VZCZCXRO1909
RR RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #1885/01 1101200
ZNR UUUUU ZZH
R 201200Z APR 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 4975
INFO RUEHCG/AMCONSUL CHENNAI 0012
RUEHCI/AMCONSUL KOLKATA 9632
RUEHLH/AMCONSUL LAHORE 3898
RUEHBI/AMCONSUL MUMBAI 9189
RUEHPW/AMCONSUL PESHAWAR 4485
RUEHIL/AMEMBASSY ISLAMABAD 2971
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 NEW DELHI 001885 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 4530/ITA/MAC/OSA/LDROKER/ASTERN 
DEPT PASS TO USTR- DHARTWICK/CLILIENFELD/AADLER 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA - ABAUKOL 
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN 
 
E.O. 12958: N/A 
TAGS: CVIS EAGR EAIR EFIN EINV PTER KTFN ETRD IN
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS 
 
REF: Mumbai 107 
 
¶1.  Below is a compilation of Economic highlights from Embassy New 
Delhi for the week of April 16-20, 2007. 
 
---------------------------------- 
New FDI Regulations Go into Effect 
---------------------------------- 
 
¶2.  (U) India's new FDI regulations in telecom were officially 
notified by the GOI on April 18.  The regulations increase allowable 
FDI in the sector from 49% to 74% while allowing investors to access 
their networks remotely, a key request of U.S. industry.  For 
further background, see cable New Delhi 1438. 
 
-------------------- 
SAARC Experts Review 
Summit Progress 
-------------------- 
 
¶3.  (SBU)  Emboffs met on April 11 with Delhi-based SAARC (South 
Asian Association for Regional Cooperation) followers, Prof. 
Amir-Ullah Khan of the India Development Foundation, Jayshree 
Sengupta of Observer Research Foundation, and Prof. M.P. Lama and 
I.N. Mukherji from Jawaharlal Nehru University, to hear their 
impressions of the preceding week's SAARC summit.  Most expressed 
disappointment that India's leaders did not use their role as Summit 
host to announce more ambitious new programs or initiatives.  Lama 
opined that the declaration this year was not very different from 
past years'.  The disappointment was probably exacerbated by dashed 
hopes, as Foreign Minister Pranab Mukherjee and Foreign Secretary 
Shiv Shankar Menon had asked several prior to the summit, including 
Lama and Khan, to offer suggestions on new steps that India could 
take to improve SAARC and regional integration. 
 
¶4.  (SBU)  While disappointed, the observers did acknowledge that 
the proposed South Asian university held promise for bringing 
together young, potential future leaders, of South Asia in an 
academic and collaborative environment.  Mukherji and Lama also 
pointed to the potentially beneficial role that the new observers -- 
China, Korea, US, EU, Japan, and Iran -- could play as motivators 
and potential pressure points for progress on regional integration, 
pressing Emboffs for information on what the US intended its role to 
be.  Lama asserted that SAARC had no domestic political constituents 
within South Asia, and saw the observers as playing that role.  He 
also noted how the observers came to be invited.  First, Pakistan, 
Bangladesh and Nepal asked for China, and in response, India, not 
wishing to be seen as a spoilsport, did not reject China's 
membership, but suggested Japan as a counter.  After the US and EU 
were considered, the group decided Iran was the counterweight to the 
US.  The one country the group would like to see invited as an 
observer was Myanmar.  The final note was optimistic - our 
interlocutors looked to provincial efforts at cross border trade, 
citing India and Pakistan's Punjabs and the Indian states of the 
North East's engagement with Bangladesh, as engines of integration. 
 
------------------------ 
FDI Soars, Surpasses FII 
------------------------ 
 
¶5.  (U) Commerce Minister Nath announced today that foreign direct 
investment (FDI) in the fiscal year ending March 2007 surged to $16 
billion - nearly triple the amount in the preceding fiscal year. 
The $16 billion does not include reinvested earnings, which are 
commonly included in countries' FDI totals.  Inclusion of reinvested 
earnings brings India's total to $19 billion for the year.  While 
this is still behind China, the difference has narrowed to a factor 
of 4, rather than a factor of 10 as it was last year.  FDI into 
India also surpassed its foreign institutional investment (FII) into 
India's stock exchanges for the first time in recent years, 
providing more stable investment in the country. 
 
------------------------------- 
Government Targets $160 billion 
in exports for 2006-07 
------------------------------- 
 
NEW DELHI 00001885  002 OF 002 
 
 
 
¶6.  (U) Exports in the previous fiscal year ending March 2007 
reached approximately $125 billion, according to preliminary figures 
from the Commerce Ministry.  To reach its goal of $160 billion for 
the current fiscal year, exports would have to increase by 28%, 
which is above the export trend growth rate of approximately 23% in 
the past few years.  Acknowledging the headwind an appreciating 
rupee poses for export-oriented industries, Commerce Minister Nath 
nevertheless believed the target was achievable, particularly given 
the increasing diversity of exported products.  Among other sectors, 
India is seeing growth in exports in machinery and engineering 
goods, autos and auto components, petroleum products, and fruits, 
vegetables and processed foods. 
 
¶12.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
Mulford