VZCZCXRO0325
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #0832/01 0801142
ZNR UUUUU ZZH
R 201142Z MAR 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 0974
INFO RUEHCG/AMCONSUL CHENNAI 2659
RUEHCI/AMCONSUL KOLKATA 1967
RUEHLH/AMCONSUL LAHORE 4348
RUEHBI/AMCONSUL MUMBAI 1764
RUEHPW/AMCONSUL PESHAWAR 4807
RUEHIL/AMEMBASSY ISLAMABAD 4697
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 04 NEW DELHI 000832 
 
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 
MARCH 17-20, 2008 
 
REF:  New Delhi 494 
 
NEW DELHI 00000832  001.2 OF 004 
 
 
¶1. (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of March 17-20, 2008. 
 
INDIA PLANS THIRD YEAR OF 
GRAIN PURCHASES 
------------------ 
 
¶2.  (U) The growing demand for wheat in India has contributed to a 
global price increase of the crop, which has more than doubled in 
the last year.  Despite last year's record yield of 75.8 million 
tons, the government was forced to import 1.8 million tons of wheat 
to meet its requirements in 2007.  Official estimates suggest that 
this year's output will be approximately 75 million tons, but the 
government anticipates purchasing large quantities of the grain for 
a third consecutive year. Foreseeing future volatility in wheat 
prices, an unnamed official suggested the government could float a 
call option tender soon to buy wheat from abroad.  A call option 
would allow the government to purchase wheat at a pre-set price 
within a limited timeframe, in exchange for a nonrefundable payment. 
 The quantity of wheat required and the date of the purchase will 
depend largely on the timing and yield of India's annual wheat 
harvest this spring. 
 
FEARS OF US RECESSION LOOM 
IN INDIAN IT SECTOR 
-------------------- 
 
¶3. (U) The rupee fell to a low of 40.84 on March 17th, its lowest 
level in six months, but recovered to end the following day at 
40.51. The projected effect of a U.S. economic downturn appears to 
be raising concerns in the Indian information-technology (IT) 
industry.  Rupee appreciation is expected to lead to delayed or 
canceled projects for outsourcing and technology firms in India 
whose primary business comes from U.S. clients. IT giant Tat 
Consultancy Services (TCS) has recently reported that two of its 
clients have delayed orders.  Additionally, The Times of India 
reports that approximately 100,000 Indian IT student recruits have 
been placed in "indefinite wait" status by the technology firms they 
would have joined this quarter. 
 
MIXED SIGNALS ON GROWTH 
----------------- 
 
¶4. (SBU) Recent economic data presents a mixed picture for the first 
three months of 2008, although still in line with our recent 
economic assessment (reftel). Advance taxes paid by Indian companies 
for January-March 2008 more than doubled over the same period last 
year, indicating that corporate earnings growth continues to be 
robust.  However, January production data showed that industrial 
production moderated to 5.3% in January 2008, compared to 11.6% 
growth recorded in January 2007. Cumulative industrial growth for 
April-January 2007-08 was considerably higher than the January 
one-month data, at 8.7%, albeit lower than 11.2% recorded last year. 
Other January data shows that capital goods output decelerated in 
January 2008 to 2% from a high of 20% during the first nine months 
of FY 2007-08. Even so, nearly 30% of the capital goods items grew 
by over 30% in the current year. More mixed signals on the economy 
came in the form of slower growth in infrastructure industries for 
January 2008 at 4.2%, compared with 8.3% for January 2007. The one 
month data is not necessarily a trend; industrial production data in 
FY 2006-07 revealed a one-month sharp slide to 4.5% in October 2006 
but bounced back to 15.8% in the following month. The full fiscal 
year's (2006-07) industrial production growth turned out to be 
11.5%. Keeping this in mind, Post will continue to monitor India's 
growth trends. 
 
GM UNVEILS PLANS FOR NEW MINI CAR 
---------------------------- 
 
 
NEW DELHI 00000832  002.2 OF 004 
 
 
¶5. (U) General Motors announced its plan to release a second mini 
car into the low-cost car segment within the next two years.  The 
new model would be priced between USD 3500 and 4000 in India, making 
it cheaper than GM's least expensive model in the country, the 
'Spark'.  GM currently has a three percent share in the Indian auto 
market and is targeting a 10% market share by 2010.  GM Group 
Vice-President David Reilly indicated that the cars will be built in 
Maharashtra, where trial production began earlier this week. 
 
FOREIGN EYES ON INDIA'S 
BURGEONING FOOD SECTOR 
------------------ 
 
¶6. (U) At an awards ceremony at the National Productivity Council on 
March 19, Minister of State for Food Processing Industries Subodh 
Kant Sahai urged potential stakeholders to invest in India's food 
processing sector.  Sahai stated that while the sector has nearly 
doubled in growth in the last four years, an additional investment 
of 100 billion rupees would be necessary to hit a target growth rate 
of 20% by the year 2015. Media sources report that two-thirds of the 
processed foods market is controlled by regional firms in India, and 
that the total value of the market is estimated at USD 90 billion. 
Several multinational firms, including Nestle and Yum Brands, have 
leveraged the influence of rising incomes, changing culinary 
preferences, and an increasingly female workforce to adapt their 
products to suit Indian audiences.  Nevertheless, tax rules and 
insufficient storage and refrigeration infrastructure continue to 
pose challenges to those firms interested in entering the market. 
 
INDIA STILL NOT READY WITH 
AMENDMENTS TO THE MONEY 
LAUNDERING ACT 
----------------- 
 
¶7.  (SBU) Anand Bajaj, Director (External Markets) at the Department 
of Economic Affairs, Ministry of Finance told Econoff on March 18 
that India is reworking the amendments to the Prevention of Money 
Laundering Act 2002, taking into account the international 
recommendations as outlined by the Financial Action Task Force at 
the last plenary in Paris in February.  Although USG has not seen 
the proposed amendments, Bajaj stated the changes to the amendments 
will expand the number of  new "scheduled offences" for money 
laundering that do not require a predicate offence from less than 
ten to approximately twenty.  Bajaj said that the bill will take 
some time to get ready and is not likely to be introduced in the 
current budget session of parliament. Although Bajaj did not mention 
specifics, previously discussed scheduled offences include those 
currently addressed in the Unlawful Activities Prevention Act on 
terror and terrorism proceeds, SEBI Act on insider trading, 
Narcotics Act on preparing opium, Explosives Act to combat 
terrorism, the Wildlife Protection Act related to hunting, the 
Prevention of the Corruption Act on criminal misconduct by a public 
servant, the Customs Act on import or export of goods prohibited 
under the Customs Act and misdeclaration of value of exports or 
imports or evasion of duty. 
 
U.S. AGENDA ON PATENT ISSUE 
CALLED INTO QUESTION 
------------------------ 
 
¶8.  (U) Indian patent experts view the comments of some US academics 
during a recent Chennai summit on intellectual property rights (IPR) 
as a indication that the U.S. seeks to avoid protections for 
traditional knowledge, to the detriment of developing countries such 
as India and Brazil.  Indian patent experts claim that Western firms 
do not share the benefits of indigenous biological resources and 
traditional knowledge with local communities where products 
originated.  One of the experts, Vibhudi Rangan, stated that the U.S 
is using trade and media pressure to express to India that 
traditional knowledge is separate from - and cannot be protected by 
- patents.  Recently, India has pushed for an amendment to WTO 
 
NEW DELHI 00000832  003 OF 004 
 
 
TRIPS, which would require patent applicants worldwide to state the 
source of origin of data related to natural resources.  During the 
summit, George Washington University law professor Martin Adelman 
stated that "traditional knowledge is not a patent issue... India's 
wealth is not dependent on traditional knowledge," and instead 
encouraged India to invest in entrepreneurship and continued 
technological and scientific progress. 
 
CIPLA TO MARKET LUNG CANCER 
TREATMENT DRUG 
-------------------- 
 
¶9.  (U) The Delhi High Court made an interim ruling that permits 
domestic Indian pharmaceutical manufacturer Cipla to market a lung 
cancer treatment drug which was developed by Roche and granted a 
patent in India in July 2007.  The generic name of the lung cancer 
drug is Erlotinib, sold under Roche's trade name as Tarceva.  Cipla 
has branded the drug 'Erlocip' and will sell it at one-third the 
price of Roche's drug.  Roche is arguing that the Indian product 
patent for Tarceva disallows other companies from manufacturing a 
"copy-cat" version of the drug, but Cipla is questioning the 
validity of the Roche patent.  Prior to India's Patent Law of 2005, 
the GOI only protected process patents, which permitted firms to 
make the same drug through different processes.  Lung cancer affects 
approximately 160,000 Indians yearly.  According to Cipla's lawyer 
in the case, the court order stated that "given the price 
difference, the court did not want patients to be deprived of a 
low-cost alternative by staying sales of the generic product." 
 
POWER SHORTFALL PROMPTS 
SUGGESTION FOR NEW "WEEKENDS" 
----------------- 
 
¶10. (U) The Tamil Nadu Electricity Board (TNEB) has asked 
information technology companies in Chennai to stagger their weekly 
holiday from the present Saturday-Sunday to either Sunday-Monday or 
Friday-Saturday.  TNEB expects a shortfall of 1000 MW this summer 
due to underinvestment in power-generation capacity in recent years 
and delays in completing a new nuclear power plant in the state. 
TNEB told the companies that shifting the weekly holidays will ease 
the load on the grid, leading to fewer unexpected power disruptions, 
a cognizant official told Consulate Chennai.  He also said that the 
companies were considering TNEB's request, but that their responses 
would depend upon their discussions with their clients. 
 
KARNATAKA APPROVES INVESTMENT 
PROJECTS WORTH USD 12 BILLION 
--------------------- 
 
¶11. (U) The State High Level Clearance Committee (SHLCC) of the 
South India state of Karnataka approved on March 18 some 28 
investment proposals valued at more than INR 490 billion (USD 12 
billion), according to press reports.  The projects, which involve 
an array of sectors from power-generation to steel-production and 
education to urban planning, are slated to generate more than 
400,000 jobs.  An official in the state governor's office told 
Consulate Chennai that most of the project investors were Indian 
entities working with international banks to provide the financial 
backing. 
 
¶12. (SBU)  A former Karnataka government minister told Consulate 
Chennai that many of these proposals were initiated during the 
previous JD(S)/BJP coalition government (which collapsed in October 
2007 and again in November), but had failed to gain approval.  He 
also said that many of the approved proposals were from business 
groups closely aligned with the Congress Party.  The SHLCC is 
chaired by Governor Rameshwar Thakur, a Congress appointee who has 
administered the state under "President's Rule" since the collapse 
of the state's elected government. 
 
¶13.  (U) Visit New Delhi's Classified Website: 
 
NEW DELHI 00000832  004.2 OF 004 
 
 
http://www.state.sgov/p/sa/newdelhi 
 
MULFORD