border trade in the state. This marks the resumption of
official trade linkages between the two Kashmirs that had been
severed since 1947. Zulfiqar Abbasi, the leader of the Muzaffarabad
Chamber of Commerce and head of the delegation, said, "Right now, it
is symbolic and we are not satisfied with the list of tradable
items. But it is just the beginning and we hope this sapling will
become a huge tree. The event is offering a chance to revive broken
roads and broken hearts of over 10 million people ..."


7. (U) The event was marked by a large ceremonial gathering with
over 200 traders chanting loudly "we are one." The Kanan bridge
which connects the Pakistan and India occupied Kashmir territories
had to be rebuilt after the 2005 earthquake. The bridge will be
opened on October 21 for small trucks (and eventually be upgraded to
handle heavy trucks) when the formal resumption of trade begins
after the two sides agree on a set of items. The road to the bridge
is currently being widened and other bridges to facilitate trade
will need to be upgraded.


8. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi

WHITE