VZCZCXRO9709
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #0096/01 0111100
ZNR UUUUU ZZH
R 111100Z JAN 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 9966
INFO RUEHCG/AMCONSUL CHENNAI 2222
RUEHCI/AMCONSUL KOLKATA 1538
RUEHLH/AMCONSUL LAHORE 4261
RUEHBI/AMCONSUL MUMBAI 1331
RUEHPW/AMCONSUL PESHAWAR 4732
RUEHIL/AMEMBASSY ISLAMABAD 4400
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGQN DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

UNCLAS SECTION 01 OF 03 NEW DELHI 000096 
 
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 
 
E.O. 12958: N/A 
TAGS: EFIN EINV EPET ETRD SENV IN
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF 
JANUARY 7-11, 2008 
 
NEW DELHI 00000096  001.2 OF 003 
 
 
¶1.  (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of January 7-11, 2008. 
 
FORD PLANS USD 500 MILLION 
UPGRADE TO ITS CHENNAI PLANT 
----------------- 
 
¶2. (SBU) Ford India announced on January 8 that it will invest USD 
500 million in its Chennai production facility over the next three 
years.  The investment will allow the plant to double its production 
capacity to 200,000 cars per year, giving it the volume necessary to 
enter India's small-car market by 2010.  Ford will also use the 
investment to build a diesel-engine assembly plant that can produce 
50,000 units per year.  A senior Ford India executive told Consulate 
Chennai that the investment should create some 12,000 new jobs 
(directly and indirectly) and that Ford's investment will spur its 
suppliers to invest an additional USD 500 million to keep up with 
the Chennai facility's increase production capacity. 
 
SOUTH INDIA'S BIG NAMES TAKE A BEATING 
IN US MARKETS 
--------------- 
 
¶3. (SBU) Some of South India's most famous companies took a Wall 
Street drubbing in the first week of 2008.  Rupee appreciation and 
fears of an economic slowdown punished U.S.-listed IT majors like 
Infosys, Cognizant, and Wipro during the first week of 2008.  Senior 
executives from these companies told Consulate Chennai that share 
prices began to tumble immediately after conference calls with 
analysts held to discuss quarterly results.  They told us that 
analysts repeatedly demanded information about the companies' 
strategies to increase productivity, handle wage inflation, and 
manage the negative effects of an appreciating rupee, and that the 
analysts seemed generally dissatisfied with the companies' 
responses.  A local analyst with a major international bank told us 
that Wall Street-listed Indian companies lost close to USD 6 billion 
in valuation during the first week of 2008.  He expects these firms' 
share prices to perform poorly this quarter. 
 
MCDONALD'S LOSES TRADEMARK 
CASE TO INDIAN COMPANY 
-------------------- 
 
¶4. (U) The Indian Supreme Court ruled on January 7 that the 
Bangalore-based "Sterling's MAC Fast Food" did not violate 
McDonald's intellectual property rights (IPR) by using "MAC" in its 
logo.  The original court case, filed by McDonald's in 1998, was 
decided in McDonald's favor, but was overturned by the Karnataka 
High Court, whose decision was upheld on January 7 by the Supreme 
Court.  A Chennai-based IPR lawyer told Consulate Chennai that this 
ruling could encourage Indian companies to adopt logos for products 
and firms that sound or look similar to the logos of established, 
internationally recognized brands. 
 
NEW FINANCIAL SERVICES 
SECRETARY AT MOF 
 
SIPDIS 
----------------------- 
 
¶5. (U) Effective January 9, 58-year old Arun Ramanathan was 
appointed the new Secretary of the Ministry of Finance's Department 
of Financial Services, replacing Vinod Rai who took over as 
Comptroller and Auditor General of India earlier this month. 
Ramanathan, an Indian Administrative Officer of the 1973 batch, is 
from the Andhra Pradesh cadre. Prior to this position, he was 
Secretary at the Department of Chemicals and Petrochemicals, 
 
SIPDIS 
Ministry of Chemicals and Fertilizers since June 2007, overseeing 
the implementation of the Reddy Data Protection Committee Report and 
the issue of pharmaceutical pricing in India.  Ramanathan has held 
several important assignments in various ministries in Andhra 
Pradesh, including the Department of Food & Civil Supplies, and the 
Ministries of Fisheries, Finance, and Transport.  He holds a number 
of graduate degrees including Nuclear Physics from Andhra 
 
NEW DELHI 00000096  002.2 OF 003 
 
 
University, Business Management from Madras University and 
Development Economics from Cambridge University. He is also an 
Associate of the Institute of Cost and Works Accountants of India. 
 
 
FDI INFLOWS SURGING 
-------------------- 
¶6.  (U) A year end annual review by India's Department of Industrial 
Policy and Promotion (DIPP) indicates that foreign direct investment 
(FDI) inflows (including reinvested earnings) into India rose 
fivefold to $19.5 billion from $4.3 billion between fiscal years 
2003-04 and 2006-07.  FDI inflows totaled $15.7 billion in FY 
2006-07. From April to September 2007, FDI inflows totaled $7.2 
billion, with most funds coming through Mauritius, because of its 
pass-through tax benefits.  The services sector witnessed the 
highest FDI inflow, followed by the telecom and the real estate 
sectors.  A good portion of the newer FDI has also come in the form 
of private equity, which reached $17 billion in 2007. India's 
position in the World Bank's ranking of "Doing Business" has 
improved to 120 in 2008 from 138 in 2006. The DIPP review further 
notes that as a percentage of total investment, the share of FDI 
rose to 6.42% in 2006-07 from 2.55% in 2003-04. FDI contributed 
2.31% to India's GDP last year, up from 0.77% in 2004. 
TATA MOTORS LAUNCHES THE NANO - 
CHEAPEST CAR IN THE WORLD 
------------------------------- 
 
¶7.  (U) After nearly four years of anticipation, India's largest 
auto manufacturer Tata Motors launched the Nano or the "People's 
Car" at this week's Auto Expo in New Delhi.  With the basic model 
priced at INR 1 lakh or 100,000 (USD 2554), the Nano runs on petrol 
and is being marketed in the smaller cities for nuclear sized 
families whose primary means of transportation are motorbikes and 
two wheeler scooters.  Tata hopes that by offering the most 
competitively priced car in the Indian market today to create a new 
class of buyers in India's lower income groups, rural areas, as well 
as among the rising middle class looking for a second or third car. 
The Nano costs less than half the price of the second lowest priced 
car by competitor Maruti. 
 
¶8.  (U) However, industry observers are already predicting future 
price wars in the cheap car segment, not just in India but possibly 
internationally.  Critics of the People's Car raise concerns about 
the car's safety and load capacity as well as broader concerns about 
the impact of this car in India, including road congestion, 
inadequate infrastructure, pollution, and increased demand for 
petroleum despite rising gas prices.  Tata Motors has countered 
these claims by ensuring the public that the vehicle meets all the 
appropriate safety, environment, and emissions standards. 
 
HIGH POWERED ADVISORY GROUP ON 
MANUFACTURING 
------------------------------ 
 
¶9.  (U) Aiming at long-term sustained growth in the manufacturing 
sector, Prime Minister Singh has established a High Powered Group. 
Dr. V. Krishnamurthy, Chairman of the National Manufacturing 
Competitiveness Council (NMCC), will head the group to recommend 
measures to help  accelerate growth in manufacturing.  The group's 
mandate includes making recommendations on current policy and 
suggestions for steps to a) devise a mechanism to ensure sustained 
growth of the Indian manufacturing industries for the next 10-15 
years; b) address the recent deceleration in the growth of the 
manufacturing industries; c) boost exports of labor intensive 
manufactured goods in light of the appreciating rupee and high 
interest rates; and d) leverage foreign investment to modernize 
manufacturing in India and create a strong technological base. 
Other members of this High Powered Committee include the Secretaries 
of Finance, Revenue, Commerce, Textiles, and Industrial Policy & 
Promotion and the Member Secretary of the NMCC.  The group will 
submit its final recommendations to the Prime Minister within three 
months (by about mid-April) but is also likely to present interim 
 
NEW DELHI 00000096  003.2 OF 003 
 
 
recommendation in the short term. 
 
¶10.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
MULFORD