VZCZCXRO9860
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #1049/01 1021206
ZNR UUUUU ZZH
R 111206Z APR 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 1309
INFO RUEHCG/AMCONSUL CHENNAI 2767
RUEHCI/AMCONSUL KOLKATA 2066
RUEHLH/AMCONSUL LAHORE 4390
RUEHBI/AMCONSUL MUMBAI 1874
RUEHPW/AMCONSUL PESHAWAR 4830
RUEHIL/AMEMBASSY ISLAMABAD 4785
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 001049 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
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 
APRIL 7-11, 2008 
 
 
NEW DELHI 00001049  001.2 OF 003 
 
 
¶1.  (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of APRIL 7-11, 2008, including the following 
items: 
-- INDIA'S INDUSTRIAL PRODUCTION BACK UP IN FEBRUARY 
-- INDIAN CIVIL AVIATION TO GET A REGULATOR BY OCTOBER 2008 
-- INDIA LOSES $14.5 BILLION OF FOOD ANNUALLY 
-- US ELECTRONICS MANUFACTURER OPENS SHOP IN INDIA 
-- TIRUCHI AIRPORT TO EXPAND INTERNATIONAL OPERATIONS 
 
INDIA'S INDUSTRIAL PRODUCTION 
BACK UP IN FEBRUARY 
---------------- 
 
¶2.  (U) India's core sector, with a combined weight of 26.7% in the 
index of industrial production (IIP), rose in February to 8.7% 
compared to 7.5% in the same month of the previous year, and sharply 
higher than the 3.1 % growth registered in January 2008. This is the 
second-highest growth in the index during FY 2007-08, next to the 
9.2% growth registered in August 2007 and suggests there may be a 
reversal of the declining trend.  A part of this rise can be 
explained by the base effect of last year.  At the same time, 
though, the growth rate of coal and cement doubled, while 
electricity production grew almost three times faster than the same 
month in 2007. 
 
¶3. (U) The upwards trend was reinforced by April 11 data showing 
that industrial production grew by 8.6% in February, led by 
electricity, manufacturing and mining. On a cumulative basis, 
industrial production was up 8.6% during April 2007-February 2008, 
compared to 11% growth during the same time the previous year. 
Capital goods production rebounded from 2.3% growth in January to 
10.4% growth in February, compared to the same month in 2007. 
Capital goods for April 2007-February 2008 grew 17.5%, barely 
dipping from April 2006-February 2007 growth of 18.3%, suggesting 
that India's growth continues to be investment-led. 
 
INDIAN CIVIL AVIATION TO GET A 
REGULATOR BY OCTOBER 2008 
-------------------------------- 
 
¶4. (U) The Indian government on April 7 announced that it will 
appoint an independent regulator for the aviation sector by October 
this year.  Ministry of Civil Aviation Joint Secretary K. N. 
Srivastava, speaking to the press on the sidelines of the 'Aerodrome 
India 2008', said that the legislation had been presented to 
Parliament and was later referred to a standing committee.  He 
expected it would be discussed during the second half of the Budget 
session when the recommendations of the standing committee would be 
available. After passage from Parliament, it would take about three 
months to set up the regulator, he said. The regulator would look 
into aspects like aeronautical charges, user development fees, and 
passenger fees. 
 
¶5. (U) Srivastava also said that a Greenfield Airport Policy would 
be announced shortly that would seek to minimize the delay faced by 
developers of new airports in getting approvals.  The policy is 
being considered by the Cabinet and is expected to be announced this 
month. He further indicated that the Indian government will soon 
come out with a Vision Document 2020 for the aviation sector. At 
present, a Group of Ministers (GoM) is looking into it. The document 
will contain plans for airport infrastructure, connectivity, 
security and other related issues. 
 
INDIA LOSES $14.5 BILLION 
OF FOOD ANNUALLY 
------------------ 
 
¶6.  (U) According to press reports, India's Ministry of Agriculture 
estimates that the country loses more than $14.5 billion (Rs 580 
billion) worth of agricultural food items every year, due to lack of 
post harvesting infrastructure such as refrigerated transport, cold 
 
NEW DELHI 00001049  002.2 OF 003 
 
 
chains, storage facilities, fragmented farming and poor management. 
This includes the 10% of food grains which is wasted because of 
inadequate and inefficient post-harvest storage and processing 
facilities, pilferage and inadequate transportation of grains from 
the farm to the market. The Central Institute of Post Harvest 
Engineering and Technology, a nodal research agency located in 
Punjab, similarly estimates that post-harvest losses of selected 
fruits and vegetables are about 25-40%.  This drastically reduces 
India's per capita availability of fruits, while less that 2% of 
vegetables are commercially processed.  The GOI also believes that 
wastage of food, which it estimates could feed the 232 million 
people below the poverty line, can be stopped through focusing on 
food processing industries, developing cold chains infrastructure, 
and filling the gaps in the supply chain system. 
 
US ELECTRONICS MANUFACTURER 
OPENS SHOP IN INDIA 
--------------------- 
 
¶7. (U) Maryland-based Patton Electronics, a leading producer of 
networking and Voice Over Internet Protocol (VoIP) equipment, 
entered the Indian market directly with its purchase of Microsense, 
its former distributor in India.  The new head of Patton's 
operations in India told Consulate Chennai that the weak dollar and 
limited volumes of current local sales did not yet justify 
establishing the company's own production facility in India.  He 
said that the current value of sales is only about $3 million, but 
that he expects this to increase to $50 million over the next three 
years, driven largely by India's burgeoning demand for computers and 
the devices to link them.  The company does, however, plan to 
establish a $10 million testing center in Chennai to serve the 
company's worldwide operations. 
 
TIRUCHI AIRPORT TO EXPAND 
INTERNATIONAL OPERATIONS 
---------------------- 
 
¶8. (U) South India's regional director of the Airports Authority of 
India (AAI) told Consulate Chennai that the airport in 
Tiruchirapalli (also known as Tiruchi or Trichy) in central Tamil 
Nadu will increase its international operations once expansion of 
its terminal buildings are complete in March 2009.  He said that the 
terminal will be able to accommodate 400 passengers at a time and 
that the airport currently operates flights to Colombo, the Arabian 
Gulf, Singapore, and Kuala Lumpur.  He noted that many passengers 
from the southern districts of Tamil Nadu and Kerala flying to 
Europe or Southeast Asia use Tiruchi as their starting point, as 
connections via Dubai and Colombo are generally cost effective. 
 
NEW REPORT ON FINANCIAL SECTOR REFORM 
------------------------------------- 
 
¶9.  (U) The Planning Commission has released the draft report of the 
Committee on Financial Sector Reforms, chaired by Eniversity of 
Chicago professor Raghuram Rajan.  While the Government of India has 
plenty of thoughtful reports on various aspects of financial sector 
reform by reputable committees, which the authors admit, this report 
tries to offer new perspectives on India's financial sector, 
strongly equating financial inclusion with not just  economic 
growth, but a stronger financial system as well. As the authors 
assert, the road to making Mumbai an international financial center 
"runs through every village and slum in India."  To achieve such a 
goal, the committee recommends many smaller reform changes, rather 
than more comprehensive reforms suggested elsewhere.  For example, 
it suggests better land titling and the removal of the restriction 
on landleasing, which ties rural residents to the countryside. Other 
proposals include limiting the RBI to a focus on inflation-fighting, 
the removal of bank branch license and ATM restrictions, and 
changing the process of directed lending. The report can be found 
at: http://planningcommission.gov.in/reports/. 
 
 
NEW DELHI 00001049  003.2 OF 003 
 
 
¶10.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
DEIKUN