NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF

UNCLAS SECTION 01 OF 03 NEW DELHI 000031 SENSITIVE SIPDIS USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD, USPTO DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR DEPT PASS TO USTR MDELANEY/CLILIENFELD/AADLER TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN USDA PASS FAS/OCRA/RADLER/BEAN/FERUS E.O. 12958: N/A TAGS: ECON EFIN EINV ECIN KIPR EIND ELTN ETRD TSPA IN JA SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF JANUARY 04 TO JANUARY 08, 2010 ¶1. (U) Below is a compilation of economic highlights from Embassy New Delhi for the week of, January 04 TO January 08, 2010, including the following: -- Cabinet Clears Copyright Amendments for Introduction in Parliament -- GOI Under Fire at Economic Seminar -- India Ranks Eighth in Internet Piracy -- India Signs Agreement with Japan to Develop Industrial Corridor -- GOI Raises Export Duties on Iron Ore -- 3G Auctions to Miss Their Scheduled January 14, 2010 Start Date, Yet Again Cabinet Clears Copyright Amendments for Introduction in Parliament -------------- ¶2. (U) On December 24 the Indian Cabinet approved a bill to amend the Copyright Act of 1957. The bill includes a host of changes including conformity with the World Intellectual Property Organization (WIPO) Internet Treaties, which include the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT),goals long advocated by the USG. Information and Broadcasting Minister Ms. Ambika Soni reportedly commented "while India has not yet signed these treaties it is necessary to amend domestic legislation to extend the copyright protection in the digital environment." The GOI press release on the Cabinet decision can be viewed at http://www.pib.nic.in. ¶3. (U) Besides introducing provisions to implement WIPO Internet treaties, the Bill proposes other amendments including making Producer and Principal Director as co-authors of the cinematograph film, extending the copyright of the cinematorgraph film from 60 to 70 years, providing a fair deal exception for the production of copyrighted material in special formats that can be used by physically challenged people, extending the term of copyright protection for photographs from 60 years to life of the author plus sixty years and providing independent rights to authors of literary and musical works in a cinematograph film. The Bill also proposes to include certain provisions with regard to enforcement of copyright. The Copyright Amendment Bill of 2009 will be introduced in the next session of Parliament starting at the end of February 2010. GOI Under Fire at Economic Seminar -------------- ¶4. (U) At a January 4 economic seminar hosted by the Federation of Indian Chambers of Commerce and Industry (FICCI),leading economists and GOI officials expressed critical views on the role played by the central government after the global economic crisis. Environment Minister Jairam Ramesh said India needed fresh thinking on the role of state investment. Rather than public-private partnerships, which refer to private funding for public projects, Ramesh said there needs to be both public investment and private management on a much larger scale. He pointed to the Kerala school model as a successful example of public funds being used for education administered by private institutions. ¶5. (SBU) Rajiv Kumar, CEO of the Indian Council for Research on International Economic Relations (ICRIER),said India faces uncertainty from excessive government interference as well as from globalization. According to Kumar, the common perception that Indian industry could continue to grow despite the GOI is a myth. Regarding globalization, Kumar did not think that India could handle the foreign capital inflows it is receiving and should consider a Tobin Tax and additional capital controls. (Note: In a December meeting, Anand Bajaj, Ministry of Finance Director of Capital Markets, told Econoff that India can handle the foreign capital it is receiving and the GOI does not think there is any need for a Tobin Tax or other capital control measures. End note.) ¶6. (U) Surjit Bhalla, Chairman of Oxus Investments, said India must correct the excesses of the State. Although he said there was a need for a central government, he rhetorically asked "who will regulate the regulator?" He noted the central government is "well ahead of itself" and there needs to be mechanisms to "discipline" the central government. NEW DELHI 00000031 002 OF 003 India Ranks Eighth in Internet Piracy -------------- ¶7. (U) According to a recent joint study by the Motion Picture Association (MPA) and Software Company Dtechnet, India ranks eighth in the world for the largest number of illegal Internet downloads. Internet piracy is widespread in peer-to-peer (P2P) data sharing with the highest level of film piracy. According to the MPA study entitled 'Internet Piracy Landscape Audit,' the two main internet piracy methods used in India are web-based file hosts 'CyberLockers' and the file-sharing network 'BitTorrent.' ¶8. (U) The study reportedly lists India as the world's fourth largest downloader after the US, the UK, and Canada, accounting for about 6.5 percent of total downloads. Media reports have quoted MPA President Michael Ellis as saying that this is alarming in view of the fact that India has a very low base of Internet penetration compared to the US and the UK. The study further suggests that India's metro cities (Delhi, Mumbai and Bangalore) are the hub of downloading activities where popular Bollywood movies get the maximum number of downloads. According to domestic film industry observers, the rate of internet piracy for films can go up even higher with broadband penetration rising within the country. MPA is reportedly in touch with some Internet Service Providers in order to curb the illegal downloading by locating the downloader. India Signs Agreement with Japan to Develop Industrial Corridor -------------- ¶9. (U) The Delhi-Mumbai Industrial Corridor (DMIC) is an ambitious Government of India project to bring in global investment and promote the region as a manufacturing destination. The six initial sites identified for development in the corridor include Dadri-Noida-Ghaziabad in Uttar Pradesh, Manesar-Bawal in Haryana, Khushkhera-Bhiwadi-Neemrana in Rajasthan, Pitampura-Dhar-Mhow in Madhya Pradesh and Bharuch-Dahej in Gujarat. On December 28, the DMIC Development Corporation signed an agreement with the Japan External Trade Organization for collaborating on the project and for the transfer of Japanese expertise in developing and promoting 'smart communities' (eco-cities) around the DMIC project area. The DMIC Project Development Fund will be funded by equal contributions from India and Japan. A USD 75 million loan from the Japan Bank for International Cooperation (JBIC) has established the fund which will be routed through India Infrastructure Finance Company Limited (IIFCL). The Indian Government has also approved a grant of USD 75 million as its contribution to the fund. The estimated total project cost is about USD 90 billion. GOI Raises Export Duty on Iron Ore -------------- ¶10. (U) On December 24, in a bid to curb iron ore exports and to encourage domestic steel production, the GOI raised export duties on two categories of iron ore. Effective immediately, the government raised the duty on iron ore lumps from five percent to ten percent and on iron ore fines from zero to five percent. Industry experts and mining sector observers have reportedly stated that the move will adversely affect the mining sector. In June 2008, India initially imposed export duties of 15 percent on iron ore products. However, in November 2008, the GOI reduced export duty on iron ore fines to eight percent, and a month later, in December, abolished the duty on iron ore fines altogether. At the same time, the GOI reduced export duties on all other varieties of iron ore to five percent. The Finance Ministry notifications for the latest decision are available at http://www.taxindiaonline.com. ¶11. (U) Earlier, Steel Minister Virbhadra Singh was quoted as saying the competitiveness of the Indian steel industry would be seriously jeopardized if iron ore exports continue unabated, since Indian steel makers face an acute shortage of quality iron ore. The Steel Ministry reportedly asked the Finance Ministry to impose a ten percent tax on export of all grades of iron ore. The mining industry, on the other hand, had been lobbying for the removal of export duties on iron lumps altogether. According to the Secretary NEW DELHI 00000031 003 OF 003 General of the Federation of Indian Mining Industry, the increase in export tax will have a negative impact on the Indian steel industry and the GOI should have allowed the steel industry to recover from the global economic recession before imposing export duties. Moreover, domestic industry does not consume iron ore fines, he added. India is currently the third largest exporter of iron ore in the world after Australia and Brazil, exporting almost 50 percent of its total ore production. 3G Auctions to Miss Their Scheduled January 14, 2010 Start Date, Yet Again -------------- ¶12. (U) The auction for third generation (3G) spectrum, which has been repeatedly rescheduled over the past two years, is once again going to miss the January 14, 2010 start date. The auction may now be rescheduled for the end of February 2010. In December 2009, A. Raja, the Indian Minister for Communication, had confidently announced that the auctions were on schedule for a January 14 start and were to culminate with the allocation of spectrum to winning bidders by August 2010. The Department of Telecom (DOT) was going to issue a notice inviting applications on December 8, 2009 with December 21 as the last date for the receipt of applications. To date, no action has been taken by the DOT and there is a noticeable absence of clarification on next steps. The Ministry of Finance has lowered its expectations for the likely revenues generated from the auction and conflicting information exists on the modalities of the auction. Even though the refusal to vacate the spectrum by the Indian Ministry of Defense is cited as the reason for the delay, other reasons, such as lower revenues among telecom service providers and anticipated heavy investment requirements for the 3G infrastructure, also may be playing a role in the auction's delay. ¶13. (U) Visit New Delhi's Classified Website: http://www.state.sgov/p/sa/newdelhi. ROEMER