New Delhi, Kalyan Ray, dhns: In what may be the first scientific effort to understand the impact of genetically modified Bt cotton in Karnataka, <b>experts have found that farmers can save more than Rs 3,000 on every hectare by doing away with multiple pesticide sprays required in non-Bt cotton.</b>
As a result, the net returns on every hectare of Bt cotton stands at Rs 13,168, says a study carried by two agriculture economists from the University of Agriculture Sciences (UAS) in Dharwad.
âSimilar studies are available in Andhra Pradesh and Maharashtra. But for the first time we are trying to understand the impacts of Bt cotton in Karnataka,â lead investigator Dr L B Hugar told Deccan Herald from Dharwad.
Monsanto â one of the manufacturerâs of Bt cotton â has funded a part of the study while the remaining came from the UAS. The research is yet to be published in a peer reviewed scientific journal.
After studying 180 cotton farmers in Raichur, Mysore and Haveri districts, <b>the duo discovered adverse health reactions like giddiness, nausea and itching which was common after pesticide use, has reduced considerably among the farmers cultivating Bt cotton.</b> The increased net returns, explained Dr Hugar, came by combining the savings from pesticides, 19 per cent higher yields because of lower pest attack and the premium price Bt cotton fetches from the market.
The GM cotton works better in irrigated areas compared to rain-fed zones. On an average, it remains effective against bollworm up to 105 days in irrigated areas of Raichur.
But in rain fed fields of Haveri and Mysore, Bt cottonâs effectiveness was felt up to 90 days. âBt protein is more effective in killing the pests when soil moisture level is high. It can be achieved only in irrigated conditions,â Dr Hugar said.
New Delhi : If individual Key Urban Towns (KUTs) do not score as high as metros with regard to affluence, the high scores on future growth potential push them up in the overall ranking.
The Ernst & Young study highlights the huge potential for KUTs such as Pune and Chandigarh that rank higher than metros like Chennai and Kolkata.
<b>Explaining the reasons behind this growth of small town India in consumer spending patterns, it says that earlier the key challenge for marketing beyond metros, especially in Tier 3 and 4 towns and rural India, had traditionally been logistics.
But recent investments and developments in infrastructure and connectivity have brought the marketer in closer contact with KUTs, Rest of Urban India (ROUI) and rural areas.
âIn addition, the movement of organised retail into smaller towns has meant that it is easier and more cost effective for the marketer to access KUT,â the study says.</b>
The rise of organised retail chains and malls provide a one-stop shop for marketers to purvey their goods and services.
<b>Leather processing: India, Ethiopia ink MoU</b> Link
March 23, 2008
<i>Access to one of the best quality raw leather; Itâs a strategic sector; India can play a support role in capacity building</i>
<b>NEW DELHI: To help their respective leather sectors in order to increase share of global presence in terms of export earning and volume of leather products, India and Ethiopia made a significant achievement by signing an MoU at a parallel session on leather and leather processing during the 4th CII-EXIM BANK Conclave on India Africa project partnership 2008, here.
It is a much needed push for the Indian leather manufacturers as they would access one of the best quality raw leather from Ethiopia.</b>
Speaking on the occasion, Shyamal Gupta, chairman, CII, also a member of national committee on leather & leather products, said today âwe are delighted to have cooperation with Ethiopia.â He reiterated that time has come for the Indian leather industry to take a giant move not only in domestic market but also in the global market.
<b>For India, leather is a strategic sector which has greater scope for employment generation as it is labour intensive. Approximately 2.4 millions of people are at present engaged in the leather sector.</b>
Further, he pointed out that for Ethiopia also it is a much needed agreement as for long Ethiopia has been a raw leather exporting country which gives a very low percentage value to leather. Such hindrances have been faced by many countries of Africa, Mr Gupta said, emphasising that India can play a support role in capacity building, research and development and making African goods globally more valued and accepted.
Lemma, an Advisor from Ethiopia, while highlighting the overall growth strategy of the Ethiopian economy, said emphasis has been laid on the private sector as an engine of growth. Exports led industrialisation, greater use of local resources and strengthening of the labour intensive technology are some of the important issues.
<b>National Horticulture Mission norms to be revised</b> Link
Mar 23, 2008
NEW DELHI: The norms of the National Horticulture Mission will be recast, particularly with regard to the costs and the pattern of assistance for some of the major components.
Giving this information after reviewing the functioning of the Mission and its Board, Union Agriculture Minister Sharad Pawar said a committee constituted by the Ministry had gone into the matter, and given recommendations, which were under consideration.
At the same time, the guidelines for setting up wholesale markets had been revised and those for terminal markets would be re-worked.
A new component of terminal markets, which was included under the Mission 2006-07 in public-private partnership (PPP) mode, had not taken off due to operational difficulties.
The guidelines for the terminal markets, therefore, are proposed to be revised in consultation with the Planning Commission and the Ministries concerned.
The guidelines for setting up wholesale markets had been revised to facilitate establishment of collection centres alongside wholesale markets.
The Minister said the active participation of States in horticulture-sector schemes and the convergence of various schemes of different Ministries would result in high growth in this sector from 2008-09. An amount of Rs. 8,809 crore had been earmarked for the Mission in the XI Plan.
The Board has assisted 7035 projects for area expansion and 209 for cold storages in 2006-07.The districts covered under the mission have been expanded to 340.
<b>'India may transform global business landscape by 2018'</b> Link
Mar 23, 2008
New Delhi, PTI: India, along with emerging market peers China, Brazil and Russia, is expected to transform the global business landscape and will have a greater influence on the markets across the world by 2018, a study says.
The study by UK-based Chartered Management Institute looking ahead to 2018, predicted what the world of work and management would look like and examined how organisations can prepare for it.
"In the probable future, Brazil, Russia, India and China (BRIC) nations will have a greater influence on business markets and transform the business landscape," the study said in its description of the most probable picture of the world of work and management in 2018.
The study also revealed that the business markets would be noticeably influenced by new players from India, Brazil, Russia, China, Eastern Europe and other developing countries as well as global businesses.
As new business models are introduced to respond to these changes, there would arise the need for greater emphasis on new skills such as understanding diversity and foreign cultures.
The study titled 'Management Futures --The World in 2018' forecast that in the next 10 years the business models and structures would changes in nature and there would be a polarisation from global corporates to virtual community-based enterprises.
To succeed, organisations would need technology that is able to capture and analyse implicit and tacit knowledge and allow the sharing of knowledge with customers and partners, it said.
The study also highlighted that organisations would have to be increasingly knowledgeable about world markets as financial affairs and interconnections between seemingly independent events may have a dramatic effect on their business.
Interestingly, as the developing and emerging nations grow economically strong in the global business arena, immigrants would choose to stay in or go back to their own countries and could lead to shrinking of workforce in the Western world.
The report also gave a scenario in case the picture does not remain rosy by the next 10 years, it could deflate the boom in the business market.
If the economy of China or India collapses due to social unrest among minorities and in parallel through pockets of war, for example in Iran, Pakistan, India, China, Taiwan, the business market could shrink suddenly and dramatically as business in these countries would become unstable, the report added.
The study combined with a survey of over 1,000 senior executives, would be used to help business leaders in the sector understand what needs to be done, today, to prepare for tomorrow.
"Looking ahead 10 years, it is clear that the successful organisations will be to those who can do more than embrace change - they will anticipate, identify and drive it," Chartered Management Institute chief executive Mary Chapman said.
"Of course, we cannot determine the future, but that does not mean we shouldn't forecast and prepare for it to ensure that organisations and teams are effective, capable and competitive," he added.
<b>India, New Zealand to sign MoU on agri sector</b> Link
24 Mar, 2008, 1710 hrs IST, PTI
NEW DELHI: India and New Zealand are likely join hands soon for exchange technology transfer and research in the agriculture sector.
"We are in the process of finalising a few things at the official level in this regard," Agriculture Minister Sharad Pawar told reporters here after meeting his New Zealand counterpart Jim Anderton.
Both the countries are likely to sign a memorandum of understanding in the farm sector shortly, which would also encourage private sector investment.
New Zealand has offered its expertise in horticulture, dairy and meat sectors to India, Pawar said. He said the MoU aimed at strengthening mutual cooperation and bilateral trade between both countries.
Among others, the proposed MoU between the Agriculture Ministries of the two countries would cover agriculture and allied activities, including food processing, agricultural research and phytosanitary issues relating to trade in plants and animal products.
India and New Zealand already have an MoU on plant quarantine issues, another tripartite MoU is being discussed among Indian Council of Agricultural Research, Land Care Research and Massey University, New Zealand.
<b>India seeks African diamonds; Ramesh to visit Angola, Namibia</b> Link
23 Mar, 2008, 1519 hrs IST, PTI
NEW DELHI: Completely dependent on imports for rough diamonds, lifeline of the 14-billion-dollar exports of the polished precious stone, India is taking steps to obtain the raw material directly from Africa instead of sourcing it from European middlemen.
Minister of State for Commerce Jairam Ramesh is taking a delegation of country's major buyers of rough diamonds to Namibia and Angola beginning March 26.
Officers from the Gems and Jewellery Export Promotion Council, State Trading Corporation and MMTC Ltd are accompanying the minister, who feels India must involve Africa in the value chain of the diamond business.
In future, India will find it difficult to source rough diamonds unless it demonstrates to African nations that it will collaborate actively in helping them move up the value chain and assist in value addition in these producing countries. The Africanisation of diamonds processing industry is not a threat to India but a great opportunity which "we must proactively embrace", Ramesh said.
He said the visit to Angola and Nambia will be followed by another one in the next couple of months to South Africa and Botswana, the other important diamond producing countries in Africa.
India's estimated imports of rough diamonds in 2007-08 are 10 billion dollars, while estimates of exports of cut and polished diamonds in 2007-08 are about 14 billion dollars.
The country is the world's largest importer of rough and exporter of cut and polished diamonds with over 90 per cent market share.
Rough diamonds are presently procured through a variety of sources with the bulk of it coming into India through Antwerp in Belgium. It is in India's long-term interest to establish direct relationships with supplier countries, cutting out all the middlemen, Ramesh said.
The Commerce Ministry has also started dialogue with the major diamond producing countries. Alrossa, the Russian diamond producing company has recently sold roughs directly to Indian buyers, though in small quantities.
Angola produces about 10 per cent of the world's rough diamonds and is also a country with which India has been trying to establish a relationship in the oil sector. Namibia accounts for about six per cent of world rough diamonds production.
Though India has embarked on exploration of diamonds, it will take at least a decade before commercial deposits in states like Chhattisgarh, Andhra Pradesh and Karnataka are proven and established. The diamond cutting and polishing industry will continue to be entirely dependent on imports of rough diamonds for a long time to come, Ramesh said.
Officials of the ONGC Videsh are also accompanying the minister and will assist him in talks on cooperation with Angola in oil exploration.
<b>India to export additional 4,124 tonnes of raw sugar to EU</b> Link
24 Mar, 2008, 1308 hrs IST, PTI
NEW DELHI: India will export 4,124 tonnes of raw sugar to European Union in addition to the 10,309 tonnes already exported to the bloc, out of free sale portion of 2007-08 season's production.
"The government allocates additional quantity of 4,124 tonnes of raw sugar for export to EU for October-September 2007-08," the Director General of Foreign Trade notification said.
The government had allowed export of 10,309 tonnes of raw sugar in October 2007 through Delhi-based Indian Sugar Exim Corporation (ISEC), it said.
In a separate notification, the government has also allowed export of 10,000 tonnes of white sugar to the 27-nation bloc for July-June 2008-09.
ISEC is the designated agency for the export of sugar to EU under preferential quota, it added.
<b>BT says to hire up to 300 in India centre</b> Link
Mar 25, 2008
NEW DELHI (Reuters) - British telecoms firm BT Group Plc said on Tuesday it would hire up to 300 people in a global operation centre in India, as it aims to outsource more operations to emerging markets to keep costs lower.
The new facility at Gurgaon will support BT's procurement, legal, finance and human resource operations, the company said in a statement.
"We have been working successfully in India for many years with partners who handle some of our non-core but mission critical activities," Chief Executive Ben Verwaayen said in the statement.
BT said it contributed 2 percent to India's $50 billion software services exports, and planned to step up outsourcing to India. The company has also built operation centres in Hungary, Brazil and China.
<b>Indian animation industry has huge business potential</b> Link
Mar 25, 2008
Mumbai, March 25 (IANS) Indian animation industry has huge business potential and the industry is beginning to scale new heights, however, content development is the need of the hour in order to sustain the growth, said experts here.
'Indian animation industry is definitely booming and it has a very bright future ahead. However, it needs to mature up its content and reach out to a wider audience,' Jean Thoren, president and CEO of Animation Magazine, US, said while addressing a session - Developing Animation Content: lessons learnt from around the world - at the Ficci-Frames 2008 Tuesday here.
'There's a huge future for animation in India. However, while visually we are achieving perfection we need to focus more on developing the content. We need to consider the responsibility of the characters we are portraying,' said Joanna Ferrone, president and founder of the New York-based Honest Entertainment.
'While drawing the characters, one has to realise that these cannot be perfect and that the world is not an even playing field. It's important to draw what's within you,' Ferrone added.
Stressed Siddhartha Jain of iRock Media Pvt. Ltd: 'Indian animation industry needs to look beyond the mythological figures as they are neither catching up with the children and nor, definitely, with the teens or adults.'
'The industry needs to push creativity both in writing and also in visual. The talent pool needs to be broadened and the current trends need to be understood,' he said.
Agreed Nandish Domlur, CEO, Paprikaas: ' The Indian animation industry is definitely going places but there are challenges. There has to be more quality content catering to a global audience.'
The entertainment portion of the animation, gaming and VFX industry grew by 24 percent over the previous year and is estimated at Rs.13 billion in 2007, up from Rs.10.5 billion in 2006, according to a report by the Federation of Indian Chambers of Commerce and Industry of India (Ficci) and PricewaterhouseCoopers (PWC).
<b>India-UAE trade to grow by 30%: Assocham</b> Link
Tue, Mar 25 2008
India's trade with UAE is slated to touch 25 billion dollars mark by 2010, an increase of over 30 per cent from the current level, industry body Assocham today said.
At present, the bilateral trade, excluding India's crude oil imports from the UAE, stands at 19 billion dollars.
The Assocham expected the Indo-UAE trade to grow by 30 per cent during the next two years and by 40 per cent beyond 2010.
"The trend will continue," said Assocham President Venugopal Dhoot. He said the trade volume estimated by the chamber is conservative and may exceed expectations.
In 2006-07, India's exports to UAE were 10 billion dollars while imports stood at 7.5 billion dollars.
Exports to UAE include gems and jewellery, vegetables, fruits, spices, engineering goods, tea, meat, rice, textiles, marine products, machinery and plastic products.
Dhoot, who is on a visit to Dubai with an eight-member delegation, met Prince of Sharjah Sheikh Sultan bin Mohammed bin Sultan Al Qaasimi and presented him the blueprint of trade potential.
The Assocham and Sharjah Chamber of Commerce and Industry have signed agreements for cooperation in solar energy,IT and technology park and higher education.
<b>State Bank of India buys 91 pct in factoring firm</b> Link
Mar 25 2008
MUMBAI (Reuters) - Government-run State Bank of India said on Tuesday it had completed an acquisition of 91 percent in an Indian factoring services company for 5.2 billion rupees.
The stake in Global Trade Finance Ltd was purchased from financial firms such as International Finance Corp (IFC) and others, State Bank, India's top lender, said in a statement.
It had signed an agreement in January with IFC, Export-Import Bank of India and Malta-based FIM Bank to buy the stake, it said.
Estimated at 227.32 million tonnes; Rice production set to increase by 2 million tonnes; May have sobering effect on prices;
NEW DELHI: The countryâs total foodgrains production in the 2007-08 crop year is estimated at 227.32 million tonnes, about 10 million tonnes more than what was achieved the previous year.
Releasing the third advance estimates for 2007-08, Agriculture and Cooperation Secretary P.K. Mishra told journalists here on Tuesday that the assessment was based on feedback from the States and validated by information from other sources.
Stating that all major crops including wheat, rice and pulses were likely to have an all-time record production, Mr. Mishra attributed it to well-distributed rainfall and improved weather conditions, among other factors.
The 2007-08 crop year would take into account standing winter crops including wheat, mustard and rice to be harvested by May. The period for estimate is from last May to this May.
Mr. Mishra said rice production at 95.68 million tonnes was estimated to be an all-time high, so would be wheat output at 76.78 million tonnes.
Coarse cereals production estimated at 39.67 million tonnes and maize at 18.54 million tonnes were also likely to be an all-time high.
Pulses production at 15.19 million tonnes and oilseeds output at 26.21 million tonnes were also estimated to touch an all-time record. Soyabean production was estimated to be 9.43 million tonnes, while cotton output was likely to be 23.19 million bales of 170 kg each. Production of sugarcane was estimated at 344.23 million tonnes, marginally less than what was recorded last year.
Compared to 2006-07, rice production was estimated to increase by about two million tonnes, wheat by about one million tonne, coarse cereals by six million tonnes and pulses by about one million tonne, Mr. Mishra said. Oilseeds production was estimated to go up by about four million tonnes and cotton by about six lakh bales.
Mr. Mishra said higher estimates of total foodgrains production would consolidate the gains already made. Though the total crop area in the country remained static at 141 million hectares, the increased production could be attributed to favourable weather conditions, good rainfall and distribution of quality seeds.
Officials in the Ministry said the estimates would not only have a âsobering effectâ on the prices of foodgrains but also send a positive signal to the international market as well as traders.
<b>Wheat procurement to cross 150 lakh tonnes</b> Link
New Delhi, April 23
Wheat procurement for Public Distribution System (PDS) in the country will cross the target of 150 lakh tonnes. Officials say to supplement the food stock; the government is prepared to procure an additional 20 lakh tonnes over and above the target of 150 lakh tonnes.
Agriculture minister Sharad Pawar on Wednesday said during the past 10 days of procurement, 86.25 lakh tonnes of wheat had been procured by government agencies for the PDS, thereby meeting almost 60 per cent of the estimated goal of 150 lakh tonnes.
At the beginning of the current Rabi marketing season, the government had set the procurement target at 1.5 million tonnes. Last year, it was able to procure only 1.1 million tonnes and was forced to import 1.8 million tonnes to augment buffer stock.
On Tuesday, the government also claimed that food grain production during 2007-08 had reached a record of 227.32 million tonnes in case of rice, wheat, oil seeds, cotton and coarse grains. While skeptics say that declarations about the bumper crop and adequate procurement are election-driven. But todayâs figures as well as yesterdayâs estimates of record food grain production during 2007-08 also mean that the country will not have to import wheat this year and prices will be stabilised.
In fact, there is a heavy arrival of wheat in mandis and the agriculture minister had expressed confidence that the target for wheat procurement was likely to be completed within the next five to seven days.
From Punjab and Haryana, which fulfills the maximum needs for the PDS, ICDS, school noon meal programme and food security reserves, government has procured about 99 per cent of the total market arrivals of wheat so far. The two states contribute 80 per cent of the total wheat for the central pool.
While majority of 86.25 lakh tonnes of wheat has been procured from Punjab and Haryana, the Center has appreciated steps taken by Gujarat, Madhya Pradesh and Maharashtra governments to improve wheat procurement. It has asked other wheat growing states to take necessary steps to ensure enough wheat procurement by the government agencies.
In India wheat has now become national crop and its consumption is increasing in southern and northeastern states. Internationally there is a shortage of wheat due to variety of factors, including consecutive drought years in Australia and bad weather conditions in other wheat producing countries. In the US wheat is being diversified towards animal feed as corn and maize is used to produce biofuel.
States have also been asked to take necessary steps for procurement of rice in the Kharif season. Inaugurating the Conference of State Agriculture and Agricultural Marketing Ministers, Pawar said rice-producing states that did not procure adequate quantities of rice should give special attention to procurement. He appealed to the states to make best use of initiatives taken in recent years to ensure food security.
Pawar called upon state ministers to give high priority to better water use efficiency, ensuring availability of quality seed and fertilisers, improving marketing infrastructure, introducing market reforms and disseminating new technology through the extension network.
He said conservation farming was required especially in Punjab, Hayana and western UP, where deceleration in productivity growth in food grains had been observed in post green revolution period due to unsustainable use of soil and water resources.
Calling upon the states to expedite market reforms, the minister said investments in post-harvest and cold-chain infrastructure were needed for which entry of the private sector was necessary to bring latest technology and expertise in marketing. Therefore, an appropriate regulatory and policy environment was necessary.
He said the states had been asked by the ministry of agriculture to amend their Agricultural Produce Marketing Committee Acts for de-regulation of the agricultural marketing system. Twenty-two states had amended their APMC Acts, but had not yet notified APMC Rules. A draft of model APMC Rules had been circulated to states. The ministry is also putting forth a proposal to constitute an Empowered Committee of State Agriculture Marketing Ministers to facilitate faster implementation of marketing reforms.
<b>MUMBAI, May 7 : <span style='color:red'>India offers one of most rewarding opportunities for growth in spite of recessionary conditions in the United States, wealth management group Merrill Lynch chief executive John Thain said on Wednesday.</span></b>
âI do not believe in the âdecouplingâ theory but India, led by strong local demand, will be relatively less affected by the global credit crisis,â Thain told reporters here.
India, which is Asiaâs second fastest growing economy, is forecast to grow by more than eight per cent in the year to March 2009.
âDespite investment risks which prevail across various markets, India offers one of the best opportunities for growth,â Thain said.
âContinuation of rising food and energy prices, lower housing prices and higher unemployment will result in a pull-back from US consumers,â Thain said.âAFP
<!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo--> Urchins save the day with bank accounts
Nidhi Mittal | New Delhi
Starting the day at 6 am delivering milk and then trying to find work with tent companies till late in the night, 11-year-old Deepak has his hands full. He earns Rs 100 a day, but is heartbroken when the money is snatched by bullies "who spend it on alcohol and drugs."
Deepak could never think of saving his hard earnings to send some back to his family in Bihar -- till he got to know about the Children's Development Bank (CDB), a bank truly of, for and by children.
The CDB is an innovative venture to help get streetchildren save, tailormade to suit their cash needs for day-to-day survival and their vulnerability to the rigours of the street.
Not only do homeless children come to CDB to deposit money in their 'savings or current accounts', the person on the other side of the window is also a child from amongst them. Children have themselves decided the rate of interest they want on their money, which is 3.5 per cent.
Catering to children in the age group of 7 to 18 years, the bank has done well to teach them how to save. Initially, the children are taught how to budget, maintain accounts, cash, ledgers and passbooks by trainers from private banks like HSBC, which also provides the stationary to CDB.
The CDB also gives advance to 13-year-olds and above who want to start a business, making sure that the child has skills to run it.
Six branches of the bank in Delhi "cater to 2,000 streetchildren" and there are eight other cities where CDB operates. NGOs not just in India, but also in many other countries in South Asia, have adopted this innovative technique to help needy children. "We now have 8,000 members in South Asia, 33 per cent of them girls," says Suman Sachdeva, Development Manager, CDB.
The bank opens from 6.30 to 7.30 pm daily and children line up outside the small window on time. "I like doing all the ledger entries and advising other children how to manage their money, as in whether they should deposit it in savings or current account," says 13-year-old bank manager Intezaar.
Sanjay has the biggest bank balance in the Old Delhi branch with Rs 2,800 to his credit. Unavailable to talk, children say he hardly spends his money, except for the school fees.
A visit to any of these banks would prove how desperately these children want to lead a life that's very different from what they have now. "I want to work in a big bank when I grow up," says Amit, with a gleam in his eyes.
Indian fund assets to hit $325bn by 2012
Friday, May 30, 2008 16:47 [IST]
Rita Raagas De Ramos
Strong economic growth, deeper financial markets and a varied distribution system will boost asset management growth in India.
India will continue to be one of the fastest growing asset management markets in the world and will see total assets in its fund industry grow to Rs 12.8 lakh crore ($325 billion) over the next 5 years, according to Boston-based research firm Cerulli Associates.
Indian mutual fund assets stood at Rs 5.4 lakh crore ($137.6 billion) at the end of 2007, up 67% from the year before.
âThe industry has seen an unprecedented expansion over the last three years,with year-on-year growth rates of 32%, 62%, and 68%, respectively,â Cerulli says in a report.
âThis has coincided with, and to a large extent been propelled by, the bull run of the Indian stock markets. Sensing exciting times ahead, a number of international asset managers have signalled their intentions to enter the fray.â
Cerulli expects the Indian mutual fund market to see an 18% compounded annual growth rate over the next 5 years, and while that may appear modest compared to the recent past, it is understandable given expectations of low growth in most global asset management markets.
A strong domestic stock market, growing investor awareness, and greater mutual fund penetration in India have helped boost assets under management (AUM), and this trend is expected to continue.
A reduction in asset churning, âthe bane of the Indian mutual fund industryâ, according to Cerulli, would go a long way in helping build a sustainable fund market in India.
The international asset management community is well-represented in India, and Cerulli expects this to increase as more global asset managers seek to build a business in that market. India has 33 mutual fund managers with 16 joint ventures and three wholly owned foreign asset managers.
Indian fund managers have been very aggressive over the last two years.
The largest fund manager, Reliance Capital Asset Management, has considerably outpaced the market in its asset growth. The industry AUM grew about 70% in 2007; Reliance by 119%.
âAsset gathering skills and product performance are far more important than the pedigree of the asset management company,â Cerulli says.
âForeign fund managers cannot rely solely on their international brand to make an impact in the Indian marketplace.â
Cerulli believes the total number of asset managers in India could rise to as many as 50 in the near future, with many of the new entrants coming from overseas.
There's much relief that Asia is holding its ground as the U.S. economy slows and credit-market woes humble Wall Street's biggest names. While asset markets are heading lower from Tokyo to Jakarta and Shanghai to Mumbai, healthy economic growth has confounded the pessimists -- so far.
Knock-On Effects
The knock-on effects are coming, just more stealthily than many expect. Asia is unlikely to get off easy even if the U.S. skirts a recession. The region hasn't decoupled from America as much as some would say.
<b>The worst-case scenario -- a prolonged U.S. decline -- could be devastating, particularly at a time when record oil and food prices are hurting Asian households. </b>Billionaire investor Warren Buffett laid it out in a June 25 Bloomberg interview. He's unsure when the U.S. will recover.
``It's not going to be tomorrow, it's not going to be next month, and it may not even be next year,'' said the chairman of Omaha, Nebraska-based Berkshire Hathaway Inc.
The idea that Asia will continue to display an impressive immunity to U.S. events ignores how dependent China is on the American economy. It also ignores how <b>reliant Asia is on China's 10 percent growth. Slowing U.S. demand will chip away at that country's export-driven expansion exponentially.</b>
<b>China's Limits </b>
<b>China is one of several Asian economies with negative real interest rates</b>. With its annual inflation above the central bank's benchmark lending rate, China would be hard-pressed to stimulate growth with lower borrowing costs or increased government spending.
Monetary quandaries abound in Asia. Bank of Japan officials, for example, are making it clear interest-rate deliberations have become increasingly challenging over the last two months.
``At the time of the June meeting, both downside and upside risks had risen compared with when we met in May,'' BOJ policy board member Seiji Nakamura said yesterday in Asahikawa, Japan.
The credit crisis that began with U.S. subprime loans is just one force crimping U.S. spending. A new Bloomberg/Los Angeles Times survey shows most Americans are feeling the pain from rising gasoline prices and many are tightening their belts. Seven in 10 of those surveyed said higher gas prices have caused them ``financial hardship.''
Export Woes
That may mean less spending on cars, flat-screen televisions, cellular phones, name-brand clothing items and other goods manufactured in Asia. <b>With U.S. consumers accounting for 70 percent of gross domestic product, any pullback would have an outsized impact on global economies</b>. Housing is arguably the key to all of this.
The U.S. will expand 1.4 percent in 2008, the weakest performance since 2001, according to a Bloomberg survey. U.S. growth may be cut by a half to a full percentage point<b> if consumers spend less and save more, according to Deutsche Bank AG economists. For Asia, that is decidedly bad news. </b>
So is Harvard's housing report and Buffett's concern that the U.S. is heading for stagflation. Rising home prices and easy access to credit have been the major drivers of U.S. growth in recent years. <b>If U.S. housing remains weak, Asia's export- dependent economies are particularly vulnerable.</b>
Here, recent comments by Federal Reserve officials are both good and bad for Asia.
The Fed this week left its benchmark rate at 2 percent, saying ``uncertainty about the inflation outlook remains high.'' Further rate cuts seem unlikely, something that could disappoint some investors. The specter of continued rate moves supported optimism about Asia's export markets.
Yet easy Fed policies also cause problems in Asia. <b>Much of the liquidity that U.S. officials create ends up in Asian markets, increasing so-called hot-money flows</b>. That has made it harder for Asian central banks to control money supply and inflation. Taking a longer-term view, an end to Fed rate cuts isn't a bad thing.
The catch is that with Asia's most important customer in trouble, the region's growth outlook is dimming. Here, the U.S. housing market is more of a linchpin than many in Asia think.
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I was also expecting, trends are very bad for India.
The Reserve Bank of India (RBI) is unlikely to allow foreign banks in the country to expand freely by increasing their branch networks or acquiring private sector banks, when this issue comes up for review in 2009.
Since banking sector reforms have not been implemented, the central bank may not be in a position to give a go-ahead to further liberalisation of foreign banks.
The apex bank was set to open up the banking sector in 2009 by according national status to foreign banks.
As per the liberalisation road map prepared by the RBI, foreign banks would have been allowed to acquire any private sector bank in the country and open up branches, post 2009.
"But given the current scenario and banking reforms, which are yet to see the light of day, the central bank is set to postpone the opening up of the sector to free competition from foreign players," an official source said.
"Foreign banks can acquire banks which are not financially stable and that too only if RBI allows," a senior banker said.
Under the first phase of banking sector liberalisation, foreign banks can set up a wholly-owned subsidiary (WOS) or convert existing branches into a WOS. The first phase was initiated in 2005, was aimed at allowing the domestic banks to strengthen their presence and financial position through consolidation and reforms.
The proposed reforms, such as aligning voting rights of the foreign partners with their stakeholding pattern, have not been implemented due to stiff opposition from the Left allies of the UPA government.
There has been no major consolidation in the sector, either, despite repeated pleas by the finance ministry.
Foreign players such as Citibank, Standard Chartered Bank and HSBC already have a presence in the country, while others are waiting in the wings. Royal Bank of Canada and the northern European bank Glitnir have opened their representative offices in the country this year.
