VZCZCXRO9357
RR RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #2036/01 1171217
ZNR UUUUU ZZH
R 271217Z APR 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 5218
INFO RUEHCG/AMCONSUL CHENNAI 0145
RUEHCI/AMCONSUL KOLKATA 9745
RUEHLH/AMCONSUL LAHORE 3910
RUEHBI/AMCONSUL MUMBAI 9319
RUEHPW/AMCONSUL PESHAWAR 4495
RUEHIL/AMEMBASSY ISLAMABAD 3047
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 002036 
 
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 
PASS TO DOC ART STERN 
 
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.  (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of April 23-27, 2007. 
 
------------------------------ 
OIL AND GAS MINISTER DISCUSSES 
LNG WITH TEHRAN 
------------------------------ 
 
¶2.  (SBU) India's Petroleum and Natural Gas Minister Murli Deora met 
with Iranian President Mahmoud Ahmadnejadi during an unscheduled 
stopover in Tehran April 26 to discuss their bilateral agreement of 
June 2005 on liquefied natural gas (LNG), media reported.  This 
agreement provides for long-term delivery of 5 million metric tons 
annually of LNG (equal to about 6.6 billion cubic meters of natural 
gas), estimated at a total of $22 billion, which has stalled over 
the last year due to Iran's demand for an upward price revision. 
Tehran now demands $5.10 per million British thermal units (mmBtu), 
compared to its offer two years ago of $3.215 per mmbtu.  Deora was 
reportedly ready to offer at the meeting with Ahmadnejadi a higher 
price for an additional 2.5 million metric tons annually, provided 
the original price applied to the original 5 million metric tons. 
Afterwards, press reports in their typical fashion simply described 
a friendly, cooperative atmosphere for the talks.  But as Embassy 
has reported previously, Iran has long claimed that its Economic 
Supreme Council still had to ratify the agreed price and had 
recently refused to do so.  For its part, the GOI has contended the 
agreement was a signed contract and has cited Iran's price 
adjustment demand as evidence of the unreliability and insincerity 
of Iran's regime for this LNG deal and for any other long term deal, 
including the proposed Iran-Pakistan India (IPI) pipeline. We expect 
that neither side yielded ground on their pricing positions. 
 
-------------------------------------- 
IMPORT DUTY ON PRIVATE AIRCRAFT 
INCONSISTENT WITH INDIA'S GROWTH STORY 
-------------------------------------- 
 
¶3.  (SBU) In a meeting on April 24 with Joint Secretary Gautam Ray 
at the Ministry of Finance, Commerce Acting Assistant Secretary for 
Manufacturing Jaime Estrada outlined U.S. government and business 
concerns about the three percent tariff duty on the import of all 
private aircraft, including helicopters.  This import duty on 
private aircraft, which in addition to the existing 16 percent 
countervailing duty and four percent additional customs duty, 
results in an effective tax at the border of  23-24 percent.  Ray 
said that our concern was "misplaced" since the aircraft is for 
personal consumption, does not affect U.S. companies, and taxes only 
five percent of aircraft imports, not all aircraft.  He also 
explained that due to feedback from other GOI ministries and Indian 
companies, the Ministry is reexamining two specific areas:  aircraft 
for training and for point-to-point tourism. 
 
¶4.  (SBU) Estrada and Commerce officials emphasized however that the 
import duty is also detrimental for Indian businesses that could use 
the smaller, more affordable aircraft to grow their economic base 
and reach more remote areas that are already connected with air 
strips.  Ray disagreed, saying that if "businesses are going to 
remote areas, the aircraft is not for general use," thus meeting the 
focus of the new import duty.  Also, Ray stressed, "the idea is not 
to tax the general public."  He also added that the import duty will 
hardly generate revenue, "not even USD 20 million," and is more 
about being equitable and taxing those that import aircraft for 
personal use.  Commerce officials further stressed that the growth 
in India's private sector is an exciting story, and the GOI should 
focus on making its policies consistent and examining ways to spur 
the growth of the aviation sector as a whole.  Ray noted that the 
Ministry of Finance will meet in ten days to review this tax along 
with other 2007-2008 budget items.  Embassy is following up with 
U.S. companies to obtain data and specific examples of cancelled 
aircraft orders and further press GOI to eliminate the proposed 
three percent import duty on private aircraft. 
 
----------------------------- 
 
NEW DELHI 00002036  002 OF 002 
 
 
TAMIL NADU SEES DOUBLE DIGIT 
GROWTH IN IT AND AUTO SECTORS 
----------------------------- 
 
¶5.  (U) The Confederation of Indian Industry (CII) - Southern Region 
reported double digit growth in the information technology and 
automobile sectors in Tamil Nadu.  In a survey covering October 2006 
- March 2007, CII found revenue growth of 18 percent in the 
automotive sector and 25 per cent in the IT sector.  Demonstrating 
the growth in IT in Tamul Nadu, IBM confirmed that it will soon open 
its fourth facility in Chennai, which will house 3,000 additional 
employees.  CII's report did, however, echo the concern highlighted 
in Chennai 289 that a lack of skilled manpower is becoming a serious 
issue for industry in Tamil Nadu. 
 
------------------------------- 
IPR CENTER STAGE IN SOUTH INDIA 
------------------------------- 
 
¶6.  (U) Ian Ellis of the Department of Commerce's Office of the U.S. 
Coordinator for International Intellectual Property Enforcement 
participated in a two-day workshop on Protection of Intellectual 
Property Rights held in Chennai April 25-26.  The workshop was 
sponsored by the Federation of Indian Chambers of Commerce and 
Industry.  Consulate General Chennai will participate in another 
workshop on intellectual property rights sponsored by the Southern 
India Chamber of Commerce on April 28. 
 
¶7.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
Kaestner