Easy Cash Turns Killers for Indian Retail

The retail boom has come to grinding halt in India. Just a few months back Reliance had announced restructuring of its retail business. Then Subhiksha problem appeared, it was unable to finance its operations. Now, Vishal retail has run into trouble. The company is also facing liquidity crunch and is shutting down a large number of shops and cutting its employee numbers to stay afloat.

Easy money had made it possible for Indian retail companies to go for expansion mode straight from incubation. This had become corporate philosophy for expansion programs of major retailing companies. Every company in hurried desire to gain the first mover advantage had indulged in aggressive expansion on borrowed money. Once the liquidity problem stated becoming apparent in Indian market, these companies started facing cash trouble to run their operations. Easy availability of cash had led to more companies becoming overtly dependent on borrowed money to run their operations.

Subhiskha, like other retail companies over-ambitiously expanded everywhere leaving the company totally starved for cash. They didn’t bother either about its cash flows or cash reserves. This left company bewildered about its future and how to manage the current operations. Vishal Retail another darling of markets, followed similar path of growth and couldn’t see the situation getting out of hands.

Easy availability of cash in the market made retail companies short sighted with assumptions that markets would continue to grown and cash would remain available. This hypothetical assumption got translated into the business model, for which companies are paying today.

Government Announces Rs 1,000 Bn Investment in Infrastructure

After it announces generating profit from seaports

The government came out with two separate announcements relating to infrastructure industry. The government announced that it has made a profit of US$ 577.4 mn out of revenue through its 12 major ports across the country during 2007-2008. it achieved stupendous growth of 159.8% over the period of last three years.

After pronouncement of its own achievements in the infrastructure sector, government announced to invest Rs 1,000 Bn in infrastructure projects in next 100 days. The Union Minister of State for Industry, Dr Ashwani Kumar, declared the government’s intention to invest in infrastructure projects not only to boost the economy but also to indirectly safeguard the jobs in infrastructure and construction sector.

India to Become an Important Market for Security Equipment Firms

With terrorism reaching a never before levels in the country and with mass transport systems acting as soft targets for criminal and terrorist activities, India is poised to become an important international spender in the global security market as per the latest report by Frost& Sullivan.

As per the report, the country’s homeland security spending is expected to total around $9.7 bn by 2016, with security of airports contributing to around $3.2 bn at a compound annual growth rate (CAGR) of 5%t. New analysis by the research firm on Indian Homeland Security Market, finds that the market earned revenues of $800 mn in 2007 and estimates this to reach over $1 bn in 2016.

Among other things, the latest Mumbai terror attacks has led to urgent call for formulation of more developed security measures to protect areas where there is a high level of civilian mobility. Mass transport systems are especially being seen as 'soft' targets for both criminal and terrorist activities. Intelligent and durable surveillance systems within 'rolling stock' are among the key revenue generators in this sector. Other technologies that will increase investment included low TCO, self-diagnosing CCTV systems, automatic wireless image downloads and innovative passenger screening technologies.

The increasing importance of air traffic couple with increase in small- to medium-size airports is also expected to enhance the demand for airport security measures. Key technologies include biometric electronic access control, passenger screening portals and explosive detection systems for baggage, as well as cutting-edge passenger processing systems.

However the report also says that foreign security firms that don’t have JV with a local partner in the country could face slow procurement trends, as an emphasis on developing the indigenous security industry and the prevalent dependence on manpower-intensive security measures could hamper security investment.

PSB hail Home Loan Package, Industry Disagree & Consumers Wait-n-Watch!!

After weeks of speculation and months of wait, a hint of hope has emerged for borrowers. In a coordinated effort, public sector banks (PSBs) put a cap on interest rate charged on fresh home loans of up to Rs.5,00,000 at 8.50% from December 16 and announce a slew of measures to stimulate credit delivery to housing and micro, small and medium enterprises sector. PSBs expect to give loans worth around Rs15,000-20,000 cr under this package. Among major other measures initiated:

· Time Frame - The special home loan package would be applicable for new loans sanctioned up to June 30, 2009
· Switch Facility - Loans up to Rs.5,00,000 will be offered at a fixed rate of 8.50% for five years after which the borrower can switch to a floating rate without paying any charge
· Loan size between Rs 5-20 lakhs - PSBs will also not charge more than 9.25% on home loans of Rs.5 lakh-20 lakh having tenure of up to 20 years
· Processing fee - Banks will not to charge any processing fees and pre-payment charges for loans up to Rs.20 lakh, and would also provide free insurance cover
· Industrial rate cuts - for micro industries, PSBs have reduced loan rates by 100 bps, while for small industries, they have reduced loan rates by 50 bps, and set up cells to redress grievances regarding these loans

The Indian Banks Association (IBA) has justified the threshold of Rs.20 lakh for interest rate relief announced for home loan borrowers, saying that the package will take care of housing requirements of the common man. However industry body Assocham has termed the home loans package by PSBs as highly inadequate, demanding that the government peg the interest rate on housing loans up to Rs.30 lakh at 6% and at 8.5% for loans above this amount. Among other negatives for the measure is that, that existing borrowers from private sector banks will not be able to transfer their loans to PSBs.

After the move from PSBs, all eyes are also on private sector banks, especially the larger ones such as HDFC, Axis and ICICI to follow suit. Until that time, its wait and watch for consumers.

What’s Wrong with Tata’s Global Footprint Strategy

Tata aggressive stance of acquiring companies globally and developing global presence has gone wrong. Tatas are now painfully recognizing the fact that they in for more trouble for their overleveraged acquisitions of giant steel and niche automotive player. Tata’s Jaguar & LandRover (JLR) unit has already asked for the £1 Bn of loan from the government, there were also news of Tatas picking up money from the market at higher interest rates to keep its JLR unit afloat. Tata Corus is already on cost cutting spree and has asked Dutch government for its staff realization program.

So, what went wrong with Tata’s strategy of developing Global presence and become a world player in almost every spree of its business?

Tata’s core strategy was evading regional and nation business cycles, to implement this strategy Tatas needed to generate revenue from world over and setup manufacturing units to ratonalise the cost. Tatas made assumption that if business cycle in a country/region goes through trough then its companies can survive on demand and revenue from other regions. Tata never thought what would happen if different regions go into recession simultaneously. The thought of global recession never concurred to Tatas as “decoupling theory” was very popular at that point of time.

The other major mistake that Tatas did was it has been unable to accrue production cost benefit from its takeover. It invested in highly niche automotive companies like JLR, which can’t be produced world over thus production cost are difficult to rationalise. The other acquisition, Corus, runs on thin margin and high costs; Corus hasn’t been able to cut costs yet, though it may be able to do it successfully in future but it is taking toll of Tatas.

Sovereign Wealth Funds to Invest in India’s Oil Exploration Sector

E&Y report also lists China’s SWF as possible investor in India

Ernst & Young has come out with a new report that forecasts India will receive up to USD10 bn of investment in oil exploration and production sector. Interestingly, report also suggests that Sovereign Wealth Fund (SWFs) of Mid-east, Singapore and China would be making such future investments in India’s oil and gas exploration. Also, exploring there chances would be much reluctant Japanese Banking institutions, which so far don’t have a bigger presence in India.

SWFs are surprise entrant to the Indian exploration market. SWFs have been making huge investments in energy sector focused around Mid-east and Africa region but India was never on its target as most of the investment is directed towards securing it energy needs. E&Y has unexpectedly included SWFs from China, which have been in forefront of securing China’s growing energy need and have been competing with India on foreign acquisitions.

India opened its oil and gas exploration sector for private players through New Exploration and Licensing Policy in 1998, so far seven rounds have taken place and 207 blocks have been awarded to the participating companies. This has brought down the average unexplored acreage in India’s total sedimentary area to 15% in FY07 from 41% in FY '99.

DLF enters Asset Management Business

DLF Pramerica, a JV between India’s largest realty firm DLF and Prudential Financial Inc (PFI) of the US, that got an in-principle approval to set up an asset management company (AMC) from the SEBI, expects to break even within three to five years in the business.

PFI is the majority shareholder in the JV with 61%, while DLF will own the remaining 39.5%. Pramerica is the brand name used by PFI in India and other select countries. The asset management business will have a capital base of $45 mn and will be based in Mumbai. DLF Pramerica Mutual Fund is a sub-brand under the umbrella brand of DLF Pramerica. The fund venture, DLF Pramerica Asset Managers Pvt Ltd, is headed by Vijay Mantri, who joined in April from the Indian fund unit of Deutsche Bank.

The AMC will provide full range of mutual fund and investment products, including domestic and international mutual funds to customers. Prudential Financial has assets under management of around $602 bn as on 30 September, 2008 and has operations in US, Asia, Europe and Latin America.

DLF Pramerica joins more than 20 firms looking to break into the Indian fund industry, which saw its assets grow more than four-fold to Rs 5.5 trillion rupees in five year ending 2007. According to a recent McKinsey report, the total AUM of the Indian mutual fund industry could grow to $350-440 bn by 2012, expanding 33% annually. While the revenue and profit (PAT) pools of Indian AMCs are pegged at $542 mn and $220 mn respectively, it is at par with fund houses in developed economies. Operating profits for AMCs in India, as a percentage of average assets under management, were at 32 basis points in 2006-07, while the number was 12 bps in UK, 17 bps in Germany and 18 bps in the US, in the same time frame, the McKinsey report said.

Even though many players are entering the mutual fund space, the space itself is seeing lots of turmoil. Assets have shrunk 28% to Rs 3.9 trillion this year due to a stunning 51.5% slump in India's benchmark index and outflows from fixed income funds. The mutual fund industry in India, in recent times, has seen a wave of redemptions especially in the debt schemes.

The sector is also seeing consolidation, recently Religare-Aegon AMC, which had recently started operations, acquired Lotus India AMC. The latter has begun operations in 2005. Even DLF Pramerica, has made its intentions clears, saying that it would also look at the inorganic growth route also in addition to the organic route, especially when there there were AMCs for sale available in the market.

OVL & Cairn boost India’s Energy Security

OVL acquires oil block in Columbia; Cairn hikes crude production in Mangala

India’s energy security got a boost last week when ONGC’s overseas arm OVL succeeded in bagging an oil block in latin American country of Columbia. The oil block is located in north-western Columbia near La Creciente natural gas field. The oil block has been awarded as equal joint venture between Columbia and OVL, which will remain property of Columbian government. The awarded block is 550km long and has total area of 2.7 Lac hectares. The OVL consortium will initially invest USD 23mn in first phase of the exploration.

In another development, the Cairn India announced that it will increase the production capacity of its Mangala oilfields to 175,000 barrels per day from present 65,000 bpd. This would increase Mangala oilfields contribution to 25% of the present domestic production capacity. Increase in production capacity will help India in reducing its oil import bill and further securing in energy needs.

Who Will Save Large US Banks?

The US banking giant, Citibank, is once again toying with the ideas of acquiring banks though it’s domestic regional banks now. But with large number of banks still on the FDIC’s list of bank with riskier assets and monthly new additions to the failed banks list (Security Pacific and Franklin Bank, this month), consolidation in the US banking sector has become a needless exercise.

As the US economy scenario is expected to deteriorate further, the number of banks going bust is likely go to higher. A large number of these failed banks are likely to be acquired by big US banks, some of the directive of treasury. This is bound to add more trouble to the large banks, which are already facing credit crisis. The imminent question is- what would happen when these large banks would be on brink of bankruptcy? Will government let them fall?

No. the government already has minor stake in several leading banking firms but this would not their reason for the survival. The US government has put some legislation that almost guarantees the survival of such large firms and puts the “onus” of safeguarding and protecting such organizations on the government. In 1999, Gramm-Leach-Billey (GLB) Act aka Financial Services Modernisation Act was passed that repealed key parts of Glass-Steagall Act. Section 108 of GLB Act states that “Use of subordinated debt to protect the financial system and deposit funds from ‘Too big to fail’ institutions.”

At this moment it is not clear if federal government is pushing large banks to acquire smaller ones knowing that ultimately they would have to save them, or it is these large banks which interested in creating “too big to fail” institutions.

R-ADAG looks to buy AIG’s life insurance business in Asia

R-ADAG has set its eyes on acquiring the life insurance business of AIG in Asia (ex-India); this comes close after Group Company Reliance Money acquiring 15% stake in Hong Kong Mercantile Exchange, which came on the back of a partnership with local firm Goldride Securities, for distributing financial products and services. Rumors have it that Citibank, acting on behalf of AIA, has approached ADAG to buy out AIA. ADAG is likely to be one of several bidders looking to buy these AIG businesses The AIG deal if goes through, could well be the second-largest overseas buyout by an Indian firm pegged at an asking price of around $10 bn, ADAG however is valuing between $5-6 bn. This deal would also make Reliance the largest life insurer in South-East Asia.

AIG has been going through tough times in recent times, last month, the US nationalised AIG, which was on the brink of collapse by acquiring 80% in the insurance giant with an $85 bn loan and restructured its top management. AIG, which had assets in excess of $1 trillion in 2007, has been looking to sell parts of its businesses and assets and focus on the core general insurance business. Globally, AIG operates majorly as AIA while in some markets like Australia and New Zealand, it functions as AIG. AIG’s move to sell AIA is at variance with its earlier statement to retain a continuing ownership interest in its foreign life insurance operations. Life insurance and retirement services business is the largest revenue generator for AIG. Out of the total revenues of $110 b in 2007, life insurance generated $53.6 bon and general insurance $51.7 bn. Asset management and other financial services are comparatively smaller business areas of AIG globally.

Meanwhile R-ADAG already has a life insurance company venture in India, viz Reliance Life Insurance. It is an associate company of Reliance Capital, the flagship financial services firm of the group, which has interests in asset management, stock broking, insurance, proprietary investments, private equity and other activities in financial services. In India, AIG has a 24:76 life insurance JV. This business is unlikely to be part of the proposed deal with Reliance-ADAG, as the Tatas may have a right of first refusal in any sale by AIG.

Nokia to Manufacture Telecommunications Equipment in Chennai

Nokia Siemens Network is also heading for Chennai to manufacture and distribute mobile communication infrastructure equipment. Earlier, another Telecom giant Motorola had chosen Chennai to set up it manufacturing base for mobile phones in India. The present investment by Nokia is not for mobile phones, but for the base station equipment.

Nokia would be investing USD 70mn in its Chennai facility to manufacture Base Station Controllers, Flexi EDGE BTS, Microwave Radio, Access line-card products and other telecom equipment. The company is also planning to increase the production of units to 4,000 per month in span of next six to nine months.

India is increasingly attracted electronics and telecommunications equipment manufacturers for several reasons including engineering design capabilities and also to cater the growing telecommunications market more efficiently.

Montek and Chidambaram mock India’s Economic Scenario

Montek Singh and Mr. Chidambaram for past few days have been giving some really exaggerating statements about the economy. They continue to assert that Indian economy will grow at 8%. Now, how that suppose to happen. The global credit lending is expected to come down drastically during next year and India desperately needs it to continue its infrastructure and capex. Indian companies were already raising debt for international market as credit rates in India were high. How are Indian companies expected to grow at same rate in this inconducive economic environment? Plus they were quick to add how fundamentally strong Indian economy is.

How come economy be fundamentally strong where commodities are playing havoc to the economy, crude prices have endangered the aviation sector and is pushing inflation, housing boom is about to go bust with high credit rates and our exports are threatened due to global slowdown. They were not done yet, they made another comment on liquidity situation.

Yes there is liquidity problem, there are not many ready to lend to consumers and corporates are finding it hard to credit at lower rate (which is next to impossible). There is credit problem in the economy, but what about the money that FIIs have brought into the market by selling share and converting them into dollars! The problem, we don’t think is of liquidity in the capital markets but of leveraging and speculation on cheaply borrowed money. Now that it is difficult to leverage and get cheap credit there aren’t many players to do so in the stock markets. So, we have more and more selling and less numbers of buyers.

Is P-Notes revision aimed at Realty stocks and Politico’s investment confidence?

P-Notes are back. After government cracked down on P-Notes last year to tame the bull-run, now government has revised it guidelines to enable foreign institutional investors to issue Participatory Notes where underlying asset is derivative. SEBI has also struck down the rule which limited the FIIs capacity to issue P-Notes only up to 40% of the value of assets held by a foreign fund.

Is the present move by government to remove restrictions on P-Notes aimed largely at Realty companies? Realty stock index on BSE has declined by 77% since the beginning of the year. It is the biggest decline amongst the sectoral indices on BSE. Last year’s favourite sectors i.e. Realty, Banks and Metals and Capital Goods all have been thrashed in the market this year.

Realty stocks gained prominence in last two years when large number of companies came out with IPOs and soon they were reports of politicians and their families having stakes in these real estate companies. Also, a number of politicians parked their money through hawala channels, which entered the market through P-Notes. Ever since the restrictions were imposed on Realty index has continued to slide. Financial crisis in the US took the shine off from FII and Hedge Funds, which had invested heavily in the real estate companies. P-Notes restriction took the toll of real estate stocks and they started falling like house of cards.

As the politicians lost most of their investments in stock market and the value of their real estate stocks came down to one-third of the investments, the government suddenly felt the need to bring back P-Notes, which it had describes as ‘Hot Money’ that created volatility in the markets. The much despised instrument, which was blamed for the skewed investment trend, is now the rescue measure to resurrect the market in same old way that had led to irrational exuberance in the market. Every one in the government is gung-ho that it will restore the “investors’ confidence”, it is really matter of concern for the individual investors that which ‘Investor’s’ confidence government wants to restore now.

India to sign FTA with European Union and ASEAN

Indian government will be signing two trade agreements with two major trade blocks in next six months. India will free trade agreements with European Union (EU) and Association of South East Asian Nations (ASEAN). India will formalize India-EU Trade and Investment agreement by beginning of next year. The agreement is expected to double the Indo-EU trade to Euro100 Bn in next five years.

Similarly, India is also expected to sign free trade agreement with ASEAN for trade in goods. This agreement will be signed during India-ASEAN summit and it will also base for commencing talks on agreement in investments and services. India already had a FTA with one of the ASEAN member, Thailand. India already has trade imbalance with ASEAN block. India’s exports to ASEAN for last financial year stood at USD16 Bn, while’s India’s imports from ASEAN nations stood at USD24 Bn.

India already has trade imbalance with ASEAN and post FTA regime is expected to widen this gap. But, India expects boost its position through the trade agreement as it is facing stiff competition from countries like China.

Indian Govt relaxes ECB norms for Infrastructure Companies

India’s Finance Ministry has raised the External Commercial Borrowings (ECB) limit to USD 500mn from present level of USD 100mn for companies engaged in building roads, ports, power plants, telecommunications and other infrastructure related activities. Government has also raised the minimum average maturity to seven years for all such borrowing above USD 100mn, which will have to be spend in India.

This is the second instance of special revision of ECB norms for infrastructure sector. Earlier, in May government allowed infrastructure companies to borrow USD 100mn for rupee expenditure. This has been done in urgent to help the infrastructure companies in raising capital for the project.

Last year, USD 22bn was raised through ECB and foreign convertible bonds and this fiscal year it is expected to fall to USD 16bn. In first quarter inflows through this route fell by 42% to USD 4.1bn. this has given jitters to the government, which is worried that such drastic decline will take toll of infrastructure related projects in the country.

UNCTAD ranks India as the 2nd most preferred FDI destination

The United Nations Conference on Trade and Development (UNCTAD) in its ‘World Investment Report 2008’ has ranked India as the second most-favored location for foreign investment in 2008, behind China but ahead of Russia and Brazil. China and India are the two top preferred destinations not only for the current year but for the next three years (2008-2010) as per the report.

Growth in FDI has been on the back of robust economic growth, improved investment environment and further opening up of telecommunication, retail and other sectors. More than a quarter of 300 international retailers told UNCTAD that they have either opened their first store in India during 2007 or are planning to do so in the near future. Large scale investment transnational corporations like Oracle, Holcim and Matsushita has further bolstered the FDI inflow.

India received the fourth largest amount of FDI inflows in 2007 in Asia (after China, Hong Kong and Singapore), at $23 bn, growing by around 17% over $ 20 billion in 2006. Significantly, India is fast giving tough competition to the Singapore that ranked third in Asia in the amount of FDI inflows. India was also the fourth-largest source of FDI in Asia, as Indian companies invested $13.64 bn abroad in 2007, up more than 6% compared with $12.84 bn in the previous year.

The country has improved its ranking in the inward FDI performance index (which measures the flow of foreign investment into a country relative to its GDP) from 110 in 2006 to 106 in 2007, which is above Germany and Taiwan, but below that of Hong Kong and Indonesia. The report also talks about a survey by the Japan Bank for International Cooperation (JBIC), in which Japanese transnational manufacturing companies have rated India higher than China for establishing business operations.

Though the report appeared bullish on India due to the interest shown by the likes of Wal-Mart, and expansion by auto giants, it also warned of possible hurdles which would make it tough for India to reach the annual inflow target of $50 bn by 2010, of which poor infrastructure emerged as the biggest roadblock. Other experts also believe that the global liquidity crunch may impact FDI inflows into the country.

Reliance Big Entertainment hits it BIG

R-ADAG's Reliance Big Entertainment has clinched a $1.2 bn deal with Hollywood’s leading director Steven Spielberg, to finance the director’s future projects. Reliance will invest $500 mn and provide another $700 mn in debt through JPMorgan Chase & Co. Thirty films are likely to emanate from Reliance's co-financing and 10 will go into production soon. The deal will split the long standing tie-up between DreamWorks and Paramount Pictures, which bought the production house for $1.6 bn in 2006.

DreamWorks SKG was founded in 1994 by Spielberg, Jeffrey Katzenberg and David Geffen. Spielberg retains the rights to the name DreamWorks and is expected to affix it to the new entity. Some hit movies produced while DreamWorks was housed at Paramount including the Will Ferrell comedy "Blades of Glory," "Transformers" and "Sweeney Todd: The Demon Barber of Fleet Street." The deal is expected to save Paramount overhead costs by cutting loose the high-priced director. Frictions emerged due to the cost of keeping between Paramount and DreamWorks. Paramount could however still be involved in distributing films made by the group, including jointly produced movies such as the upcoming sequel "Transformers: Revenge of the Fallen." Meanwhile Spielberg is expected to continue to direct "Indiana Jones" sequels with Paramount and Lucasfilm as production companies.

Earlier in the year, Reliance Big Entertainment had announced during the Cannes Film Festival in May, that it would invest $1 bn to develop and co-produce movies with Hollywood stars George Clooney, Brad Pitt, Tom Hanks and Nicholas Cage and filmmaker Chris Columbus' 1492 Pictures. Reliance Entertainment has as many as 100 films in production and development in India, and Reliance Big Entertainment, a subsidiary, is focused on striking cross-border collaborations involving gaming, movies, online, animation and music.

Will commodities cool-off as Indian markets go bottom fishing?

The Indian markets are again in the mode of bottom-fishing, FIIs, predominantly i-banks and hedge funds are in process of liquidating their portfolios to keep themselves alive with cash flows. This new round of sell-off is more likely to impact the companies which makeup the portfolio of those US firms which are now in trouble with their financial exposure.

The present eruption of year long financial crisis has casted a bigger shadow not only on the Indian markets but also on the companies. The fresh bout is expected to impact US investment banks’ investments in corporate India, which sooner or later will be liquidated. Though people are expect such liquidation from Merrill Lynch and Lehman but the fact remains that Citigroup for long (since last year) has been contemplating selling its stake in HDFC. It implies that India will see more stake sale by big US banks, though most of it may not come to the market, but will definitely impact the markets.

But, the good new may come from the commodity side, which since last year has risen tremendously on back of speculation. Now that interest rates are high, credit is further going to be squeezed out of the market and economic cycle on downhill is going to reduce the demand, speculators would prefer booking their profits and leave the markets for sometime. Commodities, especially the energy related, will see some cool-off now. This may come as good news for India, which is fighting high crude and steel prices.

India ranked 122 in 'Doing Business Report 2009’

India slips two places in new report

Even though India has grown at a scorching pace of over 9% in the recent years, and is expected to grow at around 8% in the current year, doing business in India is still tough. According to the 'Doing Business Report 2009' prepared jointly by the International Finance Corporation and the World Bank, India has slipped two places to 122nd rank.

Another important thing to notice is that even though, India has considerable economic clout against its neighbors, still Pakistan, Bangladesh and even Nepal rank higher than India in doing business. Pakistan ranks 77th place, Bangladesh 110th and Nepal is at 121st position. In terms of number of days to set up an enterprise, however India has an advantage over Bangladesh and Sri Lanka. According to the report, it takes 30 days to set up a business in India, 73 in Bangladesh and 38 in Sri Lanka. Interestingly, the report added that an entrepreneur can start a business in 9 days in Afghanistan and Maldives, and in 24 days in Pakistan. Closing a business enterprise in India also proves to be tough task, as per the report, insolvency procedure in India may take 10 years as compared to 5 in Nepal and 2.8 in Pakistan.

Among other parameters, it takes about fours years to enforce a contract in India as compared to less than six months in Singapore. The cost of enforcing a contract in India could be as high as 40% as against 24% in Pakistan and 23% in Sri Lanka. Procedures to enforce a contract, the report said, are equally cumbersome in Pakistan, Bhutan and Bangladesh. However at trade policy India beats its neighbors. According to the report, it takes 17 days to export as compared to 24 in Pakistan, 41 in Nepal and 74 in Afghanistan. Similarly, it takes 20 days to import goods into India as against 32 in Bangladesh and 35 in Nepal. It may take 77 days to import goods in Afghanistan.

On the international front, Singapore continued to garner 1st place in the ranking, which covered 181 countries of the world that provides quantitative measure of regulation for starting a business, getting credit, paying taxes, enforcing contracts and closing a business.

This report also states the importance of India as a country, and a market in the global economy, even though doing business in India is tough, still the country is able to grow at above 8% per annum as business are fighting this tough task to initiate and grow the business in the country.

Will Indian govt able to attract 10mn foreign tourists by 2010?

Indian government is giving fresh impetus to tourism industry to attract more foreign tourists. Though India is geographically large and more diverse than many countries but it still attracted only 5.08 mn foreign tourists compared to Paris, which saw 15.6 mn people visiting the city in 2007. Even a small place like Hong-Kong attracted 13 mn foreign visitors. It would be a big challenge for India to attract large number of visitors and snatch market share from even Asian countries.

Infrastructure remains the major hurdle in India. Most of the UNESCO sites don’t have quality hotels and there has hardly been any investment in such places. Even there are bottlenecks for first footfall, airports and docks for cruiseliners. Government has been trying hard to remove these hurdles by setting up additional airport terminals in places like Goa, Kochi, Chennai and Mumbai, which may improve visitors’ experience upon arrival but same can’t be said about their forward journey. Developing dock for cruiseliners will definitely boost both international and domestic tourism. Kochi’s experience with cruiseliners needs to be replicated in other parts of the country. It would give big boost to the tourism as we are peninsular country and cruiseline experience is very well limited.

At present, tourism contributes 6.4% of country’s GDP and accounts for 10% of the country’s employment. Government aims that an increase in the arrival of tourists will bring in additional revenue of USD10 bn by 2010 and would also generate 15 mn jobs for the country. This would definitely require proactive approach rather than mere policy announcements, which government is good at rather than execution.