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Press Releases
Oct, 2006

Press Information Bureau
Government of India
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PRINCE ANDREW MEETS Dr. ASHWANI KUMAR – HUGE POTENTIAL FOR
INCREASING TRADE AND INVESTMENT BETWEEN INDIA AND UK
INDIA EMERGES THIRD LARGEST INVESTOR IN UK AFTER US AND JAPAN 

New Delhi: October 30, 2006 

          Prince Andrew, the Duke of York, who is visiting India as the Special Representative of the United Kingdom (UK) for International Trade and Investment, had a meeting with Dr. Ashwani Kumar, Minister of State for Commerce & Industry, here this afternoon.  Discussions between the two underlined the major significance of this high-powered visit of a British Royal in the context of the huge potential for increasing the two-way trade and investment between India and the UK. 

          India has emerged as the 3^rd largest foreign investor in the UK, after US and Japan.  In 2005 – 06, there was a 110% rise in the number of UK bound investment projects from India accounting for over 1 billion Pound Sterling.  UK attracts about 60% of Indian investment to Europe and provides Indian business a gateway for the European market.  As Europe’s largest – e-commerce market, UK offers immense possibilities for Indian companies in the telecommunication, IT, electronic hardware and the services sector etc., it was noted. 

          Dr. Kumar in particular focussed upon possibilities for expansion of the Indo-UK trade and investment in manufacturing, infrastructure, IT, service sector, food processing, textile machinery and advance technology products.  Prince Andrew spoke of the immense contribution of the Indian diaspora in UK’s economic development and hoped for a further consolidation of Indo-UK relationship through the deepening of economic and political relations between the two countries.   

          Nearly 500 Indian companies have a presence in the UK today.  These include Saven Technologies UK Ltd., TATA Consultancy Services, HCL Technologies Europe Ltd., United Phosphorous Ltd., Bank of India, ITC Infotech Ld., Magna Infotech (UK) Ltd., Magna Infotech (UK) Ltd., Mastek, Contech Software, Infosys Technologies Ltd., Tata Tetley GB Ltd., Simco Digital UK Ltd., Wipro, Termax, Birla Soft UK Ltd., Bharat Forge, and Gautier India.   

          India is the 2^nd largest export market of the UK in the developing countries after China.  In 2005, UK exported Pound 3.05 billion of goods and services to India.  UK ranks the 3^rd as far as FDI approvals in India are concerned which account for US $ 6.67 Billion.

          Prince Andrew and Dr. Kumar also discussed the possibility of opening up of the legal services sector in the country as well as of further liberalization of the FDI norms and reforms in the banking sector. Dr. Kumar informed of the huge opportunities India offers for UK companies to invest and work in India.  “In the construction sector alone, Indian government has earmarked US $ 15 billion over the next 10 years to upgrade and extend airport capacity in the country.  This is an area in which UK companies could have major share.  Oil and gas and power sector require billions of dollars of investment in the near future”, he said, citing the success of Carin Energy, Shell, Prudential Insurance, Power Gen UK as prominent examples of successful UK companies in India.   

          Prince Andrew said that there was tremendous scope for increasing the number of joint ventures and collaborative enterprise between SMEs of the two countries, particularly in engineering, textile machineries, automobile components, automobile ancillaries, electronic hardware and pharmaceutical industry in addition to the service sector.

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     AGRI EXPORTS TO EMPOWER INDIAN FARMER – KAMAL NATH
ADDRESSES AGRICULTURE SUMMIT 

New Delhi: October 19, 2006 

          Delivering the valedictory address at the Agriculture Summit 2006 here this afternoon, Shri Kamal Nath, Union Minister of Commerce & Industry, underlined the need to reflect on how to empower the Indian farmer and said that the export thrust in various agricultural products designed to improve the standard of living of the Indian farmer was a step in this direction, which had also been complementing the objective of self-sufficiency.  

          “We in the Ministry are working towards unshackling of controls and creating an atmosphere of trust and transparency. Our export of agro and allied products including plantations are of the order of Rs.3600 crores (about $ 8 billion).  Export of these products witnessed a growth at a CAGR of 12.22% in the first four years of the Tenth Five Year Plan.  During 2005-06, the export of these products accounted for 9% of the total exports from the country.   This in itself has been a big leap forward in the background of shrinking size of holding, imperfections in the product and factored market, increased cash component in the cost of cultivation and the absence of safety nets.  Regardless of the extent to which the international agricultural markets will be reformed as a result of the negotiations in the WTO, it is expected that the next phase will be dominated by prices that have a greater market orientation, commercial crop sector, international trade and agro-processing.  In all this it would remain central that the conditions facing the Indian farmer should be made favourable and allow him to overtake any remaining constraints”, he said, while outlining the government’s agri export strategy. 

          “We are working on the rejuvenation of our plantations – tobacco, rubber, spices, tea and coffee.  We have recently set up a very ambitious special purpose tea fund to completely revamp the sector.  We are working on a similar project for coffee.  We are opening new export markets for agriculture - mangoes to Japan, tea to Pakistan, Egypt and Iran; meat to Egypt; fresh fruits to China and organic products to the European Union  (EU), the Minister said.

          Turning to the concept of Agri Export Zones (AEZs) based on a cluster approach of identifying the potential products from a contiguous area in one or more district in a State, Shri Kamal Nath said that 60 AEZs had been sanctioned so far and some of the more promising AEZs were now being selected for more funds in order to improve the infrastructure so as to trigger investment by the growers and processors.  He also stressed the urgent need for heavy investment in cold chain in order to reduce wastage of agricultural products such a food grains, fruits, vegetables and spices.

          Referring to concerns raised about diversion of prime agricultural land for purposes of Special Economic Zones (SEZs) and rehabilitation problems faced by affected farmers, Shri Kamal Nath said: “The matter has been reviewed by us and we have categorically stated that mainly waste and barren land and if necessary single crop agricultural land alone should be acquired for the SEZs. It was also discussed with the State Government representatives that if perforce a portion of double-cropped agricultural land has to be acquired to meet the minimum area requirements, the same should not exceed 10% of the total land required for the SEZs.  However, I would like to inform you that in the first 150 SEZs which were given formal approval, the entire land was in the possession of the State Industrial Development Corporations or with the Companies and not a single farmer had been displaced”.  

          Shri Kamal Nath reiterated that the interests of Indian farmers and those of small and more vulnerable industries would not be compromised in the Doha Round of multilateral trade negotiations.  “Any deal which does not result in substantially and effectively reducing all types of trade-distorting subsidies provided by the developed countries will not do justice to the more than 2 billion poor and vulnerable farmers across the world, who have no option but to eke a subsistence life out of agriculture.  This is the real Black Box, and not development instruments such as Special Products and Special Safeguard Mechanism, which are safety valves against surges in imports and fall in prices which lead to suicides and decimation of agricultural sectors in poor developing countries like India”, he added.

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         KAMAL NATH TO ADDRESS AGRICULTURE SUMMIT TOMORROW 

New Delhi: October 18, 2006 

        Shri Kamal Nath, Minister of Commerce and Industry, will address the valedictory session of the Agriculture Summit 2006 here tomorrow afternoon.   The Minister’s valedictory address will be on “Indian Agriculture in a Globalised Regime – Challenges and Opportunities” . 

         The 2-day Agriculture Summit 2006 (Reforms for Empowering the Farmer), jointly organised by the Ministry of Agriculture, Government of India and the Federation of Indian Chambers of Commerce and Industry (FICCI) was  inaugurated   by   the   Prime   Minister,   Dr. Manmohan Singh today (18th October).

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         STC PRESENTS DIVIDEND CHEQUE TO KAMAL NATH 

New Delhi: October 18, 2006 

          The State Trading Corporation of India Ltd. (STC) has paid a final dividend of 35% for 2005-06 to the Government of India. The dividend cheque for Rs.9.56 crore was handed over by Dr. Arvind Pandalai, Chairman & Managing Director of STC to Shri Kamal Nath. Union Minister of Commerce & Industry, here last evening.  This is in addition to an interim dividend of 15% already paid for the year 2005-06, thus taking the total annual dividend payment for the year 2005-06 to an all time high of 50%.  

          Dr. Pandalai informed that during 2005-06, the Corporation had earned the highest-ever net profit (post tax) of Rs.39 crore. The highest profitability was the outcome of a deliberate shift of focus from items yielding higher turnover to the ones generating greater trading margins and various diversification plans adopted by the Corporation. During 2005-06, STC reported a turnover of over Rs.7100 crore. 

          During the first six months of the current financial year i.e. April-September 2006, the Corporation has provisionally achieved a turnover of over Rs.4800 crore and earned a profit before tax of Rs.33 crore.  

          In keeping with its plans to develop agro business, the Corporation has contracted 55 lakh MT of wheat for import on behalf of the Government against 5 global tenders floated during the last about six months. As at end-September 2006, 15 lakh MT of wheat has already arrived the Indian ports and the same has been handed over to FCI. 

          The Government of India has appointed STC as a nodal agency to monitor implementation of offset/counter trade obligations arising out of purchase of aircrafts by Indian/Air India. The Corporation has already entered into a high value agreement with Airbus in this regard. Similar agreement is also being negotiated with Boeing

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          EU -- INDIA’S LARGEST TRADING PARTNER: KAMAL NATH 

New Delhi: October 12, 2006 

The European Union (EU) remains India’s largest trading partner and EU and India are now also strategic partners, Shri Kamal Nath, Union Minister of Commerce & Industry, said at the EU-India Summit in Helsinki today. The EU accounted for 21.77% of India’s exports and 18.33 per cent of total Indian imports in the year 2003-04. As per the latest figures available for the year 2004, total trade between EU and India increased from €28.4 billion in 2003 to €33.2 billion in 2004, registering a growth of 16.9%.  

Underlining the critical importance of India-EU investment relationship, Shri Kamal Nath said:  “During the year 2004, India received a FDI of US $ 451 million from EU. While in 2005 the FDI inflows from EU reduced to US $ 375 million, in the last sixteen years the cumulative FDI from EU to India has been US $ 8.16 billion, which is 21% of the total FDI received by India.   We can say that EU is one of the most important source and now destination for India for FDI. But look at the fraction of FDI from EU. (EU is the number one investor in the world.   In 2004 alone, it invested US $ 280 billion outside the EU).  We have a long way to go. How do we make India more attractive to the EU business community? We need to address this issue quickly.”  

Earlier, addressing the 7^th EU-India Business Summit Session on “Opening up New Business Opportunities” in Helsinki, Shri Kamal Nath drew attention to the vast investment opportunities of US $ 650 billion that would be offered by India in the next 5 years with a major chunk of US $ 350 billion in physical infrastructure alone.  He also flagged the huge potential in sectors such as automobiles and auto ancillaries, real estate, biotechnology and food processing. 

“We have established a high level trade group to explore ways to deepen and widen our bilateral trade and investment relationship including a future broad base trade and investment agreement.  As the world’s economy becomes more integrated and we have greater exchange of trade and commerce between Europe and India, I have no doubt, at all, that both sides will benefit and benefit immensely”, the Minister said.

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SEZs IN KARNATAKA, ANDHRA PRADESH, KERALA AND CHATTISGARH APPROVED
26 FORMAL APPROVALS AND 8 IN-PRINCIPLE APPROVALS GRANTED BY BOARD OF APPROVALS 

New Delhi: October 10, 2006

The Board of Approvals (BOA) in its meeting held on 10^th October 2006 considered 82 proposals for establishing SEZs in the States of Assam, Chattisgarh, Karnataka, Kerala and Andhra Pradesh and one proposal from Madhya Pradesh.  26 Formal approvals and 8 in principle approvals were granted in this meeting.    

Notable amongst the approvals are : 

1.                     In principle approval to Writers and Publishers Limited for a Multi Product SEZ in Chattisgarh  

2.                     Two Formal Approvals for Karnataka Industrial Areas Development Board for one Food Processing and related Services and one Pharmaceutical SEZ 

3.                     In principle approval for Hinduja Investments Private Limited for a Textile and Apparel SEZ in Bangalore   

4.                     Formal approval for Shree Renuka Sugars Limited in Belgaum District, Karnataka for Integrated sugarcane processing complex  

5.                     Formal Approval to Parsvnath Developers Limited for an IT/ITES SEZ at Nedumbassery, Ernakulam District in Kerala 

6.                     Formal approval to TCG Urban Infrastructure Holdings Limited for a Biotechnology in Cochin, Kerala 

7.                     Two Formal Approvals to APIIC for a Biotech SEZ in Medak District and Pharma (formulations) in Mahaboobnagar District in Andhra Pradesh  

8.                     Formal approval to Emaar Hills Township Pvt. Limited for an IT/ITES SEZ at Ranga Reddy Dist., Andhra Pradesh 

9.                    Two in principle approvals to Dr. Reddy’s Laboratories Ltd in Medak Dist., and Srikakulam District in Andhra Pradesh for  Pharmaceutical SEZ and  

10.                   Three formal approvals to Mayatas Properties Private Limited for IT/ITES SEZs in Ranga Reddy District.  

             With this, the total number of Formal approvals comes to 212 and in principle approvals comes to 152.   

            The full list of formal approvals and in-principle approvals given today is attached.

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KAMAL NATH CALLS FOR STEP UP IN UK FDI INFLOWS INTO INDIA 

New Delhi: October 10, 2006 

            Addressing the “India-UK Investment Summit” at Lancaster House in London today, Shri Kamal Nath, Union Minister of Commerce and Industry, called for increasing the inflow of foreign direct investment (FDI) from the United Kingdom (UK) into India as a means of further strengthening the special and strategic relationship between the two countries.   

             “UK ranks 5^th with the cumulative FDI inflow from UK is about Pound 1.1 billion (6.01%) and has flowed into electrical equipment, fuels and service sector.  British companies like Castrol Ltd., Thomas Cook Overseas Ltd., ECOM Communication Ltd., Scottish and New Castle Ltd. and PowerGen have been some of the largest British investors. I am told that the total outward investment by UK is of the order of Pound 35 billion annually of which only about Pound 80 million is India bound”, he said. 

            Emphasising India’s attractiveness as an investment destination, Shri Kamal Nath stated that global corporations understood the value of leveraging India’s advantages. “In fact, India has achieved levels of European productivity at 20 percent of the cost.  It continues to remain competitive vis-à-vis its south Asian neighbours in labour costs.  In 2003, the average labour cost in India was Pound 0.63 per hour of production worker – below most of the low cost countries’ average at Pound 1.1per hour.  A Japanese automaker realized that its equipment designing is at least 20 per cent cheaper in India than compared to any other developing country.  A US based auto component manufacturer would increase its potential return on sales by 3-6 percentage points by shifting its manufacturing to India.  Apart from labour cost advantage and the quality of skilled manpower both technical and management, India also provides capital cost advantages to companies thinking of a long terms presence.  Studies have shown that a full fledged manufacturing facility in India including roads, power and building can be set up at about 60-80 percent of the cost in a developed market”, he said.   

            “In fact, India has already put itself on the radar of every investing entity in the world. The world recognizes that it would be impossible to do business without India”, Shri Kamal Nath said. 

            Simultaneously, India has also emerged as the second biggest foreign investor in the UK, he said citing the latest issue of European Investment Monitor of Ernst and Young.

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BOARD OF APPROVALS GIVES IN-PRINCIPLE APPROVALS TO SEZs IN MADHYA
PRADESH, WEST BENGAL AND TAMIL NADU  

New Delhi: October 6, 2006 

The Board of Approvals in its meeting held on 6^th October 2006 considered 88 proposals for establishing SEZs in Madhya Pradesh, Rajasthan, Tamil Nadu and West Bengal.  8 Formal approvals and 17 in principle approvals were granted in this meeting.    

          Lists of 8 formal approvals and 17 in-principle approvals are attached. 

Notable amongst the approvals are: 

1.                   Aluminium SEZ by M/s Hindalco Industries in Sidhi district in Madhya Pradesh. (In-principle approval). 

2.                   Lotus Footwear Enterprise (contract manufacturers for NIKE Shoes) to be set up in Thiruvannamalai in Tamil Nadu.  (Formal approval) 

3.                   Suzlon Infrastructure Limited for High tech engineering including non-conventional energy equipment in Coimbatore, Tamil Nadu.  (Formal approval)  

4.                   Best and Crompton for a Textile and Apparel Park to be set up in Krishnagiri District in Tamil Nadu.    (In-principle approval). 

5.                   2 Multi product SEZs by M/s New Kolkata International Development Pvt. Ltd (a company promoted by Salim Group of Indonesia) in West Bengal with an investment of Rs.12500 crores.  (In-principle approval). 

6.                   Three proposals from Videocon Realty and Infrastructures Limited for setting up of 2 Multi products and one Electronics SEZ in West Bengal.  (In-principle approval). 

With this, the total number of formal approvals has become 189 and in- principle approvals has become 145. 

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FDI INFLOWS UP BY RECORD 92%: KAMAL NATH

 New Delhi: October 6, 2006 

           Inflows of foreign direct investment (FDI) into India (equity capital components only) during the first four months of the current financial year 2006-07 (April-July), was US $ 2.9 billion compared to US$ 1.5 billion in the same period of 2005-06, showing a record increase of nearly 92%.  FDI inflows (equity capital components only) during the month of July 2006 surged by a record 259%, having increased to US $ 1163 million from US $ 324 million in July 2005.    This was indicated by Shri Kamal Nath, Union Minister of Commerce & Industry, at a news briefing here today. 

            What is significant is that FDI inflows into the manufacturing sector and sectors impacting the manufacturing sector continue to show a record growth.    FDI equity inflows into manufacturing alone in April-July 2006-07 is estimated at US $ 668.41 million, Shri Kamal Nath said while pointing out that some of the services sector like design and engineering, air / sea transport, ports, construction activities etc. have a bearing on the growth of the manufacturing sector.  The FDI policy rationalisation and liberalisation measures have resulted in the increased inflows into such sectors as well, he said. 

             (NB: Manufacturing refers to all industrial activities except power, water supply and mining).

             According to the details available upto July 2006, the 10 sectors attracting highest FDI into India since 1991 are: electrical equipments (including computer software & electronics); services sector (financial & non-financial); telecommunications (radio paging, cellular mobile, basic telephone services); transportation industry; fuels (power + oil refinery); chemicals (other than fertilisers); food processing industries; drugs & pharmaceuticals; cement and gypsum products; and metallurgical industries.    

             The 10 top investing countries are:  Mauritius, USA, Japan, Netherlands, UK, Germany, Singapore, France, South Korea and Switzerland.     

             The single largest inflow received in the current financial year to the tune of US$ 380 million has been brought in by Barclays Bank PLC, Singapore in the financial service sector.  This has been received in the month of July 2006. Other major investors include Global Communication Services Holdings, Mauritius in Aircel Ltd. (Telecom services); SIERO Investment Holding, Mauritius in Orange Realty P Ltd. (Real Estate); Flextronics (Computer Software); Aspen Pharmacare Holdings Ltd., South Africa (Drugs &Pharma).         

           According to the Reserve Bank of India (RBI)’s revised data as per international practices, (i.e., including equity plus reinvested earnings and other capital) cumulative total FDI inflows into India from August 1991 to June 2006 were US$ 50.1 billion.
 

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MANUFACTURING GROWTH PROPELS INDUSTRIAL PRODUCTION TO A NEW HIGH
INDIA WITNESSES GROWTH OF OVER 12% IN INDUSTRIAL OUTPUT – HIGHEST IN A DECADE
QUICK ESTIMATES OF INDUSTRIAL PRODUCTION

 New Delhi: October 6, 2006

             As per the Quick Estimates of Industrial Production released by the Central Statistical Organization, industrial production in India registered a ten-year high of 12.4% in July 2006, as compared to the level in the month of July 2005.  Industrial growth during the first 4 months (April 2006 to July 2006) of the current financial year is up by 10.6% as compared to 8.9% registered in the same period last year, Shri Kamal Nath, Union Minister of Commerce & Industry, said at a news briefing here today.

             The record high in industrial production has been propelled by the consistent high level of growth in the manufacturing sector, the Minister said.

             The Manufacturing Sector has shown a robust growth of 13.3% in July 2006.  It had grown by 13.4% in June 1996 and in the recent past the closest high growth was registered in June 2005 at 13.2%. (NB: Manufacturing refers to all industrial activities except power, water supply and mining).

             Besides manufacturing, the Mining and Quarrying Sector has shown a growth of 6.0%, while as the Electricity Sector has registered a growth of 8.6% during July 2006 as compared to July 2005. 

                        The industries that have performed well in July 2006 include ‘Food Products’ (26.8%), ‘Wool, Silk and man-made Fibre Textiles’ (25%), ‘Transport Equipment and Parts’ (22.4%), ‘Other Manufacturing Industries’ (21.3%), ‘Basic Metal and Alloy Industries’ (19.5%) and ‘Textile Products (including Wearing Apparel)’ (17.3%).   

            Among the use-base economic sub-groups, Consumer Goods have registered an impressive growth of 17.9% during July 2006 over July 2005.  The Capital Goods have also recorded a high growth of 15.4%.

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KAMAL NATH STRESSES IMPORTANCE OF SOUTH-SOUTH TRADE –URGES UNCTAD TO ACT AS EFFECTIVE BRIDGE BETWEEN DEVELOPED AND DEVELOPING COUNTRIES ON TRADE AND GLOBALISATION

 New Delhi: October 4, 2006

            Shri Kamal Nath, Union Minister of Commerce and Industry, underlined the importance of South-South trade saying that trade exchanges among developing countries constitute a promising area of current and future trade growth. Delivering the keynote address at a High Level Policy Dialogue on “UNCTAD and Development: The Way Forward”, during the UNCTAD Mid-Term review in Geneva today, he cited the UNCTAD Trade and Development Report 2005, according to which the share of South-South exports in total developing country exports increased from 27% in 1985 to 43% in 2003 i.e. from US $ 97 billion to US$ 921 billion. “Exploring the full potential of South-South trade remains a desirable objective. Global System of Trade Preferences (GSTP) is an important vehicle for promoting South-South cooperation. We are actively participating in the ongoing third round of negotiations of the GSTP that was launched at Sao Paulo in 2004, and would like to see its early successful conclusion”, he said.

            UNCTAD must act as an effective bridge between developed and developing countries on the entire range of issues relating to globalization, trade and development, the Minister said.

             Stressing the development mandate of UCNTAD, Shri Kamal Nath said UNCTAD must continue to make a real contribution to assist developing countries confront today’s complex trade and development challenges and suggested the following:   

Ø       As a knowledge-based body, UNCTAD needs to remain ahead of the curve in generation of ideas and in addressing issues related to integrated treatment of trade and development. It has the wherewithal to serve as a brains trust for development-friendly and innovative analyses and policy options.  

Ø      UNCTAD should continue to examine, from the development perspective, the inherent asymmetries and inequalities in the international market place and its structural limitations.

 Ø      UNCTAD can play a role in supply-side productive and trade capacity building, in working on issues related to trade diversification, strengthening of technological capacity, and addressing the development dimension of intellectual property rights.   

            Recalling his meeting with Dr. Supachai Panitchpakdi, Secretary General, UNCTAD, during his visit to New Delhi in November 2005, Shri Kamal Nath reiterated India’s willingness to work for strengthening the UNCTAD. 

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ENHANCEMENT OF FOREIGN DIRECT INVESTMENT CEILING FROM 49% TO 74% IN TELECOM SECTOR – AMENDMENT TO PRESS NOTE 5 (2005 SERIES)

 PRESS NOTE

         The Government, vide Press Note 5 (2005 Series) dated 3.11.2005, had notified the enhancement of Foreign Direct Investment (FDI) limits in the Telecom Sector subject to specified conditions.  In terms of para 4 of the said Press Note, an initial correction time of 4 months from the date of issue of the Press Note was allowed to the existing licensee companies for adherence of the conditions. The correction time was extended from time to time and the last extension was allowed up to 2nd October 2006 vide Press Note 6 (2006 Series) dated 3.7.2006.      

         It is notified for the benefit of investors that the Government has decided to further extend the time period for the telecom service provider companies to comply with the conditions set out in Press Note 5 (2005 Series) by three months w.e.f 3.10.2006 up to 2nd January 2007.

         Press Note 5 (2005 Series) dated 3.11.2005 stands modified to the above extent.

 Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, New Delhi, October 4, 2006 (Press Note No.7 -2006 series)

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