Jan. 14 - Indian Prime Minister Dr. Manmohan Singh arrived in Beijing yesterday and urged the Indian business community both in India and China to “think big” and engage China to learn to both compete and cooperate.

“Indian businesses should think big. Indian business is ready to face the brave new world of globalization. China is an important part of that brave new world of globalization. We must engage China and learn to both compete and cooperate,” Singh said.

Singh discussed with high level Indian businessmen the problems they faced in developing trade with China, including the huge surplus in commerce with India. The main thrust from the Indian side was to ask him to press Beijing for the early removal of trade and non-trade barriers, and specifically in areas such as textiles and steel. Business leaders also praised Dr. Singh on the recent trends in bilateral trade and investment flows. They also drew attention to both the opportunities as well as the challenges faced by the Indian business in China. (more…)

In the wake of the India’s nuclear deal, the border issue and China’s ties with Pakistan, India and China are getting ready for a new new game. Today, ending more than more than 45 years of frosty relations, the armies of India and China are holding their first joint military exercise. This is in accordance with the Memorandum of Understanding (MoU) on exchange and cooperation in the field of defence, signed between India and China in 2006.

Indian and Chinese army officers ‘hand in hand’

Although security issues do exist and both India and China view eachother with suspicion, it was nice to come across news of the two armies taking part in joint exercies aptly code named ‘exercise hand in hand’ to practice counter terrorism and counter-insurgency drills.For the Asian giants, it’s a significant event especially since the two nations are regarded as competitors if not adversaries in Asia. Led by Brigadier DS Dadwal, the 100-strong Indian army team will conduct a week-long counter-insurgency and counter-terrorism exercise along with troops of the Chinese People’s Liberation Army in the Yunnan province bordering Myanmar.

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By Chris Devonshire-Ellis 

Our partner firm in Mumbai, Rahul Guatam Divan & Associates, has just alerted us to an improved decision in India that provides a more attractive platform for expatriates working in the country.

A Special Bench of the Income Tax Appellate Tribunal has held that taxes paid by an employer, on behalf of an employee, can be added only once in the taxable salary of an employee and thereafter, tax on such a perquisite does not need to be added again, since it is considered a non-monetary perquisite. The decision can be found here.

This new development goes against a recent decision of the Delhi Bench of the Tribunal.

Hence, for all of the expatriate clients working in India, this will have the impact of reducing their tax liability. Consequently in light of this new development, they will need to rework the tax liability for all of these expatriates to ascertain the remainder of the tax owed to the Indian Revenue Authorities.

If you require assistance with this matter please contact india@dezshira.com.

“Inclusive growth” is the hottest buzzword to have hit Indian shores of late. With a sizzling GDP growth of 9%, the Indian government is now trying to make sure India does not leave the bottom billion behind in its dash to emerge a global superpower. 

The India Development Policy Review 2006 titled “Inclusive Growth and Service Delivery: Building on India’s Success” focuses on two major challenges facing the country today: improving the delivery of core public services, and maintaining rapid growth while spreading the benefits of this growth more widely.

Core public services: It is essential for India’s rapidly growing economy to improve the delivery of core public services such as healthcare, education, power and water supply to all its citizens. This means empowering its people to demand better services through reforms that create more effective systems of public sector accountability. Options include decentralizing to local governments, producing regular and reliable information for citizens, undertaking internal reforms of public sector agencies, or creating public-private partnerships. But ultimately, implementation is everything.

Rapid and inclusive growth: Maintaining rapid growth will require more, and more effective, investments in infrastructure to create more jobs for low and semi-skilled workers.

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Taxi drivers they say are a good baraometer of the pulse of a city. Having just arrived in Beijing, I struck up conversation with my taxi driver to see what he knew of India. Almost immediately his face lit up & he said ‘Li zhi’!!, looking at my confused face he started singing the song Awaara hoon mein…., a 1951 super hit hindi song starring the former super star Raj kapoor - but in Chinese!! Recognising the tune so familiar to my ears i figured that Li Zhi was Raj Kapoor’s chinese name and almost immediately, all comminication hurdles fell apart. Bollywood was our great unifier! Being one of the first foreign films that the chinese were exposed to, Awaara and Bollywood is still big in China with conterfeit Hindi DVD’s available on every street corner, and colourful song and dance sequences and drama still captivating chinese audiences. Besides, films of yore being popular amongst the chinese, more recently Aamir Khan’s Lagaan, a film based on cricket, a sport completely ailen to the Chinese, was subtitled, dubbed and released in theatres across china. Serials such as Karishma Kapoor’s debut serial - ‘Karishma Miracles of Destiny’ are also attracting chinese eyeballs on primetime local Tv channels. 

After an excellent response from many on the last issue on: Setting up Foreign Enterprises in India, we now bring to you an overview of the investment environment in Delhi and Mumbai. I’m sure a lot if you know both cities well, but we dig into the demographics and give you the rundown on the investment environment in these two emerging metropolis’s

Delhi, a city where I grew up in, is very warm and welcoming to everyone. From school to University to work, I have seen it changing into a real cosmopolitan city. It can be compared in many ways to Beijing also as the political head of the nation.

Mumbai rocks! I have spent a few years there to and that time is unforgettable. The city gets to you in many ways, it’s unique culture facing both east and west, and as the financial capital of India it now boasts some of the most expensive real estate in the world. We lift the lid off what is going on and give you a peek at why Mumbai is a city you should be considering having a good look at. It too compares in many ways with Shanghai.

Finally we look at the USD100 billion planned Delhi-Mumbai Corridor, tax incentives, and free trade zones. As India opens up, this is a neat introduction to two of it’s primary cities. We hope you enjoy it – subscription is complimentary and available on the India Briefing homepage

Yesterday was a day of Halla Gulla (turbulance in our context) for Indian Stock markets. Inspite of that they opened quite strongly this morning.

After the crashing of the Sensex, there were some clarifications brought on the PNotes front with regard to Roll Over of the outstanding notes.

Mr Damodran has expained them in an interview with Udyan Mukharjee at CNBC TV18 and you just need to be “logged” on to 2point6billion to catch whats happening in India/China. If its relevant its here!

Some excerpts from the Channel:

 Q: You are saying that all underlying futures positions held by P-Notes have no problem of rolling over from month-to-month for the next eighteen months, right?

A: Let me read to you what it is that it stated - it says that an outstanding PN with an Indian exchange traded derivative as underlying, can be renewed, subject to such reviewed PNs being wound up over a period of eighteen months. 

Q: Was it the case that you spoke to the top five or seven large issuers of P-Notes in this country and they refused to cooperate in disclosing the identities of their clients which is why you had to take this step otherwise you could have had a sunset clause for those P-Note investors to move towards an FII registry route after which they could not have done it, why did you not choose that route? 

Ans: ……

Watch this Video if you want to know what the Secuties Head had to say for India, for thats the benchmark for the future!

Both India and China face political problems with an increase of Islamic militants on their borders and are having to tighten border security with Pakistan as the political situation in the country continues to deterioate in the aftermath of ex-Prime Minister Nawaz Sharif, ousted by incumbent General Pervez Musharraf being arrested and subsequently deported from Pakistan earlier today. Sharif, known for his leanings towards Islamic militants, had attempted to enter the country to mount a challenge to Musharraf, who has become increasingly fragile in his political hold on the country as it faces a showdown between becoming entirely radical, and a hotbed for fanatical Islamists, and remaining a more moderate, secular society.

This breaking report from www.guardianunlimited.com:

The former Pakistani prime minister Nawaz Sharif was today deported from the country shortly after he arrived in Islamabad on his return from exile, intelligence officials said. He was returning to lead a campaign against the US-allied military ruler who ousted him eight years ago.

A tense standoff with government security officials lasted for one and a half hours on the plane after Mr Sharif arrived home.

Mr Sharif then went to the VIP lounge, where he was arrested at midday local time (0800 BST). From there, he was taken by minibus to a helicopter.

His lawyer, Amjad Malik, said Mr Sharif had been taken into custody on corruption charges revived last week by the National Accountability Bureau. “They [the security officials] swarmed him like bees,” Mr Malik said.

Police commandos entered the aircraft and surrounded the moving staircase after Mr Sharif landed on a Pakistan International Airlines flight from London. A civilian helicopter was waiting 100 metres away, its rotors spinning. (more…)

                          Year 2007 has been marked as the ‘India-China Year of Friendship through Tourism’ which was lunched on 14.2.2007 in New Delhi to promote tourism between the two countries. On this date the two also officially released a joint logo for the tourism year, made up of Chinese landmark the Great Wall and India’s Taj Mahal as well as the two national flags.

Since then both have had on their agenda number of activities such as :

1. A sixteen Member Chinese Media / Tour Operators group visited India on fam tour in March, 2007 under the ‘Hospitality Scheme’ of Ministry of Tourism. 
2. China National Tourism Administration (CNTA) sponsored delegation comprising of Tour Operators from Jiangsu Province, Zhejiang Province and Shanghai visited India for tourism promotion.
3. CNTA participated in South Asia Travel & Tourism Exchange (SATTE) Exhibition which was held in April, 2007 in New Delhi
4. Ministry of Tourism organized Road Shows in Beijing and Shanghai in April 2007 to showcase India’s tourist attractions in Chinese market

And both governments are immensely encouraging their citizens to visit each other’s country as part of the move to enhance economic, strategic and cultural ties.

The increase in the number of tourists from China to India and vice versa justifies these moves. (more…)

Seems like there’e a complete deadlock between the Indian Government and the Left over the Indo–US Nuclear Deal and none is going to change it mind…

Devils advocate, a classy program on CCN IBN, anchored by Karan Thapar, India’s best known television commentator and interviewer, had an  exclusive interview with Rajya Sabha‘s (Council of States, the Upper House of Parliament) MP,  Sitaram Yechury, on last Sunday, on how and why is the Left against the Nuclear Deal and is the Indian Government going to be “made to fall”?

The discussion was basically on two points: bringing down the government by the Left hence stopping the deal or the Left protecting the government at the cost of the deal. 

The interview on CNN IBN goes like this:

Karan Thapar :

If operationalising the deal is your key concern rather than withdrawing support, then I shall put it you that the deal is in fact not going to be operationalised until the US Congress ratifies it and until India and America sign on the dotted line. And that being the case, if you withdraw support, then you can stop the operationalisation. Are you prepared to do that or not?

Sitaram Yechury :

According to the Indian Constitution, once an international agreement has been arrived upon, there is no need for Parliament’s ratification.

Karan Thapar :

Many people watching this interview will say that Sitaram Yechury faces a trade-off. He can either bring the government down, as a result stop the deal, or he can protect the government at the cost of the deal. What he seems to be indicating is that he doesn’t want to bring the government down, so he is prepared to let the deal take place even though he speaks against it.

Sitaram Yechury :

No, I do not accept the facile link-up of the deal being or not being operationalised or even the government falling down, which you are making. You are making a link-up that is simply not acceptable because it is not true.

For the entire hot discussion watch the Video on CNN IBN Live

It seems a mid term poll is very likely…in a few months to go.

So does the present 21st century India fear America? And are we seeing a shift in our political scenario with foreign policy issues taking a shape that it has today leading to Governments falling?

What’s your say?