Identifier
Created
Classification
Origin
09NEWDELHI878
2009-05-01 13:06:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy New Delhi
Cable title:
NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
how-toVZCZCXRO7277 RR RUEHNEH DE RUEHNE #0878/01 1211306 ZNR UUUUU ZZH ZDF R 011306Z MAY 09 FM AMEMBASSY NEW DELHI TO RUEHC/SECSTATE WASHDC 6412 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 02 NEW DELHI 000878
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/FERUS
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 27 TO MAY 1, 2009
NEW DELHI 00000878 001.2 OF 002
UNCLAS SECTION 01 OF 02 NEW DELHI 000878
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/FERUS
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 27 TO MAY 1, 2009
NEW DELHI 00000878 001.2 OF 002
1. (U) Below is a compilation of economic highlights from Embassy
New Delhi for the week of April 27 to May 1, 2009, including the
following:
-- India Signals Plans to Purchase IMF Bonds
-- Slowdown in Mergers and Acquisitions
-- Regulator Issues Notices to 12 Accounting Firms
-- India Considering Separate Standards for Medical Devices
India Signals Plans to Purchase IMF Bonds
--------------
2. (U) At the G-20 meeting in London in April, Montek Singh
Ahluwalia, Deputy Chairman of the Planning Commission, indicated
India's willingness to boost the resources and capabilities of the
IMF through the purchase of $10 billion of IMF bonds, using its
foreign exchange reserves. India's foreign exchange reserves stood
at $252.5 billion on April 17, 2009. The $10 billion contribution
is about 2 percent of the total $500 billion committed to the IMF
globally at the April G-20 Summit. This is the same contribution as
India's share in the Fund. Ahulwalia said that "if the IMF can
issue the securities, it's an easy way for us to make a
contribution." The benefit of using foreign exchange reserves to
buy bonds comes from the fact that this process can be implemented
by the Reserve Bank of India, without any legislative approval.
Moreover, India would prefer a bond issue as it does not have the
fiscal strength to contribute $10 billion to the IMF, which amounts
to about one percent of its GDP.
3. (U) Under Ahluwalia's proposal, the RBI would shift some of its
funds currently held by US treasury bills or other US government
bonds to the proposed IMF securities. Analysts opine that the
proposal could face political opposition since the contribution does
not directly help India, as it is not borrowing from the IMF.
However, India will not lose the money it plans to give to the IMF.
The Fund usually makes a small profit on its loans. The modalities
of the commitment to the IMF are yet to be worked out by the Reserve
Bank of India and the government ministries.
Slowdown in Mergers and Acquisitions
--------------
4. (U) According to Dealogic, mergers and acquisitions
(M&As)involving Indian companies in calendar year 2009 to date have
been the lowest (due to the global slowdown) in four years,
amounting to just $7.4 billion, a decline of 51 percent from the
corresponding period a year ago. Inbound M&As totaled $1.6 billion
in 70 deals so far this year, down 77 percent from last year. The
US remained the biggest investor in Indian firms with $483 million
via 21 deals. Outbound M&A activity also fell drastically - by 96
percent - to just $334 million through 34 deals. The top two
acquisitions which took place during the year were Reliance
Industries' 25 percent equity buyout in Reliance Petroleum for $1.7
billion and Quippo Telecom Infrastructure's 49 percent equity
acquisition in Wireless II Infoservices for $1.3 billion. Other
major M&As which took place include Tech Mahindra's 51 percent
acquisition in Satyam Computer Services for $577 million, Reliance
Industries' five percent buy in Reliance Petroleum and Life
Insurance Corporation of India's two percent purchase in State Bank
of India.
Regulator Issues Notices to 12 Accounting Firms
-------------- --
5. (U) The Institute of Chartered Accountants of India (ICAI -
which governs the accounting profession in India) has issued notices
to twelve Indian chartered accounting (CA) firms that have tie-ups
with foreign firms. Indian law allows only those audit firms
registered with ICAI to provide audit services. However, according
to ICAI President Uttam Prakash Agarwal, some unregistered
international audit firms have allegedly conducted audits by
associating themselves with local firms and provided services
NEW DELHI 00000878 002.2 OF 002
indirectly. "[ICAI] wants to find out how these firms are operating
and if they are sidestepping the law to do so. Therefore, notices
have been sent to 12 firms having affiliations with foreign entities
to understand their modus operandi," stated Agarwal.
6. (U) The twelve Indian CA firms must submit by May 23 all
documents, agreements, contracts, terms and conditions for usage of
a name, and fee-sharing arrangements with any multinational auditing
firm. While ICAI declined to divulge the names of the firms on whom
it has served notices, Price Waterhouse, an Indian arm of global
audit firm PricewaterhouseCoopers (PwC),and SR Batliboi, a member
firm of Ernst & Young, are some of the well-known Indian firms that
are affiliated with foreign firms. ICAI has reportedly formed a
committee to examine the Satyam accounting scandal and recommend
regulatory changes, wherever required, to the government and the
Securities and Exchange Board of India (SEBI).
India Considering Separate
Standards for Medical Devices
--------------
7. (U) India's Drugs Controller General of India (DCGI) has
reportedly decided to create separate quality standards for medical
devices. At present, for regulatory purposes, medical devices in
India are grouped with pharmaceuticals. The new guidelines are
expected to be notified by the end of May and will classify medical
devices based on the risks involved. Both drugs and devices are
regulated by state drug regulators under the Drugs and Cosmetics
Act. The new guidelines would make it mandatory for both domestic,
as well as foreign, manufacturers to have their medical devices
certified by bodies like the International Organization for
Standardization (ISO) and Bureau of Indian Standards (BIS) before
selling/exporting them in the Indian market. Some commentators
believe the move is expected to not only create a level playing
field for both Indian and foreign manufacturers of medical devices,
but will also provide transparency in rules and regulations
governing the export, manufacturing, and sale of medical devices in
India.
8. (U) The nodal department for medical devices - Ministry of
Health - has told media that DCGI has finalized the new guidelines
and submitted them to the Drug Technical Advisory Board for
approval. According to industry estimates, Indian manufacturers
produce medical devices worth $2.5 billion, with about 60 percent
exported to Europe, Middle East, Africa and North America. At the
same time, India imports approximately $1.5 billion in medical
devices to meet domestic requirements.
9. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi.
BURLEIGH
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/FERUS
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 27 TO MAY 1, 2009
NEW DELHI 00000878 001.2 OF 002
1. (U) Below is a compilation of economic highlights from Embassy
New Delhi for the week of April 27 to May 1, 2009, including the
following:
-- India Signals Plans to Purchase IMF Bonds
-- Slowdown in Mergers and Acquisitions
-- Regulator Issues Notices to 12 Accounting Firms
-- India Considering Separate Standards for Medical Devices
India Signals Plans to Purchase IMF Bonds
--------------
2. (U) At the G-20 meeting in London in April, Montek Singh
Ahluwalia, Deputy Chairman of the Planning Commission, indicated
India's willingness to boost the resources and capabilities of the
IMF through the purchase of $10 billion of IMF bonds, using its
foreign exchange reserves. India's foreign exchange reserves stood
at $252.5 billion on April 17, 2009. The $10 billion contribution
is about 2 percent of the total $500 billion committed to the IMF
globally at the April G-20 Summit. This is the same contribution as
India's share in the Fund. Ahulwalia said that "if the IMF can
issue the securities, it's an easy way for us to make a
contribution." The benefit of using foreign exchange reserves to
buy bonds comes from the fact that this process can be implemented
by the Reserve Bank of India, without any legislative approval.
Moreover, India would prefer a bond issue as it does not have the
fiscal strength to contribute $10 billion to the IMF, which amounts
to about one percent of its GDP.
3. (U) Under Ahluwalia's proposal, the RBI would shift some of its
funds currently held by US treasury bills or other US government
bonds to the proposed IMF securities. Analysts opine that the
proposal could face political opposition since the contribution does
not directly help India, as it is not borrowing from the IMF.
However, India will not lose the money it plans to give to the IMF.
The Fund usually makes a small profit on its loans. The modalities
of the commitment to the IMF are yet to be worked out by the Reserve
Bank of India and the government ministries.
Slowdown in Mergers and Acquisitions
--------------
4. (U) According to Dealogic, mergers and acquisitions
(M&As)involving Indian companies in calendar year 2009 to date have
been the lowest (due to the global slowdown) in four years,
amounting to just $7.4 billion, a decline of 51 percent from the
corresponding period a year ago. Inbound M&As totaled $1.6 billion
in 70 deals so far this year, down 77 percent from last year. The
US remained the biggest investor in Indian firms with $483 million
via 21 deals. Outbound M&A activity also fell drastically - by 96
percent - to just $334 million through 34 deals. The top two
acquisitions which took place during the year were Reliance
Industries' 25 percent equity buyout in Reliance Petroleum for $1.7
billion and Quippo Telecom Infrastructure's 49 percent equity
acquisition in Wireless II Infoservices for $1.3 billion. Other
major M&As which took place include Tech Mahindra's 51 percent
acquisition in Satyam Computer Services for $577 million, Reliance
Industries' five percent buy in Reliance Petroleum and Life
Insurance Corporation of India's two percent purchase in State Bank
of India.
Regulator Issues Notices to 12 Accounting Firms
-------------- --
5. (U) The Institute of Chartered Accountants of India (ICAI -
which governs the accounting profession in India) has issued notices
to twelve Indian chartered accounting (CA) firms that have tie-ups
with foreign firms. Indian law allows only those audit firms
registered with ICAI to provide audit services. However, according
to ICAI President Uttam Prakash Agarwal, some unregistered
international audit firms have allegedly conducted audits by
associating themselves with local firms and provided services
NEW DELHI 00000878 002.2 OF 002
indirectly. "[ICAI] wants to find out how these firms are operating
and if they are sidestepping the law to do so. Therefore, notices
have been sent to 12 firms having affiliations with foreign entities
to understand their modus operandi," stated Agarwal.
6. (U) The twelve Indian CA firms must submit by May 23 all
documents, agreements, contracts, terms and conditions for usage of
a name, and fee-sharing arrangements with any multinational auditing
firm. While ICAI declined to divulge the names of the firms on whom
it has served notices, Price Waterhouse, an Indian arm of global
audit firm PricewaterhouseCoopers (PwC),and SR Batliboi, a member
firm of Ernst & Young, are some of the well-known Indian firms that
are affiliated with foreign firms. ICAI has reportedly formed a
committee to examine the Satyam accounting scandal and recommend
regulatory changes, wherever required, to the government and the
Securities and Exchange Board of India (SEBI).
India Considering Separate
Standards for Medical Devices
--------------
7. (U) India's Drugs Controller General of India (DCGI) has
reportedly decided to create separate quality standards for medical
devices. At present, for regulatory purposes, medical devices in
India are grouped with pharmaceuticals. The new guidelines are
expected to be notified by the end of May and will classify medical
devices based on the risks involved. Both drugs and devices are
regulated by state drug regulators under the Drugs and Cosmetics
Act. The new guidelines would make it mandatory for both domestic,
as well as foreign, manufacturers to have their medical devices
certified by bodies like the International Organization for
Standardization (ISO) and Bureau of Indian Standards (BIS) before
selling/exporting them in the Indian market. Some commentators
believe the move is expected to not only create a level playing
field for both Indian and foreign manufacturers of medical devices,
but will also provide transparency in rules and regulations
governing the export, manufacturing, and sale of medical devices in
India.
8. (U) The nodal department for medical devices - Ministry of
Health - has told media that DCGI has finalized the new guidelines
and submitted them to the Drug Technical Advisory Board for
approval. According to industry estimates, Indian manufacturers
produce medical devices worth $2.5 billion, with about 60 percent
exported to Europe, Middle East, Africa and North America. At the
same time, India imports approximately $1.5 billion in medical
devices to meet domestic requirements.
9. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi.
BURLEIGH