VZCZCXRO1118
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #0262/01 0251122
ZNR UUUUU ZZH
R 251122Z JAN 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 0155
INFO RUEHCG/AMCONSUL CHENNAI 2320
RUEHCI/AMCONSUL KOLKATA 1634
RUEHLH/AMCONSUL LAHORE 4280
RUEHBI/AMCONSUL MUMBAI 1430
RUEHPW/AMCONSUL PESHAWAR 4746
RUEHIL/AMEMBASSY ISLAMABAD 4471
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
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

UNCLAS SECTION 01 OF 03 NEW DELHI 000262 
 
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 21-25, 2008 
 
NEW DELHI 00000262  001.2 OF 003 
 
 
¶1.  (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of January 21-25, 2008. 
 
LITTLE PROGRESS WITH EU/Indian FTA 
------------------ 
 
¶2.  (SBU) EC Trade Counselor Bermejo Acosta told Econ Counselor that 
progress on EU/Indian FTA negotiations remains slow.  On trade in 
goods talks, EU negotiating teams have been waiting since 
mid-November, 2007 for India's list of which items will be 
tariff-exempt (both sides agreed in advance of negotiations that at 
least 90 percent of goods from each side will be exempted from 
tariffs, to be reduced over a period of no longer than seven years). 
  Likewise, on services, where the Indian offer was to be based on 
its WTO services offer, the Commerce Ministry has not provided 
specific details and is stalling on the legal services track.  In 
contrast to its request to the USG to negotiate a bilateral 
agreement on government procurement, the GOI cites domestic 
political pressures as reason for resisting EU demands for 
procurement negotiations.   The lack of progress in submitting 
proposals has made it impossible for the EC to schedule the next 
round of negotiations, which is supposed to include EU Trade 
Commissioner Mandelson and GOI Commerce Minister Nath.  Bermejo 
Acosta also said that the EU/India Summit, normally scheduled for 
November, will be moved to late July at the request of the French, 
who will hold the EU Presidency the second half of 2008. 
 
U.S. SUPPORTS IMPLEMENTATION OF MODERN 
AIR TRAFFIC MANAGEMENT SYSTEMS IN INDIA 
--------------------------- 
 
¶3. (U) Safe and more efficient air traffic management in India is 
the goal of a $ 503, 252 U.S. Trade and Development Agency (USTDA) 
grant awarded on January 24, 2008 to the Airports Authority of India 
(AAI).  At present, India's air traffic management system relies on 
ground-based navigation aids, such as mountain-top VHF omni-ranging 
transmitters, to guide aircraft. The agreement will be used to 
develop a plan for technology upgrades that will enable AAI to make 
key aviation infrastructure improvements that are necessary as 
India's aviation sector continues its rapid growth.  Successful 
implementation of expected recommendations are conservatively 
estimated to result in U.S. exports of  modern Communications, 
Navigation, and Surveillance Air Traffic Management (CNS/ATM) 
systems valued at about $ 300 million. 
 
INDIA ENTERS THE LOW-ORBIT 
SATELLITE LAUNCH MARKET 
------------------------- 
 
¶4. (SBU) The Indian Space Research Organization (ISRO) successfully 
launched an Israeli reconnaissance satellite on January 21.  An ISRO 
official told Consulate Chennai that the launch demonstrated the 
reliability of Indian launch vehicles and that some European and 
Asian nations have already approached India, asking ISRO to put 
satellites in orbit for them.  Another ISRO official told us that 
ISRO's next launch would be in mid-February, when it will put 
Cartosat 2A -- an Indian reconnaissance satellite -- into orbit. 
 
HYDERABAD DRAWS 
AEROSPACE INTEREST 
----------------- 
 
¶5. (SBU) Machine Tools Aids and Reconditioning (MTAR), an Indian 
manufacturer of precision tools in which the private equity firm 
Blackstone holds a 30 percent stake, plans to establish an aerospace 
park in Hyderabad.  The chairman of MTAR chairman told Consulate 
Chennai that the 250-acre park will attract a cluster of small and 
medium enterprises specializing in manufacturing components for the 
growing Indian aerospace industry.  Hyderabad will also attract 
aerospace attention this fall when it hosts "India Aviation 2008," 
an air show along the lines of Bangalore's famous quadrennial 
 
NEW DELHI 00000262  002.2 OF 003 
 
 
defense air show.  Hyderabad's event, based at its new airport 
opening in March, will showcase the civilian side of the market. 
 
ANTHRAX CASES IN ANDHRA PRADESH 
---------------------- 
 
¶6. (SBU) A top local official in the Chittoor district of southern 
Andhra Pradesh (140 km from Chennai), confirmed to Consulate Chennai 
that that five people in the district were infected with cutaneous 
anthrax.  All five had assisted in the skinning of two sheep, from 
which they contracted the disease.  The infected were treated with 
penicillin and are recovering.  The official said that the 
government has put a surveillance system in place to monitor anthrax 
outbreaks.  There is no suggestion that this was anything other than 
animal husbandry gone awry. 
 
SHARP RISE IN NUMBER OF 
PATENTS GRANTED 
------------------- 
 
¶7.  (U) According to business daily The Mint, India's four patent 
offices have granted 10,132 patents in the first three quarters of 
the Indian fiscal year (April to March).  At an average of roughly 
50 a day, this represents a continuation of the rapid growth in 
patents issued from the 2005-2006 fiscal year (4,320 patents) to the 
2006-2007 fiscal year (7,500).  The number of patent applications 
has risen as well over the past three years, though more slowly, but 
the sharp increase in approvals is reportedly due to the continued 
clearing of the backlog of mailbox applications that grew leading up 
to the amendment of the Patent Act in 2005. 
 
MICROSOFT GIVES 33 STUDENTS 
IPR SCHOLARSHIPS 
------------------- 
 
¶8. (U) At a function on Monday, Microsoft India awarded 33 
scholarships for the study of intellectual property rights (IPR) to 
law students from 11 universities across the country.  Microsoft 
India Managing Director Neelam Dhawan noted that the software 
industry loses an estimated 72 percent of its revenue in India to 
piracy and said that Microsoft wanted to "create a sustainable IPR 
ecosystem" to help combat such piracy.  The scholarship program 
began in 2006 with the award of scholarships to students from Nalsar 
University of Law in Hyderabad and has since grown.  Each of this 
year's 33 awardees will receive 80,000 rupees (USD 2,051). 
 
FICCI SHARES USG CONCERNS 
ABOUT COMPETITION ACT 
---------------------- 
 
¶9. (SBU) On January 24, Deputy EconCouns met with FICCI 
representatives to discuss USG concerns about the September 2007 
merger and acquisition (M&A) provisions to the Competition Act.  In 
response to most concerns, FICCI representatives noted that they are 
working with the GOI to address issues of threshold and notification 
through regulations.  The Competition Commission of India (CCI) has 
posted draft regulations on the internet and is encouraging industry 
chambers, the private sector, and others to comment and provide 
feedback (visit http://www.competition-commission-india.nic.i n/, 
click on regulations and review final listing of draft regulations). 
 When asked if FICCI along with other industry chambers is also 
proposing draft legislative amendments to roll back some of new 
competition law amendments, officials responded that the chambers 
are "simultaneously" pursuing both regulations (i.e. draft proposals 
and comments to the CCI produced version) and legislative 
amendments.  FICCI representatives are hopeful that most of the 
industry's concerns as well as those expressed by foreign 
governments may be remedied through the regulations. 
 
TIME IS ON OUR SIDE 
------------------- 
 
NEW DELHI 00000262  003.2 OF 003 
 
 
 
¶10.  (SBU) FICCI officials expect that it will take about another 
year to sort out the regulations for the Competition Act.  They 
expect that the CCI will officially come into effect in the next six 
to seven months, or possibly as early as May.  After which, it will 
take the body some time to deliberate over the regulations to the 
September 2007 Competition Act amendments.  FICCI agreed that, over 
the medium-term, lack of capacity by CCI will persist and rapid 
institution building will have to be i priority. Both sides agreed 
to explore US technical assistance to CCI. 
 
TOWARDS INDIA'S DEVELOPMENT, 
KM BY KM 
------------ 
 
¶11.  (U) Road development projects in India offer enormous 
opportunities for private players this year.  More than 30 projects, 
requiring an investment of over USD 7.5 billion, are to be awarded 
by the National Highway Authorities of India (NHAI) in 2008.  In 
addition, there are major opportunities at the state level. The GOI 
is planning to offer roadside land development rights to developers, 
making it more attractive for investors in this segment. According 
to road sector experts, following construction, there will also be 
vast opportunities in maintenance and re-engineering. 
 
EASING LAND ACQUISITION BARRIERS 
-------------------------------- 
 
¶12.  (U) The GOI Cabinet has approved changes to existing laws to 
make it easier for the government to acquire land for special 
projects to allow for speedy development.  For example, there are 
provisions in place to ensure that land being acquired will get 
transferred to the developer, even if the title holders to the land 
dispute the claim in court. 
 
ENCOURAGING PRIVATE EQUITY 
IN ROAD SECTOR 
--------------- 
 
¶13.  (U) Private equity fund flows in the road sector are estimated 
to be in excess of USD 2 billion. Key private equity players such as 
3i, ICICI Venture, IFDC, and Blackstone are reportedly planning to 
either directly partner with developers by jointly bidding for 
projects or  acquire stakes in road construction firms.  According 
to media reports, Indiabulls, Edelweiss, Tata Realty, and Goldman 
Sachs have also started looking into road projects and are in talks 
with various developers.  The recent increase in private equity fund 
flows is a result of the government's decision to allow private 
equity players in road projects at the time of bidding. 
 
NHDP - ONE LONG HIGHWAY 
----------------------- 
 
¶14.  (U) The National Highway Development Project (NHDP), the 
largest ever highways initiative, which began in December 2000 and 
is divided into seven phases, aims to improve and strengthen 50,000 
km of national highways.  The NHDP is tentatively scheduled for 
completion in 2015.  From 2005-2015, the project will require an 
investment of USD 55.6 billion.  At present, the NHDP is being 
implemented in 4 phases - I, II, IIIA, and V. Phase I, II, and IIIA 
set out to improve more than 25,785 km of arterial routes of the 
National Highway Network to conform to international standards. 
NHDP Phase I and II are expected to be completed in December 2008, 
whereas NHDP Phase IIIA is scheduled for completion in December 
¶2009. 
 
¶18.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
MULFORD