CEO Forum

London Stock Exchange hot on India

2011-06-14T08:56:00.000-07:00

MUMBAI--The London Stock Exchange Group PLC is keen to bring in new companies from India and African nations into its fold as a way to expand their investor base.
The London Stock Exchange, which is more than 300 years old, will compete with other international exchanges to attract emerging market companies to offer overseas investors' a chance to invest in growing markets within the legal and regulatory framework of a global exchange.
In India, the LSE seeks to take advantage of the similarities in the British and Indian legal regimes to bring newly listing companies to both the main London Stock Exchange and its Alternative Investment Market, said Ibukiveun Adebayo, head of international business development for India, the Middle East, and Africa.
The Alternative Investment Market, or AIM, focuses on listing mid-sized firms.
Already India's Vedanta Resources PLC and Essar Energy PLC turned to the LSE to raise capital when their businesses turned international. Vedanta, for example, gets a large part of its business from India, but also owns large mining businesses in other geographies, especially Africa.
Mr. Adebayo said the London bourse will focus on building potential cross-listing arrangements or other such offerings for companies, allowing them to retain their existing Indian investor exposure as well as raise their international investor base.
Africa is another key growth area for the exchange where investment activity looks set to pick up sharply over the next few years, he said.

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IGC updates Iron Ore Business

2011-05-23T09:23:00.000-07:00

In July 2010 the Government of Karnataka stopped issuing permits for the transportation of iron ore from mines in Karnataka. This action was taken to curb illegal mining and put in place processes to better monitor the movement of iron ore. It effectively shut down ore mining in the state. Subsequently, the mine owners' lobby went to court to have the mines reopened. Upon hearing the case the court ordered that processes to monitor mining and transportation of ore be put in place by April 20, 2011, effectively reopening mining and transportation. However, the State of Karnataka was unable to put in place all the processes by the stipulated date and as a consequence has not reopened mining in the state. Currently, the Government is in the process of inspecting mines in Karnataka and in conversations with officials they expect to complete the inspection in June. If in fact, they complete inspecting the mines, movement of ore for domestic consumption could begin in July with exports opening shortly thereafter.
The overall demand for ore has not abated over the past one year and is expected to increase. According to the Australia & New Zealand Banking Group, the Indian iron ore market stands to gain from higher exports to China as re-building from Japan's earthquake signals a potential $30 billion increase in demand for steel.
India increased the export taxes from 5% to 20% on all grades of ore. "We do not expect any impact on Indian iron-ore exports as a result of the Indian tax changes until spot prices drop by at least around $30," said Melinda Moore, director and global commodities coordinator at Credit Suisse Equities. It remains profitable to sell the material overseas given current spot prices, she said. The price of 62 percent-content iron ore delivered to Tianjin port in China has risen about 5 percent this year to $178.5 per metric ton, according to data from Steel Business Briefing.
In light of the developments in India, IGC has 1) begun identifying domestic customers that can be serviced, 2) begun negotiations with transporters and mine owners to create the-end-to-end delivery process to service domestic customers, 3) continuing to communicate with our Chinese customers to appraise them of the rapidly evolving situation in India and 4) identified sites for an iron ore crusher. In addition we have applied and diligently followed up on mining licenses in India. We believe that substantial long-term value for our shareholders can come from owning mining assets or mining licenses. As such, we have begun identifying potential acquisition candidates in India as well as in Malaysia, Africa and North America.
Ram Mukunda, CEO of IGC, said: "While the past year has clearly been frustrating, we remain hopeful that the situation in Karnataka will be resolved soon. In the meantime, we expect demand to continue rising in India, China and now Japan. We have undertaken a program to expand our sourcing of materials beyond India."
About IGC: Based in Bethesda, Maryland, India Globalization Capital (IGC) is a materials and construction company operating in India. Through our subsidiaries in India, we supply iron ore to China and rock aggregate to the infrastructure industry in India. For more information about IGC, please visit the company's web site at http://www.indiaglobalcap.com/.

BJP booklet throws mine muck on Dharam Singh and HD Kumaraswamy

2011-05-10T09:36:00.000-07:00

Even as Congress leaders were heading to Raj Bhavan to demand the dismissal of BJP government, the ruling party on Monday released a booklet titled Who is responsible for the mining mess in Karnataka?, presenting several facts on mining during the recent regimes starting from SM Krishna to BS Yeddyurappa.
Releasing the booklet, BJP MP DB Chandre Gowda pointed out that the highest number of 47 mining licences were recommended during HD Kumaraswamy’s tenure, closely followed by 43 when Dharam Singh was the chief minister. The score of SM Krishna’s government stood at 16 and even former governor Rameshwar Thakur had recommended 22, while Yeddyurappa had recommended 24 licences.
“Of the 47 recommendations, 22 were made in the last 15 days of his rule. This was after the BJP withdrew its support to the government. Does one need any further examples of illegality and immorality?”
Instead of owning up responsibility for the mining mess systematic attempts were being made by Congress and JD(S) leaders who were misleading the public through a smear campaign against the BJP government, he said. “It is high time the public is told the real facts,” he said.
It was during the period of Dharam Singh that a decision was taken to allow movement of iron ore dumped illegally on patta lands by issuing dispatch permits ignoring the advice of mines department officials. The Lokayukta has held this as unlawful and recommended recovery of loss amounting to `23 crore from Dharam Singh.
But strangely the then governor, Rameshwar Thakur, dropped the case against Dharam Singh citing flimsy grounds. “What more proof does one need to prove complicity of the Congress with mining mafia?” asked Chandre Gowda.
Stating that it was Yeddyurappa government which has initiated measures to curb illegal mining, he asked, “If the BJP government is really colluding with mining lobbies then will such a government introduce value added mining policy? Would it have encouraged setting up steel plants while it wouldhave been convenient to allow large scale export of iron ore? Will such a government ban export of iron ore?”
Meanwhile, chief minister BS Yeddyurappa on Monday sought the intervention of prime minister Manmohan Singh for a ban on export of iron ore from the country.“India is the only country where illegal mining is being carried out in almost all the states. There is an urgent need for prime minister Manmohan Singh to intervene on this issue of imposing a total ban on export of iron ore,” he said.
Natural resources including mineral wealth must be preserved and used internally for value addition, he told reporters on the sidelines of a religious function at Kuthyaru, near Udupi. “I have been stressing this (ban on iron ore export) since a long time including at the NDC (National Development Council) meeting of the chief ministers held at New Delhi,” Yeddyurappa said. He also criticised opposition saying that it was under their rule all licences for mining were given.

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Chinese iron ore traders expect softening spot prices

2011-04-22T09:45:00.000-07:00

Chinese iron ore traders expect spot import prices to soften further to around $180/tonne cfr China for 63.5% Fe fines in the near term on the retreat of the Chinese steel mills following their recent re-stocking.

In the meantime, 63.5% Fe fines were offered at $186/t cfr on 21 April, down another $1-2/t from the beginning of the week. Transaction prices would be in the range of $180-185/t cfr though no actual transactions were reported by the few traders surveyed by Steel Business Briefing.

“The Chinese mills have more or less finished their re-stocking for this round,” an iron ore trader in north China’s Tianjin observed to SBB. “Together with the further tightening of China’s monetary policies, iron ore offer prices – mainly from India – have been softening since later last week, and this will probably continue in the near term.”

China’s central government raised the cash deposit reserve ratio for banks by another 0.5% to as high as 20.5% starting Thursday, SBB notes.

A second trader in Tianjin shared the sentiment, though he pointed out that the decline will be mild as China’s iron ore demand is unlikely to see any substantial weakening in Q2, the usual peak season for steel consumption.

Indian iron ore traders in Karnataka were allowed to begin exporting iron ore starting 21 April and this may further drag down offer prices in the near term on the anticipated supply increase, a Beijing iron ore trader said.

http://www.indiaglobalcap.com/

Investigations continue into illegal mining in Karnataka

2011-04-21T08:46:00.000-07:00

Ongoing investigations into alleged illegal mining operations in southern India’s Karnataka state – being conducted by the Supreme Court’s Central Empowered Committee (CEC) – could take some months to conclude.

The regional office of the Federation of Indian Mineral Industries – FIMI South – is demanding that these investigations be conducted on a case-by-case basis so that “minor infringements” and “gross violations” are addressed accordingly, informed sources tell Steel Business Briefing.

Following visits to iron ore mines in the state’s Bellary-Hospet region, the CEC recommended that all mining operations in the area be curtailed in order to check illegal mining, as SBB previously reported. In a hearing on 15 April, the Supreme Court ordered the Karnataka state government to respond to these findings before the next hearing scheduled on 21 April.

Based on the CEC’s initial findings, operations at some 10-15 mines in the region have already been suspended. Representing the interests of the local mining lobby, the FIMI South is arguing that a blanket suspension of all mining operations in the region is uncalled for.

For instance, the CEC noted that some miners have been operating beyond the permitted geographic boundaries of their mines. However, the FIMI South is arguing that in some cases, the mining boundaries may have been inaccurately defined by the state government itself while allotting mining leases.

Consequently, miners who have “erred inadvertently” should not be penalised on the same scale as those who have “intentionally committed gross violations,” a local source tells SBB. Should the Supreme Court call for more detailed investigations, it could take “several months” for the issue to be resolved, he adds.

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Karnataka iron ore export volumes could drop 50%

2011-04-19T21:22:00.000-07:00

With the Karnataka state government set to begin issuing iron ore export permits from 20 April, local miners and traders expect stringent regulatory procedures and bureaucratic delays to crimp the state’s ore export volumes to just 40-50% of pre-ban levels.

According to The Karnataka (Prevention of Illegal mining, transportation and storage of minerals) Rules, 2011, the state government will issue only one permit to each applicant for transporting up to 4,000 tonnes/day/mine.

Once this cargo is transported from the mine to the port, exporters would need to obtain an acknowledgement receipt from the port authorities. Only after receiving the acknowledgement from the port would the Karnataka government grant a subsequent export permit to the applicant.

“There will be a large time gap between consecutive shipments from each mine,” a local miner tells Steel Business Briefing. “Prior to the ban, we were able to export 300,000-350,000 tonnes of month of ore. Now we may be able to ship out only about 150,000 tonne per month,” he expects.

The state government also intends to clamp down on overladen trucks. “Earlier, trucks capable of carrying 16-17t of ore were loaded with 22-25t. This will no longer be possible,” a Karwar-based source tells SBB. Ore exports from Karnataka would now average 16-20m tonnes/year compared to about nearly 35-40m t/y earlier, he expects.

Though sources grumble that these stringent procedures will constrict ore outflow, they also note that these measures will help curb illegal mining in the state. “The industry stands to benefit from these measures in the long run,” a Bangalore-based exporter notes.

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Vedanta Sees Ore-Export Ban Lifted by Indian Court in May

2011-04-18T08:55:00.000-07:00

Vedanta Resources Plc (VED) the largest copper producer in India, expects a ban on iron-ore exports from the country’s Karnataka state to be lifted permanently when the Supreme Court has a hearing in May.
Karnataka, a state in India’s south, barred iron-ore exports last July to increase local supplies of the steelmaking ingredient. This month India’s Supreme Court allowed shipments to restart from April 20. Miners in the state had appealed against the ban. China, the world’s biggest steelmaker, got 14 percent of its iron ore from India in February.
“We feel that going forward the ban will be permanently taken off when the Supreme Court is called for the next hearing in the first week of May,” Prasun Kumar Mukherjee, head of Vedanta’s iron-ore division, said today on a conference call. “We make our plans for the current financial year of 2012 as there will be no restriction on exports.”
Vedanta plans to produce 7 million to 8 million metric tons of iron ore in Karnataka this year, Mukherjee said. Iron ore will account for 37 percent of all dry-bulk goods, including iron ore, thermal coal, grain and minor bulk commodities, hauled at sea this year, Clarkson Plc, the world’s biggest shipbroker, forecast.

Higher Taxes

Iron ore shipments from India, the world’s third-largest exporter of the commodity, will probably fall 25 percent in the next financial year following an increase in export taxes, Siddharth Rungta, president of the Federation of Indian Mineral Industries, said on Feb. 28. Overseas sales may decline to 64 million metric tons in the year starting April 1 from a revised forecast of 85 million tons this year, he said.
The lifting of the Karnataka ban should, in theory, increase the amount of spot cargoes coming from India, Thomas Baldwin, an iron-ore, freight and steel trader with Deutsche Bank AG in London, said in a note yesterday.
“In practice, we’re waiting to see the full impact as increased tariff and transport costs along with a clampdown on the illegal mining activity may mean that the volumes returning to the market are not as great as some predict,” he said.
India plans to increase its export tax on all grades of iron ore to 20 percent in the next financial year. The price of iron ore shipped to China from India has increased 5.1 percent this year.

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Indian court pursues investigations into illegal mining

2011-04-14T06:42:00.000-07:00

India’s Supreme Court is continuing hearings on investigations into illegal mining in the southern state of Karnataka, with the court’s Central Empowered Committee (CEC) expected to submit its findings on the issue by 15 April.

Late last month following visits to iron ore mines in the state’s Bellary-Hospet region, the CEC recommended that all mining operations in the area be curtailed in order to check illegal mining, as Steel Business Briefing previously reported.

Based on the committee’s initial investigative findings, operations at some 10-15 mines in the region have already been suspended. “The committee found that output at some of these mines exceeded the amounts permitted under their mining leases,” a local source notes. “Some other miners were reprimanded for encroaching into forest regions adjoining their mines.”

The illegal nature of these operations makes determining the volume of ore output impacted by the mine closures difficult. However, sources estimate that some of the mines affected were producing in excess of 1m tonnes/year of ore.

“A large part of the Bellary-Hospet region would be impacted by the CEC’s findings,” another local source tells SBB. “But the committee’s report will clearly spell out who the culprits are. At least, miners and traders operating legally will no longer be harassed needlessly because of the illicit activities of others,” he expects. The Karnataka government is expected to resume issuing iron ore export permits from 20 April following a Supreme Court directive to this effect early this month, as SBB has reported.

http://www.indiaglobalcap.com/

China’s iron ore imports rebound, up 14% so far this year

2011-04-13T06:54:00.000-07:00

China’s iron ore imports rebounded by 22.3% month-on-month in March, the latest preliminary figures from the country’s General Administration of Customs show.

Last month, China purchased 59.48m tonnes of iron ore from abroad, up 10.84mt from February, though the total was largely in line with the 59.01mt a year ago. China’s January iron ore import volume still remains the highest for 2011 at 68.97m t.

In the first three months of this year the country imported 177.17mt of iron ore, up 14.4% from a year ago, while the value has surged 82.5% from 2010 because of higher prices, Steel Business Briefing understands.

In February and March, the price for 63.5%/63% Fe Indian iron ore fines ranged widely at $170~197/t cfr and made for the most turbulent period so far this year, according to SBB iron ore price data.

Moreover, the price volatility has continued this month. By 8 April, the price for 63.5%/63% Fe fines from India had advanced to $189-190/t cfr China, up by $4-5/t from the beginning of last week, and by nearly $20/t from mid-March.

But most of the Chinese traders surveyed by SBB questioned whether the latest round of iron ore price increases can be sustained given the lack of support from market fundamentals. Indeed, traders have been shying away from the market so far, and this may result in a decrease in China’s iron ore import volume for April.

http://www.indiaglobalcap.com/

Hebei Steel to invest in Chile's CMP iron ore project

2011-04-12T08:21:00.000-07:00

Leading Chinese integrated steel company Hebei Iron & Steel Group (Hegang) has accelerated its foreign resources investments by agreeing to buy into the Cerro Negro Norte (CNN) iron ore project in Chile owned by mining company Compañía Minera del Pacífico (CMP).

Steel Business Briefing confirms with the northern China mill that the two parties signed a memorandum of understanding (MoU) to cooperate on the CNN project on 30 March. Hegang officials declined to comment further, however.

The most likely vehicle for Hegang’s investment in the CNN ore project will be its Hong Kong-based Hebei Steel International Holdings. Formed on the day the MoU was signed, the subsidiary was created to expand Hegang’s international trading and to focus on overseas mineral and resources investments, SBB understands.

CMP’s CNN project, approved by the Chilean environmental authorities back in 2009 and by the company board last August, is expected to cost $574.5m initially and produce 4m tonnes/year of iron ore concentrate, as SBB has reported. The project is part of CMP’s program to lift iron ore output from 9-10m t/y to over 16-17m t/y over the next several years.

CMP has signed iron ore supply contracts with several Chinese steelworks including Xinyu Iron & Steel and Jinan Iron & Steel, SBB understands.

Hegang, one of China’s largest steelmakers, has its headquarters in Shijiazhuang city, in north China's Hebei province, and boasts a combined crude steel capacity in seven steelmaking subsidiaries of over 40m t/y.

Iron ore exports from Karnataka to resume 'gradually'

2011-04-11T04:44:00.001-07:00

Iron ore supplies from southern India’s Karnataka state are expected to make their way into the global spot market “only gradually” after the state government resumes issuing export permits from 20 April, local sources tell Steel Business Briefing.

Since export permits – also known as mineral despatch permits – are issued at the mine head, exporters will be unable to move their existing stockpiles from mines to ports before 20 April. Market watchers note that the government is unlikely to issue permits to miners and traders that are presently being investigated for alleged illegal operations.

Sources say they also expect to face bureaucratic delays in securing permits, given the state government’s “disinclination” towards ore exports.

“The imposition of the ban itself was a farce,” a Bangalore-based exporter tells SBB. “The state government was simply trying to protect the politicians involved in illegal mining. And throughout the court proceedings, the government kept resorting to delaying tactics," he says, adding "I don’t expect them to promptly start issuing permits now; they can still make it difficult for us."

Consequently, ore supplies from the state are likely to start trickling into ports only by end-April or early-May. Though India’s monsoon season will see some ports on the west coast shut by late May, sources note that only the Belekeri and Karwar ports of Karnataka, and ports in neighbouring Goa state are closed for monsoons.

Karnataka’s New Mangalore port, and other ports in the neighbouring states of Andhra Pradesh and Tamil Nadu – which are functional throughout the year – are alternative channels for exporting Karnataka-origin ore.

Iron ore exports from Karnataka to recommence from April 20

2011-04-05T06:09:00.001-07:00

http://www.deccanherald.com/content/151286/iron-ore-exports-karnataka-recommence.html

SC hearing on Karnataka iron ore export ban continues Tuesday

2011-04-04T09:30:00.000-07:00

NEW DELHI (Reuters) - The Supreme Court will continue a hearing of an appeal against a ban on iron ore exports from Karnataka on Tuesday, judges in the court said on Monday. Karnataka, which accounts for a quarter of India's iron ore exports, banned shipments of iron ore from 10 ports and stopped its transport to other ports for exports in July last year. "We will continue the hearing tomorrow," one of the judges said, after turning down a request by the state government for a four-week extension. "We have to take a decision on the iron ore already parked at ports," the judge added, raising expectations of a swift decision in the case. Karnataka had cited a drive against illegal mining and the need to preserve the raw material for local steelmakers for the introduction of the ban. Exporters and miners from the state challenged the ban in Karnataka high court, but lost the case, following which they petitioned the Supreme Court in November. India is the world's third largest supplier of iron ore with most of its approximately 100 million tonnes of the commodity landing in China, which has the world's largest steel industry. India's iron ore exports fell 18.6 percent in February, as the ban on exports by Karnataka continued to cut sales.

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Karnataka Ban end is near

2011-03-31T09:21:00.000-07:00

The ban on iron ore exports from India's Karnataka state is likely to be fully lifted from the start of April, according to Sesa Goa's ceo SK Mukherjee.

“From the beginning of April the export ban will be a thing of the past," he told MB's China Iron Ore conference in Beijing.

Exports from Karnataka were banned last July as part of a crackdown by the state's government on illegal mining. The government has already taken “certain steps” towards repealing the ban, Mukherjee said. Some iron ore has recently been released from port stockpiles for export.

“Karnataka [still] has to officially announce [the end of the ban],” Mukherjee said. This could happen by April 4, after India's Supreme Court has ratified the decision.

The export ban in Karnataka was one factor fuelling the rise in iron ore prices in the second half of 2010.

Buffett Discovers Emerging Value of India

2011-03-29T21:57:00.000-07:00

Berkshire Hathaway Inc. chairman Warren Buffett believes in scale, whether in making money or giving it away.

But while he wants his investing to be a successful activity, he wants his philanthropic activity to focus on “the tough problems of society that defy both money and intellect”.

“Big-time charity should tackle things that may fail. If you are succeeding with everything you have taken on, you may have chosen what is too easy,” he told reporters in Bangalore on Tuesday, a few hours into his first visit to India.

Philanthropy was more difficult than investing, he said, as there was no feedback from the “market system” to tell you how you are doing. But if it can be done with “scale and intelligence,” it will be worth it.
Should he have started giving money away earlier? “My wife would agree. But I can compound money at a good rate, and I thought it is better to give away billions later on than just millions earlier,” he said.
The idea of his visit to India, along with Bill Gates, was to just talk about what they had done in the US in terms of pledging to give away wealth, rather than make any prescriptions. “If something like that, or a variant of it, can work here, great,” he said.

Emphasizing his well-known investment philosophy in the Indian context, he said he liked industries where the rate of change is slow.

While Indian information technology (IT) companies are good prospects for investment, he said that he had no idea which companies are going to do well in the future. “I bought 100 shares of Microsoft (Corp).”
Sectors can be identified, but the key was to identify the right companies, which is why it is important to stay within “your circle of competence.”

“I understand chewing gum and cola better,” he quipped, holding up a soft drink can. Buffett has a large stake in Coca-Cola.

Berkshire Hathaway would have to make large investments for it to be meaningful, and he was therefore looking for one good idea. “Opportunities are hard enough to find,” he said.
Besides the US, where he has nearly 80% to 90% of his investments, Buffett is looking at India and China. “I need to make large investments. I hope to spend some money here. I don’t consider India an emerging market, it’s a large market. We invest billions of dollars and it’s tough to do that in emerging markets.”
He, however, refused to say how much capital could come India’s way. “If I get one good idea here, I will invest in it.”

His advice for investors in India? “It is the same as anywhere. Invest in what you understand, go for companies with good management and a sustainable economic advantage over time, and don’t buy and sell actively.”

On his insurance business in India, an agency for Bajaj Allianz General Insurance Co. Ltd, he said that a cap higher than 26% would make things more attractive. “The effort is the same, whether we have a 26% stake, or 50 or 75. So for some time, we’ll be at the agency level rather than the underwriting level,” he said.
He was non-committal on reports of India-born Berkshire insurance chief Ajit Jain being seen as a candidate to succeed him as chairman of Berkshire Hathaway. Buffett said Jain is like a brother or a son. “He is better than me,” he said. “He has made more money for Berkshire than I have.”

India Iron Ore update

2011-03-24T22:55:00.000-07:00

India could partially roll back its 20% export duty on iron ore fines for low-grade material, said industry insiders at MB's China Iron Ore conference in Beijing.

"Representation has been made to the government to reduce the export duty," said SK Mukherjee, ceo at Sesa Goa.

"An export tax of 20% is a very high level and it might put some exporters out of business, particularly the higher-cost exporters. They are feeling the pressure," he said.

India raised the export tax for iron ore to 20% on March 1 from 5% on fines and 15% on lump.
Mukherjee said he was "more or less confident" of a tax reduction, adding that "the export tax is not part of the annual budget so it can be changed at any time".

"The price has come down a lot in a few weeks, and there is potential that some of the exporters may have to stop," he added.

"India, due to its inferior steelmaking technologies, cannot consume lower-grade iron ore. Hopefully, the Indian government will have no choice but to adjust the export duty on lower-grade iron ore in a view to facilitate exports," said a source at another Indian miner.

"[I hear that] India is considering rolling back export duty rates according to different grades, which is reasonable," confirmed a Singapore-based iron ore trader.

Indian may cut the export duty to below 10% for iron ore below 58% Fe, and to 12-13% for 58-62% Fe material, with slight duty reductions for iron ore above 62% Fe, he said.

Other Indian miners and traders agreed that chances were high that India cut the export duty for lower-grade iron ore, but felt that any duty reduction would be limited.

Good News on India Economy

2011-03-21T12:17:00.000-07:00

The Centre for Monitoring Indian Economy report says “real GDP will grow by 8.8%” in 2011-12.
“Private final consumption expenditure (PFCE) is projected to grow by a healthy 7.5% in the coming fiscal, and gross fixed capital formation by 14.6%. Growing incomes in urban and rural India will drive the robust growth in PFCE,” the report says.
CMIE sees wages and salaries in the corporate sector to rise 14.2%, while inflation at the consumer level is expected to ease to around 7% thanks to cooling food price inflation. This in turn is expected to increase purchasing power of urban consumers.
Rural and semi-urban areas too will see higher incomes with agricultural output pegged at 3-4%, and foodgrain production at “a record 240.8 million tonne. This, coupled with an increase in the prices of agricultural crops, is expected to bring around 10% more income in the hands of the farming community,” the report says.
Another positive mentioned is the linking of NREGS wages to the consumer price index for agriculture, which means that “the purchasing power of at least one-fourth of rural India will remain unaffected” even if inflation rises beyond expectations.
CMIE also sees higher industrial growth. “The six core industries — cement, steel, electricity, coal, crude oil and petroleum products — are expected to show a buoyancy in production in 2011-12. We project that industrial production will grow at around 10%,” the report concludes.

For companies involved in the development of India infrastructure such as materials this report shows the strong projected growth. The core industries are all projecting in the 10% growth range. India and its growth oriented economic opportunities are an exceptional area for investor growth. The most important aspect to seek in this sector are companies who have strong ties with the India political and business communities as well as an exceptional understanding of the cultural issues involved in growing the business opportunities in India. IGC is just such a company. (IGC:AMEX) http://www.indiaglobalcap.com/

India: An Economic Superpower in the making? Pt 2

2011-03-18T07:10:00.000-07:00

Lets look at some ways in which there is positive movement towards the changes that can move India into the realization of becoming an economic super power.

Some Indians are actively pushing for a more open economy. For instance, the Centre for Civil Society, headed by Parth Shah, helped organize a recent international conference of the Mont Pelerin Society in New Delhi. The CCS works for a freer Indian economy and society. One of its most important initiatives is an educational voucher program that empowers poor parents to provide a good education for their children.
India's widely dispersed Diaspora — apparently the world's largest after Mexico — also could help spur future economic growth. Ethnic Indians have demonstrated their entrepreneurship around the globe, including in America. A more prosperous India already has begun to draw its sons and daughters back home. More reform would encourage more investment and trade from emigrants.
A wealthier India obviously would benefit its people. A stronger India also would enhance a regional balance of power in Asia.

New Dehli's relationship with China has long been strained, yet today New Dehli is playing a well more active geo-political role in its attempts to balance relationships with China.
For instance, India has initiated a "Look East" policy, which includes improved relations with several Southeast Asian nations, including Indonesia, Malaysia, and Vietnam. Six years ago New Delhi signed a strategic partnership agreement with the first, the globe's most populous Muslim state and an emerging power in Southeast Asia. In January India added investment and trade accords with Jakarta.
India has inked a free trade agreement with ASEAN and is discussing widening the pact to investment and services. New Delhi also has negotiated a free trade agreement with Japan. Moreover, India is active in Burma, heretofore almost a satellite of China.
Equally important, New Delhi is playing a more active military role, increasing outlays and participating in naval maneuvers with Japanese and Vietnamese forces. India has developed an expanding nuclear arsenal and possesses an aircraft carrier, a weapon currently absent from China's arsenal.

There exists an improved relationship between New Dehli and the USA, however a formal alliance is not in America's interest and Indian officials won't act as Washington's tool to contain the PRC. However, both nations have an incentive to cooperate in constraining China's potentially aggressive tendencies. Deepak Lal argued: "It is in India's long term interest to recognize that the continuance of its liberal democratic open economy also requires it to support and, if necessary, take over the imperial burden from the U.S."

In conclusion, China is rising. But so is India. Sadanand Dhume pointed out that the latter has "core strengths — competitive private companies, a vast cohort of competent engineers and managers, a growing middle class and the cushion of long-term stability provided by democracy." However, New Delhi needs to recommit itself to economic reform for its people to fulfill their enormous potential.

If India does so, it will share in the leadership of the 21st century. And the world will likely be freer and more prosperous as a result.

India: An Economic Superpower in the making?

2011-03-14T12:40:00.000-07:00

In the midst of its over all poverty India enjoys rapid economic growth rates and is now the fourth largest economy in the world. A movement within the political climate to free up the entreprenurial spirit in its people and India will well challenge China as a rising econimic super-power.

China is far from free yet when they unleashed some far reaching market based reforms they started an exonomic boom. There is still much to do in essence of creating free-markets, yet the progress to date has shown pedigious growth rates.

India possesses several advantages in the coming surge of super power economies. Firstly they have the world's second largest population after that of China and will most likely over take China in the not to distance future due to China's one child policy. For those who have followed the economic driven growth of demographic designed economic principles (the baby boomers cycle) (See the work of Harry S. Dent for more info) then you clearly can understand the huge growth catalysts that exist in these world leading populations.

The second major factor that favors India is Democracy. While politics have a history of chaos in India, the simple issue is the people can toss out the rulers. A nice bit of social positive force in this major advantage.

Two decades ago the current prime minister, Manmohan Singh, presided over an economic U-turn as finance minister. Observed Indian journalist Niranjan Rajadhyaksha: "The dramatic liberalization of that year and further policy changes by governments in the late 1990s were a smashing success in some ways — India has a far more stable economy and is far more prosperous than before." "Average dollar incomes have more than tripled since 1991. Diets have improved and more proteins are being consumed. School enrollment has soared. Human development indicators increased more in the first decade of the current century than they did in the 1990s."

While there are still growing pains with issues such as the legal system regulatory processes and the business rules, and labor laws, there is enough movement towards improvements to be optimistic over the future.

Last week Finance Minister Pranab Mukherjee announced that foreign investors will soon be allowed to purchase stock mutual funds managed by Indian companies, but Wall Street managers warn that the details will determine the plan's success. While foreign investment did drop last year due to a perception of a decrease in the continued liberalization of policies, economic growth is still projected to hit 8.5-9% this year while China has pulled back its projection to 7%. If New Delhi systematically reformed its policies, India could consistently outgrow and eventually overtake China.

Later this week we will look at some ways in which there is positive movement towards the changes that can move India into the realization of becoming an econimic super power.

Focus on depth of Market

2011-03-04T09:45:00.000-08:00

The overall market of India infrastructure is a vital growth opportunity. While there have been obstacles for any small cap company in this market, it remains an exeptional growth market that will continue to explode over the next 20 years or so. The India economy is one of the most attractive emerging growth stories in the global economy expansion. Companies who provide services to this growth market will find on going opportunity for long term value. This is not simply a short term window of opportunity it is a long and deep growth opportunity. Kindly look at excepts from a recent analyst report on the depth of this growth opportunity:

"New Delhi: Putting political risks aside, global private equity (PE) funds looking for high return on investments are going to target Indian infrastructure companies in the coming years, says a report by research agency Preqin.

India is attracting the highest number of unlisted, closed-end funds that focus on a single country, making it the most preferred choice among emerging markets, according to the study, released late last week.

“In terms of opportunities, emerging markets are becoming more popular with global investors after the global financial crisis, and India is at the centre of this,” said analyst Elliot Bradbrook, who has authored the report

India, the world’s second-fastest growing major economy after China, will need $1 trillion (Rs45.1 trillion) worth of infrastructure investment over the next five years, according to the researcher.

The government is encouraging infrastructure investment, and plans to issue infrastructure bonds worth Rs30,000 crore in the year starting 1 April, finance minister Pranab Mukherjee said in his annual Union budget speech on 28 February.

Currently, there are 38 overseas infrastructure investors, all of them PE funds, with a preference for assets in India, says the Preqin report. Of these, 25 have raised an aggregate $9.5 billion, while the rest are scouting for another $7.3 billion.

In addition, nine India-focused funds will be launched in 2011, the report said."

One can clearly see that this opportunity exists and will create exceptional wealth for companies that develop strong strategic business plans focused on providing the key services to this space. The companies that are best positioned will be those who have India based relationships and can fully understand and be responsive to the select needs within the cultural and business accepted norms of the society. These should be core foundations an investor looks for in provider companies to the India infrastructure growth opportunity.

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