Identifier
Created
Classification
Origin
09NEWDELHI8
2009-01-02 11:58:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy New Delhi
Cable title:
NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
how-toVZCZCXRO8671 RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHNEH RUEHPW DE RUEHNE #0008/01 0021158 ZNR UUUUU ZZH R 021158Z JAN 09 FM AMEMBASSY NEW DELHI TO RUEHC/SECSTATE WASHDC 4913 INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE RUCPDOC/DEPT OF COMMERCE WASHDC RHEBAAA/DEPT OF ENERGY WASHDC RUEATRS/DEPT OF TREASURY WASHDC RULSDMK/DEPT OF TRANSPORTATION WASHDC RHMFIUU/FAA NATIONAL HQ WASHINGTON DC RUEHRC/DEPT OF AGRICULTURE WASHDC
UNCLAS SECTION 01 OF 03 NEW DELHI 000008
SIPDIS
SENSITIVE
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, KIPR, KWMN, IN
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
DECEMBER 29, 2008 TO JANUARY 2, 2009
UNCLAS SECTION 01 OF 03 NEW DELHI 000008
SIPDIS
SENSITIVE
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, KIPR, KWMN, IN
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
DECEMBER 29, 2008 TO JANUARY 2, 2009
1. (U) Below is a compilation of economic highlights from Embassy
New Delhi for the week of December 29, 2008 to January 2, 2009,
including the following:
-- Trade Figures Decline for Second Consecutive Month
-- 3G Telecom Spectrum Auction Postponed
-- Most Indian Carriers Cut Domestic Fares
-- Parliament Approves LLP Bill
-- Blackstone Buys Stake in Seed Firm
-- Heavy Fog in Delhi Disrupts Flight and Train Schedules
-- New 'Incredible India' Marketing Campaign
Trade Figures Decline for Second Consecutive Month
--------------
2. (U) Trade data released on January 1 shows a decline in exports
as well as a slowdown in the growth of non-oil imports. Exports
contracted by 9.9 percent in November 2008, year over year, after
declining by 12.1 percent in October. Meanwhile, the growth rate
for non-oil imports was 3.4 percent in November, the lowest figure
so far for the year. Previously, import growth for much of the year
was solidly above 20 percent. Combined with an October decline in
India's industrial production of 0.4 percent - the first contraction
since 1993 - slowing or declining trade growth is evidence of
worsening prospects for the Indian economy, according to Professor
Biswajit Dhar of the Indian Institute of Foreign Trade.
3G Telecom Spectrum Auction Postponed
--------------
3. (SBU) U.S. telecom firm AT&T's representative for India today
confirmed media reports that India's Ministry of Information and
Communications Technology (MCIT),Department of Telecom (DOT) has
postponed the long-delayed auction of third generation (3G) telecom
frequency spectrum, scheduled for January 16, 2009, until at least
January 30 and probably later. DOT officials had decided on the
postponement reportedly at the request of Indian and foreign
companies seeking more time and also due to the poor response of
potential bidders among foreign operators, who are concerned about
raising large cash sums in the currently challenging financial
markets. In addition, the Cabinet Committee on Economic Affairs
(CCEA) has not yet decided on a proposed annual administrative
charge to successful 3G spectrum bidders of 2 percent of the highest
bid amount, which was recommended by the Telecom Regulatory
Authority of India (TRAI),but rejected by DOT's Telecom Commission.
Moreover, the Ministry of Finance reportedly sent a letter to DOT
recommending a doubling of the previously announced minimum bid
price for India-wide coverage for 3G and Wimax spectrum to Indian
rupees (INR) 40.4 billion (about USD 800 million) and INR 20.2
billion (USD 400 million),respectively. Such an increase would
further dampen foreign interest and delay the auction, the AT&T
representative said.
Most Indian Carriers Cut Domestic Fares
--------------
4. (U) After weeks of mounting pressure from the government and
industry groups to cut air fares following a drop in aviation
turbine fuel (ATF) prices, some of the major Indian carriers
announced lower fares this past Tuesday. State-owned carrier Air
India announced major reductions, including cutting basic fares
(price before taxes) by 35 to 82 percent on domestic sectors. Jet
Airways and its subsidiary JetLite also announced lower basic fares
on all domestic flights. According to a statement by the airline,
their fares will now be 40 percent lower. Another industry leader,
Kingfisher Arlines, pledged to cut fares from January 1 onwards but
as of today, has not made an official announcement.
5. (U) Despite the October 2008 announcement of the Jet-Kingfisher
NEW DELHI 00000008 002 OF 003
alliance, media sources indicate there were some internal
disagreements and miscalculations as to why both carriers did not
announce fare cuts together. Last week, Kingfisher Chairman Vijay
Mallya said that it may cut fares if ATF becomes a "declared good,"
which would bring down sales tax to a uniform level of 4 percent,
compared with the current rate of 4 to 26 percent in different
states. Also, budget airlines like SpiceJet and IndiGo have also
reduced fares by 8 to 10 percent, with the former announcing schemes
like INR 99 (about USD 2) on base fares. With the drop in ATF
prices expected to help the loss-making airlines reduce their
operating costs, these announcements of air fare cuts should help
the airlines increase passenger demand.
Parliament Approves LLP Bill
--------------
6. (U) The Indian Parliament on December 13, 2008 passed the pending
Limited Liability Partnership (LLPs) Bill, 2008, which will now
enable establishment of a LLP - a business model providing the
benefits of corporate limited liability but allowing the flexibility
of organizing the internal management along the lines of a
partnership firm. Corporate Affairs Minister Gupta has stated that
this format would be quite useful for small and medium enterprises
in general and for the enterprises in professional services sector,
such as legal and accounting services. His Ministry aims to
implement the legislation by April 1, 2009.
Blackstone Buys Stake in Seed Firm
--------------
7. (U) U.S. private equity firm Blackstone has bought a stake in
privately-held NSL Seeds, which claims to be the largest hybrid seed
company in India. According to unnamed media sources, Blackstone
invested Rupees 250-300 crores (USD 50-60 million) for a 20-25
percent stake in NSL in a private transaction. NSL has a market
presence in the field crops such as corn, cotton, rice, sunflower,
sorghum, millet, and vegtables. It has a strong distribution
network of 25 warehouses, 1000 distributors, 20,000 sub-dealers, and
a 350-person sales and marketing team. In a press release, NSL
group chairman Prabhakar Rao stated, "With their track record in
adding value, their global reach and proactive approach,
Blackstone's involvement will be very valuable in our journey from a
privately-held company to a publicly-listed worldclass bio-agri
frachise."
Heavy Fog in Delhi Disrupts Flight and Train Schedules
--------------
8. (U) Many north India cities, including Delhi, faced heavy
seasonal fog which resulted in many flight delays and diversions,
delayed train travel, and longer commutes in and around the capital.
The heavy winter fog is an annual phenomenon in Delhi in the winter
months. New Delhi's airport, equipped with a new runway with visual
range (RVR) machines, had high expectations of ending fog-related
delays. However, according to media reporting, this technology was
not utilized this week due to poor visibility which hampered exact
readings by the machine as well as mechanical failures. Flight
operations were heavily impacted most of this week with some being
canceled, most being delayed in the morning and late evening hours,
and others being diverted to Mumbai or other airports. Also, many
trains to and from railway stations in Delhi were running several
hours behind schedule due to the heavy fog.
New 'Incredible India' Marketing Campaign
--------------
9. (U) In the aftermath of the Mumbai attacks, the Tourism Ministry
is planning to launch a new "Incredible India" campaign on January
7. This new marketing campaign will focus on a "resolute" India
NEW DELHI 00000008 003 OF 003
whose spirit remains unbroken. The GOI plans to launch print and
television commercials focusing on teamwork and unity while
promoting various destinations throughout India. A ministry
spokesperson told reporters that, "Our campaign is using catch
phrases like the global meltdown to turn it into an India-centric
campaign. The aim is that the campaign should strike a note with
people." In one ad, a visual of a tiger carries a quote by Mahatma
Gandhi: "I want all the cultures of all lands to be blown about my
house as freely as possible. But I refuse to be blown off my feet by
any." With the travel and tourism industry severely hit by the
global meltdown and the Mumbai attacks, the Ministry is determined
to woo back foreign visitors to India. The campaign will launch in
major tourist markets like Europe, the US, Canada, Russia, Central
Asia, Japan, China, Koreas, Scandinavia, Australia, and New Zealand.
10. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi
11. (U) This is the first weekly ECON Office highlights for 2009.
Happy New Year!
MULFORD
SIPDIS
SENSITIVE
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, KIPR, KWMN, IN
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
DECEMBER 29, 2008 TO JANUARY 2, 2009
1. (U) Below is a compilation of economic highlights from Embassy
New Delhi for the week of December 29, 2008 to January 2, 2009,
including the following:
-- Trade Figures Decline for Second Consecutive Month
-- 3G Telecom Spectrum Auction Postponed
-- Most Indian Carriers Cut Domestic Fares
-- Parliament Approves LLP Bill
-- Blackstone Buys Stake in Seed Firm
-- Heavy Fog in Delhi Disrupts Flight and Train Schedules
-- New 'Incredible India' Marketing Campaign
Trade Figures Decline for Second Consecutive Month
--------------
2. (U) Trade data released on January 1 shows a decline in exports
as well as a slowdown in the growth of non-oil imports. Exports
contracted by 9.9 percent in November 2008, year over year, after
declining by 12.1 percent in October. Meanwhile, the growth rate
for non-oil imports was 3.4 percent in November, the lowest figure
so far for the year. Previously, import growth for much of the year
was solidly above 20 percent. Combined with an October decline in
India's industrial production of 0.4 percent - the first contraction
since 1993 - slowing or declining trade growth is evidence of
worsening prospects for the Indian economy, according to Professor
Biswajit Dhar of the Indian Institute of Foreign Trade.
3G Telecom Spectrum Auction Postponed
--------------
3. (SBU) U.S. telecom firm AT&T's representative for India today
confirmed media reports that India's Ministry of Information and
Communications Technology (MCIT),Department of Telecom (DOT) has
postponed the long-delayed auction of third generation (3G) telecom
frequency spectrum, scheduled for January 16, 2009, until at least
January 30 and probably later. DOT officials had decided on the
postponement reportedly at the request of Indian and foreign
companies seeking more time and also due to the poor response of
potential bidders among foreign operators, who are concerned about
raising large cash sums in the currently challenging financial
markets. In addition, the Cabinet Committee on Economic Affairs
(CCEA) has not yet decided on a proposed annual administrative
charge to successful 3G spectrum bidders of 2 percent of the highest
bid amount, which was recommended by the Telecom Regulatory
Authority of India (TRAI),but rejected by DOT's Telecom Commission.
Moreover, the Ministry of Finance reportedly sent a letter to DOT
recommending a doubling of the previously announced minimum bid
price for India-wide coverage for 3G and Wimax spectrum to Indian
rupees (INR) 40.4 billion (about USD 800 million) and INR 20.2
billion (USD 400 million),respectively. Such an increase would
further dampen foreign interest and delay the auction, the AT&T
representative said.
Most Indian Carriers Cut Domestic Fares
--------------
4. (U) After weeks of mounting pressure from the government and
industry groups to cut air fares following a drop in aviation
turbine fuel (ATF) prices, some of the major Indian carriers
announced lower fares this past Tuesday. State-owned carrier Air
India announced major reductions, including cutting basic fares
(price before taxes) by 35 to 82 percent on domestic sectors. Jet
Airways and its subsidiary JetLite also announced lower basic fares
on all domestic flights. According to a statement by the airline,
their fares will now be 40 percent lower. Another industry leader,
Kingfisher Arlines, pledged to cut fares from January 1 onwards but
as of today, has not made an official announcement.
5. (U) Despite the October 2008 announcement of the Jet-Kingfisher
NEW DELHI 00000008 002 OF 003
alliance, media sources indicate there were some internal
disagreements and miscalculations as to why both carriers did not
announce fare cuts together. Last week, Kingfisher Chairman Vijay
Mallya said that it may cut fares if ATF becomes a "declared good,"
which would bring down sales tax to a uniform level of 4 percent,
compared with the current rate of 4 to 26 percent in different
states. Also, budget airlines like SpiceJet and IndiGo have also
reduced fares by 8 to 10 percent, with the former announcing schemes
like INR 99 (about USD 2) on base fares. With the drop in ATF
prices expected to help the loss-making airlines reduce their
operating costs, these announcements of air fare cuts should help
the airlines increase passenger demand.
Parliament Approves LLP Bill
--------------
6. (U) The Indian Parliament on December 13, 2008 passed the pending
Limited Liability Partnership (LLPs) Bill, 2008, which will now
enable establishment of a LLP - a business model providing the
benefits of corporate limited liability but allowing the flexibility
of organizing the internal management along the lines of a
partnership firm. Corporate Affairs Minister Gupta has stated that
this format would be quite useful for small and medium enterprises
in general and for the enterprises in professional services sector,
such as legal and accounting services. His Ministry aims to
implement the legislation by April 1, 2009.
Blackstone Buys Stake in Seed Firm
--------------
7. (U) U.S. private equity firm Blackstone has bought a stake in
privately-held NSL Seeds, which claims to be the largest hybrid seed
company in India. According to unnamed media sources, Blackstone
invested Rupees 250-300 crores (USD 50-60 million) for a 20-25
percent stake in NSL in a private transaction. NSL has a market
presence in the field crops such as corn, cotton, rice, sunflower,
sorghum, millet, and vegtables. It has a strong distribution
network of 25 warehouses, 1000 distributors, 20,000 sub-dealers, and
a 350-person sales and marketing team. In a press release, NSL
group chairman Prabhakar Rao stated, "With their track record in
adding value, their global reach and proactive approach,
Blackstone's involvement will be very valuable in our journey from a
privately-held company to a publicly-listed worldclass bio-agri
frachise."
Heavy Fog in Delhi Disrupts Flight and Train Schedules
--------------
8. (U) Many north India cities, including Delhi, faced heavy
seasonal fog which resulted in many flight delays and diversions,
delayed train travel, and longer commutes in and around the capital.
The heavy winter fog is an annual phenomenon in Delhi in the winter
months. New Delhi's airport, equipped with a new runway with visual
range (RVR) machines, had high expectations of ending fog-related
delays. However, according to media reporting, this technology was
not utilized this week due to poor visibility which hampered exact
readings by the machine as well as mechanical failures. Flight
operations were heavily impacted most of this week with some being
canceled, most being delayed in the morning and late evening hours,
and others being diverted to Mumbai or other airports. Also, many
trains to and from railway stations in Delhi were running several
hours behind schedule due to the heavy fog.
New 'Incredible India' Marketing Campaign
--------------
9. (U) In the aftermath of the Mumbai attacks, the Tourism Ministry
is planning to launch a new "Incredible India" campaign on January
7. This new marketing campaign will focus on a "resolute" India
NEW DELHI 00000008 003 OF 003
whose spirit remains unbroken. The GOI plans to launch print and
television commercials focusing on teamwork and unity while
promoting various destinations throughout India. A ministry
spokesperson told reporters that, "Our campaign is using catch
phrases like the global meltdown to turn it into an India-centric
campaign. The aim is that the campaign should strike a note with
people." In one ad, a visual of a tiger carries a quote by Mahatma
Gandhi: "I want all the cultures of all lands to be blown about my
house as freely as possible. But I refuse to be blown off my feet by
any." With the travel and tourism industry severely hit by the
global meltdown and the Mumbai attacks, the Ministry is determined
to woo back foreign visitors to India. The campaign will launch in
major tourist markets like Europe, the US, Canada, Russia, Central
Asia, Japan, China, Koreas, Scandinavia, Australia, and New Zealand.
10. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi
11. (U) This is the first weekly ECON Office highlights for 2009.
Happy New Year!
MULFORD