Purchasing entire companies rather than JV’s and buying used production lines signals a more mature approach

By Chris Devonshire-Ellis in Mumbai

Last weeks heralded purchase of the Land Rover and Jaguar marquees by India’s Tata Group from Ford for USD2.3 billion represents a major shift in the way Indian companies are able to obtain technological growth, in a manner that possibly outstrips the latent capabilities of China’s auto sector.

Although the deal, it has raised eyebrows internationally considering that premium global brands are being purchased by a country usually associated with cheap products, signifies different approaches to modernization between India and China, and may well prove to be a turning point when considering the future development of both nations. There are some fundamental differences in the way in which China’s auto manufacturers have chosen international partners, and have the capability to compete globally when compared to their Indian counterparts. (more…)

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Countries on the banks of the greater Mekong river - Cambodia, the People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand, and Vietnam, which have been experiencing growth rates of 7 percent or more in the past decade came together over the weekend in Laos, to discuss strenghtening trade and investment ties in the region.

The subregion’s economic performance was driven in part by increased trade, resulting from the transition to market-based systems and closer integration with external markets.

The greater Mekong subregion (GMS) countries met to discuss ways and means to increase intra-regional trade. On Monday, Xinhua reported that over the last few years, trade has expanded both within and outside the subregion. Over the period 1994-2006, intra-GMS exports, excluding to China, grew at an annual average rate of 19 percent, while exports to other countries increased at an annual average rate of 11 percent.

Regional cooperation within the GMS framework has seen advances in transportation, telecommunications, trade, tourism, and agriculture.

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Melting Himalayan glaciers, which perennially feed the Ganges and Yangtze, India and China’s main rivers may soon dry up in summer, leading to drastic food shortages at a time when prices and populations are growing unanimously. China and India are the world’s leading producers of both wheat and rice, humanity’s food staples. In the Ganges, the Yellow River and the Yangtze River basins, where irrigated agriculture depends heavily on rivers, this loss of dry-season flow will shrink harvests.

“In a world where grain prices have recently climbed to record highs, with no relief in sight, any disruption of the wheat or rice harvests due to water shortages in these two leading grain producers will greatly affect not only people living there but consumers everywhere,” the Times of India quoted Lester Brown, President of the Earth Policy Institute as saying.

An Intergovernmental Panel on Climate Change says that Himalayan glaciers are receding rapidly and that many could melt entirely by 2035. If the giant Gangotri Glacier that supplies 70 per cent of the Ganges flow during the dry season disappears, it warned, the Ganges could become a seasonal river, flowing during the rainy season but not during the summer dry season when irrigation water needs are greatest.

Moreover, Brown said, in both of these countries, food prices will likely rise and grain consumption per person can be expected to fall. In India, where just over 40 per cent of all children under five years of age are underweight and undernourished, “hunger will intensify and child mortality will likely climb.”

The Ganga is the largest source of surface water irrigation in India and the leading source of water for the 407 million people living in the Gangetic Basin, a population larger than any other single country other than China. The Yellow River and Yangtze basin hold a similar position in China.

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Kamal Nath, India’s Minister of Commerce provides his comments on how to maintain India’s growth and what lies ahead.

The full interview with Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates in Delhi

Kamal Nath is the third of the big three of Indian foreign politics – after Dr. Manmohan Singh, the Prime Minister, the Minister of Finance, Mr. Chidambaram, who we interviewed yesterday, and Kamal Nath, the charismatic and globe trotting Minister of Commerce. Together, these men represent the unified force of a resurgent India, united in views and passion for the country, and amongst the most recognizable Indian politicians around the world, these are globe trotting reformists, determined to battle the negativity of coalition politics and underpin India’s long awaited position at the high table of world trade. In this frank discussion, Mr. Nath touched on many issues, but especially the desire to get government out of the way and allow the private sector to flourish.

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Numbers: (10.9,4.86)

India’s Finance Minister lays down his reasoning India will escape a US recession, plus comments of Indian Government Corruption.

The full interview with Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates in Delhi

Meeting with India’s Finance Minister, Mr. P. Chidambaram, is always a lesson in elocution and delivery. One year ago, when we last met him in our annual series of meetings with Indian Ministers in Delhi, he was shy, somewhat reserved, yet bullish. India was doing well, with growth rates at a consistent level of between 7-9% looking sustainable, and the Prime Minister, Dr. Manmohan Singh, stating to us that as long as India could keep such growth rates, it could afford it’s massive redevelopment, infrastructure and rural expenditure needed to lift the country into a true democracy with all people able to share in it’s wealth. “As long as those rates are sustainable” both the PM and Mr. Chidambaram chorused, “India’s continued development is assumed”.

Just a year on, we are faced with a different set of issues that could impact upon the Indian, and quite possibly, other emerging market economies, especially that of China. The US sub-prime crisis has dried up liquidity and seen money vanish. The US dollar is approaching record lows. The price of gas has just exceeded USD100 a barrel, respected international financial institutions are going bankrupt, and the prices of commodities in foods and metals have doubled and tripled. A year on, it’s not just a matter of India bullishness. A large blot has appeared on the landscape.

Sitting down with Mr. Chidambaram we had just one question to ask in our hour long discussion: “Can India escape a potential US recession ?”

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India’s State Secretary for Civil Aviation, Ashok Chawla provides his blue print for development and investment

Interview with Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates in Delhi

The number of India’s total domestic passengers has doubled in just five years, and is set to expand even more rapidly. With more airports per square mile than any other Asian nation, a legacy of the British, much however needs to be done to upgrade, improve, and rebuild Indian airport capacity as anyone who has arrived at Mumbai or Delhi international airports well knows. But beyond the surface veneer of construction in progress, shabby terminals and dodgy washrooms, a revolution is occurring.

Ashok Chawla:
India has over 450 airports nationally, of which about 90 are currently operational. In conjunction with the Ministry of Urban Development (see other interview) we are highlighting a number of domestic airports for development which have a key strategic development role to play. However, firstly let me explain that all airports were previously managed by the Airports Authority of India, and that this has now changed. The AAI is now involved in two main models for airport infrastructure development. These are:

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The State Secretary for the Ministry of Urban Development Details His Roadmap

By Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates, Delhi

Often the first thing that is mentioned about India today – especially when compared to China – is the shocking state of much of its infrastructure. The problem is estimated to cost India about 2% of its GDP growth, and to be serious enough to potentially derail the development of the entire economy. We met with State Secretary Shri M Ramachandran, of the Ministry of Urban Development, for his views on what needs to be done, and how it is going to be achieved.

Chris Devonshire-Ellis with Shri M Ramachandran State Secretary, Ministry of Urban Development 

Ramachandran:
“Firstly, we have identified several areas of immediate concern to us in national redevelopment. These include:
Provision of drinking water
Waste management and drainage
Water management
Transportation
Housing

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80% turnout, Bhutan Peace & Prosperity Party wins a landslide.

Bhutan’s national emblem

Tiny Bhutan; the Himalayan kingdom sandwiched between China and India, held general elections yesterday becoming a democracy for the first time. 

Officials from India lent a hand with overseeing the election process. While turnout was heavier than expected and more than is generally seen in many Western nations — close to 80 percent by the time polls closed at 5 p.m. Of the 47 seats in Parliament, according to provisional results from the Election Commission of Bhutan, 44 went to Druk Phuensum Tshogpa, whose name can be translated as the Bhutan Peace and Prosperity Party. The rival People’s Democratic Party, the only other party running, lost resoundingly. Its leader, Sangay Ngedup, lost his own constituency.

There were no striking differences between the platforms of the two parties, making the vastly uneven results hard to explain. “We are all caught completely off balance at this moment,” Karma Ura, director of the Center for Bhutan Studies, a government-financed organization, mentioned from Thimphu, the capital. “Functioning of democracy requires a good opposition. It’s not an ideal situation.”

Bhutan may now be a democracy, however the monarchy remains in place. King Jigme Khesar Namgyel Wangchuck, 28, will remain head of state after the elections. Bhutan’s move towards democracy began after King Jigme Singye Wangchuck handed the throne to his son, the current king, in December 2006 and ordered an end to absolute monarchy. The transition to democracy, though, was not immediately met with enthusiasm. Bhutanese wondered aloud why they needed to give up palace rule, even as they took part in mock elections organized by the government last year.

It brings however democracy ever closer to China’s borders, and those of Tibet. Pakistan, bordering China’s far west Xinjiang Province, held it’s most credible elections for some time in February this year, while Nepal bordering Western Tibet, has elections planned on April 10th. Bangladesh too, is expected to adopt a democratic reform process and move towards full democracy later this year.

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