NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF

UNCLAS SECTION 01 OF 02 NEW DELHI 000770 SENSITIVE SIPDIS 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: ECON EAGR EAIR ECPS EFIN EINV EMIN ENRG EPET ETRD BEXP, KBIO, KIPR, KWMN, IN SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF APRIL 13 TO APRIL 17, 2009 ¶1. (U) Below is a compilation of economic highlights from Embassy New Delhi for the week of April 13-17, 2009, including the following: -- India Misses Export Target -- Inflation Declines, Food Still Expensive -- Domestic Steel Users Oppose Antidumping Duty -- Company Expects Approval of First Biotech Edible Crop by Year-End -- New Models of Corporate Social Responsibility in India India Misses Export Target -------------- ¶2. (U) Continuing a downward trend since October 2008, India's exports, according to provisional figures, dropped 31 percent year on year to approximately $12 billion during the last month of the Indian fiscal year (IFY) - March 2009 - compared with the same period in the previous year. India's total exports for the fiscal year 2008-09 are approximately $170 billion, in contrast to the original target of $200 billion and compared with last year's $160 billion, representing annual growth of 6 percent. Government officials and industry representatives continue to cite low demand for Indian products in the U.S. and EU, resulting from the global recession. Commerce Secretary G.K. Pillai predicted that the negative trend in exports will continue in the first half of the current fiscal 2009-10 (until September 2009). To help boost demand, the UPA government has announced three stimulus packages since October 2008, including a reduction in indirect taxes on consumer products and services, cheaper credit, and higher spending on infrastructure to facilitate trade. ¶3. (U) On the import side, while the government has yet to release official March trade figures, the Commerce Secretary estimated that growth decelerated during the last two months. With lower industrial activity during the last six months, India is likely to register lower import growth during IFY 2008-09, compared with average growth of 30 percent over the last five years. 
Inflation Declines, Food Still Expensive -------------- ¶4. (U) Wholesale price index (WPI) inflation year-on-year for the week ending April 4 fell to a 20 year low of 0.18 percent. It was 7.7 percent in the corresponding week a year ago. The dip in inflation during the review week was despite a 7.3 percent rise in prices of food articles such as vegetables, fish, liquor, soft drinks tea, coffee, pulses and cereals. Prices of vegetables rose by 25 percent and sugar by 18 percent. Fuels prices also rose during the week and are expected to go up further in the coming weeks. The disconnect between WPI inflation and prices of food items is due to the high base effect and a simultaneous fall in prices of some manufactured items, particularly metals and alloys. The Consumer Price Index for industrial workers, which is more representative of an urban household consumption basket, but whose data collection is less comprehensive than for the WPI and lags the WPI dates, was last recorded at 9.6 percent for February 2009, indicating that retail price inflation faced by consumers has not fallen as fast as the WPI. The RBI's annual monetary policy review is due on April 21 and many economists expect the RBI to reduce interest rates further, although the RBI has not used planned policy reviews for interest rate cuts in recent months. Domestic Steel Users Oppose Antidumping Duty -------------- ¶5. (U) Domestic end users of high grade stainless steel (pesticides and chemicals, refinery, auto components, utensil manufacturers, plant and machinery manufacturers and kitchen equipment makers) have reportedly protested the government's move to levy an anti-dumping duty on the import of stainless steel from China, the European Union, the US, Japan, South Korea, Taiwan, South Africa and NEW DELHI 00000770 002 OF 002 Thailand. The Indian Commerce Ministry on March 27, 2009 recommended an antidumping duty for this product following a petition by Jindal Stainless. ¶6. (U) Arguing that certain special grades and wider sizes of stainless flat steel are not readily available within the country, nearly 225 manufacturers have reportedly written a letter to Prime Minister Manmohan Singh asking that antidumping duties not be imposed. However, the Indian Stainless Steel Development Association (ISSDA) says that production of stainless steel is sufficient to meet domestic consumption. Company Expects Approval of First Biotech Edible Crop by Year-End -------------- ¶7. (U) Developed by Maharashtra-based biotech major Mahyco, India's first biotech edible crop - Bt brinjal (a type of eggplant) - is all set to be cleared by the Genetic Engineering Approval Committee (GEAC),the biotechnology regulatory body of the Government of India (GOI). Mahyco has reportedly completed field trials recently and applied to the GEAC for the commercial release of Bt brinjal seeds after addressing all health and safety concerns. A company spokesperson has told the media that the seed has been tested for safety and GEAC approval is expected by the end of 2009. [Note: Other industry sources are less optimistic that Bt brinjal will be approved by the end of the year. Any eventual approval would be a huge milestone. End note.] Mahyco had earlier introduced Bt cotton seeds in the Indian market successfully but its proposed brinjal project ran into trouble last year when the health ministry and consumer organizations raised questions about its safety. Introduction of Bt brinjal is expected to increase productivity while drastically cutting losses due to pest-related damage. In India, brinjal is cultivated on 550,000 hectares. New Models of Corporate Social Responsibility in India -------------- ¶8. (U) The US-India Business Council held a roundtable in New Delhi recently to discuss the role of corporate social responsibility (CSR) in a challenging economy. Ms. Teresa Bartels, President and Chief Executive Officer of United Way International was the featured speaker and representatives from forty-two companies attended the event. Bartels presented the group with strong rationales for engaging in corporate social responsibility during the current challenging economic environment and presented United Way as a platform to engage their communities in an effective and sustainable way. The participants then discussed challenges they had faced, their concerns about how CSR programs could be more effective and shared stories about past successes and failures. The consensus was that corporate social responsibility made sense even in economically challenging times but had to be designed and implemented in new ways so that optimum results were achieved for all stakeholders. ¶9. (U) Visit New Delhi's Classified Website: http://www.state.sgov/p/sa/newdelhi. BURLEIGH