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RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
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UNCLAS SECTION 01 OF 03 NEW DELHI 000333 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD 
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR 
DEPT PASS TO USTR CLILIENFELD/AADLER 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA ABAUKOL 
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN 
STATE FOR SCA/INS AND EB/TRA JEFFREY HORWITZ AND TOM ENGLE 
USDA PASS FAS/OCRA/RADLER/BEAN/CARVER/RIKER 
 
E.O. 12958: N/A 
TAGS: EAGR EFIN EINV EPET ETRD SENV IN
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF 
JANUARY 28 - FEBRUARY 1, 2008 
 
NEW DELHI 00000333  001.2 OF 003 
 
 
¶1.  (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of January 28 - February 1, 2008. 
 
CARREFOUR COMING TO INDIA 
-------------------- 
 
¶2.  (U) French retail giant Carrefour, after several abortive 
attempts to reach a deal with an Indian partner over the past few 
years, has announced that it is close to finalizing a franchisee 
pact with one of its three short-listed Indian candidates for 
multi-brand retail outlets.  The company has not revealed the 
identities of its three potential partners.  Carrefour also plans to 
open wholly owned cash-and-carry outlets, a format for which foreign 
direct investment of 100 percent is permitted in India. 
 
NOVARTIS CASE DELAYED 
---------------- 
 
¶3.  (U) The Indian Supreme Court Monday stayed the order of the 
Madras High Court regarding the constitution of the Intellectual 
Property Appellate Board (IPAB) set to handle Novartis's appeal of 
its patent rejection for the leukemia drug Glivec.  The appeal was 
scheduled for Monday but will now be delayed until the matter is 
resolved.  Novartis had objected to the inclusion of technical 
expert S. Chandrasekharan on the IPAB because Mr. Chandrasekharan 
had been the Controller General of Patents at the time when the 
original patent application for Glivec was refused.  The Madras High 
Court had subsequently ruled that the IPAB could hear Novartis's 
appeal without a technical expert.  This prompted generic-drug 
manufacturer Natco Pharma to appeal to the Supreme Court that an 
IPAB without a technical expert could not effectively evaluate the 
case. 
 
CFA INSTITUTE RESUMES REGISTRATIONS 
FOR OUTSIDE TEST CENTERS 
------------------ 
 
¶4.  (U) In December, the Delhi High Court dismissed the CFA 
Institute's petition requesting that the ban placed on its 
operations by the All India Council for Technical Education (AICTE) 
be lifted.  CFA offered training and testing in India for Chartered 
Financial Analyst (CFA) certification from 1995 until May 2007, when 
the AICTE, prompted by complaints from ICFAI (an Indian competitor 
of CFA that CFA was suing for trademark infringement in Indian 
Courts) ordered CFA closed because it was operating without prior 
AICTE authorization.  CFA has more than 10,000 enrollees in India, 
and their Director for Asia Pacific Operations indicated in a 
meeting with Econoffs that CFA is eager to reach an accommodation 
with AICTE.  During CFA's most recent meeting with AICTE, AICTE 
granted CFA permission to accept registrations in India for exams 
that will take place outside of the country, a small but positive 
sign that AICTE is willing to work with the CFA Institute to resolve 
this issue. 
 
TATA CHEMICAL BUYS U.S. 
SODA-ASH COMPANY 
---------------- 
 
¶5.  (U) Tata Chemical, which previously had an 8-percent share of 
the global market for soda ash, increased its share to 14 percent 
with the purchase, announced Thursday, of U.S. company General 
Chemical Industrial Products, making Tata the world's second-largest 
producer of soda ash.  The USD-1-billion purchase gives Tata a share 
in the Green River Basin (Wyoming) mines, the world's only known 
source for commercially viable, natural trona ore, from which soda 
ash is made.  Soda ash accounts for 70 percent of the materials that 
go into the manufacture of glass, as well as 30 percent for powdered 
detergents.  (Comment:  Post requested a drop in the tariff on soda 
ash from 7.5 percent to 5 percent in its annual budget non-paper to 
the GOI.  Tata's purchase is likely to improve the chances of such a 
reduction.  End comment.) 
 
NEW DELHI 00000333  002.2 OF 003 
 
 
 
FINANCE MINISTRY TO CONSIDER 
SOVEREIGN WEALTH FUND 
-------------------- 
 
¶6.  (U) Despite Finance Minister Chidambaram's recent announcement 
that India would not pursue a sovereign wealth fund (SWF), business 
daily The Economic Times reported Thursday that the Ministry of 
Finance is planning to set up a committee to analyze the pros and 
cons of an SWF. Supporters point out that India gets less than 5 
percent on its USD 266.5 billion in foreign-exchange reserves by 
investing in U.S. treasury bills, while Singapore gets more than 20 
percent with its SWF.  The argument in favor of an SWF has gained 
steam since September, when China floated the USD-200-billion China 
Investment Corporation, but opponents point out that China is 
drawing from a current account surplus, while India runs a current 
account deficit. 
 
PANEL DEBATES PREFERENTIAL 
TRADE AGREEMENTS 
------------------ 
 
¶7.  (U) The CUTS Center for International Trade, Economics and 
Environment, a prominent non-government research institute, 
organized a panel of GOI figures, economists, and industry 
representatives January 29 to discuss India's approach to both 
bilateral and multilateral free trade agreements (FTAs).  Department 
of Commerce Additional Secretary Rahul Khullar stressed the 
importance of unilateral liberalization while aggressively pursuing 
bilateral trade agreements, especially given "the backdrop of a hazy 
outlook from Geneva (Doha)," with the broad objective of increasing 
India's share of global trade in goods.  He emphasized that success 
in the Doha Round is still crucial to India while noting that 
regional economic engagement also promotes economic cooperation, 
citing the successes of NAFTA and EU. 
 
¶8.  (U) Economists cautioned Indian policy makers that trade 
diversions and distortions can result from overlapping bilateral 
trade agreements.  Rajeev Kumar, an eminent economist heading the 
Indian Council of Research on International Economic Relations 
(ICRIER), believes India should liberalize itself first, then work 
with neighboring countries and then with the rest of the world. 
Prof T. N. Srinivasan of Yale University also advocated the Doha 
global forum for liberalization as the best option.  He was very 
skeptical about gains from the "mad rush" to conclude FTAs and 
flagged his doubts over complex negotiations such as the Indo-EU FTA 
where negotiations have commenced. 
 
GOI PEGS 2006-2007 GROWTH RATE 
AT 9.6 PERCENT 
------------------- 
 
¶9.  (U) On January 31, the GOI revised its estimate of India's 
growth rate for 2006-2007 from 9.4 to 9.6 percent and for 2005-2006 
from 9.0 to 9.4 percent, raising the average annual growth rate over 
the past four years to 8.8 percent.  The revised rate of 9.6 percent 
is the highest annual rate in 18 years.  The higher estimate stems 
from higher growth than projected in the mining, manufacturing, 
financial, construction, and services sectors.  Additionally, the 
agriculture sector experienced higher growth than expected, but 
slower growth than in the previous year.  Finance Minister 
Chidambaram projected India's economy to grow at 9.0 percent in 
2007-2008, with the help of rising foreign and domestic investment, 
and stated that he is prepared to make rapid policy adjustments to 
sustain high levels of growth in a time of global economic 
uncertainties. 
 
U.S. REAL ESTATE AND MORTGAGE 
WOES ECHO IN SOUTH INDIA 
------------------- 
 
 
NEW DELHI 00000333  003.2 OF 003 
 
 
¶10. (U) Wage cuts and interest rate hikes are softening South 
India's real estate market and realtors are encountering 
difficulties in selling space.  The formerly booming markets of 
Bangalore, Cochin and Hyderabad have seen real estate price declines 
of 5 to 10 percent, according to the business press.  Primary 
residential sales in Bangalore have reported dropped by 30 percent 
over the past year and decreasing demand is forcing developers to 
use innovative schemes to attract potential buyers. 
 
¶11. (SBU) The regional head of a major real estate company told 
Consulate Chennai that there was a visible slump in demand for real 
estate, particularly in the housing segment.  A top executive at an 
international bank told us that many of his customers are seeking 
modifications in their repayment schedule, due mainly to increases 
in interest rates and recent wage cuts at some of India's big-name 
information technology firms, including Tata Consultancy Services 
(TCS) and Wipro.  He said that his bank is increasing repayment 
periods and reducing monthly payments for many of these customers. 
 
BOEING FORMS PUBLIC-PRIVATE 
AEROSPACE RESEARCH CONSORTIUM 
------------------------- 
 
¶12. (SBU) Boeing signed a tripartite agreement with the Indian 
Institute of Science in Bangalore (IIS-B), Wipro Technologies, and 
Hindustan Computers Limited (HCL) to develop wireless and network 
technologies for aerospace applications.  A Boeing press release 
announced the agreement, calling it the Aerospace Network Research 
Consortium and describing it as the first of its kind in India.  The 
project's leader for WIPRO told Consulate Chennai that IISC will 
undertake basic research while Wipro and HCL will work more on 
applications.  Our interlocutor, noting his company's non-disclosure 
agreement with Boeing, did not wish to elaborate further on the 
specifics of the arrangement. 
 
INTERNET DISRUPTION HURTS 
SOME OUTSOURCING COMPANIES 
----------------------- 
 
¶13. (U) Business-process outsourcing firms (BPOs) in South India 
faced disruptions following damage to an undersea cable in the 
Mediterranean on January 30, but smaller firms were hit harder than 
big ones.  Smaller firms, which make up 12 to 15 percent of the 
sector, often lack the connectivity redundancy of larger firms, 
making them especially vulnerable to these sorts of disruptions. 
Firms located in smaller cities also faced greater disruptions than 
those in India's metropolitan centers, according to the business 
press. 
 
¶14. (SBU) One BPO executive told Consulate Chennai that the 
disruption prevented his company from delivering services within its 
usual timeframe.  He also told us that the disruption prevented his 
company from working effectively on projects that involved detailed 
graphics, which depend on the high-speed transfer of large amounts 
of data.  He added that his company had to send these kinds of 
projects to its Sri Lanka branch, which remained unaffected.  An 
executive for an even larger BPO told us that his company was able 
to route its traffic through cables connecting India with the United 
States via Singapore and Guam, allowing it to continue to operate 
largely unaffected. 
 
¶15.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
MULFORD